QUEST DIAGNOSTICS INCORPORATED 
By MADISON, N.J., Jan. 23, 2013 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic information services, announced today that for the fourth quarter ended December 31, 2012, adjusted income from continuing operations was $163 million, or $1.01 per diluted share, compared to adjusted income from continuing operations of $191 million, or $1.20 per diluted share, for 2011. In the fourth quarter of 2012, as previously announced, Hurricane Sandy reduced revenues by an estimated $21 million, operating income by an estimated $16 million and earnings per diluted share by an estimated $0.06. Fourth quarter results include a benefit of $0.02 per share in 2012 and $0.08 in 2011 associated with discrete tax items.
For the fourth quarter of 2012, reported income from continuing operations was $140 million, or $0.87 per diluted share, compared to reported income from continuing operations of $184 million, or $1.16 per diluted share, in 2011. Income from continuing operations in the fourth quarter of 2012 was reduced by $0.14 per diluted share related to restructuring and integration costs. In the fourth quarter of 2011, income from continuing operations was reduced by $0.02 per diluted share related to restructuring and integration costs and by $0.02 per diluted share related to CEO succession costs.
Revenues from continuing operations were $1.8 billion for the fourth quarter, 4.0% below the prior year. Diagnostic information services revenues decreased 4.4%. Volume, measured by the number of requisitions, declined 2.4% versus the prior year and revenue per requisition was 2.0% below the prior year. The impact of Hurricane Sandy in the quarter is estimated to have reduced diagnostic information services revenues by 1.3% and volume by 1.0%.
For the fourth quarter of 2012, adjusted operating income from continuing operations was $301 million, or 17.0% of revenues, compared to $332 million, or 17.9% of revenues, for 2011. Reported operating income from continuing operations was $265 million, or 14.9% of revenues, compared to $320 million, or 17.3% of revenues, in 2011. Cash provided by operations was $380 million, and benefited $90 million due to the timing of tax payments. Cash from operations was $338 million in the fourth quarter of 2011. During the fourth quarter of 2012, the company reduced outstanding debt by $147 million and repurchased $50 million of its common shares.
"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."
In connection with the company's strategy to refocus on diagnostic information services, the company sold OralDNA and announced its plan to sell its HemoCue diagnostic products business. As a result, its consolidated income statements for the full-year 2012 and 2011 reflect the operating results of these businesses as discontinued operations.
Full Year 2012 Performance
For the full year 2012, revenues from continuing operations were $7.4 billion, essentially unchanged from the prior year. Adjusted income from continuing operations was $701 million, or $4.36 per diluted share, compared to $704 million, or $4.38 per diluted share, in 2011. On a reported basis, income from continuing operations was $630 million, or $3.92 per diluted share, compared to $459 million, or $2.85 per diluted share, in 2011.
Adjusted operating income from continuing operations for 2012 was $1.3 billion, or 17.8% of revenues, compared to $1.3 billion, or 17.5% of revenues, for 2011. On a reported basis, operating income from continuing operations was $1.2 billion, or 16.3% of revenues, compared to $987 million, or 13.4% of revenues, in 2011. Cash provided by operations was $1.2 billion. In 2011, cash provided by operations was $895 million and was reduced by the Medi-Cal settlement payment. During 2012, the company reduced outstanding debt by $654 million and repurchased $200 million of its common shares.
Outlook for 2013
For 2013, the company estimates results from continuing operations, before special items, as follows:
-- Revenue growth of between 0% and 1%;
-- Earnings per diluted share to be between $4.35 and $4.55
-- Cash provided by operations to approximate $1 billion
-- Capital expenditures to approximate $250 million
"In 2013 our focus will continue to be driving operational excellence and restoring growth," said Mr. Rusckowski. "We will build on the positive momentum of our 2012 Invigorate performance in 2013. We expect results from our efforts to restore growth to gradually build throughout 2013, and anticipate continued revenue softness in the first half, with improvement thereafter."
