Thank you for standing by, and welcome to the Labcorp Q1 2021 Earnings Conference Call. . I would now like to hand the conference over to your speaker today, Chas Cook. Thank you. Please go ahead, sir..

Thank you, operator. Good morning, and welcome to Labcorp's First Quarter 2021 Conference Call. As detailed in today's press release, there will be a replay of this conference call available via telephone and Internet.

With me today are Adam Schechter, Chairman and Chief Executive Officer; and Glenn Eisenberg, Executive Vice President and Chief Financial Officer. .

Thank you, Chas. Good morning, everyone. Thanks for joining us today. Our focus continues to be on bringing innovations to market that help improve people's health and lives. As you'll see from our first quarter results, doing so can generate strong growth and returns for our shareholders.

I'm going to begin by covering our overall performance in the first quarter, which is very strong across all of our businesses. Revenue increased 47% versus the same period in 2020. While a good amount of growth can be attributed to COVID testing, we also delivered 15% year-over-year growth in our base business.

In Diagnostics and Drug Development, base business revenue increased 8% and 24%, respectively, from the prior year. Our drug development book-to-bill remains very strong and reached 1.47 for the trailing 12 months. Our adjusted EPS of $8.79 represents significant growth from last year. And we generated $1.1 billion of free cash flow in the quarter.

That's up from $97 million in the first quarter of 2020. Our first quarter results and our improved outlook for the year enabled us to increase our full year guidance. .

Thank you, Adam. I'm going to start my comments with a review of our first quarter results, followed by a discussion of our performance in each segment and conclude with an update on our 2021 full year guidance.

Revenue for the quarter was $4.2 billion, an increase of 47.4% over last year due to organic revenue growth of 45%, acquisitions of 0.9% and favorable foreign currency translation of 140 basis points. The increase in organic revenue was driven by COVID testing of 32.9% and organic base business growth of 12.2%.

Operating income for the quarter was $1.1 billion or 25.4% of revenue. .

Are you there?.

There we go, operator. We can hear you..

Sorry about that. I don't know what happened. You could continue..

Okay. I think we've completed our formal remarks, and we're now ready to take questions..

. And your first question comes from Jack Meehan with Nephron Research..

I wanted to start with the Covance performance. So I was calculating new awards up 60% year-over-year, which would make Labcorp #1 so far in the quarter.

So Adam, I was wondering, is that math right? Were there any chunky awards to call out? And can you maybe talk about the relative performance of each of the businesses within Drug Development?.

Yes. Jack, no, your math is about right, and we're very pleased with the performance of all the businesses, frankly, Diagnostics and each of the businesses in Drug Development. Central Laboratory was particularly strong, but we saw good growth in early stage as well in late-stage.

And as I mentioned on previous calls, we had recently won some larger pharmaceutical clients that are helping with our book-to-bill. So if you look at our book-to-bill, it reached a record of 1.47 for the trailing 12 months. And the total backlog, as you said, grew to $13.97 billion.

And I'll just add to that, that only a very small percent of that backlog is related to COVID work. So it's really related to the other therapeutic areas..

Great. And maybe building off that, Glenn, you mentioned in the prepared remarks how the stacked growth is somewhere in the mid-teens.

As you think about how this backlog growth is going to convert over the next year or a few years, how do you think the near-term trend rate for Covance is looking? Are you going to have tough comps as we're looking out a year from now? Or do you think there's just a lot of work to burn through for some time?.

Yes. No, we have seen over the past several quarters a little bit of a decline in the conversion rate. We're now at around 33%. And it's, as you know, relative to the mix of business that we're doing, more oncology work that we're seeing, good growth in our backlog, as Adam commented. So right now, we continue to have a lot of good momentum.

Our orders continue to be very strong. We're building up a very strong backlog, again, at $14 billion. So nothing from our view long term would change.

Obviously, in the first quarter especially, you'll see kind of a really strong growth rate in part because of the COVID-related vaccine and therapeutic studies that we have that at some point will obviously start to taper off..

