Quest Diagnostics Doubles Earnings in First Quarter 2001

- Earnings Guidance for 2001 Revised Upward -



Apr 23, 2001, 01:00 ET from Quest Diagnostics Incorporated

    TETERBORO, N.J., April 23 /PRNewswire Interactive News Release/ -- Quest
 Diagnostics Incorporated (NYSE:   DGX), the nation's leading provider of
 diagnostic testing, information and services, announced that for the first
 quarter ended March 31, 2001, net income increased to $35.7 million, or $0.74
 per diluted share, from $17.8 million, or $0.39 per diluted share, in the
 first quarter of 2000. Cash earnings, or earnings before amortization of
 intangible assets, rose to $0.94 per diluted share from $0.63 per diluted
 share for the 2000 period.
     First quarter revenues of $883 million grew 7% over last year, when
 adjusted for the prior-year gross-up of revenues and expenses associated with
 the company's network management business. First quarter revenues grew
 approximately 3% from the reported prior-year level. Revenue per requisition
 during the first quarter grew 8% compared to the prior year. Clinical testing
 volume, measured by the number of requisitions, increased approximately 1%
 over the prior year period, after adjusting for business contributed to
 unconsolidated joint ventures, which reduced volume by approximately 1.5%. As
 a result, reported volume during the first quarter was approximately 1% below
 the prior year's level.
     "We had strong financial performance during the quarter, doubling net
 income compared to last year," said Kenneth W. Freeman, Chairman and Chief
 Executive Officer. "Now that laboratory consolidations are essentially behind
 us, we are directing our focus toward accelerating revenue growth,
 standardizing our operations and expanding our Six Sigma Quality efforts.
 Looking ahead, we now expect 2001 full year earnings per diluted share to grow
 at least 50% from last year, to between $3.40 and $3.50 on reported revenue
 growth of 5% to 7%."
     Earnings before interest, taxes, depreciation and amortization (EBITDA),
 were $122 million, or 13.9% of revenues, compared to $98 million, or 11.4% of
 revenues, for the prior year period. The increase in EBITDA was due to the
 company's continued pricing discipline, a shift to higher value testing
 services and the realization of synergies associated with the integration of
 SmithKline Beecham Clinical Laboratories.
     Bad debt expense improved to 6.3% from 7.3% a year ago and remained
 unchanged from the fourth quarter 2000 level. During the quarter, days sales
 outstanding improved to 51 days from 56 days at the end of the fourth quarter.
 The company ended the quarter with $121 million in cash and no borrowings
 outstanding under its $250 million revolving credit facility. Net interest
 expense for the quarter was reduced to $22.7 million from $29.8 million a year
 ago. Capital expenditures totaled $44 million for the quarter.
     Quest Diagnostics will discuss results for the first quarter during a
 conference call on April 24 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 April 24 through
 5 P.M. on April 26 to investors in the U.S. by dialing 800-342-8825. Investors
 outside the U.S. may dial 402-220-9674. No password is required for either
 number.
 
     Quest Diagnostics is the nation's leading provider of diagnostic testing,
 information and services with annual revenues of $3.4 billion in 2000. 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 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 described
 in the Quest Diagnostics Incorporated 2000 Form 10-K and subsequent filings.
 
                     Quest Diagnostics Incorporated and Subsidiaries
 
                          Consolidated Statements of Operations
                   For the Three Months Ended March 31, 2001 and 2000
                          (in millions, except per share data)
 
                                                        Three Months Ended
                                                              March 31,
 
                                                         2001           2000
 
     Net revenues                                      $882.6         $857.5
 
     Costs and expenses:
       Cost of services                                 529.1          529.0
       Selling, general and administrative              252.8          249.8
       Interest, net                                     22.7           29.8
       Amortization of intangible assets                 11.1           11.9
       Minority share of income                           1.1            2.1
       Other, net                                         0.4          (0.3)
         Total                                          817.2          822.3
 
     Income before taxes                                 65.4           35.2
     Income tax expense                                  29.7           17.4
     Net income                                         $35.7          $17.8
 
     Basic earnings per common share:
     Net income                                         $0.78          $0.40
 
     Weighted average common
       shares outstanding -- basic                       45.9           44.1
 
     Diluted earnings per common share:
     Net income                                         $0.74          $0.39
     Cash earnings                                       0.94           0.63
 
     Weighted average common
       shares outstanding -- diluted                     48.3           45.6
 
     EBITDA                                            $122.4          $98.1
 
                     Quest Diagnostics Incorporated and Subsidiaries
 
                         Consolidated Balance Sheet Information
                          March 31, 2001 and December 31, 2000
                                      (in millions)
 
                                                    March 31,   December 31,
                                                         2001           2000
 
     Assets
 
     Cash and cash equivalents                         $120.7         $171.5
     Accounts receivable, net                           509.3          485.6
     Intangible assets, net                           1,297.7        1,261.6
     Other assets                                       975.5          945.8
 
       Total assets                                  $2,903.2       $2,864.5
 
     Liabilities and Stockholders' Equity
 
     Short-term debt                                   $265.0         $265.4
     Long-term debt                                     758.5          760.7
     Other liabilities                                  780.5          807.6
     Common stockholders' equity                      1,099.2        1,030.8
 
       Total liabilities and
         stockholders' equity                        $2,903.2       $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 $32.4 million to both
         reported revenues and cost of services for the three months ended
         March 31, 2000. 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) Depreciation expense totaled $23.2 million and $21.2 million for the
         three months ended March 31, 2001 and 2000, respectively.
 
     (3) 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.
 
     (4) 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
         amortization of all intangible assets, net of applicable taxes.
 
