Built by Grok 4.6 HighReported Thursday, October 22, 2026. Prepared Monday, October 26, 2026. This is the fiscal 2026Q3 print, quarter ended September 30, 2026. Quest Diagnostics is a calendar-year company, so the slug is 2026Q3, not FY2026Q3. The homepage calendar labels the announcement date 2026Q4. That label is the announcement quarter and runs one quarter ahead of the fiscal quarter reported. This page is not a 2026Q4 review, and it does not replace the 2026Q3 preview.
DGX | Earnings Review
Quest printed a twelfth straight revenue and adjusted-EPS beat, and both surprises got smaller. Net revenue of $3,097 million was +10.0% versus $2,816 million and +1.5% versus the FMP bar of $3,052 million. Adjusted diluted EPS of $3.00 was +15.4% versus $2.60 and +$0.13 / +4.5% versus FMP $2.87. Q2 was a wider beat: +2.4% on revenue and +$0.30 on adjusted EPS, and about $0.10 of that EPS was a tax-contingency item that did not repeat. Strip it and Q2 grew about 15.3%. Q3's +15.4% is the same operating pace, not a rollover, and it is a cleaner beat.
The trajectory that matters is organic, not the reported 10%. Organic revenue growth held at 10.0%, +320 bps versus Q3 2025's 6.8% and unchanged versus Q2's 10.0%. Reported revenue YoY stopped rising: the two Daloopa dollars are +9.98%, −23 bps versus Q2's +10.21%, because partner volume is now inside the compare and revenue per requisition fell 4.2% on mix. Ex Corewell and Fresenius, volume accelerated again, from 4.0% to 5.0%, and revenue per requisition was still +1.7%. Unit price was flat. Adjusted operating margin flipped from −40 bps in Q2 to +40 bps, to 16.7% from 16.3%. Derived EBITDA margin expanded much more (+146 bps). That is not the operating story. Last year's GAAP result carried a larger adjustment gap.
New guidance. Third raise of FY2026, and a narrower one. Revenue $12.065 billion to $12.105 billion, growth 9.3% to 9.7%. Midpoint $12.085 billion, +9.5% versus FY2025 $11,035 million, about 230 bps slower than last year's +11.8%. Adjusted EPS $11.25 to $11.35. Midpoint $11.30, +14.7% versus $9.85. The new floor equals the old ceiling. Post-print FMP (October 26) is $12.076 billion and $11.29, inside the range. The street absorbed the raise. There is no leftover "they do not believe 2026." The Q4 residual of the midpoint is about $3.050 billion and $2.68, +8.7% and +10.7% versus Q4 2025. That slowdown is the October Corewell/Fresenius lap, not a utilization cut. Jim Davis said there is no reason to expect utilization to moderate.
Tone. Demand language got firmer. The financial guide got tighter, not louder. The Q3 revenue step is about half the Q2 step. The EPS step is about a third. The range was cut in half. Interest expense is now a help. Fuel is a larger hurt, closer to $14 million versus a $10 million estimate, and they still raised EPS. They refused every 2027 dollar. Ten answers were usable. Eight were deflections. Five of those eight are the 2027 PAMA and RESULTS complex. The other three are whether the 5% ex-partnership volume is share or the market, Apple's contribution, and the cyber 8-K.
Contradictions. The 2027 PAMA hit was rewritten on this call from a $100 million point estimate (Q2 and Q3 2025) to "always $100–120 million" and "consistent with prior expectations," while Jim also said they did not expect 775 codes at the 15% cap. The only post-file point estimate he stated is about $120 million, and that still fights the "1% of next year's revenue" line he gave Lisa Gill. Corewell's 2027 margin is still low-teens (February) versus mid-single digits (July, called "no meaningful change") and was not reconciled in October.
What is next. FMP already has Q4 on the raised guide. FY2027 at +4.5% revenue and +6.1% EPS assumes the roughly 3-point partnership lap and most of the roughly 1% / about $120 million PAMA cut, with only a partial offset. RESULTS Act passage is the upside that is not in the model. The February 9, 2027 print is the 2027 number. Investor Day is March 25, 2027. Hold: the operating print is still good, the acceleration has leveled off at 10% organic, and the street is not missing a 2026 raise. The gap that is left is a policy outcome management keeps repeating and will not probability-weight.
