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DGX, Quest Diagnostics

Life Sciences Tools & Services diversified Serial acquirer

Revenue is DIS business (98%) and DS businesses (2%).

We play a critical role in healthcare decisions for customers across the healthcare ecosystem, including physicians, hospitals, patients and consumers, health plans, government agencies, employers, retailers, pharmaceutical companies and insurers.

Latest annual: FY2025 10-K

DGX · Quest Diagnostics

The business

What it sells, where the money comes from, the kind of company it is.

Revenue · FY2025

$11.0B

+11.8% YoY · 3% 5-yr CAGR

Vital signs · TTM, with 5-yr average

Revenue $11.3B 5-yr avg $10.2B

Gross margin 33% 5-yr avg 35%

Operating margin 14.3% 5-yr avg 15.6%

ROIC 10% 5-yr avg 12%

Owner-earnings margin 12% 5-yr avg 12%

Free cash flow margin 12% 5-yr avg 12%

The business in brief

read the 10-K →

What this business is and what moves its needle, from its own SEC filings.

What it is: A healthcare-services business, paid to deliver or facilitate care.
Situation: Serial acquirer. Goodwill and acquired intangibles are 65% of assets, with meaningful acquisition spending in 6 of the record's 9 years; much of what this business is was bought, at prices the record carries.
What moves the needle: Gross margin has run about 35% and operating margin about 15% through the cycle, a solid spread between what it charges and what the product costs to make. Read this kind of business on volume, payer mix and reimbursement. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
Is it a good business?: Return on capital has sat near the cost of capital (median 10%). By owner earnings: roughly 12% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the rest is in the 10-K.

Every line is arithmetic on the company's filings, shown in full in the sections below.

Where the money comes from

read the 10-K →

The biggest segment, DIS business, is also where the profit is made: 98% of revenue and 98% of segment operating profit.

Revenue by reportable segment, FY2025

Operating profit same segments

DIS business98%$10.8B98% of profit
DS businesses2%$250M2% of profit

From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.

The record

Ten years of arithmetic, read across the cycle.

