Executive Summary

Q4 2024 delivered strong topline growth: net revenues of $2.621B (+14.5% YoY) with Diagnostic Information Services up 15.1%; requisition volume +13.9% and revenue per requisition +0.2% . Reported EPS was $1.95 (+14.7% YoY) and adjusted EPS was $2.23 (+3.7% YoY) .
Sequentially, revenue rose vs Q3 2024 ($2.621B vs $2.488B), but EPS dipped as higher interest expense, a higher tax rate, and weather reduced adjusted EPS by ~$0.06; reported EPS fell to $1.95 from $1.99; adjusted EPS to $2.23 from $2.30 .
FY2025 guidance introduced: net revenues $10.70–$10.85B (+8.4–9.9%), reported EPS $8.34–$8.59, adjusted EPS $9.55–$9.80; cash from operations ~$1.45B; capex ~$500M, with operating margin expansion expected .
Dividend raised 6.7% to $0.80 per share (from $0.75), effective with the April 21, 2025 payment; Quest has raised its dividend annually since 2011 .
Stock-relevant catalysts: new guidance above 2024 trajectory, margin expansion plans, Haystack MRD commercial launch, and expanded payer access (>90% in-network lives; Elevance and Sentara effective Jan 1, 2025) .

What Went Well and What Went Wrong

What Went Well

Network and payer reach expanded: access to >90% of in-network lives nationwide; new collaborations with Elevance Health and Sentara Health Plans effective Jan 1, 2025 .
Advanced Diagnostics momentum: double-digit growth in brain health, advanced cardiometabolic, autoimmune, and women’s health; strong demand for AD-Detect Alzheimer’s blood tests .
Consumer-initiated testing scale: questhealth.com revenues grew nearly 50% in Q4 and ~40% for FY2024; total consumer-initiated testing revenues reached nearly $100M in 2024 (including channel partners) .
Management quote (strategy execution): “We delivered impressive revenue growth of nearly 15%, including approximately 5% organic growth, while also improving our profitability” — Jim Davis, CEO .

What Went Wrong

Weather and costs pressured profitability: weather reduced Q4 operating margin by ~30 bps and EPS by ~$0.06; reported higher interest expense and tax rate vs prior year weighed on adjusted EPS .
Unit price pressure in hospital reference testing amid increased RFPs; price per test expected roughly flat (+/−30 bps), with continued price pressure in the segment .
Operating cash flow down YoY in the quarter: cash from operations $464M vs $527M (−12.3%) in Q4 2023; capex up 73.9% YoY to $123M (timing/investment intensity) .

Financial Results

Headline Financials vs Prior Periods

Metric	Q4 2023	Q3 2024	Q4 2024
Net Revenues ($USD Billions)	$2.288	$2.488	$2.621
Reported Diluted EPS ($)	$1.70	$1.99	$1.95
Adjusted Diluted EPS ($)	$2.15	$2.30	$2.23
Operating Margin % (Reported)	11.7%	13.3%	13.8%
Operating Margin % (Adjusted)	14.8%	15.5%	15.6%

Segment and Mix

Segment/Metric	Q4 2023	Q3 2024	Q4 2024
Diagnostic Information Services Revenues ($USD Millions)	$2,221	$2,427	$2,556
Net Revenues ($USD Millions)	$2,288	$2,488	$2,621

KPIs

KPI (YoY unless noted)	Q4 2023	Q3 2024	Q4 2024
Requisition Volume Growth (%)	N/A	5.5%	13.9%
Revenue per Requisition Growth (%)	N/A	3.3%	0.2%
Organic Requisition Volume Growth (%)	N/A	0.5%	0.6%
Organic Revenue per Requisition Growth (%)	N/A	N/A	3.3%

Actual vs Consensus (Q4 2024)

Metric	Actual	Consensus (Q4 2024)
Net Revenues ($USD Billions)	$2.621	Unavailable (SPGI rate limit)
Reported Diluted EPS ($)	$1.95	Unavailable (SPGI rate limit)
Adjusted Diluted EPS ($)	$2.23	Unavailable (SPGI rate limit)

Note: Wall Street consensus via S&P Global was unavailable due to request limits; estimate comparisons cannot be quantified at this time.

Non-GAAP Adjustments (Impact on Q4 2024)

Adjusted operating income reconciles from reported $361M to $409M; adjustments include restructuring/integration (+$17M), amortization (+$37M), and other items .
Adjusted diluted EPS reconciles from reported $1.95 to $2.23; key add-backs: amortization $0.25, restructuring $0.11; partial offsets from other items and ETB .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Revenues ($B)	FY2025	N/A	$10.70–$10.85	New
Net Revenues Increase (%)	FY2025	N/A	8.4–9.9%	New
Reported Diluted EPS ($)	FY2025	N/A	$8.34–$8.59	New
Adjusted Diluted EPS ($)	FY2025	N/A	$9.55–$9.80	New
Cash from Operations ($B)	FY2025	N/A	~$1.45	New
Capital Expenditures ($MM)	FY2025	N/A	~$500	New
Dividend per Share (Quarterly)	From Apr 2025	$0.75	$0.80	Raised

Reference (for trend): FY2024 guidance was updated in Q3 to net revenues $9.80–$9.85B; reported EPS $7.60–$7.70; adjusted EPS $8.85–$8.95, reflecting acquisitions and Hurricane Milton impacts .

