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Quest Diagnostics Q2 Revenues Up 40 Percent

NEW YORK – Quest Diagnostics reported on Thursday that its second quarter revenues were up 40 percent year over year.

For the three months ended June 30, total revenues reached $2.55 billion, up from $1.83 billion a year ago and beating the consensus Wall Street estimate of $2.38 billion.

Quest Diagnostic Information Services revenues rose by 40 percent to $2.47 billion from $1.76 billion in Q2 2020. Test volume rose by 45 percent year over year, though revenue per requisition was down 4 percent.

On a conference call following release of the financial results, Steve Rusckowski, Quest's chairman and CEO, said that the quarter saw strong growth in the company's base testing business. He noted that it grew not only year over year but also compared to pre-COVID-19 pandemic 2019 levels. Q2 2021 is the first quarter since the start of the pandemic where base testing levels have grown compared to their 2019 levels, he said.

Quest CFO Mark Guinan said that base testing volumes were up 7 percent compared to Q2 2019 and were up 2 percent excluding acquisitions.

Rusckowski said that this base business growth was driven by people returning to the healthcare system as well as by contributions from new hospital management contracts. In March, Quest entered an agreement with healthcare system Mercy to acquire the system's outreach lab services, picking up the business from 29 Mercy hospital labs and two independent clinic labs servicing patients and providers throughout Arkansas, Kansas, Missouri, and Oklahoma.

Rusckowski said that Quest expected that acquisitions including the Mercy deal would grow its base testing business by 2 percent this year and added that the company expected to make additional acquisitions in the second half of the year.

Rusckowski said with regard to routine testing that Quest had seen a strong recovery in areas including general health, cardiometabolic testing, and advanced diagnostics, while areas like prescription drug monitoring and toxicology had been more sluggish and were still below 2019 levels.

He said that Quest saw demand for COVID-19 molecular testing decline during the quarter, which he said reflected an industrywide slowdown. He noted, though, that in the last weeks of June "demand stabilized and has since increased modestly, which we believe is attributable to some extent to the emergence of the delta variant."

Quest performed an average of 57,000 COVID-19 molecular tests per day in Q2 and currently has the capacity to perform 300,000 tests per day, Rusckowski said. It averaged 73,000 COVID-19 tests per day in Q1 2021.

For Q2 2021, income from continuing operations attributable to Quest was $631 million, or $4.96 per share, up from $185 million, or $1.36 per share, in Q2 2020. On an adjusted basis, EPS from continuing operations was $3.18, beating analysts' average estimate of $2.86.

For full-year 2021, Quest provided a revenue guidance range of between $9.54 billion and $9.79 billion. Its EPS is expected to be between $11.48 and $12.18. Adjusted EPS is anticipated to be between $10.65 and $11.35.

Guinan said the low end of this guidance assumes at least 20,000 COVID-19 molecular tests and 3,000 serology tests per day and low single-digit growth in the company's base testing business compared to 2019.

Quest exited the quarter with $560 million in cash and cash equivalents.

In Thursday morning trading on the New York Stock Exchange, Quest shares were down less than 1 percent to $135.35.