Q1 2026 Quest Diagnostics Inc Earnings Call

April 21, 2026

Operator 2: Welcome to the Quest Diagnostics Q1 2026 Conference Call. At the request of the company, this call is being recorded. The entire contents of this call, including the presentation and question and answer session that will follow, are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without written consent of Quest Diagnostics is strictly prohibited.

Operator: Welcome to the Quest Diagnostics Q1 2026 Conference Call. At the request of the company, this call is being recorded. The entire contents of this call, including the presentation and question and answer session that will follow, are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without written consent of Quest Diagnostics is strictly prohibited.

Welcome to the Quest Diagnostics First Quarter 2026 Conference Call.

Operator 2: Now I'd like to turn the conference over to Dan Hamill, Interim Vice President of Investor Relations for Quest Diagnostics. Please go ahead.

Operator: Now I'd like to turn the conference over to Dan Hamill, Interim Vice President of Investor Relations for Quest Diagnostics. Please go ahead.

At the request of the company, this call is being recorded the entire contents of this call including the presentation and question and answer session that will follow are the copyrighted property of Quest, Diagnostics with all rights. Reserved, any redistribution retransmission or rebroadcast of this call in a form without written consent of Quest Diagnostics is strictly prohibited.

Now, I'd like to turn the conference over to Dan Hambley, Interim Vice President of Investor Relations for Quest Diagnostics. Please go ahead.

Dan Hamill: Thank you, and good morning. I'm 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'll 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' future results include, but are not limited to, those described in our most recent annual report on Form 10-K and subsequently quarterly filed reports on Form 10-Q, and the 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.

Dan Haemmerle: Thank you, and good morning. I'm 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'll 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' future results include, but are not limited to, those described in our most recent annual report on Form 10-K and subsequently quarterly filed reports on Form 10-Q, and the 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.

Thank you and good morning. I'm joined by Jim Davis, our chairman chief executive officer and president and Sam zamad. Our Chief Financial Officer

During this call, we may make forward-looking statements, and we'll 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' 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.

Dan Hamill: 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's Jim Davis.

Dan Haemmerle: 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's Jim Davis.

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.

Organic revenue growth and adjusted earnings growth are compound annual growth rates.

Now, here's Jim Davis.

Jim Davis: Thanks, Dan, and good morning, everyone. Our strong Q1 performance reflects a focused business delivering innovative solutions that meet our customers' evolving needs for lab insights. During Q1, we grew revenues over 9%, almost entirely from organic revenue growth on broad-based demand for our clinical innovations, expansion into new clinical areas, and collaborations with elite healthcare and consumer health organizations. In addition, we grew adjusted diluted earnings per share by approximately 13%, supported by productivity gains from our deployment of automation and AI across our operations, both in and outside our labs. Given our strong Q1 momentum and continued strategic focus, we are raising our revenue and EPS guidance for the year. Now I'll provide more detail on how we executed our strategy across key customer channels and operations during the quarter.

Thanks, Dan, and good morning, everyone. Our strong first quarter performance reflects a focused business, delivering the innovative solutions that meet our customers' evolving needs for lab insights.

During the first quarter, we grew revenues over 9%, almost entirely from organic revenue growth on broad-based demand for our clinical innovations, expansion into new clinical areas, and collaborations with elite healthcare and consumer health organizations.

In addition, we grew adjusted diluted earnings per share by approximately 13%.

Supported by productivity gains from our deployment of automation and AI across our operations, both in and outside our labs.

Given our strong first quarter momentum and continued strategic focus, we are raising our revenue and EPS guidance for the year.

Jim Davis: Quest operates at the center of healthcare, delivering solutions that make testing simpler and smarter for our core clinical customers, physicians, and hospitals, as well as customers in higher growth areas of consumer health, life sciences, and data analytics. In the physician channel, we delivered high single-digit revenue growth in Q1 on strong demand for our clinical innovations, geographic expansion from greater health plan access, and increased volume from our growing business in enterprise accounts. We are also pleased with our growth during the quarter in end-stage renal disease, a new clinical area for us, focused on lab testing for dialysis patients. In addition to volume from serving thousands of dialysis clinics operated by Fresenius Medical Care nationwide, we also added independent dialysis clinics and other providers as clients of our lab and water purity testing.

Now, I'll provide more detail on how we executed our strategy across key customer channels and operations during the quarter.

Quest operates at the center of healthcare delivery solutions that make testing simpler and smarter for our core clinical customers—physicians and hospitals—as well as customers in higher growth areas of consumer health, life sciences, and data analytics.

In the Physician channel, we delivered high single-digit revenue growth in the first quarter, on strong demand for our clinical innovations, geographic expansion from greater health plan access, and increased volume from our growing business in enterprise accounts.

We are also pleased with our growth during the quarter in end-stage renal disease. A new clinical area for us focused on lab testing for dialysis patients.

Jim Davis: In the hospital channel, we grew revenues at a double-digit rate, with the majority of this growth coming from our collaborative lab solutions for Corewell Health, a leading health system in Michigan. Our CoLab solutions combine our scale, clinical depth, and operational excellence to improve quality and cost efficiencies. Our implementation with Corewell Health is proceeding smoothly. We are also advancing our joint venture with Corewell Health, with plans to open a state-of-the-art lab in Southeast Michigan next year. Hospitals value our flexible solutions that enable them to free up capital while benefiting from our expertise and innovation. Our pipeline of potential CoLab collaborations, as well as potential outreach and independent acquisitions, remain strong. In the consumer channel, we deliver solutions that empower people to own their health.

In addition to volume from serving thousands of dialysis clinics operated by Fresenius Medical Care nationwide, we also added independent dialysis clinics and other providers as clients of our last and water purity testing.

In the hospital channel, we grew revenues at a double-digit rate, with the majority of this growth coming from our collaborative lab solutions. For Corewell Health, a leading health system in Michigan.

Our collab solutions combine our scale, clinical depth, and operational excellence to improve quality and cost efficiencies.

Our implementation with Corewell Health is proceeding smoothly.

We are also advancing our joint venture with Corewell Health, with plans to open a state-of-the-art lab in southeast Michigan next year.

Hospitals value. Our flexible solutions that enable them to free up Capital while benefiting from our expertise and innovation.

Our pipeline of potential collaborations, as well as potential outreach and independent acquisitions, remains strong.

Jim Davis: Similar to recent quarters, we generated significant revenue growth during the quarter, both from questhealth.com and from our portfolio of top consumer health collaborations. Growth from questhealth.com featured robust double-digit customer repeat rates and notable demand for new solutions, such as our Elite Health Profile and autoimmune and hormone tests. Quest is a trusted healthcare brand with broad reach, which enables us to drive efficient customer acquisition for questhealth.com. In addition, we are the preferred lab engine for top consumer health brands, and a key part of our growth this quarter was due to consumers accessing our lab insights within the apps and wearables of our collaborators. Our customer channels are also growing as we continue to deliver advanced diagnostics in five key clinical areas, advanced cardiometabolic and endocrine, autoimmune, brain health, oncology, and women's and reproductive health.

In the consumer channel, we deliver solutions that empower people to own their health.

Similar to recent quarters. We generated significant Revenue growth during the quarter both from Quest health.com and from our portfolio of top consumer health, collaborations

growth from Quest, health.com featured robust double digit customer, repeat rates and notable demand for new Solutions. Such as our elite health, profile, and autoimmune, and hormone tests.

Quest is a trusted healthcare brand with broad reach, which enables us to drive efficient customer acquisition for QuestHealth.com.

In addition, we are the preferred lab engine for top consumer health brands, and a key part of our growth this quarter was due to consumers accessing our lab insights within the apps and wearables of our collaborators.

Jim Davis: We delivered double-digit revenue growth across several of these areas in Q1. I'll comment briefly on a couple of examples. In the areas of brain health, Alzheimer's disease is a progressive dementia that affects over 7 million people in the US, and is expected to affect nearly 13 million Americans by 2050. For several quarters, we've spoken about delivering double-digit revenue growth from our AD-Detect blood tests for Alzheimer's disease, a trend that continued in Q1. To understand this growth, consider that until recently, clinicians typically diagnosed Alzheimer's using PET CT scans, which are costly and inaccessible for many. While these scans are highly accurate at identifying mid- and late-stage disease, they are less sensitive at detecting Alzheimer's in the early stages before major impairment has occurred.

Our customer channels are also growing. As we continue to deliver advanced diagnostics in five key clinical areas: advanced cardio, metabolic and endocrine, autoimmune, brain health, oncology, and women's and reproductive health.

We delivered double-digit Revenue growth across several of these areas in the first quarter, I'll comment briefly on a couple of examples.

In the area of brain health, Alzheimer's disease is a progressive dementia that affects over 7 million people in the U.S. and is expected to affect nearly 13 million Americans by 2050.

Digit revenue growth from our AD detect blood tests for Alzheimer's disease—a trend that continued in the first quarter.

To understand this growth, consider that until recently, clinicians typically diagnosed Alzheimer's using PET CT scans, which are costly and inaccessible for many.

Jim Davis: Years ago, we recognized the power of blood testing to reveal disease earlier and more affordably so more patients could benefit from the emerging therapies with potential to slow progression sooner. Today, Quest provides a range of tests under the AD-Detect brand, featuring sensitive mass spec tests for amyloid beta and ApoE, a genetic risk marker to complement p-tau 217 and p-tau 181. We also developed a proprietary algorithm that combines multiple biomarker results to establish Alzheimer's pathology with sensitivity and specificity of 90% or greater. At the same time, we are seeing that physicians are becoming more confident using blood tests to aid diagnosis and guide pharmaceutical treatment decisions, often in lieu of imaging. As blood tests are increasingly used both in primary and specialty care, we expect to remain a leading source of diagnostic innovation and insights for managing this disease.

While these scans are highly accurate at identifying mid and late stage disease, they are less sensitive at detecting Alzheimer's in early stages, before major impairment has occurred.

Years ago, we recognized the power of blood testing to reveal disease earlier and more affordably, so more patients could benefit from the emerging therapies with potential to slow progression sooner.

Today Quest provides a range of tests under the add detect brand, featuring sensitive Mass spect tests for Amoy beta in apoe. A genetic risk marker to compliment petal, 27, and petal 181.

We also developed a proprietary algorithm that combines multiple biomarker results to establish all Alzheimer's pathology with sensitivity and specificity of 90% or greater.

At the same time, we are seeing that Physicians are becoming more confident. Using blood tests to Aid, diagnosis and guide pharmacutical treatment decisions, often in lie of Imaging.

