QUEST DIAGNOSTICS INCORPORATED MADISON, N.J., Jan. 26, 2017 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic information services, announced today financial results for the fourth quarter and full year ended December 31, 2016.
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"We grew revenues, operating income, margins and operating cash flow in the fourth quarter, capping a strong year in which we achieved our commitments and created value for shareholders," said Steve Rusckowski, Chairman, CEO and President. "We are laser focused on our two point strategy to accelerate growth and continue to drive operational excellence. Revenue growth in the quarter came from expanding relationships with hospital health systems and strength in several of our advanced diagnostic offerings. Our guidance for full year 2017 reflects expectations for continued acceleration of top-line growth and is consistent with the earnings outlook we provided at our Investor Day in November."
Three Months Ended December 31, Twelve Months Ended December 31,
2016 2015 Change 2016 2015 Change
---- ---- ------ ---- ---- ------
(dollars in millions, except per share data)
Reported:
---------
Net revenues $1,861 $1,849 0.7% $7,515 $7,493 0.3%
DIS revenues $1,773 $1,738 2.0% $7,138 $6,965 2.5%
Revenue per requisition 0.4% 0.4%
Requisition volume 1.5% 2.0%
Operating income (a) $276 $239 15.4% $1,277 $1,399 (8.7)%
Operating income as a pct of net revenues (a) 14.8% 12.9% 190 bps 17.0% 18.7% (170) bps
Net income attributable to Quest $155 $188 (17.5)% $645 $709 (9.1)%
Diagnostics (a)
Diluted earnings per share (a) $1.09 $1.29 (15.5)% $4.51 $4.87 (7.4)%
Cash provided by operations (b) $304 $272 11.8% $1,069 $821 30.2%
Capital expenditures $128 $94 35.7% $293 $263 11.5%
Adjusted:
---------
Revenues on an equivalent basis $1,861 $1,825 1.9% $7,515 $7,324 2.6%
Operating income $305 $288 6.1% $1,230 $1,203 2.3%
Operating income as a pct of net revenues 16.4% 15.5% 90 bps 16.4% 16.1% 30 bps
Net income attributable to Quest $173 $157 9.6% $682 $640 6.4%
Diagnostics
Diluted earnings per share excluding $1.31 $1.19 10.1% $5.15 $4.77 8.0%
amortization
(a) For 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
earnings per share, see note 3
of the financial tables
attached below.
(b) For details impacting the year-
over-year comparisons related
to cash provided by operations,
see note 8 of the financial
tables attached below.
Share Repurchase Authority Increase
In the fourth quarter the company's Board of Directors increased by $1 billion the amount available under the company's existing share repurchase program. As of December 31, 2016, $1.4 billion remained available for repurchase under the program.
Outlook for Full Year 2017
The company estimates full year 2017 results as follows:
Low High
--- ----
Revenues $7.64 billion $7.72 billion
Revenue increase on a reported
basis 1.7% 2.7%
Revenue increase on an
equivalent basis (c) 2% 3%
Reported diluted EPS $4.65 $4.80
Adjusted diluted EPS excluding
amortization $5.37 $5.52
Cash provided by operations Approximately $1.1
billion
Capital expenditures $250 million $300 million
(c) Revenues on an equivalent basis for full year
2016 were $7.49 billion which represents the
company's reported revenues, excluding all Focus
Diagnostics products revenue, in 2016.
Note on Non-GAAP Financial Measures
As used in this press release the term "reported" refers to measures under the accounting principles generally accepted in the United States ("GAAP"). The term "adjusted" refers to non-GAAP measures as follows: (i) for the purpose of income measures the term "adjusted" refers to operating performance measures that exclude special items such as the gain on sale of the Focus Diagnostics products business, gain on the contribution to the clinical trials joint venture, retirement of debt and related refinancing charges, restructuring and integration charges, recognition of certain income tax benefits and other items; (ii) the term "adjusted diluted EPS excluding amortization" represents the company's diluted EPS before the impact of special items and amortization; (iii) reference to "revenues on an equivalent basis" when comparing 2016 results to 2015 represents 2015 reported revenues excluding all clinical trials testing and Celera products revenues and Focus Diagnostics products revenues subsequent to April 2015; and (iv) reference to "revenues on an equivalent basis" when comparing full year 2017 estimates to 2016 represents 2016 reported revenues excluding all Focus Diagnostics products revenues.
