Quest Diagnostics Inc. (DGX, Financial) filed Quarterly Report for the period ended 2012-09-30.
Quest Diagnostics Inc has a market cap of $9.39 billion; its shares were traded at around $58.43 with a P/E ratio of 12.7 and P/S ratio of 1.3. The dividend yield of Quest Diagnostics Inc stocks is 1.1%. Quest Diagnostics Inc had an annual average earning growth of 11.4% over the past 10 years. GuruFocus rated Quest Diagnostics Inc the business predictability rank of 3.5-star.
Results for the nine months ended September 30, 2011 were affected by a number of items which impacted earnings per diluted share by $1.55. During the first quarter of 2011, we recorded the Medi-Cal charge of $236 million, or $1.21 per diluted share, in “other operating expense, net.” In addition, results for the nine months ended September 30, 2011 included $46.7 million of pre-tax charges, or $0.18 per diluted share, principally associated with workforce reductions. Results for the nine months ended September 30, 2011 also included pre-tax charges of $19.7 million, or $0.09 per diluted share, associated with the acquisitions of Athena and Celera. Of these costs, $16.6 million, primarily related to professional fees and integration costs, were recorded in selling, general and administrative expenses and $3.1 million of financing related costs were included in interest expense, net. In addition, we estimate that the impact of severe weather during the first quarter of 2011 adversely affected operating income for the nine months ended September 30, 2011 by $18.5 million, or $0.07 per diluted share.
Clinical testing revenue increased 1.6% for the nine months ended September 30, 2012 compared to the prior year period. The acquisitions of Athena, Celera and S.E.D. contributed about 1.2% to clinical testing revenue growth during the period. Clinical testing volume, measured by the number of requisitions, increased 1.0% compared to the prior year period. We estimate that the impact of weather favorably affected the year-over-year volume comparisons by about 0.6%, and acquisitions contributed about 0.5%. After considering the favorable impact of weather and acquisitions, underlying volume growth was essentially flat compared to the prior year period. Pre-employment drug testing volume grew about 6% during the nine months ended September 30, 2012.
Also, year-over-year comparisons for both the three and nine months ended September 30, 2012 were unfavorably impacted by approximately $8.4 million and $9.5 million, respectively, associated with gains and losses on investments in our supplemental deferred compensation plans. Under our supplemental deferred compensation plans, employee compensation deferrals, together with Company matching contributions, are invested in a variety of investments held in trusts. Gains and losses associated with the investments are recorded in earnings within other income (expense), net. A corresponding and offsetting adjustment is also recorded to the deferred compensation obligation to reflect investment gains and losses earned by the employee. Such adjustments to the deferred compensation obligation are recorded in earnings principally within selling, general and administrative expenses and offset the amount of investment gains and losses recorded in other income (expense), net. Results for the three and nine months ended September 30, 2012 included an increase in operating costs of $2.5 million and $6.0 million, respectively, representing increases in the deferred compensation obligation to reflect investment gains earned by employees participating in our deferred compensation plans. Results for the three and nine months ended September 30, 2011 included a decrease in operating costs of $5.9 million and $3.5 million, respectively, representing decreases in the deferred compensation obligation to reflect investment losses incurred by employees participating in our deferred compensation plans.
There was no impact associated with discontinued operations, net of taxes, for the three months ended September 30, 2012. For the three months ended September 30, 2011, results from discontinued operations, net of taxes was a loss of $0.3 million, with a $0.01 negative impact on diluted earnings per share. Results from discontinued operations, net of taxes for the nine months ended September 30, 2012 was income of $0.3 million with no impact on diluted earnings per share and a loss of $1.1 million, with a $0.01 negative impact on diluted earnings per share, for the nine months ended September 30, 2011. See Note 13 to the interim consolidated financial statements for further details.