The record, 2017–2025

realized figures from each filing · older years to the left

2017’17	2018’18	2019’19	2020’20	2021’21	2022’22	2023’23	2024’24	2025’25	TTMTTMMar 2026
										Income statement
$7.4B	$7.5B	$7.7B	$9.4B	$10.8B	$9.9B	$9.3B	$9.9B	$11.0B	$11.3B	RevenueRevenue
36%	35%	35%	38%	39%	35%	33%	33%	33%	33%	Gross marginGross mgn
19%	19%	19%	16%	16%	19%	18%	18%	18%	18%	SG&A / revenueSG&A/rev
$1.2B	$1.1B	$1.2B	$2.0B	$2.4B	$1.4B	$1.3B	$1.3B	$1.6B	$1.6B	Operating incomeOp. inc.
15.7%	14.6%	15.9%	20.9%	22.1%	14.4%	13.6%	13.6%	14.1%	14.3%	Operating marginOp. mgn
$772M	$736M	$858M	$1.4B	$2.0B	$946M	$854M	$871M	$992M	$1.0B	Net incomeNet inc.
24%	20%	22%	24%	23%	22%	23%	24%	24%	24%	Effective tax rateTax rate
										Cash flow & returns
$1.2B	$1.2B	$1.2B	$2.0B	$2.2B	$1.7B	$1.3B	$1.3B	$1.9B	$1.9B	Operating cash flowOp. cash
$270M	$309M	$329M	$361M	$408M	$437M	$439M	$493M	$570M	$577M	DepreciationDeprec.
$54M	$94M	$0	$116M	($249M)	$258M	($98M)	($118M)	$236M	$163M	Working capital & otherWC & other
$252M	$383M	$400M	$418M	$403M	$404M	$408M	$425M	$527M	$524M	CapexCapex
3.4%	5.1%	5.2%	4.4%	3.7%	4.1%	4.4%	4.3%	4.8%	4.6%	Capex / revenueCapex/rev
$923M	$817M	$843M	$1.6B	$1.8B	$1.3B	$864M	$909M	$1.4B	$1.3B	Owner earningsOwner earn.
12.5%	10.8%	10.9%	16.8%	17.0%	13.3%	9.3%	9.2%	12.3%	11.8%	Owner earnings marginOE mgn
$923M	$817M	$843M	$1.6B	$1.8B	$1.3B	$864M	$909M	$1.4B	$1.3B	Free cash flowFCF
12.5%	10.8%	10.9%	16.8%	17.0%	13.3%	9.3%	9.2%	12.3%	11.8%	Free cash flow marginFCF mgn
$581M	$421M	$58M	$330M	$331M	$144M	$611M	$2.2B	$101M	$139M	AcquisitionsAcquis.
$247M	$266M	$286M	$297M	$309M	$305M	$314M	$331M	$353M	$357M	Dividends paidDiv. paid
$465M	$322M	$353M	$325M	$2.2B	$1.4B	$275M	$151M	$450M	—	BuybacksBuybacks
10%	10%	10%	16%	19%	12%	9%	8%	10%	10%	ROICROIC
16%	14%	15%	21%	31%	16%	14%	13%	14%	14%	Return on equityROE
11%	9%	10%	17%	26%	11%	9%	8%	9%	9%	Retained to equityRetained/eq
										Balance sheet
$137M	$135M	$1.2B	$1.2B	$872M	$315M	$686M	$549M	$420M	$393M	Cash & investmentsCash+inv
$924M	$1.0B	$1.1B	$1.5B	$1.4B	$1.2B	$1.2B	$1.3B	$1.4B	$1.6B	ReceivablesReceiv.
$95M	$99M	$123M	$223M	$208M	$192M	$190M	$188M	$189M	$225M	InventoryInvent.
$224M	$222M	$263M	$446M	$357M	$324M	$378M	$287M	$307M	$1.5B	Accounts payablePayables
$795M	$889M	$923M	$1.3B	$1.3B	$1.1B	$1.0B	$1.2B	$1.3B	$312M	Operating working capitalOper. WC
$1.3B	$1.4B	$2.5B	$3.1B	$2.7B	$1.9B	$2.4B	$2.4B	$2.4B	$2.6B	Current assetsCur. assets
$1.1B	$1.5B	$2.0B	$1.8B	$1.8B	$1.6B	$1.8B	$2.2B	$2.3B	$2.2B	Current liabilitiesCur. liab.
1.2×	0.9×	1.3×	1.7×	1.6×	1.2×	1.3×	1.1×	1.0×	1.2×	Current ratioCurr. ratio
$6.3B	$6.6B	$6.6B	$6.9B	$7.1B	$7.2B	$7.7B	$8.9B	$8.9B	$9.1B	GoodwillGoodwill
$10.5B	$11.0B	$12.8B	$14.0B	$13.6B	$12.8B	$14.0B	$16.2B	$16.2B	$16.7B	Total assetsAssets
$3.8B	$3.9B	$4.8B	$4.0B	$4.0B	$4.0B	$4.7B	$6.2B	$5.7B	$5.7B	Total debtDebt
$3.6B	$3.8B	$3.6B	$2.9B	$3.1B	$3.7B	$4.0B	$5.7B	$5.3B	$5.3B	Net debt / (cash)Net debt
7.6×	6.5×	6.8×	11.9×	15.7×	9.6×	7.7×	—	—	8.8×	Interest coverageInt. cov.
$4.9B	$5.2B	$5.6B	$6.8B	$6.4B	$5.9B	$6.3B	$6.8B	$7.2B	$7.4B	Shareholders’ equityEquity
1.1%	0.8%	0.7%	1.0%	0.7%	0.8%	0.8%	0.9%	0.8%	0.8%	Stock comp / revenueSBC/rev
										Per share
140M	139M	136M	136M	128M	118M	113M	113M	113M	112M	Shares out (diluted)Shares
$52.87	$54.18	$56.81	$69.39	$84.28	$83.75	$81.88	$87.36	$97.65	$100.70	Revenue / shareRev/sh
$5.51	$5.29	$6.31	$10.52	$15.59	$8.02	$7.56	$7.71	$8.78	$9.14	EPS (diluted)EPS
$6.59	$5.88	$6.20	$11.67	$14.30	$11.14	$7.65	$8.04	$12.03	$11.84	Owner earnings / shareOE/sh
$6.59	$5.88	$6.20	$11.67	$14.30	$11.14	$7.65	$8.04	$12.03	$11.84	Free cash flow / shareFCF/sh
$1.76	$1.91	$2.10	$2.18	$2.41	$2.58	$2.78	$2.93	$3.12	$3.19	Dividends / shareDiv/sh
$1.80	$2.76	$2.94	$3.07	$3.15	$3.42	$3.61	$3.76	$4.66	$4.68	Cap. spending / shareCapex/sh
$35.15	$37.53	$41.48	$49.70	$50.34	$49.94	$55.81	$59.98	$63.45	$65.77	Book value / shareBVPS