Non-GAAP "adjusted" measures are presented because management believes those measures are useful adjuncts to GAAP results. Non-GAAP "adjusted" measures should not be considered as an alternative to the corresponding measures determined under GAAP. Management may use these non-GAAP measures to evaluate our performance period over period and relative to competitors, to analyze the underlying trends in our business, to establish operational budgets and forecasts or for incentive compensation purposes. We believe that these non-GAAP measures are useful to investors and analysts to evaluate our performance period over period and relative to competitors, as well as to analyze the underlying trends in our business and to assess our performance. The additional tables attached below include reconciliations of adjusted measures to GAAP measures.
Conference Call Information
Quest Diagnostics will hold its quarterly conference call to discuss financial results beginning at 8:30 a.m. Eastern Time today. The conference call can also be accessed in listen-only mode by dialing 773-681-5898, passcode 3214469. The company suggests participants dial in approximately 10 minutes before the call. A replay of the call may be accessed online at www.QuestDiagnostics.com/investor or by phone at 866-373-9234 for domestic callers or 203-369-0282 for international callers. Telephone replays will be available from 10:30 a.m. Eastern Time on January 26, 2017 until midnight Eastern Time on February 9, 2017. Anyone listening to the call is encouraged to read the company's periodic reports, on file with the Securities and Exchange Commission, including the discussion of risk factors and historical results of operations and financial condition in those reports.
About Quest Diagnostics
Quest Diagnostics empowers people to take action to improve health outcomes. Derived from the world's largest database of clinical lab results, our diagnostic insights reveal new avenues to identify and treat disease, inspire healthy behaviors and improve health care management. Quest annually serves one in three adult Americans and half the physicians and hospitals in the United States, and our 43,000 employees understand that, in the right hands and with the right context, our diagnostic insights can inspire actions that transform lives. www.QuestDiagnostics.com.
The statements in this press release which are not historical facts may be forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date that they are made and which reflect management's current estimates, projections, expectations or beliefs and which involve risks and uncertainties that could cause actual results and outcomes to be materially different. Risks and uncertainties that may affect the future results of the company include, but are not limited to, adverse results from pending or future government investigations, lawsuits or private actions, the competitive environment, changes in government regulations, changing relationships with customers, payers, suppliers or strategic partners and other factors discussed in the company's most recently filed Annual Report on Form 10-K and in any of the company's subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including those discussed in the "Business," "Risk Factors," "Cautionary Factors that May Affect Future Results" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of those reports.
This earnings release, including the attached financial tables, is available online in the Newsroom section at www.QuestDiagnostics.com.
