Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were $2,820 million, reflecting a 13.1% increase year-over-year, with organic revenue growth of 6.8% [13][16] - Reported operating income was $386 million, or 13.7% of revenues, compared to $330 million, or 13.3% of revenues last year [15][16] - Adjusted EPS for the quarter was $2.60, up from $2.30 a year ago, while reported EPS was $2.16 compared to $1.99 last year [16] - Cash from operations increased to $1,420 million year-to-date, a 63.1% increase from the prior year [17] Business Line Data and Key Metrics Changes - Revenues for Diagnostic Information Services increased by 13.5%, driven by organic growth across physician, hospital, and consumer channels [13] - The physician channel saw approximately 17% revenue growth, with organic growth in the high single digits [4][5] - The hospital channel experienced low single-digit revenue growth, supported by collaborative lab solutions [6] - The consumer channel showed strong double-digit growth, particularly from the questhealth.com platform [7][8] Market Data and Key Metrics Changes - Total volume measured by requisitions increased by 12.5% year-over-year, with organic volume up 3.9% [13][14] - The company noted broad-based demand across clinical solutions, particularly in advanced diagnostics areas such as autoimmune and brain health [4][9] Company Strategy and Development Direction - The company is focused on delivering solutions that meet the evolving needs of core clinical customers and expanding into higher growth areas like consumer health and data analytics [3][4] - Recent acquisitions are emphasized as key growth drivers, particularly in hospital outreach and independent labs [4] - The company is investing in automation and AI to improve operational efficiency and customer experience [11] Management's Comments on Operating Environment and Future Outlook - Management raised the full-year 2025 guidance due to strong performance year-to-date, expecting revenues between $10,960 million and $11,000 million [17][18] - The company is optimistic about potential PAMA reforms, although the passage of the Results Act is uncertain [2][27] - Management expects continued strong demand for clinical solutions and a positive outlook for the consumer health channel [20][36] Other Important Information - The company announced a joint venture with CoreWell Health to establish lab services in Michigan, which is expected to generate approximately $1 billion in annual revenues once fully scaled [7][18] - The company is implementing Project Nova, a multi-year order to cash transformation, with significant investments expected in 2025 [11][18] Q&A Session Summary Question: Utilization backdrop and expectations into year-end - Management noted that raw requisition volume was up 3.9%, with strong growth in autoimmune and advanced cardiometabolic testing, and expects utilization levels to continue into Q4 [22][24][26] Question: Latest expectations on PAMA - Management indicated a likelihood of a PAMA delay, with a potential $100 million impact if PAMA is reinstated, but they can offset some of this impact through controlled investments [27][28] Question: Mix performance relative to expectations - Management stated that consumer channels are performing slightly above expectations, with strong growth in episodic testing and wellness testing [32][34][36] Question: Q4 margins and impacts - Management highlighted strong Q3 margins but noted elevated employee health expenses and increased investments in Project Nova as potential headwinds for Q4 [40][44] Question: Cash flow and one-time benefits - Management confirmed strong cash flow guidance of $1,800 million, noting one-time benefits from the CARES Act and recent tax legislation that may not recur in 2026 [60][62] Question: Consumer health momentum and partnerships - Management discussed partnerships with WHOOP and Aura, highlighting the potential for significant growth in the consumer health segment [68][71] Question: Oncology initiatives and Haystack integration - Management provided updates on the integration of the Haystack MRD test and ongoing studies to expand its indications, with positive market response expected [96][98][112]

Financial Data and Key Metrics Changes - Consolidated revenues for Q3 2025 were $2.82 billion, reflecting a 13.1% increase year-over-year, with organic revenue growth of 6.8% [13][16] - Adjusted operating income was $458 million, or 16.3% of revenues, compared to $385 million, or 15.5% of revenues in the prior year [15] - Reported EPS was $2.16, up from $1.99 a year ago, while adjusted EPS increased to $2.60 from $2.30 [16] - Cash from operations year-to-date reached $1.42 billion, a 63.1% increase compared to the prior year [16] Business Line Data and Key Metrics Changes - Revenue from diagnostic information services grew by 13.5%, driven by organic growth across physician, hospital, and consumer channels [13] - In the physician channel, revenue grew approximately 17%, with organic growth in the high single digits [7] - The hospital channel saw low single-digit revenue growth, primarily driven by COLAB Solutions [8] - The consumer channel experienced strong double-digit growth, particularly from the questhealth.com platform [9] Market Data and Key Metrics Changes - Total volume measured by requisitions increased by 12.5% year-over-year, with organic volume up 3.9% [14] - The company noted a benefit of approximately 50 basis points in volume due to disruptions from the previous year [14] Company Strategy and Development Direction - The company is focused on delivering solutions for core clinical customers and expanding into consumer life sciences and data analytics [6] - Recent acquisitions are emphasized as key growth drivers, particularly in hospital outreach and independent labs [6] - The company announced a joint venture with Corewell Health to establish a lab services partnership in Michigan [2][8] - Project Nova aims to modernize the order-to-cash process, with significant investments expected in 2025 [12][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding the potential delay of PAMA legislation, which could mitigate a projected $100 million impact next year [26] - The company anticipates continued strong demand for clinical solutions and is raising its full-year 2025 guidance [19] - Management highlighted the importance of consumer health channels, which are expected to maintain momentum into the next year [32] Other Important Information - The company received FDA Breakthrough Device designation for its Haystack MRD test, reinforcing its cancer monitoring innovation [10] - The company is targeting 3% annual cost savings and productivity improvements through its Invigorate program [11] Q&A Session Summary Question: What are the expectations for utilization levels into year-end? - Management noted that utilization levels are expected to continue as seen in Q3, with strong growth in the consumer health business contributing to this trend [24] Question: What are the latest expectations regarding PAMA? - Management indicated that while the RESULTS Act has been proposed, a delay in PAMA is considered more likely than the act passing, with a potential $100 million impact next year [26] Question: How is the consumer health channel performing relative to expectations? - The consumer health channel is performing slightly above expectations, with strong growth in both direct and indirect channels [30] Question: Can you provide insights on the impact of Project Nova investments? - Management confirmed that there will be a ramp-up in Project Nova investments in Q4, but this is not expected to negatively impact 2026 [110] Question: What is the status of the Haystack MRD test integration? - The Haystack MRD test is fully integrated into the company, with ongoing studies and positive market response expected to enhance its presence [94][95]

分组1 - Quest Diagnostics reported quarterly earnings of $2.6 per share, exceeding the Zacks Consensus Estimate of $2.51 per share, and showing an increase from $2.3 per share a year ago, resulting in an earnings surprise of +3.59% [1][2] - The company achieved revenues of $2.82 billion for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 3.45%, compared to $2.49 billion in the same quarter last year [2] - Quest Diagnostics has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2][6] 分组2 - The stock has gained approximately 26.2% since the beginning of the year, outperforming the S&P 500's gain of 14.5% [3] - The current consensus EPS estimate for the upcoming quarter is $2.42 on revenues of $2.72 billion, and for the current fiscal year, it is $9.74 on revenues of $10.85 billion [7] - The Zacks Industry Rank for Medical - Outpatient and Home Healthcare is in the top 19% of over 250 Zacks industries, indicating a favorable outlook for the sector [8]

Q3 2025 Performance Highlights - Total revenue increased by 13.1% to $2.82 billion[1, 5, 14] - Adjusted diluted EPS reached $2.60 per share[1, 14] - Operating income increased 16.8% to $386 million[14] - Adjusted operating income increased 18.9% to $458 million[14] - Net income attributable to Quest Diagnostics increased 8.5% to $245 million[14] Growth Drivers - Organic revenue growth was 6.8%[5] - Total requisition volume increased by 12.5%[14] - Organic requisition volume increased by 3.9%[14] Strategic Initiatives - Established a lab services joint venture with Corewell Health, expecting Co-Lab Solutions annual revenues to reach approximately $1 billion[6] - Announced Epic as the technology partner for Project Nova[7] 2025 Full Year Guidance - Updated net revenue guidance to $10.96 billion - $11.00 billion, representing an increase of 11.0% - 11.4%[16] - Updated adjusted diluted EPS guidance to $9.76 - $9.84[16]

