Quest Diagnostics Inc.'s (DGX) sustained growth momentum within the legacy base business is poised to help it grow in the upcoming quarters. Strong progress in the company's highly specialized Advanced Diagnostics offerings is encouraging. Additionally, the cost discipline program, Invigorate, is boosting productivity through automation and AI. However, a debt-laden balance sheet and challenges from fierce competition are concerning for DGX's operations. In the past year, this Zacks Rank #2 (Buy) stock has ...

Quest achieves top score of 100 on 2024 Disability Equality Index® Best Places to Work for Disability Inclusion SECAUCUS, N.J., Aug. 1, 2024 /PRNewswire/ -- Quest Diagnostics (NYSE: DGX), a leading provider of diagnostic information services, announced it has been named to the 2024 Disability Equality Index® Best Places to Work for Disability Inclusion by Disability: IN and the American Association of People with Disabilities (AAPD). Quest Diagnostics Named a 'Best Place to Work for Disability Inclusion' fo ...

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels. DGX has seen stronger estimate revision activity and sports more attractive valuation metrics than PNTG, so it seems like value investors will conclude that DGX is the superior option right now. The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The ...

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large. One company value investors might notice is Quest Diagnostics (DGX) . DGX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 15.65, which compares to its indust ...

BALTIMORE, Md. and MONTREAL, July 29, 2024 /PRNewswire/ -- Haystack Oncology, a Quest Diagnostics (NYSE: DGX) company, announced today a research collaboration with Dr. Simon Turcotte, hepatopancreatobiliary surgeon and scientist at Université de Montréal's affiliated hospital research centre, the CRCHUM, to utilize Haystack Oncology's personalized MRD technology (Haystack MRD™) to evaluate treatment effectiveness in patients with metastatic colorectal cancer (mCRC) with metastases confined to the liver. "O ...

In my previous analysis of Quest Diagnostics (NYSE:DGX), I examined their Q2 2023 eamings report, which produced a slight beat on EPS and revenue. The company did report a slight decline in COVID-related revenues, however, they were able to log a 9.5% year-over-year growth in revenue. At that time, I believed that Quest's efforts in expanding its clinical services, and amassing acquisitions, were going to lead to additional growth. As a result, I was bullsh on DGX, especially considering Quest's healthy div ...