ADDITIONAL TABLES FOLLOW
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2016 and 2015
(in millions, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
Net revenues $1,861 $1,849 $7,515 $7,493
Operating costs, expenses and other
income:
Cost of services 1,160 1,150 4,616 4,657
Selling, general and
administrative 400 429 1,681 1,679
Amortization of
intangible assets 18 20 72 81
Gain on disposition of
business - - (118) (334)
Other operating expense
(income), net 7 11 (13) 11
--- --- --- ---
Total operating costs and
expenses, net 1,585 1,610 6,238 6,094
----- ----- ----- -----
Operating income 276 239 1,277 1,399
Other income (expense):
Interest expense, net (36) (36) (143) (153)
Other income (expense),
net 2 3 (48) (143)
Total non-operating
expenses, net (34) (33) (191) (296)
--- --- ---- ----
Income from continuing
operations before income
taxes and equity in 242 206 1,086 1,103
earnings of equity method investees
Income tax expense (84) (14) (429) (373)
Equity in earnings of
equity method investees,
net of taxes 9 8 39 23
--- --- --- ---
Net income 167 200 696 753
Less: Net income
attributable to
noncontrolling interests 12 12 51 44
Net income attributable
to Quest Diagnostics $155 $188 $645 $709
---- ---- ---- ----
Earnings per share attributable to Quest Diagnostics' common
stockholders:
Basic $1.11 $1.31 $4.58 $4.92
----- ----- ----- -----
Diluted $1.09 $1.29 $4.51 $4.87
----- ----- ----- -----
Weighted average common shares
outstanding:
Basic 138 143 140 144
Diluted 141 144 142 145
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Balance Sheets
December 31, 2016 and 2015
(in millions, except per share data)
(unaudited)
December 31, December 31,
2016 2015
---- ----
Assets
------
Current assets:
Cash and cash
equivalents $359 $133
Accounts
receivable, net 926 901
Inventories 82 84
Prepaid expenses
and other
current assets 155 207
Assets held for
sale 9 176
--- ---
Total current
assets 1,531 1,501
Property, plant
and equipment,
net 1,029 925
Goodwill 6,000 5,905
Intangible
assets, net 949 984
Investment in
equity method
investees 443 473
Other assets 148 174
Total assets $10,100 $9,962
------- ------
Liabilities and Stockholders'
Equity
-----------------------------
Current liabilities:
Accounts payable
and accrued
expenses $975 $1,014
Current portion
of long-term
debt 6 159
Total current
liabilities 981 1,173
Long-term debt 3,728 3,492
Other liabilities 654 514
Redeemable
noncontrolling
interest 77 70
Stockholders' equity:
Quest Diagnostics stockholders'
equity:
Common stock, par
value $0.01 per
share; 600
shares
authorized at
both December
31, 2016 2 2
and 2015; 216 shares issued at
both December 31, 2016 and 2015
Additional paid-
in capital 2,545 2,481
Retained earnings 6,613 6,199
Accumulated other
comprehensive
loss (72) (38)
Treasury stock,
at cost; 79
shares and 73
shares at
December 31,
2016 and 2015, (4,460) (3,960)
respectively
---
Total Quest
Diagnostics
stockholders'
equity 4,628 4,684
Noncontrolling
interests 32 29
--- ---
Total
stockholders'
equity 4,660 4,713
Total liabilities
and
stockholders'
equity $10,100 $9,962
------- ------
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
For the Twelve Months Ended December 31, 2016 and 2015
(in millions)
(unaudited)
Twelve Months Ended
December 31,
2016 2015
---- ----
Cash flows from operating
activities:
Net income $696 $753
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and
amortization 249 304
Provision for
doubtful
accounts 308 297
Deferred income
tax provision 37 112
Stock-based
compensation
expense 69 52
Gain on
disposition of
business (118) (334)
Other, net (6) 6
Changes in operating assets
and liabilities:
Accounts
receivable (343) (262)
Accounts payable
and accrued
expenses 56 (24)
Income taxes
payable 42 (41)
Termination of
interest rate
swap agreements 54 -
Other assets and
liabilities,
net 25 (42)
Net cash
provided by
operating
activities 1,069 821
----- ---
Cash flows from investing
activities:
Business
acquisitions,
net of cash
acquired (139) (67)
Proceeds from
sale of
businesses 270 -
Capital
expenditures (293) (263)
Investment in
equity method
investee - (33)
Decrease in
investments and
other assets 10 1
Net cash used in
investing
activities (152) (362)
---- ----
Cash flows from financing
activities:
Proceeds from
borrowings 1,869 2,453
Repayments of
debt (1,724) (2,537)
Purchases of
treasury stock (590) (224)
Exercise of
stock options 73 60
Employee payroll
tax
withholdings on
stock issued
under stock-
based
compensation
plans (10) (7)
Dividends paid (223) (212)
Distributions to
noncontrolling
