Quest Diagnostics Inc. Reports Second Quarter 2012 Financial Results

MADISON, N.J., July 19, 2012 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic testing, information and services, announced today that for the second quarter ended June 30, 2012, adjusted income from continuing operations was $187 million, or $1.17 per diluted share, compared to $179 million, or $1.12 per diluted share, in 2011.

For the second quarter of 2012, reported income from continuing operations was $178 million, or $1.11 per diluted share, compared to $164 million, or $1.02 per diluted share, in 2011. Income from continuing operations in the second quarter of 2012 was reduced by $0.06 per diluted share related to restructuring, integration, and CEO succession costs. In the second quarter of 2011, income from continuing operations was reduced by $0.10 per diluted share related to transaction and integration costs associated with the Athena Diagnostics and Celera transactions.

Revenues were $1.9 billion for the second quarter, essentially unchanged compared to 2011. Clinical testing revenues increased 0.7%, with volume, measured by the number of requisitions, up 0.7% and revenue per requisition unchanged from a year ago.

For the second quarter of 2012, adjusted operating income was $350 million, or 18.4% of revenues, compared to $337 million, or 17.7% of revenues, for 2011. Reported operating income was $335 million, or 17.6% of revenues, compared to $317 million, or 16.6% of revenues, in 2011. Cash provided by operations was $251 million, compared to $60 million in 2011. In 2011, cash provided by operations was reduced by the Medi-Cal settlement payment. During the second quarter of 2012, the company repurchased $50 million of its common shares.

"Quest Diagnostics delivered earnings growth and margin expansion in the quarter, despite revenues that were essentially unchanged from a year ago," said Steve Rusckowski, President and CEO. "We are accelerating our efforts to drive productivity improvements, reduce costs and restore revenue growth. And we remain focused on increasing shareholder returns through a combination of improved operating performance and disciplined capital deployment."

First Half Performance

Revenues increased 3.2% from 2011, to $3.8 billion. For the first six months of 2012, adjusted income from continuing operations was $359 million, or $2.24 per diluted share, compared to $343 million, or $2.12 per diluted share in 2011. On a reported basis, income from continuing operations was $337 million, or $2.10 per diluted share, compared to $110 million, or $0.68 per diluted share, for the first half of 2011.

Adjusted operating income for the first half of 2012 was $670 million, or 17.4% of revenues, compared to $638 million, or 17.0% of revenues, for 2011. On a reported basis, operating income was $634 million, or 16.5% of revenues, compared to $348 million, or 9.3% of revenues, in 2011. Cash provided by operations was $412 million in the first half of 2012. In 2011, cash provided by operations was $220 million and was reduced by the Medi-Cal settlement payment. During the first half of 2012, the company repurchased $100 million of its common shares.

Outlook for Full-Year 2012 Updated

For 2012, the company estimates results from continuing operations, before special items, as follows:

• Revenues to grow between 1% and 2%, compared to the prior outlook of between 2% and 2.5%;
• Earnings per diluted share to be between $4.45 and $4.60, unchanged from the prior outlook;
• Operating income as a percentage of revenues to approximate 18%, unchanged from the prior outlook;
• Cash provided by operations to approximate $1.2 billion, unchanged from the prior outlook; and
• Capital expenditures to approximate $200 million, compared to the prior outlook of between $200 million and $225 million.

Note on Non-GAAP Financial Measures

As used in this press release, the term adjusted refers to the operating performance measures that exclude the Medi-Cal charge, restructuring and integration charges, transaction costs related to acquisitions, CEO succession costs and the estimated impact of severe weather. Adjusted measures are presented because management believes those measures are useful adjuncts to reported results under accounting principles generally accepted in the United States. Adjusted measures should not be considered as an alternative to the corresponding measures determined under accounting principles generally accepted in the United States.

Conference Call Information

Quest Diagnostics will hold its second quarter conference call on July 19, 2012 at 8:00 a.m. Eastern Time. The public may access the conference call through a live audio webcast available on Quest Diagnostics' Investor Relations internet site at www.QuestDiagnostics.com/investor. The conference call can also be accessed in listen-only mode by dialing 415-228-4961, passcode 3214469. The company suggests participants dial in approximately 10 minutes before the call. Registered analysts may access the call at: www.streetevents.com. In addition, a replay of the call may be accessed online at www.QuestDiagnostics.com/investor or by phone at 888-673-3567 for domestic callers, or 402-220-6430 for international callers. Telephone replays will be available until midnight Eastern Time on August 19, 2012.

About Quest Diagnostics

Quest Diagnostics is the world's leading provider of diagnostic testing, information and services that patients and doctors need to make better healthcare decisions. The company offers the broadest access to diagnostic testing services through its network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. Quest Diagnostics is a pioneer in developing innovative new diagnostic tests and advanced healthcare information technology solutions that help improve patient care. Additional company information is available at QuestDiagnostics.com.

The statements in this press release which are not historical facts may be forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date that they are made and which reflect management's current estimates, projections, expectations or beliefs and which involve risks and uncertainties that could cause actual results and outcomes to be materially different. Risks and uncertainties that may affect the future results of the company include, but are not limited to, adverse results from pending or future government investigations, lawsuits or private actions, the competitive environment, changes in government regulations, changing relationships with customers, payers, suppliers and strategic partners and other factors discussed in "Business," "Risk Factors," "Cautionary Factors that May Affect Future Results," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures About Market Risk" in the company's 2011 Annual Report on Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and "Risk Factors" in the company's Quarterly Reports on Form 10-Q and other items throughout the Form 10-K and the company's 2012 Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

This earnings release, including the attached financial tables, is available online in the Newsroom section at www.QuestDiagnostics.com.