Quest Diagnostics Inc 10-Q for FY2026 Q3
Quest Diagnostics Inc (DGX)
10-Q
2026-10-23
For: 2026-09-30
View Original
Added on
October 23, 2026
About this 10-Q
Quest Diagnostics Inc filed this 10-Q on October 23, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Quest Diagnostics reported third-quarter 2026 net revenues of $3,097 million, operating income of $479 million and diluted earnings per share of $2.78; it also completed a Corewell Health laboratory venture in January 2026. AI summary
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.1B
- up 10.0% from $2.82B a year earlier
- Net income
- $312M
- up 27.3% from net income of $245M a year earlier
- Diluted EPS
- $2.78
- up 28.7% from $2.16 a year earlier
| UNITED STATES | ||
| SECURITIES AND EXCHANGE COMMISSION | ||
| WASHINGTON, DC 20549 | ||
FORM 10-Q
(Mark One)
For the quarterly period ended September 30, 2026
Or
For the transition period from to
Commission file number 001-12215
| (State of Incorporation) | (I.R.S. Employer Identification Number) | ||||||||||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | |||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
| Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of October 15, 2026, there were outstanding 110,019,073 shares of the registrant’s common stock, $.01 par value.
PART I - FINANCIAL INFORMATION
| Page | ||||||||
| Item 1. Financial Statements (unaudited) | ||||||||
| Index to unaudited consolidated financial statements filed as part of this report: | ||||||||
Notes to Consolidated Financial Statements (unaudited) | ||||||||
1
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(unaudited)
(in millions, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net revenues | $ | $ | $ | $ | |||||||||||||||||||
| Operating costs and expenses and other operating income: | |||||||||||||||||||||||
| Cost of services | |||||||||||||||||||||||
| Selling, general and administrative | |||||||||||||||||||||||
| Amortization of intangible assets | |||||||||||||||||||||||
| Other operating expense, net | |||||||||||||||||||||||
| Total operating costs and expenses, net | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Other (expense) income, net | ( | ||||||||||||||||||||||
| Total non-operating expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes and equity in earnings of equity method investees | |||||||||||||||||||||||
| Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
| Equity in earnings of equity method investees, net of taxes | |||||||||||||||||||||||
| Net income | |||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||||||||
| Net income attributable to Quest Diagnostics | $ | $ | $ | $ | |||||||||||||||||||
| Earnings per share attributable to Quest Diagnostics’ common stockholders: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding: | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
The accompanying notes are an integral part of these statements.
2
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(unaudited)
(in millions)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive income (loss): | |||||||||||||||||||||||
| Foreign currency translation adjustment | ( | ( | ( | ||||||||||||||||||||
| Other comprehensive (loss) income | ( | ( | ( | ||||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Less: Comprehensive income attributable to noncontrolling interests | |||||||||||||||||||||||
| Comprehensive income attributable to Quest Diagnostics | $ | $ | $ | $ | |||||||||||||||||||
The accompanying notes are an integral part of these statements.
3
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2026 AND DECEMBER 31, 2025
(unaudited)
(in millions, except per share data)
| September 30, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other current assets | |||||||||||
| Total current assets | |||||||||||
| Property, plant and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Investments in equity method investees | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Stockholders’ Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable and accrued expenses | $ | $ | |||||||||
| Current portion of long-term debt | |||||||||||
| Current portion of long-term operating lease liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Other liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Redeemable noncontrolling interest | |||||||||||
| Stockholders’ equity: | |||||||||||
| Quest Diagnostics stockholders’ equity: | |||||||||||
Common stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock, at cost; | ( | ( | |||||||||
| Total Quest Diagnostics stockholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total stockholders’ equity | |||||||||||
| Total liabilities and stockholders’ equity | $ | $ | |||||||||
The accompanying notes are an integral part of these statements.
4
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(unaudited)
(in millions)
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Provision for credit losses | |||||||||||
| Deferred income tax expense | |||||||||||
| Stock-based compensation expense | |||||||||||
| Other, net | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Accounts payable and accrued expenses | |||||||||||
| Income taxes payable | ( | ( | |||||||||
| Other assets and liabilities, net | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities: | |||||||||||
| Business acquisitions, net of cash acquired | ( | ( | |||||||||
| Capital expenditures | ( | ( | |||||||||
| Other investing activities, net | ( | ||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities: | |||||||||||
| Proceeds from borrowings | |||||||||||
| Repayments of debt | ( | ( | |||||||||
| Purchases of treasury stock | ( | ( | |||||||||
| Exercise of stock options | |||||||||||
| Employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Distributions to noncontrolling interest partners | ( | ( | |||||||||
| Contributions from noncontrolling interest partners | |||||||||||
| Other financing activities, net | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | ( | ||||||||||
| Net change in cash and cash equivalents and restricted cash | ( | ||||||||||
| Cash and cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash and cash equivalents and restricted cash, end of period | $ | $ | |||||||||
The accompanying notes are an integral part of these statements.
5
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AND 2025
(unaudited)
(in millions)
| For the Three Months Ended September 30, 2026 | Quest Diagnostics Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares of Common Stock Outstanding | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Compre- hensive Loss | Treasury Stock, at Cost | Non- controlling Interests | Total Stock- holders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of taxes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest partners | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under benefit plans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interest partners | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2026 | Quest Diagnostics Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares of Common Stock Outstanding | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Compre- hensive Loss | Treasury Stock, at Cost | Non- controlling Interests | Total Stock- holders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of taxes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributions to noncontrolling interest partners | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock under benefit plans | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Contributions from noncontrolling interest partners | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these statements.
6
| For the Three Months Ended September 30, 2025 | Quest Diagnostics Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares of Common Stock Outstanding | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Compre- hensive Loss | Treasury Stock, at Cost | Non- controlling Interests | Total Stock- holders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of taxes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest partners | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under benefit plans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2025 | Quest Diagnostics Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares of Common Stock Outstanding | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Compre- hensive Loss | Treasury Stock, at Cost | Non- controlling Interests | Total Stock- holders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of taxes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest partners | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under benefit plans | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these statements.
7
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in millions, unless otherwise indicated)
1. DESCRIPTION OF BUSINESS
Background
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accounting policies of the Company are the same as those set forth in Note 2 to the audited consolidated financial statements contained in the Company’s 2025 Annual Report on Form 10-K.
Use of Estimates
Earnings Per Share
8
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
participating securities, by the weighted average number of common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options and performance share units granted under the Company's Amended and Restated Employee Long-Term Incentive Plan (“ELTIP”) and its Amended and Restated Non-Employee Director Long-Term Incentive Plan (“DLTIP”), as well as the dilutive effect of accelerated share repurchase agreements, if applicable. Earnings allocable to participating securities include the portion of dividends declared as well as the portion of undistributed earnings during the period allocable to participating securities.
New Accounting Standards to be Adopted
In September 2025, the FASB issued a new accounting standard which impacts internal-use software accounting by removing all references to software development project stages such that the guidance is neutral to different software development methods. The pronouncement is effective for annual filings for the year ended December 31, 2028 and for interim periods within such year. The Company is currently evaluating the impact of the standard.
3. EARNINGS PER SHARE
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Amounts attributable to Quest Diagnostics’ common stockholders: | |||||||||||||||||||||||
| Net income attributable to Quest Diagnostics | $ | $ | $ | $ | |||||||||||||||||||
| Less: Earnings allocated to participating securities | |||||||||||||||||||||||
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average common shares outstanding – basic | |||||||||||||||||||||||
| Effect of dilutive securities: | |||||||||||||||||||||||
| Stock options and performance share units | |||||||||||||||||||||||
| Weighted average common shares outstanding – diluted | |||||||||||||||||||||||
| Earnings per share attributable to Quest Diagnostics’ common stockholders: | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
4. RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES
Invigorate Program
The Company is engaged in a multi-year program called Invigorate, which includes structured plans to drive savings and improve productivity across the value chain, including in such areas as patient services, logistics and laboratory operations,
9
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
revenue services, information technology and procurement. The Invigorate program aims to deliver 3 % annual cost savings and productivity improvements to partially offset pressures from the current inflationary environment, including labor and benefit cost increases and reimbursement pressures. The Company is leveraging automation and artificial intelligence to improve productivity and also improve quality across the entire value chain, not just in the laboratory. Other areas of focus include reducing denials and patient concessions, enhancing the digital experience, and selecting and retaining talent.
Restructuring Charges and Impairment Charges
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Employee separation costs | $ | $ | $ | $ | |||||||||||||||||||
| Asset impairment charges | |||||||||||||||||||||||
| Total restructuring and impairment charges | $ | $ | $ | $ | |||||||||||||||||||
The Company's pre-tax restructuring charges for the three and nine months ended September 30, 2026 included $1 million and $10 million, respectively, related to employee separation costs associated with various workforce reduction initiatives as the Company continued to restructure its organization. All of the restructuring charges incurred during the three months ended September 30, 2026 were recorded in selling, general and administrative expenses. Of the total restructuring charges incurred during the nine months ended September 30, 2026, $3 million and $7 million, respectively, were recorded in cost of services and selling, general and administrative expenses.
The Company's pre-tax restructuring charges for the three and nine months ended September 30, 2025 included $6 million and $18 million, respectively, of employee separation costs associated with various workforce reduction initiatives as the Company continued to restructure its organization. Additionally, during the three and nine months ended September 30, 2025, the Company recorded impairment charges of $5 million and $29 million, respectively, on certain long-lived assets related to the exit of a business. Of the total restructuring and impairment charges incurred during the three months ended September 30, 2025, $2 million, $4 million and $5 million were recorded in cost of services, selling, general and administrative expenses and other operating expense, net, respectively. Of the total restructuring and impairment charges incurred during the nine months ended September 30, 2025, $8 million, $10 million and $29 million were recorded in cost of services, selling, general and administrative expenses and other operating expense, net, respectively.
Charges for all periods presented were primarily recorded in the Company's DIS business.
The restructuring liability as of September 30, 2026 and December 31, 2025, which is included in accounts payable and accrued expenses, was $9 million and $18 million, respectively.