Note on Non-GAAP Financial Measures
As used in this press release, the term "adjusted" refers to the operating performance measures that exclude the Medi-Cal charge, restructuring and integration charges, transaction costs related to acquisitions and CEO succession costs. Adjusted results do not exclude the impact of Hurricane Sandy in 2012 or the impact of severe weather in 2011. The GAAP to non-GAAP reconciliation for full year 2011 has been revised to reflect this change in treatment. Adjusted measures are presented because management believes those measures are useful adjuncts to reported results under accounting principles generally accepted in the United States. Adjusted measures should not be considered as an alternative to the corresponding measures determined under accounting principles generally accepted in the United States.
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 also be accessed in listen-only mode by dialing 415-228-4961, passcode 3214469. The company suggests participants dial in approximately 10 minutes before the call. A replay of the call may be accessed online at www.QuestDiagnostics.com/investor or by phone at 800-835-4610 for domestic callers, or 203-369-3352 for international callers. Telephone replays will be available from 10:30 a.m. Eastern Time on January 23 until midnight Eastern Time on February 23, 2013.
Anyone listening to the call is encouraged to read the company's 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 is the world's leading provider of diagnostic information services that patients and doctors need to make better healthcare decisions. The company offers the broadest access to diagnostic testing services through its network of laboratories and patient service centers, and provides interpretive consultation through its extensive medical and scientific staff. Quest Diagnostics is a pioneer in developing innovative diagnostic tests and advanced healthcare information technology solutions that help improve patient care. Additional company information is available at QuestDiagnostics.com.
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, changes in government regulations, changing relationships with customers, payers, suppliers and strategic partners and other factors discussed in "Business," "Risk Factors," "Cautionary Factors that May Affect Future Results," "Legal Proceedings," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Quantitative and Qualitative Disclosures About Market Risk" in the company's 2011 Annual Report on Form 10-K and "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Quantitative and Qualitative Disclosures About Market Risk," and "Risk Factors" in the company's Quarterly Reports on Form 10-Q and other items throughout the Form 10-K and the company's 2012 Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
This earnings release, including the attached financial tables, is available online in the Newsroom section at www.QuestDiagnostics.com.
Contacts:
Kathleen Valentine (Investors): 973-520-2900
Wendy Bost (Media): 973-520-2800
TABLES FOLLOW
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2012 and 2011
(in millions, except per share and percentage data)
(unaudited)
Three Months Twelve Months
Ended December 31, Ended December 31,
------------------ ------------------
2012 2011 2012 2011
---- ---- ---- ----
Net revenues $1,773.8 $1,848.2 $7,382.6 $7,391.9
Operating costs and expenses:
Cost of services 1,072.6 1,068.8 4,364.7 4,362.9
Selling, general and administrative 421.0 441.0 1,745.2 1,743.1
Amortization of intangible assets 18.5 17.8 74.7 61.2
Other operating (income) expense, net (3.3) 0.2 (2.8) 238.1
---- --- ---- -----
Total operating costs and expenses 1,508.8 1,527.8 6,181.8 6,405.3
------- ------- ------- -------
Operating income 265.0 320.4 1,200.8 986.6
Other income (expense):
Interest expense, net (40.0) (42.6) (164.7) (169.6)
Equity earnings in unconsolidated joint ventures 6.0 6.1 25.6 29.0
Other income, net 0.6 3.5 6.7 2.8
Total non-operating expenses, net (33.4) (33.0) (132.4) (137.8)
----- ----- ------ ------
Income from continuing operations before taxes 231.6 287.4 1,068.4 848.8
Income tax expense 81.6 93.8 401.9 354.7