Core Insights - Digi Power X Inc. is expanding its AI data center capacity by adding five new ARMS-200 GPU modules, set to be operational in March 2026, which will increase its total GPU capacity to 2,304 [1][2] - The company is also developing a retail compute platform named "NeoCloudz," expected to launch in January 2026, aimed at providing on-demand GPU compute access to a wider market [3][4] - Digi Power X maintains a strong financial position with approximately $60 million in cash and no long-term debt, allowing for continued expansion and investment in AI infrastructure [4] Expansion Plans - The expansion will enhance Digi Power X's capabilities as an independent provider of GPU-as-a-Service for AI, cloud, and blockchain workloads in North America [2] - The Alabama data center currently has a power capacity of up to 55 MW, with further expansion plans to accommodate increasing demand from AI and decentralized computing clients [5] Product Development - NeoCloudz will utilize a Supermicro enterprise-grade backbone and is designed to offer scalable, high-performance AI and HPC capabilities through a consumer-friendly interface [3] - The platform aims to combine enterprise-grade reliability with retail accessibility, broadening the company's market reach [4]

Core Insights - Quest Diagnostics has raised its full-year profit and revenue forecast due to strong demand for its diagnostic tests [1] Company Summary - The company is experiencing robust demand for its diagnostic tests, which has led to an optimistic revision of its financial outlook for the year [1]

Executive Summary & Business Highlights [Third Quarter 2025 Performance Overview](index=1&type=section&id=1.1.%20Third%20Quarter%202025%20Performance%20Overview) Quest Diagnostics reported robust financial performance for the third quarter of 2025, demonstrating significant top- and bottom-line growth driven by strong demand for clinical solutions, strategic acquisitions, and expansion in its consumer channel - The company achieved robust top- and bottom-line growth, underscoring strong demand for clinical solutions and diligent execution of its strategy[3](index=3&type=chunk) Third Quarter 2025 Key Financial Highlights | Metric | Q3 2025 Value | Change from Q3 2024 | Source | | :-------------------------------- | :-------------- | :------------------ | :----- | | Revenues | $2.82 billion | +13.1% | chunk_num: [5] | | Organic Growth (Revenues) | N/A | +6.8% | chunk_num: [3] | | Reported Diluted EPS | $2.16 | +8.5% | chunk_num: [5] | | Adjusted Diluted EPS | $2.60 | +13.0% | chunk_num: [5] | | Year-to-date Cash provided by operations | $1.4 billion | +63.1% | chunk_num: [5] | | Requisition volume | N/A | +12.5% | chunk_num: [7] | | Organic requisition volume | N/A | +3.9% | chunk_num: [7] | [Key Strategic Developments and Collaborations](index=1&type=section&id=1.2.%20Key%20Strategic%20Developments%20and%20Collaborations) Quest Diagnostics advanced its strategic objectives through a major joint venture, key acquisitions, and several collaborations aimed at expanding its market reach, enhancing service offerings, and driving innovation in diagnostic testing - Entered into an agreement with Corewell Health to establish a lab services joint venture in Michigan, with Quest deploying comprehensive Co-Lab Solutions across 21 Corewell hospitals, expected to reach approximately **$1 billion in annual revenues next year**[3](index=3&type=chunk)[6](index=6&type=chunk) - Completed the acquisition of select dialysis testing assets from Fresenius Medical Care and began scaling clinical lab testing for approximately **200,000 dialysis patients annually**[6](index=6&type=chunk) - Formed collaborations with WHOOP and ŌURA Health to integrate lab services into their mobile apps, catering to growing consumer interest in wellness and preventive health[6](index=6&type=chunk) - Announced a collaboration with Epic for Project Nova, a multi-year initiative to streamline systems and improve experiences for patients and providers[6](index=6&type=chunk) - Secured FDA breakthrough device designation for the Haystack MRD™ test and formed collaborations with Mass General Brigham and Rutgers Cancer Institute for trials[6](index=6&type=chunk) [Updated Full Year 2025 Guidance](index=1&type=section&id=1.3.%20Updated%20Full%20Year%202025%20Guidance) Quest Diagnostics raised its full-year 2025 financial guidance, reflecting strong year-to-date performance and a positive outlook for net revenues, adjusted diluted EPS, and cash provided by operations Updated Full Year 2025 Guidance Comparison | Metric | Updated Guidance (Low) | Updated Guidance (High) | Prior Guidance (Low) | Prior Guidance (High) | | :-------------------------- | :--------------------- | :---------------------- | :------------------- | :-------------------- | | Net revenues | $10.96 billion | $11.00 billion | $10.80 billion | $10.92 billion | | Net revenues increase | 11.0% | 11.4% | 9.4% | 10.6% | | Reported diluted EPS | $8.58 | $8.66 | $8.60 | $8.80 | | Adjusted diluted EPS | $9.76 | $9.84 | $9.63 | $9.83 | | Cash provided by operations | Approximately $1.8 billion | N/A | Approximately $1.55 billion | N/A | | Capital expenditures | Approximately $500 million | N/A | Approximately $500 million | N/A | Consolidated Financial Statements [Consolidated Statements of Operations](index=4&type=section&id=2.1.%20Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show significant year-over-year growth in net revenues and operating income for both the three and nine months ended September 30, 2025, reflecting strong operational performance Consolidated Statements of Operations Highlights (Three Months Ended September 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (%) | | :------------------------------------ | :-------------- | :-------------- | :--------- | | Net revenues | $2,816 | $2,488 | 13.1% | | Operating income | $386 | $330 | 16.8% | | Net income attributable to Quest Diagnostics | $245 | $226 | 8.4% | | Diluted EPS | $2.16 | $1.99 | 8.5% | Consolidated Statements of Operations Highlights (Nine Months Ended September 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (%) | | :------------------------------------ | :-------------- | :-------------- | :--------- | | Net revenues | $8,229 | $7,251 | 13.5% | | Operating income | $1,170 | $985 | 18.8% | | Net income attributable to Quest Diagnostics | $747 | $649 | 15.1% | | Diluted EPS | $6.57 | $5.74 | 14.5% | [Consolidated Balance Sheets](index=5&type=section&id=2.2.%20Consolidated%20Balance%20Sheets) As of September 30, 2025, Quest Diagnostics maintained a stable financial position with total assets slightly increasing, while managing its debt and enhancing stockholders' equity Consolidated Balance Sheet Highlights (September 30, 2025 vs. December 31, 2024) | Metric | Sep 30, 2025 (Millions) | Dec 31, 2024 (Millions) | Change (Millions) | | :-------------------------------- | :---------------------- | :---------------------- | :---------------- | | Total assets | $16,197 | $16,153 | +$44 | | Cash and cash equivalents | $432 | $549 | -$117 | | Accounts receivable, net | $1,456 | $1,304 | +$152 | | Goodwill | $8,901 | $8,856 | +$45 | | Total current liabilities | $2,134 | $2,169 | -$35 | | Long-term debt | $5,171 | $5,615 | -$444 | | Total Quest Diagnostics stockholders' equity | $7,258 | $6,778 | +$480 | [Consolidated Statements of Cash Flows](index=6&type=section&id=2.3.%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2025, Quest Diagnostics generated significantly more cash from operating activities compared to the prior year, while cash used in investing activities decreased substantially due to lower business acquisition spending Consolidated Statements of Cash Flows Highlights (Nine Months Ended September 30) | Metric | 2025 (Millions) | 2024 (Millions) | Change (Millions) | | :------------------------------------ | :-------------- | :-------------- | :---------------- | | Net cash provided by operating activities | $1,421 | $870 | +$551 | | Net cash used in investing activities | $(440) | $(2,046) | +$1,606 | | Net cash (used in) provided by financing activities | $(1,101) | $1,254 | -$2,355 | | Net change in cash and cash equivalents | $(117) | $78 | -$195 | | Business acquisitions, net of cash acquired | $(51) | $(1,781) | +$1,730 | | Repayments of debt | $(1,011) | $(302) | -$709 | | Purchases of treasury stock | $(150) | — | -$150 | Non-GAAP Financial Measures and Reconciliations [Definition and Rationale for Non-GAAP Measures](index=2&type=section&id=3.1.%20Definition%20and%20Rationale%20for%20Non-GAAP%20Measures) Quest Diagnostics utilizes non-GAAP 'adjusted' financial measures, which exclude specific special items, to provide a clearer view of the company's core operating performance and underlying business trends, complementing GAAP results for management and investor analysis - The term 'reported' refers to measures under GAAP, while 'adjusted' refers to non-GAAP operating performance measures that exclude special items[9](index=9&type=chunk) - Special items excluded from adjusted measures include restructuring and integration charges, amortization expense, excess tax benefits (ETB) from stock-based compensation, gains/losses on strategic investments, impairment charges, and other items[9](index=9&type=chunk) - Management uses these non-GAAP measures to evaluate performance, analyze underlying business trends, establish budgets, and for incentive compensation purposes, believing they are useful to investors and analysts[10](index=10&type=chunk)[11](index=11&type=chunk) [Reconciliation of Reported to Adjusted Results - Three Months Ended September 30, 2025](index=7&type=section&id=3.2.