Q4 2025 Earnings Call Transcript

Welcome to the Quest Diagnostics Incorporated Fourth Quarter and Year End 2025 Conference Call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and the question-and-answer session that will follow, are the copyrighted property of Quest Diagnostics Incorporated with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without the written consent of Quest Diagnostics Incorporated is strictly prohibited.

I would like to introduce Shawn Bevec, President of Investor Relations for Quest Diagnostics Incorporated. Please go ahead.

Thank you, and good morning. I am joined by Jim Davis, our Chairman, Chief Executive Officer and President, and Sam Samad, our Chief Financial Officer. During this call, we may make forward-looking statements and we will discuss non-GAAP measures. We provide a reconciliation of non-GAAP measures to comparable GAAP measures in the tables to our earnings press release.

Actual results may differ materially from those projected. Risks and uncertainties that may affect Quest Diagnostics Incorporated’s future results include, but are not limited to, those described in our most recent annual report on Form 10-K and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K. For this call, references to reported EPS refer to reported diluted EPS, and references to adjusted EPS refer to adjusted diluted EPS. Growth rates associated with our long-term outlook projections, including consolidated revenue growth, revenue growth from acquisitions, organic revenue growth, and adjusted earnings growth, are compound annual growth rates.

Now here is Jim Davis.

Thanks, Shawn, and good morning, everyone. With diligent execution of our strategy and a strong fourth quarter, we generated double-digit growth in revenues and earnings per share for the full year. In 2025, we expanded our category-defining clinical innovation to meet robust demand, formed strategic collaborations with elite health care organizations, and further advanced our position as the premier lab engine powering the wellness industry. We also continue to improve quality, productivity, and the customer and patient experience with process enhancements, AI, and automation.

As we look ahead to 2026, our guidance reflects our continued confidence in our business strengths and market fundamentals, which include favorable demographic trends, increasing use of blood-based lab diagnostics, and growing interest in preventative health and wellness. Now before I turn to this year’s highlights, I would like to take a moment to comment on PAMA. Last week, bipartisan legislation was enacted that delays the implementation of PAMA until 2026. This one-year delay in rate cuts was paired with an update to the data collection period to 2025 from 2019 based on the data to be supplied by applicable laboratories to CMS later this year.

We greatly appreciate Congress for recognizing the need to reform PAMA and for providing this one-year delay of PAMA cuts, which provides meaningful short-term relief. However, these steps do not fix PAMA’s structural flaws, which include relying on an estimated 10,000 plus labs to self-report data to establish industry-representative data for payment rate setting. As a reminder, fewer than 1% of all the clinical laboratories reported commercial payer data to CMS in 2017, resulting in three rounds of excessive rate cuts based on data that did not reflect the market. A different approach is needed to prevent a repeat of excessive rate cuts.

The RESULTS Act provides a common-sense long-term solution that corrects these deficiencies by, for example, eliminating the need for thousands of labs to self-report data and instead leveraging an independent third-party database that provides comprehensive and representative data to set accurate market-based rates. We will continue to work with our trade association, ACLA, to build on progress in securing the necessary support in Congress to pass RESULTS into law this year. Now I will provide more detail on how we executed our strategy across our key customer channels and operations during the quarter and the year.

We are focused on delivering solutions that meet the evolving needs of our core clinical customers, physicians and hospitals, as well as customers in the higher growth areas of consumer, life sciences, and data analytics. In the physician channel, we delivered high single-digit organic revenue growth in the fourth quarter on broad-based demand for our clinical solutions, including several areas of advanced diagnostics, and from geographic expansion resulting from increased health plan access. We also grew revenues in enterprise accounts as we added new customers and extended business with existing customers.

In addition, during the quarter, we scaled our lab testing to serve more than 200,000 patients at Fresenius Medical Care’s dialysis centers in the United States. We also added water purity testing capabilities to our menu to support dialysis customers nationwide. In the hospital channel, revenues grew low single digits with Collaborative Lab Solutions driving our growth in the quarter. Our CoLab Solutions harness our lab and process management expertise to optimize quality and drive cost efficiencies in areas ranging from hospital lab and supply chain management to analytics and blood utilization.

At the start of 2026, we began to scale our CoLab Solutions across all 21 hospitals of Corewell Health, a leading health system in Michigan, and our largest implementation of these solutions to date. We expect CoLab Solutions to generate approximately $1 billion in annual revenue in 2026. Additionally, we recently finalized our laboratory joint venture with Corewell Health and are jointly constructing a state-of-the-art laboratory in Southeast Michigan from which we plan to serve the state in 2027. Hospitals value our flexible solutions for accessing expertise, innovation, and capital. We are pursuing several potential hospital outreach and independent lab acquisitions as well as CoLab opportunities while also continuing to integrate and generate value from our recent transactions.

In the consumer channel, we are leveraging our diagnostics expertise and technology to drive growth through our consumer-initiated test platform, questhealth.com, as well as through collaborations with industry-leading wellness and wearables companies. In the fourth quarter, we expanded questhealth.com to offer more than 150 tests, including our new 85-biomarker Elite Health Profile. Our innovation, quality, and technology integrated into existing apps and experiences make us the clear choice for organizations seeking to add diagnostic insights to their offerings. And we added new consumer brands to our extensive roster of collaborations in the fourth quarter.

