- Fourth quarter revenues of $2.29
billion, down 1.9% from 2022
- Fourth quarter reported diluted earnings per share ("EPS") of
$1.70, up 95.4% from 2022; and
adjusted diluted EPS of $2.15, up
8.6% from 2022
- Fourth quarter base business revenues of $2.25 billion, up 4.7% from 2022
- Fourth quarter COVID-19 testing revenues of $37 million, down 79.8% from 2022
- Full year revenues of $9.25
billion, down 6.4% from 2022
- Full year reported diluted EPS of $7.49, down 6.0% from 2022; and adjusted diluted
EPS of $8.71, down 12.5% from
2022
- Full year base business revenues of $9.03 billion, up 7.1% from 2022
- Full year COVID-19 testing revenues of $223 million, down 84.7% from 2022
- Full year 2024 reported diluted EPS expected to be between
$7.69 and $7.99; and adjusted diluted EPS expected to be
between $8.60 and $8.90
SECAUCUS, N.J., Feb. 1, 2024
/PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the
world's leading provider of diagnostic information services,
announced today financial results for the fourth quarter and full
year ended December 31, 2023.
"We delivered strong revenue growth in our base business of 7%
for the full year 2023 and delivered on our earnings commitment as
we transitioned away from COVID testing," said Jim Davis, Chairman, CEO, and President. "We
made progress during the year advancing our growth strategy with
innovative testing solutions, new and expanded relationships with
health systems, and a robust pipeline of M&A and professional
lab services opportunities. We also delivered double-digit revenue
growth in several clinical areas, including in advanced
cardiometabolic, prenatal and hereditary genetics, and neurology,
as well as strengthened our oncology offering with a strategic
investment in higher growth minimal residual disease testing."
Mr. Davis continued: "Our guidance for 2024 reflects a return to
overall revenue growth while balancing the earnings tailwinds and
headwinds we see for the year. Looking beyond 2024, we are well
positioned to deliver our long-term financial outlook to drive
mid-single digit revenue growth and high-single digit earnings
growth. Finally, I'm grateful to our dedicated Quest colleagues who
bring our purpose to life every day, working together to create a
healthier world, one life at a time."
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
|
Change
|
|
2023
|
|
2022
|
|
Change
|
|
(dollars in millions,
except per share data)
|
Reported:
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
2,288
|
|
$
2,333
|
|
(1.9) %
|
|
$
9,252
|
|
$
9,883
|
|
(6.4) %
|
Base business revenues
(a)
|
$
2,251
|
|
$
2,149
|
|
4.7 %
|
|
$
9,029
|
|
$
8,429
|
|
7.1 %
|
COVID-19 testing
revenues
|
$
37
|
|
$ 184
|
|
(79.8) %
|
|
$ 223
|
|
$
1,454
|
|
(84.7) %
|
|
|
|
|
|
|
|
|
|
|
|
|
Diagnostic information
services revenues
|
$
2,221
|
|
$
2,265
|
|
(2.0) %
|
|
$
8,976
|
|
$
9,609
|
|
(6.6) %
|
Revenue per
requisition
|
|
|
|
|
(3.5) %
|
|
|
|
|
|
(5.9) %
|
Requisition
volume
|
|
|
|
|
1.9 %
|
|
|
|
|
|
(0.6) %
|
Organic requisition
volume
|
|
|
|
|
1.4 %
|
|
|
|
|
|
(1.0) %
|
Operating income
(b)
|
$ 267
|
|
$ 135
|
|
98.2 %
|
|
$
1,262
|
|
$
1,428
|
|
(11.6) %
|
Operating income as a
percentage of net revenues (b)
|
11.7 %
|
|
5.8 %
|
|
5.9 %
|
|
13.6 %
|
|
14.5 %
|
|
(0.9) %
|
Net income attributable
to Quest Diagnostics (b)
|
$ 192
|
|
$ 101
|
|
91.3 %
|
|
$ 854
|
|
$ 946
|
|
(9.7) %
|
Diluted EPS
(b)
|
$ 1.70
|
|
$ 0.87
|
|
95.4 %
|
|
$ 7.49
|
|
$ 7.97
|
|
(6.0) %
|
Cash provided by
operations
|
$ 527
|
|
$ 334
|
|
58.0 %
|
|
$
1,272
|
|
$
1,718
|
|
(25.9) %
|
Capital
expenditures
|
$
72
|
|
$ 147
|
|
