# QUEST DIAGNOSTICS INC (DGX) Informational only - not investment advice. CIK: 0001022079 SIC: 8071 Services-Medical Laboratories SIC breadcrumb: [Services](/division/I/) > [SIC Major Group 80](/major-group/80/) > [SIC 8071 Services-Medical Laboratories](/industry/8071/) Latest 10-K filed: 2026-02-26 SEC page: https://www.sec.gov/edgar/browse/?CIK=1022079 Filing source: https://www.sec.gov/Archives/edgar/data/1022079/000102207926000015/dgx-20251231.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 11035000000 | USD | 2025 | 2026-02-26 | | Net income | 992000000 | USD | 2025 | 2026-02-26 | | Assets | 16225000000 | USD | 2025 | 2026-02-26 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001022079.json. Derived margins are computed from the extracted annual SEC facts. | Metric | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | 7,402,000,000 | 7,531,000,000 | 7,726,000,000 | 9,437,000,000 | 10,788,000,000 | 9,883,000,000 | 9,252,000,000 | 9,872,000,000 | 11,035,000,000 | | Net income | 645,000,000 | 772,000,000 | 736,000,000 | 858,000,000 | 1,431,000,000 | 1,995,000,000 | 946,000,000 | 854,000,000 | 871,000,000 | 992,000,000 | | Operating income | 1,277,000,000 | 1,165,000,000 | 1,101,000,000 | 1,231,000,000 | 1,971,000,000 | 2,381,000,000 | 1,428,000,000 | 1,262,000,000 | 1,346,000,000 | 1,556,000,000 | | Diluted EPS | 4.51 | 5.50 | 5.29 | 6.28 | 10.47 | 15.55 | 7.97 | 7.49 | 7.69 | 8.75 | | Assets | 10,100,000,000 | 10,503,000,000 | 11,003,000,000 | 12,843,000,000 | 14,026,000,000 | 13,611,000,000 | 12,837,000,000 | 14,022,000,000 | 16,153,000,000 | 16,225,000,000 | | Stockholders' equity | 4,628,000,000 | 4,921,000,000 | 5,216,000,000 | 5,641,000,000 | 6,759,000,000 | 6,444,000,000 | 5,893,000,000 | 6,307,000,000 | 6,778,000,000 | 7,170,000,000 | | Cash and cash equivalents | 359,000,000 | 137,000,000 | 135,000,000 | 1,192,000,000 | 1,158,000,000 | 872,000,000 | 315,000,000 | 686,000,000 | 549,000,000 | 420,000,000 | | Net margin | | 10.43% | 9.77% | 11.11% | 15.16% | 18.49% | 9.57% | 9.23% | 8.82% | 8.99% | | Operating margin | | 15.74% | 14.62% | 15.93% | 20.89% | 22.07% | 14.45% | 13.64% | 13.63% | 14.10% | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance ## Latest 10-K MD&A Extracted from a later financial-section MD&A body after the formal Item 7 span was a short reference. Confidence: high 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 ("ACOs") and Federally Qualified Health Centers ("FQHCs")), hospitals, and patients and consumers. Our other customers include health plans, employers, new and emerging retail healthcare providers, government agencies, pharmaceutical companies and other commercial clinical laboratories. We offer broad access to clinical testing through a 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. During 2025, we processed approximately 244 million test requisitions through our extensive laboratory network.     Clinical testing is an essential element in the delivery of healthcare services. Clinical testing is used for predisposition, screening, monitoring, diagnosis, prognosis and treatment choices of diseases and other medical conditions. We primarily compete with three types of clinical testing providers: commercial clinical laboratories, hospital-affiliated laboratories and physician-office laboratories. In addition, we compete with many smaller regional and local commercial clinical laboratories, specialized advanced laboratories and providers of consumer-initiated testing.     The clinical testing industry is subject to seasonal fluctuations in operating results and cash flows. Typically, testing volume declines during vacation and major holiday periods, reducing net revenues and operating cash flows below annual averages. Testing volume is also subject to declines due to severe weather or other events (such as public health emergencies and health pandemics), which can deter patients from having testing performed and which can vary in duration and severity from year to year. Additionally, orders for clinical testing generated from customers, including physicians, hospitals, and consumers, can be affected by factors such as changes in the economy and regulatory environment, which affect the number of unemployed and uninsured, and design changes in healthcare plans, which affect utilization as well as patient responsibility for healthcare costs.     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. 2025 Highlights     59 Table of Contents Year Ended December 31, 2025 2024 2023 (dollars in millions, except per share data) Net revenues $11,035 $9,872 $9,252 DIS revenues $10,785 $9,614 $8,976 Revenue per requisition change 0.1% 1.3% (5.9)% Requisition volume change 12.3% 5.5% (0.6)% Organic requisition volume change 3.4% 0.7% (1.0)% DS revenues $250 $258 $276 Operating income $1,556 $1,346 $1,262 Net income attributable to Quest Diagnostics $992 $871 $854 Diluted earnings per share $8.75 $7.69 $7.49 Net cash provided by operating activities $1,886 $1,334 $1,272 Capital expenditures $527 $425 $408     For further discussion of the year-over-year changes for the year ended December 31, 2025 compared to the year ended December 31, 2024, see "Results of Operations" below. Acquisitions     Acquisition of select testing assets of Spectra Laboratories     During February 2025, we entered into a definitive agreement to acquire select clinical testing assets and select dialysis-related water testing assets of Fresenius Medical Care's wholly-owned Spectra Laboratories, a leading provider of renal-specific laboratory testing services in the United States. During August 2025, the acquisition of the select clinical testing assets closed and during November 2025 the acquisition of the select dialysis-related water testing assets closed. We paid $84 million of aggregate cash consideration for the businesses. The acquired businesses are included in our DIS business.     