管理層發言
Welcome to the Quest Diagnostics Second Quarter 2026 Conference Call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and the question-and-answer session that will follow are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission or rebroadcast of this call in any form without the written consent of Quest Diagnostics is strictly prohibited. I'd now like to introduce Dan Haemmerle, Vice President of Finance for Quest Diagnostics. Please go ahead, sir.
Thank you, and good morning. I'm joined by Jim Davis, our Chairman, Chief Executive Officer and President; and Sam Samad, our Chief Financial Officer. Also joining us is Domini Chokshi, our new Head of Investor Relations, who joined Quest Diagnostics last week. During this call, we may make forward-looking statements and will discuss non-GAAP measures. We provide a reconciliation of non-GAAP measures to comparable GAAP measures in the tables to our earnings press release. Actual results may differ materially from those projected. Risks and uncertainties that may affect Quest Diagnostics' future results include, but are not limited to, those described in our most recent annual report on Form 10-K and subsequently filed quarterly reports on Form 10-Q and current reports on Form 8-K. For this call, references to reported EPS refer to reported diluted EPS, and references to adjusted EPS refer to adjusted diluted EPS. Growth rates associated with our long-term outlook projections, including consolidated revenue growth, revenue growth from acquisitions, organic revenue growth and adjusted earnings growth are compound annual growth rates. Now here is Jim Davis.
Thanks, Dan, and good morning, everyone. Before we get started, I want to welcome Domini who brings to Quest a strong record of investor relations and financial management experience from her nearly two decades with Merck. I also want to thank Dan for his leadership over the past few months as we completed the hiring process. Dan will continue to work closely with Domini over the coming weeks as she transitions into this new role. Now turning to our results. Our strong performance in the second quarter demonstrates focused execution of our strategy to connect people and providers to innovative testing and actionable insights that illuminate a path for better health. In the quarter, we grew revenues by over 10%, driven by broad clinical demand from physicians, hospitals and consumers and increased volume from our collaborations with Corewell Health and Fresenius Medical Care. We also grew adjusted diluted earnings per share by over 19%. Our implementation of automation and AI across our business is driving continuous improvements in quality and productivity, both in and outside our labs. We are also using advanced technologies to make it easier for our customers to engage with us and draw greater insights from our lab data. With our strategic execution and demographic and technological trends driving sustained demand, we are again raising our guidance for the year. I'll now provide more detail on how we executed our strategy across our key customer channels and operations during the quarter. Quest Diagnostics operates at the center of health care, providing insights to make health more proactive, personal and connected. We deliver solutions that make testing simpler and smarter for our core clinical customers, physicians and hospitals as well as for our customers in the higher growth areas of consumer health, life sciences and data analytics. In the physician channel, we delivered high single-digit revenue growth in the second quarter on broad-based demand for our clinical innovations, new customer wins and increased business with existing customers. We continue to deliver strong growth in several geographies where we have expanded our reach to physicians through increased health plan access and acquisitions in recent years. We also continued to grow our enterprise accounts, especially in clinical areas where providers value our ability to deliver solutions that serve the growing interest in prevention and wellness. In addition, our collaborations with Fresenius Medical Care continued to support growth in the quarter. Through this relationship, we have fostered new capabilities for serving nephrologists and other providers caring for the nearly 36 million people in the U.S. with chronic kidney disease. Today, we provide a highly comprehensive kidney testing portfolio spanning risk assessment to post-transplant monitoring for providers focused on this growing area of medicine. In the hospital channel, we grew revenues at a double-digit rate during the quarter, primarily from Co-Lab Solutions with Corewell Health in Michigan. In addition, revenues from reference testing grew versus the first quarter and prior year. Hospitals continue to contend with workforce, financial and other pressures. As a preferred strategic partner, we empower hospitals to improve quality, expand access to new test innovations and maximize cost efficiencies and capital allocation. As one example during the quarter, we formed a new Co-Lab agreement with a nonprofit regional health system in California. Through these deep relationships, we have created a strong pipeline of potential collaborations and acquisitions of hospital outreach as well as independent labs. In the consumer health channel, we deliver solutions that enable people to own their health. Wellness is not the absence of sickness. It's health that is proactive, personal and connected and we're helping to make wellness possible by illuminating early signals of disease and by making