Quest Diagnostics Reports Fourth Quarter and Full Year 2024 Financial Results; Provides Guidance for Full Year 2025; Increases Quarterly Dividend 6.7% to $0.80 Per Share

Three Months Ended December 31,

Twelve Months Ended December 31,

2024

2023

Change

2024

2023

Change

(dollars in millions, except per share data)

Reported:

Net revenues

$   2,621

$   2,288

14.5 %

$   9,872

$   9,252

6.7 %

Diagnostic information services revenues

$   2,556

$   2,221

15.1 %

$   9,614

$   8,976

7.1 %

Revenue per requisition

0.2 %

1.3 %

Requisition volume

13.9 %

5.5 %

Organic requisition volume

0.6 %

0.7 %

Operating income (a)

$      361

$      267

35.3 %

$   1,346

$   1,262

6.7 %

Operating income as a percentage of net revenues (a)

13.8 %

11.7 %

2.1 %

13.6 %

13.6 %

— %

Net income attributable to Quest Diagnostics (a)

$      222

$      192

15.1 %

$      871

$      854

2.0 %

Diluted EPS (a)

$     1.95

$     1.70

14.7 %

$     7.69

$     7.49

2.7 %

Cash provided by operations

$      464

$      527

(12.3) %

$   1,334

$   1,272

4.8 %

Capital expenditures

$      123

$        72

73.9 %

$      425

$      408

4.4 %

Adjusted (a):

Operating income

$      409

$      338

21.2 %

$   1,541

$   1,457

5.8 %

Operating income as a percentage of net revenues

15.6 %

14.8 %

0.8 %

15.6 %

15.8 %

(0.2) %

Net income attributable to Quest Diagnostics

$      253

$      245

3.7 %

$   1,011

$      994

1.8 %

Diluted EPS                     

$     2.23

$     2.15

3.7 %

$     8.93

$     8.71

2.5 %

(a) 

For further details impacting the year-over-year comparisons related to operating income, operating income as a percentage of net revenues, net income attributable to Quest Diagnostics, and diluted EPS, see note 2 of the financial tables attached below.

Low

High

Net revenues

$10.70 billion

$10.85 billion

Net revenues increase

8.4 %

9.9 %

Reported diluted EPS

$8.34

$8.59

Adjusted diluted EPS

$9.55

$9.80

Cash provided by operations

Approximately $1.45 billion

Capital expenditures

Approximately $500 million

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Statements of Operations

For the Three and Twelve Months Ended December 31, 2024 and 2023

(in millions, except per share data)

(unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2024

2023

2024

2023

Net revenues

$   2,621

$   2,288

$   9,872

$   9,252

Operating costs and expenses and other operating income:

Cost of services

1,763

1,552

6,628

6,199

Selling, general and administrative

466

407

1,770

1,642

Amortization of intangible assets

37

27

127

108

Other operating (income) expense, net

(6)

35

1

41

Total operating costs and expenses, net

2,260

2,021

8,526

7,990

Operating income

361

267

1,346

1,262

Other income (expense):

Interest expense, net

(65)

(40)

(201)

(152)

Other income, net

3

10

30

20

Total non-operating expense, net

(62)

(30)

(171)

(132)

Income before income taxes and equity in earnings of equity method investees

299

237

1,175

1,130

Income tax expense

(68)

(40)

(273)

(248)

Equity in earnings of equity method investees, net of taxes

5

8

19

26

Net income

236

205

921

908

Less: Net income attributable to noncontrolling interests

14

13

50

54

Net income attributable to Quest Diagnostics

$       222

$       192

$       871

$       854

Earnings per share attributable to Quest Diagnostics' common stockholders:

Basic

$     1.98

$     1.72

$     7.78

$     7.59

Diluted

$      1.95

$      1.70

$      7.69

$      7.49

Weighted average common shares outstanding:

Basic

111

112

111

112

Diluted

113

113

113

113

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Balance Sheets

December 31, 2024 and 2023

(in millions, except per share data)

(unaudited)

December 31, 2024

December 31, 2023

Assets

Current assets:

Cash and cash equivalents

$                 549

$                686

Accounts receivable, net

1,304

1,210

Inventories

188

190

Prepaid expenses and other current assets

351

286

Total current assets

2,392

2,372

Property, plant and equipment, net

2,113

1,816

Operating lease right-of-use assets

651

602

Goodwill

8,856

7,733

Intangible assets, net

1,763

1,166

Investment in equity method investees

123

135

Other assets

255

198

Total assets

$            16,153

$           14,022

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses

$              1,394

$             1,359

Current portion of long-term debt

602

303

Current portion of long-term operating lease liabilities

173

153

Total current liabilities

2,169

1,815

Long-term debt

5,615

4,410

Long-term operating lease liabilities

535

503

Other liabilities

938

876

Redeemable noncontrolling interest

83

76

Stockholders' equity:

Quest Diagnostics stockholders' equity:

