On February 1, 2024 Quest Diagnostics Incorporated (NYSE: DGX), the world’s leading provider of diagnostic information services, reported financial results for the fourth quarter and full year ended December 31, 2023 (Press release, Quest Diagnostics, FEB 1, 2024, View Source [SID1234639789]).

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"We delivered strong revenue growth in our base business of 7% for the full year 2023 and delivered on our earnings commitment as we transitioned away from COVID testing," said Jim Davis, Chairman, CEO, and President. "We made progress during the year advancing our growth strategy with innovative testing solutions, new and expanded relationships with health systems, and a robust pipeline of M&A and professional lab services opportunities. We also delivered double-digit revenue growth in several clinical areas, including in advanced cardiometabolic, prenatal and hereditary genetics, and neurology, as well as strengthened our oncology offering with a strategic investment in higher growth minimal residual disease testing."

Mr. Davis continued: "Our guidance for 2024 reflects a return to overall revenue growth while balancing the earnings tailwinds and headwinds we see for the year. Looking beyond 2024, we are well positioned to deliver our long-term financial outlook to drive mid-single digit revenue growth and high-single digit earnings growth. Finally, I’m grateful to our dedicated Quest colleagues who bring our purpose to life every day, working together to create a healthier world, one life at a time."

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Three Months Ended December 31,

Twelve Months Ended December 31,

2023

2022

Change

2023

2022

Change

(dollars in millions, except per share data)

Reported:

Net revenues

$ 2,288

$ 2,333

(1.9) %

$ 9,252

$ 9,883

(6.4) %

Base business revenues (a)

$ 2,251

$ 2,149

4.7 %

$ 9,029

$ 8,429

7.1 %

COVID-19 testing revenues

$ 37

$ 184

(79.8) %

$ 223

$ 1,454

(84.7) %

Diagnostic information services revenues

$ 2,221

$ 2,265

(2.0) %

$ 8,976

$ 9,609

(6.6) %

Revenue per requisition

(3.5) %

(5.9) %

Requisition volume

1.9 %

(0.6) %

Organic requisition volume

1.4 %

(1.0) %

Operating income (b)

$ 267

$ 135

98.2 %

$ 1,262

$ 1,428

(11.6) %

Operating income as a percentage of net revenues (b)

11.7 %

5.8 %

5.9 %

13.6 %

14.5 %

(0.9) %

Net income attributable to Quest Diagnostics (b)

$ 192

$ 101

91.3 %

$ 854

$ 946

(9.7) %

Diluted EPS (b)

$ 1.70

$ 0.87

95.4 %

$ 7.49

$ 7.97

(6.0) %

Cash provided by operations

$ 527

$ 334

58.0 %

$ 1,272

$ 1,718

(25.9) %

Capital expenditures

$ 72

$ 147

(51.6) %

$ 408

$ 404

0.9 %

Adjusted (b):

Operating income

$ 338

$ 330

2.1 %

$ 1,457

$ 1,742

(16.3) %

Operating income as a percentage of net revenues

14.8 %

14.2 %

0.6 %

15.8 %

17.6 %

(1.8) %

Net income attributable to Quest Diagnostics

$ 245

$ 229

6.9 %

$ 994

$ 1,181

(15.9) %

Diluted EPS

$ 2.15

$ 1.98

8.6 %

$ 8.71

$ 9.95

(12.5) %

(a)

Excludes COVID-19 testing.

(b)

For further details impacting the year-over-year comparisons related to operating income, operating income as a percentage of net revenues, net income attributable to Quest Diagnostics, and diluted EPS, see note 2 of the financial tables attached below.

Dividend Increased

Quest Diagnostics’ Board of Directors has authorized a 5.6% increase in its quarterly dividend from $0.71 to $0.75 per share, or $3.00 per share annually, effective with the dividend payable on April 22, 2024 to shareholders of record of Quest Diagnostics common stock on April 8, 2024. The company has raised its dividend annually since 2011.

Guidance for Full Year 2024

We estimate full year 2024 guidance as follows:

Low

High

Net revenues

$9.35 billion

$9.45 billion

Net revenues increase

1.1 %

2.1 %

Reported diluted EPS

$7.69

$7.99

Adjusted diluted EPS

$8.60

$8.90

Cash provided by operations

Approximately $1.3 billion

Capital expenditures

Approximately $420 million

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, 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 (our initiative with the Quest Diagnostics Foundation to reduce health disparities in underserved communities), gains and losses associated with changes in the carrying value of our strategic investments, impairment charges, 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.

Conference Call Information

Quest Diagnostics will hold its quarterly conference call to discuss financial results beginning at 8:30 a.m. Eastern Time today. The conference call can be accessed by dialing 888-455-0391 within the U.S. and Canada, or 773-756-0467 internationally, passcode: 7895081; or via live webcast on our website at www.QuestDiagnostics.com/investor. We suggest participants dial in approximately 10 minutes before the call.

A replay of the call may be accessed online at www.QuestDiagnostics.com/investor or, from approximately 10:30 a.m. Eastern Time on February 1, 2024 until midnight Eastern Time on February 15, 2024, by phone at 800-934-9421 for domestic callers and 203-369-3391 for international callers. Anyone listening to the call is encouraged to read our periodic reports, on file with the Securities and Exchange Commission, including the discussion of risk factors and historical results of operations and financial condition in those reports.