This news report contains some info about how Quest paid $236 million to settle a whistleblower lawsuit that alleged Quest had overcharged California’s Medicaid program and provided kickbacks to doctors, hospitals and clinics over a 15 year period.
MADISON, N.J.—Medical laboratory operator Quest Diagnostics Inc. turned a profit in the first quarter compared with a loss a year ago, when it paid $236 million to settle allegations it overcharged a California health care program. The company also raised its full-year profit forecast.
Quest said Wednesday that net income totaled $159.1 million, or 99 cents per share. In the first quarter of 2011, the company lost $53.9 million, or 33 cents per share. Its revenue rose 6 percent, to $1.94 billion from $1.82 billion.
Analysts were forecasting a profit of $1.01 per share and revenue of $1.88 billion, according to FactSet.
Quest said its testing volume grew 3.4 percent in the latest quarter. Clinical testing revenue rose 6.4 percent and revenue per request was up 2.9 percent. The company’s results were aided by mild weather over the first three months of the year. In the first quarter of 2011 Quest said its business was hurt by severe winter weather.
In 2011 Quest paid $236 million to settle allegations it overcharged Medi-Cal, the state’s Medicaid program, over 15 years. The whistleblower lawsuit also said Quest paid kickbacks to doctors, hospitals and clinics that referred Medi-Cal patients and charged Medi-Cal up to six times more than other customers for tests.
Quest at the time acknowledged the settlement but denied allegations of wrongdoing.
In the most recent quarter Quest said it took 5 cents per share in charges from restructuring and the integration of acquisitions like Celera Corp. and Athena Diagnostics. It also took 3 cents per share in charges related to its search for a new CEO. Quest said in October that President, Chairman and CEO Surya Mohapatra would leave the company this year. Earlier this month it said Philips Healthcare CEO Stephen Rusckowski will become its president and CEO on May 1, and director Daniel Stanzione will become nonexecutive chairman of the board.
Mohapatra has been Quest’s president since 1999 and CEO and chairman since 2004.
The company raised its adjusted profit forecast and said it now expects to earn $4.45 to $4.60 per share in 2012. Previously it had called for a profit of $4.40 to $4.55 per share. Quest still expects its revenue to grow 2 to 2.5 percent, which implies a total of $7.66 billion and $7.7 billion.
Analysts are forecasting a profit of $4.56 per share and revenue of $7.68 billion.
Shares of Quest Diagnostics fell $1.28, or 2.1 percent, to $59.01 in morning trading.