On July 12, 2020, in Livingston, Montana, volunteers were deployed to perform Covid-19 surveillance testing with Quest Diagnostics’ self-administered PCR test.
William Campbell | Getty Images
Quest Diagnostics announced Thursday that continued high demand for Covid-19 testing has helped the company generate record sales and earnings for the fourth quarter and all of 2020.
While the coronavirus pandemic has disrupted routine blood and molecular tests that make up much of the company’s operations, Quest has steadily increased its capacity to conduct Covid-19 testing over the past year.
Here’s how Quest has performed compared to Wall Street’s expectations, based on the average analyst estimates made by Refinitiv:
- Adjusted EPS: $ 4.48 versus $ 4.24 expected.
- Revenue: $ 3 billion versus $ 2.93 billion expected.
The company reported net sales of more than $ 3 billion for the quarter ended December 31, up nearly 56% from $ 1.93 billion for the same period in 2019. On an unadjusted basis, the company’s earnings more than doubled from $ 253 million in the reporting period to $ 579 million in the same period last year.
“In a year marked by the pandemic, Quest brought critical COVID-19 tests to our country and achieved record sales, results and operating results for the fourth quarter and all of 2020,” Quest chairman and CEO Steve Rusckowski said in a statement .
Rusckowski announced that the company will increase its dividend by 10.7% to 62 cents per quarter and approve a $ 1 billion increase in its share buyback plan.
Quest and other large diagnostic laboratories were the focus of research over the summer when the demand for Covid-19 testing services increased dramatically amid the resurgence of infections in parts of the country, particularly the Sun Belt. In July, the company admitted that it took most patients more than a week to get coronavirus test results, similar to what competitors like LabCorp do.
Politicians urged laboratories to identify the cause of the delay in the turnaround, while some public health specialists called for the need to study and introduce new types of tests. While some progress has been made in the development of new fast-paced antigen tests, PCR molecular tests such as those performed by Quest’s laboratories remain the gold standard in the country.
The company is confident it will be able to improve test scores in no more than three days, Rusckowski said in a conference call with analysts.
Rusckowski noted that the company’s non-Covid business rebounded over the summer and fall as new cases decreased in the United States every day. However, the recovery stopped as the country approached winter and there was a further increase in cases.
“The declines in our core business recovered rapidly in the summer and fall. However, the recovery stalled in late November and into December due to the rise in COVID-19 infections across the country,” said Rusckowski. “The continued high demand for COVID-19 tests boosted our performance in the second half of the year.”
Rusckowski added the company is optimistic about President Joe Biden’s plans to expand Covid-19 testing as part of his administration’s response to the pandemic. He noted that the demand for testing has historically been linked to an increase in confirmed Covid-19 cases. But, he said, testing will remain important even as cases decline as more people are vaccinated, as tests are used to identify and isolate infected people.
Mark Guinan, CFO of Quest, said on a conference call with analysts that the company performed 12.5 million Covid-19 molecular tests and approximately 1 million serology tests in the fourth quarter. The molecular tests detect an active infection, while the serological tests look for antibodies against a previous infection. He said the company expects the Covid-19 tests to remain important through 2022, but the average daily volume is likely to decrease as more people are vaccinated.
The company set an outlook for the first half of 2021 and expected net sales of $ 4.85 billion to $ 5.15 billion. Guinan said a resurgence of cases, possibly fueled by new, contagious varieties of the virus, would likely push the company to the top.