Quest Diagnostics NYSE: DGX reported first-quarter 2026 results that management said reflected broad-based organic growth, improving productivity from automation and artificial intelligence, and contributions from major collaborations including Fresenius Medical Care and Corewell Health. The company also raised its full-year revenue and earnings guidance following the quarter.
First-quarter results and raised 2026 outlook
Chairman, President and CEO Jim Davis said Quest delivered “strong first quarter performance” as demand increased for clinical innovations, expansions into new clinical areas, and collaborations with healthcare and consumer health organizations. Davis said revenue grew more than 9% “almost entirely from organic revenue growth,” while adjusted diluted EPS rose about 13%.
CFO Sam Samad reported consolidated revenue of $2.9 billion, up 9.2% year over year, with consolidated organic revenue up 9%.
Diagnostic Information Services revenue increased 9.4% versus the prior year, which Samad attributed to strong organic growth across physician, hospital and consumer channels. Reported operating income was $399 million, or 13.8% of revenue, compared with $346 million, or 13% of revenue, a year earlier. On an adjusted basis, operating income was $447 million, or 15.4% of revenue, compared with $406 million, or 15.3% of revenue, last year.
Quest posted reported EPS of $2.24 compared with $1.94 a year ago; adjusted EPS was $2.50 compared with $2.21. Samad said adjusted EPS growth was driven largely by organic revenue growth, increased productivity, and lower interest expense, partially offset by wage increases and weather impacts.
Cash from operations was $278 million, down from $314 million in the prior-year period due to timing of receipts and disbursements and higher bonus payments, partially offset by higher operating income.
Based on first-quarter performance, Samad said Quest raised its full-year 2026 guidance and now expects:
- Revenue: $11.78 billion to $11.9 billion (6.8% to 7.8% growth)
- Reported EPS: $9.58 to $9.78
- Adjusted EPS: $10.63 to $10.83
- Cash from operations: approximately $1.75 billion
- Capital expenditures: approximately $550 million
Samad said the revenue guide does not include contributions from prospective M&A and that operating margin is expected to expand versus the prior year.
Volume, mix, and the impact of Corewell and Fresenius
Total volume, measured by requisitions, increased 10.9% year over year, with organic volume up 10.8%. Samad said Fresenius Medical Care and Corewell Health contributed roughly 7% to organic volume growth in the quarter; excluding those relationships, organic volume growth was 3.8%.
Revenue per requisition declined 1.3% year over year, which Samad said reflected business mix from the Corewell and Fresenius collaborations, as those relationships include a greater proportion of routine tests. Excluding that mix impact, revenue per requisition increased about 2.5%. Samad said unit price reimbursement was “relatively flat,” and that the main driver of the higher revenue per requisition excluding the two collaborations was an increase in tests per requisition.
In response to a question about expectations for the rest of the year, Samad reiterated the company’s view of continued organic utilization growth and quantified the embedded revenue contribution from the two collaborations. He said Corewell was expected to contribute about $250 million to revenue growth for the year, with Fresenius adding roughly $80 million to $100 million on top of that.
Davis also pointed to test mix benefits, highlighting growth in consumer health partnerships and advanced testing panels, as well as continued strength in Alzheimer’s-related testing. He said Quest’s Alzheimer’s testing “more than doubled year-over-year.”
Channel performance: physician, hospital, and consumer
Davis said the physician channel produced high single-digit revenue growth, driven by demand for clinical innovations, geographic expansion tied to greater health plan access, and increased enterprise account volume. He also highlighted growth in end-stage renal disease testing, describing it as a new clinical area for Quest and noting volume from dialysis clinics operated by Fresenius Medical Care, as well as independent dialysis clinics and other providers for lab and water purity testing.
In the hospital channel, Davis said revenue rose at a double-digit rate, with most of the growth coming from Quest’s collaborative lab solutions for Corewell Health. He said implementation was “proceeding smoothly” and that Quest was advancing its joint venture with plans to open a “state-of-the-art lab in Southeast Michigan next year.” Davis added that Quest’s pipeline for potential Co-Lab collaborations, as well as outreach and independent acquisitions, remained strong.
In consumer health, Davis said Quest again delivered “significant revenue growth” from both questhealth.com and consumer collaborations. He cited “robust double-digit customer repeat rates” on questhealth.com and demand for newer offerings such as the Elite Health Profile as well as autoimmune and hormone tests. He also said a meaningful part of growth came from consumers accessing Quest lab insights through apps and wearables of collaborators.
Discussing consumer partnerships, Davis said questhealth.com grew “somewhere between in the high 20s%,” while growth from partnerships and value-added resellers was even stronger. He also addressed Function Health’s acquisition of Getlabs, saying Quest viewed it as positive because it can expand access to home blood draws in areas where Quest has less patient service center coverage. Samad added that the collaboration ecosystem was broad-based, with growth coming from multiple players.