---- ---- ----- -----
Income from continuing operations 150.0 193.6 666.5 494.1
Income (loss) from discontinued operations, net of taxes (84.4) 5.3 (74.4) 11.6
----- --- ----- ----
Net income 65.6 198.9 592.1 505.7
Less: Net income attributable to noncontrolling interests 9.8 9.4 36.4 35.1
Net income attributable to Quest Diagnostics $55.8 $189.5 $555.7 $470.6
----- ------ ------ ------
Amounts attributable to Quest Diagnostics' common stockholders:
Income from continuing operations $140.2 $184.2 $630.1 $459.0
Income (loss) from discontinued operations, net of taxes (84.4) 5.3 (74.4) 11.6
Net income $55.8 $189.5 $555.7 $470.6
----- ------ ------ ------
Earnings per share attributable to Quest Diagnostics' common
stockholders - basic:
Income from continuing operations $0.88 $1.17 $3.96 $2.88
Income (loss) from discontinued operations (0.53) 0.03 (0.47) 0.07
Net income $0.35 $1.20 $3.49 $2.95
----- ----- ----- -----
Earnings per share attributable to Quest Diagnostics' common
stockholders - diluted:
Income from continuing operations $0.87 $1.16 $3.92 $2.85
Income (loss) from discontinued operations (0.53) 0.03 (0.46) 0.07
Net income $0.34 $1.19 $3.46 $2.92
----- ----- ----- -----
Weighted average common shares outstanding:
Basic 158.7 157.8 158.6 158.7
Diluted 160.1 159.1 160.1 160.2
Operating income as a percentage of net revenues 14.9% 17.3% 16.3% 13.4%
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Balance Sheets
December 31, 2012 and 2011
(in millions, except per share data)
December 31, December 31,
2012 2011
------------- -------------
(unaudited)
Assets
------
Current assets:
Cash and cash equivalents $295.6 $164.9
Accounts receivable, net 867.0 906.5
Inventories 93.1 89.1
Deferred income taxes 174.2 153.3
Prepaid expenses and other current assets 91.0 87.4
Current assets held for sale 40.2 -
---- ---
Total current assets 1,561.1 1,401.2
Property, plant and equipment, net 755.8 799.8
Goodwill 5,535.8 5,795.8
Intangible assets, net 872.2 1,035.6
Other assets 204.6 281.0
Non-current assets held for sale 354.4 -
----- ---
Total assets $9,283.9 $9,313.4
-------- --------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable and accrued expenses $1,016.2 $906.8
Short-term borrowings and current portion of long-term debt 9.4 654.4
Current liabilities held for sale 22.0 -
Total current liabilities 1,047.6 1,561.2
Long-term debt 3,354.2 3,370.5
Other liabilities 635.5 666.7
Non-current liabilities held for sale 60.8 -
Stockholders' equity:
Quest Diagnostics stockholders' equity:
Common stock, par value $0.01 per share; 600 shares authorized at both December 31, 2012 and 2.2 2.1
2011; 215.1 shares and 214.6 shares issued at December 31, 2012 and 2011, respectively
Additional paid-in capital 2,370.7 2,347.5
Retained earnings 4,690.4 4,263.6
Accumulated other comprehensive income (loss) 14.3 (8.0)
Treasury stock, at cost; 56.7 shares and 57.2 shares at December 31, 2012 and 2011, respectively (2,914.5) (2,912.3)
-------- --------
Total Quest Diagnostics stockholders' equity 4,163.1 3,692.9
Noncontrolling interests 22.7 22.1
---- ----
Total stockholders' equity 4,185.8 3,715.0
Total liabilities and stockholders' equity $9,283.9 $9,313.4
-------- --------
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
For the Twelve Months Ended December 31, 2012 and 2011
(in millions)
(unaudited)
Twelve Months Ended
December 31,
------------
2012 2011
---- ----
Cash flows from operating activities:
Net income $592.1 $505.7
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 286.6 281.1
Provision for doubtful accounts 268.6 279.6
Deferred income tax provision 6.5 28.6
Stock-based compensation expense 50.3 71.9
Excess tax benefits from stock-based compensation arrangements (4.0) (4.5)
Provision for special charge - 236.0
Asset impairment and loss on sale of business 86.3 -
Other, net (7.7) 8.6
Changes in operating assets and liabilities:
Accounts receivable (243.0) (306.7)
Accounts payable and accrued expenses (13.2) (17.6)
Settlement of special charge - (241.0)
Income taxes payable 100.6 39.1
Termination of interest rate swap agreements 71.8 -
Other assets and liabilities, net (7.8) 14.7
