QUEST DIAGNOSTICS INCORPORATED MADISON, N.J., Jan. 28, 2016 /PRNewswire/ -- Quest Diagnostics Incorporated (NYSE: DGX), the world's leading provider of diagnostic information services, announced today that for the fourth quarter ended December 31, 2015, adjusted income from continuing operations was $157 million, essentially unchanged from 2014. Adjusted diluted EPS excluding amortization was $1.19 in the fourth quarter of 2015, compared to $1.18 in 2014.
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For the fourth quarter of 2015, reported income from continuing operations was $188 million, or $1.29 per diluted share. Reported income from continuing operations in the fourth quarter of 2015 benefitted from the recognition of deferred tax benefits totaling $58 million, or $0.40 per diluted share. This benefit was partially offset by $27 million after tax, or $0.19 per diluted share, of charges primarily related to restructuring and integration costs and ongoing efforts to drive operational excellence. In the fourth quarter of 2014, reported income from continuing operations was $185 million, or $1.26 per diluted share. Reported income from continuing operations in the fourth quarter of 2014 benefited from the favorable resolution of tax contingencies of $44 million, or $0.30 per diluted share. This benefit was partially offset by $17 million after tax, or $0.12 per diluted share, of charges primarily related to restructuring and integration costs and ongoing efforts to drive operational excellence.
Fourth quarter 2015 revenues were $1.85 billion. Revenues grew 0.6% versus the prior year on an equivalent basis, which excludes the fourth quarter 2014 revenues of the clinical trials testing business contributed to the Q(2) Solutions joint venture in July 2015. On a reported basis, revenues were lower by 1.8% compared to a year ago. Diagnostic information services revenues grew by 0.4% versus the prior year. Volume, measured by the number of requisitions, grew by 0.3% versus the prior year and revenue per requisition increased by 0.1%.
For the fourth quarter of 2015, adjusted operating income from continuing operations grew to $288 million, or 15.5% of revenues, compared to $283 million, or 15.0% of revenues, a year ago. For the fourth quarter of 2015, reported operating income from continuing operations was $239 million, or 12.9% of revenues, compared to $257 million, or 13.7% of revenues a year ago. Reported cash provided by operations was $271 million.
"We finished 2015 with a solid quarter, delivering both revenue and earnings growth. For the year, we increased adjusted operating income by 7.5% as a result of our return to growth and our operational excellence program," said Steve Rusckowski, President and CEO. "Looking ahead to 2016, the growth we are projecting is based on continued execution of our five point strategy, which includes two recently announced hospital opportunities and the launch of our Data Diagnostics solution with Inovalon."
Full Year 2015 Performance
Revenues for 2015 were $7.5 billion, an increase of 2% on an equivalent basis. On a reported basis, revenues grew by 0.8% compared to a year ago.
Adjusted diluted EPS excluding amortization was $4.77 for 2015 and grew 6% compared to 2014. Reported income from continuing operations for 2015 was $709 million, or $4.87 per diluted share, compared to $551 million, or $3.78 per diluted share, in 2014. Reported income from continuing operations in 2015 benefitted from the net gain on the contribution to the clinical trials joint venture and recognition of deferred tax benefits which were partially offset by restructuring and integration charges as well as debt refinancing and other charges.
Adjusted operating income from continuing operations for 2015 grew 7.5% to $1.2 billion, or 16.1% of revenues, compared to $1.1 billion, or 15.0% of revenues, for 2014. On a reported basis, operating income from continuing operations was $1.4 billion, or 18.7% of revenues, compared to $983 million, or 13.2% of revenues, in 2014. Reported operating income from continuing operations in 2015 benefitted from the gain on the contribution to the clinical trials joint venture.
Adjusted cash provided by operations was $899 million for 2015. Reported cash provided by operations for 2015 was $810 million and was negatively impacted by after tax cash charges associated with the company's debt refinancing. Capital expenditures for 2015 were $263 million.
Dividend Increased
Quest Diagnostics' Board of Directors authorized a 5% increase in its quarterly dividend from $0.38 to $0.40 per share, or $1.60 per share annually, payable on April 20, 2016, to shareholders of record of Quest Diagnostics common stock on April 6, 2016. The increase is the company's fifth dividend increase since 2011.