| Q3 revenue / YoY | $3,097 million · +10.0% vs Q3 2025 | Q3 adjusted EPS / YoY | $3.00 · +15.4% · beat +$0.13 |
| Organic revenue | 10.0% · +320 bps vs Q3 2025 · flat vs Q2 | Ex-partnership volume | +5.0% · was +4.0% in Q2 and +3.8% in Q1 |
| Adjusted operating margin | 16.7% · +40 bps YoY · was −40 bps in Q2 | FY2026 guide mid | $12.085 billion · $11.30 adjusted EPS |
| FMP FY2026 / FY2027 | $12.076B / $11.29 · then +4.5% / +6.1% | Q4 residual at the mid | ~$3.050 billion · ~$2.68 · +8.7% / +10.7% |
Twelve quarters, 2023Q4 through 2026Q3. Growth is same-quarter year over year, never Q3 versus Q2. Quest does not report EBITDA as a managed line. Derived EBITDA is shown only so it is not confused with adjusted operating margin. Gross margin is gross profit divided by net revenue. Both inputs are cited under the table. Organic revenue is a Daloopa series from 2024Q3. "Organic requisition volume" includes Corewell and Fresenius. The ex-partner volume rate is a separate series and is the one to use for underlying demand.
| Metric | 23Q4 | 24Q1 | 24Q2 | 24Q3 | 24Q4 | 25Q1 | 25Q2 | 25Q3 | 25Q4 | 26Q1 | 26Q2 | 26Q3 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net revenue ($M) | 2,288 | 2,366 | 2,397 | 2,488 | 2,621 | 2,652 | 2,761 | 2,816 | 2,806 | 2,895 | 3,043 | 3,097 |
| Revenue YoY | n/a | n/a | n/a | +8.4% | +14.6% | +12.1% | +15.2% | +13.2% | +7.1% | +9.2% | +10.2% | +10.0% |
| Organic revenue growth | — | — | — | 4.2% | 5.0% | 2.5% | 5.2% | 6.8% | 6.4% | 9.0% | 10.0% | 10.0% |
| Requisition volume YoY | +1.9% | +1.6% | +1.1% | +5.5% | +13.9% | +12.4% | +16.3% | +12.5% | +8.5% | +10.9% | +13.1% | +14.5% |
| Rev. / requisition YoY | −3.5% | +0.1% | +1.6% | +3.3% | +0.2% | +0.3% | −0.4% | +0.8% | −0.1% | −1.3% | −2.8% | −4.2% |
| Rev. / req. ex partnerships | — | — | — | — | — | — | — | — | — | +2.5% | +3.0% | +1.7% |
| Adj. operating margin | 14.8% | 14.8% | 16.6% | 15.5% | 15.6% | 15.3% | 16.9% | 16.3% | 15.3% | 15.4% | 16.5% | 16.7% |
| Adj. margin YoY (bps) | n/a | n/a | n/a | −110 | +80 | +50 | +30 | +80 | −30 | +10 | −40 | +40 |
| Adj. diluted EPS ($) | 2.15 | 2.04 | 2.35 | 2.30 | 2.23 | 2.21 | 2.62 | 2.60 | 2.42 | 2.50 | 3.12 | 3.00 |
| Adj. EPS YoY | n/a | n/a | n/a | +3.6% | +3.7% | +8.3% | +11.5% | +13.0% | +8.5% | +13.1% | +19.1% | +15.4% |
| GAAP diluted EPS ($) | 1.70 | 1.72 | 2.03 | 1.99 | 1.95 | 1.94 | 2.47 | 2.16 | 2.18 | 2.24 | 2.84 | 2.78 |
Q3 2026 company growth rates match the call: revenue +10.0%, DIS +10.2%, organic revenue 10.0%, volume +14.5%. DIS revenue was $3,035 million. Diagnostic Solutions was $62 million, about 2% of sales. Ex-partnership volume was +5.0%. The 9.5 points of volume from the two relationships are management and the filing series, not a second volume print.
Diagnostic Information Services was $3,035 million, +10.2% versus $2,755 million. DIS organic growth was 10.1%, the same rate as Q2. Gross profit was $1,042 million on $3,097 million, a 33.65% margin, about −5 bps versus Q3 2025. That is a better print than Q2's −40 bps. Adjusted operating income was $517 million, +12.9% versus $458 million. Sam's bridge for the +40 bps is organic growth, partly offset by wage inflation and Corewell/Fresenius mix. Q3 had no material supplemental deferred-compensation hit. That item hurt Q2 margin and is neutral to EPS.
Derived EBITDA was $626 million, a 20.21% margin, +146 bps versus last Q3. Do not read +146 bps as the operating story. The operating story is 16.7% versus 16.3%. GAAP operating margin did jump +180 bps, to 15.5% from 13.7%, on operating income of $479 million versus $386 million. That gap is a larger year-ago adjustment, not a second beat.
