- Second quarter revenues of $2.40
billion, up 2.5% from 2023
- Second quarter reported diluted earnings per share ("EPS") of
$2.03, down 1.0% from 2023; and
adjusted diluted EPS of $2.35, up
2.2% from 2023
- Full year 2024 revenues now expected to be between $9.50 billion and $9.58
billion; reported diluted EPS now expected to be between
$7.57 and $7.77; and adjusted diluted EPS expected to be
between $8.80 and $9.00
SECAUCUS, N.J., July 23,
2024 /PRNewswire/ -- Quest Diagnostics Incorporated
(NYSE: DGX), a leading provider of diagnostic information services,
today announced financial results for the second quarter ended
June 30, 2024.
"We delivered another strong quarter, with base business revenue
growth of nearly 4% and total revenue growth of 2.5% as well as
continued improvement in productivity and profitability in the base
business," said Jim Davis, Chairman,
CEO and President. "This performance is due to growth of new
physician and hospital customers, more favorable test mix that
includes greater adoption of advanced diagnostics and continued
strength in healthcare utilization. We also made progress improving
our operational quality and efficiency through greater use of
automation and AI."
Mr. Davis added: "In addition, we are excited to announce four
acquisitions that meet our criteria for growth, profitability and
returns, and that will enable us to expand in strategic growth
areas. Our planned acquisition of LifeLabs will position us to help
this trusted lab leader grow and better serve Canada's growing and aging population. The
acquisitions we recently announced of select outreach lab assets of
Allina Health in Minnesota and
Wisconsin and OhioHealth in
Ohio reflect our ability to
partner with high-quality health systems and extend our presence in
key geographies. Our recently completed PathAI Diagnostics
acquisition positions us to rapidly scale digital pathology
innovation to help health systems and other providers improve
cancer diagnoses."
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2024
|
|
2023
|
|
Change
|
|
2024
|
|
2023
|
|
Change
|
|
|
(dollars in millions,
except per share data)
|
|
|
Reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues
|
$
2,397
|
|
$
2,338
|
|
2.5 %
|
|
$ 4,763
|
|
$ 4,669
|
|
2.0 %
|
|
|
Diagnostic Information
Services revenues
|
$
2,333
|
|
$
2,268
|
|
2.8 %
|
|
$ 4,631
|
|
$ 4,527
|
|
2.3 %
|
|
|
Revenue per
requisition
|
|
|
|
|
1.6 %
|
|
|
|
|
|
0.9 %
|
|
|
Requisition
volume
|
|
|
|
|
1.1 %
|
|
|
|
|
|
1.4 %
|
|
|
Organic
requisition volume
|
|
|
|
|
0.7 %
|
|
|
|
|
|
0.9 %
|
|
|
Operating income
(a)
|
$
355
|
|
$
348
|
|
1.9 %
|
|
$
655
|
|
$
653
|
|
0.2 %
|
|
|
Operating income as a
percentage of net revenues (a)
|
14.8 %
|
|
14.9 %
|
|
(0.1) %
|
|
13.7 %
|
|
14.0 %
|
|
(0.3) %
|
|
|
Net income attributable
to Quest Diagnostics (a)
|
$
229
|
|
$
235
|
|
(2.4) %
|
|
$
423
|
|
$
437
|
|
(3.1) %
|
|
|
Diluted EPS
(a)
|
$
2.03
|
|
$
2.05
|
|
(1.0) %
|
|
$
3.75
|
|
$
3.83
|
|
(2.1) %
|
|
|
Cash provided by
operations
|
$
360
|
|
$
444
|
|
(18.9) %
|
|
$
514
|
|
$
538
|
|
(4.4) %
|
|
|
Capital
expenditures
|
$
92
|
|
$
104
|
|
(10.8) %
|
|
$
196
|
|
$
231
|
|
(14.9) %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
(a):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
398
|
|
$
389
|
|
2.1 %
|
|
$
747
|
|
$
739
|
|
1.0 %
|
|
|
Operating income as a
percentage of net revenues
|
16.6 %
|
|
16.7 %
|
|
(0.1) %
|
|
15.7 %
|
|
15.8 %
|
|
(0.1) %
|
|
|
Net income attributable
to Quest Diagnostics
|
$
266
|
|
$
263
|
|
1.4 %
|
|
$
496
|
|
$
495
|
|
0.2 %
|
|
|
Diluted EPS
|
$
2.35
|
|
$
2.30
|
|
2.2 %
|
|
$
4.39
|
|
$
4.34
|
|
1.2 %
|
|
|
|
|
(a)
|
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.
