Quest Diagnosticsis the world's leading provider of diagnostic information services ("DIS"), providing insights that empower and enable patients, physicians, hospitals, integrated delivery networks, health plans, employers and others to make better healthcare decisions. Over 90% of our revenues are derived from DIS with the balance derived from risk assessment services, clinical trials testing, diagnostic products and healthcare information technology. Our business segment information is disclosed in Note 15 to the interim consolidated financial statements.
Third Quarter Highlights
Our third quarter performance was impacted by a softer market than we expected entering the year, and our efforts to restore growth are taking longer than expected. The healthcare industry overall continues to face utilization headwinds. This is supported by commentary from industry stakeholders, including hospitals, physicians, payers and suppliers. Additionally, the industry faces ongoing pressure on reimbursement which has become more pronounced due to: (1) reductions in
Medicarepayments of approximately 5%; (2) cuts to the pathology codes on the Medicarephysician fee schedule; (3) changes to Medicarefee schedules and coding requirements for molecular diagnostics; and (4) the effects of renewed commercial payer contracts. Our total net revenues of $1.79 billionwere 1.9% below the prior year period. DIS revenues of $1.65 billionwere 2.4% below the prior year period. This was principally driven by lower than anticipated healthcare utilization, which resulted in lower DIS volume of approximately 2% after excluding the impact of acquisitions and business days. DIS revenue per requisition for the three months ended September 30, 2013decreased 4.3% from the prior year period. Diagnostic Solutions ("DS") revenues were 4.1% higher than the prior year period. Income from continuing operations was $402.7 millionfor the three months ended September 30, 2013. This increase over the prior year period was principally due to the after-tax gain of $298.5 millionrelated to the sale of future royalty rights of Ibrutinib ("Ibrutinib Sale") and was partially offset by the loss on sale of Enterix, our colorectal cancer screening test business ("Enterix"). Earnings per diluted share from continuing operations was $2.66for the three months ended September 30, 2013. The increase over the prior year period was primarily due to the Ibrutinib Sale and the impact of common stock repurchases on our diluted share count, partially offset by the loss on sale of Enterix.
Initiatives to Improve Operating Efficiency and Restore Growth
In 2012, we launched a new vision and five-point business strategy for our Company (please refer to Item 1. Business in our 2012 Form 10-K) . During the third quarter, we made continued progress on the execution of this strategy.
• We sold the royalty rights of Ibrutinib and completed the sale of Enterix.
• Our cost excellence program, Invigorate, is on track to realize more than
repurchase ("ASR") agreement to repurchase