On profitability of consumer offerings, Samad said margins in these collaborations and on questhealth.com were “on par, if not slightly better than our overall enterprise average,” citing cash-pay dynamics and lower complexity from fewer denials and patient concessions.
Advanced diagnostics, AI, and operational initiatives
Davis said Quest delivered double-digit revenue growth across several advanced diagnostic areas during the quarter, including brain health, cardiometabolic and endocrine testing, and other categories. He reiterated momentum in the AD-Detect blood testing franchise for Alzheimer’s disease and described the company’s test menu and algorithmic approach, noting Quest developed a proprietary algorithm combining multiple biomarkers to establish Alzheimer’s pathology with sensitivity and specificity of 90% or greater.
In cardiometabolic and endocrine testing, Davis pointed to double-digit growth in parts of the portfolio, including Lp(a) and ApoB tests, as well as kidney, liver, and reproductive hormone testing. He noted new American Heart Association guidelines that recommend Lp(a) and ApoB testing for the first time and also recommend earlier cholesterol screening.
In oncology, Davis highlighted a research collaboration with City of Hope to study use of Quest’s Haystack MRD test in monitoring recurrence and treatment decisions in clinical trial participants across 14 U.S. sites. He also discussed an arrangement with Guardant Health related to blood collections for the Shield test, saying the partnership began during the quarter but it was “early” to comment on volumes.
Samad said Quest was making progress on Haystack’s commercial ramp and reimbursement, including submission to MolDX for technical assessment to pursue Medicare Advantage reimbursement, and noted the company had PLA codes priced at $3,900 baseline and $800 for monitoring. He said it was too early to discuss the year’s EPS phasing for Haystack and that Quest would provide updates over time.
On operations, Davis said Quest’s Invigorate program targets 3% annual cost savings and productivity improvements. He cited expanded deployment of AI and automation beyond the lab, including a 40% productivity boost among customer service agents using AI to triage and route emails. Davis also described the launch of Quest AI Companion in the myQuest app, powered by Google Gemini, saying patients engaged the tool about 350,000 times since rollout in the first quarter.
Davis also said Quest was scaling planning and design work for Project Nova, a multi-year initiative to transform order-to-cash processes and systems, with the first wave of solutions targeted for implementation in fall 2027.
Samad said Project Nova’s expected impact remained $0.25 of EPS dilution for the year, though expense cadence shifted, with more than 60% of costs now expected in the second half. He also cited elevated fuel costs as a headwind of $7 million to $10 million embedded in guidance, equating to about $0.05 to $0.07 of EPS.
Policy, reimbursement, and M&A commentary
On ACA subsidies and potential disenrollments, Davis said it was “too early to tell,” adding that Quest cannot identify every ACA-related requisition, though the company believed roughly 60% can be discretely identified and it was not seeing an impact to date. Samad said guidance still assumes a 30-basis-point revenue impact from ACA disenrollments, though the company had not seen the negative impact in the first quarter.
Regarding PAMA data collection and potential 2027 Medicare rates, Davis said Quest was prepared to submit data after May 1 and noted Medicare’s guidance that entities with more than $25,000 in Medicare revenue should submit, which he said could include more than 2,600 hospital labs. He said Quest would continue pushing for the RESULTS Act and described ongoing steps such as a CMS technical assessment and CBO scoring. Davis said it was too early to speculate on 2027 rates, but argued that broader participation in data submission could result in higher rates than reflected in prior, more limited submissions.
Davis also addressed investor concerns tied to the CMS CRUSH initiative, saying Quest did not believe it would have an impact. He said an OIG report identified 10 tests driving most of the 2024 Medicare lab spending increase, with seven being PLA codes in which Quest had “nothing,” and three being genetic or molecular-based tests where Quest’s exposure was “de minimis.”
On M&A, Davis said the “M&A funnel is good,” including health system outreach opportunities and some remaining independent labs. He said potential Medicare reimbursement changes were not affecting hospitals’ views of outreach, but argued health plans were increasingly scrutinizing the higher prices paid to some hospital labs versus independent labs and that Quest advocated for paying all labs the same for outreach work.
About Quest Diagnostics NYSE: DGX
Quest Diagnostics NYSE: DGX is a leading provider of diagnostic information services that supports clinical decision-making for patients, physicians and healthcare organizations. The company operates a network of clinical laboratories and patient service centers that perform a broad range of laboratory tests and diagnostic assays used in routine care, disease diagnosis, monitoring and screening.
Its services span core clinical laboratory testing, anatomic pathology, molecular and genomic diagnostics, infectious disease testing and toxicology.
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