At our Investor Day in March, we said that we would expect consumer-initiated testing to generate revenue growth in excess of 20%, and we exceeded that growth rate in 2025. Across the consumer channel, we delivered nearly $250 million in revenues for the full year. We enable growth across our customer channels through faster growing advanced diagnostics in five key clinical areas: advanced cardiometabolic and endocrine, autoimmune, brain health, oncology, and women’s and reproductive health. During the quarter and full year, we delivered double-digit revenue growth across several clinical areas of our advanced portfolio.

I would like to highlight a couple of these innovations today. Our Analyzer solution provides a comprehensive yet simple approach for aiding the diagnosis of the eight most common autoimmune disorders. About 24 million Americans suffer from at least one of over 100 autoimmune disorders. Because symptoms of these disorders often overlap, and a shortage of rheumatologists exists nationwide, patients may go for years before receiving the correct diagnosis.

Analyzer helps primary care clinicians identify the likely category of disease affecting the patient, and thereby speeding referral to the right specialist for faster diagnosis and treatment. In brain health, our portfolio of Quest AD-Detect blood tests for Alzheimer’s disease extended its year-long double-digit growth momentum into the fourth quarter as providers increasingly adopted the high-quality blood-based biomarker tests for the most prevalent type of dementia. A recent study by our scientific team suggests that blood tests like our newest AD-Detect panel, which fulfills guideline criteria for confirmatory blood testing, could decrease cost to the health care system by reducing the use of higher-cost PET/CT imaging for diagnosis, improving access and affordability.

In oncology, we continue to build our presence in blood-based minimal residual disease testing. New research presented at ASCO GI in early January highlighted the strong clinical value of our Haystack MRD test in monitoring for colorectal cancer. We further expanded in the MRD space with the launch last week of our cutting-edge flow MRD test for blood-based cancer myeloma. This test enables ultrasensitive detection of residual disease in a blood specimen, sparing patients the pain and complications of conventional testing of bone marrow biopsies.

Along with driving top-line growth across our business, we are focused on delivering operational excellence with enhanced processes and strategic implementation of automation, AI, and other advanced technologies. Through our INFIGURATE program, we achieved our full-year target of 3% annual cost savings and productivity improvements in 2025. Inside our labs, we deployed automated sample processing across our network and collaborative accessioning at multiple sites to streamline and optimize our processes. We also implemented the Hologic Genius Digital Diagnostic System at two of our laboratories and look forward to scaling this solution for enhancing quality and productivity in cervical cancer screenings at several of our labs this year.

Outside the lab, we are using AI to make the customer and employee experiences easier, faster, and more insightful. For example, our virtual AI agent has reduced routine logistics calls by up to 50%, and we expect a new AI logistics tool will help us reduce courier transportation times as we roll it out this year. I will now turn the call over to Sam Samad for the financial results.

Thanks, Jim. In the fourth quarter, consolidated revenues were $2.81 billion, up 7.1% versus the prior year. Consolidated organic revenues grew by 6.4%. Revenues for Diagnostic Information Services were up 7.3% compared to the prior year, reflecting organic growth in our physician, hospital, and consumer channels as well as recent acquisitions.

Total volume, measured by the number of requisitions, increased 8.5% versus 2024, with organic volume up 7.9%. Total revenue per requisition was down 0.1% versus the prior year. As a reminder, Corewell Health and Fresenius Medical Care deliver significant volume growth at a lower revenue per requisition than our company average. Excluding these two relationships, our organic volume growth accelerated to 4.1% in the fourth quarter, while our revenue per requisition growth remained solid at approximately 3%.

Unit price remained consistent with our expectations. Reported operating income in the fourth quarter was $386 million, or 13.8% of revenues, compared to $361 million, or 13.8% of revenues, last year. On an adjusted basis, operating income was $429 million, or 15.3% of revenues, compared to $409 million, or 15.6% of revenues, last year. The adjusted operating income dollar increase was due to organic revenue growth and revenue growth from recent acquisitions, partially offset by wage increases.

Operating income percent was reduced in the quarter by startup expenses related to Fresenius Medical Care and Corewell Health, as well as Project Nova expenses. Reported EPS was $2.18 in the quarter, and adjusted EPS was $2.42, compared to $1.95 and $2.23 the prior year, respectively. Foreign exchange rates had no meaningful impact on our results. Cash from operations was $1.89 billion for the full year 2025 versus $1.33 billion in the prior year.

This significant year-over-year increase was driven by higher operating income, favorable working capital due to timing of disbursements, a cash tax benefit related to recent tax legislation, and the one-time CARES Act tax credit. As Jim said, we successfully executed on our strategy in 2025 to deliver these results, and we will continue to build on this as we progress through 2026. Turning now to our full-year 2026 guidance. Revenues are expected to be between $11.7 billion and $11.82 billion, which represents a growth rate of 6% to 7.1%. Reported EPS is expected to be in a range of $9.45 to $9.65 and adjusted EPS in a range of $10.50 to $10.70. Cash from operations is expected to be approximately $1.75 billion.

