Quest Diagnostics Inc. (DGX) on Wednesday reported a profit for its first quarter, compared to prior year's loss, benefited by the non-recurring of last year's hefty charge related to California's Medicaid program. Adjusted earnings increased from last year on higher revenues. Further, the provider of diagnostic testing, information and services lifted its fiscal 2012 adjusted earnings forecast, while maintained revenue growth forecast.
Surya Mohapatra, Chairman and CEO, said, "Quest Diagnostics had a very solid first quarter. We saw strong growth in esoteric and advanced gene-based testing as a result of our focus on cancer, cardiovascular disease, infectious disease and neurological disorders. In addition, we saw improved growth in routine testing."
For its first quarter, net income attributable to company was $159.1 million or $0.99 per share, compared to a loss of $53.9 million or $0.33 per share in the year ago quarter.
The latest quarter results were hurt by $0.08 per share charges related to restructuring and integration activities as well as CEO succession costs. The prior year's results were hurt by $1.33 per share charge mainly related to Medi-Cal, California's Medicaid program, and other special items.
Adjusted income from continuing operations, which excluded items, grew 7 percent to $171 million or $1.07 per share from $164 million or $1 per share last year. On average, 22 analysts polled by Thomson Reuters expected the company to report earnings of $1.01 per share. Analysts' estimates typically exclude special items.
Net revenues increased 6.3 percent to $1.94 billion from $1.82 billion in the prior year, driven by both organic growth and acquisitions and beat analysts' consensus estimate of $1.88 billion. The acquisitions of Athena, Celera and SED contributed 3.2 percent to consolidated revenue growth.
In the quarter, clinical testing revenues increased 6.4 percent driven by higher revenue per requisition and volume, measured by the number of requisitions.
The extreme weather in last year's first quarter contrasted with the unseasonably mild weather this year is estimated to have benefited the revenue and volume comparisons by approximately 2 percent, the company noted.
For the first quarter, operating margin surged to 15.5 percent from 1.7 percent last year, and adjusted operating margin increased to 16.5 percent from 16.3 percent a year ago.
Quest added that it is making good progress in its previously announced $500 million cost reduction initiative, aimed at improving operational efficiency.
Looking ahead for fiscal 2012, the company now expects adjusted earnings from continuing operations to be between $4.45 and $4.60 per share, higher than previous range of $4.40 to $4.55 per share. Analysts expect the company to report earnings of $4.54 per share.
On a reported basis, full-year earnings would be between $4.37 and $4.52 per share.
Meanwhile, the company continues to expect revenues to grow between 2 percent and 2.5 percent.
Quest shares are currently trading at $62.27 in pre-market activity, up $1.98 or 3.28 percent.
by RTT Staff Writer
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