Quest Diagnostics DGX Form 10-Q filing Q2 FY2026

Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

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.

Second Quarter Highlights

For further discussion of the year-over-year changes for the three months ended June 30, 2026 compared to the three months ended June 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.

For the six months ended June 30, 2026, we incurred $11 million of pre-tax charges in connection with restructuring and integration activities, including $9 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.

Results of Operations

The following tables set forth certain results of operations data for the periods presented:

The following table sets forth certain results of operations data as a percentage of net revenues for the periods presented:

Operating Results

Results for the three months ended June 30, 2026 were affected by certain items that on a net basis decreased diluted earnings per share by $0.28 as follows:

• pre-tax amortization expense of $38 million, recorded in amortization of intangible assets, or $0.25 per diluted share;
• pre-tax charges of $4 million ($1 million recorded in cost of services and $3 million recorded in selling, general and administrative expenses), or $0.04 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 $1 million, principally recorded in other operating expense (income), net, or $0.02 per diluted share, primarily representing a loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions; partially offset by
• pre-tax gains of $1 million, recorded in equity in earnings of equity method investees, net of taxes, or $0.01 per diluted share, representing gains associated with changes in the carrying value of our strategic investments; and
• $2 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.02 per diluted share.

Results for the six months ended June 30, 2026 were affected by certain items that on a net basis decreased diluted earnings per share by $0.54 as follows:

• pre-tax amortization expense of $75 million, recorded in amortization of intangible assets, or $0.50 per diluted share;
• pre-tax charges of $11 million ($2 million recorded in cost of services and $9 million recorded in selling, general and administrative expenses), or $0.08 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 $5 million, principally recorded in other operating expense (income), net, or $0.05 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 $6 million, principally recorded in equity in earnings of equity method investees, net of taxes, or $0.04 per diluted share, representing losses associated with changes in the carrying value of our strategic investments; partially offset by
• $14 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.13 per diluted share.

Results for the three months ended June 30, 2025 were affected by certain items that on a net basis decreased diluted earnings per share by $0.15 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 $28 million, recorded in other operating expense (income), net, or $0.19 per diluted share, primarily representing a $24 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 $7 million ($1 million recorded in cost of services and $6 million recorded in selling, general and administrative expenses), or $0.04 per diluted share, primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business; partially offset by
• a pre-tax gain of $46 million, recorded in other operating expense (income), net, or $0.30 per diluted share, from a payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") associated with the retention of employees;
• pre-tax gains of $2 million ($1 million recorded in other 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
• $3 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.02 per diluted share.

Results for the six months ended June 30, 2025 were affected by certain items that on a net basis decreased diluted earnings per share by $0.42 as follows:

• pre-tax amortization expense of $78 million recorded in amortization of intangible assets, or $0.51 per diluted share;

• pre-tax charges of $30 million, recorded in other operating expense (income), net, or $0.21 per diluted share, primarily representing a $24 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 $26 million ($7 million recorded in cost of services and $19 million recorded in selling, general and administrative expenses), or $0.17 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 (income), 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 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 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

• $12 million of excess tax benefits associated with stock-based compensation arrangements, recorded in income tax expense, or $0.10 per diluted share.

  Net Revenues

Net revenues for the three months ended June 30, 2026 increased by 10.2% compared to the prior year period principally driven by organic revenue growth of 10.0%.

DIS revenues for the three months ended June 30, 2026 increased by 10.3% compared to the prior year period.

For the three months ended June 30, 2026:

• The increase in DIS revenues compared to the prior year period was principally driven by organic growth of 10.1%.
• DIS volume increased by 13.1% compared to the prior year period principally driven by organic growth of 13.0%, of which approximately 9% was due to both our new relationship 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, organic volume increased by approximately 4% 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 approximately 3% primarily driven by an increase in the number of tests per requisition.

DS revenues for the three months ended June 30, 2026 were principally consistent with the prior year period.

Net revenues for the six months ended June 30, 2026 increased by 9.7% compared to the prior year period principally driven by organic revenue growth of 9.5%.

DIS revenues for the six months ended June 30, 2026 increased by 9.9% compared to the prior year period.

