Quest takes $89.5M hit as it plots sale of Dx products unit
Quest Diagnostics ($DGX) is putting its HemoCue diagnostic products business up for sale, resulting in an $89.5 million charge against fourth-quarter earnings that also covers the company's December sale of its OralDNA unit.
Quest is paring down and refocusing on diagnostic information services, selling the OralDNA lab salivary diagnostics business to Access Genetics for an undisclosed sum and plotting to ship out HemoCue, which designs and manufactures point-of-care testing systems. In addition to the one-time charge, ditching the two units will push $15 million of 2012 net income and $117 million of revenue into the discontinued operations column when Quest reports its full-year and fourth-quarter results Jan. 23.
The diagnostics giant's realignment comes amid a declining demand for assays, and Quest is retreating to its core diagnostic information services to stave off the quarterly revenue declines it posted all last year. After reporting another round of tepid results in Q3, Quest lowered its full-year outlook to predict just .5% revenue growth, down from 2% to 2.5% earlier in the year.
In October, Quest announced a broad reorganization plan that involved cutting up to 600 jobs, changing managerial structures and reorganizing its business units. That plan is designed to save about $500 million, Quest said.
In the process, Quest split its operations into two categories: Diagnostics Solutions and Diagnostic Information Services. The company is counting on the latter to account for most of its revenue, and, by distancing itself from OralDNA and HemoCue, Quest appears to be slowly exiting--or at least minimizing--the diagnostic products business.
"Our new organizational structure and management team ... will allow us to drive operational excellence and improve our customer focus, which will, over time, enable us to restore growth," Quest CEO Steve Rusckowski said back in October.
Separately, the company disclosed that Hurricane Sandy and the resultant struggles in its home state of New Jersey took a $21 million bite out of fourth-quarter revenue.
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