Per-share growththe realized rate an owner's share compounded

	8-yr	5-yr
Revenue / share	+8.0%/yr	+7.1%/yr
Owner earnings / share	+7.8%/yr	+0.6%/yr
EPS	+6.0%/yr	−3.6%/yr
Dividends / share	+7.4%/yr	+7.4%/yr
Capital spending / share	+12.6%/yr	+8.7%/yr
Book value / share	+7.7%/yr	+5.0%/yr

The record, charted

FY2017–2025

Each measure over its full record; the current point and the worst year marked.

Share count

113Mpeak FY2017

ROIC

10%low FY2024

Gross margin

33%low FY2024

Net debt ÷ owner earnings

3.9×peak FY2024

Owner earnings vs. net income

Owner earningsNet income

The accountant's number, and the cash an owner can take; the gap is the tell.

$1.4Bowner earningsvs.$992Mnet incomelow FY2018

Where the cash went

ReinvestBuybacksDividendsAcquisitionsRetainedBeyond op. cash

Each year's outlays against its operating cash: the mix, and how it drifts. The hatched cap is spending beyond that year's operating cash — financed from the balance sheet or borrowing, not operations.

FY2017FY2025

Owner-earnings bridge

FY2021–FY2025cash-flow statement, SEC EDGAR →

Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.

In fiscal 2025 the business turned $992M of profit into $1.4B of owner earnings: more cash than the profit line showed, after the non-cash charges and the capital it put back in.

Reported net income$992M

Owner earnings$1.4B · 12% of revenue

	FY2025	FY2024	FY2023	FY2022	FY2021
Reported net income	$992M	$871M	$854M	$946M	$2.0B
Depreciation & amortizationnon-cash charge added back	+$570M	+$493M	+$439M	+$437M	+$408M
Stock-based compensationreal costnon-cash, but a real cost	+$88M	+$88M	+$77M	+$77M	+$79M
Working capital & othertiming of cash in and out, other non-cash items	+$236M	−$118M	−$98M	+$258M	−$249M
Cash from operations	$1.9B	$1.3B	$1.3B	$1.7B	$2.2B
Capital expenditurecash put back in to keep running and to grow	−$527M	−$425M	−$408M	−$404M	−$403M
Owner earnings	$1.4B	$909M	$864M	$1.3B	$1.8B
Owner-earnings marginowner earnings ÷ revenue	12%	9%	9%	13%	17%

Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position . The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $88M), owner earnings is nearer $1.3B.

Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.

III

Quality & stewardship

Returns, the balance sheet, capital allocation, and pay.

Owner’s Scorecard

FY2025 10-K · source on SEC EDGAR →

Will it survive?

Can it pay its interest? 9.5×

Comfortable

Operating income $1.6B ÷ interest expense $163M

What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
How heavy is the debt, net of cash? $5.3B · 3.4× operating profit

Meaningful net debt

Cash $420M − debt $5.7B

What this means
Netting $420M of cash and short-term investments against $5.7B of debt leaves $5.3B owed, about 3.4× a year's operating profit (3.6× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
How long is cash tied up? 41d

Tight

DSO 47 + DIO 9 − DPO 15 days

What this means
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

Return on invested capital 10%

Solid through the cycle

9-yr median, range 8%–19%; 10% latest = NOPAT $1.2B ÷ invested capital $12.4B

Industry peers: median 7%

What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 9 years (it ran 10% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
Owner-earnings margin 12%

Solid through the cycle

9-yr median margin, range 9%–17%; latest $1.4B = operating cash $1.9B − maintenance capex $527M

Industry peers: median 5%

What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 12% of revenue this year, a 12% median across 9 years. Treating stock comp as the real expense it is (less $88M of SBC) leaves $1.3B.
Are earnings backed by cash? 1.90×

