- Third quarter revenues of $2.30
billion, down 7.7% from 2022
- Third quarter reported diluted earnings per share ("EPS")
of $1.96, down 9.7% from 2022; and
adjusted diluted EPS of $2.22, down
5.9% from 2022
- Third quarter base business revenues of $2.27 billion, up 4.6% from 2022
- Full year 2023 revenues now expected to be between $9.19 billion and $9.24
billion; reported diluted EPS now expected to be between
$7.61 and $7.71; and adjusted diluted EPS expected to be
between $8.65 and $8.75
SECAUCUS, N.J., Oct. 24,
2023 /PRNewswire/ -- Quest Diagnostics Incorporated
(NYSE: DGX), the world's leading provider of diagnostic information
services, announced today financial results for the third quarter
ended September 30, 2023.
"We grew our base business revenues nearly 5% in the third
quarter, largely due to strength in our physician and hospital
channels," said Jim Davis, Chairman,
CEO and President. "In addition, we are pleased that we have now
successfully negotiated all of our strategic health plan renewals
that were scheduled for this year."
"Also in the third quarter, we improved the productivity of our
base business both sequentially and year over year."
Mr. Davis continued: "Given the strength of our business and a
robust pipeline of professional lab services and M&A
opportunities, Quest Diagnostics is well positioned for continued
growth."
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
|
|
(dollars in millions,
except per share data)
|
|
Reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
2,295
|
|
$
2,486
|
|
(7.7) %
|
|
$ 6,964
|
|
$ 7,550
|
|
(7.8) %
|
|
Base business revenues
(a)
|
$
2,269
|
|
$
2,170
|
|
4.6 %
|
|
$ 6,778
|
|
$ 6,280
|
|
7.9 %
|
|
COVID-19 testing
revenues
|
$
26
|
|
$
316
|
|
(92.0) %
|
|
$
186
|
|
$ 1,270
|
|
(85.4) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diagnostic Information
Services revenues
|
$
2,228
|
|
$
2,419
|
|
(7.9) %
|
|
$ 6,755
|
|
$ 7,344
|
|
(8.0) %
|
|
Revenue per
requisition
|
|
|
|
|
(7.2) %
|
|
|
|
|
|
(6.6) %
|
|
Requisition
volume
|
|
|
|
|
(0.5) %
|
|
|
|
|
|
(1.4) %
|
|
Organic
requisition volume
|
|
|
|
|
(1.0) %
|
|
|
|
|
|
(1.7) %
|
|
Operating income
(b)
|
$
342
|
|
$
392
|
|
(13.0) %
|
|
$
995
|
|
$ 1,293
|
|
(23.1) %
|
|
Operating income as a
percentage of net revenues (b)
|
14.9 %
|
|
15.8 %
|
|
(0.9) %
|
|
14.3 %
|
|
17.1 %
|
|
(2.8) %
|
|
Net income attributable
to Quest Diagnostics (b)
|
$
225
|
|
$
256
|
|
(12.2) %
|
|
$
662
|
|
$
845
|
|
(21.7) %
|
|
Diluted EPS
(b)
|
$
1.96
|
|
$
2.17
|
|
(9.7) %
|
|
$
5.79
|
|
$
7.05
|
|
(17.9) %
|
|
Cash provided by
operations
|
$
207
|
|
$
502
|
|
(58.8) %
|
|
$
745
|
|
$ 1,384
|
|
(46.2) %
|
|
Capital
expenditures
|
$
105
|
|
$
118
|
|
(10.1) %
|
|
$
336
|
|
$
257
|
|
31.1 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
(b):
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
380
|
|
$
423
|
|
(10.1) %
|
|
$ 1,119
|
|
$ 1,412
|
|
(20.7) %
|
|
Operating income as a
percentage of net revenues
|
16.6 %
|
|
17.0 %
|
|
(0.4) %
|
|
16.1 %
|
|
18.7 %
|
|
(2.6) %
|
|
Net income attributable
to Quest Diagnostics
|
$
254
|
|
$
279
|
|
(8.8) %
|
|
$
749
|
|
$
952
|
|
(21.3) %
|
|
Diluted EPS
|
$
2.22
|
|
$
2.36
|
|
(5.9) %
|
|
$
6.56
|
|
$
7.94
|
|
(17.4) %
|
|
|
|
(a)
|
Excludes COVID-19
testing.
