UPDATE 3-Quest sees waning demand for COVID-19 tests, rebound in core U.S. business as pandemic subsides

(Adds commentary from investor call, share price)

By Trisha Roy and Carl O'Donnell

April 22 (Reuters) - Quest Diagnostics Inc on Thursday reported a first-quarter profit that exceeded Wall Street expectations as a recovery in its non-COVID-19 businesses offset a slowdown in coronavirus testing.

Quest, Abbott Laboratories, and others in the sector have benefited from surging demand for COVID-19 testing, bringing in billions in sales last year. But a slowdown in demand is widely expected as vaccinations gain steam in the United States.

"We continue to expect the decline in clinical demand for COVID-19 molecular testing in the second half of 2021 versus our expectations for the first half," Mark Guinan, Quest's chief financial officer, said during an investor call to discuss the quarterly results.

"Return to life testing such as the K-12 school testing program should partially offset declining clinical demand later in the year," he added.

The company is offering pooled COVID-19 diagnostic tests to schools, businesses and other groups that want to monitor their students or staff for illness.

Quest said COVID-19 testing demand declined faster in the first quarter of 2021 than it anticipated, and it projected further declines in the second half of the year with full recovery in its base diagnostic business.

The company is well positioned to grow as the United States exits the pandemic and neglected routine care is addressed, said Chief Executive Officer Steve Rusckowski.

Quest in February predicted COVID-19 testing volume would decline through the first half of 2021, while Abbott reported a drop in demand for its coronavirus tests on Tuesday.

Quest, which said it expects to launch an accelerated share repurchase of nearly $1.5 billion in the coming days, tightened its profit forecast range for the first half of 2021 to between $6.30 and $6.80 per share from $5.90 to $6.90, raising the midpoint by 15 cents. Its shares were up 1% at $131.32

Excluding items, Quest earned $3.76 per share, beating analysts' estimates by 5 cents, according to data from Refinitiv IBES.

Net income attributable to the company rose to $469 million, or $3.46 per share, in the quarter, from $99 million, or 73 cents per share, a year earlier.

(Reporting by Trisha Roy in Bengaluru; Editing by Ankur Banerjee and Bill Berkrot)