Your next question comes from the line of Erin Wright with Credit Suisse..

Great. Another one on the Covance business here. There's obviously a ton of promotion in the CRO space right now.

What are you seeing in terms of opportunities from some of the potential disruption there, whether it's win rates or employee recruitment? And on the flip side of that, does the ongoing strategic review change any of your own relationships with customers? I assume it doesn't, given the latest bookings trends that you just posted.

But do you see also further consolidation across the CRO space from here? Or do you see the need to add scale to the Covance business as always, a controversial topic..

Yes. So first of all, Erin, thanks for the questions. Whenever you have large-scale integrations or mergers and consolidation, you see some interruption of business.

So we're going to be prepared to take advantage of whatever is out there in terms of disruption distractions of companies that are being acquired or that are going through the significant integrations. Integrations are just hard to do. We've said all along that we believe that there was going to be additional consolidation in the industry.

So it's not a surprise to us. I mean we're aware of the marketplace and all the competitors. And obviously, we know what's happening. At the same time, we've always said you need a certain level of critical mass to be successful. And the good news is we have that critical mass. And as you said, Erin, you can see it in our numbers.

You can see it in the strength of our book-to-bill, you can see it in the strength of our ability to continue to grow in the Covance business. So we know the industry, we know the other players very well. And that's a great thing about Labcorp. I mean everybody comes and talks to us. At the same time, we feel like we're in a very strong position.

With regard to your second question was, as we go through a strategic review, we're focused on executing in the marketplace. And we're not going to lose focus and we're not going to spend time in the vast majority of our organization, they're just meeting the needs of our clients and our customers every single day.

It's going to be the Board, the management team that are working together to do this thorough review. And We're not going to distract the largest parts of our organization. We're going to keep them focused on delivering. Hopefully, you see that our execution in the marketplace has been really strong across Diagnostics and Drug Development.

It's been strong with everything we're doing for COVID. It's been strong in our base business. I mean our base business for the overall grew 15%, and the base business for Diagnostics was up 8%. Drug Development was up 24%. So you see strength there. That's because we're so focused on executing on the needs of our customers.

And we're going to continue to do that while we also perform the strategic review..

Okay. And switching over to the Diagnostics segment.

I guess, in your view, how has the competitive landscape changed as we emerge from the pandemic here with some emerging smaller labs and other entities stepping up investments and testing capabilities? Does this change any of your outlook from a consolidation standpoint at this point across the core clinical lab space?.

Yes. And a couple of parts to answer. The first thing is that if you look at people that have built capabilities to do COVID testing, those are really doing molecular testing. Molecular testing is a very, very small part of the 530 million or so tests that Labcorp does a year.

So no matter how much capacity is out there for molecular testing, I don't think that there would be a significant impact to our business with new competition that can do some molecular tests.

What I do believe is that some of those competitors are not going to be able to make it with just COVID testing as we've seen the number of tests per day go down. And therefore, I believe there will continue to be consolidation in the industry. And frankly, that's something that we'll continue to look at.

We've always said that acquiring local laboratories or hospital laboratories, even regional laboratories are a great way for us to use our capital. We know how to integrate those. They return their cost of capital very quickly, and they're accretive typically in the first year.

So we'll look for opportunities for continued consolidation, but not just in the smaller new competitors, but also in the hospitals and other laboratories..

Your next question comes from the line of Dan Leonard with Wells Fargo..

Another question on the Drug Development business, big growth year-on-year in the new awards but off of a lower base.

Can you comment on the book-to-bill ratio in the quarter? And on your upper trailing 12, but specifically for the quarter and if you felt like you were winning your pro rata share of bookings and anything to be aware of on the monthly trend front?.

Yes. Dan, it's Glenn. As you know, we do a book-to-bill on a trailing 12 number, and again, a record level of 1 4 7. So it's picked up nicely from the prior trailing 12 months. So obviously, it implies, obviously, a very good quarter. We tend not to give the quarterly numbers because we don't want it to be focused on the quarter.

