Labcorp and Quest Diagnostics Drop After CMS Announces Medicare Rate Cuts Starting in 2027
Labcorp (LH) and Quest Diagnostics (DGX) fell in after-hours trading following the Centers for Medicare & Medicaid Services' announcement of reduced payment rates for laboratory services starting in 2027. The preliminary rate cuts are set at a 15% reduction from current levels, though by law, actual declines cannot exceed this amount until further adjustments take effect. The proposed changes signal potential long-term financial pressure on lab service providers that rely heavily on Medicare reimbursements. Analysts suggest the impact may be more pronounced in future years as full reductions are phased in over time. The move reflects ongoing efforts to control healthcare spending and align payments with cost efficiencies, which could affect industry profitability. Investors reacted negatively to the news immediately after hours, highlighting concerns about revenue stability for major diagnostic companies.
Topics: healthcare lab services payment rates