UNILAB REPORTS 63% INCREASE IN NET INCOME FOR 3RD QTR.

Unilab Corporation (Nasdaq:ULAB), Tarzana, Calif., has announced that net sales for the quarter ended September 30, 2002 were $110.5 million, an increase of 11.5% from $99.0 million in the same period last year. Net income and earnings per share increased by more than 63% to $11.1 million, or $0.31 per diluted share, for the third quarter of 2002 compared to net income, before the non-recurring charge described below, of $6.8 million, or $0.19 per diluted share, in the same period last year. The third quarter of 2002 net income per diluted share includes a $0.03 increase from the required change in goodwill accounting.

Earnings before interest, taxes, depreciation, amortization, and non-recurring items ("Adjusted EBITDA") were $25.4 million for the third quarter of 2002, or 23.0% of sales, compared to $21.0 million, or 21.2% of sales, for the same period last year.

In the third quarter of last year, Unilab repaid a portion of its senior subordinated notes and reported an extraordinary loss, net of taxes, of $5.8 million.

For the first nine months of 2002, net sales totaled $323.5 million, an increase of 10.3% from $293.3 million in the same period of the prior year. EBITDA, EBITDA margin, net income and net income per diluted share, excluding non-recurring item discussed above and previously disclosed non-recurring items in 2001, were $72.4 million, 22.4%, $30.7 million and $0.87, respectively, for the first nine months of 2002 versus $61.3 million, 20.9%, $15.9 million and $0.54 in the same period last year. For the nine months ended September 30, 2002, net income per diluted share included a $0.09 increase from the required change in goodwill accounting. Including the non-recurring items, EBITDA, EBITDA margin, net income and net income per diluted share were $43.6 million, 14.9%, $5.5 million and $0.19, respectively, for the nine months ended September 30, 2001.

Testing volumes increased 7.0% and revenue per requisition improved 4.4% in the third quarter of 2002 compared to the same period in the prior year. Excluding the revenue generated from acquired businesses, core business volumes grew by 6.8% while revenue per requisition improved by 4.2%. Days sales outstanding ("DSO") -- a measure of billing and collection efficiency -- was 56 days, compared to 63 days at the end of 2001. Bad debt expense decreased to 6.8% of revenue in the third quarter of 2002 from 7.3% of revenue in the same period last year. The company's cash position was $52.3 million (even after paying for approximately $4.5 million of costs related to our proposed merger with Quest Diagnostics) at the end of the third quarter, with no borrowing having taken place under the company's revolving credit facility. Capital expenditures were $1.3 million for the quarter.

"We are pleased to report record revenue, EBITDA and earnings per share for Unilab in the third quarter," said Bob Whalen, Unilab's CEO and president. "Our record results are particularly impressive given the seasonality of our business whereby testing volumes and results in our industry are usually softer during the third quarter summer holiday/vacation season. In addition, these record results are a tremendous credit to our entire organization who have kept their focus on meeting our patients' and customers' needs and have not become distracted by our pending merger."

Unilab Corporation is the largest provider of clinical laboratory testing services in California through its primary testing facilities in Los Angeles, San Jose and Sacramento and over 400 regional service and testing facilities located throughout the state.

For more information, visit http://www.unilab.com or call 818/758-6611.