MADISON, N.J., Oct. 25, 2011 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world’s leading provider of diagnostic testing, information and services, announced today that for the third quarter ended September 30, 2011, adjusted income from continuing operations was $189 million, or $1.18 per diluted share. For the third quarter of 2010, reported income from continuing operations was $198 million, or $1.13 per diluted share. Income from continuing operations in the third quarter of 2011 was reduced by $0.10 per share in charges, principally related to restructuring and integration activities. Including these items, reported income from continuing operations was $172 million, or $1.08 per diluted share. Third quarter results include a benefit of $0.05 per share in 2011 and $0.08 per share in 2010, primarily associated with the favorable resolution of tax contingencies.
Revenues increased 2.2% to $1.9 billion for the third quarter. The acquisitions of Athena and Celera contributed 3.0% to revenue growth. Clinical testing revenues increased approximately 1%, with revenue per requisition up 2.1% and volume, measured by the number of requisitions, down 1.2%.
For the third quarter of 2011, adjusted operating income was $349 million or 18.3% of revenues. For the third quarter of 2010, reported operating income was $337 million, or 18.1% of revenues. Including the impact of restructuring and integration costs, reported operating income was $322 million, or 16.9% of revenues, in 2011. Cash flow from operations was $338 million, compared to $330 million in 2010. During the third quarter, the company repurchased $50 million of its common shares.
“During the third quarter, revenues grew 2.2%, adjusted earnings per share increased 4%, and we generated strong cash flow . While there are signs of progress in a number of areas, there is still much work to be done,” said Surya N. Mohapatra, Ph.D., Chairman and CEO. “We remain focused on increasing shareholder value and improving returns on capital. We are taking a series of actions to improve our performance by driving organic growth and significantly reducing our cost structure.”
Dr. Mohapatra continued: “In addition, with key strategic capabilities now in place as a result of recent acquisitions, we plan to return the majority of our future cash flow to shareholders. This morning we announced a 70% increase in our dividend, demonstrating confidence in our continued ability to generate strong cash flow. Together, we believe these actions, over time, will be successful in unlocking significant shareholder value.”
Year-to-Date Performance
Revenues of $5.6 billion increased 1.6% from 2010. For the first nine months of 2011, adjusted income from continuing operations was $532 million, or $3.30 per diluted share, compared to adjusted income from continuing operations of $575 million, or $3.20 per diluted share, in 2010. On a reported basis, income from continuing operations was $282 million, or $1.75 per diluted share in 2011, compared to $556 million, or $3.09 per diluted share, in 2010.
Adjusted operating income for the first nine months of 2011 was $988 million, or 17.5% of revenues, compared to adjusted operating income of $1.0 billion, or 18.6% of revenues, for 2010. On a reported basis, operating income was $670 million, or 11.9% of revenues, in 2011, compared to $1.0 billion, or 18.1% in 2010. Cash provided by operations was $558 million and was reduced by the Medi-Cal settlement payment, restructuring, transaction and integration costs, totaling $244 million. Before these items, cash flow was $802 million, compared to $778 million in 2010. During the first nine months of 2011, the company repurchased $885 million of its common shares.
Outlook for 2011
For the full-year 2011, the company estimates results from continuing operations, before future special items, as follows:
- Revenues to grow 1.5%, unchanged from previous guidance;
- Earnings per share to be between $4.30 and $4.35 on an adjusted basis and between $2.74 and $2.79 on a reported basis, compared to previous guidance of between $4.25 to $4.35 on an adjusted basis and between $2.81 and $2.91 on a reported basis.
- Operating income as a percentage of revenues to be 17.5% on an adjusted basis, unchanged from previous guidance, and 13.3% on a reported basis;
- Cash from operations to approximate $1.1 billion before the effect of the Medi-Cal settlement payment, restructuring, transaction and integration costs, and to approximate $900 million after these items, unchanged from previous guidance; and
- Capital expenditures to approximate $190 million, compared to $200 million previously.
Conference Call Information
Quest Diagnostics will hold its third quarter conference call on October 25, 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 888-673-3567 for domestic callers, or 402-220-6430 for international callers. No access code will be required. Telephone replays will be available until midnight Eastern Time on November 22, 2011.
About Quest Diagnostics
Quest Diagnostics Incorporated (NYSE: DGX) 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: 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 “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 2011 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.
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, restructuring charges, the Medi-Cal settlement 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.
