Quest Diagnostics is furloughing more than 4,000 employees — roughly 9% of its workforce — as the medical testing company contends with a sharp drop in business only partially offset by surging demand for COVID-19 results.
The company has performed nearly 800,000 tests for the respiratory illness caused by the coronavirus, or about 40% of all testing in the U.S. by commercial labs. But Quest also saw its overall testing volumes decline more than 40% in the last two weeks of March, CEO Steve Rusckowski wrote in a letter to employees filed on Monday with the Securities and Exchange Commission.
In addition to furloughing employees who'd expressed a preference for staying home during the coronavirus pandemic, Rusckowski and the company's board of directors are all taking a 25% cut in pay for the next 12 weeks, while other employees will see wage reductions ranging from 5% to 20%, he wrote. Quest is also suspending its contributions to the company's employee 401k plan and dismissing temporary and contract workers.
Quest's cost-cutting initiative will not "impact our ability to deliver critical COVID-19 testing," Rusckowski said. The company says it can now perform approximately 45,000 tests per day, providing results in as little as a day. The executive also said Quest is preparing to offer antibody blood testing to identify people who have been exposed and built immunity to the virus.
In a March 31 regulatory filing, Quest warned that the coronavirus would likely have a material impact on its business. Efforts to curb the spread of COVID-19 have resulted in "a significant reduction in physician office visits, the cancellation of elective medical procedures, customers closing or severely curtailing their operations (voluntarily or in response to government orders), and the adoption of work-from-home or shelter-in-place policies, all of which have had, and we believe will continue to have, an impact on the Company's operating results, cash flows and financial condition," the company stated.
Headquartered in Secaucus, New Jersey, Quest operates roughly 2,200 testing locations and dozens of clinical laboratories throughout the U.S., and generated $7.7 billion in revenue last year.