%20Reconciliation%20of%20Reported%20to%20Adjusted%20Results%20-%20Three%20Months%20Ended%20September%2030%2C%202025) For the third quarter of 2025, adjusted financial results, which exclude specific non-recurring and non-operational items, show higher operating income and diluted EPS compared to reported GAAP figures Q3 2025 GAAP to Adjusted Reconciliation | Metric | As Reported (GAAP) | Adjustments (Millions) | As Adjusted (Non-GAAP) | | :------------------------------------ | :----------------- | :--------------------- | :--------------------- | | Operating income | $386 | +$72 | $458 | | Operating income as a percentage of net revenues | 13.7% | +2.6% | 16.3% | | Net income attributable to Quest Diagnostics | $245 | +$51 | $296 | | Diluted EPS | $2.16 | +$0.44 | $2.60 | [Reconciliation of Reported to Adjusted Results - Nine Months Ended September 30, 2025](index=8&type=section&id=3.3.%20Reconciliation%20of%20Reported%20to%20Adjusted%20Results%20-%20Nine%20Months%20Ended%20September%2030%2C%202025) For the nine months ended September 30, 2025, adjusted financial results, excluding various special items, demonstrate a stronger underlying performance with higher operating income and diluted EPS compared to reported GAAP figures YTD 2025 GAAP to Adjusted Reconciliation | Metric | As Reported (GAAP) | Adjustments (Millions) | As Adjusted (Non-GAAP) | | :------------------------------------ | :----------------- | :--------------------- | :--------------------- | | Operating income | $1,170 | +$160 | $1,330 | | Operating income as a percentage of net revenues | 14.2% | +2.0% | 16.2% | | Net income attributable to Quest Diagnostics | $747 | +$98 | $845 | | Diluted EPS | $6.57 | +$0.86 | $7.43 | [Reconciliation of Reported to Adjusted Results - Three Months Ended September 30, 2024](index=8&type=section&id=3.4.%20Reconciliation%20of%20Reported%20to%20Adjusted%20Results%20-%20Three%20Months%20Ended%20September%2030%2C%202024) For the third quarter of 2024, adjusted financial results, which exclude specific non-recurring and non-operational items, also showed higher operating income and diluted EPS compared to reported GAAP figures Q3 2024 GAAP to Adjusted Reconciliation | Metric | As Reported (GAAP) | Adjustments (Millions) | As Adjusted (Non-GAAP) | | :------------------------------------ | :----------------- | :--------------------- | :--------------------- | | Operating income | $330 | +$55 | $385 | | Operating income as a percentage of net revenues | 13.3% | +2.2% | 15.5% | | Net income attributable to Quest Diagnostics | $226 | +$36 | $262 | | Diluted EPS | $1.99 | +$0.31 | $2.30 | [Reconciliation of Reported to Adjusted Results - Nine Months Ended September 30, 2024](index=8&type=section&id=3.5.%20Reconciliation%20of%20Reported%20to%20Adjusted%20Results%20-%20Nine%20Months%20Ended%20September%2030%2C%202024) For the nine months ended September 30, 2024, adjusted financial results, excluding various special items, indicated a stronger underlying performance with higher operating income and diluted EPS compared to reported GAAP figures YTD 2024 GAAP to Adjusted Reconciliation | Metric | As Reported (GAAP) | Adjustments (Millions) | As Adjusted (Non-GAAP) | | :------------------------------------ | :----------------- | :--------------------- | :--------------------- | | Operating income | $985 | +$147 | $1,132 | | Operating income as a percentage of net revenues | 13.6% | +2.0% | 15.6% | | Net income attributable to Quest Diagnostics | $649 | +$109 | $758 | | Diluted EPS | $5.74 | +$0.96 | $6.70 | [Notes on Adjustments to Financial Measures](index=9&type=section&id=3.6.%20Notes%20on%20Adjustments%20to%20Financial%20Measures) The adjustments to GAAP results primarily include restructuring and integration charges, legal and impairment charges, gains/losses on strategic investments, and other non-recurring gains, with income tax impacts calculated using a combined statutory rate of 25.5% - Restructuring and integration charges primarily relate to workforce reductions and integration costs, impacting cost of services and selling, general and administrative expenses[32](index=32&type=chunk) - Other charges for 2025 include a **$15 million charge for legal matters** and impairment charges of **$5 million (Q3)** and **$29 million (YTD)** on long-lived assets due to a business exit, plus losses from contingent consideration accruals[32](index=32&type=chunk) - Other gains for 2025 include a **$46 million pre-tax gain** from a CARES Act payroll tax credit and a non-recurring gain related to a lease[34](index=34&type=chunk) - Income tax impacts for most adjustments were calculated using a combined statutory income tax rate of **25.5%** for both 2025 and 2024[33](index=33&type=chunk)[37](index=37&type=chunk) [Reconciliation of Full Year 2025 EPS Guidance](index=10&type=section&id=3.7.%20Reconciliation%20of%20Full%20Year%202025%20EPS%20Guidance) The company provided a reconciliation of its full-year 2025 diluted EPS outlook from GAAP to adjusted figures, detailing the estimated impact of various special items Full Year 2025 Diluted EPS Guidance Reconciliation | Metric | Low (Dollars) | High (Dollars) | | :-------------------------------- | :------------ | :------------- | | Diluted EPS (GAAP) | $8.58 | $8.66 | | Restructuring and integration charges (a) | +$0.30 | +$0.30 | | Amortization expense (b) | +$1.02 | +$1.02 | | Other charges (c) | +$0.39 | +$0.39 | | Other gains (d) | -$0.36 | -$0.36 | | Gains and losses on investments (e) | -$0.01 | -$0.01 | | ETB | -$0.16 | -$0.16 | | Adjusted diluted EPS | $9.76 | $9.84 | - The outlook for adjusted diluted EPS represents management's estimates before the impact of special items, which are subject to further changes and difficult to predict[36](index=36&type=chunk) - As of September 30, 2025, **$0.7 billion remained available** under the company's share repurchase authorization, with **0.9 million shares repurchased for $150 million** during the three and nine months ended September 30, 2025[36](index=36&type=chunk) Additional Information [Conference Call Details](index=3&type=section&id=4.1.%20Conference%20Call%20Details) Quest Diagnostics hosted a conference call to discuss its financial results, providing access via dial-in and live webcast, with a replay available for a limited period - A quarterly conference call was held on **October 21, 2025, at 8:30 a.m. Eastern Time** to discuss financial results[12](index=12&type=chunk) - Access was available via phone (**888-455-0391 U.S./Canada, 773-756-0467 international, passcode: 7895081**) or live webcast at www.QuestDiagnostics.com/investor[12](index=12&type=chunk) - A replay of the call is accessible online or by phone until midnight Eastern Time on **November 4, 2025**[13](index=13&type=chunk) [About Quest Diagnostics](index=3&type=section&id=4.2.%20About%20Quest%20Diagnostics) Quest Diagnostics is a leading provider of diagnostic information services, leveraging its extensive network and data to empower healthcare decisions and improve health outcomes for a significant portion of the U.S. population - Quest Diagnostics provides diagnostic insights from laboratory testing to empower people, physicians, and organizations to improve health outcomes[14](index=14&type=chunk) - The company serves **one in three adult Americans** and **half the physicians and hospitals** in the United States annually, with over **55,000 employees**[14](index=14&type=chunk) - Diagnostic insights are derived from one of the world's largest databases of de-identifiable clinical lab results[14](index=14&type=chunk) [Forward-Looking Statements](index=3&type=section&id=4.3.%20Forward-Looking%20Statements) The press release contains forward-looking statements that are subject to various risks and uncertainties, which could cause actual results to differ materially from current expectations - Statements in the press release that are not historical facts are considered forward-looking statements, reflecting management's current estimates and expectations[15](index=15&type=chunk) - Readers are cautioned not to place undue reliance on these statements, as they involve risks and uncertainties that could materially affect actual results[15](index=15&type=chunk) - Risks include uncertain economic conditions, adverse government investigations or lawsuits, competitive environment, billing complexities, changes in government policies, and other factors detailed in SEC filings[15](index=15&type=chunk) [Investor Relations Contact](index=3&type=section&id=4.4.%20Investor%20Relations%20Contact) Contact information for media and investor inquiries is provided, along with details on where to access the full earnings release - Media inquiries can be directed to Wendy Bost at **973-520-2800**[16](index=16&type=chunk) - Investor inquiries can be directed to Shawn Bevec at **973-520-2900**[16](index=16&type=chunk) - The earnings release, including financial tables, is available online in the Newsroom section at www.QuestDiagnostics.com[16](index=16&type=chunk)

