Why did Quest raise its full-year 2026 EPS guidance, and how much of the increase is driven by one-time items?

The company raised adjusted diluted EPS guidance to $11.05–$11.25 from $10.63–$10.83, a roughly $0.42 increase at the midpoint. Management cited favorable resolution of various tax contingencies in the second quarter as a basis for the change. Because the guidance is for the full year, tax-contingency benefits are likely a meaningful share of the raise, and investors should separate them from the underlying operating improvement.

Is Quest's revenue growth coming from higher prices or higher volume?

Growth is coming mainly from volume. Requisition volume rose 13.1% in Q2, while revenue per requisition declined 2.8%. Volume growth is strong, but the pricing decline means each test is generating less revenue, which investors should monitor for sustainability.

Did profitability improve in the quarter?

Profitability was mixed. Reported operating income rose 4.6% to $459 million, but the reported operating margin declined to 15.1% from 15.9%. Adjusted operating margin fell to 16.5% from 16.9%. Net income growth of 13.4% and EPS growth of 15.0% were supported by lower amortization and other items rather than margin expansion at the operating level.

Why is operating cash flow guidance lower even though earnings guidance is higher?

Guidance for operating cash flow was lowered to approximately $1.75 billion from approximately $1.80 billion. Accounts receivable rose 18% to $1.67 billion in the first half, reflecting growth in billings and collection timing. Working capital absorbed cash, so investors should watch collections and receivable days in future quarters.

How is Quest's balance sheet and capital allocation positioned?

Total debt was about $5.64 billion at June 30, 2026, roughly flat versus year-end 2025, with cash of $626 million. The company repurchased $100 million of stock in Q2 and has $1.3 billion remaining under its authorization. Noncontrolling interests increased to $303 million from $36 million, reflecting the Corewell Health joint venture. Capital expenditures are guided at about $550 million for the year.

DGX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 23, 2026. Cited figures are marked; the original filing is the authoritative source.

Quest Diagnostics (DGX) reported strong second-quarter 2026 results, with net revenues of $3.04 billion^a, up 10.2% year over year, and 10.0% organic revenue growth.

Requisition volume rose 13.1%, though revenue per requisition declined 2.8%, indicating that growth is being driven by volume rather than pricing or mix. Reported diluted EPS was $2.84^b (up 15.0%), and adjusted diluted EPS was $3.12 (up 19.1%). Operating income grew 4.6% on a reported basis, with the operating margin falling to 15.1% from 15.9%, while the adjusted operating margin declined to 16.5% from 16.9%.

Cash from operations rose 9.7% to $597 million^c for the quarter. Management raised full-year 2026 guidance. Net revenues are now expected at $11.95 to $12.05 billion (8.3% to 9.2% growth), up from $11.78 to $11.90 billion.

Reported diluted EPS is now $9.97 to $10.17^d, and adjusted diluted EPS is $11.05 to $11.25, up from $10.63 to $10.83. Management attributed part of the EPS raise to favorable resolution of tax contingencies in the quarter, and the adjusted effective tax rate is expected to be consistent with 2025. Guidance for operating cash flow was lowered to approximately $1.75 billion from approximately $1.80 billion, which is a point investors should weigh against the earnings increase.

Capital expenditures are unchanged at approximately $550 million. The balance sheet shows total debt of roughly $5.64 billion, down from about $5.67 billion at year-end 2025, with cash of $626 million. Accounts receivable rose 18% to $1.67 billion, which contributed to the year-to-date cash flow drag.

Goodwill increased to $9.11 billion, and noncontrolling interests rose sharply to $303 million from $36 million, reflecting the Corewell Health joint venture. Share repurchases totaled $100 million in the quarter, with $1.3 billion remaining under the authorization.

02—Key points

Key Highlights

Q2 2026 net revenues of $3.04 billion, up 10.2% year over year, with 10.0% organic growth and requisition volume up 13.1%
Reported diluted EPS of $2.84 (up 15.0%) and adjusted diluted EPS of $3.12 (up 19.1%)
Full-year 2026 revenue guidance raised to $11.95–$12.05 billion; adjusted diluted EPS guidance raised to $11.05–$11.25 from $10.63–$10.83
Revenue per requisition fell 2.8% in the quarter, so growth is volume-driven and pricing is a headwind
Operating cash flow guidance lowered to approximately $1.75 billion from approximately $1.80 billion despite the higher earnings outlook
Part of the EPS raise reflects favorable resolution of tax contingencies, which may be non-recurring
Accounts receivable increased 18% to $1.67 billion, and the Corewell Health joint venture lifted noncontrolling interests to $303 million from $36 million

03—Questions

Frequently Asked Questions

Why did Quest raise its full-year 2026 EPS guidance, and how much of the increase is driven by one-time items?
The company raised adjusted diluted EPS guidance to $11.05–$11.25 from $10.63–$10.83, a roughly $0.42 increase at the midpoint. Management cited favorable resolution of various tax contingencies in the second quarter as a basis for the change. Because the guidance is for the full year, tax-contingency benefits are likely a meaningful share of the raise, and investors should separate them from the underlying operating improvement.
Is Quest's revenue growth coming from higher prices or higher volume?
Growth is coming mainly from volume. Requisition volume rose 13.1% in Q2, while revenue per requisition declined 2.8%. Volume growth is strong, but the pricing decline means each test is generating less revenue, which investors should monitor for sustainability.
Did profitability improve in the quarter?
Profitability was mixed. Reported operating income rose 4.6% to $459 million, but the reported operating margin declined to 15.1% from 15.9%. Adjusted operating margin fell to 16.5% from 16.9%. Net income growth of 13.4% and EPS growth of 15.0% were supported by lower amortization and other items rather than margin expansion at the operating level.
Why is operating cash flow guidance lower even though earnings guidance is higher?
Guidance for operating cash flow was lowered to approximately $1.75 billion from approximately $1.80 billion. Accounts receivable rose 18% to $1.67 billion in the first half, reflecting growth in billings and collection timing. Working capital absorbed cash, so investors should watch collections and receivable days in future quarters.
How is Quest's balance sheet and capital allocation positioned?
Total debt was about $5.64 billion at June 30, 2026, roughly flat versus year-end 2025, with cash of $626 million. The company repurchased $100 million of stock in Q2 and has $1.3 billion remaining under its authorization. Noncontrolling interests increased to $303 million from $36 million, reflecting the Corewell Health joint venture. Capital expenditures are guided at about $550 million for the year.

04—Continue

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