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Quest Diagnostics (DGX) to Report Q3 Earnings: What's in Store?
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Quest Diagnostics Incorporated (DGX - Free Report) is scheduled to report third-quarter 2022 earnings on Oct 20, before the opening bell.
In the last reported quarter, the company’s earnings of $2.36 surpassed the Zacks Consensus Estimate by 4.42%. Its earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 12.06%.
Factors at Play
Quest Diagnostics is likely to have benefited from the continued sales rebound in the non-COVID base business as economic activities return to pre-pandemic levels.
The non-COVID base business is expected to have gained from the company’s efforts to expand value-based contracts with payers. Over the past few months, the company has accelerated growth through health plan access. Excluding COVID-19, health plan volumes and revenues are seen growing faster than the overall base business. We expect value-based contracts (over the last two years DGX has renewed 12 national and large regional health plan contracts) to align better with health plans, allowing it to gain share in Q3.
In this regard, earlier in 2022, Quest Diagnostics was selected as one of UnitedHealthcare's preferred lab network providers for the fourth consecutive year. Other notable partnerships include the joint venture (JV) with Sonora Quest, where the JV resulted in approximately 3.7 million molecular tests (as per the company’s July update). These contracts might have contributed to the company’s top line in the to-be-reported quarter.
Apart from this, the company is expanding its diagnostic information services portfolio. In this regard, we may note Quest Diagnostics’ recent collaboration with IRIS (Intelligent Retinal Imaging Systems) to offer diabetic retinal imaging services through designated Quest Diagnostics patient service centers across the United States. The new service extends the Quest Diagnostics Extended Care portfolio of services, which aims to facilitate access to care beyond traditional healthcare settings.
Quest Diagnostics Incorporated Price and EPS Surprise
However, the base business is likely to have faced continued inflationary headwinds as it did in the second quarter. To offset the inflationary pressure, Quest Diagnostics has been making several investments to strengthen advanced diagnostics capabilities within the base business.
In the to-be-reported quarter, Quest Diagnostics’ COVID-19 testing revenues are expected to have declined year over year, owing to a robust year-ago comparison. Per its last-released media statement in October,the company noted that demand for its COVID-19 molecular testing in July was consistent with June. However, demand for COVID-19 molecular diagnostic testing declined in August versus the prior month. This decline in COVID-19 diagnostic testing demand is likely to have significantly impacted sales in Q3. Also, the sales performance is anticipated to have been impacted by the reduced average reimbursement for COVID-19 molecular testing.
On a positive note, the FDA in September granted DGX the emergency use authorization for its monkeypox virus PCR test, the first EUA for a monkeypox in-vitro diagnostic during the monkeypox public health emergency. This might have provided a favorable boost to the company’s testing sales growth in Q3.
Q3 Estimates
For third-quarter 2022, the Zacks Consensus Estimate for total revenues is pegged at $2.34 billion, indicating a 15.5% decline from the prior-year reported figure. The consensus estimate for earnings is pegged at $2.14, suggesting a year-over-year decline of 45.9%.
What Our Model Suggests
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates. This is not the case, as you can see:
Earnings ESP:Quest Diagnostics has an Earnings ESP of -0.53 %. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks to Consider
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Charles River has a long-term historical earnings growth rate of 17.7%. Charles River’s earnings yield of 5.47% compares favorably with the industry’s -2.84%.
McKesson (MCK - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter 2022 results on Nov 1.
McKesson’s long-term historical earnings growth rate is estimated at 14.2%. MCK’s earnings yield of 6.94% compares favorably with the industry’s 5.22%.
Humana (HUM - Free Report) currently has an Earnings ESP of +0.76% and a Zacks Rank of #2. Humana is slated to release third-quarter 2022 results on Nov 2.
Humana’s long-term historical earnings growth rate is estimated at 16.2%. HUM’s earnings yield of 5.02% compares favorably with the industry’s 5.00%.
Image: Bigstock
Quest Diagnostics (DGX) to Report Q3 Earnings: What's in Store?
