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Quest Diagnostics Incorporated DGX is scheduled to report fourth-quarter 2021 earnings on Feb 3, before the opening bell.
In the last reported quarter, the company’s earnings of $3.96 outpaced the Zacks Consensus Estimate by 33.8%. Its earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 12.25%.
Key Factors to Note
Quest Diagnostics has been benefiting from the two-pronged agenda to accelerate growth and drive operational excellence. In Q4, the company’s non-COVID base business might have registered a year-over-year sales rebound as the economy gradually returned to normalcy. However, just like the other industry players, the company might have faced a sequential slowdown in the base-business recovery process due to the massive spread of the extremely-contagious Omicron variant of COVID-19. With the rapid emergence of this strain globally, the non-elective hospital procedures have been once again cornered. Also, the hospital staffing problem is yet another major concern that might have played an adverse role in the base business performance. Still, year-over-year results might show a recovery from COVID-induced 2020 when the business was restricted by social distancing and supply issues.
In terms of COVID-19 testing revenues, the company is expected to report a dull first half of Q4 on gradual stabilization in testing demand. However, the latter half is expected to report an upturn with a considerable increase in daily case count. Keeping that in mind, the company is expected to have registered sequential growth within the COVID-19 diagnostic testing business in Q4. Positivity rates are expected to have increased in all geographies served by the company’s performing lab in this period. However, on a year-over-year basis, COVID-19 testing revenues might show a decline considering a very-strong year-ago comparable.
In January, the company came up with its preliminary financial results for the fourth quarter and full-year 2021. Quest Diagnostics noted that the fourth-quarter results reflect higher-than-expected demand for COVID-19 testing services. In contrast, base testing volumes remained steady and consistent with the company's earlier outlook shared on Oct 21, 2021.
Per the preliminary announcement, Quest Diagnostics anticipates fourth-quarter 2021 reported revenues at around $2.74 billion (down 9% from the year-ago $3.00 billion). Total volume, measured by the number of requisitions, is expected to increase around 1.3% in the fourth quarter of 2021 from the prior year. Total base testing volumes (excluding COVID-19 testing) are projected to increase by around 10% from the year-ago period, representing a pre-pandemic baseline.