Net cash provided by operating activities 1,187.1 895.5
------- -----
Cash flows from investing activities:
Business acquisitions, net of cash acquired (50.6) (1,298.6)
Sale of securities acquired in business acquisition - 213.5
Capital expenditures (182.2) (161.5)
Decrease in investments and other assets 15.7 3.2
Net cash used in investing activities (217.1) (1,243.4)
------ --------
Cash flows from financing activities:
Proceeds from borrowings 715.0 2,689.4
Repayments of debt (1,369.4) (1,710.3)
Purchases of treasury stock (200.0) (935.0)
Exercise of stock options 162.1 136.8
Excess tax benefits from stock-based compensation arrangements 4.0 4.5
Dividends paid (108.1) (64.7)
Distributions to noncontrolling interests (37.8) (35.7)
Other financing activities, net 12.1 (21.5)
Net cash (used in) provided by financing activities (822.1) 63.5
------ ----
Net change in cash and cash equivalents 147.9 (284.4)
Less: Cash included in assets held for sale (17.2) -
Cash and cash equivalents, beginning of period 164.9 449.3
----- -----
Cash and cash equivalents, end of period $295.6 $164.9
------ ------
Cash paid during the period for:
Interest $163.1 $161.8
Income taxes $305.4 $285.3
Notes to Financial Tables
1) The computation of basic
and diluted earnings per
common share is as follows:
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
(in millions, except per share data)
Amounts attributable to Quest Diagnostics' common stockholders:
Income from continuing operations $140.2 $184.2 $630.1 $459.0
Income (loss) from discontinued operations, net of taxes (84.4) 5.3 (74.4) 11.6
Net income available to common stockholders $55.8 $189.5 $555.7 $470.6
----- ------ ------ ------
Income from continuing operations $140.2 $184.2 $630.1 $459.0
Less: Earnings allocated to participating securities 0.6 1.0 2.5 2.9
Earnings available to Quest Diagnostics' common stockholders - basic and diluted $139.6 $183.2 $627.6 $456.1
------ ------ ------ ------
Weighted average common shares outstanding - basic 158.7 157.8 158.6 158.7
Effect of dilutive securities:
Stock options and performance share units 1.4 1.3 1.5 1.5
Weighted average common shares outstanding - diluted 160.1 159.1 160.1 160.2
----- ----- ----- -----
Earnings per share attributable to Quest Diagnostics' common stockholders - basic:
Income from continuing operations $0.88 $1.17 $3.96 $2.88
Income (loss) from discontinued operations (0.53) 0.03 (0.47) 0.07
Net income $0.35 $1.20 $3.49 $2.95
----- ----- ----- -----
Earnings per share attributable to Quest Diagnostics' common stockholders - diluted:
Income from continuing operations $0.87 $1.16 $3.92 $2.85
Income (loss) from discontinued operations (0.53) 0.03 (0.46) 0.07
Net income $0.34 $1.19 $3.46 $2.92
----- ----- ----- -----
2) Adjusted amounts for operating
income, operating income as a
percentage of net revenues, income
from continuing operations, and
diluted earnings per common share
represent the Company's results
before the Medi-Cal charge,
restructuring and integration
charges, transaction costs related
to the acquisitions of Athena
Diagnostics and Celera
Corporation, and CEO succession
costs. Adjusted measures are
presented because management
believes those measures are useful
adjuncts to reported results under
accounting principles generally
accepted in the United States when
comparing results of operations
from period to period. Adjusted
measures should not be considered
as an alternative to the
corresponding measures determined
under accounting principles
generally accepted in the United
States. The following tables
reconcile reported results to
adjusted results:
Three Months Ended December 31, 2012
(dollars in millions, except per share data)
-------------------------------------------
Restructuring
& Integration
Charges
As Reported (a) As Adjusted
----------- --- -----------
Operating
income $265.0 $36.4 $301.4
Operating
income
as
a
%
of
net
revenues 14.9% 2.1% 17.0%
Income
from
continuing
operations
(b) 140.2 22.3 162.5
Diluted
earnings
per
common
share 0.87 0.14 1.01
(a) Represents costs primarily
associated with workforce
reductions and professional
fees incurred in connection
with further restructuring and
integrating our business.
