8-KEarnings & ResultsExhibits & Filings

QUEST DIAGNOSTICS INC 8-K Report, Financial Results (Jan 16, 2013)

Filed January 16, 2013For Securities:DGX

Summary

Quest Diagnostics Inc. (DGX) announced on January 16, 2013, a strategic decision to divest its HemoCue diagnostic products business as part of a broader initiative to concentrate on its core diagnostic information services. This divestiture, along with the prior sale of its OralDNA products business in December 2012, will lead to the classification of both HemoCue and OralDNA results as discontinued operations for the fourth quarter and full year 2012. Consequently, the company will recognize a significant after-tax charge of $89.5 million ($0.56 per diluted share) for estimated asset impairment related to HemoCue and the loss on sale of OralDNA. The impact of these divestitures on continuing operations is material. For the full years 2012 and 2011, revenues from continuing operations will be reduced by approximately $117 million and $119 million, respectively. Operating income from continuing operations will be lower by $11 million (2012) and $8 million (2011). Net income from continuing operations is projected to decrease by $15 million (2012) and $13 million (2011), with a corresponding impact of $0.09 and $0.08 per diluted share. Additionally, the company provided an update on the financial impact of Hurricane Sandy, estimating a $21 million reduction in fourth-quarter 2012 revenues, a $16 million decrease in operating income, and a $0.06 reduction in earnings per diluted share.

Key Highlights

  • 1Quest Diagnostics is divesting its HemoCue diagnostic products business to focus on core diagnostic information services.
  • 2The sale of HemoCue, combined with the prior sale of OralDNA, will result in both businesses being reported as discontinued operations.
  • 3A significant after-tax charge of $89.5 million ($0.56 per diluted share) will be recorded for asset impairment and loss on sale related to these divestitures.
  • 4Discontinued operations will reduce reported revenues from continuing operations by approximately $117 million (2012) and $119 million (2011).
  • 5Net income from continuing operations is expected to be reduced by $15 million (2012) and $13 million (2011) due to these divestitures.
  • 6Hurricane Sandy is estimated to have reduced fourth-quarter 2012 revenues by $21 million and operating income by $16 million.
  • 7Earnings per diluted share were negatively impacted by approximately $0.06 due to Hurricane Sandy in the fourth quarter of 2012.

Frequently Asked Questions

Quest Diagnostics is selling the HemoCue diagnostic products business as part of a strategic decision to refocus on its core diagnostic information services, aiming to streamline operations and concentrate on its primary areas of expertise.

Reporting these businesses as discontinued operations will result in a combined after-tax charge of $89.5 million ($0.56 per diluted share) for asset impairment and loss on sale. It will also reduce reported revenues and net income from continuing operations for the full years 2012 and 2011.

Hurricane Sandy is estimated to have reduced fourth-quarter 2012 revenues by approximately $21 million and operating income by $16 million, leading to an estimated negative impact of $0.06 per diluted share for that quarter.

Yes, the divestitures will reduce the top-line revenue and profitability of continuing operations. For instance, revenues from continuing operations are reduced by approximately $117 million in 2012 and $119 million in 2011, with a corresponding impact on net income from continuing operations.