Summary
Quest Diagnostics Incorporated (DGX) reported second quarter and year-to-date results for 2017, demonstrating steady top-line growth primarily driven by its Diagnostic Information Services (DIS) segment. Total net revenues increased by 1.9% for both the three and six months ended June 30, 2017, compared to the prior year. The DIS segment, which represents over 90% of revenues, saw a 2.5% increase in the quarter and a 2.9% increase year-to-date, attributed to expanding hospital relationships and growth in advanced diagnostics, supported by a 1.8% and 2.6% increase in volume (requisitions) respectively. Profitability saw a mixed picture for the quarter, with net income attributable to Quest Diagnostics stockholders slightly decreasing by 0.9% to $193 million ($1.37 per diluted share) for the three months ended June 30, 2017, compared to $195 million ($1.37 per diluted share) in the prior year. However, for the six months ended June 30, 2017, net income attributable to Quest Diagnostics stockholders increased by 19.8% to $357 million ($2.53 per diluted share), up from $298 million ($2.08 per diluted share) in the prior year. This increase was significantly influenced by a gain on disposition of business in the prior year's six-month period and higher operating income in the current year. The company continues to execute its cost reduction strategy ('Invigorate Program') and made strategic acquisitions, including PeaceHealth Laboratories and plans for Med Fusion and Clear Point, positioning itself for future growth.
Financial Highlights
56 data points| Revenue | $1.86B |
| Cost of Revenue | $1.17B |
| Gross Profit | $694.00M |
| SG&A Expenses | $358.00M |
| Operating Expenses | $1.54B |
| Operating Income | $319.00M |
| Interest Expense | $38.00M |
| Net Income | $193.00M |
| EPS (Basic) | $1.40 |
| EPS (Diluted) | $1.37 |
| Shares Outstanding (Basic) | 137.00M |
| Shares Outstanding (Diluted) | 140.00M |
Key Highlights
- 1Total net revenues for Q2 2017 grew 1.9% to $1.94 billion, with the DIS segment showing 2.5% revenue growth and 1.8% volume growth.
- 2For the first six months of 2017, net income attributable to Quest Diagnostics stockholders increased significantly by 19.8% to $357 million, or $2.53 per diluted share, compared to $298 million, or $2.08 per diluted share, in the prior year.
- 3The company announced the acquisition of PeaceHealth Laboratories' outreach business for $102 million in May 2017 and entered into agreements to acquire Med Fusion and Clear Point in June 2017, aiming to build a national center for precision diagnostics in oncology.
- 4Cash flow from operations remained strong, providing $490 million in the first six months of 2017, an increase of $26 million from the prior year.
- 5The 'Invigorate Program' for cost reduction is on track to achieve its savings goal of $1.3 billion by the end of 2017, with ongoing initiatives to drive further operational excellence.
- 6The company continued its capital return strategy, repurchasing $300 million of its common stock in the first six months of 2017 and declaring quarterly dividends of $0.45 per common share.
- 7The effective income tax rate decreased significantly in both the three-month and six-month periods of 2017 compared to 2016, benefiting from an increase in excess tax benefits from stock-based compensation and the absence of a large tax expense related to a business disposition in the prior year.