* Expects adj profit from cont ops $1.02/shr vs est $1.20
* Expects revenue from cont ops $1.79 bln vs est $1.84 bln
* Shares fall as much as 7 pct
By Vrinda Manocha
Oct 10 (Reuters) - Laboratory tests provider Quest Diagnostics Inc estimated a third-quarter profit below analysts’ expectations as fewer tests were ordered partly due to strict reimbursement rules, sending its shares down as much as 7 percent.
Quest, which has missed profit estimates for three consecutive quarters, said it had been suffering from cuts in Medicare reimbursement all this year.
“The insurance companies and the government are being strict about what tests they will reimburse for and some of these genomic tests are not being reimbursed as often,” Maxim Group analyst Anthony Vendetti told Reuters.
He said lower healthcare utilization has also led to fewer lab tests being ordered.
Volume of tests ordered, excluding 2013 acquisitions, fell 1 percent from a year earlier, Quest said.
The company estimated adjusted earnings of $1.02 per share from continuing operations, down from $1.15 per share a year earlier. Analysts were expecting $1.20 per share, according to Thomson Reuters I/B/E/S.
Quest, which will report third-quarter results on Oct. 17, also estimated revenue of $1.79 billion from continuing operations, marginally below analysts’ estimates of $1.84 billion.
Quest’s shares were trading down 4 percent at $59.16 in late morning trading. Shares of peer Laboratory Corp of America Holdings were down about 1 percent at $99.45.
Vendetti said the reimbursement environment was likely to affect LabCorp as well.
“Since Quest is the largest independent lab, I don’t think the others are going to be immune,” he said. “There’s a popular Wall Street saying that when the behemoth sneezes, everyone gets a cold.”
Quest has been trying to save $600 million in costs by the end of 2014, to offset reimbursement pressure and increases in the cost of labor.
“Perhaps the company’s ongoing cost cutting initiative and other reorganization efforts are making it difficult to translate efforts to restore top-line growth into results,” William Blair analyst Amanda Murphy said.
Revenue per requisition from the company’s core diagnostics business fell 3.3 percent in the quarter, excluding the effect of recent acquisitions.