* Q1 EPS of 89 cents vs forecast of 82 cents
* Boosts 2009 EPS forecast to $3.65-$3.75 per share
* Shares rise 5.9 percent in early NYSE trading (Recasts, updates with analyst comments, CFO comments, share price)
By Susan Kelly and Lewis Krauskopf
CHICAGO/NEW YORK, April 21 (Reuters) - Quest Diagnostics Inc (DGX.N) said on Tuesday its quarterly profit rose nearly 20 percent as it controlled costs and its clinical testing revenue remained steady, and it raised its 2009 earnings outlook.
Its shares rose almost 6 percent in early New York Stock Exchange trading.
The No. 1 medical testing provider said an ongoing shift to more sophisticated, higher-margin tests, including certain cancer diagnostics, and improved operating efficiency drove the better-than-expected bottom line growth. Higher-value tests now generate 35 percent of all revenue, Quest said.
Quest reported first-quarter net income of $167.1 million, or 88 cents a share, up from $139.6 million, or 71 cents a share, a year earlier.
Income from continuing operations of 89 cents per share was 7 cents ahead of analyst forecasts, according to Reuters Estimates.
Total revenue rose 1.3 percent to $1.8 billion for the quarter.
“A reduction in operating expenses offset slower-than-expected revenue growth,” said Goldman Sachs analyst Matthew Borsch in a note, but cautioned that a rise of 1.3 percent in revenue for the quarter “implies a steep ramp to full-year guidance of 3 percent.”
Quest said clinical testing volume, measured by the number of requisitions, fell 1.9 percent. The volume of tests given by employers to detect drug abuse is sensitive to hiring trends and fell 25 percent, the company said.
Quest Chief Financial Officer Robert Hagemann said overall testing volumes have remained at consistent levels for the past three to four quarters, but noted it is difficult to assess the direct impact of the weak economy on physician office visits.
“We see no reason to think that there is going to be a significant change in the experience we’ve had over the last few quarters,” Hagemann said on a conference call with analysts.
The company projected 2009 earnings from continuing operations of between $3.65 per share and $3.75 per share, including a 5-cent benefit from an anticipated insurance recovery. Previously, it had estimated earnings of between $3.50 per share and $3.70 per share.
Quest reiterated its revenue growth forecast of 3 percent.
Shares of Quest rose $2.90, or 5.74 percent, to $53.40 in morning trading. (Reporting by Lewis Krauskopf in New York and Susan Kelly in Chicago, editing by Gerald E. McCormick)