Quest Diagnostics Reports First Quarter 2026 Financial Results; Raises Revenue and EPS Guidance for Full Year 2026

Three Months Ended March 31,

2026

2025

Change

(dollars in millions, except per share data)

Reported:

Net revenues

$       2,895

$       2,652

9.2 %

Diagnostic Information Services revenues

$       2,832

$       2,589

9.4 %

Revenue per requisition

(1.3) %

Requisition volume

10.9 %

  Organic requisition volume

10.8 %

Operating income (a)

$          399

$          346

15.5 %

Operating income as a percentage of net revenues (a)                         

13.8 %

13.0 %

0.8 %

Net income attributable to Quest Diagnostics (a)

$          252

$          220

14.4 %

Diluted EPS (a)

$         2.24

$         1.94

15.5 %

Cash provided by operations

$          278

$          314

(11.6) %

Capital expenditures

$          114

$          117

(1.8) %

Adjusted (a):

Operating income

$          447

$          406

10.0 %

Operating income as a percentage of net revenues

15.4 %

15.3 %

0.1 %

Net income attributable to Quest Diagnostics

$          281

$          251

12.1 %

Diluted EPS

$         2.50

$         2.21

13.1 %

(a) 

For further details impacting the year-over-year comparisons related to operating income, operating income as

a percentage of net revenues, net income attributable to Quest Diagnostics, and diluted EPS, see note 2 of the

financial tables attached below.

Updated Guidance

Prior Guidance

Low

High

Low

High

Net revenues

$11.78 billion

$11.90 billion

$11.70 billion

$11.82 billion

Net revenues increase

6.8 %

7.8 %

6.0 %

7.1 %

Reported diluted EPS

$9.58

$9.78

$9.45

$9.65

Adjusted diluted EPS

$10.63

$10.83

$10.50

$10.70

Cash provided by operations

Approximately $1.75 billion

Approximately $1.75 billion

Capital expenditures

  Approximately $550 million

Approximately $550 million

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Statements of Operations

For the Three Months Ended March 31, 2026 and 2025

(in millions, except per share data)

(unaudited)

Three Months Ended

March 31,

2026

2025

Net revenues

$    2,895

$    2,652

Operating costs and expenses and other operating income:

Cost of services

1,953

1,789

Selling, general and administrative

504

476

Amortization of intangible assets

37

39

Other operating expense, net

2

2

Total operating costs and expenses, net

2,496

2,306

Operating income

399

346

Other income (expense):

Interest expense, net

(63)

(67)

Other expense, net

(2)

(3)

Total non-operating expense, net

(65)

(70)

Income before income taxes and equity in earnings of equity method investees

334

276

Income tax expense

(74)

(59)

Equity in earnings of equity method investees, net of taxes

4

18

Net income

264

235

Less: Net income attributable to noncontrolling interests

12

15

Net income attributable to Quest Diagnostics

$       252

$       220

Earnings per share attributable to Quest Diagnostics' common stockholders:

Basic

$      2.27

$      1.97

Diluted

$      2.24

$      1.94

Weighted average common shares outstanding:

Basic

110

111

Diluted

112

113

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Balance Sheets

March 31, 2026 and December 31, 2025

(in millions, except per share data)

(unaudited)

March 31,

2026

December 31,

2025

Assets

Current assets:

Cash and cash equivalents

$                 393

$                420

Accounts receivable, net

1,587

1,408

Inventories

225

189

Prepaid expenses and other current assets

361

361

Total current assets

2,566

2,378

Property, plant and equipment, net

2,189

2,203

Operating lease right-of-use assets

691

657

Goodwill

9,120

8,945

Intangible assets, net

1,717

1,636

Investments in equity method investees

134

136

Other assets

256

270

Total assets

$            16,673

$           16,225

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued expenses

$              1,500

$             1,600

Current portion of long-term debt

503

504

Current portion of long-term operating lease liabilities

174

174

Total current liabilities

2,177

2,278

Long-term debt

5,155

5,167

Long-term operating lease liabilities

574

537

Other liabilities

1,022

957

Redeemable noncontrolling interest

79

80

Stockholders' equity:

