<SUBMISSION>
<ACCESSION-NUMBER>0000950117-04-002750
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>6
<PERIOD>20040630
<FILING-DATE>20040730
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>QUEST DIAGNOSTICS INC
<CIK>0001022079
<ASSIGNED-SIC>8071
<IRS-NUMBER>161387862
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-12215
<FILM-NUMBER>04942710
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>ONE MALCOLM AVE
<CITY>TETERBORO
<STATE>NJ
<ZIP>07608
<PHONE>2013935000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>ONE MALCOLM AVE
<CITY>TETERBORO
<STATE>NJ
<ZIP>07601
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>CORNING CLINICAL LABORATORIES INC
<DATE-CHANGED>19960903
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>a38099.txt
<DESCRIPTION>QUEST DIAGNOSTICS INCORPORATED
<TEXT>

<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

--------------------------------------------------------------------------------

                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                       For the Quarter ended June 30, 2004
                         Commission file number 1-12215

                         Quest Diagnostics Incorporated

                               One Malcolm Avenue
                               Teterboro, NJ 07608
                                 (201) 393-5000

                                    Delaware
                            (State of Incorporation)

                                   16-1387862
                     (I.R.S. Employer Identification Number)

--------------------------------------------------------------------------------

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [_]

As of July 23, 2004, there were 101,884,157 outstanding shares of the
registrant's common stock, $.01 par value.



<PAGE>


                         PART I - FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----
<S>                                                                                 <C>
Item 1. Financial Statements

        Index to consolidated financial statements filed as part of this report:

        Consolidated Statements of Operations for the
        Three and Six Months Ended June 30, 2004 and 2003                            2

        Consolidated Balance Sheets as of
        June 30, 2004 and December 31, 2003                                          3

        Consolidated Statements of Cash Flows for the
        Six Months Ended June 30, 2004 and 2003                                      4

        Notes to Consolidated Financial Statements                                   5

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations

        Management's Discussion and Analysis of Financial
           Condition and Results of Operations                                      18

Item 3. Quantitative and Qualitative Disclosures About Market Risk

        See Item 2. "Management's Discussion and Analysis of Financial Condition
           and Results of Operations"                                               24

Item 4. Controls and Procedures

        Controls and Procedures                                                     24
</TABLE>


                                        1



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                      (in thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                 Three Months Ended         Six Months Ended
                                                      June 30,                  June 30,
                                              -----------------------   -----------------------
                                                 2004         2003         2004         2003
                                              ----------   ----------   ----------   ----------
<S>                                           <C>          <C>          <C>          <C>
Net revenues ..............................   $1,297,674   $1,219,935   $2,553,416   $2,312,732
                                              ----------   ----------   ----------   ----------
Operating costs and expenses:
Cost of services ..........................      747,577      703,124    1,484,858    1,351,221
Selling, general and administrative .......      307,402      296,062      614,947      575,261
Amortization of intangible assets .........        2,058        2,068        4,122        4,091
Other operating expense, net ..............       10,618           10       10,591          233
                                              ----------   ----------   ----------   ----------
   Total operating costs and expenses .....    1,067,655    1,001,264    2,114,518    1,930,806
                                              ----------   ----------   ----------   ----------

Operating income ..........................      230,019      218,671      438,898      381,926

Other income (expense):
Interest expense, net .....................      (16,346)     (16,866)     (30,990)     (30,775)
Minority share of income ..................       (5,019)      (4,415)      (9,473)      (8,218)
Equity earnings in unconsolidated joint
   ventures ...............................        5,397        4,554        9,954        8,610
Other income (expense), net ...............       (1,223)       1,461          (24)         656
                                              ----------   ----------   ----------   ----------
   Total non-operating expenses, net ......      (17,191)     (15,266)     (30,533)     (29,727)
                                              ----------   ----------   ----------   ----------

Income before taxes .......................      212,828      203,405      408,365      352,199
Income tax expense ........................       85,999       82,993      165,387      143,751
                                              ----------   ----------   ----------   ----------
Net income ................................   $  126,829   $  120,412   $  242,978   $  208,448
                                              ==========   ==========   ==========   ==========

Basic earnings per common share:
Net income ................................   $     1.23   $     1.15   $     2.36   $     2.03
Weighted average common shares outstanding
   - basic ................................      103,009      105,049      103,075      102,543

Diluted earnings per common share:
Net income ................................   $     1.20   $     1.12   $     2.30   $     1.98
Weighted average common shares outstanding
   - diluted ..............................      105,397      107,677      105,569      105,066
</TABLE>

        The accompanying notes are an integral part of these statements.


                                        2



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 2004 AND DECEMBER 31, 2003
                      (in thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                              June 30,    December 31,
                                                                                2004          2003
                                                                             ----------   ------------
<S>                                                                          <C>           <C>
Assets
Current assets:
Cash and cash equivalents ................................................   $  137,802    $  154,958
Accounts receivable, net of allowance of $202,894 and $211,739 at
   June 30, 2004 and December 31, 2003, respectively .....................      677,710       609,187
Inventories ..............................................................       72,848        72,484
Deferred income taxes ....................................................       97,764       108,975
Prepaid expenses and other current assets ................................       57,996        50,182
                                                                             ----------    ----------
   Total current assets ..................................................    1,044,120       995,786
Property, plant and equipment, net .......................................      615,301       607,305
Goodwill, net ............................................................    2,517,338     2,518,875
Intangible assets, net ...................................................       12,760        16,978
Deferred income taxes ....................................................       54,675        49,635
Other assets .............................................................      102,657       112,839
                                                                             ----------    ----------
Total assets .............................................................   $4,346,851    $4,301,418
                                                                             ==========    ==========

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses ....................................   $  639,633    $  649,850
Short-term borrowings and current portion of long-term debt ..............      130,409        73,950
                                                                             ----------    ----------
   Total current liabilities .............................................      770,042       723,800
Long-term debt ...........................................................      971,717     1,028,707
Other liabilities ........................................................      165,719       154,217
Commitments and contingencies
Common stockholders' equity:
Common stock, par value $0.01 per share; 300,000 shares authorized;
   106,797 and 106,804 shares issued at June 30, 2004 and December 31,
   2003, respectively ....................................................        1,068         1,068
Additional paid-in capital ...............................................    2,231,752     2,267,014
Retained earnings ........................................................      592,708       380,559
Unearned compensation ....................................................         (419)       (2,346)
Accumulated other comprehensive income ...................................        1,009         5,947
Treasury stock, at cost; 5,083 and 3,990 shares at June 30, 2004 and
   December 31, 2003, respectively .......................................     (386,745)     (257,548)
                                                                             ----------    ----------
   Total common stockholders' equity .....................................    2,439,373     2,394,694
                                                                             ----------    ----------
Total liabilities and stockholders' equity ...............................   $4,346,851    $4,301,418
                                                                             ==========    ==========
</TABLE>

        The accompanying notes are an integral part of these statements.


                                        3



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                              2004        2003
                                                                           ---------   ---------
<S>                                                                        <C>         <C>
Cash flows from operating activities:
Net income..............................................................   $ 242,978   $ 208,448
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization...........................................      83,917      74,972
Provision for doubtful accounts.........................................     112,338     113,543
Deferred income tax provision...........................................       9,748       5,891
Minority share of income................................................       9,473       8,218
Stock compensation expense..............................................         965       2,876
Tax benefits associated with stock-based compensation plans.............      39,983       9,541
Other, net..............................................................       2,592       1,442
Changes in operating assets and liabilities:
   Accounts receivable..................................................    (180,861)   (157,996)
   Accounts payable and accrued expenses................................        (461)    (63,821)
   Integration, settlement and other special charges....................     (16,341)     (9,283)
   Income taxes payable.................................................       4,920      29,769
   Other assets and liabilities, net....................................       8,873       4,078
                                                                           ---------   ---------
Net cash provided by operating activities...............................     318,124     227,678
                                                                           ---------   ---------

Cash flows from investing activities:
Business acquisitions, net of cash acquired.............................          --    (237,411)
Capital expenditures....................................................     (90,847)    (75,806)
Proceeds from disposition of assets.....................................       4,741       3,402
Increase in investments and other assets................................      (2,876)    (11,114)
                                                                           ---------   ---------
Net cash used in investing activities...................................     (88,982)   (320,929)
                                                                           ---------   ---------

Cash flows from financing activities:
Proceeds from borrowings................................................     304,921     450,000
Repayments of debt......................................................    (305,637)   (354,539)
Purchases of treasury stock.............................................    (271,103)    (10,065)
Exercise of stock options...............................................      66,839       9,207
Dividends paid..........................................................     (30,943)         --
Distributions to minority partners......................................      (8,314)     (6,262)
Financing costs paid....................................................      (2,061)     (4,227)
Other...................................................................          --         429
                                                                           ---------   ---------
Net cash (used in) provided by financing activities.....................    (246,298)     84,543
                                                                           ---------   ---------

Net change in cash and cash equivalents.................................     (17,156)     (8,708)

Cash and cash equivalents, beginning of period..........................     154,958      96,777
                                                                           ---------   ---------
Cash and cash equivalents, end of period................................   $ 137,802   $  88,069
                                                                           =========   =========
</TABLE>

        The accompanying notes are an integral part of these statements.


                                        4



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

1.   BASIS OF PRESENTATION

     Background

     Quest Diagnostics Incorporated and its subsidiaries ("Quest Diagnostics" or
the "Company") is the largest clinical laboratory testing business in the United
States. As the nation's leading provider of diagnostic testing and related
services for the healthcare industry, Quest Diagnostics offers a broad range of
clinical laboratory testing services to physicians, hospitals, managed care
organizations, employers, governmental institutions and other commercial
clinical laboratories. Quest Diagnostics is the leading provider of esoteric
testing, including gene-based testing, and testing for drugs of abuse. The
Company is also a leading provider of anatomic pathology services and testing to
support clinical trials of new pharmaceuticals worldwide. Through the Company's
national network of laboratories and patient service centers, and its esoteric
testing laboratories and development facilities, Quest Diagnostics offers
comprehensive and innovative diagnostic testing, information and related
services used by physicians and other healthcare customers to diagnose, treat
and monitor diseases and other medical conditions.

     On an annual basis, Quest Diagnostics processes over 130 million
requisitions for testing through its extensive network of laboratories and
patient service centers in virtually every major metropolitan area throughout
the United States.

     Basis of Presentation

     The interim consolidated financial statements reflect all adjustments,
which in the opinion of management are necessary for a fair statement of
financial condition and results of operations for the periods presented. Except
as otherwise disclosed, all such adjustments are of a normal recurring nature.
The interim consolidated financial statements have been compiled without audit.
Operating results for the interim periods are not necessarily indicative of the
results that may be expected for the full year. These interim consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements included in the Company's 2003 Annual Report on Form 10-K.
Certain amounts reported in the Company's consolidated statements of operations
for the three and six months ended June 30, 2003 have been reclassified to
conform to the 2004 presentation, which reports operating income on the face of
the consolidated statements of operations.

     Earnings Per Share

     Basic earnings per common share is calculated by dividing net income by the
weighted average common shares outstanding. Diluted earnings per common share is
calculated by dividing net income by the weighted average common shares
outstanding after giving effect to all potentially dilutive common shares
outstanding during the period. The if-converted method is used in determining
the dilutive effect of the Company's 1 3/4% contingent convertible debentures
(the "Debentures") in periods when the holders of such securities are permitted
to exercise their conversion rights. Potentially dilutive common shares include
outstanding stock options and restricted common shares granted under the
Company's Employee Equity Participation Program. These dilutive securities
increased the weighted average common shares outstanding by 2.4 million shares
and 2.5 million shares for the three and six months ended June 30, 2004,
respectively. For the three and six months ended June 30, 2003, these dilutive
securities increased the weighted average common shares outstanding by 2.6
million and 2.5 million shares, respectively.

     Stock-Based Compensation

     The Company has chosen to adopt the disclosure only provisions of Statement
of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), as amended by SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure - an amendment of FASB
Statement No. 123" ("SFAS 148"), and continue to account for stock-based
compensation using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
("APB 25"), and related interpretations. Under this approach, the cost of
restricted stock awards is expensed over their vesting period, while the imputed
cost of stock option grants and discounts offered under the Company's Employee
Stock Purchase Plan ("ESPP") is disclosed, based on the vesting provisions of
the individual grants, but not charged to expense. Stock-based compensation
expense recorded in accordance with APB 25, related to restricted stock awards,
was $0.5 million and $1.3 million for the three months ended June 30, 2004 and
2003, respectively, and $1.0 million and $2.9 million for the six months ended
June 30, 2004 and 2003, respectively.


                                        5



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

     The following table presents net income and basic and diluted earnings per
common share, had the Company elected to recognize compensation cost based on
the fair value at the grant dates for stock option awards and discounts granted
for stock purchases under the Company's ESPP, consistent with the method
prescribed by SFAS 123, as amended by SFAS 148 (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                                      Three Months Ended     Six Months Ended
                                                           June 30,              June 30,
                                                     -------------------   -------------------
                                                       2004       2003       2004       2003
                                                     --------   --------   --------   --------
<S>                                                  <C>        <C>        <C>        <C>
Net income:
Net income, as reported...........................   $126,829   $120,412   $242,978   $208,448
Add: Stock-based compensation under APB 25........        417      1,340        965      2,876
Deduct: Total stock-based compensation expense
   determined under fair value method for all
   awards, net of related tax effects.............    (10,796)   (13,124)   (21,760)   (27,929)
                                                     --------    -------   --------   --------
Pro forma net income..............................   $116,450   $108,628   $222,183   $183,395
                                                     ========   ========   ========   ========

Earnings per common share:
Basic - as reported...............................   $   1.23   $   1.15   $   2.36   $   2.03
                                                     --------   --------   --------   --------
Basic - pro forma.................................   $   1.13   $   1.03   $   2.16   $   1.79
                                                     --------   --------   --------   --------

Diluted - as reported.............................   $   1.20   $   1.12   $   2.30   $   1.98
                                                     --------   --------   --------   --------
Diluted - pro forma...............................   $   1.11   $   1.02   $   2.12   $   1.77
                                                     --------   --------   --------   --------
</TABLE>

     The fair value of each option grant was estimated on the date of grant
currently calculated using the Black-Scholes option-pricing model with the
following weighted average assumptions:

<TABLE>
<CAPTION>
                                       Three Months Ended   Six Months Ended
                                            June 30,             June 30,
                                       ------------------   ----------------
                                         2004      2003       2004     2003
                                       --------  --------   -------  -------
<S>                                      <C>       <C>        <C>      <C>
Dividend yield......................      0.7%      0.0%       0.7%     0.0%
Risk-free interest rate.............      3.7%      2.6%       3.1%     2.8%
Expected volatility.................     47.1%     48.5%      47.2%    48.1%
Expected holding period, in years...       5         5          5        5
</TABLE>

     New Accounting Standards

     In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities", as
revised in December 2003 ("FIN 46"). FIN 46 requires a variable interest entity
to be consolidated by a company if that company is subject to a majority of the
risk of loss from the variable interest entity's activities or entitled to
receive a majority of the entity's residual returns or both. Historically,
entities generally were not consolidated unless the entity was controlled
through voting interests. FIN 46 also requires disclosures about variable
interest entities that a company is not required to consolidate but in which it
has a significant variable interest. The adoption of FIN 46 did not have an
impact on the Company's consolidated financial statements.