Obviously, this is done over the years, but it's fair to say that we feel we had a very good quarter, and it was enough to meaningfully bump up our trailing 12-month level..

And I would also say, Dan, is if you look at RFPs, they continue to be coming in strong. If you look at investment from pharma and biotech, it continues to be strong. And we continue to win at a minimum, our share move even a bit better..

And then my follow-up, can you elaborate a bit more on the drivers of the organic growth in your base business in Diagnostics? It seems like the health care system hasn't fully normalized yet, doing 6% organic is better than industry. So maybe if there's more granular detail you could offer on the drivers there..

Yes. No, Dan, we've been really pleased with the pace of the recovery in Diagnostics, frankly, coming in a little stronger than what we would have expected, which, again, is one of the reasons we've increased the guidance that we have for Diagnostics.

When you look at the breakup of the, call it, the 6% plus organic revenue growth, volumes are still down year-on-year. They were down around 1.3% but actually would have been favorable if you took out the negative impact from weather. So we've really started to see the trend change.

And when you think about it, not too surprising when you're comping now at the end of the first quarter to the beginning of the pandemic impact last year. But what we're equally pleased to see is that the volume levels continue to improve while still be down from 2019 pre-pandemic levels. Low single digits as well.

And so while revenue continues to be up year-on-year to '20, while revenues continue to be up compounded compared to '19, kind of a normalized year, volumes are still a little bit down. And our expectation continues to be that the volume levels will now start to kind of kick in above '19 levels, call it at the middle of the year.

But the good news is that we -- while volumes are still a little bit soft compared to historical levels, we're making that up on our price/mix, which we're attributing more to the number of tests we're doing because we report volume on an accession basis.

So maybe fewer visits to the physicians, but they're doing more tests for each of those visits, but good momentum that we're continuing to see..

Your next question comes from the line of Kevin Caliendo with UBS..

You mentioned in your prepared comments, capital allocation would accelerate over the course of the year. Is the strategic review part -- was that the reason why there wasn't really much capital deployed in 1Q? Your buyback was $69 million. M&A was $34 million.

And then I guess, the second half of that is, how should we really think about capital deployment in total, meaning is there a target in terms of buybacks? Is there a target -- total allocation been built into these numbers?.

Yes. Kevin, to your point, what we've said in our guidance overall is that the free cash flow that we're going to generate this year, call it, the $1.8 billion to $2 billion, we expect to deploy between M&A and share repurchases.

We tend to start off slower in the first quarter, just historically, even with our buyback program just to let the year a little bit unfold and see what the M&A opportunities are there. We continue, as Adam said, to have really a strong pipeline of M&A transactions.

The reason why we said we were accelerating especially on the share repurchase side because we can obviously you unilaterally control that, is that with 1 quarter under our belt 3 to go, we still have that midpoint of 1.9 to fully deploy.

So you would normally expect that instead of it just being done all towards the end of the year, you'll start to see a pickup. But we're encouraged with the pipeline of deals that we feel we can do. We're encouraged, obviously, that we'll continue to redeploy our capital with M&A.

And from our perspective, we're on track with what we were expecting to see happen..

And Kevin, just to give you a sense of how we think about it. I mean, we've always said that local hospitals, regional or laboratories, local laboratories, those would be things that we would look to acquire.

And as I said before, they're accretive in the first year, return cost of capital in a couple of years, and we know how to integrate those really well. We then look for strategic acquisitions that are typically tuck-ins like we did with Global Care last year, Snap IoT that helped us with our decentralized clinical trials.

There may be some things in oncology or other parts of our strategy where we want to reinforce our position, and that's the second place we look. And then, of course, we're opportunistic with the buybacks. And we look at all 3 of those..

Okay. And just 1 follow-up.

One quick follow-up is the -- is the biggest delta between the high end and low end of your guidance still PCR volumes? Or is there something else that would sort of be the biggest net mover of earnings for the rest of the year?.