|
(b)
|
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 2023
The company updates its Full Year 2023 guidance as
follows:
|
Updated
Guidance
|
|
Prior
Guidance
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Net revenues
|
$9.19
billion
|
|
$9.24
billion
|
|
$9.12
billion
|
|
$9.22
billion
|
Net revenues
decrease
|
(7.0) %
|
|
(6.5) %
|
|
(7.7) %
|
|
(6.7) %
|
Base business revenues
(a)
|
$8.99
billion
|
|
$9.04
billion
|
|
$8.92
billion
|
|
$9.02
billion
|
Base business revenues
increase
|
6.7 %
|
|
7.3 %
|
|
5.8 %
|
|
7.0 %
|
COVID-19 testing
revenues
|
Approximately $200
million
|
|
Approximately $200
million
|
COVID-19 testing
revenues decrease
|
(86.2) %
|
|
(86.2) %
|
Reported diluted
EPS
|
$7.61
|
|
$7.71
|
|
$7.52
|
|
$7.92
|
Adjusted diluted
EPS
|
$8.65
|
|
$8.75
|
|
$8.50
|
|
$8.90
|
Cash provided by
operations
|
Approximately $1.3
billion
|
|
At least $1.3
billion
|
Capital
expenditures
|
Approximately
$400 million
|
|
Approximately $400
million
|
|
|
(a)
|
Excludes COVID-19
testing
|
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, costs associated with
donations, contributions, and other financial support through Quest
for Health Equity (our initiative with the Quest Diagnostics
Foundation to reduce health disparities in underserved
communities), 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 24, 2023 until midnight Eastern Time on November 7, 2023, by phone at 800-945-5759 for
domestic callers or 203-369-3502 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 empowers people to take action to improve
health outcomes. Derived from the world's largest database of
clinical lab results, our diagnostic insights reveal new avenues to
identify and treat disease, inspire healthy behaviors and improve
health care management. Quest annually serves one in three
adult Americans and half the physicians and hospitals in
the United States, and our nearly
50,000 employees understand that, in the right hands and with the
right context, our diagnostic insights can inspire actions that
transform lives. 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 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, 2023 and
2022
|
(in millions, except
per share data)
|
(unaudited)
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
revenues
|
$
2,295
|
|
$
2,486
|
|
$
6,964
|
|
$
7,550
|
|
|
|
|
|
|
|
|
Operating costs and
expenses and other operating income:
|
|
|
|
|
|
|
|
Cost of
services
|
1,541
|
|
1,618
|
|
4,647
|
|
4,875
|
Selling, general and
administrative
|
380
|
|
464
|
|
1,235
|
|
1,311
|
Amortization of
intangible assets
|
27
|
|
27
|
|
81
|
|
81
|
Other operating expense
(income), net
|
5
|
|
(15)
|
|
6
|
|
(10)
|
Total operating costs
and expenses, net
|
1,953
|
|
2,094
|
|
5,969
|
|
6,257
|
|
|
|
|
|
|
|
|
Operating
income
|
342
|
|
392
|
|
995
|
|
1,293
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(40)
|
|
(33)
|
|
(112)
|
|
(106)
|
Other (expense) income,
net
|
(3)
|
|
(8)
|
|
10
|
|
(61)
|
Total non-operating
expense, net
|
(43)
|
|
(41)
|
|
(102)
|
|
(167)
|
|
|
|
|
|
|
|
|
Income before income
taxes and equity in earnings of equity method
investees
|
299
|
|
351
|
|
893
|
|
1,126
|
Income tax
expense
|
(68)
|
|
(81)
|
|
(208)
|
|
(268)
|
Equity in earnings
of equity method investees, net of taxes
|
6
|
|
6
|
|
18
|
|
41
|
Net
income
|
237
|
|
276
|
|
703
|
|
899
|
Less: Net income
attributable to noncontrolling interests
|
12
|
|
20