Jim Davis: In other areas, we drove double-digit revenue growth across much of our cardiometabolic and endocrine portfolio, including for tests for Lp(a) and ApoB, as well as for kidney, liver, and reproductive hormones. New guidelines from the American Heart Association recommend Lp(a) and ApoB testing for the first time, underscoring the clinical value of these important biomarkers. We are also encouraged that the guidelines now recommend screening for high cholesterol at young ages, as new research has found dangerous cardiovascular events are increasingly occurring in young adults. In oncology, we recently announced a research collaboration with City of Hope, a cancer and research treatment organization, to study the use of our Haystack MRD test to aid recurrence monitoring and treatment decisions in clinical trial participants with solid tumor cancers across 14 US sites.

As blood tests are increasingly used, both in primary and specialty care, we expect to remain a leading source of diagnostic innovation and insights for managing this disease.

In other areas, we drove double-digit revenue growth across much of our cardiometabolic and endocrine portfolio, including for tests for LP(a) and Apo B, as well as for kidney, liver, and reproductive hormones.

New guidelines from the American Heart Association recommend LP(a), also known as little a, and ApoB testing for the first time, underscoring the clinical value of these important biomarkers.

We are also encouraged that the guidelines now recommend screening for high cholesterol at young ages, as new research has found dangerous cardiovascular events are increasingly occurring in young adults.

Jim Davis: In addition to driving top-line growth through innovation and collaborations, our focus on operational excellence aims to improve productivity as well as quality and the patient experiences. Through our Invigorate program, we expect to continue to deliver 3% in annual cost savings and productivity improvements. We have spoken in the past about our growing use of AI and automation in our labs. While that continues to be a major focus, in Q1, we stepped up our deployment of these technologies in several other areas. As one example, we boosted productivity by 40% in Q1 among customer service agents that used AI to triage and route customer emails to speed responses. We are also deploying AI to make testing simpler and smarter for everyone, including our patients. Our new Quest AI Companion transforms complex biomarker data and reference ranges on test reports into clear, plain language.

in oncology. We recently announced a research collaboration with City of Hope a cancer in research treatment organization to study, the use of our hstack mrd test through Aid. Recurrent monitoring and treatment decisions in clinical trial, participants with solid tumor cancers, across 14, us sites,

In addition to driving Topline growth through Innovation and collaborations are focused on operational excellence aims to improve productivity as well as quality and the patient experiences.

Through our invigorate program. We expect to continue to deliver 3% in annual cost savings and productivity improvements.

We have spoken in the past about our growing use of AI and automation in our labs.

And while that continues to be a major focus in the first quarter, we stepped up our deployment of these technologies in several other areas.

As one example, we boosted productivity by 40% in the first quarter among customer service agents that used AI to triage and route customer emails to speed responses.

Jim Davis: By empowering patients with lab insights, our AI tool, which is powered by Google Gemini, can help shift the doctor-patient relationship to be focused on shared decision-making instead of data-gathering, potentially improving care outcomes. Patients have engaged Quest AI Companion approximately 350,000 times since we rolled it out to users of our MyQuest app in Q1. Lastly, we are scaling the planning and design work for Project Nova, our multi-year initiative to transform our order-to-cash processes and systems, and are on track to implement our first wave of solutions in the fall of 2027. Now Sam will provide more details on our performance and 2026 guidance. Sam?

We are also deploying AI to make testing simpler and smarter for everyone—including our patients. Our new Quest AI companion transforms complex biomarker data and reference ranges on test reports into clear, plain language.

By empowering patients with lab insights, our AI tool—which is powered by Google Gemini—can help shift the doctor-patient relationship to be focused on shared decision-making instead of data gathering, potentially improving care outcomes.

Patients have engaged Quest AI Companion approximately 350,000 times since we rolled it out to users of our MyQuest app in the first quarter.

Lastly, we are scaling the planning and design work for Project Nova, our multi-year initiative to transform our order-to-cash processes and systems, and are on track to implement our first wave of solutions in the fall of 2027.

And now, Sam will provide more details on our performance and 2026 guidance. Sam.

Sam Samad: Thanks, Jim. As Jim mentioned, our solid Q1 results reflect the disciplined execution of our strategy. Consolidated revenues were $2.9 billion, up 9.2% versus the prior year, and consolidated organic revenues grew by 9% in the quarter. Revenues for Diagnostic Information Services were up 9.4% compared to the prior year, reflecting strong organic growth in our physician, hospital, and consumer channels. Our total volume measured by the number of requisitions increased 10.9% versus Q1 2025, with organic volume up by 10.8%. Fresenius Medical Care and Corewell Health contributed approximately 7% to organic volume growth in the quarter. Our organic volume growth in the quarter was 3.8%, excluding the favorable impact from these two relationships.

Thanks Jim.

Consolidated revenues were $2.9 billion, up 9.2% versus the prior year, and consolidated organic revenues grew by 9% in the quarter.

Revenues for Diagnostic Information Services were up 9.4% compared to the prior year, reflecting strong organic growth in our physician hospital and consumer channels.

Our total volume, measured by the number of requisitions, increased 10.9% versus the first quarter of 2025.

With organic volume up by 10.8%.

For Seniors Medical Care and Corewell Health contributed approximately 7% to organic volume growth in the quarter.

Sam Samad: As expected, Fresenius Medical Care and Corewell Health's business mix impacted total revenue per requisition, which was down 1.3% compared to the prior year. As a reminder, the business mix from these two collaborations includes a greater proportion of routine tests than most of our clinical testing. Excluding this business mix impact, total revenue per requisition increased by approximately 2.5%. Unit price reimbursement was relatively flat, consistent with our expectations. Reported operating income in Q1 was $399 million, or 13.8% of revenues, compared to $346 million or 13% of revenues last year. On an adjusted basis, operating income was $447 million, or 15.4% of revenues, compared to $406 million or 15.3% of revenues last year. This increase in operating income was primarily due to organic revenue growth and increased productivity, partially offset by the impact of wage increases and, to a lesser extent, weather.

Our organic volume growth in the quarter was 3.8%. Excluding the favorable impact from these 2 relationships.

As expected for seniors, Medical Care and Corewell Health's business mix impacted total revenue per requisition, which was down 1.3% compared to the prior year.

As a reminder, the business mix from these two collaborations includes a greater proportion of routine tests than most of our clinical testing.

Excluding this business mix impact, total revenue per requisition increased by approximately 2.5%.

Unit price reimbursement was relatively flat consistent with our expectations.

Reported operating income in the first quarter was $399 million, or 13.8% of revenues.

Compared to $346 million, or 13% of revenues, last year.

On an adjusted basis, operating income was $447 million, or 15.4% of revenues, compared to $406 million, or 15.3% of revenues last year.

This increase in operating income was primarily due to organic revenue growth and increased productivity.

Sam Samad: Reported EPS was $2.24 in the quarter, compared to $1.94 a year ago. Adjusted EPS was $2.50 versus $2.21 a year ago. Adjusted EPS grew in Q1 versus the prior year, largely due to organic revenue growth, increased productivity, and lower interest expense, partially offset by the impact of wage increases and weather. Cash from operations was $278 million in Q1 versus $314 million in the prior year. Cash from operations was lower than a year ago due to the timing of operating receipts and disbursements, and higher bonus payments in the current period versus a year ago, partially offset by an increase in operating income. Turning now to our updated full year 2026 guidance. Given the solid performance in Q1, we are raising our full year revenue and EPS estimates.

partially offset by the impact of wage increases, and, to a lesser extent, whether

Reported EPS was $2.24 in the quarter, compared to $1.94 a year ago.

Adjusted EPS was $2.50 versus $2.21 a year ago.

Adjusted EPS grew in the first quarter versus the prior year. Largely due to organic Revenue growth, increased productivity and lower interest expense, partially offset, by the impact of wage increases and weather.

Cash from operations was $278 million in the first quarter.

versus $314 million in the prior year.

Cash from operations was lower than a year ago due to the timing of operating receipts and disbursements, and higher bonus payments in the current period versus a year ago.

Partially offset by an increase in operating income.

Turning now to our updated full-year 2026 guidance.

Sam Samad: We now expect revenues to be between $11.78 billion and $11.9 billion, a growth rate of 6.8% to 7.8%. Reported EPS to be in a range of $9.58 to $9.78, and adjusted EPS in a range of $10.63 to $10.83. Cash from operations to be approximately $1.75 billion. Capital expenditures to be approximately $550 million. Share count and interest expense to be consistent with 2025. Our 2026 guidance reflects the following considerations. Our revenue guide does not include any contribution from prospective M&A. Operating margin is expected to expand versus the prior year. With that, I will now turn it back to Jim.

Given the solid performance in the first quarter, we are raising our full-year revenue and EPS estimates.

We now expect revenue to be between $11.78 billion and $11.9 billion, a growth rate of 6.8% to 7.8%.

Reported EPS to be in a range of $9.58 to $9.78, and adjusted EPS in a range of $10.63 to $10.83.

Cash from operations to be approximately 1.75 billion dollars.

Capital expenditures to be approximately $550 million.

Share count and interest expense to be consistent with 2025.

And our 2026 guidance reflects the following considerations.

Our Revenue guide does not include any contribution from prospective m&a.

Operating margin is expected to expand versus the prior year.

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

Jim Davis: Thanks, Sam. We are very pleased with our start to the year. More than ever, people are turning to our lab insights to illuminate their path to better health. In summary, our Q1 results reflect a strong, focused business delivering innovative diagnostic solutions to meet our customers' evolving needs for lab insights. We grew the top line on broad-based demand for our clinical innovations, expansion into new clinical areas, and collaborations with elite healthcare and consumer health organizations. We also grew the bottom line with productivity benefits from automation and AI. Given our Q1 momentum, we are raising our guidance for the full year. I'd like to thank each of my nearly 57,000 Quest colleagues for living our purpose every day, working together to create a healthier world one life at a time.

Thanks Sam. We are very pleased with our start to the year more than ever people are turning to our last insights, to eliminate their path to Better Health.

In summary, our first quarter results reflect a strong, focused business delivering innovative diagnostic solutions to meet our customers' evolving needs for lab insights.

We grew the top line on broad-based demand for our clinical Innovations.

Expansion into new clinical areas and collaborations with elite healthcare and consumer health organizations.

We also grew the bottom line with productivity benefits from automation and AI.

We are raising our guidance for the full year.

