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Quest Diagnostics (DGX) to Post Q2 Earnings: What's in Store?
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Quest Diagnostics (DGX - Free Report) is set to release second-quarter 2023 results on Jul 26 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.04 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 3.55%. Quest Diagnostics beat earnings estimates in all the trailing four quarters, the average surprise being 5.24%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Base Business
Quest Diagnostics is likely to have witnessed strong growth momentum within its base business in the second quarter of 2023, banking on the solid performance across physician and health system lab services. During the last reported quarter, the higher number of tests per requisition across a broad range of clinical test categories showed that people are returning to routine health checkups after delaying care during the pandemic. This trend is expected to have continued in the second quarter as well.
We expect Quest Diagnostics to have benefited from its ongoing efforts to partner with health plans to actively steer patients to high-quality, lower-cost providers, leading to faster volume growth of the company’s health plans than the overall business.
Similar to the first quarter, the company is expected to have reported strong second-quarter sales driven by impressive new wins across its reference and professional lab services offerings.
Quest Diagnostics announced a multi-year agreement with Pennsylvania-based healthcare system, Tower Health, to manage its laboratory supply chain and perform reference testing. In addition, the company completed the previously announced acquisitions of NewYork-Presbyterian and the Northern Light Laboratory in Maine.
Quest Diagnostics Incorporated Price and EPS Surprise
Further, Quest Diagnostics’ recent buyout of Haystack Oncology incorporated the highly sensitive minimal-residual disease testing technology into its cancer diagnostics portfolio. Given the strength in the M&A pipeline of Quest Diagnostics health system business, we expect all these developments have made a positive impact on the company’s second-quarter performance.
Within advanced diagnostics, the area of brain health is expected to have reported strong growth in the second quarter of 2023. This should largely be attributed to Quest Diagnostics AD-Detect Alzheimer's blood test. We also anticipate the growth momentum to have continued in the second quarter for the company’s advanced cardiometabolic portfolio, prenatal genetics, blood-based tuberculosis screening and hepatitis B and C testing.
In consumer health, we expect the addition of new services in the test menu to have favored Quest Diagnostics’ top line in the second quarter. The strength seen in the year-over-year volume growth in allergy and general health testing is also encouraging, with consumers utilizing the company’s offerings as a complement to the care provided by their physicians. We are also upbeat about Quest Diagnostics’ progress toward achieving a 3% annual productivity savings target under the Invigorate program. The program is intended to offset reimbursement pressures and labor and benefit cost increases, as well as free up additional resources to invest in innovation and other growth initiatives, thereby improving service quality and operating profitability.
Per our model, Quest Diagnostics’ Base business revenues for the second quarter are pegged at $2.18 billion, suggesting a 4.1% improvement from the year-ago quarter’s reported figure.
Diagnostic Information Services
Revenues for the diagnostic information services business reported a year-over-year decline in the first quarter, owing to lower revenues from COVID-19 testing services. Total volume, measured by the number of requisitions, also decreased compared with the first quarter of 2022, with acquisitions contributing 10 basis points to total volume. We expect this trend to have negatively impacted the second quarter’s top line.
For the second quarter, our model projects revenues from this business to have decreased 10.5% year over year to $2.13 billion.
Covid-19 Testing Service
During the first quarter of 2023, Quest Diagnostics’ COVID-19 testing revenues nosedived to a large extent, with the continuous decline in testing volumes. The company witnessed a downward trend in the demand for COVID-19 molecular testing volumes earlier than anticipated. For the remaining half of the year, Quest Diagnostics’ revised guidance assumes very modest COVID-19 revenues following the end of the public health emergency in May.
Our model projects Quest Diagnostics’ Covid-19 testing revenues for the second quarter to have declined 93.5% year-over-year to $22.9 million.
Q2 Estimates
For the second quarter of 2023, the Zacks Consensus Estimate for Quest Diagnostics’ revenues is pegged at $2.24 billion, suggesting a decline of 8.5% from the year-ago reported figure.
The Zacks Consensus Estimate for the company’ second-quarter 2023 EPS of $2.25 indicates a 4.7% fall from the year-ago reported figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates, which is the case here, as elaborated below.
Earnings ESP: Quest Diagnostics has an Earnings ESP of +1.31%. 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 #3.
Other Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this time around.
MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 4.48%. The Zacks Consensus Estimate for MCK’s fiscal 2024 first-quarter EPS is expected to rise 0.5% from the year-ago reported figure.
SiBone (SIBN - Free Report) has an Earnings ESP of +1.21% and a Zacks Rank #2. SiBone is scheduled to release second-quarter 2023 results on Aug 07.
SIBN’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 11.11%. The Zacks Consensus Estimate for SIBN’s second-quarter EPS is expected to be 22.2% narrower than the year-ago reported figure.
AmerisourceBergen currently has an Earnings ESP of +0.61% and a Zacks Rank #2. ABC is scheduled to release third-quarter fiscal 2023 results on Aug 02.
ABC’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.14%. The Zacks Consensus Estimate for ABC’s fiscal 2023 third-quarter EPS is expected to improve 5.6% from the year-ago reported figure.
Image: Shutterstock
Quest Diagnostics (DGX) to Post Q2 Earnings: What's in Store?
Quest Diagnostics (DGX - Free Report) is set to release second-quarter 2023 results on Jul 26 before the opening bell.