Quest Diagnostics Incorporated (DGX - Free Report) is scheduled to report third-quarter 2022 earnings on Oct 20, before the opening bell.
In the last reported quarter, the company’s earnings of $2.36 surpassed the Zacks Consensus Estimate by 4.42%. Its earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 12.06%.
Factors at Play
Quest Diagnostics is likely to have benefited from the continued sales rebound in the non-COVID base business as economic activities return to pre-pandemic levels.
The non-COVID base business is expected to have gained from the company’s efforts to expand value-based contracts with payers. Over the past few months, the company has accelerated growth through health plan access. Excluding COVID-19, health plan volumes and revenues are seen growing faster than the overall base business. We expect value-based contracts (over the last two years DGX has renewed 12 national and large regional health plan contracts) to align better with health plans, allowing it to gain share in Q3.
In this regard, earlier in 2022, Quest Diagnostics was selected as one of UnitedHealthcare's preferred lab network providers for the fourth consecutive year. Other notable partnerships include the joint venture (JV) with Sonora Quest, where the JV resulted in approximately 3.7 million molecular tests (as per the company’s July update). These contracts might have contributed to the company’s top line in the to-be-reported quarter.
Apart from this, the company is expanding its diagnostic information services portfolio. In this regard, we may note Quest Diagnostics’ recent collaboration with IRIS (Intelligent Retinal Imaging Systems) to offer diabetic retinal imaging services through designated Quest Diagnostics patient service centers across the United States. The new service extends the Quest Diagnostics Extended Care portfolio of services, which aims to facilitate access to care beyond traditional healthcare settings.
Quest Diagnostics Incorporated Price and EPS Surprise
Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote
However, the base business is likely to have faced continued inflationary headwinds as it did in the second quarter. To offset the inflationary pressure, Quest Diagnostics has been making several investments to strengthen advanced diagnostics capabilities within the base business.
In the to-be-reported quarter, Quest Diagnostics’ COVID-19 testing revenues are expected to have declined year over year, owing to a robust year-ago comparison. Per its last-released media statement in October,the company noted that demand for its COVID-19 molecular testing in July was consistent with June. However, demand for COVID-19 molecular diagnostic testing declined in August versus the prior month. This decline in COVID-19 diagnostic testing demand is likely to have significantly impacted sales in Q3. Also, the sales performance is anticipated to have been impacted by the reduced average reimbursement for COVID-19 molecular testing.
On a positive note, the FDA in September granted DGX the emergency use authorization for its monkeypox virus PCR test, the first EUA for a monkeypox in-vitro diagnostic during the monkeypox public health emergency. This might have provided a favorable boost to the company’s testing sales growth in Q3.
Q3 Estimates
For third-quarter 2022, the Zacks Consensus Estimate for total revenues is pegged at $2.34 billion, indicating a 15.5% decline from the prior-year reported figure. The consensus estimate for earnings is pegged at $2.14, suggesting a year-over-year decline of 45.9%.
What Our Model Suggests
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates. This is not the case, as you can see:
Earnings ESP:Quest Diagnostics has an Earnings ESP of -0.53 %. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #2.
Stocks to Consider
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Charles River Laboratories International (CRL - Free Report) has an Earnings ESP of +0.66% and a Zacks Rank of #3. The company will release third-quarter 2022 results on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Charles River has a long-term historical earnings growth rate of 17.7%. Charles River’s earnings yield of 5.47% compares favorably with the industry’s -2.84%.
McKesson (MCK - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter 2022 results on Nov 1.
McKesson’s long-term historical earnings growth rate is estimated at 14.2%. MCK’s earnings yield of 6.94% compares favorably with the industry’s 5.22%.
Humana (HUM - Free Report) currently has an Earnings ESP of +0.76% and a Zacks Rank of #2. Humana is slated to release third-quarter 2022 results on Nov 2.
Humana’s long-term historical earnings growth rate is estimated at 16.2%. HUM’s earnings yield of 5.02% compares favorably with the industry’s 5.00%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.