10
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
5. BUSINESS ACQUISITIONS
During August 2025, the Company and Corewell Health signed a definitive agreement to form a new entity which will perform laboratory testing in the state of Michigan via a new laboratory facility. The parties completed the transaction during January 2026. In connection with the transaction, Corewell Health contributed a laboratory business over which the Company obtained a controlling financial interest. Under the terms of the transaction, the Company and Corewell Health are continuing to serve providers and patients in Michigan from their existing patient service centers (which are operated by the newly formed entity) and their existing laboratories until a new laboratory is operational during 2027. Equity ownership of the newly formed entity is shared 51 % by the Company and 49 % by Corewell Health and the Company is consolidating the entity in its consolidated financial statements.
The total purchase consideration transferred to Corewell Health in conjunction with the formation of the entity included $38 million of cash consideration and a 49 % non-controlling interest in the entity, with such interest valued at $253 million.
Based on the preliminary purchase price allocation, which may be revised as additional information becomes available during the measurement period, the assets acquired and liabilities assumed principally consist of $179 million of goodwill, of which $22 million is deductible for tax purposes, $124 million of customer-related intangible assets, $20 million of operating lease assets, $20 million of operating lease liabilities, and $12 million of deferred income tax liabilities. The intangible assets are being amortized over a useful life of 15 years.
The acquisition described above was accounted for under the acquisition method of accounting. As such, the assets acquired and liabilities assumed are recorded based on their estimated fair values as of the closing date. The goodwill recorded primarily includes the expected synergies resulting from combining the operations of the acquired entity with those of the Company and the value associated with an assembled workforce and other intangible assets that do not qualify for separate recognition. All of the goodwill acquired in connection with the acquisition has been allocated to the Company's DIS business. For further details regarding business segment information, see Note 12. Supplemental pro forma combined financial information, and financial information subsequent to the acquisition close date, has not been presented as the impact of the acquisition is not material to the Company's consolidated financial statements.
The Company has entered into a definitive agreement to acquire select outreach lab assets from a leading health system and long-time Co-Lab Solutions customer in the Northeastern U.S. The transaction, which is expected to close later in 2026, remains subject to customary closing conditions.
11
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
6. FAIR VALUE MEASUREMENTS
Assets and Liabilities Measured at Fair Value on a Recurring Basis
| Basis of Fair Value Measurements | |||||||||||||||||||||||
| Quoted Prices in Active Markets for Identical Assets/Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||
| September 30, 2026 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Deferred compensation trading securities | $ | $ | $ | $ | |||||||||||||||||||
| Cash surrender value of life insurance policies | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Deferred compensation liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Contingent consideration | |||||||||||||||||||||||
| Fixed-to-variable interest rate swaps | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Redeemable noncontrolling interest | $ | $ | $ | — | $ | ||||||||||||||||||
| Basis of Fair Value Measurements | |||||||||||||||||||||||
| December 31, 2025 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Deferred compensation trading securities | $ | $ | $ | $ | |||||||||||||||||||
| Cash surrender value of life insurance policies | |||||||||||||||||||||||
| Equity investments | |||||||||||||||||||||||
| Fixed-to-variable interest rate swaps | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Deferred compensation liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Contingent consideration | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
| Redeemable noncontrolling interest | $ | $ | $ | — | $ | ||||||||||||||||||
A detailed description regarding the Company's fair value measurements is contained in Note 7 to the audited consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.
The Company offers certain employees the opportunity to participate in a non-qualified supplemental deferred compensation plan. A participant's deferrals, together with Company matching credits, are invested in a variety of participant-directed stock and bond mutual funds that are classified as trading securities. The trading securities are classified within Level
12
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
1 of the fair value hierarchy because the changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held, exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation. The deferred compensation liabilities are classified within Level 2 of the fair value hierarchy because their inputs are derived principally from observable market data by correlation to the trading securities.
The Company offers certain employees the opportunity to participate in a non-qualified deferred compensation program. A participant's deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program's liability. Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments. Changes in the fair value of the deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. The cash surrender value, which is recorded in other assets in the Company's consolidated balance sheet, and the deferred compensation obligation are classified within Level 2 of the fair value hierarchy because their inputs are derived principally from observable market data by correlation to the hypothetical investments. Through December 31, 2025, deferrals under the plan could only be made by participants who made deferrals under the plan in 2017. Effective January 1, 2026, the plan no longer accepted deferrals on compensation earned after December 31, 2025.
The Company's investment portfolio primarily includes equity investments comprised mostly of strategic holdings in companies concentrated in the life sciences and healthcare industries. Equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) with readily determinable fair values are measured at fair value in prepaid expenses and other current assets in the Company's consolidated balance sheet. Such equity investments are classified within Level 1 of the fair value hierarchy because the changes in the fair values of the securities are measured using quoted prices in active markets based on the market price per share multiplied by the number of shares held, exclusive of any transaction costs.
The fair value measurements of the Company's fixed-to-variable interest rate swaps, classified within Level 2 of the fair value hierarchy, are model-derived valuations as of a given date, in which all significant inputs are observable in active markets including certain financial information and certain assumptions regarding past, present and future market conditions.
During June 2023, the Company acquired Haystack Oncology, Inc. ("Haystack"), an early-stage oncology company focused on minimal residual disease testing to aid in the detection of residual or recurring cancer and better inform therapy decisions. In connection with the acquisition there is a contingent consideration obligation under which the seller can receive up to $100 million of additional consideration dependent upon the achievement of certain revenue benchmarks through 2028 and up to an additional $50 million of consideration dependent upon the Company receiving reimbursement coverage from the Centers for Medicare and Medicaid Services ("CMS"). The portion of the contingent consideration obligation which is dependent upon the achievement of certain revenue benchmarks was measured at fair value using a Monte Carlo method and is classified within Level 3 of the fair value hierarchy as the fair value is determined based on significant inputs that are not observable. Significant inputs include management’s estimate of revenue and other market inputs, including comparable company revenue volatility (25 %) and a discount rate (7.0 %). The portion of the contingent consideration obligation which is dependent upon the Company receiving reimbursement coverage from the CMS is also classified within Level 3 of the fair value hierarchy as the fair value is principally determined based on management's estimate, which is a significant input that is not observable. Additionally, the fair value of the entire contingent consideration obligation is also impacted by a market discount rate (5 %) which adjusts the estimated payments to present value. The fair value of the contingent consideration obligation is not overly sensitive to movements in the comparable company revenue volatility or the discount rate used for the portion of the obligation that is dependent upon the achievement of certain revenue benchmarks. For example, changing the comparable company revenue volatility from 25 % to 30 % impacts the fair value by $3 million (assuming no other inputs are modified) and changing the discount rate from 7.0 % to 10.5 % impacts the fair value by $3 million (assuming no other inputs are modified).
The Company has additional contingent consideration obligations in connection with other acquisitions. The liabilities related to such obligations are included in the amounts below.
13
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
unobservable inputs (Level 3):
| Contingent Consideration | ||||||||||||||
Balance, December 31, 2025 | $ | |||||||||||||
| Total fair value adjustments included in earnings - unrealized | ||||||||||||||
| Balance, September 30, 2026 | $ | |||||||||||||
The $7 million net loss included in earnings associated with the change in the fair value of contingent consideration for the nine months ended September 30, 2026 is reported in other operating expense, net.
Of the aggregate $103 million contingent consideration obligation as of September 30, 2026, $52 million and $51 million were included in other liabilities and accounts payable and accrued expenses, respectively, in the Company's consolidated balance sheet. Of the aggregate $96 million contingent consideration obligation as of December 31, 2025, $45 million and $51 million were included in other liabilities and accounts payable and accrued expenses, respectively, in the Company's consolidated balance sheet.
During the nine months ended September 30, 2025, the Company recorded a $29 million impairment charge on certain long-lived assets related to the exit of a business. The fair value measurement was classified within Level 3 of the fair value hierarchy as it was based on significant inputs that are not observable.
In connection with the sale of an 18.9 % noncontrolling interest in a subsidiary to UMass Memorial Medical Center ("UMass") on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. As of September 30, 2026, the redeemable noncontrolling interest was presented at its fair value. The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy because the fair value is based on a discounted cash flow analysis that takes into account, among other items, the joint venture's expected future cash flows, long term growth rates, and a discount rate commensurate with economic risk.
The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments. As of September 30, 2026 and December 31, 2025, the fair value of the Company’s debt was estimated at $5.4 billion and $5.7 billion, respectively. Principally all of the Company's debt is classified within Level 1 of the fair value hierarchy because the fair value of the debt is estimated based on rates currently offered to the Company with identical terms and maturities, using quoted active market prices and yields, taking into account the underlying terms of the debt instruments.
14
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
7. DEBT
Long-Term Debt
| September 30, 2026 | December 31, 2025 | ||||||||||
| $ | $ | ||||||||||
| Other | |||||||||||
| Debt issuance costs | ( | ( | |||||||||
| Total long-term debt | |||||||||||
| Less: Current portion of long-term debt | |||||||||||
| Total long-term debt, net of current portion | $ | $ | |||||||||
Senior Notes Offering and Repayment of Existing Senior Notes
In May 2026, the Company completed a senior notes offering consisting of $500 million aggregate principal amount of 5.00 % senior notes due June 2036 (the "2036 Senior Notes") which were issued at an original issue discount of $6 million. The 2036 Senior Notes are unsecured obligations of the Company that rank equally with the Company's other senior unsecured obligations and do not have a sinking fund requirement. The Company incurred $5 million of debt issuance costs associated with the 2036 Senior Notes, which are included as a reduction to the carrying value of long-term debt and which are being amortized over the term of the related 2036 Senior Notes.
On June 1, 2026, the net proceeds from the 2036 Senior Notes and cash on hand were used to repay in full at maturity the outstanding indebtedness under the Company's $500 million of 3.45 % senior notes.
