TETERBORO, N.J., Oct. 18 /PRNewswire/ -- Quest Diagnostics Incorporated
(NYSE: DGX), the nation's leading provider of diagnostic testing, information
and services, announced that for the third quarter ended September 30, 2001,
net income was $50.1 million, or $0.51 per diluted share, up 70% from the
$28.7 million, or $0.30 per diluted share, reported in 2000. The company
estimates that earnings were reduced by $0.03 per diluted share as a result of
the tragic events of September 11. Cash earnings, or earnings before
amortization of intangible assets, rose to $0.61 per diluted share from
$0.41 per diluted share for the 2000 period.
Third quarter revenues of $903 million grew by $53 million, or more than
6%, over last year, primarily driven by improved revenue per requisition. The
revenue impact of the September 11 tragedy was approximately $8 million, or
1%. Clinical testing volume, measured by the number of requisitions, increased
approximately 2% over the prior year period, excluding the impact of the
tragedy and adjusting for business contributed to unconsolidated joint
ventures. As a result, reported volume during the third quarter equaled the
prior year's level.
"The strong results reflect continued improvement in operating performance
and actions taken to strengthen our balance sheet," said Kenneth W. Freeman,
Chairman and Chief Executive Officer. "Our business, like many others in the
New York metropolitan area, was impacted by the tragic events of September 11.
The focused efforts of our employees, coupled with our logistics capability,
geographic breadth and scale enabled us to mitigate what could have otherwise
been a much more severe impact to our business and our customers. We now
expect full-year 2001 earnings per share before special items to grow more
than 65% from last year and are comfortable with the current consensus of
earnings per share estimates of $0.48 for the fourth quarter, as published by
First Call. In addition, we continue to expect to deliver earnings growth in
excess of 30% in 2002."
Earnings before interest, taxes, depreciation, amortization and special
items (adjusted EBITDA), were $142 million, or 15.7% of revenues, compared to
$120 million, or 14.1%, for the prior year period. The increase in adjusted
EBITDA was due to the company's revenue growth and improved operating
performance.
Days sales outstanding were 53 days, compared to 54 days a year ago. Bad
debt was 6.1% of revenues in the quarter, compared to 6.8% in the prior year
period. The company ended the quarter with nearly $240 million in cash and no
borrowings outstanding under its $325 million revolving credit facility.
Capital expenditures totaled $32 million for the quarter.
For the first nine months of 2001, income before special items increased
to $136.6 million, or $1.40 per diluted share, compared to $78.0 million, or
$0.83 per diluted share, in 2000. Revenues increased by $133 million to
$2.7 billion. Adjusted EBITDA was $413 million, or 15.2% of revenues for the
nine-month period, compared to $347 million, or 13.4% a year ago. Capital
expenditures for the nine-month period totaled $110 million.
Quest Diagnostics will discuss results for the third quarter during a
conference call on October 19 at 8:00 A.M. Eastern Time. To hear a simulcast
of the call over the Internet, or a replay, registered analysts may access
StreetEvents at: http://www.streetevents.com and all others may access the
Quest Diagnostics website at: http://www.questdiagnostics.com. In addition, a
replay of the call will also be available from 10 A.M. on October 19 through
5 P.M. on October 22 to investors in the U.S. by dialing 800-754-7906.
Investors outside the U.S. may dial 402-220-0366. No password is required for
either number.
Quest Diagnostics is the nation's leading provider of diagnostic testing,
information and services with $3.4 billion in annual revenues. The company's
diagnostic testing yields information that enables health care professionals
and consumers to make better decisions to improve health. Quest Diagnostics
offers patients and physicians the broadest access to diagnostic testing
services through its national network of approximately 30 full-service
laboratories, 150 rapid response laboratories and more than 1,300 patient
service centers, where specimens are collected. Quest Diagnostics is the
leading provider of esoteric testing, including gene-based testing, and is the
leader in routine medical testing, drugs of abuse testing, and
non-hospital-based anatomic pathology testing. Through partnerships with
pharmaceutical, biotechnology and information technology companies, Quest
Diagnostics provides support to help speed the development of health care
insights and new therapeutics. Additional company information can be found on
the Internet at: http://www.questdiagnostics.com.
The statements in this press release which are not historical facts or
information may be forward-looking statements. These forward-looking
statements involve risks and uncertainties that could cause the outcome to be
materially different. Certain of these risks and uncertainties are listed in
the Quest Diagnostics Incorporated 2000 Form 10-K and subsequent filings.