For the six months ended June 30, 2026:

• The increase in DIS revenues compared to the prior year period was principally driven by organic growth of 9.6%.
• DIS volume increased by 12.0% compared to the prior year period principally driven by organic growth of 11.9%, of which approximately 8% was due to both our new relationship 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, organic volume increased by approximately 4% compared to the prior year period.
• Revenue per requisition decreased by 2.1% 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 approximately 2.5% primarily driven by an increase in the number of tests per requisition and favorable test mix.

DS revenues for the six months ended June 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 June 30, 2026, cost of services increased by $198 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 six months ended June 30, 2026, cost of services increased by $362 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 June 30, 2026, SG&A increased by $43 million compared to the prior period. The increase was primarily driven by higher compensation costs.

For the six months ended June 30, 2026, SG&A increased by $71 million compared to the prior period. The increase was primarily driven by higher compensation costs.

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, 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 six months ended June 30, 2026, amortization expense was principally consistent with the prior year periods.

Other Operating Expense (Income), Net

Other operating expense (income), net includes miscellaneous income and expense items and other charges related to operating activities.

For both the three and six months ended June 30, 2026, other operating expense (income), net primarily represents losses associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions.

For both the three and six months ended June 30, 2025, other operating expense (income), net includes a $46 million gain from a payroll tax credit under the CARES Act associated with the retention of employees. Additionally, during the three and six months ended June 30, 2025, we recorded an impairment charge of $24 million on certain long-lived assets related to the exit of a business. Also, both periods include 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 June 30, 2026, interest expense, net decreased by $4 million compared to the prior year period primarily due to lower interest rates associated with our indebtedness and higher interest income on cash and cash equivalents.

For the six months ended June 30, 2026, interest expense, net decreased by $8 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 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 three and six months ended June 30, 2026, other income, net included $16 million and $14 million, respectively, of gains associated with investments in our deferred compensation plans.

For the three and six months ended June 30, 2025, other income, net included $11 million and $9 million, respectively, of gains associated with investments in our deferred compensation plans.

Income Tax Expense

Income tax expense for the three months ended June 30, 2026 and 2025 was $88 million and $97 million, respectively.

The effective income tax rate for the three months ended June 30, 2026 and 2025 was 21.5% and 25.1%, respectively. The effective income tax rate benefited from $2 million and $3 million of excess tax benefits associated with stock-based compensation arrangements for the three months ended June 30, 2026 and 2025, respectively. The effective income tax rate for the three months ended June 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.

Income tax expense for the six months ended June 30, 2026 and 2025 was $162 million and $156 million, respectively.

The effective income tax rate for the six months ended June 30, 2026 and 2025 was 21.8% and 23.6%, respectively. The effective income tax rate benefited from $14 million and $12 million of excess tax benefits associated with stock-based compensation arrangements for the six months ended June 30, 2026 and 2025, respectively. The effective income tax rate for the six months ended June 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.

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 June 30, 2026 was principally consistent with the prior year period.

Equity in earnings of equity method investees, net of taxes, decreased by $13 million for the six months ended June 30, 2026, compared to the prior year period, primarily due to the six months ended June 30, 2025 including an $8 million non-recurring gain related to a lease and the six months ended June 30, 2026 including $7 million of losses associated with changes in the carrying value of our strategic investments.

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 June 30, 2026 and December 31, 2025, the fair value of our debt was estimated at approximately $5.6 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 June 30, 2026 and December 31, 2025, the estimated fair value was (less than) more than the carrying value of the debt by $(5) million and $59 million, respectively. A hypothetical 10% increase in interest rates (representing 49 basis points and 44 basis points as of June 30, 2026 and December 31, 2025, respectively) would potentially reduce the estimated fair value of our debt by approximately $152 million and $135 million as of June 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 June 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 June 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 June 30, 2026 and December 31, 2025 was $1.8 billion. The aggregate net fair value of the fixed-to-variable interest rate swaps was $(21) million and $14 million, in a net (liability) asset position, as of June 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 39 basis points change in the weighted average yield) would potentially change the fair value of our fixed- to-variable interest rate swaps by $43 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 $47 million as of June 30, 2026. In conjunction with the preparation of our June 30, 2026 financial statements, we considered whether the carrying values of our investments were impaired and concluded that no such impairment existed.