Core Insights - Quest Diagnostics reported a strong financial performance for Q3 2025, with revenues increasing by 13.1% year-over-year, driven by organic growth of 6.8% and contributions from acquisitions [2][6] - The company has raised its full-year 2025 guidance due to robust year-to-date performance [2][5] Financial Performance - Q3 2025 net revenues reached $2.82 billion, up from $2.49 billion in Q3 2024, marking a 13.1% increase [4] - Diagnostic Information Services revenues were $2.76 billion, a 13.5% increase from $2.43 billion in the previous year [4] - Operating income for Q3 2025 was $386 million, an increase of 16.8% compared to $330 million in Q3 2024 [4] - Net income attributable to Quest Diagnostics was $245 million, up 8.5% from $226 million in Q3 2024 [4] - Diluted EPS for Q3 2025 was $2.16, reflecting an 8.5% increase from $1.99 in Q3 2024 [4] Year-to-Date Performance - Year-to-date cash provided by operations was $1.42 billion, a significant increase of 63.1% from $870 million in the same period last year [6] - For the first nine months of 2025, net revenues totaled $8.23 billion, up 13.5% from $7.25 billion in 2024 [4] Updated Guidance - The updated guidance for full-year 2025 includes net revenues projected between $10.96 billion and $11.00 billion, an increase from the previous range of $10.80 billion to $10.92 billion [5] - Reported diluted EPS is now expected to be between $8.58 and $8.66, while adjusted diluted EPS is projected to be between $9.76 and $9.84 [5][6] Strategic Developments - Quest Diagnostics entered into a joint venture with Corewell Health to provide lab services in Michigan, with expected annual revenues for Co-Lab Solutions reaching approximately $1 billion [2][7] - The company completed the acquisition of dialysis testing assets from Fresenius Medical Care, enhancing its clinical lab testing capabilities [7] - Collaborations with WHOOP and URA Health aim to integrate Quest's services into wellness and preventive health applications [7]

[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements for Quest Diagnostics and its subsidiaries, along with detailed notes on business, accounting policies, and specific financial items [Item 1. Financial Statements (unaudited)](index=2&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited consolidated financial statements for Quest Diagnostics Incorporated and its subsidiaries, including statements of operations, comprehensive income, balance sheets, cash flows, and stockholders' equity for the periods ended September 30, 2025 and 2024, along with detailed notes explaining the company's business, accounting policies, and specific financial items [Consolidated Statements of Operations](index=3&type=section&id=Consolidated%20Statements%20of%20Operations) This section provides a summary of the company's financial performance over specific periods, detailing net revenues, operating income, net income, and diluted earnings per share | Metric | Three Months Ended Sep 30, 2025 (in millions) | Three Months Ended Sep 30, 2024 (in millions) | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net revenues | $2,816 | $2,488 | $8,229 | $7,251 | | Operating income | $386 | $330 | $1,170 | $985 | | Net income attributable to Quest Diagnostics | $245 | $226 | $747 | $649 | | Diluted EPS | $2.16 | $1.99 | $6.57 | $5.74 | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) This section outlines the company's total comprehensive income, including net income and other comprehensive income or loss components | Metric | Three Months Ended Sep 30, 2025 (in millions) | Three Months Ended Sep 30, 2024 (in millions) | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net income | $259 | $237 | $790 | $685 | | Other comprehensive (loss) income | $(24) | $4 | $48 | $(1) | | Comprehensive income attributable to Quest Diagnostics | $221 | $230 | $795 | $648 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) This section presents a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time | Metric | Sep 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :-------------------------------- | :------------------------- | :------------------------- | | Total assets | $16,197 | $16,153 | | Total current assets | $2,407 | $2,392 | | Total liabilities | $8,821 | $9,257 | | Total current liabilities | $2,134 | $2,169 | | Total stockholders' equity | $7,295 | $6,813 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities, showing the overall change in cash and cash equivalents | Metric | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net cash provided by operating activities | $1,421 | $870 | | Net cash used in investing activities | $(440) | $(2,046) | | Net cash (used in) provided by financing activities | $(1,101) | $1,254 | | Net change in cash and cash equivalents and restricted cash | $(117) | $78 | | Cash and cash equivalents and restricted cash, end of period | $432 | $764 | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity accounts, including retained earnings and treasury stock, over specific periods | Metric | Balance, Dec 31, 2024 (in millions) | Balance, Sep 30, 2025 (in millions) | | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Total Quest Diagnostics stockholders' equity | $6,778 | $7,258 | | Retained earnings | $9,360 | $9,837 | | Treasury stock, at cost | $(4,857) | $(4,896) | - For the nine months ended September 30, 2025, Quest Diagnostics' stockholders' equity increased by **$482 million**, primarily driven by **net income of $747 million**, partially offset by dividends declared of **$270 million** and treasury stock purchases of **$150 million**[17](index=17&type=chunk) [Notes to Consolidated Financial Statements (unaudited)](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and additional information supporting the consolidated financial statements [1. Description of Business](index=10&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS) This section describes Quest Diagnostics' core business operations, primarily focusing on diagnostic information services and its smaller Diagnostic Solutions group - Quest Diagnostics provides diagnostic information services (DIS) through laboratory testing, offering insights to improve health outcomes for physicians, hospitals, patients, and other healthcare entities[21](index=21&type=chunk) - The DIS business accounts for **over 97% of consolidated net revenues**[21](index=21&type=chunk) - The Diagnostic Solutions (DS) group provides risk assessment services for insurers and healthcare IT solutions[21](index=21&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the key accounting principles and methods used in preparing the interim financial statements, including updates on new accounting standards and their expected impact - The interim financial statements are unaudited and reflect management's necessary adjustments, with accounting policies consistent with the 2024 Annual Report on Form 10-K[22](index=22&type=chunk) - New accounting standards for income tax disclosures (effective 2025) and disaggregation of income statement expenses (effective 2027) are not expected to materially impact financial statements[23](index=23&type=chunk) - The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, making 100% bonus depreciation and domestic research cost expensing permanent, is not expected to materially impact the statement of operations, but increased deferred income tax liabilities to **$378 million** as of September 30, 2025, from **$278 million** at December 31, 2024[28](index=28&type=chunk)[29](index=29&type=chunk)[31](index=31&type=chunk) [3. Earnings Per Share](index=12&type=section&id=3.%20EARNINGS%20PER%20SHARE) This section provides a detailed breakdown of basic and diluted earnings per share calculations, including net income attributable to Quest Diagnostics and weighted average common shares outstanding | Metric | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------------ | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net income attributable to Quest Diagnostics (in millions) | $245 | $226 | $747 | $649 | | Basic EPS | $2.18 | $2.01 | $6.66 | $5.80 | | Diluted EPS | $2.16 | $1.99 | $6.57 | $5.74 | | Weighted average common shares outstanding – diluted (in millions) | 113 | 113 | 113 | 112 | [4. Restructuring Activities and Impairment Charges](index=12&type=section&id=4.%20RESTRUCTURING%20ACTIVITIES%20AND%20IMPAIRMENT%20CHARGES) This section details the company's restructuring initiatives, including the 'Invigorate' program, and associated employee separation and asset impairment charges - The company's multi-year 'Invigorate' program aims for **3% annual cost savings** and productivity improvements through automation and AI, focusing on patient services, logistics, laboratory operations, revenue services, IT, and procurement[34](index=34&type=chunk) | Charge Type | Three Months Ended Sep 30, 2025 (in millions) | Three Months Ended Sep 30, 2024 (in millions) | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | | :------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Employee separation costs | $6 | $7 | $18 | $21 | | Asset impairment charges | $5 | $— | $29 | $— | | Total restructuring and impairment charges | $11 | $7 | $47 | $21 | - Restructuring charges for Q3 2025 included **$6 million** in employee separation costs and **$5 million** in asset impairment charges related to a business exit[37](index=37&type=chunk) - For the nine months ended September 30, 2025, total charges were **$47 million**, including **$18 million** for employee separation and **$29 million** for asset impairment, primarily recorded in the DIS business[37](index=37&type=chunk)[39](index=39&type=chunk) [5. Business Acquisitions](index=13&type=section&id=5.%20BUSINESS%20ACQUISITIONS) This section provides an overview of recent acquisition activities, including the LifeLabs Inc. and Spectra Laboratories deals, and a new venture with Corewell Health - On August 23, 2024, Quest Diagnostics acquired LifeLabs Inc. for approximately **CAN $1.35 billion (USD $1 billion)**, with the purchase price allocation finalized in Q3 2025, resulting in a **$9 million increase** to deferred income tax assets and a corresponding decrease to goodwill[40](index=40&type=chunk) - In February 2025, the Company agreed to acquire select clinical testing assets and dialysis-related water testing assets of Spectra Laboratories, with the clinical testing assets acquisition closing on August 4, 2025, for **$34 million cash**[44](index=44&type=chunk)[45](index=45&type=chunk) - The Spectra Laboratories acquisition included **$25 million** of tax-deductible goodwill and **$9 million** of customer-related intangible assets, with the dialysis-related water testing assets acquisition expected to close by the end of 2025[46](index=46&type=chunk) - In August 2025, Quest Diagnostics and Corewell Health signed an agreement to form a venture for laboratory testing in Michigan, with Quest owning **51%**, expected to close in Q1 2026 with a new facility operational in 2027[49](index=49&type=chunk) [6. Fair Value Measurements](index=15&type=section&id=6.