Cash-backed

Cash from ops $1.9B ÷ net income $992M

What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

Where do the earnings go? 59%

Returns about half

Dividends + buybacks $803M ÷ Owner Earnings $1.4B

What this means
Of $1.4B Owner Earnings, $803M (59%) went back to shareholders, $353M dividends, $450M buybacks. Net of $88M stock comp, the real buyback was about $362M. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
Investing or harvesting? 0.92×

Maintaining

Capex $527M ÷ depreciation $570M

What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 3 of 6 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

Adequate size Pass

Revenue ≥ $2B · $11.0B

What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
Strong liquidity Miss

Current ratio ≥ 2× · 1.04×

What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
Conservative debt Miss

Debt ≤ working capital · $5.7B vs $100M WC

What this means
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
Earnings stability Pass

A profit every year (9-yr record) · no losses

What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
Dividend record Pass

Uninterrupted dividends · paid every year (9)

What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
Earnings growth Near

Earnings +33% over the record · +15%

What this means
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
Moderate price —

P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price

What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $8.18/share (latest year $8.96), the averaged base the calculator's gate runs on, and book value is $64.77/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2017–2025

Whether the record’s returns held, and what the capital reinvested earned.

Profitable years 9 of 9

What this means
Never lost money over the record, the earnings stability Graham insisted on.
Return on capital ≥ 15% 2 of 9 yrs

What this means
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
Operating margin 15% → 14% (3-yr avg ends)

In the filing’s words The filing ties gains to its own pricing, but names price competition too — pricing power that is real yet contested, not unopposed. The margin shows who is winning.

What this means
Through the cycle the operating margin held roughly steady — about 15% early, 14% lately, median 15%.
Reinvestment, incremental ROIC 5%

What this means
Reinvested capital came back at only a modest incremental return — near the cost of capital, where extra growth adds little per dollar. The record shows whether it is a soft stretch or a thinning moat.
Owner earnings growth +3%/yr

What this means
Owner earnings grew about 3% a year over the record.
Worst year 2024 · 13.6% op. margin

What this means
Stayed profitable even in its hardest year, the resilience that survives recessions.
Share count −2.6%/yr

What this means
The share count is shrinking, buybacks are quietly growing your slice of the business.
Dividend record rising

What this means
Paid and raised the dividend across the record, the continuity Graham prized.
How management talks about it Promotional

What this means
Results have held roughly flat while the filing leans on a promoter’s vocabulary — watch whether the words are doing work the numbers are not.

Does AI threaten the moat?

Moderate contestability

AI is likely to reshape costs and some products here without clearly contesting or sparing the core moat; how the company itself frames it is the tell.

In its own filing A competitive risk, new this year

Its FY2025 10-K names artificial intelligence as a competitive threat, in language that was not in the prior year's filing.

“(p) Challenges, including the associated competitive pressures, with properly managing the development, implementation, oversight and use of AI.”

The question is whether a moat the record shows as durable outlasts a technology that lowers the cost of part of what the firm sells. The durability is read in the record above, the filing's own framing of AI beside it; the industry label decides nothing on its own.

Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.

All figures as filed; the source filing is linked above.

Current Position

as of the latest quarter, Mar 31, 2026

Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.

Current assets$2.6B

Cash & short-term investments$393M
Receivables$1.6B
Inventory$225M
Other current assets$361M

Current liabilities$2.2B

Debt due within a year$503M
Accounts payable$1.5B
Other current liabilities$174M

Current ratio1.18×all current assets ÷ what's due · Graham looked for 2×

Quick ratio1.08×stricter: inventory excluded

Cash ratio0.18×strictest: cash alone against what's due

Working capital$389Mthe cushion left after near-term bills

Debt due this year vs. cash$503M due · $393M cash cash alone won't cover the maturities; it leans on refinancing or operating cash · both figures from the Mar 31, 2026 balance sheet

Revenue, latest quarter vs. a year ago+9.2%the freshest read on whether the business is still growing

Current ratio, recent quarters1.0× → 1.2×

Deeper floors

Tangible book value($3.5B)equity stripped of goodwill & intangibles

Debt incl. operating leases$6.4B$748M of it operating leases; with finance leases, “total fixed claims” below reaches $6.4B (annual-report basis)

From the company's latest filing.