Common stock, par value $0.01 per share; 600 shares authorized as of both December 31, 2024 and 2023; 162 shares issued as of both December 31, 2024 and 2023

2

2

Additional paid-in capital

2,361

2,320

Retained earnings

9,360

8,825

Accumulated other comprehensive loss

(88)

(14)

Treasury stock, at cost; 51 shares as of both December 31, 2024 and 2023

(4,857)

(4,826)

Total Quest Diagnostics stockholders' equity

6,778

6,307

Noncontrolling interests

35

35

Total stockholders' equity

6,813

6,342

Total liabilities and stockholders' equity

$            16,153

$           14,022

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Statements of Cash Flows

For the Twelve Months Ended December 31, 2024 and 2023

(in millions)

(unaudited)

2024

2023

Cash flows from operating activities:

Net income

$           921

$           908

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

493

439

Provision for credit losses

5

1

Deferred income tax provision (benefit)

13

(49)

Stock-based compensation expense

88

77

Other, net

15

41

Changes in operating assets and liabilities:

Accounts receivable

(71)

(15)

Accounts payable and accrued expenses

(67)

(55)

Income taxes payable

16

(2)

Other assets and liabilities, net

(79)

(73)

Net cash provided by operating activities

1,334

1,272

Cash flows from investing activities:

Business acquisitions, net of cash acquired

(2,164)

(611)

Capital expenditures

(425)

(408)

Other investing activities, net

41

(42)

Net cash used in investing activities

(2,548)

(1,061)

Cash flows from financing activities:

Proceeds from borrowings

1,846

2,592

Repayments of debt

(303)

(1,844)

Purchases of treasury stock

(151)

(275)

Exercise of stock options

73

72

Employee payroll tax withholdings on stock issued under stock-based compensation plans

(24)

(28)

Dividends paid

(331)

(314)

Distributions to noncontrolling interest partners

(47)

(57)

Other financing activities, net

21

14

Net cash provided by financing activities

1,084

160

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(7)

—

Net change in cash and cash equivalents and restricted cash

(137)

371

Cash and cash equivalents and restricted cash, beginning of period

686

315

Cash and cash equivalents and restricted cash, end of period

$           549

$           686

Cash paid during the period for:

Interest

$           262

$           134

Income taxes

$           256

$           317

1)  The computation of basic and diluted earnings per common share is as follows:

Three Months Ended December 31,

Twelve Months Ended December 31,

2024

2023

2024

2023

(in millions, except per share data)

Amounts attributable to Quest Diagnostics' common stockholders:

Net income attributable to Quest Diagnostics

$           222

$           192

$           871

$           854

Less: Earnings allocated to participating securities

2

—

5

4

Earnings available to Quest Diagnostics' common stockholders - basic and diluted

$           220

$           192

$           866

$           850

Weighted average common shares outstanding - basic

111

112

111

112

Effect of dilutive securities:

Stock options and performance share units

2

1

2

1

Weighted average common shares outstanding - diluted

113

113

113

113

Earnings per share attributable to Quest Diagnostics' common stockholders:

Basic

$          1.98

$          1.72

$          7.78

$          7.59

Diluted

$          1.95

$          1.70

$          7.69

$          7.49

2)  The following tables reconcile reported GAAP results to non-GAAP adjusted results:

Three Months Ended December 31, 2024

(dollars in millions, except per share data)

Operating
income

Operating
income as a
percentage of
net revenues

Income tax
expense (e)

Equity in
earnings of
equity method
investees,
net of taxes

Net income
attributable
to Quest
Diagnostics

Diluted EPS

As reported

$                 361

13.8 %

$                 (68)

$                     5

$                 222

$                1.95

Restructuring and integration charges (a)

17

0.6

(5)

—

12

0.11

Other charges (b)

(6)

(0.2)

—

—

(6)

(0.06)

Gains and losses on investments (c)

—

—

(1)

4

3

0.03

Other gains (d)

—

—

1

—

(3)

(0.02)

Amortization expense

37

1.4

(9)

—

28

0.25

ETB

—

—

(3)

—

(3)

(0.03)

As adjusted

$                 409

15.6 %

$                 (85)

$                     9

$                 253

$                2.23

Twelve Months Ended December 31, 2024

(dollars in millions, except per share data)

Operating
income

Operating
income as a
percentage of
net revenues

Income tax
expense (e)

Equity in
earnings of
equity method
investees,
net of taxes

Net income
attributable
to Quest
Diagnostics

Diluted EPS

As reported

$             1,346

13.6 %

$               (273)

$                   19

$                 871

$                7.69

Restructuring and integration charges (a)

62

0.6

(15)

—

47

0.42

Other charges (b)

6

0.1

—

—

5

0.04

Gains and losses on investments (c)

—

—

(4)

15

11

0.10

Other gains (d)

—

—

3

—

(9)

(0.08)

Amortization expense

127

1.3

(32)

—

95

0.84

ETB

—

—

(9)

—

(9)

(0.08)

