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1. Company Snapshot

1.a. Company Description

Quest Diagnostics Incorporated provides diagnostic testing, information, and services in the United States and internationally.The company develops and delivers diagnostic information services, such as routine testing, non-routine and advanced clinical testing, anatomic pathology testing, and other diagnostic information services.It offers diagnostic information services primarily under the Quest Diagnostics brand, as well as under the AmeriPath, Dermpath Diagnostics, ExamOne, and Quanum brands to patients, clinicians, hospitals, independent delivery networks, health plans, employers, direct contract entities, and accountable care organizations through a network of laboratories, patient service centers, phlebotomists in physician offices, call centers and mobile paramedics, nurses, and other health and wellness professionals.


The company also provides risk assessment services for the life insurance industry; and healthcare organizations and clinicians robust information technology solutions.Quest Diagnostics Incorporated was founded in 1967 and is headquartered in Secaucus, New Jersey.

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1.b. Last Insights on DGX

Quest Diagnostics' recent performance was driven by strong Advanced Diagnostics growth, strategic acquisitions, and cost savings. The company's Q2 earnings beat, with a 15.2% revenue growth and an 11.5% adjusted EPS increase, lifted its full-year revenue guidance to $10.8 billion to $10.92 billion and adjusted EPS to $9.63 to $9.83. Additionally, the integration of last year's LifeLabs acquisition and scale-driven productivity gains contributed to its growth.

1.c. Company Highlights

2. Quest Diagnostics' Q3 2025 Earnings: Strong Revenue Growth and Margin Expansion

Quest Diagnostics reported a strong third quarter in 2025, with revenues growing 13.1% to $2.82 billion, driven by 6.8% organic growth. The company's EPS came in at $2.6, beating analyst estimates of $2.51. The revenue growth was broad-based, with the physician channel growing approximately 17%, driven by high single-digit organic revenue growth, while the hospital channel grew in the low single digits. The company's operating margins expanded to 16.3%, driven by utilization and mix.

Publication Date: Nov -25

📋 Highlights
  • Revenue & Organic Growth:: Q3 revenue rose 13.1% to $2.82B, with 6.8% organic growth driven by clinical innovations and consumer channel expansion.
  • Full-Year Guidance Raised:: 2025 revenue guidance updated to $10.96B–$11B, with adjusted EPS of $9.76–$9.84 and $1.8B operating cash flow.
  • Operating Margin & Costs:: Q3 operating margin hit 16.3%, but Q4 margins face 40–50 bps pressure from elevated group health expenses and Nova investments.
  • Consumer Health Momentum:: Growth in indirect channel partnerships (WHOOP, OURA) and home testing, with consumer health gains expected to persist into 2026.
  • Haystack Test Progress:: Advanced diagnostics segment integrated the Haystack MRD test, projected to shift from dilution to tailwind by 2026 with Medicare reimbursement secured.

Revenue Growth Drivers

The company's revenue growth was driven by the adoption of clinical innovations, acquisitions, and growth in the consumer channel. The acquisition of select clinical testing assets from Fresenius Medical Care enabled Quest to offer lab testing used in dialysis delivery to independent dialysis clinics in the U.S. The company's consumer health channel is seeing significant growth, driven by partnerships with companies like WHOOP, OURA, and Function Health.

Margin Expansion and Expenses

The company's operating margins expanded to 16.3%, driven by utilization and mix. However, group health expenses, including medical expenses, were higher than expected and will continue at an elevated level in Q4, impacting margins by 40-50 basis points. The company also expects a ramp-up in Nova investments in Q4, which will add expenses.

Outlook and Guidance

The company raised its full-year 2025 guidance, expecting revenues between $10.96 billion and $11 billion, and adjusted EPS of $9.76 to $9.84. For 2026, the company expects mid-single-digit revenue growth, high single-digit EPS growth, and margin expansion. Analysts estimate next year's revenue growth at 3.5%.

Valuation

Quest Diagnostics' current valuation metrics are as follows: P/E Ratio at 22.03, P/B Ratio at 2.94, and EV/EBITDA at 12.74. The company's ROE is 13.75%, and ROIC is 8.03%. The dividend yield is 1.65%. These metrics indicate that the company's stock is fairly valued, with a reasonable price-to-earnings ratio and a decent dividend yield.

Advanced Diagnostics and Partnerships

The company's advanced diagnostics segment is progressing well, particularly with the Haystack test. The test is fully integrated into the company and run at its Cancer Center of Excellence in Texas. Volumes are building, and evidence generation continues through studies with academic medical centers. The company is also expanding partnerships with cancer screening players, such as GRAIL and Guardant, and is balancing these distribution partnerships with potentially doing some testing itself in the future.