%20FAIR%20VALUE%20MEASUREMENTS) This section details the fair value of the company's assets and liabilities, including debt and contingent consideration, categorized by valuation hierarchy levels | Asset/Liability | September 30, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------------------------ | :------------------------------- | :------------------------------- | | Total Assets Measured at Fair Value | $175 | $136 | | Total Liabilities Measured at Fair Value | $266 | $280 | | Redeemable noncontrolling interest | $81 | $83 | - The fair value of the Company's debt was estimated at **$5.7 billion** as of September 30, 2025, compared to **$6.1 billion** as of December 31, 2024, primarily classified within Level 1 of the fair value hierarchy[66](index=66&type=chunk) - Contingent consideration liabilities, primarily from the Haystack Oncology acquisition, increased from **$106 million** at December 31, 2024, to **$114 million** at September 30, 2025, due to fair value adjustments and classified within Level 3 due to unobservable inputs[59](index=59&type=chunk)[62](index=62&type=chunk) [7. Debt](index=18&type=section&id=7.%20DEBT) This section provides information on the company's debt instruments, including amendments to credit facilities and repayment of senior notes - In April 2025, the Company amended its **$750 million** senior unsecured revolving credit facility, extending its maturity to April 2030 while maintaining borrowing capacity, with no outstanding borrowings as of September 30, 2025[68](index=68&type=chunk) - During the nine months ended September 30, 2025, the Company fully repaid its **$600 million** of 3.50% senior notes that matured on March 30, 2025, and has **$500 million** of 3.45% senior notes due June 2026 now classified as current portion of long-term debt[69](index=69&type=chunk) [8. Financial Instruments](index=18&type=section&id=8.%20FINANCIAL%20INSTRUMENTS) This section describes the company's use of derivative financial instruments to manage interest rate and foreign currency risks - The Company uses derivative financial instruments, such as interest rate swap agreements and foreign currency forward contracts, to manage exposure to interest rate and foreign currency risks, not for speculative purposes[71](index=71&type=chunk) | Debt Instrument | Notional Amount Sep 30, 2025 (in millions) | Notional Amount Dec 31, 2024 (in millions) | | :-------------------------------- | :----------------------------------------- | :----------------------------------------- | | 5.00% Senior Notes due Dec 2034 | $850 | $700 | | 2.80% Senior Notes due Jun 2031 | $550 | $— | | 6.40% Senior Notes due Nov 2033 | $400 | $— | | Total notional amounts | $1,800 | $700 | - The Company increased its notional amount of fixed-to-variable interest rate swaps from **$700 million** at December 31, 2024, to **$1.8 billion** at September 30, 2025, to convert a portion of long-term debt into variable interest rate debt[75](index=75&type=chunk) [9. Stockholders' Equity and Redeemable Noncontrolling Interest](index=21&type=section&id=9.%20STOCKHOLDERS'%20EQUITY%20AND%20REDEEMABLE%20NONCONTROLLING%20INTEREST) This section details changes in stockholders' equity, including accumulated other comprehensive loss, foreign currency translation adjustments, and dividend and share repurchase activities | Component | Balance, Dec 31, 2024 (in millions) | Balance, Sep 30, 2025 (in millions) | | :------------------------------------ | :---------------------------------- | :---------------------------------- | | Accumulated Other Comprehensive Loss | $(88) | $(40) | | Foreign Currency Translation Adjustments | $(93) | $(45) | | Net Deferred Gains on Cash Flow Hedges, net of tax | $5 | $5 | - The accumulated other comprehensive loss decreased from **$(88) million** at December 31, 2024, to **$(40) million** at September 30, 2025, primarily due to a **$48 million** other comprehensive income before reclassifications for the nine months ended September 30, 2025[81](index=81&type=chunk) - The Board of Directors declared a quarterly cash dividend of **$0.80 per common share** for the first three quarters of 2025, an increase from **$0.75 per common share** in 2024[85](index=85&type=chunk) - The Company repurchased **0.9 million shares** of common stock for **$150 million** during the nine months ended September 30, 2025, with **$0.7 billion** remaining under the share repurchase authorization[86](index=86&type=chunk)[87](index=87&type=chunk) [10. Supplemental Cash Flow and Other Data](index=24&type=section&id=10.%20SUPPLEMENTAL%20CASH%20FLOW%20AND%20OTHER%20DATA) This section provides additional details on cash flow components, including depreciation, interest, income taxes, and business acquisitions | Metric | Three Months Ended Sep 30, 2025 (in millions) | Three Months Ended Sep 30, 2024 (in millions) | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Depreciation and amortization expense | $142 | $125 | $425 | $358 | | Interest expense, net | $(66) | $(49) | $(200) | $(136) | | Interest paid | $22 | $62 | $167 | $167 | | Income taxes paid | $2 | $61 | $112 | $179 | | Business acquisitions, net of cash acquired | $34 | $1,533 | $51 | $1,781 | - During the nine months ended September 30, 2025, the Company received a **$46 million payroll tax credit** under the CARES Act for employee retention, recorded in other operating expense, net[93](index=93&type=chunk) [11. Commitments and Contingencies](index=25&type=section&id=11.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the company's outstanding commitments, including letters of credit, and details ongoing legal matters and associated reserves - The Company has **$78 million** in outstanding letters of credit under its Secured Receivables Credit Facility as of September 30, 2025, supporting its risk management program[96](index=96&type=chunk) - The Company is involved in several legal matters, including class action lawsuits related to its 401(k) plan (appeal ongoing), the AMCA Data Security Incident (discovery and class certification ongoing), and alleged internet communications tracking with Facebook (appeal ongoing)[99](index=99&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk) - Legal matter reserves totaled **$21 million** as of September 30, 2025, significantly up from **$4 million** at December 31, 2024, while reserves for general and professional liability claims remained at **$169 million**[114](index=114&type=chunk)[117](index=117&type=chunk) [12. Business Segment Information](index=28&type=section&id=12.%20BUSINESS%20SEGMENT%20INFORMATION) This section provides financial data segmented by the company's primary business operations, Diagnostic Information Services (DIS) and Diagnostic Solutions (DS) - The Diagnostic Information Services (DIS) business is the Company's only reportable segment, accounting for **over 97% of net revenues** in both 2025 and 2024[120](index=120&type=chunk) - The Diagnostic Solutions (DS) group comprises risk assessment services and healthcare information technology businesses[121](index=121&type=chunk) | Segment | Three Months Ended Sep 30, 2025 (in millions) | Three Months Ended Sep 30, 2024 (in millions) | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | | :------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | DIS Net revenues | $2,755 | $2,427 | $8,043 | $7,058 | | DS revenues | $61 | $61 | $186 | $193 | | Total Net revenues | $2,816 | $2,488 | $8,229 | $7,251 | | DIS operating income | $482 | $407 | $1,390 | $1,200 | | DS operating income | $9 | $6 | $24 | $23 | | Total operating income | $386 | $330 | $1,170 | $985 | [13. Revenue Recognition](index=29&type=section&id=13.%20REVENUE%20RECOGNITION) This section explains the company's policies for recognizing revenue, including how consideration is estimated across different payer customer groups - The DIS business recognizes revenue primarily upon completion of testing or service rendering, estimating consideration based on payer customer groups (healthcare insurers, government payers, client payers, and patients), including contractual allowances and patient price concessions[127](index=127&type=chunk) | Payer Customer Type | Three Months Ended Sep 30, 2025 | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2025 | Nine Months Ended Sep 30, 2024 | | :------------------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Healthcare insurers | 39 % | 41 % | 39 % | 40 % | | Government payers | 16 % | 13 % | 16 % | 12 % | | Client payers | 31 % | 33 % | 31 % | 33 % | | Patients | 12 % | 10 % | 12 % | 12 % | | Total DIS | 98 % | 97 % | 98 % | 97 % | | DS | 2 % | 3 % | 2 % | 3 % | | Payer Customer Type | Sep 30, 2025 | Dec 31, 2024 | | :------------------------------------------ | :----------- | :----------- | | Healthcare Insurers | 29 % | 26 % | | Government Payers | 9 % | 7 % | | Client Payers | 41 % | 45 % | | Patients | 19 % | 20 % | | Total DIS | 98 % | 98 % | | DS | 2 % | 2 % | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, and results of operations for the three and nine months ended September 30, 2025, compared to the prior year, covering revenue drivers, cost trends, acquisitions, strategic programs, regulatory outlook, and liquidity | Metric | Three Months Ended Sep 30, 2025 (in millions) | Three Months Ended Sep 30, 2024 (in millions) | $ Change (YoY) | % Change (YoY) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :------------- | :------------- | | Total net revenues | $2,816 | $2,488 | $328 | 13.1 % | | Total operating costs and expenses, net | $2,430 | $2,158 | $272 | 12.6 % | | Operating income | $386 | $330 | $56 | 16.8 % | | Net income attributable to Quest Diagnostics | $245 | $226 | $19 | 8.5 % | | Diluted earnings per common share | $2.16 | $1.99 | $0.17 | 8.5 % | | Metric | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | $ Change (YoY) | % Change (YoY) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :------------- | :------------- | | Total net revenues | $8,229 | $7,251 | $978 | 13.5 % | | Total operating costs and expenses, net | $7,059 | $6,266 | $793 | 12.6 % | | Operating income | $1,170 | $985 | $185 | 18.7 % | | Net income attributable to Quest Diagnostics | $747 | $649 | $98 | 15.0 % | | Diluted earnings per common share | $6.57 | $5.74 | $0.83 | 14.5 % | - For the three months ended September 30, 2025, diluted EPS decreased by **$0.44** due to amortization expense (**$0.25**), legal matters and impairment charges (**$0.15**), and restructuring costs (**$0.07**), partially offset by excess tax benefits (**$0.03**)[148](index=148&type=chunk) - For the nine months, diluted EPS decreased by **$0.86** due to amortization (**$0.76**), impairment/legal/contingent consideration (**$0.36**), and restructuring (**$0.24**), partially offset by CARES Act payroll tax credit and lease gain (**$0.36**), investment gains (**$0.01**), and excess tax benefits (**$0.13**)[148](index=148&type=chunk) [Our Company](index=31&type=section&id=Our%20Company) This section describes Quest Diagnostics' core business segments, Diagnostic Information Services (DIS) and Diagnostic Solutions (DS), and how revenue performance is assessed - Quest Diagnostics' Diagnostic Information Services (DIS) business, comprising **over 97% of consolidated net revenues**, provides diagnostic insights from laboratory testing to a wide range of customers including physicians, hospitals, and patients[132](index=132&type=chunk) - Revenue performance is assessed by test requisitions and revenue per requisition, influenced by fee schedule changes, test mix, payer mix, business mix, and tests per requisition[133](index=133&type=chunk) - The Diagnostic Solutions (DS) group offers risk assessment services for insurers and healthcare information technology solutions for providers and payers, representing the balance of consolidated net revenues[134](index=134&type=chunk) [Third Quarter Highlights](index=32&type=section&id=Third%20Quarter%20Highlights) This section summarizes key financial and operational performance metrics for the third quarter of 2025 | Metric | Three Months Ended Sep 30, 2025 (in millions, except per share data) | Three Months Ended Sep 30, 2024 (in millions, except per share data) | | :------------------------------------ | :------------------------------------------------------------------- | :------------------------------------------------------------------- | | Net revenues | $2,816 | $2,488 | | DIS revenues | $2,755 | $2,427 | | Revenue per requisition change | 0.8% | 3.3% | | Requisition volume change | 12.5% | 5.5% | | Organic requisition volume change | 3.9% | 0.5% | | Operating income | $386 | $330 | | Net income attributable to Quest Diagnostics | $245 | $226 | | Diluted earnings per share | $2.16 | $1.99 | | Net cash provided by operating activities | $563 | $356 | | Capital expenditures | $144 | $106 | [Acquisition of select clinical testing assets of Spectra Laboratories](index=32&type=section&id=Acquisition%20of%20select%20clinical%20testing%20assets%20of%20Spectra%20Laboratories) This section details the acquisition of specific clinical testing assets from Spectra Laboratories and its integration into the DIS business - On August 4, 2025, Quest Diagnostics acquired select clinical testing assets of Fresenius Medical Care's Spectra Laboratories for **$34 million** in cash, integrated into the Company's DIS business[136](index=136&type=chunk) [Invigorate Program](index=32&type=section&id=Invigorate%20Program) This section describes the company's multi-year 'Invigorate' program, its objectives for cost savings and productivity, and associated restructuring charges - The multi-year 'Invigorate' program aims to achieve **3% annual cost savings** and productivity improvements across the value chain, leveraging automation and artificial intelligence to offset inflationary pressures, focusing on patient services, logistics, laboratory operations, revenue services, IT, procurement, reducing denials, enhancing digital experience, and talent management[137](index=137&type=chunk) - For the nine months ended September 30, 2025, the Company incurred **$37 million** in pre-tax charges for restructuring and integration activities, including **$18 million** in employee separation costs[138](index=138&type=chunk) [Outlook and Trends](index=32&type=section&id=Outlook%20and%20Trends) This section discusses the impact of recent legislative changes, such as the One Big Beautiful Bill Act (OBBBA), and the expiration of Premium Tax Credits on the company's financial outlook - The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, makes permanent **100% bonus depreciation** and domestic research cost expensing, accelerating tax deductions and potentially lowering cash tax payments[139](index=139&type=chunk) - While not expected to materially impact the statement of operations, OBBBA increased deferred income tax liabilities by **$100 million** to **$378 million** as of September 30, 2025[142](index=142&type=chunk) - The OBBBA and the planned expiration of enhanced Premium Tax Credits (PTC) at the end of 2025 are not expected to materially impact consolidated revenues for 2025 and 2026[139](index=139&type=chunk) - For 2026-2028, these changes could reduce consolidated revenues by up to **50-60 basis points by 2028**, primarily affecting ACA-related Exchange Plans revenues[140](index=140&type=chunk) [Critical Accounting Policies](index=33&type=section&id=Critical%20Accounting%20Policies) This section confirms that there have been no significant changes to the company's critical accounting policies since its last annual report - There have been no significant changes to the Company's critical accounting policies from those disclosed in its 2024 Annual Report on Form 10-K[144](index=144&type=chunk) [Impact of New Accounting Standards](index=33&type=section&id=Impact%20of%20New%20Accounting%20Standards) This section refers to the notes to the financial statements for details on the adoption and impact of new accounting standards - The adoption of new accounting standards and the impact of recent pronouncements not yet effective are discussed in Note 2 to the interim unaudited consolidated financial statements[145](index=145&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, examining changes in revenues, costs, and expenses over the reporting periods [Net Revenues](index=37&type=section&id=Net%20Revenues) This section analyzes the drivers of changes in total net revenues, including organic growth, acquisitions, and revenue per requisition - For the three months ended September 30, 2025, total net revenues increased by **13.1%** year-over-year, with organic growth of **6.8%**[149](index=149&type=chunk) - DIS revenues grew by **13.5%**, driven by recent acquisitions (**6.5% contribution**) and organic volume growth of **3.9%**[150](index=150&type=chunk) - Total revenue per requisition increased by **0.8%**, with organic revenue per requisition up **3.0%**[151](index=151&type=chunk) - DS revenues decreased by **1.0%** due to lower risk assessment services[152](index=152&type=chunk) - For the nine months ended September 30, 2025, total net revenues increased by **13.5%** year-over-year, with organic growth of **4.8%**[153](index=153&type=chunk) - DIS revenues grew by **14.0%**, primarily from recent acquisitions (**8.9% contribution**) and organic volume growth of **1.8%**[160](index=160&type=chunk) - Revenue per requisition was flat, with organic revenue per requisition up **3.3%**[160](index=160&type=chunk) - DS revenues decreased by **4.0%** due to lower risk assessment services[160](index=160&type=chunk) [Cost of Services](index=38&type=section&id=Cost%20of%20Services) This section examines the factors contributing to changes in the cost of services, including acquisitions, wage increases, and program savings - For the three months ended September 30, 2025, cost of services increased by **$190 million**, primarily due to recent acquisitions, wage increases, and higher employee healthcare costs, partially offset by savings from the Invigorate program[155](index=155&type=chunk) - For the nine months ended September 30, 2025, cost of services increased by **$609 million**, driven by recent acquisitions, wage increases, and higher supplies expense, partially offset by Invigorate program savings[156](index=156&type=chunk) [Selling, General and Administrative Expenses ("SG&A")](index=38&type=section&id=Selling,%20General%20and%20Administrative%20Expenses%20(%22SG%26A%22)) This section analyzes the changes in selling, general, and administrative expenses, attributing them to acquisitions and compensation costs - For the three months ended September 30, 2025, SG&A increased by **$53 million**, mainly due to recent acquisitions and higher compensation costs[157](index=157&type=chunk) - For the nine months ended September 30, 2025, SG&A increased by **$159 million**, primarily driven by recent acquisitions, higher compensation costs, and increased depreciation expense[158](index=158&type=chunk) [Amortization