Quest Diagnostics Inc

NYSE:DGX

Q2-2025 Earnings Call

[Operator]

Welcome to the Quest Diagnostics Second Quarter 2025 Conference Call. At the request of the company, this call is being recorded. The entire contents of this call, including the presentation and question-and-answer session that will follow for the 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.

Now I would like to introduce Shawn Bevec, Vice President of Investor Relations for Quest Diagnostics. Please go ahead.

[Shawn Bevec, executive]

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. 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.

[James Davis, executive]

Thanks, Shawn, and good morning, everyone. At our Investor Day in March, we communicated our strategy to drive growth through innovative solutions that meet the evolving needs of our customers. Our strong second quarter results reinforce this strategic direction. Given our performance in the quarter and continued utilization trends, we're raising our full year 2025 guidance.

During the quarter, we saw strong top line growth of 15.2%, including 5.2% organic revenue growth as increased demand for our innovative clinical solutions and expanded business from enterprise accounts complemented growth from acquisitions. Our adjusted earnings per share grew 11.5% as a result of strong top line growth, combined with productivity gains from our deployment of automation, digitization and other advanced technologies.

Before Sam provides more detail on our results, I'll highlight a few ways our strategy is enabling growth. We are focused on delivering solutions that meet the evolving needs of our core clinical customers, physicians and hospitals as well as customers in the higher growth areas of consumer, life sciences and data analytics. We enable growth across our customer channels through faster-growing advanced diagnostics in five key clinical areas, which are advanced cardio-metabolic, autoimmune, brain health, oncology and women's and reproductive health. In addition, acquisitions are a key growth driver, and our strategy emphasizes accretive outreach purchases and independent labs. Finally, we are focused on driving operational improvements across the business with the deployment of automation, AI and other advanced technologies for improved quality, productivity and customer and employee experiences.

Here are some of the updates on the progress we have made in these areas in the second quarter. In the physician channel, we delivered approximately 20% revenue growth driven primarily by acquisitions complemented by organic revenue growth in the high single digits. Demand for our innovative clinical solutions contributed significantly to organic revenue growth as physicians ordered more tests per requisition across our portfolio, supported by strong commercial execution. We also saw robust growth from large enterprise accounts, particularly in functional medicine, a growing area of preventative health care in which providers often order a range of lab tests to identify and act on multiple health risks. Large enterprises value our ability to scale diagnostic innovation to improve access, quality and affordability. Later this summer, we expect to begin providing laboratory testing under our previously announced relationship with Fresenius Medical Care to support over time more than 200,000 kidney dialysis patients in the U.S.

In the hospital channel, revenues grew low single digits with collaborative lab solutions driving our growth in the quarter. As hospitals grapple with financial pressures and shortages of skilled lab technologists, they are choosing Quest to access our best-in-class expertise, innovation and efficiency instead of running their own lab. Our acquisition of Outreach Labs also provides hospitals with capital for investment in their core care missions. Our pipelines for hospital outreach M&A and collaborative lab solutions remains strong.

In addition to our physician and hospital channels, we are highly focused on expanding access for our consumer channel. During the quarter, we continued to see strong growth across our expanding array of offerings, including a new women's hormone panel on questhealth.com. We recently fulfilled our 1 millionth customer order since launching this enhanced online platform in the fall of 2022, demonstrating ongoing consumer demand for greater health information. Complementing our consumer-initiated channel, we continue to expand our partnerships with top consumer and wellness brands who value our high-quality lab testing, broad access and flexible technology integrations as the lab engine inside of their offerings.

In advanced diagnostics, we delivered double-digit revenue growth in several areas, including advanced cardiometabolic, especially testing for metabolic and endocrine disorders and chronic kidney disease as well as for our analyzer autoimmune solution. In brain health, we drove robust growth for our AD-Detect blood test for Alzheimer's disease. During the quarter, we launched our new AB 4240 and PTAO217 AD-Detect panel which is designed to help physicians confirm amyloid brain pathology in symptomatic patients. In oncology, we are ramping up our commercial outreach to drive Haystack MRD market adoption while we also continue to convert participants from our early experience program, a recent study in the New England Journal of Medicine affirmed the high sensitivity and specificity of our Haystack MRD test finding it identified complete response to an immunotherapy in Phase II trials several months before standard imaging tests.

