• Consolidated Revenue: $2.65 billion, up 12.1% year-over-year.
• Organic Revenue Growth: 2.4% increase.
• Diagnostic Information Services Revenue: Up 12.7% compared to the prior year.
• Total Volume Growth: Increased 12.4% versus the first quarter of 2024.
• Organic Volume Change: Down 0.9%.
• Revenue per Requisition: Up 0.3% year-over-year; organic basis up 3.6%.
• Reported Operating Income: $346 million or 13% of revenues.
• Adjusted Operating Income: $406 million or 15.3% of revenues.
• Reported EPS: $1.94, compared to $1.72 a year ago.
• Adjusted EPS: $2.21, compared to $2.04 the prior year.
• Cash from Operations: $314 million, compared to $154 million in the prior year.
• Full Year 2025 Revenue Guidance: Expected between $10.7 billion and $10.85 billion.
• Full Year 2025 Reported EPS Guidance: Expected to be in the range of $8.62 to $8.87.
• Full Year 2025 Adjusted EPS Guidance: Expected to remain in the range of $9.55 to $9.80.
• Full Year 2025 Cash from Operations Guidance: Approximately $1.5 billion.
• Full Year 2025 Capital Expenditures Guidance: Approximately $500 million.

• Warning! GuruFocus has detected 9 Warning Signs with DGX.

Release Date: April 22, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Quest Diagnostics Inc (NYSE:DGX) reported strong revenue growth of approximately 12% in the first quarter, with nearly 2.5% in organic growth.
• The company reaffirmed its revenue and adjusted EPS guidance for the full year 2025, indicating confidence in its financial outlook.
• Quest Diagnostics Inc (NYSE:DGX) expanded its use of automation, robotics, and AI to improve quality, customer and employee experiences, and productivity.
• The company was named as the first independent national lab to be selected to the Optum Health Preferred Lab Network, enhancing its reputation and partnerships.
• Quest Diagnostics Inc (NYSE:DGX) saw impressive uptake of its novel PFAS forever chemicals test, demonstrating successful innovation and market adoption.

Negative Points

• Organic volume growth was down by 0.9%, impacted by weather and one less day in the quarter compared to the prior year.
• Higher interest expenses impacted EPS in the first quarter, with reported EPS at $1.94 compared to $1.72 a year ago.
• The company faces potential challenges from tariffs, although it believes the impact is manageable under current regulations.
• There are ongoing labor strikes at LifeLabs in British Columbia, which could impact operations and financial performance.
• Quest Diagnostics Inc (NYSE:DGX) continues to face challenges in the health system pricing landscape, which remains the most difficult area to manage.

Q & A Highlights

Q: Can you provide insights on the organic volume trends and expectations for the rest of the year? A: James Davis, CEO, explained that organic volume was down 0.9% but would have been up nearly 1% if adjusted for leap year and weather impacts. He noted a strong rebound in March and consistent trends in April, aligning with expectations from the previous year.

Q: How is Quest Diagnostics managing potential tariff impacts on supply costs? A: James Davis, CEO, stated that less than 1% of their $2 billion supply spend is directly sourced from China. Most supplies are under multi-year contracts, and 75-80% of lab reagents are manufactured in the U.S., minimizing tariff exposure. Sam Samad, CFO, added that the impact is manageable and included in current guidance.

Q: What is the status of the LifeLabs acquisition and its impact on margins? A: James Davis, CEO, mentioned that LifeLabs' revenue was in line with expectations, and they are making progress in improving margins. They expect LifeLabs to reach corporate average margins within two to three years, potentially sooner.

Q: Are there any strategic opportunities arising from potential hospital reimbursement challenges? A: James Davis, CEO, noted that while it's too early to see direct impacts, there is a robust pipeline of opportunities in collaborative lab services. Tariff impacts could accelerate these opportunities if suppliers pass on price increases to health systems.

Q: How is Quest Diagnostics leveraging its collaboration with Google Cloud for data management? A: James Davis, CEO, explained that moving data to the cloud will enhance efficiency in their data analytics business, improve employee productivity, and enable AI-based tools for better customer and physician interactions. This will streamline operations and improve service quality.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.