Quest Diagnostics stockholders' equity:

Common stock, par value $0.01 per share; 600 shares authorized as of both March 31, 2026 and

  December 31, 2025; 162 shares issued as of both March 31, 2026 and December 31, 2025

2

2

Additional paid-in capital

2,347

2,381

Retained earnings

10,151

9,994

Accumulated other comprehensive loss

(43)

(27)

Treasury stock, at cost; 51 shares and 52 shares as of March 31, 2026 and December 31, 2025,

  respectively

(5,091)

(5,180)

Total Quest Diagnostics stockholders' equity

7,366

7,170

Noncontrolling interests

300

36

Total stockholders' equity

7,666

7,206

Total liabilities and stockholders' equity

$            16,673

$           16,225

Quest Diagnostics Incorporated and Subsidiaries

Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2026 and 2025

(in millions)

(unaudited)

Three Months Ended

March 31,

2026

2025

Cash flows from operating activities:

Net income

$              264

$              235

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

147

140

Provision for credit losses

1

1

Deferred income tax expense

48

7

Stock-based compensation expense

20

22

Other, net

8

(1)

Changes in operating assets and liabilities:

Accounts receivable

(180)

(101)

Accounts payable and accrued expenses

(12)

(53)

Income taxes payable

13

15

Other assets and liabilities, net

(31)

49

Net cash provided by operating activities

278

314

Cash flows from investing activities:

Business acquisitions, net of cash acquired

(38)

—

Capital expenditures

(114)

(117)

Other investing activities, net

—

2

Net cash used in investing activities

(152)

(115)

Cash flows from financing activities:

Proceeds from borrowings

—

215

Repayments of debt

(1)

(600)

Exercise of stock options

65

29

Employee payroll tax withholdings on stock issued under stock-based compensation plans               

(37)

(42)

Dividends paid

(88)

(84)

Distributions to noncontrolling interest partners

(7)

(18)

Other financing activities, net

(84)

(61)

Net cash used in financing activities

(152)

(561)

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(1)

1

Net change in cash and cash equivalents and restricted cash

(27)

(361)

Cash and cash equivalents and restricted cash, beginning of period

420

549

Cash and cash equivalents and restricted cash, end of period

$              393

$              188

Cash paid during the period for:

Interest

$                22

$                32

Income taxes

$                  8

$                  4

1)  The computation of basic and diluted earnings per common share is as follows:

Three Months Ended

March 31,

2026

2025

(in millions, except per share data)

Amounts attributable to Quest Diagnostics' common stockholders:

Net income attributable to Quest Diagnostics

$           252

$           220

Less: earnings allocated to participating securities

1

1

Earnings available to Quest Diagnostics' common stockholders - basic and diluted

$           251

$           219

Weighted average common shares outstanding - basic

110

111

Effect of dilutive securities:

Stock options and performance share units

2

2

Weighted average common shares outstanding - diluted

112

113

Earnings per share attributable to Quest Diagnostics' common stockholders:                         

Basic

$          2.27

$          1.97

Diluted

$          2.24

$          1.94

2)  The following tables reconcile reported GAAP results to non-GAAP adjusted results:

Three Months Ended March 31, 2026

(dollars in millions, except per share data)

Operating

income

Operating

income as a

percentage of

net revenues

Income tax

expense (e)

Equity in

earnings of

equity method

investees, net

of taxes

Net income

attributable to

Quest

Diagnostics

Diluted

EPS

As reported

$                 399

13.8 %

$                  (74)

$                     4

$                 252

$                2.24

Restructuring and

integration charges (a)

7

0.2

(2)

—

5

0.04

Other charges (b)

4

0.1

(1)

—

3

0.03

Gains and losses on

investments (c)

—

—

(2)