15
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
Maturities of Long-Term Debt
| Year Ending December 31, | |||||
Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| 2031 | |||||
| Thereafter | |||||
| Total maturities of long-term debt | |||||
| Unamortized discount | ( | ||||
| Debt issuance costs | ( | ||||
| Fair value basis adjustments attributable to hedged debt | ( | ||||
| Total long-term debt | |||||
| Less: Current portion of long-term debt | |||||
| Total long-term debt, net of current portion | $ | ||||
16
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
8. FINANCIAL INSTRUMENTS
Interest Rate Risk
The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows and the impact of interest rate risk is not material. The Company's debt obligations consist of fixed-rate and, from time to time, variable-rate debt instruments. The Company's primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within an acceptable range. In order to achieve this objective, the Company has historically entered into interest rate swap agreements.
Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements between the counterparties are recognized as an adjustment to interest expense, net.
Interest Rate Derivatives – Cash Flow Hedges
From time to time, the Company has entered into various interest rate lock agreements and forward-starting interest rate swap agreements to hedge part of the Company's interest rate exposure associated with the variability in future cash flows attributable to changes in interest rates.
Interest Rate Derivatives – Fair Value Hedges
The Company maintains various fixed-to-variable interest rate swaps to convert a portion of the Company's long-term debt into variable interest rate debt.
| Notional Amount | ||||||||||||||
| Debt Instrument | September 30, 2026 | December 31, 2025 | ||||||||||||
| $ | $ | |||||||||||||
| $ | $ | |||||||||||||
The fixed-to-variable interest rate swap agreements in the table above have variable interest rates ranging from the Secured Overnight Financing Rate ("SOFR") minus 1.36 % to SOFR plus 2.48 %.
17
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
| Carrying Amount of Hedged Long-Term Debt | Hedge Accounting Basis Adjustment | Carrying Amount of Hedged Long-Term Debt | Hedge Accounting Basis Adjustment | ||||||||||||||||||||
| Balance Sheet Classification | September 30, 2026 | September 30, 2026 | December 31, 2025 | December 31, 2025 | |||||||||||||||||||
| Long-term debt | $ | $ | ( | $ | $ | ||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Interest Expense, Net | Interest Expense, Net | Interest Expense, Net | Interest Expense, Net | ||||||||||||||||||||||||||
| Total for line item in which the effects of fair value hedges are recorded | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||
| Gain (loss) on fair value hedging relationships: | |||||||||||||||||||||||||||||
| Hedged items (Long-term debt) | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||
| Derivatives designated as hedging instruments | $ | ( | $ | $ | ( | $ | |||||||||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||||||||||||||
| Balance Sheet Classification | Fair Value | Balance Sheet Classification | Fair Value | ||||||||||||||||||||
| Derivatives Designated as Hedging Instruments | |||||||||||||||||||||||
| Fixed-to-variable interest rate swap agreements | Other liabilities | $ | Other assets | $ | |||||||||||||||||||
9. STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST
Stockholders' Equity
Changes in Accumulated Other Comprehensive Loss by Component
Comprehensive income (loss) includes:
•Foreign currency translation adjustments;
•Net deferred gains (losses) on cash flow hedges, which represent deferred gains (losses), net of tax, on interest rate-related derivative financial instruments designated as cash flow hedges, net of amounts reclassified to interest expense (see Note 8); and
•Net changes in available-for-sale debt securities, which represent unrealized holding gains (losses), net of tax, on available-for-sale debt securities.
For the three and nine months ended September 30, 2026 and 2025, the tax effects related to the deferred gains (losses) on cash flow hedges were not material. Foreign currency translation adjustments related to indefinite investments in non-U.S. subsidiaries are not adjusted for income taxes.
18
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
| For the Three Months Ended September 30, 2026 | Foreign Currency Translation Adjustments | Net Deferred Gains on Cash Flow Hedges, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | |||||||||||||||||||||||||||
| Net current period other comprehensive loss | ( | ( | |||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2026 | Foreign Currency Translation Adjustments | Net Deferred Gains on Cash Flow Hedges, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | |||||||||||||||||||||||||||
| Net current period other comprehensive loss | ( | ( | |||||||||||||||||||||||||||
| Balance, September 30, 2026 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
The changes in accumulated other comprehensive loss by component for the three and nine months ended September 30, 2025 were as follows:
| For the Three Months Ended September 30, 2025 | Foreign Currency Translation Adjustments | Net Deferred Gains on Cash Flow Hedges, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| Other comprehensive loss before reclassifications | ( | ( | |||||||||||||||||||||||||||
| Net current period other comprehensive loss | ( | ( | |||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| For the Nine Months Ended September 30, 2025 | Foreign Currency Translation Adjustments | Net Deferred Gains on Cash Flow Hedges, net of tax | Accumulated Other Comprehensive Loss | ||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||||||||||||||
| Net current period other comprehensive income | |||||||||||||||||||||||||||||
| Balance, September 30, 2025 | $ | ( | $ | $ | ( | ||||||||||||||||||||||||
19
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
Dividend Program
During each of the first three quarters of 2026, the Company's Board of Directors declared a quarterly cash dividend of $0.86 0.80
Share Repurchase Program
In February 2026, the Company's Board of Directors authorized the Company to repurchase an additional $1 billion of the Company's common stock. As of September 30, 2026, $1.2 billion remained available under the Company’s share repurchase authorization. The share repurchase authorization has no set expiration or termination date.
Share Repurchases
For the nine months ended September 30, 2026, the Company repurchased 1.2 million shares of its common stock for $250 million.
For the nine months ended September 30, 2025, the Company repurchased 0.9 million shares of its common stock for $150 million.
Shares Reissued from Treasury Stock
For the nine months ended September 30, 2026 and 2025, the Company reissued 1.4 million shares and 1.2 million shares, respectively, from treasury stock under its Employee Stock Purchase Plan and its stock-based compensation program.
For details regarding the Company's stock ownership and compensation plans, see Note 17 to the audited consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.
Redeemable Noncontrolling Interest
In connection with the sale of an 18.9 % noncontrolling interest in a subsidiary to UMass on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. The subsidiary performs diagnostic information services in a defined territory within the state of Massachusetts. Since the redemption of the noncontrolling interest is outside of the Company's control, it has been presented outside of stockholders' equity at the greater of its carrying amount or its fair value. As of September 30, 2026 and December 31, 2025, the redeemable noncontrolling interest was presented at its fair value. For further details regarding the fair value of the redeemable noncontrolling interest, see Note 6.
20
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
10. SUPPLEMENTAL CASH FLOW AND OTHER DATA
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Depreciation expense | $ | $ | $ | $ | |||||||||||||||||||
| Amortization expense | |||||||||||||||||||||||
| Depreciation and amortization expense | $ | $ | $ | $ | |||||||||||||||||||
| Interest expense | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Interest income | |||||||||||||||||||||||
| Interest expense, net | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Interest paid | $ | $ | $ | $ | |||||||||||||||||||
| Income taxes paid | $ | $ | $ | $ | |||||||||||||||||||
| Deferred income tax liabilities | $ | $ | $ | $ | |||||||||||||||||||
| Trade accounts payable | $ | $ | $ | $ | |||||||||||||||||||
| Accounts payable associated with capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
| Dividends payable | $ | $ | $ | $ | |||||||||||||||||||
| Leases: | |||||||||||||||||||||||
| Leased assets obtained in exchange for new operating lease liabilities | $ | $ | $ | $ | |||||||||||||||||||
During the nine months ended September 30, 2026 and 2025, other financing activities, net in the Company's consolidated statement of cash flows included changes in bank overdrafts, which are generally settled in cash in the short term, of $(163 ) million and $(61 ) million, respectively.
During the nine months ended September 30, 2025, the Company received $46 million from a payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act associated with the retention of employees. Such amount is recorded in other operating expense, net in the Company's consolidated statement of operations.
11. COMMITMENTS AND CONTINGENCIES
Letters of Credit
The Company can issue letters of credit under its $600 million secured receivables credit facility and its $750 million senior unsecured revolving credit facility. For further discussion regarding the facilities, see Note 13 to the audited consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.
In support of its risk management program $83 million in letters of credit under the secured receivables credit facility were outstanding as of September 30, 2026, providing collateral for current and future automobile liability and workers’ compensation loss payments.
21
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
Contingent Lease Obligations
The Company remains subject to contingent obligations under certain real estate leases for which no liability has been recorded. For further details, see Note 18 to the audited consolidated financial statements in the Company’s 2025 Annual Report on Form 10-K.
Certain Legal Matters
The Company may incur losses associated with these proceedings and investigations, but it is not possible to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements, fines, penalties, or other resolution of these proceedings and investigations based on the stage of these proceedings and investigations, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and/or the lack of resolution of significant factual and legal issues. The Company has insurance coverage rights in place (limited in amount; subject to deductible) for certain potential costs and liabilities related to these proceedings and investigations.
In 2020, two putative class action lawsuits were filed in the U.S. District Court for New Jersey against the Company and other defendants with respect to the Company’s 401(k) plan. The complaint alleged, among other things, that the fiduciaries of the 401(k) plan breached their duties by failing to disclose the expenses and risks of plan investment options, allowing unreasonable administration expenses to be charged to plan participants, and selecting and retaining high cost and poor performing investments. In October 2020, the court consolidated the two lawsuits under the caption In re: Quest Diagnostics ERISA Litigation and plaintiffs filed a consolidated amended complaint. In May 2021, the court denied the Company's motion to dismiss the complaint. After discovery was completed, the Company filed a motion for summary judgment, which was granted. Plaintiffs appealed. The Third Circuit upheld the District Court's summary judgment in the Company's favor.
On June 3, 2019, the Company reported that Retrieval-Masters Creditors Bureau, Inc./American Medical Collection Agency (“AMCA”) had informed the Company and Optum360 LLC that an unauthorized user had access to AMCA’s system between August 1, 2018 and March 30, 2019 (the “AMCA Data Security Incident”). Optum360 provided revenue management services to the Company, and AMCA provided debt collection services to Optum360. AMCA first informed the Company of the AMCA Data Security Incident on May 14, 2019. AMCA’s affected system included financial information (e.g., credit card numbers and bank account information), medical information and other personal information (e.g., social security numbers). Test results were not included. Neither Optum360’s nor the Company’s systems or databases were involved in the incident. AMCA also informed the Company that information pertaining to other laboratories’ customers was also affected. Following announcement of the AMCA Data Security Incident, AMCA sought protection under the U.S. bankruptcy laws. The bankruptcy proceeding has been dismissed.