(b) For the restructuring and
integration charges, income tax
benefits were calculated using
a combined federal and state
rate of 38.7%.
Twelve Months Ended December 31, 2012
(dollars in millions, except per share data)
-------------------------------------------
Restructuring & CEO Succession
Integration Costs
Charges
As Reported (c) (d) As Adjusted
----------- --- --- -----------
Operating income $1,200.8 $106.0 $10.1 $1,316.9
Operating income as a % of net revenues 16.3% 1.4% 0.1% 17.8%
Income from continuing operations (e) 630.1 65.0 6.1 701.2
Diluted earnings per common share 3.92 0.40 0.04 4.36
(c) Represents costs primarily
associated with workforce
reductions and professional
fees incurred in connection
with further restructuring and
integrating our business.
(d) Principally represents accrued
severance and accelerated
vesting of equity awards in
connection with the succession
of our prior CEO.
(e) For both the restructuring and
integration charges, and CEO
succession costs, income tax
benefits were calculated using
a combined federal and state
rate of 38.7%.
Three Months Ended December 31, 2011
(dollars in millions, except per share data)
-------------------------------------------
Restructuring & CEO
Integration Succession
Charges Costs
As Reported (f) (g) As Adjusted
----------- --- --- -----------
Operating income $320.4 $5.5 $5.6 $331.5
Operating income as a % of net revenues 17.3% 0.3% 0.3% 17.9%
Income from continuing operations (h) 184.2 3.4 3.4 191.0
Diluted earnings per common share 1.16 0.02 0.02 1.20
(f) Includes $8.7 million of pre-
tax costs principally
associated with professional
fees incurred in conjunction
with further restructuring and
integrating our business. The
remainder is primarily
associated with the reversal of
certain previously established
reserves for restructuring
activities, principally
associated with workforce
reductions.
(g) Principally represents accrued
severance and accelerated
vesting of equity awards in
connection with the succession
of our prior CEO.
(h) For both the restructuring and
integration charges, and CEO
succession costs, income tax
benefits were calculated using
a combined federal and state
rate of 38.7%.
Twelve Months Ended December 31, 2011
(dollars in millions, except per share data)
-------------------------------------------
Medi-Cal Restructuring & Transaction CEO
Settlement Integration Costs Succession
Charges Costs
As Reported (i) (j) (k) (l) As Adjusted
----------- --- --- --- --- -----------
Operating income $986.6 $236.0 $52.1 $16.9 $5.6 $1,297.2
Operating income as a % of net revenues 13.4% 3.1% 0.7% 0.2% 0.1% 17.5%
Income from continuing operations (m) 459.0 194.7 31.9 15.2 3.4 704.2
Diluted earnings per common share 2.85 1.22 0.20 0.09 0.02 4.38
(i) Represents the first quarter 2011
pre-tax charge of $236 million
associated with the Medi-Cal
settlement.
(j) Represents costs incurred in
conjunction with further
restructuring and integrating our
business, and includes $41.6
million of pre-tax charges,
principally associated with
workforce reductions, with the
remainder principally
professional fees.
(k) Includes $20.0 million of pre-tax
transaction costs, associated
with the acquisitions of Athena
Diagnostics and Celera
Corporation. Of these costs,
$16.9 million, primarily related
to professional fees, was
recorded in selling, general, and
administrative expenses and $3.1
million of financing related
costs were recorded in interest
expense, net.
(l) Principally represents accrued
severance and accelerated vesting
of equity awards in connection
with the succession of our prior
CEO.
(m) Income tax benefit of $41.3
million associated with the Medi-
Cal charge was calculated by
applying a combined federal and
the applicable state tax rate of
36% to the portion of the
settlement for which a tax
benefit has been recorded. Income
tax benefit of $4.8 million
associated with transaction costs
was calculated by applying a
combined federal and state rate
of 38.7% to those costs for which
a tax benefit has been recorded.
For the impact of restructuring
and integration charges, income
tax benefits were calculated
using a combined federal and
state rate of 38.7%.
