DGX-Quest Diagnostics Inc Q2 Earnings Call Transcript

We expect changes in revenue per requisition will continue to be modest for the first half of next year with an anniversary of the business mix, pair mix and contract changes which are currently offsetting the benefits of the increasing proportion of gene-based and esoteric testing.

Volume in the second quarter was 1.3% below the prior year and continues to be pressured by the general slowdown in the provisional office business. This compares to a 2.6% decrease in the first quarter.

Again, note that weather contributed an estimated 1% to the first quarter decrease. Excluding the first quarter weather impact, volume performance reflected modest improvement in the second quarter principally due to drugs-of-abuse testing which has began to rebound and grew approximately 5% in the quarter.

Revenue in our non-clinical testing businesses which includes risk assessments, clinical trials testing, point-of-care testing and healthcare IT was comparable to the prior year level.

Operating income as a percentage of revenues was 19.5%, a 60 basis point improvement from the prior year. Margin improvement was realized despite the slower revenue growth due to progress we are continuing to make in managing our core structure and driving quality improvements.

Contributing to the year-over-year margin improvement are reduced costs for performance-based compensation, improved experience associated with professional liability claims and continued progress in reducing bad debt.

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