Numerous putative class action lawsuits were filed against the Company related to the AMCA Data Security Incident. The U.S. Judicial Panel on Multidistrict Litigation transferred the cases that were then still pending to, and consolidated them for pre-trial proceedings in, the U.S. District Court for New Jersey. In November 2019, the plaintiffs in the multidistrict proceeding filed a consolidated putative class action complaint against the Company and Optum360 that named additional individuals as plaintiffs and that asserted a variety of common law and statutory claims in connection with the AMCA Data Security Incident. In January 2020, the Company moved to dismiss the consolidated complaint; the motion to dismiss was granted in part and denied in part. Plaintiffs filed an amended complaint, which the Company also moved to dismiss. The motion was granted in part and denied in part. The parties have reached an agreement in principle to settle the matters and are in the process of drafting a definitive settlement agreement.
In addition, a group of state attorney general offices are investigating the Company in connection with the AMCA Data Security Incident. The Company is cooperating with the investigation.
The Company also received subpoenas from the U.S. Attorney for the District of New Jersey (the “NJ USAO”). The subpoenas sought various records relating to the Company’s relationship with the New York Giants and adherence to certain company policies and federal laws. The Company settled the matter with the NJ USAO and agreed to enter into a Corporate Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services. The Company has also received several subpoenas from the New York Attorney General’s Office, and has responded to them.
22
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
The Company also received a Civil Investigative Demand from the Texas Attorney General’s Office requesting documents related to its billing to Texas Medicaid. The Company is cooperating with the investigation.
Other Legal Matters
In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with the Company's activities as a provider of diagnostic testing, information and services. These actions could involve claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, and could have an adverse impact on the Company's client base and reputation.
The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental agencies regarding the Company's business which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.
The federal or state governments may bring claims based on the Company's current practices, which it believes are lawful. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers. The Company is aware of lawsuits, and from time to time has received subpoenas, related to billing or other practices based on the False Claims Act or other federal and state statutes, regulations or other laws. The Company understands that there may be other pending qui tam claims brought by former employees or other "whistleblowers" as to which the Company cannot determine the extent of any potential liability.
Management cannot predict the outcome of such matters. Although management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company's financial condition, given the high degree of judgment involved in establishing loss estimates related to these types of matters, the outcome of such matters may be material to the Company's consolidated results of operations or cash flows in the period in which the impact of such matters is determined or paid.
These matters are in different stages. Some of these matters are in their early stages. Matters may involve responding to and cooperating with various government investigations and related subpoenas. As of September 30, 2026, the Company does not believe that material losses related to legal matters are probable.
Reserves for legal matters totaled $32 million and $20 million as of September 30, 2026 and December 31, 2025, respectively.
Reserves for General and Professional Liability Claims
As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on the Company's client base and reputation. The Company maintains various liability insurance coverages for, among other things, claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. The Company's insurance coverage limits its maximum exposure on individual claims; however, the Company is essentially self-insured for a significant portion of these claims.
23
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
The Company is subject to a series of individual claims brought by persons in Ireland related to allegations stemming from pap smear screening services performed by the Company. In general, claimants have alleged that the results of certain pap smear screening tests performed by the Company and other providers, pursuant to a program coordinated by the Irish government, were incorrect for individuals who were later diagnosed with cervical cancer. The Irish government and an independent scoping inquiry commissioned by the Irish government found that the Company’s performance of its screening services for the Irish cervical cancer screening program were in accordance with both Ireland’s requirements and international standards. The Company has settled claims made by certain individuals, is a party in multiple lawsuits and may be served as a party in additional lawsuits. The Company does not believe that the resolution of existing or future claims will have a material adverse effect on its financial position or liquidity, but the ultimate outcomes of these claims are unpredictable and subject to significant uncertainties.
Reserves for general and professional liability claims matters, including those associated with both asserted and incurred but not reported claims, are established on an undiscounted basis by considering actuarially determined losses based upon the Company's historical and projected loss experience. Such reserves totaled $180 million and $178 million as of September 30, 2026 and December 31, 2025, respectively.
While the basis for claims reserves is actuarially determined losses based upon the Company's historical and projected loss experience, the process of analyzing, assessing and establishing reserve estimates relative to these types of claims involves a high degree of judgment. Although the Company believes that its present reserves and insurance coverage are sufficient to cover currently estimated exposures, it is possible that the Company may incur liabilities in excess of its recorded reserves or insurance coverage. Changes in the facts and circumstances associated with claims could have a material impact on the Company’s results of operations (principally costs of services), cash flows and financial condition in the period that reserve estimates are adjusted or paid.
12. BUSINESS SEGMENT INFORMATION
The Company's DIS business is the only reportable segment based on the manner in which the Chief Executive Officer, who is the Company's Chief Operating Decision Maker ("CODM"), assesses performance and allocates resources across the organization. The CODM uses the reported measurement of segment profit (loss) in assessing segment performance versus budget and when deciding how to allocate resources to segments. The DIS business provides diagnostic information services to a broad range of customers within its primary customer channels - physicians, hospitals, and patients and consumers. The DIS business accounted for greater than 95
All other operating segments include the Company's DS businesses, which consist of its risk assessment services and healthcare information technology businesses. The Company's DS businesses offer solutions for insurers and offer solutions for healthcare providers and payers.
As of September 30, 2026, substantially all of the Company’s services were provided within the United States, and substantially all of the Company’s assets were located within the United States.
24
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2026 | September 30, 2026 | ||||||||||||||||||||||||||||
| DIS | Total | DIS | Total | ||||||||||||||||||||||||||
| Net revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
| DS revenues | |||||||||||||||||||||||||||||
| Total net revenues | $ | $ | |||||||||||||||||||||||||||
| Less: Other segment items | |||||||||||||||||||||||||||||
| Segment operating income | $ | $ | $ | $ | |||||||||||||||||||||||||
| DS operating income | |||||||||||||||||||||||||||||
| General corporate activities | ( | ( | |||||||||||||||||||||||||||
| Total operating income | |||||||||||||||||||||||||||||
| Non-operating expense, net | ( | ( | |||||||||||||||||||||||||||
| Income before income taxes and equity in earnings of equity method investees | |||||||||||||||||||||||||||||
| Income tax expense | ( | ( | |||||||||||||||||||||||||||
| Equity in earnings of equity method investees, net of taxes | |||||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||||||||||||||
| Net income attributable to Quest Diagnostics | $ | $ | |||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, 2025 | September 30, 2025 | ||||||||||||||||||||||||||||
| DIS | Total | DIS | Total | ||||||||||||||||||||||||||
| Net revenues | $ | $ | $ | $ | |||||||||||||||||||||||||
| DS revenues | |||||||||||||||||||||||||||||
| Total net revenues | $ | $ | |||||||||||||||||||||||||||
| Less: Other segment items | |||||||||||||||||||||||||||||
| Segment operating income | $ | $ | $ | $ | |||||||||||||||||||||||||
| DS operating income | |||||||||||||||||||||||||||||
| General corporate activities | ( | ( | |||||||||||||||||||||||||||
| Total operating income | |||||||||||||||||||||||||||||
| Non-operating expense, net | ( | ( | |||||||||||||||||||||||||||
| Income before income taxes and equity in earnings of equity method investees | |||||||||||||||||||||||||||||
| Income tax expense | ( | ( | |||||||||||||||||||||||||||
| Equity in earnings of equity method investees, net of taxes | |||||||||||||||||||||||||||||
| Net income | |||||||||||||||||||||||||||||
| Less: Net income attributable to noncontrolling interests | |||||||||||||||||||||||||||||
| Net income attributable to Quest Diagnostics | $ | $ | |||||||||||||||||||||||||||
25
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
Depreciation and amortization expense for the three and nine months ended September 30, 2026 and 2025 was as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| DIS business | $ | $ | $ | $ | |||||||||||||||||||
| All other operating segments | |||||||||||||||||||||||
| General corporate | |||||||||||||||||||||||
| Total depreciation and amortization | $ | $ | $ | $ | |||||||||||||||||||
13. REVENUE RECOGNITION
DIS
Net revenues in the Company’s DIS business accounted for over 95
For further details regarding revenue recognition in the Company's DIS business, see Note 3 to the audited consolidated financial statements in the Company's 2025 Annual Report on Form 10-K.
DS
The Company’s DS businesses primarily satisfy their performance obligations and recognize revenues when delivery has occurred or services have been rendered.
Net Revenue and Net Accounts Receivable by Payer Customer Type
26
QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(unaudited)
(in millions, unless otherwise indicated)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||||||||
| Healthcare insurers: | |||||||||||||||||||||||||||||
| Fee-for-service | % | % | % | % | |||||||||||||||||||||||||
| Capitated | |||||||||||||||||||||||||||||
| Total healthcare insurers | |||||||||||||||||||||||||||||
| Government payers (principally fee-for-service) | |||||||||||||||||||||||||||||
| Client payers | |||||||||||||||||||||||||||||
| Patients (including coinsurance and deductible responsibilities) | |||||||||||||||||||||||||||||
| Total DIS | |||||||||||||||||||||||||||||
| DS | |||||||||||||||||||||||||||||
| Net revenues | % | % | % | % | |||||||||||||||||||||||||
| September 30, 2026 | December 31, 2025 | ||||||||||
| Healthcare Insurers | % | % | |||||||||
| Government Payers | |||||||||||
| Client Payers | |||||||||||
| Patients (including coinsurance and deductible responsibilities) | |||||||||||
| Total DIS | |||||||||||
| DS | |||||||||||
| Net accounts receivable | % | % | |||||||||
27
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Our Company
Diagnostic Information Services
Quest Diagnostics works across the healthcare ecosystem to create a healthier world, one life at a time. Our diagnostic information services ("DIS") business provides diagnostic insights from the results of our laboratory testing to empower people, physicians, and organizations to take action to improve health outcomes. Derived from one of the world's largest databases of de-identifiable clinical lab results, our diagnostic insights reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management. In the right hands and with the right context, our diagnostic insights can inspire actions that transform lives and create a healthier world. We provide services to a broad range of customers within our primary customer channels - physicians (including those associated with accountable care organizations and Federally Qualified Health Centers), hospitals, and patients and consumers. Our other customers include health plans, employers, emerging retail healthcare providers, government agencies, pharmaceutical companies and other commercial clinical laboratories. We offer broad access to clinical testing through a nationwide network of laboratories, patient service centers, phlebotomists in physician offices, and our connectivity resources, including call centers and mobile phlebotomists, nurses and other health and wellness professionals. Our large in-house staff of medical and scientific experts, including medical directors, scientific directors, genetic counselors and board-certified geneticists, provide medical and scientific consultation to healthcare providers and patients regarding our tests and test results, and help them best utilize our services to improve outcomes and enhance satisfaction. Our DIS business makes up greater than 95% of our consolidated net revenues.