(51.6) %
|
|
$ 408
|
|
$ 404
|
|
0.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
(b):
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$ 338
|
|
$ 330
|
|
2.1 %
|
|
$
1,457
|
|
$
1,742
|
|
(16.3) %
|
Operating income as a
percentage of net revenues
|
14.8 %
|
|
14.2 %
|
|
0.6 %
|
|
15.8 %
|
|
17.6 %
|
|
(1.8) %
|
Net income attributable
to Quest Diagnostics
|
$ 245
|
|
$ 229
|
|
6.9 %
|
|
$ 994
|
|
$
1,181
|
|
(15.9) %
|
Diluted
EPS
|
$ 2.15
|
|
$ 1.98
|
|
8.6 %
|
|
$ 8.71
|
|
$ 9.95
|
|
(12.5) %
|
|
|
(a)
|
Excludes COVID-19
testing.
|
|
|
(b)
|
For further details
impacting the year-over-year comparisons related to operating
income, operating income as a percentage of net revenues, net
income attributable to Quest Diagnostics, and diluted EPS, see note
2 of the financial tables attached below.
|
Dividend Increased
Quest Diagnostics' Board of Directors has authorized a 5.6%
increase in its quarterly dividend from $0.71 to $0.75 per
share, or $3.00 per share annually,
effective with the dividend payable on April
22, 2024 to shareholders of record of Quest Diagnostics
common stock on April 8, 2024. The
company has raised its dividend annually since 2011.
Guidance for Full Year 2024
We estimate full year 2024 guidance as follows:
|
Low
|
|
High
|
Net revenues
|
$9.35
billion
|
|
$9.45
billion
|
Net revenues
increase
|
1.1 %
|
|
2.1 %
|
Reported diluted
EPS
|
$7.69
|
|
$7.99
|
Adjusted diluted
EPS
|
$8.60
|
|
$8.90
|
Cash provided by
operations
|
Approximately $1.3
billion
|
Capital
expenditures
|
Approximately $420
million
|
Note on Non-GAAP Financial Measures
As used in this press release the term "reported" refers to
measures under accounting principles generally accepted in
the United States ("GAAP"). The
term "adjusted" refers to non-GAAP operating performance measures
that exclude special items such as restructuring and integration
charges, amortization expense, excess tax benefits ("ETB")
associated with stock-based compensation, costs associated with
donations, contributions, and other financial support through Quest
for Health Equity (our initiative with the Quest Diagnostics
Foundation to reduce health disparities in underserved
communities), gains and losses associated with changes in the
carrying value of our strategic investments, impairment charges,
and other items.
Non-GAAP adjusted measures are presented because management
believes those measures are useful adjuncts to GAAP results.
Non-GAAP adjusted measures should not be considered as an
alternative to the corresponding measures determined under GAAP.
Management may use these non-GAAP measures to evaluate our
performance period over period and relative to competitors, to
analyze the underlying trends in our business, to establish
operational budgets and forecasts and for incentive compensation
purposes. We believe that these non-GAAP measures are useful to
investors and analysts to evaluate our performance period over
period and relative to competitors, as well as to analyze the
underlying trends in our business and to assess our performance.
The additional tables attached below include reconciliations of
non-GAAP adjusted measures to GAAP measures.
Conference Call Information
Quest Diagnostics will hold its quarterly conference call to
discuss financial results beginning at 8:30
a.m. Eastern Time today. The conference call can be
accessed by dialing 888-455-0391 within the U.S. and Canada, or 773-756-0467 internationally,
passcode: 7895081; or via live webcast on our website at
www.QuestDiagnostics.com/investor. We suggest participants
dial in approximately 10 minutes before the call.