Debt maturity

the debt note, SEC EDGAR →

Not how much it owes, but when it falls due, and against what. The ladder the company files, beside cash on hand and a year's owner earnings.

'26$503M

'27$403M

'28$1M

'29$1.1B

'30$801M

later$2.9B

Bars scaled to the largest single year; “later” is everything due after 2030, shown apart since it dwarfs the years.

Due in the next 12 months$503Mthe first rung: what must be repaid or rolled over within the year

Within two years$906Mthe near wall, the part most exposed to today’s credit conditions

Biggest single year$1.1Bin 2029the lumpiest maturity, where a refinancing, if needed, is largest

Total scheduled principal$5.7Bevery year plus what lies beyond, as the footnote totals it

Against what the business has and earns

Cash & short-term investments, Mar 31, 2026$393M

One year of owner earnings (FY2025)$1.4B

Together, against $503M due next year3.5×

Cash on hand as of Mar 31, 2026 plus a year’s owner earnings comes to $1.8B against the $503M due in the twelve months after the Dec 31, 2025 schedule: 3.5 times it.

Maturity schedule extracted from the company’s Dec 31, 2025 annual report and reconciled to the total the table states.

Lease obligations

the lease note, SEC EDGAR →

Debt by another name. What the business owes on the property, aircraft, stores and equipment it rents rather than owns is a fixed claim due on a schedule; added back to the debt, it is the true leverage. That ladder, operating and finance leases together, and what it adds to the debt on the page above.

Operating leasesFinance leases

'26$200M

'27$183M

'28$145M

'29$100M

'30$60M

later$165M

Lease payments by year, scaled to the largest; “later” is everything beyond year five, shown apart. These are the contractual cash payments, before the interest the filing imputes back out to the balance-sheet liability.

Due in the next 12 months$200Ma fixed cash payment, owed whether or not the business has a good year

Total lease payments$853Mevery year plus the tail, undiscounted: the full cash the leases will take

On the balance sheet$732Mthe present value of those payments, the recognised lease liability

True leverage: debt plus leases

On-balance-sheet debt$5.7B

Lease obligations (present value)$732M

Total fixed claims on the business$6.4B

Counting the leases the way Buffett does, the fixed claims on this business come to $6.4B, of which the leases are 11%. The lease wall above and the debt schedule together are the calendar of what must be paid, and when.

Lease ladder read from the ASC 842 tags in the company’s Dec 31, 2025 annual report and reconciled: the yearly buckets sum to the undiscounted total, which less the imputed interest equals the balance-sheet liability; a ladder that doesn’t tie out is withheld.

How the cash was used, 2017–2025

Over the record, the business generated $14.1B of operating cash; how management split it reads as a cash returner, paying most of what it earns straight back to owners.

Reinvested$3.6B · 26%
Dividends$2.7B · 19%
Buybacks$5.9B · 42%
Retained (debt / cash)$1.8B · 13%

Returned to owners$8.7B
83% of the owner earnings the business produced over the span, $2.7B as dividends and $5.9B as buybacks.
Average price paid for buybacks—
Buybacks ran $5.9B over the span, but the filings don't tag the share count needed to deduce the average price paid.
Net change in share count−20.0%
The diluted count fell from 140M to 112M, so the buybacks outran the stock issued to staff.
Dividend record$3.12/sh
Paid in 9 of the years on record, the per-share dividend growing about 7% a year. It was never cut over the span.
Return on what it retained—
Not read here: owner earnings are negative over the span, or the company returned nearly all its earnings rather than retaining them, so there is too little retained to measure a return on.

Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.

Acquisitions & goodwill

from the balance sheet & the 9-year cash-flow record

Goodwill grows only when a company acquires and falls only when it concedes it overpaid. The size of that bet, the cash put into buying rather than building, and how much has already been written off.

Goodwill & intangibles$10.6B65% of all assets; the premium carried on the balance sheet for businesses acquired

Against book equityexceeds itgoodwill alone is larger than the company’s entire book equity; stripped of the acquisition premium, there is no net book worth

Cash spent acquiring$4.7Bover 9 years buying other businesses, against $3.6B of capital spent building

None written down over the record; the goodwill is still carried at full cost. That is the deals holding their value on the books so far; whether they keep doing so is the test an owner watches, since the write-down, when it comes, is the admission the price was too high.