     In March 2004, the Emerging Issues Task Force ("EITF") reached a final
consensus on Issue 03-6, "Participating Securities and the Two-Class Method
under FASB Statement No. 128, Earnings Per Share", ("Issue 03-6"), effective
June 30, 2004. Issue 03-6 requires the use of the two-class method to compute
earnings per share for companies that have issued securities other than common
stock that contractually entitle the holder to participate in dividends and
earnings of the company when, and if, it declares dividends on its common stock.
The contingent interest feature of the Debentures represents a participation
right, thereby qualifying the Debentures as a participating security and
requiring the use of the two-class method for purposes of calculating earnings
per share when holders of the security are entitled to receive contingent
interest.


                                        6



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)


The holders of the Debentures will receive contingent interest, and the Company
would be required to utilize the two-class method, if the Debentures trade at
a price greater than or equal to 120% of the principal amount of the Debentures
(or $1,200 per Debenture) for periods specified under the indenture. For the
periods presented, the holders of the Debentures were not entitled to contingent
interest and as such, the two-class method has not been utilized to compute
earnings per common share. For purposes of presenting diluted earnings per
common share, a company would reflect the more dilutive effect of either the
if-converted or the two-class methods. Had utilization of the two-class method
been required, basic and diluted earnings per common share for the three and
six months ended June 30, 2004, as presented, would have been reduced by
approximately 3%. The if-converted method is used in determining the dilutive
effect of the Debentures in periods when the holders of such securities are
permitted to exercise their conversion rights. For the periods presented,
the holders of the Debentures did not have the ability to exercise their
conversion rights. Had the use of the if-converted method been required to
give effect to the conversion of the Debentures, diluted earnings per
common share for the the three and six months ended June 30, 2004 would
have been reduced by approximately 2%. As such, the use of the two-class
method would have resulted in an additional 1% dilution beyond the 2%
dilution calculated using the if-converted method.

2.   BUSINESS ACQUISITION

     On February 28, 2003, the Company completed the acquisition of Unilab
Corporation ("Unilab"), the leading commercial clinical laboratory in
California. In connection with the acquisition of Unilab, the Company entered
into an agreement to sell to Laboratory Corporation of America Holdings, Inc.,
certain assets in northern California (the "Divestiture"). During the fourth
quarter of 2003, the Company finalized its plan related to the integration of
Unilab into the Company's laboratory network. As part of the plan, and following
the Divestiture, the Company closed its previously owned clinical laboratory in
the San Francisco Bay area and completed the integration of remaining customers
in the northern California area to Unilab's laboratories in San Jose and
Sacramento. The Company currently operates two laboratories in the Los Angeles
metropolitan area. The Company plans to open a new regional laboratory in the
Los Angeles metropolitan area and then integrate its business in the Los Angeles
metropolitan area into the new facility. As of June 30, 2004 and December 31,
2003, accruals related to the Unilab integration plan totaled approximately $5
million and $7 million, respectively. While the majority of the accrued costs at
June 30, 2004 are expected to be paid during the remainder of 2004, there are
certain severance costs that have payment terms extending into 2005.

     The following unaudited pro forma combined financial information for the
three and six months ended June 30, 2003, assumes that the acquisition of Unilab
and the related Divestiture were completed on January 1, 2003 (in thousands,
except per share data):

<TABLE>
<CAPTION>
                                                          Three Months Ended   Six Months Ended
                                                             June 30, 2003       June 30, 2003
                                                          ------------------   ----------------
                                                               Pro forma           Pro forma
                                                          ------------------   ----------------
<S>                                                           <C>                 <C>
Net revenues...........................................       $1,215,626          $2,378,649
Net income.............................................          119,959             216,675

Basic earnings per common share:
Net income.............................................       $     1.14          $     2.07
Weighted average common shares outstanding - basic.....          105,049             104,816

Diluted earnings per common share:
Net income.............................................       $     1.11          $     2.02
Weighted average common shares outstanding - diluted...          107,677             107,360
</TABLE>

     The unaudited pro forma combined financial information presented above
reflects certain reclassifications to the historical financial statements of
Unilab to conform the acquired company's accounting policies and classification
of certain costs and expenses to that of Quest Diagnostics. These adjustments
had no impact on pro forma net income. Pro forma results for the six months
ended June 30, 2003 exclude $14.5 million of direct transaction costs, which
were incurred and expensed by Unilab immediately prior to the closing of the
Unilab acquisition.


                                        7



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

3.   GOODWILL AND INTANGIBLE ASSETS

     Goodwill at June 30, 2004 and December 31, 2003 consisted of the following:

<TABLE>
<CAPTION>
                                                                               June 30,    December 31,
                                                                                 2004          2003
                                                                              ----------   ------------
<S>                                                                           <C>           <C>
Goodwill...................................................................   $2,705,391    $2,706,928
Less: accumulated amortization ............................................     (188,053)     (188,053)
                                                                              ----------    ----------
Goodwill, net..............................................................   $2,517,338    $2,518,875
                                                                              ==========    ==========
</TABLE>

     The changes in the gross carrying amount of goodwill for the six month
period ended June 30, 2004 and for the year ended December 31, 2003 are as
follows:

<TABLE>
<CAPTION>
                                                                               June 30,    December 31,
                                                                                 2004          2003
                                                                              ----------   ------------
<S>                                                                           <C>           <C>
Balance at beginning of period.............................................   $2,706,928    $1,976,903
Goodwill acquired during the period........................................           --       730,025
Other......................................................................       (1,537)           --
                                                                              ----------    ----------
Balance at end of period...................................................   $2,705,391    $2,706,928
                                                                              ==========    ==========
</TABLE>

     Intangible assets at June 30, 2004 and December 31, 2003 consisted of the
following:

<TABLE>
<CAPTION>
                                             June 30, 2004                     December 31, 2003
                                   ---------------------------------   --------------------------------
                      Weighted
                       Average
                    Amortization               Accumulated                        Accumulated
                       Period        Cost     Amortization     Net       Cost    Amortization     Net
                    ------------   --------   ------------   -------   -------    -----------   -------
<S>                   <C>           <C>         <C>          <C>       <C>         <C>          <C>
Non-compete
   agreements....      5 years      $44,942     $(40,811)    $ 4,131   $44,942     $(37,947)    $ 6,995
Customer lists...     15 years       42,225      (36,477)      5,748    42,225      (35,568)      6,657
Other............     10 years        5,600       (2,719)      2,881     5,895       (2,569)      3,326
                                    -------       ------     -------   -------     --------     -------
   Total.........     10 years      $92,767     $(80,007)    $12,760   $93,062     $(76,084)    $16,978
                                    =======     ========     =======   =======     ========     =======
</TABLE>

         Amortization expense related to intangible assets was $2,058 and $2,068
for the three months ended June 30, 2004 and 2003, respectively. For the six
months ended June 30, 2004 and 2003, amortization expense related to intangible
assets was $4,122 and $4,091, respectively.


                                        8



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

     The estimated amortization expense related to intangible assets for each of
the five succeeding fiscal years and thereafter as of June 30, 2004 is as
follows:

<TABLE>
<CAPTION>
 Fiscal Year Ending
    December 31,
--------------------
<S>                    <C>
Remainder of 2004...   $ 2,478
2005................     3,148
2006................     1,872
2007................     1,037
2008................       847
2009................       750
Thereafter..........     2,628
                       -------
  Total.............   $12,760
                       =======
</TABLE>

4.   DEBT

     Term Loan due December 2008

     On December 19, 2003, the Company entered into a new $75 million amortizing
term loan facility (the "term loan due December 2008"), which was funded on
January 12, 2004 and the proceeds of which were used to repay $75 million of
outstanding principal under the Company's term loan due June 2007. Interest is
based on LIBOR plus an applicable margin that can fluctuate over a range of up
to 119 basis points, based on changes in the Company's public debt rating. As of
June 30, 2004, the Company's borrowing rate for LIBOR-based loans was LIBOR plus
0.55%. The term loan due December 2008 requires principal repayments of the
initial amount borrowed equal to 20% on each of the third and fourth anniversary
dates of the funding and the remainder of the outstanding balance on December
31, 2008. The term loan due December 2008 is guaranteed by the Company's wholly
owned subsidiaries that operate clinical laboratories in the United States (the
"Subsidiary Guarantors").

     2004 Debt Refinancings

     On April 20, 2004, the Company entered into a new $500 million senior
unsecured revolving credit facility which replaced a $325 million unsecured
revolving credit facility. Under the new $500 million senior unsecured revolving
credit facility (the "Credit Facility"), which matures in April 2009, interest
is based on certain published rates plus an applicable margin that will vary
over an approximate range of 90 basis points based on changes in the Company's
credit ratings. At the option of the Company, it may elect to enter into
LIBOR-based interest rate contracts for periods up to 180 days. Interest on any
outstanding amounts not covered under the LIBOR-based interest rate contracts is
based on an alternate base rate, which is calculated by reference to the prime
rate or federal funds rate. As of June 30, 2004, the Company's borrowing rate
for LIBOR-based loans was LIBOR plus 0.625%. The Credit Facility is guaranteed
by the Subsidiary Guarantors. The Credit Facility contains various covenants,
including the maintenance of certain financial ratios, which could impact the
Company's ability to, among other things, incur additional indebtedness.

     In addition, on April 20, 2004, the Company entered into a new $300 million
receivables securitization facility which replaced a $250 million receivables
securitization facility that matured in April 2004. The new $300 million
receivables securitization facility (the "secured receivables credit facility")
matures in April 2007. Interest on the secured receivables credit facility is
based on rates that are intended to approximate commercial paper rates for
highly rated issuers. The secured receivables credit facility is supported by
one-year back-up facilities provided by two banks on a committed basis.
Borrowings outstanding under the secured receivables credit facility, if any,
are classified as a current liability on the Company's consolidated balance
sheet since the lenders fund the borrowings through the issuance of commercial
paper which matures at various dates within one year from the date of issuance
and the term of the one-year back-up facilities described above.


                                        9



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

     On April 30, 2004, the Company repaid the remaining $230 million of
principal outstanding under its term loan due June 2007 with $100 million of
borrowings under the Credit Facility and $130 million of borrowings under the
secured receivables credit facility.

     In conjunction with the debt refinancings, the Company recorded a $2.9
million charge to earnings in the second quarter of 2004 representing the
write-off of deferred financing costs associated with the debt that was
refinanced. The $2.9 million charge was included in interest expense, net within
the consolidated statements of operations for the three and six months ended
June 30, 2004.

5.   COMMITMENTS AND CONTINGENCIES

     The Company has standby letters of credit issued under its $68 million
letter of credit lines to ensure its performance or payment to third parties,
which amounted to $61 million at June 30, 2004. The letters of credit, which are
renewed annually, primarily represent collateral for current and future
automobile liability and workers' compensation loss payments.

     The Company has entered into several settlement agreements with various
government and private payers during recent years relating to industry-wide
billing and marketing practices that had been substantially discontinued by the
mid-1990s. The Company is aware of certain pending lawsuits filed under the qui
tam provisions of the civil False Claims Act. Some of the proceedings against
the Company involve claims that are substantial in amount.

     Although management believes that established reserves for billing-related
claims are sufficient, including qui tam cases of which management is aware, it
is possible that additional information (such as the indication by the
government of criminal activity, additional tests being questioned or other
changes in the government's or private claimants' theories of wrongdoing) may
become available which may cause the final resolution of these matters to exceed
established reserves by an amount which could be material to the Company's
results of operations and cash flows in the period in which such claims are
settled. The Company does not believe that these issues will have a material
adverse effect on its overall financial position. However, the Company
understands that there may be pending qui tam claims brought by former employees
or other "whistle blowers" as to which it has not been provided with a copy of
the complaint and accordingly cannot determine the extent of any potential
liability.

     In addition to the billing-related settlement reserves discussed above, the
Company is involved in various legal proceedings arising in the ordinary course
of business. Some of the proceedings against the Company involve claims that are
substantial in amount. Although management cannot predict the outcome of such
proceedings or any claims made against the Company, management does not
anticipate that the ultimate outcome of the various proceedings or claims will
have a material adverse effect on the Company's financial position but may be
material to the Company's results of operations and cash flows in the period in
which such proceedings or claims are resolved.

     As a general matter, providers of clinical laboratory testing services may
be subject to lawsuits alleging negligence or other similar legal claims. These
suits could involve claims for substantial damages. Any professional liability
litigation could also have an adverse impact on the Company's client base and
reputation. The Company maintains various liability insurance programs for
claims that could result from providing or failing to provide clinical
laboratory testing services, including inaccurate testing results and other
exposures. The Company's insurance coverage limits its maximum exposure on
individual claims; however, the Company is essentially self-insured for a
significant portion of these claims. The basis for claims reserves incorporates
actuarially determined losses based upon the Company's historical and projected
loss experience. Management believes that present insurance coverage and
reserves are sufficient to cover currently estimated exposures. Although
management cannot predict the outcome of any claims made against the Company,
management does not anticipate that the ultimate outcome of any such proceedings
or claims will have a material adverse effect on the Company's financial
position but may be material to the Company's results of operations and cash
flows in the period in which such claims are resolved.