For further details, see Note 6 to the audited 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 an 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, and enhancing the digital experience.     For the year ended December 31, 2025, we incurred $53 million of pre-tax charges in connection with restructuring and integration activities, including $28 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.     For further details of the Invigorate program and associated costs, see Note 5 to the audited consolidated financial statements. Outlook and Trends 60 Table of Contents     The healthcare system in the United States continues to evolve and industry and regulatory change is likely to be extensive. Because diagnostic information services is an essential healthcare service, we believe that the industry will continue to grow over the long term. There are a number of key trends that we expect will continue to have a significant impact on the growth and the nature of the diagnostic information services business in the United States and on our business. These trends present both opportunities and risks.     Healthcare market participants, including health plans and governments, are focusing on controlling costs, including potentially by reducing reimbursement for healthcare services, changing reimbursement for healthcare services (including but not limited to a shift from fee-for-service to capitation), changing medical coverage policies (e.g., healthcare benefits design), denying coverage for services, requiring preauthorization of laboratory testing, requiring co-pays, introducing laboratory spend management utilities and payment and patient care innovations such as ACOs and patient-centered medical homes. In recent years, there has been an ongoing trend of rising patient responsibility which has resulted in an increase in our reserves for patient price concessions. As health plans and government programs require greater levels of patient cost-sharing, our patient price concessions may continue to be negatively impacted and adversely impact our results of operations. There could be a shift to capitation arrangements where we agree to a predetermined monthly reimbursement rate for each member enrolled in a restricted plan, generally regardless of the number or cost of services provided by us. In 2025 and 2024, we derived approximately 8% and 5%, respectively, of our consolidated net revenues from capitated payment arrangements and in 2025 and 2024, we derived approximately 15% and 11%, respectively, of our testing volume from capitated payment arrangements.     The political environment impacting healthcare regulation in the United States continues to be uncertain. The services that we offer and our result of operations could be adversely affected by legislative, enforcement, regulatory and public policy changes at the federal or state level, many of which we cannot anticipate at this time.     Historically, the Medicare Clinical Laboratory Fee Schedule ("CLFS") and the Medicare Physician Fee Schedule established under Part B of the Medicare program have been subject to change, including each year. Pursuant to The Protecting Access to Medicare Act of 2014 ("PAMA"), reimbursement rates for many clinical laboratory tests provided under Medicare were reduced during 2018 - 2020. Starting in 2020, Congress has repeatedly acted to delay PAMA implementation by delaying the next round of data reporting (2020-2026) and Medicare cuts (2021-2026). Congress introduced legislation in 2025, the Results Act, which would reform PAMA and create a true market-based CLFS.     The diagnostic information services industry remains fragmented, is highly competitive and is subject to new competition. Consolidation in the healthcare industry has continued at a rapid pace, including among our customer base. Certain of our customers are seeking to diversify their service offerings and to partner with other providers to offer value-based care alternatives. Consolidation is increasing pricing transparency, and may encourage internalization of clinical testing.     On-going inflationary pressures have resulted in increases in the cost of our operations, including the costs of testing equipment, supplies and other goods and services we purchase from manufacturers, suppliers and others. Inflationary pressures, along with the competition for labor, have also resulted in a rise of our labor costs, which include the costs of compensation, benefits and recruiting and training new hires. Our Invigorate program is designed to, among other things, partially offset these impacts.     