Outlook for Full Year 2016
For 2016, the company estimates results before special items as follows:
-- Revenues to be between $7.52 billion and $7.59 billion, an increase of
1.5% to 2.5% over 2015 revenues on an equivalent basis.
-- As part of the company's strategy to refocus on diagnostic
information services, the company contributed its clinical trials
testing business to the Q(2) Solutions joint venture in July 2015.
Revenues on an equivalent basis for full year 2015 are $7.41 billion
and represent the reported revenues excluding 2015 clinical trials
revenue totaling $85 million.
-- Adjusted diluted EPS excluding amortization expense to be between $5.02
and $5.17.
-- Cash provided by operations to approximate $1 billion.
-- Capital expenditures to be between $250 million and $300 million.
Note on Non-GAAP Financial Measures
As used in this press release: (i) for the purpose of income measures the term "adjusted" refers to operating performance measures that exclude special items such as gain on the contribution to the clinical trials joint venture, charges on retirement of debt and related refinancing charges, restructuring and integration charges, recognition of certain income tax benefits, charges in equity earnings in equity method investees and other items; (ii) the term "adjusted diluted EPS excluding amortization expense" represents the company's results before the impact of special items and amortization expense; (iii) the term "adjusted cash provided by operations" represents cash provided by operations before the cash impact of charges on retirement of debt; (iv) reference to "revenues on an equivalent basis" when comparing 2015 results to 2014 results represents 2014 reported revenues excluding clinical trials revenues reported in the third and fourth quarters of 2014; and (v) reference to "revenues on an equivalent basis" in the Outlook for Full Year 2016 section represents 2015 reported revenues excluding clinical trials revenues for 2015. Adjusted measures are presented because management believes those measures are useful adjuncts to reported results under accounting principles generally accepted in the United States. Adjusted measures should not be considered as an alternative to the corresponding measures determined under accounting principles generally accepted in the United States. The attached tables include reconciliations of adjusted measures to measures reported under accounting principles generally accepted in the United States.
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 415-228-4961, 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 888-568-0748 for domestic callers or 203-369-3927 for international callers. Telephone replays will be available from approximately 10:30 a.m. Eastern Time today until midnight Eastern Time on February 27, 2016.
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 44,000 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.
TABLES FOLLOW
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Statements of Operations
For the Three and Twelve Months Ended December 31, 2015 and 2014
(in millions, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
Net revenues $1,849 $1,883 $7,493 $7,435
Operating costs and expenses:
Cost of services 1,150 1,184 4,657 4,637
Selling, general and
administrative 429 427 1,679 1,728
Amortization of
intangible assets 20 23 81 94
Gain on contribution of
business to joint
venture - - (334) -
Other operating expense
(income), net 11 (8) 11 (7)
--- --- --- ---
Total operating costs and
expenses 1,610 1,626 6,094 6,452
----- ----- ----- -----
Operating income 239 257 1,399 983
Other income (expense):
Interest expense, net (36) (42) (153) (164)
Other income (expense),
net 3 1 (143) 4
Total non-operating
expenses, net (33) (41) (296) (160)
--- --- ---- ----
Income from continuing
operations before income
taxes 206 216 1,103 823
and equity in earnings of equity
method investees
Income tax expense (14) (28) (373) (262)
Equity in earnings of
equity method investees,
net of taxes 8 7 23 26
--- --- --- ---
Income from continuing
operations 200 195 753 587
Income from discontinued
operations, net of taxes - 5 - 5
--- --- --- ---
Net income 200 200 753 592
Less: Net income
attributable to
noncontrolling interests 12 10 44 36
Net income attributable
to Quest Diagnostics $188 $190 $709 $556
---- ---- ---- ----
Amounts attributable to Quest
Diagnostics' common stockholders:
Income from continuing
