- First quarter revenues of $2.37
billion, up 1.5% from 2023
- First quarter reported diluted earnings per share ("EPS") of
$1.72, down 3.4% from 2023; and
adjusted diluted EPS of $2.04, flat
with 2023
- Full year 2024 revenues now expected to be between $9.40 billion and $9.48
billion; reported diluted EPS now expected to be between
$7.57 and $7.82; and adjusted diluted EPS expected to be
between $8.72 and $8.97
SECAUCUS, N.J., April 23,
2024 /PRNewswire/ -- Quest Diagnostics Incorporated
(NYSE: DGX), a leading provider of diagnostic information services,
today announced financial results for the first quarter ended
March 31, 2024.
"In the first quarter, we delivered nearly 6% base business
revenue growth, continuing the strong momentum of recent quarters.
We also grew total revenues for the first time since the height of
the pandemic nearly three years ago," said Jim Davis, Chairman, CEO and President. "Our
strong commercial focus on physicians and hospitals combined with
our broad health plan access enabled us to take advantage of
sustained high rates of healthcare utilization and drive new
customer growth. Our investments within advanced diagnostics also
enabled double digit growth within multiple key clinical areas,
including brain health, women's health and advanced cardiometabolic
health.
"In addition, our Invigorate initiative, which includes ongoing
investments in automation and AI, continued to improve productivity
as well as service levels and quality. Given the strength of our
business, we are raising our revenue and adjusted earnings guidance
for the full year," Mr. Davis said.
|
Three Months Ended
March 31,
|
|
2024
|
|
2023
|
|
Change
|
|
(dollars in millions,
except per share data)
|
Reported:
|
|
|
|
|
|
Net revenues
|
$
2,366
|
|
$
2,331
|
|
1.5 %
|
Diagnostic Information
Services revenues
|
$
2,298
|
|
$
2,259
|
|
1.7 %
|
Revenue per
requisition
|
|
|
|
|
0.1 %
|
Requisition
volume
|
|
|
|
|
1.6 %
|
Organic
requisition volume
|
|
|
|
|
1.0 %
|
Operating income
(a)
|
$
300
|
|
$
305
|
|
(1.7) %
|
Operating income as a
percentage of net revenues (a)
|
12.7 %
|
|
13.1 %
|
|
(0.4) %
|
Net income attributable
to Quest Diagnostics (a)
|
$
194
|
|
$
202
|
|
(3.9) %
|
Diluted EPS
(a)
|
$
1.72
|
|
$
1.78
|
|
(3.4) %
|
Cash provided by
operations
|
$
154
|
|
$
94
|
|
64.8 %
|
Capital
expenditures
|
$
104
|
|
$
127
|
|
(18.2) %
|
|
|
|
|
|
|
Adjusted
(a):
|
|
|
|
|
|
Operating
income
|
$
349
|
|
$
350
|
|
(0.2) %
|
Operating income as a
percentage of net revenues
|
14.8 %
|
|
15.0 %
|
|
(0.2) %
|
Net income attributable
to Quest Diagnostics
|
$
230
|
|
$
232
|
|
(1.1) %
|
Diluted EPS
|
$
2.04
|
|
$
2.04
|
|
— %
|
(a)
|
For further details
impacting the year-over-year comparisons related to operating
income, operating income as a percentage of net revenues, net
income attributable to Quest Diagnostics, and diluted EPS, see note
2 of the financial tables attached below.
|
Updated Guidance for Full Year 2024
The company updates its full year 2024 guidance as
follows:
|
Updated
Guidance
|
|
Prior
Guidance
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Net revenues
|
$9.40
billion
|
|
$9.48
billion
|
|
$9.35
billion
|
|
$9.45
billion
|
Net revenues
increase
|
1.6 %
|
|
2.5 %
|
|
1.1 %
|
|
2.1 %
|
Reported diluted
EPS
|
$7.57
|
|
$7.82
|
|
$7.69
|
|
$7.99
|
Adjusted diluted
EPS
|
$8.72
|
|
$8.97
|
|
$8.60
|
|
$8.90
|
Cash provided by
operations
|
Approximately $1.3
billion
|
|
Approximately $1.3
billion
|
Capital
expenditures
|
Approximately
$420 million
|
|
Approximately $420
million
|
Note on Non-GAAP Financial Measures
As used in this press release the term "reported" refers to
measures under 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 benefits ("ETB")
associated with stock-based compensation, gains and losses
associated with changes in the carrying value of our strategic
investments, 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: 7895081; or via live webcast on our website at
www.QuestDiagnostics.com/investor. We suggest participants
dial in approximately 10 minutes before the call.
