Should Labcorp Stock Holders Look At Quest Diagnostics Instead?
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Labcorp (LH) and Quest Diagnostics (DGX) are both bought for the lab tests that doctors and hospitals order. They part ways beyond that testing: Labcorp also runs Biopharma Laboratory Services, lab work for drug developers, while Quest is growing a consumer health business that sells tests straight to people. A Labcorp holder looking at Quest is choosing between those two extra businesses. So what did each company tell investors when it reported in October?
Labcorp And Quest Diagnostics Raised Guidance On Different Businesses
Labcorp raised its 2026 outlook on October 28, directing the larger forecast increase to its drug-development labs. Management now expects Biopharma Laboratory Services revenue to grow 7.9% at the midpoint, up from 6.0% in its July guidance. The forecast for the diagnostics business, which covers the tests doctors order, rose by just 20 basis points at the midpoint.
Quest raised its own 2026 guide on October 22, with management pointing to the company’s organic growth. Quest now expects revenue to grow 9.5% at the midpoint, up from 8.8%. During the third quarter, Quest’s testing volume rose 14.5%, or 5% excluding its new relationships with Corewell Health and Fresenius Medical Care.
So the two raises are different kinds of news. Labcorp’s larger raise was for its drug-development labs, while Quest raised its guide on growth in its testing volume, much of it from two large new partners.
Where Labcorp And Quest Diagnostics Are Exposed And Protected
Labcorp’s drug-development business offers visibility into future revenue. That segment ended the third quarter with a backlog of $8.9 billion, and management expects about $2.8 billion of it to turn into revenue over the next 12 months.
Quest’s consumer health business grows faster than the company as a whole. Management expects consumer health to grow more than 30% in 2026, and says margins in that business are accretive to the company’s overall operating margins.
Both companies face the same cut. Proposed changes to Medicare lab fees related to PAMA would lower what Medicare pays for hundreds of lab tests from 2027. Labcorp estimates its 2027 hit at about $125 million, against $14.6 billion of revenue over the past twelve months. Quest puts its own 2027 hit at about 1% of revenue, a similar share.
Quest also carries a risk of its own. On its October 22 call, management said the company found unauthorized access to a test ordering system, and Quest has since confirmed that patients’ personal and health data was compromised.
How Labcorp Stacks Up Against Quest Diagnostics
Quest is cheaper on trailing earnings, trading at 25.3 times its trailing profit against 30.1 for Labcorp. On management’s adjusted earnings forecasts for 2026, the order flips: Labcorp trades at 20.1 times and Quest at 23.0 times. Labcorp is cheaper on sales, valued at 2.1 times against 2.4 for Quest.
Quest also grows at a faster pace. Its revenue rose 9.1% over the twelve months ended September 30, 2026, against 6.0% for Labcorp. Averaged across the last three twelve-month periods, Quest recorded growth of 8.5%, against 6.6% for Labcorp.
Quest keeps more of each sales dollar: its operating margin over the past twelve months was 14.6%, against 11.3% for Labcorp. Labcorp’s margin rose more over that year, climbing 1.4 points from the twelve months before, against 0.4 points for Quest.
Both companies have about the same debt: 22.4% of market value for Labcorp and 22.0% for Quest. Labcorp’s October release raised its revenue guides for both of its businesses. Labcorp kept its free cash flow guide unchanged, while Quest raised its cash from operations guide.
On these measures, Quest comes out ahead, with a lower trailing earnings multiple, faster growth and a wider margin. Labcorp is cheaper on sales and on adjusted forecast earnings, and its raise reached the revenue forecasts for both of its businesses. Labcorp’s revenue growth, set against Quest’s, is the measure to watch when both report fourth-quarter results early in 2027.
Beyond LH: A Systematic Way To Invest
Before you decide on LH, consider a better choice. Since its September 2020 launch, the Trefis High Quality (HQ) Portfolio has returned 105%, ahead of a benchmark that combines the S&P 500, S&P MidCap and Russell 2000, without betting on one stock.
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