interests (41) (42)
Sale of
noncontrolling
interest in
subsidiary - 63
Payment of
deferred
business
acquisition
consideration - (51)
Other financing
activities, net (45) (21)
Net cash used in
financing
activities (691) (518)
---- ----
Net change in
cash and cash
equivalents 226 (59)
Cash and cash
equivalents,
beginning of
period 133 192
--- ---
Cash and cash
equivalents,
end of period $359 $133
---- ----
Cash paid during the period
for:
Interest $148 $172
Income taxes $361 $319
Notes to Financial Tables
1) The computation of basic and
diluted earnings per common
share is as follows:
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(in millions, except per share data)
Amounts attributable to
Quest Diagnostics'
common stockholders:
Net income attributable
to Quest Diagnostics $155 $188 $645 $709
Less: Earnings
allocated to
participating
securities - - 3 3
Earnings available to
Quest Diagnostics'
common stockholders -
basic and diluted $155 $188 $642 $706
---- ---- ---- ----
Weighted average common
shares outstanding -
basic 138 143 140 144
Effect of dilutive
securities:
Stock options and
performance share
units 3 1 2 1
Weighted average common
shares outstanding -
diluted 141 144 142 145
--- --- --- ---
Earnings per share
attributable to Quest
Diagnostics' common
stockholders:
Basic $1.11 $1.31 $4.58 $4.92
----- ----- ----- -----
Diluted $1.09 $1.29 $4.51 $4.87
----- ----- ----- -----
2) In the second quarter of 2016, the
company elected to early adopt the
accounting standard update that
simplifies several aspects of the
accounting for stock-based
compensation award transactions,
including the income tax consequences,
classification of awards as either
equity or liabilities, classification
on the statement of cash flows and
accounting for forfeitures, effective
January 1, 2016. As a result, certain
reclassifications have been made to
the prior period financial statements
to conform with the current period
presentation.
3) The following tables reconcile reported
results to adjusted results:
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(dollars in millions, except per share data)
Adjusted operating
income:
------------------
Operating income $276 $239 $1,277 $1,399
Gain on disposition
of business (a) - - (118) (334)
Restructuring and
integration charges
(b) 23 22 78 105
Other (c) 6 27 (7) 33
Adjusted operating
income $305 $288 $1,230 $1,203
---- ---- ------ ------
Adjusted operating
income as a
percentage of net
revenues:
------------------
Operating income as
a percentage of net
revenues 14.8% 12.9% 17.0% 18.7%
Gain on disposition
of business (a) - - (1.5) (4.4)
Restructuring and
integration charges
(b) 1.2 1.2 1.0 1.4
Other (c) 0.4 1.4 (0.1) 0.4
Adjusted operating
income as a
percentage of net
revenues 16.4% 15.5% 16.4% 16.1%
---- ---- ---- ----
Adjusted net income:
--------------------
Net income
attributable to
Quest Diagnostics $155 $188 $645 $709
Gain on disposition
of business (a) - - (118) (334)
Retirement of debt
and related
refinancing charges
(d) - - 48 150
Restructuring and
integration charges
(b) 24 22 82 110
Other (c) 6 25 - 31
Income tax expense
(benefit)
associated with the
special items (e) (12) (78) 25 (26)
Adjusted net income $173 $157 $682 $640
---- ---- ---- ----
Adjusted diluted EPS
excluding
amortization
expense:
--------------------
Diluted earnings per
common share $1.09 $1.29 $4.51 $4.87
Gain on disposition
of business (a) (e) - - (0.24) (1.30)
Retirement of debt
and related
refinancing charges
(d) (e) - (0.01) 0.21 0.62
Restructuring and
integration charges
(b) (e) 0.10 0.09 0.35 0.46
Certain income tax
benefits (e) - (0.40) - (0.40)
Other (c) (e) 0.03 0.11 (0.06) 0.14
Amortization expense
(f) 0.09 0.11 0.38 0.38
Adjusted diluted EPS
excluding
amortization
expense $1.31 $1.19 $5.15 $4.77
----- ----- ----- -----
Revenue on an
equivalent basis:
------------------
Net revenues $1,861 $1,849 $7,515 $7,493
Excluded revenue (g) - (24) - (169)
----
Revenue on an
equivalent basis $1,861 $1,825 $7,515 $7,324
------ ------ ------ ------
(a) For the twelve months ended
December 31, 2016, represents
the pre-tax gain on the sale of
our Focus Diagnostics products
business to DiaSorin S.p.A. for
$300 million in cash, or $293
million net of transaction costs
and working capital adjustments,
which includes $25 million of
proceeds held in escrow. For
the twelve months ended December
31, 2015, represents the gain
associated with the contribution
of our clinical trials testing
business to Q(2) Solutions, the
clinical trials joint venture
with Quintiles Transnational
Holdings Inc.
