COVID Sticking Around Alongside Recovery For $DGX

07/22/21 10:38AM EDT

Below is an excerpt from a complimentary research note by our Healthcare Team of Tom TobinWilliam McMahon, and Justin Venneri. If you are interested for more Healthcare research, check out our Sector Pro Product Health Care Pro. Click HERE to learn more.

COVID Sticking Around Alongside Recovery For $DGX - AdobeStock 281498819 Editorial Use Only

Earlier this week, we began working on a name we had held towards the top of our watchlist since the beginning of the year, Quest Diagnostics (DGX).

We had a number of data tools (app downloads, forecast algorithms, COVID Testing data) and themes (prolonged COVID surveillance, pent-up demand) that would support a potential thesis, but timing and catalyst path kept us away.

During the week, we updated a number of these series including our NEW forecast algorithm process which estimated requisition volume growth of 46.2% (Top 50) and 40.3% (Top Model) versus 45.2% (Reported).

While neither of these pinpointed the number, they were incredibly informative in building our 2Q21 preview which emphasized 1) COVID volumes should overperform Street expectations (75-65k/day v 50k/day), 2) Base Business remains LSD below pre-pandemic/in-line with 2019 baseline (makes up with PLS, M&A), and 3) Revenue per requisition remains above baseline, but sequentially negative.

All in all, we had 2Q21 revenue of $2,458MM versus consensus of $2,388MM and reported of $2,550MM.

On the call, we’ll be listening for 1) COVID K-12 Surveillance Program share and outlook, 2) Significant PLS wins (like Mercy in June), and 3) pent-up demand commentary.

COVID Sticking Around Alongside Recovery For $DGX - dgx

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