We assess our revenue performance for our DIS business based upon, among other factors, volume (measured by test requisitions) and revenue per requisition. Each test requisition accompanies patient specimens, indicating the test(s) to be performed and the party to be billed for the test(s). Revenue per requisition is impacted by various factors, including, among other items, the impact of fee schedule changes (i.e., unit price), test mix, payer mix, business mix and the number of tests per requisition. Management uses number of requisitions and revenue per requisition data to assist with assessing the growth and performance of the business, including understanding trends affecting number of requisitions, pricing and test mix. Therefore, we believe that information related to changes in these metrics from period to period are useful information for investors as it allows them to assess the performance of the business.
Diagnostic Solutions
Our diagnostic solutions ("DS") group, which represents the balance of our consolidated net revenues, includes our risk assessment services business, which offers solutions for insurers, and our healthcare information technology businesses, which offer solutions for healthcare providers and payers.
28
Third Quarter Highlights
| Three Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| (dollars in millions, except per share data) | ||||||||||||||
| Net revenues | $3,097 | $2,816 | ||||||||||||
| DIS revenues | $3,035 | $2,755 | ||||||||||||
| Revenue per requisition change | (4.2)% | 0.8% | ||||||||||||
| Requisition volume change | 14.5% | 12.5% | ||||||||||||
| Organic requisition volume change | 14.4% | 3.9% | ||||||||||||
| DS revenues | $62 | $61 | ||||||||||||
| Operating income | $479 | $386 | ||||||||||||
| Net income attributable to Quest Diagnostics | $312 | $245 | ||||||||||||
| Diluted earnings per share | $2.78 | $2.16 | ||||||||||||
| Net cash provided by operating activities | $611 | $563 | ||||||||||||
| Capital expenditures | $166 | $144 | ||||||||||||
For further discussion of the year-over-year changes for the three months ended September 30, 2026 compared to the three months ended September 30, 2025, see "Results of Operations" below.
Senior Notes Offering and Repayment of Existing Senior Notes
In May 2026, we completed a senior notes offering consisting of $500 million aggregate principal amount of 5.00% senior notes due June 2036 (the "2036 Senior Notes"), which were issued at an original issue discount of $6 million. On June 1, 2026, the net proceeds from the 2036 Senior Notes and cash on hand were used to repay in full at maturity the outstanding indebtedness under our $500 million of 3.45% senior notes.
For further details see Note 7 to the interim unaudited consolidated financial statements.
Venture with Corewell Health
During August 2025, we and Corewell Health signed a definitive agreement to form a new entity which will perform laboratory testing in the state of Michigan via a new laboratory facility. The parties completed the transaction during January 2026. In connection with the transaction, Corewell Health contributed a laboratory business over which we obtained a controlling financial interest. Under the terms of the transaction, the parties are continuing to serve providers and patients in Michigan from their existing patient service centers (which are operated by the newly formed entity) and their existing laboratories until a new laboratory is operational during 2027. Equity ownership of the newly formed entity is shared 51% by us and 49% by Corewell Health and we are consolidating the entity in our consolidated financial statements. The business is included in our DIS segment.
For further details see Note 5 to the interim unaudited consolidated financial statements.
Invigorate Program
We are engaged in a multi-year program called Invigorate, which includes structured plans to drive savings and improve productivity across the value chain, including in such areas as patient services, logistics and laboratory operations, revenue services, information technology and procurement. The Invigorate program aims to deliver 3% annual cost savings and productivity improvements to partially offset pressures from the current inflationary environment, including labor and benefit cost increases and reimbursement pressures. We are leveraging automation and artificial intelligence to improve productivity and also improve quality across our entire value chain, not just in the laboratory. Other areas of focus include reducing denials and patient concessions, enhancing the digital experience, and selecting and retaining talent.
29
For the nine months ended September 30, 2026, we incurred $14 million of pre-tax charges in connection with restructuring and integration activities, including $10 million of employee separation costs, with the remainder including integration costs. Most of the charges will result in cash expenditures. Additional restructuring and integration charges may be incurred in future periods, including as we identify additional opportunities to achieve further savings and productivity improvements.
Critical Accounting Policies
There have been no significant changes to our critical accounting policies from those disclosed in our 2025 Annual Report on Form 10-K.
Impact of New Accounting Standards
The adoption of new accounting standards, if any, is discussed in Note 2 to the interim unaudited consolidated financial statements.
The impact of recent accounting pronouncements not yet effective on our consolidated financial statements, if any, is also discussed in Note 2 to the interim unaudited consolidated financial statements.
30
Results of Operations
The following tables set forth certain results of operations data for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||||||||||||||||||||||
| (dollars in millions, except per share amounts) | |||||||||||||||||||||||||||||||||||||||||||||||
| Net revenues: | |||||||||||||||||||||||||||||||||||||||||||||||
| DIS business | $ | 3,035 | $ | 2,755 | $ | 280 | 10.2 | % | $ | 8,845 | $ | 8,043 | $ | 802 | 10.0 | % | |||||||||||||||||||||||||||||||
| DS businesses | 62 | 61 | 1 | 2.3 | 190 | 186 | 4 | 2.5 | |||||||||||||||||||||||||||||||||||||||
| Total net revenues | $ | 3,097 | $ | 2,816 | $ | 281 | 10.0 | % | $ | 9,035 | $ | 8,229 | $ | 806 | 9.8 | % | |||||||||||||||||||||||||||||||
| Operating costs and expenses and other operating income: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cost of services | $ | 2,055 | $ | 1,867 | $ | 188 | 10.1 | % | $ | 6,024 | $ | 5,474 | $ | 550 | 10.1 | % | |||||||||||||||||||||||||||||||
| Selling, general and administrative | 523 | 501 | 22 | 4.3 | 1,556 | 1,463 | 93 | 6.4 | |||||||||||||||||||||||||||||||||||||||
| Amortization of intangible assets | 37 | 39 | (2) | (4.1) | 112 | 117 | (5) | (4.1) | |||||||||||||||||||||||||||||||||||||||
| Other operating expense, net | 3 | 23 | (20) | NM | 6 | 5 | 1 | NM | |||||||||||||||||||||||||||||||||||||||
| Total operating costs and expenses, net | $ | 2,618 | $ | 2,430 | $ | 188 | 7.8 | % | $ | 7,698 | $ | 7,059 | $ | 639 | 9.1 | % | |||||||||||||||||||||||||||||||
| Operating income | $ | 479 | $ | 386 | $ | 93 | 24.2 | % | $ | 1,337 | $ | 1,170 | $ | 167 | 14.3 | % | |||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense, net | $ | (61) | $ | (66) | $ | 5 | (7.7) | % | $ | (187) | $ | (200) | $ | 13 | (6.7) | % | |||||||||||||||||||||||||||||||
| Other (expense) income, net | (2) | 8 | (10) | NM | 12 | 18 | (6) | NM | |||||||||||||||||||||||||||||||||||||||
| Total non-operating expense, net | $ | (63) | $ | (58) | $ | (5) | NM | $ | (175) | $ | (182) | $ | 7 | NM | |||||||||||||||||||||||||||||||||
| Income tax expense | $ | (99) | $ | (77) | $ | (22) | 27.3 | % | $ | (261) | $ | (233) | $ | (28) | 11.9 | % | |||||||||||||||||||||||||||||||
Effective income tax rate | 23.7 | % | 23.6 | % | 22.5 | % | 23.6 | % | |||||||||||||||||||||||||||||||||||||||
| 0 | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity in earnings of equity method investees, net of taxes | $ | 9 | $ | 8 | $ | 1 | 17.8 | % | $ | 23 | $ | 35 | $ | (12) | (33.8) | % | |||||||||||||||||||||||||||||||
| Net income attributable to Quest Diagnostics | $ | 312 | $ | 245 | $ | 67 | 27.6 | % | $ | 884 | $ | 747 | $ | 137 | 18.4 | % | |||||||||||||||||||||||||||||||
| Diluted earnings per common share attributable to Quest Diagnostics' common stockholders | $ | 2.78 | $ | 2.16 | $ | 0.62 | 28.7 | % | $ | 7.86 | $ | 6.57 | $ | 1.29 | 19.6 | % | |||||||||||||||||||||||||||||||
| NM - Not Meaningful | |||||||||||||||||||||||||||||||||||||||||||||||
31
The following table sets forth certain results of operations data as a percentage of net revenues for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net revenues: | |||||||||||||||||||||||
| DIS business | 98.0 | % | 97.8 | % | 97.9 | % | 97.7 | % | |||||||||||||||
| DS businesses | 2.0 | 2.2 | 2.1 | 2.3 | |||||||||||||||||||
| Total net revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
Operating costs and expenses and other operating income: | |||||||||||||||||||||||
| Cost of services | 66.4 | % | 66.3 | % | 66.7 | % | 66.5 | % | |||||||||||||||
| Selling, general and administrative | 16.9 | 17.8 | 17.2 | 17.8 | |||||||||||||||||||
| Amortization of intangible assets | 1.2 | 1.4 | 1.2 | 1.4 | |||||||||||||||||||
| Other operating expense, net | — | 0.8 | 0.1 | 0.1 | |||||||||||||||||||
| Total operating costs and expenses, net | 84.5 | % | 86.3 | % | 85.2 | % | 85.8 | % | |||||||||||||||
| Operating income | 15.5 | % | 13.7 | % | 14.8 | % | 14.2 | % | |||||||||||||||
Operating Results
Results for the three months ended September 30, 2026 were affected by certain items that on a net basis decreased diluted earnings per share by $0.22 as follows:
•pre-tax amortization expense of $37 million, recorded in amortization of intangible assets, or $0.24 per diluted share;
•pre-tax charges of $4 million, principally recorded in other operating expense, net, or $0.03 per diluted share, primarily representing a loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions;
•pre-tax charges of $3 million ($1 million recorded in cost of services and $2 million recorded in selling, general and administrative expenses), or $0.02 per diluted share, primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business; and
•pre-tax charges of $2 million, primarily recorded in other (expense) income, net, or $0.02 per diluted share, representing losses associated with changes in the carrying value of our strategic investments; partially offset by
•pre-tax gains of $6 million, recorded in selling, general and administrative expenses, or $0.04 per diluted share, primarily related to insurance recoveries for certain legal matters; and
•$6 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.05 per diluted share.
