On Thursday, April 19, lab-testing firm Quest Diagnostics
- Net sales fell 1.7% as UnitedHealth Group
(NYSE:UNH) decided to award its lab-testing contract to Quest archrival LabCorp(NYSE:LH) .
- Reported diluted earnings fell 25% on the UnitedHealth contract loss and a number of other special charges.
- Quest recently inked a new contract with Aetna
(NYSE:AET) and announced the acquisition of diagnostic firm AmeriPath from private equity groups. - For the full year, management expects revenues of $6.1 billion to $6.2 billion and diluted earnings of $2.75-$2.95.
- Quest has a five-star rating, the highest, in Motley Fool CAPS, as does LabCorp. Smaller peer Bio-Reference Labs
(NASDAQ:BRLI) carries a four-star rating, while MEDTOX(NASDAQ:MTOX) also has a coveted five-star rating.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Avg. Est. |
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|---|
|
Sales |
$1,540 |
$1,526 |
$1,553 |
(1.7%) |
|
Net Profit |
-- |
$106 |
$145 |
(26.8%) |
|
EPS |
$0.69 |
$0.54 |
$0.72 |
(25.0%) |
|
Diluted Shares |
-- |
195 |
201 |
(2.8%) |
Get back to basics with a look at the income statement.
Margin Checkup
|
Q1 2007 |
Q1 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
38.95% |
41.01% |
(2.06) |
|
Operating Margin |
13.16% |
16.66% |
(3.50) |
|
Net Margin |
6.94% |
9.31% |
(2.37) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$158 |
$156 |
1.2% |
|
Accounts Rec. |
$811 |
$776 |
4.5% |
|
Inventory |
$88 |
$78 |
12.6% |
|
Liabilities |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$801 |
$836 |
(4.2%) |
|
Long-Term Debt |
$1,238 |
$1,241 |
(0.2%) |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$152 |
$241 |
(37.1%) |
|
Capital Expenditures |
$40 |
$42 |
(5.0%) |
|
Free Cash Flow |
$111 |
$199 |
(43.9%) |
Free cash flow is a Fool's best friend.
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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.
UnitedHealth is a recommendation of both Motley Fool Stock Advisor and Motley Fool Inside Value. LabCorp is a recommendation of Stock Advisor as well.
Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