Finally, Quest continues to be at the forefront of serving public health needs. Earlier this month, we announced the launch of a molecular test for diagnosing Oropuchevirus, which we developed under a CDC contract to enhance the nation's preparedness for emerging infectious diseases.

Turning now to operational excellence. We continue to target 3% annual cost savings and productivity improvements through our Invigorate program. We are deploying innovative automation and AI technologies, including digitizing processes to improve quality, productivity and customer and employee experiences. We have now installed our front-end automation solution, which speeds specimen aliquoting and labeling at half a dozen sites. We also recently completed a successful pilot of our automated accessioning platform at our Clifton lab. We plan to roll out both solutions across our lab network through the rest of the year and into 2026.

Along with automation enhancements, strong employee retention improves productivity across our operations and service lines. During the quarter, employee retention further improved building on trends in recent quarters. Overall, we are pleased with our progress in the quarter, executing on our strategy to serve customers and drive gains in revenue and productivity. And now Sam will provide more details on our performance and 2025 guidance. Sam?

[Sam Samad, executive]

Thanks, Jim. In the second quarter, consolidated revenues were $2.76 billion, up 15.2% versus the prior year. Consolidated organic revenues grew by 5.2%. Revenues for Diagnostic Information Services were up 15.7% compared to the prior year, reflecting recent acquisitions as well as organic growth in our physician and hospital channels.

Total volume measured by the number of requisitions, increased 16.3% versus the second quarter of 2024, with organic volume up 2.1%. Total revenue per requisition was down 0.4% versus the prior year, driven primarily by the impact of the LifeLabs acquisition, which carries a lower revenue per req. On an organic basis, revenue per requisition was up 3.3% in the quarter versus last year, driven primarily by an increase in the number of tests per requisitions and test mix. Unit price reimbursement remained consistent with our expectations.

Reported operating income in the second quarter was $438 million or 15.9% of revenues compared to $355 million or 14.8% of revenues last year. On an adjusted basis, operating income was $466 million or 16.9% of revenues compared to $398 million or 16.6% of revenues last year. The increase in adjusted operating income was due to recent acquisitions and organic revenue growth, partially offset by wage increases.

Reported EPS was $2.47 in the quarter, compared to $2.03 a year ago. Adjusted EPS was $2.62 versus $2.35 the prior year. EPS in the second quarter was impacted by higher interest expense versus the prior year. Foreign exchange rates had no meaningful impact on our results. Cash from operations was $858 million year-to-date through the second quarter versus $514 million in the prior year. This year-over-year increase of 67.1% was driven by higher operating income, a onetime Cares Act tax credit and the timing of receipts and disbursements.

Turning now to our updated full year 2025 guidance. Revenues are expected to be between $10.8 billion and $10.92 billion. Reported EPS is now expected to be in a range of $8.60 to $8.80, and adjusted EPS in a range of $9.63 to $9.83. Cash from operations is now expected to be approximately $1.55 billion and capital expenditures are expected to be approximately $500 million.

Our 2025 guidance reflects the following considerations. Our updated revenue guidance assumes approximately 3.5% to 4% organic revenue growth, in addition to contributions from acquisitions completed in 2024 and announced to date. It does not assume any contribution from prospective M&A. We are making investments in 2025 related to Project Nova, which we expect will modernize our entire order to cash process. Most of these investments will occur in the second half of the year. Operating margin is expected to expand versus the prior year. Our below-the-line assumptions for net interest expense, adjusted tax rate and full year share count remain unchanged from our prior guidance. Finally, our updated EPS guidance assumes that we can absorb the impact of tariffs currently in place, primarily in Europe and China.

With that, I will now turn it back to Jim.

[James Davis, executive]

Thanks, Sam. To summarize, we delivered robust top line and bottom line growth in the second quarter on strong execution of our strategy and utilization trends. Through our sharp customer focus, we grew demand for innovative clinical solutions and expanded business from enterprise accounts to complement growth from acquisitions. Given our performance in the quarter and continued utilization trends, we are raising our full year 2025 guidance. Finally, I want to thank our more than 55,000 colleagues for their hard work this quarter to fulfill our purpose to create a healthier world, one life at a time. .

Now we'd be happy to take your questions. Operator?

[Operator]

[Operator Instructions] Our first question comes from Ann Hynes with Mizuho Securities.