Nine-month revenue is $9,035 million versus $8,229 million, +9.8%. Nine-month adjusted EPS is $8.62. Nine-month adjusted operating income is $1,466 million on that $9,035 million, a 16.2% margin, only about +6 bps versus the same three quarters of 2025. "Expand versus the prior year" off FY2025's 15.9% is a low bar. It does not require Q4 margin to expand versus Q4 2025's 15.3%.
Why the 10% rate can sit still while volume speeds up: Corewell and Fresenius are lower-priced work, and hospital reference added single-test Lp(a), Alzheimer's, and a cyclospora spike at about $15 to $16. Reference work runs about 1.6 tests per requisition. Jim put ex-partner revenue growth at about 6.6%, which foots to +5.0% volume and +1.7% revenue per requisition. Physician-channel revenue was above mid-single digits. Consumer, Quest Health plus partnerships, is north of 30% this year and is margin-accretive. Government payers were a stable 16% of revenue, the same as 16% a year ago. The beat was not a payer-mix event.
FMP epsActual matches adjusted diluted EPS in every quarter of this window, not GAAP. Do not score GAAP $2.78 against the $2.87 bar. That would be a false miss. The $0.22 GAAP-to-adjusted gap this quarter is smaller than the $0.44 gap in Q3 2025. Quest guides the year, not the quarter, so the variance is versus the street only. Any positive surprise is a beat. There is no in-line band.
| Metric | 24Q4 | 25Q1 | 25Q2 | 25Q3 | 25Q4 | 26Q1 | 26Q2 | 26Q3 |
|---|---|---|---|---|---|---|---|---|
| Revenue surprise | +1.6% | +0.8% | +1.3% | +2.9% | +1.9% | +2.3% | +2.4% | +1.5% |
| Adj. EPS surprise | +$0.04 | +$0.06 | +$0.05 | +$0.10 | +$0.06 | +$0.13 | +$0.30 | +$0.13 |
Green is a beat. The yellow rule marks Q3 2026. No miss in these eight quarters, and none in the twelve back to Q4 2023. Revenue surprise is percent. EPS surprise is dollars. Consensus is FMP. Actuals are Daloopa. Darker shading is not used: the brand has one green, and the number carries the magnitude.
This quarter versus the FMP row: revenue +$45 million / +1.5% (estimate $3,052.092 million, 9 analysts) and adjusted EPS +$0.13 / +4.5% (estimate $2.87; the unrounded 11-analyst mean is $2.87486, a +4.4% beat). The September 24 preview had the same $2.87 EPS and a lower revenue bar of about $3,043 million. Against that older bar the revenue beat is about +1.8%. Using the later, higher estimate makes the beat smaller, not larger. This note uses the October 26 bar.
Pattern: consistent beater, deteriorating magnitude on the latest print. L12Q (Q4 2023 through Q3 2026) is 12/12 on revenue and 12/12 on adjusted EPS. L4Q is 4/4 and 4/4. The thinnest old prints are Q2 2024 at +0.3% revenue and +$0.01 EPS. The L4Q average revenue surprise is about +2.0%, still a bit wider than the prior four quarters at +1.7%, only because Q4 2025 through Q2 2026 were still about +2%. One more print like Q3 and that average slips. EPS dollar surprises since Q3 2025 run +$0.10, +$0.06, +$0.13, +$0.30, +$0.13. The L4Q average of about +$0.155 is still more than double the prior four (+$0.063) because Q1 and Q2 were wide. Ex the $0.10 tax item, Q2 was still about +$0.20, so the step-down is not only the tax item leaving. Versus Q3 2025's +$0.10, this quarter is modestly larger. The spike reversed. The streak did not.
What the beat is: organic volume, including a 5% rate outside the two relationships; flat price and more tests per requisition on the base; and 40 bps of adjusted-margin expansion after wages and low-priced mix. What it is not: tax, price, or weather. A +1.5% revenue beat produced a +4.5% EPS beat. Drop-through is still positive and smaller than Q2. The street is no longer being surprised by a faster organic rate. It is still about a point light on revenue and about thirteen cents light on adjusted EPS.
Quest does not guide the quarter, gross margin, or EBITDA. The live guide is full-year 2026, raised and narrowed for the third time. FY2027 is still unnumbered. 2027 guidance comes with the Q4 print. The long-term outlook is an Investor Day on March 25, 2027. Midpoints, the Q4 residual, and growth rates below are arithmetic on cited endpoints. They are not separate Daloopa tags. Management said the 2026 share count will be slightly below 2025, so the Q4 EPS residual is a bridge, not a quarterly target.