Goodwill, acquired intangibles and equity from the latest balance sheet; acquisition spend and write-downs summed across the 9-year record, from the company's own filings.

Management, ownership & pay

read the proxy →

From the proxy: how much of the business the people running it own, and how they are paid, beside what the business earned for its owners in the same years.

Fiscal year	Pay, as filed	“Actually paid”	Owner earnings
2021	$14.6M	$49.2M	$1.8B
2022	$15.7M	$9.8M	$1.3B
2022	$11.9M	$12.7M	$1.3B
2023	$12.7M	$9.4M	$864M
2024	$14.4M	$24.3M	$909M
2025	$15.5M	$26.5M	$1.4B

Both pay figures are the company’s own, from the pay-versus-performance table its proxy statement files. “As filed” is the Summary Compensation Table total: salary, bonus, and equity awards at their value on the day of grant. “Actually paid” is the SEC’s prescribed recalculation, which re-marks those equity awards to what they became as they vested; it can swing far above or below the filed figure in either direction, and negative years occur. Owner earnings are the whole business's, from the record above, for the same fiscal years.

CEO pay ratio275:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio alone settles nothing; some businesses are genuinely top-heavy in scarce skill. A runaway figure is where Buffett starts asking whether the board is doing its job.
Stock-based compensation$88M
The slice of the business handed to employees in shares this year, 1% of revenue, equal to 6% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.

Inverting the record

Invert: instead of why Quest Diagnostics is a good business, the question is what would make owning it a mistake, and whether those marks are in the record. Disconfirming tests across 2017–2025.

None of the 5 tests turned up a mark; each came back clean. A clean panel says only that these particular ways of being wrong are not written into the record.

Each test came back clean

Is it less profitable than it was?
Did the share count rise anyway?
Did debt outgrow the business?
Did reported profit become cash?
Did receivables and inventory outpace sales?

Each test is read from the filings and is noisy alone; a flag can mark a cyclical trough or a year of heavy investment as easily as a problem. The filing says which.

Peers, Life Sciences Tools & Services

The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.

Company	Revenue	Gross margin	Op. margin	ROIC	Owner earn. margin
THCTenet Healthcare	$21.3B	—	11.7%	18%	4%
LHLabcorp	$14.0B	30%	11.9%	8%	9%
DVADaVita	$13.6B	—	14.8%	13%	11%
BTSGBrightSpring Health Services Inc.	$12.9B	—	1.7%	6%	1%
DGXQuest Diagnostics	$11.0B	35%	14.6%	10%	12%
AGLagilon health inc.	$5.9B	—	-5.4%	-52%	-5%
SEMSelect Medical Holdings	$5.5B	—	7.6%	7%	5%
FTREFortrea Holdings Inc.	$2.7B	—	1.1%	1%	5%
Group median	—	—	9.7%	8%	5%

The price

What a price has to assume.

What the price implies

reverse-DCF

Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Quest Diagnostics has delivered.

Today’s price $

Through the cycle, Quest Diagnostics earns about $1.4B on its 12.3% median owner-earnings margin. This year’s 12.3% margin runs in line with that. Normalize, below, values the price on that through-cycle figure rather than the latest year.

Base Normalize · through-cycle ($1.4B) Net of stock comp (−$86M)

—

The assumptions Required return 9% Years of high growth 10 Terminal growth 2.5%

9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.

Enter a price above to run it.

Implied by the price—

Owner-earnings growth · ’21→’25−8%/yr

Owner-earnings growth · ’17→’25+3%/yr

Owner-earnings yield—

P/E (3-yr earnings ’23–’25)—

P/B—

Graham’s price gate—

Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.

Against a high-grade bond: Graham’s yardstick bond yield%

Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.

Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.

Owner earnings $1.3B on 111M shares outstanding, per the 10-Q cover, as of 2026-04-15; net debt $5.3B. The base is the latest year by default; Normalize values it on the through-cycle median owner-earnings margin (to avoid paying on a peak year). Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.

Weigh DGX against another business →

The owners of DGX: the meeting and the votes →

Cite: Owner Scorecard, "Quest Diagnostics (DGX), the owner's record," https://ownerscorecard.com/c/DGX, data as of 2026-07-09.

Manual order: ← DGII its page in the Manual DGXX →

Industry order: ← CTKB the Life Sciences Tools & Services chapter EXAS →