Capital expenditures are expected to be approximately $550 million. Our share count and interest expense are expected to be consistent with 2025. This guidance reflects the following considerations. We assume approximately 6% to 7.1% in revenue growth, and this does not include any contribution from prospective M&A. The severe weather impact experienced in January 2026 is creating a greater headwind than what we experienced during the same period a year ago.

We have contemplated the impact to date in our full-year guidance. We expect the seasonality of our business to be generally in line with last year’s and pre-COVID seasonality. Based on the passage of federal funding legislation last week, there will be no impact from PAMA in 2026. For Project Nova, our multiyear initiative to modernize our order-to-cash process, we expect approximately $0.25 of EPS dilution related to increased investment spend versus 2025. Operating margin is expected to expand versus the prior year. The CoLab relationship with Corewell Health will add approximately $250 million in organic revenue at low single-digit margins in 2026. We continue to make progress with our launch of 100 basis points in 2026 versus 2025. Our lower operating cash flow guidance in 2026 compared to 2025 reflects several one-time benefits in the prior year, and one more payroll cycle in 2026 than 2025. The one-time benefits in 2025 were approximately $150 million, and the impact of the one additional payroll cycle in 2026 is approximately $120 million.

With that, I will now turn it back to Jim.

Thanks, Sam. To summarize, with diligent execution of our strategy and a strong fourth quarter, we generated double-digit growth in revenues and earnings per share for the full year. In 2025, we delivered category-defining clinical innovations that fulfill customer needs, formed strategic collaborations to create new growth opportunities, and further advanced our position as the premier lab engine in consumer health. Our 2026 guidance reflects our continued confidence in our business strengths and market fundamentals supporting enduring interest in our diagnostic innovations.

Looking ahead, I am excited about our path forward. We are focused on connecting everyone, from clinicians to consumers, to illuminate a path to better health, and are well positioned to serve growing interest in accessing the health insights that only laboratory diagnostics can deliver. Quest Diagnostics Incorporated sits at the center of health care as a trusted provider, and that is because of the dedication of our nearly 57,000 colleagues to living our purpose—working together to create a healthier world one life at a time. I would like to close by thanking each of my colleagues for what we accomplished together in 2025 and for their ongoing commitment to transforming lives for the better in the years ahead.

Now we would be happy to take your questions.

Thank you. We will now open for questions. At the request of the company, we ask that you please limit yourself to one question. If you have additional questions, we ask that you fall back in the queue.

To be placed in the queue, please press 1 from your phone. To withdraw, press 2. Again, to ask a question, please press 1. Our first question comes from Luke Sergott with Barclays. Your line is open. You may ask your question.

Great. Thanks for the questions, guys. I guess, as you are looking for 2026, can you just give a sense of what the underlying growth drivers are as you think about, or the assumptions on the growth drivers as you think about, like the consumer piece, new tests as you think of MRD coming on, potential reimbursement there, chronic disease management, etcetera, you know, just kind of break it out as to what you guys are thinking as we kind of bridge that build. Yeah.

Hey. Good morning, Luke. I think you touched on most of those. Look, we expect the organic growth to remain strong as Sam indicated.

I think from a testing standpoint, we are seeing tremendous uplift in our Alzheimer’s portfolio of tests. Those include the Aβ42 and several p-tau markers, as well as our algorithms that assess the likelihood of disease. Our autoimmune testing, as I indicated in the script, is again very, very strong. The new diagnosis rate of autoimmune disorders continues to grow.

Diabetes continues to grow. Cardiovascular testing—and not just the routine testing. The more advanced testing, what we call CardioIQ that includes Lp(a), ApoB, insulin resistance. All of those doing very, very well.

Some of that being generated by the consumer segment. Our own questhealth.com just saw tremendous growth throughout last year. The partnerships that we developed with WHOOP, with Oura, with Function Health, with several other types of wellness companies. All of that helping.

The last thing I would mention is, you know, we got back into network with Elevance in several key states last year, Nevada, Colorado, Georgia, and Virginia. And I would still say we are in the early innings of winning our fair share in those states. So all of that continues to just, you know, propel the organic growth as we enter this year.

Great. And then a follow-up here. As you think about 1Q, you talked about the bigger weather impact, that headwind. You think about, like, consumer ramping and just from a pacing perspective, how are you guys thinking about 1Q and then how that ramps throughout the year?

Yes. Let me just comment on the weather impact. It was a tough January versus last January. But the good news is it was in January.

So we have the rest of the quarter, the rest of the year to make it up. Now you know, we cannot predict the weather in the last six weeks of the quarter here. But what I will tell you is, you know, the first three, three and a half weeks of January were very strong, very strong growth. And so we are convinced that the majority, or some portion of it, comes back.

You know, whether it is 30%, 40%, it is hard to predict. The general health and wellness types of work always come back to us. Some of the episodic work, if people were getting tests every two weeks for some chronic care condition, maybe they missed that appointment. But the other thing I would tell you is we have really good systems in place today to track the appointments that were canceled, to track the appointments that we canceled because we could not open our patient service centers, and we continue to remind patients that they missed their appointment, and we see nice uptick from those reminders in terms of patients rescheduling.