7

5

0.05

Amortization expense

37

1.3

(9)

—

28

0.25

ETB

—

—

(12)

—

(12)

(0.11)

As adjusted

$                 447

15.4 %

$                (100)

$                   11

$                 281

$                2.50

Three Months Ended March 31, 2025

(dollars in millions, except per share data)

Operating

income

Operating

income as a

percentage of

net revenues

Income tax

expense (e)

Equity in

earnings of

equity method

investees, net

of taxes

Net income

attributable to

Quest

Diagnostics

Diluted

EPS

                                   As reported

$                 346

13.0 %

$                  (59)

$                   18

$                 220

$                1.94

Restructuring and

integration charges (a)

19

0.7

(5)

—

14

0.13

Other charges (b)

2

0.1

—

—

2

0.02

Other gains (d)

—

—

2

(8)

(6)

(0.06)

Amortization expense

39

1.5

(9)

—

30

0.26

ETB

—

—

(9)

—

(9)

(0.08)

As adjusted

$                 406

15.3 %

$                  (80)

$                   10

$                 251

$                2.21

(a)  For both the three months ended March 31, 2026 and 2025, the pre-tax impact represents costs primarily associated with workforce reductions and integration

      costs incurred in connection with further restructuring and integrating our business. The following table summarizes the pre-tax impact of restructuring and

      integration charges on our consolidated statements of operations:

Three Months Ended

March 31,

2026

2025

(dollars in millions)

Cost of services

$               1

$               6

Selling, general and administrative                                                                                                                                                   

6

13

Operating income

$               7

$             19

     (b) 

For both the three months ended March 31, 2026 and 2025, the pre-tax impact primarily represents a loss associated with the change in the fair value of the contingent consideration accrual associated with previous acquisitions, recorded in other operating expense, net.

     (c) 

For the three months ended March 31, 2026, the pre-tax impact represents losses associated with changes in the carrying value of our strategic investments, principally recorded in equity in earnings of equity method investees, net of taxes.

     (d) 

The three months ended March 31, 2025 includes pre-tax gains of $8 million, recorded in equity in earnings of equity method investees, net of taxes, principally consisting of a non-recurring gain related to a lease.

     (e) 

For restructuring and integration charges, other gains/charges, gains and losses on investments, and amortization expense, income tax impacts, where recorded, were primarily calculated using combined statutory income tax rates of 25.5% for both 2026 and 2025.  No income tax impact was recorded on losses associated with the change in the fair value of the contingent consideration accrual associated with previous acquisitions.

3)  The outlook for adjusted diluted EPS represents management's estimates for the full year 2026 before the impact of special items. Further

     impacts to earnings related to special items may occur throughout 2026. Additionally, the amount of ETB is dependent upon employee stock

     option exercises and our stock price, which are difficult to predict. The following table reconciles our 2026 outlook for diluted EPS under GAAP

     to our outlook for adjusted diluted EPS:

Low

High

Diluted EPS

$                                   9.58

$                                   9.78

Restructuring and integration charges (a)

0.10

0.10

Amortization expense (b)

0.99

0.99

Other charges (c)

0.10

0.10

Gains and losses on investments (d)

0.05

0.05

ETB

(0.19)

(0.19)

Adjusted diluted EPS

$                                 10.63

$                                 10.83

(a) 

Represents estimated pre-tax charges of $16 million primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business. Income tax benefits were primarily calculated using a combined statutory income tax rate of 25.5%.

(b) 

Represents estimated pre-tax amortization expenses of $149 million. Income tax benefits were primarily calculated using a combined statutory income tax rate of 25.5%.

(c) 

Principally represents estimated pre-tax net losses of $10 million associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions. Such estimate is subject to the risks and uncertainties discussed in the "Forward Looking Statements" section above. No income tax benefits are recorded on the changes associated with the contingent consideration accrual.

(d) 

Income tax impacts were calculated using a combined statutory income tax rate of 25.5%.