In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. The OBBBA and other possible legislation is expected to impact healthcare providers in the United States, including us, primarily through changes to Medicaid and the Affordable Care Act (“ACA”). These changes could lead to reduced funding, increased regulatory burdens and potential shifts in patient populations among payer types and utilization. Additional federal and state guidance is expected to be issued in order to implement the various provisions of the OBBBA, many of which have effective dates in 2027 and 2028. In addition, the enhanced Premium Tax Credits (“PTC”) that were part of the Inflation Reduction Act of 2022, which have helped drive an increase in Individual Public Exchange enrollment, expired at the end of 2025 and such expiration could also have an impact on patient populations and result in shifts among payer types and utilization.     Revenues generated under Medicaid and managed Medicaid programs, and through the ACA related Exchange Plans, represented approximately 8% and less than 5%, respectively, of consolidated revenues for 2025. Based on the provisions of the new legislation (including various effective dates), we currently believe that the OBBBA, and expiration of the enhanced PTCs, are not expected to have a material impact on our consolidated revenues for 2026. In addition, we currently estimate that for 2026 through 2028 the OBBBA and the expiration of the enhanced PTCs at the end of 2025 could reduce our consolidated revenues by up to 50-60 basis points by 2028, compared to 2025, primarily reflecting the impact on our ACA related Exchange Plans revenues. 61 Table of Contents     While the impacts outlined above represent our current estimates, we continue to assess the impact of the OBBBA and the expiration of the enhanced PTCs on our outlook for 2026 through 2028.     The OBBBA makes permanent key elements of the Tax Cuts and Jobs Act of 2017, including 100% bonus depreciation, domestic research cost expensing and the business interest expense limitation, among other tax changes. Many of the tax provisions of the OBBBA are designed to accelerate tax deductions, which leads to lower cash tax payments. The new legislation has multiple effective dates, with certain provisions effective in 2025 and others in the future. The tax provisions of the legislation did not have a material impact on our statement of operations. Our consolidated deferred income tax liabilities as of December 31, 2025 and 2024 were $354 million and $278 million, respectively. The increase was principally due to the domestic research cost expensing and bonus depreciation elements of the OBBBA.     For additional information on our key trends, which present both opportunities and risks, see "Item 1. Business: The Clinical Testing Industry." Critical Accounting Policies     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions and select accounting policies that affect our reported financial results and the disclosure of contingent assets and liabilities.     Our revenues are primarily comprised of a high volume of relatively low-dollar transactions, and about one-half of our total costs and expenses consist of employee compensation and benefits. Due to the nature of our business, several of our accounting policies involve significant estimates and judgments: •revenues and accounts receivable associated with DIS; •reserves for general and professional liability claims; •reserves for other legal proceedings; and •accounting for and recoverability of goodwill.     Revenues and accounts receivable associated with DIS     The process for estimating revenues and the ultimate collection of receivables associated with our DIS business involves significant assumptions and judgments. We recognize revenues primarily upon completion of the testing process (when results are reported) or when services have been rendered. We estimate the amount of consideration we expect to be entitled to receive from payer customer groups in exchange for providing services using the portfolio approach. These estimates include the impact of contractual allowances (including payer denials), and patient price concessions, as discussed below. The portfolios determined using the portfolio approach consist of the following payer customers: •Healthcare Insurers/Health Plans •Government Payers •Client Payers •Patients     We have a standardized approach to estimate the amount of consideration that we expect to be entitled to, including the impact of contractual allowances (including payer denials), and patient price concessions. Historical collection and payer reimbursement experience (along with the period of time that the receivables have been outstanding) is an integral part of the estimation process related to revenues and receivables. Adjustments to our estimated contractual allowances and implicit patient price concessions are recorded in the current period as changes in estimates. Further adjustments to the allowances, based on actual receipts, may be recorded upon settlement. 