Expense](index=39&type=section&id=Amortization%20Expense) This section details the increase in amortization expense, primarily linked to recent business acquisitions - Amortization expense increased by **$7 million** for the three months and **$27 million** for the nine months ended September 30, 2025, compared to prior year periods, primarily due to recent acquisitions[161](index=161&type=chunk) [Other Operating Expense, Net](index=39&type=section&id=Other%20Operating%20Expense,%20Net) This section breaks down the components of other operating expense, net, including legal charges, asset impairments, and contingent consideration adjustments - For the three months ended September 30, 2025, other operating expense, net, included a **$15 million charge** for legal matters, a **$5 million asset impairment charge**, and **$2 million** in losses from contingent consideration accrual increases[163](index=163&type=chunk) - For the nine months ended September 30, 2025, this category included a **$46 million CARES Act payroll tax credit gain**, offset by a **$29 million asset impairment charge**, a **$15 million legal matters charge**, and **$8 million** in losses from contingent consideration accrual increases[164](index=164&type=chunk) [Interest Expense, Net](index=39&type=section&id=Interest%20Expense,%20Net) This section explains the increase in net interest expense, primarily due to the issuance of senior notes in the prior year - Interest expense, net, increased by **$17 million** for the three months and **$64 million** for the nine months ended September 30, 2025, primarily due to the issuance of **$1.85 billion** in senior notes in August 2024[166](index=166&type=chunk) [Other Income, Net](index=39&type=section&id=Other%20Income,%20Net) This section details the components of other income, net, including gains from deferred compensation plan investments and foreign exchange contracts - For the three and nine months ended September 30, 2025, other income, net, included **$7 million** and **$16 million**, respectively, in gains from deferred compensation plan investments[167](index=167&type=chunk) - In 2024, both periods included an additional **$8 million gain** from a foreign exchange forward contract related to an acquisition[168](index=168&type=chunk) [Income Tax Expense](index=39&type=section&id=Income%20Tax%20Expense) This section provides an overview of income tax expense and effective tax rates for the reporting periods, noting benefits from stock-based compensation - Income tax expense for the three months ended September 30, 2025, was **$77 million (effective rate 23.6%)**, up from **$65 million (21.9%)** in 2024[169](index=169&type=chunk) - For the nine months, it was **$233 million (23.6%)** in 2025, up from **$205 million (23.4%)** in 2024, with both periods benefiting from excess tax benefits related to stock-based compensation[170](index=170&type=chunk) [Equity in Earnings of Equity Method Investees, Net of Taxes](index=40&type=section&id=Equity%20in%20Earnings%20of%20Equity%20Method%20Investees,%20Net%20of%20Taxes) This section explains the changes in equity in earnings from equity method investees, highlighting a non-recurring gain in 2025 - Equity in earnings of equity method investees, net of taxes, increased by **$2 million** for the three months and **$21 million** for the nine months ended September 30, 2025[171](index=171&type=chunk) - The nine-month increase was primarily due to an **$8 million non-recurring gain** related to a lease in 2025, compared to **$11 million** in net losses from strategic investments in 2024[172](index=172&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=41&type=section&id=Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's strategies for managing market risks, particularly interest rate risk, and assesses potential impacts of interest rate changes - The Company manages interest rate risk through derivative financial instruments, maintaining a balanced mix of fixed-rate and variable-rate debt, with foreign exchange and commodity price impacts not considered material[174](index=174&type=chunk) - As of September 30, 2025, the fair value of the Company's debt was estimated at **$5.7 billion**, with a hypothetical **10% increase in interest rates** potentially reducing its fair value by approximately **$141 million**[175](index=175&type=chunk) - The notional amount of fixed-to-variable interest rate swaps increased to **$1.8 billion** from **$700 million** at December 31, 2024[177](index=177&type=chunk) - A hypothetical **10% change in the SOFR curve (36 basis points)** could change the fair value of fixed-to-variable interest rate swaps by **$46 million**[178](index=178&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) This section analyzes the company's cash position, cash flow activities, and available capital resources to meet its financial obligations and investment needs | Metric | Nine Months Ended Sep 30, 2025 (in millions) | Nine Months Ended Sep 30, 2024 (in millions) | Change (YoY) | | :------------------------------------ | :------------------------------------------- | :------------------------------------------- | :----------- | | Net cash provided by operating activities | $1,421 | $870 | $551 | | Net cash used in investing activities | $(440) | $(2,046) | $1,606 | | Net cash (used in) provided by financing activities | $(1,101) | $1,254 | $(2,355) | | Net change in cash and cash equivalents and restricted cash | $(117) | $78 | $(195) | [Cash and Cash Equivalents](index=42&type=section&id=Cash%20and%20Cash%20Equivalents) This section reports the total cash and cash equivalents held by the company, including amounts held outside the United States - Cash and cash equivalents totaled **$432 million** as of September 30, 2025, a decrease from **$549 million** at December 31, 2024, with approximately **17%** held outside the United States[184](index=184&type=chunk) [Cash Flows from Operating Activities](index=42&type=section&id=Cash%20Flows%20from%20Operating%20Activities) This section details the increase in net cash provided by operating activities, driven by improved operating income, tax benefits, and collection efficiency - Net cash provided by operating activities increased by **$551 million** to **$1.4 billion** for the nine months ended September 30, 2025, driven by increased operating income, timing of non-income tax payments, decreased income tax payments due to OBBBA, and the CARES Act payroll tax credit[185](index=185&type=chunk) - Days sales outstanding (DSO) improved to **47 days** as of September 30, 2025, from **48 days** at December 31, 2024, and **49 days** at September 30, 2024, indicating improved billing and collection efficiency[186](index=186&type=chunk) [Cash Flows from Investing Activities](index=42&type=section&id=Cash%20Flows%20from%20Investing%20Activities) This section explains the decrease in net cash used in investing activities, primarily due to reduced spending on business acquisitions - Net cash used in investing activities decreased by **$1.6 billion** to **$440 million** for the nine months ended September 30, 2025, primarily due to decreased cash used for business acquisitions, partially offset by higher capital expenditures[187](index=187&type=chunk) [Cash Flows from Financing Activities](index=42&type=section&id=Cash%20Flows%20from%20Financing%20Activities) This section outlines the shift from cash provided to cash used in financing activities, driven by debt repayments and share repurchases - Net cash used in financing activities was **$(1.1) billion** for the nine months ended September 30, 2025, compared to **$1.3 billion** provided in the prior year, due to the repayment of **$600 million** senior notes and **$150 million** in share repurchases in 2025, contrasting with **$1.85 billion** in senior note issuances in 2024[188](index=188&type=chunk) [Dividend Program](index=43&type=section&id=Dividend%20Program) This section reports the quarterly cash dividend declared by the Board of Directors, noting an increase from the prior year - The Board of Directors declared a quarterly cash dividend of **$0.80 per common share** for the first three quarters of 2025, an increase from **$0.75 per common share** in 2024[190](index=190&type=chunk) [Share Repurchase Program](index=43&type=section&id=Share%20Repurchase%20Program) This section provides information on the remaining authorization under the company's share repurchase program - As of September 30, 2025, **$0.7 billion** remained available under the Company's share repurchase authorization, which has no set expiration date[191](index=191&type=chunk) [Share Repurchases](index=43&type=section&id=Share%20Repurchases) This section details the number of shares and total cost of common stock repurchased during the reporting period - For the nine months ended September 30, 2025, the Company repurchased **0.9 million shares** of its common stock for **$150 million**[192](index=192&type=chunk) - No shares were repurchased in the same period of 2024[193](index=193&type=chunk) [Contractual Obligations](index=43&type=section&id=Contractual%20Obligations) This section refers to the annual report for detailed information on the company's contractual obligations - Details regarding the Company's indebtedness, debt service requirements, lease obligations, and noncancellable commitments to purchase products or services are contained in the 2024 Annual Report on Form 10-K[194](index=194&type=chunk)[195](index=195&type=chunk) [Equity Method Investees](index=43&type=section&id=Equity%20Method%20Investees) This section describes the company's equity method investees and confirms the absence of material obligations or impairment - The Company's equity method investees, primarily a