[Ann Hynes, analyst]

I want to focus my question just on the Washington backdrop, obviously, with the One Big Beautiful Bill passed and the CBO came out yesterday and said this will lead to 10 million more uninsured over the next few years between the ACA and Medicaid. How do you view that many people going uninsured? How should we view that impact on Quest over the coming years? And then secondly, as it relates to Washington, what are your thoughts on PAMA going into 2026?

[James Davis, executive]

Okay. Thanks for the question. So first, let's put the One Big Beautiful Bill into some context here. First, the U.S. health care system, we spend $5 trillion a year. And over the next 10 years, with a 5% inflation, that will amount to $62 trillion, $62 trillion. What the One Beautiful Bill Act is taking out is $1 trillion. So less than -- right around 1.5%. Now what we did read yesterday, yes, about 10 million lives could come out over the next 10 years. From a Medicaid standpoint, it's actually no impact in '26. Very, very little impact in '27 given that they're giving the states time to react to these changes. On the exchange, we estimate that no more than 4% to 5% of our revenue today comes from the exchange. And again, given the timing of when these lives would come out of those plans, at best, we -- worst-case scenario, we estimate no more than a 30 to 40 basis point impact on volume in 2026. So we don't really see that big of an impact in '26 or in '27. I think the other thing to keep in mind is with the people that are on the exchange, these people are working. They have jobs. In some cases, they're small business owners or they're self-employed. And -- so they have incomes. And so they may be able to pay higher premiums to keep their insurance. We also know that some people go to the exchange because they are subsidized, and they could hop on to their employers' health insurance, but they're choosing the exchange today because it is a cheaper alternative than signing on to their own employers' health plan.

[Sam Samad, executive]

So Ann, this is Sam. Just to underscore or reemphasize these -- the financial assumptions that Jim briefly mentioned, and make sure that -- I'm sure we'll get more questions on this on the call, so I just want to make sure people are clear. For the Medicaid impact, we don't believe there's a material impact. We don't believe there's any impact in '26 an immaterial impact in '26. For the exchange impact, assuming these subsidies are not renewed at the end of this year, we expect in '26 approximately 30 basis points of impact on our volumes. That's what we've sized. Obviously, there's assumptions around that, but that's what we believe.

[James Davis, executive]

And you also asked about PAMA. So here's the most recent update. So look, we're pursuing two strategies. Number one is PAMA reform. And number two is a [indiscernible] delay in the cuts. With respect to PAMA reform, our Trade Association has introduced language that would turn into legislation and a bill to the three committees, two in the house and one in the Senate that ultimately decide on health care policy in the U.S. That language is in front of the committees. We expect that to be turned into a bill later this summer. And then the traditional process will start from there. The committees discuss the bills. If there's differences between the two communities in the house and the one in the senate together, they reconcile this. And our hope is that it will turn into a bill. And whether it gets voted on as an independent bill or it gets put into some larger health care type of package towards the end of the year, that remains to be seen. The alternative path is obviously continue to push for another delay if we don't see the PAMA reform getting enacted this year. But I can tell you, we have strong bipartisan support in each of the three committees where this legislation will be discussed. .

[Operator]

Our next question comes from Kevin Caliendo with UBS.

[Kevin Caliendo, analyst]

I wanted to talk about the comment, the modernization investments. It sounds like some of it may have come forward into 2Q. Are you still anticipating sort of $0.20 for the full year? And I guess the second part of that is in the context of margins expanding year-over-year, you've been able to do that the first 2 quarters. Do you still anticipate that happening i the second half even with these modernization investments? .

[Sam Samad, executive]

Yes. So Kevin, so this is Sam. Let me tackle your two -- the two components of your question here. With regards to modernization expenses, we had called out approximately $0.20 around modernization, and we have talked about also some QRA expenses that we're going to incur as well. So -- and we said that we're going to incur these expenses this year. We've had some QRA expenses already in the first half. We haven't had much in terms of modernization expenses yet in the first half. So the bulk of those are going to occur in the second half. In terms of margin expansion, yes, we had good healthy margin expansion in Q2 and in the first half. And our expectation for the full year is that we continue to have operating margin expansion for the full year. So that's still the prevailing assumption in our guidance.

[Operator]

Our next question comes from Elizabeth Anderson with Evercore ISI.