Tables follow
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2001 and 2000
(in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
Net revenues $903.2 $850.2 $2,717.3 $2,584.8
Costs and expenses:
Cost of services 535.6 504.7 1,614.0 1,554.2
Selling, general and
administrative 251.0 251.2 760.3 753.9
Interest expense, net 14.8 29.5 58.0 89.4
Amortization of
intangible assets 11.4 11.5 34.7 35.4
Provision for special
charges -- -- 6.0 2.1
Minority share of income 2.9 2.1 6.8 7.5
Other, net (2.4) (2.8) (3.6) (5.1)
Total 813.3 796.2 2,476.2 2,437.4
Income before taxes and
extraordinary loss 89.9 54.0 241.1 147.4
Income tax expense 39.8 25.3 108.1 70.7
Income before
extraordinary loss 50.1 28.7 133.0 76.7
Extraordinary loss,
net of taxes -- -- (21.6) --
Net income $50.1 $28.7 $111.4 $76.7
Income before
extraordinary loss
and special charges $50.1 $28.7 $136.6 $78.0
Basic net income per
common share:
Income before
extraordinary loss $0.54 $0.32 $1.43 $0.86
Net income $0.54 $0.32 $1.20 $0.86
Income before
extraordinary loss and
special charges $0.54 $0.32 $1.47 $0.87
Diluted net income
per common share:
Income before
extraordinary loss $0.51 $0.30 $1.37 $0.82
Net income $0.51 $0.30 $1.14 $0.82
Income before
extraordinary loss
and special charges $0.51 $0.30 $1.40 $0.83
Cash earnings per
diluted share $0.61 $0.41 $1.71 $1.18
Weighted average
common shares
outstanding - basic 93.4 89.9 92.6 89.1
Weighted average
common shares
outstanding - diluted 98.0 95.8 97.3 93.7
Adjusted EBITDA $141.8 $119.6 $413.0 $346.9
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Balance Sheet Information
September 30, 2001 and December 31, 2000
(in millions)
September 30, December 31,
2001 2000
Assets
Cash and cash equivalents $238.9 $171.5
Accounts receivable, net 513.6 485.6
Intangible assets, net 1,282.7 1,261.6
Other assets 898.3 945.8
Total assets $2,933.5 $2,864.5
Liabilities and Stockholders' Equity
Short-term debt $280.6 $265.4
Long-term debt 677.9 760.7
Other liabilities 732.1 807.6
Common stockholders' equity 1,242.9 1,030.8
Total liabilities and stockholders' equity $2,933.5 $2,864.5
Notes to Financial Tables
1) Results for 2000 included the effects of testing performed by third
parties under the Company's laboratory network management
arrangements. As laboratory network manager, Quest Diagnostics
included in its consolidated revenues and expenses the cost of
testing performed by third parties. This treatment added
$2.0 million and $48.8 million to both reported revenues and cost of
services for the three and nine months ended September 30, 2000,
respectively. This treatment also served to increase cost of
services as a percentage of net revenues and decrease selling,
general and administrative expenses as a percentage of net revenues.
2) During the second quarter of 2001, the Company refinanced the
majority of its indebtedness. The extraordinary loss of
$36.0 million ($21.6 million, net of tax), represents the write off
of deferred financing costs, and tender premiums paid in connection
with extinguishing the debt that was refinanced.
3) In conjunction with the Company's debt refinancing during the second
quarter of 2001, the Company recorded a special charge of
$6.0 million ($3.6 million, net of tax) representing the costs to
settle existing interest rate swap agreements on its debt which was
refinanced. During the second quarter of 2000, the Company recorded
a net special charge of $2.1 million ($1.3 million, net of tax). Of
the special charge, $13.4 million represented the costs to cancel
certain contracts that management believed were not economically
viable as a result of the SBCL acquisition. These costs were
principally associated with the cancellation of a co-marketing
agreement for clinical trials testing services. These charges were
partially offset by a reduction in reserves attributable to a
favorable resolution of outstanding claims for reimbursements
associated with billings of certain tests.
4) Depreciation expense totaled $25.7 million and $21.9 million for the
three months ended September 30, 2001 and 2000, respectively and
$73.3 million and $65.4 million for the nine months ended
September 30, 2001 and 2000, respectively.
5) On May 8, 2001, the Company announced a two-for-one stock split
effected by the issuance on May 31, 2001 of a stock dividend of one
new share of common stock for each share of common stock held by
stockholders of record on May 16, 2001. All references to shares and
per share data have been restated to reflect the stock split for all
periods presented.
6) Net income per common share is computed by dividing net income less
dividends on preferred stock (approximately $30 thousand per quarter)
by the weighted average number of common shares outstanding.
Potentially dilutive common shares primarily represent stock options.
7) Cash earnings per common share is calculated as cash earnings less
preferred dividends, divided by the diluted weighted average common
shares outstanding. Cash earnings represents income before
extraordinary loss, special charges and amortization of all
intangible assets, net of applicable taxes.
8) Adjusted EBITDA represents income before extraordinary loss, special
charges, income taxes, net interest expense, depreciation, and
amortization. Adjusted EBITDA for 2000 also excludes $2.7 million
and $7.2 million, respectively, of costs associated with the SBCL
integration plan which were included in operating costs and expensed
as incurred during the three and nine months ended September 30,
2000.
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SOURCE Quest Diagnostics Incorporated
CONTACT: Investors - Cathy Doherty, +1-201-393-5030, or Media - Gary
Samuels, +1-201-393-5700, both for Quest Diagnostics Incorporated/