MADISON, N.J., July 23, 2015 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world’s leading provider of diagnostic information services, announced today that for the second quarter ended June 30, 2015, adjusted net income was $170 million compared to $157 million for 2014. Adjusted diluted EPS excluding amortization was $1.25 in the second quarter of 2015, compared to $1.19 in 2014. Amortization expense per diluted share was $0.08 in the second quarter of 2015 and $0.11 in 2014.
For the second quarter of 2015, reported net income was $118 million, or $0.81 per diluted share, compared to $133 million, or $0.92 per diluted share, in 2014. Reported net income in the second quarter of 2015 was negatively impacted by charges of $52 million after tax, or $0.36 per diluted share, of which $41 million is associated with the company’s recent debt refinancing. The remainder of the charges were related to restructuring and integration costs and ongoing efforts to drive operational excellence. In the second quarter of 2014, reported net income was reduced by charges of $24 million after tax, or $0.16 per diluted share, primarily related to restructuring and integration costs associated with acquisitions and ongoing efforts to drive operational excellence.
Second quarter 2015 revenue of $1.93 billion grew by 1.2% versus the prior year and grew 0.8% on an organic basis. Diagnostic information services revenue grew by 0.4%. Volume, measured by the number of requisitions, decreased by approximately 0.4%. Revenue per requisition grew by approximately 0.9%.
For the second quarter of 2015, adjusted operating income was $321 million, or 16.7% of revenues, compared to $296 million, or 15.5% of revenues, for 2014. Reported operating income was $301 million, or 15.6% of revenues, compared to $262 million, or 13.8% of revenues, in 2014. Adjusted cash provided by operations, reflecting cash charges for debt refinancing, was $324 million in the second quarter of 2015. Reported cash provided by operations in the second quarter of 2015 was $275 million and was negatively impacted by after tax cash charges of $49 million associated with the early retirement of debt in connection with the company’s debt refinancing. In the second quarter of 2014, reported cash provided by operations was $280 million.
“In the second quarter we once again grew operating income faster than revenues, demonstrating results from our five-point strategy. We are not just driving growth, we are driving profitable growth,” said Steve Rusckowski, President and Chief Executive Officer. “Our strategies to restore growth and drive operational excellence are delivering both a better customer experience and earnings growth. An important element of restoring growth is to engage with healthcare systems around their lab strategy. Our recently announced acquisition of MemorialCare Health System’s outreach business is another great example of this effort. Also, we have updated our outlook to reflect the clinical trials joint venture, and have maintained our full year EPS guidance.”
First Half Performance
Revenues were $3.76 billion for the first six months of 2015, 3.2% better than the prior year. Adjusted net income was $311 million for the first six months of 2015 compared to $279 million in 2014. Adjusted diluted EPS excluding amortization was $2.30 for the first six months of 2015, compared to $2.12 in 2014. Reported net income for the first six months of 2015 was $179 million, or $1.23 per diluted share, compared to $237 million, or $1.63 per diluted share, in 2014. Reported net income in 2015 was negatively impacted by charges of $132 million after tax, or $0.90 per diluted share, principally associated with the debt refinancing.
Adjusted operating income for the first six months of 2015 was $590 million, or 15.7% of revenues, compared to $532 million, or 14.6% of revenues, for 2014. On a reported basis, operating income was $529 million, or 14.1% of revenues, compared to $470 million, or 12.9% of revenues, in 2014. Adjusted cash provided by operations for the first six months of 2015 was $454 million. Reported cash provided by operations for the six months of 2015 was $327 million and was negatively impacted by after tax cash charges of $127 million associated with the company’s debt refinancing. In the first six months of 2014, reported cash provided by operations was $364 million.
Outlook for 2015
For 2015, the company estimates results, before special items, as follows:
- Full year 2015 revenue now expected to be between $7.49 billion and $7.57 billion.
- Revenue for 2014 on an equivalent basis excludes clinical trials revenue reported in the third and fourth quarter of 2014 of $41 million and $46 million, respectively.
- Updated 2015 revenue guidance is an increase of 2% to 3% versus 2014 on an equivalent revenue basis.
- Previous 2015 revenue guidance was an increase of 2% to 3% versus 2014 reported revenue.
- Adjusted diluted EPS excluding amortization to be between $4.70 and $4.85, unchanged.
- Adjusted cash provided by operations to exceed $850 million, versus previous guidance that adjusted cash would approximate $850 million.
- Capital expenditures to approximate $300 million, unchanged.
Note on Non-GAAP Financial Measures
As used in this press release: (i) for the purpose of income measures the term “adjusted” refers to operating performance measures that exclude special items such as charges on retirement of debt and related refinancing charges, restructuring and integration charges, and other items; (ii) the term “adjusted diluted EPS excluding amortization expense” represents the company’s results before the impact of special items and amortization expense; (iii) the term “adjusted cash provided by operations” represents cash provided by operations before the cash impact of charges on retirement of debt; and (iv) the term “equivalent revenue” represents 2014 reported revenues excluding clinical trials revenues reported in the third and fourth quarters of 2014. 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. The attached tables include reconciliations of adjusted measures to measures reported under accounting principles generally accepted in the United States.
Conference Call Information
Quest Diagnostics will hold its quarterly conference call to discuss financial results beginning at 8:30 a.m. Eastern Time today. 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. A replay of the call may be accessed online at www.QuestDiagnostics.com/investor or by phone at 800-677-4302 for domestic callers or 402-998-0977 for international callers. Telephone replays will be available from approximately 10:30 a.m. Eastern Time today until midnight Eastern Time on August 21, 2015.
Anyone listening to the call is encouraged to read the company’s periodic reports, on file with the Securities and Exchange Commission, including the discussion of risk factors and historical results of operations and financial condition in those reports.
About Quest Diagnostics
Quest Diagnostics empowers people to take action to improve health outcomes. Derived from the world’s largest database of clinical lab results, our diagnostic insights reveal new avenues to identify and treat disease, inspire healthy behaviors and improve health care management. Quest annually serves one in three adult Americans and half the physicians and hospitals in the United States, and our 45,000 employees understand that, in the right hands and with the right context, our diagnostic insights can inspire actions that transform lives. www.QuestDiagnostics.com.
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