Earnings call transcript: Quidel Ortho’s Q2 2025 EPS beats forecast by 7900%

Quidel Ortho reported a remarkable second quarter of 2025, with earnings per share (EPS) of $0.12, far exceeding the forecast of $0.0015, marking a 7900% surprise. Revenue reached $614 million, slightly above expectations. Despite this strong performance, the stock closed down 1.78% at $24.11, suggesting mixed investor sentiment. According to InvestingPro data, the company’s market capitalization stands at $1.61 billion, with analysis indicating the stock is currently undervalued based on its Fair Value assessment.

Key Takeaways

• EPS of $0.12 significantly surpassed expectations, marking a 7900% surprise.
• Revenue of $614 million slightly beat forecasts, with a 0.67% surprise.
• Stock fell 1.78% post-earnings, closing at $24.11.
• Full-year revenue guidance remains unchanged at $2.6 billion to $2.81 billion.
• Strategic acquisition plans with Lex Diagnostics announced.

Company Performance

Quidel Ortho showcased robust performance in Q2 2025, with a notable 271% increase in adjusted diluted EPS from a loss of $0.07 the previous year. This growth was driven by a 1% increase in revenue, excluding COVID and donor screening impacts, and a 19% rise in adjusted EBITDA.

Financial Highlights

• Revenue: $614 million, up 1% excluding COVID impacts.
• Earnings per share: $0.12, a 271% increase from last year’s loss.
• Adjusted EBITDA: $107 million, up 19% year-over-year.
• Adjusted EBITDA margin improved by 330 basis points to 17%.

Earnings vs. Forecast

Quidel Ortho’s EPS of $0.12 far exceeded the forecasted $0.0015, resulting in a 7900% surprise. Revenue also surpassed expectations slightly, with a 0.67% surprise. This performance highlights the company’s ability to outperform market predictions significantly.

Market Reaction

Despite the earnings beat, Quidel Ortho’s stock declined by 1.78%, closing at $24.11. This drop positions the stock closer to its 52-week low of $22.05, indicating potential investor caution despite positive earnings. InvestingPro analysis reveals the stock has shown counter-market movement tendencies with a beta of -0.03, potentially offering diversification benefits. InvestingPro subscribers have access to 10 additional key insights about QDEL, along with comprehensive financial metrics and expert analysis through the Pro Research Report.

Outlook & Guidance

Quidel Ortho maintained its full-year revenue guidance of $2.6 billion to $2.81 billion. The company is focusing on strategic initiatives, including the acquisition of Lex Diagnostics, expected to enhance its molecular diagnostics capabilities. InvestingPro data shows the company operates with a debt-to-equity ratio of 0.9 and maintains a current ratio of 1.2, factors that could influence its acquisition strategy. While not profitable over the last twelve months, analysts tracked by InvestingPro expect the company to return to profitability this year.

Executive Commentary

CEO Brian Blazer stated, "We are seeing the results of our efforts materialize," highlighting the company’s strategic progress. He also noted the unique dynamics of Quidel Ortho’s business in China compared to peers.

Risks and Challenges

• Unchanged full-year revenue guidance may indicate limited growth expectations.
• Narrowed growth guidance in China could impact future revenue streams.
• Stock price decline suggests potential investor concerns despite positive earnings.

Q&A

During the earnings call, analysts inquired about the company’s molecular strategy and the potential of the Lex platform. Discussions also covered the impact of market dynamics in China and expectations for respiratory testing.

Full transcript - Quidel Corporation (QDEL) Q2 2025:

Conference Operator: Welcome to the Quito Ortho Second Quarter twenty twenty five Financial Results Conference Call and Webcast. At this time, all participant lines are in a listen only mode. For those of you participating in this conference call, there will be an opportunity for your questions at the end of today’s prepared remarks. Please note this conference call is being recorded. An audio replay of this conference call will be available on company’s webcast shortly after this call.

I would now like to turn the call over to Juliet Cunningham, the Vice President of Investor Relations. Please proceed.

Juliet Cunningham, Vice President of Investor Relations, Quidel Ortho: Thank you. Good afternoon, everyone, and thanks for joining the Clyde L. Ortho’s Second Quarter twenty twenty five Financial Results Conference Call. Joining me today are Brian Blaser, President and Chief Executive Officer and Joe Buske, Chief Financial Officer. This conference call is being simultaneously webcast on the Investor Relations page of our website.