3) The following tables summarize the
impact to the year over year
comparisons for the Medi-Cal
charge, restructuring and
integration charges, transaction
costs, and CEO succession costs
on certain reported results for
the three and twelve months ended
December 31, 2012 and 2011 (in
millions, except per share data):
Three Months ended December 31, 2012 and 2011
---------------------------------------------
Restructuring & CEO Succession Costs
Integration Charges
-------------------
2012 2011 Better (Worse) 2012 2011 Better
(Worse)
---- ---- -------------- ---- ---- -------
Cost of services $22.9 $(2.7) $(25.6) $ - $ - $ -
Selling, general and administrative 13.5 8.2 (5.3) - 5.6 5.6
Operating income 36.4 5.5 (30.9) - 5.6 5.6
Income from continuing operations 22.3 3.4 (18.9) - 3.4 3.4
Diluted earnings per common share 0.14 0.02 (0.12) - 0.02 0.02
Twelve Months ended December 31, 2012 and 2011
----------------------------------------------
Restructuring & CEO Succession Costs
Integration Charges
-------------------
2012 2011 Better (Worse) 2012 2011 Better
(Worse)
---- ---- -------------- ---- ---- -------
Cost of services $51.5 $22.2 $(29.3) $ - $ - $ -
Selling, general and administrative 54.5 29.9 (24.6) 10.1 5.6 (4.5)
Operating income 106.0 52.1 (53.9) 10.1 5.6 (4.5)
Income from continuing operations 65.0 31.9 (33.1) 6.1 3.4 (2.7)
Diluted earnings per common share 0.40 0.20 (0.20) 0.04 0.02 (0.02)
Medi-Cal Settlement Transaction Costs
------------------- -----------------
2012 2011 Better (Worse) 2012 2011 Better
(Worse)
---- ---- -------------- ---- ---- -------
Cost of services $ - $ - $ - $ - $ - $ -
Selling, general and administrative - - - - 16.9 16.9
Operating income - 236.0 236.0 - 16.9 16.9
Income from continuing operations - 194.7 194.7 - 15.2 15.2
Diluted earnings per common share - 1.22 1.22 - 0.09 0.09
4) The Company previously announced
its plan to sell its HemoCue
diagnostics products business and
completed the sale of its OralDNA
salivary-diagnostics business.
As a result, the Company's fourth
quarter 2012 results include
related after-tax charges in
discontinued operations for the
estimated asset impairment
associated with HemoCue and the
loss on sale associated with
OralDNA totaling $89.5 million, or
$0.56 per diluted share, in the
period. Results of operations for
HemoCue and OralDNA have been
reported as discontinued
operations in the accompanying
financial tables and related notes
to financial tables for all
periods presented. At December
31, 2012, the assets and
liabilities of HemoCue have been
reported as held for sale on the
accompanying balance sheet.
The Company's consolidated
income statements for the full-
year 2012 and 2011 reflect the
operating results of HemoCue
and OralDNA as discontinued
operations. The combined
results of HemoCue and OralDNA
are as follows:
--Revenues of $117 million in 2012
and $119 million in 2011;
--Operating income of $11 million
in 2012 and $8 million in 2011;
--Net income from operations of
$15 million in 2012 and $13
million in 2011; and
--Earnings per diluted share of
$0.09 in 2012 and $0.08 in 2011.
To assist in understanding how
treating HemoCue and OralDNA as
discontinued operations has
impacted 2012 financial
performance, the following table
summarizes the affects on certain
financial measures of such
treatment, and presents "Proforma
Adjusted Results" including
HemoCue and OralDNA.
