Quest dumps $1B into repurchase plan as sales ail

Quest Diagnostics CEO Steve Rusckowski

Quest Diagnostics ($DGX) is tossing another $1 billion into its share repurchase program, looking to reaffirm shareholder confidence after repeatedly dampening its revenue expectations.

The scale-up brings Quest's total repurchase war chest to about $1.3 billion, CEO Steve Rusckowski said, and $300 million of the new cash comes from the company's July sale of its stake in the blockbuster hopeful ibrutinib. Quest flipped its share of the Johnson & Johnson ($JNJ) cancer drug to Royalty Pharma for $485 million flat, just days after the molecule won the FDA's coveted "breakthrough" designation.

Coupled with that was Quest's revelation that it now expects full-year sales to come in between 1% and 2% below 2012, a downgrade from the flat revenue it previously projected. The results cratered Quest's stock price about 6% to $58, and the company's shares have charted a rocky path ever since, closing at $58.76 on Tuesday.

Rusckowski has described 2013 as "a building year" for the diagnostics giant, as it grapples with declining Medicare reimbursement and a bearish market for tests in the U.S. But Quest sees a way forward as a leaner operation, over the past year selling off its HemoCue diagnostic products business to Danaher ($DHR) for $300 million and shipping out salivary testing subsidiary OralDNA to Access Genetics for an undisclosed sum.

Quest is still in the midst of its "Invigorate" plan, announced in the fall, under which the company is cutting up to 600 jobs, changing its managerial structure and reorganizing business units in an effort to save $500 million this year.

Despite all the austerity measures, Quest still has an appetite for deals of its own, buying up the lab outreach segment of Dignity Health and Concentra's toxicology business this year, two deals it expects to add 1% to 2% revenue growth per year.

- read Quest's announcement