62 Table of Contents     We regularly assess the state of our billing operations in order to identify issues which may impact the collectability of receivables or revenue estimates. We believe that the collectability of our receivables is directly linked to the quality of our billing processes, most notably those related to obtaining the correct information in order to bill effectively for the services we provide. As such, we strive to implement “best practices” and endeavor to increase the use of electronic ordering to reduce the number of requisitions that we receive from healthcare providers with missing or incorrect billing information. We believe that our collection and revenue estimation processes, along with our close monitoring of our billing operations, help to reduce the risk associated with material adjustments to reserve estimates. However, changes to our estimate of the impact of contractual allowances (including payer denials) and patient price concessions could have a material impact on our results of operations and financial condition in the period that the estimates are adjusted.     The following table shows the approximate percentage of our total requisition volume and net revenues associated with our DIS business during 2025 applicable to each payer customer group: % of % of Total Consolidated Volume Net Revenues Healthcare insurers 43% 39% Government payers 17 16 Client payers 37 31 Patients * 1 12 Total DIS 98% 98% *Patients revenue includes coinsurance and deductible responsibilities; but volume associated with such revenue is reported under Healthcare insurers.     The following table shows net accounts receivable as of December 31, 2025 applicable to each payer customer group:     % of Consolidated Net Accounts Receivable Healthcare insurers 27% Government payers 8 Client payers 43 Patients (including coinsurance and deductible responsibilities) 20 Total DIS 98%     Healthcare insurers/ Health plans     Reimbursements from healthcare insurers are based on fee-for-service schedules and on capitated payment rates. Under fee-for-service arrangements, healthcare insurers are billed at our list price. Net revenues recognized consist of amounts billed net of contractual allowances for differences between amounts billed and the estimated consideration we expect to receive from such payers, which considers historical denial and collection experience and the terms of our contractual arrangements.     Substantially all of the accounts receivable due from healthcare insurers represent amounts billed under fee-for-service arrangements. Collection of our net revenues from healthcare insurers is normally a function of providing complete and correct billing information to the healthcare insurers within the various filing deadlines and generally occurs within 30 to 60 days of billing. Provided we have billed healthcare insurers accurately with complete information prior to the established filing deadline, there has historically been little to no credit risk. If there has been a delay in billing, we determine if the amounts in question will likely go past the filing deadline, and if so, we will reserve accordingly for the billing.     Under capitated arrangements with healthcare insurers, we recognize revenue based on a predetermined monthly reimbursement rate for each member of an insurer's health plan regardless of the number or cost of services provided by us. Under capitated payment arrangements, the healthcare insurers typically reimburse us in the same month services are performed, essentially giving rise to no outstanding accounts receivable at the end of a reporting period. If any capitated 63 Table of Contents payments are not received on a timely basis, we determine the cause and make a separate determination as to whether or not the collection of the amount from the healthcare insurer is at risk and, if so, would reserve accordingly.     Government payers     Reimbursements from domestic government payers are based on fee-for-service schedules set by governmental authorities, including traditional Medicare and Medicaid. Reimbursements from government payers in Canada are based on a combination of fee-for-service schedules, with a cap on maximum billings, and capitated arrangements. Net revenues recognized for fee-for-service arrangements principally consist of amounts billed net of contractual allowances for differences between amounts billed and the estimated consideration we expect to receive from such payers, which considers historical denial and collection experience.     Collection of our net revenues from government payers is normally a function of providing the complete and correct billing information within the various filing deadlines. Collection generally occurs within 30 days of billing. Provided we have billed government payers accurately with complete information prior to the established filing deadline, there has historically been little to no credit risk. If there has been a delay in billing, we determine if the amounts in question will likely go past the filing deadline, and, if so, we will reserve for the billing accordingly.     Client payers     Client payers include physicians, hospitals, employers, new and emerging retail healthcare providers, pharmaceutical companies and other commercial clinical laboratories and institutions for which services are performed on a wholesale basis, and are billed based on a negotiated fee schedule. Credit risk and ability to pay are more of a consideration for these payers than healthcare insurers and government payers. Collection of consideration we expect to receive generally occurs within 60 to 90 days of billing.     