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For best results when printing this announcement, please click on link below:
Quest Diagnostics Reports First Quarter 2024 Financial Results; Raises Guidance for Full Year 2024
PR Newswire
SECAUCUS, N.J., April 23, 2024
* 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.
(https://mma.prnewswire.com/media/200883/quest_diagnostics_incorporated_logo_logo.html)
"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
(
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, December 31,
2024 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 2 2
March 31, 2024
and December 31, 2023; 162 shares issued as of both March 31, 2024 and
December 31, 2023
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 (4,781) (4,826)
December 31, 2023
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 (23) (28)
compensation plans
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 $ 193 $ 201
diluted
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 tax expense (d) Equity in Net income Diluted EPS
income as a percentage of earnings of attributable to
net revenues equity method investees, net Quest Diagnostics
of taxes
As reported $ 300 12.7 % $ (66) $ 8 $ 194 $ 1.72
Restructuring and 17 0.7 (4) — 13 0.12
integration charges (a)
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 tax expense (d) Equity in Net income Diluted EPS
income as a percentage of earnings of attributable to
net revenues equity method investees, net Quest Diagnostics
of taxes
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
Shawn Bevec (Investors): 973-520-2900 or Dennis Moynihan (Media): 973-520-2800
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