On September 22, Quest Diagnostics declined 5.15% in regular trading, trading at $232.61/share, with turnover of $292 million. The selloff was triggered by the Centers for Medicare & Medicaid Services announcing plans for new payment rates for laboratory services, expected to save approximately $1 billion annually.

According to CMS, Medicare has been paying roughly 16% more for laboratory services than private payors and intends to better align the 2027 laboratory fee schedule with private sector rates. The agency expects to finalize 2027 payment rates for clinical diagnostic laboratory tests in November, with final rates set to take effect by January 1, 2027. Reductions will be phased in gradually through 2029, with payments capped at no more than a 15% annual reduction. Industry peer Labcorp also fell 3.62% on the same catalyst.

The policy headwind arrives at a time when Quest had been riding strong operational momentum. The company reported Q2 adjusted EPS of $3.12, beating estimates of $2.83 by over 10%, and raised full-year guidance to $11.05-$11.25 in adjusted EPS on revenue of $11.95-$12.05 billion. Analysts maintain an average overweight rating with a mean price target of $250.50, though the proposed Medicare rate changes may prompt reassessments of long-term revenue assumptions.

(The above content is based on publicly available market information, generated by a program or algorithm, and is intended solely as a stock movement alert. It does not constitute investment advice or a basis for trading decisions.)