|
Updated Guidance for Full Year 2024
The company updates its full year 2024 guidance as
follows:
|
Updated
Guidance
|
|
Prior
Guidance
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Net revenues
|
$9.50
billion
|
|
$9.58
billion
|
|
$9.40
billion
|
|
$9.48
billion
|
|
Net revenues
increase
|
2.7 %
|
|
3.5 %
|
|
1.6 %
|
|
2.5 %
|
|
Reported diluted
EPS
|
$7.57
|
|
$7.77
|
|
$7.57
|
|
$7.82
|
|
Adjusted diluted
EPS
|
$8.80
|
|
$9.00
|
|
$8.72
|
|
$8.97
|
|
Cash provided by
operations
|
Approximately $1.3
billion
|
|
Approximately $1.3
billion
|
|
Capital
expenditures
|
Approximately
$420 million
|
|
Approximately $420
million
|
The company's updated guidance does not include the impact of
the pending LifeLabs acquisition given the uncertainty around when
the transaction will close. The company continues to expect to
complete the transaction by the end of the year, subject to certain
customary closing conditions and approvals, including Canadian
regulatory approvals.
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, gains and losses
associated with changes in the carrying value of our strategic
investments, 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
July 23, 2024 until midnight Eastern Time on August 6, 2024, by phone at 866-363-1805 for
domestic callers or 203-369-0193 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 works across the healthcare ecosystem to
create a healthier world, one life at a time. We provide diagnostic
insights from the results of our laboratory testing to empower
people, physicians and organizations to take action to improve
health outcomes. Derived from one of the world's largest databases
of de-identifiable clinical lab results, Quest's diagnostic
insights reveal new avenues to identify and treat disease, inspire
healthy behaviors and improve healthcare management. Quest
Diagnostics 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 and create a
healthier world. 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, acquisitions 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 Six Months Ended June 30, 2024
and 2023
(in millions, except
per share data)
(unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net
revenues
|
$
2,397
|
|
$
2,338
|
|
$
4,763
|
|
$
4,669
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses and other operating income:
|
|
|
|
|
|
|
|
|
Cost of
services
|
1,593
|
|
1,546
|
|
3,188
|
|
3,106
|
|
Selling, general and
administrative
|
416
|
|
416
|
|
856
|
|
855
|
|
Amortization of
intangible assets
|
29
|
|
28
|
|
58
|
|
54
|
|
Other operating
expense, net
|
4
|
|
—
|
|
6
|
|
1
|
|
Total operating costs
and expenses, net
|
2,042
|
|
1,990
|
|
4,108
|
|
4,016
|
|
|
|
|
|
|
|
|
|
Operating
income
|
355
|
|
348
|
|
655
|
|
653
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(44)
|
|
(37)
|
|
(87)
|
|
(72)
|
|
Other income,
net
|
3
|
|
6
|
|
12
|
|
13
|
|
Total non-operating
expense, net
|
(41)
|
|
(31)
|
|
(75)
|
|
(59)
|
|
|
|
|
|
|
|
|
|
Income before income
taxes and equity in earnings of equity method
investees
|
314
|
|
317
|
|
580
|
|
594
|
|
Income tax
expense
|
(74)
|
|
(75)
|
|
(140)
|
|
(140)
|
|
Equity in earnings
of equity method investees, net of taxes
|
—
|
|
7
|
|
8
|
|
12
|
|
Net
income
|
240
|
|
249
|
|
448
|
|
466
|
|
Less: Net income
attributable to noncontrolling interests
|
11
|
|
14
|
|
25
|
|
29
|
|
Net income
attributable to Quest Diagnostics
|
$ 229
|
|
$ 235
|
|
$ 423
|
|
$ 437
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
$ 2.05
|
|
$ 2.08
|
|
$
3.79
|
|
$ 3.88
|
|
|
|
|
|
|
|
|
|
Diluted
|
$ 2.03
|
|
$ 2.05
|
|
$
3.75
|
|
$ 3.83
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
111
|
|
112
|
|
111
|
|
112
|
|
|
|
|
|
|
|
|
|
Diluted
|
112
|
|
