On October 23, 2018 Quest Diagnostics Incorporated (NYSE: DGX), the world’s leading provider of diagnostic information services, reported financial results for the third quarter ended September 30, 2018 and updated its outlook for full-year 2018 (Press release, Quest Diagnostics, OCT 23, 2018, View Source [SID1234530338]).
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"We grew revenues and continued to deliver strong earnings growth in the third quarter," said Steve Rusckowski, Chairman, President and CEO. "We had a productive quarter, announcing three acquisitions and a Professional Lab Services agreement. We are updating our full-year revenue guidance to reflect lower than expected revenue performance this year, which has been affected in large part by industry headwinds we called out in the previous quarter. Looking ahead, our acquisition pipeline, along with our expanding health plan access, including UnitedHealthcare beginning January 1, position us well for growth in 2019."
ng, general and administrative expenses for the three and nine months ended September 30, 2017 have been restated to reflect the impact of new revenue recognition rules that became effective January 1, 2018 and were adopted on a retrospective basis. Under the new rules, the Company reports uncollectible balances associated with patient responsibility as a reduction in net revenues; historically these amounts were classified as bad debt expense within selling, general and administrative expenses.
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.
The updated outlook for revenue growth in 2018 represents management’s estimates for 2018 versus 2017 reported revenues adjusted to reflect the impact of new revenue recognition rules that became effective January 1, 2018. Full-year 2017 revenues adjusted to reflect the new rules were $7,402 million. See note 5 of the financial tables attached below.
Note on Non-GAAP Financial Measures
As used in this press release the term "reported" refers to measures under the accounting principles generally accepted in the United States ("GAAP"). The term "adjusted" refers to non-GAAP measures as follows: (i) for the purpose of income measures the term "adjusted" refers to operating performance measures that exclude special items such as restructuring and integration charges, excess tax benefit ("ETB") associated with stock based compensation and other items; and (ii) the term "adjusted diluted EPS excluding amortization" represents the company’s diluted EPS before the impact of special items (described above) and amortization expense.
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 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 in listen-only mode by dialing 888-455-0391 within the U.S. and Canada, or 773-756-0467, passcode: Investor; or via live webcast on the Company’s website at www.QuestDiagnostics.com/investor.
A replay of the call may be accessed online at www.QuestDiagnostics.com/investor or by phone at 866-483-9044 for domestic callers or 203-369-1586 for international callers. No passcode is required. Telephone replays will be available from approximately 10:30 a.m. Eastern Time on October 23, 2018 until midnight Eastern Time on November 6, 2018. 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.