Quest Diagnostics Earnings: Heading in the Wrong Direction

Quest Diagnostics Inc. (NYSE:DGX) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 5.10%.

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Quest Diagnostics Inc. Earnings Cheat Sheet

Results: Net income decreased -70.54% to $55.8 million (34 cents per diluted share) in the quarter versus a net gain of $189.44 million in the year-earlier quarter.

Revenue: Decreased 5.82% to $1.77 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Quest Diagnostics Inc. reported adjusted net income of $1.01 cents per share. By that measure, the company missed the mean analyst estimate of $1.02. It missed the average revenue estimate of $1.8 billion.

Quoting Management: “During the fourth quarter, continued strong progress in our Invigorate cost-reduction initiative enabled us to mitigate some of the impact of revenue softness, which was exacerbated by the impact of Hurricane Sandy,” said Steve Rusckowski, President and CEO…

…In late 2012, we unveiled our new strategic plan to improve performance and build value for our shareholders. We have moved aggressively on all five elements of our plan, starting with our first strategic goal of refocusing on our core diagnostic information services business. We sold OralDNA and announced the planned sale of HemoCue. We continued to pursue a disciplined approach to capital deployment, announcing a substantial increase in our dividend, repurchasing shares, and investing in strategic opportunities as exemplified by our new relationship with UMass Memorial Health Care.”

Key Stats:

Revenue decreased 4.4% from $1.85 billion in the previous quarter. Net income decreased 65.78% from $163.08 million in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $1.15 to a profit $1.12. For the current year, the average estimate has moved down from a profit of $4.53 to a profit of $4.42 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)