Quest Diagnostics Sees Growth Outpace Targets as Consumer Testing Surges

Key Points

• Quest Diagnostics is outperforming its growth targets: Revenue increased about 12% and earnings more than 10% in 2025, while 2026 guidance calls for nearly 8% revenue growth and more than 13% earnings growth.
• Consumer health is a major organic-growth driver. Quest’s $250 million consumer-testing business is expected to grow at least 30% in 2026, supported by direct-to-consumer testing and partnerships with companies including Apple Health, Hims & Hers, Oura and WHOOP.
• Quest has deployed $2.8 billion on acquisitions and partnerships since 2024, while integrating health-system and Fresenius laboratory businesses. The company also faces uncertainty from potential PAMA reimbursement cuts, with worst-case exposure estimated at slightly above $100 million.

Quest Diagnostics NYSE: DGX CEO and President Jim Davis said the diagnostic testing company is exceeding the growth framework it outlined at its prior investor day, driven largely by organic growth, consumer-health demand and partnerships rather than a heavier-than-expected pace of acquisitions.

Davis said Quest had previously targeted 4% to 5% revenue growth, including 1% to 2% from acquisitions, along with 7% to 9% earnings-per-share growth. He said revenue rose about 12% in 2025 and earnings grew just above 10%. For 2026, Quest has guided for revenue growth of nearly 8% and earnings growth of more than 13%, approaching 14%.

While Quest had initially contemplated $1.5 billion in mergers and acquisitions, Davis said the company has deployed $2.8 billion of capital in M&A since 2024. Its acquisition activity was concentrated in 2024, including LifeLabs in Canada and outreach laboratory transactions involving Allina Health, OhioHealth and University Hospitals, among others.

Since then, Quest has focused on integrating those operations while also taking on large partnership-related businesses that were not structured as acquisitions. Those include a co-lab arrangement with Corewell Health that Davis described as a $250 million business, as well as laboratory testing previously handled by Fresenius for dialysis patients, representing about $100 million in business.

Organic Growth Drivers

Davis said Quest’s core physician-office business remains structurally stronger than it was before the COVID-19 pandemic. He cited the aging population, continued prevalence of chronic conditions and the expanding use of newer tests.

Quest expects to test 250 million people in 2026, representing an estimated 110 million to 120 million unique individuals, Davis said. The company continues to see elevated levels of diabetes, cardiovascular disease, liver disease and other chronic conditions across the population it serves.

He also highlighted growing adoption of tests associated with cardiovascular risk and metabolic health, including Lp(a), ApoB and insulin-resistance testing. Blood-based biomarkers used in assessing Alzheimer’s disease are gaining traction beyond neurologists and are increasingly being used in primary care, Davis said.

“People are proactively getting lab work,” Davis said, describing a broader consumer trend toward monitoring biomarkers and biometric data before deciding whether to visit a physician.

Quest’s consumer-health business, which includes its QuestHealth.com direct-to-consumer operations and partnerships with Function Health, Junction Health, Hims & Hers, Hone Health, WHOOP, Oura and Apple Health, was a $250 million business at the end of 2025 and was expected to grow at least 30% in 2026, according to Davis. Apple Health was not expected to begin contributing until December.

Davis said direct-to-consumer wellness testing has higher average margins than the company overall because it is cash-pay business, avoiding insurance denials and patient concessions. He said Quest can also leverage its existing patient service center and courier infrastructure as volumes increase.

Health-System Partnerships and Market Expansion

Quest has used health-system outreach arrangements to build its presence in markets where independent physician practices are less prevalent. Davis pointed to Minneapolis, Cleveland and Columbus, Ohio, where large health systems employ a substantial share of primary-care physicians and laboratory work has historically remained within those systems.

Following outreach transactions with health systems in those markets, Quest has begun generating growth above the business volumes it initially purchased, Davis said. The company has expanded its commercial presence, logistics network and patient service centers after entering those regions.

Corewell Health is expected to be an important part of Quest’s Michigan strategy. Quest currently operates laboratories inside Corewell’s 21 hospitals, but Davis said outreach work from those facilities will move next year into a jointly operated central laboratory in Southfield, Michigan.

Quest will also contribute its legacy Michigan business to that laboratory, which Davis said will become the state’s largest lab and will compete for additional testing business. The economics of the Corewell arrangement are expected to improve over a three-year period as Quest transitions equipment and supplies to its preferred vendors and realizes scale benefits.

For the Fresenius testing business, Davis said Quest expects margins to reach the company average by the fourth quarter of 2026 and become accretive to the company average in 2027.

PAMA Remains an Uncertainty

Davis also addressed the potential impact of the federal Protecting Access to Medicare Act, or PAMA, which could affect Medicare laboratory reimbursement rates. He said the company is awaiting details from the Centers for Medicare & Medicaid Services on participation in the recent data-collection process.

Quest plans to challenge the results if participation falls materially short of broad industry representation, Davis said. He noted that fewer than 1% of eligible laboratories submitted data during the prior collection process in 2016, which he said produced an unrepresentative pricing profile.

The company is also supporting the RESULTS Act, a bipartisan proposal Davis said would simplify data collection and provide a more accurate measure of market-based pricing. The legislation had 130 co-sponsors, according to Davis, though he said he could not assign a probability to either passage of the bill or a further PAMA delay.

In a worst-case scenario in which every affected test rate fell by the maximum 15%, Davis estimated Quest’s exposure at somewhat more than $100 million. He added that Medicare fee-for-service now represents less than half of the relevant business as more beneficiaries shift into Medicare Advantage plans.

About Quest Diagnostics (NYSE:DGX)

Quest Diagnostics Incorporated NYSE: DGX is a provider of diagnostic information services. The company performs laboratory testing used to help diagnose, monitor and manage diseases and other health conditions, serving physicians, hospitals, health plans, employers, government agencies and individual consumers.

Its services include routine blood and urine testing, advanced and esoteric diagnostics, molecular and genetic testing, anatomic pathology, cancer testing, drug screening and wellness-related assessments.

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