                                       10



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

6.   STOCKHOLDERS' EQUITY

     Changes in stockholders' equity for the six months ended June 30, 2004 were
as follows:

<TABLE>
<CAPTION>
                                                                                         Accumulated
                                 Shares of                                                  Other
                                   Common            Additional                            Compre-     Treasury   Compre-
                                   Stock     Common    Paid-In   Retained    Unearned      hensive    Stock, at  hensive
                                Outstanding   Stock    Capital   Earnings  Compensation     Income       Cost     Income
                                -----------  ------  ----------  --------  ------------  -----------  ---------  --------
<S>                               <C>        <C>     <C>         <C>         <C>           <C>        <C>        <C>
Balance,
   December 31, 2003..........    102,814    $1,068  $2,267,014  $380,559    $(2,346)      $ 5,947    $(257,548)
Net income....................                                    242,978                                        $242,978
Other comprehensive loss......                                                              (4,938)                (4,938)
                                                                                                                 --------
   Comprehensive income.......                                                                                   $238,040
                                                                                                                 ========
Dividends declared ...........                                    (30,829)
Issuance of common stock
   under benefit plans........         93         1       1,777                  962                      4,310
Exercise of stock options.....      2,081               (70,757)                                        137,596
Shares to cover employee
   payroll tax
   withholdings on stock
   issued under benefit
   plans......................        (76)       (1)     (6,265)
Tax benefits associated
   with stock-based
   compensation plans.........                           39,983
Amortization of unearned
   compensation...............                                                   965
Purchases of treasury stock ..     (3,198)                                                             (271,103)
                                  -------    ------  ----------  --------    -------       -------    ---------
Balance,
   June 30, 2004..............    101,714    $1,068  $2,231,752  $592,708    $  (419)      $ 1,009    $(386,745)
                                  =======    ======  ==========  ========    =======       =======    =========
</TABLE>

     In 2003, the Company's Board of Directors authorized a share repurchase
program, which permits the Company to purchase up to $600 million of its common
stock. For the three months ended June 30, 2004, the Company repurchased
approximately 2.7 million shares of its common stock at an average price of
$85.34 per share for a total of $226 million. For the six months ended June 30,
2004, the Company repurchased approximately 3.2 million shares of its common
stock at an average price of $84.76 per share for a total of $271 million.
Through June 30, 2004, the Company has repurchased approximately 7.2 million
shares of its common stock at an average price of $73.54 for a total of $529
million. At June 30, 2004, $71 million of the share repurchase authorization
remained available. In July 2004, the Company's Board of Directors authorized
the Company to purchase up to an additional $300 million of its common stock,
bringing the total available for repurchases under the combined authorizations
to $371 million as of July 22, 2004. For the three and six months ended
June 30, 2004, the Company reissued approximately 1.0 million shares and
2.1 million shares, respectively, in connection with employee benefit plans.

     During the first quarter of 2004, the Company's Board of Directors declared
a quarterly cash dividend of $0.15 per common share payable on April 21, 2004 to
shareholders of record on April 7, 2004. The quarterly dividend was paid on
April 21, 2004 and totaled approximately $15.5 million. During the second
quarter of 2004, the Company's Board of Directors declared a quarterly cash
dividend of $0.15 per common share payable on July 21, 2004 to shareholders of
record on July 7, 2004 and totaled approximately $15.3 million.


                                       11



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

     Changes in stockholders' equity for the six months ended June 30, 2003 were
as follows:

<TABLE>
<CAPTION>
                                                                                             Accumulated
                                                                                                Other
                                 Shares of                         Retained                    Compre-
                                   Common            Additional    Earnings                    hensive     Treasury   Compre-
                                   Stock     Common    Paid-In   (Accumulated    Unearned       Income    Stock, at   hensive
                                Outstanding   Stock    Capital     Deficit)    Compensation     (Loss)       Cost     Income
                                -----------  ------  ----------  ------------  ------------  -----------  ---------  --------
<S>                               <C>        <C>     <C>           <C>           <C>           <C>         <C>       <C>
Balance,
   December 31, 2002..........     97,963    $  980  $1,817,511    $(40,772)     $(3,332)      $(5,524)    $     --
Net income....................                                      208,448                                          $208,448
Other comprehensive income....                                                                   3,190                  3,190
                                                                                                                     --------
   Comprehensive income.......                                                                                       $211,638
                                                                                                                     ========
Shares issued to acquire
   Unilab.....................      7,055        71     372,393
Fair value of Unilab
   converted options..........                            8,452
Issuance of common stock
   under benefit plans........        274         3      11,630                   (5,041)
Exercise of stock options.....        453         4       9,203
Shares to cover employee
   payroll tax
   withholdings on stock
   issued under benefit
   plans......................       (170)       (2)     (9,099)
Tax benefits associated
   with stock-based
   compensation plans.........                            9,541
Amortization of unearned
   compensation...............                                                     3,301
Purchases of treasury stock...       (162)                                                                  (10,065)
                                  -------    ------  ----------    --------      -------       -------     --------
Balance,
   June 30, 2003..............    105,413    $1,056  $2,219,631    $167,676      $(5,072)      $(2,334)    $(10,065)
                                  =======    ======  ==========    ========      =======       =======     ========
</TABLE>


                                       12



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

7.   SUPPLEMENTAL CASH FLOW & OTHER DATA

<TABLE>
<CAPTION>
                                                   Three Months Ended     Six Months Ended
                                                        June 30,              June 30,
                                                  -------------------   -------------------
                                                    2004       2003       2004       2003
                                                  --------   --------   --------   --------
<S>                                               <C>        <C>        <C>        <C>
Depreciation expense...........................   $ 40,789   $ 36,203   $ 79,795   $ 70,881

Interest expense...............................    (16,768)   (16,993)   (31,818)   (31,178)
Interest income................................        422        127        828        403
                                                  --------   --------   --------   --------
Interest expense, net..........................    (16,346)   (16,866)   (30,990)   (30,775)

Interest paid..................................      4,012      5,434     25,915     32,545
Income taxes paid..............................    108,820     93,432    112,391    100,630

Businesses acquired:
Fair value of assets acquired..................   $     --   $  5,102   $     --   $977,866
Fair value of liabilities assumed..............         --      4,161         --    279,510

Non-cash financing activities:
Fair value of common stock issued to acquire
   Unilab......................................   $     --   $     --   $     --   $372,464
Fair value of converted options issued in
   conjunction with the Unilab acquisition.....         --         --         --      8,452
</TABLE>

8.   SUMMARIZED FINANCIAL INFORMATION

     The Company's 6 3/4% senior notes due 2006, 7 1/2% senior notes due 2011
and 1 3/4% contingent convertible debentures due 2021 are guaranteed by the
Subsidiary Guarantors. With the exception of Quest Diagnostics Receivables
Incorporated (see paragraph below), the non-guarantor subsidiaries are primarily
foreign subsidiaries and less than wholly owned subsidiaries.

     In conjunction with the receivables securitization, the Company formed a
new wholly owned non-guarantor subsidiary, Quest Diagnostics Receivables
Incorporated ("QDRI"). Through March 31, 2004, the Company and the Subsidiary
Guarantors, with the exception of American Medical Laboratories, Incorporated
("AML") and Unilab, transferred all private domestic receivables (principally
excluding receivables due from Medicare, Medicaid and other federal programs,
and receivables due from customers of its joint ventures) to QDRI. In
conjunction with the Company's new $300 million secured receivables credit
facility, effective in the second quarter of 2004, the Company and the
Subsidiary Guarantors, including AML and Unilab, transfer all private domestic
receivables to QDRI. QDRI utilizes the transferred receivables to collateralize
the Company's secured receivables credit facility. The Company and the
Subsidiary Guarantors provide collection services to QDRI. QDRI uses cash
collections principally to purchase new receivables from the Company and the
Subsidiary Guarantors.

     The following condensed consolidating financial data illustrates the
composition of the combined guarantors. Investments in subsidiaries are
accounted for by the parent using the equity method for purposes of the
supplemental consolidating presentation. Earnings (losses) of subsidiaries are
therefore reflected in the parent's investment accounts and earnings. The
principal elimination entries relate to investments in subsidiaries and
intercompany balances and transactions. On February 28, 2003, Quest Diagnostics
acquired Unilab, which has been included in the accompanying condensed
consolidating financial data, subsequent to the closing of the acquisition, as a
Subsidiary Guarantor.


                                       13



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2004

<TABLE>
<CAPTION>
                                                             Subsidiary   Non-Guarantor
                                                   Parent    Guarantors    Subsidiaries   Eliminations   Consolidated
                                                   ------    ----------    ------------   ------------   ------------
<S>                                               <C>        <C>            <C>             <C>           <C>
Net revenues...................................   $209,548   $1,021,661     $133,259        $(66,794)     $1,297,674

Operating costs and expenses:
   Cost of services............................    115,462      586,962       45,153              --         747,577
   Selling, general and administrative.........     27,528      220,894       63,927          (4,947)        307,402
   Amortization of intangible assets...........        503        1,546            9              --           2,058
   Royalty (income) expense....................    (82,968)      82,968           --              --              --
   Other operating (income) expense, net.......     10,622            3           (7)             --          10,618
                                                  --------   ----------     --------        --------      -----------
      Total operating costs and expenses.......     71,147      892,373      109,082          (4,947)       1,067,655
                                                  --------   ----------     --------        --------      -----------
Operating income...............................    138,401      129,288       24,177         (61,847)        230,019
Non-operating expenses, net....................    (20,832)     (57,301)        (905)         61,847         (17,191)
                                                  --------   ----------     --------        --------      ----------
Income before taxes............................    117,569       71,987       23,272              --         212,828
Income tax expense.............................     47,280       28,795        9,924              --          85,999
                                                  --------   ----------     --------        --------      ----------
Income before equity earnings..................     70,289       43,192       13,348              --         126,829
Equity earnings from subsidiaries..............     56,540           --           --         (56,540)             --
                                                  --------   ----------     --------        --------      ----------
Net income.....................................   $126,829   $   43,192     $ 13,348        $(56,540)     $  126,829
                                                  ========   ==========     ========        ========      ==========
</TABLE>

Condensed Consolidating Statement of Operations
Three Months Ended June 30, 2003

<TABLE>
<CAPTION>
                                                             Subsidiary   Non-Guarantor
                                                   Parent    Guarantors    Subsidiaries   Eliminations   Consolidated
                                                   ------    ----------    ------------   ------------   ------------
<S>                                               <C>         <C>            <C>            <C>           <C>
Net revenues...................................   $203,649    $956,955       $122,729       $(63,398)     $1,219,935

Operating costs and expenses:
   Cost of services............................    113,864     548,495         40,765             --         703,124
   Selling, general and administrative.........     18,045     225,769         56,210         (3,962)        296,062
   Amortization of intangible assets...........        821       1,247             --             --           2,068
   Royalty (income) expense....................    (70,661)     70,661             --             --              --
   Other operating (income) expense, net.......         --          (4)            14             --              10
                                                  --------    --------       --------       --------      ----------
      Total operating costs and expenses.......     62,069     846,168         96,989         (3,962)      1,001,264
                                                  --------    --------       --------       --------      ----------
Operating income...............................    141,580     110,787         25,740        (59,436)        218,671
Non-operating expenses, net....................    (17,539)    (55,761)        (1,402)        59,436         (15,266)
                                                  --------    --------       --------       --------      ----------
Income before taxes............................    124,041      55,026         24,338             --         203,405
Income tax expense.............................     50,928      22,009         10,056             --          82,993
                                                  --------    --------       --------       --------      ----------
Income before equity earnings..................     73,113      33,017         14,282             --         120,412
Equity earnings from subsidiaries..............     47,299          --             --        (47,299)             --
                                                  --------    --------       --------       ---------     ----------
Net income.....................................   $120,412    $ 33,017       $ 14,282       $(47,299)     $  120,412
                                                  ========    ========       ========       =========     ==========
</TABLE>


                                       14



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2004

<TABLE>
<CAPTION>
                                                              Subsidiary   Non-Guarantor
                                                    Parent    Guarantors    Subsidiaries   Eliminations   Consolidated
                                                    ------    ----------    ------------   ------------   ------------
<S>                                               <C>         <C>             <C>           <C>            <C>
Net revenues...................................   $ 409,773   $2,013,982      $254,917      $(125,256)     $2,553,416

Operating costs and expenses:
   Cost of services............................     236,282    1,160,797        87,779             --       1,484,858
   Selling, general and administrative.........      55,444      446,519       122,262         (9,278)        614,947
   Amortization of intangible assets...........       1,026        3,078            18             --           4,122
   Royalty (income) expense....................    (163,967)     163,967            --             --              --
   Other operating expense, net................       9,886           22           683             --          10,591
                                                  ---------   ----------      --------      ---------      ----------
      Total operating costs and expenses.......     138,671    1,774,383       210,742         (9,278)      2,114,518
                                                  ---------   ----------      --------      ---------      -----------
Operating income...............................     271,102      239,599        44,175       (115,978)        438,898
Non-operating expenses, net....................     (35,528)    (109,020)       (1,963)       115,978         (30,533)
                                                  ---------   ----------      --------      ---------      ----------
Income before taxes............................     235,574      130,579        42,212             --         408,365
Income tax expense.............................      96,985       52,232        16,170             --         165,387
                                                  ---------   ----------      --------      ---------      ----------
Income before equity earnings..................     138,589       78,347        26,042             --         242,978
Equity earnings from subsidiaries..............     104,389           --            --       (104,389)             --
                                                  ---------   ----------      --------      ---------      ----------
Net income.....................................   $ 242,978   $   78,347      $ 26,042      $(104,389)     $  242,978
                                                  =========   ==========      ========      =========      ==========
</TABLE>

Condensed Consolidating Statement of Operations
Six Months Ended June 30, 2003

<TABLE>
<CAPTION>
                                                              Subsidiary   Non-Guarantor
                                                    Parent    Guarantors    Subsidiaries   Eliminations   Consolidated
                                                    ------    ----------    ------------   ------------   ------------
<S>                                               <C>         <C>             <C>           <C>            <C>
Net revenues...................................   $ 395,280   $1,806,325      $235,709      $(124,582)     $2,312,732

Operating costs and expenses:
   Cost of services............................     229,370    1,044,281        77,570             --       1,351,221
   Selling, general and administrative.........      37,272      432,808       112,967         (7,786)        575,261
   Amortization of intangible assets...........       1,110        2,981            --             --           4,091
   Royalty (income) expense....................    (139,965)     139,965            --             --              --
   Other operating (income) expense, net.......          --           (7)          240             --             233
                                                  ---------   ----------      --------      ---------      ----------
      Total operating costs and expenses.......     127,787    1,620,028       190,777         (7,786)      1,930,806
                                                  ---------   ----------      --------      ---------      ----------
Operating income...............................     267,493      186,297        44,932       (116,796)        381,926
Non-operating expenses, net....................     (34,839)    (108,865)       (2,819)       116,796         (29,727)
                                                  ---------   ----------      --------      ---------      ----------
Income before taxes............................     232,654       77,432        42,113             --         352,199
Income tax expense.............................      95,119       30,972        17,660             --         143,751
                                                  ---------   ----------      --------      ---------      ----------
Income before equity earnings..................     137,535       46,460        24,453             --         208,448
Equity earnings from subsidiaries..............      70,913           --            --        (70,913)             --
                                                  ---------   ----------      --------      ---------      ----------
Net income.....................................   $ 208,448   $   46,460      $ 24,453      $ (70,913)     $  208,448
                                                  =========   ==========      ========      =========      ==========
</TABLE>


