Quest Diagnostics Pricing Spineometer: 4 of 5 Vertebrae

Quest Diagnostics, a U.S. healthcare diagnostic company, had a positive FY 2024. Revenue rose 6.7% to $9.87 billion, and earnings before interest and taxes rose 6.7% to $1.34 billion over the last year.

A review of Quest Diagnostics’ 30 January 2025 earnings call and associated financial reports provided insight regarding the importance of pricing on performance.

FACTS FROM EARNINGS CALL AND ANNUAL REPORT

Pricing was not a topic discussed in their earnings call. This is largely understandable. Quest Diagnostics receives most of its revenue in the United States and has recently expanded to parts of Canada. In the United States, its revenue is primarily generated from insurance companies as well as the federal Medicaid and Medicare programs. In these programs, prices are dictated by a fee schedule.

Quest Diagnostics primarily serves physicians, hospitals, and patients. It operates with two lines of business. Diagnostic Information Services, 97% of revenue, conducts clinical testing and provides laboratory results to physicians and patients. Diagnostic Solutions, 3% of revenue, includes risk assessment services to insurance companies for underwriting life insurance.

VALUE-BASED PRICING FRAMEWORK IMPLIED PRICING REQUIREMENTS

Of the 56,000 employees at Quest Diagnostics, industry benchmarks would suggest 20 to 100 professionals would manage pricing decisions daily. Based on the complexity of their business, we would recommend the pricing team towards the lower end of this industry benchmark, in the range of 20 to 40.

Areas where pricing can contribute meaningfully to Quest Diagnostics are related to new testing procedures and industry trends.

1. Quest Diagnostics is very active in genetic testing and cancer care, an on-trend and evolving field. New procedures and tests in this area are constantly under development. Pricing should be working with solution development early stage to estimate the size and value of a new testing procedure and late in development to define the testing fee schedule in coordination with government agencies and insurers.
2. Quest Diagnostics is also very active in healthcare digital records, yielding anonymized health records used in artificial intelligence (AI) development. AI Healthcare is a rapidly evolving field. Academic research has demonstrated the high value of engaging pricing professionals more deeply in rapidly evolving industries. In this area, senior pricing professionals would add great value to Quest Diagnostics.
3. Reimbursement and compliance are largely a detail-oriented pricing administration field. Several pricing analysts and managers would be recommended to ensure operational excellence.

OBSERVED PRICING CAPABILITY

Research into the investment by Quest Diagnostics in pricing yielded encouraging results.

1. The pricing team size was well within industry benchmarks.
2. Team roles include Analysts, Managers, Directors, and several Sr. Directors. No vice president of pricing was identified
3. Responsibilities related to physician pricing, network pricing, pricing operations, pricing infrastructure, and pricing strategy. New product development pricing and pricing related to initiatives in healthcare AI were not identified.

Given the importance and capability of pricing at Quest Diagnostics, as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of October 2025.

Quest Diagnostics Pricing Spineometer: 4 out of 5 Vertebrae.

DGX (Quest Diagnostics Incorporated) rose from 154 the day prior to their earnings call to 161 one week later. FY 2024 revenue of $9.9 billion with a 13.6% operating margin and a P/E ratio near 22.

For FY 2024, a 1% improvement in price would yield a 7.3% improvement in operating profits, holding all else constant at Quest Diagnostics.