The Q3 step is about half the Q2 step, and the range was cut in half. That is more confidence with one quarter left, not a larger beat being passed through. Cash from operations is the line that kept stepping up in dollars.
| FY2026 guide | Original Q4'25 | After Q1 | After Q2 | After Q3 | FMP 10/26 |
|---|---|---|---|---|---|
| Revenue midpoint | $11.76B | $11.84B | $12.00B | $12.085B | $12.076B |
| Revenue change | — | +$80M | +$160M | +$85M | −$9M vs mid |
| Adj. EPS midpoint | $10.60 | $10.73 | $11.15 | $11.30 | $11.29 |
| Adj. EPS change | — | +$0.13 | +$0.42 | +$0.15 | −$0.01 vs mid |
| Cash from operations | $1.75B | $1.75B | $1.8B | $1.9B | n/a |
| Capital expenditures | ~$550M | ~$550M | $550M | $550M | n/a |
Original revenue range $11.70–$11.82 billion. Q1 range $11.78–$11.90 billion. Q2 range $11.95–$12.05 billion. Current range $12.065–$12.105 billion. Adjusted EPS ranges: $10.50–$10.70, then $10.63–$10.83, then $11.05–$11.25, then $11.25–$11.35. FMP is four days after the print, so it may already include the raise.
Current range versus the July range, and versus FMP. Reported diluted EPS moved from a $10.07 mid to a $10.26 mid, $10.21 to $10.31. Do not put FMP EPS on the reported line. FMP EPS is the adjusted series.
| Metric | July mid | New low | New high | New mid | FMP | vs July | vs FMP |
|---|---|---|---|---|---|---|---|
| FY revenue | $12.00B | $12.065B | $12.105B | $12.085B | $12.076B | +$85M | +$9M |
| FY adj. EPS | $11.15 | $11.25 | $11.35 | $11.30 | $11.292 | +$0.15 | +$0.01 |
| Q4 revenue residual | $2,965M | $3,030M | $3,070M | $3,050M | $3,039M | +$85M | +$11M |
| Q4 adj. EPS residual | $2.53 | $2.63 | $2.73 | $2.68 | $2.681 | +$0.15 | in line |
| Q4 revenue YoY at mid | — | +8.0% | +9.4% | +8.7% | +8.3% | vs Q3 +10.0% | inside band |
| Q4 adj. EPS YoY at mid | — | +8.7% | +12.8% | +10.7% | +10.8% | vs Q3 +15.4% | in line |
The entire $85 million revenue raise and the entire $0.15 adjusted-EPS raise sit in the Q4 residual, because Q3 is already reported. The July "prior Q4 mid" is what Q4 would have had to be for the old full-year midpoint to hold. It was not a quarterly guide. Q4 revenue of $3,050 million versus $2,806 million is +8.7%, about 130 bps slower than Q3. Q4 EPS of $2.68 versus $2.42 is +10.7%, about 460 bps slower than Q3. FMP Q4 is $3.039 billion and $2.681, on that midpoint. The street is not paying for another $0.13.
Implied full-year growth is mixed, and the mix is the point. Revenue at the new mid (+9.5%) is slower than FY2025's +11.8% and a bit slower than the quarter just printed. Adjusted EPS at the new mid (+14.7%) is faster than FY2025's +10.3%. The quarterly EPS rate, ex the Q2 tax item, has been about +15%, and the Q4 residual is about +11%. They did not turn one quarter of +40 bps into a bigger full-year margin number. Operating margin is still only "expected to expand versus the prior year."
Assumptions that moved under the raise: interest expense is now lower than 2025, with no dollar given. Fuel is closer to $14 million and is not expected to ease in Q4. Invigorate is still the 3% productivity program against 3% to 4% wage inflation, at least $120 million, and they say it is covering fuel. Project Nova stays a $0.25 EPS drag, about 70% in the second half, with a slight Q4 ramp versus Q3. The guide now includes announced M&A only. A Northeast outreach purchase is expected to close later this year. No revenue dollar was given. Consumer health is expected to exceed 30% for the year. That is a new qualitative KPI, not a tagged guide. Adjusted tax rate stays consistent with 2025. Share count stays slightly below 2025.
FY2027, the sketch they would give and would not number: utilization holds, about 3 points of 2026 revenue growth from the partnerships go away in the October lap, PAMA is about 1% of 2027 revenue if preliminary rates stick (cumulative under 1.3% across 2027–2029), they intend to offset a portion without cutting the labs or the front line, price ex-PAMA stays flattish, partnership margins improve as integration costs fade, and Nova spend steps up again because the first Epic lab is planned for the end of 2027. A mechanical 9.5% minus 3 points minus 1 point is about +5.5% before any offset. FMP FY2027 revenue of $12.621 billion is +4.5% versus FMP's own FY2026 and about +4.4% versus the new guide mid. FMP EPS of $11.981 is +6.1% versus FMP FY2026 and about +6.0% versus $11.30. The street's slower 2027 is the same message Sam just gave. It is not a case of management being bullish and the street refusing to underwrite the year they just raised.