Three Months Ended December 31, 2012 Continuing Adjustments for Proforma Loss on Sale Restructuring & CEO
Operations HemoCue and /Impairment Integration Succession
OralDNA Charges Costs Proforma
Results Adjusted
(dollars in millions, except per share data) As Reported (a) (b) (c) (d) (e) Results
------------------------------------------- ----------- --- --- --- --- --- -------
Net revenues $1,773.8 $31.0 $1,804.8 $ - $ - $ - $1,804.8
Operating income (loss) 265.0 (82.7) 182.3 86.4 37.7 - 306.4
Operating income (loss) as a % of net revenues 14.9% (4.8)% 10.1% 4.8% 2.1% - 17.0%
Income (loss) from continuing operations (f) 140.2 (84.5) 55.7 89.5 23.1 - 168.3
Diluted earnings (loss) per common share 0.87 (0.53) 0.34 0.56 0.15 - 1.05
Twelve Months Ended December 31, 2012
(dollars in millions, except per share data)
-------------------------------------------
Net revenues $7,382.6 $116.9 $7,499.5 $ - $ - $ - $7,499.5
Operating income (loss) 1,200.8 (75.4) 1,125.4 86.4 107.8 10.1 1,329.7
Operating income (loss) as a % of net revenues 16.3% (1.3)% 15.0% 1.2% 1.4% 0.1% 17.7%
Income (loss) from continuing operations (f) 630.1 (74.7) 555.4 89.5 66.3 6.1 717.3
Diluted earnings (loss) per common share 3.92 (0.47) 3.45 0.56 0.42 0.04 4.47
(a) Represents the results of
HemoCue and Oral DNA included
in discontinued operations,
which include charges for asset
impairment and loss on sale.
(b) Represents the results before
the treatment of HemoCue and
Oral DNA as discontinued
operations.
(c) Represents pre-tax charges
totaling $86.4 million, for
asset impairment of HemoCue and
loss on sale of OralDNA.
Income (loss) from continuing
operations includes $7.5
million income tax expense
related to the re-valuation of
deferred tax assets associated
with HemoCue.
(d) Represents costs primarily
associated with workforce
reductions and professional
fees incurred in connection
with further restructuring and
integrating our business.
(e) Principally represents accrued
severance and accelerated
vesting of equity awards in
connection with the succession
of our prior CEO.
(f) For both the restructuring and
integration charges, and CEO
succession costs, income tax
benefits were calculated using
a combined federal and state
rate of 38.7%.
5) Other operating (income) expense, net
includes special charges, and
miscellaneous income and expense
items related to operating
activities. For the twelve months
ended December 31, 2011, other
operating expense, net included a
pre-tax charge of $236 million
associated with the Medi-Cal
settlement.
6) Other income, net represents
miscellaneous income and expense
items related to non-operating
activities, such as gains and losses
associated with investments and other
non-operating assets. For the three
months ended December 31, 2012 and
2011, other income, net includes
gains of $0.5 million and $3.8
million, respectively, associated
with investments held in trusts
pursuant to our supplemental deferred
compensation plans. For the twelve
months ended December 31, 2012 and
2011, other income, net includes
gains of $6.5 million and $0.3
million, respectively, associated
with investments held in trusts
pursuant to our supplemental deferred
compensation plans. For the twelve
months ended December 31, 2011, other
income, net includes a pre-tax gain
of $3.2 million associated with the
sale of an investment.
7) Results for both the three and twelve
months ended December 31, 2012
include discrete tax benefits of
$0.02 per diluted share. Results for
the three and twelve months ended
December 31, 2011 include discrete
tax benefits of $0.08 and $0.11 per
diluted share, respectively,
primarily associated with certain
state tax planning initiatives and
the favorable resolution of certain
tax contingencies.
8) In January 2012, our Board of
Directors authorized $1.0 billion of
additional share repurchases,
bringing the total available under
share repurchase authorizations at
that time to $1.1 billion. For the
three months ended December 31, 2012,
the Company repurchased 869 thousand
shares of its common stock at an
average price of $57.55 per share for
$50 million. For the twelve months
ended December 31, 2012, the Company
repurchased 3.4 million shares of its
common stock at an average price of
$58.31 per share for $200 million.
For the three and twelve months ended
December 31, 2012, the Company
reissued 0.5 million shares and 3.9
million shares, respectively, for
employee benefit plans. As of
December 31, 2012, the Company had
$865 million remaining under share
repurchase authorizations.
SOURCE Quest Diagnostics Incorporated
