Within the healthcare sector, we hold Quest Diagnostics (DGX, Financial), a leading independent lab and diagnostics services provider that offers lab testing at a fraction of the cost of hospitals—an important long-term competitive advantage and moat. We believe Quest Diagnostics is well-positioned as demand for healthcare services continues to increase with not only the pandemic, but also longer term as the population ages, since it is clear that costs must be contained. Quest Diagnostics essentially has exposure to the healthcare industry’s growing demand, but is a rare business insofar as it makes more money by driving down costs for the system—an uncommon combination that figures prominently in our long-term assessment of the business model, its competitive position and longevity overall.
From Chris Davis (Trades, Portfolio)' Davis Appreciation and Income Fund semi-annual 2020 review.