Jim Davis: Your passion and commitment are the engine that empowers Quest to deliver diagnostic insights that improve health and transform lives. Now, we'd be happy to take your questions. Operator?

I'd like to thank each of my nearly 57,000 Quest colleagues for living our purpose. Every day, working together to create a healthier world, one life at a time.

Your passion and commitment are the engine that empowers Quest to deliver diagnostic insights that improve health and transform lives.

Operator 2: Thank you. We will now open it up to 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 please fall back in the queue. To be placed in the queue, please press *1 from your phone. To withdraw your question, you may press *2. Again, to ask a question, please press *1. Our first question comes from Michael Cherny with Leerink Partners. Your line is open. You may ask your question.

Operator: Thank you. We will now open it up to 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 please fall back in the queue. To be placed in the queue, please press *1 from your phone. To withdraw your question, you may press *2. Again, to ask a question, please press *1. Our first question comes from Michael Cherny with Leerink Partners. Your line is open. You may ask your question.

Now, we'd be happy to take your questions, operator.

Thank you. We will now open it up to 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 please re-enter the queue. Please press star 1 from your phone to be placed in the queue. To withdraw your question, you may press star 2.

Again, to ask a question, please press star 1.

Michael Cherny: Good morning. Thanks for taking the question. Congrats on a nice quarter. If it's possible to unpack the organic volume dynamics a bit, clearly that was a standout, especially against a broader macro backdrop. How should we think about the impact of mix, the impact of commercial activities on your part, and if you can you just reaffirm the same expected contribution from Corewell and Fresenius relative to what was embedded in your guidance to start the year?

Our first question comes from Michael Journey with Larry Partners. Your line is open. You may ask your question.

Good morning. Thanks for taking the question, and congrats on a nice quarter. If it's possible, could you unpack the organic volume dynamics a bit? Clearly, that was a standout, especially against a broader macro backdrop. How should we think about the impact of mix, and the impact of commercial activities on your part? And if you can, can you just reaffirm the same expected contribution from Corewell and for Zenius, relative to what was embedded in your guidance to start the year?

Sam Samad: Yeah, sure, Michael, and good morning. Hey, this is Sam. Let me just start with some of the facts about Q1 that we talked about in the prepared remarks. Organic volume growth was 10.8% in the quarter. Total volume growth was 10.9%. The contribution to volume from Fresenius and Corewell was about 7%. If you exclude those from organic volume growth, the organic volume growth excluding those two was 3.8%. The revenue per requisition, in total, was down 1.3%. If you exclude the impact of Corewell and Fresenius, it was actually up 2.5%. A solid revenue per requisition.

Yeah, sure Michael and good morning. Hey, this is Sam. So um,

Sam Samad: If you look at the impacts within that revenue per requisition, the excluding Corewell and Fresenius impact, if you look at what's driving that 2.5%, which is a really strong revenue per req, I would say tests per requisition was really the key driver. We continue to see a step up in terms of the number of tests per requisition. This is being driven by a lot of the things that we have shared over the course of last year and this year, more advanced diagnostics testing, more early detection options, and screening options. Our consumer business contributing to it as well. We continue to expect that that test per req continues to be solid and has benefited Q1 rev per req significantly. Now, I think your other question was how should we think about the balance of the year.

Let me just start with some of the facts about q1 that uh we talked about in the prepared remarks uh organic volume growth was 10.8% in the quarter total, volume growth was 10.9%. Uh so the contribution to volume from um, for SAS and corewell was about 7% and so if you exclude those from organic volume growth, the organic volume growth, excluding those 2 was was 3.8%, um, you know, the revenue per acquisition, uh, in total was down 1.3% if you exclude, the impact of core. Well, and forced up to a half percent. So, a solid Revenue per requisition. Um, if you look at the impacts within that Revenue per requisition, the excluding corewell and for seniors impact. If you look at what's driving that 2 and a half percent which is a really strong Revenue per wreck. Um you know I would say test for requisition was really the key driver. You know we continue to see a step up in terms of the number of tests.

Acquisition. This is being driven by a lot of the things that we have shared over the course of last year. And this year, you know, more Advanced Diagnostics testing more uh early. Um detection options and and uh screening options, our consumer business contributing to it as well. So we can continue to to expect that that test correct continues to be solid and has benefited.

Sam Samad: As we think about Q2 to Q4, we're looking at continued growth in terms of organic utilization. A continued impact, I would say, on revenues from Fresenius. We said it was about a $250 million impact for the year in terms of revenue growth impact from Corewell. That's, I think, what you should be thinking about in terms of the impact of Corewell. Fresenius would be an additional, roughly, let's call it between $80 and 100 million on top of that. Between those two, it's about a 3.3% increase to our revenue, that's embedded in the guide. We expect an impact on volume, I would say somewhat consistent with what you saw in Q1. Still expect very strong utilization as we go forward and expect strong revenue per requisition excluding the impact of those two businesses. Jim had a couple of comments.

Q1 refere significantly now. Uh, I think your other question was, how should we think about the balance of the year? Um, you know, as we think about Q2 to Q4, we're we're looking at, you know, continued growth in terms of organic utilization and continue to impact. I would say on revenues from for seniors. We said it was about a 250 million impact for the year, uh, in terms of Revenue, growth impact from corewell. So that's I think what you should be thinking about, in terms of the impact of of, uh, corewell and uh, for SAS would be an additional, uh, roughly. Let's call it between 80 and 100 million on top of that. So, between those 2, it's about a 3.3% increase to our, uh, Revenue. Um, you know, that's embedded in the guide and, um,

Uh, we expect, uh, an impact on volume. I would say somewhat consistent with what you saw in Q1, uh, but still expect very strong utilization as we go forward and expect strong revenue for acquisition, excluding the impact of those two businesses.

Jim Davis: Yeah. Hey, Mike. The mix impact has really benefited our business from an organic revenue standpoint. Specifically, our commitment to consumer health and wellness and these partnerships in the wellness industry have really helped us nicely. There's really two things there. It's both the absolute test per req, which has a big impact, mixes this up from a test per req standpoint, and then the advanced types of tests that are being ordered on these panels, from advanced cardiovascular tests to autoimmune testing to hormone testing. The last thing, and this comes mostly from our physician channel, both neurologists and primary care physicians, as I mentioned in the script, our Alzheimer's book of testing more than doubled year over year. We're really, really seeing nice lift from our Alzheimer's set of tests.

And Jim, Jim had a couple of comments. Yeah. Hey Mike. Um, the mix impact, um, has really, um, benefited our business from an organic revenue standpoint and specifically, our commitment to consumer health and wellness, and these partnerships, um, in the wellness industry have, have really, um, helped us nicely. There's really two things there. It's both the absolute test per req, which has—

A big impact, mixes us up from a test-perk standpoint, and then the advanced types of tasks that are being ordered on these panels, um, from advanced cardiovascular tests.

Jim Davis: All of those things together, Mike, is what's really driving this nice organic test mix.

More than doubled year-over-year, so we're really, really seeing nice lift from our Alzheimer's set of tests.

Sam Samad: Great. Operator, next question.

Operator 2: Thank you. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open. You may ask your question.

Operator: Thank you. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open. You may ask your question.

All of those things together, Mike, is what's really driving this nice organic test mix. Great operator. Next question.

Thank you. Our next question comes from Elizabeth Anderson, with evercore, isi. Your line is open. You may ask your question.

Elizabeth Anderson: Hi, guys. Thanks so much for the question. I guess on just a couple of things on a short-term basis, can you talk about sort of any embedded like weather and sort of flu expectations for the short term in the quarter? If we think about going forward for the rest of the year, can you talk about sort of any other expectations in terms of what's your takes on timing for the quarter? Thank you so much for your help, in particular regards to margins on that second part of the question. Thank you.

Hi guys, thanks so much for the question. Um, I guess just a couple of things. On the short-term basis, can you talk about, um, sort of any embedded, like, weather and sort of flu expectations, um, for the short term in the quarter? Um, and then if we think about, um,

Uh, going forward for the rest of the year, um, can you talk about sort of any other expectations in terms of, put your cheeks on timing for the quarter? Thank you so much for your help, in particular regards to margins on that second part of the question. Thank you.

Jim Davis: Yeah. Hey, Liz. On the weather, I'll take that first, and Sam can comment on the second part. If we look at it on a year-over-year basis, it was like a $9 million revenue impact, $7 million operating income. That's on a year-over-year basis. Now, we know in January it was a rough month. We had some weather in February. Honestly, what we did see in March is that the people who canceled appointments during those bad weather events, about 70% of them made appointments and came back to Quest. The follow-on from canceled appointments was really good. That only comes from us emailing out to patients, texting patients, and really trying to encourage patients to come back from missed visits.

Yeah. Hey, Liz, on the weather, I'll take that first and Sam can comment on the second part. Yeah, you know, if we look at it on a year-over-year basis, um, it was like a $9 million revenue impact, um, $7 million operating income. Um, so, um,

Sam Samad: Yeah. With regards to the weather, as Jim said, we had some impact in the quarter, some negative impact year over year, but a good recovery in the last month of the quarter. Now, I think the second part of your question, Elizabeth, was on the going forward, what should we expect. If you think about at least from a year-over-year compare, we are expecting in the H2 this year that we're going to have some negative weather, which we usually have. Usually in the summer, we'll have the hurricane season and some negative weather. That's embedded in our guidance expectation. If you compare it to last year, last year was actually a very mild weather season in the summer from, I think we virtually had very little to no hurricanes in the summer of last year.

But that's not on a year-over-year basis. So now, um, we know in January it was a rough month. We had some, um, weather in February, but honestly, what we did see in March is that, uh, the people who canceled appointments during those bad weather events—about 70% of them—made appointments and came back to Quest. So the follow-on from canceled appointments was really good, and that not only comes from us emailing out to the patients, texting patients, and really trying to encourage patients to come back for those visits.

Yeah. And um,

With regards to the weather as as uh, as Jim said, so we had some impact on the quarter, um, you know, some negative impact year-over-year, but a good recovery in the last month of the quarter now, I think the second part of your question Elizabeth was on the go forward. What should we expect? Um,

Sam Samad: There is some embedded expectation of some more negative weather in the next, let's call it in the summer, versus what we saw. In terms of the cadence over the next three quarters, I think you should expect that similar cadence to last year to some extent, with maybe more of a contribution in the H1 than what you saw last year than in the H2. I would call it just over 49% of our revenue and EPS in the H1, just over 50% in the H2. That's kind of a cadence to think about also is to give you more precision on how to think about revenue and EPS. Operator, next question.