operations $188 $185 $709 $551
Income from discontinued
operations, net of taxes - 5 - 5
Net income $188 $190 $709 $556
---- ---- ---- ----
Earnings per share attributable to Quest Diagnostics' common stockholders - basic:
Income from continuing
operations $1.31 $1.27 $4.92 $3.80
Income from discontinued
operations - 0.03 - 0.03
Net income $1.31 $1.30 $4.92 $3.83
----- ----- ----- -----
Earnings per share attributable to Quest Diagnostics' common stockholders - diluted:
Income from continuing
operations $1.29 $1.26 $4.87 $3.78
Income from discontinued
operations - 0.03 - 0.03
Net income $1.29 $1.29 $4.87 $3.81
----- ----- ----- -----
Weighted average common shares
outstanding:
Basic 143 145 144 145
Diluted 144 146 145 145
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Balance Sheets
December 31, 2015 and 2014
(in millions, except per share data)
(unaudited)
December 31, December 31,
2015 2014
---- ----
Assets
------
Current assets:
Cash and cash
equivalents $133 $192
Accounts
receivable, net 901 932
Inventories 84 110
Deferred income
taxes - 169
Prepaid expenses
and other
current assets 207 186
Assets held for
sale 176 14
--- ---
Total current
assets 1,501 1,603
Property, plant
and equipment,
net 925 933
Goodwill 5,905 6,032
Intangible
assets, net 984 1,071
Investment in
equity method
investees 473 46
Other assets 174 172
Total assets $9,962 $9,857
------ ------
Liabilities and Stockholders'
Equity
-----------------------------
Current liabilities:
Accounts payable
and accrued
expenses $1,014 $1,191
Current portion
of long-term
debt 159 518
Total current
liabilities 1,173 1,709
Long-term debt 3,492 3,224
Other liabilities 514 594
Redeemable
noncontrolling
interest 70 -
Stockholders' equity:
Quest Diagnostics stockholders'
equity:
Common stock, par
value $0.01 per
share; 600
shares
authorized at
both December
31, 2015 2 2
and 2014; 216 shares and 215
shares issued at December 31,
2015 and 2014, respectively
Additional paid-
in capital 2,481 2,418
Retained earnings 6,199 5,723
Accumulated other
comprehensive
loss (38) (27)
Treasury stock,
at cost; 73
shares and 71
shares at
December 31,
2015 and 2014,
respectively (3,960) (3,815)
------ ------
Total Quest
Diagnostics
stockholders'
equity 4,684 4,301
Noncontrolling
interests 29 29
--- ---
Total
stockholders'
equity 4,713 4,330
Total liabilities
and
stockholders'
equity $9,962 $9,857
------ ------
Quest Diagnostics Incorporated and Subsidiaries
Consolidated Statements of Cash Flows
For the Twelve Months Ended December 31, 2015 and 2014
(in millions)
(unaudited)
Twelve Months Ended
December 31,
------------
2015 2014
---- ----
Cash flows from operating
activities:
Net income $753 $592
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and
amortization 304 314
Provision for
doubtful
accounts 297 296
Deferred income
tax provision 112 23
Stock-based
compensation
expense 52 51
Excess tax
benefits from
stock-based
compensation
arrangements (5) -
Gain on
contribution of
business to
joint venture (334) -
Other, net 6 (12)
Changes in operating assets and
liabilities:
Accounts
receivable (262) (312)
Accounts payable
and accrued
expenses (31) 68
Income taxes
payable (41) (84)
Other assets and
liabilities, net (41) 2
Net cash provided
by operating
activities 810 938
--- ---
Cash flows from investing
activities:
Business
acquisitions,
net of cash
acquired (67) (728)
Capital
expenditures (263) (308)
Investment in
equity method
investee (33) -
Decrease in
investments and
other assets 1 11
Net cash used in
investing
activities (362) (1,025)
---- ------
Cash flows from financing
activities:
Proceeds from
borrowings 2,453 2,018
Repayments of
debt (2,537) (1,647)
Purchases of
treasury stock (224) (132)
Exercise of stock
options 60 78
Excess tax
benefits from
stock-based
compensation
arrangements 5 -
Dividends paid (212) (187)
Distributions to
noncontrolling
interests (42) (31)
Sale of
noncontrolling
interest in
subsidiary 63 -
Payment of
deferred
business
acquisition
consideration (51) -
Other financing
activities, net (22) (7)
Net cash (used
in) provided by
financing
activities (507) 92
---- ---
Net change in
cash and cash
equivalents (59) 5
Cash and cash
equivalents,
beginning of
period 192 187
--- ---
Cash and cash
equivalents, end
of period $133 $192
---- ----
Cash paid during the period
for:
Interest $172 $170
Income taxes $319 $327
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,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