Well, again, if you're -- one of the reasons, again, we've broken out the guidance between our underlying base business and the COVID testing is such that we can give various ranges for the 2.

And clearly, there's a little bit more uncertainty visibility, if you will, on the level of PCR testing depending on what's going on with, obviously, the pandemic and how it impacts. So from our perspective, when we gave that range, we've said 2 things.

That it's going to be a combination of different volume levels, but also potentially different levels of pricing. So right now, we obviously had a very strong first quarter relative to PCR volumes, 112,000 tests per day. But we ended the quarter at kind of the 80,000 test per day level.

So you can see that we continue to see and expect that volume levels will continue to trail down. But again, we'll see if it picks up again, if you will. But at the midpoint, we're clearly considering that the volumes will come down. And there's also pricing. With CMS, we've always held to the pricing on the reimbursement We continue to do that.

At some point, that pricing may change. CMS may change their pricing reimbursement. So there's just a lot of variability. So at this point, we continue to do. We have all the capacity there. Our turnaround times are extremely strong. And so we're just meeting the needs that are out there..

And Kevin, I think the good news is that our base business is strong. And that's why we're able to increase the guidance in both of our base businesses. And frankly, that's the long-term success that we expect to have in the base business.

If you look at the PCR testing today and you looked at our range between down 35% and down 50%, you would actually get closer to down 50% today versus the 35%. But let's see what happens because in November, there could be another outbreak of the flu, and therefore, a lot of people might come in for PCR tests.

Where we have back to school and the kids are going back to school, whether be large-scale screening. So that's why we've given ranges in both, and that's where we have a much broader range for PCR testing..

Your next question comes from the line of Ralph Giacobbe with Citi..

I want to probe a little more into the guidance and more around trying to figure out baseline earnings this year, excluding COVID. I know midpoint of guidance, you said COVID revenue, $1.6 billion. But it sounds like you're trending towards sort of the lower end of that.

But even if I take that sort of lower end, based on my math, I'm still coming up with maybe $6 to $7 of EPS contribution.

Do you think it's a fair ballpark?.

Again, there it's -- we guide to the revenue. Obviously, we've talked a little bit about kind of the leverage that we get on that volume for PCR depending upon the pricing. So we've talked about it being kind of north of our 65% incremental leverage on PCR volumes.

Kind of comparable, but a little bit north of what we would normally have seen like on incremental volume from weather, if you will. So as Adam said, when we gave our guidance, we give a range. Obviously, the midpoint is kind of where the most expectations.

But clearly, we could see our way to getting higher at the upper end and other things that could be headwinds on the lower end. The reason we commented on the PCR one is that it's a little bit south of the center point is because, one, that's what we're currently seeing on the trends. But two, as Adam said, we could see it pick up again.

So we were just trying to provide some color. And given where the extension of the public health emergency continues to go out, if it gets extended again, that could reinforce better pricing than what -- that would hold our pricing, which would be an improvement because we do assume in some of the scenarios we'll see lower pricing overall.

But when you look at our earnings, and it's kind of interesting, we obviously had a very solid first quarter and you compare it to, call it, the midpoint of the guidance that we give for earnings for the year, we had a much higher percentage of earnings than we would historically do.

We tend to try to track not this precisely, but let's say, 1/4 of our earnings would normally be -- or 1 quarter, a quarter of the year. Here, we did around 40% of our earnings.

And frankly, in the second quarter, I think it's fair to say It will be a strong quarter relative to the full year as well because we're still going to have another strong quarter of COVID testing, even though it will be less than what we saw in the first quarter.

From our standpoint, the bigger question will be the second half of the year, which was really where we do expect to see a decline in volumes and potentially a declining in pricing. But there's still that uncertainty out there that could potentially be upside if the volume levels hold up greater and the pricing holds up greater.

But there's just a wide range of outcomes..

Okay. All right. That's helpful. And then just a follow-up question.

