NEW YORK – Quest Diagnostics on Wednesday reported that its second quarter revenues fell 5 percent year over year although its base business revenues increased nearly 10 percent. The company also beat analysts' expectations on the top and bottom lines.
For the three months ended June 30, the Secaucus, New Jersey-based lab company reported total revenues of $2.34 billion compared to $2.45 billion a year ago. On average, analysts had expected Q2 revenues of $2.25 billion.
Base business revenues, excluding dwindling COVID-19 testing revenues, rose to $2.30 billion from $2.10 billion in the year-ago period. Meanwhile, COVID-19 testing revenues declined 88 percent to $41 million from $355 million a year ago.
"We had strong base business performance in the second quarter, with nearly double-digit revenue growth year over year," Jim Davis, Quest chairman, CEO, and president, said in a statement. "Demand for our services remained strong, boosted by the collaborations we have forged with health plans, hospitals, and physicians amid a continued return to care. We are particularly encouraged by revenue growth in our base business of nearly 10 percent from our health system customers."
Davis further noted that the company made "substantial progress" in improving the profitability of its base business despite persistently high employee turnover.
During the quarter, Quest completed its acquisition of Haystack Oncology for up to $450 million in cash. Originally announced in April, the acquisition is expected to facilitate the company's entry into the liquid biopsy space while further building out its cancer testing portfolio.
Test volume as measured by requisitions was up a fraction of a percent year over year, with organic volume down a fraction of a percent and revenue per requisition down 5 percent.
In Q2, Quest shaved its SG&A expenses by 1 percent to $416 million from $422 million a year ago.
Quest reported Q2 net income of $235 million, or $2.05 per share, compared to $234 million, or $1.96 per share, a year ago. Adjusted EPS was $2.30, besting the consensus Wall Street estimate of $2.27.
Quest updated its full-year 2023 revenue guidance upward to a range of $9.12 billion to $9.22 billion from a prior range of $8.93 billion to $9.08 billion. It also tightened its adjusted EPS guidance to a range of $8.50 to $8.90 from a previous range of $8.45 to $8.95.
Davis said the updated guidance "reflects our expectations for revenue growth and improved profitability in the base business while we continue to operate in a tight labor market."
Quest finished Q2 with $126 million in cash and cash equivalents.
In early morning trading on the New York Stock Exchange, shares of Quest were down about 5 percent at $137.63.