Executive Summary

Q3 2025 delivered solid growth: net revenues $2.82B (+13.1% YoY), adjusted EPS $2.60 (+13.0% YoY), with adjusted operating margin expanding 80 bps to 16.3% .
Clear beat vs S&P Global consensus: revenue $2.816B vs $2.735B*, adjusted EPS $2.60 vs $2.50*; Street had 13 EPS and 15 revenue estimates for the quarter (see Estimates Context) *.
Guidance raised: FY25 revenue to $10.96–$11.00B (from $10.80–$10.92B), adjusted EPS to $9.76–$9.84 (from $9.63–$9.83), and operating cash flow to ~$1.8B (from ~$1.55B) .
Strategic catalysts: Corewell Health JV expected to scale Co-Lab Solutions to ~$1B annual revenues in 2026 and consumer channel momentum via WHOOP/Oura integrations and AD-Detect/Haystack MRD traction .

What Went Well and What Went Wrong

What Went Well

Robust core performance: Diagnostic Information Services revenues +13.5% YoY; requisition volume +12.5% (organic +3.9%); revenue per requisition +0.8% YoY, with organic rev/req +3% driven by test density and mix .
Strategic wins: Agreement with Corewell to scale Co-Lab Solutions across 21 hospital labs; collaborations with WHOOP/Oura to embed Quest testing in consumer apps; Epic selected for Project Nova transformation .
Advanced diagnostics momentum: AD-Detect demand more than doubled Q/Q; FDA Breakthrough Device for Haystack MRD; new clinical evidence supporting AD-Detect confirmatory accuracy (91% sensitivity/specificity) .

Quote: “Revenues grew 13.1%, including 6.8% organic growth… and growth in our consumer channel as we build our presence as the preferred lab engine inside top health and wellness brands.” — Jim Davis (CEO)

What Went Wrong

Reported margin compression sequentially: reported operating margin 13.7% in Q3 vs 15.9% in Q2; adjusted margin 16.3% vs 16.9% in Q2, impacted by higher employee health costs (−40–50 bps) and ramp in Project Nova expenses in Q4 .
Higher net interest expense weighed on EPS vs prior year; FX neutral .
Non-GAAP add-backs include legal charges ($15M) and asset impairments ($5M) tied to an exit, highlighting discrete items in adjusted results .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Net Revenues ($B)	$2.49	$2.76	$2.82
Reported Diluted EPS ($)	$1.99	$2.47	$2.16
Adjusted Diluted EPS ($)	$2.30	$2.62	$2.60
Reported Operating Margin (%)	13.3%	15.9%	13.7%
Adjusted Operating Margin (%)	15.5%	16.9%	16.3%

Segment and KPIs

Segment revenue
- Diagnostic Information Services revenues: $2.755B (Q3’25) vs $2.427B (Q3’24) .

KPI	Q3 2024	Q3 2025
Requisition Volume YoY	—	+12.5%
Organic Requisition Volume YoY	—	+3.9%
Revenue per Requisition YoY	—	+0.8%
Organic Revenue per Requisition YoY	—	+3.0%

Cash Flow and Capex

YTD operating cash flow: $1.421B (+63.1% YoY), with contributions from working capital timing, CARES Act tax credit ($46M), and recent tax legislation .
YTD capex: $369M (+22.3% YoY) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenues ($B)	FY 2025	$10.80–$10.92	$10.96–$11.00	Raised
Net Revenues Increase (%)	FY 2025	9.4–10.6	11.0–11.4	Raised
Reported Diluted EPS ($)	FY 2025	$8.60–$8.80	$8.58–$8.66	Lowered (narrowed/lower midpoint)
Adjusted Diluted EPS ($)	FY 2025	$9.63–$9.83	$9.76–$9.84	Raised (low end)
Operating Cash Flow ($B)	FY 2025	~$1.55	~$1.80	Raised
Capital Expenditures ($M)	FY 2025	~$500	~$500	Maintained
Quarterly Dividend ($/share)	Declared Nov 2025	—	$0.80 (paid Jan 28, 2026)	Maintained cadence