You know, if you think about at least from a year-over-year compare, um, we are expecting in the second half of the year this year that we're going to have some negative weather, which we usually have. Usually in the summer, we'll have the hurricane season and some negative weather, so that's embedded in our guide expectation. And if you compare it to last year—last year, it was actually a very mild weather season in the summer. I think we virtually had no to, you know, very little to no hurricanes in the summer of last year. So there is some embedded expectation of some more negative weather in the, in the next—uh, let's call it, in the summer versus what we saw. And in terms of

Of, you know, the cadence over the next three quarters, I think you should expect that. Um,

Operator 2: Thank you. Our next question comes from Patrick Donnelly with Citi. Your line is open. You may ask your question.

Operator: Thank you. Our next question comes from Patrick Donnelly with Citi. Your line is open. You may ask your question.

Similar Cadence to last year to some extent with maybe more of a contribution in the first half than what you saw last year than in the second half. Uh so I would call it just over 49% of our revenue and EPS in the first half just over 50 in the second half so that that's kind of a Cadence to think about also to give you more Precision on how how to think about revenue and EPS. Operator next question,

Thank you. Our next question comes from Patrick Donley with Citi. Your line is open, you may ask your question.

Patrick Donnelly: Hey, thanks guys. Maybe similar, Sam, on some of the moving pieces on the cost. Can you just talk about the Project Nova piece, how the investments are progressing there? Wondering if potentially higher expenses tied to some of the macro conflicts caused you to move those investments around at all. I think it was $0.25 dilution. Is that still the right way to think about it? Again, where those investments are heading and when we see the fruit of those would be helpful. Thank you, guys.

Hey, thanks guys. Um, maybe similar Sam on, on some of the

Moving pieces on the COG. Can you just talk about the Project Nova piece, how the investments are progressing there? You know, wondering if potentially higher expenses tied to some of the macro conflicts caused you to move those investments around at all.

I think it was $0.25 dilution—is that still the right way to think about it? And again, where those investments are kind of heading, and when we see the fruit of those, would be helpful. Thank you, guys.

Sam Samad: Yeah, thanks, Patrick. Let me break down some of the impacts that you mentioned. Yeah, Nova expectations are still $0.25 for the year as we shared last quarter. In terms of the cadence of those expenses, slightly changed from my comments on the Q4 call. I think we're expecting now more of those expenses to happen in H2 than in H1. We had some expenses in Q1 that's going to ramp in Q2, and I'd say we're going to see probably more than 60% of those expenses be in H2. That's one portion in terms of just thinking about the cadence of the year. I think it goes back to also the question that Elizabeth asked. If you think about the macro, listen, we're impacted by obviously fuel costs.

Yeah, thanks Patrick. So let let me get break break down some of the um, the impacts that you mentioned. Um, yeah, Nova expectations are still 25 cents for the year as we shared last quarter. Um, you know, in terms of the Cadence of those expenses, slightly changed from my comments. Uh, on the 2, 4 4,

Year than in the first half of the year. Uh, you know, we had some expenses in q1 that's going to ramp in Q2 and uh I'd say we're going to see probably more than 60% of those expenses be in the second half of the year. Um, so you know, that's 1 portion in terms of just thinking about the Cadence of the year. Um I think goes back to also the the question that Elizabeth asked

Sam Samad: We have a fleet of transportation vehicles. We have a fleet of planes. We have some fuel expenses that we're going to be impacted by the higher fuel costs. That, I will size it for you at somewhere in the $7 to $10 million range, and it's embedded in our guidance. Our expectation is that fuel costs will continue to be elevated somewhere at the $4 per gallon and above, and that embedded in guidance is somewhere in the $7 to $10 million of fuel costs that, again, will impact the next three quarters. We've sized it, we've included it. It's not that significant, but it's still somewhere between $0.05 and $0.07 of EPS. Operator, next question.

For you at somewhere, in the 7, to 10 million dollar range and it's in our guidance. You know, our expectation, is that fuel costs will continue to be elevated somewhere at the $4, per gallon, and above. And, uh, that, uh, embedded in guidance is somewhere in the 7 to 10 million dollars of of fuel costs that again, will will impact the next 3 quarters. Um, so we, we've sized it, we've included it. It's not that significant, but it's still, you know, somewhere between 5 to 7 cents of eps.

Operator. Next question.

Operator 2: Thank you. Our next question comes from Ann Hynes with Mizuho Securities. Your line is open. You may ask your question.

Operator: Thank you. Our next question comes from Ann Hynes with Mizuho Securities. Your line is open. You may ask your question.

Thank you. Our next question comes from Ann Hinds with Zeo Securities. Your line is open. You may ask your question.

Ann Hynes: Good morning. Thank you for the question. Just on the organic volume front, was there anything that came in better or worse than your expectations? And maybe just on the ACA, I know the subsidies ran out in December. Did you see any meaningful impact, versus what's embedded in your guidance in Q1?

Um good morning, thank you for the question. Um just on the organic volume front. Was there anything that came in Better or Worse, new expectations, and maybe just on the ACA, I know the, um, subsidies ran out in December. Did you see any meaningful impact? Um, versus what the better your guidance and q1.

Jim Davis: We didn't, Ann, on the ACA subsidies. I think it's too early to tell. As we've said in the past as well, we can't tell 100% with every requisition, is it an ACA req or not? Not all the commercial plans code the reqs that way. But we think about 60% of our reqs, we know discrete are ACA, and so based on that, we're not seeing any impact to date. On the organic growth, it was strong across the board. Our hospital reference business up 3%. It was very strong. Our CoLab business, obviously with Corewell, was up significantly, double-digit growth. Our physician business, organically, was high single digits, as we indicated on the call. It's broad-based, and then obviously the contribution from all the consumer health in both our direct channel plus our partnerships, were strong double-digit growth in that area.

um,

we did in an on the ACA subsidies. Um, I think it's too early to tell, um, is we've said in the past as well, we can't tell, um, 100% with every requisition, is it an ACA record or not? Not all the commercial plans code directs that way. Um, but to the, we think about 60% of our racks, um, you know, we know discreet, our ACA. And So based on that, we're not seeing any impact.

Jim Davis: It was pretty broad-based and across all segments that we serve.

Sam Samad: Just one clarification, Ann, on the ACA, to add to Jim's comments. We have built in our guide still the expectation that we do see a 30 basis point impact to revenues as a result of ACA disenrollments or higher subsidies. The enrollments have been good in Q1. We just need to validate that actually the enrollments lead to utilization and some people don't drop off. We kept the assumption in our guide of 30 basis point impact. To Jim's comment, we haven't seen really that negative impact in Q1.

Today, you know, the on the organic, um, growth, um, it it was strong across the board. I mean, our our Hospital reference business. Um, you know, had you know, up 3%, it was very strong. Um, our collab business obviously with with corewell was up significantly double-digit growth. Um, our physician business, um, organically was high single digits as we indicated on the call. So it's broad-based and then obviously the contribution from all the consumer health and, um, both our direct Channel, plus our Partnerships, you know, were strong, strong double digit growth in in that area. So, it was pretty, um, broad-based and across all segments that we serve.

Operator 2: Operator, next question.

And just one point of clarity on ACA, to add to Jim's comments. We have built into our guide, still, the expectation that we do see a 30 basis point impact to revenues as a result of ACA disenrollment or higher subsidies. The enrollments have been good in Q1. We just need to validate that the enrollments actually lead to utilization and that some people don't drop off. So we kept the assumption in our guide of a 30 basis point impact. But to Jim's comment, we haven't really seen that negative impact in Q1.

Operator 2: Thank you. Our next question comes from Jack Meehan with Nephron. You may ask your question. Your line is open.

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

Operator. Next question.

Noah: Morning, guys. I wanted to ask you about PAMA. The survey kicks off in 10 days or so. How's your prep work in terms of participating in that? Then just your latest thoughts on how you think the Medicare rates for 2027 will shake out, that whole process. Thank you.

Jack Meehan: Morning, guys. I wanted to ask you about PAMA. The survey kicks off in 10 days or so. How's your prep work in terms of participating in that? Then just your latest thoughts on how you think the Medicare rates for 2027 will shake out, that whole process. Thank you.

Thank you. Next question comes from Jack, man, with Nefon Nefon. You may ask your question. Your line is open.

Morning guys.

I wanted to ask you about PAMMA. So, the survey kicks off in 10 days or so. Um, how's your prep work in terms of participating in that, and then just your latest thoughts on how you think the Medicare rates for 2027 will shake out, that whole process. Thank you.

Jim Davis: Yeah. Hey, Jack. We're ready. Obviously, we submitted last time. We're going to submit this time. That's the law, and we're going to abide by the law and submit the data after 1 May of this year. I think the period is open basically till the end of July. As you know, Medicare actually this year provided some guidance as to what labs need to submit. Anybody that makes more than $25,000 a year from a revenue standpoint from Medicare requisitions is supposed to submit. That would really say there's over 2,600 hospital labs that are going to need to submit. Now, whether that happens or not, we can't tell. We'll have to wait and see.

Yeah, hey Jack. Um, so we're—we're ready, obviously. Um, we submitted last time, we're going to submit this time—that's the law. And, uh, we're going to abide by the law and submit the data. Um, after May 1st of this year, I think, um, the—

Period is open till uh, basically till the end of July. Um, as you know, Medicare actually this year provided some guidance as to what labs need to submit. So anybody that um, makes more than 25,000 dollars a year from a revenue standpoint from Medicare requisitions is supposed to submit

Jim Davis: CMS also came out again and said, If you don't submit, there's potential fines of upwards of $10,000 per day to those that don't submit data. Now, they didn't collect those fines last time, so again, it remains to be seen. At the same time, we're going to drive the RESULTS Act as fast and furious as we can. There's a few things that still have to be completed in order for the bill to get through this year. Number one, there has to be a tech assessment done. CMS does that. That is underway. Second is the CBO scoring. We think that process is underway as well. There's over 80 co-sponsors for the bill. There was a hearing already this year in the health subcommittee of Energy and Commerce. It was a good hearing, very positive.

Um, that would, um, that would really say there's over 2,600 hospital labs that are going to need to submit. Now, whether that happens or not, we can't tell. Uh, we'll, we'll have to wait and see. Um, CMS also came out again and said, um, if you don't submit, there's potential fines of upwards of dollars per day, uh, to those that don't submit data now.

They didn't collect those fines last time. So again, it remains to be seen

Um, at the same time, um, you know, we're going to drive the results Act.

