DGX

Healthcare

Quest Diagnostics

Price Chart

Market Data

Financials

XBRL · SEC EDGAR

2007–2025(19yr)

Revenue

Net Income

Free CF

Metric	FY 2007	FY 2008	FY 2009	FY 2010	FY 2011	FY 2012	FY 2013	FY 2014	FY 2015	FY 2016	FY 2017	FY 2018	FY 2019	FY 2020	FY 2021	FY 2022	FY 2023	FY 2024	FY 2025Latest	YoY
Revenue	$6.7B	$7.2B	$7.5B	$7.4B	$7.5B	$7.4B	$7.1B	$7.4B	$7.5B	$7.5B	$7.4B	$7.5B	$7.7B	$9.4B	$10.8B	$9.9B	$9.3B	$9.9B	$11.0B	+11.8%
Gross Profit	$2.7B	$3.0B	$3.1B	$3.1B	$3.1B	$3.0B	$2.8B	$2.8B	$2.8B	$2.9B	$3.0B	$2.6B	$2.7B	$3.6B	$4.2B	$3.4B	$3.1B	$3.2B	$3.7B	+13.0%
Gross Margin	40.8%	41.3%	42.0%	41.4%	41.5%	40.9%	39.5%	37.6%	37.8%	38.6%	40.4%	34.6%	34.8%	38.5%	39.0%	34.7%	33.0%	32.9%	33.2%	+0.4pp
Operating Income	$1.1B	$1.2B	$1.4B	$1.3B	$995.0M	$1.2B	$1.5B	$983.0M	$1.4B	$1.3B	$1.2B	$1.1B	$1.2B	$2.0B	$2.4B	$1.4B	$1.3B	$1.3B	$1.6B	+15.6%
Operating Margin	16.3%	16.9%	18.2%	17.6%	13.2%	16.3%	20.6%	13.2%	18.7%	17.0%	15.7%	14.6%	15.9%	20.9%	22.1%	14.4%	13.6%	13.6%	14.1%	+0.5pp
Net Income	$339.9M	$581.5M	$729.1M	$720.9M	$470.6M	$555.7M	$849.0M	$556.0M	$709.0M	$645.0M	$772.0M	$736.0M	$858.0M	$1.4B	$2.0B	$946.0M	$854.0M	$871.0M	$992.0M	+13.9%
Net Margin	5.1%	8.0%	9.8%	9.8%	6.3%	7.5%	11.9%	7.5%	9.5%	8.6%	10.4%	9.8%	11.1%	15.2%	18.5%	9.6%	9.2%	8.8%	9.0%	+0.2pp
Free Cash Flow	$707.8M	$850.4M	$830.5M	$912.6M	$733.9M	$1.0B	$421.0M	$630.0M	$547.0M	$776.0M	$923.0M	$817.0M	$843.0M	$1.6B	$1.8B	$1.3B	$864.0M	$909.0M	$1.4B	+49.5%
FCF Margin	10.6%	11.7%	11.1%	12.4%	9.8%	13.6%	5.9%	8.5%	7.3%	10.3%	12.5%	10.8%	10.9%	16.8%	17.0%	13.3%	9.3%	9.2%	12.3%	+3.1pp
EPS (Diluted)	$1.74	$2.96	$3.87	$4.05	$2.92	$3.46	$5.54	$3.81	$4.87	$4.51	$5.50	$5.29	$6.28	$10.47	$15.55	$7.97	$7.49	$7.69	$8.75	+13.8%

Total Debt$5.7B

Cash & Equiv.$420.0M

Net Debt$5.3B

4 min read

1. THE BIG PICTURE

Quest Diagnostics is successfully pivoting from a commodity blood-work provider into a high-value data and specialized diagnostics firm, evidenced by its sector-leading 11.8% revenue growth. While it faces a "fragmented landscape" of hospital and physician competitors, Quest is using its massive scale—244 million test requisitions and 80 billion data points—to maintain a 12.1% free cash flow margin that outpaces most of its peers (XBRL).

