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Quest Diagnostics Incorporated’s (DGX - Free Report) third-quarter 2018 adjusted earnings per share (EPS) of $1.68 were on par with the Zacks Consensus Estimate. Adjusted earnings rose 20.9% from the year-ago number.
Reported EPS came in at $1.53, reflecting a 32.7% rise from the year-ago quarter.
Reported revenues in the third quarter moved up 1.8% year over year to $1.889 billion but missed the Zacks Consensus Estimate by 3.1%.
Volumes (measured by the number of requisitions) increased 2% year over year in the third quarter. However, revenue per requisition was down 0.8%. Diagnostic information services revenues in the quarter rose 1.9% on a year-over-year basis to $1.81 billion.
Cost of services during the reported quarter was $1.222 billion, up 2.7% year over year. Gross margin came in at 35.3%, reflecting a 60-basis point (bps) contraction year over year.
Quest Diagnostics Incorporated Price, Consensus and EPS Surprise
Selling, general and administrative expenses rose 1.7% to $354 million in the reported quarter. Consequently, adjusted operating margin showed a contraction of 50 bps to 16.6%.
Quest Diagnostics exited the third quarter with cash and cash equivalents of $263 million, compared to $132 million at the end of second-quarter 2018. Net cash provided by operating activities was $905 million for the nine months ending Sep 30, 2018, compared with $852 million in the year-ago quarter.
In the third quarter, the company repurchased 0.9 million shares of the common stock for $100 million. As of Sep 30, 2018, Quest Diagnostics was left with $0.8 billion of authorization under the approved share repurchase plan.
Guidance Tweaked
Quest Diagnostics has updated its 2018 guidance. Excluding the impact of amortization expense, adjusted EPS for the full year is now projected in the range of $6.53 to $6.60 compared to the previous range of $6.53 to $6.67. The Zacks Consensus Estimate of $6.59 is within the guided range.
Revenues for 2018 are now estimated around $7.62 billion (annualized growth of roughly 3%) compared to the previous range of $7.70 billion to $7.74 billion (annualized growth of 4-4.5%). The current Zacks Consensus Estimate for revenues of $7.70 billion, exceeds the company’s projected figure.
Operating cash flow for 2018 is still expected at around $1.3 billion. The current estimates for capital expenditure remain unchanged at the range of $350 million to $400 million.
Our Take
Quest Diagnostics exited the third quarter on a mixed note. The company is refocusing on its core diagnostic information services business and working on disciplined capital deployment.
We are also highly optimistic about the company’s focus on its two-point strategy. The company’s latest collaborations with hospitals and integrated delivery networks continue to act as major growth drivers.
Quest Diagnostics has been grabbing headlines on a slew of inorganic developments. In this regard, the company recently acquired certain assets of Hurley Medical Center, Hooper Holmes and PhenoPath. Moreover, in a bid to expand in the field of fertility diagnostics, the company acquired ReproSource.
The company announced its plans to acquire the U.S. laboratory services business of Oxford Immunotec Global PLC. Moreover, Quest Diagnostics came up with a laboratory partnership with Regional Medical Center Health System (RMC).
Management also seems upbeat about the expanded long-term strategic partnership agreement with UnitedHealthcare, a business of UnitedHealth Group, to operate as a preferred national laboratory for all of the company’s members starting Jan 1, 2019.
Meanwhile, in the last couple of years, Quest Diagnostics has faced several reimbursement issues which have hurt revenues.
Zacks Rank & Key Picks
Quest Diagnostics currently carries a Zacks Rank #3 (Hold). A few top-ranked stocks in the broader medical space are Amedisys, Inc. (AMED - Free Report) , Baxter International Inc (BAX - Free Report) and Masimo Corporation (MASI - Free Report) .
Amedisys is expected to release third-quarter 2018 results on Oct 29. The Zacks Consensus Estimate for adjusted EPS is 79 cents and for revenues is $410.2 million. The stock carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pegged at 74 cents and for revenues at $2.79 billion. The stock has a Zacks Rank #2 (Buy).
Masimo is slated to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pinned at 68 cents and for revenues at $206.3 million. The company is a Zacks #2 Ranked player.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
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Quest Diagnostics (DGX) Q3 Earnings Meet, Guidance Tweaked
Quest Diagnostics Incorporated’s (DGX - Free Report) third-quarter 2018 adjusted earnings per share (EPS) of $1.68 were on par with the Zacks Consensus Estimate. Adjusted earnings rose 20.9% from the year-ago number.