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Quest Diagnostics Inc has a market cap of $9.39 billion; its shares were traded at around $58.43 with a P/E ratio of 12.7 and P/S ratio of 1.3. The dividend yield of Quest Diagnostics Inc stocks is 1.1%. Quest Diagnostics Inc had an annual average earning growth of 11.4% over the past 10 years. GuruFocus rated Quest Diagnostics Inc the business predictability rank of 3.5-star.
Highlight of Business Operations:
Results for the nine months ended September 30, 2012 were affected by certain items that impacted earnings per diluted share by $0.31. During the nine months ended September 30, 2012, we incurred costs of $70.2 million, or $0.27 per diluted share, primarily associated with workforce reductions and professional fees associated with further restructuring and integrating our business. Results for the nine months ended September 30, 2012 also included $10.1 million, or $0.04 per diluted share, principally associated with separation costs and accelerated vesting of certain equity awards in connection with the succession of our prior CEO.Results for the nine months ended September 30, 2011 were affected by a number of items which impacted earnings per diluted share by $1.55. During the first quarter of 2011, we recorded the Medi-Cal charge of $236 million, or $1.21 per diluted share, in “other operating expense, net.” In addition, results for the nine months ended September 30, 2011 included $46.7 million of pre-tax charges, or $0.18 per diluted share, principally associated with workforce reductions. Results for the nine months ended September 30, 2011 also included pre-tax charges of $19.7 million, or $0.09 per diluted share, associated with the acquisitions of Athena and Celera. Of these costs, $16.6 million, primarily related to professional fees and integration costs, were recorded in selling, general and administrative expenses and $3.1 million of financing related costs were included in interest expense, net. In addition, we estimate that the impact of severe weather during the first quarter of 2011 adversely affected operating income for the nine months ended September 30, 2011 by $18.5 million, or $0.07 per diluted share.
Clinical testing revenue increased 1.6% for the nine months ended September 30, 2012 compared to the prior year period. The acquisitions of Athena, Celera and S.E.D. contributed about 1.2% to clinical testing revenue growth during the period. Clinical testing volume, measured by the number of requisitions, increased 1.0% compared to the prior year period. We estimate that the impact of weather favorably affected the year-over-year volume comparisons by about 0.6%, and acquisitions contributed about 0.5%. After considering the favorable impact of weather and acquisitions, underlying volume growth was essentially flat compared to the prior year period. Pre-employment drug testing volume grew about 6% during the nine months ended September 30, 2012.
Also, year-over-year comparisons for both the three and nine months ended September 30, 2012 were unfavorably impacted by approximately $8.4 million and $9.5 million, respectively, associated with gains and losses on investments in our supplemental deferred compensation plans. Under our supplemental deferred compensation plans, employee compensation deferrals, together with Company matching contributions, are invested in a variety of investments held in trusts. Gains and losses associated with the investments are recorded in earnings within other income (expense), net. A corresponding and offsetting adjustment is also recorded to the deferred compensation obligation to reflect investment gains and losses earned by the employee. Such adjustments to the deferred compensation obligation are recorded in earnings principally within selling, general and administrative expenses and offset the amount of investment gains and losses recorded in other income (expense), net. Results for the three and nine months ended September 30, 2012 included an increase in operating costs of $2.5 million and $6.0 million, respectively, representing increases in the deferred compensation obligation to reflect investment gains earned by employees participating in our deferred compensation plans. Results for the three and nine months ended September 30, 2011 included a decrease in operating costs of $5.9 million and $3.5 million, respectively, representing decreases in the deferred compensation obligation to reflect investment losses incurred by employees participating in our deferred compensation plans.
There was no impact associated with discontinued operations, net of taxes, for the three months ended September 30, 2012. For the three months ended September 30, 2011, results from discontinued operations, net of taxes was a loss of $0.3 million, with a $0.01 negative impact on diluted earnings per share. Results from discontinued operations, net of taxes for the nine months ended September 30, 2012 was income of $0.3 million with no impact on diluted earnings per share and a loss of $1.1 million, with a $0.01 negative impact on diluted earnings per share, for the nine months ended September 30, 2011. See Note 13 to the interim consolidated financial statements for further details.
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