A replay of the call may be accessed online at
www.QuestDiagnostics.com/investor or, from approximately
10:30 a.m. Eastern Time on
February 1, 2024 until midnight Eastern
Time on February 15, 2024, by phone at 800-934-9421 for
domestic callers and 203-369-3391 for international callers. Anyone
listening to the call is encouraged to read our periodic reports,
on file with the Securities and Exchange Commission, including the
discussion of risk factors and historical results of operations and
financial condition in those reports.
About Quest Diagnostics
Quest Diagnostics empowers people to take action to improve
health outcomes. Derived from the world's largest database of
clinical lab results, our diagnostic insights reveal new avenues to
identify and treat disease, inspire healthy behaviors and improve
healthcare management. Quest annually serves one in three adult
Americans and half the physicians and hospitals in the United States, and our nearly 50,000
employees understand that, in the right hands and with the right
context, our diagnostic insights can inspire actions that transform
lives. www.QuestDiagnostics.com
Forward Looking Statements
The statements in this press release which are not historical
facts may be forward-looking statements. Readers are
cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date that they are made and
which reflect management's current estimates, projections,
expectations or beliefs and which involve risks and uncertainties
that could cause actual results and outcomes to be materially
different. Risks and uncertainties that may affect the future
results of the company include, but are not limited
to, adverse results from pending or future government
investigations, lawsuits or private actions, the competitive
environment, the complexity of billing, reimbursement and revenue
recognition for clinical laboratory testing, changes in government
regulations, changing relationships with customers, payers,
suppliers or strategic partners and other factors discussed in the
company's most recently filed Annual Report on Form 10-K and in any
of the company's subsequently filed Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K, including those discussed in the
"Business," "Risk Factors," "Cautionary Factors that May Affect
Future Results" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections of those
reports.
This earnings release, including the attached financial tables,
is available online in the Newsroom section at
www.QuestDiagnostics.com.
ADDITIONAL TABLES FOLLOW
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated
Statements of Operations
For the Three and
Twelve Months Ended December 31, 2023 and 2022
(in millions, except
per share data)
(unaudited)
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net
revenues
|
$
2,288
|
|
$
2,333
|
|
$
9,252
|
|
$
9,883
|
|
|
|
|
|
|
|
|
Operating costs and
expenses and other operating income:
|
|
|
|
|
|
|
|
Cost of
services
|
1,552
|
|
1,575
|
|
6,199
|
|
6,450
|
Selling, general and
administrative
|
407
|
|
563
|
|
1,642
|
|
1,874
|
Amortization of
intangible assets
|
27
|
|
39
|
|
108
|
|
120
|
Other operating
expense, net
|
35
|
|
21
|
|
41
|
|
11
|
Total operating costs
and expenses, net
|
2,021
|
|
2,198
|
|
7,990
|
|
8,455
|
|
|
|
|
|
|
|
|
Operating
income
|
267
|
|
135
|
|
1,262
|
|
1,428
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense,
net
|
(40)
|
|
(32)
|
|
(152)
|
|
(138)
|
Other income (expense),
net
|
10
|
|
6
|
|
20
|
|
(55)
|
Total non-operating
expense, net
|
(30)
|
|
(26)
|
|
(132)
|
|
(193)
|
|
|
|
|
|
|
|
|
Income before income
