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Healthcare diagnostics company Quest Diagnostics (NYSE:DGX) in Q2 CY2026, with sales up 10.2% year on year to $3.04 billion. Its non-GAAP profit of $3.12 per share was 10.5% above analysts’ consensus estimates.
Is now the time to buy Quest? Find out by accessing our full research report, it’s free.
Quest (DGX) Q2 CY2026 Highlights:
・Revenue: $3.04 billion vs analyst estimates of $2.97 billion (10.2% year-on-year growth, 2.3% beat)
・Adjusted EPS: $3.12 vs analyst estimates of $2.82 (10.5% beat)
・Management raised its full-year Adjusted EPS guidance to $11.15 at the midpoint, a 3.9% increase
・Operating Margin: 15.1%, in line with the same quarter last year
・Free Cash Flow Margin: 15.1%, similar to the same quarter last year
・Sales Volumes rose 12% year on year (16.3% in the same quarter last year)
・Market Capitalization: $23.23 billion
Company Overview
Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE:DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Unfortunately, Quest struggled to consistently increase demand as its $11.56 billion of sales for the trailing 12 months was close to its revenue five years ago. This was below our standards and is a sign of lacking business quality.
We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Quest’s annualized revenue growth of 11.2% over the last two years is above its five-year trend, suggesting some bright spots.
Quest also reports its number of requisition volumes. Over the last two years, Quest’s requisition volumes averaged 11.5% year-on-year growth. Because this number is in line with its revenue growth, we can see the company kept its prices fairly consistent.
This quarter, Quest reported year-on-year revenue growth of 10.2%, and its $3.04 billion of revenue exceeded Wall Street’s estimates by 2.3%.
Looking ahead, sell-side analysts expect revenue to grow 4.5% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests its products and services will see some demand headwinds.
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Adjusted Operating Margin
Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses — everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.
Quest has managed its cost base well over the last five years. It demonstrated solid profitability for a healthcare business, producing an average adjusted operating margin of 16.9%.
Looking at the trend in its profitability, Quest’s adjusted operating margin decreased by 5.7 percentage points over the last five years. Even though its historical margin was healthy, shareholders will want to see Quest become more profitable in the future.
In Q2, Quest generated an adjusted operating margin profit margin of 15.8%, down 1 percentage points year on year. This reduction is quite minuscule and indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Quest, its EPS declined by 7.5% annually over the last five years while its revenue was flat. This tells us the company struggled because its fixed cost base made it difficult to adjust to choppy demand.
Diving into the nuances of Quest’s earnings can give us a better understanding of its performance. As we mentioned earlier, Quest’s adjusted operating margin declined by 5.7 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q2, Quest reported adjusted EPS of $3.12, up from $2.62 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Quest’s full-year EPS to grow 5% from $10.64 to $11.17.
Key Takeaways from Quest’s Q2 Results
We enjoyed seeing Quest beat analysts’ full-year EPS guidance expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 6.6% to $227 immediately after reporting.
Quest put up rock-solid earnings, but one quarter doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
