- Diluted earnings per share of $0.87, up 10%
- Total revenues of $1.8 billion, up 1.7%
- Cash flow from operations improved to $363 million
- 2009 EPS expected to be between $3.50 to $3.70 per diluted share
MADISON, N.J., Jan. 26 /PRNewswire-FirstCall/ -- Quest Diagnostics Incorporated , the world's leading provider of diagnostic testing, information and services, announced that for the fourth quarter ended December 31, 2008, income from continuing operations increased to $170 million, or $0.87 per diluted share, compared to $154 million, or $0.79 per diluted share in 2007. The 2008 results included a pre-tax charge of $16 million, or $0.05 per share, principally associated with workforce reductions, and a benefit of $0.05 per share, primarily associated with the favorable resolution of various tax contingencies.
Fourth quarter revenues increased 1.7% to $1.8 billion. Clinical testing revenues increased by 2.3% compared to the prior year. Revenue per requisition increased 2.8% and clinical testing volume, measured by the number of requisitions, decreased 0.4%. Excluding the impact of drugs-of-abuse testing, which is sensitive to hiring trends, testing volume increased by approximately 1%.
"We delivered another quarter of solid earnings growth, completing a year of strong performance. For the full year, earnings per share increased 14%, revenues grew 8% and cash flow exceeded $1 billion. I am very pleased with our achievements," said Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer. "Our business is strong, and we expect continued growth in 2009. We will grow revenues largely by driving increased sales of esoteric tests, particularly cancer diagnostics, to physicians and hospitals. We will grow earnings through top-line growth combined with further improvements in operating efficiencies."
For the fourth quarter, operating income increased to $317 million, or 17.6% of revenues, from $312 million, or 17.6% of revenues in 2007. The $16 million charge reduced fourth quarter operating income as a percentage of revenues by approximately 1%. Bad debt expense, as a percentage of revenues, improved to 4.3%, compared to 4.4% in 2007. Days sales outstanding improved to 44 days, compared to 45 days at the end of the third quarter of 2008 and 48 days a year ago. Cash from operations increased to $363 million from $355 million in the fourth quarter of 2007. During the quarter, the company repurchased $254 million of its common shares; reduced debt by $45 million; and made capital expenditures of $73 million. Cash and cash equivalents was $254 million at the end of the fourth quarter.
Full Year Performance
Diluted earnings per share increased 14% to $3.23 from $2.84 in 2007. Income from continuing operations increased to $632 million, from $554 million in 2007. Revenues increased 8.1% to $7.2 billion. For the full year, the May 31, 2007 acquisition of AmeriPath increased consolidated revenues by 5.0%.
Operating income for 2008 increased to $1.2 billion, or 16.9% of revenues, compared to $1.1 billion, or 16.3% of revenues in 2007. Cash from operations for 2008 increased to $1.1 billion from $927 million in 2007. During 2008, the company repurchased $254 million of its common shares; reduced debt by $458 million, and made capital expenditures of $213 million.
Outlook for 2009
For 2009, the company expects results from continuing operations as follows: earnings per diluted share of between $3.50 and $3.70, excluding special charges; revenue growth of approximately 3%, and operating income approaching 18% of revenues. Cash from operations is expected to approximate $1 billion, before the expected payment of the $316 million reserve established for the previously disclosed NID matter, or approximately $700 million after such payment. Capital expenditures are expected to approximate $200 million.
Quest Diagnostics will hold its fourth quarter conference call on January 26, 2009 at 8:30 A.M. Eastern Time. A simulcast of the call is available by dialing 415-228-4961, passcode 3214469 and via the Internet at: www.questdiagnostics.com. Registered analysts may access the call at: www.streetevents.com. In addition, a replay of the call will be available from 10:30 A.M. on January 26 through midnight on February 23, 2009 to investors in the U.S. by dialing 866-431-7950. Investors outside the U.S. may dial 203-369-0981. No password is required for either number.
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.
Quest Diagnostics maintains one of the largest private clinical laboratory databases in the United States. The data is used to generate Quest Diagnostics Health Trends(TM), which identifies and tracks disease and wellness benchmarks, and the Drug Testing Index(R), which is published as a public service for government, media and industry and has been considered a benchmark for national drugs-of-abuse trends since its inception in 1988. 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" in Part I, Item 1, "Risk Factors" and "Cautionary Factors that May Affect Future Results" in Part I, Item 1A, "Legal Proceedings" in Part I, Item 3, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 and "Quantitative and Qualitative Disclosures About Market Risk" in Part II, Item 7A in the company's 2007 Annual Report on Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures about Market Risk" in the company's 2008 Quarterly Reports on Form 10-Q and other items throughout the Form 10-K and the company's 2008 Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Estimated cash from operations before the expected payment for the NID matter is presented because management believes that it is a useful adjunct to estimated cash from operations under accounting principles generally accepted in the United States since it is a meaningful measure of the company's ongoing operating performance. Estimated cash from operations before the expected payment for the NID matter is not a measure of financial performance under accounting principles generally accepted in the United States and should not be considered as an alternative to estimated cash from operations. See footnote 7 to the attached tables.
This earnings release, including the attached financial tables, is available online in the Press Room section at www.questdiagnostics.com.
CONTACT: Laure Park (Investors): +1-973-520-2900, or Nancy Fitzsimmons
(Media): +1-973-520-2800
Web site: http://www.questdiagnostics.com/
