Quest Diagnostics to use cash for growth, enhancing shareholder value

By Jennifer Lanning Drey

Portland, Ore., Jan. 25 - Quest Diagnostics Inc. will apply its cash toward growth and other opportunities to enhance shareholder value in 2010, Robert A. Hagemann, chief financial officer of Quest, said Monday during the company's fourth-quarter and year-end conference call.

"Given our current credit profile, we do not anticipate further debt reduction in 2010," he said.

Quest had cash and cash equivalents of $534.3 million at Dec. 31, up from $253.9 million at the end of 2008.

The increase in cash during the year was primarily the result of Quest's $750 million notes offering completed in November. The company used $600 million of the proceeds to repay debt maturing through 2011 and added the remainder to its available cash balance, he said.

Cash from operations was $360 million in the fourth quarter, bringing the full-year total to $1 billion.

"Our cash balance, coupled with our unused credit lines, provides us with significant liquidity and positions us extremely well to capitalize on growth opportunities and take other actions like share repurchases to drive shareholder value," Hagemann said.

Consistent with that objective, Quest also announced Monday that its board of directors increased its share repurchase authorization by $750 million.

Cash will be put to use

During the question-and-answer portion of the call, Hagemann said he would not speculate as to when or what level of share repurchases might be made in 2010, but the CFO noted, "You should expect that we're going to put our cash to use, whether it's growth, which is our first priority, or share repurchases, which would be the alternative.

"We're going to deploy the excess cash we generate in 2010," he said.

Hagemann also noted during the call that Quest will look for acquisitions in 2010 that provide opportunities for the company to expand its point-of-care operations as well as investments that would provide it access to new testing methods and technologies, either through licenses, investments or acquisitions.

"We remain confident in our prospects for continued growth in 2010," he said.

Quest reported fourth-quarter revenues of $1.8 billion, up 2.7% over the prior-year period. For the full year, revenues grew about 3%, the company reported.

The company expects revenue growth of 3% to 4% in 2010 and cash from operations of about $1.3 billion.

Quest Diagnostics provides diagnostic testing, information and services and is based in Lyndhurst, N.J.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.