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Quest Diagnostics (DGX) Base Volume Aids Amid Low COVID Tests
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Quest Diagnostics (DGX - Free Report) has been focusing on areas with high potential as part of its two-point strategy. Yet, declining COVID-19 testing sales have acted as a dampener. The stock carries a Zacks Rank #3 (Hold).
Quest Diagnostics is benefiting from strong volume growth across its base business (which refers to testing volumes, excluding COVID-19 testing).
The collaborations with health plans, hospitals and physicians have aided the company amid the elevated demand for services, which reflects continued return to care. With the severity of the COVID-19 pandemic significantly reducing over the past few quarters, the company is making substantial progress in improving the profitability of the base business compared to the pandemic-laden phase up to the first half of 2022.
Across Physician Lab Services, a large number of strategic partnerships with health plans involve value-based arrangements, which are leading to faster growth and share gains than traditional relationships. These arrangements make Quest Diagnostics well-positioned to be a more strategic partner with health plans, cooperating on leakage, shared savings and redirection programs. In addition, the recent acquisition of NewYork-Presbyterian's outreach assets also added to the volume growth from physicians.
Meanwhile, Quest Diagnostics’ highly specialized Advanced Diagnostics services are gaining traction. Within this, the QuestAD-Detect Alzheimer's blood test is adding to Neurology’s growth trends, fortifying the company’s position in the rapidly evolving Alzheimer’s landscape. The AD-Detect portfolio enables the early assessment of Alzheimer's risk, along with the monitoring of the progression. The test, currently available to physicians across the United States, equally holds the potential to witness strong customer demand.
In addition, Quest Diagnostics continues to witness growth momentum in the cardiometabolic, endocrinology, infectious disease and carrier and prenatal genetic screening services.
On the flip side, Quest Diagnostics posted second-quarter 2023 results, wherein the top line reflected a nearly 88% drop in COVID-19 testing revenues. Citing this reason, Diagnostic Information Services reported lower contributions in the quarter despite strong growth in the base business.
The adjusted operating income also bore the brunt, resulting in a 104-basis point contraction. In its updated guidance for the full year, Quest Diagnostics anticipates delivering approximately $200 million from COVID-19 testing revenues.
The company’s solvency level remains a concern. As of Jun 30, 2023, the long-term debt was $3.78 million, while the cash and cash equivalent balance was only $126 million. The current portion of the debt was also much higher at $518 million.
Pressure on volume, owing to a difficult macroeconomic situation and pricing, constitutes the primary risk for Quest Diagnostics. Although total volumes measured by the number of requisitions grew a mere 0.2% in the second quarter, revenues per requisition declined 4.9% year over year due to lower COVID-19 molecular testing volumes.
Shares of DGX have dropped 10.7% in the past six months compared with the industry's 4.4% decline.
Haemonetics’stock has risen 13.5% in the past year. Earnings estimates for Haemonetics have increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Align Technologies’ 2023 EPS have increased from $8.31 to $8.75 in the past 30 days. Shares of the company have increased 24% in the past year compared with the industry’s rise of 10.5%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.9%.
Estimates for SiBone’s 2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have increased 15.1% in the past year against the industry’s fall of 5.1%.
SIBN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBone delivered an earnings surprise of 26.83%.
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Quest Diagnostics (DGX) Base Volume Aids Amid Low COVID Tests
Quest Diagnostics (DGX - Free Report) has been focusing on areas with high potential as part of its two-point strategy. Yet, declining COVID-19 testing sales have acted as a dampener. The stock carries a Zacks Rank #3 (Hold).
Quest Diagnostics is benefiting from strong volume growth across its base business (which refers to testing volumes, excluding COVID-19 testing).
The collaborations with health plans, hospitals and physicians have aided the company amid the elevated demand for services, which reflects continued return to care. With the severity of the COVID-19 pandemic significantly reducing over the past few quarters, the company is making substantial progress in improving the profitability of the base business compared to the pandemic-laden phase up to the first half of 2022.
Across Physician Lab Services, a large number of strategic partnerships with health plans involve value-based arrangements, which are leading to faster growth and share gains than traditional relationships. These arrangements make Quest Diagnostics well-positioned to be a more strategic partner with health plans, cooperating on leakage, shared savings and redirection programs. In addition, the recent acquisition of NewYork-Presbyterian's outreach assets also added to the volume growth from physicians.
Quest Diagnostics Incorporated Price
Quest Diagnostics Incorporated price | Quest Diagnostics Incorporated Quote
Meanwhile, Quest Diagnostics’ highly specialized Advanced Diagnostics services are gaining traction. Within this, the QuestAD-Detect Alzheimer's blood test is adding to Neurology’s growth trends, fortifying the company’s position in the rapidly evolving Alzheimer’s landscape. The AD-Detect portfolio enables the early assessment of Alzheimer's risk, along with the monitoring of the progression. The test, currently available to physicians across the United States, equally holds the potential to witness strong customer demand.
In addition, Quest Diagnostics continues to witness growth momentum in the cardiometabolic, endocrinology, infectious disease and carrier and prenatal genetic screening services.
On the flip side, Quest Diagnostics posted second-quarter 2023 results, wherein the top line reflected a nearly 88% drop in COVID-19 testing revenues. Citing this reason, Diagnostic Information Services reported lower contributions in the quarter despite strong growth in the base business.
The adjusted operating income also bore the brunt, resulting in a 104-basis point contraction. In its updated guidance for the full year, Quest Diagnostics anticipates delivering approximately $200 million from COVID-19 testing revenues.
The company’s solvency level remains a concern. As of Jun 30, 2023, the long-term debt was $3.78 million, while the cash and cash equivalent balance was only $126 million. The current portion of the debt was also much higher at $518 million.
Pressure on volume, owing to a difficult macroeconomic situation and pricing, constitutes the primary risk for Quest Diagnostics. Although total volumes measured by the number of requisitions grew a mere 0.2% in the second quarter, revenues per requisition declined 4.9% year over year due to lower COVID-19 molecular testing volumes.
Shares of DGX have dropped 10.7% in the past six months compared with the industry's 4.4% decline.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Align Technologies (ALGN - Free Report) and SiBone (SIBN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Haemonetics’stock has risen 13.5% in the past year. Earnings estimates for Haemonetics have increased from $3.56 to $3.74 in 2023 and $3.96 to $4.07 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.
Estimates for Align Technologies’ 2023 EPS have increased from $8.31 to $8.75 in the past 30 days. Shares of the company have increased 24% in the past year compared with the industry’s rise of 10.5%.
ALGN’s earnings beat estimates in three of the trailing four quarters and missed the same in one. In the last reported quarter, it posted an earnings surprise of 9.9%.
Estimates for SiBone’s 2023 loss have narrowed from $1.42 to $1.27 per share in the past 30 days. Shares of the company have increased 15.1% in the past year against the industry’s fall of 5.1%.
SIBN’s earnings beat estimates in each of the trailing four quarters, the average surprise being 20.37%. In the last reported quarter, SiBone delivered an earnings surprise of 26.83%.