For the first quarter of 2011, income from continuing operations was reduced by $0.07 per share associated with the estimated impact of severe weather, $0.05 per share associated with workforce reductions, and $0.02 per share in costs associated with the Athena Diagnostics and Celera transactions. Including these items, reported income from continuing operations was $141 million, or $0.86 per diluted share.
For the first quarter of 2010, income from continuing operations was reduced by $0.06 per share associated with restructuring charges and $0.05 per share associated with the estimated impact of severe weather. Including these items, reported income from continuing operations was $163 million or $0.89 per diluted share.
First quarter 2011 revenues grew approximately 1% to $1.8 billion. Clinical testing revenues increased 0.3% from the prior year. Clinical testing volume, measured by the number of requisitions, increased 2% above the prior year level. Revenue per requisition was 1.7% below the prior year. The impact of severe weather in the quarter is estimated to have reduced revenues and volume by 1.4%.
Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer, said: "This was an important quarter for Quest Diagnostics. We completed our acquisition of Athena Diagnostics, and established the leading position in the neurology diagnostics market. We also announced our proposed acquisition of Celera to further strengthen our leadership position in cardiovascular testing as well as molecular diagnostics products and discovery. These transactions position us well for the future.
"During the first quarter, we repurchased $835 million of our shares to immediately enhance shareholder value. Testing volume continued to improve, and we increased revenues. Our earnings were down, and we took actions to reduce our cost structure accordingly."
For the first quarter of 2011, adjusted operating income was $301 million, or 16.3% of revenues, compared to $330 million, or 18.1% of revenues in 2010. Including the impact of severe weather, costs for workforce reductions and transaction costs, reported operating income was $267 million, or 14.7% of revenues, for the first quarter of 2011. Including the impact of severe weather and costs for workforce reductions, reported operating income was $299 million, or 16.5% of revenues, for the first quarter of 2010.
Cash flow from operations was $161 million for the first quarter of 2011, compared to $239 million for the first quarter of 2010. During the quarter, the company made capital expenditures of $39 million.
Outlook for 2011
For the full-year 2011, the company now expects results from continuing operations, before future special items, as follows:
* Revenue to grow approximately 2%, reflecting a 1% increase from the impact of the Athena acquisition; * Earnings per diluted share to remain between $4.25 and $4.45 on an adjusted basis and be between $4.11 and $4.31 on a reported basis; * Operating income as a percentage of revenues between 17.5% and 18.0% on an adjusted basis and between 17.0% and 17.5% on a reported basis; * Cash from operations of approximately $1.1 billion; and * Capital expenditures to approximate $220 million.
The outlook on an adjusted basis excludes the first quarter impact of severe weather, workforce reductions and costs associated with the Athena Diagnostics and Celera transactions.
Quest Diagnostics will hold its first quarter conference call on April 20, 2011 at 8:30 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 in the U.S. at 866-350-3614 for domestic callers, or 203-369-0039 for international callers. No access code will be required. Telephone replays will be available until midnight Eastern Time on May 20, 2011.
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 diagnostic tests and advanced healthcare information technology solutions that help improve patient care. Additional company information is available at www.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 2010 Annual Report on Form 10-K and other items throughout the Form 10-K and the company's 2010 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.
Note on Non-GAAP Financial Measures
As used in this press release, the term adjusted refers to the operating performance measures that exclude the estimated impact of severe weather, charges associated with workforce reductions, and costs associated with the Athena Diagnostics and Celera transactions. 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.
Contacts: For Quest Diagnostics: Kathleen Valentine (Investors), +1-973-520-2900, or Gary Samuels (Media), +1-973-520-2800