taxes and equity in earnings of equity method
investees
|
237
|
|
109
|
|
1,130
|
|
1,235
|
Income tax (expense)
benefit
|
(40)
|
|
4
|
|
(248)
|
|
(264)
|
Equity in earnings
of equity method investees, net of taxes
|
8
|
|
3
|
|
26
|
|
44
|
Net
income
|
205
|
|
116
|
|
908
|
|
1,015
|
Less: Net income
attributable to noncontrolling interests
|
13
|
|
15
|
|
54
|
|
69
|
Net income
attributable to Quest Diagnostics
|
$ 192
|
|
$ 101
|
|
$ 854
|
|
$ 946
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
|
|
|
|
Basic
|
$ 1.72
|
|
$ 0.89
|
|
$ 7.59
|
|
$ 8.10
|
|
|
|
|
|
|
|
|
Diluted
|
$ 1.70
|
|
$ 0.87
|
|
$ 7.49
|
|
$ 7.97
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
112
|
|
113
|
|
112
|
|
116
|
|
|
|
|
|
|
|
|
Diluted
|
113
|
|
115
|
|
113
|
|
118
|
|
|
|
|
|
|
|
|
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated Balance
Sheets
December 31,
2023 and 2022
(in millions, except
per share data)
(unaudited)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
686
|
|
$
315
|
Accounts receivable,
net
|
1,210
|
|
1,195
|
Inventories
|
190
|
|
192
|
Prepaid expenses and
other current assets
|
286
|
|
196
|
Total current
assets
|
2,372
|
|
1,898
|
Property, plant and
equipment, net
|
1,816
|
|
1,766
|
Operating lease
right-of-use assets
|
602
|
|
585
|
Goodwill
|
7,733
|
|
7,220
|
Intangible assets,
net
|
1,166
|
|
1,092
|
Investment in equity
method investees
|
135
|
|
132
|
Other
assets
|
198
|
|
144
|
Total
assets
|
$
14,022
|
|
$
12,837
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
1,359
|
|
$
1,396
|
Current portion of
long-term debt
|
303
|
|
2
|
Current portion of
long-term operating lease liabilities
|
153
|
|
153
|
Total current
liabilities
|
1,815
|
|
1,551
|
Long-term
debt
|
4,410
|
|
3,978
|
Long-term operating
lease liabilities
|
503
|
|
489
|
Other
liabilities
|
876
|
|
812
|
Redeemable
noncontrolling interest
|
76
|
|
77
|
Stockholders'
equity:
|
|
|
|
Quest Diagnostics
stockholders' equity:
|
|
|
|
Common stock, par
value $0.01 per share; 600 shares authorized as of both December
31, 2023
and 2022; 162 shares issued as of both December 31, 2023 and
2022
|
2
|
|
2
|
Additional paid-in
capital
|
2,320
|
|
2,295
|
Retained
earnings
|
8,825
|
|
8,290
|
Accumulated other
comprehensive loss
|
(14)
|
|
(21)
|
Treasury stock, at
cost; 51 shares as of both December 31, 2023 and
2022
|
(4,826)
|
|
(4,673)
|
Total Quest Diagnostics
stockholders' equity
|
6,307
|
|
5,893
|
Noncontrolling
interests
|
35
|
|
37
|
Total stockholders'
equity
|
6,342
|
|
5,930
|
Total liabilities
and stockholders' equity
|
$
14,022
|
|
$
12,837
|
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated
Statements of Cash Flows
For the Twelve
Months Ended December 31, 2023 and 2022
(in
millions)
(unaudited)
|
|
|
Twelve Months Ended
December 31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
908
|
|
$
1,015
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
439
|
|
437
|
Provision for credit
losses
|
1
|
|
3
|
Deferred income tax
(benefit) provision
|
(49)
|
|
1
|
Stock-based
compensation expense
|
77
|
|
77
|
Other, net
|
41
|
|
66
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
(15)
|
|
246
|
Accounts payable and
accrued expenses
|
(55)
|
|
(149)
|
Income taxes
payable
|
(2)
|
|
(31)
|
Other assets and
liabilities, net
|
(73)
|
|
53
|
Net cash provided by
operating activities
|
1,272
|
|
1,718
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Business acquisitions,
net of cash acquired
|
(611)
|
|
(144)
|
Capital
expenditures
|
(408)
|
|
(404)
|
(Increase) decrease in
investments and other assets, net
|
