On October 22, 2020 Quest Diagnostics Incorporated (NYSE: DGX), the world’s leading provider of diagnostic information services, reported financial results for the third quarter ended September 30, 2020 (Press release, Quest Diagnostics, OCT 22, 2020, View Source [SID1234568799]).
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"Quest had a very strong third quarter, benefiting from continued demand for COVID-19 testing and the rapid recovery of health care utilization," said Steve Rusckowski, Chairman, CEO and President, Quest Diagnostics. "Quest has performed over 22 million COVID-19 molecular and serology tests to date, more than any other provider. We also developed and introduced several new innovations that are contributing to enabling the country’s return to work, the classroom, and the athletic field. I am extremely proud of all that Quest Diagnostics has accomplished throughout the COVID-19 pandemic, and would like to thank our more than 47,000 employees for their hard work and dedication.
"We’ve seen further signs of the health care system returning to pre-pandemic levels, as our base testing volume, which excludes COVID-19 molecular and antibody testing, continued to recover throughout the third quarter. As we exited September, organic volumes in our base business were down mid-to-high single digits compared to last year. We are raising our full year 2020 outlook given our year to date performance and a clearer line of sight for both the base business and COVID-19 testing."
Mr. Rusckowski continued: "We are grateful for the CARES Act funding that provided our company with support earlier this year at a time of great uncertainty for our nation. Several months into this pandemic, we do not require this funding. As a result, we believe returning these funds to the government now is the right thing to do."
For further details impacting the year-over-year comparisons related to operating income, operating income as a percentage of net revenues, income from continuing operations attributable to Quest Diagnostics, and diluted EPS, see note 2 of the financial tables attached below.
The sum of reported and adjusted diluted EPS for the first three quarters of 2020 did not equal the totals for the nine months ended September 30, 2020 due to quarterly fluctuations in the company’s earnings and weighted average common shares outstanding throughout the period as a result of the impact of COVID-19 and the temporary cessation of repurchases under the company’s share repurchase program.
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, certain financial impacts resulting from the COVID-19 pandemic, amortization expense, excess tax benefits ("ETB") associated with stock-based compensation, a gain on remeasurement of an equity interest, costs associated with the company’s recently announced initiative with the Quest Diagnostics Foundation to reduce health disparities in underserved communities, 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 the company’s website at www.QuestDiagnostics.com/investor. 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 800-337-6568 for domestic callers or 402-220-9660 for international callers. No passcode is required. Telephone replays will be available from approximately 10:30 a.m. Eastern Time on October 22, 2020 until midnight Eastern Time on November 5, 2020. 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.