Um, there are a few things that still have to be, uh, completed in order for the bill to get through this year. Number one, there has to be a tech assessment done—CMS does that, um, that is underway. And then second is the CBO scoring.

Jim Davis: We're hopeful, but we're also mindful of the fact that there's summer vacations coming up and then obviously elections. There's a lot to get done before the end of this year, especially with those two things coming up. Now, in terms of rates for 2027, I think it's too early to speculate. If RESULTS Act gets done, it would keep rates as is for 2027. If the RESULTS Act does not get done and we rely on this data collection process, if everybody submits, Jack, we're hopeful that the data will come out and show that our rates should actually go up. If you think about it this way, the last time there was a data submission, there were probably two companies that submitted over 80% of the data.

Already this year in the health, uh subcommittee uh of of Energy and Commerce. Um, it was a good hearing very positive.

So we're hopeful, but we're also mindful of the fact that, um, you know, there's summer vacations coming up and then obviously elections. And so, um, you know, there's a lot to get done before the end of this year, especially with those two things coming up. Now, in terms of, um, you know, rates for 2027, I think it's too early to speculate. If the RESULTS Act gets done, it would keep rates, um, as is for 2027. If the RESULTS Act does not get done and we rely on this data collection process,

Jim Davis: The two companies, probably, and we're one of them, and our nearest competitor is the second one, we probably have, at best, 17% to 20% share of the Medicare market, right? We're disproportionately lower in that portion of our business than in other segments because it's any willing provider. When only two providers submit, basically two providers submit 80% of the data, and you have less than 20% of the market, it's obviously going to lead to a very skewed data set. We're hopeful that the other 80% submit. We know that that other 80% is paid 2 to 3x Medicare rates by most health plans. You put all that together, Jack, and it should indicate a price increase.

If everybody submits, Jack, we're hopeful that the data will come out and show that our rates should actually go up. If you think about it this way, the last time there was a data submission, there were probably two companies that submitted over 80% of the data. And so the two companies were probably— we're one of them—us and our nearest competitor. The second one, we probably have, you know, at best,

Um, you know, 17 to 20% share of the Medicare market, right? We were disproportionately lower and that portion of our business than in other segments, because, um, it's any willing provider. So, when only 2 providers, submit basically 2 providers submit 80% of the data and you have less than 20% of the year the uh 20% of the market.

Sam Samad: Operator, next question.

It's obviously going to lead to a very skewed data set. So we're hopeful that the other 80% submit. We know that that other 80% is paid 2 to 3x Medicare rates by most health plans, and you put all that together, Jack, and it should indicate a price increase.

Operator 2: Thank you. Our next question comes from Luke Sergott with Barclays. Your line is open. You may ask your question.

Operator: Thank you. Our next question comes from Luke Sergott with Barclays. Your line is open. You may ask your question.

Operator. Next question.

Thank you. Our next question, comes from Luke Essay with Barclays. Your line is open. You may ask your question.

Anna Krasny: Hey, guys, this is Anna Krasny on for Luke. Thank you for taking our questions. We were hoping to hear more about the consumer business and how that momentum has been building with your recent partnerships. We saw that Function Health acquired a mobile lab testing company during the quarter. Just any color on how you're thinking about that potentially impacting volumes to Quest. Thank you.

Anna Krasinski: Hey, guys, this is Anna Krasny on for Luke. Thank you for taking our questions. We were hoping to hear more about the consumer business and how that momentum has been building with your recent partnerships. We saw that Function Health acquired a mobile lab testing company during the quarter. Just any color on how you're thinking about that potentially impacting volumes to Quest. Thank you.

Hi, this is Anna Kazenski on for Luke. Thank you for taking our questions. We were hoping to hear more about the consumer business and how that momentum has been building with recent partnerships. We also saw that Functional Health acquired a mobile lab testing company during the quarter, so just any color on how you're thinking about that potentially impacting buying Sequest. Thank you.

Jim Davis: Yeah. Our consumer business, again, we think of it in two segments. Our own questhealth.com, our direct-to-consumer business, that grew very nicely in the quarter. Let's just call it somewhere in the high 20s. All of our partnerships. We have value-added resellers that we provide lab testing to. These include two of the wearable companies that we've talked about in the past. I would just say that the growth in that combined non-Quest direct is even stronger than our own direct channel in the quarter. Yes, Function Health did acquire Getlabs. We think that's a real positive for Function Health.

Yeah, so our consumer business. Um again we we think of it in 2 sections, our own Quest, health.com our direct to Consumer business. Um that grew very nicely in the quarter, um, you know somewhere, let's just call it somewhere between in in the high 20s. Um, and then all of our Partnerships, um, we have value added resellers that, um, we provide lab testing too. These include 2 of the wearable companies, um, that we've talked about in the past. And I would just say that the growth in, uh, that combined, uh, non-question our own direct channel in the quarter.

Jim Davis: There's many parts of the country where even though we have 2,000 patient service centers to conduct blood draws and urine collections, there's parts of the country where we simply don't have some of the coverage, and that includes areas in the upper Midwest, the Great Plains. We also know that there's a segment of customers that would prefer a home draw. Function having this capability now, Getlabs will acquire the specimens, bring them to our Quest PSC, or have them transported directly to our lab, and we'll continue to do that lab testing. We think it's a positive.

Um, yes, Function Health, um, did acquire Get Labs. We think that's a real positive, um, um, positive, uh, for Function Health. Um, there's many parts of the country where, even though we have 2,000 patient service centers to conduct blood draws and urine collections, there's parts of the country where we simply don't have some of the coverage. And that includes, uh, areas in the Upper Midwest, the Great Plains.

Sam Samad: The one addition I'd make to Jim's comments is, the growth that we're seeing from some of the collaborations that we have, the wellness companies that we're partnering with, is broad-based. We're seeing a lot of growth from different players and a broad ecosystem that we're very encouraged about. Operator, next question.

Um, we also know that there's a segment of customers that would prefer a home draw, and so, um, function having, uh, this capability now, um, Get Labs will acquire the specimens, bring them to our Quest PSC, uh, PSC, um, or, um, have them transported directly to our lab. And we'll continue to do that lab testing. So we think it's a positive.

And then, in addition, the growth that we're seeing from some of the collaborations that we have—the wellness companies that we're partnering with—is broad-based. We're seeing a lot of growth from different players and a broad ecosystem that we're very encouraged about.

Operator 2: Thank you. Our next question comes from Eric Coldwell with Baird. Your line is open. You may ask your question.

Operator: Thank you. Our next question comes from Eric Coldwell with Baird. Your line is open. You may ask your question.

operator. Next question.

Eric Coldwell: Thanks very much. A couple of weeks ago, we had this odd day in the market where labs were getting hit on a Friday afternoon, I think it was, and apparently there were rumblings or rumors going around about some impact from the CMS CRUSH RFI. I don't think that's a big deal, but I'd love you to put that in perspective and maybe talk through what you see happening in the government in terms of various fraud, waste, and abuse initiatives, and then your exposure to any tests that are in question, and what potential impacts, positive or negative, may come out of this in the future. Thanks very much.

Thank you. Our next question comes from Eric Caldwell with Beard. Your line is open. You may ask your question.

Uh thanks very much a couple of weeks ago. Uh we had this odd day in the market where Labs were getting hidden on a Friday afternoon. I think it was and uh apparently there were Rumblings or rumors going around about some impact from the CMS Crush RFI.

Uh, I don't think that's a big deal, but I'd love you to put that in perspective, and maybe talk through what you see happening in the government in terms of—

Jim Davis: Yeah. Thanks, Eric. We're glad you don't think it has an impact because we don't think it does either. Just for those who may not have heard of CRUSH, it stands for Comprehensive Regulations to Uncover Suspicious Healthcare. First of all, I want to say we applaud the government's efforts to crack down on any fraud, waste, or abuse. Certainly applaud those efforts. The second thing I'd say is, if you look at the tests. First of all, it came out of an OIG report, right? There was an OIG report that looked at 2024 Medicare lab spending, and the report noted that lab spending was up 5%. As you know, Medicare enrollees are probably flat to down. Why would it be going up 5% if pricing stayed flat across the industry?

Yeah. Um, thanks Eric. Um, and we're glad you don't think it has a, uh, an impact because we don't think it does either. But just for those, um, who may not have heard of Crush, um, it stands for, uh, comprehensive regulations to uncover suspicious Healthcare. And um, first of all, I want to say, you know, we we applaud the government's efforts to crack down on a on any fraud, waste or abuse. Um, so um, certainly applaud those efforts. Um, the second thing I'd say is, um, you know, um,

Jim Davis: What the report noted is that there were 10 tests that drove the majority of the increase, okay? Now, seven of those 10 tests were PLA codes, meaning they're very proprietary tests to individual laboratories, okay? We had nothing in those categories, okay? The other three categories were genetic or molecular-based tests. When we look at our billing or our revenue from those tests, it was de minimis. It really, really wasn't a factor at all. We don't put Quest in the bucket of driving that 5% increase in Medicare spend. Now, the last thing I'd say about the report is that we all ought to be concerned about this. If you look at that report, it did show that routine and wellness tests that are critical to preventative health and wellness, critical to making the country healthy again, those test categories were actually down.

If you look at the test first of all, it came out of an oig report. Right? There was an oig report that looked at 2024 Medicare lab spending and the report noted that lab spending was up 5%. Um and as you know Medicare um enrollees are probably flat to down. So why would it be going up 5% if pricing stayed flat across the industry and what the report noted is that there were 10 tests that drove the majority of the increase, okay? Now, 7 of those 10 tests were pla codes. Meaning they're very proprietary tests to, uh, individual Laboratories, okay? We had nothing in those categories, okay? The other 3, um, categories, um, were genetic or molecular based tests. Uh, and when we look at, um, our billing or our revenue from those tests, it was

The Minimus. Okay, so it really, really wasn't a factor at all, so, um, we don't put Quest in the bucket of driving, um, that 5% increase in Medicare spend. Now, the last thing I'd say about the report, um, and we all, we all ought to be concerned about this.

Jim Davis: What I'm talking about is basic CBC panels, CMP panels. Those panels and information that really illuminate chronic care conditions, progress towards those conditions, or people that aren't making progress. Those are absolutely the kinds of tests that we want to see growing across the Medicare population, in order to make sure that people's chronic conditions aren't worsening and become a bigger cost and health burden to the country. In summary, Eric, we don't think it's an issue, and thank you for asking the question. Great. Operator, next question.