                                       15



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

Condensed Consolidating Balance Sheet
June 30, 2004

<TABLE>
<CAPTION>
                                                                          Non-
                                                         Subsidiary     Guarantor
                                              Parent     Guarantors   Subsidiaries   Eliminations   Consolidated
                                            ----------   ----------   ------------   ------------   ------------
<S>                                         <C>          <C>           <C>           <C>             <C>
Assets
Current assets:
Cash and cash equivalents................   $  123,002   $    2,869    $  11,931     $        --     $  137,802
Accounts receivable, net.................       21,965       85,097      570,648              --        677,710
Other current assets.....................       33,324      107,655       87,629              --        228,608
                                            ----------   ----------    ---------     -----------     ----------
   Total current assets..................      178,291      195,621      670,208              --      1,044,120
Property, plant and equipment, net.......      222,820      365,745       26,736              --        615,301
Goodwill and intangible assets, net .....      157,355    2,327,350       45,393              --      2,530,098
Intercompany receivable (payable)........      637,737     (228,221)    (409,516)             --             --
Investment in subsidiaries...............    2,022,950           --           --      (2,022,950)            --
Other assets.............................       50,207       69,036       38,089               -        157,332
                                            ----------   ----------    ---------     -----------     ----------
   Total assets..........................   $3,269,360   $2,729,531    $ 370,910     $(2,022,950)    $4,346,851
                                            ==========   ==========    =========     ===========     ==========

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses....   $  355,033   $  256,690    $  27,910     $        --     $  639,633
Short-term borrowings and current
  portion of long-term debt..............           --          488      129,921              --        130,409
                                            ----------   ----------    ---------     -----------     ----------
   Total current liabilities.............      355,033      257,178      157,831              --        770,042
Long-term debt...........................      416,004      553,757        1,956              --        971,717
Other liabilities........................       58,950       83,327       23,442              --        165,719
Common stockholders' equity..............    2,439,373    1,835,269      187,681      (2,022,950)     2,439,373
                                            ----------   ----------    ---------     -----------     ----------
   Total liabilities and stockholders'
      equity.............................   $3,269,360   $2,729,531    $ 370,910     $(2,022,950)    $4,346,851
                                            ==========   ==========    =========     ===========     ==========
</TABLE>

Condensed Consolidating Balance Sheet
December 31, 2003

<TABLE>
<CAPTION>
                                                                          Non-
                                                         Subsidiary     Guarantor
                                              Parent     Guarantors   Subsidiaries   Eliminations    Consolidated
                                            ----------   ----------   ------------   ------------    ------------
<S>                                         <C>          <C>           <C>           <C>             <C>
Assets
Current assets:
Cash and cash equivalents................   $  141,588   $    1,991    $  11,379     $        --     $  154,958
Accounts receivable, net.................       17,919      164,247      427,021              --        609,187
Other current assets.....................       36,576      114,758       80,307              --        231,641
                                            ----------   ----------    ---------     -----------     ----------
   Total current assets..................      196,083      280,996      518,707              --        995,786
Property, plant and equipment, net.......      228,109      350,196       29,000              --        607,305
Goodwill and intangible assets, net......      158,295    2,332,147       45,411              --      2,535,853
Intercompany receivable (payable)........      510,958     (106,078)    (404,880)             --             --
Investment in subsidiaries...............    1,929,235           --           --      (1,929,235)            --
Other assets.............................       73,398       50,053       39,023              --        162,474
                                            ----------   ----------    ---------     -----------     ----------
   Total assets..........................   $3,096,078   $2,907,314    $ 227,261     $(1,929,235)    $4,301,418
                                            ==========   ==========    =========     ===========     ==========

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses....   $  337,635   $  281,753    $  30,462     $        --     $  649,850
Current portion of long-term debt........           --       73,950           --              --         73,950
                                            ----------   ----------    ---------     -----------     ----------
   Total current liabilities.............      337,635      355,703       30,462              --        723,800
Long-term debt...........................      315,844      710,908        1,955              --      1,028,707
Other liabilities........................       47,905       83,781       22,531              --        154,217
Common stockholders' equity..............    2,394,694    1,756,922      172,313      (1,929,235)     2,394,694
                                            ----------   ----------    ---------     -----------     ----------
   Total liabilities and stockholders'
      equity.............................   $3,096,078   $2,907,314    $ 227,261     $(1,929,235)    $4,301,418
                                            ==========   ==========    =========     ===========     ==========
</TABLE>


                                       16



<PAGE>


                 QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
                   (in thousands, unless otherwise indicated)
                                   (unaudited)

Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2004

<TABLE>
<CAPTION>
                                                        Subsidiary   Non-Guarantor
                                              Parent    Guarantors    Subsidiaries   Eliminations   Consolidated
                                            ---------   ----------   -------------   ------------   ------------
<S>                                         <C>         <C>            <C>            <C>            <C>
Cash flows from operating activities:
Net income ..............................   $ 242,978   $  78,347      $  26,042      $(104,389)     $ 242,978
Adjustments to reconcile net income to
   net cash provided by (used in)
   operating activities:
   Depreciation and amortization ........      28,519      50,474          4,924             --         83,917
   Provision for doubtful accounts ......       2,409      25,143         84,786             --        112,338
   Other, net ...........................     (29,288)    (17,501)         5,161        104,389         62,761
   Changes in operating assets and
      liabilities ......................       (4,162)     24,705       (204,413)            --       (183,870)
                                            ---------   ---------      ---------      ---------      ---------
Net cash provided by (used in) operating
   activities ...........................     240,456     161,168        (83,500)            --        318,124
Net cash provided by (used in) investing
   activities ...........................     107,719     (52,066)        (3,957)      (140,678)       (88,982)
Net cash (used in) provided by financing
   activities ...........................    (366,761)   (108,224)        88,009        140,678       (246,298)
                                            ---------   ---------      ---------      ---------      ---------
Net change in cash and cash
   equivalents ..........................     (18,586)        878            552             --        (17,156)
Cash and cash equivalents, beginning of
   period ...............................     141,588       1,991         11,379             --        154,958
                                            ---------   ---------      ---------      ---------      ---------
Cash and cash equivalents, end of
   period ...............................   $ 123,002   $   2,869      $  11,931      $      --      $ 137,802
                                            =========   =========      =========      =========      =========
</TABLE>

Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2003

<TABLE>
<CAPTION>
                                                        Subsidiary   Non-Guarantor
                                              Parent    Guarantors    Subsidiaries   Eliminations   Consolidated
                                            ---------   ----------   -------------   ------------   ------------
<S>                                         <C>          <C>           <C>             <C>           <C>
Cash flows from operating activities:
Net income ..............................   $ 208,448    $ 46,460      $ 24,453        $(70,913)     $ 208,448
Adjustments to reconcile net income to
   net cash provided by operating
   activities:
   Depreciation and amortization ........      27,165      43,502         4,305              --         74,972
   Provision for doubtful accounts ......       2,943      29,917        80,683              --        113,543
   Other, net ...........................     (44,043)    (12,476)       13,574          70,913         27,968
   Changes in operating assets and
      liabilities .......................     (33,699)    (78,008)      (85,546)             --       (197,253)
                                            ---------    --------      --------        --------      ---------
Net cash provided by operating
   activities ...........................     160,814      29,395        37,469              --        227,678
Net cash used in investing
   activities ...........................    (260,004)    (39,305)       (6,306)        (15,314)      (320,929)
Net cash provided by (used in) financing
   activities ...........................      90,845      10,942       (32,558)         15,314         84,543
                                            ---------    --------      --------        --------      ---------
Net change in cash and cash
   equivalents ..........................      (8,345)      1,032        (1,395)             --         (8,708)
Cash and cash equivalents, beginning of
   period ...............................      79,015       7,377        10,385              --         96,777
                                            ---------    --------      --------        --------      ---------
Cash and cash equivalents, end of
   period ...............................   $  70,670    $  8,409      $  8,990        $     --      $  88,069
                                            =========    ========      ========        ========      =========
</TABLE>


                                       17



<PAGE>


Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Critical Accounting Policies

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires us to make estimates
and assumptions and select accounting policies that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

     While many operational aspects of our business are subject to complex
federal, state and local regulations, the accounting for it is generally
straightforward with net revenues primarily recognized upon completion of the
testing process. Our revenues are primarily comprised of a high volume of
relatively low dollar transactions, and about one-half of total operating costs
and expenses consist of employee compensation and benefits. Due to the nature of
our business, several of our accounting policies involve significant estimates
and judgments. These accounting policies have been described in our 2003 Annual
Report on Form 10-K.

Integration of Unilab Corporation

     On February 28, 2003, we completed the acquisition of Unilab Corporation,
or Unilab, the leading commercial clinical laboratory in California. In
connection with the acquisition of Unilab, we entered into an agreement to sell
to Laboratory Corporation of America Holdings, Inc., certain assets in northern
California, or the Divestiture. During the fourth quarter of 2003, we finalized
our plan related to the integration of Unilab into our laboratory network. As
part of the plan, and following the Divestiture, we closed our previously owned
clinical laboratory in the San Francisco Bay area and completed the integration
of remaining customers in the northern California area to Unilab's laboratories
in San Jose and Sacramento. We currently operate two laboratories in the
Los Angeles metropolitan area. We plan to open a new regional laboratory in
the Los Angeles metropolitan area and then integrate our business in the
Los Angeles metropolitan area into the new facility.

     As of June 30, 2004 and December 31, 2003, accruals related to the Unilab
integration plan totaled approximately $5 million and $7 million, respectively.
While the majority of the accrued costs at June 30, 2004 are expected to be paid
during the remainder of 2004, there are certain severance costs that have
payment terms extending into 2005.

Results of Operations

     Three and Six Months Ended June 30, 2004 Compared with Three and Six Months
Ended June 30, 2003

     Net income for the three months ended June 30, 2004 increased to $127
million from $120 million for the prior year period. For the six months ended
June 30, 2004, net income increased to $243 million from $208 million for the
prior year period. These increases in earnings were primarily attributable to
revenue growth and efficiencies generated from our Six Sigma and standardization
initiatives, partially offset by investments in our operations and the impact of
$13.2 million in pre-tax charges recorded in the second quarter of 2004. Of the
$13.2 million of charges incurred in the second quarter of 2004, $10.3 million
related to the acceleration of certain pension obligations in connection with
the recently completed CEO succession process with the remaining $2.9 million
representing the write-off of deferred financing costs associated with the
refinancing of our bank debt and credit facility. These charges served to reduce
reported net income for both the three and six months ended June 30, 2004 by
$7.9 million.

     Net Revenues

     Net revenues for the three months ended June 30, 2004 grew by 6.4% over the
prior year level, driven by increases in average revenue per requisition and
improvements in testing volumes. Net revenues for the six months ended June 30,
2004 grew by 10.4% over the prior year level and include six months of Unilab's
results, which was acquired on February 28, 2003, compared to four months of
Unilab's results in the prior year. Pro forma revenue growth, assuming that the
Unilab acquisition and the related Divestiture had been completed on January 1,
2003, was 7.3% for the six months ended June 30, 2004.

     For the three and six months ended June 30, 2004, clinical testing volume,
measured by the number of requisitions, increased 2.1% and 6.4%, respectively,
compared to the prior year periods. On a pro forma basis, assuming that the
Unilab acquisition and the Divestiture had been completed on January 1, 2003,
testing volume increased 2.6% for


                                       18



<PAGE>


the six months ended June 30, 2004.

     Average revenue per requisition improved 3.7% and 3.4% for the three and
six months ended June 30, 2004, respectively, compared to the prior year
periods, primarily attributable to a continuing shift in test mix to higher
value testing, including gene-based testing, which continued to grow at
approximately 15% over the prior year level, and increases in the number of
tests ordered per requisition. The inclusion of Unilab's results subsequent to
February 28, 2003 served to reduce average revenue per requisition by
approximately 0.7% for the six months ended June 30, 2004, reflecting Unilab's
lower revenue per requisition.

     Drugs of abuse testing, which is among our lowest priced services and
accounts for approximately 6% of our volume and 3% of our consolidated net
revenues, grew for the second consecutive quarter after several years of
decline. The growth in drugs of abuse testing had an insignificant impact on our
overall volume growth and revenue per requisition for the three and six months
ended June 30, 2004.

     Our businesses, other than clinical laboratory testing, which represent
approximately 4% of our consolidated net revenues, grew over 15% and 20% during
the three and six months ended June 30, 2004, respectively, compared to the
prior year periods and contributed approximately one-half of a percent to
reported net revenue growth in both periods.

     Operating Costs and Expenses

     Total operating costs and expenses for the three and six months ended June
30, 2004 increased $66 million and $184 million, respectively, from the prior
year periods primarily due to increases in our clinical testing volume. The
increased costs were primarily in the areas of employee compensation and
benefits and testing supplies. While our cost structure has been favorably
impacted by efficiencies generated from our Six Sigma and standardization
initiatives, we continue to make investments to further improve customer
service levels and pursue our overall business strategy.

     Cost of services, which includes the costs of obtaining, transporting and
testing specimens, was 57.6% of net revenues for the three months ended June 30,
2004, unchanged from the prior year period. For the six months ended June 30,
2004, cost of services, as a percentage of net revenues, decreased to 58.2% from
58.4% in the prior year period. This improvement was primarily the result of the
increase in average revenue per requisition and efficiency gains resulting from
our Six Sigma and standardization initiatives. This improvement was partially
offset by initial installation costs associated with deploying our
Internet-based orders and results systems in physicians' offices and an increase
in the number of phlebotomists in our patient service centers to support an
increasing percentage of our volume generated from these sites. At June 30,
2004, greater than 30% of our orders and greater than 40% of our test results
were being transmitted via the Internet, approximately double the level of a
year ago. The increase in the number of orders and test results reported via our
Internet-based systems is improving the initial collection of billing
information which is reducing the cost of billing and bad debt expense, both of
which are components of selling, general and administrative expenses.
Additionally, we believe that the number of physicians who no longer draw blood
in their office continues to increase, which is resulting in an increase in the
number of blood draws in our patient service centers or by our phlebotomists
placed in physicians' offices. This shift has increased our operating costs
associated with our blood draws, but is reducing costs in accessioning and other
parts of our operations due to improved billing information and a reduction in
the number of inadequate patient samples obtained by our trained phlebotomists
compared to samples collected by physician employed phlebotomists.

     Selling, general and administrative expenses, which include the costs of
the sales force, billing operations, bad debt expense and general management and
administrative support, decreased during the three months ended June 30, 2004,
as a percentage of net revenues, to 23.7% from 24.3% in the prior year period.
For the six months ended June 30, 2004, selling, general and administrative
expenses, as a percentage of net revenues, decreased to 24.1% from 24.9% in the
prior year period. The improvements were primarily due to efficiencies from our
Six Sigma and standardization initiatives and the improvement in average revenue
per requisition. Partially offsetting these improvements are additional costs
for expanding our sales force and enhancing their training. During the second
quarter of 2004, bad debt expense improved to 4.3% of net revenues, compared to
4.8% in the prior year period. For the six months ended June 30, 2004, bad debt
expense was 4.4% of net revenues, compared to 4.9% of net revenues in the prior
year period. This improvement primarily relates to the collection of diagnosis,
patient and insurance information necessary to more effectively bill for
services performed. We believe that our Six Sigma and standardization
initiatives and the increased use of electronic ordering by our customers will
provide additional opportunities to further improve our overall collection
experience and cost structure.