114
|
|
112
|
|
114
|
|
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated Balance
Sheets
June 30,
2024 and December 31, 2023
(in millions, except
per share data)
(unaudited)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
271
|
|
$
686
|
|
Accounts receivable,
net
|
1,319
|
|
1,210
|
|
Inventories
|
182
|
|
190
|
|
Prepaid expenses and
other current assets
|
245
|
|
286
|
|
Total current
assets
|
2,017
|
|
2,372
|
|
Property, plant and
equipment, net
|
1,832
|
|
1,816
|
|
Operating lease
right-of-use assets
|
603
|
|
602
|
|
Goodwill
|
7,885
|
|
7,733
|
|
Intangible assets,
net
|
1,202
|
|
1,166
|
|
Investments in
equity method investees
|
126
|
|
135
|
|
Other
assets
|
216
|
|
198
|
|
Total
assets
|
$
13,881
|
|
$
14,022
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
accrued expenses
|
$
1,247
|
|
$
1,359
|
|
Current portion of
long-term debt
|
606
|
|
303
|
|
Current portion of
long-term operating lease liabilities
|
159
|
|
153
|
|
Total current
liabilities
|
2,012
|
|
1,815
|
|
Long-term
debt
|
3,816
|
|
4,410
|
|
Long-term operating
lease liabilities
|
507
|
|
503
|
|
Other
liabilities
|
811
|
|
876
|
|
Redeemable
noncontrolling interest
|
79
|
|
76
|
|
Stockholders'
equity:
|
|
|
|
|
Quest Diagnostics
stockholders' equity:
|
|
|
|
|
Common stock, par
value $0.01 per share; 600 shares authorized as of both
June 30, 2024 and
December 31, 2023; 162
shares issued as of both June 30, 2024 and December 31,
2023
|
2
|
|
2
|
|
Additional paid-in
capital
|
2,314
|
|
2,320
|
|
Retained
earnings
|
9,080
|
|
8,825
|
|
Accumulated other
comprehensive loss
|
(19)
|
|
(14)
|
|
Treasury stock, at
cost; 51 shares as of both June 30, 2024 and December 31,
2023
|
(4,760)
|
|
(4,826)
|
|
Total Quest
Diagnostics stockholders' equity
|
6,617
|
|
6,307
|
|
Noncontrolling
interests
|
39
|
|
35
|
|
Total stockholders'
equity
|
6,656
|
|
6,342
|
|
Total liabilities
and stockholders' equity
|
$
13,881
|
|
$
14,022
|
|
Quest Diagnostics
Incorporated and Subsidiaries
Consolidated
Statements of Cash Flows
For the Six Months
Ended June 30, 2024 and 2023
(in
millions)
(unaudited)
|
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
448
|
|
$
466
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
233
|
|
219
|
|
Provision (credit) for
credit losses
|
3
|
|
(1)
|
|
Deferred income tax
benefit
|
(36)
|
|
(16)
|
|
Stock-based
compensation expense
|
42
|
|
40
|
|
Other, net
|
16
|
|
1
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
(113)
|
|
(38)
|
|
Accounts payable and
accrued expenses
|
(111)
|
|
(156)
|
|
Income taxes
payable
|
20
|
|
5
|
|
Other assets and
liabilities, net
|
12
|
|
18
|
|
Net cash provided by
operating activities
|
514
|
|
538
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Business acquisitions,
net of cash acquired
|
(248)
|
|
(609)
|
|
Capital
expenditures
|
(196)
|
|
(231)
|
|
Other investing
activities, net
|
31
|
|
—
|
|
Net cash used in
investing activities
|
(413)
|
|
(840)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
borrowings
|
—
|
|
1,147
|
|
Repayments of
debt
|
(301)
|
|
(828)
|
|
Exercise of stock
options
|
28
|
|
47
|
|
Employee payroll tax
withholdings on stock issued under stock-based compensation
plans
|
(23)
|
|
(28)
|
|
Dividends
paid
|
(163)
|
|
(154)
|
|
Distributions to
noncontrolling interest partners
|
(18)
|
|
(28)
|
|
Other financing
activities, net
|
(39)
|
|
(43)
|
|
Net cash (used in)
provided by financing activities
|
(516)
|
|
113
|
|
|
|
|
|
Net change in cash
and cash equivalents and restricted cash
|
(415)
|
|
(189)
|
|
Cash and cash
equivalents and restricted cash, beginning of period
|
686
|
|
315
|
|
Cash and cash
equivalents and restricted cash, end of period
|
$
271
|
|
$
126
|
|
|
|
|
|