(in millions, except per share data)
Amounts attributable to
Quest Diagnostics'
common stockholders:
Income from continuing
operations $188 $185 $709 $551
Income from
discontinued
operations, net of
taxes - 5 - 5
Net income available to
common stockholders $188 $190 $709 $556
---- ---- ---- ----
Income from continuing
operations $188 $185 $709 $551
Less: Earnings
allocated to
participating
securities - - 3 2
Earnings available to
Quest Diagnostics'
common stockholders -
basic and diluted $188 $185 $706 $549
---- ---- ---- ----
Weighted average common
shares outstanding -
basic 143 145 144 145
Effect of dilutive
securities:
Stock options and
performance share
units 1 1 1 -
Weighted average common
shares outstanding -
diluted 144 146 145 145
--- --- --- ---
Earnings per share
attributable to Quest
Diagnostics' common
stockholders -basic:
Income from continuing
operations $1.31 $1.27 $4.92 $3.80
Income from
discontinued
operations - 0.03 - 0.03
Net income $1.31 $1.30 $4.92 $3.83
----- ----- ----- -----
Earnings per share
attributable to Quest
Diagnostics' common
stockholders -
diluted:
Income from continuing
operations $1.29 $1.26 $4.87 $3.78
Income from
discontinued
operations - 0.03 - 0.03
Net income $1.29 $1.29 $4.87 $3.81
----- ----- ----- -----
2) Adjusted amounts for operating
income, operating income as a
percentage of net revenues and
income from continuing operations
attributable to Quest Diagnostics'
stockholders represent the
company's results before the
impact of special items, such as
the gain on contribution of
business to clinical trials joint
venture, charges on retirement of
debt and related refinancing
charges, restructuring and
integration charges, charges in
equity in earnings of equity
method investeees, recognition of
certain income tax benefits and
other items. Adjusted diluted EPS
excluding amortization expense
represents the company's results
before the impact of special items
and amortization expense. Revenue
on an equivalent basis represents
2014 net revenues excluding
clinical trials testing revenues
in the third and fourth quarters
of 2014. Adjusted cash provided
by operations represents cash
provided by operations before the
cash impact of charges on
retirement of debt. Adjusted
measures are presented because
management believes those measures
are useful adjuncts to reported
results under accounting
principles generally accepted in
the United States when comparing
results of operations and cash
flows from period to period.
Adjusted measures should not be
considered as an alternative to
the corresponding measures
determined under accounting
principles generally accepted in
the United States. The following
tables reconciles reported results
to adjusted results:
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
(dollars in millions, except per share data)
Adjusted operating
income:
------------------
Operating income $239 $257 $1,399 $983
Gain on
contribution of
business to
clinical trials
joint venture (a) - - (334) -
Restructuring and
integration
charges (b) 22 30 105 121
Other (c) 27 (4) 33 15
Adjusted operating
income $288 $283 $1,203 $1,119
---- ---- ------ ------
Adjusted operating
income as a
percentage of net
revenues:
------------------
Operating income
as a percentage
of net revenues 12.9% 13.7% 18.7% 13.2%
Gain on
contribution of
business to
clinical trials
joint venture (a) - - (4.4) -
Restructuring and
integration
charges (b) 1.2 1.5 1.4 1.6
Other (c) 1.4 (0.2) 0.4 0.2
Adjusted operating
income as a
percentage of net
revenues 15.5% 15.0% 16.1% 15.0%
---- ---- ---- ----
Adjusted income
from continuing
operations:
----------------
Income from
continuing
operations
attributable to
Quest
Diagnostics'
stockholders $188 $185 $709 $551
Gain on
contribution of
business to
clinical trials
joint venture (a)
(e) - - (189) -
Charges on
retirement of
debt and related
refinancing
charges (d) (e) (2) - 90 -
Restructuring and
integration
charges (b) (e) 13 18 64 77
Charges in equity
in earnings of
equity method
investees (f) - - 3 -
Income tax
benefits (g) (58) (44) (58) (44)
Other (c) (e) 16 (1) 21 14
Adjusted income
from continuing
operations $157 $158 $640 $598
---- ---- ---- ----
Adjusted diluted
EPS:
----------------
Diluted earnings
per common share $1.29 $1.26 $4.87 $3.78
Gain on
contribution of
business to
clinical trials
joint venture (a)
(e) - - (1.30) -
Charges on
retirement of
debt and related
refinancing