[Elizabeth Anderson, analyst]

Maybe a follow-up from Ann's question about the exposure and maybe more broadly. If we think back to sort of uninsured utilization rates, are the 30 bps of impact that you're talking about, what are you assuming in your assumptions for potential utilization of like an uninsured population? And how do we think about that as a potential offset to some of the headwinds that you described from that One Big Beautiful Bill?

[James Davis, executive]

Yes. So thanks for the question. So the uninsured is a very small portion of our revenue today. Now again, if you take all -- if you take all the lives that you expect to fall out of the exchange, again, we believe, call it, 65%, 70% are going to find other alternatives, okay? Alternative, number one is they just simply pay the higher rate. Alternative number two is they hop on to an employer's insurance plan that already exists out there. The third alternative is that they go uninsured. But again, we don't think that's going to be the majority of the people because, again, the majority of the folks that are on exchange programs today, they have income. By definition, they're not on Medicaid because they have incomes. And again, they've got the two alternatives. So we don't feel like it's going to be a major impact. As Sam said, 30 basis point impact on volume in 2026.

[Operator]

Our next question comes from Erin Wright with Morgan Stanley.

[Erin Wilson Wright, analyst]

So last quarter, you talked a little bit about how it progressed throughout the quarter in terms of utilization trends and how that was accelerating some of that was because of the weather dynamics at the time. But how are we trending now into kind of the third quarter, I guess, how would you characterize the utilization throughout the quarter as well and with a relatively consistent? And anything you can, I guess, parse out in terms of underlying utilization versus market share gains, that would be helpful.

[James Davis, executive]

Yes. Thanks for the question. So we did see strong utilization in the second quarter. And yes, it was a definite uptick from the first quarter. I would tell you that the drivers of that utilization, first and foremost, it's our expanded access that we gained on January 1 of this year. And you don't instantly just start to pick up that business. So we saw a nice steady increase from Q1 to Q2. And what I'm talking about is our access through Elevance and our access through Sentara. Elevance, got us -- we're in network in Nevada, Colorado, West Virginia, Georgia, and together with the Sentara plan, we picked up 1 million new lives. So we feel good about the progress that we're making there. Second is our advanced diagnostic tests, our Alzheimer's AB4240 test our advanced cardiometabolic test, we continue to see nice, nice volume growth in some of these advanced diagnostics testing. And then finally, as you cite, yes, weather had a big impact in our Q1 results. So I'm sure just the timing of people coming back into the health care system after they missed general health wellness exams, certainly did help in the second quarter. In terms of utilization rates, as we sit here in the first part of Q3, were no real changes, where it's consistent with what we've been seeing. And again, there's a combination of good utilization plus some big wins and the expanded access through the new health plan access.

[Operator]

Our next question comes Michael Cherny with Leerink Partners.

[Michael Cherny, analyst]

Maybe if I can just ask a question on mix. I think, Jim, you said a 3.3% organic rev correct mix. Can you dive a little bit more into what were the drivers of that dynamic? How much of it was contracting on your side, offensive moves versus just the way the market developed? And how that should factor into your guidance for the remainder of the year?

[James Davis, executive]

Yes. I would say the majority of it is offensive. So you're right, 3.3% organic rev per rec increase. We've said for the year, price is flattish. It will come in somewhere between plus or minus 30 basis points. So the other components in rev per req are test per reqd rec and test mix and business mix, payer mix. Test per req again, continue to be very strong. And we see it, again, with the advanced diagnostics testing, our AB 4240 significantly -- significant growth quarter-over-quarter as well as year-over-year. Our work with functional medicine entities continues to grow in a very meaningful way. Our own CIT business, as we mentioned in the script, was up 40%, and with that comes strong test mix, strong test per req improvement. So those are the underlying drivers. I don't see a change in those drivers to tell you the truth. And we just kind of expect it will continue here in the rest of the year.

[Operator]

Next question comes from Patrick Donnelly with Citi.

[Patrick Donnelly, analyst]

Maybe quick one for Sam, just on the cadence in the second half. Can you just talk about the 3Q setup in terms of margins or earnings would be helpful. And then a follow-up on PAMA. Can you just talk about the financial setup here, what the implications are? How you guys think about potential offsets what the pacing there would be helpful just to frame up the PAMA piece of it.