The company posted adjusted earnings per share (EPS) of $2.04 in the last reported quarter, which surpassed the Zacks Consensus Estimate by 3.55%. Quest Diagnostics beat earnings estimates in all the trailing four quarters, the average surprise being 5.24%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Base Business
Quest Diagnostics is likely to have witnessed strong growth momentum within its base business in the second quarter of 2023, banking on the solid performance across physician and health system lab services. During the last reported quarter, the higher number of tests per requisition across a broad range of clinical test categories showed that people are returning to routine health checkups after delaying care during the pandemic. This trend is expected to have continued in the second quarter as well.
We expect Quest Diagnostics to have benefited from its ongoing efforts to partner with health plans to actively steer patients to high-quality, lower-cost providers, leading to faster volume growth of the company’s health plans than the overall business.
Similar to the first quarter, the company is expected to have reported strong second-quarter sales driven by impressive new wins across its reference and professional lab services offerings.
Quest Diagnostics announced a multi-year agreement with Pennsylvania-based healthcare system, Tower Health, to manage its laboratory supply chain and perform reference testing. In addition, the company completed the previously announced acquisitions of NewYork-Presbyterian and the Northern Light Laboratory in Maine.
Quest Diagnostics Incorporated Price and EPS Surprise
Quest Diagnostics Incorporated price-eps-surprise | Quest Diagnostics Incorporated Quote
Further, Quest Diagnostics’ recent buyout of Haystack Oncology incorporated the highly sensitive minimal-residual disease testing technology into its cancer diagnostics portfolio. Given the strength in the M&A pipeline of Quest Diagnostics health system business, we expect all these developments have made a positive impact on the company’s second-quarter performance.
Within advanced diagnostics, the area of brain health is expected to have reported strong growth in the second quarter of 2023. This should largely be attributed to Quest Diagnostics AD-Detect Alzheimer's blood test. We also anticipate the growth momentum to have continued in the second quarter for the company’s advanced cardiometabolic portfolio, prenatal genetics, blood-based tuberculosis screening and hepatitis B and C testing.
In consumer health, we expect the addition of new services in the test menu to have favored Quest Diagnostics’ top line in the second quarter. The strength seen in the year-over-year volume growth in allergy and general health testing is also encouraging, with consumers utilizing the company’s offerings as a complement to the care provided by their physicians. We are also upbeat about Quest Diagnostics’ progress toward achieving a 3% annual productivity savings target under the Invigorate program. The program is intended to offset reimbursement pressures and labor and benefit cost increases, as well as free up additional resources to invest in innovation and other growth initiatives, thereby improving service quality and operating profitability.
Per our model, Quest Diagnostics’ Base business revenues for the second quarter are pegged at $2.18 billion, suggesting a 4.1% improvement from the year-ago quarter’s reported figure.
Diagnostic Information Services
Revenues for the diagnostic information services business reported a year-over-year decline in the first quarter, owing to lower revenues from COVID-19 testing services. Total volume, measured by the number of requisitions, also decreased compared with the first quarter of 2022, with acquisitions contributing 10 basis points to total volume. We expect this trend to have negatively impacted the second quarter’s top line.
For the second quarter, our model projects revenues from this business to have decreased 10.5% year over year to $2.13 billion.
Covid-19 Testing Service
During the first quarter of 2023, Quest Diagnostics’ COVID-19 testing revenues nosedived to a large extent, with the continuous decline in testing volumes. The company witnessed a downward trend in the demand for COVID-19 molecular testing volumes earlier than anticipated. For the remaining half of the year, Quest Diagnostics’ revised guidance assumes very modest COVID-19 revenues following the end of the public health emergency in May.
Our model projects Quest Diagnostics’ Covid-19 testing revenues for the second quarter to have declined 93.5% year-over-year to $22.9 million.
Q2 Estimates
For the second quarter of 2023, the Zacks Consensus Estimate for Quest Diagnostics’ revenues is pegged at $2.24 billion, suggesting a decline of 8.5% from the year-ago reported figure.
The Zacks Consensus Estimate for the company’ second-quarter 2023 EPS of $2.25 indicates a 4.7% fall from the year-ago reported figure.
What Our Model Suggests
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating estimates, which is the case here, as elaborated below.
Earnings ESP: Quest Diagnostics has an Earnings ESP of +1.31%. 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 #3.
Other Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this time around.
Mckesson (MCK - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #2. The company will release first-quarter fiscal 2024 results on Aug 02. You can see the complete list of today’s Zacks #1 Rank stocks here.
MCK’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 4.48%. The Zacks Consensus Estimate for MCK’s fiscal 2024 first-quarter EPS is expected to rise 0.5% from the year-ago reported figure.
SiBone (SIBN - Free Report) has an Earnings ESP of +1.21% and a Zacks Rank #2. SiBone is scheduled to release second-quarter 2023 results on Aug 07.
SIBN’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 11.11%. The Zacks Consensus Estimate for SIBN’s second-quarter EPS is expected to be 22.2% narrower than the year-ago reported figure.
AmerisourceBergen currently has an Earnings ESP of +0.61% and a Zacks Rank #2. ABC is scheduled to release third-quarter fiscal 2023 results on Aug 02.
ABC’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 3.14%. The Zacks Consensus Estimate for ABC’s fiscal 2023 third-quarter EPS is expected to improve 5.6% from the year-ago reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.