As adjusted

$             1,541

15.6 %

$               (330)

$                   34

$              1,011

$                8.93

Three Months Ended December 31, 2023

(dollars in millions, except per share data)

Operating
income

Operating
income as a
percentage of
net revenues

Income tax
expense (e)

Equity in
earnings of
equity method
investees,
net of taxes

Net income
attributable
to Quest
Diagnostics

Diluted EPS

As reported

$                267

11.7 %

$                 (40)

$                     8

$                 192

$                1.70

Restructuring and integration charges (a)

11

0.5

(2)

—

9

0.07

Other charges (b)

33

1.4

(6)

—

27

0.23

Amortization expense

27

1.2

(8)

—

19

0.17

ETB

—

—

(2)

—

(2)

(0.02)

As adjusted

$                338

14.8 %

$                 (58)

$                     8

$                 245

$                2.15

Twelve Months Ended December 31, 2023

(dollars in millions, except per share data)

Operating
income

Operating
income as a
percentage of
net revenues

Income tax
expense (e)

Equity in
earnings of
equity method
investees,
net of taxes

Net income
attributable
to Quest
Diagnostics

Diluted EPS

As reported

$             1,262

13.6 %

$               (248)

$                   26

$                 854

$                7.49

Restructuring and integration charges (a)

43

0.5

(10)

—

33

0.29

Other charges (b)

44

0.5

(8)

—

36

0.31

Gains and losses on investments (c)

—

—

(1)

3

2

0.02

Amortization expense

108

1.2

(28)

—

80

0.70

ETB

—

—

(11)

—

(11)

(0.10)

As adjusted

$             1,457

15.8 %

$               (306)

$                   29

$                 994

$                8.71

(a) 

For both the three and twelve months ended December 31, 2024 and 2023, the pre-tax impact represents costs primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business.  The following table summarizes the pre-tax impact of restructuring and integration charges on our consolidated statements of operations:

Three Months Ended December 31,

Twelve Months Ended December 31,

2024

2023

2024

2023

(dollars in millions)

Cost of services

$              8

$              4

$            27

$            16

Selling, general and administrative

9

7

37

27

Other operating (income) expense, net

—

—

(2)

—

Operating income

$            17

$            11

$            62

$            43

(b) 

For all periods presented, other operating (income) expense, net includes pre-tax (gains)/losses associated with the change in the fair value of the contingent consideration accrual associated with previous acquisitions.  For both the three and twelve months ended December 31, 2023, the pre-tax impact also includes a $29 million impairment charge on certain long-lived assets related to the shutdown of a business.  The following table summarizes the pre-tax impact of these other items on our consolidated statement of operations:

Three Months Ended December 31,

Twelve Months Ended December 31,

2024

2023

2024

2023

(dollars in millions)

Cost of services

$              2

$            —

$              2

$            —

Selling, general and administrative

—

(2)

2

5

Other operating (income) expense, net

(8)

35

2

39

Operating income

$            (6)

$            33

$              6

$            44

(c) 

For all periods presented, the pre-tax impact primarily represents (gains) and losses associated with changes in the carrying value of our strategic investments, recorded in equity in earnings of equity method investees, net of taxes. 

(d) 

The twelve months ended December 31, 2024 principally includes a non-recurring $8 million pre-tax gain associated with a foreign exchange forward contract utilized in conjunction with an acquisition.  For all periods presented, all amounts are recorded in other income, net.

(e) 

For restructuring and integration charges, gains and losses on investments, other charges and gains, and amortization expense, income tax impacts, where recorded, were primarily calculated using combined statutory income tax rates of 25.5% for both 2024 and 2023.

3)  For both the three and twelve months ended December 31, 2024, we repurchased 0.9 million shares of our common stock for $150 million. As of December 31, 2024, $0.9 billion remained available under our share repurchase authorization.

4)  The outlook for adjusted diluted EPS represents management's estimates for the full year 2025 before the impact of special items. Further impacts to earnings related to special items may occur throughout 2025. Additionally, the amount of ETB is dependent upon employee stock option exercises and our stock price, which are difficult to predict. The following table reconciles our 2025 outlook for diluted EPS under GAAP to our outlook for adjusted diluted EPS:

Low

High

Diluted EPS

$          8.34

$          8.59

Restructuring and integration charges (a)

0.11

0.11

Amortization expense (b)

1.05

1.05

Other charges (c)

0.13

0.13

ETB

(0.08)

(0.08)

Adjusted diluted EPS

$          9.55

$          9.80

(a)

Represents estimated pre-tax charges of $16 million primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business.  Income tax benefits were primarily calculated using a combined statutory income tax rate of 25.5%.

(b)

Represents estimated pre-tax amortization expenses of $160 million.  Income tax benefits were primarily calculated using a combined statutory income tax rate of 25.5%.

(c)

Represents estimated pre-tax net losses of $15 million, principally associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions.  No income tax benefits are recorded on the losses associated with the contingent consideration accrual.