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Quest Diagnostics Q3 Revenues Down Less Than 1 Percent

NEW YORK – Quest Diagnostics reported on Thursday that its Q3 revenues were down less than 1 percent year over year.

Revenues were $2.77 billion for the three-month period ended Sept. 30, down from $2.79 billion in the third quarter last year and beating the consensus Wall Street estimate of $2.45 billion.

The decline in revenue reflected lower levels of COVID-19 versus 2020, Steve Rusckowski, Quest's president, chairman, and CEO, said on a conference call following the release of the earnings results. He noted, though, that this was counteracted by "continued recovery in our base business," which continued to improve sequentially in the third quarter.

Demand for COVID-19 testing did increase from Q2 to Q3 of 2021, Rusckowski said, driven by the spread of the Delta variant. COVID-19 test volumes began to increase meaningfully in mid-July and peaked in early-to-mid September, he said. Quest performed an average of 83,000 molecular tests per day in Q3.

Rusckowski added that as clinical COVID-19 testing declines, the company has expanded nonclinical testing to support schools, offices, travel, and entertainment venues. Quest is performing K-12 testing in roughly 20 states with five additional states soon to come online, he said.

Quest CFO Mark Guinan said on the call that in Q3 base testing volumes were up 9 percent year over year and were up roughly 4 percent excluding acquisitions. He noted that while the company saw softening in its base business in August, the business rebounded in September.

Guinan said that COVID-19 molecular volumes have declined in October by around 10 percent year over year, but that the company is still seeing higher demand than it anticipated prior to the emergence of the Delta variant. He said the company expected to do around 50,000 molecular COVID-19 tests per day in Q4. Quest also expects to see low-single-digit growth in Q4 for its routine testing business compared to the pre-pandemic levels of Q4 2019.

Requisition volumes were up 5 percent in the quarter, with organic requisition volume up 3 percent and revenue per requisition down 5 percent.

For Q3, net income attributable to Quest was $505 million, or $4.02 per share, down from $568 million, or $4.14 per share, for the same quarter in 2020.

Adjusted EPS was $3.96 per share for the quarter and beat the consensus analyst estimate of $2.87.

During the quarter, Quest spent $427 million on SG&A, up 8 percent from $396 million in the same quarter last year. The company ended Q3 2021 with $1.47 billion in cash and cash equivalents.

For full-year 2021, the Secaucus, New Jersey-based company revised its revenue guidance to a new range of between $10.45 billion and $10.60 billion from a previous range of $9.84 billion to $10.09 billion. It projected full-year 2021 adjusted EPS of between $13.50 and $13.90, up from a previous guidance of $11.65 to $12.35.

In Thursday morning trading on the New York Stock Exchange, Quest shares were down 5 percent to $141.46.