Quest Diagnostics reported that second-quarter net income climbed 3 percent, yet the medical laboratory operator cut its annual guidance Wednesday because of falling revenue and shares tumbled 8 percent before the market opened.
Visits to doctors' offices fell with so many people out of work or trying to save money. Quest said clinical testing revenues fell 1.6 percent compared to the prior year, and clinical testing volume dropped 1.3 percent.
Operating costs and expenses for the company did fall 2 percent to $1.51 billion, but it wasn't enough to offset falling revenue as visits to the doctor declined.
The Madison, N.J., company said it earned $194.7 million, or $1.07 per share, in the three months that ended June 30. That compares to $188.2 million, or $1 per share, in the previous year's quarter.
Revenue fell 1 percent to $1.87 billion.
Analysts polled by Thomson Reuters expected, on average, earnings of $1.06 per share on $1.93 billion in revenue.
Chairman and CEO Surya N. Mohapatra said the business continues to perform well in a number of areas.
"However, revenue softness through the first half has made us more cautious about our full-year outlook, and we have reduced 2010 guidance accordingly," Mohapatra said.
The company reduced its 2010 earnings guidance to between $3.90 and $4 per share, down from a previous expectation of between $4 and $4.20 per share.
Analysts had expected net income of $4.18 per share.
Quest said it now expects revenues to fall about 1 percent compared to the prior year. It previously expected growth of between 1 and 2 percent.
Shares of Quest Diagnostics Inc. fell $4.15 to $45.80 in premarket trading.