Quest Diagnostics Bumps Guidance While Managing Quanum System Breach

Quest Diagnostics Incorporated (NYSE:DGX) on Thursday reported third-quarter adjusted earnings of $3 per share, beating the Wall Street estimate of $2.86.

Revenue increased 10% year over year to $3.097 billion, beating the $3.046 billion consensus estimate.

Adjusted operating income climbed 13% to $517 million.

Jim Davis, chairman, CEO and president, cited continued strength across physician, hospital, and consumer channels, complemented by productivity gains from automation and AI.

• Quest Diagnostics stock is showing weakness. What’s driving DGX stock lower?

Requisition Volume Drivers and Revenue Per Test Mix

Total requisition volume increased 14.5% year over year, with organic volume up 14.4%. Corewell Health and Fresenius Medical Care relationships contributed 9.5% to volume in the quarter.

Excluding these two relationships, volumes grew by 5%. Total revenue per requisition was down 4.2% versus the prior year, due to the Corewell and Fresenius business mix.

Adjusting for that business mix, revenue per requisition was up by 1.7% versus prior year, driven primarily by an increased number of tests per requisition.

Unit price reimbursement remained generally flat, consistent with expectations.

Assessing Projected PAMA Regulatory Headwinds

CFO Sam Samad said the PAMA impact for 2027 is estimated at approximately 1% of total company revenues, consistent with previous commentary.

The cumulative impact is expected to be less than 1.3% of total revenues for years 2027 through 2029. The company intends to offset some of this anticipated headwind.

For the readers, the Protecting Access to Medicare Act (PAMA) is a 2014 law that changes how Medicare pays for clinical diagnostic laboratory tests. It requires labs to report private-payer rates to determine Medicare fee schedules.

Upward Revision to 2026 Guidance

In an earnings call, CEO Davis said, “Our robust organic revenue growth demonstrates that our solutions are fulfilling the expanding clinical care needs of an aging population as well as the increasing number of people focused on prevention and wellness. With these growth trends and our strong performance, we are again raising our guidance for revenues and earnings per share for the full year.”

Quest Diagnostics raised its fiscal 2026 adjusted earnings guidance from $11.05-$11.25 per share to $11.25-$11.35 per share compared to the consensus estimate of $11.19.

The diagnostic mammoth also raised fiscal 2026 sales guidance from $11.95 billion-$12.05 billion to $12.065 billion-$12.105 billion compared to the consensus of $12.001 billion.

Quanum LSM Cybersecurity Breach

The company, in an SEC filing, noted unauthorized access to its Quanum LSM system, which certain clients use to place test orders, receive and look up results.

The company said it initiated its cybersecurity incident response procedures to contain the activity, assess and investigate the nature and scope of the incident, and implement appropriate remedial measures.

While the full scope of unauthorized access remains under investigation, at this time the company believes that an unauthorized party accessed certain patient records.

This incident has not materially disrupted Quest Diagnostics’ business operations or its ability to serve patients.

DGX Price Action: Quest Diagnostics shares were down 2.36% at $233.30 at the time of publication on Thursday, according to Benzinga Pro data.

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