Um, you know, if if you look at that report, it did show that um, routine and wellness tests that are critical to preventive health and wellness critical to making the country. Healthy again, those test categories were actually down and what I'm talking about is basic, CDC, panel, CMP, panels, those, those panels and information that really illuminate, you know, chronic care conditions, progress towards those conditions, or people that aren't making Pro progress.

Sam Samad: Great. Operator, next question.

Operator 2: Thank you. Our next question comes from Erin Wright with Morgan Stanley. Your line is open. You may ask your question.

Operator: Thank you. Our next question comes from Erin Wright with Morgan Stanley. Your line is open. You may ask your question.

And those are the absolutely the kinds of tests that we want to see growing across the Medicare population. Uh, in order to make sure that people's chronic conditions aren't worsening and become a bigger cost in health, burden to the country. Um, so in summary, Eric, um, we don't think it's an issue, um, and thank you for asking the question. Great operator, next question.

Right with Morgan Stanley. Your line is.

Erin Wright: Great. Thanks. On consumer, I have a follow-up. I understand there's a broad range of types of partnerships that you're engaged in, and the economics may vary, but can you speak to the overall margin profile outside of the QuestDirect business? How should we think about the pipeline of future partnerships? Are you talking with several different types of platforms from a wellness or wearable standpoint? A follow-up, just a broader question. You gave some interesting stats on AI and automation and just, how do we think about your targets or your goals on that front from an efficiency gain standpoint, and what you can leverage from an AI use case? Thanks.

Is open. You may ask your question.

Great. Thanks on on consumer, I have a follow-up. Um, you know, I understand there's a broad range of types of Partnerships that you're engaged in and the economics may vary, but can you speak to the overall margin profile outside of the the, the quest Direct business? Um, and how should we think about the pipeline of future Partnerships? Like, do you have um, are you talking with several different types of platforms or Wellness or wearable standpoint and then a follow-up just a broader question. You gave some interesting stats on AI and Automation and just you know how do we think about your targets or your goals on that front from an efficiency gain standpoint um and what you can leverage from an AI use case, thanks,

Jim Davis: Yeah. Hi, good morning, Erin. This is Sam. I'll take the first question around the margin profile, and then I'll hand it over to Jim, who'll talk about the pipeline and AI. I'll keep it simple. The margin on these deals, both in terms of the deals and collaborations that we have, whether they're wearables collaborations, whether they're wellness companies, but also the margin profile on the questhealth.com business is on par, if not slightly better than our overall enterprise average. These are tests that are out-of-pocket, at least on questhealth.com, and then it's a client bill business with the wellness companies that we engage with. It's all cash pay, so there's no denials, there's no patient concessions. It's clean business in terms of just at least the complexity, or the lack thereof. It provides a really good margin profile for us. Yeah.

Sam Samad: Yeah. Hi, good morning, Erin. This is Sam. I'll take the first question around the margin profile, and then I'll hand it over to Jim, who'll talk about the pipeline and AI. I'll keep it simple. The margin on these deals, both in terms of the deals and collaborations that we have, whether they're wearables collaborations, whether they're wellness companies, but also the margin profile on the questhealth.com business is on par, if not slightly better than our overall enterprise average. These are tests that are out-of-pocket, at least on questhealth.com, and then it's a client bill business with the wellness companies that we engage with. It's all cash pay, so there's no denials, there's no patient concessions. It's clean business in terms of just at least the complexity, or the lack thereof. It provides a really good margin profile for us.

Yeah, hi, good morning, Aaron. So, this is Sam, I'll take the first question around the margin profile and then, um, I'll hand it over to Jim. We'll talk about the pipeline and and AI, uh, you know, I'll keep it simple. I mean, the margin on these deals both in terms of the, the, the deals, uh, and collaborations that we have whether they're wearables collaborations, whether they're Wellness companies, but also the margin profile on the quest help.com business is on par if not slightly better than our overall Enterprise average. Um, you know, these are, uh, tests that, um, are out of pocket, um, at least on Quest help.com. And then it's a client bill business with the wellness companies that we engage with, uh, it's all, um, cash.

Jim Davis: Yeah. Erin, yes, we continue to pursue other partnerships. It's part of our goal. As we've said before, we're trying to empower people to own their own health. We want people to be the CEO of their own healthcare. If we find other partnerships out there that meet our brand criteria, that are in line with the mission of our company, then we'll certainly support it. There's others out there that we continue to talk to. We're encouraged by the growth, in both our direct channel, as well as the growth that we're getting through these partnerships. In terms of AI and automation, certainly, we continue. I would say 60% to 70% of our efforts are in the four walls of our laboratory, because that's where still opportunity exists.

Pay. So there is no, uh, denials, uh, there's no patient concessions, so it's clean business in terms of, you know, just at least the complexity uh or the lack thereof. And uh you know, it provides a really good uh margin profile for us.

Jim Davis: Erin, yes, we continue to pursue other partnerships. It's part of our goal. As we've said before, we're trying to empower people to own their own health. We want people to be the CEO of their own healthcare. If we find other partnerships out there that meet our brand criteria, that are in line with the mission of our company, then we'll certainly support it. There's others out there that we continue to talk to. We're encouraged by the growth, in both our direct channel, as well as the growth that we're getting through these partnerships. In terms of AI and automation, certainly, we continue. I would say 60% to 70% of our efforts are in the four walls of our laboratory, because that's where still opportunity exists.

Yeah, so Aaron, um, yes, we continue to pursue, um, other partnerships. Um, it's part of our goal. Um,

There are others out there that we continue to talk to. So, we're encouraged by the growth in both our direct channel, as well as the growth that we're getting through these partnerships.

In terms of AI and automation.

Jim Davis: Anytime we see somebody looking through a microscope, we ask the question: is what you're looking at, can we digitize that image? If you can digitize an image, you can apply algorithms to that image. If you can apply algorithms to that image, it can assist whoever is reading that image, and make a higher quality diagnosis as well as improve the productivity. There are still plenty of areas in our laboratory where we have laboratory technicians or MDs looking at data or looking at slides or looking at pathology, and we know there's ways to automate that. We've made tremendous progress in cytology. We've made great progress in microbiology, hematology, and there's still other areas for us to go. Outside of the laboratory, as I mentioned in the script, we've deployed some tools in our call centers. Our call centers are a big part of our operations.

Um, certainly, um, we continue—I would say 60 to 70% of our efforts are in the four.

Jim Davis: Anything we can do to improve the productivity of the call centers as well as emails and text messages that come into the company, we're certainly going to drive that. The last thing I mentioned is we did put that Quest AI assistant out on our MyQuest application. This empowers people to now ask questions about the lab results that we've just provided to you. We were pleasantly surprised by the use of that AI tool, for people trying to decipher what all of these 40, 50, 60 analytes could possibly mean. We think it's a great way to educate patients so that patients can have more proactive discussions with their clinicians, and we think it's a win-win for the industry. Great. Operator, next question.

Laboratories I mentioned in the script—um, we've deployed some tools in our call centers. Our call centers are a big part of our operations, so anything we can do to improve the productivity of the call centers, as well as emails and text messages that come into the company, we're certainly going to drive that. The last thing I mentioned is we did put that Quest AI assistant out.

Sam Samad: Great. Operator, next question.

Out on our MyQuest application, this empowers people to now ask questions about the lab results that we've just provided to you. And we were pleasantly surprised by the use of that AI tool for people trying to decipher what all of these 40, 50, 60 analytes could possibly mean. We think it's a great way to educate patients, so that patients can have more proactive discussions with their clinicians, and we think it's a win-win for the industry.

Operator 2: Thank you. This question comes from Kevin Caliendo with UBS. Your line is open. You may ask your question.

Operator: Thank you. This question comes from Kevin Caliendo with UBS. Your line is open. You may ask your question.

Great operator. Next question.

Thank you. And this question comes from Kevin Kelly ambo with UBS

Your line is open. You may ask your question.

Kevin Caliendo: Thanks, and thanks for taking my question. Sam, if I'm taking your comments correctly, it sounds like the north of 49% comment for H1 is pretty consistent with what you said before, but then you also commented that you're pushing maybe more of the Project Nova expenses to H2. There's some higher fuel costs that are going to be impacting H2. Within your guidance, what's the offset that makes H2 a little bit better? Just one quick follow-up to Eric's question on CRUSH. Part of the proposal talked about prior authorizations and looking at that.

Thanks, and thanks for taking my question.

Um, Sam. If I'm taking your comments correctly, it sounds like the 'north of 49%' comment for, uh, for the first half of the year is pretty consistent with what you said before. But then you also commented that you're pushing maybe more of the, uh, Project Nova expenses to the second half. There's some higher fuel costs that are going to be impacting the second half of the year.

So within your guidance, what's the offset? That makes the second half a little bit better and then just 1 quick, follow-up.

Kevin Caliendo: Can you discuss that aspect of it, which isn't necessarily just on the molecular test, but I don't know if they're talking more broadly about how prior authorizations might be handled, and if there's anything we should think about with regards to that part of the proposal. Thanks, guys.

To Eric's question on Crush part of part of, uh, the proposal talked about prior authorizations and looking at that. And can can you discuss that aspect of it? Which isn't necessarily just on the molecular test. But I don't know if they're they're talking more broadly about how prior authorizations might be handled and if there's anything we should think about with regards to that part of The Proposal. Thanks guys.

Sam Samad: Yeah. Thanks, Kevin. Let me start with the second half, first half comment. I would say some of the fuel costs that I mentioned, they basically start now, right? It's not like just the second half that you have to phase those across. Again, I don't want to make too much of them because it's $7 to $10 million of additional fuel costs. It's not that significant, but I was just giving it for completeness and to give a full view as to EPS. They do start now and they impact Q2 and they impact H2. Nova steps up in Q2. Obviously H1, because Q1 was lower in terms of Nova spend, H2 is going to be over 60% of the Nova expenses. It does step up in Q2.

Yeah, thanks, Kevin. So, um, let me start with the, uh, second half, first half comment. Um,

Sam Samad: In terms of why we see the contribution being over 50% in H2, I think it's really primarily the margin profile across, again, those two partnerships, those two important partnerships that we have, Corewell and Fresenius. That margin profile improves in H2, notably for Fresenius, as that business ramps. I've said before that that business a year in starts to approach the average enterprise margin. It's just the ramp up. There's some ramp-up costs that initially impact us. I think you start to see some improvement in the margin profile of those businesses. Then just the normal seasonality of the business with the strength of utilization. That's really what I'd point to.

