Quest Diagnostics(US:DGX)2025-04-23 20:21Financial Performance - Net revenues for the three months ended March 31, 2025, increased by 12.1% to $2,652 million compared to $2,366 million in the prior year period [114]. - Operating income for the three months ended March 31, 2025, was $346 million, a 15.4% increase from $300 million in the prior year [114]. - Net income attributable to Quest Diagnostics increased by 13.2% to $220 million, with diluted earnings per share rising to $1.94 from $1.72 [114][121]. Revenue Drivers - Diagnostic Information Services (DIS) revenues rose by 12.7% to $2,589 million, driven primarily by recent acquisitions contributing approximately 10.0% to DIS revenues [122][133]. - Requisition volume increased by 12.4%, with organic volume down by 0.9%, while revenue per requisition increased by 0.3% [114][133]. Cost and Expenses - Cost of services increased by $194 million, primarily due to recent acquisitions and wage increases, partially offset by cost savings from the Invigorate program [126]. - Selling, general and administrative expenses (SG&A) rose by $36 million, mainly driven by the impact of recent acquisitions [128]. - The Invigorate program aims to deliver 3% annual cost savings and productivity improvements to offset inflationary pressures [115]. Tax and Charges - The effective income tax rate decreased to 21.5% from 25.0%, benefiting from excess tax benefits associated with stock-based compensation arrangements [136]. - The company incurred $19 million in pre-tax charges related to restructuring and integration activities during the quarter [116]. Cash Flow and Investments - The company reported a net cash provided by operating activities of $314 million for the three months ended March 31, 2025, an increase of $160 million compared to $154 million in the same period of 2024 [149]. - Net cash used in investing activities decreased to $115 million for the three months ended March 31, 2025, from $213 million in the prior year, primarily due to reduced cash used for business acquisitions [151]. - Net cash used in financing activities increased to $561 million for the three months ended March 31, 2025, compared to $153 million in the same period of 2024, mainly due to the repayment of $600 million of senior notes [152]. Debt and Borrowing - As of March 31, 2025, the estimated fair value of the company's debt was approximately $5.8 billion, down from $6.1 billion as of December 31, 2024, with a fair value less than the carrying value by $59 million [139]. - The company had $1.1 billion of borrowing capacity available under existing credit facilities as of March 31, 2025, including $308 million under the secured receivables credit facility [164]. - As of March 31, 2025, the company had $215 million of borrowings outstanding under the secured receivables credit facility and no borrowings under the senior unsecured revolving credit facility [140]. Dividends and Shareholder Returns - The company declared a quarterly cash dividend of $0.80 per common share during the first quarter of 2025, up from $0.75 per share in each quarter of 2024 [155]. Operational Efficiency - Days sales outstanding improved to 47 days as of March 31, 2025, down from 50 days as of March 31, 2024, indicating enhanced billing and collection efficiency [150]. - The company is committed to a multi-year project ("Project Nova") aimed at modernizing its "Order-to-Cash" business processes, which is expected to deliver operational benefits and improve customer experience [163]. Capital Expenditures - The company expects to invest approximately $500 million in capital expenditures during 2025 to support and grow existing operations, particularly in laboratory equipment and facilities [162]. Interest Rate Swaps - The notional amount of fixed-to-variable interest rate swaps was $1.25 billion as of March 31, 2025, with an aggregate fair value in a liability position of $6 million [141]. - The fair value of fixed-to-variable interest rate swaps was $6 million in a liability position as of March 31, 2025, down from $34 million as of December 31, 2024 [141].