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Quest Diagnostics (DGX) Q1 Earnings Top Estimates, Margins Down
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Quest Diagnostics Incorporated’s (DGX - Free Report) first-quarter 2022 adjusted earnings per share of $3.22 were 10.7% ahead of the Zacks Consensus Estimate. Adjusted earnings, however, declined 14.4% from the year-ago adjusted figure of $3.76.
Certain one-time expenses like the ones related to amortization expenses, and certain restructuring and integration charges were excluded from the quarter’s adjusted figures.
GAAP earnings came in at $2.92 per share, marking a 15.6% decline from the year-ago period.
Revenues
Reported revenues in the first quarter dropped 4% year over year to $2.61 billion. Revenues missed the Zacks Consensus Estimate by 1.1%.
Quarterly Details
Base Business (excludes COVID-19 testing) revenues were $2.01 billion in the reported quarter, up 6.3% year over year. COVID-19 testing revenues on the other hand plunged 27.6% in the first quarter to $599 million.
Diagnostic information services revenues in the quarter were down 3.9% on a year-over-year basis to $2.54 billion.
Volumes (measured by the number of requisitions) improved 1.3% year over year in the first quarter (flat organically). Revenue per requisition, however, dropped 5.2% year over year.
Margins
The cost of services during the reported quarter was $1.65 billion, up 1.2% year over year. The gross margin was 36.9%, reflecting a 326 basis point (bp) contraction from the year-ago figure.
Quest Diagnostics Incorporated Price and EPS Surprise
Selling, general and administrative expenses increased 4.4% to $425 million in the quarter under review. Adjusted operating margin of 20.7% represented a 458-bp contraction year over year.
Cash, Capital Structure and Solvency
Quest Diagnostics exited the first quarter of 2022 with cash and cash equivalents of $712 million compared with $872 million at the end of 2021. Cumulative net cash provided by operating activities at the end of the first quarter was $480 million compared with $731 million in the year-ago period.
In the first quarter, the company repurchased 2.6 million shares for $350 million. In February 2022, Quest Diagnostics’ board of directors increased the size of its share repurchase program by $1 billion. As of Mar 31, 2022, the company had $1.3 billion available under its existing share repurchase authorization.
Despite the sluggish first-quarter results, the company raised its full-year 2022 guidance.
Full-year net revenues are currently estimated in the range of $9.20-$9.50 billion (increasing the lower end of the earlier projection of $9.00-$9.50). The Zacks Consensus Estimate for the same is pegged at $9.31 billion.
Adjusted EPS is now expected in the range of $9.00-$9.50 (the earlier guided range was $8.65-$9.35). The Zacks Consensus Estimate for the metric is pegged at $9.01.
Our Take
Quest Diagnostics reported better-than-expected first-quarter earnings while revenues missed the mark.
The year-over-year decline in revenues and adjusted earnings due to lower COVID-19 testing demand during the first quarter raises concern. According to the company, COVID-19 volumes remained strong early in the first quarter and decreased in February and March, in line with the market. Significant margin contraction is another downside.
However, the base business showcased strong year-over-year growth during the quarter. Quest Diagnostics specifically noted the investments to further accelerate growth in the base business. With a bullish expectation for the remainder of 2022, the company raised its full-year guidance.
Zacks Rank
Quest Diagnostics currently carries a Zacks Rank #3 (Hold).
Upcoming Earnings
Here are some medical stocks with the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), or #3 to post an earnings beat this quarter.
Lucira Health’s long-term earnings growth rate is estimated at 40.2%. LHDX’s current-year P/E of 3.73x is significantly cheaper than the S&P 500 Index’s 19.36x.
NanoString Technologies, Inc. has an Earnings ESP of +1.53% and a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NanoString Technologies’ 2023 earnings growth rate is estimated at 35.1%. NSTG’s revenue growth rate for 2023 is expected to be 41.83%.
Meridian Bioscience has an Earnings ESP of +26.32% and a Zacks Rank of 2.
Meridian Bioscience’s long-term historical earnings growth rate is 16.3%. VIVO’s 2022 revenue growth rate is expected to be 6.2%.