3. NewsRoom

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Quest Diagnostics Incorporated (DGX) Presents at Citi Annual Global Healthcare Conference 2025 Transcript

Dec -02

Source: seekingalpha.com

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Octave Bioscience Forms Strategic Collaboration with Quest Diagnostics to Expand Patient Access to the Octave® Multiple Sclerosis Disease Activity (MSDA) Test Across the United States

Dec -01

Source: businesswire.com

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Advisors Asset Management Inc. Reduces Stock Position in Quest Diagnostics Incorporated $DGX

Nov -28

Source: defenseworld.net

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Quest Diagnostics Incorporated $DGX Shares Acquired by Charles Schwab Investment Management Inc.

Nov -28

Source: defenseworld.net

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HOLX vs. DGX: Which Healthcare Diagnostics Stock Is the Better Bet?

Nov -27

Source: zacks.com

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Boston Partners Has $545.32 Million Position in Quest Diagnostics Incorporated $DGX

Nov -26

Source: defenseworld.net

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Ameritas Investment Partners Inc. Sells 371 Shares of Quest Diagnostics Incorporated $DGX

Nov -26

Source: defenseworld.net

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925 Shares in Quest Diagnostics Incorporated $DGX Purchased by AlphaCore Capital LLC

Nov -26

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.00%)

6. Segments

Diagnostic Information Services

Expected Growth: 3%

Quest Diagnostics' Diagnostic Information Services segment growth is driven by increasing demand for healthcare analytics, expansion of healthcare IT infrastructure, and growing adoption of value-based care models. Additionally, the company's strategic acquisitions, investments in digital health, and strong relationships with healthcare providers contribute to its growth.

All Other

Expected Growth: 3%

Quest Diagnostics' 'All Other' segment growth is driven by increasing demand for non-core diagnostic services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on innovation, such as its Quanum suite of healthcare information technologies, contributes to growth. Furthermore, the company's efforts to improve operational efficiency and reduce costs also support growth.

7. Detailed Products

Clinical Testing

Quest Diagnostics offers a comprehensive range of clinical testing services, including routine and esoteric tests, to help diagnose and monitor various medical conditions.

Molecular Diagnostics

Quest Diagnostics' molecular diagnostics services utilize advanced genetic testing technologies to identify genetic mutations and variations associated with diseases.

Anatomic Pathology

Quest Diagnostics' anatomic pathology services provide diagnostic insights through the examination of tissue samples, helping physicians diagnose and treat diseases.

GeneSight

GeneSight is a genetic test that helps physicians personalize medication treatment plans for patients based on their genetic profile.

Quanum

Quanum is a healthcare analytics platform that provides insights and data analytics to help healthcare providers improve patient care and reduce costs.

Care360

Care360 is a healthcare IT platform that provides electronic health record (EHR) services, practice management, and revenue cycle management solutions.

8. Quest Diagnostics Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Quest Diagnostics Incorporated faces moderate threat from substitutes, as patients have limited alternatives for certain medical tests and services. However, the company's strong brand reputation and wide network of laboratories help mitigate this threat.

Bargaining Power Of Customers

Quest Diagnostics Incorporated has a large customer base, including healthcare providers, patients, and insurance companies. However, the bargaining power of customers is relatively low due to the company's dominant market position and the lack of alternative providers.

Bargaining Power Of Suppliers

Quest Diagnostics Incorporated has a diverse supplier base, and the bargaining power of suppliers is relatively low. The company's large scale of operations and strong relationships with suppliers help mitigate the risk of supplier concentration.

Threat Of New Entrants

The threat of new entrants in the medical testing and diagnostic services industry is relatively low due to high barriers to entry, including significant capital requirements, regulatory hurdles, and the need for specialized expertise.

Intensity Of Rivalry

The medical testing and diagnostic services industry is highly competitive, with several established players competing for market share. Quest Diagnostics Incorporated faces intense rivalry from competitors such as Laboratory Corporation of America Holdings and Sonic Healthcare Limited.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 43.55%
Debt Cost 3.95%
Equity Weight 56.45%
Equity Cost 8.30%
WACC 6.40%
Leverage 77.15%

11. Quality Control: Quest Diagnostics Incorporated passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Quest Diagnostics

A-Score: 6.1/10

Value: 4.6

Growth: 4.6

Quality: 5.5

Yield: 4.0

Momentum: 8.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
LabCorp

A-Score: 5.5/10

Value: 3.7

Growth: 4.3

Quality: 5.1

Yield: 2.0

Momentum: 8.5

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Medpace

A-Score: 4.8/10

Value: 1.3

Growth: 9.2

Quality: 8.1

Yield: 0.0

Momentum: 8.5

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Natera

A-Score: 4.5/10

Value: 4.0

Growth: 7.1

Quality: 3.3

Yield: 0.0

Momentum: 7.5

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
Waters

A-Score: 3.9/10

Value: 1.5

Growth: 5.2

Quality: 7.5

Yield: 0.0

Momentum: 3.0

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Charles River Laboratories

A-Score: 3.3/10

Value: 4.7

Growth: 4.1

Quality: 3.1

Yield: 0.0

Momentum: 3.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

182.45$

Current Price

182.45$

Potential

-0.00%

Expected Cash-Flows