Quest Diagnostics Incorporated

This is our first report on leading diagnostic service provider, Quest Diagnostics Incorporated. The company reported a successful fourth quarter with total revenue of $2.3 billion and an all-around beat. While their upside from COVID-19 testing has gone down, in the health insurance industry, value-based contracts are helping them advance since they exhibit significantly higher growth than conventional contracts. Additionally, they have already begun to reap the rewards of these value-based contracts’ incentives, further demonstrating these strategic alliances’ importance. The company produced significant double-digit growth in prenatal genetics and pharmaceutical services for sophisticated diagnostics. They also introduced a solid tumor expanded panel in 2022 as a test created in a lab. This 523-gene test utilizes the Illumina TruSight Oncology 500 Assay to provide thorough genomic profiling of a patient’s tumor, assisting oncologists in selecting therapy. In Q4, they completed acquiring Summa Health’s outreach laboratory services division. Also, they agreed to a contract to purchase a portion of the Maine-based outreach laboratory services company of Northern Light Health. Agilent Technologies further signed an agreement with Quest to make the Agilent Resolution ctDx FIRST liquid biopsy next-generation sequencing (NGS) test available to providers and patients across the U.S. We initiate coverage on the stock of Quest Diagnostics Incorporated with a ‘Hold’ rating.