2010 was a challenging year for our company, as Americans reduced their utilization of healthcare services. Against a backdrop of a 4% decline in physician office visits in the U.S., our revenue decline of 1.2% to $7.4 billion was not surprising.
Despite the downward pressure caused by fewer physician office visits, we were able to increase earnings per share for the year and generate significant cash flow. In addition, we made progress on a number of key growth initiatives.
As the world leader in diagnostic testing, information and services, Quest Diagnostics is well positioned to capitalize on fundamental trends, which remain positive for our company. Diagnostic testing is becoming even more essential to quality healthcare, and we play a central role in improving health outcomes and reducing overall healthcare costs. We expect increased demand for higher value and more complex tests that help physicians identify predisposition to disease, diagnose disease, select treatment based on a patient’s individual genetic profile, and monitor therapy and recurrence.
The pace of technological change is accelerating. In order to remain competitive, we must therefore continually develop new tests to anticipate the evolving needs of the healthcare community.
As this letter is written, we finalized the acquisition of Athena Diagnostics and are preparing to complete the acquisition of Celera Corporation in separate transactions that are expected to add 2% to our 2011 revenue growth and drive sustainable growth.
Athena will establish Quest Diagnostics as the clear leader in the rapidly emerging neurology testing market. This represents one of the next significant growth areas in diagnostic testing, with significant interest and potential in the emerging area of diagnostics and therapy for Alzheimer’s disease. We expect to operate Athena as an independent business within Quest Diagnostics.
Celera, one of the world’s pioneers in genetic diagnostics discovery and development, will further strengthen our leadership position in molecular diagnostics. We will gain immediate access to an impressive range of proprietary tests and products, and a strong pipeline of biomarkers for the future. Berkeley HeartLab’s unique test offering and specialized sales force enhances our leading position in gene-based and esoteric cardiovascular testing. Celera’s products business significantly expands our in-vitro diagnostics products and development capability.
Strategy Starts with Patients
Our business strategy remains firmly focused on patients, growth and people.
We differentiate ourselves from our competitors in several important ways, by:
- Developing and promoting new tests and technologies by building on our leadership position in science and innovation;
- Improving quality by applying Lean Six Sigma principles; and
- Providing superior service.
Our long term goals are to:
- Grow faster than the industry rate;
- Expand operating income to 20% of revenues; and
- Increase international operations to 10% of revenues.
We have assembled an unmatched network of laboratories, patient service centers for specimen collection and ground and air logistics, which position us well for growth.