                                       19



<PAGE>


     Other operating expense, net represents miscellaneous income and expense
items related to operating activities including gains and losses associated with
the disposal of operating assets. For the three and six months ended June 30,
2004, other operating expense, net includes a $10.3 million charge associated
with the acceleration of certain pension obligations in connection with the
recently completed CEO succession process.

     Operating Income

     Operating income for the three months ended June 30, 2004 improved to $230
million, or 17.7% of net revenues, from $219 million, or 17.9% of net revenues,
in the prior year period. For the six months ended June 30, 2004, operating
income improved to $439 million, or 17.2% of net revenues, from $382 million, or
16.5% of net revenues, in the prior year period. The increases in operating
income for the three and six months ended June 30, 2004 were principally driven
by revenue growth and efficiencies generated from our Six Sigma and
standardization initiatives, which have reduced both the cost of services and
selling, general and administrative expenses as a percentage of net revenues.
Offsetting these improvements were investments in our operations and a charge in
the second quarter of 2004 of $10.3 million related to the acceleration of
certain pension obligations associated with the recently completed CEO
succession process. This charge reduced operating income, as a percentage of net
revenues, by 0.8% and 0.4%, respectively, for the three and six months ended
June 30, 2004.

     Other Income (Expense)

     Interest expense, net for both the three and six months ended June 30, 2004
included a $2.9 million charge representing the write-off of deferred financing
costs associated with the second quarter 2004 refinancing of our bank debt and
credit facility. Our 2004 debt refinancing, which was done to take advantage of
the improved lending environment and our improved credit profile, is discussed
further in Note 4 to the interim consolidated financial statements. Serving to
reduce interest expense, net for the three and six months ended June 30, 2004
was a reduction in the amount of debt outstanding during the periods, compared
to the prior year, as well as a reduction in borrowing costs associated with our
2004 refinancing.

     Other income (expense), net represents miscellaneous income and expense
items related to non-operating activities such as gains and losses associated
with investments and other non-operating assets.

Impact of Contingent Convertible Debentures on Earnings per Common Share

     The if-converted method is used in determining the dilutive effect of our
1 3/4% contingent convertible debentures due 2021, or the Debentures, in periods
when the holders of such securities are permitted to exercise their conversion
rights. As of and for the three and six months ended June 30, 2004, the holders
of the Debentures did not have the ability to exercise their conversion rights.
Had the requirements to allow the holders to exercise their conversion rights
been met and the Debentures remained outstanding for the entire period, diluted
earnings per common share would have been reduced by approximately 2% during the
three and six months ended June 30, 2004. See Note 1 to the interim consolidated
financial statements for a discussion of the potential impact of the Debentures
on earnings per common share calculations as a result of a new accounting
standard. Also, see Note 11 to the Consolidated Financial Statements contained
in our 2003 Annual Report on Form 10-K for a further discussion of the
Debentures.

Quantitative and Qualitative Disclosures About Market Risk

     We address our exposure to market risks, principally the market risk of
changes in interest rates, through a controlled program of risk management that
may include the use of derivative financial instruments. We do not hold or issue
derivative financial instruments for trading purposes. We do not believe that
our foreign exchange exposure is material to our financial position or results
of operations. See Note 2 to the Consolidated Financial Statements contained in
our 2003 Annual Report on Form 10-K for additional discussion of our financial
instruments and hedging activities.

     At both June 30, 2004 and December 31, 2003, the fair value of our debt was
estimated at approximately $1.2 billion, using quoted market prices and yields
for the same or similar types of borrowings, taking into account the underlying
terms of the debt instruments. At June 30, 2004 and December 31, 2003, the
estimated fair value exceeded the carrying value of the debt by approximately
$70 million and $86 million, respectively. An assumed 10% increase in interest
rates (representing approximately 45 and 50 basis points at June 30, 2004 and
December 31, 2003, respectively) would potentially reduce the estimated fair
value of our debt by approximately $16 million and $17 million at June 30, 2004
and December 31, 2003, respectively.


                                       20



<PAGE>


     The Debentures have a contingent interest component that will require us to
pay contingent interest based on certain thresholds, as outlined in the
indenture governing the Debentures. The contingent interest component is
considered to be a derivative instrument subject to Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended. As such, the derivative was recorded at its fair value
in the consolidated balance sheet and was not material at June 30, 2004 and
December 31, 2003.

     Borrowings under our senior unsecured revolving credit facility, our
secured receivables credit facility and our term loan due December 2008 are
subject to variable interest rates. Interest rates on our senior unsecured
revolving credit facility and term loan are subject to a pricing schedule that
can fluctuate based on changes in our credit rating. As such, our borrowing cost
under these credit arrangements will be subject to both fluctuations in interest
rates and changes in our credit rating. As of June 30, 2004, our borrowing rates
for our LIBOR-based loans ranged from LIBOR plus 0.55% to LIBOR plus 0.625%. At
June 30, 2004, there was $130 million of borrowings outstanding under our $300
million secured receivables credit facility, $100 million of borrowings
outstanding under our $500 million senior unsecured revolving credit facility
and $75 million outstanding under our term loan due December 2008. See Note 4 to
the interim consolidated financial statements for details regarding the 2004
debt refinancings.

     Based on our net exposure to interest rate changes, an assumed 10% change
in interest rates on our variable rate indebtedness (representing approximately
12 basis points) would impact annual net interest expense by approximately $0.4
million, assuming no changes to the debt outstanding at June 30, 2004.

Liquidity and Capital Resources

     Cash and Cash Equivalents

     Cash and cash equivalents at June 30, 2004 totaled $138 million, compared
to $155 million at December 31, 2003. Cash flows from operating activities in
2004 provided cash of $318 million, which together with cash on-hand were used
to fund investing and financing activities, which required cash of $89 million
and $246 million, respectively. Cash and cash equivalents at June 30, 2003
totaled $88 million, compared to $97 million at December 31, 2002. Cash flows
from operating activities in 2003 provided cash of $228 million, which along
with cash flows from financing activities of $85 million and cash on-hand, were
used to fund investing activities, which required cash of $321 million.

     Cash Flows From Operating Activities

     Net cash provided by operating activities for the six months ended June 30,
2004 was $318 million compared to $228 million in the prior year period. This
increase was primarily due to improved operating performance and increased tax
benefits associated with stock-based compensation plans, partially offset by an
increase in accounts receivable associated with growth in net revenues. Days
sales outstanding, a measure of billing and collection efficiency, improved to
47 days at June 30, 2004 from 48 days at December 31, 2003.

     Cash Flows From Investing Activities

     Net cash used in investing activities for the six months ended June 30,
2004 was $89 million, consisting primarily of capital expenditures of $91
million.

     Net cash used in investing activities for the six months ended June 30,
2003 was $321 million, consisting primarily of acquisition and related
transaction costs of $237 million to acquire the outstanding capital stock of
Unilab, and capital expenditures of $76 million. The acquisition and related
transaction costs included the cash portion of the Unilab purchase price of $297
million and approximately $12 million of transaction costs paid in 2003,
partially offset by $72 million of cash acquired from Unilab.


                                       21



<PAGE>


     Cash Flows From Financing Activities

     Net cash used in financing activities in the six months ended June 30, 2004
was $246 million, consisting primarily of purchases of treasury stock totaling
$271 million, and dividend payments totaling $31 million, partially offset by
$67 million received from the exercise of stock options. In addition, we repaid
the remaining $305 million of principal outstanding under our term loan due June
2007 with $100 million of borrowings under our senior unsecured revolving credit
facility, $130 million of borrowings under our secured receivables credit
facility and $75 million of borrowings under our term loan due December 2008.
The $271 million in treasury stock purchases represents 3.2 million shares of
our common stock repurchased at an average price of $84.76 per share.

     Net cash provided by financing activities for the six months ended June 30,
2003 was $85 million, consisting primarily of $450 million of borrowings under
our term loan due June 2007, partially offset by debt repayments totaling $355
million. Borrowings under our term loan facility due June 2007 were used to
finance the cash portion of the purchase price and related transaction costs
associated with the acquisition of Unilab, and to repay $220 million of debt,
representing substantially all of Unilab's then existing outstanding debt, and
related accrued interest. Of the $220 million, $124 million represents payments
related to our cash tender offer which was completed on March 7, 2003, for all
of the outstanding $100.8 million principal amount of Unilab's 12 3/4% senior
subordinated notes due 2009 and $23 million of related tender premium and
associated tender offer costs. The remaining debt repayments in 2003 consisted
primarily of $127 million of repayments under our term loan facility due June
2007 and a $6 million capital lease repayment. During the six months ended June
30, 2003, we repurchased $10 million of our common stock.

     Dividend Policy

     On October 21, 2003, our Board of Directors declared our first payment of a
quarterly cash dividend of $0.15 per common share, which was paid on January 23,
2004. We have paid a $0.15 per share dividend each quarter since the first
quarter's payment. We expect to fund future dividend payments with cash flows
from operations, and do not expect the dividend to have a material impact on our
ability to finance future growth.

     Share Repurchase Plan

     In 2003, our Board of Directors authorized a share repurchase program,
which permitted us to purchase up to $600 million of our common stock. For the
three months ended June 30, 2004, we repurchased approximately 2.7 million
shares of our common stock at an average price of $85.34 per share for a total
of $226 million. For the six months ended June 30, 2004, we repurchased
approximately 3.2 million shares of our common stock at an average price of
$84.76 per share for a total of $271 million. Through June 30, 2004, we have
repurchased approximately 7.2 million shares of our common stock at an average
price of $73.54 for a total of $529 million under our share repurchase program.
In July 2004, our Board of Directors authorized us to purchase up to an
additional $300 million of our common stock, bringing the total available for
repurchases under the combined authorizations to $371 million as of July 22,
2004.

     Contractual Obligations and Commitments

     A description of the terms of our indebtedness, related debt service
requirements and our future payments under certain of our contractual
obligations is contained in Note 11 to the Consolidated Financial Statements in
our 2003 Annual Report on Form 10-K. A discussion of our debt refinancings in
April 2004 is contained in Note 4 to the interim consolidated financial
statements. A discussion and analysis regarding our minimum rental commitments
under noncancelable operating leases and noncancelable commitments to purchase
products or services at December 31, 2003 is contained in Note 15 to the
Consolidated Financial Statements in our 2003 Annual Report on Form 10-K. See
Note 5 to the interim consolidated financial statements for information
regarding the status of our remaining contractual obligations and commitments.

     Our credit agreements relating to our senior unsecured revolving credit
facility and our term loan due December 2008 contain various covenants and
conditions, including the maintenance of certain financial ratios, that could
impact our ability to, among other things, incur additional indebtedness. We do
not expect these covenants to adversely impact our ability to execute our growth
strategy or conduct normal business operations.

     Unconsolidated Joint Ventures

     We have investments in unconsolidated joint ventures in Phoenix, Arizona;
Indianapolis, Indiana; and Dayton, Ohio, which are accounted for under the
equity method of accounting. We believe that our transactions with our joint
ventures are


                                       22



<PAGE>


conducted at arm's length, reflecting current market conditions and pricing.
Total net revenues of our unconsolidated joint ventures, on a combined basis,
are less than 6% of our consolidated net revenues. Total assets associated with
our unconsolidated joint ventures are less than 3% of our consolidated total
assets. We have no material unconditional obligations or guarantees to, or in
support of, our unconsolidated joint ventures and their operations.

     Requirements and Capital Resources

     We estimate that we will invest approximately $180 million to $190 million
during 2004 for capital expenditures to support and expand our existing
operations, principally related to investments in information technology,
equipment, and facility upgrades.

     In April 2004, we entered into a new $500 million senior unsecured
revolving credit facility which replaced a $325 million unsecured revolving
credit facility. In addition, we entered into a new $300 million secured
receivables credit facility which replaced a $250 million secured receivables
credit facility that matured in April 2004. On April 30, 2004, we repaid the
remaining $230 million of principal outstanding under our term loan due June
2007 with $100 million of borrowings under the $500 million senior unsecured
revolving credit facility and $130 million of borrowings under the $300 million
secured receivables credit facility. See Note 4 to the interim consolidated
financial statements for further details regarding the refinancings. As of June
30, 2004, $400 million of the $500 million senior unsecured revolving credit
facility and $170 million of the $300 million secured receivables credit
facility remained available to us for future borrowing.

     We believe that cash from operations and our borrowing capacity under our
credit facilities will provide sufficient financial flexibility to meet seasonal
working capital requirements and to fund capital expenditures, debt service
requirements, cash dividends on common shares, share repurchases and additional
growth opportunities for the foreseeable future. Our investment grade credit
ratings have had a favorable impact on our cost of and access to capital, and we
believe that our strong financial performance should provide us with access to
additional financing, if necessary, to fund growth opportunities that cannot be
funded from existing sources.

Impact of New Accounting Standards

     In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities", as revised
in December 2003. In March 2004, the Emerging Issues Task Force reached a final
consensus on Issue 03-6, "Participating Securities and the Two-Class Method
under FASB Statement No. 128, Earnings Per Share". The impacts of these
accounting standards are discussed in Note 1 to the interim consolidated
financial statements.


                                       23



<PAGE>


Forward-Looking Statements

     Some statements and disclosures in this document are forward-looking
statements. Forward-looking statements include all statements that do not relate
solely to historical or current facts and can be identified by the use of words
such as "may", "believe", "will", "expect", "project", "estimate", "anticipate",
"plan" or "continue". These forward-looking statements are based on our current
plans and expectations and are subject to a number of risks and uncertainties
that could significantly cause our plans and expectations, including actual
results, to differ materially from the forward-looking statements. The Private
Securities Litigation Reform Act of 1995 (the "Litigation Reform Act") provides
a "safe harbor" for forward-looking statements to encourage companies to provide
prospective information about their companies without fear of litigation.

     We would like to take advantage of the "safe harbor" provisions of the
Litigation Reform Act in connection with the forward-looking statements included
in this document. The risks and other factors that could cause our actual
financial results to differ materially from those projected, forecasted or
estimated by us in forward-looking statements may include, but are not limited
to, unanticipated expenditures, changing relationships with customers, payers,
suppliers and strategic partners, competitive environment, changes in government
regulations, conditions of the economy and other factors described in our 2003
Annual Report on Form 10-K and subsequent filings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     See Item 2. "Management's Discussion and Analysis of Financial Condition
     and Results of Operations".

Item 4. Controls and Procedures

(a)  Our Chief Executive Officer and Chief Financial Officer have evaluated the
     effectiveness of the design and operation of our disclosure controls and
     procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the
     Securities Exchange Act of 1934, as amended) as of the end of the period
     covered by this report. Based upon that evaluation, our Chief Executive
     Officer and Chief Financial Officer have concluded that our disclosure
     controls and procedures are adequate and effective.