[Sam Samad, executive]

Yes. Thanks, Patrick. I think I heard your question, just let me know if I didn't quite capture it all. So I think you had mentioned what's the pacing here, especially as it relates to Q3 in terms of margin and earnings, and then you wanted some more color on PAMA, the financial impact and potential actions. So in terms of the pacing, really, I'd reiterate what we've said at the beginning of the year and I think on the Q1 call as well, which is -- we do expect that the pacing usually is that Q2 is our best margin and earnings quarter of the year. Q3 is usually, and I'm talking about traditionally what we've seen and especially if you take out and normalize some of the COVID impacts that we've seen in past years, at least the last few years. But usually Q3 is a slight step down from Q2. And then Q4 is a step down from Q3 with Q1 being the weakest quarter. And so that's usually our, I would say, normal pacing in terms of margin and earnings. In terms of PAMA, I would say the impact that we currently size is approximately $100 million. If PAMA does not get deferred for another year or if we don't get a permanent fix, we're looking at about $100 million in terms of pricing impact on our business. We've mentioned that previously. Now we will take some actions to offset some of that. I will not give you a number in terms of how much exactly that would be, but we will offset a portion of that is not going to be the majority. We're unable to take actions to offset the majority of $100 million. But we will take some actions to offset a portion of this negative impact if there is no permanent fix or if there is no delay.

[Operator]

And this question comes from Pito Chickering with Deutsche Bank.

[Pito Chickering, analyst]

A question to you on tariffs for your presentation that you talked about, how you're absorbing the impact of tariffs from China and Europe. Can you quantify the impact that you're absorbing? Any color on how that hits the third quarter and fourth quarter? And should be analyzed at fourth quarter impact as you think about 2026?

[Sam Samad, executive]

Yes. We're not going to give a specific number, Pito. But as we've said before, I'll go back to our previous comments. We think the impact is manageable within our guidance. And so we are estimating that we would absorb this impact. Did we have tariff impact in Q2, yes, we had some some impact from tariffs in Q2 that we absorbed in our results. Q3 and Q4, we do expect some negative impact. But again, we can manage it within our guidance and the updated guidance that we provided on the call. What's assumed in our guidance today is the tariffs that are in place. That are currently in place and currently implemented per law. I know there's a lot of uncertainty around what's going to happen August 1 or I mean, there's always a lot of scenarios around that. We have contracts in place with almost 80% of our spend on the supply side. So again, we believe that even with an August 1 scenario where tariffs do go up on certain products that we can offset that impact through the contracts that we have in place and through the alternate sourcing supply channels that we have looking at different vendors where we can resource some of the supplies from U.S. manufacturers or at least U.S.-based manufacturing, not China-based manufacturing.

[James Davis, executive]

Yes. Just again, to frame this, our spend of $2 billion, 80% of that spend is in the U.S. We've said less than 1% was China. We had already executed on some moves away from China that minimized, as Sam said, the impact in Q1 and Q2. The other 20% is spread outside the U.S., outside of China, with the majority of that coming from Europe with our traditional big suppliers that are located there. But as Sam said, we have contracts in place. The language is favorable to us. So we feel very comfortable that it is manageable within the guidance that we've given this year.

[Operator]

Our next question comes from Jack Meehan with Nephron Research.

[Jack Meehan, analyst]

I wanted to ask about the LifeLabs acquisition. Is it possible you could call out within the $240 million or so of M&A contribution in the quarter? How much came from LifeLabs versus other deals? And then just more broadly, how is the integration going and just latest thoughts around EPS accretion?

[Sam Samad, executive]

Let me -- I'll start and maybe talk just briefly on the financials. Maybe Jim can give some qualitative commentary on the acquisition. Listen, the acquisition is going really well is the punch line. But in terms of the contribution, Jack, from -- on revenue. So we had 10% growth from M&A in the quarter. I would say approximately 8% was from LifeLabs. So that's the portion of the growth that came from LifeLabs of the 10% contribution from M&A. In terms of financial cadence or improvements that we're seeing, we had set operating margin, it's going to take a couple of years to get to be on parity with overall enterprise Quest rates. I think we're tracking to that goal. It's not better, and it's generating the EPS contribution that we expect when we size this deal and when we put our plans in place for this year. So progressing really well, but maybe I'll let Jim speak to the other qualitative...