Non-GAAP outlook bridge (illustrative per Company): adjusted EPS excludes restructuring/integration (~~$0.30), amortization (~~$1.02), other charges (~$0.39), other gains (−$0.36), gains/losses on investments (−$0.01), ETB (−$0.16) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Consumer & Wellness Integrations	Enhanced questhealth.com; strong CIT growth; functional medicine momentum	WHOOP/Oura integrations; WHOOP sign-ups ~350k; Oura $99 panel; consumer channel YTD +30–40%	Accelerating
Advanced Diagnostics (AD-Detect)	New AB42/40 + p-tau217 panel launch; double-digit growth	Demand more than doubled; external study confirms 91% sens/spec	Stronger validation and adoption
Oncology (Haystack MRD)	Commercial ramp; NEJM study; Medicare paid; reimbursement building	FDA Breakthrough; >25 studies; expected favorable fee schedule; vended at Cancer CoE	Building evidence; improving reimbursement
Hospital Solutions (Co-Lab)	Low-single-digit hospital revenue growth; pipeline strong	Corewell JV; ~$1B Co-Lab rev next year when fully scaled	Scaling materially
Technology/AI (Project Nova)	Announced modernization and Google Cloud data strategy	Epic selected (Beaker/MyChart/Care Everywhere); spend ramps in Q4	Implementation phase begins
Tariffs/Macro	Exposure manageable; contracts cover ~70–80%; U.S.-manufactured reagents ~80%	Assumed in guidance; manageable within updated outlook	Stable/managed
Policy/Regulatory (PAMA/LDT)	LDT rule vacated; pursuing PAMA reform/delay	RESULTS Act introduced; $100M potential 2026 PAMA impact; offsets only partial	Risk into 2026; working reform/delay

Management Commentary

“Once we fully scale across Corewell’s 21 hospital labs next year, we expect annual revenues from Co-Lab Solutions to be approximately $1 billion.” — Jim Davis (CEO)
“Adjusted operating income was $458 million or 16.3% of revenues… increase due to acquisitions and organic growth, partially offset by wage increases and higher than expected employee health care costs.” — Sam Samad (CFO)
“On PAMA… it’s a $100 million impact next year. We will offset a portion of it… we control the pace of some investments.” — Sam Samad (CFO)
“We continue to target 3% annual cost savings and productivity improvements through our Invigorate program.” — Jim Davis (CEO)

Q&A Highlights

Utilization backdrop remains elevated; organic requisition growth +3.9% aided by regained Elevance/Sentara access and strong mix (autoimmune, cardiometabolic, brain health) .
Margins: employee health costs were a 40–50 bps headwind in Q3 and expected to remain elevated in Q4; typical seasonality implies 50–100 bps lower OM in Q4 vs Q3; Project Nova investments pushed into Q4 .
Consumer partnerships: WHOOP advanced labs announced; ~350k sign-ups; Oura integration pending; enterprise Function Health exclusive lab relationship continues to scale .
Cash flow: FY OCF raised by $250M to ~$1.8B; one-timers include CARES Act ($46M) and recent tax legislation benefits ($100–$130M) .
Haystack MRD: integrated and building; Medicare paying; expectation of favorable reimbursement in November fee schedule; >25 ongoing studies .
Project Nova spend: ~$20M planned in 2025, majority timed into Q4; multi-year $250–$310M program (OpEx + CapEx), pacing controllable vs PAMA/macro .

Estimates Context

Metric	Consensus*	Actual
Revenue ($B)	$2.735	$2.816
Primary EPS ($)	$2.50	$2.60

Beat: revenue by ~$0.08B and EPS by ~$0.10; 13 revenue and 15 EPS estimates contributed to consensus *.
Models should reflect: higher FY revenue range, higher FY operating cash flow, adjusted EPS low-end lift; reported EPS range narrowed/lowered .

Note: * Values retrieved from S&P Global.

Key Takeaways for Investors

DGX posted a clean top-line and adjusted EPS beat, with durable drivers in test-per-requisition and mix; advanced diagnostics and consumer channels are becoming meaningful growth vectors .
Sequential margin normalizing vs Q2 was expected seasonality plus elevated employee health costs; watch Q4 margin impact from Nova ramp and benefits cadence .
FY25 guidance move is material: revenue and cash flow raised; adjusted EPS nudged up; reported EPS narrowed/lowered amid increased special items accounting .
Strategic scale initiatives (Corewell Co-Lab ~$1B, Epic Project Nova) deepen moat with health systems and improve data/operational leverage, a medium-term margin and productivity catalyst .
Policy watch: PAMA reform/delay could swing 2026; management can pace investments to partially offset potential pricing pressure (~$100M), but not fully .
Cash generation is robust; note one-time elements (CARES/tax); consumer-direct cash nature further enhances conversion quality .
Near-term trading lens: positive guidance raise and beat, plus healthcare IT/EHR partnership and JV scale announcements are supportive catalysts; monitor Q4 margin headwinds and November CLFS outcomes for Haystack MRD .

QUEST DIAGNOSTICS INC (DGX)·Q3 2025 Earnings Summary