Summary
Quest Diagnostics Inc. (DGX) reported solid revenue and income growth for the nine months ended September 30, 2008, compared to the same period in 2007. Net revenues increased by 10.4% to $5.45 billion, driven by organic growth and the acquisition of AmeriPath. Income from continuing operations saw a significant rise of 15.7% to $462.6 million, translating to diluted EPS of $2.36, up from $2.05 in the prior year. This performance reflects successful revenue generation, effective cost management, and the integration of recent acquisitions. A notable item for investors is the ongoing resolution of a federal government investigation concerning NID, a former test kit subsidiary. The company reached an agreement in principle and recorded a charge of $73 million in the third quarter of 2008, bringing the total reserve for this matter to $314 million. While this impacted reported net income negatively ($411.7 million for nine months ended Sept 30, 2008, down from $345.2 million in 2007 due to this charge), the core operating business remains strong. The company's liquidity position also improved, with cash and cash equivalents increasing to $286.7 million from $167.6 million at the end of 2007.
Financial Highlights
27 data points| Revenue | $1.83B |
| Cost of Revenue | $1.07B |
| Gross Profit | $753.48M |
| SG&A Expenses | $428.18M |
| Operating Expenses | $1.51B |
| Operating Income | $316.94M |
| Net Income | $110.74M |
| EPS (Basic) | $0.57 |
| EPS (Diluted) | $0.56 |
| Shares Outstanding (Basic) | 194.97M |
| Shares Outstanding (Diluted) | 197.19M |
Key Highlights
- 1Net revenues increased 10.4% to $5.45 billion for the nine months ended September 30, 2008, compared to $4.93 billion in the prior year.
- 2Income from continuing operations rose 15.7% to $462.6 million for the nine months ended September 30, 2008, with diluted EPS increasing to $2.36 from $2.05.
- 3The company reached an agreement in principle to settle a federal investigation concerning NID, recording a $73 million charge in Q3 2008, increasing the total reserve to $314 million.
- 4Cash and cash equivalents significantly increased to $286.7 million as of September 30, 2008, up from $167.6 million at December 31, 2007.
- 5Operating income as a percentage of net revenues improved to 16.6% for the nine months ended September 30, 2008, from 15.8% in the prior year.
- 6The AmeriPath acquisition, completed in May 2007, contributed significantly to revenue growth, particularly in the clinical testing segment.
- 7The company continues to manage its debt, reducing total debt by $831 million since the AmeriPath acquisition, demonstrating a focus on financial leverage management.