[James Davis, executive]

Yes. So Jack, first, we have a very strong management team in place in Canada that is doing a terrific job from an execution standpoint. I would tell you that we've already gotten some really good procurement synergies, as you would expect, when we look at contracts that we have, contracts that they have. We've gotten, what I would call nice operational know-how synergies, right, how we do things, how they do things. And by the way, some things it's not just a one-way street. We've certainly learned some things from them from an operational standpoint that it helped us. So put all that together, and as Sam said, we're really pleased with the execution. We're pleased with the acquisition. It's generating nice top line growth for us. Obviously, it's inorganic, but when we look at the growth of LifeLabs itself, even though it was in our numbers last Q2, we're pleased with that growth. So all in all, we're really happy with how we're tracking.

[Operator]

Our next question comes from David Westenberg with Piper Sandler.

[David Westenberg, analyst]

Congrats on a good quarter. You -- well, first of all, I want to talk about one of the slides that had client pay. It looks like it's contracted by about 5% over the last few years and then government has kind of gone up. Is some of that LifeLabs? And if not, what else would that be? And then how should we look at that on kind of a go-forward basis? And then just a clarity on wage increases. You kind of mentioned acquisitions helped drive net operating income, offset by a little bit of wage inflation. Are we trending back to normal at at least still going down? I know you had -- that's been a headwind for the last few years. So I mean, at least is that heading in the right direction now?

[James Davis, executive]

Yes. Just in terms of the payer mix, it's all driven -- you're adding in what will be over $700 million of LifeLabs revenue this year. So all of the other categories are just going to mix down by that amount. So that's what's driving that.

[Sam Samad, executive]

Yes. And David, we kind of lost you there on the other parts of the question. Can you repeat because we -- maybe it's on our end, but we didn't hear the other part of the question.

[David Westenberg, analyst]

It was on the wage increases.

[Sam Samad, executive]

Yes, the wage increases.

[James Davis, executive]

Yes. Wage inflation has stayed in the 3% to 4% range for the year -- for the first half of the year, and we don't expect that to change in the second half of the year. What has changed from a labor standpoint, though, is our attrition continues to come down -- and we're in the mid-teens and getting very, very close to where we were pre-pandemic. And so as you know, that really helps us from a productivity standpoint. So pleased with that.

[Operator]

Our next question comes from Andrew Brackmann with William Blair.

[Andrew Brackmann, analyst]

Jim, a few times you mentioned working with functional medicine as sort of a larger growth driver for you guys. Can you maybe help us size that as a broader opportunity? And what further investments are you making there?

[James Davis, executive]

Yes, I don't want to give exact numbers, but it's a sizable chunk of our business that's growing almost in line with our own consumer initiated testing business. And in many ways, when we sell through functional health, it is generally either patient paid or physician paid and then the physician is charging the consumer. As you know, in functional medicine, the goal is to analyze a lot of things in the human body, hormone levels, obviously, all the cardiometabolic, all the chemistry testing. And then functional medicine seeks to treat the patient through nutritional changes, exercise changes, sleep changes, may be supplements but treat the patient in a very natural and holistic way. And we're seeing just a surge in this across the U.S. with all the focus on prevention, wellness and just people wanting to live longer. You see it in the podcasters, Peter and Humerman. These guys, in essence, are generating a lot of free markets for us. They have these podcasts, they start talking about ApoB and Lp(a). And the next thing you know, we see a surge in ApoB and Lp(a) testing. So it's become a real trend in the U.S. as people are focused again on prevention and wellness and longevity. And it's sizable, and we expect it to grow double digits here as we move forward.

[Operator]

[Operator Instructions] Our next question comes from Tycho Peterson with Jefferies.

[Noah Kava, analyst]

This is Noah on for Tycho. I wanted to unpack the revenue guidance a little bit. You had raised it by around $80 million, $85 million. And I'm wondering what contribution you have baked in from new tests things like Haystack, AD-Detect, and then other buckets there, like acquisitions would really be helpful.