A cybersecurity 8-K landed the morning of the print: unauthorized access to a test-ordering system used by some non-EMR clients. Sam said it has not materially disrupted operations. No dollar, and no change to the guide. The investigation is early.
Reported revenue is three acts, then a hold. The acquisition gap opened in late 2024, when reported growth ran mid-teens and organic was about 5%. It closed in 2025Q4, when reported growth troughed at +7.06% and organic only dipped to 6.4%. It reaccelerated through Q2 2026 until reported growth met organic growth. Q3 is the hold: reported −23 bps to +9.98%, organic 0 bps at 10.0%.
Adjusted EPS did not follow the acquisition spike. It accelerated into Q3 2025, reset in Q4 2025, then spiked to +19.08% in Q2 2026 because of the $0.10 tax item. Q3 is +15.38%, −370 bps on the reported series. Ex that $0.10, Q2 was +15.3% and Q3 is +15.4%. Underlying EPS growth did not decelerate. GAAP diluted EPS was +28.7%. The adjusted deceleration is not a GAAP deterioration.
| Metric | 24Q4 | 25Q1 | 25Q2 | 25Q3 | 25Q4 | 26Q1 | 26Q2 | 26Q3 |
|---|---|---|---|---|---|---|---|---|
| Revenue YoY | +14.55% | +12.09% | +15.19% | +13.18% | +7.06% | +9.16% | +10.21% | +9.98% |
| Rev. acceleration (bps) | +614 | −246 | +310 | −201 | −612 | +210 | +105 | −23 |
| Organic revenue YoY | 5.0% | 2.5% | 5.2% | 6.8% | 6.4% | 9.0% | 10.0% | 10.0% |
| Organic acceleration (bps) | +80 | −250 | +270 | +160 | −40 | +260 | +100 | 0 |
| Adj. EPS YoY | +3.72% | +8.33% | +11.49% | +13.04% | +8.52% | +13.12% | +19.08% | +15.38% |
| EPS acceleration (bps) | +12 | +461 | +316 | +155 | −452 | +460 | +596 | −370 |
Yellow is organic. Blue is reported. Green is the current organic print. Red is the acquisition-anniversary trough, not an organic air pocket. Source: Daloopa organic series and net-revenue dollars cited in the tables.
Inflection points:
- Q4 2024. Reported revenue +614 bps to +14.55%. Organic was only 5.0%. Adjusted EPS barely moved, +12 bps to +3.72%. Acquired revenue did not drop through.
- Q2 2025. Reported-revenue high of +15.19%. Organic was still 5.2%. The gap between reported and organic was the easy comparison.
- Q4 2025. Reported trough, +7.06% (−612 bps) and adjusted EPS +8.52% (−452 bps). Organic only moved from 6.8% to 6.4%. The trough is the acquisition anniversary.
- Q1–Q2 2026. Reported revenue +210 bps then +105 bps, back to +10.21%. Organic went 6.4% to 9.0% to 10.0%. By Q2 the M&A gap is gone.
- Q3 2026. A hold, not a break. Reported −23 bps. Organic unchanged. Ex-partnership volume accelerated from 4.0% to 5.0%. The revenue-rate stall is mix, not a volume stall: revenue per requisition went from −1.3% to −2.8% to −4.2%, while ex-mix yield slowed from +3.0% to +1.7% with no negative price inside it.
A company growing 10% and no longer accelerating is, on the rule, less interesting than one growing 7% and still accelerating. Quest was the second company from Q4 2025 through Q2 2026. In Q3 it became the first. The level is fine. The acceleration on the reported line, and this quarter on the organic line, is over. EPS, ex a one-time, is stable in the mid-teens and still ahead of revenue. The guide says the next print should be slower on both year-over-year rates. That slowdown is the lap and Nova spend. Management said utilization itself is not moderating.