Results for the nine months ended September 30, 2026 were affected by certain items that on a net basis decreased diluted earnings per share by $0.76 as follows:
•pre-tax amortization expense of $112 million, recorded in amortization of intangible assets, or $0.74 per diluted share;
•pre-tax charges of $14 million ($3 million recorded in cost of services and $11 million recorded in selling, general and administrative expenses), or $0.10 per diluted share, primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business;
•pre-tax charges of $9 million, principally recorded in other operating expense, net, or $0.08 per diluted share, primarily representing a loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions; and
•pre-tax charges of $8 million, principally recorded in equity in earnings of equity method investees, net of taxes, or $0.06 per diluted share, representing losses associated with changes in the carrying value of our strategic investments; partially offset by
32
•pre-tax gains of $6 million, principally recorded in selling, general and administrative expenses, or $0.04 per diluted share, primarily related to insurance recoveries for certain legal matters; and
•$20 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.18 per diluted share.
Results for the three months ended September 30, 2025 were affected by certain items that on a net basis decreased diluted earnings per share by $0.44 as follows:
•pre-tax amortization expense of $39 million recorded in amortization of intangible assets, or $0.25 per diluted share;
•pre-tax charges of $22 million, recorded in other operating expense, net, or $0.15 per diluted share, comprised of a $15 million charge to earnings related to legal matters, a $5 million impairment charge on certain long-lived assets related to the exit of a business and, to a lesser extent, losses associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions; and
•pre-tax charges of $11 million ($1 million recorded in cost of services and $10 million recorded in selling, general and administrative expenses), or $0.07 per diluted share, primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business; partially offset by
•$3 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.03 per diluted share.
Results for the nine months ended September 30, 2025 were affected by certain items that on a net basis decreased diluted earnings per share by $0.86 as follows:
•pre-tax amortization expense of $117 million recorded in amortization of intangible assets, or $0.76 per diluted share;
•pre-tax charges of $52 million, recorded in other operating expense, net, or $0.36 per diluted share, primarily comprised of a $29 million impairment charge on certain long-lived assets related to the exit of a business, a $15 million charge to earnings related to legal matters and, to a lesser extent, losses associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions; and
•pre-tax charges of $37 million ($8 million recorded in cost of services and $29 million recorded in selling, general and administrative expenses), or $0.24 per diluted share, primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business; partially offset by
•pre-tax gains of $54 million ($46 million recorded in other operating expense, net and $8 million recorded in equity in earnings of equity method investees, net of taxes), or $0.36 per diluted share, from a $46 million payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") associated with the retention of employees and, to a lesser extent, an $8 million non-recurring gain related to a lease;
•pre-tax gains of $2 million ($1 million recorded in other (expense) income, net and $1 million recorded in equity in earnings of equity method investees, net of taxes), or $0.01 per diluted share, representing net gains associated with changes in the carrying value of our strategic investments; and
•$15 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.13 per diluted share.
Net Revenues
Net revenues for the three months ended September 30, 2026 increased by 10.0% compared to the prior year period, on strong organic revenue growth.
DIS revenues for the three months ended September 30, 2026 increased by 10.2% compared to the prior year period.
For the three months ended September 30, 2026:
•The increase in DIS revenues compared to the prior year period was principally driven by organic growth of 10.1%.
33
•DIS volume increased by 14.5% compared to the prior year period (principally driven by organic growth of 14.4%) of which 9.5% was due to both our new relationships with Corewell Health to provide Collaborative Lab Solutions and increasing our laboratory testing at dialysis clinics owned by Fresenius Medical Care in the United States. Excluding the Corewell Health and Fresenius Medical Care related testing, volume increased by 5% compared to the prior year period.
•Revenue per requisition decreased by 4.2% compared to the prior year period primarily driven by the business mix associated with our new relationships with Corewell Health and Fresenius Medical Care, which include a greater proportion of routine tests than most of our clinical testing. Excluding the Corewell Health and Fresenius Medical Care business mix impacts, revenue per requisition increased by 1.7% primarily driven by an increase in the number of tests per requisition.
DS revenues for the three months ended September 30, 2026 were principally consistent with the prior year period.
Net revenues for the nine months ended September 30, 2026 increased by 9.8% compared to the prior year period principally driven by organic revenue growth of 9.6%.
DIS revenues for the nine months ended September 30, 2026 increased by 10.0% compared to the prior year period.
For the nine months ended September 30, 2026:
•The increase in DIS revenues compared to the prior year period was principally driven by organic growth of 9.8%.
•DIS volume increased by 12.9% compared to the prior year period (principally driven by organic growth of 12.8%) of which 8.6% was due to both our new relationships with Corewell Health to provide Collaborative Lab Solutions and increasing our laboratory testing at dialysis clinics owned by Fresenius Medical Care in the United States. Excluding the Corewell Health and Fresenius Medical Care related testing, volume increased by 4.3% compared to the prior year period.
•Revenue per requisition decreased by 2.8% compared to the prior year period primarily driven by the business mix associated with our new relationships with Corewell Health and Fresenius Medical Care, which include a greater proportion of routine tests than most of our clinical testing. Excluding the Corewell Health and Fresenius Medical Care business mix impacts, revenue per requisition increased by 2.4% primarily driven by an increase in the number of tests per requisition and favorable test mix.
DS revenues for the nine months ended September 30, 2026 were principally consistent with the prior year period.
Cost of Services
Cost of services consists principally of costs for obtaining, transporting and testing specimens as well as facility costs used for the delivery of our services.
For the three months ended September 30, 2026, cost of services increased by $188 million compared to the prior year period. The increase was primarily driven by higher compensation costs and, to a lesser extent, an increase in supplies expense reflecting higher testing volumes, partially offset by cost savings and productivity improvements from our Invigorate program.
For the nine months ended September 30, 2026, cost of services increased by $550 million compared to the prior year period. The increase was primarily driven by higher compensation costs and, to a lesser extent, an increase in supplies expense reflecting higher testing volumes, partially offset by cost savings and productivity improvements from our Invigorate program.
Selling, General and Administrative Expenses ("SG&A")
SG&A consists principally of the costs associated with our sales and marketing efforts, billing operations, credit loss expense and general management and administrative support as well as administrative facility costs.
For the three months ended September 30, 2026, SG&A increased by $22 million compared to the prior period. The increase was primarily driven by higher compensation costs and, to a lesser extent, spend for Project Nova, our multi-year project to modernize our "Order-to-Cash" business processes (see below for further discussion).
For the nine months ended September 30, 2026, SG&A increased by $93 million compared to the prior period. The increase was primarily driven by higher compensation costs.
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The changes in the value of our deferred compensation obligations are largely offset by changes in the value of the associated investments, which are recorded in other (expense) income, net. For further details regarding our deferred compensation plans, see Note 17 to the audited consolidated financial statements included in our 2025 Annual Report on Form 10-K.
Amortization Expense
For both the three and nine months ended September 30, 2026, amortization expense was principally consistent with the prior year periods.
Other Operating Expense, Net
Other operating expense, net includes miscellaneous income and expense items and other charges related to operating activities.
For both the three and nine months ended September 30, 2026, other operating expense, net primarily represents losses associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions.
For the three months ended September 30, 2025, other operating expense, net is comprised of a $15 million charge to earnings related to legal matters, an impairment charge of $5 million on certain long-lived assets related to the exit of a business and $2 million of losses associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions.
For the nine months ended September 30, 2025, other operating expense, net includes a $46 million gain from a payroll tax credit under the CARES Act associated with the retention of employees. Additionally, during the nine months ended September 30, 2025, we also recorded an impairment charge of $29 million on certain long-lived assets related to the exit of a business, a $15 million charge to earnings related to legal matters and $8 million of losses associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions.
Interest Expense, Net
For the three months ended September 30, 2026, interest expense, net decreased by $5 million compared to the prior year period primarily due to lower interest rates associated with our indebtedness and higher interest income due to higher cash balances.
For the nine months ended September 30, 2026, interest expense, net decreased by $13 million compared to the prior year period primarily due to lower interest rates associated with our indebtedness and the repayment in full of the outstanding indebtedness under our $600 million of 3.50% senior notes, which matured on March 30, 2025.
Other (Expense) Income, Net
Other (expense) income, net represents miscellaneous income and expense items related to non-operating activities, such as gains and losses associated with investments and other non-operating assets.
For the three and nine months ended September 30, 2026, other (expense) income, net included $0.2 million and $14 million, respectively, of gains associated with investments in our deferred compensation plans.
For the three and nine months ended September 30, 2025, other (expense) income, net included $7 million and $16 million, respectively, of gains associated with investments in our deferred compensation plans.
Income Tax Expense
Income tax expense for the three months ended September 30, 2026 and 2025 was $99 million and $77 million, respectively.
The effective income tax rate for the three months ended September 30, 2026 and 2025 was 23.7% and 23.6%, respectively. The effective income tax rate benefited from $6 million and $3 million of excess tax benefits associated with stock-based compensation arrangements for the three months ended September 30, 2026 and 2025, respectively.
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Income tax expense for the nine months ended September 30, 2026 and 2025 was $261 million and $233 million, respectively.