[Sam Samad, executive]

Yes. So just in terms of breaking it down between acquisitions and organic growth, Noah. So we talked about the fact that we expect organic revenue growth now to be between 3.5% to 4%. So by default, that would tell you that acquisitions are 6% to 6.5%. Listen, we're seeing strong -- so two things that are driving this, and I won't go into the specifics as to which tests are driving how much. But we have talked about the fact that some of our advanced diagnostic tests in those high-growth areas that Jim quoted earlier are driving good upside and good performance. AD-Detect being one of them, but we have many tests across these high-growth areas that are contributing to it. Utilization is strong. As you saw in Q2, we are seeing positive utilization driven by increased access in some of those states where we got access as of January 1 this year. And we saw a good bounce back from some tough weather months in January and February and Q2 generally was strong utilization, which gives us confidence in increasing the guidance for the full year. We're seeing very strong revenue per requisition, 3.3% organic revenue per requisition in Q2, which again gives us confidence on the fact that the test correct assumptions that we have are durable and sustainable, and we're seeing good healthy mix in terms of payer mix. So all of those things are really driving our confidence in terms of increasing the revenue guide by this $85 million at the midpoint that you quoted. And one other thing I would just add at the end, Noah, is the fact that pricing is still -- we are still expecting our price overall across the Quest book of business to be flattish with a potential range of outcomes of plus or minus 30 basis points. So pricing is still within the assumptions that we had earlier.

[Operator]

Our next question comes from Michael Ryskin with Bank of America.

[Unknown Analyst]

This is Aaron on for Mike. Congrats on the quarter. I wanted to touch on Haystack a little bit and ask about any oncologist feedback or impressions and just get an overall update on progress made there.

[James Davis, executive]

Yes. So -- we're making good progress. And as we stated previously, we ran this early experience program. We're seeing really nice conversion of people that sent us work as part of the early experience program in becoming full-time customers. The feedback from oncologists thus far has been very positive. They recognize the superior limits of detection that we have with this test. They like the turnaround time. They like the hands-on touch that they get the personal touch from our client team. So we're pleased with the progress. We continue to make progress from Q1 to Q2, and we expect to continue to grow that business significantly Q3, Q4 and into 2026.

[Operator]

And our final question comes from Luke Sergott with Barclays.

[Unknown Analyst]

This is Anna Pruzanski on for Luke. I wanted to ask about organic tests per day. So a nice 2.5 step-up this quarter. Just curious how should we be thinking about this going forward since last year, this only increased about 1% each quarter? And if you could just talk about what's driving that upside.

[James Davis, executive]

Yes. So let me start and Sam can add. As we said, what's really driving it from Q1 to Q2 was our access, right? We got into network with Elevance and Sentara on January 1 of this year. And so we've seen a nice, steady ramp-up of new clients as a result of having access to over 1 million new lives. That includes in the states of Nevada, Colorado, West Virginia and Georgia. The other thing driving it, we said was our advanced diagnostics testing, just an uptick in some of these advanced cardiometabolic, autoimmune testing, women's health care testing, especially the advanced diagnostics and IPT and QHerit, and then obviously, our new brain health offerings has also helped. We did say, yes, weather impacted the business in Q1, and so people that missed appointments, especially general health and wellness popped back in Q2. So all of that contributed to the strong organic revenue growth. Now -- the other thing we saw in the quarter is -- recall last year, we have said that our employer businesses, the two employer businesses, employer pop health, plus our employer drug testing business, were a significant headwind in terms of volume and revenue growth. I would tell you those two businesses have stabilized this year. It's still a bit of a volume headwind, but it actually -- those two businesses combined had revenue growth in the quarter, which obviously means if it's a volume headwind, but it helped from a growth standpoint, it means we've been raising prices in those two segments. And we've raised those prices, and they're sticky, especially in our employer drug testing business, which we're very pleased with. So put all of those things together, and that's what got us the strong organic volume growth. And our expectations is going to continue in that range for the rest of the year.

[Sam Samad, executive]

And just one last point maybe to add to Jim's great explanation is -- because I'm not sure if this is also something that you wanted color on. Rev per req as well organic rev per req was up 3.3% in the quarter, and a big portion of that was driven by test per req. I would say almost close to 70% of that was test per req appreciation. And the growth of test per req that we've seen over the past few years before the pandemic, it was less than 4 tests per req that we were seeing. And now we're seeing more than 4 tests per req. So the req density that we see from across our business has improved as well.

[Operator]

At this time, I'm showing no further questions.

[James Davis, executive]

Okay. Thanks, everyone, for joining in today. I appreciate all your questions and feedback and look forward to talking to you all soon. Have a great week ahead. Thank you.

[Operator]

Thank you for participating in the Quest Diagnostics Second Quarter 2025 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 [phone] for domestic callers or [phone] for international callers. Telephone replays will be available from approximately 10:30 a.m. Eastern Time on July 22, 2025 until midnight Eastern time on August 5, 2025. Goodbye.