Financial Performance - Net income attributable to Quest Diagnostics for the three months ended June 30, 2024, was $229 million, compared to $235 million for the same period in 2023, representing a decrease of approximately 2.6%[28] - The company reported basic earnings per share of $2.05 for the three months ended June 30, 2024, down from $2.08 in the same period of 2023, reflecting a decline of 1.4%[28] - Net revenues for Q2 2024 were $2,397 million, a 2.5% increase from $2,338 million in Q2 2023[74] - Diagnostic Information Services (DIS) revenues were $2,333 million, up 2.8% from $2,268 million in the same period last year[74] - Operating income increased to $355 million, reflecting a 1.9% growth compared to $348 million in Q2 2023[74] - Net income attributable to Quest Diagnostics was $229 million, a decrease of 2.4% from $235 million in Q2 2023[74] - Diluted earnings per share were $2.03, down 1.0% from $2.05 in the prior year[74] - For the six months ended June 30, 2024, net revenues increased by 2.0% compared to the prior year period[121] Cash and Investments - Quest Diagnostics' cash and cash equivalents and restricted cash at the end of the period were $271 million, an increase from $126 million at the beginning of the period[11] - The company utilized $413 million in net cash for investing activities during the six months ended June 30, 2024, compared to $840 million in the same period of 2023, indicating a reduction of 50.9%[10] - The company reported cash paid for business acquisitions of $106 million for the three months ended June 30, 2024, compared to $578 million for the same period in 2023, a decrease of 81.7%[40] - The company plans to acquire LifeLabs for approximately $985 million, including net debt, with the transaction expected to close by the end of 2024[72] - The company has entered into definitive agreements to acquire LifeLabs and select assets of laboratory services businesses from Allina Health and OhioHealth, expected to close in the second half of 2024[164] Debt and Financing - As of June 30, 2024, long-term debt decreased to $8 million from $13 million as of December 31, 2023, representing a 38.5% reduction[37] - Interest expense for the three months ended June 30, 2024, was $(44) million, compared to $(37) million for the same period in 2023, reflecting an increase of 18.9%[40] - Interest paid increased to $61 million for the three months ended June 30, 2024, from $48 million in the same period of 2023, a rise of 27.1%[40] - Net cash used in financing activities for the six months ended June 30, 2024 was $(516) million, a change of $629 million compared to the prior year period[157] - As of June 30, 2024, the company had $1.2 billion of borrowing capacity available under existing credit facilities, with no outstanding borrowings[165] Operational Efficiency - Quest Diagnostics aims to achieve 3% annual cost savings and productivity improvements through its Invigorate program, which focuses on various operational efficiencies[19] - The Invigorate program aims to achieve 3% annual cost savings and productivity improvements to counter inflationary pressures[95] - The company incurred $27 million in pre-tax charges related to restructuring and integration activities during the first half of 2024[77] - Restructuring and impairment charges for the three months ended June 30, 2024, totaled $8 million, compared to $6 million for the same period in 2023, reflecting an increase of 33.3%[31] - The company reported a restructuring liability of $16 million as of June 30, 2024, up from $12 million at the end of 2023[20] Acquisitions - The company acquired select assets of PathAI Diagnostics for $100 million on June 10, 2024, which included $55 million of tax-deductible goodwill and $39 million of customer-related intangible assets[22] - During June 2023, Quest Diagnostics acquired Haystack Oncology, with a contingent consideration obligation of up to $150 million based on revenue benchmarks and reimbursement coverage from CMS[26] - The company completed the acquisition of select assets from Lenco Diagnostic Laboratories, enhancing its service capabilities[75] Revenue and Cost Analysis - Total operating costs and expenses for the three months ended June 30, 2024 were 85.2% of net revenues, slightly up from 85.1% in the prior year[115] - Cost of services for the six months ended June 30, 2024 increased by $82 million compared to the prior year period, driven by higher supplies expenses and wage increases[124] - SG&A for the three months ended June 30, 2024 was consistent with the prior year period, with recent acquisitions offset by lower benefit costs[109] Tax and Equity - The effective income tax rate for the six months ended June 30, 2024 was 24.2%, compared to 23.5% in the prior year[132] - The effective income tax rate for the three months ended June 30, 2024 was 23.4%, slightly lower than 23.5% for the same period in 2023[143] - Income tax expense for the six months ended June 30, 2024 and 2023 was $140 million for both periods[144] - Equity in earnings of equity method investees decreased by $4 million for the six months ended June 30, 2024, primarily due to net losses associated with strategic investments[133] - Equity in earnings of equity method investees, net of taxes, decreased by $7 million for the three months ended June 30, 2024, primarily due to $9 million of net losses associated with changes in the carrying value of strategic investments[145] Miscellaneous - Days sales outstanding was 50 days as of June 30, 2024, consistent with the previous period[156] - The company has not repurchased any shares of its common stock during the six months ended June 30, 2024, consistent with the same period in 2023[56] - The company has $1.0 billion remaining under its share repurchase authorization, which has no set expiration date[161] - The proportionate share of income before income taxes from equity method investees is less than 5% of the company's consolidated income before income taxes[162] - The company believes its cash and cash equivalents, along with cash from operations and borrowing capacity, will provide sufficient financial flexibility for future obligations and growth opportunities[166]

Quest Diagnostics' (DGX) subsidiary, Haystack Oncology, and Lisata Therapeutics, Inc. (LSTA) recently announced a research collaboration for using the Haystack MRD (minimal residual disease) technology. Under the partnership, Lisata will deploy the highly sensitive technology to detect the circulating tumor DNA (ctDNA) in a clinical study evaluating certepetide plus chemotherapy as an investigational treatment for metastatic pancreatic cancer. DGX completed the validation of the Haystack MRD test in March 2 ...

