Quest Diagnostics Reports Third Quarter 2024 Financial Results; Updates Guidance for Full Year 2024
Third quarter revenues of $2.49 billion, up 8.5% from 2023
Third quarter reported diluted earnings per share ("EPS") of $1.99, up 1.5% from 2023; and adjusted diluted EPS of $2.30, up 3.6% from 2023
Full year 2024 revenues now expected to be between $9.80 billion and $9.85 billion; reported diluted EPS now expected to be between $7.60 and $7.70; and adjusted diluted EPS expected to be between $8.85 and $8.95
SECAUCUS, N.J., Oct. 22, 2024 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE:DGX), a leading provider of diagnostic information services, today announced financial results for the third quarter ended September 30, 2024.
"We delivered a strong third quarter, with total revenue growth of 8.5%, including 4.2% organic growth," said Jim Davis, Chairman, CEO and President. "Our performance was driven by new customer wins and expanded business with physicians and hospitals as well as recent acquisitions, including LifeLabs. We are now on track to complete eight acquisitions by year's end that meet our criteria for profitability, growth and returns."
"We have increased our 2024 revenue guidance due to contributions from recent acquisitions and have maintained the midpoint of our adjusted EPS guidance despite the impact of Hurricane Milton in the fourth quarter," Mr. Davis continued. "Given the strength of our business and revenue from acquisitions, we are well positioned to drive accelerated revenue and earnings growth in 2025."
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
Change
2024
2023
Change
(dollars in millions, except per share data)
Reported:
Net revenues
$ 2,488
$ 2,295
8.5 %
$ 7,251
$ 6,964
4.1 %
Diagnostic Information Services revenues
$ 2,427
$ 2,228
9.0 %
$ 7,058
$ 6,755
4.5 %
Revenue per requisition
3.3 %
1.7 %
Requisition volume
5.5 %
2.7 %
Organic requisition volume
0.5 %
0.7 %
Operating income (a)
$ 330
$ 342
(3.3) %
$ 985
$ 995
(1.0) %
Operating income as a percentage of net revenues (a)
13.3 %
14.9 %
(1.6) %
13.6 %
14.3 %
(0.7) %
Net income attributable to Quest Diagnostics (a)
$ 226
$ 225
0.5 %
$ 649
$ 662
(1.9) %
Diluted EPS (a)
$ 1.99
$ 1.96
1.5 %
$ 5.74
$ 5.79
(0.9) %
Cash provided by operations
$ 356
$ 207
72.5 %
$ 870
$ 745
17.0 %
Capital expenditures
$ 106
$ 105
1.0 %
$ 302
$ 336
(10.4) %
Adjusted (a):
Operating income
$ 385
$ 380
1.3 %
$ 1,132
$ 1,119
1.1 %
Operating income as a percentage of net revenues
15.5 %
16.6 %
(1.1) %
15.6 %
16.1 %
(0.5) %
Net income attributable to Quest Diagnostics
$ 262
$ 254
3.1 %
$ 758
$ 749
1.2 %
Diluted EPS
$ 2.30
$ 2.22
3.6 %
$ 6.70
$ 6.56
2.1 %
(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 shown in the table below. The updated guidance reflects the impact of recent acquisitions including LifeLabs as well as the impact from Hurricane Milton in the fourth quarter. The company projects the disruption from Hurricane Milton to negatively impact net revenues by approximately $15 million and EPS by approximately 8 cents in the fourth quarter.
Updated Guidance
Prior Guidance
Low
High
Low
High
Net revenues
$9.80 billion
$9.85 billion
$9.50 billion
$9.58 billion
Net revenues increase
5.9 %
6.5 %
2.7 %
3.5 %
Reported diluted EPS
$7.60
$7.70
$7.57
$7.77
Adjusted diluted EPS
$8.85
$8.95
$8.80
$9.00
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. We suggest participants dial in 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 October 22, 2024 until midnight Eastern Time on November 5, 2024, by phone at 800-839-5154 for domestic callers or 203-369-3358 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 de-identifiable 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 more than 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, acquisitions 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 and Nine Months Ended September 30, 2024 and 2023
(in millions, except per share data)
(unaudited)
Three Months EndedSeptember 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net revenues
$ 2,488
$ 2,295
$ 7,251
$ 6,964
Operating costs and expenses and other operating income:
Cost of services
1,677
1,541
4,865
4,647
Selling, general and administrative
448
380
1,304
1,235
Amortization of intangible assets
32
27
90
81
Other operating expense, net
1
5
7
6
Total operating costs and expenses, net
2,158
1,953
6,266
5,969
Operating income
330
342
985
995
Other income (expense):
Interest expense, net
(49)
(40)
(136)
(112)
Other income (expense), net
15
(3)
27
10
Total non-operating expense, net
(34)
(43)
(109)
(102)
