Quest Diagnostics Incorporated, the world’s leading provider of diagnostic information services, announced financial results for the second quarter ended June 30, 2019.
- Second quarter revenues of $1.95 billion, up 1.8% from 2018
- Second quarter reported diluted earnings per share from continuing operations (“EPS”) of $1.51, down 3.9% from 2018; and adjusted diluted EPS of $1.73, down 1.1% from 2018
- Affirms outlook for full-year 2019
SECAUCUS, N.J., July 23, 2019 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world’s leading provider of diagnostic information services, announced today financial results for the second quarter ended June 30, 2019.
“Our volume growth accelerated in the second quarter due to our expanded network access, and we continued to build momentum through the first half of 2019,” said Steve Rusckowski, Chairman, CEO and President. “This strong volume growth combined with our strategy to drive operational excellence helped offset the significant reimbursement pressures we are experiencing this year. We are excited by our new Preferred Lab Network status within UnitedHealthcare, which represents a multi-year opportunity that will build over time.”
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
| 2019 | 2018 | Change | 2019 | 2018 | Change | ||||||||||||||||
| (dollars in millions, except per share data) | |||||||||||||||||||||
| Reported: | |||||||||||||||||||||
| Net revenues | $ | 1,953 | $ | 1,919 | 1.8 | % | $ | 3,844 | $ | 3,803 | 1.1 | % | |||||||||
| Diagnostic Information Services revenues | $ | 1,872 | $ | 1,835 | 2.0 | % | $ | 3,684 | $ | 3,638 | 1.3 | % | |||||||||
| Revenue per requisition | (2.3) | % | (2.6) | % | |||||||||||||||||
| Requisition volume | 4.4 | % | 4.0 | % | |||||||||||||||||
| Organic requisition volume | 2.9 | % | 2.6 | % | |||||||||||||||||
| Operating income (a) | $ | 307 | $ | 305 | 0.4 | % | $ | 555 | $ | 577 | (3.9) | % | |||||||||
| Operating income as a percentage of net revenues (a) | 15.7 | % | 15.9 | % | (20) bps | 14.4 | % | 15.2 | % | (80) bps | |||||||||||
| Income from continuing operations attributable to Quest Diagnostics (a) | $ | 206 | $ | 219 | (5.8) | % | $ | 370 | $ | 396 | (6.5) | % | |||||||||
| Diluted EPS from continuing operations (a) | $ | 1.51 | $ | 1.57 | (3.9) | % | $ | 2.71 | $ | 2.84 | (4.6) | % | |||||||||
| Cash provided by operations | $ | 321 | $ | 323 | (0.9) | % | $ | 596 | $ | 503 | 18.5 | % | |||||||||
| Capital expenditures | $ | 85 | $ | 78 | 9.2 | % | $ | 132 | $ | 151 | (12.3) | % | |||||||||
| Adjusted (b): | |||||||||||||||||||||
| Operating income | $ | 352 | $ | 362 | (2.9) | % | $ | 638 | $ | 687 | (7.0) | % | |||||||||
| Operating income as a percentage of net revenues | 18.0 | % | 18.9 | % | (90) bps | 16.6 | % | 18.1 | % | (150) bps | |||||||||||
| Income from continuing operations attributable to Quest Diagnostics | $ | 237 | $ | 245 | (3.2) | % | $ | 427 | $ | 456 | (6.3) | % | |||||||||
| Diluted EPS from continuing operations | $ | 1.73 | $ | 1.75 | (1.1) | % | $ | 3.13 | $ | 3.27 | (4.3) | % | |||||||||
| (a) | For further details impacting the year-over-year comparisons related to operating income, operating income as a percentage of net revenues, income from continuing operations attributable to Quest Diagnostics, and diluted EPS from continuing operations, see note 2 of the financial tables attached below. |
| (b) | Beginning in 2019, the company has changed how it presents adjusted income measures to additionally exclude amortization expense for all periods presented. We believe this presentation provides investors with additional insight to evaluate our performance period over period and relative to competitors, as well as to analyze the underlying trends in our business. |
Outlook for full-year 2019
The company affirmed its outlook for full-year 2019 as follows:
| Current Outlook | |||
| Low | High | ||
| Net revenues | $7.60 billion | $7.75 billion | |
| Net revenue increase | 1% | 3% | |
| Reported diluted EPS from continuing operations (a) | Greater than $5.29 | ||
| Adjusted diluted EPS | Greater than $6.40 | ||
| Cash provided by operations | Approximately $1.3 billion | ||
| Capital expenditures | $350 million | $400 million | |
| (a) | The outlook for reported diluted EPS from continuing operations was updated to greater than $5.29 from the previous outlook of greater than $5.16 due to the impact of special items in the second quarter. For a reconciliation of adjusted diluted EPS to reported diluted EPS from continuing operations, see note 5 to the financial tables attached below. |
Note on Non-GAAP Financial Measures
As used in this press release the term “reported” refers to measures under the accounting principles generally accepted in the United States (“GAAP”). The term “adjusted” refers to non-GAAP operating performance measures that exclude special items such as restructuring and integration charges, amortization expense, excess tax benefit (“ETB”) associated with stock-based compensation and other items.
Non-GAAP adjusted measures are presented because management believes those measures are useful adjuncts to GAAP results. Non-GAAP adjusted measures should not be considered as an alternative to the corresponding measures determined under GAAP. Management may use these non-GAAP measures to evaluate our performance period over period and relative to competitors, to analyze the underlying trends in our business, to establish operational budgets and forecasts and for incentive compensation purposes. We believe that these non-GAAP measures are useful to investors and analysts to evaluate our performance period over period and relative to competitors, as well as to analyze the underlying trends in our business and to assess our performance. The additional tables attached below include reconciliations of non-GAAP adjusted measures to GAAP measures.
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 be accessed by dialing 888-455-0391 within the U.S. and Canada, or 773-756-0467 internationally, passcode: Investor; or via live webcast on the company’s website at www.QuestDiagnostics.com/investor. 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 800-871-1320 for domestic callers or 402-280-1688 for international callers. No passcode is required. Telephone replays will be available from approximately 10:30 a.m. Eastern Time on July 23, 2019 until midnight Eastern Time on August 6, 2019. 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 46,000 employees understand that, in the right hands and with the right context, our diagnostic insights can inspire actions that transform lives. www.QuestDiagnostics.com.
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, the complexity of billing, reimbursement and revenue recognition for clinical laboratory testing, changes in government regulations, changing relationships with customers, payers, suppliers or strategic partners and other factors discussed in the company’s most recently filed Annual Report on Form 10-K and in any of the company’s subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including those discussed in the “Business,” “Risk Factors,” “Cautionary Factors that May Affect Future Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those reports.
This earnings release, including the attached financial tables, is available online in the Newsroom section at www.QuestDiagnostics.com.
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SOURCE Quest Diagnostics Incorporated
Company Codes: NYSE:DGX