Reported EPS came in at $1.53, reflecting a 32.7% rise from the year-ago quarter.
Reported revenues in the third quarter moved up 1.8% year over year to $1.889 billion but missed the Zacks Consensus Estimate by 3.1%.
Volumes (measured by the number of requisitions) increased 2% year over year in the third quarter. However, revenue per requisition was down 0.8%. Diagnostic information services revenues in the quarter rose 1.9% on a year-over-year basis to $1.81 billion.
Cost of services during the reported quarter was $1.222 billion, up 2.7% year over year. Gross margin came in at 35.3%, reflecting a 60-basis point (bps) contraction year over year.
Quest Diagnostics Incorporated Price, Consensus and EPS Surprise
Quest Diagnostics Incorporated Price, Consensus and EPS Surprise | Quest Diagnostics Incorporated Quote
Selling, general and administrative expenses rose 1.7% to $354 million in the reported quarter. Consequently, adjusted operating margin showed a contraction of 50 bps to 16.6%.
Quest Diagnostics exited the third quarter with cash and cash equivalents of $263 million, compared to $132 million at the end of second-quarter 2018. Net cash provided by operating activities was $905 million for the nine months ending Sep 30, 2018, compared with $852 million in the year-ago quarter.
In the third quarter, the company repurchased 0.9 million shares of the common stock for $100 million. As of Sep 30, 2018, Quest Diagnostics was left with $0.8 billion of authorization under the approved share repurchase plan.
Guidance Tweaked
Quest Diagnostics has updated its 2018 guidance. Excluding the impact of amortization expense, adjusted EPS for the full year is now projected in the range of $6.53 to $6.60 compared to the previous range of $6.53 to $6.67. The Zacks Consensus Estimate of $6.59 is within the guided range.
Revenues for 2018 are now estimated around $7.62 billion (annualized growth of roughly 3%) compared to the previous range of $7.70 billion to $7.74 billion (annualized growth of 4-4.5%). The current Zacks Consensus Estimate for revenues of $7.70 billion, exceeds the company’s projected figure.
Operating cash flow for 2018 is still expected at around $1.3 billion. The current estimates for capital expenditure remain unchanged at the range of $350 million to $400 million.
Our Take
Quest Diagnostics exited the third quarter on a mixed note. The company is refocusing on its core diagnostic information services business and working on disciplined capital deployment.
We are also highly optimistic about the company’s focus on its two-point strategy. The company’s latest collaborations with hospitals and integrated delivery networks continue to act as major growth drivers.
Quest Diagnostics has been grabbing headlines on a slew of inorganic developments. In this regard, the company recently acquired certain assets of Hurley Medical Center, Hooper Holmes and PhenoPath. Moreover, in a bid to expand in the field of fertility diagnostics, the company acquired ReproSource.
The company announced its plans to acquire the U.S. laboratory services business of Oxford Immunotec Global PLC. Moreover, Quest Diagnostics came up with a laboratory partnership with Regional Medical Center Health System (RMC).
Management also seems upbeat about the expanded long-term strategic partnership agreement with UnitedHealthcare, a business of UnitedHealth Group, to operate as a preferred national laboratory for all of the company’s members starting Jan 1, 2019.
Meanwhile, in the last couple of years, Quest Diagnostics has faced several reimbursement issues which have hurt revenues.
Zacks Rank & Key Picks
Quest Diagnostics currently carries a Zacks Rank #3 (Hold). A few top-ranked stocks in the broader medical space are Amedisys, Inc. (AMED - Free Report) , Baxter International Inc (BAX - Free Report) and Masimo Corporation (MASI - Free Report) .
Amedisys is expected to release third-quarter 2018 results on Oct 29. The Zacks Consensus Estimate for adjusted EPS is 79 cents and for revenues is $410.2 million. The stock carries a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Baxter is expected to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pegged at 74 cents and for revenues at $2.79 billion. The stock has a Zacks Rank #2 (Buy).
Masimo is slated to release third-quarter 2018 results on Oct 31. The Zacks Consensus Estimate for EPS is pinned at 68 cents and for revenues at $206.3 million. The company is a Zacks #2 Ranked player.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>