     (5) EBITDA represents income before income taxes, net interest expense,
         depreciation and amortization.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X08717184
 
 

SOURCE Quest Diagnostics Incorporated
    TETERBORO, N.J., April 23 /PRNewswire Interactive News Release/ -- Quest
 Diagnostics Incorporated (NYSE:   DGX), the nation's leading provider of
 diagnostic testing, information and services, announced that for the first
 quarter ended March 31, 2001, net income increased to $35.7 million, or $0.74
 per diluted share, from $17.8 million, or $0.39 per diluted share, in the
 first quarter of 2000. Cash earnings, or earnings before amortization of
 intangible assets, rose to $0.94 per diluted share from $0.63 per diluted
 share for the 2000 period.
     First quarter revenues of $883 million grew 7% over last year, when
 adjusted for the prior-year gross-up of revenues and expenses associated with
 the company's network management business. First quarter revenues grew
 approximately 3% from the reported prior-year level. Revenue per requisition
 during the first quarter grew 8% compared to the prior year. Clinical testing
 volume, measured by the number of requisitions, increased approximately 1%
 over the prior year period, after adjusting for business contributed to
 unconsolidated joint ventures, which reduced volume by approximately 1.5%. As
 a result, reported volume during the first quarter was approximately 1% below
 the prior year's level.
     "We had strong financial performance during the quarter, doubling net
 income compared to last year," said Kenneth W. Freeman, Chairman and Chief
 Executive Officer. "Now that laboratory consolidations are essentially behind
 us, we are directing our focus toward accelerating revenue growth,
 standardizing our operations and expanding our Six Sigma Quality efforts.
 Looking ahead, we now expect 2001 full year earnings per diluted share to grow
 at least 50% from last year, to between $3.40 and $3.50 on reported revenue
 growth of 5% to 7%."
     Earnings before interest, taxes, depreciation and amortization (EBITDA),
 were $122 million, or 13.9% of revenues, compared to $98 million, or 11.4% of
 revenues, for the prior year period. The increase in EBITDA was due to the
 company's continued pricing discipline, a shift to higher value testing
 services and the realization of synergies associated with the integration of
 SmithKline Beecham Clinical Laboratories.
     Bad debt expense improved to 6.3% from 7.3% a year ago and remained
 unchanged from the fourth quarter 2000 level. During the quarter, days sales
 outstanding improved to 51 days from 56 days at the end of the fourth quarter.
 The company ended the quarter with $121 million in cash and no borrowings
 outstanding under its $250 million revolving credit facility. Net interest
 expense for the quarter was reduced to $22.7 million from $29.8 million a year
 ago. Capital expenditures totaled $44 million for the quarter.
     Quest Diagnostics will discuss results for the first quarter during a
 conference call on April 24 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 April 24 through
 5 P.M. on April 26 to investors in the U.S. by dialing 800-342-8825. Investors
 outside the U.S. may dial 402-220-9674. No password is required for either
 number.
 
     Quest Diagnostics is the nation's leading provider of diagnostic testing,
 information and services with annual revenues of $3.4 billion in 2000. 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 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 described
 in the Quest Diagnostics Incorporated 2000 Form 10-K and subsequent filings.
 
                     Quest Diagnostics Incorporated and Subsidiaries
 
                          Consolidated Statements of Operations
                   For the Three Months Ended March 31, 2001 and 2000
                          (in millions, except per share data)
 
                                                        Three Months Ended
                                                              March 31,
 
                                                         2001           2000
 
     Net revenues                                      $882.6         $857.5
 
     Costs and expenses:
       Cost of services                                 529.1          529.0
       Selling, general and administrative              252.8          249.8
       Interest, net                                     22.7           29.8
       Amortization of intangible assets                 11.1           11.9
       Minority share of income                           1.1            2.1
       Other, net                                         0.4          (0.3)
         Total                                          817.2          822.3
 
     Income before taxes                                 65.4           35.2
     Income tax expense                                  29.7           17.4
     Net income                                         $35.7          $17.8
 
     Basic earnings per common share:
     Net income                                         $0.78          $0.40
 
     Weighted average common
       shares outstanding -- basic                       45.9           44.1
 
     Diluted earnings per common share:
     Net income                                         $0.74          $0.39
     Cash earnings                                       0.94           0.63
 
     Weighted average common
       shares outstanding -- diluted                     48.3           45.6
 
     EBITDA                                            $122.4          $98.1
 
                     Quest Diagnostics Incorporated and Subsidiaries
 
                         Consolidated Balance Sheet Information
                          March 31, 2001 and December 31, 2000
                                      (in millions)
 
                                                    March 31,   December 31,
                                                         2001           2000
 
     Assets
 
     Cash and cash equivalents                         $120.7         $171.5
     Accounts receivable, net                           509.3          485.6
     Intangible assets, net                           1,297.7        1,261.6
     Other assets                                       975.5          945.8
 
       Total assets                                  $2,903.2       $2,864.5
 
     Liabilities and Stockholders' Equity
 
     Short-term debt                                   $265.0         $265.4
     Long-term debt                                     758.5          760.7
     Other liabilities                                  780.5          807.6
     Common stockholders' equity                      1,099.2        1,030.8
 
       Total liabilities and
         stockholders' equity                        $2,903.2       $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 $32.4 million to both
         reported revenues and cost of services for the three months ended
         March 31, 2000. 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) Depreciation expense totaled $23.2 million and $21.2 million for the
         three months ended March 31, 2001 and 2000, respectively.
 
     (3) 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.
 
     (4) 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
         amortization of all intangible assets, net of applicable taxes.
 
     (5) EBITDA represents income before income taxes, net interest expense,
         depreciation and amortization.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X08717184
 
 SOURCE  Quest Diagnostics Incorporated