A replay of the call may be accessed online at
www.QuestDiagnostics.com/investor or, from approximately
10:30 a.m. Eastern Time on
April 23, 2024 until midnight Eastern
Time on May 7, 2024, by phone at 866-363-1809 for
domestic callers or 203-369-0197 for international callers.
Anyone listening to the call is encouraged to read our 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 works across the healthcare ecosystem to
create a healthier world, one life at a time. We provide diagnostic
insights from the results of our laboratory testing to empower
people, physicians and organizations to take action to improve
health outcomes. Derived from one of the world's largest databases
of deidentified clinical lab results, Quest's diagnostic insights
reveal new avenues to identify and treat disease, inspire healthy
behaviors and improve healthcare management. Quest Diagnostics
annually serves one in three adult Americans and half the
physicians and hospitals in the United
States, and our nearly 50,000 employees understand that, in
the right hands and with the right context, our diagnostic insights
can inspire actions that transform lives and create a healthier
world. www.QuestDiagnostics.com.
Forward Looking Statements
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.
ADDITIONAL TABLES FOLLOW
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated
Statements of Operations
For the
Three Months Ended March 31, 2024 and
2023
(in millions, except
per share data)
(unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
Net
revenues
|
$
2,366
|
|
$
2,331
|
|
|
|
|
Operating costs and
expenses and other operating income:
|
|
|
|
Cost of
services
|
1,595
|
|
1,560
|
Selling, general and
administrative
|
440
|
|
439
|
Amortization of
intangible assets
|
29
|
|
26
|
Other operating
expense, net
|
2
|
|
1
|
Total operating costs
and expenses, net
|
2,066
|
|
2,026
|
|
|
|
|
Operating
income
|
300
|
|
305
|
|
|
|
|
Other income
(expense):
|
|
|
|
Interest expense,
net
|
(43)
|
|
(35)
|
Other income,
net
|
9
|
|
7
|
Total non-operating
expense, net
|
(34)
|
|
(28)
|
|
|
|
|
Income before income
taxes and equity in earnings of equity method
investees
|
266
|
|
277
|
Income tax
expense
|
(66)
|
|
(65)
|
Equity in earnings
of equity method investees, net of taxes
|
8
|
|
5
|
Net
income
|
208
|
|
217
|
Less: Net income
attributable to noncontrolling interests
|
14
|
|
15
|
Net income
attributable to Quest Diagnostics
|
$ 194
|
|
$ 202
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
Basic
|
$ 1.74
|
|
$ 1.80
|
|
|
|
|
Diluted
|
$ 1.72
|
|
$ 1.78
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
111
|
|
112
|
|
|
|
|
Diluted
|
112
|
|
113
|
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated Balance
Sheets
March 31,
2024 and December 31, 2023
(in millions, except
per share data)
(unaudited)
|
|
|
|
|
|
March 31,
2024
|
|
December 31,
2023
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
474
|
|
$
686
|
Accounts receivable,
net
|
1,322
|
|
1,210
|
Inventories
|
181
|
|
190
|
Prepaid expenses and
other current assets
|
251
|
|
286
|
Total current
assets
|
2,228
|
|
2,372
|
Property, plant and
equipment, net
|
1,810
|
|
1,816
|
Operating lease
right-of-use assets
|
579
|
|
602
|
Goodwill
|
7,830
|
|
7,733
|
Intangible assets,
net
|
1,192
|
|
1,166
|
Investments in
equity method investees
|
133
|
|
135
|
Other
assets
|
182
|
|
198
|
Total
assets
|
$
13,954
|
|
$
14,022
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
1,239
|
|
$
1,359
|
Current portion of
long-term debt
|
906
|
|
303
|
Current portion of
long-term operating lease liabilities
|
153
|
|
153
|
Total current
liabilities
|
2,298
|
|
1,815
|
Long-term
debt
|
3,804
|
|
4,410
|
Long-term operating
lease liabilities
|
489
|
|
503
|
Other
liabilities
|
817
|
|
876
|
Redeemable
noncontrolling interest
|
77
|
|
76
|
Stockholders'
equity:
|
|
|
|
Quest Diagnostics
