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| Quest Diagnostics CEO Stephen Rusckowski |
The quest to restore growth continues at Quest Diagnostics ($DGX), which reported first-quarter revenue of $1.8 billion, down 2.3% from the same period a year ago. Adjusted income from continuing operations was $122 million compared to $143 million in 2013.
Interestingly, diagnostic information services revenue decreased 2.1% even though the number of requisitions increased .7% versus the prior year period. The company blamed the price decline on "expected changes in reimbursement" and last year's acquisition of the toxicology and clinical laboratory business of Concentra, a former subsidiary of Humana.
The comments indicate Quest remains subject to the whims of government reimbursement policies, but Congress took steps that could help the company's prospects in that arena. Quest CEO Stephen Rusckowski said in a statement that he is "pleased that Congress took positive action in the recent legislation to provide needed clarity around timing and process for changes to the Clinical Lab Fee Schedule."
He was referring to reforms to CMS reimbursement made in the Medicare Sustainable Growth Rate, or SGR, extension legislation that eliminates the agency's ability to make changes to fee schedule based on technological changes. The provision won applause from the American Clinical Laboratory Association, which said the modification increases transparency and improves the process for fee schedule rate reconsideration.
Quest blamed the harsh winter in the U.S. for reducing revenues and volume by about 2%.
Rusckowski said the company expects to make progress on its top priority of restoring revenue growth beginning in the next quarter and continuing until the end of the year.
Quest has been on an acquisition binge of late as it seeks to achieve that goal. This quarter it acquired Summit Health for an undisclosed sum and Solstas Lab for about $570 million.
The company ended the quarter with $144 million of cash and cash equivalents, compared to $187 million at the beginning of the year.
- read the earnings release
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