Quest Diagnostics Reports Strong Performance in Third Quarter 2009
- Total revenues of $1.9 billion, up 3.9%












MADISON, N.J., Oct. 20 /PRNewswire-FirstCall/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic testing, information and services, announced that for the third quarter ended September 30, 2009, income from continuing operations rose to $192 million, or $1.02 per diluted share, from $160 million, or $0.81 per diluted share, for the third quarter of 2008. In 2008, third quarter results were reduced by a $0.03 per share charge associated with the write-down of an equity investment, and a $0.02 per share impact associated with hurricanes.



Third quarter revenues increased 3.9% to $1.9 billion compared to the prior year. Clinical testing revenues increased by 4.3% compared to the prior year. Revenue per requisition increased 4.3%. Underlying volume in clinical testing, measured by the number of requisitions, continued to grow in the quarter. Reported testing volume was unchanged from the prior year and reflected a 23% decline in drugs-of-abuse testing volume, which is sensitive to hiring trends, and which reduced the company's consolidated volume by 1.7%. In the third quarter of 2008, consolidated revenues and volume were reduced by approximately half a percent as a result of the impact of hurricanes.



"Quest Diagnostics' strong financial performance continues to be driven by increased demand in testing for cancer, sexually transmitted diseases, allergies and Vitamin D levels. Based on our strong performance, we are raising earnings guidance for the full year," said Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer. "Our continued focus on innovation is driving growth today and positioning Quest Diagnostics well for the future. We recently introduced the first commercial test for the H1N1 flu virus authorized by the FDA for emergency use, and launched a saliva-based genetic test that helps physicians predict response to the blood thinner Plavix®."



For the third quarter, operating income increased to $348 million, or 18.4% of revenues, compared to $317 million, or 17.4% of revenues, for the third quarter of 2008. In the third quarter of 2008, operating income as a percentage of revenues was reduced by approximately half a percent as a result of the impact of hurricanes.



For the third quarter, bad debt expense as a percentage of revenues was 4.4%, unchanged from the second quarter and the prior year. Days sales outstanding of 43 days were unchanged from the second quarter and improved by two days from the prior year period. Cash flow from operations improved to $374 million compared to $329 million for 2008. During the quarter, the company repurchased $100 million of its common shares and made capital expenditures of $41 million.



Year-to-Date Performance



For the first nine months of 2009, income from continuing operations increased to $549 million, or $2.91 per diluted share, from $463 million, or $2.35 per diluted share for the first nine months of 2008. Revenues increased 2.9% to $5.6 billion.



Operating income for the first nine months of 2009 increased to $1.0 billion, or 18.3% of revenues, compared to $905 million, or 16.6% of revenues for 2008. Cash from operations, which was reduced by the $308 million payment in the second quarter related to the previously announced NID settlement, was $637 million. In the first nine months of 2008, cash from operations was $700 million. During the first nine months of 2009, the company repurchased $350 million of its common shares, and made capital expenditures of $117 million.





Outlook for the Full-Year 2009



For the full-year 2009, the company today increased its estimated earnings per diluted share from continuing operations to a range of $3.80 to $3.85. Previously, the company estimated diluted earnings per share of between $3.70 and $3.80. The company expects revenue growth of approximately 3% and operating income to exceed 18% of revenues. Cash from operations is expected to approximate $1.2 billion before the payment of the previously announced NID settlement, or $900 million after such payment. Capital expenditures are expected to approximate $180 million.



Quest Diagnostics will hold its third quarter conference call on October 20, 2009 at 8:30 A.M. Eastern Time. The public may access the conference call through a live audio webcast available on Quest Diagnostics' Investor Relations Internet site at www.QuestDiagnostics.com/investor. The conference call can also be accessed in listen-only mode by dialing 415-228-4961, passcode 3214469. Registered analysts may access the call at: www.streetevents.com. In addition, a replay of the call may be accessed online at www.QuestDiagnostics.com/investor or by phone in the U.S. at 866-428-3803 for domestic callers, or 203-369-0904 for international callers. No access code will be required. Telephone replays will be available from 10:30 a.m. Eastern Time on October 20 until midnight Eastern Time on November 20, 2009.



About Quest Diagnostics



Quest Diagnostics is the world's leading provider of diagnostic testing, information and services that patients and doctors need to make better healthcare decisions. The company offers the broadest access to diagnostic testing services through its network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. Quest Diagnostics is a pioneer in developing innovative diagnostic tests and advanced healthcare information technology solutions that help improve patient care. Additional company information is available at 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, changes in government regulations, changing relationships with customers, payers, suppliers and strategic partners and other factors discussed in "Business," "Risk Factors," "Cautionary Factors that May Affect Future Results," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures About Market Risk" in the company's 2008 Annual Report on Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk" and "Risk Factors" in the company's 2009 Quarterly Reports on Form 10-Q and other items throughout the Form 10-K and the company's 2009 Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.



This earnings release, including the attached financial tables, is available online in the Newsroom section at www.QuestDiagnostics.com.



© 2000-2009 Quest Diagnostics Incorporated. All rights reserved. Quest, Quest Diagnostics, the associated logo, and all associated Quest Diagnostics marks are the registered trademarks of Quest Diagnostics.



Plavix (R) (clopidigrel biphosphate) is a registered trademark of Bristol-Myers Squibb/Sanofi Pharmaceuticals Partnership.



Contact:

For Quest Diagnostics: Kathleen Valentine (Investors), +1-973-520-2900, or Gary Samuels and Wendy Bost, (Media), +1-973-520-2800