You know, I would say some of the fuel costs that I mentioned, I mean they they basically start now, right? So, it's not like, just the second half that you have to phase those across. Um, and and again, you know, I don't want to make too much of them because it's 7 to 10 million of additional fuel costs. It's not that significant but I was just giving it to for completeness and to give a full view as to EPS. But they do start now and, you know, they're they impact you too and they impact the second half Nova, uh, you know, steps up in the second quarter. Uh but obviously the first half because it's uh you know because q1 was lower in terms of Nova. Spend the second half is going to be over 60% of the Nova expenses, but it does step up in the second quarter. You know in terms of why we see the contribution being over 50% in the second half. I mean I think it's really um primarily the margin profile across. You know again those 2 Partnerships, those 2, important Partnerships that we have corewell

Jim Davis: Yeah. Then Kevin, in terms of your questions on CRUSH, again, I'll remind you that there were 10 tests that contributed to the vast majority of the growth in the spend. 7 of those 10 tests we have no participation in, and 3 of those 10 tests, it's de minimis. Really, Quest was not a driver of those increased costs. In terms of prior authorization, CMS did put out a request for information, a response. They asked people to comment on the CRUSH initiative. Our trade association did that. I can tell you that prior authorization is not something we would ask for. But rather, I think what's appropriate is CMS ought to require some type of certificate of accreditation for the labs that are performing these higher complexity tests.

And for Senyas, that margin profile improves in the second half, notably for Fenius as that business ramps. I've said before that that business, a year in, starts to approach the average Enterprise margin—it's just the ramp up, there's some ramp up cost that, you know, initially impacts us. So I think you start to see some improvement in the margin profile of those businesses, and then just the normal seasonality of the business with the strength of utilization. So that's really what I point to.

And 3 of those 10 tasks—um, it's the Minimus—um, so, um, it really, Quest was not a driver of those increased costs.

Jim Davis: That's a way to ensure that those labs that are producing these tests, and some of these tests are absolutely necessary in healthcare today, that you know they're being done by certified labs with good quality and a commitment to science, technology, and excellence.

Um, in terms of pre-authorization um, you know, um, CMS. Um, did put out a, a request for information, a response, they asked um, people to comment on, on the crush initiative, um, our trade Association, did that. I can tell you that pre-authorization is not something. Uh, we would, uh, we would ask for, um, but rather, you know, I think what's appropriate is, you know, CMS ought to require, you know, some type of certificate of a credit accreditation, for the labs that are performing these higher complexity tests

Sam Samad: Great. Operator, next question.

Um, that's a way to ensure that, uh, those labs, um, that are producing these tests—and some of these tests are absolutely necessary in healthcare today—that, you know, they're being done by certified labs with good quality and, uh, and a commitment to science, technology, and excellence.

Operator 2: Thank you. Our next question comes from Andrew Brackmann with William Blair. Your line is open. You may ask your question.

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

Great operator. Next question.

Next question comes from Andrew Bradman with William Blair. Your line is open; you may proceed.

Andrew Brackmann: Hi, guys. Thanks for taking the questions, and good morning. Jim, I want to ask on the advanced diagnostic strength and all the color that you gave on that business. Can you maybe just sort of talk about any specific investments that are going to those areas in 2026 or in 2027? Just sort of anything to call out with respect to maybe specific clinical trials in some of those areas or your sales team increases. I really just sort of want to get a sense of the opportunities that might exist there to maybe further accelerate that growth. Thanks.

A question.

Hi guys. Thanks for taking the question. Uh, and good morning. Um, Jim. I, I want to ask you on the Advanced Diagnostic strength, uh, and and all the color that you gave on that business, can you maybe just just sort of talk about any specific Investments that are going to those areas in 20?

6 or in 2027 just sort of anything to call out with respect to maybe.

Spec specific clinical trials and some of those areas or sales team increases. I really just sort of want to get a sense of the opportunities, that that might exist there. So maybe further accelerate that growth

Jim Davis: Yeah. Thanks, Andrew. Yes, again, some of these advanced diagnostics tests were certainly a strong contributor to the mix that we saw in the quarter and the organic rep per REC increase of 2.5% that Sam cited. The biggest area, again, is brain health. As I indicated, the business more than doubled from Q1 of last year to Q1 of this year. We are committed to the space. There are other biomarkers that we are investing in and doing research on in addition to the Aβ42/40, in addition to the ApoE NfL. Then commercially, we procure the p-tau 181 and p-tau 217 assays. There's other biomarkers we're working on. We're in constant discussions with the therapy makers, who are collaborating with us on looking at different biomarkers that help identify the disease at the earliest possible point.

Jim Davis: We continue to invest in advanced cardiometabolic testing in various biomarkers, one specifically in the HDL arena, that goes beyond just the basic HDL test. Then obviously I'd be remiss if I didn't talk about Haystack. We continue to invest in the space. We've made progress quarter over quarter. As we discussed in the script, we have a great partnership now with City of Hope, which is a leading cancer detection and treatment center on the West Coast. There's all types of clinical partnerships that we have there. We've discussed a few in the past, Rutgers and MGH. We continue to invest in that area and continue to make progress.

Yeah, thanks Andrew. Um Yes again um some of these Advanced Diagnostics tests, were certainly a strong contributor to um the mix that we saw in the, in the quarter, in the organic, uh, rep proact, increase of of 2 and a half percent that, um, that's Sam sighted. But the biggest area again is brain health. Um, as I indicated the business more than doubled from q1 of last year to q1 of this year, um, we are committed, uh, to the space. Um, there are other biomarkers, um, that we are, um, you know, investing in and doing research on. In addition to the ab 4240 in addition to the apoe NFL, um, and then commercially, we procure the uh, you know, ptow 181 and 2, 217 assays. But there's other biomarkers, we're working on. We're in constant discussions with the therapy makers, um, who are collaborating with us on looking at different biomarkers that help, um, identify the disease that the earliest possible point we continue.

Continue to invest in advanced cardio, metabolic, um, testing in various biomarkers, um, specifically in the HDL arena. Um, that goes beyond just the basic HDL test.

Sam Samad: Yeah, Andrew, maybe to add to Jim's comments, a healthy portion of our $550 million capital investment goes towards our esoteric labs to drive capacity upgrades, given the growth that we're seeing in that business, in that advanced diagnostics business. I'd be remiss if I didn't mention that as well, because in addition to the investments that Jim talked about, which are more on the business side, that we do have a significant portion of capital investments going towards those tests as well.

And then obviously, I'd be remiss if I didn't talk about Haystack, we continue um, to invest in the space, we've made progress quarter over quarter. Um, as we discussed in the script, um, we have a, a great partnership now with City of Hope, which is a leading cancer, um, treatment uh, detection and treatment center on, on the west coast. Um, and there's all Sites all types of clinical Partnerships that we have there. We've discussed a few in the past Ruckers and MGH. Um, so we continue to invest in that area and continue to make progress. Yeah, and Andrew, uh, maybe to add to Jim's comments.

Jim Davis: Great. Operator, next question.

Sam Samad: Great. Operator, next question.

Operator 2: Thank you. Our next question comes from Tycho Peterson with Jefferies. Your line is open. You may ask your question.

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

A healthy portion of our $550 million capital investment goes towards our esoteric labs to drive capacity upgrades, given the growth that we're seeing in that business and that Advanced Diagnostics business. So I don't want to—I’d be remiss if I didn’t mention that as well, because in addition to the investments that Jim talked about, which are more on the business side, we do have a significant portion of capital investments going towards those tests as well. Great. Operator, next question.

Noah: Hi, team, this is Noah on for Tycho. I wanted to ask a few on oncology. I believe the partnership with Guardant for Shield went live about a month ago, if you could speak to early adoption there. Just on Haystack, what should we be expecting in terms of the phasing of EPS contribution throughout the year and kind of getting to breakeven? Thanks.

Noah Kava: Hi, team, this is Noah on for Tycho. I wanted to ask a few on oncology. I believe the partnership with Guardant for Shield went live about a month ago, if you could speak to early adoption there. Just on Haystack, what should we be expecting in terms of the phasing of EPS contribution throughout the year and kind of getting to breakeven? Thanks.

Thank you. And this question comes from Tau Peterson with Jeffrey. Your line is open. May I ask your question?

Hi team, this is Noah on for Taiko. I wanted to ask a few on oncology. I believe the partnership with Guardant for Shield went live about a month ago. If you could speak to early adoption there, and then just on Haystack, what should we be expecting in terms of the phasing of EPS contribution throughout the year and kind of getting to break even? Thanks.

Jim Davis: Yeah. Thanks, Noah. Yes, we announced a partnership to distribute our blood collections for the Guardant colon cancer CRC test. It started in the quarter. We are listing the test on our test menu so that Quest physicians can order that test. Patients, regardless if it came from a Quest physician or another physician, can bring that requisition to a Quest PSC, and we'll draw the blood and send the specimen on to Guardant's lab. I would say it's early. We just got going in the middle part of the quarter, so I can't make a comment yet on the volumes. It's certainly starting to take hold. On the Haystack margin profile, Sam, I'll ask you to comment on that.

And patients can bring that requisition to a quest PSC and um and we'll draw the blood and send the specimen on to Gardens lab. Um, I would say um, it's early, you know, we just got going in the middle part of the quarter. Um so um I can't make a comment yet on the volumes um but um but it's starting to uh to take hold

Sam Samad: Yeah, thanks, Noah. So Haystack, listen, we're making some really good progress on the test with regards to the order experience, the commercial, both ramp in terms of resources and the uptake in terms of tests ordered. I think oncologists are starting to recognize just the impressive profile of the test with its low limits of detection. Making good progress on the reimbursement front. We have submitted to MolDX the technical assessment to get Medicare Advantage reimbursement. We have PLA codes now that are basically priced at $3,900 baseline and an $800 monitoring reimbursed price. We're making really good progress. It's early days to talk about EPS ramp in terms of the dilution or the improvement over the course of the year. We'll provide updates as we go.

Sam Samad: Again, it's a test, and we have many tests in our portfolio, both in terms of AD, advanced diagnostics and routine tests. I don't want to be overly focused on just one test, but obviously, it's an important business for us, and we're making good progress on it.