Five completed years, because the quarterly chart sits on a base that already reaccelerated off the post-COVID trough. FY2021 is the COVID-testing peak and is not a clean base. Annual revenue growth: −8.4%, −6.4%, +6.7%, +11.8%. The raised FY2026 revenue guide of 9.3% to 9.7% would be a slower year than FY2025 on the reported line. That is what a partnership lap looks like, not a break in organic demand. FY2025 organic revenue growth was 5.3%, well below the quarterly organic rate now running at 10%.
| Metric | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Net revenue ($M) | 10,788 | 9,883 | 9,252 | 9,872 | 11,035 |
| Revenue YoY | — | −8.4% | −6.4% | +6.7% | +11.8% |
| Adj. diluted EPS | 14.24 | 9.95 | 8.71 | 8.93 | 9.85 |
| Adj. EPS YoY | — | −30.1% | −12.5% | +2.5% | +10.3% |
| Adj. operating margin | 23.8% | 17.6% | 15.8% | 15.6% | 15.9% |
| Adj. margin YoY | — | −620 bps | −180 bps | −20 bps | +30 bps |
FMP has already re-anchored FY2026 to the raised guide. For the quarter now underway, FMP Q4 EPS of $2.68 and revenue of $3.039 billion sit on the arithmetic midpoint. The street is not underwriting another beat. The duration debate is 2027. No alternative-data feed is connected, so that column is empty rather than invented. Grades are Hold: 13 Buy, 18 Hold, 3 Sell.
| Catalyst | Timing | What is in the model | What management said |
|---|---|---|---|
| Q4 against the raised year | 2027-02-09 | FMP $3.039B and $2.681, +8.3% and +10.8% vs Q4 2025. Guide mid $3.050B and $2.68. | No quarterly guide. The raise was the Q3 beat plus a modest Q4. A low-end print is the miss setup if ex-partner volume rolls under 5% as the lap starts. |
| Partnership lap | October 2026, inside Q4 | FMP FY2027 revenue +4.5% vs FMP FY2026, about 500 bps slower than the new 9.5% mid. | About 3 points of this year's revenue growth, and 9.5% of Q3 volume. Not a 2027 growth factor. Margins should improve. Utilization should not moderate. |
| PAMA 2027 rates | Final rates expected November 2026, effective 2027-01-01 | FMP FY2027 EPS +6.1% on +4.5% revenue. That is a partial offset, not a repeal. The cut is in the base case. | About 1% of revenue, sharpened to about $120 million including straight Medicaid. Cumulative under 1.3%, with about 30 bps more across 2028 and 2029 together. Offset a portion. Dollar waits for February. |
| RESULTS Act | CBO score mid to late November. Year-end package is the vehicle. No probability. | Not in the +4.5% / +6.1% path. This is the upside the model does not contain. | Over 135 cosponsors across both chambers, call figure. RESULTS first, a delay if the committees cannot agree. They would not give odds. |
| Apple Health, Roche, Waters | Apple beta now, launch later in 2026. Roche p-tau217 soon. Waters HPV self-collection in 2027. | None of the three is a line in FMP. Do not put them in the 2027 bridge until they are sized. | Apple panel over 50 biomarkers at a $119 rack. No forecast until January. Consumer above 30% is the existing channel, and Apple is not yet in that rate. |
| Nova, fuel, ACA, cyber | Q4 carries a bit more of the $0.25 Nova hit. ACA sized at 10–20 bps. Cyber investigation open. | The FY EPS guide already contains Nova. No FMP cost for the 8-K. The guide was raised the same morning. | Q3 exchange impact about 10 bps, not the July fear. Fuel about $14 million versus a $10 million estimate. Cyber has not materially disrupted operations. No dollar. |
The number that would make 2027 better than FMP is a CBO score and a year-end RESULTS bill, or an offset larger than the street will book before February. Management is louder on the first than the model is. They have been loud on it since January. The model still has the cut in it. Labcorp reports two days after this print. Quest did not name Labcorp. If that peer's diagnostics volume is only 1% to 2%, Quest's 5.0% is share. If the peer also prints mid-single-digit diagnostics volume, the 5% is the market. That compare was not on this call.
Haystack was not updated. Do not model a back-half 2026 Medicare Advantage step-up from silence. Alzheimer's testing is already in the volume, and single-test reference orders are dilutive to revenue per requisition until panels replace them. The Northeast outreach close is inside the raised guide only to the extent it was announced. A slip past December is a guide risk, not dry powder on top of $12.085 billion.
The street did not litigate the quarter. It litigated 2027. Thirteen analysts got in. The company asked for one question. The tally is 10 well answered and 8 deflected. Five of the eight are the PAMA and RESULTS complex. The other three are Michael Cherny on whether the 5% is share or the market, Apple's contribution, and the cyber 8-K. The margin question stays in the ten.
