How Does This Lab Business Operate?
Quest Diagnostics runs a large clinical laboratory business, providing diagnostic testing and related services. It processes patient specimens and delivers results that support routine screening, chronic-disease monitoring, and more specialized testing. The company operates at national scale in the US health care system, serving a broad mix of ordering channels. Its equity value sits around USD 23 billion.
Are Margins And Cash Flow Holding Steady?
FundamentalsFor 2025, reported in USD, revenue reached about USD 11.0 billion, with EBIT of roughly USD 1.6 billion and net income of around USD 1.0 billion. Over the same period, the business generated a cash flow proxy of about USD 1.3 billion, while maintaining a gross margin of 33.27% and an operating margin of 14.27% on a trailing basis.
Reinvestment ran close to depreciation: about USD 527 million of capital spending alongside USD 570 million of depreciation and amortization. Cash on hand was roughly USD 420 million against total debt of about USD 1.0 billion at year-end.
Is The Market Price Reflecting Fair Value?
DCF / MultiplesAt USD 207.44, the stock sits above the lower DCF estimate of USD 195.57, while remaining below the central estimate of USD 285.20 and the upper estimate of USD 393.49. On headline pricing, the stock trades around 22.42x trailing earnings and 16.03x EV/EBITDA.
Disciplined Growth With Sensible Risk
TakeawayThe setup leans on sustained growth with disciplined reinvestment. Capex is sizable, so returns on that spend matter. If margins slip, cash generation can thin quickly. If growth holds, the current price has room to look conservative.