The effective income tax rate for the nine months ended September 30, 2026 and 2025 was 22.5% and 23.6%, respectively. The effective income tax rate benefited from $20 million and $15 million of excess tax benefits associated with stock-based compensation arrangements for the nine months ended September 30, 2026 and 2025, respectively. The effective income tax rate for the nine months ended September 30, 2026 also included income tax benefits of approximately $11 million, or $0.10 per diluted share, primarily related to the favorable resolution of various income tax contingencies during the three months ended June 30, 2026.
Equity in Earnings of Equity Method Investees, Net of Taxes
Equity in earnings of equity method investees, net of taxes for the three months ended September 30, 2026 was principally consistent with the prior year period.
Equity in earnings of equity method investees, net of taxes, decreased by $12 million for the nine months ended September 30, 2026, compared to the prior year period, primarily due to the nine months ended September 30, 2025 including an $8 million non-recurring gain related to a lease and the nine months ended September 30, 2026 including $7 million of losses associated with changes in the carrying value of our strategic investments.
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Quantitative and Qualitative Disclosures About Market Risk
We address our exposure to market risks, principally the risk of changes in interest rates, through a controlled program of risk management that includes the use of derivative financial instruments. We do not hold or issue derivative financial instruments for speculative purposes. We seek to mitigate the variability in cash outflows that result from changes in interest rates by maintaining a balanced mix of fixed-rate and variable-rate debt obligations. In order to achieve this objective, we have historically entered into interest rate swap agreements. Interest rate swap agreements involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements are recognized as an adjustment to interest expense, net. We believe that our exposures to foreign exchange impacts and changes in commodity prices are not material to our consolidated results of operations, financial position or cash flows.
As of September 30, 2026 and December 31, 2025, the fair value of our debt was estimated at approximately $5.4 billion and $5.7 billion, respectively, principally using quoted prices in active markets and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. As of September 30, 2026 and December 31, 2025, the estimated fair value was (less than) more than the carrying value of the debt by $(133) million and $59 million, respectively. A hypothetical 10% increase in interest rates (representing 56 basis points and 44 basis points as of September 30, 2026 and December 31, 2025, respectively) would potentially reduce the estimated fair value of our debt by approximately $159 million and $135 million as of September 30, 2026 and December 31, 2025, respectively.
Borrowings under our secured receivables credit facility and our senior unsecured revolving credit facility are subject to variable interest rates. Interest on our secured receivables credit facility is based on either commercial paper rates for highly-rated issuers or the adjusted Term Secured Overnight Financing Rate ("Term SOFR"), plus a spread. Interest on our senior unsecured revolving credit facility is based on certain published rates plus an applicable margin based on changes in our public debt ratings. As such, our borrowing cost under this credit arrangement is subject to fluctuations in interest rates and changes in our public debt ratings. As of September 30, 2026, the borrowing rates under these debt instruments were: for our secured receivables credit facility, commercial paper rates for highly-rated issuers or the adjusted Term SOFR, plus a spread of 0.80%; and for our senior unsecured revolving credit facility, the adjusted Term SOFR, plus 1.00%. As of September 30, 2026, there were no borrowings outstanding under either the secured receivables credit facility or the senior unsecured revolving credit facility.
The notional amount of fixed-to-variable interest rate swaps outstanding as of both September 30, 2026 and December 31, 2025 was $1.8 billion. The aggregate net fair value of the fixed-to-variable interest rate swaps was $(112) million and $14 million, in a net (liability) asset position, as of September 30, 2026 and December 31, 2025, respectively.
Based on our net exposure to interest rate changes, a hypothetical 10% change to the variable rate component of our variable-rate indebtedness would not materially change our annual interest expense. A hypothetical 10% change in the SOFR curve (representing a 48 basis points change in the weighted average yield) would potentially change the fair value of our fixed- to-variable interest rate swaps by $50 million.
For further details regarding our outstanding debt, see Note 7 to the interim unaudited consolidated financial statements and Note 13 to the audited consolidated financial statements included in our 2025 Annual Report on Form 10-K. For details regarding our financial instruments and hedging activities, see Note 8 to the interim unaudited consolidated financial statements and Note 15 to the audited consolidated financial statements included in our 2025 Annual Report on Form 10-K.
Risk Associated with Investment Portfolio
Our investment portfolio primarily includes equity investments comprised mostly of strategic holdings in companies concentrated in the life sciences and healthcare industries. Equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) with readily determinable fair values are measured at fair value in our consolidated balance sheet with changes in fair value recorded in current earnings in our consolidated statement of operations. Equity investments that do not have readily determinable fair values (which consist of investments in preferred and common shares of private companies) are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes.
We regularly evaluate equity investments that do not have readily determinable fair values to determine if there are any indicators that the investments are impaired. The carrying value of our equity investments that do not have readily determinable fair values was $48 million as of September 30, 2026. In conjunction with the preparation of our September 30, 2026 financial statements, we considered whether the carrying values of our investments were impaired and concluded that no such impairment existed.
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We do not hedge our equity price risk. The impact of an adverse movement in equity prices on our holdings in privately held companies cannot be easily quantified as our ability to realize returns on investments depends on, among other things, the enterprises’ ability to raise additional capital or derive cash inflows from continuing operations or through liquidity events such as initial public offerings, mergers or private sales.
Liquidity and Capital Resources
| Nine Months Ended September 30, | |||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||
| (dollars in millions) | |||||||||||||||||
| Net cash provided by operating activities | $ | 1,486 | $ | 1,421 | $ | 65 | |||||||||||
| Net cash used in investing activities | (455) | (440) | (15) | ||||||||||||||
| Net cash used in financing activities | (652) | (1,101) | 449 | ||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (2) | 3 | (5) | ||||||||||||||
| Net change in cash and cash equivalents and restricted cash | $ | 377 | $ | (117) | $ | 494 | |||||||||||
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly-liquid short-term investments with original maturities, at the time of acquisition, of three months or less. Cash and cash equivalents as of September 30, 2026 totaled $797 million, compared to $420 million as of December 31, 2025.
As of September 30, 2026, approximately 10% of our $797 million of consolidated cash and cash equivalents were held outside of the United States.
Cash Flows from Operating Activities
Net cash provided by operating activities for the nine months ended September 30, 2026 and 2025 was $1.5 billion and $1.4 billion, respectively. The $65 million increase in net cash provided by operating activities for the nine months ended September 30, 2026, compared to the prior year period, was primarily a result of increased operating income being partially offset by the timing of net working capital and the prior year period including a $46 million gain from a payroll tax credit under the CARES Act.
Days sales outstanding, a measure of billing and collection efficiency, was 51 days as of September 30, 2026, 48 days as of December 31, 2025 and 47 days as of September 30, 2025. The increase was primarily due to a shift in payer mix associated with outstanding receivables from client payers.
Cash Flows from Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2026 and 2025 was $455 million and $440 million, respectively. This $15 million increase in net cash used in investing activities for the nine months ended September 30, 2026, compared to the prior year period, was primarily a result of higher capital expenditures, partially offset by decreased cash used for business acquisitions.
Cash Flows from Financing Activities
Net cash used in financing activities for the nine months ended September 30, 2026 and 2025 was $652 million and $1.1 billion, respectively. The prior year period includes the repayment in full of the outstanding indebtedness under our $600 million of 3.50% Senior Notes due March 30, 2025 at maturity and $150 million of share repurchases of our common stock. The current year period includes approximately $250 million of share repurchases of our common stock.
During the nine months ended September 30, 2026, we completed the issuance of the 2036 Senior Notes and repaid in full at maturity our $500 million of 3.45% Senior Notes due June 1, 2026. During the nine months ended September 30, 2026, there were no borrowings or repayments under our secured receivables credit facility or our senior unsecured revolving credit facility.
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During the nine months ended September 30, 2025, we borrowed $410 million under our secured receivables credit facility, which was repaid prior to September 30, 2025. During the nine months ended September 30, 2025, there were no borrowings or repayments under our senior unsecured revolving credit facility.
Dividend Program
During each of the first three quarters of 2026, our Board of Directors declared a quarterly cash dividend of $0.86 per common share. During each of the four quarters of 2025, our Board of Directors declared a quarterly cash dividend of $0.80 per common share.
Share Repurchase Program
In February 2026, our Board of Directors authorized us to repurchase an additional $1 billion of our common stock. As of September 30, 2026, $1.2 billion remained available under our share repurchase authorization. The share repurchase authorization has no set expiration or termination date.
Share Repurchases
For the nine months ended September 30, 2026, we repurchased 1.2 million shares of our common stock for $250 million.
For the nine months ended September 30, 2025, we repurchased 0.9 million shares of our common stock for $150 million.
Contractual Obligations
A description of the terms of our indebtedness and related debt service requirements is contained in Note 7 to the interim unaudited consolidated financial statements and Note 13 to the audited consolidated financial statements included in our 2025 Annual Report on Form 10-K.
A discussion of our lease obligations is contained in Note 14 to the audited consolidated financial statements included in our 2025 Annual Report on Form 10-K.
A discussion of our noncancellable commitments to purchase products or services is contained in Note 18 to the audited consolidated financial statements included in our 2025 Annual Report on Form 10-K.
Equity Method Investees
Our equity method investees primarily consist of a diagnostic information services joint venture and an investment in a fund that purchases strategic holdings in private companies in the healthcare industry. Such investees are accounted for under the equity method of accounting. Our investment in equity method investees is less than 5% of our consolidated total assets. Our proportionate share of income before income taxes associated with our equity method investees is less than 5% of our consolidated income before income taxes and equity in earnings of equity method investees. We have no material unconditional obligations or guarantees to, or in support of, our equity method investees and their operations.
In conjunction with the preparation of our September 30, 2026 financial statements, we considered whether the carrying values of our equity method investments were impaired and concluded that no such impairment existed.
Requirements and Capital Resources
We estimate that we will invest approximately $550 million during 2026 for capital expenditures, to support and grow our existing operations, principally related to investments in laboratory equipment and facilities, including laboratory automations and information technology to support our diagnostic offerings.