|
|
41
|
|
54
|
Net income
attributable to Quest Diagnostics
|
$ 225
|
|
$ 256
|
|
$ 662
|
|
$ 845
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
|
|
|
|
Basic
|
$ 1.99
|
|
$ 2.20
|
|
$ 5.87
|
|
$ 7.17
|
|
|
|
|
|
|
|
|
Diluted
|
$ 1.96
|
|
$ 2.17
|
|
$ 5.79
|
|
$ 7.05
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
112
|
|
116
|
|
112
|
|
117
|
|
|
|
|
|
|
|
|
Diluted
|
114
|
|
118
|
|
114
|
|
119
|
Quest Diagnostics
Incorporated and Subsidiaries
|
Consolidated Balance
Sheets
|
September 30,
2023 and December 31, 2022
|
(in millions, except
per share data)
|
(unaudited)
|
|
|
September
30, 2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
143
|
|
$
315
|
Accounts receivable,
net
|
1,281
|
|
1,195
|
Inventories
|
184
|
|
192
|
Prepaid expenses and
other current assets
|
207
|
|
196
|
Total current
assets
|
1,815
|
|
1,898
|
Property, plant and
equipment, net
|
1,830
|
|
1,766
|
Operating lease
right-of-use assets
|
607
|
|
585
|
Goodwill
|
7,732
|
|
7,220
|
Intangible assets,
net
|
1,219
|
|
1,092
|
Investments in
equity method investees
|
130
|
|
132
|
Other
assets
|
149
|
|
144
|
Total
assets
|
$
13,482
|
|
$
12,837
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
1,157
|
|
$
1,396
|
Current portion of
long-term debt
|
304
|
|
2
|
Current portion of
long-term operating lease liabilities
|
157
|
|
153
|
Total current
liabilities
|
1,618
|
|
1,551
|
Long-term
debt
|
3,946
|
|
3,978
|
Long-term operating
lease liabilities
|
505
|
|
489
|
Other
liabilities
|
874
|
|
812
|
Redeemable
noncontrolling interest
|
76
|
|
77
|
Stockholders'
equity:
|
|
|
|
Quest Diagnostics
stockholders' equity:
|
|
|
|
Common stock, par
value $0.01 per share; 600 shares authorized as of both
September 30, 2023
and December 31, 2022; 162 shares issued as of both
September 30, 2023 and December 31, 2022
|
2
|
|
2
|
Additional paid-in
capital
|
2,302
|
|
2,295
|
Retained
earnings
|
8,711
|
|
8,290
|
Accumulated other
comprehensive loss
|
(20)
|
|
(21)
|
Treasury stock, at
cost; 50 and 51 shares as of September 30, 2023 and
December 31, 2022, respectively
|
(4,570)
|
|
(4,673)
|
Total Quest
Diagnostics stockholders' equity
|
6,425
|
|
5,893
|
Noncontrolling
interests
|
38
|
|
37
|
Total stockholders'
equity
|
6,463
|
|
5,930
|
Total liabilities
and stockholders' equity
|
$
13,482
|
|
$
12,837
|
Quest Diagnostics
Incorporated and Subsidiaries
|
Consolidated
Statements of Cash Flows
|
For the Nine Months
Ended September 30, 2023 and 2022
|
(in
millions)
|
(unaudited)
|
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
703
|
|
$
899
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
330
|
|
321
|
Provision for credit
losses
|
—
|
|
1
|
Deferred income tax
(benefit) provision
|
(39)
|
|
45
|
Stock-based
compensation expense
|
58
|
|
55
|
Other, net
|
12
|
|
37
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(86)
|
|
162
|
Accounts payable and
accrued expenses
|
(231)
|
|
(169)
|
Income taxes
payable
|
—
|
|
(1)
|
Other assets and
liabilities, net
|
(2)
|
|
34
|
Net cash provided by
operating activities
|
745
|
|
1,384
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Business acquisitions,
net of cash acquired
|
(611)
|
|
(106)
|
Capital
expenditures
|
(336)
|
|
(257)
|
Increase in investments
and other assets
|
—
|
|
(6)
|
Net cash used in
investing activities
|
(947)
|
|
(369)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
1,703
|
|
—
|
Repayments of
debt
|
(1,426)
|