In terms of the pacing of the quarter, I will let Sam comment on that.

Yes. So Luke, I would echo, first of all, the comment that Jim made around very strong utilization in January, and then we had some historically bad storms across the country that impacted the month. But we are still confident about the recovery in the quarter, and what we are seeing is also that strength coming back. But in terms of seasonality, you know, I think what you should expect is something similar to what we saw last year in terms of pacing across the quarters over the full year and something similar to what we saw pre-COVID seasonality.

If you go back before 2020, specifically referring to the 2019 period, that type of seasonality is very, I would say, consistent in our business. It was during COVID. But if you compare it to 2025, I think the seasonality is very similar in terms of how you should think about the pacing.

Great. Operator, next question.

Thank you. Our next question comes from Erin Wilson Wright with Morgan Stanley. Your line is open. You may ask your question. Erin, your line is open. Please check your mute feature. Hearing no line, this is the Operator, let us go to the next question. Yep. Thank you. Our next question then comes from Patrick Donnelly with Citi. Your line is open. You may ask your question.

Hey, guys. Thank you for taking the questions. Sam, probably one for you. Just want to talk through the moving pieces on the margins.

And it seems like a lot is going on in 2026 between Corewell, Project Nova, Haystack. An extra week of payroll, which you mentioned. It does sound like they will be slightly up year-over-year, so can you talk through the impact, a little bit of a bridge, if you are able to? And then the cadence, it sounds like typical seasonality.

I know typically 2Q is the highest. It would be helpful just to talk to the cadence and then the moving pieces on the margin if you are able to quantify, that would be even better. Thank you, guys.

Yeah. Thanks, Patrick. So let me go through all the moving parts here, at least the moving parts that we have in 2026. First of all, let me just say operating margin is expected to increase in 2026 versus 2025. So that is the starting point here in terms of how you think about 2026. It is impacted somewhat negatively by the ramp of Corewell and Fresenius businesses, mostly Corewell actually, in terms of the roughly $250 million of Corewell revenue increasing in 2026, which comes at a lower margin. It is a CoLab business.

It is low single-digit margin in 2026, improving to, you know, normal CoLab margins later in 2027 and beyond. But in 2026, it is impacting operating margin rate. It is very good business. It is $250 million in terms of additional revenues, but at low single-digit margins this year.

So that is impacting the operating margin rate expansion, but even with that, operating margin rate is improving. Obviously, we have very strong organic volumes. The 6.6% at the midpoint guide that we have given is mostly organic growth. It is almost all organic growth.

Actually, there is only about, you know, roughly 15 basis points of M&A carryover in that. So think about it as all organic growth and driving margin expansion. In terms of price impact, again, another piece of the story here. Price is relatively flat year-over-year, consistent with our expectations and consistent with what we have been seeing in practice over the last couple of years.

So no negative impact from price, roughly flat within that plus or minus 30 basis points that we have talked about. In terms of Haystack, Haystack is less dilutive in 2026, so it is actually helping. You know, that is consistent with what we have shared in terms of 2026. So the test is ramping, good volume ramp that leads to less dilution on Haystack. And then, you know, you have, as an offset, Project Nova.

We have quantified that in the guide that we provided. It is roughly $0.25 of incremental expenses in 2026 that is impacting our margins. So that is going to happen across 2026. It started to ramp more significantly in Q4 of 2025, and it is going to continue in 2026 as we stated prior, and we have quantified it now for 2026. In terms of seasonality, the last thing I think that you asked, Patrick, and then I will hand it over to Jim who wanted to add a couple of comments. But seasonality, consistent with what we saw last year.

But if you think about it in terms of maybe more specific terms across the quarters, you know, Q1 is usually our weakest quarter, as we say, in terms of EPS contribution to the year. Q2 is the strongest quarter. Q3 is a step down from Q2, and Q4 is a step down from Q3. In terms of seasonality, first half, second half, I think you should expect somewhere just north of 49% in the first half and just north of 50% in the second half in terms of EPS contribution for the full year. That is just giving you more specifics.

That is the seasonality pacing. Jim?

Yeah. Patrick, a couple of other things that are enhancing the margins, margin rate. One is our consumer business. We mentioned in the script, it is a $250-ish million book of business that continues to grow at 20%.

Remember, with that business, there are no denials and there are no patient concessions or bad debt. It is definitely a help from a margin rate standpoint. We continue to grow that business north of 20% relative to the portfolio growing 6% to 7%. The other thing I would mention is LifeLabs in Canada.

The margin rate continues to improve. We said by year three it would be at the company average, and it is definitely heading in that direction, very close to that. And as that margin rate of that business continues to improve, it will help our margin rate as well.

Great. Operator, next question.

Thank you. Our next question comes from Michael Cherny with Leerink Partners. Your line is open. You may ask your question.

