Today, Quest Diagnostics is the clear leader in an attractive industry that provides an essential healthcare service—diagnostic testing. We are differentiating ourselves from our competitors by implementing a strategy that emphasizes providing superior service to our patients; making continuous improvements in quality by applying Lean Six Sigma principles; prudently investing to drive science and innovation; and relentlessly focusing on building an unparalleled set of assets and capabilities.
While no company is immune to the effects of the worldwide economic downturn, we believe the opportunities before us far outweigh the challenges. Our company is strong operationally and financially. We are bifocal in our approach—doing what is right in the short term and reshaping our business to position us well for long-term success.
Strong Financial Performance
We reported outstanding financial results for 2008.
- Revenues grew 8% to $7.2 billion.
- Earnings per share increased 14% to $3.23.
- Operating income increased to $1.2 billion, or 16.9% of revenues.
- Cash flow exceeded $1 billion.
We exceeded our commitment for earnings in 2008, despite the challenging economic environment. One important driver of this earnings improvement was the growth of our business. Demand for diagnostic testing has continued to increase in all three of our key service offerings—routine testing, esoteric and gene-based testing, and anatomic pathology. In our two businesses that have been most affected by a slowing economy—pre-employment drug testing and risk assessment of candidates for life insurance—we are taking actions to mitigate their impact to our earnings growth, and also to position them for accelerating growth when the economy rebounds.
In addition, higher earnings were also driven by a company-wide initiative we launched more than two years ago to reshape, remake and re-energize our company. This program is well underway and is focused on streamlining and simplifying processes to make us even more effective, while also improving efficiency and reducing costs. To date, this initiative, focused on driving continuous improvement, has removed more than $300 million from our cost structure. By the end of 2009, we will have reduced our cost structure by $500 million.