What was answered cleanly: the operating bridge. Ex-partnership volume 5.0%, up from 4.0%. The revenue-per-requisition slowdown is single-test mix, not price. Inside the +1.7% there is no negative price. ACA is about 10 bps, and Q4 is sized at 10 to 20 bps. Weather was clean. DSO up about three days is client-bill terms and fewer banking days, not bad debt. Patient price concessions were flat. Receivables used −$308 million of cash year to date versus −$153 million. Year-to-date operating cash was still up, $1,486 million versus $1,421 million. The sequential margin step, 16.7% versus Q2's 16.5%, is partnership catch-up plus an EPS-neutral deferred-compensation mark. Nova tilts slightly into Q4 inside an unchanged $0.25. Commercial spillover of PAMA is mostly engineered out: a very small minority of 700 to 1,000 health-plan contracts still reference the fee schedule, and the book has been flat to slightly up. The kidney sales force is already in the field, so it is not a new 2027 opex surprise. The revenue from that call point was not sized.
What was refused: the dollar offset to the roughly 1% hit, twice. Lisa Gill offered $20–25 million versus the full gross hit and was told to use neither. A RESULTS dollar versus the cut. A probability of another delay. A 2028-versus-2029 split, beyond "about 30 bps cumulative" on top of the 2027 point. An Apple forecast, a contract comparison, and a consumer price. Any financial range on the 8-K, which was closed rather than deferred to January. Cherny got channel breadth — physician above mid-single digits, hospital reference volume double-digit, consumer north of 30% — and not a share bridge.
Do not let Luke Sergott's $125–165 million into the model. Jim restated an old $100–120 million range, said they did not expect 775 codes at a 15% cut, and did not adopt either end of Luke's range. One percent of the new guide midpoint is about $121 million. One percent of a base grossed up by the $500–600 million of 2027 revenue he told Lisa to add is about $126 million. Those are two different 2027 impacts, and neither is a Daloopa fundamental.
Guidance behavior on this call is the clean part. The revenue-growth floor was lifted from 8.3% to 9.3%, through the old ceiling, and the adjusted-EPS floor was set at $11.25, equal to the old ceiling. Cash from operations was raised from $1.8 billion to $1.9 billion without anyone asking. They will not do the same for 2027 while PAMA, RESULTS, and the budget are open.
Five statement-versus-statement conflicts. Two are high. Labeled updates are not in this list: Nova's second-half mix moving from 60% to 70% was named on the Q2 call, fuel stepping from about $10 million to about $14 million was named, RESULTS cosponsor counts rose, and the observed ACA hit moved from a guided 30 bp full-year assumption to about 10 bp. Those are updates.
On the Q2 2025 and Q3 2025 calls, Sam sized the hit at about $100 million and said that was what they had indicated before. The offset would not be the majority. No transcript in this set, before this call, states a $100–120 million range. On October 22, Sam called about 1% of revenue "consistent with our previous commentary" and "largely consistent with our expectations" before and after the data file. Jim told Luke Sergott they have always set a range of $100–120 million, and in the same answer said they did not expect 775 codes at the 15% cap and did not expect the data process to come out this way. He then told Elizabeth Anderson the impact is $120 million, and told Lisa Gill to take 1% of 2026 revenue plus another $500–600 million of 2027 revenue. One percent of about $12 billion is about $120 million. One percent of that base plus $500–600 million is about $126 million. The code count he used to explain the move does not foot: 1,500 codes reduced, then 1,200 of 1,550 cut.
Use Jim's post-file $120 million as the only point estimate stated after the CMS file, and do not treat 1% as "what they always said." The offset is still unquantified. This call does not repeat the old "not the majority" constraint and does not replace it. The cumulative line is not a separate contradiction: under 1.3% for 2027–2029 and about 1% plus 30 bps in the out-years are the same estimate.
In February, Jim put the Corewell book at about $250 million in 2026, starting at a low-single-digit margin and reaching the low teens in 2027. Sam called the destination normal Co-Lab margins. In July, Sam restated the ramp as low-single digits improving to mid-single digits and called that "no meaningful change" and "largely playing out as we expected." Low teens and mid-single digits are not the same rate on that book. October says only "continued improvement" and "as we said before," which points at two different befores and chooses neither. Do not model low teens as the live target, and do not treat mid-single digits as the original plan. Fresenius is a separate sentence and is not this conflict.
Prepared remarks: hospital-channel revenue grew double digits on Corewell, and reference testing revenue grew in the mid-single digits. To Michael Cherny, reference volume was double-digit and revenue was "slightly less than that." Mid-single-digit revenue is not slightly less than double-digit volume. The mix answer to Kevin Caliendo can rescue the script: single-test Lp(a), Alzheimer's, and cyclospora can put volume in the double digits and revenue in the mid-single digits. That makes the "slightly less" phrase the one that does not fit. Use mid-single-digit reference revenue. The only double-digit reference figure that is repeated is volume.