To aid in the presentation, we have also posted supplemental on the Investor Relations page that will be referenced throughout this call. This conference call and supplemental information contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not strictly historical, including the company’s expectations, plans, financial guidance and future performance as well as prospects are forward looking statements that are subject to certain risks, uncertainties, assumptions and other factors. This includes the expected impact of tariffs and macroeconomic conditions and the proposed acquisition of Lex Diagnostics. Actual results may vary materially from those expressed or implied in these forward looking statements.

Information about potential factors that could affect our actual results is available in our annual report on Form 10 ks for the 2024 fiscal year and subsequent reports filed with the SEC, including the Risk Factors section. Forward looking statements are made as of today, 08/05/2025, and we assume no obligation to update any forward looking statement except as required by law. In addition, today’s call includes discussion of certain non GAAP financial measures. Tables reconciling these non GAAP measures to the most directly comparable GAAP measures are available in our earnings release and the supplemental information, which are on the Investor Relations page of our website at quidelortho.com. Lastly, unless stated otherwise, all year over year revenue growth rates given on today’s call are on a constant currency basis.

Now I’d like to turn the call over to our CEO, Brian Blazer.

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Thanks, Juliet. Good afternoon, everyone, and thanks for joining us today. I’ll begin by reviewing our second quarter results, and then I’ll discuss how we are addressing changes to U. S. Trade policy and tariffs.

And I’ll finish with my thoughts on our recently announced intent to acquire Lex Diagnostics in the molecular space. Beginning with our second quarter results, total revenue of $614,000,000 grew 1% excluding COVID and the donor screening business, which we are in the process of winding down. Joe will go into additional detail, but let me provide some of the top line Q2 and year to date highlights. First, we delivered consistent solid results in our labs in immunohematology business units with organic constant currency growth of 53% respectively. Our respiratory business remained stable for this time of year with a relatively small $2,000,000 revenue decline excluding COVID.

As many of you know, Q2 is typically our lowest revenue quarter of the year due to the seasonally low viral prevalence, especially in North America. As a result, North America revenue declined by 12% during the quarter. Our Q2 OUS performance was led by strength in Latin America, Japan, Asia Pacific and Europe, Middle East and Africa. EMEA growth was up 3% in the quarter and is up 6% year to date. And our other region grew 10 in the quarter with 14% growth in Latin America and 6% growth in Japan and Asia Pacific.

Our low OUS penetration continues to be a significant opportunity for growth for us and is an area of focus. Turning now to China, we had 2% growth in Q2 despite the tariff related shipment holds we had in place in the month of April and those shipments have since been fully restored. China has been a challenging market for many of our peers, but it continues to be an important market for us. Most of our China business is in clinical chemistry where we have differentiated technology that has not been subject to the volume based procurement processes that are impacting other multinational companies. Our solutions are highly valued in the market, in particular in stat labs and distributed testing environments that benefit from our waterless technology and the reliability of our platforms.

We also have relatively low market penetration in China, particularly in immunoassays, so we look forward to a very long runway for expansion over the coming years. Our view is that the volume based procurement initiatives will not have a significant impact on our business this year. We have seen reimbursement changes flow through in cardiac markers that we have discussed for some time now. We have good visibility to our second half forecast. So we’re narrowing our range for China to mid single digit growth.

Moving to our Q2 profitability metrics, the impact of our cost structure actions are really starting to kick in. Adjusted EBITDA margin improved by three thirty basis points and we also saw meaningful improvement in adjusted diluted EPS compared to the prior year period. And these results were in line with our guidance and higher than consensus. Our second quarter and year to date results reinforce that the commercial and operations improvement initiatives that we launched last year are having a positive impact on our performance. Our global commercial team has sharpened its focus on key markets, value expansion in key accounts and profitable growth in international markets that value our broad portfolio of solutions.

Our R and D team is working on compelling innovation, increasing the breadth of our testing menu, improving the utility of our current platforms and developing new systems that will continue to differentiate us from our competitors. And our operations team is making strides in optimizing our cost structure, generating direct and indirect procurement cost savings and consolidating one of our major manufacturing sites. We have clear visibility to a rich funnel of projects that we expect will yield significant incremental cost savings and margin expansion, and we expect to see the positive impact of these initiatives appear in our results in the latter part of 2025 and into 2026. And importantly, our efforts to be a more customer focused organization are really paying off, And you can see this with our announcement last week that Quidel Orto earned first place rankings by service track for best overall clinical chemistry and integrated system performance and best overall for service. Our company has the highest customer service ranking in our markets as measured by Net Promoter Score among some very tough competitors.

