Quest Diagnostics fourth quarter revenues decrease 1.3% to $1.8 billion

Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic testing, information and services, announced that for the fourth quarter ended December 31, 2010, income from continuing operations was $167 million, or $0.97 per diluted share, compared to $182 million, or $0.97 per diluted share, for the fourth quarter of 2009. Fourth quarter 2010 results include charges associated with workforce reductions ($0.03 per share) and the settlement of employment litigation ($0.03 per share), which were partially offset by a benefit of $0.05 per share primarily associated with the favorable resolution of tax contingencies.

Fourth quarter revenues of $1.8 billion were 1.3% below the prior year level. Clinical testing revenues were 1.4% below the prior year.  Revenue per requisition was 1.5% below the prior year, and in line with the last two quarters. Clinical testing volume, measured by the number of requisitions, was 0.1% above the prior year level.  

"We generated strong cash flow in the quarter, and were encouraged by the continued improvement in our volume trends and the stability in revenue per requisition," said Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer. "We have taken actions to strengthen our sales organization, expand our pipeline of new tests and services, and improve our operating efficiency, which position us for revenue and EPS growth."

For the fourth quarter, operating income was $294 million, or 16.1% of revenues, compared to $330 million, or 17.9% of revenues, for the fourth quarter of 2009. The 2010 fourth-quarter charges reduced operating income as a percentage of revenues by approximately 1.0%. Bad debt expense as a percentage of revenues was 3.8%, compared to 3.9% in the prior year. Days sales outstanding were 44 days. Cash flow from operations was $340 million compared to $360 million for 2009. During the quarter, the company made capital expenditures of $69 million.

Quest Diagnostics also announced today that its Board of Directors has approved an additional $750 million share repurchase authorization, bringing the company's current authorization to $1 billion. The company repurchased $750 million of its shares in 2010.

Full Year Performance

Income from continuing operations was $723 million, or $4.06 per diluted share, compared to $730 million, or $3.88 per diluted share, for 2009. Revenues of $7.4 billion were 1.2% below the prior year level.

Operating income for 2010 was $1.3 billion, or 17.6% of revenues, compared to $1.4 billion, or 18.2% of revenues, for 2009. Cash flow from operations was $1.1 billion, compared to $1 billion in 2009. Cash provided by operations in 2009 was reduced by the net impact of the NID settlement. During 2010, the company made capital expenditures of $205 million.

Outlook for 2011

Full-year 2011 guidance, before potential special items, is:

• Earnings per diluted share between  $4.10 and $4.30;
• Revenues to grow approximately 1%;
• Operating income to approximate 18% of revenues;
• Cash from operations to approximate $1.1 billion; and
• Capital expenditures to approximate $220 million.

SOURCE Quest Diagnostics Incorporated