Quest Diagnostics delivered a strong start to the year, with revenue and adjusted profit both coming in above Wall Street expectations. Management attributed the robust performance to higher sales volumes, contributions from recent acquisitions, and expanded partnerships with large enterprise accounts. CEO Jim Davis pointed to particularly strong demand in advanced diagnostics, new health plan contracts, and the successful integration of acquired businesses as key factors supporting growth. Davis also highlighted the company's ongoing efforts to improve productivity through increased automation and the deployment of artificial intelligence in laboratory operations.
Is now the time to buy DGX? Find out in our full research report (it’s free).
Quest (DGX) Q1 CY2025 Highlights:
- Revenue: $2.65 billion vs analyst estimates of $2.62 billion (12.1% year-on-year growth, 1.3% beat)
- Adjusted EPS: $2.21 vs analyst estimates of $2.15 (2.9% beat)
- Adjusted EPS guidance for the full year is $9.68 at the midpoint, roughly in line with what analysts were expecting
- Operating Margin: 13%, in line with the same quarter last year
- Sales Volumes rose 12.4% year on year (1.5% in the same quarter last year)
- Market Capitalization: $20.33 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 Q1 Earnings Call
- Luke Sergott (Barclays) asked about the sustainability of organic volume growth and if recent trends would persist. CEO Jim Davis explained that, after adjusting for weather and leap year effects, volume trends are consistent with the company’s expectations and are tracking with late-2024 levels.
- Kevin Caliendo (UBS) inquired about Quest’s tariff exposure and supply chain resilience. Davis stated that less than 1% of supply costs are directly sourced from China and that most critical reagents are U.S.-manufactured, minimizing tariff risks.
- Patrick Donnelly (Citi) questioned margin pacing for the rest of the year and the performance of LifeLabs. CFO Sam Samad confirmed that margin seasonality is expected to follow historical trends and that LifeLabs is showing steady progress toward corporate margin targets.
- Noah Kava (Jefferies) sought clarity on the early commercial traction and reimbursement pathway for the Haystack MRD cancer recurrence test. Davis said commercial orders have begun, with reimbursement submissions underway and additional clinical evidence expected in coming quarters.
- David Westenberg (Piper Sandler) asked about the financial benefits and performance indicators for Quest’s collaboration with Google Cloud and use of generative AI. Samad outlined that these efforts will improve data analytics efficiency, support faster customer service, and enable AI-based tools for physicians and patients, with success measured by speed and accuracy of information delivery.
Catalysts in Upcoming Quarters
In the quarters ahead, the StockStory team will be monitoring (1) the adoption rates of new advanced diagnostic tests such as the AD-Detect Alzheimer’s panel and Haystack MRD, (2) progress on integration and margin improvement at recently acquired businesses like LifeLabs, and (3) efficiency gains from automation and Project Nova modernization. The evolution of enterprise partnerships and regulatory updates will also be important signposts for Quest’s trajectory.
Quest currently trades at $182, up from $161.98 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).
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