Quest Diagnostics Incorporated DGX reported second-quarter 2026 adjusted earnings of $3.12 per share, up 19.1% year over year. The figure beat the Zacks Consensus Estimate by 11%.
The adjusted results exclude certain one-time items, including amortization expenses, restructuring and integration charges, other expenses, and excess tax benefits related to stock-based compensation. GAAP earnings were $2.84 per share, up 15% from the prior-year figure.
DGX’s Q2 Revenues
Revenues rose 10.2% year over year to $3.04 billion and surpassed the Zacks Consensus Estimate by 2.1%. Growth was driven by higher testing demand, with requisition volume increasing 13.1% and organic requisition volume rising 13.0%.
DGX's Diagnostic Services Revenues Climb
Diagnostic Information Services revenues increased 10.3% year over year to $2.98 billion in the second quarter. The business accounted for nearly all of the company’s consolidated revenues and benefited from growth across physician, hospital and consumer channels.
Revenue per requisition declined 2.8% year over year. The decrease partly offset the benefit of higher volumes, but the scale of requisition growth supported double-digit revenue expansion for the segment.
DGX’s shares have gained nearly 6.2% in pre-market trading following the earnings report.
DGX's Margin Performance
The cost of services during the reported quarter was $2.02 billion, up 10.9% year over year. Gross profit was $1.03 billion, up 8.9% from $943 million in the year-ago quarter. The gross margin contracted 40 basis points to 33.7%.
Selling, general and administrative expenses totaled $529 million, increasing 8.8% year over year. The operating margin narrowed 80 basis points to 15.1% in the second quarter.
DGX Strengthens Cash Flow and Liquidity
Quest Diagnostics ended the second quarter with $626 million in cash and cash equivalents, up from $393 million at the end of the first quarter. During the first half, the company repurchased 0.5 million shares for $100 million, with $1.3 billion remaining under its authorization.
For the first six months of 2026, cash provided by operating activities increased 1.9% year over year to $875 million. Capital expenditures rose 12.1% to $252 million, reflecting continued investment in the business.
Quest Diagnostics Incorporated Price, Consensus and EPS Surprise
Quest Diagnostics Incorporated price-consensus-eps-surprise-chart | Quest Diagnostics Incorporated Quote
Quest Diagnostics Raises 2026 Outlook
The company now expects 2026 revenues to be between $11.95 billion and $12.05 billion, up from its prior range of $11.78-$11.90 billion. The revised outlook implies growth of 8.3-9.2%. The Zacks Consensus Estimate is pegged at $11.84 billion.
Adjusted diluted earnings are projected to be between $11.05 and $11.25 per share compared with the previous range of $10.63-$10.83. The Zacks Consensus Estimate for the metric is pegged at $10.72.
Our View on DGX Stock
Quest Diagnostics ended the second quarter of 2026 with earnings and revenues surpassing their respective estimates. The company saw robust growth across questhealth.com, consumer partnerships and Advanced Diagnostics. During the quarter, it also advanced key collaborations, secured New York approval for Haystack MRD and expanded laboratory automation and specimen-collection tools. Driven by the robust second-quarter performance, Quest Diagnostics raised its full-year 2026 guidance.
That said, the contraction of both margins in the quarter is discouraging.
DGX’s Zacks Rank & Other Key Picks
Quest Diagnostics currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Intuitive Surgical ISRG, Phibro Animal Health PAHC and QuidelOrtho CP QDEL.
Intuitive Surgical, carrying a Zacks Rank #2 at present, posted a second-quarter 2026 adjusted EPS of $2.80, exceeding the Zacks Consensus Estimate by 12.9%. Revenues of $2.89 billion topped the Zacks Consensus Estimate by 3.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ISRG’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.5%.
Phibro Animal Health, carrying a Zacks Rank #2 at present, posted a third-quarter fiscal 2026 adjusted EPS of 76 cents, exceeding the Zacks Consensus Estimate by 5.9%. Revenues of $383.5 million outperformed the Zacks Consensus Estimate by 6.3%. PAHC’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 16.2%.
QuidelOrtho, currently carrying a Zacks Rank #2, reported a first-quarter 2026 adjusted loss of 4 cents per share, which missed the Zacks Consensus Estimate by 110.8%. Revenues of $619.8 million beat the Zacks Consensus Estimate by 0.3%. QDEL beat earnings estimates in three of the trailing four quarters and missed on one occasion.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Quest Diagnostics Incorporated (DGX): Free Stock Analysis Report
Intuitive Surgical, Inc. (ISRG): Free Stock Analysis Report
QuidelOrtho Corporation (QDEL): Free Stock Analysis Report
Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).