Cash paid during the
period for:
|
|
|
|
|
Interest
|
$
105
|
|
$
80
|
|
Income taxes
|
$
118
|
|
$
134
|
Notes to Financial Tables
|
|
|
1)
|
The computation of
basic and diluted earnings per common share is as
follows:
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(in millions, except
per share data)
|
|
Amounts attributable
to Quest Diagnostics' common stockholders:
|
|
|
|
|
|
|
|
|
Net income attributable
to Quest Diagnostics
|
$
229
|
|
$
235
|
|
$
423
|
|
$
437
|
|
Less: earnings
allocated to participating securities
|
1
|
|
1
|
|
2
|
|
2
|
|
Earnings available to
Quest Diagnostics' common stockholders - basic and
diluted
|
$
228
|
|
$
234
|
|
$
421
|
|
$
435
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding - basic
|
111
|
|
112
|
|
111
|
|
112
|
|
Effect of dilutive
securities:
|
|
|
|
|
|
|
|
|
Stock options and
performance share units
|
1
|
|
2
|
|
1
|
|
2
|
|
Weighted average common
shares outstanding - diluted
|
112
|
|
114
|
|
112
|
|
114
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Quest Diagnostics' common
stockholders:
|
|
|
|
|
|
|
|
|
Basic
|
$
2.05
|
|
$
2.08
|
|
$
3.79
|
|
$
3.88
|
|
Diluted
|
$
2.03
|
|
$
2.05
|
|
$
3.75
|
|
$
3.83
|
|
|
|
2)
|
The following tables
reconcile reported GAAP results to non-GAAP adjusted
results:
|
|
|
|
Three Months Ended
June 30, 2024
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (d)
|
|
Equity in
earnings of
equity method
investees, net
of taxes
|
|
Net income
attributable to
Quest
Diagnostics
|
|
Diluted
EPS
|
|
As reported
|
$
355
|
|
14.8 %
|
|
$
(74)
|
|
$
—
|
|
$
229
|
|
$
2.03
|
|
Restructuring and
integration charges (a)
|
10
|
|
0.4
|
|
(3)
|
|
—
|
|
7
|
|
0.06
|
|
Other (b)
|
4
|
|
0.2
|
|
—
|
|
—
|
|
4
|
|
0.03
|
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(3)
|
|
9
|
|
6
|
|
0.05
|
|
Amortization
expense
|
29
|
|
1.2
|
|
(8)
|
|
—
|
|
21
|
|
0.19
|
|
ETB
|
—
|
|
—
|
|
(1)
|
|
—
|
|
(1)
|
|
(0.01)
|
|
As adjusted
|
$
398
|
|
16.6 %
|
|
$
(89)
|
|
$
9
|
|
$
266
|
|
$
2.35
|
|
|
|
Six Months Ended
June 30, 2024
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (d)
|
|
Equity in
earnings of
equity method
investees, net
of taxes
|
|
Net income
attributable to
Quest
Diagnostics
|
|
Diluted
EPS
|
|
As reported
|
$
655
|
|
13.7 %
|
|
$
(140)
|
|
$
8
|
|
$
423
|
|
$
3.75
|
|
Restructuring and
integration charges (a)
|
27
|
|
0.6
|
|
(7)
|
|
—
|
|
20
|
|
0.17
|
|
Other (b)
|
7
|
|
0.2
|
|
—
|
|
—
|
|
7
|
|
0.06
|
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(3)
|
|
9
|
|
6
|
|
0.05
|
|
Amortization
expense
|
58
|
|
1.2
|
|
(15)
|
|
—
|
|
43
|
|
0.39
|
|
ETB
|
—
|
|
—
|
|
(3)
|
|
—
|
|
(3)
|
|
(0.03)
|
|
As adjusted
|
$
747
|
|
15.7 %
|
|
$
(168)
|
|
$
17
|
|
$
496
|
|
$
4.39
|
|
|
|
Three Months Ended
June 30, 2023
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (d)
|
|
Equity in
earnings of
equity method
investees, net
of taxes
|
|
Net income
attributable to
Quest
Diagnostics
|
|
Diluted
EPS
|
|
As reported
|
$
348
|
|
14.9 %
|
|
$
(75)
|
|
$
7
|
|
$
235
|
|
$
2.05
|
|
Restructuring and
integration charges (a)
|
7
|
|
0.3
|
|
(2)
|
|
—
|
|
5
|
|
0.05
|
|
Other (b)
|
6
|
|
0.3
|
|
(2)
|
|
—
|
|
4
|
|
0.04
|
|
Amortization
expense
|
28
|
|
1.2
|
|
(7)
|
|
—
|
|
21
|
|
0.18
|
|
ETB
|
—
|
|
—
|
|
(2)
|
|
—
|
|
(2)
|
|
(0.02)
|
|
As adjusted
|
$
389
|
|
16.7 %
|
|
$
(88)
|
|
$
7
|
|
$
263
|
|
$
2.30
|
|
|
|
Six Months Ended
June 30, 2023
|
|
(dollars in
millions, except per share data)
|
|
Operating
income
|
|
Operating
income as a
percentage of
net revenues
|
|
Income tax
expense (d)
|
|
Equity in
earnings of
equity method
investees, net
of taxes
|
|
Net income
attributable to
Quest
Diagnostics
|
|
Diluted
EPS
|
|
As reported
|
$
653
|
|
14.0 %
|
|
$
(140)
|
|
$
12
|
|