Good morning, and thanks for taking the question. Maybe if we can talk about the competitive environment as you see it, and you talked obviously about above-expectations organic growth. Some of these are contract-oriented. As you think about the current health of the market, think about where you sit across the hospital labs and an environment where you continue to have different types of partnerships, where do you see your biggest competitive strengths as you kick off in 2026 and 2027?

And how much of the expectations for organic growth are, for lack of a better term, share gain?

Yeah. Hey, Michael. Look. I think there is absolutely share gains in the organic growth that we saw in 2025, and I think it will continue into 2026. As I mentioned, getting back into network in those key states with Elevance, that is all share gain in those states.

I did not mention Sentara, but Sentara is a big health system health plan in the Southeast along the Atlantic Coast. We are back in network with them, and that has been a tremendous help. Look. Our strengths are simply our national coverage.

We have over 1,200 sales reps out there positioned with primary care, with all of the various channels. And that really helps when it comes to positioning our autoimmune testing, our brain health testing, our cardiometabolic testing. Having that broad national coverage really, really helps. Now in terms of, you know, everyone wants to make a lot about, you know, Quest and our nearest competitor.

But I have to tell you what. Quest and our nearest competitor are probably less than 30% of the market. So I think we are making inroads versus hospital outreach. I think we are making inroads against physician office labs.

And, you know, perhaps these big health systems are just, you know, not going after that business as strongly. They have other things to invest in. They have other priorities, other investments that generate higher returns than laboratory testing. So I think we are capitalizing on those trends.

Great. Operator, next question.

Thank you. Our next question comes from Kevin Caliendo with UBS. Your line is open. You may ask your question.

Hi. Thanks for taking my question. What are you guys seeing in terms of the HIX now that we have further visibility? Is that sort of in line with your original expectations around the potential impact?

And just a clarifying question around volumes. I appreciate that you are now including Fresenius and Corewell in this, but if we were to take that out, what would your organic volumes have been in Q4?

Sure, Kevin. Let me comment on both, and Jim can add color as well. But first, on the health exchanges, I will remind you about what we modeled and what our expectations are. We modeled a 30 basis point impact on revenue growth from the exchanges.

And that is factored into our guide for the year. So that was our modeling, and that is what our expectation is. Now in reality, what we have seen in terms of enrollments has actually been better than expected. It is early days to measure utilization as a result of that and what the loss of utilization is off of the enrollments.

But I would say we are encouraged by what we saw so far in terms of by the end of the year and also what we saw in January in terms of enrollment. Now, again, we need to see the mix of those enrollments of potentially patients going to higher-deductible plans, bronze plans versus gold plans. I mean, there are a lot of moving parts there. And it is very early days to be able to say, you know, this is really encouraging.

But so far, based on the enrollments, we have seen it better than expected. In terms of Fresenius and Corewell. Listen. Corewell is all organic growth.

It is a CoLab relationship. It is all organic growth. Fresenius is mostly organic growth as well. In terms of Q4, where our DIS business grew by roughly close to 8% organically in terms of volumes, the volume growth ex-Fresenius and Corewell was just over 4%.

So, basically, from a volume perspective, they had a sizable impact because the nature of the Fresenius business specifically, and to some extent Corewell, but more so Fresenius, is it is very routine business, very high-volume business that is done on a very regular basis. It is a lower rev-per-rec business, still very profitable, based on the fact that we do not do draws. We do not incur as much cost. It is a high-volume business.

The impact on revenue in Q4 was much less. It was just less than a percent. So our organic revenue growth was 5.6%, excluding those two businesses, and it was 6.4% in total.

Kevin, the other thing I would point out is, in addition to the 4.1% organic growth when you strip out Fresenius and Corewell, we also had 3% organic rev-per-rec lift. And, again, that is coming from price being stable, number one. Number two, the continued test-per-rec increase we are seeing. Some of that coming from the mix of our consumer business, so all of that just continues to point to strong organic revenue growth that we are seeing.

Operator, next question.

Thank you. Our next question comes from Jack Meehan with Nephron Research. Your line is open. You may ask your question.

Thank you. Good morning, guys. Jim, wanted to ask you about how you see PAMA playing out this year. So we do have the survey coming up from May through July. I assume, like, are you ready to participate in that? And do you think this data ultimately is read out later in the year and could inform rates in 2027?

Yeah. So first check, we are really thankful that we got a delay for the sixth year in a row. And I think that is reflective of the fact that Congress feels that the original methodology was flawed and it led to excessive cuts, and that is why we got the further delay. As you indicated, they moved the data collection from 2019 to 2025. And, yes, we are absolutely prepared to report.

The problem, Jack, is I am not sure the other 10,000 labs—maybe there will be a few—are prepared to report. So if we end up with less than 1% of the labs reporting, like what happened before, it is just going to lead to inaccurate market-based pricing. So that is why we continue to push the RESULTS Act. And we remain optimistic that the Act will get, for lack of a better word, acted on this year.

There was a hearing on January 8 with the Energy and Commerce Committee, the Health Subcommittee. Our ACLA president testified at that meeting. There are over 65 cosponsors of the bill. And as you know, under the RESULTS Act, that leads to a different type of data collection process, one that uses a third-party database.