|
(1)
|
Purchases of treasury
stock
|
—
|
|
(947)
|
Exercise of stock
options
|
60
|
|
96
|
Employee payroll tax
withholdings on stock issued under stock-based compensation
plans
|
(28)
|
|
(28)
|
Dividends
paid
|
(234)
|
|
(230)
|
Distributions to
noncontrolling interest partners
|
(41)
|
|
(58)
|
Other financing
activities, net
|
(4)
|
|
(19)
|
Net cash provided by
(used in) financing activities
|
30
|
|
(1,187)
|
|
|
|
|
Net change in cash
and cash equivalents and restricted cash
|
(172)
|
|
(172)
|
Cash and cash
equivalents and restricted cash, beginning of period
|
315
|
|
872
|
Cash and cash
equivalents and restricted cash, end of period
|
$
143
|
|
$
700
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
Interest
|
$
97
|
|
$
110
|
Income taxes
|
$
233
|
|
$
187
|
Notes to Financial
Tables
1) The
computation of basic and diluted earnings per common share is as
follows:
|
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in millions, except
per share data)
|
Amounts attributable
to Quest Diagnostics' common stockholders:
|
|
|
|
|
|
|
|
Net income attributable
to Quest Diagnostics
|
$
225
|
|
$
256
|
|
$
662
|
|
$
845
|
Less: earnings
allocated to participating securities
|
2
|
|
2
|
|
4
|
|
4
|
Earnings available to
Quest Diagnostics' common stockholders - basic and
diluted
|
$
223
|
|
$
254
|
|
$
658
|
|
$
841
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding - basic
|
112
|
|
116
|
|
112
|
|
117
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
Stock options and
performance share units
|
2
|
|
2
|
|
2
|
|
2
|
Weighted average common
shares outstanding - diluted
|
114
|
|
118
|
|
114
|
|
119
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
1.99
|
|
$
2.20
|
|
$
5.87
|
|
$
7.17
|
Diluted
|
$
1.96
|
|
$
2.17
|
|
$
5.79
|
|
$
7.05
|
2) The following
tables reconcile reported GAAP results to non-GAAP adjusted
results:
|
|
|
Three Months Ended
September 30, 2023
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (d)
|
|
Equity in
earnings of
equity method
investees, net
of taxes
|
|
Net income
attributable to
Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
342
|
|
14.9 %
|
|
$
(68)
|
|
$
6
|
|
$
225
|
|
$
1.96
|
Restructuring and
integration charges (a)
|
6
|
|
0.3
|
|
(1)
|
|
—
|
|
5
|
|
0.05
|
Other (b)
|
5
|
|
0.2
|
|
—
|
|
—
|
|
5
|
|
0.04
|
Amortization
expense
|
27
|
|
1.2
|
|
(6)
|
|
—
|
|
21
|
|
0.18
|
ETB
|
—
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
|
(0.01)
|
As adjusted
|
$
380
|
|
16.6 %
|
|
$
(77)
|
|
$
6
|
|
$
254
|
|
$
2.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2023
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (d)
|
|
Equity in
earnings of
equity method
investees, net
of taxes
|
|
Net income
attributable to
Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
995
|
|
14.3 %
|
|
$
(208)
|
|
$
18
|
|
$
662
|
|
$
5.79
|
Restructuring and
integration charges (a)
|
32
|
|
0.5
|
|
(8)
|
|
—
|
|
24
|
|
0.22
|
Other (b)
|
11
|
|
0.1
|
|
(2)
|
|
—
|
|
9
|
|
0.08
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(1)
|
|
3
|
|
2
|
|
0.02
|
Amortization
expense
|
81
|
|
1.2
|
|
(20)
|
|
—
|
|
61
|
|
0.53
|
ETB
|
—
|
|
—
|
|
(9)
|
|
—
|
|
(9)
|
|
(0.08)
|
As adjusted
|
$
1,119
|
|
16.1 %
|
|
$
(248)
|
|
$
21
|
|
$
749
|
|
$
6.56
|
|
Three Months Ended
September 30, 2022
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as
a
percentage
of
net
revenues
|
|
Income
tax
expense
(d)
|
|
Equity
in
earnings
of
equity
