Quest posts 24% Q4 profit drop amid restructuring
Quest Diagnostics ($DGX) is undergoing a sweeping reorganization, and its fourth-quarter results give a hint as to why. The diagnostics giant reported $140 million in net income, a 24% slide from the previous year.
Revenue fell 4% to $1.8 billion in Q4, as sales of diagnostic information services dropped 4.4% and test volume declined 2.4% from the same period in 2011. Furthermore, Superstorm Sandy, which ravaged Quest's home state of New Jersey, contributed to a $21 million revenue shortfall, the company said.
But Quest is being proactive, working through its "Invigorate" plan to save $500 million through this year. Under the restructuring, Quest will cut up to 600 jobs, change its managerial structures and reorganize its business units. In December, Quest sold off its OralDNA unit and is planning to do the same for its HemoCue diagnostic products business, all part of a broad plan to reinstate growth, CEO Steve Rusckowski said.
"We will build on the positive momentum of our 2012 Invigorate performance in 2013," Rusckowski said in a statement. "We expect results from our efforts to restore growth to gradually build throughout 2013 and anticipate continued revenue softness in the first half, with improvement thereafter."
But by "softness," he means flatness: Quest is projecting revenue growth between 0% and 1% for 2013. If those results prove true, 2013 will be another consecutive sluggish year for the diagnostics company, as 2012's $7.4 billion in revenue was essentially unchanged from 2011.