There are many third-party databases out there. The one we have recommended represents a sample of over 80% of the adjudicated laboratory reqs, and we think that is going to be a much better indicator of what the market price will be. And when you mix in, you know, the roughly 9,800 labs that failed to report the last time—and those are labs that are primarily hospital outreach labs, physician office labs, other smaller independent labs—when you mix all that data into the two largest national labs, we think it is good news for the calculations related to the absolute market rate of the testing that is out there today.

So we are optimistic, but we are going to keep pushing it hard in the first, you know, six months of this year and hopefully get it done before the fall.

Great. Operator, next question.

Thank you. Our next question comes from Erin Wilson Wright with Morgan Stanley.

Great. Sorry for the issue earlier. But can we dig into some of the consumer testing dynamics in the environment that you are seeing? You have launched several new partnerships, new initiatives, WHOOP, Oura, Function Health.

Can you speak to some of the sustainability of growth across this segment, the margin profile? Are you seeing anything new or different in terms of consumer utilization trends across this segment? And how should we think about what is embedded in guidance in 2026 on this front? Thanks.

Yeah. So thanks, Erin. We remain very optimistic about this. This is all about consumers who are interested in their own health.

They are interested in prevention. And as you know, prevention is not about waiting for symptoms. Prevention is doing some things before diagnosis, doing something before symptoms set in. Let me start with the wearable companies.

I think this notion of linking your biometrics with your biomarkers so that you understand the influence of those biometrics—whether it is sleep, nutrition, movement, heart rate variability, pulse—you can create these correlations between those biometrics and your biomarkers, ultimately giving feedback to the consumer on what they need to do in order to improve their biomarkers. And I think these wearable companies are really on it, and we are seeing nice lift from, still very early with both those companies, but we are seeing nice lift. I think some of our value-added resellers that are providing, let us just say, other value-added medical guidance to the laboratory testing that we do for them, I think it is serving the need, honestly, that consumers cannot get or are not getting from their physicians.

Many of the tests on these panels will not be covered by normal health plans under normal conditions, under normal general health and wellness testing. And yet these same tests are covered if the patient is sick. So again, people are worried about prevention, not waiting until they get sick to get these types of tests. So, you know, look.

We are looking at the renewal rate of these companies. Many of these value-added resellers are subscription based, and we look at the renewal rates, and we are positive about what we are seeing. The last thing I would leave you with is our own questhealth.com channel is on a $100 million run-rate business right now. And we continue to see nice uptick there.

And it is not just in the wellness panels that we offer on questhealth.com, but there is a lot of what I call episodic testing that occurs. This could be allergy testing, tick testing. This could be diabetics who just want to check their A1c. It is a lot of STD testing.

So our own channel continues to grow very nicely, and we certainly look at the repeat business of our own consumers and are happy with it.

Maybe I will add a couple of comments, Erin, just on the financial side. So, you know, with regard to the direct-to-consumer that Jim just mentioned, the questhealth.com, we have talked about that business growing somewhere in the 35% range over the course of the year, and that is in fact where it ended. It is approximately 35% for the full year 2025. So that business is really doing very well. And then if I think about the direct-to-consumer, but also the partnerships that we have and the partnerships are wearables and other wellness companies, etcetera.

We have a vibrant ecosystem there that we are supporting and that we are the engine for. You know, the margin rates on those businesses, both direct and the other collaborations that we have, is an attractive margin rate above our corporate average because basically, it is simple. It is all cash pay. We do not have patient concessions.

We do not have denials. So that business has an attractive margin profile. You asked about guidance for 2026. I am not going to give you a specific number, but all I will say is that the greater than 20% growth, in terms of a CAGR over the long term, we still feel very confident about in terms of consumer and these other high-growth businesses that we called out during Investor Day. And the expectation this year is that we are going to continue to sign up new partners as well in collaborations because we are powering a whole ecosystem here.

Our next question comes from Michael Ryskin with Bank of America. Your line is open. You may ask your question.

Hey, thanks for the question, guys. I want to go back to Corewell and Fresenius contribution in 2026. Just given that it is organic amounts of traditional M&A basket. But I also want to focus on margin opportunity and the ramp there over time. I know you talked about sort of dilutive to margins and price in 2026 and improving over time.

Could you just walk us through the ramp and what gets you there? Just sort of give us a sense for the time frame for both of those businesses going beyond this year? Thanks.

Yes. I think it is pretty straightforward, Michael. On Corewell, we said it is a $250-ish million book of business for us in 2026. And we said that would start out at low single-digit margin rate. As we get into 2027, we expect that to be in the low teens.

Fresenius, the margin rate will continue to improve through the end of the year. And by the end of the year, we expect that book of business to be at or slightly above the company operating margin rate average.

Great. Okay. Okay. And is that the—

Next question.

Go ahead. Go ahead, Michael. Go ahead. Sorry. Just real quick. Is that, when we think about the moving pieces to the margins in 2026, you talked about margins will grow this year. But it sounds like it is a little bit less than we would have expected in prior. Is that the biggest swing factor? Is there something else that we are keeping in mind for margins this year?