(42)
|
|
5
|
Net cash used in
investing activities
|
(1,061)
|
|
(543)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
borrowings
|
2,592
|
|
—
|
Repayments of
debt
|
(1,844)
|
|
(2)
|
Purchases of treasury
stock
|
(275)
|
|
(1,408)
|
Exercise of stock
options
|
72
|
|
123
|
Employee payroll tax
withholdings on stock issued under stock-based compensation
plans
|
(28)
|
|
(28)
|
Dividends
paid
|
(314)
|
|
(305)
|
Distributions to
noncontrolling interest partners
|
(57)
|
|
(73)
|
Other financing
activities, net
|
14
|
|
(39)
|
Net cash provided by
(used in) financing activities
|
160
|
|
(1,732)
|
|
|
|
|
Net change in cash
and cash equivalents and restricted cash
|
371
|
|
(557)
|
Cash and cash
equivalents and restricted cash, beginning of period
|
315
|
|
872
|
Cash and cash
equivalents and restricted cash, end of period
|
$
686
|
|
$
315
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
Interest
|
$
134
|
|
$
156
|
Income taxes
|
$
317
|
|
$
283
|
Notes to Financial
Tables
|
1)
|
The computation of
basic and diluted earnings per common share is as
follows:
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(in millions, except
per share data)
|
Amounts attributable
to Quest Diagnostics' common stockholders:
|
|
|
|
|
|
|
|
Net income attributable
to Quest Diagnostics
|
$
192
|
|
$
101
|
|
$
854
|
|
$
946
|
Less: Earnings
allocated to participating securities
|
—
|
|
—
|
|
4
|
|
4
|
Earnings available to
Quest Diagnostics' common stockholders - basic and
diluted
|
$
192
|
|
$
101
|
|
$
850
|
|
$
942
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding - basic
|
112
|
|
113
|
|
112
|
|
116
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
Stock options and
performance share units
|
1
|
|
2
|
|
1
|
|
2
|
Weighted average common
shares outstanding - diluted
|
113
|
|
115
|
|
113
|
|
118
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
|
|
|
|
Basic
|
$
1.72
|
|
$
0.89
|
|
$
7.59
|
|
$
8.10
|
Diluted
|
$
1.70
|
|
$
0.87
|
|
$
7.49
|
|
$
7.97
|
2)
|
The following tables
reconcile reported GAAP results to non-GAAP adjusted
results:
|
|
|
|
Three Months Ended
December 31, 2023
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of net
revenues
|
|
Income tax
expense (e)
|
|
Equity in
earnings of
equity method
investees, net of
taxes
|
|
Net income
attributable
to Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
267
|
|
11.7 %
|
|
$
(40)
|
|
$
8
|
|
$
192
|
|
$
1.70
|
Restructuring and
integration charges (a)
|
11
|
|
0.5
|
|
(2)
|
|
—
|
|
9
|
|
0.07
|
Other (b)
|
33
|
|
1.4
|
|
(6)
|
|
—
|
|
27
|
|
0.23
|
Amortization
expense
|
27
|
|
1.2
|
|
(8)
|
|
—
|
|
19
|
|
0.17
|
ETB
|
—
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
|
(0.02)
|
As adjusted
|
$
338
|
|
14.8 %
|
|
$
(58)
|
|
$
8
|
|
$
245
|
|
$
2.15
|
|
Twelve Months Ended
December 31, 2023
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of net
revenues
|
|
Income tax
expense (e)
|
|
Equity in
earnings of
equity method
investees, net of
taxes
|
|
Net income
attributable
to Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
1,262
|
|
13.6 %
|
|
$
(248)
|
|
$
26
|
|
$
854
|
|
$
7.49
|
Restructuring and
integration charges (a)
|
43
|
|
0.5
|
|
(10)
|
|
—
|
|
33
|
|
0.29
|
Other (b)
|
44
|
|
0.5
|
|
(8)
|
|
—
|
|
36
|
|
0.31
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(1)
|
|
3
|
|
2
|
|
0.02
|
Amortization
expense
|
108
|
|
1.2
|
|
(28)
|
|
—
|
|
80
|
|
0.70
|
ETB
|
—
|
|
—
|
|
(11)
|
|
—
|
|
(11)
|
|
(0.10)
|
As adjusted
|
$
1,457
|
|
15.8 %
|
|
$
(306)
|
|
$
29
|
|
$
994
|
|
$
8.71
|
|
Three Months Ended
December 31, 2022