(b)  During the quarterly period covered by this report, there were no changes
     in our internal control over financial reporting that have materially
     affected, or are reasonably likely to materially affect, our internal
     control over financial reporting.


                                       24



<PAGE>


                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

     See Note 5 to the interim consolidated financial statements for information
regarding the status of government investigations and private claims.


Item 2. Changes in Securities and Use of Proceeds

                      ISSUER PURCHASES OF EQUITY SECURITIES

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
                                                                               (d) Approximate Dollar Value
                  (a) Total                       (c) Total Number of Shares     of Shares that May Yet Be
                  Number of                          Purchased as Part of      Purchased Under the Plans or
                   Shares     (b) Average Price       Publicly Announced                  Programs
    Period        Purchased     Paid per Share         Plans or Programs               (in thousands)
-----------------------------------------------------------------------------------------------------------
<S>               <C>               <C>                    <C>                           <C>
April 1, 2004 -
April 30, 2004      270,500         $84.96                   270,500                     $274,600
-----------------------------------------------------------------------------------------------------------
May 1, 2004 -
May 31, 2004        892,900         $86.15                   892,900                     $197,672
-----------------------------------------------------------------------------------------------------------
June 1, 2004 -
June 30, 2004     1,487,518         $84.92                 1,487,518                     $ 71,348
-----------------------------------------------------------------------------------------------------------
Total             2,650,918         $85.34                 2,650,918                     $ 71,348
-----------------------------------------------------------------------------------------------------------
</TABLE>

     In 2003, our Board of Directors authorized a share repurchase program,
which permits us to purchase up to $600 million of our common stock. In July
2004, our Board of Directors authorized us to purchase up to an additional $300
million of our common stock, bringing the total available for repurchases under
the combined authorizations to $371 million as of July 22, 2004.

Item 4. Submission of Matters to a Vote of Security Holders

(a)  The Annual Meeting of Stockholders of the Company was held on May 4, 2004.
     At the meeting the matters described below were approved by the
     stockholders.

(b-c) The following nominees for the office of director were elected for terms
     expiring at the 2007 Annual Meeting of Stockholders, by the following
     votes:

<TABLE>
<CAPTION>
                                  For       Withheld
                              ----------   ---------
<S>                           <C>          <C>
     Dr. John C. Baldwin      84,250,137   7,416,589
     Mr. William R. Grant     84,054,787   7,611,939
     Dr. Surya N. Mohapatra   84,030,540   4,636,186
</TABLE>

     The following persons continue as directors:

     Mr. William F. Buehler
     Mr. James F. Flaherty III
     Mr. Kenneth W. Freeman
     Ms. Rosanne Haggerty
     Dr. Dan C. Stanzione
     Dr. Gail R. Wilensky
     Mr. John B. Ziegler


                                       25



<PAGE>


     The appointment of PricewaterhouseCoopers LLP as independent
     accountants to audit the financial statements of the Company and its
     subsidiaries for the fiscal year ending December 31, 2004, was approved by
     the following number of stockholder votes for, against, and abstained:

          For: 89,787,655   Against: 1,349,558   Abstained: 528,713

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits:

     10.1   First Amendment to Term Loan Credit Agreement dated as April 20,
            2004 among Quest Diagnostics Incorporated, certain subsidiary
            guarantors of the Company, the lenders party thereto, and Sumitomo
            Mitsui Banking Corporation

     31.1   Certification of Chief Executive Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002

     31.2   Certification of Chief Financial Officer Pursuant to Section 302 of
            the Sarbanes-Oxley Act of 2002

     32.1   Certification of Chief Executive Officer Pursuant to 18 U.S.C.
            'SS' 1350, as Adopted Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002

     32.2   Certification of Chief Financial Officer Pursuant to 18 U.S.C.
            'SS' 1350, as Adopted Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002

(b)  Reports on Form 8-K filed during the second quarter of 2004:

     On April 22, 2004, the Company furnished a current report on Form 8-K
     reporting its press release of April 22, 2004 announcing, among other
     things, its results for the quarter ended March 31, 2004.

     On April 22, 2004, the Company filed a current report on Form 8-K
     announcing that Surya N. Mohapatra, Ph.D., will be appointed President and
     Chief Executive Officer on May 4, 2004, the date of its 2004 Annual Meeting
     of Stockholders, completing the CEO succession plan announced in November
     2003.


                                       26



<PAGE>


                                   Signatures

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

July 30, 2004
Quest Diagnostics Incorporated


By /s/ Surya N. Mohapatra
   -----------------------------------------
       Surya N. Mohapatra, Ph.D.
       President and Chief Executive Officer


By /s/ Robert A. Hagemann
   -----------------------------------------
       Robert A. Hagemann
       Senior Vice President and
       Chief Financial Officer


                                       27



                         STATEMENT OF DIFFERENCES
                         ------------------------
The section symbol shall be expressed as................................ 'SS'



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>2
<FILENAME>ex10-1.txt
<DESCRIPTION>EXHIBIT 10.1
<TEXT>




<PAGE>


                                                                    Exhibit 10.1


                       FIRST AMENDMENT TO CREDIT AGREEMENT


         This FIRST AMENDMENT TO TERM LOAN CREDIT AGREEMENT (this "Amendment")
is entered into as of April 20, 2004 among QUEST DIAGNOSTICS INCORPORATED, a
Delaware corporation (the "Borrower"), certain Subsidiaries of the Borrower, as
Guarantors (the "Guarantors"), the Lenders party hereto and Sumitomo Mitsui
Banking Corporation, as Administrative Agent for the Lenders (the
"Administrative Agent"). Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Credit Agreement (as defined below).

                                    RECITALS

         WHEREAS, the Borrower, the Guarantors, the Lenders and the
Administrative Agent entered into that certain Term Loan Credit Agreement dated
as of December 19, 2003, as amended hereby and as the same may hereafter be
further amended, modified, supplemented or restated, the "Credit Agreement");

         WHEREAS, the Credit Agreement incorporated in Section 7 of the Credit
Agreement the corresponding covenants contained in Section 7 of the Credit
Agreement dated as of June 27, 2001, (the "2001 Senior Credit Agreement") among
the Borrower, the Guarantors, the lender parties thereto and Bank of America,
N.A., as Administrative Agent entered into a Credit Agreement dated as of June
27, 2001, (the "2001 Senior Credit Agreement").

         WHEREAS, Section 11.6 of the Credit Agreement provides that if the
Initial Lender participates in a facility that replaces the 2001 Senior Credit
Agreement (a "Replacement Facility"), such participation shall represent its
agreement to amend the Credit Agreement to conform to the covenants of such
Replacement Facility without payment of any fees in connection with such
confirming amendment.

         WHEREAS, subsequent to the execution of the Credit Agreement, the 2001
Senior Credit Agreement was replaced by a Credit Agreement dated as of April 20,
2004 (the "2004 Senior Credit Agreement") among Borrower, the Guarantors, the
lender parties thereto (including the Initial Lender) and Bank of America, N.A.,
as Administrative Agent.

         WHEREAS, the Initial Lender was a lender party to the 2004 Senior
Credit Agreement, which constitutes a Replacement Facility for purposes of
Section 11.6 of the Credit Agreement.

         WHEREAS, the Credit Parties are requesting that the Lenders agree to
amend certain terms of the Credit Agreement in order to conform certain of the
covenants to those contained in the 2004 Senior Credit Agreement; and

         WHEREAS, the Lenders have agreed to such amendments, subject to the
conditions set forth below.




<PAGE>



         NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:


                                    AGREEMENT

         1. Amendments to Credit Agreement.

                  (a) Existing Definitions. The following definitions set forth
         in Section 1.1 of the Credit Agreement are amended and restated in
         their entirety to read as follows:

                  "Cash Equivalents" means (a) securities issued or directly and
         fully guaranteed or insured by the United States of America or any
         agency or instrumentality thereof having maturities of not more than
         eighteen months from the date of acquisition, (b) Dollar denominated
         time and demand deposits, certificates of deposit and banker's
         acceptances of (i) any Lender, (ii) any domestic commercial bank having
         capital and surplus in excess of $500,000,000 or (iii) any bank whose
         short-term commercial paper rating from S&P is at least A-1 or the
         equivalent thereof or from Moody's is at least P-1 or the equivalent
         thereof (any such bank being an "Approved Bank"), in each case with
         maturities of not more than 270 days from the date of acquisition, (c)
         commercial paper and variable or fixed rate notes issued by any
         Approved Bank (or by the parent company thereof) or any variable rate
         notes issued by, or guaranteed by, any domestic corporation rated A-1
         (or the equivalent thereof) or better by S&P or P-1 (or the equivalent
         thereof) or better by Moody's and maturing within six months of the
         date of acquisition, (d) repurchase agreements with a bank or trust
         company (including any of the Lenders) or recognized securities dealer
         having capital and surplus in excess of $500,000,000 for direct
         obligations issued by or fully guaranteed by the United States of
         America in which the Borrower shall have a perfected first priority
         security interest (subject to no other Liens) and having, on the date
         of purchase thereof, a fair market value of at least 100% of the amount
         of the repurchase obligations, (e) Investments in tax-exempt municipal
         bonds rated A (or the equivalent thereof) or better by S&P or MIG2 (or
         the equivalent thereof) or better by Moody's, (f) auction rate
         securities rated AA or better by S&P or Moody's, in either case with a
         reset of no longer than 90 days and (g) Investments, classified in
         accordance with GAAP as current assets, in money market investment
         programs registered under the Investment Company Act of 1940, as
         amended, which are administered by reputable financial institutions
         having capital of at least $500,000,000 and the portfolios of which are
         limited to Investments of the character described in the foregoing
         subdivisions (a) through (f).

                  "EBITDA" means, for any period, with respect to the Borrower
         and its Subsidiaries on a consolidated basis, (a) Net Income for such
         period (excluding the effect of any extraordinary or other
         non-recurring gains and losses (including any gain or loss from the
         sale of Property)) plus (b) an amount which, in the determination of
         Net Income for such period, has been deducted for (i) Interest Expense
         for such period, (ii) total Federal, state, foreign or other income or
         franchise taxes for such period, (iii) all depreciation and
         amortization for such period, (iv) other items of expense during such
         period that do not involve a cash payment at any time (other than the
         provision for bad



                                       2


<PAGE>




         debt in connection with uncollectible accounts receivable), (v) cash
         charges during such period for which the Borrower and its Subsidiaries
         are reimbursed by a third party during such period and (vi) special or
         restructuring items during any such period included in Net Income that
         do not involve a cash payment during such period (collectively,
         "Non-Cash Items") minus (c) any actual cash payments during the
         applicable period related to Non-Cash Items expensed or reserved under
         clauses (v) and (vi) above plus (d) Tender Costs during such period.

                  "Eligible Assets" means any assets or any business (or any
         substantial part thereof) used or useful in the same or a similar line
         of business as the Borrower and its Subsidiaries are engaged on the
         Closing Date or other healthcare-related businesses or businesses
         reasonably related thereto.

                  "Eligible Assignee" means (a) a Lender; (b) an Affiliate of a
         Lender; (c) an Approved Fund and (d) any other Person approved by the
         Administrative Agent, the Issuing Lender and the Borrower (such
         approval not to be unreasonably withheld or delayed); provided that (i)
         the Borrower's consent is not required during the existence and
         continuation of a Default or an Event of Default, (ii) approval by the
         Borrower shall be deemed given if no objection is received by the
         assigning Lender and the Administrative Agent from the Borrower within
         five Business Days after notice of such proposed assignment has been
         delivered to the Borrower; (iii) neither the Borrower nor an Affiliate
         of the Borrower shall qualify as an Eligible Assignee; and (iv) no
         competitor of the Borrower shall qualify as an Eligible Assignee.

                  "Guarantor" means each of the Material Domestic Subsidiaries
         of the Borrower, any other Subsidiary of the Borrower that guaranties
         any Pari Passu Debt and each Additional Credit Party, together with
         their successors and assigns.

                  "Leverage Ratio" means, as of the last day of each fiscal
         quarter, the ratio of (a) Funded Debt on such date to (b) EBITDA for
         the twelve month period ending on such date.

                  "Medicaid Regulations" means, collectively, (a) all federal
         statutes (whether set forth in Title XIX of the Social Security Act or
         elsewhere) affecting Medicaid and any statutes succeeding thereto; (b)
         all applicable provisions of all federal rules, regulations, manuals
         and orders and administrative, reimbursement and other guidelines
         having the force of law of all Governmental Authorities promulgated
         pursuant to or in connection with the statutes described in clause (a)
         above; (c) all state statutes and plans for medical assistance enacted
         in connection with the statutes and provisions described in clauses (a)
         and (b) above; and (d) all applicable provisions of all rules,
         regulations, manuals and orders and administrative, reimbursement and
         other guidelines having the force of law of all Governmental
         Authorities promulgated pursuant to or in connection with the statutes
         described in clause (c) above and all state administrative,
         reimbursement and other guidelines of all Governmental Authorities
         having the force of law promulgated pursuant to or in connection with
         the statutes described in clause (b) above, in each case as may be
         amended, supplemented or otherwise modified from time to time.



                                       3


<PAGE>




                  "Medicare Provider Agreement" means an agreement entered into
         between CMS or other such entity administering the Medicare program on
         behalf of CMS, and a health care provider or supplier under which the
         health care provider or supplier agrees to provide services for
         Medicare patients in accordance with the terms of the agreement and
         Medicare Regulations.

                  "Medicare Regulations" shall mean, collectively, all federal
         statutes (whether set forth in Title XVIII of the Social Security Act
         or elsewhere) affecting the health insurance program for the aged and
         disabled established by Title XVIII of the Social Security Act and any
         statutes succeeding thereto; together with all applicable provisions of
         all rules, regulations, manuals and orders and administrative,
         reimbursement and other guidelines having the force of law of all
         Governmental Authorities (including, without limitation, the HHS, CMS,
         the OIG, or any person succeeding to the functions of any of the
         foregoing) promulgated pursuant to or in connection with any of the
         foregoing having the force of law, as each may be amended, supplemented
         or otherwise modified from time to time.

                  "OIG" means the Office of Inspector General of HHS and any
         successor thereof.

                  "Permitted Acquisition" means an Acquisition by the Borrower
         or any of its Subsidiaries; provided that (a) substantially all of the
         Property acquired (or the Property of the Person acquired) in such
         Acquisition constitutes Eligible Assets (or goodwill associated
         therewith), (b) in the case of an Acquisition of the Capital Stock of
         another Person, the board of directors (or other comparable governing
         body) of such other Person or its parent shall have duly approved such
         Acquisition, (c) on the date of such Acquisition no Event of Default
         exists, (d) after giving effect to such Acquisition, no Default or
         Event of Default shall exist, (e) if such Acquisition involves the
         formation of a new Subsidiary of the Borrower, such Subsidiary complies
         with Section 7.12 and (f) such Acquisition is undertaken in accordance
         with all laws, rules, regulations, orders, writs, judgments,
         injunctions, decrees and awards to which any party to such Acquisition
         may be subject.