it easier for people and partners to link our biomarker insights with biometrics. We expect to continue to expand our own platform and solutions for partners as interest and investment in preventative health and wellness continues to grow. During the quarter, questhealth.com continued to generate robust revenue growth and strong demand for existing wellness panels and new services, such as our thyroid test offering. In addition, we continue to attract new partners as a result of our diagnostic innovations, flexible technology integrations and scale. Our customer channels are also growing as we continue to deliver advanced diagnostics in five key clinical areas: advanced cardiometabolic and endocrine, autoimmune, brain health, oncology and women's and reproductive health. During the quarter, we grew revenues by double digits across several of these areas. These include advanced cardiometabolic tests like ApoB and Lp(a) as well as liver fibrosis testing, an area poised for additional growth given new treatments for late stage liver disease. We also continue to drive strong growth for our analyzer solution, which aids the diagnosis of autoimmune disorders. In brain health, we continued to drive robust double-digit growth across our portfolio of AD-detect blood tests, which include amyloid beta and pTau and other biomarkers, demonstrating the clinical value of our multi-biomarker approach to dementia care. In oncology, we achieved key milestones for Haystack MRD during the quarter. New York State approved the test, placing it among an elite group of solid tumor ctDNA MRD tests to fulfill the state's rigorous quality criteria. This approval allows us to extend our commercial efforts to all 50 states. We also became the largest reference lab to extend access to cancer tests such as Haystack MRD through Flatiron Health's Onco EMR Molecular Profiling integration platform. We began a pilot of the solution with American Oncology Network, a leading community oncology organization, and plan to roll it out to Flatiron's 4,700 clinicians and other providers nationwide later this year. I'd like to turn now to operational excellence. We remain on track to deliver 3% in annual cost savings and productivity improvements through our Invigorate program. We are also making testing simpler and smarter by investing in AI and automation to improve our operations, services and experiences, both in and outside our labs. For instance, in our labs, we recently installed the Genius digital diagnostic system in two more locations following successful implementations at about half a dozen sites over the past year. The system first digitizes a Pap test slide and then uses AI to scan for signs of cervical cancer, helping to improve the quality of the slide review by our medical team. Our front-end specimen processing automation is delivering meaningful gains in productivity, and we look forward to extending the solution to other sites later this year. Beyond our labs, we recently launched IntelliDraw, a web-based tool that guides the clinical staff of our physician customers through the process of specimen collection, improving quality and the service experience. In addition, we will be implementing an AI tool at patient service centers this year to cut the time it normally takes to track and order supplies. Overall, we are pleased with our growth momentum with customers and strategic execution in the second quarter. I'll now turn it over to Sam for more details on our performance and guidance. Sam?
Thanks, Jim. In the second quarter, consolidated revenues were $3.04 billion, up 10.2% versus the prior year. Consolidated organic revenues grew by 10%. Revenues for Diagnostic Information Services were up 10.3% compared to the prior year, with 10.1% organic growth, reflecting strong growth in our physician, hospital and consumer channels. Total volume measured by the number of requisitions increased 13.1% versus the second quarter of 2025 with organic volume up 13%. Our Corewell Health and Fresenius Medical Care relationships contributed 9% to volume in the quarter. Excluding these two relationships, volumes grew by 4.1%. As anticipated, total revenue per requisition was down 2.8% versus the prior year due to the Corewell and Fresenius business mix. Adjusting for that business mix, revenue per requisition was up by 2.9% versus prior year, driven primarily by an increase in the number of tests per requisition. Unit price reimbursement remained flat, consistent with our expectations. Reported operating income in the second quarter was $459 million or 15.1% of revenues, compared to $438 million or 15.9% of revenues last year. On an adjusted basis, operating income was $502 million or 16.5% of revenues compared to $466 million or 16.9% of revenues last year. The increase in adjusted operating income is largely due to organic revenue growth partially offset by wage increases. Operating income as a percent of revenues was impacted by investments in Project Nova and the lower operating margin rate associated with the ramp of the Corewell Co-Lab business. Operating income was also adversely impacted by higher supplemental deferred compensation expenses. The total of all three drivers amounted to a 70 basis point reduction of operating income as a percent of revenues. Reported EPS was $2.84 in the quarter, compared to $2.47 a year ago. Adjusted EPS was $3.12 versus $2.62 the prior year. The improvement in EPS in the second quarter was largely driven by strong organic operating performance as well as the favorable resolution of various tax contingencies, which contributed $0.10 of EPS in the quarter. As previously indicated, adjusted EPS grew by 19.1% and excluding the one-time tax benefit, grew by 15.3%. Cash from operations was $875 million year-to-date through the second quarter versus $858 million in the prior year. This year-over-year increase is the result of higher operating income in the current year, largely offset by a one-time CARES Act tax credit a year ago. Turning now to our updated full year 2026 guidance. With our strong first half performance and continued momentum, we are raising our full year revenue and EPS estimates. We now expect revenues to be between $11.95 billion and $12.05 billion, reflecting a growth rate of 8.3% to 9.2%. Reported EPS to be in a range of $9.97 to $10.17 and adjusted EPS in a range of $11.05 to $11.25. Cash from operations to be approximately $1.8 billion and capital expenditures to be approximately $550 million. Our 2026 full year guidance reflects the following considerations: the revenue guide does not include any contribution from prospective M&A. Nova expenses are unchanged for the full year, but we anticipate increased spend in the second half of the year compared to prior expectations. Higher fuel costs in the second half of 2026 versus prior expectations. Operating margin is expected to expand versus the prior year. Share count is expected to be slightly below 2025. Interest expense to be consistent with 2025 and adjusted effective tax rate is now expected to be consistent with 2025. With that, I'll now turn it back to Jim.
Thanks, Sam. In summary, during the quarter, we generated robust top and bottom line growth on focused execution of our strategy and sustained demand across physicians, hospitals and consumers. Revenues increased by over 10%, almost all from organic revenues while adjusted diluted EPS grew by over 19%. Given our growth momentum and continued interest in our lab insights, we are again raising our guidance for the full year. As we head into the back half of the year, we remain focused on our strategy to connect people and providers to innovative testing and actionable insights that illuminate a path for better health. I'm going to close by thanking my colleagues across Quest to enable those insights with care and commitment every day. Now we'd be happy to take your questions. Operator?
分析師問答
Our first question will come from Erin Wright of Morgan Stanley.
Great. I think you mentioned in your prepared remarks, double-digit growth across the hospital channel. I'm just curious what you're seeing across that channel right now, how those relationships are progressing? And just given some of the headwinds, whether it's reimbursement or otherwise across the hospital segment, I guess, are you seeing a building hospital deal pipeline? And how do some of those relationships work? How do we think about bad debt exposure, that kind of stuff when we think about your Co-Lab relationships on that front. But anything to call out on the hospital side from a utilization standpoint would be great.
Sure. Thanks, Erin. So when we look at our hospital business, as you know, we look at it in two pieces. One is our pure reference business and the second is our Co-Lab business. Now in total, that portfolio was up significantly, driven primarily by the Corewell Health relationship. But let me give you a couple of the pieces underneath. Our core reference business, which is hospital labs referring work out to Quest Diagnostics, the revenue growth was mid-single digits and actually the volume growth slightly higher than that. So we are seeing no slowdown at all from reference testing coming to Quest Diagnostics. Now if we look at our Co-Lab business ex Corewell and we just look at same-store sales year-over-year, we see, again, mid-single-digit growth in that book of business. So we're not seeing any slowdown in our hospital business, whether it's Co-Lab or reference. You mentioned bad debt — that is not a concern with our hospitals or any of our client bills. We're not seeing any bad debt trends at all. We mentioned in the prepared remarks that we took on one new relationship with a regional hospital in California, a supply chain relationship and the opportunities as we look into our funnel and look out for the rest of the year, look good.
The next question will come from Lisa Gill with JPMorgan.
Previously, you had 30 basis points of a headwind because of changes in ACA and Medicaid. I'm just curious, one, what you saw in the quarter specific to ACA changes; and two, if you still have something in the updated guidance around potential headwinds?
Yes. So the guidance, Lisa, has not changed. We still think it's a 30 basis point impact. Now look, we've all seen the data on enrollment. Enrollment is down north of 20%, estimates of 21%, I think we've read. But that's not translating into our business. So what we do see is the following. We see a requisition volume growth that's down around 8%. However, the tests per requisition are up 6%. So we see fewer requisitions but we're getting more tests per requisition. Now why is that? Because I think the common wisdom is prevailing here that the healthier people dropped off, the sicker people remained. So what we see is a book of business that is only down 2% from a test standpoint. And quite frankly, it's flattish from a revenue standpoint because the mix of tests, the tests per requisition and a little bit of payer mix is keeping our revenue from the exchange relatively flat. Now could it get worse in the back half of the year? Maybe. But at this point, we're not seeing a major impact on our business.
