Press release·02/27/2025 21:58:22

Overview

QuidelOrtho is a global leader in diagnostic testing, with expertise in areas like immunoassay, molecular testing, clinical chemistry, and transfusion medicine. The company operates in over 130 countries and has manufacturing facilities in the U.S. and U.K. QuidelOrtho manages its business geographically, with reportable segments in North America, EMEA, and China. The company generates revenue through its Labs, Transfusion Medicine, Point of Care, and Molecular Diagnostics business units.

In 2022, Quidel and Ortho-Clinical Diagnostics merged to form QuidelOrtho. The company’s financial statements for 2023 and 2024 include a full year of Ortho’s operations.

Financial Performance

QuidelOrtho’s total revenues decreased by 7% in 2024 to $2,782.9 million, and decreased by 8% in 2023 to $2,997.8 million. These declines were primarily driven by variability in the company’s U.S. respiratory products, including COVID-19 tests. Currency exchange rates also had an unfavorable impact on growth rates.

The company’s revenues can be highly concentrated in a small number of products, including certain respiratory products. In 2024, 2023, and 2022, revenues from respiratory products accounted for approximately 18%, 24%, and 57% of total revenues, respectively.

Planned Wind-Down of U.S. Donor Screening Portfolio

In 2024, QuidelOrtho initiated a plan to wind down its U.S. donor screening portfolio, specifically the VIP platform and microplate assays. This will not affect the company’s donor screening business outside the U.S. The wind-down is expected to be substantially complete by the end of 2025.

Supply Chains

QuidelOrtho obtains raw materials from reputable outside suppliers. Some materials are available from a limited number of sources. The company faced increasing raw material pricing pressures in 2023 and 2022, but these impacts lessened in 2024. To mitigate supply chain challenges, QuidelOrtho has taken steps like partnering with suppliers, diversifying its supply base, creating redundancy in its global supply chain, and insourcing activity where it makes strategic and financial sense.

Outlook

QuidelOrtho’s future financial performance will depend on factors like the occurrence, spread, and severity of respiratory diseases, as well as ongoing supply, production, and logistics challenges. Demand for the company’s respiratory products, including COVID-19 tests, declined in 2024 compared to 2023.

The company expects overall demand for its non-respiratory and respiratory products to continue fluctuating, and pricing pressures on certain products to persist. QuidelOrtho’s long-term growth and profitability will depend on its ability to retain and grow current customers and attract new customers through developing and delivering new and improved products and services.

Results of Operations

Revenues

QuidelOrtho’s total revenues decreased in both 2024 and 2023, primarily due to variability in respiratory product sales. The Labs business unit saw growth in reagents, consumables, and services, but this was offset by decreased COVID-19 and non-core revenue. The Immunohematology business unit grew, while the Donor Screening business declined due to the wind-down of the U.S. portfolio. The Point of Care and Molecular Diagnostics business units also saw revenue declines.

Cost of Sales

Cost of sales, excluding amortization of intangible assets, increased as a percentage of total revenues in 2024 compared to 2023, driven by product mix and the absence of a COVID-19 government award that benefited the prior year. In 2023, cost of sales increased as a percentage of revenues compared to 2022, primarily due to the impact of the Ortho acquisition and a decrease in respiratory product sales.

Operating Expenses

Selling, marketing, and administrative expenses increased slightly in 2024 compared to 2023, due to higher incentive-based compensation, partially offset by cost savings initiatives and lower advertising. In 2023, these expenses increased significantly compared to 2022, primarily due to the impact of the Ortho acquisition.

Research and development expenses decreased in 2024 compared to 2023, driven by lower employee costs and outside services. In 2023, R&D expenses increased compared to 2022, again due to the Ortho acquisition and increased costs for product development.

QuidelOrtho recognized significant goodwill and asset impairment charges in 2024, totaling $1.8 billion and $56.9 million, respectively. Acquisition and integration costs also increased in 2024 compared to 2023.

Segment Results

North America: Revenues and Adjusted EBITDA declined in 2024 and 2023, primarily due to decreased Point of Care sales, the wind-down of the U.S. donor screening business, and the absence of a settlement award in 2023.

EMEA: Revenues and Adjusted EBITDA increased in both 2024 and 2023, driven by growth in Immunohematology and Point of Care.

China: Revenues and Adjusted EBITDA increased in 2024 and 2023, with the growth coming from the Labs business unit, partially offset by declines in Point of Care.

Other: Revenues and Adjusted EBITDA increased in both years, with the growth coming from the Labs business and offset by declines in Point of Care.

Liquidity and Capital Resources

As of the end of 2024, QuidelOrtho had $98.3 million in cash and cash equivalents, and $589.0 million available to borrow under its Revolving Credit Facility. The company’s debt capitalization includes a $2.75 billion Term Loan and an $800 million Revolving Credit Facility.

QuidelOrtho’s primary sources of liquidity are cash flows from operations and availability under the Revolving Credit Facility. The company believes its current cash, cash flows, and credit facility will be sufficient to fund its near-term capital and operating needs.

The company’s future capital requirements will depend on factors like its ability to integrate and grow the Ortho business, realize revenue from new technologies, manage debt and covenant restrictions, and fund working capital, R&D, and business development efforts.

Critical Accounting Estimates

QuidelOrtho’s critical accounting estimates include:

• Allowance for Contractual Rebates: The company records revenue net of estimated rebates, which are largely driven by customer programs and can involve complex calculations.

• Goodwill and Intangible Assets: The company tests goodwill for impairment at least annually, using estimates and assumptions about future cash flows, discount rates, and market multiples. Significant impairment charges were recognized in 2024.

• Income Taxes: Determining the company’s provision for income taxes and ability to realize deferred tax assets requires significant judgment and estimation.

• Accounting for Business Combinations: The fair value assessments of acquired assets, liabilities, and contingent payments involve estimates and assumptions.

• Inventory Valuations: QuidelOrtho periodically reviews inventory for obsolescence and declines in market value, writing down the value as necessary.

Conclusion

QuidelOrtho faced revenue and profitability challenges in 2024 and 2023, primarily due to variability in its respiratory product sales, including COVID-19 tests. The company initiated a wind-down of its U.S. donor screening business and recognized significant impairment charges.

Looking ahead, QuidelOrtho’s financial performance will depend on factors like the future course of respiratory diseases, its ability to retain and grow customers, and its success in developing and launching new products. The company believes its current liquidity position and credit facilities provide the financial flexibility to fund its near-term needs, but its long-term capital requirements will depend on its strategic and operational execution.