Now remember, we are – in the next three quarters, we’re not assuming that we continue at the same level and same rate of whether you call it base revenue growth and maybe to some extent base clinical volume growth. We do expect that some of this – as utilization starts to come down and normalize. Maybe that’s a conservative assumption, not sure, but at this point, we’re more comfortable saying that it’s going to be, volume growth is going to be closer to that, just slightly lower than mid-single digits. Jim, anything you would add there?
Jim Davis : Yeah, I would just say, the mix in the quarter was really good. On a total basis, so all in, even with COVID we still had 10 basis points of growth from a rev-per-rec standpoint, pricing relatively flat. So it suggests that test-pa rec and test-mix were really, really strong. Remember, that offset, as Sam said in the script, $90 million worth of COVID decline. COVID that last year was at $100 per test. So, we completely offset that from a mix standpoint and still saw growth in rev-per-rec. So, really happy with the mix that we saw in the quarter.
Operator: The next question comes from Jack Meehan of Nephron Research. Your line is open.
Jack Meehan : Thanks. Good morning, guys. I was hoping you could unpack the core growth a little bit more. So, nearly 6% that was a 3% beat versus what I was looking for. Historically, the lab has been a pretty steady business. So, to post a beat like this, it’s pretty notable. Can you just lay out the factors for why maybe outside of core utilization growth came in a lot stronger in the quarter? Any thoughts on share gains? Was that a dynamic? Thanks.
Jim Davis : I think it’s all of the above, Jack. Certainly, the utilization remains strong, consistent with what we’ve seen in the last three or four quarters. But, we also said that, yeah, we think we’re picking up share. We closed several large transactions with two integrated large physician groups in the quarter. Our core physician volume growth was strong. Our hospital reference growth was strong. Our PLS volume relatively strong in the quarter. So, that suggests utilization in hospitals was also up, and our pathology business contributing as well to growth. So, we see it across all physician types, all physician channels, retailers, as well as these large physician groups. It’s a combination of utilization plus share gain.
Sam Samad : Yeah, and Jack, this is Sam. I’ll mention one other thing as well. If you’re looking at overall base business growth, I mean, the Quest Health Consumer-Initiated Testing business as well was a very good strength and tailwind in the quarter. Basically, that base business excluding COVID almost doubled in the quarter – year-over-year.
Operator: The next question comes from Elizabeth Anderson of Evercore ISI. Your line is open.
Elizabeth Anderson : Hi guys. Maybe a slight two-parter for me. First just to pick up Sam, what you were just saying about the consumer business. Can you talk about when you sort of think about, how you think about the margin progression of that and sort of like what your expectations are for that to get more towards the corporate average? And then secondarily, could you just comment on the continued labor environment? How are you seeing sort of wages and turnover versus the prior quarter? Thank you.
Sam Samad : Yeah. Hey, I’ll address both. So the margins on our consumer business are consistent with the margins in the overall business. So, it’s right there. It’s at the meeting for the company and it continued to improve all last year and so feel good about that. In terms of the labor environment, we definitely saw a tick down or a tick up, let’s just say, in our retention rates. Not yet back to pre-COVID levels, but below in the high teens, below the 20% threshold that we were running at last year. So, we feel good about that. We saw a downward tick in logistics attrition, our specimen processing. It was across the board. All front-line jobs improved in the quarter and feel good about the direction that that’s moving in.
Operator: The next question comes from Lisa Gill of J.P. Morgan. Your line is open.
Lisa Gill : Thanks very much. Good morning. In your prepared comments, you talked about 50% of health plans now having some type of value-based care arrangement. Can you maybe just give us an example of what that looks like and talk about what that means to the margin?
Jim Davis : Yeah. So we call it value-based incentives is what we’re talking about here. Generally there is two types. So, one is related to acquisitions. So when we acquire an outreach book of business, and let’s say the health plan was paying that health system 200% to 300% of Medicare, it is not going to come down to the rates that we are contracted with that health plan with on day one. It will step down over time. In fact, there’s – again, since it doesn’t step right down to our rate, we’re getting paid a higher price for that work over some period of time. The second incentive types are broad-based or types of incentives are really related to volume movement. So, movement of high-priced requisitions from health system laboratories or from out-of-network laboratories into Quest Diagnostics.
In essence, you’re getting paid for share gains at that health plan that are tied to share gains coming from, moving those requisitions from, again, health systems and out-of-network labs. So, really those are the two types of value incentives that we get.
Lisa Gill : Just to confirm, there’s no impact from the change cyber-attack at all on Quest in the quarter?
Jim Davis : No, less than 2% of our requisitions were ever moving through those pipes from an adjudication standpoint. There’s somewhere between a $15 million and $20 million cash impact, but no revenue impact in the quarter.
Sam Samad : And just to be clear, the cash impact is really a delay, not necessarily any impact to revenue.
Lisa Gill : Okay, great. Thanks for the comment.
Operator: This question comes from Michael Ryskin of Bank of America. Your line has opened, sir.