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

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 June 30, 2026 totaled $626 million, compared to $420 million as of December 31, 2025.

As of June 30, 2026, approximately 12% of our $626 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 six months ended June 30, 2026 and 2025 was $875 million and $858 million, respectively. The $17 million increase in net cash provided by operating activities for the six months ended June 30, 2026, compared to the prior year period, was primarily a result of increased operating income being substantially offset by 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 50 days as of June 30, 2026, 48 days as of December 31, 2025 and 47 days as of June 30, 2025.

Cash Flows from Investing Activities

Net cash used in investing activities for the six months ended June 30, 2026 and 2025 was $286 million and $239 million, respectively. This $47 million increase in net cash used in investing activities for the six months ended June 30, 2026, compared to the prior year period, was primarily a result of increased cash used for capital expenditures and business acquisitions.

Cash Flows from Financing Activities

Net cash used in financing activities for the six months ended June 30, 2026 and 2025 was $381 million and $854 million, 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. The current year period includes approximately $100 million of treasury stock purchases.

During the six months ended June 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 six months ended June 30, 2026, there were no borrowings or repayments under our secured receivables credit facility or our senior unsecured revolving credit facility.

During the six months ended June 30, 2025, we borrowed $400 million under our secured receivables credit facility, which was repaid prior to June 30, 2025. During the six months ended June 30, 2025, there were no borrowings or repayments under our senior unsecured revolving credit facility.

Dividend Program

During each of the first and second 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 June 30, 2026, $1.3 billion remained available under our share repurchase authorization. The share repurchase authorization has no set expiration or termination date.

Share Repurchases

For the six months ended June 30, 2026, we repurchased 0.5 million shares of our common stock for $100 million.

For the six months ended June 30, 2025, we repurchased no shares of our common stock.

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 June 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.

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 June 30, 2026, we had $1.3 billion of borrowing capacity available under our existing credit facilities, including $518 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 June 30, 2026. In support of our risk management program, $82 million in letters of credit under the secured receivables credit facility were outstanding as of June 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 June 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.

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 second 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

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 second quarter of 2026.

(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 June 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 the Company’s 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

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

Mark Delaney SVP, Chief Commercial Officer Rule 10b5-1 plan to sell Common Stock Adoption April 23, 2026 April 23, 2026 to January 22, 2027* Up to 1,600*

Mike Prevoznik SVP, General Counsel Rule 10b5-1 plan to sell Common Stock Adoption May 29, 2026 May 29, 2026 to March 31, 2027* Up to 31,956*

Gary Pfeiffer Director Rule 10b5-1 plan to sell Common Stock Adoption May 29, 2026 May 29, 2026 to May 28, 2027* Up to 1,203*

• Includes shares of common stock to be released from (a) stock options and/or restricted stock units that are expected to vest and/or (b) performance share awards that may vest, subject to the satisfaction of the applicable performance metrics. The actual number of shares of common stock that will be released is not yet determinable and the actual number of shares of common stock that will be sold will be net of the number of shares withheld to satisfy tax withholding obligations.

Item 6.Exhibits

Exhibits:

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4.1 Twenty-Fourth Supplemental Indenture, dated as of May 6, 2026, between the Company and The Bank of New York Mellon (filed as Exhibit 4.2 to the Company’s current report on Form 8-K (Date of Report: May 6, 2026) and incorporated herein by reference) (Commission File Number 001-12215) 4.2 Form of the Company’s 5.000% Senior Note due 2036 (filed as Exhibit 4.3 to the Company’s current report on Form 8-K (Date of Report: May 6, 2026) and incorporated herein by reference) (Commission File Number 001-12215) (22) Subsidiary Guarantors of Securities 31.1 Rule 13a-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a) Certification of Chief Financial Officer 32.1 Section 1350 Certification of Chief Executive Officer 32.2 Section 1350 Certification of Chief Financial Officer 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-20260630.xsd 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document - dgx-20260630_cal.xml 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document - dgx-20260630_def.xml 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document - dgx-20260630_lab.xml 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document - dgx-20260630_pre.xml (104) Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

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