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of net
revenues
|
|
Income tax
(expense)
benefit (e)
|
|
Equity in
earnings of
equity method
investees, net of
taxes
|
|
Net income
attributable
to Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
135
|
|
5.8 %
|
|
$
4
|
|
$
3
|
|
$
101
|
|
$
0.87
|
Restructuring and
integration charges (a)
|
51
|
|
2.2
|
|
(12)
|
|
—
|
|
39
|
|
0.34
|
Other (b)
|
21
|
|
0.9
|
|
(20)
|
|
—
|
|
1
|
|
0.01
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(2)
|
|
3
|
|
1
|
|
0.01
|
Quest for Health Equity
costs (d)
|
84
|
|
3.6
|
|
(22)
|
|
|
|
62
|
|
0.53
|
Amortization
expense
|
39
|
|
1.7
|
|
(10)
|
|
—
|
|
29
|
|
0.25
|
ETB
|
—
|
|
—
|
|
(4)
|
|
—
|
|
(4)
|
|
(0.03)
|
As adjusted
|
$
330
|
|
14.2 %
|
|
$
(66)
|
|
$
6
|
|
$
229
|
|
$
1.98
|
|
Twelve Months Ended
December 31, 2022
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (e)
|
|
Equity in
earnings of
equity method
investees, net of
taxes
|
|
Net income
attributable
to Quest
Diagnostics
|
|
Diluted
EPS
|
As reported
|
$
1,428
|
|
14.5 %
|
|
$
(264)
|
|
$
44
|
|
$
946
|
|
$
7.97
|
Restructuring and
integration charges (a)
|
88
|
|
0.9
|
|
(22)
|
|
—
|
|
66
|
|
0.56
|
Other (b)
|
13
|
|
0.1
|
|
(19)
|
|
—
|
|
(6)
|
|
(0.05)
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(11)
|
|
12
|
|
31
|
|
0.26
|
Quest for Health Equity
costs (d)
|
93
|
|
0.9
|
|
(24)
|
|
—
|
|
69
|
|
0.59
|
Amortization
expense
|
120
|
|
1.2
|
|
(31)
|
|
—
|
|
89
|
|
0.74
|
ETB
|
—
|
|
—
|
|
(14)
|
|
—
|
|
(14)
|
|
(0.12)
|
As adjusted
|
$
1,742
|
|
17.6 %
|
|
$
(385)
|
|
$
56
|
|
$
1,181
|
|
$
9.95
|
(a)
|
For both the three and
twelve months ended December 31, 2023, the pre-tax impact
represents costs primarily associated with workforce reductions and
integration costs incurred in connection with further restructuring
and integrating our business. For both the three and twelve
months ended December 31, 2022, the pre-tax impact represents costs
primarily associated with workforce reductions, systems conversions
and integration costs incurred in connection with further
restructuring and integrating our business. The following table
summarizes the pre-tax impact of restructuring and integration
charges on our consolidated statements of operations:
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(dollars in
millions)
|
Cost of
services
|
$
4
|
|
$
19
|
|
$
16
|
|
$
32
|
Selling, general and
administrative
|
7
|
|
32
|
|
27
|
|
56
|
|
|
|
|
|
|
|
|
Operating
income
|
$
11
|
|
$
51
|
|
$
43
|
|
$
88
|
(b)
|
For both the three and
twelve months ended December 31, 2023, the pre-tax impact primarily
represents a $29 million impairment charge on certain long-lived
assets related to the shutdown of a business and, to a lesser
extent, losses associated with the increase in the fair value of
the contingent consideration accrual associated with previous
acquisitions. For the three months ended December 31, 2022,
the pre-tax impact primarily represents a $14 million impairment
charge on certain property, plant and equipment and a $6 million
loss associated with the increase in the fair value of the
contingent consideration accrual associated with previous
acquisitions. For the twelve months ended December 31, 2022,
the pre-tax impact primarily represents the $14 million impairment
charge on certain property, plant and equipment and a $5 million
loss associated with the increase in the fair value of the
contingent consideration accrual associated with previous
acquisitions, partially offset by a $10 million gain from a payroll
tax credit under the Coronavirus Aid, Relief, and Economic Security