We principally estimate the allowance for credit losses for client payers based on historical collection experience, the current credit worthiness of the customers, current economic conditions, expectations of future economic conditions and the period of time that the receivables have been outstanding. To the extent that any individual client payers are identified that have deteriorated in credit quality, we establish allowances based on the individual risk characteristics of such customers.     Patients     Uninsured patients are billed based on established patient fee schedules or fees negotiated with physicians on behalf of their patients. Insured patients (includes coinsurance and deductible responsibilities) are billed based on fees negotiated with healthcare insurers. Collection of billings from patients is subject to credit risk and ability of the patients to pay. Net revenues consist of amounts billed net of discounts provided to uninsured patients in accordance with our policies and implicit price concessions. Implicit price concessions represent differences between amounts billed and the estimated consideration we expect to receive from patients, which considers historical collection experience (along with the period of time that the receivables have been outstanding) and other factors including current market conditions. Patient billings are generally fully reserved for when the related service reaches 210 days outstanding. Balances are automatically written off when they are sent to collection agencies. Allowances are further adjusted for estimated recoveries of amounts sent to collection agencies based on historical collection experience, which is regularly monitored. Collection of consideration we expect to receive generally occurs within 30 to 60 days of billing.     Reserves for general and professional liability claims     As a general matter, providers of diagnostic information services may be subject to lawsuits alleging negligence or other similar claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on our client base and reputation. We maintain various liability insurance coverages for claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. Our insurance coverage limits our maximum exposure on individual claims; however, we are essentially self-insured for a significant portion of these claims. While the basis for claims reserves is actuarially determined losses based upon our 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 we believe that our present reserves and insurance coverage are sufficient to cover currently estimated exposures, it is possible that we may incur liabilities in excess of our recorded reserves or insurance coverage. Changes in the facts and circumstances associated with claims could have a material impact on our results of operations (principally costs of services), cash flows and financial condition in the period that reserve 64 Table of Contents estimates are adjusted or paid. See Note 18 to the audited consolidated financial statements for a discussion of our reserves for general and professional liability claims.     Reserves for other legal proceedings     Our businesses are subject to or impacted by extensive and frequently changing laws and regulations, including inspections and audits by governmental agencies, in the United States (at both the federal and state levels) and the other jurisdictions in which we conduct business. Although we believe that we are in compliance, in all material respects, with applicable laws and regulations, there can be no assurance that a regulatory agency would not reach a different conclusion. Any noncompliance by us with applicable laws and regulations could have a material adverse effect on our results of operations. In addition, these laws and regulations may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require us to make changes in our operations, including our pricing and/or billing practices. In addition, certain federal and state statutes, including the qui tam provisions of federal and state false claims acts, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers alleging inappropriate billing practices. We are aware of certain pending lawsuits including class action lawsuits, and have received subpoenas related to billing practices. See Note 18 to the audited consolidated financial statements for a discussion of the various legal proceedings that we are involved in.     The process of analyzing, assessing and establishing reserve estimates relative to legal proceedings involves a high degree of judgment. Management has established reserves for legal proceedings in accordance with generally accepted accounting principles in the United States. Changes in facts and circumstances related to such proceedings could lead to significant adjustments to reserve estimates for such matters and could have a material impact on our results of operations, cash flows and financial condition in the period that reserve estimates are adjusted or paid.     Accounting for and recoverability of goodwill     We do not amortize goodwill, but evaluate the recoverability and measure the potential impairment of our goodwill annually, or more frequently, in the case of other events that indicate a potential impairment. We identified the following reporting units for goodwill impairment testing in 2025: •DIS business; •Risk assessment services business, which is part of our DS businesses     The DIS reporting unit components have been aggregated into a single reporting unit because they have similar economic characteristics, including similarities in financial performance, nature of products or services, nature of production processes and types of customers.     