So Lisa, just to reaffirm what Jim said in terms of our guidance for the year, we're still assuming for the full year that there's a 30 basis point impact on revenue from the ACA exchange subsidy expiration.
The next question will come from Michael Cherny of Leerink Partners.
Maybe if I can just jump into the back half assumed margins. You talked about year-over-year margin improvement. That means that the second half margins just based on year-to-date math have to be a bit better. When we square together the timing of the Nova expenses and the gas price increases, can you give us the offsets that help build towards that second half margin ramp embedded in getting you year-over-year margin expansion?
Yes, for sure, Michael. So I mean, first, let me talk a little bit about Q2 and then I'll talk about the second half. Again, to reconfirm in terms of Q2, our operating margin was 16.5% which was down 40 basis points from the same quarter last year. Now that was impacted by, I would say, three key things that I think we need to keep in mind. One is Nova, which was probably about 20 basis points of that. You've got also the impact of Corewell and Fresenius, which is about 30 basis points. And then you've got SDCP, supplemental deferred compensation plans, which is how we value these plans — we essentially mark to market them — and that was a 20 basis point impact on the quarter. So if you put all those together, that was a 70 basis point impact. Now as we look forward for the rest of the year, yes, we are still expecting for the full year that we are going to be up in terms of operating margin. So what are the things that change? We do have in the back half of the year, on the headwind side, we have fuel costs, as you said, right? Now we're expecting the fuel cost impact for the year to be at the high end of the range that we previously gave, which is equivalent to close to about $10 million. We're expecting Nova expenses in the second half to be about 70% of the full year. Previously, we had set about 60%. So we've changed that expectation a bit. But the things that are offsetting that are two key things. Number one, continued growth in volumes and continued strength of volumes. Number two is we lap Corewell and Fresenius in Q4 of the second half. So you see less of a dilutive impact from Corewell and Fresenius in the second half on our total operating margins. So again, still expecting operating margins to be up for the full year versus prior year.
The next question will come from Michael Ryskin of Bank of America.
I just wanted to go back to the Corewell relationship. Are there any changes in the full-year revenue guide? Is it still the same as the prior quarter? Also, I want to follow up on pricing. It seems a little worse than Q1, but you only have about a 2% sequential increase in volume. I just wanted to double check that and understand the impact on margin in the second half.
Yes. So thank you for the question. With regards to Corewell, still in line with what we had said at the beginning of the year, which is basically that it's a $250 million positive impact on our revenues this year in total, so it's largely playing as expected. I would say the margin rate, which we had set is going to be in the low single digits, improving to mid-single digits, is still largely playing out as we expected. So really no meaningful change in terms of our expectations from Corewell. The Co-Lab relationship right now is going really well. We anticipate to scale us up to a JV next year as we build the lab in Michigan, and we look to launch that JV in early next year. With regards to pricing, so I'm not sure if your question was specific to Corewell or overall. But with regards to overall pricing for the company, our pricing expectations are still the same, which is we expect basically roughly flattish pricing year-over-year, and that's what we're seeing actually in Q2. And we see, I would say, a positive flat to slightly positive impact from the health plans. We see a slightly negative impact from the hospital reference business, which is largely playing out as expected. It's a competitive sector, and the pricing is slightly negative there. So overall, I would say pricing for the company overall is still relatively flat.
The other thing you didn't ask, but it came up in the prior question. Look, the Fresenius book of business is a significant revenue increase year-over-year as well, close to $100 million. And the margin profile of that business continues to improve from Q1 to Q2 to Q3 and into Q4. So that is also giving us lift from an operating margin perspective in the second half of the year.
The next question will come from Ann Hynes of Mizuho Securities.
So I think in your remarks on one of your answers, you said you have not seen any change in bad debt. Obviously, one of the big hospital companies preannounced and most of that was just an increase in bad debt. But can you make us comfortable, maybe talk about what your bad debt is as a percentage of revenue, what you have it embedded in guidance? And why wouldn't we see kind of that downstream impact the clinical labs? And maybe in your answer if you can just let us know what your bad debt policy is regarding look backs and how timely it is.