(b) For the twelve months ended
December 31, 2016, represents
costs primarily associated with
systems conversions and
integration incurred in
connection with further
restructuring and integrating
our business. For the twelve
months ended December 31, 2015,
represents costs primarily
associated with workforce
reductions and professional fees
incurred in connection with
further restructuring and
integrating our business. The
following table summarizes the
pre-tax impact of restructuring
and integration charges on the
company's consolidated
statements of operations:
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(dollars in millions)
Cost of services $15 $12 $40 $63
Selling, general
and administrative 7 10 37 42
Other operating
expense, net 1 - 1 -
Operating income $23 $22 $78 $105
--- --- --- ----
Equity in earnings
of equity method
investees, net of
taxes $1 $ - $4 $5
--- --- --- --- ---
(c) For the three months ended
December 31, 2016, primarily
represents non-cash asset
impairment charges. For the
twelve months ended December 31,
2016, primarily represents a
gain on escrow recovery
associated with an acquisition,
partially offset by costs
associated with winding down
subsidiaries, non-cash asset
impairment charges and costs
incurred related to certain
legal matters.
For the three months ended
December 31, 2015, primarily
represents non-cash asset
impairment charges and other
costs associated with winding
down subsidiaries as well as
costs incurred related to
certain legal matters. For the
twelve months ended December 31,
2015, primarily represents non-
cash asset impairment charges
and other costs associated with
Celera Products and the winding
down of another subsidiary as
well as costs incurred related
to certain legal matters,
partially offset by a pre-tax
gain of $13 million associated
with a decrease in the fair
value of the contingent
consideration accrual associated
with our Summit Health, Inc.
acquisition. The following
table summarizes the pre-tax
impact of these other items on
the company's consolidated
statement of operations:
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(dollars in millions)
Cost of Sales $ - $2 $ - $2
Selling, general
and administrative - 14 6 21
Other operating
expense (income),
net 6 11 (13) 10
--- --- --- ---
Operating income $6 $27 $(7) $33
--- --- --- ---
Other non-
operating (income)
expense, net $ - $(2) $7 $(2)
--- --- --- --- ---
(d) For the twelve months ended
December 31, 2016, represents
charges associated with the
March 2016 cash tender offer
where the company purchased
$200 million of its 6.95%
Senior Notes due July 2037 and
5.75% Senior Notes due January
2040. For the twelve months
ended December 31, 2015,
represents: charges associated
with the March 2015 cash tender
offer where the company
purchased $250 million
aggregate principal amount of
its 6.95% Senior Notes due July
2037 and 5.75% Senior Notes due
January 2040; and charges
associated with the April 2015
redemption where the company
redeemed all of its 5.45%
Senior Notes due November 2015,
$150 million of its 3.2% Senior
Notes due April 2016 and all of
its 6.4% Senior Notes due July
2017. The following table
summarizes the impact of pre-
tax charges on retirement of
debt and related refinancing
charges on the company's
consolidated statements of
operations:
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(dollars in millions)
Interest
expense,
net $ - $ - $ - $6
Other
non-
operating
expense,
net - - 48 144
$ - $ - $48 $150
--- --- --- --- --- ----
(e) For the twelve months ended
December 31, 2016, for the gain
on disposition of business,
income tax expense resulted in a
combined tax rate of 71.4%,
which was significantly in
excess of the statutory rate
primarily due to a lower tax
basis in the assets sold,
specifically the goodwill
associated with the disposition.