Um on the H, stack margin profile Sam, I'll ask you to comment on that. Yeah, thanks Noah. So, hey stack listen, we're making some really good progress on the test. With regards, to the order experience, the commercial both ramp in terms of resources and the update. In terms of tests ordered, I think oncologists are, are starting to recognize just the the impressive profile of the test with its low limits of detection. Uh, making good progress on the reimbursement front. We have submitted to mold DX, the technical assessment to get Medicare Advantage reimbursement. We have pla codes now that are basically priced, 3,900 Baseline and an 800 monitoring uh reimburse price. So we're making really good progress. Its early days to talk about EPS uh ramp in terms of the dilution or the ramp improvement. Over the course of the year we'll provide updates as we go. Uh again it's a test and we have many tests in our portfolio both in terms of ad uh Advanced Diagnostics and

Jim Davis: Operator, next question.

Sam Samad: Operator, next question.

Routine tests. So, uh, I don't want to be overly focused on just one test, but we, we obviously—it's an important business for us, and we're making good progress on it.

Operator 2: Thank you. Our next question comes from Lisa Gill with JP Morgan. Your line is open. You may ask your question.

Operator: Thank you. Our next question comes from Lisa Gill with JP Morgan. Your line is open. You may ask your question.

Operator. Next question.

Lisa Gill: Thanks very much, and good morning. I just was wondering the current M&A environment. I appreciate that there's nothing in your guidance for 2026, but are you seeing anything different? Are you seeing any incremental opportunities in the market? I heard your comments earlier around hospitals and their need to submit their rates. Is that changing any of their views around the potential for reimbursement cuts for Medicare going forward? Just anything on an update on the M&A side would be helpful. Thank you.

Thank you. Our, next question comes from Lisa Gil with JP Morgan. Your line is open. You may ask your question. Uh, thanks very much and good morning. Um, I, I just was wondering the current m&a environment. I appreciate that. There's nothing in your guidance, uh, for 26. But um, are you seeing anything different? Are you seeing any incremental opportunities, in the market? I heard your comments earlier around hospitals and their need to, to submit their rates. Um, you know, is that changing any of their views around the potential for reimbursement cuts, um, for, for Medicare going forward. So, just anything on on an update on the m&a, side would be helpful. Thank you.

Jim Davis: Yeah. Thanks, Lisa. The M&A funnel is good. We have a mix of various health system outreach types of deals that are there. There's not a ton of remaining independent labs across the country, but there's still some out there, and we still take a look, and sometimes they proactively come to us. I don't think that the Medicare reimbursement changes are affecting a hospital's view of their outreach business. You got to remember, in general, Medicare is our best payer here at Quest Diagnostics, and in general, it's the worst payer for a health system. If the worst payer goes down a little bit in pricing, I don't think that affects their viewpoint on outreach. What I do think affects their viewpoint on outreach is the commercial view of the lab market and the lab industry.

Yeah, thanks, Lisa. Um, the M&A tunnel is good. Um, we have a mix of, um, various health system outreach types of deals, um, that are there, um, and, um, there's not a ton of, you know, remaining independent labs, um, across the country, but there's still some out there and we still, um, you know, take a look and sometimes they, uh, proactively come to us.

Jim Davis: I think you got a lot of really smart health plans that are starting to wake up and say, "Hey, why am I paying these health system labs 2 to 300% of what we pay 2 of the leading independents across the country?" Furthermore, that 2 to 300% price premium that they get affects patients, copays, and deductibles. It affects employers who are paying for this healthcare. There's nothing easier to get a quick hit, a quick win from an employer standpoint, from a patient standpoint, than to normalize these rates. We strongly advocate that health plans ought to pay all labs the same amount of money for outreach work.

Jim Davis: It doesn't do anyone any good to penalize patients and penalize employers who are paying for the majority of the healthcare costs in this country to reimburse some labs 2% to 300% of what the two leading independents are getting paid. Operator, next question.

Our viewpoint on Outreach, what I do think affects their viewpoint on Outreach is the commercial view of of the lab Market in the lab industry. And I think you got a lot of, uh, really smart health plans that are starting to wake up and say, hey, why am I paying these Health System Labs 2 to 300% of what we pay, you know, 2 of the leading Independents across the country. And um, furthermore that 2 to 300%, um, you know, price premium that they get it, it it affects patients, it affects, you know, co-pays it affects code deductibles, it affects employers who are paying for this Healthcare and so there's nothing uh, easier to get a quick hit, a quick win. Um, from from an employer standpoint, from a patient standpoint is to normalize these rates and we strongly Advocate that. Um, Health Plans ought to pay all Labs the same amount of money for outreach work. It doesn't do anyone any good to penalize patients, and penalize, and

Jim Davis: Operator, next question.

Employers, who are paying for the majority of the health care costs in this country, reimburse some labs 200% to 300% of what the two we need independents are getting paid.

Operator 2: Thank you. Our last question comes from David Westenberg with Piper Sandler. Your line is open. You may ask your question.

Operator: Thank you. Our last question comes from David Westenberg with Piper Sandler. Your line is open. You may ask your question.

Operator. Next question.

David Westenberg: Hi. Thanks for taking my question. I wanted to talk about the convergence of multiple factors, AI, wearables, consumer-initiated testing. Just given the fact that these AI wearables, et cetera, and consumer-initiated testing gamify longitudinal testing, it seems like there would be an increase in longitudinal testing. Should I think about this the right way, and how should we think about test per patient right now and where it could go in the next 5 to 10 years? Are you monitoring test per patient right now, and is it trending in the right way? Maybe one of the things I might want to look at is something like, are the Function Health people, for example, also doing their annual labs, and is that increasing? I mean, where's the momentum going with this? Thank you.

Thank you. And our last question comes from David Westenberg with Piper Sandler. Your line is open. You may ask your question.

Jim Davis: Yeah. That's a great question, David. Look, we continue to think that this convergence of consumer health, wellness, wearables, and AI are going to have a profound impact on how people think about their healthcare going forward.

Hi, thanks for taking my question. So I wanted to talk about the convergence of, uh, multiple factors—AI, wearables, consumer-initiated testing. Uh, just given the fact that these AI, wearables, etc., and consumer-initiated testing gamify longitudinal testing, it seems like there would be an increase in longitudinal testing. So, am I thinking about this the right way? And how should we think about tests per patient right now and where it could go in the next 5 to 10 years? Are you monitoring tests per patient right now? And is it trending, indeed, uh, the right way? And maybe one of the things that I might want to look at is something like: are the functional health people, for example, also doing their, um, their annual labs, and is that, you know, increasing? I mean, where's the momentum going with this? Thank you.

Jim Davis: I don't think the physical of today, where you go see a doctor, they do a physical in the office, they order labs generally after they've done the physical, and then the information flows back to the physician, back to the patient, and maybe somebody calls the patient and says, "Here's a few things that are out of range, and here's what you should do about it." I honestly think the physical of the future is going to be really before you ever see the doctor. You're going to download your wearable information, you're going to get your lab work done ahead of time, and all that information is going to be fed into an AI engine, and it's going to provide you, the patient, with a report. It's going to provide the physician with a report.

Yeah. So, uh, that's a great question, David. Um, look, we continue to think that this convergence of consumer health, wellness, wearables, and AI is going to have a profound impact on how people think about their healthcare going forward. I don't think, um, the physical of today, where you go see a doctor—um, they do a physical in the office, they order labs generally after they've done the physical, and then the information flows back to the physician, back to the patient, and maybe somebody calls the patient and says, you know, here's a few things that are out of range and here's what you should do about it.

Jim Davis: When you actually go and see the physician, the physical exam itself is informed by all of that information. It becomes more of a discussion between you and the physician on the things that you really need to work on from a biometric standpoint, sleep, diet, heart rate variability, blood pressure, stress, the things that you really need to work on to improve your biomarkers. This linkage between biomarkers and biometrics is so incredibly important. Just this past March, I believe it was 13 March, there was a really interesting article written in Nature, some work that Google Health did. It was a study between us, Google Health, and Fitbit that really highlighted the linkage between biometrics and biomarkers and the use of artificial intelligence to actually calculate some of these biomarkers in between lab tests.

I I honestly think the the future, the physical of the future um is going to be really before you ever see the doctor, you're going to download your wearable information, you're going to get your lab work, done ahead of time, and all that information is going to be fed into an AI engine and is going to provide you the patient with a report. It's going to provide the physician with a report and then when you actually go and see the physician, the physical exam itself is informed by all of that information. And then it becomes more of a discussion between you and the physician on the things that you really need to work on from a biometric standpoint, sleep diet, heart rate, variability blood pressure, um stress the things that you really need to work on to improve your biomarkers. This linkage between biomarkers and Biometrics is so incredibly important. You know, just this past March, I believe it was March 13th. It was a really interesting article written in nature. Uh, some work that Google help.

Jim Davis: What we're actually seeing is, I think this trend that you check your biomarkers, combine it with your wearable data, combine it with artificial intelligence, it's just making people more and more conscious of what's going on inside their body. I think, as you indicated, we're likely to see an increased trend of consumers continuing to test certain biomarkers to check to make sure that the things that they're working on, the things they're trying to optimize are actually improving. Great. Okay, operator, I think that wraps up today's call. I want to thank everyone for joining our call today. We certainly appreciate your continued support. Have a great day, everyone, and good health to all of you.

There was a study between us, Google Health, and Fitbit that really highlighted the linkage between biometrics and biomarkers, and the use of artificial intelligence to actually calculate some of these biomarkers in between lab tests.

So, what we're actually seeing is, um, I think this trend that you check your biomarkers, combine it with your wearable data, combined it with artificial intelligence, it's just making people more and more conscious of their of of of what's going on inside their body. And then, I think as you indicated, we're likely to see an increased trend of consumers, continuing to test certain biomarkers to check to make sure that the things that they're working on the things that are trying to optimize are actually improving.

Okay, operator, I think that wraps up today's call. I want to thank everyone for joining our call today. We certainly appreciate your continued support. Have a great day, everyone, and good health to all of you.

Operator 2: Thank you for participating in the Quest Diagnostics Q1 2026 Conference Call. A transcript of prepared remarks on this call will be posted later today on Quest Diagnostics' 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 10:30AM Eastern Time on 21 April 2026, until midnight Eastern Time, 5 May 2026. Goodbye.

Operator: Thank you for participating in the Quest Diagnostics Q1 2026 Conference Call. A transcript of prepared remarks on this call will be posted later today on Quest Diagnostics' 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 10:30AM Eastern Time on 21 April 2026, until midnight Eastern Time, 5 May 2026. Goodbye.

The call will be posted later today on the Quest Diagnostics 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 a.m. eastern time, on April, 21st, 2026 until midnight eastern time. May 5th 2026, goodbye

Q1 2026 Quest Diagnostics Inc Earnings Call

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