On a quarterly basis, we perform a review of our business to determine if events or changes in circumstances have occurred which could have a material adverse effect on our fair value and our goodwill. If such events or changes in circumstances were deemed to have occurred, we would perform an impairment test of goodwill and record any noted impairment loss.     The annual impairment test for goodwill includes an option to perform a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value; the qualitative analysis may be performed prior to, or as an alternative to, performing a quantitative goodwill impairment test. In evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying value, we assess relevant events and circumstances, such as: (a) macroeconomic conditions; (b) industry and market considerations; (c) cost factors; (d) overall financial performance; (e) other relevant entity-specific events; (f) events affecting a reporting unit; and (g) a sustained decrease in share price. If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we are required to perform the quantitative goodwill impairment test. Otherwise, no further analysis is required. Additionally, our policy is to update the fair value calculation of our reporting units and perform the quantitative goodwill impairment test on a periodic basis.     The quantitative impairment test involves the comparison of the fair value of the reporting unit to its carrying value. If the carrying value is greater than our estimate of fair value, an impairment loss will be recognized in the amount of the excess. We calculate the fair value of each reporting unit using either (i) a discounted cash flows analysis that converts future cash flow amounts into a single discounted present value amount or (ii) a market approach. We assess the valuation methodology based upon the relevance and availability of the data at the time we perform the valuation. The discounted cash flows analysis 65 Table of Contents includes several unobservable inputs related to our own assumptions. The assumptions and estimates used in the discounted cash flows model are based upon the best available information in the circumstances and include a forecast of expected future cash flows, long-term growth rates, discount rates that are commensurate with economic risks, assumed income tax rates and estimates of capital expenditures and working capital. The fair values of the reporting units could be different if, for example, forecasted revenue growth rates, economic conditions, government regulations or actions by payers to control utilization of or reimbursement for healthcare services, turn out to be different than our assumptions or estimates. Changes in the assumed discount rates due to changes in interest rates could also affect the estimated fair values of the reporting units. We use a discount rate that considers a weighted average cost of capital plus an appropriate risk premium based upon the reporting unit being valued. Our analysis also considers publicly available information regarding our market capitalization, as well as (i) the financial projections and future prospects of our business, including its growth opportunities and likely operational improvements, and (ii) comparable sales prices, if available. We believe our estimation methods are reasonable and reflect common valuation practices.     We perform our annual impairment test during the fourth quarter of the fiscal year. For the year ended December 31, 2025, we performed a qualitative assessment for our DIS and risk assessment services reporting units. Based on the totality of the information available for each reporting unit, we concluded that it was more likely than not that the estimated fair values were greater than the carrying values of the reporting values, and as such, no further analysis was required. As a sensitivity, in conjunction with the most recent quantitative test performed for the year ended December 31, 2023, if the estimated fair values of each of our reporting units decreased by 10%, we would have concluded that our goodwill was not impaired. However, DS revenues for the year ended December 31, 2025 decreased by 3.3% compared to the prior year primarily due to lower revenues associated with our risk assessment services offered to insurers. Therefore, we will continue to closely monitor the risk assessment services reporting unit for potential impairment going forward. 66 Table of Contents Results of Operations     For a comparison of results of operations for the year ended December 31, 2024 compared to December 31, 2023, along with the results of operations for the year ended December 31, 2023, see "Item 7 - Management's Discussion and Analysis of Financial Condition and Result of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024. See "Available Information."     