Advancing the performance of our business also requires investment in top talent. And so we were pleased to welcome two exceptional senior leaders in global quality and regulatory affairs last month. Devin Burrup joined us as Senior Vice President of Global Quality and Sergio Gadaleta joined as Senior Vice President of Clinical and Regulatory Affairs. Both Devin and Sergio have extensive industry experience, but more importantly, they’re the kind of transformational leaders that we want in our business to elevate our performance. So now I’d like to briefly discuss the situation with tariffs and how we are navigating current conditions.

While the global trade tensions have caused uncertainty, other market conditions in the second quarter were generally consistent with what we saw in the first quarter. I think our team did a tremendous job of acting quickly to mitigate any potential impact primarily through inventory management and cost controls. And given the current state of trade agreements and our continued mitigation efforts, we estimate potential tariff headwinds of 20,000,000 to $25,000,000 in 2025, which is lower than our prior estimate of 30,000,000 to $40,000,000 We continue to expect to fully mitigate tariff headwinds through the actions we’re taking. And of course, we continue to closely monitor the situation. Lastly, I’d like to talk about our molecular strategy and why we are so excited about this incremental growth opportunity.

As we announced in June, we intend to acquire ownership of Lex Diagnostics upon FDA clearance of its Belo molecular platform and respiratory panel. Lex is a UK based molecular diagnostics company with an innovative molecular platform that can deliver results in minutes. It takes approximately six minutes for a positive result on its respiratory panel for flu a, flu b, and COVID with excellent performance. The Lex platform integrates seamlessly in the point of care workflows. It provides a highly competitive value proposition centered on speed, performance and cost.

And once the transaction is completed, we will move quickly to expand the test menu both in the respiratory space, but importantly into other applications like women’s health and STI. And since our announcement, we have garnered significant interest from our customers. Our commercial team is really excited about the growth potential, for the platform. Lex submitted a dual five ten and CLIA waiver for the Velo platform to the FDA in June and the review process is well underway. If the product is successful in achieving clearance in 2025, we would expect to begin placements on a limited basis in early twenty twenty six with the objective of ramping up placements during the 2026, 2027 respiratory season.

With that, I’ll wrap up by saying that we are pleased with the progress we’ve made on our top priorities and the strength of our underlying business. We are seeing the results of our efforts materialize, and we remain committed to delivering on our strategy to drive growth, expand profitability, and deliver on innovation that advances the power of diagnostics for a healthier future. With that, I’ll turn the call over to Joe to take you through our second quarter financial details. Joe?

Joe Buske, Chief Financial Officer, Quidel Ortho: Thanks, Brian, and hello, everyone. I’ll start by discussing our second quarter results, which are detailed on Slide three of the supplemental information available on the Investor Relations section of our website. And unless otherwise noted, all year over year revenue growth figures discussed today are presented on a constant currency basis. Let me begin by taking you through our second quarter performance, followed by a discussion of our full year 2025 financial guidance, which remains unchanged. After that, we’ll open up the call for questions.

Total reported revenue for the 2025 was $614,000,000 compared to $637,000,000 in the prior year period. The year over year decrease in total revenue was primarily due to lower COVID and donor screening revenue, the latter of which is related to the continued wind down of that business. Excluding COVID and donor screening revenue, revenue growth was 1% during our seasonally lowest quarter of the year. Foreign currency translation had a slightly favorable impact of 20 basis points during the second quarter. Based on foreign currency exchange rates as of the July, we expect FX to now have a neutral impact on revenue and adjusted EBITDA for the full year.

Brian provided the regional commentary, so I’ll focus on our broader business results. Looking at our non respiratory business in the 2025, revenue grew 1% excluding donor screening. Within that non respiratory category, our labs business grew 5%, driven by good performance in both Clin Chemistry and immunoassay testing. Notably in our Labs business, we continue to see strong recurring revenue with long contracts and a loyal customer base. Integrated and Automated Labs installed base grew 611%, respectively.

This growth is evidence that our commercial strategy to lead with integrated analyzers and automation continues to work well. In transfusion medicine, immunohematology revenue continued its consistent performance with 3% growth with particular strength in Latin America and Europe, Middle East and Africa. And donor screening revenue decreased by 61% due to the continued wind down of that business as expected. And lastly, our TreeHouse business decreased by 2%, largely driven by order timing in China. Note that we also saw some decline in other cardiac testing revenue, which was timing related between quarters.

Turning now to our respiratory business. Revenue of $47,000,000 decreased by $2,000,000 excluding COVID. Point of care was down 21%, primarily due to lower COVID sales, which were $9,000,000 in the quarter and decreased by 52%. Flu was slightly down compared to the prior year period. Given lower year to date COVID revenue and what we have seen thus far in Q3, we now expect full year 2025 COVID revenue of between 70 to $100,000,000 compared to our previous range of 110,000,000 to $140,000,000 To be prudent, we are lowering the range because while positivity rates are increasing, emergency room visits and hospitalization rates indicate that the current COVID strains are not severe, which typically results in less testing.

