Categories AlphaGraphs, Earnings, Health Care

Quest Diagnostics Q4 profit drops 50%, misses estimates

Quest Diagnostics (DGX) reported a 50% drop in earnings for the fourth quarter due to a decline in net revenues, higher costs and expenses as well as an income tax expense. The results missed analysts’ expectations. The diagnostic information services provider guided full-year revenue and earnings below consensus estimates. Following this, the stock inched down over 2% in the premarket session.

Net income attributable to the company plunged by 50% to $127 million and earnings tumbled by 49.5% to $0.92 per share. The previous year quarter included a tax benefit recorded as a result of the Tax Cuts and Jobs Act. Adjusted earnings declined by 2.9% to $1.36 per share.

Net revenues slid 1.4% to $1.84 billion. Diagnostic information services revenues declined by 1.5% to $1.76 billion. Revenue per requisition fell by 5.5% while requisition volume increased by 3.4%. Organic requisition volume rose by 1.1%.

Looking ahead into the full year 2019, the company expects net revenues in the range of $7.60 billion to $7.75 billion and earnings to be greater than $5.16 per share. Adjusted earnings excluding amortization expense are anticipated to be greater than $6.40 per share.

Quest Diagnostics fourth quarter 2018 earnings snapshot
Quest Diagnostics Q4 2018 Earnings Infographic

Cash provided by operations are predicted to be about $1.3 billion and capital expenditures are anticipated to be in the $350 million to $400 million range. The forecast reflects significant reimbursement pressure offset by strong volume growth and continued execution of its Invigorate program.

The company has been inching closer to reducing the costs by pursuing strategic buyouts but the purchase of PhenoPath and ReproSource, which was closed last year, yielded unsatisfactory results during the fourth quarter. The purchase of the clinical laboratory business of Boyce & Bynum would be yielding the result in the next quarter only.

The company has depended on the initiative to incorporate blockchain technology into hospital health systems to improve data quality and cut costs during the fourth quarter. However, the positive effect is likely to be derived in the next quarter.

Shares of Quest Diagnostics ended Wednesday’s regular session up 0.69% at $89.88 on the NYSE. The stock has fallen over 11% in the past year and over 5% in the past three months.

 

Listen to publicly listed companies’ earnings conference calls along with the edited closed caption text.

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