                  "Permitted Investments" means Investments which constitute the
         following: (a) cash or Cash Equivalents, (b) trade accounts receivable
         created, acquired or made in the ordinary course of business, (c)
         inventory, raw materials, general intangibles and other current assets
         acquired in the ordinary course of business, (d) Investments by the
         Borrower or one of its Subsidiaries in each other, (e) Permitted
         Acquisitions, (f) advances to management personnel and employees in the
         ordinary course of business, (g) Investments existing as of the Closing
         Date; provided that any such Investment in excess of $2,000,000 is set
         forth on Schedule 8.6, (h) Investments consisting of non-cash
         consideration received in the form of securities, notes or similar
         obligations in connection with any conveyance, sale, lease, assignment,
         transfer or other disposition of any Property by the Borrower or one of
         its Subsidiaries to any Person, and which are permitted hereunder, and
         (i) any other Investment as long as (i) on the date of such Investment,
         no Event of Default exists and (ii) after giving effect to such
         Investment no Default or Event of Default shall exist.


                                       4



<PAGE>




                  "Permitted Liens" means (a) Liens securing Credit Party
         Obligations, if any, (b) Liens for taxes not yet due or Liens for taxes
         being contested in good faith by appropriate proceedings for which
         adequate reserves determined in accordance with GAAP have been
         established (and as to which the Property subject to any such Lien is
         not yet subject to foreclosure, sale, collection, levy or loss on
         account thereof), (c) Liens in respect of Property imposed by law
         arising in the ordinary course of business such as materialmen's,
         mechanics', warehousemen's, carrier's, landlords' and other
         nonconsensual statutory Liens which are not yet due and payable or
         which are being contested in good faith by appropriate proceedings for
         which adequate reserves determined in accordance with GAAP have been
         established (and as to which the Property subject to any such Lien is
         not yet subject to foreclosure, sale or loss on account thereof), (d)
         Liens (other than Liens imposed under ERISA) consisting of pledges or
         deposits made in the ordinary course of business to secure payment of
         worker's compensation insurance, unemployment insurance, pensions or
         social security programs, (e) Liens arising from good faith deposits in
         connection with or to secure performance of tenders, bids, leases,
         government contracts, performance and return-of-money bonds and other
         similar obligations incurred in the ordinary course of business (other
         than obligations in respect of the payment of borrowed money), (f)
         Liens arising from good faith deposits in connection with or to secure
         performance of statutory obligations and surety and appeal bonds, (g)
         easements, rights-of-way, restrictions (including zoning restrictions),
         matters of plat, minor defects or irregularities in title and other
         similar charges or encumbrances not, in any material respect, impairing
         the use of the encumbered Property for its intended purposes, (h)
         judgment Liens that would not constitute an Event of Default, (i) Liens
         in connection with Indebtedness permitted by Sections 8.1(d), (j) Liens
         arising by virtue of any statutory or common law provision relating to
         banker's liens, rights of setoff or similar rights as to deposit
         accounts or other funds maintained with a creditor depository
         institution, (k) Liens existing on the date hereof and identified on
         Schedule 8.2, (l) Liens upon Property acquired (or the Property of a
         Subsidiary that is acquired) after the Effective Date by the Borrower
         or its Subsidiaries, which Liens either (i) existed on such Property
         before the time of such acquisition and was not created in anticipation
         thereof or (ii) were created solely for the purpose of securing
         Indebtedness representing, or incurred to finance or refinance, the
         cost of such Property or improvements thereon; provided, however; that
         (A) no such Lien shall extend to or cover any Property of any Credit
         Party other than the Property so acquired and improvements thereon and
         proceeds thereof, (B) the principal amount of Indebtedness secured by
         any such Lien shall at no time exceed 100% of the fair market value of
         such Property at the time it was acquired or constructed and (C) the
         Indebtedness secured by any such Lien is permitted hereunder; provided
         that (x) no such Lien shall extend to any Property other than the
         Property subject thereto on the closing date of such acquisition and
         (y) the principal amount of the Indebtedness secured by such Liens
         shall not be increased, (m) Liens in connection with Permitted
         Receivables Financing, (n) Liens with respect to lease filings for
         notice purposes only, (o) Liens on purchase money Indebtedness incurred
         by the Borrower in an amount not to exceed, in the aggregate,
         $100,000,000 less Indebtedness incurred by Subsidiaries of the Borrower
         pursuant to Section 8.1(d), (p) Liens on Property of non-wholly owned
         Subsidiaries of the Borrowers incurred to finance working capital and
         (q) renewals and extensions of the foregoing so long as such Lien (i)
         does not



                                       5


<PAGE>



         cover any additional Property, (ii) does not secure additional
         Indebtedness and (iii) is not otherwise prohibited by this Credit
         Agreement.

                  "Tender Costs" means the costs incurred by the Borrower in
         connection with any tender for outstanding indebtedness of the
         Borrower, and the termination of the interest rate swap contracts
         related thereto in an aggregate amount not to exceed $35,000,000 during
         the term of this Credit Agreement.

                  (b) New Definitions. The following definitions are added to
         Section 1.1 of the Credit Agreement in the appropriate alphabetical
         order to read as follows:

                  "Approved Fund" means any Fund that is administered or managed
         by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an
         Affiliate of an entity that administers or manages a Lender.

                  "CMS" means the Centers for Medicare and Medicaid Services of
         HHS, any successor thereof and any predecessor thereof, including HCFA.

                  "Effective Date" means the Effective Date as defined in the
         2004 Senior Credit Agreement.

                  "Fund" means any Person (other than a natural person) that is
         (or will be) engaged in making, purchasing, holding or otherwise
         investing in commercial loans and similar extensions of credit in the
         ordinary course of its business.

                  "HIPAA" means the Health Insurance Portability and
         Accountability Act of 1996, Pub. L. 104-191, Aug. 21, 1996, 110
         Stat. 1936.

                  "HHS" means the United States Department of Health and Human
         Services and any successor thereof.

                  "Interest Coverage Ratio" means, as of the last day of each
         fiscal quarter, the ratio of (a) EBITDA for the twelve month period
         ending on such date to (b) Cash Interest Expense for the twelve month
         period ending on such date.

                  "Pari Passu Debt" means all unsecured indebtedness of the
         Borrower.

                  (c) References to the 2001 Senior Credit Agreement. The Credit
         Agreement is amended to change all references in the Credit Agreement
         to the "2001 Senior Credit Agreement" to the "2004 Senior Credit
         Agreement."

                  (d) Information Covenants.

                           (1) Section 7.01(a) of the Credit Agreement is
         amended by adding the clause "the earlier of (i)" after the word
         "within" in the first line thereof and adding the



                                       6


<PAGE>




         clause "or (ii) ten Business Days after the date the Borrower files
         its Form 10-K with the Securities and Exchange Commission" in the
         second line after the word "Borrower".

                           (2) Section 7.01(b) of the Credit Agreement is
         amended by adding the clause "the earlier of (i)" after the word
         "within" in the first line thereof and adding the clause "or (ii) ten
         Business Days after the date the Borrower files its Form 10-Q with the
         Securities and Exchange Commission" in the second line after the word
         "Borrower".

                           (3) Section  7.01(c) of the Credit Agreement is
         amended by deleting the reference to Section 7.13 therein.

                           (4) A new Section 7.01(i) is added to the Credit
         Agreement to read as follows:

                           (c) Public/Private Information. The Borrower hereby
                  acknowledges that (i) the Administrative Agent will make
                  available to the Lenders materials and/or information provided
                  by or on behalf of the Borrower hereunder (collectively,
                  "Borrower Materials") by posting the Borrower Materials on
                  IntraLinks or another similar electronic system (the
                  "Platform") and (ii) certain of the Lenders may be
                  "public-side" Lenders (i.e., Lenders that do not wish to
                  receive material non-public information with respect to the
                  Borrower or its securities) (each, a "Public Lender"). The
                  Borrower hereby agrees that (A) all Borrower Materials that
                  are to be made available to the Public Lenders shall be
                  clearly and conspicuously marked "PUBLIC" which, at a minimum,
                  shall mean that the word "PUBLIC" shall appear prominently on
                  the first page thereof; (B) by marking Borrower Materials
                  "PUBLIC", the Borrower shall be deemed to have authorized the
                  Administrative Agent and the Lenders to treat such Borrower
                  Materials as either publicly available information or not
                  material information (although it may be sensitive and
                  proprietary) with respect to the Borrower or its securities
                  for purposes of United States federal and state securities
                  laws; (C) all Borrower Materials marked "PUBLIC" are permitted
                  to be made available through a portion of the Platform
                  designated as "Public"; and (D) the Administrative Agent shall
                  be entitled to treat any Borrower Materials that are not
                  marked "PUBLIC" as being suitable only for posting on a
                  portion of the Platform not marked "Public".

                           (5) A new Section 7.01(j) is added to the Credit
         Agreement to read as follows:

                           (d) Electronic Delivery. Documents required to be
                  delivered pursuant to Section 7.1(a) or (b) (to the extent any
                  such documents are included in materials otherwise filed with
                  the Securities and Exchange Commission) may be delivered
                  electronically and if so delivered, shall be deemed to have
                  been delivered on the date (i) on which the Borrower posts
                  such documents, or provides a link thereto on the Borrower's
                  website on the Internet at the website address listed on
                  Schedule 11.1 or (ii) on which such documents are posted on
                  the Borrower's behalf on an Internet or intranet website, if
                  any, to which each Lender and the Administrative Agent have



                                       7


<PAGE>




                  access (whether a commercial, third-party website or whether
                  sponsored by the Administrative Agent); provided that: (A) the
                  Borrower shall deliver paper copies of such documents to the
                  Administrative Agent or any Lender that requests the Borrower
                  to deliver such paper copies until a written request to cease
                  delivering paper copies is given by the Administrative Agent
                  or such Lender and (B) the Borrower shall notify (which may be
                  facsimile or electronic mail) the Administrative Agent and
                  each Lender of the posting of any such documents and provide
                  to the Administrative Agent by electronic mail electronic
                  versions (i.e., soft copies) of such documents.
                  Notwithstanding anything contained herein, in every instance
                  the Borrower shall be required to provide paper copies of the
                  compliance certificates required by Section 7.1(c) to the
                  Administrative Agent. Except for such compliance certificates,
                  the Administrative Agent shall have no obligation to request
                  the delivery or to maintain copies of the documents referred
                  to above, and in any event shall have no responsibility to
                  monitor compliance by the Borrower with any such request for
                  delivery, and each Lender shall be solely responsible for
                  requesting delivery to it or maintaining its copies of such
                  documents.

                  (e) Financial Covenants. Section 7.02(b) of the Credit
         Agreement is amended and restated in its entirety to read as follows:

                  (b) Interest Coverage Ratio. The Interest Coverage Ratio, as
         of the last day of each fiscal quarter of the Borrower, shall be
         greater than or equal to 3.5 to 1.0.

                  (f) Compliance with Law. Section 7.05 of the Credit Agreement
         is amended by deleting the words "Titles XVIII and XIX of the Social
         Security Act" and by substituting the word "HIPAA" in replacement
         therefor; by adding the following clause at the end thereof; and making
         the appropriate grammatical and punctuation changes thereto:

                  ;and (iii) no event or related events occur that results in
                  the exclusion of the Borrower or any of its Subsidiaries from
                  participation in any Medical Reimbursement Program and (e)
                  make commercially reasonable efforts to implement policies
                  that are consistent with HIPAA on or before the date that any
                  Credit Party is required to comply therewith.

                  (g) Additional Credit Parties. Section 7.12 of the Credit
         Agreement is amended by changing the reference to "2001 Senior Credit
         Agreement or the Senior Unsecured Notes" to "any Pari Passu Debt".

                  (h) Credit Party Revenues. Section 7.13 of the Credit
         Agreement is deleted in its entirety and Section 7.14 of the Credit
         Agreement is renumbered as Section 7.13.

                  (i) Indebtedness.

                           (1) Section 8.1(d) of the Credit Agreement is amended
         by deleting the number "$50,000,000" and by substituting the number
         "$100,000,000" in replacement therefor.



                                       8


<PAGE>



                           (2) Section 8.1(e) of the Credit Agreement is amended
         by deleting the number "$450,000,000" and by substituting the number
         "$600,000,000" in replacement therefor.

                           (3) Section 8.11(h) of the Credit Agreement is
         amended by deleting the term "Closing Date" and substituting the term
         "Effective Date".

                           (4) Schedule 8.1 of the Credit Agreement is amended
         and replaced by the Schedule 8.1 attached hereto.

                  (j) Nature of Business. Section 8.3 of the Credit Agreement
         is amended and restated in its entirety to read as follows:

                  The Borrower will not, nor will it permit its Subsidiaries to,
                  alter the character of its business from that conducted as of
                  the Effective Date or engage in any substantial manner in any
                  business other than (a) the business conducted by the Borrower
                  and its Subsidiaries as of the Effective Date and (b) other
                  healthcare-related businesses and businesses reasonably
                  related thereto.

                  (k) Consolidation and Merger. Section 8.4 of the Credit
         Agreement is amended by deleting the number "$100,000,000" and by
         substituting the number "$750,000,000" in replacement therefor.

                   (l) Transactions with Affiliates. Section 8.7 of the Credit
         Agreement is amended by deleting clause (i) in its entirety; by
         amending and replacing Schedule 8.7 with the Schedule 8.7 attached
         hereto; and by making the appropriate grammatical and punctuation
         changes thereto.

                   (m) Stock Repurchases. Section 8.9 of the Credit Agreement
         is amended and restated in its entirety to read as follows:

                  The Borrower will not, nor will it permit its Subsidiaries to,
                  directly or indirectly, purchase, redeem or otherwise acquire
                  or retire or make any provisions for redemption, acquisition
                  or retirement of any shares of the Capital Stock of the
                  Borrower of any class or any warrants or options to purchase
                  any such shares (collectively, a "Stock Repurchase"); provided
                  that the Borrower or its Subsidiaries may consummate Stock
                  Repurchases as long as on the date of such Stock Repurchase
                  and after giving effect to such Stock Repurchase no Default or
                  Event of Default exists and is continuing.

                  (n) Events of Default.

                           (1) Section 9.1(c)(i) of the Credit Agreement is
         amended by deleting in their entirety the references to Section 7.13
         and Section 7.15 therein.



                                       9


<PAGE>


                           (2) Section 9.1(g) of the Credit Agreement is amended
         by deleting the number "$50,000,000" and by substituting the number
         "$100,000,000" in replacement therefor.