method
investees,
net
of
taxes
|
|
Net
income
attributable
to
Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
392
|
|
15.8 %
|
|
$
(81)
|
|
$
6
|
|
$
256
|
|
$
2.17
|
Restructuring and
integration charges (a)
|
13
|
|
0.5
|
|
(4)
|
|
—
|
|
9
|
|
0.08
|
Other (b)
|
(9)
|
|
(0.4)
|
|
2
|
|
—
|
|
(7)
|
|
(0.06)
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
—
|
|
—
|
|
2
|
|
0.01
|
Amortization
expense
|
27
|
|
1.1
|
|
(7)
|
|
—
|
|
20
|
|
0.17
|
ETB
|
—
|
|
—
|
|
(1)
|
|
—
|
|
(1)
|
|
(0.01)
|
As adjusted
|
$
423
|
|
17.0 %
|
|
$
(91)
|
|
$
6
|
|
$
279
|
|
$
2.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2022
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (d)
|
|
Equity in
earnings of
equity method
investees, net
of taxes
|
|
Net income
attributable to
Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
1,293
|
|
17.1 %
|
|
$
(268)
|
|
$
41
|
|
$
845
|
|
$
7.05
|
Restructuring and
integration charges (a)
|
37
|
|
0.5
|
|
(10)
|
|
—
|
|
27
|
|
0.23
|
Other (b)
|
1
|
|
—
|
|
(1)
|
|
—
|
|
—
|
|
—
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(9)
|
|
9
|
|
30
|
|
0.24
|
Amortization
expense
|
81
|
|
1.1
|
|
(21)
|
|
—
|
|
60
|
|
0.50
|
ETB
|
—
|
|
—
|
|
(10)
|
|
—
|
|
(10)
|
|
(0.08)
|
As adjusted
|
$
1,412
|
|
18.7 %
|
|
$
(319)
|
|
$
50
|
|
$
952
|
|
$
7.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
For both the three and
nine months ended September 30, 2023, the pre-tax impact represents
costs primarily associated with workforce reductions and
integration costs incurred in connection with further restructuring
and integrating our business. For both the three and nine
months ended September 30, 2022, the pre-tax impact represents
costs primarily associated with workforce reductions, systems
conversions and integration costs incurred in connection with
further restructuring and integrating our business. The
following table summarizes the pre-tax impact of restructuring and
integration charges on our consolidated statements of
operations:
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(dollars in
millions)
|
Cost of
services
|
$
2
|
|
$
6
|
|
$
12
|
|
$
13
|
Selling, general and
administrative
|
4
|
|
7
|
|
20
|
|
24
|
Operating
income
|
$
6
|
|
$
13
|
|
$
32
|
|
$
37
|
|
|
(b)
|
For the three months
ended September 30, 2023, the pre-tax impact primarily represents a
$5 million loss associated with the increase in the fair value of
the contingent consideration accrual associated with previous
acquisitions. For the nine months ended September 30, 2023,
the pre-tax impact primarily represents the impairment of a
corporate facility that is currently held for sale and a $5 million
loss associated with the increase in the fair value of the
contingent consideration accrual associated with previous
acquisitions. For the three months ended September 30, 2022,
the pre-tax impact primarily represents a $10 million gain from a
payroll tax credit under the Coronavirus Aid, Relief, and Economic
Security Act ("CARES Act") associated with the retention of
employees and a $7 million gain associated with the decrease in the
fair value of the contingent consideration accrual associated with
previous acquisitions, partially offset by $5 million of costs
associated with donations, contributions and other financial
support through Quest for Health Equity. For the nine months
ended September 30, 2022, the pre-tax impact primarily represents
