Quest Diagnostics Incorporated: 10-K Risk Factor Changes

We plan selectively to enhance our business from time to time through business development activities, such as acquisitions, licensing arrangements, investments and alliances, including joint ventures. However, these plans are subject to 37 37 37 Table of Contents Table of Contents the availability of appropriate opportunities and competition from other companies seeking similar opportunities. Moreover, the success of any such effort may be affected by a number of factors, including our ability to properly assess and value the potential business opportunity, obtain any necessary regulatory clearance (including due to antitrust concerns), integrate the new businesses and manage the costs related to any such integration, and retain key technical, professional or management personnel. The success of our strategic alliances depends not only on our contributions and capabilities, but also on the property, resources, efforts and skills contributed by our strategic partners. Further, disputes may arise with strategic partners, due to conflicting priorities or conflicts of interests. Acquisitions are not all the same (e.g., asset acquisitions differ from acquisitions of equity interests); different acquisitions offer different risks and require different levels of effort to obtain regulatory clearance. Acquisitions may involve the integration of a separate company that has different systems, processes, policies and cultures. Integration of acquisitions involves a number of risks including the diversion of management's attention to the integration of the operations of assets or businesses we have acquired, difficulties in the diligence and integration of operations and systems and the realization of potential operating synergies, or introduction of IT security vulnerabilities not adequately investigated during diligence or managed after acquisition, the integration and retention of the personnel of the acquired businesses and of our existing business, challenges in retaining the customers of the combined businesses, and potential adverse effects on operating results. The process of negotiating, completing and integrating acquisitions may be disruptive to our businesses (especially as transactions become increasingly complex) and may cause an interruption of, or a loss of momentum in, such businesses as a result of the following difficulties, among others: •loss of key customers or employees; •difficulty and/or delays in standardizing information and other systems; •difficulty in consolidating facilities and infrastructure; •failure to maintain the quality or timeliness of services and profitability that our Company has historically provided; •failing to satisfy the performance requirements of the physicians associated with an acquired outreach business; •regulatory delay or failure to develop, acquire licenses for, introduce, or commercialize newly-acquired tests, technology and services; •diversion of management's attention from the day-to-day business of our Company as a result of the need to deal with the foregoing disruptions and difficulties; and •the added costs of dealing with such disruptions. If we are unable successfully to integrate strategic acquisitions in a timely manner, our business and our growth strategies could be negatively affected. Even if we are able to successfully complete the integration of the operations of other assets or businesses we may acquire in the future, we may not be able to realize all or any of the benefits that we expect to result from such integration, either in monetary terms or in a timely manner. We have also entered into arrangements with a number of new entrants in the health services industry who are leveraging the increasing trend for consumers to manage and take direct responsibility for their own healthcare, where we provide the underlying testing services for their consumer health service offerings. These companies are operating in a new, rapidly evolving and uncertain regulatory landscape that subjects them to several risks, including those related to application of regulatory requirements (e.g., under CLIA, for testing performed outside of a commercial laboratory), unlicensed and corporate practice of medicine laws that differ across the United States, reimbursement uncertainty of direct-to-consumer health services, specimen collection errors and logistics, cybersecurity and health data privacy risks and clinical and professional liability. Our contractual relationship with these companies could expose us to these legal or regulatory risks and reputational harm.

We plan selectively to enhance our business from time to time through business development activities, such as acquisitions, licensing arrangements, investments and alliances. However, these plans are subject to the availability of appropriate opportunities and competition from other companies seeking similar opportunities. Moreover, the success of any such effort may be affected by a number of factors, including our ability to properly assess and value the potential business 37 37 37 Table of Contents Table of Contents opportunity, and to integrate the new businesses, manage the costs related to any such integration and to retain key technical, professional or management personnel. The success of our strategic alliances depends not only on our contributions and capabilities, but also on the property, resources, efforts and skills contributed by our strategic partners. Further, disputes may arise with strategic partners, due to conflicting priorities or conflicts of interests. Acquisitions are not all the same (e.g., asset acquisitions differ from acquisitions of equity interests); different acquisitions offer different risks. Acquisitions may involve the integration of a separate company that has different systems, processes, policies and cultures. Integration of acquisitions involves a number of risks including the diversion of management's attention to the assimilation of the operations of assets or businesses we have acquired, difficulties in the diligence and integration of operations and systems and the realization of potential operating synergies, or introduction of IT security vulnerabilities not adequately investigated during diligence or managed after acquisition, the integration and retention of the personnel of the acquired businesses and of our existing business, challenges in retaining the customers of the combined businesses, and potential adverse effects on operating results. The process of combining acquisitions may be disruptive to our businesses and may cause an interruption of, or a loss of momentum in, such businesses as a result of the following difficulties, among others: •loss of key customers or employees; •difficulty and/or delays in standardizing information and other systems; •difficulty in consolidating facilities and infrastructure; •failure to maintain the quality or timeliness of services that our Company has historically provided; •failing to satisfy the performance requirements of the physicians associated with an acquired outreach business; •diversion of management's attention from the day-to-day business of our Company as a result of the need to deal with the foregoing disruptions and difficulties; and •the added costs of dealing with such disruptions. If we are unable successfully to integrate strategic acquisitions in a timely manner, our business and our growth strategies could be negatively affected. Even if we are able to successfully complete the integration of the operations of other assets or businesses we may acquire in the future, we may not be able to realize all or any of the benefits that we expect to result from such integration, either in monetary terms or in a timely manner.