* First-quarter adjusted profit $0.89/share vs est $1.03
* Net revenue $1.78 bln vs est $1.86 bln
* Expects $600 mln in run-rate savings by end of 2014
* 2013 adjusted earnings-per-share outlook unchanged
April 17 Laboratory tests provider Quest
Diagnostics Inc, whose earnings have been hurt by
Medicare reimbursement cuts, said growth this year will be
driven by acquisitions.
The No. 1 U.S. laboratory testing company has been
implementing a $500 million restructuring program to restore
growth and improve operational efficiency as hospital operators
buy up physician practices, cutting into its customer base.
The company announced on Wednesday its second deal this year
to expand services to people who live in remote areas and do not
have easy access to such services.
Quest, which bought Massachusetts-based UMass Memorial
Medical Center's clinical and anatomic-pathology laboratory
outreach business in January, said it acquired California-based
Dignity Health's outreach business.
"The Dignity transaction, combined with the UMass, positions
us extremely well in two states that are leading the way in
healthcare reform and is one more indication that hospitals are
looking for more cost-effective ways to manage diagnostic
testing," Chief Executive Steve Rusckowski said.
"We expect to complete additional fold-in acquisitions
consistent with our goal of delivering 1 percent to 2 percent
growth per year," he said on a conference call with analysts.
The company expects the Dignity deal to be neutral to
adjusted earnings in 2013 and slightly add to earnings per share
"We think (the Dignity) acquisition is an incremental
positive as it could help mitigate some competition in one of
Quest's stronger markets, California," Piper Jaffray analyst
Kevin Ellich said in a note.
Quest's net income for the quarter ended March 31 fell 15
percent to $135.8 million, or 85 cents per share, from a year
Excluding items, Quest earned 89 cents per share, much below
the average analyst expectation of $1.03, according to Thomson
Net revenue fell about 6 percent to $1.78 billion, below
analysts' expectations of $1.86 billion.
"Our results for the quarter reflect our previously stated
expectation for revenue softness during the first half of 2013,
with gradual improvement throughout the remainder of the year,"
CEO Rusckowski said.
Quest Chief Financial Officer Robert Hagemann, who is set to
retire at the end of May, said the company expects to achieve
$600 million in run-rate savings by the end of 2014, and will
have reached about two-thirds of that goal by the end of 2013.
Quest shares were down marginally at $58.21 on the New York
Stock Exchange in midday trading.