$9 million of costs associated with donations, contributions and
other financial support through Quest for Health Equity, offset by
the gain from the payroll tax credit under the CARES Act associated
with the retention of employees. The following table
summaries the pre-tax impact of these other items on our
consolidated statements of operations:
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(dollars in
millions)
|
Cost of
services
|
$
—
|
|
$
2
|
|
$
—
|
|
$
2
|
Selling, general and
administrative
|
1
|
|
5
|
|
7
|
|
9
|
Other operating expense
(income), net
|
4
|
|
(16)
|
|
4
|
|
(10)
|
Operating
income
|
$
5
|
|
$
(9)
|
|
$
11
|
|
$
1
|
|
|
(c)
|
For all periods
presented, the pre-tax impact represents gains and losses
associated with changes in the carrying value of our strategic
investments. The following table summarizes the pre-tax
impact of gains and losses on investments on our consolidated
statements of operations:
|
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(dollars in
millions)
|
Other (expense) income,
net
|
$
—
|
|
$
2
|
|
$
—
|
|
$
30
|
|
|
|
|
|
|
|
|
Equity in earnings of
equity method investees, net of taxes
|
$
—
|
|
$
—
|
|
$
3
|
|
$
9
|
|
|
(d)
|
For restructuring and
integration charges, gains and losses on investments, other items
and amortization expense, income tax impacts, where recorded, were
primarily calculated using combined statutory income tax rates of
25.5% for both 2023 and 2022.
|
3) The outlook
for adjusted diluted EPS represents management's estimates for the
full year 2023 before the impact of special items. Further impacts
to earnings related to special items may occur throughout 2023.
Additionally, the amount of ETB is dependent upon employee stock
option exercises and our stock price, which are difficult to
predict. The following table reconciles our 2023 outlook for
diluted EPS under GAAP to our outlook for adjusted diluted EPS:
|
|
|
Low
|
|
High
|
Diluted EPS
|
$
7.61
|
|
$
7.71
|
Restructuring and
integration charges (a)
|
0.32
|
|
0.32
|
Amortization expense
(b)
|
0.71
|
|
0.71
|
Other (c)
|
0.08
|
|
0.08
|
Gains and losses on
investments (d)
|
0.02
|
|
0.02
|
ETB
|
(0.09)
|
|
(0.09)
|
Adjusted diluted
EPS
|
$
8.65
|
|
$
8.75
|
|
|
(a)
|
Represents estimated
pre-tax charges of $49 million primarily associated with workforce
reductions and integration costs incurred in connection with
further restructuring and integrating our business. Income
tax benefits were primarily calculated using a combined statutory
income tax rate of 25.5%.
|
|
|
(b)
|
Represents estimated
pre-tax amortization expenses of $108 million. Income tax
benefits were calculated using a combined statutory income tax rate
of 25.5%.
|
|
|
(c)
|
Primarily represents
the impairment of a corporate facility that is currently held for
sale and a loss associated with the increase in the fair value of
the contingent consideration accrual associated with previous
acquisitions. Income tax benefits were primarily calculated
using a combined statutory income tax rate of 25.5%.
|
|
|
(d)
|
Represents $3 million
of pre-tax losses associated with changes in the carrying value of
our strategic investments. Income tax impacts were calculated using
a combined statutory income tax rate of 25.5%.
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/quest-diagnostics-reports-third-quarter-2023-financial-results-updates-guidance-for-full-year-2023-301964795.html
SOURCE Quest Diagnostics