NEW YORK – Quest Diagnostics on Thursday morning reported a 56 percent year-over-year rise in revenues for the fourth quarter, driven by continued high demand for COVID-19 testing.
Revenue for the three months ended Dec. 31, 2020 was $3.00 billion, up from $1.93 billion in the same quarter last year and above the consensus Wall Street estimate of $2.93 billion.
Test volumes grew 27 percent during the quarter with revenue per test growing 25 percent.
On a conference call following the release of the financial results, Quest Chairman, President, and CEO Steve Rusckowski noted that the growth was driven by continued demand for SARS-CoV-2 molecular testing. He added, however, that while routine testing volumes had recovered rapidly throughout the summer after plummeting at the beginning of the pandemic, this recovery stalled towards the end of November and into December due to a surge in COVID-19 infections.
Quest Executive VP and CFO Mark Guinan said organic testing volume was down by high-single digits in December due to the increase in COVID-19 cases.
Guinan said Quest performed roughly 12.5 million molecular SARS-Cov-2 tests and 1 million SARS-CoV-2 serology tests. At the end of Q4, the company was averaging 130,000 molecular SARS-CoV-2 tests and 10,000 serology tests per day.
Rusckowski highlighted several lab service deals it completed during the quarter, including with New York's Montefiore Nyack Hospital and Goshen Hospital in Indiana and Nutley, New Jersey-based Hackensack Meridian Health.
He also noted that Quest's new flagship laboratory in Clifton, New Jersey went live on January 4 and said that the company expected to consolidate volumes at the facility from its Baltimore, Philadelphia, and Teterboro, New York labs over the course of 2021.
Net income for the quarter was $579 million, or $4.21 per share, up from $253 million, or $1.86 per share, in the fourth quarter last year. Adjusted EPS was $4.48 and beat the analyst average estimate of $4.24.
In the fourth quarter Quest spent $447 million on SG&A, up 28 percent from $349 million in the same quarter last year.
The company ended the quarter with $1.16 billion in cash and cash equivalents.
For full-year 2020, revenues were $9.44 billion, up 22 percent from $7.73 billion in 2019, and above the consensus Wall Stree estimate of $9.33 billion. Test volumes increased 7 percent for the year while revenue per test rose 16 percent.
Net income for 2020 was $1.43 billion, or $10.47 per share, compared to $858 million, or $6.28 per share, in 2019. Adjusted EPS for the year was $11.18, beating the consensus analyst estimate of $10.84.
In 2020, Quest spent $1.55 billion on SG&A, up 6 percent from $1.46 billion in 2019.
For the first half of 2021, the company provided revenue guidance of between $4.85 billion and $5.15 billion, an increase between 33 and 41 percent compared to 2020. Reported EPS is expected to be between $5.07 and $6.07 and adjusted EPS between $5.90 and $6.90.
Guinan said this half-year outlook assumed improvements in base testing volumes but that Quest expects these to remain below pre-pandemic 2019 levels throughout the first half of the year.
He said Quest expects to average around 100,000 SARS-CoV-2 molecular tests per day throughout H1, but that demand for these tests will decline over that period as more people become vaccinated. He said the company expects to average around 15,000 serology tests per day during H1, with demand for these tests increasing modestly throughout that period.
Separately, Quest said that its board has authorized an increase to its quarterly dividend to $.62 per share from $.56 per share, effective with the dividend payable on April 21 to shareholders of record on April 7. The annual dividend will now be $2.48 per share.
The company's board has also increased Quest's repurchase authorization by $1 billion. The increased authority is on top of the $917 billion that was available as of Dec. 31, 2020 under the firm's share repurchase program, Quest said. For the three months ended Dec. 31, it had repurchased 2 million shares of its common stock for $250.
In morning trading on the New York Stock Exchange, Quest's shares were down almost 2 percent, at $124.78.