I think the Corewell one is the biggest swing factor, given the fact that it is a $250 million incremental business at low single-digit margin. So that is definitely a swing factor. Fresenius, as Jim mentioned, I mean, think about it as kind of a somewhat similar profile to a physician outreach acquisition where it starts out below the margin average. You know, we have got integration costs.

We have got some setup costs. And then over time, maybe it takes longer than a typical physician outreach acquisition. But over time, it improves. And by the end of the year, I think we will be at the average.

The only other thing I would point to, which I mentioned earlier when I answered Patrick’s question, is Nova expenses and the fact that we have an incremental $0.25 of Nova expenses in 2026. But, you know, we still have a healthy operating margin rate expansion, impacted to some extent by the Corewell growth. But Corewell will ramp over time to improve to normal CoLab margin rates.

Our next question comes from Tycho Peterson with Jefferies. Your line is open. You may ask your question.

Hey. Thanks. Couple on oncology. So, Haystack, you have got the PLA reimbursement.

You have MolDX decision effective January 1. Maybe just touch on the path to getting commercial coverage, Medicare Advantage, some of the next steps we should be thinking about on the back of MolDX. And then on the flow cytometry-based MRD, I am just curious how you think about the value proposition there. Obviously, more of that market is moving towards sequencing-based tests. And then just lastly, are you baking anything in for your multicancer risk stratification test launching this year?

And what about the partnerships with Guardant and GRAIL? Thanks.

Yeah. So there is a lot there, Tycho. Look. With respect to Haystack reimbursement, Novitas is the MAC that we submit to, and it did receive a PLA code.

It received reimbursement. We continue to adjudicate through Novitas and are successful there. With respect to Medicare Advantage, we are still waiting on the MolDX tech assessment. Once that tech assessment is complete, we will be well positioned with the Medicare Advantage plans.

And then, you know, look. We are having ongoing discussions with all the major payers in terms of commercial reimbursement. In some cases, we get paid. In other cases, we do not.

In some, you know, we bill them all. We have doctors write letters around medical necessity. And we continue to make progress on that. The flow MRD is an ultrasensitive flow test that has incredibly good sensitivity and specificity, and we think it is very, very competitive with next-gen sequencing-based tests.

We are very confident of that. We will continue to do studies to show that. The value proposition is really around speed. So as you know, patients with myeloma, you know, that disease moves very, very quickly.

Speed is of the essence. And we can get an answer back within three days. It is also a significantly lower-cost test. So from a reimbursement standpoint, it will offer payers a choice.

It will offer physicians and patients a choice to have a test that is highly comparable with the next-gen sequencing test at, again, a turnaround time that is very, very short—three days, not weeks—and with, again, ultra-good sensitivity and specificity. In terms of the multicancer early detection test, yes, we have a partnership with GRAIL. We will do the blood draws for GRAIL. We have listed it in our test compendium.

And GRAIL obviously pays us to do those draws and handle the logistics for them. And then, we did announce a partnership to draw for the Guardant colon cancer-based blood screening test, and that will be underway later in the first quarter.

Yeah. And from a guidance perspective, Tycho, the partnerships with GRAIL and Guardant are reflected in our guide. They are a modest contribution in terms of the percentage of the total. The risk stratification test is, again, very modest. It does not launch until later in the year. So, we are excited about that launch.

Our next question comes from Andrew Brackmann with William Blair. Your line is open. You may ask your question.

Yeah. Hi, guys. Good morning. Thanks for taking the question here.

So, Jim, maybe a big-picture question for you, sort of related to the opportunity for Quest Diagnostics Incorporated in monetizing the data that you generate. You know, you obviously generate quite a bit of it. So as you sort of think potentially about monetizing some of this longer term or maybe even partnering with some of these AI companies to further unlock that value, what are the things that you are putting in place today to maybe go after that opportunity? Thanks.

Yeah. The data business has been a nice business for Quest. It is growing double digits. It has been growing double digits for the last several years.

There are multiple customers when we think about who are the customers for that data. Number one, the pharmaceutical industry, whether it is targeting clinical trials, targeting patients with certain conditions—you know, type 2 diabetes, you name the condition—pharma turns to us to look for patient cohorts. We give patients, when they are getting a blood draw, the option to make their names available for clinical trials, and that has been very successful as well. The payers tend to be a very good customer of this data.

As an example, you know that people switch from Medicare Advantage Plan to Medicare Advantage Plan. If a patient switches from Plan A to Plan B, Plan B will come to us and ask us for previous lab data, lab history, of that patient so they can quickly understand what chronic conditions and other issues that that patient may be dealing with. Then I would say the public health agencies are also customers. You know, there are certain tests that we, certain results that we have to provide public health agencies, including the CDC.

But very often, these public health agencies come to us and want to understand, you know, viral conditions, STD outbreaks, and things like that, and we highlight to that. I will say we have partnerships with several different AI-based companies that we are working with to better use the data to provide health insights and other population health insights to all the constituencies that I mentioned above.

Thank you. And this question comes from Elizabeth Anderson with Evercore ISI. Your line is open. You may ask your question.

