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By the numbers
Q2 Revenue: $2.45B
3.8% year-over-year decline
Base Business Revenue: $2.1B
2.9% year-over-year growth
COVID-19 Testing Revenue: $355M
31% year-over-year decline
- Q2 trends: CEO Steve Rusckowski, who will be leaving the role Nov. 1, said on a Thursday earnings call that the company grew its base business in the quarter. Quest also has boosted its share of COVID-19 molecular testing since March, although it posted a drop in revenue year over year. Rusckowski assured investors that the company expects that COVID-19 testing demand isn’t “going away any time soon.”
- 2022 revenue forecast: Even with the slowdown in the second quarter, Quest raised its forecast for full-year revenue. The company now expects a sales range of $9.5 billion to $9.75 billion, up from a prior range of $9.2 billion to $9.5 billion. This was spurred by growth in its COVID-19 testing business as the high-end forecast for its base business was trimmed from $8.5 billion to $8.45 billion. Quest now forecasts its COVID-19 testing business to bring in a range of $1.15 billion to $1.35 billion in revenue, a jump of $300 million. The new forecast still assumes a year-over-year revenue decrease of about 12% on the low end and 9.6% on the higher end of the range.
- COVID-19 testing: Coronavirus testing revenue came in better than expected even with the year-over-year revenue decline and a drop of about $245 million from the first quarter. CFO Mark Guinan, who is retiring next week, said that COVID-19 molecular testing volumes in June and July have been averaging about 40,000 tests per day excluding Sonora Quest, an independently run joint venture between Banner Health and Quest Diagnostics. The company forecasts daily COVID-19 molecular testing volumes to range between 15,000 and 25,000 for the remainder of the year. Guinan said that the second-half volumes also are expected to run into 2023, and noted that the extension of the public health emergency through mid-October will hold average reimbursement “relatively steady.”
- Monkeypox testing: Quest is one of five companies to coordinate with the federal government on increasing monkeypox testing. The company announced on July 13 that it has started testing for the virus with its own product, with estimates of having the capacity to run up to 30,000 tests by the end of July. It also plans to begin testing with the U.S. Centers for Disease Control and Prevention’s orthopoxvirus test in mid-August. Still, there has been little volume so far. While Jim Davis, Quest’s CEO-elect, did not give a specific estimate, he said that 500 to 600 total tests would be on the high end. The company expects volumes to grow over the coming weeks, particularly when its test is approved in New York state, which Davis said may come in the next week or two.
- M&A: The company closed the first half of 2022 with $790 million in cash and cash equivalents. Guinan said that the strategy for deploying cash will be situational depending on the quarter, noting that the company prefers M&A to share repurchasing. While no potential deals were mentioned, the executive noted that the company is in some advanced negotiations and added that “we'd all be very disappointed if we didn't execute some deals before the end of the year.”
- Recession risk: “Yes, we do believe there may be some impact in our business related to a slowdown in the economy and the recession,” Rusckowski told investors. “We do believe that we're so essential to the delivery of healthcare and the need for healthcare going forward … that utilization will continue to be reasonable throughout any up and down in an economic cycle.”
