Quest Diagnostics (DGX) reported positive top and bottom line results for its first quarter, with revenue increasing to $1.88 billion, up 3.7%, driven by strategic acquisitions and lower Medicare reimbursement under PAMA (Protecting Access to Medicare Act).
Net income was boosted by benefits from tax reforms and revenue increase, pushing it up 8.2% year-over-year to $177 million. EPS on a reported basis increased 9.5% to $1.27, while on an adjusted basis, EPS spiked 24.6% to $1.52 per share.
The company topped on analysts’ earnings estimates, while missed on revenue expectation. The positive results were also driven by higher requisition volumes, which increased 2.2% from the prior year.
For fiscal year 2018, Quest has kept its earlier guidance unchanged and sees revenue in the range of $7.70 billion to $7.77 billion, an increase of 4% to 5% year-over-year. Reported earnings, on a per share basis, is expected in the range of $5.42 to $5.62, while adjusted EPS is forecast to be in the range of $6.50 to $6.70. The guidance reflects the impact of new revenue recognition rules that are effective January 1, 2018.
DGX stock almost dipped 1% post earnings announcement in pre-market trading.
The Madison, New Jersey-based company has a long-term revenue growth target of 3% to 5% that it is progressing with the help of its two-prong approach of strategic acquisitions and operational excellence. In line with its progress, the company completed two key acquisitions in the recent past of Cleveland HeartLab and Mobile Medical Examination Service MedXM, which contributed to the positive results.