Basis of Presentation     Our DIS business currently represents our one reportable business segment. The DIS business for the years ended December 31, 2025 and 2024 accounted for greater than 95% of our consolidated net revenues. Our other operating segments consist of our DS businesses. For further details regarding our business segment information, see Note 19 to the audited consolidated financial statements.     Results of Operations         The following table sets forth certain results of operations data for the periods presented:     2025 2024 $ Change % Change (dollars in millions, except per share data) Net revenues: DIS business $ 10,785  $ 9,614  $ 1,171  12.2  % DS businesses 250  258  (8) (3.3) Total net revenues $ 11,035  $ 9,872  $ 1,163  11.8  % Operating costs and expenses and other operating income: Cost of services $ 7,370  $ 6,628  $ 742  11.2  % Selling, general and administrative 1,967  1,770  197  11.1  Amortization of intangible assets 154  127  27  20.8  Other operating (income) expense, net (12) 1  (13) NM Total operating costs and expenses, net $ 9,479  $ 8,526  $ 953  11.2  % Operating income $ 1,556  $ 1,346  $ 210  15.6  % Other income (expense): Interest expense, net $ (264) $ (201) $ (63) 31.5  % Other income, net 26  30  (4) NM Total non-operating expense, net $ (238) $ (171) $ (67) NM Income tax expense $ (314) $ (273) $ (41) 14.9  % Effective income tax rate 23.8  % 23.2  % Equity in earnings of equity method investees, net of taxes $ 42  $ 19  $ 23  120.5  % Net income attributable to Quest Diagnostics $ 992  $ 871  $ 121  13.9  % Diluted earnings per share attributable to Quest Diagnostics’ common stockholders $ 8.75  $ 7.69  $ 1.06  13.8  % NM - Not Meaningful 67 Table of Contents     The following table sets forth certain results of operations data as a percentage of net revenues for the periods presented: 2025 2024 Net revenues: DIS business 97.7  % 97.4  % DS businesses 2.3  2.6  Total net revenues 100.0  % 100.0  % Operating costs and expenses and other operating income: Cost of services 66.8  % 67.2  % Selling, general and administrative 17.8  17.9  Amortization of intangible assets 1.4  1.3  Other operating (income) expense, net (0.1) —  Total operating costs and expenses, net 85.9  % 86.4  % Operating income 14.1  % 13.6  %     Operating Results     Results for the year ended December 31, 2025 were affected by certain items that on a net basis decreased diluted earnings per share by $1.10 as follows: •pre-tax amortization expense of $154 million (recorded in amortization of intangible assets) or $1.01 per diluted share; •pre-tax charges of $53 million ($12 million recorded in cost of services, $40 million recorded in selling, general and administrative expenses and $1 million in other operating (income) expense, net), or $0.39 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 $52 million, or $0.34 per diluted share, ($29 million recorded in other operating (income) expense, net for an impairment charge on certain long-lived assets related to the exit of a business; and $7 million and $15 million recorded in selling, general and administrative expenses and other operating (income) expense, net, respectively, for charges to earnings related to legal matters); partially offset by •pre-tax gains of $54 million ($46 million recorded in other operating (income) 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 an $8 million non-recurring gain related to a lease; •a pre-tax gain of $10 million (recorded in other operating (income) expense, net), or $0.09 per diluted share, associated with the decrease in the fair value of the contingent consideration accrual associated with previous acquisitions; •pre-tax gains of $4 million (principally recorded in other income, net), or $0.03 per diluted share, representing net gains associated with changes in the carrying value of our strategic investments, and •$18 million of excess tax benefits associated with stock-based compensation arrangements (recorded in income tax expense), or $0.16 per diluted share.     Results for the year ended December 31, 2024 were affected by certain items that on a net basis decreased diluted earnings per share by $1.24 as follows: •pre-tax amortization expense of $127 million (recorded in amortization of intangible assets), or $0.84 per diluted share; •pre-tax net charges of $62 million ($27 million recorded in cost of services and $37 million recorded in selling, general and administrative expenses, partially offset by a $2 million gain recorded in other operating (income) expense, net), or $0.42 per diluted share, primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business; 68 Table of Contents •pre-tax charges of $15 million (recorded in equity in earnings of equity method investees, net of taxes), or $0.10 per diluted share, representing net losses associated with changes in the carrying value of our strategic investments; and •pre-tax charges of $6 million ($2 million recorded in cost of services, $2 million recorded in selling, general and administrative expenses and $2 million recorded in other operating (income) expense, net), or $0.04 per diluted share, including an increase in the fair value of the contingent consideration accrual associated with previous acquisitions; partially offset by •pre-tax gains of $12 million (recorded in other income, net), or $0.08 per diluted share, principally representing a non-recurring gain associated with a foreign exchange forward contract utilized in conjunction with an acquisition, and •$9 million of excess tax benefits associated with stock-based compensation arrangements (recorded in income tax expense), or $0.08 per diluted share.     