Quest Diagnostics Incorporated

DGX · NYSE · USD

Analysis

Last 4 earnings calls · through Q2 FY2026

Quest keeps raising guidance because demand for testing is accelerating, and the growth is coming from higher-value work: more tests per order, more advanced diagnostics, more cash-paying consumers. The catch is that its biggest new contracts arrive at below-average margins.How much of this year's growth comes from Corewell and Fresenius?

  • The consumer channel is now the highest-value part of the business.

    Consumer testing beat management's own 20% growth target, helped by WHOOP, Oura and Function Health tie-ups. Selling direct means cash up front and no insurance denials, so this revenue lifts profit per test as well as volume.What margin does the consumer channel earn versus the lab average?

  • Growth is arriving at a thinner profit rate.

    Nova, the order-to-cash rebuild, costs about $0.25 a share this year. Corewell Health and Fresenius supplied most of the volume growth in Q2 FY2026, 9 points of it, at lower prices per test.When do Corewell and Fresenius reach the company's average margin?

  • Tests per order keep rising, and that is where the extra revenue comes from.

    Tests per requisition now run above 4.5, up from the pre-COVID range, driven by advanced cardiometabolic, autoimmune and Alzheimer's panels. More tests on the same order lifts revenue per customer without winning new ones.

Bullish
  • Tests per order keep climbing. Every extra panel on a blood draw brings in more money with almost no added cost, so profit grows faster than visits.
  • The consumer channel keeps growing faster than 20%. Customers pay up front and no insurer can deny the bill, so the money arrives faster and more of it sticks.
  • Corewell and Fresenius margins climb toward the company average. The deals dragging profit down today start adding to it, so next year's margin improves without needing faster sales.
Bearish
  • The low-margin contracts keep taking a bigger share of revenue. Sales grow while each dollar brings less profit, so the headline growth rate overstates how well the business is doing.
  • Nova's costs land years before its benefits do. Quest spends on the rebuild long before the paperwork gets faster, so profit grows more slowly while that plays out.
  • PAMA's Medicare rate cut is delayed, not gone. If new rates take effect in 2027, Quest is paid less for the same routine testing and can cover only part of it.
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PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Sale≥$15KJul 23Sep 22
Donald Trump
Republican · Executive
Sale≥$1KJun 12Aug 22
Donald Trump
Republican · Executive
Purchase≥$100KMay 18Jul 1
Donald Trump
Republican · Executive
Purchase≥$100KMay 11Jul 1
Julie Johnson
Democratic · House · TX-32
Purchase≥$1KOct 30Aug 5

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Product segmentsGeography
FY2025 · USD

How Quest Diagnostics Incorporated turned $11.0B of revenue into $1.6B of operating income.

Revenue
Diagnostic Information Services Business$10.8B▲ 12.18% YoY
Total revenue$11.0B
Gross profit$3.7B33.2%
Operating income$1.6B14.1%
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