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Quest Diagnostics (DGX) Q1 Earnings Top Estimates, Margins Down
Quest Diagnostics Incorporated’s (DGX - Free Report) first-quarter 2022 adjusted earnings per share of $3.22 were 10.7% ahead of the Zacks Consensus Estimate. Adjusted earnings, however, declined 14.4% from the year-ago adjusted figure of $3.76.
Certain one-time expenses like the ones related to amortization expenses, and certain restructuring and integration charges were excluded from the quarter’s adjusted figures.
GAAP earnings came in at $2.92 per share, marking a 15.6% decline from the year-ago period.
Revenues
Reported revenues in the first quarter dropped 4% year over year to $2.61 billion. Revenues missed the Zacks Consensus Estimate by 1.1%.
Quarterly Details
Base Business (excludes COVID-19 testing) revenues were $2.01 billion in the reported quarter, up 6.3% year over year. COVID-19 testing revenues on the other hand plunged 27.6% in the first quarter to $599 million.
Diagnostic information services revenues in the quarter were down 3.9% on a year-over-year basis to $2.54 billion.
Volumes (measured by the number of requisitions) improved 1.3% year over year in the first quarter (flat organically). Revenue per requisition, however, dropped 5.2% year over year.
Margins
The cost of services during the reported quarter was $1.65 billion, up 1.2% year over year. The gross margin was 36.9%, reflecting a 326 basis point (bp) contraction from the year-ago figure.
Quest Diagnostics Incorporated Price and EPS Surprise
Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote
Selling, general and administrative expenses increased 4.4% to $425 million in the quarter under review. Adjusted operating margin of 20.7% represented a 458-bp contraction year over year.
Cash, Capital Structure and Solvency
Quest Diagnostics exited the first quarter of 2022 with cash and cash equivalents of $712 million compared with $872 million at the end of 2021. Cumulative net cash provided by operating activities at the end of the first quarter was $480 million compared with $731 million in the year-ago period.
In the first quarter, the company repurchased 2.6 million shares for $350 million. In February 2022, Quest Diagnostics’ board of directors increased the size of its share repurchase program by $1 billion. As of Mar 31, 2022, the company had $1.3 billion available under its existing share repurchase authorization.
The company has a 5-year annualized dividend growth rate of 7.43%.
2022 Guidance Raised
Despite the sluggish first-quarter results, the company raised its full-year 2022 guidance.
Full-year net revenues are currently estimated in the range of $9.20-$9.50 billion (increasing the lower end of the earlier projection of $9.00-$9.50). The Zacks Consensus Estimate for the same is pegged at $9.31 billion.
Adjusted EPS is now expected in the range of $9.00-$9.50 (the earlier guided range was $8.65-$9.35). The Zacks Consensus Estimate for the metric is pegged at $9.01.
Our Take
Quest Diagnostics reported better-than-expected first-quarter earnings while revenues missed the mark.
The year-over-year decline in revenues and adjusted earnings due to lower COVID-19 testing demand during the first quarter raises concern. According to the company, COVID-19 volumes remained strong early in the first quarter and decreased in February and March, in line with the market. Significant margin contraction is another downside.
However, the base business showcased strong year-over-year growth during the quarter. Quest Diagnostics specifically noted the investments to further accelerate growth in the base business. With a bullish expectation for the remainder of 2022, the company raised its full-year guidance.
Zacks Rank
Quest Diagnostics currently carries a Zacks Rank #3 (Hold).
Upcoming Earnings
Here are some medical stocks with the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy), or #3 to post an earnings beat this quarter.
Lucira Health has an Earnings ESP of +485.72% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lucira Health’s long-term earnings growth rate is estimated at 40.2%. LHDX’s current-year P/E of 3.73x is significantly cheaper than the S&P 500 Index’s 19.36x.
NanoString Technologies, Inc. has an Earnings ESP of +1.53% and a Zacks Rank of 2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NanoString Technologies’ 2023 earnings growth rate is estimated at 35.1%. NSTG’s revenue growth rate for 2023 is expected to be 41.83%.
Meridian Bioscience has an Earnings ESP of +26.32% and a Zacks Rank of 2.
Meridian Bioscience’s long-term historical earnings growth rate is 16.3%. VIVO’s 2022 revenue growth rate is expected to be 6.2%.