diagnostic information services joint venture and an investment fund, represent **less than 5%** of consolidated total assets and income before income taxes[196](index=196&type=chunk) - No material unconditional obligations or guarantees exist for these investees, and no impairment was identified as of September 30, 2025[197](index=197&type=chunk) [Requirements and Capital Resources](index=43&type=section&id=Requirements%20and%20Capital%20Resources) This section outlines the company's estimated capital expenditures and available borrowing capacity to support future operations and growth - The Company estimates **$500 million** in capital expenditures for 2025 to support and grow existing operations, including investments in laboratory equipment, facilities, automation, and IT[198](index=198&type=chunk) - A multi-year 'Project Nova' was committed in February 2025 to modernize 'Order-to-Cash' business processes and IT infrastructure[199](index=199&type=chunk) - As of September 30, 2025, the Company had **$1.3 billion** in available borrowing capacity under existing credit facilities (**$522 million** from secured receivables and **$750 million** from senior unsecured revolving credit facility), with no outstanding borrowings[201](index=201&type=chunk) - The Company believes its cash, operations, and borrowing capacity provide sufficient financial flexibility for future needs[203](index=203&type=chunk) [Forward-Looking Statements](index=44&type=section&id=Forward-Looking%20Statements) This section cautions that certain statements in the document are forward-looking and subject to various risks and uncertainties that could cause actual results to differ materially - This section highlights that certain statements in the document are forward-looking and subject to risks and uncertainties, including economic conditions, government investigations, competition, billing complexities, regulatory changes, and acquisitions[204](index=204&type=chunk) - Actual results may differ materially from these statements[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section refers to the detailed discussion on market risk disclosures provided in Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations,' covering the company's exposure to interest rate changes and its risk management strategies - The Company's quantitative and qualitative disclosures about market risk are incorporated by reference from Item 2, 'Management's Discussion and Analysis of Financial Condition and Results of Operations'[205](index=205&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2025, with no material changes to internal control over financial reporting during the third quarter of 2025 - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of September 30, 2025[205](index=205&type=chunk) - No material changes in internal control over financial reporting occurred during the third quarter of 2025[206](index=206&type=chunk) [PART II - OTHER INFORMATION](index=44&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, equity security sales, other disclosures, and exhibits [Item 1. Legal Proceedings](index=44&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the interim unaudited consolidated financial statements for detailed information regarding the status of legal proceedings involving the Company - Information regarding the status of legal proceedings involving the Company is provided in Note 11 to the interim unaudited consolidated financial statements[208](index=208&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 - There have been no material changes in the risk factors described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[209](index=209&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the Company's common stock repurchases during the third quarter of 2025 under its share repurchase program and employee transactions, along with the remaining authorization | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | :-------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------- | | July 1, 2025 – July 31, 2025 | 220,867 | $169.78 | 220,867 | | August 1, 2025 - August 31, 2025 | 588,957 | $178.16 | 588,957 | | September 1, 2025 – September 30, 2025 | 42,070 | $179.82 | 42,070 | | Total (Share Repurchase Program) | 851,894 | $176.07 | 851,894 | - As of September 30, 2025, **$0.7 billion** remained available under the Company's share repurchase authorization, which has no set expiration or termination date[211](index=211&type=chunk) - The program has authorized **$13 billion** in share repurchases since its inception in May 2003[213](index=213&type=chunk) [Item 5. Other Information](index=46&type=section&id=Item%205.%20Other%20Information) This section provides information on Rule 10b5-1 trading arrangements adopted by the Company's directors and officers during the third quarter of 2025, including details on the individuals, type of arrangement, and covered securities | Name | Title | Type of Trading Arrangement | Security | Action | Date of Action | Duration of Trading Arrangement | Aggregate Number of Securities Covered | | :--------- | :-------------------------- | :-------------------------- | :------- | :------- | :--------------- | :------------------------------ | :------------------------------------- | | Jim Davis | Chairman, CEO, and President | Rule 10b5-1 plan to sell | Common Stock | Adoption | August 26, 2025 | August 26, 2025 to December 4, 2026 | Up to 95,093 | | Mark Delaney | SVP and Chief Commercial Officer | Rule 10b5-1 plan to sell | Common Stock | Adoption | August 18, 2025 | August 18, 2025 to May 11, 2026 | Up to 7,946 | - During the third quarter of 2025, Jim Davis (Chairman, CEO, and President) and Mark Delaney (SVP and Chief Commercial Officer) adopted Rule 10b5-1 trading arrangements to sell common stock[214](index=214&type=chunk)[215](index=215&type=chunk) - These plans cover shares expected to vest from stock options, restricted stock units, and performance share awards, with actual shares sold being net of tax withholding obligations[215](index=215&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q report, including certifications, XBRL documents, and other supporting materials - The exhibits include Subsidiary Guarantors of Securities, Rule 13a-14(a) Certifications of the CEO and CFO, Section 1350 Certifications of the CEO and CFO, and various Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, and Presentation Linkbase Documents), along with the Cover Page Interactive Data File[219](index=219&type=chunk) [Signatures](index=49&type=section&id=Signatures) This section contains the official signatures of the authorized representatives of Quest Diagnostics Incorporated, including the Chairman, Chief Executive Officer, and President, James E. Davis, and the Executive Vice President and Chief Financial Officer, Sam A. Samad, certifying the report on October 21, 2025 - The report was signed on October 21, 2025, by James E. Davis, Chairman, Chief Executive Officer, and President, and Sam A. Samad, Executive Vice President and Chief Financial Officer, on behalf of Quest Diagnostics Incorporated[220](index=220&type=chunk)

Core Insights - Quest Diagnostics (DGX) is scheduled to release its third-quarter 2025 results on October 21, before market opening, with adjusted EPS of $2.62 in the last quarter, exceeding the Zacks Consensus Estimate by 1.95% [1] - The Zacks Consensus Estimate for Q3 2025 revenues is $2.72 billion, reflecting a 9.3% increase year-over-year, while EPS is projected to rise 9.1% to $2.51 [2] Revenue and Earnings Estimates - The revenue estimate for Q3 2025 indicates a significant growth trajectory, with a 9.3% increase from the previous year [2] - The EPS estimate suggests a 9.1% rise, indicating strong earnings potential for the quarter [2] Performance Trends - Earnings estimates for Q3 have remained stable over the past 30 days, suggesting confidence in the company's performance [3] - The company has consistently surpassed earnings estimates in the last four quarters, with an average surprise of 2.09% [1] Factors Influencing Q3 Results - The core Diagnostics Information Services (DIS) business is expected to show strong revenue growth, driven by physician and hospital channels [4] - Increased test orders per requisition and demand for clinical solutions are anticipated to sustain revenue momentum [4] - The partnership with Fresenius Medical Care is likely to enhance revenues from physician channels, supporting over 200,000 kidney dialysis patients [5] M&A Contributions - M&A activities contributed 10% growth in the previous quarter, with expectations for continued positive momentum in Q3 [6] - The acquisition of clinical testing assets from Fresenius Medical Care is projected to add a 7.1% contribution to DIS revenues [6] Strategic Developments - Collaborative Lab Solutions and strategic acquisitions are expected to drive growth in the hospital channel [7] - The enhanced questhealth.com platform and partnerships with consumer brands are likely to complement revenue growth [8] Advanced Diagnostics Performance - Robust revenues are anticipated in Advanced Diagnostics, particularly in Advanced Cardiometabolic and Brain Health areas [9] - The launch of a molecular test for diagnosing Oropouche virus is expected to positively impact revenues [10] Operational Excellence - The company is likely to continue leveraging automation, robotics, and AI to enhance operational efficiency and productivity [11] - Projected operating income (non-GAAP) is expected to increase by 21.4% year-over-year in Q3 [11] Earnings ESP and Zacks Rank - Quest Diagnostics has an Earnings ESP of +0.49%, indicating a higher chance of beating estimates [12] - The company currently holds a Zacks Rank of 3, suggesting a stable outlook [12]