charges (d) (e) (0.01) - 0.62 -
Restructuring and
integration
charges (b) (e) 0.09 0.13 0.44 0.53
Charges in equity
in earnings of
equity method
investees (f) - - 0.02 -
Income tax
benefits (g) (0.40) (0.30) (0.40) (0.30)
Other (c) (e) 0.11 (0.01) 0.14 0.09
Amortization
expense (h) 0.11 0.10 0.38 0.40
Adjusted diluted
EPS excluding
amortization
expense $1.19 $1.18 $4.77 $4.50
----- ----- ----- -----
Three Months Ended Twelve Months Ended
December 31, December 31,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
(dollars in millions)
Revenue on an
equivalent
basis:
-------------
Net revenues $1,849 $1,883 $7,493 $7,435
Clinical trials
revenue (i) - (46) - (87)
---
Revenue on an
equivalent basis $1,849 $1,837 $7,493 $7,348
------ ------ ------ ------
Adjusted cash
provided by
operations:
-------------
Cash provided by
operations $271 $303 $810 $938
Cash charges on
retirement of
debt (j) (14) - 89 -
---
Adjusted cash
provided by
operations $257 $303 $899 $938
---- ---- ---- ----
(a) 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) 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,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
(dollars in millions)
Cost of services $12 $13 $63 $50
Selling, general
and administrative 10 16 42 69
Other operating
expense (income),
net - 1 - 2
$22 $30 $105 $121
--- --- ---- ----
(c) For the three months ended December
31, 2105, primarily represents
non-cash asset impairment charges
and other costs associated with
winding down subsidiaries as well
as costs incurred related to 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 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 acquisition.
For the three months ended December
31, 2014, represents a pre-tax
gain of $9 million associated with
a decrease in the fair value of
the contingent consideration
accrual associated with the Summit
Health acquisition, partially
offset by costs incurred related
to legal matters. For the twelve
months ended December 31, 2014,
represents costs incurred related
to legal matters, partially offset
by a pre-tax gain of $9 million
associated with a decrease in the
fair value of the contingent
consideration accrual associated
with the Summit Health
acquisition.
(d) Charges on retirement of debt and
related refinancing charges
represent: charges associated with
the March 2015 cash tender offer
(the "Tender Offer") in which 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 (the
"Redemption") in which 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,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
(dollars in millions)
Interest
expense,
net $ - $ - $6 $ -
Other
expense,
net - - 144 -
$ - $ - $150 $ -
--- --- --- --- ---- --- ---
(e) For the gain on contribution of
business to clinical trials joint
venture, the associated deferred
tax liability was calculated using
a combined tax rate of 43.3% and
does not result in any significant
current taxes payable. For the
charges on retirement of debt and
related refinancing charges,
income tax benefits were
calculated such that the combined
tax rate for the full year was
40%. For the restructuring and
integration charges and other
items, income tax impacts, where
recorded, were calculated using
combined tax rates of 38.9% and
38.2% for 2015 and 2014,
respectively.
(f) Charges in equity in earnings of
equity method investees of $5
million, pre-tax, primarily
consist of restructuring and
integration charges incurred by
the clinical trials joint venture.
(g) For the three and twelve months
ended December 31, 2015,
represents the recognition of a
deferred tax benefit associated
with winding down a subsidiary.
For the three and twelve months
ended December 31, 2014,
represents a benefit associated
with the favorable resolution of
certain tax contingencies.
(h) 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 combined tax
rates of 38.9% and 38.2% for 2015
and 2014, 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,
------------ ------------
2015 2014 2015 2014
---- ---- ---- ----
(dollars in millions)
Amortization
of
intangible
assets $20 $23 $81 $94
Equity
in
earnings
of
equity
method
investees,
net
of
taxes 4 - 8 -
$24 $23 $89 $94
--- --- --- ---
(i) Effective July 1, 2015, the
company's clinical trials testing
business was contributed to the
clinical trials joint venture.
Clinical trials revenue reported in
the third and fourth quarters of
2014 is excluded to provide 2014
revenue on an equivalent basis.
