Another health care sector holding, Quest Diagnostics (DGX, Financial) reported solid quarterly revenues, attributable to their expanding book of business and healthy operating cash flow position. The company raised full-year guidance, confident in its business fundamentals and outlook. The stock price was stable until September 22, when the Centers for Medicare & Medicaid Services introduced proposed Medicare payment rates for clinical diagnostic laboratory tests. Draft rates called for a 10% rate cut in 2018 with heftier cuts from 2019-2021. Quest Diagnostics’ stock reacted negatively to this news and management intends to challenge the proposal.
From Bernard Horn (Trades, Portfolio)'s third quarter 2017 shareholder commentary.
