Quest Diagnostics 4Q profit slides 9%

MADISON, N.J. - Quest Diagnostics Inc. said Tuesday its fourth-quarter net income dropped 9 percent, as revenue fell and the medical laboratory operator also took a $1.1 million loss from discontinued operations.

The Madison, N.J., company, which has testing sites throughout the Philadelphia region, earned $165.7 million, or 96 cents per share, in the three months that ended Dec. 31. That compares with net income of $181.6 million, or 97 cents per share, in the same quarter last year, when it had more shares outstanding. Revenue slid 1 percent to $1.82 billion.

Analysts surveyed by FactSet expected, on average, earnings of 91 cents per share on $1.8 billion in revenue.

The company, said clinical testing revenue fell 1.4 percent compared with the prior year. Revenue per requisition was down 1.5 percent, but clinical testing volume rose slightly. Quest also said it took a $1.1 million loss from discontinued operations in the quarter, compared with a $200,000 loss in the same quarter last year.

The company's operating costs and expenses also climbed slightly to $1.53 billion.

Chairman and CEO Surya N. Mohapatra said in a statement that the company was encouraged by improvement in volume trends and stability in revenue per requisition.

"We have taken actions to strengthen our sales organization, expand our pipeline of new tests and services, and improve our operating efficiency, which position us for revenue and [earnings per share] growth," Mohapatra said.

For the full year, Quest earned $720.9 million, or $4.05 per share, on $7.37 billion in revenue.

The company forecasts 2011 earnings per share to range from $4.10 to $4.30 and revenue growth of 1 percent. Analysts expect earnings per share of $4.31 and revenue of $7.45 billion.

Also on Tuesday, Quest said its board of directors increased its share repurchase authorization by $750 million to $1 billion. The company had 171 million shares outstanding as of Dec. 31, and last year it repurchased about 15 million shares for $750 million.

GlaxoSmithKline holds approximately 30.8 million shares, or 16.5% of the outstanding shares of Quest Diagnostics.

Shares of the company gained $1.87 (3.45 percent), to $56.04, late this morning.