Quest Diagnostics ($DGX) watched its net income drop in its fiscal 2013 first quarter. The company said it expected some softness in the first half of 2013 anyway, due to reimbursement declines from both Medicare and private payers, overall market conditions and restructuring costs.
Quest's adjusted net income from continuing operations reached $143.6 million during the quarter, down from $168.5 million over the same period a year ago. And while revenue from continuing operations hit the $1.8 billion mark, that's a dip of 6.4% over the previous year.
The decline follows a 24% drop in 2012 fourth quarter net income, and at $7.4 billion, flat overall revenue in 2012 compared to 2011.
Quest President and CEO Steve Rusckowski noted in the company's earnings statement that executives already cautioned about "revenue softness" for the first half of 2013, with expectations that the numbers will improve through the rest of the year. The hope is that the company's "Invigorate" plan will improve things, which includes a reorganization, changes in managerial structure and the sale of its HemoCue Business for $300 million. Rusckowski said the company will channel that money back into the company in the form of share repurchases and also pursue growth through strategic acquisitions.
In other words, there is a plan moving forward. But the expectations are small. Through that strategy, Quest hopes its strategic acquisitions will contribute between 1% and 2% annual revenue growth. For now, however, the company has downgraded its expectations for the year, revealing that revenues are now expected to match 2012 levels, rather than the previous guidance of no more than 1% growth for 2013.
And the changes are continuing in personnel, too. Robert Hagemann, the company's long-time chief financial officer, announced in March that he'd step down at the end of May.
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