Quest Diagnostics(DGX) - 2025 Q2 - Quarterly Results

Financial Performance Overview Quest Diagnostics reported strong Q2 2025 results and raised full-year guidance, reflecting robust growth and operational efficiency Second Quarter 2025 Performance Highlights Quest Diagnostics reported strong second-quarter 2025 results, with total revenue increasing by 15.2% to $2.76 billion, driven by a 5.2% rise in organic revenues and contributions from acquisitions. Adjusted diluted EPS grew by 11.5% to $2.62. The company also saw a significant 67.1% year-over-year increase in year-to-date cash provided by operations, reaching $858 million Q2 & H1 2025 Financial Performance vs. 2024 | Metric | Three Months Ended June 30, 2025 | Change vs. 2024 | Six Months Ended June 30, 2025 | Change vs. 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $2,761 million | 15.2% | $5,413 million | 13.7% | | Reported Diluted EPS | $2.47 | 21.7% | $4.41 | 17.6% | | Adjusted Diluted EPS | $2.62 | 11.5% | $4.83 | 10.0% | | Cash Provided by Operations | $544 million | 51.5% | $858 million | 67.1% | | Requisition Volume | N/A | 16.3% | N/A | 14.3% | - Growth was driven by demand for innovative clinical solutions, expanded business from enterprise accounts, and contributions from acquisitions[2] - Productivity gains were realized through the continued deployment of automation and digital technologies across operations[2] Updated Full Year 2025 Guidance Reflecting strong performance and positive utilization trends, the company has raised its full-year 2025 guidance. The updated forecast anticipates higher net revenues, adjusted diluted EPS, and cash from operations compared to previous estimates Full Year 2025 Guidance Update | Metric | Updated Guidance (Low - High) | Prior Guidance (Low - High) | | :--- | :--- | :--- | | Net Revenues | $10.80B - $10.92B | $10.70B - $10.85B | | Net Revenues Increase | 9.4% - 10.6% | 8.4% - 9.9% | | Reported Diluted EPS | $8.60 - $8.80 | $8.62 - $8.87 | | Adjusted Diluted EPS | $9.63 - $9.83 | $9.55 - $9.80 | | Cash Provided by Operations | Approx. $1.55B | Approx. $1.5B | Consolidated Financial Statements The company's Q2 2025 financial statements show revenue growth, increased profitability, and improved cash flow, alongside a strengthened balance sheet Consolidated Statements of Operations For the second quarter of 2025, net revenues grew to $2.76 billion from $2.40 billion year-over-year. Operating income increased to $438 million, and net income attributable to Quest Diagnostics rose to $282 million, or $2.47 per diluted share, compared to $229 million, or $2.03 per diluted share, in the prior-year period Key Income Statement Data (in millions) | Line Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $2,761 | $2,397 | $5,413 | $4,763 | | Operating Income | $438 | $355 | $784 | $655 | | Net Income Attributable to Quest | $282 | $229 | $502 | $423 | | Diluted EPS | $2.47 | $2.03 | $4.41 | $3.75 | Consolidated Balance Sheets As of June 30, 2025, Quest Diagnostics reported total assets of $16.0 billion, a slight decrease from $16.2 billion at year-end 2024. Cash and cash equivalents decreased to $319 million from $549 million, while total debt (current and long-term) was reduced to $5.67 billion from $6.22 billion over the same period. Total stockholders' equity increased to $7.27 billion Key Balance Sheet Data (in millions) | Line Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $319 | $549 | | Total Assets | $15,969 | $16,153 | | Total Debt (Current + Long-term) | $5,673 | $6,217 | | Total Liabilities | $8,704 | $9,340 | | Total Stockholders' Equity | $7,265 | $6,813 | Consolidated Statements of Cash Flows For the first six months of 2025, net cash provided by operating activities significantly increased to $858 million from $514 million in the prior-year period. Net cash used in investing activities was $239 million, primarily for capital expenditures. Financing activities used $854 million, largely due to $1.0 billion in debt repayments and $174 million in dividend payments Cash Flow Summary for Six Months Ended June 30 (in millions) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $858 | $514 | | Net Cash used in Investing Activities | ($239) | ($413) | | Net Cash used in Financing Activities | ($854) | ($516) | | Net Change in Cash | ($230) | ($415) | - Key uses of cash in financing activities for H1 2025 included $1,001 million for debt repayments and $174 million for dividend payments[19] Notes to Financial Tables This section details the reconciliation of GAAP to non-GAAP financial measures, explaining key adjustments for a clearer