Profits dropped at Quest Diagnostics in the fourth quarter as the company's revenue remained relatively stable. Full-year results followed a similar trend.
The results came as Madison, N.J.-based Quest reported a new lab partnership deal with Montefiore Health System in New York. Quest will process "a portion" of low complexity diagnostic ordered for Montefiore patients, while Montefiore lab staff will continue to perform the remainder of testing. The tests will be performed off-site at Quest's Teterboro, N.J. lab.
"This new venture will allow Montefiore to maintain its laser focus on improving patient care and outcomes, while teaming up with a leader in the field who has access to the most sophisticated diagnostic equipment available," said Montefiore Chief Operating Officer Dr. Philip Ozuah in a statement.
The partnership with Montefiore follows a number of deals that both Quest and rival LabCorp have inked with health systems to grow their businesses as the consolidation of hospitals and the trend of employing physicians has made hospitals a bigger force in the lab business. Quest has said the deals reflect the company's focus on its core business of diagnostic information services.
Still, Quest's profits were down 17.5% during the quarter ended Dec. 31, at $155 million, while revenue climbed 0.7% to $1.9 billion. Fiscal 2016 profits were down 9.1% at $645 million, while revenue rose by a third of a percent to $7.5 billion.
Quest's profit was impacted by income tax expenses that were six times higher this quarter at $84 million due to gains on the sale of its Focus Diagnostics product business. Full-year income tax expense was up about 15%.
Quest CEO Steve Rusckowski said during a conference call that the company is waiting to see what Congress and the Trump administration plan to do with the Affordable Care Act, but noted that the company never realized the full fiscal benefit from the law that it expected, so it doesn't expect an immediate impact if it's repealed.
"We hope any alternative recognizes the value of diagnostics in healthcare," Rusckowski said.
Rusckowski said Quest is working with its trade association, the American Clinical Laboratory Association, to understand how the Trump administration will handle the CMS Clinical Laboratory Fee Schedule, which is being adjusted as a result of the Protecting Access to Medicare Act. The majority of Quest's taxable income originates in the U.S., so the company would benefit from Trump's proposed reduction in the U.S. corporate tax rate, he said.