Quest Diagnostics (DGX) Morgan Stanley 24th Annual Global Healthcare Conference summary

Financial performance and guidance

• Raised 2026 guidance to 8.3%-9.2% growth, driven by strong first-half utilization and revenue per requisition, as well as new partnerships with Corewell Health and Fresenius.

• Consumer business achieved nearly 30% year-over-year growth, contributing to overall confidence in full-year performance.

• Second-half guidance assumes impact from health exchange dis-enrollments and some weather-related conservatism, with deceleration mainly attributed to these factors.

• Lapping of Corewell and Fresenius partnerships in October will affect revenue growth rates but improve margin rates.

Margin trends and profitability

• Full-year operating margin expansion expected for 2026, with ongoing productivity improvements post-COVID.

• Margin rates impacted by initial integration costs from partnerships and transformation initiatives, but these effects will diminish as partnerships mature.

• Corewell and Fresenius partnerships are becoming more profitable, with Corewell approaching a 10% margin rate by year-end.

• Higher tests per requisition significantly improve incremental margins due to limited additional costs.

Organic growth drivers and market share

• Organic volume growth excluding major partnerships is about 4%, with revenue per requisition at 2.9% in Q2.

• Growth driven by expanding preventive care guidelines, strong physician channel utilization, and onboarding new health system relationships.

• Consumer business annualizing at $300 million, growing at 30%, with expectations of 20%+ growth over the next 3-5 years.

• Market share gains attributed to new state access, payer partnerships, and recent acquisitions in physician outreach.