By the numbers:
- 3Q revenue: $2.49 billion
10% decline from 2021
- 3Q adjusted diluted earnings per share: $2.36,
40% decline from 2021
- 3Q base revenue: $2.17 billion
5.1% growth from 2021
Quest Diagnostics, one of the largest U.S. laboratory testing firms, raised its forecast for full-year sales even after revenue slid 10% in the third quarter. The company’s shares climbed.
Quest now expects full-year sales of $9.72 billion to $9.86 billion, compared to previous guidance of $9.50 billion to $9.75 billion. It anticipates COVID testing revenue of $1.34 billion to $1.41 billion in 2022, up from the prior forecast of $1.15 billion to $1.30 billion. That’s still a drop in COVID-testing revenue of between 49% and 53% from 2021.
The company also expects an adjusted EPS of $9.75 to $9.95, narrowing the band from the $9.55 to $9.95 from its prior forecast.
Net income in the quarter dropped 44% to $279 million.
Quest said that while inflationary pressures are weighing on the company, efforts to move away from tests for COVID-19, where demand has been declining, appear to be paying off.
"Our base business revenue grew five percent year-over-year in the third quarter, with performance rebounding in August and September from the softer volume trends we saw earlier in the year. At the same time, we continued to invest in advanced diagnostics and consumer initiated testing while managing our cost structure to help offset inflationary pressures and declining COVID-19 volumes," said acting CEO Jim Davis, who will take over as CEO and president on Nov. 1 from Steve Rusckowski, who will remain as executive chairman.
Quest’s earnings of $2.36 per share in the quarter beat the consensus estimate of $2.17 per share, compiled by Zacks Equity Research.
“This quarterly report represents an earnings surprise of 8.76%,” wrote a Zacks analyst, noting that over the last four quarters the company has surpassed consensus EPS estimates three times.
Third-quarter revenue of $2.49 billion beat the Zacks consensus estimate by 5.6%.
Quest shares rose 6.2%, or $7.76, to $134.43 in morning trading in New York. The stock has dropped 27% since the beginning of the year, while the S&P 500 has fallen 23%