Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic testing, information and services, announced that for the first quarter ended March 31, 2011, adjusted income from continuing operations was $164 million, or $1.00 per diluted share, compared to $182 million, or $0.99 per diluted share in 2010.
For the first quarter of 2011, income from continuing operations was reduced by $0.07 per share associated with the estimated impact of severe weather, $0.05 per share associated with workforce reductions, and $0.02 per share in costs associated with the Athena Diagnostics and Celera transactions. Including these items, reported income from continuing operations was $141 million, or $0.86 per diluted share.
For the first quarter of 2010, income from continuing operations was reduced by $0.06 per share associated with restructuring charges and $0.05 per share associated with the estimated impact of severe weather. Including these items, reported income from continuing operations was $163 million or $0.89 per diluted share.
First quarter 2011 revenues grew approximately 1% to $1.8 billion. Clinical testing revenues increased 0.3% from the prior year. Clinical testing volume, measured by the number of requisitions, increased 2% above the prior year level. Revenue per requisition was 1.7% below the prior year. The impact of severe weather in the quarter is estimated to have reduced revenues and volume by 1.4%.
Surya N. Mohapatra, Ph.D., Chairman and Chief Executive Officer, said: "This was an important quarter for Quest Diagnostics. We completed our acquisition of Athena Diagnostics, and established the leading position in the neurology diagnostics market. We also announced our proposed acquisition of Celera to further strengthen our leadership position in cardiovascular testing as well as molecular diagnostics products and discovery. These transactions position us well for the future.
"During the first quarter, we repurchased $835 million of our shares to immediately enhance shareholder value. Testing volume continued to improve, and we increased revenues. Our earnings were down, and we took actions to reduce our cost structure accordingly."
For the first quarter of 2011, adjusted operating income was $301 million, or 16.3% of revenues, compared to $330 million, or 18.1% of revenues in 2010. Including the impact of severe weather, costs for workforce reductions and transaction costs, reported operating income was $267 million, or 14.7% of revenues, for the first quarter of 2011. Including the impact of severe weather and costs for workforce reductions, reported operating income was $299 million, or 16.5% of revenues, for the first quarter of 2010.
Cash flow from operations was $161 million for the first quarter of 2011, compared to $239 million for the first quarter of 2010. During the quarter, the company made capital expenditures of $39 million.
Outlook for 2011
For the full-year 2011, the company now expects results from continuing operations, before future special items, as follows:
- Revenue to grow approximately 2%, reflecting a 1% increase from the impact of the Athena acquisition;
- Earnings per diluted share to remain between $4.25 and $4.45 on an adjusted basis and be between $4.11 and $4.31 on a reported basis;
- Operating income as a percentage of revenues between 17.5% and 18.0% on an adjusted basis and between 17.0% and 17.5% on a reported basis;
- Cash from operations of approximately $1.1 billion; and
- Capital expenditures to approximate $220 million.
The outlook on an adjusted basis excludes the first quarter impact of severe weather, workforce reductions and costs associated with the Athena Diagnostics and Celera transactions.
Quest Diagnostics Incorporated