Quest Diagnostics to return CARES Act funds due to strong Q3 growth

Quest Diagnostics, a Secaucus, N.J.–based provider of lab testing and diagnostic services, upgraded its revenue outlook after experiencing solid growth in the third quarter, it announced Thursday. As a result, the company plans to return funding it received as part of the federal Cares Act.

“Quest had a very strong third quarter, benefiting from continued demand for Covid-19 testing and the rapid recovery of health care utilization,” said Steve Rusckowski, chairman, CEO and president.

Revenue for the three months that ended Sept. 30 was $2.8 billion—a 42.5% increase from the same period last year. Earnings for the nine months that ended Sept. 30 were $6.4 billion—an 11% increase from the previous year.

Reported earnings per share for the third quarter jumped 165%, to $4.14, and for the nine-month period they rose 46%, to $6.25. After adjustments, earnings per share grew 145%, to $4.31, for the third quarter and 37%, to $6.69, for the nine-month period.

Due to the strong performance during the quarter, Quest upgraded its full-year revenue outlook to between $8.8 billion and $9.1 billion, representing year-over-year growth of 13.9% to 17.8%. The previous revenue outlook was $8.4 billion to $8.8 billion, or 8.7% to 13.9% growth.

Adjusted earnings per share also were upgraded to a range of between $9 and $10, from one of $7.50 to $9.

Quest said it intends to return the $138 million in Cares Act funding it received.

“Several months into this pandemic, we do not require this funding,” Rusckowski said. “As a result, we believe returning these funds to the government now is the right thing to do.”