Earnings Call Themes & Trends

Topic	Q2 2024 (Previous Q-2)	Q3 2024 (Previous Q-1)	Q4 2024 (Current)	Trend
AI/Automation & Invigorate	Expanded AI in microbiology and customer service; automation in specimen processing; targeted 3% savings	Productivity gains noted in updated guidance context	Ongoing automation and AI deployments; IT modernization planned in 2025	Continuation; increased investment in 2025
M&A/Outreach	Announced LifeLabs, Allina, OhioHealth, PathAI; funnel robust	8 acquisitions targeted; guidance raised on acquisitions	Completed 8 acquisitions; closed University Hospitals outreach lab in Jan; LifeLabs integrated; pace moderates in 2025	Execution; integration focus
Haystack MRD	Early experience program; 2024 dilution $0.35–$0.40; less dilutive in 2025	Limited disclosure in PR; ongoing build	Transition to commercial; modest 2025 revenue; reimbursement path via MAC/MA; more clinical data expected	Commercialization beginning
Health Plan Access/MA	~90% in-network lives; strong MA volume	Stable utilization; share gains via outreach	New Elevance/Sentara partnerships effective Jan 1; >90% access	Strengthening payer position
Pricing & Rev per Req	Total rev/req +1.6%; base +2.4%; test per req driver	Rev/req +3.3% YoY	Total rev/req +0.2% YoY; organic +3.3%; hospital reference price pressure persists	Mix-positive; price flat to modest pressure
Regulatory (LDT/PAMA)	LDT rule in place; compliance prep; cost not material in 2024	Advocating for PAMA delay; SALSA difficult in election year	$0.20 EPS headwind for LDT/IT investments; first requirements May 6; renewed bipartisan focus on PAMA reform	Near-term compliance costs; potential legislative relief
Macro/Weather/IT	Global IT outage headwind $0.06–$0.08 (Q3); Hurricane Beryl minor	Hurricane Milton expected to impact Q4 ($15M revenue; ~$0.08 EPS)	Weather impacted Q4 volume (~50 bps), margins (~~30 bps), EPS (~~$0.06)	Episodic but manageable

Management Commentary

Strategy and growth drivers: “Our guidance for 2025 reflects our confidence in the core strength of our business, continuing robust utilization, and the momentum from acquisitions completed in 2024.” — Jim Davis, CEO .
IT and LDT investment rationale: “We’re modernizing this IT infrastructure… migrate to cloud-based systems… improve the overall customer experience… ultimately lower our IT costs… good ROI; first FDA LDT requirements go into effect May 6.” — Jim Davis .
2025 financial targets: “Operating margin is expected to expand versus the prior year… net interest expense ~ $275 million… adjusted tax rate ~25%… ~114 million diluted shares.” — Sam Samad, CFO .

Q&A Highlights

Guidance bridge and one-timers: Management emphasized no additional one-timers beyond the guidance bridge; benefits include no repeat of CrowdStrike outage, reduced Haystack dilution; headwinds from LDT/IT investments (~$0.20 EPS) and interest expense; no explicit weather baked into 1Q, but monitoring .
Margin cadence and LifeLabs: Expect margin expansion in 2025; organic contribution margin ~40%; acquisitions contribution margin high-teens; LifeLabs margin starts low double digits, ramping to corporate average over 2–3 years .
Revenue per requisition drivers: Organic rev/req +3.3% in Q4; two-thirds from increased tests per req; remainder from mix and payer mix; price per test relatively flat .
University Hospitals outreach acquisition: ~$180M deal value; typical outreach valuation ~3.5x revenues (illustrative); contribution included in $0.65–$0.75 EPS from acquisitions in guidance bridge .
Haystack MRD commercialization: Modest revenue expected in 2025; initial denials assumed with engagement of MACs and MA plans; oncology pull-through anticipated across Quest’s ~$1B oncology business .
PAMA reform: Renewed bipartisan momentum; Quest actively engaging Senate Finance, House Ways and Means, and House Energy & Commerce .

Estimates Context

S&P Global consensus for Q4 2024 EPS and revenue was unavailable due to request limits; therefore, beats/misses cannot be quantified at this time. However, FY2025 guidance implies 8.4–9.9% revenue growth and operating margin expansion, which may drive upward revisions to revenue and margin forecasts as coverage models incorporate acquisitions (including LifeLabs) and organic growth .

Key Takeaways for Investors

Q4 momentum with broad-based volume growth: +13.9% requisitions and DIS +15.1%; organic rev/req strength (3.3%) underscores mix-led growth from advanced diagnostics and payer mix tailwinds .
Watch margin trajectory in 2025: Operating margin expected to expand despite investments; interest expense guided to ~$275M and adjusted tax ~25% provide modeling anchors .
Acquisitions drive 2025 growth: Carryover from 2024 deals (notably LifeLabs) supports top-line acceleration; LifeLabs margins ramping over 2–3 years temper near-term margin rate but add scale .
Haystack MRD enters commercialization: Modest 2025 revenue with longer-term oncology pull-through; track reimbursement progress and upcoming clinical data updates .
Payer access a competitive moat: >90% in-network lives and new Elevance/Sentara relationships enhance share capture in physician and Medicare Advantage channels .
Regulatory/LDT compliance costs are near-term headwind but strategic IT modernization may yield efficiency and customer experience benefits; clarity post-Feb 19 court hearing could change trajectory .
Dividend growth highlights capital return discipline amid M&A: 6.7% raise to $0.80 per share supports total shareholder return while integration focus continues in 2025 .

Additional Q4-Relevant Press Releases

University Hospitals outreach lab services acquisition completed (Jan 27, 2025), broadening access in Ohio and leveraging Twinsburg and Pittsburgh labs .
Q4 earnings press release reiterates accomplishments including AI deployments, AD-Detect biomarkers, and Haystack MRD early experience program transitioning to commercial .

QUEST DIAGNOSTICS INC (DGX)·Q4 2024 Earnings Summary