June 3, 2023

(Reuters) – Quest Diagnostics Inc posted a first-quarter profit on Thursday that beat Wall Street estimates as its basic business helped offset a decline in COVID-19 test kit sales.

The demand for routine diagnostic testing has increased as an increasing number of people return to the health care system for routine care after deferring care during the pandemic.

Healthcare giant Abbott Laboratories and hospital operator HCA Healthcare Inc last week sounded optimistic about demand for medical device procedures, routine diagnostic tests and consumer-based health products as the number of cases of COVID-19 infection declines.

Quest Diagnostics’ core business revenue, excluding COVID-19 products, increased 10% year-over-year to $2.21 billion.

Global sales of its COVID-19 test kits fell 80.2% to $119 million and the company cut its annual COVID-19 sales forecast from $175 million to $275 million from $150 million to $200 million as the US government plans to end COVID-19 test kits. 19 Public health emergency next month.

Separately, Quest said it would buy cancer testing developer Haystack in an all-cash deal worth up to $450 million, which consists of $300 million at closing and up to $150 million in potential milestone payments.

The deal will augment Quest Diagnostic’s advanced testing portfolio and is expected to close in the second quarter. It will slightly dilute the company’s earnings over the next three years.

Excluding one-time items, Quest’s earnings were $2.04 per share for the quarter ended March 31, higher than the average analyst estimate of $1.97 cents per share, according to data from Refinitiv.

The company revised its annual adjusted earnings forecast from $8.40 per share to $9 per share from $8.45 per share to $8.95 per share.

(Reporting by Khushi Mandowara in Bengaluru; Editing by Subhranshu Sahu)