Any update on school testing, I guess, broadly? And then more specifically on the K3 program that I think is going to be announced shortly, could you just help us -- did you guys bid for a coordinator role in 4 regions? Or will you just be 1 of the up to 10, I guess, labs to serve the program? And is there any way to sort of size or frame the opportunity as you see it?.

No, it's a great question. And we did bid on certain regions, and we do expect that we would be 1 of the labs, irrespective if we have 1 of the hubs or not. So we expect to be involved in both, but we'll see as it plays out. At the minimum, it's hard to imagine where you wouldn't need the capacity and the capabilities we have for the testing itself.

It's really going to come down to how many schools want to implement the screening.

And as more and more people are vaccinated, as more parts of the country are opening up, I mean, almost fully in certain parts of the country, it's hard to tell to be honest, how many schools are going to say, we're going to want to screen on a fairly often basis all of our students.

So we -- as we said, that's why we have this broad kind of guidance between down 35% and down 50%. We're turning more down towards the 50%. But if the schools were bigger and actually do a lot of testing, well, then we did go the other way in the range. But right now, we're not expecting that to be a very significant amount.

And that's why we kept the range where it is..

Your next question comes from the line of Ricky Goldwasser with Morgan Stanley..

First question on the Diagnostics side. If we think about the base business, organic growth for core business was up 70 basis points when you adjust for the weather. I suspect there was also sort of an impact of the light flu season that contributed there. So i.e., that if we normalize for that, core testing would have been even higher.

Maybe you can give us a sense of those dynamics. And also, one thing that's very clear from all the details you're giving is that you are growing faster than your closest competitor, both on core testing and on PCR testing. And while some of it could be geographic, I think that core testing would grow faster geographically, PCR testing not.

So can you talk a little bit about share dynamics that you're seeing?.

Yes, Ricky. So a couple of things. First of all, Our base business, as you say, is very strong. And it's strong across Diagnostics for Drug Development and frankly, each area of Drug Development. When you look at the diagnostics, we're seeing that people are coming back to the more routine health care.

And if you look at the volume and you compare it to 2019, it's only down in the low single digits now versus if you look at the end of last year, it was in the mid- to upper single digits. So we've seen continued improvement in people coming back to the routine test.

The other thing that we're seeing is that for each blood draw, that there's more tests being run in that blood draw than historically happened. And the question is, will that be maintained? We are hypothesizing that some people have been out of health care for a while.

So when they finally do go to their doctor or telemedicine, they're doing a lot of tests just to check on people's overall health, and therefore, that might not continue over time. But on the other hand, it may. And we're going to have to watch that closely in terms of how many tests per accession we see over time.

There's no doubt that the Diagnostic team is executing extraordinarily well in the marketplace. The team is focused. They're energized. They're doing a great job. They've worked through COVID. Our sales folks were out there the entire time doing whatever they could where doctors' offices were open, doing things remotely.

One of our platforms for our key pillars of our strategy was digitalization. So we were able to do a lot of things digitally through the pandemic that historically we would not have been able to do. So I agree with your assessment that we're performing well in the marketplace versus others..

Okay. And then on the CRO business, I mean, the one thing that I think that we're clearly seeing from the industry consolidation is that scale matters more and more. Your competitors are becoming bigger. So just kind of like any thoughts of how you think about Covance core clinical scale, excluding the Central Lab business.

And just kind of like how you think that competitive environment is going to evolve..

Yes. No. So first of all, I'd say, if you look at the 3 pieces of our business, and I'll break them quite individually. If you look at our early-stage business, we have scale. And we're strong and we're a leader in that business, and it performs very well. If you look at our central laboratory business, we're a leader there as well.

We have scale, we can compete. And I've said all along that we have the scale that we need in late-stage clinical trials. That's the area that as you get more trials, you can scale the quickest. And you can do that to some degree organically. You don't necessarily have to scale in clinical trials inorganically.