For the twelve months ended
December 31, 2015, for the gain
on disposition of business, the
associated deferred income tax
liability was calculated using a
combined tax rate of 43.3% and
did not result in any
significant current income taxes
payable. For the retirement of
debt and related refinancing
charges, income tax benefits
were calculated such that the
combined tax rate was 38.9% and
40% for 2016 and 2015,
respectively. For the
restructuring and integration
charges and other items, income
tax impacts, where recorded,
were calculated using combined
tax rates of 38.7% and 38.9% for
2016 and 2015, respectively.
The following table summarizes
the income tax expense (benefit)
associated with the special
items:
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(dollars in millions)
Gain on
disposition of
business $ - $ - $84 $145
Retirement of debt
and related
refinancing
charges - (2) (18) (60)
Restructuring and
integration
charges (9) (9) (32) (43)
Certain income tax
benefits - (58) - (58)
Other (3) (9) (9) (10)
$(12) $(78) $25 $(26)
---- ---- --- ----
For the three and twelve months
ended December 31, 2015, certain
income tax benefits represent
the recognition of a deferred
income tax benefit associated
with winding down a subsidiary.
(f) Represents the impact of
amortization expense on diluted
earnings per common share, net
of the income tax benefit. The
income tax benefit was primarily
calculated using a combined tax
rate of 38.7% and 38.9% for 2016
and 2015, respectively. The
pre-tax amortization expense
that is excluded from the
calculation of adjusted diluted
EPS excluding amortization
expense is recorded in the
company's statements of
operations as follows:
Three Months Ended Twelve Months Ended
December 31, December 31,
2016 2015 2016 2015
---- ---- ---- ----
(dollars in millions)
Amortization
of
intangible
assets $18 $20 $72 $81
Equity
in
earnings
of
equity
method
investees,
net
of
taxes 4 4 16 8
$22 $24 $88 $89
--- --- --- ---
(g) Effective July 1, 2015, the company
contributed its clinical trials
testing business to the Q(2)
Solutions joint venture. In 2016,
the company wound down its Celera
products business and completed its
exit from the products business as
a result of the sale of Focus
Diagnostics products on May 13,
2016. For the three months ended
December 31, 2015, excluded revenue
represents Celera products and
Focus Diagnostics products reported
revenues. Excluded revenue for the
twelve months ended December 31,
2015, represents clinical trials
testing reported revenues for the
first and second quarters of 2015,
Celera products reported revenues
for all of 2015 and Focus
Diagnostics products revenues
subsequent to April 2015.
4) For the twelve months ended December
31, 2016, the company recorded
income tax expense of $84 million
associated with the gain on sale of
our Focus Diagnostics products
business, consisting of $91 million
of current income tax expense and a
deferred income tax benefit of $7
million. In connection with the
gain associated with the
contribution of our clinical trial
testing business to the Q(2)
Solutions joint venture, the
company recorded a deferred income
tax liability of $145 million for
the twelve months ended December
31, 2015.
5) Other operating expense (income),
net includes miscellaneous income
and expense items related to
operating activities. For the
three months ended December 31,
2016, other operating expense
(income), net principally consists
of non-cash asset impairment
charges. Other operating expense
(income), net for the twelve months
ended December 31, 2016,
principally consists of a gain on
an escrow recovery associated with
an acquisition, partially offset by
non-cash asset impairment charges.
For the three months ended December
31, 2015, other operating expense
(income), net principally includes
non-cash asset impairment charges
associated with winding down a
subsidiary. Other operating
expense (income), net for the
twelve months ended December 31,
2015, principally includes non-
cash asset impairment charges
primarily associated with Celera
products and the winding down of
another subsidiary, partially
offset by a gain of $13 million
associated with a decrease in the
fair value of the contingent
consideration accrual associated
with our Summit Health, Inc.
acquisition.
6) Other income (expense), net
represents miscellaneous income and
expense items related to non-
operating activities, such as gains
and losses associated with
investments, other non-operating
assets and early retirement of
debt. For the twelve months ended
December 31, 2016, other income
(expense), net includes $48 million
of charges on the retirement of
debt associated with the March 2016
cash tender offer and non-cash
asset impairment charges associated
with certain investments of $7
million. Other income (expense),
net for the twelve months ended
December 31, 2015, includes $144
million of charges on the
retirement of debt associated with
the March 2015 cash tender offer
and April 2015 redemption.
