Quest Diagnostics Stock Drops Amid Medicare Reimbursement Rate Reduction
Quest Diagnostics (DGX) saw its stock fall by nearly 5% on Tuesday after the Centers for Medicare & Medicaid Services announced a plan to reduce reimbursement rates for lab work starting in January 2027. The new policy will cut CMS payments by up to 15%, which is expected to save taxpayers $1 billion annually but could significantly impact Quest's revenue. Quest disclosed that approximately 11% of its total revenue comes from Medicare and Medicaid reimbursements, as outlined in its 2025 SEC filing. A full 15% reduction would cut annual revenues by about 1.65%. The potential for successive reductions through 2029 could lead to a worst-case scenario of nearly 5% lower business performance. Analysts suggest that the market has already priced in this risk, with Quest's stock down more than expected based on current projections. This overreaction may present an opportunity for recovery rather than further decline.
Tickers: $DGX
Topics: CMS healthcare lab_services Medicare/Medicaid