NEW YORK – Quest Diagnostics disclosed after the close of the market on Monday that it is undertaking a series of moves to offset a sharp drop in its overall testing volume in late March resulting from the COVID-19 pandemic.
In a letter to Quest employees, Chairman, President, and CEO Steve Rusckowski said that he will take a 25 percent cut to his base pay for the next 12 weeks. Additionally, members of Quest's board will forgo 25 percent of their cash compensation over the next 12 weeks, while Quest exempt employees (those who are exempt from receiving overtime pay) will take a pay cut for the same period, ranging from 20 percent for most of the lab firm's senior executives down to 5 percent, depending on level.
Other steps that Quest is taking include suspending its 401(k) match and its supplemental deferred compensation plans through the end of 2020. It will also approve furloughs for employees with diminished work who have expressed an interest to stay at home, though Quest will continue to provide employee benefits and cover employee contributions. Lastly, hours for non-exempt employees (those eligible for overtime pay) will be reduced "where possible and necessary." Overtime will be also reduced, virtually all hiring and promotions will be frozen, and temporary and contract workers will be dismissed.
Quest noted that the changes will not affect its ability to perform testing for the coronavirus.
"The past few weeks have been a time of unprecedented challenges, and we have all seen the impact of the COVID-19 crisis on our families, colleagues, communities, and our business," Rusckowski said in his letter. "In order to preserve cash and support the business as we navigate through the pandemic, we are taking a series of temporary actions that will impact all of us at Quest in some way.
"These are the temporary actions we need to take now to help us through the second quarter. After that time, we will evaluate what we need to do beyond that, if anything," he added.
In his letter, he claimed that Quest has performed about 800,000 tests, or about 40 percent of all coronavirus testing by commercial labs, and it is now readying itself to offer serology coronavirus testing to identify individuals who may have been exposed to SARS-CoV-2 and developed immunity to COVID-19.
Quest is not alone in its worries about the impact of the coronavirus pandemic. Companies across the entire diagnostics, life sciences, and medical devices industries are reporting that the coronavirus pandemic will have an adverse effect on their top and bottom lines, and several firms have withdrawn their full-year 2020 guidances, citing the uncertainty caused by the pandemic.
In the lab industry, overall testing volumes have plummeted. While demand for SARS-CoV-2 testing continues to soar, it has also led to a precipitous decline in other kinds of routine testing, as patients delay visits to doctors and elective procedures. At the end of March, Quest said in a document filed with the US Securities and Exchange Commission that during the last two weeks of the month total testing volume, including SARS-CoV-2 testing, fell more than 40 percent.
Smaller regional and community laboratories, similarly, are being challenged, and the National Independent Laboratory Association said in a statement recently that the drop in testing volumes "is forcing many regional [and] community laboratories to reduce their workforce."
Quest is scheduled to report its first quarter earnings results on April 22.