(Reuters) – Laboratory operator Quest Diagnostics beat fourth-quarter estimates and forecast 2024 sales above Wall Street expectation on Thursday, as it benefits from strong demand for its routine testing kits, excluding COVID products.
Health insurers such as Humana and hospital operator HCA Healthcare saw high demand for medical care in the past few weeks and expects medical utilization levels to remain elevated in 2024 as well, which means more sales of diagnostic kits used in testing heart, prenatal, and neurological ailments.
Quest forecast 2024 sales between $9.35 billion and $9.45 billion, compared with analysts’ average estimate of $9.39 billion, according to LSEG data.
But its 2024 adjusted profit forecast of $8.60 to $8.90 per share came below analysts’ estimates of $8.99.
Quest margins for 2024 could be impacted by an increase in employees health care costs, said EvercoreISI analyst Elizabeth Anderson.
Labour shortages and high employee health costs continue to pressurise margins, said Quest last quarter. The labour inflation, which was roughly 2%, has risen to 3% to 4% following COVID.
Quest has also said its deal to acquire cancer test developer Haystack would be modestly dilutive to its profit in 2024.
For the fourth quarter ended Dec. 31, Quest posted an adjusted profit of $2.15 per share on sales of $2.29 billion, above LSEG estimate of $2.11 per share on sales of $2.25 billion.
Quest’s sales from base business, which excludes COVID-19 related products, rose 4.7% to $2.25 billion from a year earlier.
(Reporting by Khushi Mandowara in Bengaluru; Editing by Shinjini Ganguli)
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