stockholders' equity:
|
|
|
|
Common stock, par
value $0.01 per share; 600 shares authorized as of both
March 31, 2024
and December 31, 2023; 162 shares issued as of both
March 31, 2024 and December 31, 2023
|
2
|
|
2
|
Additional paid-in
capital
|
2,292
|
|
2,320
|
Retained
earnings
|
8,935
|
|
8,825
|
Accumulated other
comprehensive loss
|
(16)
|
|
(14)
|
Treasury stock, at
cost; 51 shares as of both March 31, 2024 and
December 31, 2023
|
(4,781)
|
|
(4,826)
|
Total Quest
Diagnostics stockholders' equity
|
6,432
|
|
6,307
|
Noncontrolling
interests
|
37
|
|
35
|
Total stockholders'
equity
|
6,469
|
|
6,342
|
Total liabilities
and stockholders' equity
|
$
13,954
|
|
$
14,022
|
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated
Statements of Cash Flows
For the Three Months
Ended March 31, 2024 and 2023
(in
millions)
(unaudited)
|
|
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
208
|
|
$
217
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
116
|
|
107
|
Provision (credit) for
credit losses
|
1
|
|
(1)
|
Deferred income tax
benefit
|
(18)
|
|
(4)
|
Stock-based
compensation expense
|
22
|
|
24
|
Other, net
|
11
|
|
3
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(114)
|
|
(58)
|
Accounts payable and
accrued expenses
|
(152)
|
|
(211)
|
Income taxes
payable
|
42
|
|
11
|
Other assets and
liabilities, net
|
38
|
|
6
|
Net cash provided by
operating activities
|
154
|
|
94
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Business acquisitions,
net of cash acquired
|
(142)
|
|
(31)
|
Capital
expenditures
|
(104)
|
|
(127)
|
Other investing
activities
|
33
|
|
—
|
Net cash used in
investing activities
|
(213)
|
|
(158)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
—
|
|
140
|
Repayments of
debt
|
—
|
|
(140)
|
Exercise of stock
options
|
12
|
|
25
|
Employee payroll tax
withholdings on stock issued under stock-based compensation
plans
|
(23)
|
|
(28)
|
Dividends
paid
|
(79)
|
|
(74)
|
Distributions to
noncontrolling interest partners
|
(11)
|
|
(14)
|
Other financing
activities, net
|
(52)
|
|
15
|
Net cash used in
financing activities
|
(153)
|
|
(76)
|
|
|
|
|
Net change in cash
and cash equivalents and restricted cash
|
(212)
|
|
(140)
|
Cash and cash
equivalents and restricted cash, beginning of period
|
686
|
|
315
|
Cash and cash
equivalents and restricted cash, end of period
|
$
474
|
|
$
175
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
Interest
|
$
44
|
|
$
32
|
Income taxes
|
$
3
|
|
$
33
|
Notes to Financial
Tables
|
|
1) The
computation of basic and diluted earnings per common share is as
follows:
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
(in millions, except
per
share data)
|
Amounts attributable
to Quest Diagnostics' common stockholders:
|
|
|
|
Net income attributable
to Quest Diagnostics
|
$
194
|
|
$
202
|
Less: earnings
allocated to participating securities
|
1
|
|
1
|
Earnings available to
Quest Diagnostics' common stockholders - basic and
diluted
|
$
193
|
|
$
201
|
|
|
|
|
Weighted average common
shares outstanding - basic
|
111
|
|
112
|
Effect of dilutive
securities:
|
|
|
|
Stock options and
performance share units
|
1
|
|
1
|
Weighted average common
shares outstanding - diluted
|
112
|
|
113
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
Basic
|
$
1.74
|
|
$
1.80
|
Diluted
|
$
1.72
|
|
$
1.78
|
2) The following
tables reconcile reported GAAP results to non-GAAP adjusted
results:
|
|
Three Months Ended
March 31, 2024
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a percentage of
net revenues
|
|
Income tax expense
(d)
|
|
Equity in
earnings of
equity method investees, net
of taxes
|
|
Net income
attributable to
Quest Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
300
|
|
12.7 %
|
|
$
(66)
|
|
$
8
|
|
$
194
|
|
$
1.72
|
Restructuring and
integration charges (a)
|
17
|
|
0.7
|
|
(4)
|
|
—
|
|
13
|
|
0.12
|
Other (b)
|
3
|
|
0.2
