Quest Diagnostics Incorporated DGX reported third-quarter 2026 adjusted earnings of $3.00 per share, up 15.4% year over year. The figure beat the Zacks Consensus Estimate by 5.3%.
GAAP earnings were $2.78 per share, up 28.7% from the prior-year figure.
Revenues rose 10% year over year to $3.10 billion, surpassing the Zacks Consensus Estimate by 1.7%. Growth was supported by strong testing demand across physician, hospital and consumer channels, with organic requisition volume increasing 14.4%.
DGX’s shares have lost nearly 1.6% in pre-market trading following the earnings report.
Quest's Diagnostic Services Revenues Climb
Diagnostic Information Services revenues increased 10.2% year over year to $3.04 billion. The business accounted for nearly all consolidated revenues, reflecting continued strength across the company's core testing channels.
Total requisition volume increased 14.5% year over year, while organic requisition volume climbed 14.4%. However, revenue per requisition declined 4.2%, partially offsetting the benefits of higher testing volumes. Despite the lower revenue per requisition, robust testing demand helped sustain double-digit revenue growth.
DGX's Margin Performance Improves
The cost of services during the reported quarter was $2.06 billion, up 10.1% year over year. Gross profit increased 9.8% to $1.04 billion from $949 million in the year-ago quarter. The gross margin remained relatively stable at approximately 33.6%.
Selling, general and administrative expenses totaled $523 million, increasing 4.4% year over year. Reported operating income surged 24.2% to $479 million, while the operating margin expanded 180 basis points to 15.5%.
Adjusted operating income increased 13% to $517 million. The adjusted operating margin improved 40 basis points to 16.7%, reflecting stronger operating profitability.
Quest Strengthens Cash Flow and Liquidity
Quest Diagnostics exited the third quarter with cash and cash equivalents of $797 million compared with $626 million at the end of the second quarter. The company generated $611 million in operating cash flow during the quarter, up 8.8% from $563 million a year ago.
For the first nine months of 2026, operating cash flow increased 4.6% to $1.49 billion. Capital expenditures totaled $418 million, up 13.3% year over year. During the same period, the company spent $252 million on share repurchases and paid $279 million in dividends.
DGX Raises 2026 Revenue and Earnings Outlook
Quest Diagnostics raised its full-year 2026 revenue guidance to $12.065-$12.105 billion from the previous projection of $11.95-$12.05 billion. The updated outlook represents expected revenue growth of 9.3-9.7%. The Zacks Consensus Estimate is pegged at $12.01 billion, indicating an increase of 8.9% from the year-ago figure.
The company increased its adjusted earnings guidance to $11.25-$11.35 per share from $11.05-$11.25. The Zacks Consensus Estimate for the metric is pegged at $11.15.
Quest Advances Diagnostics and Strategic Partnerships
Quest Diagnostics expanded its Alzheimer's disease testing portfolio by adding Roche's FDA-cleared Elecsys Phospho-Tau (217P) Plasma blood test to its AD-Detect menu. It also launched a new panel combining pTau217, amyloid beta and APOE biomarkers to support diagnosis and treatment decisions.
On the partnership front, Quest finalized an agreement to acquire select outreach laboratory assets from a Northeastern U.S. health system. It also advanced its Co-Lab Solutions implementation and joint venture laboratory with Corewell Health in Michigan.
Quest Diagnostics Incorporated Price, Consensus and EPS Surprise
Quest Diagnostics Incorporated price-consensus-eps-surprise-chart | Quest Diagnostics Incorporated Quote
Our View on DGX Stock
Quest Diagnostics ended the third quarter of 2026 with earnings and revenues surpassing their respective estimates. Revenue growth was driven by sustained demand for diagnostic testing services, supported by contributions from the company’s expanding laboratory operations. Productivity improvements from automation and artificial intelligence also supported the company's performance. Driven by the robust third-quarter performance, Quest Diagnostics raised its full-year 2026 guidance.
Additionally, the improvement in operating margin during the quarter is a positive development.
DGX’s Zacks Rank & Key Picks
Quest Diagnostics currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Phibro Animal Health PAHC, Agilent Technologies A and Globus Medical GMED .
Phibro Animal Health, sporting a Zacks Rank #1 (Strong Buy), reported fourth-quarter fiscal 2026 adjusted EPS of 85 cents, which surpassed the Zacks Consensus Estimate by 18.06%. Revenues of $396.7 million beat the Zacks Consensus Estimate by 8.35%. You can see the complete list of today’s Zacks #1 Rank stocks here.
PAHC has an earnings yield of 8.9% compared with the industry’s 2.8%. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 18.36%.
Agilent Technologies,carrying a Zacks Rank #2 at present, posted third-quarter fiscal 2026 adjusted EPS of $1.62, exceeding the Zacks Consensus Estimate by 9.5%. Revenues of $1.88 billion topped the Zacks Consensus Estimate by 2.1%.
A has an earnings yield of 3.7% compared with the industry’s 2.8%. The company’s earnings outpaced estimates in two of the trailing four quarters, broke even once and missed on another one, the average surprise being 3.8%.
Globus Medical,carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $1.34, exceeding the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million outperformed the Zacks Consensus Estimate by 0.4%.
GMED has an estimated earnings yield of 6.6% against the industry’s 2.3% decline. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 27.9%.
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This article originally published on Zacks Investment Research (zacks.com).