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In February 2025, we committed to a multi-year project ("Project Nova") to modernize our "Order-to-Cash" business processes including related information technology infrastructure and underlying enabling technologies. We expect to deliver value throughout the implementation of Project Nova, as it unlocks a variety of streamlined operational benefits, reduced technology-related operating costs, accelerated revenue opportunities and improvements to the customer and patient experience. See our 2025 Annual Report on Form 10-K for further details.
As of September 30, 2026, we had $1.3 billion of borrowing capacity available under our existing credit facilities, including $517 million available under our secured receivables credit facility and $750 million available under our senior unsecured revolving credit facility. There were no borrowings outstanding under the secured receivables credit facility and no borrowings outstanding under the senior unsecured revolving credit facility as of September 30, 2026. In support of our risk management program, $83 million in letters of credit under the secured receivables credit facility were outstanding as of September 30, 2026.
Our secured receivables credit facility is subject to customary affirmative and negative covenants, and certain financial covenants with respect to the receivables that comprise the borrowing base and secure the borrowings under the facility. Our senior unsecured revolving credit facility is also subject to certain financial covenants and limitations on indebtedness. As of September 30, 2026, we were in compliance with all such applicable financial covenants.
We believe that our cash and cash equivalents and cash from operations, together with our borrowing capacity under our credit facilities, will provide sufficient financial flexibility to fund seasonal and other working capital requirements, capital expenditures, debt service requirements and other obligations, cash dividends on common shares, share repurchases and additional growth opportunities, including acquisitions, for the foreseeable future. However, should it become necessary, we believe that our credit profile should provide us with access to additional financing in order to fund normal business operations, make interest payments, fund additional growth opportunities, including acquisitions, and satisfy upcoming debt maturities.
Forward-Looking Statements
Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan”, "aim", or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Risks and uncertainties that may affect our future results include, but are not limited to, the impact of the incident described in the Current Report on Form 8-K filed on October 22, 2026, uncertain and volatile economic conditions, adverse results from pending or future government investigations, lawsuits or private actions, the competitive environment, the complexity of billing, reimbursement and revenue recognition for clinical laboratory testing, changes in government policies, including related to trade, and regulations, changing relationships with customers, payers, suppliers and strategic partners, acquisitions and other factors discussed in our most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including those discussed in the “Business,” “Risk Factors,” “Cautionary Factors that May Affect Future Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those reports.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Item 4. Controls and Procedures
Management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.
During the third quarter of 2026, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
See Note 11 to the interim unaudited consolidated financial statements for information regarding the status of legal proceedings involving the Company.
Item 1A. Risk Factors
Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2025 includes a discussion of our risk factors. There have been no material changes in the risk factors described in that report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The table below sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the third quarter of 2026.
| ISSUER PURCHASES OF EQUITY SECURITIES | ||||||||||||||||||||||||||||||||
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) | ||||||||||||||||||||||||||||
| July 1, 2026 – July 31, 2026 | ||||||||||||||||||||||||||||||||
| Share Repurchase Program (A) | — | $ | — | — | $ | 1,333,483 | ||||||||||||||||||||||||||
| Employee Transactions (B) | 21 | $ | 209.12 | N/A | N/A | |||||||||||||||||||||||||||
| August 1, 2026 - August 31, 2026 | ||||||||||||||||||||||||||||||||
| Share Repurchase Program (A) | — | $ | — | — | $ | 1,333,483 | ||||||||||||||||||||||||||
| Employee Transactions (B) | 11,634 | $ | 237.60 | N/A | N/A | |||||||||||||||||||||||||||
| September 1, 2026 – September 30, 2026 | ||||||||||||||||||||||||||||||||
| Share Repurchase Program (A) | 627,674 | $ | 238.98 | 627,674 | $ | 1,183,483 | ||||||||||||||||||||||||||
| Employee Transactions (B) | — | $ | — | N/A | N/A | |||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||
| Share Repurchase Program (A) | 627,674 | $ | 238.98 | 627,674 | $ | 1,183,483 | ||||||||||||||||||||||||||
| Employee Transactions (B) | 11,655 | $ | 237.55 | N/A | N/A | |||||||||||||||||||||||||||
(A)In February 2026, our Board of Directors increased the size of our share repurchase program by $1 billion. Since the share repurchase program’s inception in May 2003, our Board of Directors has authorized $14 billion of share repurchases of our common stock through September 30, 2026. The share repurchase authorization has no set expiration or termination date.
(B)Includes: (1) shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by holders of stock options (granted under our Amended and Restated Employee Long-Term Incentive Plan) who exercised options; and (2) shares withheld (under the terms of grants under the Amended and Restated Employee Long-Term Incentive Plan) to offset tax withholding obligations that occur upon the delivery of outstanding common shares underlying restricted stock units and performance share units.
Item 5. Other Information
a.None
b.None
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c.Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements by Our Directors and Officers
During the quarterly period covered by this report, our directors and officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted, terminated or modified the Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K) set forth in the table below. No non-Rule 10b5-1 trading arrangements were adopted , modified or terminated by any director or officer during the quarterly period covered by this report.
| Name | Title | Type of Trading Arrangement | Security | Action | Date of Action | Duration of Trading Arrangement | Aggregate Number of Securities Covered | ||||||||||||||||
| Rule 10b5-1 plan to sell | Common Stock | August 13, 2026 to | Up to | ||||||||||||||||||||
| Rule 10b5-1 plan to sell | Common Stock | August 3, 2026 to | Up to | ||||||||||||||||||||
| Rule 10b5-1 plan to sell | Common Stock | August 26, 2026 to | Up to | ||||||||||||||||||||
| Rule 10b5-1 plan to sell | Common Stock | August 11, 2026 to | Up to | ||||||||||||||||||||
| Rule 10b5-1 plan to sell | Common Stock | August 10, 2026 to | Up to | ||||||||||||||||||||
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Item 6.Exhibits
Exhibits:
| 22 | ||||||||
| 31.1 | ||||||||
| 31.2 | ||||||||
| 32.1 | ||||||||
| 32.2 | ||||||||
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document - dgx-20260930.xsd | |||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document - dgx-20260930_cal.xml | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document - dgx-20260930_def.xml | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document - dgx-20260930_lab.xml | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document - dgx-20260930_pre.xml | |||||||
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | |||||||
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
October 23, 2026
Quest Diagnostics Incorporated
| By | /s/ James E. Davis | ||||
| James E. Davis | |||||
| Chairman, Chief Executive Officer | |||||
| and President | |||||
| By | /s/ Sam A. Samad | ||||
| Sam A. Samad | |||||
| Executive Vice President and | |||||
| Chief Financial Officer | |||||
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Exhibit 22
Subsidiary Guarantors of Securities
As of October 23, 2026, the following subsidiaries of Quest Diagnostics Incorporated provided, subject to the terms of such senior notes, unconditional and irrevocable guarantees to the senior notes listed below that were issued by Quest Diagnostics Incorporated pursuant to an offering registered under the Securities Act of 1933, as amended:
Securities | Issuer | Subsidiary Guarantor | State of Organization | ||||||||
6.95% Senior Notes due 2037 5.75% Senior Notes due 2040 | Quest Diagnostics Incorporated | American Medical Laboratories, Incorporated | Delaware | ||||||||
AmeriPath, Inc. | Delaware | ||||||||||
AmeriPath Consolidated Labs, Inc. | Florida | ||||||||||
AmeriPath Florida, LLC | Delaware | ||||||||||
AmeriPath Hospital Services Florida, LLC | Delaware | ||||||||||
AmeriPath Kentucky, Inc. | Kentucky | ||||||||||
AmeriPath New York, LLC | Delaware | ||||||||||
AmeriPath Texas, Inc. | Delaware | ||||||||||
Diagnostic Pathology Services, Inc. | Oklahoma | ||||||||||
ExamOne World Wide, Inc. | Pennsylvania | ||||||||||
ExamOne World Wide of NJ, Inc. | New Jersey | ||||||||||
Kailash B. Sharma, M.D., Inc. | Georgia | ||||||||||
LabOne, LLC | Missouri | ||||||||||
LabOne of Ohio, Inc. | Delaware | ||||||||||
Ocmulgee Medical Pathology Association, Inc. | Georgia | ||||||||||
Quest Diagnostics Clinical Laboratories, Inc. | Delaware | ||||||||||
Quest Diagnostics Esoteric Massachusetts, Inc. | Delaware | ||||||||||
Quest Diagnostics Holdings Incorporated | Delaware | ||||||||||
Quest Diagnostics Incorporated | Maryland | ||||||||||
Quest Diagnostics Incorporated | Nevada | ||||||||||
Quest Diagnostics Investments LLC | Delaware | ||||||||||
Quest Diagnostics LLC | Connecticut | ||||||||||
Quest Diagnostics LLC | Illinois | ||||||||||
Quest Diagnostics LLC | Massachusetts | ||||||||||
Quest Diagnostics Nichols Institute | California | ||||||||||
Quest Diagnostics Nichols Institute, Inc. | Virginia | ||||||||||
Quest Diagnostics of Pennsylvania Inc. | Delaware | ||||||||||
Specialty Laboratories, Inc. | California | ||||||||||
Unilab Corporation | Delaware | ||||||||||
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James E. Davis, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
October 23, 2026
| By | /s/ James E. Davis | ||||
| James E. Davis | |||||
| Chairman, Chief Executive Officer and | |||||
| President | |||||
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Sam Samad, certify that:
1.I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
October 23, 2026
| By | /s/ Sam Samad | ||||
| Sam Samad | |||||
| Executive Vice President and | |||||
| Chief Financial Officer | |||||
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Quarterly Report on Form 10-Q for the period ended September 30, 2026 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.
| Dated: | October 23, 2026 | /s/ James E. Davis | ||||||||||||
| James E. Davis | ||||||||||||||
| Chairman, Chief Executive Officer and | ||||||||||||||
| President | ||||||||||||||
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. § 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Quarterly Report on Form 10-Q for the period ended September 30, 2026 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.
| Dated: | October 23, 2026 | /s/ Sam Samad | ||||||||||||
| Sam Samad | ||||||||||||||
| Executive Vice President and | ||||||||||||||
| Chief Financial Officer | ||||||||||||||