Oct 17 Quest Diagnostics Inc slashed its full-year earnings forecast as the laboratory tests provider struggles with cuts to Medicare reimbursements and a decline in healthcare utilization.
Quest, which just last week estimated third-quarter profit well below market expectations, cut its earnings forecast for the year to $3.85-$3.95 per share from $4.35-$4.50.
Analysts were expecting earnings of $4.23 per share, according to Thomson Reuters I/B/E/S.
"We're not surprised because there's a new CFO. We think ... it's prudent for him to bring guidance down to a range that they feel is much more reasonable," Maxim Group analyst Anthony Vendetti told Reuters.
Shares in the company, which named Mark Guinan as chief financial officer in July, fell 1.8 percent.
Quest and rival Laboratory Corp of America Holdings have been hurting all year due to government cuts to reimbursement rates for certain diagnostics tests and fewer tests being ordered as people put off elective procedures in a weak economy.
The companies have also been losing business as the hospital operators that buy physician practices order testing to be done in-house.
Quest said it expected full-year revenue to fall about 3.5 percent from a year earlier, bigger than its earlier forecast of a 1-2 percent decline. The company reported net revenue of $7.38 billion in 2012.
The company reported adjusted earnings from continuing operations of $1.02 per share on revenue of $1.79 billion for the third quarter, in line with numbers it estimated last week.
Quest said test volume, measured by the number of requisitions, rose 2 percent in the quarter. Revenue per requisition fell 4.3 percent, mainly due to the reimbursement pressure.
Net income from continuing operations rose to $402.7 million in the three months ended Sept. 30, as the company gained about $300 million after tax from the sale of royalty rights for an experimental cancer drug to Royalty Pharma.
Shares of the company traded at $57.67 in early trade on the New York Stock Exchange.