Act associated with the retention of employees. Additionally,
both the three and twelve months ended December 31, 2022 include an
$18 million income tax benefit due to the adjustment to state
deferred tax liabilities related to depreciation expense, recorded
in income tax (expense) benefit. The following table
summarizes the pre-tax impact of these other items on our
consolidated statement of operations:
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(dollars in
millions)
|
Cost of
services
|
$
—
|
|
$
—
|
|
$
—
|
|
$
2
|
Selling, general and
administrative
|
(2)
|
|
—
|
|
5
|
|
—
|
Other operating
expense, net
|
35
|
|
21
|
|
39
|
|
11
|
Operating
income
|
$
33
|
|
$
21
|
|
$
44
|
|
$
13
|
(c)
|
For all periods
presented, the pre-tax impact primarily represents gains and losses
associated with changes in the carrying value of our strategic
investments. The following table summarizes the pre-tax
impact of gains and losses on investments on our consolidated
statement of operations:
|
|
|
|
Three Months
Ended
December 31,
|
|
Twelve Months
Ended
December 31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
|
(dollars in
millions)
|
Other income (expense),
net
|
$
—
|
|
$
—
|
|
$
—
|
|
$
30
|
|
|
|
|
|
|
|
|
Equity in earnings of
equity method investees, net of taxes
|
$
—
|
|
$
3
|
|
$
3
|
|
$
12
|
|
|
(d)
|
For both the three and
twelve months ended December 31, 2022, the pre-tax impact
represents the costs associated with donations, contributions and
other financial support through Quest for Health Equity, recorded
in selling, general and administrative expenses.
|
|
|
(e)
|
For restructuring and
integration charges, gains and losses on investments, Quest for
Health Equity costs, other items and amortization expense, income
tax impacts, where recorded, were primarily calculated using
combined statutory income tax rates of 25.5% for both 2023 and
2022. Additionally, both the three months and twelve months
ended December 31, 2022 include an $18 million benefit due to an
adjustment to state deferred tax liabilities related to
depreciation expense.
|
|
|
3)
|
For the three and
twelve months ended December 31, 2023, we repurchased 2.0 million
shares of our common stock for $276 million. As of December
31, 2023, $1.0 billion remained available under our share
repurchase authorization.
|
|
|
4)
|
The outlook for
adjusted diluted EPS represents management's estimates for the full
year 2024 before the impact of special items. Further impacts to
earnings related to special items may occur throughout 2024.
Additionally, the amount of ETB is dependent upon employee stock
option exercises and our stock price, both of which are difficult
to predict. The following table reconciles our 2024 outlook for
diluted EPS under GAAP to our outlook for adjusted diluted
EPS:
|
|
|
|
Low
|
|
High
|
Diluted EPS
|
$
7.69
|
|
$
7.99
|
Restructuring and
integration charges (a)
|
0.17
|
|
0.17
|
Amortization expense
(b)
|
0.84
|
|
0.84
|
ETB
|
(0.10)
|
|
(0.10)
|
Adjusted diluted
EPS
|
$
8.60
|
|
$
8.90
|
|
|
(a)
|
Represents estimated
pre-tax charges of $26 million primarily associated with workforce
reductions and integration costs incurred in connection with
further restructuring and integrating our business. Income
tax benefits were calculated using a combined statutory income tax
rate of 25.5%.
|
|
|
(b)
|
Represents estimated
pre-tax amortization expenses of $128 million. Income tax
benefits were calculated using a combined statutory income tax rate
of 25.5%
|
.
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SOURCE Quest Diagnostics