Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic information services, announced today financial results for the fourth quarter and full year ended December 31, 2020.
"In a year dominated by the pandemic, Quest brought critical COVID-19 testing to our country, and delivered record revenues, earnings and cash from operations for the fourth quarter and full year 2020," said Steve Rusckowski, Chairman, CEO and President. "Declines in our base business recovered rapidly throughout the summer and fall; however the recovery stalled at the end of November and into December due to the surge in COVID-19 infections across the country. Continued high demand for COVID-19 testing drove our performance through the second half of the year.
"In light of the company's strong financial position, we have increased our dividend and our share repurchase authorization while maintaining flexibility to pursue our M&A strategy," Mr. Rusckowski continued. "Given the ongoing uncertainty regarding the trajectory of the virus and its impact on COVID-19 testing trends as well as further recovery of our base business, we are providing an outlook for the first six months of 2021. We expect to provide additional updates as the year progresses."
Mr. Rusckowski continued: "The pandemic has tested our nearly 50,000 employees and they have responded as heroes, by developing COVID-19 tests, building test capacity, innovating new testing models with our retail partners, transporting specimens, delivering results and of course, supporting our customers. I'm proud of what we have achieved and optimistic about what we can accomplish in 2021."
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Three Months Ended December 31, |
Twelve Months Ended December 31, |
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|
2020 |
2019 |
Change |
2020 |
2019 |
Change |
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|
(dollars in millions, except per share data) |
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Reported: |
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|
Net revenues |
$ |
3,002 |
$ |
1,926 |
55.8 |
% |
$ |
9,437 |
$ |
7,726 |
22.1 |
% |
|||||||||
|
Diagnostic information services revenues |
$ |
2,922 |
$ |
1,844 |
58.4 |
% |
$ |
9,139 |
$ |
7,405 |
23.4 |
% |
|||||||||
|
Revenue per requisition |
25.2 |
% |
16.2 |
% |
|||||||||||||||||
|
Requisition volume |
26.8 |
% |
6.6 |
% |
|||||||||||||||||
|
Organic requisition volume |
22.3 |
% |
4.5 |
% |
|||||||||||||||||
|
Operating income (a) |
$ |
795 |
$ |
363 |
119.1 |
% |
$ |
1,971 |
$ |
1,231 |
60.2 |
% |
|||||||||
|
Operating income as a percentage of net revenues (a) |
26.5 |
% |
18.8 |
% |
7.7 |
% |
20.9 |
% |
15.9 |
% |
5.0 |
% |
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|
Income from continuing operations attributable to Quest Diagnostics (a) |
$ |
579 |
$ |
253 |
129.0 |
% |
$ |
1,431 |
$ |
838 |
70.8 |
% |
|||||||||
|
Diluted EPS (a) (b) |
$ |
4.21 |
$ |
1.86 |
126.9 |
% |
$ |
10.47 |
$ |
6.13 |
70.8 |
% |
|||||||||
|
Cash provided by operations |
$ |
541 |
$ |
348 |
55.4 |
% |
$ |
2,005 |
$ |
1,243 |
61.3 |
% |
|||||||||
|
Capital expenditures |
$ |
162 |
$ |
172 |
(5.9) |
% |
$ |
418 |
$ |
400 |
4.4 |
% |
|||||||||
|
Adjusted: |
|||||||||||||||||||||
|
Operating income |
$ |
860 |
$ |
329 |
161.8 |
% |
$ |
2,210 |
$ |
1,316 |
68.0 |
% |
|||||||||
|
Operating income as a percentage of net revenues |
28.6 |
% |
17.0 |
% |
11.6 |
% |
23.4 |
% |
17.0 |
% |
6.4 |
% |
|||||||||
|
Income from continuing operations attributable to Quest Diagnostics |
$ |
615 |
$ |
228 |
170.0 |
% |
$ |
1,527 |
$ |
896 |
70.4 |
% |
|||||||||
|
Diluted EPS (b) |
$ |
4.48 |
$ |
1.67 |
167.7 |
% |
$ |
11.18 |
$ |
6.56 |
70.4 |
% |
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|
(a) |
For further details impacting the year-over-year comparisons related to operating income, operating income as a percentage of net revenues, income from continuing operations attributable to Quest Diagnostics, and diluted EPS, see note 2 of the financial tables attached below. |
|
(b) |
The sum of reported and adjusted diluted EPS for the four quarters of 2020 did not equal the total for the year ended December 31, 2020 due to quarterly fluctuations in the company's earnings and weighted average common shares outstanding throughout the year as a result of the impact of COVID-19 and the temporary suspension of repurchases under the company's share repurchase program. |
Outlook for First Half of 2021
The company estimates its first half 2021 results as follows:
|
Low |
High |
|||
|
Net revenues |
$4.85 billion |
$5.15 billion |
||
|
Net revenues increase |
32.9% |
41.1% |
||
|
Reported diluted EPS |
$5.07 |
6.07 |
||
|
Adjusted diluted EPS |
$5.90 |
$6.90 |
||
|
Cash provided by operations |
At least $800 million |
|||
|
Capital expenditures |
Approximately $200 million |
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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, certain financial impacts resulting from the COVID-19 pandemic, amortization expense, excess tax benefits ("ETB") associated with stock-based compensation, a gain on remeasurement of an equity interest, costs associated with donations, contributions and other financial support through Quest for Health Equity, the company's recently announced initiative with the Quest Diagnostics Foundation to reduce health disparities in underserved communities, the gain on the sale and leaseback of a property, 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.
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.