7) For the twelve months ended December
31, 2016, the company repurchased
7.4 million shares of its common
stock for $590 million, including
3.1 million shares repurchased
under an accelerated share
repurchase agreement during the
second and third quarters of 2016.
As of December 31, 2016, $1.4
billion remained available under
the Company's share repurchase
authorizations.
8) For the twelve months ended December
31, 2016, net cash provided by
operations included $91 million of
income taxes paid associated with
the sale of Focus Diagnostics
products and $47 million of pre-
tax cash charges, or $30 million
after the related cash tax benefit,
related to the retirement of debt,
which were partially offset by $54
million of proceeds received from
the termination of interest rate
swap agreements.
For the twelve months ended December
31, 2015, net cash provided by
operations included $146 million of
pre-tax cash charges, or $89
million after the related cash tax
benefit, related to the retirement
of debt.
9) The outlook for adjusted diluted EPS
excluding amortization expense
represents management's estimates
for the full year 2017 before the
impact of special items and
amortization expense. Further
impacts to earnings related to
special items may be incurred
throughout 2017. The following
table reconciles our 2017 outlook
for adjusted diluted EPS excluding
amortization expense to the
corresponding amount determined
under GAAP:
Low High
--- ----
Diluted earnings per common share $4.65 $4.80
Restructuring and integration
charges (a) 0.35 0.35
Amortization expense (b) 0.37 0.37
---- ----
Adjusted diluted EPS excluding
amortization expense $5.37 $5.52
----- -----
(a) Represents estimated full year
pre-tax charges of $80 million
primarily associated with
systems conversions and
integration costs incurred in
connection with further
restructuring and integrating
our business. Income tax
benefits were calculated using
a combined tax rate of 38.7%.
(b) Represents the estimated impact
of amortization expense for
2017 on the calculation of
adjusted diluted EPS excluding
amortization expense.
Amortization expense used in
the calculation is as follows
(dollars in millions):
Amortization of intangible
assets $69
Amortization expense included in equity
in earnings of equity method investees,
net of taxes 16
Total pre-tax amortization
expense $85
---
Total amortization expense, net
of an estimated tax benefit $53
---
10) The outlook for 2% to 3% revenue
growth on an equivalent basis in
2017 represents management's
estimates for 2017 versus reported
2016 revenues adjusted to exclude
the 2016 revenues from the Focus
Diagnostics products business.
The company completed its exit
from the products business as a
result of the sale of Focus
Diagnostics products on May 13,
2016. Consequently, our 2017
revenues will not include revenues
associated with that business.
The following table reconciles our
2016 net revenues determined under
GAAP with equivalent revenue for
2016:
Three Months Ended Year Ended
----------
March 31, June 30, September 30, December 31, December 31,
2016 2016 2016 2016 2016
---- ---- ---- ---- ----
(dollars in millions)
2016 Revenue on an equivalent basis:
------------------------------------
Net revenues $1,863 $1,906 $1,885 $1,861 $7,515
Excluded
revenue (a) (18) (8) - - (26)
2016 Revenue
on an
equivalent
basis $1,845 $1,898 $1,885 $1,861 $7,489
------ ------ ------ ------ ------
2017 Revenue outlook: Low High
--------------------- --- ----
2016 Revenue on an
equivalent basis $7,489 $7,489
2017 Equivalent revenue
growth 2% 3%
2017 Revenue outlook $7,640 $7,720
------ ------
(a) The 2016 excluded revenue is
comprised of all of Focus
Diagnostics products revenues
reported in 2016.
Quest Diagnostics
Denny Moynihan, Quest Diagnostics (Media): 973-520-2800
Shawn Bevec, Quest Diagnostics (Investors): 973-520-2900
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/quest-diagnostics-reports-fourth-quarter-and-full-year-2016-financial-results-provides-guidance-for-full-year-2017-300397040.html
SOURCE Quest Diagnostics Incorporated
