In a small bit of good news, Quest Diagnostics ($DGX) nudged up the lower end of its earnings-per-share guidance for 2013. But the New Jersey company warned it will still end the year with lower revenue, and that previously discussed challenges including lower test volume and reimbursement pressures won't be going away any time soon.
Quest said it now expects adjusted earnings per diluted share to hit between $3.90 and $3.95, versus earlier guidance of $3.85 and $3.95. But revenue for the full year should still be about 3.5% lower than levels hit in 2012, Quest said, a figure that's unchanged from prior guidance.
Without going into detail, Quest noted in its statement that "it continues to see the same challenges in the operating environment that it has identified and discussed over the past year." Those challenges are many, and include pressure from public and private payers over reimbursement and a drop in test volume.
Investors seemed encouraged by the news--Quest's stock opened trading today near $54.50, after closing yesterday at $53.81.
Quest has pursued acquisitions that have helped soften the blow of declining revenue, as well as a multi-faceted reorganization and strategy shift. The company sold off its share of Johnson & Johnson's ($JNJ) cancer drug ibrutinib to Royalty Pharma for $485 million earlier this year. And Quest has continued an ongoing revamp strategy involving up to 600 job cuts, managerial changes and a reorganizations of business units, all in a bid to save $500 million in 2013 and recharge revenue growth.
Quest has also taken on a high-profile test launch--debuting a new BRCA-related cancer predictive test. Myriad Genetics ($MYGN) has dominated this space, but a U.S. Supreme Court decision over the summer that upheld some Myriad patents and overturned others opened the door to competition. Myriad is suing Quest and other rivals who have subsequently launched BRCA-related assays.
- read the release