Thank you, Ann. I would say to reemphasize or reconfirm what Jim said earlier, we are not seeing any meaningful change in terms of bad debt. Bad debt is still very much in line with our expectations with what we were seeing last year and in previous periods. So I know the hospitals have talked about some challenges there, but we have really not seen any meaningful impact for us. We track, obviously, hospital collections very closely. We make sure that we are on top of those and — in fact, we have not seen any deterioration in terms of the rate of collections or the timing of collections from hospitals. We track those really diligently every quarter. In terms of patient concessions, which we track closely as well to see if there's any deterioration in terms of our ability to collect from patients for co-pay or amounts that patients owe us — usually, that hovers around, I would say, 5% or so of revenues. And that, in fact, has also not seen any material deterioration at all. In fact, it's slightly improved this quarter versus last year same quarter. So both in terms of bad debt, which we track really closely and we manage very closely and in terms of patient concessions, we are not seeing any adverse impact of either of those.
And you asked on what our policies are. With respect to patient concessions, first of all, we have a sliding scale for people that are at or below the poverty line and slightly above the poverty line. Second, after time, we do turn the receivables over to collection agencies, and we have some success with that. The last thing I would tell you is that when a patient comes back into our patient service center, if they owe us a significant amount of money, we actually require them to pay off before we provide that next service. So we have pretty tight controls over patient balances, and I think we manage it very effectively.
The next question will come from Luke Sergott of Barclays.
This is Anna Kruszenski on for Luke. Congrats on the quarter. I was wondering if you could talk about — help us understand why DSOs are up again both year-over-year and sequentially in the quarter.
Yes. So there's a couple of reasons for that. One is minor, which is technical around the number of deposit days that we had in the quarter, which is really just a technical item; it doesn't have anything to do with performance of receivables. The other one has to do with mix — our business mix — as we see some of our client-bill portion of the business, specifically our consumer business, increase, and it's increasing quite robustly. Those have higher DSOs and longer collection periods than our health plan reimbursed business, our third-party payer business. So really, this has to do with a business mix nuance in our overall revenues.
The next question will come from Tycho Peterson of Jefferies.
This is Noah on for Tycho. I wanted to ask about PAMA as we get closer to the next phase of implementation here. How are you thinking about the potential reimbursement outcomes? And what actions can you take to offset potential future reimbursement risk?
Thanks for the question. At this point, there are three possible outcomes on PAMA. The first is the current data collection process going on by CMS, and that data collection process ends on July 30. We expect to hear something in late September or early October. At this point, we don't have any idea how many of the roughly 10,000 labs are going to report the data. What we do know from the prior cycle is that only a small percentage of the labs submitted data, and that resulted in a biased sample. If that process continues on, there could be new rates implemented by CMS effective January 1. The second outcome is we get the RESULTS Act passed. The RESULTS Act was introduced in September 2025. It has strong bipartisan support, with over 115 cosponsors. In addition, there are roughly 60 patient and consumer-based organizations endorsing the bill. There's been a successful hearing in the House Energy and Commerce Committee. But it still needs to go through a markup process, be scored by the CBO and for CMS to do their tech assessment. No matter what, we will continue to push for the RESULTS Act. Even if CMS implements new rates, we would still push for the RESULTS Act because we believe it's a better and fair way of collecting the data and corrects some of the flaws in the original process. As part of the RESULTS Act, we've advocated for a third-party group that collects adjudicated claims across the industry, and we believe it's a much more effective, higher quality and more efficient way to arrive at market-based prices for lab testing. The third possible outcome is if RESULTS is not passed, we will again push for another delay. As you know, there have been six delays now. Congress has acknowledged that the original PAMA cuts were not sustainable. The original estimates on those cuts provided by the CBO were on the order of $2.5 billion in savings over 10 years. But the first three cuts that were executed actually saved the government approximately $4 billion over a three-year period. So there's acknowledgment that the process, as originally designed, did not work as intended. If we don't get RESULTS done this year, we will push, obviously, for another delay.
The next question will come from Elizabeth Anderson of Evercore ISI.
You talked a lot about sort of the hospital and the changing environment. Could you update us on the pipeline of hospital deals? Are some of the pressures that they're seeing as a result of the ACA, which as you talked about, you haven't seen on your side, causing them to sort of be more interested in perhaps partnering with you guys going forward? Are you seeing any changes in that perspective?