So for example, we wanted to have more capabilities in China and Japan, we were able to build scale for clinical development in those countries fairly quickly. So we see what's happening in the marketplace. We understand the marketplace well. We understand the importance of scale.

And to me, it's a certain level of scale you need to have and then you can be successful. And I believe we have the level of scale across each of our three businesses that we need..

And then one last question. I wanted to follow up on what you said. You said that you're seeing more people coming back to do routine health care. Acuity is something that the market is very, very focused on. And you see sort of what type of tests are being ordered, which I think are positively correlated or correlation with acuity level.

Any sense there in terms of what type of tests you're seeing being ordered?.

Yes. So Ricky, so we've seen all of the business come back, whether it be our base business or it'd be our esoteric business. In the first quarter, we saw a little bit more of the base business coming back. We think it was probably because people were getting physicals and the year was starting.

It's typical to see that base business perform a bit better in the first quarter. Esoteric business continues to be pretty consistent because when people need to get one of those tests, they get it irrespective of the time of the year. So there's not a really significant difference versus what we would expect to see..

Your next question comes from the line of Brian Tanquilut from Jefferies..

Just thinking about your comments on pricing expectations later in the year.

Thinking out COVID, how are you thinking about the durability of pricing in the base business ex the COVID testing that we're seeing right now?.

Brian, when I look at the business, the pricing is always under some pressure, but it's pretty asymptotic. It doesn't tend to be significantly more pressure over time than not. And the pricing is pretty stable. I feel good about our volume. I feel good about our pricing as we go into the future.

Obviously, PAMA right now, we're having our base case that there'll be an impact next year. And we expect that will be about the same as it was in 2019, around $100 million mark. But at the same time, we think that there's ways to get through that and be able to be successful through that..

Yes. The only thing, too, Brian, that I'd add is I agree that from a unit pricing standpoint, exactly as Adam has conveyed it. When we talk about price, we also do price mix. And so as you see that the volume levels are coming back, you'll see the price mix come down a little bit.

Again, when you think about it and now those people are going to the physician's office more normally, you'll start to see a more normal cadence of how many tests per session they would have.

So especially as we continue to grow, when we talk about a normal historical growth rate of kind of 2% to 3%, if you will, in, call it, the organic revenue with 1% to 2% coming from volume, one from price. So we normally always still do expect to have a contribution from favorable price mix.

But given that the volume levels have been negative from year-over-year comparisons, we've seen an unusually high price/mix. So again, as we get more to normal, so you'll see both kind of fall back into where we would normally expect it to be..

Your next question comes from the line of Matt Larew with William Blair..

Given some goalposts around what you expect molecular look like in 2021.

But do you have a sense or maybe give us some sort of wider goalpost around what it could look like in 2022? Do you think potentially down another 50%? And then the second piece of that would be, you talked about leveraging the experience and expertise you've gained through COVID.

But what about sort of the substantial footprint and capacity that you've built out to meet COVID demand? How do you leverage that moving forward?.

Yes. Thank you, Matt. So it's hard to predict where 2021 is going to end up. That's why we have such a broad range. It makes it even more difficult to predict 2022. What I would say is part of it is going to depend on how long the vaccines work for.

Are we going to need a booster shot every year? Is it going to last for several years? Part of it is going to depend on how tough the flu seasons are. So there's still a lot of unknowns as we go to 2022. I mean I would expect there will still be testing for COVID in 2022 that we'll be doing.

The level of which will be determined to some degree by the vaccines. But on the other hand, if the vaccines last a longer period of time, will we need to do more serology tests? Will we need to do more T cell testing? I think that the story is still going to be written as we learn more scientifically.

And PCR testing will play a role, but serology and/or T cell, another test may play a very different role as we go into 2022 and beyond. With regard to the testing capabilities that we've built, the machinery, we can still use a lot of that. I mean we use it for our other tests. There might be some excess capacity that has to be written off over time.

But for us, it wouldn't be a significant issue where others that all they do is COVID testing and all they've done is build capacity for that, I think they'll have a significant issue. We're in very good shape there, frankly..

