SECAUCUS, N.J., Sept. 9,
2021 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE:
DGX), the world's leading provider of diagnostic information
services, today updated its financial outlook for full year
2021.
Since the company reported its financial performance for the
second quarter of 2021 on July 22,
2021, COVID-19 molecular testing volumes were stronger than
anticipated through the end of August and are expected to continue
to be stronger than anticipated because of the surge of the Delta
variant. The low end of the company's outlook now assumes average
COVID-19 volumes of at least 40,000 molecular tests per day for the
second half of the year. Organic testing volumes in the company's
base business (excluding COVID-19 molecular and antibody testing
and the impact of recent acquisitions) remain consistent with its
previous outlook.
Updated Outlook for Full Year 2021
The company revised its full year 2021 outlook as follows:
|
Updated
Outlook
|
|
Previous
Outlook
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Net
revenues
|
$9.84
billion
|
|
$10.09
billion
|
|
$9.54
billion
|
|
$9.79
billion
|
Net revenues
increase
|
4.3%
|
|
6.9%
|
|
1.1%
|
|
3.7%
|
Reported diluted
EPS
|
$12.54
|
|
$13.24
|
|
$11.48
|
|
$12.18
|
Adjusted diluted
EPS
|
$11.65
|
|
$12.35
|
|
$10.65
|
|
$11.35
|
Cash provided by
operations
|
At least
$2.0 billion
|
|
At least $1.9
billion
|
Capital
expenditures
|
Approximately $400
million
|
|
Approximately $400
million
|
The company is scheduled to participate in the Morgan Stanley
19th Annual Global Healthcare Conference today at 9:30 a.m. Eastern Time. The presentation will be
webcast live during the conference and will be available on the
company's investor relations page which can be accessed at
ir.QuestDiagnostics.com. During the discussion, the company's
management plans to discuss the company's vision, goals and
two-point strategy to accelerate growth and drive operational
excellence, as well as the company's current perspective on the
impact of the COVID-19 pandemic.
Management continues to believe that the COVID-19 pandemic's
impact on its future operating results, cash flows and/or financial
condition will be primarily driven by a number of factors beyond
the company's knowledge and control, including: the pandemic's
severity and duration; healthcare insurer, government, and client
payer reimbursement rates for COVID-19 molecular tests; the
pandemic's impact on the U.S. healthcare system and the U.S.
economy; and the timing, scope and effectiveness of federal, state
and local governmental responses to the pandemic including the
impact of vaccination efforts.
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, costs associated with
donations, contributions and other financial support through Quest
for Health Equity, the company's initiative with the Quest
Diagnostics Foundation to reduce health disparities in underserved
communities, a gain on the sale of an ownership interest in a joint
venture 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 table attached below includes a reconciliation 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.
Forward Looking Statements
The statements in this press release which are not historical
facts may be forward-looking statements. Readers are
cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date that they are made and
which reflect management's current estimates, projections,
expectations or beliefs and which involve risks and uncertainties
that could cause actual results and outcomes to be materially
different. Risks and uncertainties that may affect the future
results of the company include, but are not limited to, impacts of
the COVID-19 pandemic and measures taken in response, adverse
results from pending or future government investigations, lawsuits
or private actions, the competitive environment, the complexity of
billing, reimbursement and revenue recognition for clinical
laboratory testing, changes in government regulations, changing
relationships with customers, payers, suppliers or strategic
partners and other factors discussed in the company's most recently
filed Annual Report on Form 10-K and in any of the company's
subsequently filed Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, including those discussed in the "Business,"
"Risk Factors," "Cautionary Factors that May Affect Future Results"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" sections of those reports.
ADDITIONAL TABLES FOLLOW
The outlook for adjusted diluted EPS represents management's
estimates for the full year 2021 before the impact of special
items. Further impacts to earnings related to special items may
occur throughout 2021. Additionally, the amount of ETB is
dependent upon employee stock option exercises and the company's
stock price, which are difficult to predict. The following table
reconciles our full year 2021 outlook for adjusted diluted EPS to
the corresponding amounts determined under GAAP:
|
Low
|
|
High
|
Diluted
EPS
|
$
|
12.54
|
|
|
$
|
13.24
|
|
Restructuring and
integration charges (a)
|
0.46
|
|
|
0.46
|
|
COVID-19 impact
(b)
|
0.03
|
|
|
0.03
|
|
Amortization expense
(c)
|
0.62
|
|
|
0.62
|
|
Costs associated with
Quest for Health Equity (d)
|
0.15
|
|
.
|
0.15
|
|
Gain on sale of
ownership in joint venture (e)
|
(2.02)
|
|
|
(2.02)
|
|
ETB
|
(0.13)
|
|
|
(0.13)
|
|
Adjusted diluted
EPS
|
$
|
11.65
|
|
|
$
|
12.35
|
|
(a)
|
Represents estimated
pre-tax charges of $75 million primarily associated with workforce
reductions, systems conversions and integration costs incurred in
connection with further restructuring and integrating our business
and impairment charges. Income tax benefits were calculated
using a combined statutory income tax rate of 25.5%.
|
|
|
(b)
|
Represents estimated
pre-tax charges of $4 million associated with the impact of certain
items resulting from the COVID-19 pandemic. Income tax
benefits were calculated using a combined statutory income tax rate
of 25.5%.
|
|
|
(c)
|
Represents the
estimated impact of amortization expense on the calculation of
adjusted diluted EPS. Income tax benefits were calculated
using a combined statutory income tax rate of 25.5%.
|
Amortization of
intangible assets
|
$
|
104
|
|
Amortization expense
included in equity in earnings of equity method investees, net of
taxes
|
2
|
|
Total pre-tax
amortization expense
|
$
|
106
|
|
|
|
Total amortization
expense, net of an estimated tax benefit using a combined statutory
income tax rate of 25.5%
|
$
|
79
|
|
(d)
|
Represents estimated
pre-tax charges of $25 million associated with donations,
contributions and other financial support through Quest for Health
Equity. Income tax benefits were calculated using a combined
statutory income tax rate of 25.5%.
|
|
|
(e)
|
Represents a pre-tax
gain of $314 million recorded in other income (expense), net
following the sale of the company's 40% ownership in Q2
Solutions®. Income tax expense on the transaction
resulted in an effective income tax rate of 17.6%.
|
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SOURCE Quest Diagnostics