|
|
—
|
|
—
|
|
3
|
|
0.03
|
Amortization
expense
|
29
|
|
1.2
|
|
(7)
|
|
—
|
|
22
|
|
0.19
|
ETB
|
—
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
|
(0.02)
|
As adjusted
|
$
349
|
|
14.8 %
|
|
$
(79)
|
|
$
8
|
|
$
230
|
|
$
2.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31, 2023
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a percentage of
net revenues
|
|
Income tax expense
(d)
|
|
Equity in
earnings of
equity method investees, net
of taxes
|
|
Net income
attributable to
Quest Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
305
|
|
13.1 %
|
|
$
(65)
|
|
$
5
|
|
$
202
|
|
$
1.78
|
Restructuring and
integration charges (a)
|
19
|
|
0.8
|
|
(5)
|
|
—
|
|
14
|
|
0.12
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(1)
|
|
3
|
|
2
|
|
0.02
|
Amortization
expense
|
26
|
|
1.1
|
|
(7)
|
|
—
|
|
19
|
|
0.17
|
ETB
|
—
|
|
—
|
|
(5)
|
|
—
|
|
(5)
|
|
(0.05)
|
As adjusted
|
$
350
|
|
15.0 %
|
|
$
(83)
|
|
$
8
|
|
$
232
|
|
$
2.04
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For both the three
months ended March 31, 2024 and 2023, the pre-tax impact represents
costs primarily associated with workforce reductions and
integration costs incurred in connection with further restructuring
and integrating our business. The following table summarizes
the pre-tax impact of restructuring and integration charges on our
consolidated statements of operations:
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
(dollars in
millions)
|
Cost of
services
|
$
13
|
|
$
10
|
Selling, general and
administrative
|
4
|
|
9
|
Operating
income
|
$
17
|
|
$
19
|
(b)
|
For the three months
ended March 31, 2024, the pre-tax impact represents a loss
associated with the increase in the fair value of the contingent
consideration accrual associated with previous acquisitions,
recorded in other operating expense, net.
|
|
|
(c)
|
For the three months
ended March 31, 2023, the pre-tax impact represents gains and
losses associated with changes in the carrying value of our
strategic investments, recorded in equity in earnings of equity
method investees, net of taxes.
|
|
|
(d)
|
For restructuring and
integration charges, gains and losses on investments, other items
and amortization expense, income tax impacts, where recorded, were
primarily calculated using combined statutory income tax rates of
25.5% for both 2024 and 2023.
|
3)
|
The outlook for
adjusted diluted EPS represents management's estimates for the full
year 2024 before the impact of special items. Further impacts to
earnings related to special items may occur throughout 2024.
Additionally, the amount of ETB is dependent upon employee stock
option exercises and our stock price, which are difficult to
predict. The following table reconciles our 2024 outlook for
diluted EPS under GAAP to our outlook for adjusted diluted
EPS:
|
|
Low
|
|
High
|
Diluted EPS
|
$
7.57
|
|
$
7.82
|
Restructuring and
integration charges (a)
|
0.25
|
|
0.25
|
Amortization expense
(b)
|
0.82
|
|
0.82
|
Other (c)
|
0.12
|
|
0.12
|
ETB
|
(0.04)
|
|
(0.04)
|
Adjusted diluted
EPS
|
$
8.72
|
|
$
8.97
|
(a)
|
Represents estimated
pre-tax charges of $38 million primarily associated with workforce
reductions and integration costs incurred in connection with
further restructuring and integrating our business. Income
tax benefits were primarily calculated using a combined statutory
income tax rate of 25.5%.
|
|
|
(b)
|
Represents estimated
pre-tax amortization expenses of $125 million. Income tax
benefits were primarily calculated using a combined statutory
income tax rate of 25.5%.
|
|
|
(c)
|
Represents estimated
pre-tax losses of $12 million associated with the increase in the
fair value of the contingent consideration accrual associated with
previous acquisitions. No income tax benefits are recorded on
the losses.
|
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SOURCE Quest Diagnostics