Jim said exchange "rec volume" was down about 11%, then requisition volume down 8%, tests per requisition up 8%, net tests down 3%, and revenue about 10 basis points. The test bridge foots to the 11% leg, not the 8% leg. The 8% matches the prior quarter's figure. The 10 bp revenue impact is said twice, by Jim and by Sam, and is not in conflict with itself. Do not cite down 8% as the Q3 exchange volume fact. Q4 is sized at 10 to 20 basis points.
On the July call Jim said the CMS collection ended July 30 with a read-out in "late September, early August," then July 31 with a read-out in late September or early October. August is not after late September. On this call he said CMS released the mix data the day before, October 21, and he did not correct the old windows. The file is public, so the old window is not a forecast input. It remains two incompatible timelines for one process.
No comment on policy rates, CPI, tariffs, or a recession. Net interest expense was $61 million, −7.6% versus $66 million, and full-year interest expense is now expected to be lower than 2025. That is a guidance update, not a rate view. Wage inflation of 3% to 4%, at least $120 million, is the standing cost, and adjusted margin still expanded 40 bps. Fuel was revised up by about $4 million, to about $14 million, and is not assumed to ease in Q4. Unit price stayed flat. The −4.2% yield decline is partnership mix.
Utilization is unmoderated. Jim: no reason to expect it to ease, and they will not cut the front line, the lab, phlebotomy, or logistics because utilization has been strong. The ACA exchange is the consumer-insurance negative, and it is small: about 10 bps of revenue this quarter, "next to nothing" versus what hospitals are reporting, with Q4 sized at 10 to 20 bps. The July caveat that the 30 bp full-year assumption could worsen was not restated. Bad debt is mostly in line. Patient concessions are flat. DSO up about three days is terms and calendar, not a credit event, and it is not the cyber incident.
2027 reported growth should decelerate even if utilization holds. The partnerships are roughly 3 points of this year's additional revenue growth and lap in October. PAMA, if it lands, is roughly 1% of revenue, about $120 million. Do not annualize the +10.0% print. Apple, Roche, and Waters are unquantified. No competitor was named. Do not assign the PAMA cut or the ACA comment to a ticker Quest did not say.
| Who | Relationship | Read-through |
|---|---|---|
| Fresenius (FMS) and Corewell | Customers. Dialysis testing and the Michigan Co-Lab. Together 9.5% of Q3 volume and about 3 points of 2026 revenue growth. | Better for 2026 volume. The margin drag is fading. Worse for 2027 reported growth, because the 3 points go away even if the volumes hold. Not a Fresenius forecast, and the 9.5% is not split between them. |
| Hospitals as a group | Customers, and the client-bill counterparty on bad debt. Quest says it serves half of U.S. hospitals. | Worse for hospital operators reporting exchange pressure. Better for Quest twice: the testing book took about 10 bps, and the same stress feeds Co-Lab and outreach deals. An unnamed Northeastern system is selling select outreach assets, expected to close this year, inside the guide only as an announced deal. No purchase price. |
| Apple | New consumer distribution. Not a payer. Beta, launch later this year, $119 rack, 50-plus biomarkers including ApoB and Lp(a). | Not in the 2026 above-30% consumer rate and not a 2026 guidance item. Immaterial to Apple. No forecast until January. Do not treat it as a wearable cycle. |
| Roche and Waters | Roche p-tau217 to be added to the AD-Detect panel. Waters Onclarity HPV self-collection, introduced next year. | Menu placement, unquantified. Advanced cardiometabolic, hormone, and Alzheimer's tests grew double digits in the quarter, a management rate, not a Daloopa series. Waters is a 2027 item. Neither is a share claim against an unnamed vendor. |
| Epic and CMS | Epic is the Project Nova vendor. CMS sets the clinical lab fee schedule. | Nova moved from design to build. First lab in the fall or at the end of 2027, and 2027 spend is higher than 2026. That is a cost headwind in the same year as PAMA and the lap. The preliminary rates, if they stick, are worse for every lab paid on the fee schedule. Less worse for Quest's commercial book than for a lab whose plans still reference Medicare. Quest did not name that peer. |
| Unnamed kidney organization | New customer for pre-dialysis CKD testing. Not Fresenius. Not named. | A different population from the dialysis book. No revenue, start date, or exclusivity. Do not map it to another nephrology platform. |
The 5% ex-partnership volume is Quest's own volume. Michael Cherny said it tracks above most market stats. Jim did not quote a market growth rate and did not name a share donor. Adjusted operating income of $517 million, +12.9% versus $458 million, is the earnings power after wages, the fuel revision, and the partnership mix. It is not a signal that 2027 grows at the same rate.