                           (3) Section 9.1(h) of the Credit Agreement is amended
         by deleting the number "$50,000,000" and by substituting the number
         "$100,000,000" in replacement therefor.

                           (4) Section 9.1(i) of the Credit Agreement is amended
         by deleting the number "$50,000,000" and by substituting the number
         "$100,000,000" in replacement therefor.

                           (5) Section 9.1(k) of the Credit Agreement is deleted
         in its entirety.

                           (6) Section 9.3 of the Credit Agreement is amended by
         deleting the clause "occurrence and during the continuation of an Event
         of Default" in the first line therof and by substituting the clause
         "the exercise of any remedies by the Administrative Agent or the
         Lenders pursuant to Section 9.2 (or after any Event of Default that
         causes the Commitments to terminate and/or all of the Credit Party
         Obligations to be due hereunder)," in replacement therefor.

                  (o) A new Section 1.5 is added to the Credit Agreement to read
         as follows:

                  0.1 Rounding.

                           Any financial ratios required to be maintained by the
                  Borrower pursuant to this Credit Agreement shall be calculated
                  by dividing the appropriate component by the other component,
                  carrying the result to one place more than the number of
                  places by which such ratio is expressed herein and rounding
                  the result up or down to the nearest number (with a
                  rounding-up if there is no nearest number).

                  (p) A new Section 1.6 is added to the Credit Agreement to read
         as follows:

                  0.2  References to Agreements and Laws.

                           Unless otherwise expressly provided herein, (a)
                  references to organization documents, agreements (including
                  the Credit Documents) and other contractual instruments shall
                  be deemed to include all subsequent amendments, restatements,
                  extensions, supplements and other modifications thereto, but
                  only to the extent that such amendments, restatements,
                  extensions, supplements and other modifications are not
                  prohibited by any Credit Document and (b) references to any
                  law shall include all statutory and regulatory provisions
                  (having the force of law) consolidating, amending, replacing,
                  supplementing or interpreting such law.

                  (q) Section 1.2 of the Credit Agreement is amended and
         restated in its entirety to read as follows:


                                       10


<PAGE>



         0.3 Other Interpretive Provisions.

                  With reference to this Credit Agreement and each other Credit
                  Document, unless otherwise specified herein or in such other
                  Credit Document:

                  (a) The meanings of defined terms are equally applicable to
                  the singular and plural forms of the defined terms.

                  (b) (i) The words "herein", "hereto", "hereof" and "hereunder"
                  and words of similar import when used in any Credit Document
                  shall refer to such Credit Document as a whole and not to any
                  particular provisions thereof.

                  (ii) Article, Section, Exhibit and Schedule references are to
                  the Credit Document in which such reference appears.

                  (iii) The term "including" is by way of example and not
                  limitation.

                  (iv) the term "documents" includes any and all instruments,
                  documents, agreements, certificates, notices, reports,
                  financial statements and other writings, however evidenced,
                  whether in physical or electronic form.

                  (c) In the computation of periods of time from a specified
                  date to a later specified date, the word "from" means "from
                  and including"; the words "to" and "until" each mean "to but
                  excluding"; and the word "through" means "to and including".

                  (d) Section headings herein and in the other Credit Documents
                  are included for convenience of reference only and shall not
                  affect the interpretation of this Credit Agreement or any
                  other Credit Document.

         2. Effectiveness; Conditions Precedent. This Amendment shall be deemed
to have become effective as of the date above written upon receipt by the
Administrative Agent of copies of this Amendment duly executed by the Credit
Parties and the Lenders.

         3. Ratification of Credit Agreement. The term "Credit Agreement" as
used in each of the Credit Documents shall hereafter mean the Credit Agreement
as amended and modified by this Amendment. Except as herein specifically agreed,
the Credit Agreement, as amended by this Amendment, is hereby ratified and
confirmed and shall remain in full force and effect according to its terms. The
Credit Parties acknowledge and consent to the modifications set forth herein and
agree that this Amendment does not impair, reduce or limit any of their
obligations under the Credit Documents (including, without limitation, the
indemnity obligations set forth therein) and that this Amendment shall
constitute a Credit Document. Notwithstanding anything herein to the contrary
and without limiting the foregoing, each of the Guarantors reaffirms its
guaranty obligations set forth in the Credit Agreement.



                                       11


<PAGE>




         4. Authority/Enforceability. Each of the Credit Parties represents and
warrants as follows:

                  (a) It has taken all necessary action to authorize the
         execution, delivery and performance of this Amendment.

                  (b) This Amendment has been duly executed and delivered by
         such Person and constitutes such Person's legal, valid and binding
         obligations, enforceable in accordance with its terms, except as such
         enforceability may be subject to (i) bankruptcy, insolvency,
         reorganization, fraudulent conveyance or transfer, moratorium or
         similar laws affecting creditors' rights generally and (ii) general
         principles of equity (regardless of whether such enforceability is
         considered in a proceeding at law or in equity).

                  (c) No consent, approval, authorization or order of, or
         filing, registration or qualification with, any court or governmental
         authority or third party is required in connection with the execution,
         delivery or performance by such Person of this Amendment.

                  (d) The execution and delivery of this Amendment does not
         violate, contravene or conflict with any Requirement of Law applicable
         to it or any of its Subsidiaries.

         5. No Default. The Credit Parties represent and warrant to the Lenders
that after giving effect to this Amendment (a) the representations and
warranties of the Credit Parties set forth in Section 6 of the Credit Agreement
are true and correct as of the date hereof and (b) no event has occurred and is
continuing which constitutes a Default or an Event of Default.

         6. Release. In consideration of entering into this Amendment, each of
the Credit Parties releases the Agents, the Lenders, and each Agent's and each
Lender's respective Affiliates, Subsidiaries, officers, employees,
representatives, agents, counsel and directors from any and all actions, causes
of action, claims, demands, damages and liabilities of whatever kind or nature,
in law or in equity, now known or unknown, suspected or unsuspected to the
extent that any of the foregoing arises from any action or failure to act with
respect to the Credit Agreement or the other Credit Documents on or prior to the
date hereof.

         7. Counterparts/Telecopy. This Amendment may be executed in any number
of counterparts, each of which when so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument.
Delivery of executed counterparts of this Amendment by telecopy shall be
effective as an original and shall constitute a representation that an original
shall be delivered promptly upon request.

         8. Entirety. This Amendment and the other Credit Documents embody the
entire agreement between the parties hereto and supersede all prior agreements
and understandings, oral or written, if any, relating to the subject matter
hereof.



                                       12


<PAGE>


         9. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         10. Venue; Jurisdiction; Waivers. The venue, jurisdiction, waiver of
jury trial and waiver of consequential damages provisions set forth in Sections
11.11 and 11.12 of the Credit Agreement are hereby incorporated by reference,
mutatis mutandis.



                  [remainder of page intentionally left blank]




                                       13


<PAGE>







         IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered and this Amendment shall be
effective as of the date first above written.


BORROWER:
                                    QUEST DIAGNOSTICS INCORPORATED,
                                    A Delaware corporation

                                    By: /s/ Joseph P. Manory
                                       ---------------------------------
                                    Name:  Joseph P. Manory
                                    Title: Vice President and Treasurer


GUARANTORS:
                                    QUEST DIAGNOSTICS HOLDINGS
                                    INCORPORATED,
                                    a Delaware corporation

                                    QUEST DIAGNOSTICS CLINICAL
                                    LABORATORIES, INC.,
                                    a Delaware corporation

                                    QUEST DIAGNOSTICS INCORPORATED,
                                    a California corporation

                                    QUEST DIAGNOSTICS INCORPORATED,
                                    a Maryland corporation

                                    QUEST DIAGNOSTICS INCORPORATED,
                                    a Michigan corporation

                                    QUEST DIAGNOSTICS OF PENNSYLVANIA, INC.,
                                    a Delaware corporation

                                    METWEST INC.,
                                    a Delaware corporation

                                    NICHOLS INSTITUTE DIAGNOSTICS,
                                    a California corporation

                                    DPD HOLDINGS, INC.,
                                    a Delaware corporation

                                    DIAGNOSTIC REFERENCE SERVICES INC.,
                                    a Maryland corporation



                                       14


<PAGE>



                                    AMERICAN MEDICAL LABORATORIES,
                                    INCORPORATED,
                                    a Delaware corporation

                                    AML INC.,
                                    a Delaware corporation

                                    QUEST DIAGNOSTICS INCORPORATED (NV),
                                    a Nevada corporation

                                    QUEST DIAGNOSTICS NICHOLS INSTITUTE, INC.
                                    f/k/a MEDICAL LABORATORIES CORPORATION,
                                    a Virginia corporation

                                    QUEST DIAGNOSTICS LLC,
                                    an Illinois limited liability company

                                    QUEST DIAGNOSTICS LLC,
                                    a Connecticut limited liability company

                                    QUEST DIAGNOSTICS LLC,
                                    a Massachusetts limited liability company

                                    APL PROPERTIES LIMITED LIABILITY COMPANY,
                                    a Nevada limited liability company

                                    UNILAB ACQUISITION CORPORATION,
                                    A Delaware corporation

                                    UNILAB CORPORATION,
                                    A Delaware corporation


                                    By: /s/ Joseph P. Manory
                                       ---------------------------------------
                                    Name:  Joseph P. Manory
                                    Title: Vice President and Treasurer

                                    Of each of the Above Guarantors




                                       15


<PAGE>






                                    QUEST DIAGNOSTICS INVESTMENTS
                                    INCORPORATED,
                                    a Delaware corporation

                                    By: /s/ Stephen A. Calamari
                                       ---------------------------------------
                                    Name:  Stephen A. Calamari
                                    Title: Treasurer

                                    QUEST DIAGNOSTICS FINANCE INCORPORATED,
                                    a Delaware corporation

                                    By: /s/ Stephen A. Calamari
                                       ---------------------------------------
                                    Name:  Stephen A. Calamari
                                    Title: Treasurer



                                       16


<PAGE>






                                    PATHOLOGY BUILDING PARTNERSHIP,
                                    a Delaware general partnership

                                    By: Quest Diagnostics Incorporated,
                                    a Maryland corporation, its general partner

                                           By: /s/ Joseph P. Manory
                                              ---------------------------------
                                           Name:  Joseph P. Manory
                                           Title: Vice President and Treasurer

                                    By: Diagnostic Reference Services, Inc.,
                                    a Maryland corporation, its general partner

                                           By: /s/ Joseph P. Manory
                                              ---------------------------------
                                           Name:  Joseph P. Manory
                                           Title: Vice President and Treasurer





                                       17


<PAGE>



LENDERS:

ADMINISTRATIVE
AGENT AND
INITIAL LENDER:                     SUMITOMO MITSUI BANKING CORPORATION


                                         By: /s/ Robert Riley
                                             ---------------------------------
                                             Name:  Robert Riley
                                             Title: Senior Vice President







                                       18





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>3
<FILENAME>ex31-1.txt
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<PAGE>

                                                                    Exhibit 31.1

              CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Surya N. Mohapatra certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics
     Incorporated;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this quarterly report is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this quarterly report our conclusions
          about the effectiveness of the disclosure controls and procedures, as
          of the end of the period covered by this report based on such
          evaluation; and

     c)   disclosed in this quarterly report any change in the registrant's
          internal control over financial reporting that occurred during the
          registrant's most recent fiscal quarter (the registrant's fourth
          fiscal quarter in the case of an annual report) that has materially
          affected, or is reasonably likely to materially affect, the
          registrant's internal control over financial reporting; and

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent functions):

     a)   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

July 30, 2004


By /s/ Surya N. Mohapatra
   -----------------------------------------
       Surya N. Mohapatra, Ph.D.
       President and Chief Executive Officer





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>4
<FILENAME>ex31-2.txt
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<PAGE>

                                                                    Exhibit 31.2

              CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Robert A. Hagemann, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics
     Incorporated;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)   designed such disclosure controls and procedures, or caused such
          disclosure controls and procedures to be designed under our
          supervision, to ensure that material information relating to the
          registrant, including its consolidated subsidiaries, is made known to
          us by others within those entities, particularly during the period in
          which this quarterly report is being prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
          and procedures and presented in this quarterly report our conclusions
          about the effectiveness of the disclosure controls and procedures, as
          of the end of the period covered by this report based on such
          evaluation; and

     c)   disclosed in this quarterly report any change in the registrant's
          internal control over financial reporting that occurred during the
          registrant's most recent fiscal quarter (the registrant's fourth
          fiscal quarter in the case of an annual report) that has materially
          affected, or is reasonably likely to materially affect, the
          registrant's internal control over financial reporting; and

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation of internal control over financial reporting, to
     the registrant's auditors and the audit committee of registrant's board of
     directors (or persons performing the equivalent functions):

     a)   all significant deficiencies and material weaknesses in the design or
          operation of internal control over financial reporting which are
          reasonably likely to adversely affect the registrant's ability to
          record, process, summarize and report financial information; and

     b)   any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          control over financial reporting.

July 30, 2004


By /s/ Robert A. Hagemann
   -----------------------------------------
       Robert A. Hagemann
       Senior Vice President and
       Chief Financial Officer





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>5
<FILENAME>ex32-1.txt
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<PAGE>

                                                                    Exhibit 32.1

  CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. 'SS' 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     Pursuant to 18 U.S.C. 'SS' 1350, the undersigned certifies that, to the
best of my knowledge, the Quarterly Report on Form 10-Q for the period ended
June 30, 2004 of Quest Diagnostics Incorporated, as being filed with the
Securities and Exchange Commission concurrently herewith, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 'SS' 78m or 78o(d)) and that the information contained in the
Quarterly Report fairly presents, in all material respects, the financial
condition and results of operations of Quest Diagnostics Incorporated.


Dated: July 30, 2004                        /s/ Surya N. Mohapatra
                                            ------------------------------------
                                                Surya N. Mohapatra, Ph.D.
                                                President and
                                                Chief Executive Officer





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>6
<FILENAME>ex32-2.txt
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<PAGE>

                                                                    Exhibit 32.2

  CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. 'SS' 1350,
      AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     Pursuant to 18 U.S.C. 'SS' 1350, the undersigned certifies that, to the
best of my knowledge, the Quarterly Report on Form 10-Q for the period ended
June 30, 2004 of Quest Diagnostics Incorporated, as being filed with the
Securities and Exchange Commission concurrently herewith, fully complies with
the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (15 U.S.C. 'SS' 78m or 78o(d)) and that the information contained in the
Quarterly Report fairly presents, in all material respects, the financial
condition and results of operations of Quest Diagnostics Incorporated.


Dated: July 30, 2004                        /s/ Robert A. Hagemann
                                            ------------------------------------
                                                Robert A. Hagemann
                                                Senior Vice President and
                                                Chief Financial Officer





</TEXT>
</DOCUMENT>
</SUBMISSION>