view of underlying performance Reconciliation of GAAP to Non-GAAP Financial Measures This section provides a detailed reconciliation between reported GAAP results and adjusted non-GAAP figures. Management presents these adjusted measures, which exclude items like restructuring charges, amortization, and certain gains or losses, because they believe it provides a clearer view of underlying business trends and performance Q2 2025 Reconciliation For the second quarter of 2025, reported diluted EPS of $2.47 was adjusted for several items, including restructuring charges, amortization expense, and a gain related to the CARES Act, resulting in an adjusted diluted EPS of $2.62 Q2 2025 GAAP to Non-GAAP EPS Reconciliation | Description | Per Share Impact | | :--- | :--- | | Reported Diluted EPS (GAAP) | $2.47 | | Restructuring and integration charges | $0.04 | | Other charges | $0.19 | | Gains and losses on investments | ($0.01) | | Other gains (e.g., CARES Act) | ($0.30) | | Amortization expense | $0.25 | | Excess Tax Benefits (ETB) | ($0.02) | | Adjusted Diluted EPS (Non-GAAP) | $2.62 | YTD 2025 Reconciliation For the six months ended June 30, 2025, reported diluted EPS of $4.41 was adjusted to $4.83. The adjustments were similar to the quarterly figures, accounting for restructuring, amortization, and other special items over the six-month period YTD 2025 GAAP to Non-GAAP EPS Reconciliation | Description | Per Share Impact | | :--- | :--- | | Reported Diluted EPS (GAAP) | $4.41 | | Restructuring and integration charges | $0.17 | | Other charges | $0.21 | | Gains and losses on investments | ($0.01) | | Other gains (e.g., CARES Act) | ($0.36) | | Amortization expense | $0.51 | | Excess Tax Benefits (ETB) | ($0.10) | | Adjusted Diluted EPS (Non-GAAP) | $4.83 | Full Year 2025 Guidance Reconciliation The company's full-year 2025 guidance for reported diluted EPS of $8.60-$8.80 is reconciled to an adjusted diluted EPS range of $9.63-$9.83 by factoring in estimated full-year impacts from amortization, restructuring, and other special charges and gains Full Year 2025 GAAP to Non-GAAP Guidance Reconciliation | Description | Per Share Impact | | :--- | :--- | | Diluted EPS (GAAP) Outlook | $8.60 - $8.80 | | Restructuring and integration charges | $0.24 | | Amortization expense | $1.03 | | Other charges | $0.27 | | Other gains | ($0.36) | | Gains and losses on investments | ($0.01) | | Excess Tax Benefits (ETB) | ($0.14) | | Adjusted Diluted EPS (Non-GAAP) Outlook | $9.63 - $9.83 | Explanation of Adjustments The adjustments between GAAP and non-GAAP results for Q2 and H1 2025 include several key items. These consist of pre-tax charges for restructuring and workforce reductions, a significant impairment charge on long-lived assets, and a notable pre-tax gain from a CARES Act payroll tax credit - Restructuring and integration charges amounted to $7 million for Q2 and $26 million for H1 2025, primarily from workforce reductions and integration costs[27] - A pre-tax impairment charge of $24 million was recorded in Q2 2025 on long-lived assets related to the potential exit of a business[27] - A $46 million pre-tax gain was recognized in Q2 2025 from a CARES Act payroll tax credit for employee retention[29] Other Information Quest Diagnostics, a leading diagnostic information provider, includes standard forward-looking statements cautioning on potential risks About Quest Diagnostics & Forward-Looking Statements Quest Diagnostics describes itself as a leading provider of diagnostic information services, serving one in three adult Americans and half of U.S. physicians and hospitals. The release also contains standard forward-looking statements, cautioning that actual results could differ materially due to various risks and uncertainties detailed in their SEC filings - Quest Diagnostics annually serves one in three adult Americans and half the physicians and hospitals in the United States[9] - The report includes a forward-looking statements disclaimer, warning of risks that could cause actual results to differ, such as economic conditions, competitive environment, and changes in government policies[10][11] Conference Call Information The company announced it will hold a conference call at 8:30 a.m. Eastern Time on July 22, 2025, to discuss the quarterly financial results. Access is available via phone and a live webcast, with a replay available until August 5, 2025 - A conference call to discuss results is scheduled for 8:30 a.m. Eastern Time on July 22, 2025[7] - A replay of the call will be available by phone and online until midnight Eastern Time on August 5, 2025[8]