* Quest starts search for new CFO
* Departure comes during restructuring
* Shares gain 25 cents early
By Caroline Humer
March 14 Laboratory tests provider Quest
Diagnostics on Thursday said its Chief Financial Officer
Robert Hagemann will leave at the end of May as the company
continues a restructuring aimed at returning to revenue growth.
Quest, which has been making management changes and named a
new chief executive last year, said it will look both internally
and externally for a new CFO.
"After 21 years with the company and almost 15 years as the
CFO, we agreed now is a good time for a change," Hagemann said
in a statement.
Quest, the nation's largest lab testing company, has been
hurt by the weak economy as people use fewer medical services
and tests. The growth of high-deductible health plans has also
meant less demand from consumers who are watching their
In addition, President Barack Obama's Affordable Care Act
has put pressure on government payments for services for people
with Medicare and Medicaid health insurance, also cutting into
In the fourth quarter, the company missed analyst estimates
and said it expected these government payments, or
reimbursements, to continue to fall in the next few years.
Revenue in 2012 fell to $7.4 billion from $7.5 billion in 2011.
"Utilization has been not great. And then they have some
reimbursement pressures from Medicare. It's been a tough
environment and people are in wait-and-see mode to see what
happens with this restructuring effort," said Amanda Murphy, an
analyst at William Blair & Co.
Quest has been working on a $500 million cost-cutting plan,
sold its OralDNA products business in December and in February,
agreed to sell its HemoCue diagnostics business for about $300
The company named Steve Rusckowski, who had been head of
Philips Healthcare, as CEO in April. He has worked on reducing
layers of management, changing sales force incentives and
cutting costs from vendors, procurement and technology systems,
Quest shares gained about 25 cents to $56.26 in early
trading. They have fallen about 5 percent in the last year. The
stock hit a 52-week closing high of $64.68 in October 2012.