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Quest Diagnostics Posts $1.85B in Q4 Revenues

NEW YORK (GenomeWeb) – Quest Diagnostics today posted fourth quarter revenues of $1.85 billion, a roughly 2 percent decrease from revenues of $1.88 billion in the prior-year period.

Quest's revenues for the three months ended Dec. 31 matched analysts' consensus estimate. 

As part of its strategy to refocus its diagnostic information services, the firm said it added revenue from its clinical trials testing business to the Q2 Solutions joint venture with Quintiles in July 2015. As such, on an equivalent basis, excluding the fourth quarter 2014 revenues of the clinical trials testing business, the company's revenues grew nearly 1 percent year over year.

The company said revenues from diagnostic information services and test volume grew by a fraction of a percent over last year. Revenue per requisition was nearly flat compared to Q4 2014.

Quest's net earnings in the quarter were $188 million, or $1.29 a share, compared with $190 million, or $1.29 a share, for Q4 2014. Earnings per share on an adjusted basis were $1.19, in line with analysts' estimate.

For full-year 2015, Quest's revenues increased around 1 percent on a reported basis to $7.49 billion from $7.44 billion, in line with the consensus Wall Street estimate. Revenues on an equivalent basis for 2015 were $7.41 billion, excluding the clinical trials revenue totaling $85 million for the year.

Its net income for the year grew to $709 million, or $4.87 a share, from $556 million, of $3.81 a share, in 2014. The company said that reported operating income from continuing operations in 2015 benefitted from contributions from Q2 Solutions.

The company highlighted that during the previous year it added new companion and complementary diagnostics to its portfolio of products for predicting treatment benefit to newly approved immunotherapeutics. In a call with analysts to discuss quarterly earnings, Quest CFO Mark Guinan noted that over 2015 the firm also saw growth in use of testing for BRCA1/2 gene mutations and infectious diseases, such as HIV and HCV, and growth in non-invasive prenatal testing.

Quest is building a portfolio of health information technology solutions to help payors, providers and patients to improve care, lower costs, and manage populations, and is rolling out a new suite of services, called Quantum Solutions, internally to its sales force this week. Quest CEO Steve Rusckowski added that under Quest's partnership with Maryland-based firm Inovalon to develop real-time, point-of-care analytics, the company launched a service called Data Diagnostics in December that allows providers to receive patient-level insights, adding that Quest is seeing strong interest in this service from customers.

Quest ended 2015 with cash and cash equivalents totaling $133 million.

Looking ahead, Quest said it expects its 2016 revenues from continuing operations to be between $7.52 billion and $7.59 billion, and adjusted earnings per share between $5.02 and $5.17.

Quest's board has authorized a 5 percent increase in the firm's quarterly dividend to $.40 a share from $.38 a share, or $1.60 per share annually.

During the call, Rusckowski reiterated the company's stance on forthcoming regulatory and reimbursement changes the lab industry is facing. With regard to implementation of the "Protecting Access to Medicare Act," which aims to establish a market-based payment system for diagnostics under the Clinical Laboratory Fee Schedule, Rusckowski noted that the planned 2017 effective date for the law "will be a significant challenge for all parties."

With regard to the US Food and Drug Administration's plan to regulate lab-developed tests, he sided with the American Clinical Laboratory Association stance that the agency lacks the statutory authority to regulate LDTs. "We continue to believe what the FDA has proposed would result in labs being subject to both CLIA and FDA regulations that may be overlapping, duplicative, and sometimes contradictory," Rusckowski said.

Quest is hoping a solution will come from the House Energy & Commerce Committee, which has drafted legislation based on a proposal from a small group of labs and diagnostic firms. Rusckowski called the House E&C's efforts "a good first step."

In Thursday morning trade on the New York Stock Exchange, shares of Quest were down around 2 percent at $64.18.