Quest Diagnostics Reports First Quarter 2025 Financial Results; Reaffirms Revenue and Adjusted Diluted EPS Guidance for Full Year 2025

Three Months Ended March 31,

Change

(dollars in millions, except per share data)

Reported:

Net revenues

$       2,652

$       2,366

12.1 %

Diagnostic Information Services revenues

$       2,589

$       2,298

12.7 %

Revenue per requisition

0.3 %

Requisition volume

12.4 %

  Organic requisition volume

(0.9) %

Operating income (a)

$          346

$          300

15.4 %

Operating income as a percentage of net revenues (a)

13.0 %

12.7 %

0.3 %

Net income attributable to Quest Diagnostics (a)

$          220

$          194

13.2 %

Diluted EPS (a)

$         1.94

$         1.72

12.8 %

Cash provided by operations

$          314

$          154

103.4 %

Capital expenditures

$          117

$          104

11.9 %

Adjusted (a):

Operating income

$          406

$          349

16.3 %

Operating income as a percentage of net revenues

15.3 %

14.8 %

0.5 %

Net income attributable to Quest Diagnostics

$          251

$          230

9.0 %

Diluted EPS

$         2.21

$         2.04

8.3 %

(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

Prior Guidance

Low

High

Low

High

Net revenues

$10.70 billion

$10.85 billion

$10.70 billion

$10.85 billion

Net revenues increase

8.4 %

9.9 %

8.4 %

9.9 %

Reported diluted EPS

$8.62

$8.87

$8.34

$8.59

Adjusted diluted EPS

$9.55

$9.80

$9.55

$9.80

Cash provided by operations

Approximately $1.5 billion

Approximately $1.45 billion

Capital expenditures

  Approximately $500 million

Approximately $500 million

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Statements of Operations

For the Three Months Ended March 31, 2025 and 2024

(in millions, except per share data)

(unaudited)

Three Months Ended March 31,

2025

2024

Net revenues

$    2,652

$    2,366

Operating costs and expenses and other operating income:

Cost of services

1,789

1,595

Selling, general and administrative

476

440

Amortization of intangible assets

39

29

Other operating expense, net

2

2

Total operating costs and expenses, net

2,306

2,066

Operating income

346

300

Other income (expense):

Interest expense, net

(67)

(43)

Other (expense) income, net

(3)

9

Total non-operating expense, net

(70)

(34)

Income before income taxes and equity in earnings of equity method investees

276

266

Income tax expense

(59)

(66)

Equity in earnings of equity method investees, net of taxes

18

8

Net income

235

208

Less: Net income attributable to noncontrolling interests

15

14

Net income attributable to Quest Diagnostics

$       220

$       194

Earnings per share attributable to Quest Diagnostics' common stockholders:

Basic

$      1.97

$      1.74

Diluted

$      1.94

$      1.72

Weighted average common shares outstanding:

Basic

111

111

Diluted

113

112

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Balance Sheets

March 31, 2025 and December 31, 2024

(in millions, except per share data)

(unaudited)

March 31,

2025

December 31,

2024

Assets

Current assets:

Cash and cash equivalents

$                 188

$                549

Accounts receivable, net

1,404

1,304

Inventories

189

188

Prepaid expenses and other current assets

294

351

Total current assets

2,075

2,392

Property, plant and equipment, net

2,098

2,113

Operating lease right-of-use assets

656

651

Goodwill

8,849

8,856

Intangible assets, net

1,725

1,763

Investments in equity method investees

134

123

Other assets

260

255

Total assets

$            15,797

$           16,153

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses

$              1,267

$             1,394

Current portion of long-term debt

1

602

Current portion of long-term operating lease liabilities

173

173

Total current liabilities

1,441

2,169

Long-term debt

5,858

5,615

Long-term operating lease liabilities

538

535

Other liabilities

917

938

Redeemable noncontrolling interest

81

83

Stockholders' equity:

Quest Diagnostics stockholders' equity:

Common stock, par value $0.01 per share; 600 shares authorized as of both March 31, 2025 and

December 31, 2024; 162 shares issued as of both March 31, 2025 and December 31, 2024

2

2

Additional paid-in capital

2,310

2,361

Retained earnings

9,490

9,360

Accumulated other comprehensive loss

(83)

(88)

Treasury stock, at cost; 50 and 51 shares as of March 31, 2025 and December 31, 2024, respectively

(4,790)

(4,857)

Total Quest Diagnostics stockholders' equity

6,929

6,778

Noncontrolling interests

33

35

Total stockholders' equity

6,962

6,813

Total liabilities and stockholders' equity

$            15,797

$           16,153

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2025 and 2024

(in millions)

(unaudited)

Three Months Ended March 31,

2025

2024

Cash flows from operating activities:

Net income

$              235

$              208

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

140

116

Provision for credit losses

1

1

Deferred income tax expense (benefit)

7

(18)

Stock-based compensation expense

22

22

Other, net

(1)

11

Changes in operating assets and liabilities:

