Quest Diagnostics Inc. (DGX), a provider of diagnostic testing, information and services, Monday reported higher fourth-quarter profit, helped by revenue growth, which reflected growing demand for gene-based and esoteric tests. The company lifted its stock buyback authorization by $750 million and provided outlook for fiscal 2010.
Quest reported fourth-quarter net income attributable to the company of $181.6 million or $0.97 per share, compared to $169.8 million or $0.87 per share in the same quarter last year.
The quarterly results included a $0.04 per share charge associated with the early extinguishment of debt, which was offset by certain non-recurring tax benefits totaling $0.04 per share.
On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.96 per share for the quarter. Analysts' estimates typically exclude special items.
Quest's net revenues for the quarter were $1.85 billion, up 2.7% from $1.80 billion in the comparable quarter last year. Analysts expected the company to report revenue of $1.87 billion for the quarter.
Quest said revenue per requisition increased 2.6% and clinical testing volume, measured by the number of requisitions, decreased 0.3% in the fourth quarter. Excluding the impact of drugs-of-abuse testing, which is sensitive to hiring trends, testing volume was up approximately 0.5%.
For the preceding third quarter, Quest's net income was $192.2 million or $1.02 per share on revenues of $1.89 billion.
Commenting on the fourth-quarter results, Surya Mohapatra, Ph.D., Chairman and Chief Executive Officer of Quest Diagnostics, stated, "Revenues grew largely as a result of increased demand for innovative gene-based and esoteric tests, including cancer diagnostics. Earnings grew through top-line growth combined with continued improvements in operating efficiencies."
"As the leader in a vital and growing industry that is playing an increasingly important role in improving health outcomes and reducing overall healthcare costs, we are well-positioned for continued growth in 2010," Mohapatra added.
For fiscal 2009, Quest reported net income attributable to Quest Diagnostics of $729.1 million or $3.87 per share, compared with $581.5 million or $2.96 per share a year ago. Revenues increased 2.8% to $7.46 billion from $7.25 billion last year. Analysts expected earnings of $3.87 per share on revenues of $7.48 billion.
Separately, Quest announced that its Board of Directors increased the company's share repurchase authorization by $750 million.
"The expansion of our share repurchase program reflects the company's financial strength and our ability to continue generating strong cash flows, and, in addition to continuing to invest in the growth of our business, provides another means to return value to our shareholders," said Mohapatra.
In 2009, the company repurchased approximately 10 million shares of common stock for $500 million, fully utilizing its previous authorization. The company had approximately 183 million shares outstanding as of December 31, 2009.
Moving forward, Quest Diagnostics expects fiscal 2010 earnings excluding potential special charges in the range of $4.10 - $4.30 per share on revenue growth in the range of 3% - 4%. The company also foresees operating income to approach 19% of revenues. Analysts anticipate the company to earn $4.20 per share on revenue of $7.78 billion.
Among peers, Bio-Reference Laboratories, Inc. (BRLI) has reported an increase in profit for the fourth quarter, benefiting from higher revenues due to a 27% increase in the number of patients that more than offset a slight decrease in revenue per patient. The Elmwood Park, New Jersey-based clinical laboratory testing services provider reported a net income of $7.18 million or $0.51 per share, up from $5.24 million or $0.38 per share in the previous year. Net revenues increased 26% to $102.31 million from $81.24 million last year.
Bio-Reference expects revenue to grow at least 15% and net income to increase at least 20% for the fiscal 2010.
Another rival, Laboratory Corp. of America Holdings (LH) is slated to report its fourth-quarter results on February 11. Analysts are of the view that the company will earn $1.15 per share for the quarter on revenues of $1.17 billion.
DGX closed Friday's trading at $58.80, down $0.97, on a volume of 1.76 million shares. In pre-market trading, the company's shares dropped 4.27% or $2.51 to $56.29.
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