Quest Diagnostics delivered a quarter that surpassed Wall Street’s expectations, with strong results driven by a combination of acquisition contributions and robust organic growth. Management highlighted heightened demand for advanced diagnostic tests and expanded access through new health plan contracts as primary factors behind the performance. CEO Jim Davis pointed to increased test ordering from both physicians and enterprise accounts as essential to the company’s top-line momentum, noting that “demand for our innovative clinical solutions contributed significantly to organic revenue growth.”
Is now the time to buy DGX? Find out in our full research report (it’s free).
Quest (DGX) Q2 CY2025 Highlights:
- Revenue: $2.76 billion vs analyst estimates of $2.72 billion (15.2% year-on-year growth, 1.4% beat)
- Adjusted EPS: $2.62 vs analyst estimates of $2.57 (1.9% beat)
- Adjusted EBITDA: $609 million vs analyst estimates of $561.6 million (22.1% margin, 8.4% beat)
- The company slightly lifted its revenue guidance for the full year to $10.86 billion at the midpoint from $10.78 billion
- Management slightly raised its full-year Adjusted EPS guidance to $9.73 at the midpoint
- Operating Margin: 15.9%, up from 14.8% in the same quarter last year
- Sales Volumes rose 16.3% year on year (1.1% in the same quarter last year)
- Market Capitalization: $18.77 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Quest’s Q2 Earnings Call
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Ann Hynes (Mizuho Securities) asked about the impact of new U.S. healthcare legislation on volumes and uninsured rates; CEO Jim Davis explained that any volume impact in 2026 is expected to be minimal, estimating at most a 30-40 basis point reduction.
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Kevin Caliendo (UBS) inquired about the timing and impact of modernization investments on margins; CFO Sam Samad clarified that most costs will be incurred in the second half of the year, but margin expansion is still anticipated for the full year.
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Elizabeth Anderson (Evercore ISI) questioned assumptions around uninsured population utilization; Davis responded that most affected individuals are likely to find alternative coverage, making any negative impact modest.
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Pito Chickering (Deutsche Bank) focused on tariffs and their potential effects; Samad said tariff impacts are manageable within current guidance, with contracts and alternative sourcing in place to mitigate cost increases.
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Jack Meehan (Nephron Research) sought details on the LifeLabs acquisition’s contribution; Samad estimated LifeLabs accounted for roughly 8% of M&A-driven growth and emphasized that integration and earnings accretion are progressing well.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will closely watch (1) the pace of adoption and revenue mix from new advanced diagnostics like the Alzheimer’s and oncology panels, (2) the integration and financial impact of the LifeLabs acquisition, and (3) progress on operational modernization and automation initiatives. Additionally, we are monitoring potential regulatory changes affecting reimbursement rates and insurance coverage, as these could influence both volume and pricing power.
Quest currently trades at $167.85, in line with $166.56 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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