AI Takeaway
Quest Diagnostics delivered 10.2% revenue growth and 13.5% net-income growth in Q2 FY2026, led by higher Diagnostic Information Services testing volume, although lower revenue per requisition and higher service costs reduced operating margin to 15.1%.
Revenue
$3.04B
++10.21% YoY
EPS (Basic)
$2.88
++14.74% YoY
Operating Income
$459M
++4.79% YoY
Filed · Source: SEC EDGAR 10-Q filing
Quest Diagnostics (DGX) reported Q2 FY2026 revenue of $3.04B, up 10.2% year over year. The company posted net income of $320M, up 13.5% from a year earlier, with diluted EPS of $2.84.
Total net revenues increased 10.2% to $3.043B, principally driven by 10.0% organic revenue growth; Diagnostic Information Services (DIS), which represents more than 95% of consolidated revenue, increased 10.3% to $2.978B, while Diagnostic Solutions revenue rose 4.3% to $65M.
Source: 10-Q Item 2 MD&A, pp.28, 31-33
DIS requisition volume increased 13.1%, including approximately 9 percentage points from the Corewell Health Collaborative Lab Solutions relationship and increased testing at Fresenius Medical Care dialysis clinics. Revenue per requisition declined 2.8% because these relationships have a greater proportion of routine tests; excluding their mix effect, revenue per requisition increased approximately 3%.
Source: 10-Q Item 2 MD&A, pp.28, 33
Operating income increased 4.6% to $459M, slower than revenue growth, as cost of services increased $198M, or 10.9%, primarily from higher compensation costs and higher supplies expense associated with testing volume. SG&A rose $43M, or 9.0%, also primarily due to higher compensation costs; operating margin declined to 15.1% from 15.9%.
Source: 10-Q Item 2 MD&A, pp.31, 33-34
Net income attributable to Quest Diagnostics rose 13.4% to $320M and diluted EPS increased 15.0% to $2.84. The effective tax rate fell to 21.5% from 25.1%, including approximately $11M of tax benefits, or $0.10 per diluted share, primarily from favorable resolution of income-tax contingencies.
Source: 10-Q Item 2 MD&A, pp.31-32, 35
In May 2026, Quest issued $500M of 5.00% senior notes due 2036 and used the proceeds plus cash on hand to repay $500M of 3.45% senior notes at maturity. During the first six months of 2026, the company repurchased 0.5M shares for $100M, declared quarterly dividends of $0.86 per share, and had $1.3B remaining under its repurchase authorization as of June 30, 2026.
Source: 10-Q Item 2 MD&A, pp.28, 37-39
Cost of revenue increased 10.9% year over year to $2.016B, exceeding the 10.2% increase in revenue to $3.043B. This contributed to operating margin declining to 15.1% from 15.9%, indicating that continued cost growth could constrain operating-profit expansion.
Source: 10-Q Income Statement (XBRL)
Long-term debt was $5.642B at the end of Q2 FY2026, compared with stockholders' equity of $7.516B. This represents debt-to-equity of approximately 0.75x and creates ongoing interest and refinancing exposure, although the filing reports positive operating cash flow.
Source: 10-Q Balance Sheet (XBRL)
Year-to-date operating cash flow increased 2.0% to $875M, materially slower than the 13.5% increase in quarterly net income to $320M. Investing cash outflow also increased 19.7% to $286M year to date, which may reduce cash available for debt service, dividends, repurchases, and investment if the trend persists.
Source: 10-Q Cash Flow Statement (XBRL)
Revenue per requisition decreased 2.8% year over year in Q2 FY2026, despite higher testing volume. A continued decline in revenue per requisition could limit revenue and margin growth even if test requisition volume remains strong.
Source: 10-Q Income Statement (XBRL)
Reported EPS of $3.12 versus the $2.85 analyst consensus — a +9.3% beat for Q2 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $3.04B | $2.76B | +10.21% |
Cost of Revenue | $2.02B | $1.82B | +10.89% |
Operating Income | $459M | $438M | +4.79% |
Net Income | $320M | $282M | +13.48% |
EPS (Basic) | $2.88 | $2.51 | +14.74% |
EPS (Diluted) | $2.84 | $2.47 | +14.98% |
SG&A Expense | $529M | $486M | +8.85% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $16.94B | $15.97B | +6.07% |
Current Assets | $2.84B | $2.2B | +29.39% |
Current Liabilities | $1.79B | $2.02B | -11.66% |
Stockholders' Equity | $7.52B | $7.23B | +3.98% |
Cash & Equivalents | $626M | $319M | +96.24% |
Long-Term Debt | $5.64B | — | — |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $875M | $858M | +1.98% |
Investing Cash FlowYTD | $-286M | $-239M | -19.67% |
Financing Cash FlowYTD | $-381M | $-854M | +55.39% |
Share BuybacksYTD | $102M | $0 | — |
D&A | $146M | $143M | +2.10% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 15.1% | 15.9% | -0.78% |
Net Margin | 10.5% | — | — |
ROE | 4.3% | — | — |
ROA | 1.9% | — | — |
Current Ratio | $1.591 | — | — |
Expected release date, analyst estimates & what to watch
DGX delivered solid Q1 FY2026 results with revenue of $2.90B (+9.2% YoY) and net income of $252M (+14.5% YoY), driven by operating leverage that expanded operating margin to 13.8%.
DGX (Quest Diagnostics) delivered solid FY2025 results with revenue growing 11.8% to $11.0B and net income rising 13.9% to $992M, driven by strong operating cash flow of $1.9B and continued debt reduction.
Other companies in Health Care Services
Quest Diagnostics generated Q2 FY2026 revenue of $3.043B, up 10.2% from $2.761B a year earlier. Growth was principally driven by 10.0% organic revenue growth, with DIS requisition volume increasing 13.1%. Source: 10-Q Item 2 MD&A, pp.31-33
Diluted EPS rose 15.0% to $2.84 and net income increased 13.4% to $320M, while revenue grew 10.2% to $3.043B. However, operating margin declined to 15.1% from 15.9% because service costs rose 10.9%, slightly faster than revenue. Source: 10-Q Item 2 MD&A, pp.31, 33-35
Revenue per requisition declined 2.8%, primarily because the newer Corewell Health and Fresenius Medical Care relationships include a higher proportion of routine tests than Quest's broader clinical-testing mix. Excluding those business-mix effects, management said revenue per requisition increased approximately 3%, principally due to more tests per requisition. Source: 10-Q Item 2 MD&A, p.33
Quest reported a 1.59x current ratio, $626M of cash and cash equivalents, and $875M of year-to-date operating cash flow. It also had $5.642B of long-term debt, while the filing stated that $1.3B of credit-facility borrowing capacity remained available and that it was in compliance with applicable financial covenants. Source: 10-Q Balance Sheet (XBRL); 10-Q Item 2 MD&A, pp.37-39
During the first six months of 2026, Quest repurchased 0.5M shares for $100M, compared with no repurchases in the comparable 2025 period. The Board declared quarterly cash dividends of $0.86 per share in both the first and second quarters of 2026, up from $0.80 per share in each quarter of 2025. Source: 10-Q Item 2 MD&A, pp.38-39