2. WHERE THE RISKS HIT HARDEST

Quest’s national network of 2,400 patient service centers is directly threatened by the evolution of the U.S. healthcare system toward value-based reimbursement. For example, UnitedHealthcare’s Preferred Lab Network and CMS 2030 goals favor integrated care models that can divert volume away from independent labs (10-K Item 1A).

Furthermore, Quest Diagnostics’s focus on specialized "Clinical Franchises" in oncology and neurology is vulnerable to hospital acquisitions of physician practices. When hospitals buy these practices, they create a "competitive barrier" that prevents Quest from capturing outreach testing, regardless of Quest's technical expertise (10-K Item 1A). Finally, the "Invigorate" cost-savings program, which delivered 3% annual productivity gains, is a necessary but defensive response to "structural flaws" in Medicare’s PAMA reimbursement rates and private payer efforts to reduce utilization through prior authorization (8-K).

3. WHAT THE NUMBERS SAY TOGETHER

Quest Diagnostics currently leads its peer group in revenue growth at 11.8% (TTMTTMTrailing Twelve Months — the most recent full year of financial data, updated on a rolling basis each quarter), significantly higher than larger competitors like Thermo Fisher (+3.9%) or Labcorp (+7.2%). However, the most recent quarter showed a slight deceleration to 7.1% growth, suggesting that while Quest is gaining market share, the breakneck pace of the previous year may be normalizing (8-K).

The underlying health of the business is visible in its 12.1% FCFFCFFree Cash Flow — cash left after paying for operations and capital investments; what the company can actually spend, save, or return to shareholders margin, which ranks second in its peer group and nearly doubles the 6.4% margin of its closest direct competitor, Labcorp (XBRL). This cash generation is critical because Quest’s revenue per requisition actually declined by 0.1% in the fourth quarter. This confirms that Quest’s growth is entirely volume-driven (+8.5% in requisitions), placing immense pressure on Quest Diagnostics to maintain its logistics and processing efficiency to stay profitable (8-K). Short interest stands at 5.0% of the float, indicating a moderate level of market skepticism regarding the sustainability of these volume gains (Yahoo Finance).

4. IS IT WORTH IT AT THIS PRICE?

At 17.5x Forward P/EP/EPrice-to-Earnings ratio — share price divided by annual earnings per share; how much investors pay per dollar of profit. Higher P/E = higher growth expectations, Quest Diagnostics trades at a 25% premium to the peer median of 14.0x. According to CAPM analysis, this price implies the market expects roughly 2.3% long-term growth.

This premium appears justified by Quest’s superior growth profile and cash flow efficiency. While it has the lowest gross margins in its peer group (33.3% vs. BDX’s 45.0%), its operating margin of 14.0% is the second-highest among peers, suggesting Quest is far more efficient at managing overhead and logistics than its competitors (XBRL). The 2.3% implied growth rate is conservative relative to Quest Diagnostics’s recent 11.8% revenue growth. However, the biggest risk to this valuation is a "regulatory and legal" shift; if Medicare or private payers successfully implement further reimbursement cuts, the justified multiple could fall toward the peer median.

5. WHAT WOULD CHANGE THIS VIEW?

Constructive if the "Project Nova" initiative to modernize order-to-cash systems delivers margin expansion ahead of its 2031-2032 completion date, or if Advanced Diagnostics™ grows to a larger percentage of total revenue.
Cautious if revenue per requisition continues to decline for consecutive quarters, or if capital expenditures significantly exceed the $550 million guidance for 2026, suggesting the "Invigorate" program is losing its ability to offset inflation (8-K).

6. BOTTOM LINE

Structural Advantage: A massive proprietary logistics network of 5,000 vehicles and 18 aircraft paired with a database of 80 billion patient data points that competitors cannot easily replicate.

Bottom Line: Quest Diagnostics is a high-performing operator in a difficult regulatory environment, and its premium valuation is supported by its ability to turn high volume into superior cash flow.