(j) Represents the portion of the
estimated cash tax benefit realized
on the retirement of debt in
connection with the recent debt
refinancing during the three months
ended December 31, 2015. For the
twelve months ended December 31,
2015, represents $146 million of
pre-tax cash charges on retirement
of debt in connection with our
recent debt refinancing, net of the
estimated cash tax benefit
realized.
3) For the twelve months ended December
31, 2015, the $334 million gain on
contribution of business to joint
venture represents the gain
associated with the contribution of
our clinical trials testing
business to the clinical trials
joint venture.
4) Other operating expense (income),
net includes miscellaneous income
and expense items related to
operating activities. 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 acquisition.
For the three and twelve months
ended December 31, 2014, other
operating expense (income), net
includes a gain of $9 million
associated with a decrease in the
fair value of the contingent
consideration accrual associated
with the Summit Health acquisition.
5) Other income (expense), net
represents miscellaneous income and
expense items related to non-
operating activities, such as gains
and losses associated with
investments and other non-
operating assets. For the twelve
months ended December 31, 2015,
other income (expense), net
includes $144 million of pre-tax
charges on the retirement of debt
associated with the Tender Offer
and Redemption.
6) For the three months ended December
31, 2015, the company repurchased
0.8 million shares of its common
stock at an average price of $68.14
per share for $50 million. For the
twelve months ended December 31,
2015, the company repurchased 3.2
million shares of its common stock
at an average price of $70.54 per
share for $224 million. At
December 31, 2015, $972 million
remained available under the
Company's share repurchase
authorizations.
7) The outlook for adjusted diluted EPS
excluding amortization expense
represents management's estimates
for the full year 2016 before the
impact of special items and
amortization expense. This measure
is presented because management
believes it is a useful adjunct to
the corresponding amount determined
under accounting principles
generally accepted in the United
States since it is meaningful to
evaluate the company's ongoing
operating performance. Adjusted
diluted EPS excluding amortization
expense is not a measure of
financial performance under
accounting principles generally
accepted in the United States and
should not be considered as an
alternative to the corresponding
amount determined under accounting
principles generally accepted in
the United States.
The following table reconciles our
2016 outlook for adjusted diluted
EPS excluding amortization expense
to the corresponding amount
determined under accounting
principles generally accepted in
the United States:
Low High
--- ----
Diluted earnings per common
share $4.63 $4.78
Amortization expense, net of
tax (a) 0.39 0.39
---- ----
Adjusted diluted EPS excluding
amortization expense $5.02 $5.17
----- -----
(a) Represents the estimated impact
of amortization expense for
2016 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 $74
Amortization expense included in
equity in earnings of equity
method investees, net of taxes 17
Total pre-tax amortization
expense $91
---
Total amortization expense, net
of an estimated tax benefit $56
---
8) The outlook for 1.5% to 2.5%
revenue growth on an equivalent
basis in 2016 represents
management's estimates for 2016
versus reported 2015 revenues
adjusted to exclude the 2015
revenues from the clinical trials
testing business. In 2015, the
company contributed its clinical
trials testing business to the
clinical trials joint venture.
Consequently, our 2016 revenues
will not include revenues
associated with that business.
Revenues for 2015 have been
adjusted to exclude clinical
trials testing revenues to provide
an equivalent basis for our growth
outlook.
The following table reconciles our
2015 net revenues determined under
accounting principles generally
accepted in the United States with
equivalent revenue for 2015:
Three Months Ended Year Ended
------------------ ----------
March 31, June 30, September 30, December 31, December 31,
2015 2015 2015 2015 2015
---- ---- ---- ---- ----
(dollars in millions)
2015 Revenue on an equivalent basis:
------------------------------------
Net revenues $1,839 $1,925 $1,880 $1,849 $7,493
Excluded
revenue (a) (40) (45) - - (85)
2015 Revenue
on an
equivalent
basis $1,799 $1,880 $1,880 $1,849 $7,408
------ ------ ------ ------ ------
(a) The 2015 excluded revenue
is comprised of clinical
trials testing revenues
reported in the first and
second quarters of 2015.
CONTACT: Dan Haemmerle (investors) at 973-520-2900; Dennis Moynihan (media) at 973-520-2800
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SOURCE Quest Diagnostics Incorporated