Accounts receivable

(101)

(114)

Accounts payable and accrued expenses

(53)

(152)

Income taxes payable

15

42

Other assets and liabilities, net

49

38

Net cash provided by operating activities

314

154

Cash flows from investing activities:

Business acquisitions, net of cash acquired

—

(142)

Capital expenditures

(117)

(104)

Other investing activities, net

2

33

Net cash used in investing activities

(115)

(213)

Cash flows from financing activities:

Proceeds from borrowings

215

—

Repayments of debt

(600)

—

Exercise of stock options

29

12

Employee payroll tax withholdings on stock issued under stock-based compensation plans

(42)

(23)

Dividends paid

(84)

(79)

Distributions to noncontrolling interest partners

(18)

(11)

Other financing activities, net

(61)

(52)

Net cash used in financing activities

(561)

(153)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

1

—

Net change in cash and cash equivalents and restricted cash

(361)

(212)

Cash and cash equivalents and restricted cash, beginning of period

549

686

Cash and cash equivalents and restricted cash, end of period

$              188

$              474

Cash paid during the period for:

Interest

$                32

$                44

Income taxes

$                  4

$                  3

1)  The computation of basic and diluted earnings per common share is as follows:

Three Months Ended March 31,

2025

2024

(in millions, except per share data)

Amounts attributable to Quest Diagnostics' common stockholders:

Net income attributable to Quest Diagnostics

$           220

$           194

Less: earnings allocated to participating securities

1

1

Earnings available to Quest Diagnostics' common stockholders - basic and diluted

$           219

$           193

Weighted average common shares outstanding - basic

111

111

Effect of dilutive securities:

Stock options and performance share units

2

1

Weighted average common shares outstanding - diluted

113

112

Earnings per share attributable to Quest Diagnostics' common stockholders:

Basic

$          1.97

$          1.74

Diluted

$          1.94

$          1.72

2)  The following tables reconcile reported GAAP results to non-GAAP adjusted results:

Three Months Ended March 31, 2025

(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

$                 346

13.0 %

$                  (59)

$                   18

$                 220

$                1.94

Restructuring and integration charges (a)

19

0.7

(5)

—

14

0.13

Other charges (b)

2

0.1

—

—

2

0.02

Other gains (c)

—

—

2

(8)

(6)

(0.06)

Amortization expense

39

1.5

(9)

—

30

0.26

ETB

—

—

(9)

—

(9)

(0.08)

As adjusted

$                 406

15.3 %

$                  (80)

$                   10

$                 251

$                2.21

Three Months Ended March 31, 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

$                 300

12.7 %

$                  (66)

$                     8

$                 194

$                1.72

Restructuring and integration charges (a)

17

0.7

(4)

—

13

0.12

Other charges (b)

3

0.2

—

—

3

0.03

Amortization expense

29

1.2

(7)

—

22

0.19

ETB

—

—

(2)

—

(2)

(0.02)

As adjusted

$                 349

14.8 %

$                  (79)

$                     8

$                 230

$                2.04

(a) 

For both the three months ended March 31, 2025 and 2024, 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:

2025

2024

(dollars in millions)

Cost of services

$               6

$             13

Selling, general and administrative

13

4

Operating income

$             19

$             17

(b) 

For both the three months ended March 31, 2025 and 2024, the pre-tax impact primarily represents a loss associated with the change in the fair value of the contingent consideration accrual associated with previous acquisitions, recorded in other operating expense, net.

(c) 

The three months ended March 31, 2025 includes pre-tax gains of $8 million, recorded in equity in earnings of equity method investees, net of taxes, principally consisting of a non-recurring gain related to a lease.

(d) 

For restructuring and integration charges, other gains/charges, and amortization expense, income tax impacts, where recorded, were primarily calculated using combined statutory income tax rates of 25.5% for both 2025 and 2024.

The outlook for adjusted diluted EPS represents management's estimates for the full year 2025 before the impact of special items. Further impacts to earnings related to special items may occur throughout 2025. 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 2025 outlook for diluted EPS under GAAP to our outlook for adjusted diluted EPS:

Low

High

Diluted EPS

$                                   8.62

$                                   8.87

Restructuring and integration charges (a)

0.27

0.27

Amortization expense (b)

1.04

1.04

Other charges (c)

0.12

0.12

Other gains (d)

(0.36)

(0.36)

ETB

(0.14)

(0.14)

Adjusted diluted EPS

$                                   9.55

$                                   9.80

(a) 

Represents estimated pre-tax charges of $41 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 $160 million. Income tax benefits were primarily calculated using a combined statutory income tax rate of 25.5%.

(c) 

Principally represents estimated pre-tax net losses of $12 million 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 changes associated with the contingent consideration accrual.

(d) 

Includes a pre-tax gain of $46 million related to a payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act associated with the retention of employees.  Also, includes a pre-tax non-recurring gain of $8 million related to a lease.  Income tax impacts on the gains were calculated using a combined statutory income tax rate of 25.5%.