Hey, guys. Good morning. Thanks for the question. I just had two modeling questions.

One, and I apologize if I missed it, but can you just highlight the Elevance and Sentara reinclusion in their networks and sort of the impacts you think that that will put through in 2026 volumes? And then in response to Luke’s question, I understand that core volumes are continuing to be strong. I just did not quite understand whether you were calling out that there was any weather impact from the cold weather and storms in January. So I just want to make sure I have that down exactly.

Thank you.

Yeah. So, again, on Elevance, we mentioned in 2025 we got back in network in the states of Nevada, Colorado. We were partially in network in Georgia, but we were not in network with all of their plans. So back in Georgia and Virginia.

And, you know, let us just say it is a three-year ramp from our current share position with other health plans to get to that same level with Elevance in those states. So we are now in year two. So we expect continued share gains with that. Sentara, as you know, is a health system in Virginia, and it has its own health plan.

And we are the only one in their network on their health plan side, so we will continue to get share gains in Virginia, and the health plan actually goes even further south. So the health plan extends beyond just the Virginia border. So we are excited about that as well.

With regards to weather, Elizabeth, what we said is the weather impact was significant in January, but it is embedded in our guide for the year. So, as we think about the year itself and the seasonality, we expect the seasonality to be similar to what we saw last year, even with this weather impact that we saw in January, which was actually worse than January 2025, which in itself was pretty bad. But we had some pretty bad storms across the country in January. We do expect some recovery in the next two months or the next month and a half remaining in the quarter, and we have seen the underlying utilization has been very strong.

So, we are encouraged by that.

Thank you. Our next question comes from Pito Chickering with Deutsche Bank. Your line is open. You may ask your question.

Hey, guys. You have got Benjamin Shaver on for Pito. Thanks for taking the question. Just a quick one on 2026 guidance. How should we think about the price-per-rec versus requisition growth assumptions as it pertains to that? And also within the pricing assumption, how does the test-per-rec versus unit pricing play out? Thanks.

Yeah. So we are not going to provide the specific guidance around revenue per requisition. We usually do not. We provide revenue assumptions in terms of the guide.

On a qualitative basis, I will tell you the impact that we talked about with regards to the high-volume impact from Fresenius at a lower revenue per rec, still very profitable business, but that will impact revenue per rec as a total in 2026. If you look at it excluding those two businesses, Corewell and Fresenius, I think the rev per rec will be consistent with what we have been seeing. But those two businesses, Corewell and Fresenius—and mostly Fresenius—will impact rev per rec negatively, as we saw in Q4. In terms of the other factors within revenue per requisition, I think the key thing that you should factor in is the fact that we continue to see tests per rec improve.

We saw that across all of 2025. And that improvement is driven by a number of factors, whether it is the advanced diagnostics, more options for early screening, both cancer and other disease states, guidelines evolving, and physicians really gravitating towards more testing. So all of those continue to play out, and we are still encouraged by, definitely based on what we saw in Q4, continued growth of tests per rec and what we expect to see in 2026.

Thank you. And this question comes from Eugene Park with Baird. Your line is open. You may ask your question.

Hi. Can you hear me?

Yes. Go ahead.

Hi. Thanks for taking my question. Can you quantify the impacts on setting up Fresenius and Corewell? And maybe break out the Project Nova cost in Q4? And if you can elaborate more on how much setup, if there is any left to do, and you can provide more color on Q1 2026 on potential impact.

Yeah. So I think I heard most of your question. If I did not catch all of it, please correct me. But in terms of Q4, without quantifying the exact impact, because I do not want to get into quantifying every single quarter the impact of Nova and also Fresenius, Corewell.

All I would say is there was a significant impact from the setup expenses of Fresenius and Corewell because we are standing up these businesses. There are integration costs. You know, there is a lot of cost when you initially set up these new partnerships, both the CoLab partnership and, in the case of Fresenius, a new partnership across dialysis testing. And then Nova, we had also expenses in Q4. We had previously called out the fact that with the delayed signing of the contract with Epic, we had some expenses that got pushed out into Q4, and that is in fact what played out in the quarter.

As you think about next year in terms of specifically Nova, we called out roughly $0.25 impact from Nova expenses in 2026. So when you think about 2026, the impact is roughly $0.25. The way I think about it is fairly even in terms of quarterly impact across the quarters. Maybe slightly more in the first half than the second half, but not materially. So, you know, I think you can model it fairly equally across the quarters.

Okay. Thank you. And I would like to thank everyone again for joining the call today. Certainly appreciate your continued support. Have a great day, and stay healthy.

Thank you for participating in the Quest Diagnostics Incorporated Fourth Quarter and Year End 2025 Conference Call. A transcript of prepared remarks on this call will be posted later today on Quest Diagnostics Incorporated’s website at www.questdiagnostics.com. A replay of the call may be accessed online at www.questdiagnostics.com/investor or by phone at (866) 388-5361 for domestic callers or (203) 369-0416 for international callers. Telephone replays will be available from approximately 10:30 AM Eastern Time on 02/10/2026 until midnight Eastern Time, 02/24/2026. Goodbye.