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Quest Diagnostics (DGX) Unveils Corporate Responsibility Report

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Quest Diagnostics DGX recently came up with its Annual Corporate Responsibility Report for 2020, primarily featuring the company’s pandemic-impacted areas and COVID-19 response. According to the company, since the onset of the pandemic, with nearly 50,000 employees it has played a pivotal role in the national response to COVID-19.

The key milestones mentioned in this report, which is titled "A Year of Challenge and Change," reflect employee health and safety, business continuity and cross-functional collaboration.

COVID-19 Test Landmarks of 2020

In terms of COVID-19 tests development, Quest Diagnostics noted that it has expanded COVID-19 capacity throughout 2020, performing 30 million COVID-19 molecular tests and serology tests.

On Mar 9, the company launched its first COVID-19 molecular test in two labs using its own lab-developed test (LDT). This test was launched two days before the WHO declared the crisis a pandemic. On Mar 16, the company received Emergency Use Authorizations (EUA) for this LDT.

In April, the company widely released an IgG antibody test. Next month, it received EUA for the nasal swab self-collection kits for molecular testing. In July, it got EUA as the first commercial lab to perform molecular specimen pooling method using Quest LDT test. In September, the company launched three new COVID-19 panels to co-test for SARS-CoV-2, influenza and other respiratory pathogens using a single swab. In November, the company released IgG/IgM antibody test panel and in December, it received EUA for nasal swab at-home collection kits for flu/COVID-19.

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In total, in 2020, Quest Diagnostics received 16 new and amended EUAs, including for industry-first laboratory innovations such as a consumer-initiated antibody test and specimen pooling.

Among other highlights of the report, the company mentioned that the launch of Quest for Health Equity (Q4HE) is a more than $100-million initiative to address disparities in underserved communities. Q4HE comprises donated testing services, education programs and financial support.

Surge in Chronic Conditions

The report also highlighted testing hesitancy and fear of exposure, which reduced healthcare visits. This led to a massive surge in chronic conditions among the Americans. The report stated that per Quest Health Trends research released in December 2020, the pandemic has negatively impacted Americans’ willingness to seek routine or preventive care, including COVID-19 testing. Per the research, three in five U.S. adults have avoided or delayed in-person healthcare during the pandemic. Two in five Americans are concerned that they may have an undiagnosed health condition. Nearly one in three of the 67% of Americans who have a chronic health condition say their condition has worsened since the pandemic began.

The report also raised concerns about a potential increase in U.S. cancer deaths due to delayed diagnoses.

Scenario in 2021

We note in the first quarter of 2021, despite decline in demand for Quest Diagnostics’ COVID-19 testing, the company performed an average of 101,000 COVID-19 molecular tests per day. Overall, in the first quarter, approximately 9.1 million molecular tests and nearly 900,000 serology tests were performed, contributing nearly 21% to volume growth. According to the company, it will continue to realize demand for coronavirus testing as this will help control the spread of the virus in addition to reducing hospitalization and saving lives. Further, continued testing will be the key to help the economy reopen as more Americans become vaccinated.

In the first quarter, the base business continued to recover to near pre-pandemic levels. Compared to the first-quarter 2019 baseline, total base testing volumes increased 1.5% and benefited from M&A and new PLS partnerships that began in 2020. In March 2021, for the first time since the pandemic began, monthly organic revenues in the base business grew compared to the 2019 comparable figure. According to Quest Diagnostics, as the United States exits the pandemic, it is well-positioned to grow while addressing the routine care issues that have been postponed over the past year.

Share Price Performance

Over the past year, Quest Diagnostics has outperformed its industry. The stock has gained 24.6% compared with 12% rise of the industry.

Zacks Rank and Key Picks

Currently, Quest Diagnostics carries a Zacks Rank #3 (Hold).

A few better-ranked stocks from the broader medical space are Envista Holdings Corporation NVST, Inogen, Inc INGN and IDEXX Laboratories, Inc. IDXX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Envista Holdings has an estimated long-term earnings growth rate of 26%.

Inogen has an estimated long-term earnings growth rate of 33%.

IDEXX Laboratories has a projected long-term earnings growth rate of 20%.

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Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report

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