Your next question comes from the line of Derik De Bruin with Bank of America..

So I wanted to follow up on the longer-term COD testing you were just discussing. So I wanted to say where do you think the testing for is for reference labs in the long term given the vaccine rollout but also more variants come in.

And also the testing decentralization happening right now? And then a follow-up for related question for that is for the excess capacity in the future from all of this testing roll-off.

I wanted to see if you could comment more on what sort of maybe strategic tuck-ins in the testing side that you'll be focusing on?.

Yes. So again, with the longer-term COA testing, it's early to understand exactly how that's going to play out. Part of it is going to depend on vaccines, but part of it will also depend on if we have good therapeutics.

So for example, if we get to next year and it's a big flu season, And if somebody gets COVID, they still have a high likelihood of being hospitalized and/or dying from COVID. I think people are going to want to use a molecular PCR test and have it done by us.

If there's great therapeutics and if people get COVID, they end up not being hospitalized and they can be managed from their home and it's more like the flu, then I think you might find more testing that's done in physicians' offices. So really, it's going to depend on how the science plays out.

I assume there will be some testing needed in the long term that we'll be doing. But obviously, it will be significantly less over time than what we've done in the past.

To me, the real question continues to be, will there be a role for serology? Will we need to know if people are still immune to the disease or are vaccinated and have titers at the right level for the disease. And there might be other tests in the future that play a more important role than they do today, and we'll have to continue to watch that.

The last thing I'd say is with regard to capacity in the future, I've seen some countries that are going to use that capacity to do significantly more screening for things like HCV or HIV, things where molecular tests are done routinely today, but they're routinely done to diagnose versus the screen.

So there might be some opportunities to do those types of things. But in general, as I said, molecular testing is a very small amount of the 530 million tests or so that we do every year. And therefore, for us, it's not going to be a significant issue. I feel very optimistic as I look at our base businesses moving forward..

Your next question comes from the line of Pito Chickering with Deutsche Bank..

This is Justin Bowers on for Pito. And nice strength across both segments this quarter. But digging into diagnostics a little more, can you give us a sense of what you saw across different regions of the country.

And then as you look at your different customer base, whether it's like physician order test or reference labs, can you tell us what inform us what trends are like in the quarter there? And then lastly, where are you guys tracking now on daily PCR tests versus kind of where you exited in March?.

Yes. So some of the first thing I'll answer the last question first. We exited the quarter averaging around 80,000 tests per day. We averaged for the quarter about 113,000 tests per day. So you saw a continued decline. With regard to geographical differences, weather was probably a bigger impact than other things.

So when we saw the Northeast get hit by weather, there was a 2% impact. A lot of it came from where the weather was, obviously. In Texas, we saw a significant issue with what was occurring there at some point when electricity was out for a week. So it was more driven, I believe, by that than it was differences in other testing.

Obviously, you're going to see some differences by geography as different parts of the country open up in different ways at different times. But frankly, you saw strength pretty much across all parts of the country when you compare it to where we were at the end of last year..

And at this time, there are no further questions..

Okay. So thank you, everybody, for joining us today. I'll end by saying we remain optimistic about the progress against the virus, albeit certain parts of the world continue to be impacted significantly, and our thoughts are with them as they continue to go through the devastation from the virus.

But in the U.S., we are very optimistic about where we are and how things are progressing. We are very pleased to see our base businesses perform well across every single area of our business.

And we're seeing that as people go back to the normal lives and their normal health care routines in the United States, but we're also seeing pharma and biotech colleagues begin to perform their important research and development, particularly in therapeutic areas outside of COVID. As you can see, our first quarter was very strong.

It was a strong quarter of performance. I think we executed in the marketplace very well. We look forward to continuing to execute on our mission to improve health and improve lives, and we look forward to talking with you soon. Thanks for the time today..

Thank you for participating. This concludes today's conference. You may now disconnect..