Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic information services, announced today that for the second quarter ended June 30, 2016, reported net income was $195 million, or $1.37 per diluted share, compared to $118 million, or $0.81per diluted share, in 2015.

Adjusted net income was $178 million, compared to $170 million in 2015. Adjusted diluted EPS excluding amortization was $1.34 in the quarter, compared to $1.25 in 2015. In the second quarter of 2016, reported net income was favorably impacted by the gain on the sale of the company's Focus Diagnostics products business of $34 million after tax, or $0.24 per diluted share. This gain was offset by approximately $17 million after tax, or $0.12 per diluted share, consisting primarily of restructuring and integration charges. In the second quarter of 2015, reported net income was reduced by $52 million after tax, or $0.36 per diluted share, principally associated with debt refinancing charges and restructuring and integration charges.

Second quarter 2016 revenues were $1.91 billion. Revenues declined 1.0% versus the prior year on a reported basis, due to divestitures driven by our strategy to refocus the business on diagnostic information services. On an equivalent basis, revenues grew 2.4% compared to a year ago. 2015 equivalent revenues exclude: second quarter 2015 clinical trials testing and Celera products revenues; and Focus Diagnostics products revenues for May and June 2015. Diagnostic Information Services revenues grew 2.2% compared to a year ago. Volume, measured by the number of requisitions, grew 1.9% versus the prior year and revenue per requisition grew 0.2%.

"We had another good quarter of earnings growth and a solid first half," said Steve Rusckowski, President and CEO. "We've refocused our business on diagnostic information services, and without clinical trials or diagnostic products businesses, reported revenues decreased 1%, but we grew equivalent revenues more than 2% in the quarter. Our expanding hospital relationships, including the CLP acquisition and Barnabas Health PLS agreement, have been key contributors to growth this year, and our latest PLS agreement with HCA's HealthONE system will help continue the momentum. We continued to drive operational excellence, which produced Invigorate cost savings and also improvements in medical quality and our customer experience. We remain on track to meet our commitments for the remainder of the year."

For the second quarter of 2016, reported operating income was $422 million, or 22.1% of revenues, compared to $301 million, or 15.6% of revenues, in 2015. Adjusted operating income was $324 million, or 17.0% of revenues, compared to $321 million, or 16.7% of revenues, in 2015. Reported cash provided by operations was $311 million in the second quarter of 2016 and was positively impacted by a $9 million cash tax benefit associated with the early retirement of debt. In the second quarter of 2015, reported cash provided by operations was $277 million and was negatively impacted by after cash tax charges of $49 million associated with the company's debt refinancing. Adjusted cash provided by operations was $302 million during the second quarter of 2016 and $326 million in 2015.

First Half Performance

Revenues were $3.77 billion for the first six months of 2016, essentially flat versus the prior year on a reported basis, and grew 3.2% on an equivalent basis. Reported net income for the first six months of 2016 was $298 million, or $2.08 per diluted share, compared to $179 million, or $1.23 per diluted share, in 2015. Reported net income in the first half of 2016 was negatively impacted by charges of $29 million after tax, or $0.20 per diluted share, principally associated with charges on retirement of debt, restructuring and integration charges, partially offset by the gain on the sale of the company's Focus Diagnostics products business. Adjusted net income was $327 million for the first six months of 2016, compared to $311 million in 2015. Adjusted diluted EPS excluding amortization was $2.47 for the first six months of 2016, compared to $2.30 in 2015.

On a reported basis, operating income was $679 million, or 18.0% of revenues, compared to $529 million, or 14.1% of revenues, in 2015. Adjusted operating income for the first six months of 2016 was $605 million, or 16.0% of revenues, compared to $590 million, or 15.7% of revenues for 2015. Reported cash provided by operations for the six months of 2016 was $464 million and was negatively impacted by after tax cash charges of $38 million associated with the retirement of debt. In the first six months of 2015, reported cash provided by operations was $337 million and was negatively impacted by after cash tax charges of $127 million associated with the company's debt refinancing. Adjusted cash provided by operations was $502 million during the first half of 2016 and $464 million in 2015.

Outlook for Full-Year 2016

For 2016, the company estimates results, before special items, as follows:

• Revenues to be between $7.47 billion and $7.54 billion, flat to an increase of approximately 1% over 2015 revenues on a reported basis, and an increase of 2% to 3% over 2015 revenues on an equivalent basis. For further details, see note 9 of the financial tables.
• Revenues on an equivalent basis for full year 2015 were $7.32 billion. This represents the company's reported revenues, excluding $85 million in 2015 clinical trials testing revenues, and $84 million in revenues representing all Celera products revenue for 2015 and Focus Diagnostics products revenue subsequent to April 2015.
• Reported diluted EPS to be between $4.18 and $4.33. Adjusted diluted EPS excluding amortization to be between $5.02 and $5.17. For further details, see note 8 of the financial tables.
• Reported cash provided by operations to approximate $880 million. Adjusted cash provided by operations to approximate $1 billion. For further details, see note 8 of the financial tables.
• Capital expenditures to be between $250 million and $300 million.

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 44,000 employees understand that, in the right hands and with the right context, our diagnostic insights can inspire actions that transform lives.www.QuestDiagnostics.com.