Yes. On the hospital side, there's multiple ways we work with hospitals. One is that we take on their reference work — work that they choose not to do. I indicated earlier that that book of business grew nicely in the second quarter. Maybe what we are seeing is a willingness to outsource more tests — those tests that they don't feel they can make money on. The second way we work with them is through these Co-Lab arrangements. We closed one arrangement in the second quarter and the pipeline of other opportunities looks good. The third way we work with them is on outreach deals. The funnel of outreach deals continues to be good. Some deals are better than other deals. We like to work with health systems that are growing, expanding services and expanding their doctors as opposed to health systems that are closing hospitals, shedding hospitals and losing doctors. Those are the kinds of health systems we search for. We also look into markets where our presence may not be that strong as a way to get a foothold into that local market — we'll reach out to these hospitals and see if we can work with them more closely.
The next question will come from Kevin Caliendo of UBS.
Congrats. I wanted to talk about the rev per requisition number. It was really strong. 2.9% is up from even what you did in the first quarter. And just what's the makeup of that? Is it a number of tests per requisition driving that? Is it more consumer testing that's causing that? Is it a different mix of more esoteric or higher cost testing? And is this number sort of sustainable going forward? How should we think about the trends in revenue per requisition into the second half and beyond?
Kevin, I think you've hit on the key drivers. Revenue per requisition was very strong in the quarter — up 2.9% excluding the Corewell and Fresenius mix impact. The key things driving that are, number one, tests per requisition is continuing to improve. We continue to see tests per requisition creep up every quarter. Prior to COVID, we were sitting somewhere between 3.5 and 4 tests per requisition. Today, we're almost north of 4.5. So we've added almost an additional test per requisition, which makes a big difference. You mentioned consumer, and that's definitely also helping revenue per requisition. These are robust wellness panels with a high revenue per requisition. Our consumer business, where we power many functional and wellness companies, contributes meaningfully. Advanced diagnostics or esoteric mix also helps drive revenue per requisition as well. So test per requisition is the key driver, with consumer and esoteric mix also contributing.
And just to add color: our brain health portfolio continues to grow at high double-digit rates — both pTau markers and amyloid markers including the Aβ42/40 ratio. Our advanced cardiometabolic business continues to grow strongly — ApoB, Lp(a), insulin resistance testing. Autoimmune testing also continues to grow, and the analyzer assay we've deployed for primary care to help diagnose autoimmune disorders is aiding referrals to specialists. Many of these advanced diagnostics interact — they show up across chronic conditions, and we see pickup of testing from patients with chronic diseases like diabetes and liver disease as well.
Next question will come from Pito Chickering of Deutsche Bank.
Could you talk a little bit more about Haystack, like how we should think the volumes can increase sort of post the New York State approval? And also talk about the Flatiron deal and how we should think about that partnership?
So importantly, we did get New York State approval of our Haystack tumor-informed test in the quarter. There are very few tumor-informed tests with New York State approval; the New York approval process is extremely rigorous. We believe it sends a strong signal about the quality and efficacy of the assay. New York is an important market from a cancer standpoint — you have major cancer institutions that this opens us up to. The Flatiron relationship is significant — it provides ease of ordering to a large group of medical oncologists across the country. We are integrated into major EHRs such as Epic or Cerner and into Flatiron, and we also have our own portal. These integrations make ordering and tracking tests simpler and easier for clinicians. We are pacing our commercial investments and the growth of tests commensurate with reimbursement. We don't want to get too far out in front of ourselves because switching costs are low; clinicians can switch. We're advancing reimbursement — we sit with Novitas MAC and have submitted to MolDx for Medicare Advantage reimbursement, and we hope to see that in the back half of this year.
Next question will come from Patrick Donnelly of Citi.
Maybe a follow-up on all of the earlier ones. Just in terms of the utilization backdrop, what you guys are seeing overall, what you're assuming as we work our way into the back half? And then on the back of that, just the pricing conversations, I know those roll each quarter. Any changes in terms of the tone from the payer side as you guys have those pricing discussions?