Financial Data and Key Metrics - Consolidated revenues for Q2 2024 were $2.4 billion, up 2.5% YoY, with base business revenues growing 3.8% [38] - Organic base business revenues grew by 3.1% [38] - Total volume, measured by requisitions, increased 1.1% YoY, with acquisitions contributing 40 basis points [39] - Base testing volumes grew 1.7% YoY [39] - Reported operating income was $355 million (14.8% of revenues), compared to $348 million (14.9% of revenues) last year [42] - Adjusted operating income was $398 million (16.6% of revenues), compared to $389 million (16.7% of revenues) last year [42] - Reported EPS was $2.03, compared to $2.05 a year ago, while adjusted EPS was $2.35, versus $2.30 the prior year [46] - Cash from operations was $514 million year-to-date through Q2, compared to $538 million in the prior year [46] Business Line Data and Key Metrics - Physician lab services delivered high single-digit base business revenue growth, driven by healthcare utilization and market growth [23] - Advanced Diagnostics saw double-digit revenue growth in brain health, women's health, and cardiometabolic health [26] - Hospital lab services grew base business revenues by nearly 4%, with reference testing remaining strong [30] - Consumer-initiated testing through questhealth.com grew total revenues nearly 40%, with base business revenues up more than 50% YoY [31] - Medicare Advantage plans showed strong volume and revenue growth, with Quest having access to approximately 90% of covered lives in the U.S. [29] Market Data and Key Metrics - The Canadian market, particularly in British Columbia and Ontario, is a strategic focus, with LifeLabs acquisition expected to close by year-end [10][11] - The U.S. market saw growth in physician and hospital channels, which comprise approximately 90% of total revenues [41] - The company expanded its presence in Minneapolis, Minnesota, Wisconsin, and Ohio through acquisitions [15][16] Company Strategy and Industry Competition - The company's strategy focuses on advanced diagnostics, particularly in brain health, molecular genomics, and oncology [19] - Acquisitions are a key growth driver, with a focus on accretive outreach purchases and independent labs [27] - The company is leveraging automation and AI to improve operational quality, service, efficiency, and workforce experience [27][44] - The company is expanding its digital pathology capabilities through the acquisition of PathAI Diagnostics [17] Management Commentary on Operating Environment and Future Outlook - Management highlighted strong healthcare utilization and favorable test mix as drivers of growth [12][13] - The company expects to complete several acquisitions in Q3 2024, which will contribute to revenue growth [15][16] - Management remains optimistic about the pricing and reimbursement environment, which has stabilized and is improving [75] - The company updated its 2024 guidance, with revenues expected to be between $9.5 billion and $9.58 billion, and adjusted EPS between $8.80 and $9.00 [55] Other Important Information - The company experienced a global IT outage, which impacted Q3 earnings by an estimated $0.06 to $0.08 [60][61] - The company is not including the LifeLabs acquisition in its 2024 guidance but expects it to generate approximately $710 million in annual revenues post-closing [56] Q&A Session Summary Question: Volume trends in employer-based business - The employer-based business, including drug testing and population health, showed meaningful declines, impacting overall volume growth [51][52] Question: Canadian market and LifeLabs acquisition - The Canadian market is attractive due to faster population growth and aging, with LifeLabs centered in British Columbia and Ontario, which account for over 50% of Canada's population [68][93] Question: Utilization trends and guidance - Utilization remains strong, with base revenue growth expected to be around 5% for the full year, and 5.3% in the second half [84][108] Question: Digital pathology and PathAI acquisition - Digital pathology is expected to improve quality and efficiency, with potential cost savings from collapsing the network of sites [113][138] Question: Value-based care contracts - Value-based care contracts are lumpy and difficult to model, with payments varying based on contract terms [144][145] Question: Regulatory environment (PAMA and SALSA) - The company expects a one-year delay in PAMA and is pushing for SALSA, though it acknowledges challenges in an election year [120][147] Question: Haystack Oncology and future outlook - Haystack Oncology is expected to be dilutive in 2024 but less so in 2025, with potential for accretion by 2026 [124][149] Question: Wage costs and turnover - Wage increases are expected to remain in the 3% to 4% range, with turnover improving from over 20% last year to mid-18% in Q2 2024 [158][183] Question: Debt and LifeLabs acquisition financing - The LifeLabs acquisition is expected to be funded by a combination of debt and cash, with 75% of the purchase price funded by debt [186] Question: Market share and preferred networks - The company believes it is gaining market share, particularly in physician and hospital channels, with strong growth in preferred network arrangements [168][188]

Quest Diagnostics (DGX) came out with quarterly earnings of $2.35 per share, beating the Zacks Consensus Estimate of $2.31 per share. This compares to earnings of $2.30 per share a year ago. These figures are adjusted for non-recurring items. Quest Diagnostics, which belongs to the Zacks Medical - Outpatient and Home Healthcare industry, posted revenues of $2.4 billion for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.50%. This compares to year-ago revenues of $2.34 billion. The ...