$
437
|
|
$
3.83
|
|
Restructuring and
integration charges (a)
|
26
|
|
0.5
|
|
(7)
|
|
—
|
|
19
|
|
0.17
|
|
Other (b)
|
6
|
|
0.1
|
|
(2)
|
|
—
|
|
4
|
|
0.04
|
|
Gains and losses on
investments (c)
|
—
|
|
—
|
|
(1)
|
|
3
|
|
2
|
|
0.02
|
|
Amortization
expense
|
54
|
|
1.2
|
|
(14)
|
|
—
|
|
40
|
|
0.35
|
|
ETB
|
—
|
|
—
|
|
(7)
|
|
—
|
|
(7)
|
|
(0.07)
|
|
As adjusted
|
$
739
|
|
15.8 %
|
|
$
(171)
|
|
$
15
|
|
$
495
|
|
$
4.34
|
|
|
|
(a)
|
For both the three and
six months ended June 30, 2024 and 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. The following table summarizes
the pre-tax impact of restructuring and integration charges on our
consolidated statements of operations:
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(dollars in
millions)
|
|
Cost of
services
|
$
1
|
|
$
—
|
|
$
14
|
|
$
10
|
|
Selling, general and
administrative
|
9
|
|
7
|
|
13
|
|
16
|
|
Operating
income
|
$
10
|
|
$
7
|
|
$
27
|
|
$
26
|
|
|
|
(b)
|
For the three and six
months ended June 30, 2024, the pre-tax impact primarily represents
a loss associated with the increase in the fair value of the
contingent consideration accrual associated with previous
acquisitions. For both the three and six months ended June
30, 2023, the pre-tax impact primarily represents the impairment of
a corporate facility that was held for sale. The following
table summarizes the pre-tax impact of these other items on our
consolidated statements of operations:
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
(dollars in
millions)
|
|
Selling, general and
administrative
|
$
1
|
|
$
6
|
|
$
1
|
|
$
6
|
|
Other operating
expense, net
|
3
|
|
—
|
|
6
|
|
—
|
|
Operating
income
|
$
4
|
|
$
6
|
|
$
7
|
|
$
6
|
|
|
|
(c)
|
For each of the three
and six months ended June 30, 2024 and the six months ended June
30, 2023, the pre-tax impact represents gains and losses associated
with changes in the carrying value of our strategic investments,
recorded in equity in earnings of equity method investees, net of
taxes.
|
|
|
|
(d)
|
For restructuring and
integration charges, gains and losses on investments, other items
and amortization expense, income tax impacts, where recorded, were
primarily calculated using combined statutory income tax rates of
25.5% for both 2024 and 2023.
|
|
|
|
|
|
3)
|
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, 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
|
$
7.57
|
|
$
7.77
|
|
Restructuring and
integration charges (a)
|
0.30
|
|
0.30
|
|
Amortization expense
(b)
|
0.81
|
|
0.81
|
|
Other (c)
|
0.11
|
|
0.11
|
|
Gains and losses on
investments (d)
|
0.05
|
|
0.05
|
|
ETB
|
(0.04)
|
|
(0.04)
|
|
Adjusted diluted
EPS
|
$
8.80
|
|
$
9.00
|
|
|
|
(a)
|
Represents estimated
pre-tax charges of $45 million primarily associated with workforce
reductions and integration costs incurred in connection with
further restructuring and integrating our business. Income
tax benefits were primarily calculated using a combined statutory
income tax rate of 25.5%.
|
|
|
|
(b)
|
Represents estimated
pre-tax amortization expenses of $123 million. Income tax
benefits were primarily calculated using a combined statutory
income tax rate of 25.5%.
|
|
|
|
(c)
|
Represents estimated
pre-tax losses of $13 million primarily associated with the
increase in the fair value of the contingent consideration accrual
associated with previous acquisitions. No income tax benefits
are recorded on the losses.
|
|
|
|
(d)
|
Represents $9 million
of pre-tax losses associated with changes in the carrying value of
our strategic investments. Income tax impacts were calculated using
a combined statutory income tax rate of 25.5%.
|
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SOURCE Quest Diagnostics