Net Revenues     Net revenues for the year ended December 31, 2025 increased by 11.8% compared to the prior year. For the year ended December 31, 2025, organic growth was 5.3% compared to the prior year.     DIS revenues for the year ended December 31, 2025 increased by 12.2% compared to the prior year. For the year ended December 31, 2025: •The increase in DIS revenues compared to the prior year was driven by both organic growth and the impact of recent acquisitions. For the year ended December 31, 2025, recent acquisitions contributed approximately 6.7% to DIS revenues. •DIS volume increased by 12.3% compared to the prior year primarily driven by the impact of recent acquisitions, which contributed approximately 8.9% to DIS volume, with organic volume up by 3.4%. •Revenue per requisition increased by 0.1% compared to the prior year as an increase in the number of tests per requisition and favorable test mix were offset by the impact of the acquisition of LifeLabs, which has a lower revenue per requisition. On an organic basis, revenue per requisition increased 2.4% during the period.     DS revenues for the year ended December 31, 2025 decreased by 3.3% compared to the prior year primarily due to lower revenues associated with our risk assessment services offered to insurers.     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.     Cost of services increased by $742 million for the year ended December 31, 2025 compared to the prior year. The increase was primarily driven by the impact of recent acquisitions, wage increases, and, to a lesser extent, higher supplies expense, 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.     SG&A increased by $197 million for the year ended December 31, 2025 compared to the prior year. The increase was primarily driven by the impact of recent acquisitions and, to a lesser extent, higher compensation costs and higher depreciation expense.     The changes in the value of our deferred compensation obligations is largely offset by changes in the value of the associated investments, which are recorded in other income, net. For further details regarding our deferred compensation plans, see Note 17 to the audited consolidated financial statements.     Amortization of Intangible Assets 69 Table of Contents     For the year ended December 31, 2025, amortization expense was $27 million higher than the prior year as a result of recent acquisitions.     Other Operating (Income) Expense, Net     Other operating (income) expense, net includes miscellaneous income and expense items and other charges related to operating activities.     For the year ended December 31, 2025, other operating (income) expense, net includes a $46 million gain from a payroll tax credit under the CARES Act associated with the retention of employees and $10 million of gains associated with the decrease in the fair value of the contingent consideration accrual associated with previous acquisitions.     Additionally, during the year ended December 31, 2025, we recorded an impairment charge of $29 million on certain long-lived assets related to the exit of a business and $15 million of charges to earnings related to legal matters.     Interest Expense, Net     Interest expense, net increased by $63 million for the year ended December 31, 2025, compared to the prior year, primarily due to the issuance in August 2024 of $1.85 billion of senior notes.     Other Income, Net     Other 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 year ended December 31, 2025, other income, net included $19 million of gains associated with investments in our deferred compensation plans and $7 million of gains associated with changes in the carrying value of our strategic investments.     For the year ended December 31, 2024, other income, net included $18 million of gains associated with investments in our deferred compensation plans and an $8 million gain associated with a foreign exchange forward contract utilized in conjunction with an acquisition.     Income Tax Expense     Income tax expense for the years ended December 31, 2025 and 2024 was $314 million and $273 million, respectively. The increase in income tax expense compared to the prior year was driven by an increase in income before income taxes and equity in earnings of equity method investees.     The effective income tax rate for the years ended December 31, 2025 and 2024 was 23.8% and 23.2%, respectively. The effective income tax rates benefited from $18 million and $9 million of excess tax benefits associated with stock-based compensation arrangements for the years ended December 31, 2025 and 2024, respectively.     Equity in Earnings of Equity Method Investees, Net of Taxes     For the year ended December 31, 2025, there was a $23 million increase in equity in earnings of equity method investees, net of taxes, compared to the prior year primarily due to the year ended December 31, 2025 including an $8 million non-recurring gain related to a lease and the year ended December 31, 2024 including $15 million of net losses associated with changes in the carrying value of our strategic investments.