James E. Davis
CEO-elect at Quest Diagnostics
Thanks, Steve. On behalf of our 50,000 Quest colleagues, I would like to thank you for your leadership of Quest Diagnostics over the last 10 years, you turned around a company that was struggling and built shareholder value, and transformed Quest into a trusted healthcare partner with a strong foundation for future growth. I'm personally grateful for all the help and guidance and friendship that you shared during the transition. Thanks, Steve.
Turning to our results. Our base business grew year-over-year in the third quarter with performance rebounding in August and September from the softer volume trends that we saw earlier in the year. In fact, before Hurricane Ian hit in September, we were seeing some of the highest base testing volumes we have ever experienced.
I'd like to thank our employees for their incredible efforts to restore our labs and PSCs for our patients and customers in the wake of Hurricane Ian, while also enduring personal loss of their homes and belongings. I'm also grateful to our employees outside of the impacted areas, who stepped up to provide financial support to our colleagues in need.
As many of you are aware, Florida is an important state for us. During the quarter, we grew the base business revenues and continued to invest in advanced diagnostics and consumer-initiated testing. To help offset inflationary pressures, we have continued to pursue our operational excellence strategy and have been closely managing our cost structure through our Invigorate initiatives.
In the third quarter, total revenues were $2.5 billion. Earnings per share were $2.17 on a reported basis and $2.36 on an adjusted basis. Cash provided by operations was $502 million. COVID-19 testing revenues were $316 million in the third quarter, down 55% from 2021 and down 11% from the previous quarter. After plateauing in June and July, our COVID-19 molecular testing volumes steadily declined. We expect COVID-19 molecular volumes to average 10,000 to 15,000 per day in the fourth quarter.
In the third quarter, we continued to make progress executing our two-point strategy to accelerate growth and drive operational excellence. Here are some highlights from the quarter. M&A continues to be a driver of growth. We recently announced an outreach lab purchase from Summa Health, a large integrated healthcare delivery system in Ohio.
While this is a small acquisition, it's a positive indicator. We are seeing that hospital systems are more open to discussions than before the pandemic. Many large and small health systems faced substantial financial and labor pressures that make our range of services very attractive. We're pleased with the activity in our M&A pipeline and hope to share additional news with you later this year.
We also announced a professional lab services relationship with Lee Health, Southwest Florida's primary community-owned health system, to provide supply chain expertise for five hospitals owned by Lee Health and selected outpatient centers. We will also continue to perform reference testing for Lee Health. Our implementation plans have been slightly delayed by Hurricane Ian, though we expect this relationship will have a positive impact on revenue growth in 2023.
Turning now to health plans. Both volumes and revenues continue to grow faster than our overall base business in the quarter. Value-based care relationships continue to gain traction. Not only does this yield benefit for health plans and their members, but also it enables us to gain share. We've begun to renew some of our value-based contracts with national health plans, while continuing to engage and expand our value-based footprint with other plans.
Value-based relationships are appealing to health plans because it helps them reduce the overall cost of care, provides insights to better health outcomes, and provides an exceptional value to members. We're on track to meet our goal of realizing 50% of our health plan revenues from value-based relationships by the end of next year.
Also, as we continue to extend and renegotiate health plan agreements, we see increased volumes and pricing from these contracts. We're seeing a more favorable pricing environment. And over the last two years, the majority of our renewals have included stable to positive reimbursement.
In advanced diagnostics, we saw growth from prenatal genetics and genomics sequencing services in the third quarter. We continue to make investments to strengthen our capabilities to accelerate growth in oncology and hematology, hereditary genetics, genomic sequencing services, and pharma services.
Just last week, we announced the addition of Mark Gardner, our Senior Vice President of Molecular Genomics and Oncology. In this new position, Mark, an established leader in molecular genomics, next-generation sequencing and oncology diagnostics, is responsible for driving growth and expanding our offerings in these areas.
The investments we're making in consumer-initiated testing enabled us to recently launch a new e-commerce platform. The new site is more powerful and consumer-friendly with a compelling user experience and a number of enhancements. We're encouraged by the early success of the site in the first few weeks of its launch, and we expect to make further progress in the fourth quarter and in 2023 toward our goal of $250 million of annual consumer-initiated testing revenues by 2025.
We also launched a new ad campaign to drive broader awareness of our consumer-initiated testing offerings, which cover everything from women's health tests to allergy testing and sexually transmitted infections. Check out the new site at questhealth.com and look for the new ads.
The second part of our two-point strategy is to drive operational excellence. We remain focused on improving our operational quality, service and cost, thereby driving productivity gains and improving the customer experience. Here are a few examples.
As COVID-19 volumes have declined, we've begun to repurpose some of our COVID-19 testing platforms to enhance our quality and reduce costs. Today, 75% of our patients are arriving at a PSC with an appointment compared to less than 25% just three years ago. This increased number of appointments allows us to flex our workforce to meet demand within a particular geography, which enables us to serve our patients faster.
For patients, who walk into a patient service center, our new schedule at check-in program sets expectations in the waiting room and balances the load for our phlebotomists. Walk-ins now self-register when they arrive and learn how long they'll need to wait. Our average wait time is approximately five minutes, which is roughly half the level since 2019.
Finally, we continue to drive the use of automation and artificial intelligence to drive productivity gains to help offset inflationary pressures.
Now I'll turn it over to Sam, who will provide more details on our performance and share more insights on our updated guidance for the remainder of 2022.