Source: Synthesis · LLM Analysis

4 min read

1. Top 5 Material Risks

Healthcare System Evolution: The shift toward value-based reimbursement (such as UnitedHealthcare’s Preferred Lab Network) and CMS goals for 2030, combined with the rise of non-traditional providers and venues, threatens to decline demand for Quest Diagnostics’ diagnostic information services.
Intense Market Competition: Quest Diagnostics faces a fragmented landscape where hospitals, physician-office laboratories, and new players (including employers and government agencies) compete on pricing, quality, and scope of service. Hospital acquisition of physician practices further strengthens ties to hospital-affiliated labs, creating a competitive barrier to Quest Diagnostics’ outreach testing.
Payer Reimbursement Pressure: Government payers (Medicare/Medicaid) and private health plans are actively reducing utilization and reimbursement through prior authorization, stricter cost controls, and bundled payment models. The structural flaws in PAMA, which led to excessive cuts in 2018–2020, remain a risk to future Medicare rates.
Technological Disruption: The rise of point-of-care testing, home testing, and digital pathology allows for the internalization of testing by clinicians and hospitals. If Quest Diagnostics fails to innovate or license new technologies, its services risk becoming outdated, negatively impacting testing volume.
Regulatory and Legal Compliance: Quest Diagnostics is subject to extensive, complex, and frequently changing laws, including the False Claims Act and anti-kickback statutes. Failure to comply with billing regulations or privacy laws (such as HIPAA or GDPR) could result in substantial fines, exclusion from government programs, and loss of licenses.

2. Company-Specific Risks

Project Nova Implementation: Quest Diagnostics is currently executing a multi-year modernization of its "Order to Cash" business processes and IT infrastructure in partnership with Epic; any failure or delay in this implementation could disrupt operations and customer service.
Third-Party Billing Dependency: The majority of billing and related operations for Quest Diagnostics are provided by a third party under Quest Diagnostics's oversight, creating a dependency that could lead to material adverse effects if billing is inaccurate or non-compliant.
Cybersecurity Exposure: While past incidents have not materially disrupted performance, Quest Diagnostics remains vulnerable to cyberattacks and data breaches, such as the 2019 incident involving a third-party debt collection service provider (AMCA) that exposed patient and financial information.
Corporate Responsibility Expectations: Quest Diagnostics faces conflicting expectations from a broad range of stakeholders regarding sustainability and social goals; failure to meet these targets or satisfy stakeholder demands could negatively impact Quest Diagnostics's reputation and stock price.

3. Regulatory/Legal Risks

False Claims Act: Quest Diagnostics is subject to qui tam lawsuits from whistleblowers alleging inappropriate billing practices, which can result in fines and damages of up to three times the amount claimed.
FDA Regulation: While a U.S. District Court vacated the FDA’s LDT rule in March 2025, Quest Diagnostics remains exposed to the risk of future Congressional legislation that could impose new regulatory requirements on laboratory-developed tests.
Government Investigations: Quest Diagnostics regularly receives subpoenas and information requests from governmental authorities; these investigations can divert management attention and require significant cash expenditures on legal fees and potential damages.
International Compliance: Operations in Canada and Europe subject Quest Diagnostics to the U.S. Foreign Corrupt Practices Act, local data privacy regulations (e.g., GDPR), and varying legal systems that may affect the enforcement of intellectual property rights.

4. Financial Impact Map

Healthcare System Evolution → Revenue → Decline in demand for diagnostic information services. Intense Market Competition → Revenue and Profitability → Pricing pressure and loss of testing volume to hospital-affiliated labs. Payer Reimbursement Pressure → Net Revenues → Reduced reimbursement rates and increased payment denials from Medicare, Medicaid, and private health plans. Technological Disruption → Testing Volume → Internalization of testing by hospitals and clinicians reduces the frequency of use of Quest Diagnostics’ services. Regulatory and Legal Compliance → Operating Costs → Increased administrative, billing, and legal costs, plus potential for substantial fines and penalties.

Source: 10-K Item 1A · LLM Analysis

Recent Filings

Form	Filed	Period
10-K	Feb 2026	Dec 2025
8-K	Feb 2026	—