Quest says high demand for Covid testing drove record revenues, increases dividend

Quest Diagnostics said Thursday that continued high demand for Covid-19 testing helped drive record revenue and earnings for the company in the fourth quarter and throughout 2020.

While the coronavirus pandemic has disrupted routine blood tests and molecular testing that comprises a bulk of the company’s business operations, Quest steadily ramped up its capacity last year to conduct Covid-19 tests.

Here’s how Quest performed compared with what Wall Street expected, based on average analysts’ estimates compiled by Refinitiv:

• Adjusted EPS: $4.48 vs $4.24 expected.
• Revenue: $3 billion vs $2.93 billion expected.

The company reported net revenues of more than $3 billion for the quarter ended Dec. 31, up almost 56% from $1.93 billion during the same period in 2019. On an unadjusted basis, the company’s profits more than doubled to $579 million from $253 million during the same time in the prior year.

“In a year dominated by the pandemic, Quest brought critical COVID-19 testing to our country, and delivered record revenues, earnings and cash from operations for the fourth quarter and full year 2020,” Chairman and CEO of Quest Steve Rusckowski said in a statement.

Rusckowski announced the company will increase its dividend by 10.7% to 62 cents per quarter and will authorize a $1 billion increase in its share repurchase plan.

Quest and other major diagnostic labs were at the center of scrutiny over the summer, when demand for Covid-19 testing services rose dramatically amid a resurgence of infections across parts of the country, particularly the Sun Belt. In July, the company acknowledged that it was taking more than a week to turnaround coronavirus testing results for most patients, similarly to competitors like LabCorp.

Politicians pressed the labs over what was causing the delay in turnaround while some public health specialists called for a need to study and rollout new kinds of testing. While some progress has been made in developing new, rapid-turnaround antigen tests, PCR molecular tests, like those processed by Quest’s labs, remain the gold standard in the country.

CEO Rusckowski noted that the company’s non-Covid business recovered during the summer and fall, as daily new cases in the U.S. fell, but the recovery halted as the country approached the winter and another surge of cases.

“Declines in our base business recovered rapidly throughout the summer and fall; however the recovery stalled at the end of November and into December due to the surge in COVID-19 infections across the country,” Rusckowski said. “Continued high demand for COVID-19 testing drove our performance through the second half of the year.”

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