The utilization remains strong. Our primary segments — hospital systems via reference business, which is mid-single-digit growth; our core physician business; and our consumer business — are all seeing solid growth. Our consumer business, which we sized at roughly $250 million last year, was expected to grow 20%–30% in 2027, and right now it's on the high side of that estimate. So we feel good about utilization across channels. It's driven by chronic conditions and consumers taking charge of their health. We're three weeks into July and the volumes so far are consistent with what we saw in the second quarter.
I'd add that utilization has been very strong and we expect the same tailwind in the second half. There are a few discrete items to keep in mind: the ACA subsidies — we're assuming roughly a 30 basis point impact on the year which will affect the second half; we lap Corewell and Fresenius in Q4 which affects year-over-year comparisons; and weather in Q3 is always a wildcard. In terms of pricing with health plans, those conversations and renewals are constructive. Our health plan partners recognize the value we bring in terms of high-quality testing at lower cost, and that dynamic is contributing to flattish pricing as we expected.
The next question will come from David Westenberg of Piper Sandler.
Congrats on the quarter. Maybe a couple on oncology. First, the field partnership, if you can maybe speak to early adoption there? And then going back to Haystack, can you maybe speak to priorities around evidence generation to compete with other MRD tests and drive further adoption and reimbursement?
On the partnership with Guardant (and similar field partnerships), we don't comment on specific volumes for third-party platforms. On Haystack, from a clinical evidence standpoint, we are solid in colorectal cancer with published studies and feel good about that. We have ongoing studies across breast and lung that will provide additional evidence. At the end of the day, adoption depends on both clinical evidence and demonstrating assay performance — sensitivity and specificity. We have strong data on the sensitivity and limit of detection of the Haystack assay, and we continue to generate clinical evidence to support broader adoption and reimbursement.
The next question will come from Jay Lewis with Baird.
Elevance recently added coverage for certain blood-based biomarker tests for Alzheimer's. I think that makes it one of, if not the first major payer to do so. How big of an opportunity or driver is this new coverage policy for a major payer? And was anything like this embedded in 2026 expectations? And as a quick follow-up, could you size the Alzheimer's testing book and the growth you're seeing there?
Elevance is now reimbursing for the pTau217 biomarker, which is a biomarker we offer (sourced from one of our suppliers). They are not yet reimbursing for the amyloid biomarker Aβ42/40. At recent conferences there is broad recognition of the importance of both pTau and amyloid biomarkers. Our combined panel and algorithmic interpretation, which includes both types of biomarkers, is performing well commercially. Other payers are also reimbursing for one or both of these biomarkers, and Medicare Advantage has broad reimbursement. The majority of the testing we see is for patients over 60 years of age. While we are not providing an absolute size of the Alzheimer's book today, it is growing at high double-digit rates.
And our last question for the day will come from Jack Meehan of Operon Research.
I wanted to get your latest thoughts on the policy outlook with PAMA and the outlook for the RESULTS Act and how you were thinking about how things play out through the rest of the year?
Thanks, Jack. As I mentioned earlier, there are three possible outcomes for PAMA. First is the current CMS data collection process which ends July 31; we expect CMS to report out in late September or early October and hope to hear an assessment of the data quality and how many labs submitted. Last time a very small subset submitted and the sample was biased. Second is passage of the RESULTS Act, which has strong bipartisan support with more than 115 cosponsors and support from many patient groups; if passed, RESULTS would keep rates flat for 2027 and 2028, collect new data in 2027, and implement new rates in 2029 with a cap of no more than 5% cuts per year. RESULTS also envisions a third party collecting adjudicated claims to create a more reliable data set. Third, if RESULTS is not passed this year, we will push for another delay. There have already been six delays, and Congress recognizes the original PAMA process did not work as intended. We will continue to advocate for RESULTS regardless of CMS actions. Okay. Thank you, everyone, for joining today. We certainly appreciate the continued support. We'll see some of you soon. Thank you, and have a great day.
Thank you for participating in the Quest Diagnostics Second Quarter Conference Call. A transcript of prepared remarks on this call will be posted later today on Quest Diagnostics' website at www.questdiagnostics.com. A replay of the call may be accessed online at www.questdiagnostics.com/investor or by phone at (866) 388-5361 for domestic callers or (203) 369-0416 for international callers. Telephone replays will be available from approximately 10:30 a.m. Eastern Time on July 23, 2026, and until midnight Eastern time on August 6, 2026. Thank you, and goodbye.