We will, of course, continue to monitor summer activity for any change. We do, however, expect to see normal increases in COVID revenue later in the year, but therefore, it’s likely that COVID revenue will be lower in Q3 than originally anticipated. Now to finish up our business unit results, Molecular revenue grew 24%, although off a smaller base, as we continue to support our Savannah customers through our transition plan. Moving down the P and L, second quarter adjusted gross profit margin was 45.7% versus 44.2% in the prior year period. The 150 basis point year over year increase was driven by disciplined expense control and favorable product mix.

Non GAAP operating expenses of $215,000,000 comprised of SG and A and R and D decreased by 21,000,000 or 9% as a direct result of our ongoing cost savings actions in the areas of staffing and indirect procurement. Our Q2 results included $179,000,000 in restructuring, integration and other charges. Consistent with our June announcement, we had primarily noncash charges of $150,000,000 related to the discontinuation of the Savanna platform. These charges were related to fixed assets and inventory. We also recorded $23,000,000 in integration costs primarily related to our ERP system conversion.

And we are happy to report that we have completed our ERP conversion related to the business combination, and it has gone very well, thanks to the efforts and dedication of our team. In addition, because of this, we expect lower integration costs in the second half of the year. Also included in the restructuring reserve was a $6,000,000 charge for planned headcount reductions related to our Raritan, New Jersey manufacturing site consolidation. Given the complexity of the manufacturing operations in Raritan, we expect the site closure to take place over a two year period. We expect to save approximately $20,000,000 of annual operating costs as a result.

These savings are another example of actions that move us toward our adjusted EBITDA margin goals of mid- to high 20% range. Adjusted EBITDA of $107,000,000 increased by 19% compared to the prior year period. Adjusted EBITDA margin was 17%, a three thirty basis point improvement. And on a year to date basis, adjusted EBITDA was $267,000,000 or 20% margin, which represents an increase of approximately 400 basis points. Notably, adjusted diluted EPS was $0.12 compared to adjusted diluted loss of $07 in the prior year period, which was growth of 271%.

Year to date adjusted diluted EPS was $0.86 compared to $0.37 with growth of 132%. The impressive growth in adjusted EBITDA and diluted EPS are evidence that our cost savings initiatives are working and that we continue to drive towards our adjusted EBITDA margin goals. Turning now to the balance sheet on Slide six. We finished the quarter with $152,000,000 in cash and $3.00 $9,000,000 in borrowings on our $800,000,000 revolving credit facility. We had an increase of $81,000,000 in net debt as expected since Q2 was our seasonally lowest quarter for revenue, margin and cash flow.

Adjusted free cash flow was a negative $32,000,000 which was in line with our expectations for Q2. And given that we expect seasonally stronger cash flow in the second half of the year, we continue to expect full year recurring cash flow to be 25% to 30% of adjusted EBITDA. During Q2, our net debt to adjusted EBITDA ratio was 4.2 times. Our consolidated leverage ratio, including pro form a EBITDA adjustments as permitted and defined under our current agreement, was slightly down sequentially at 3.3 times. We expect our gross year end leverage ratio to be at the higher end of our previously communicated range of 3.5 to four times.

As an update on our debt refinance, we now have high confidence that we will refinance our existing Term Loan A in Q3, and we do expect advantageous terms as compared to our current credit agreement. And lastly, our highest capital allocation priority continues to be debt paydown, and our goal continues to be net debt leverage of between 2.5x and 3x. Now turning to Slide seven. Based on our current business outlook, we are reiterating our full year 2025 financial guidance as follows. We continue to expect full year 2025 total reported revenue of between $2,600,000,000 and $2,810,000,000 with a neutral FX impact to the full year.

We are reiterating our full year revenue guidance range with the balancing factors of a decrease in COVID revenue assumptions and a benefit to revenue from FX tailwinds. And as Brian mentioned, we now expect gross tariff impacts of 20,000,000 to $25,000,000 which on a net basis is now a tailwind to our overall financial results due to our mitigation plans already in progress. Therefore, on the adjusted EBITDA and adjusted EPS lines, we expect lower COVID margin contribution to be fully offset by lower tariffs as well as some savings from the Savannah discontinuation. So there is no change to our full year guidance. We are maintaining our full year guidance for adjusted EBITDA of $575,000,000 to $615,000,000 which equates to 22% adjusted EBITDA margin, which is a two fifty basis point improvement over the prior year and adjusted diluted EPS of between $2.07 to $2.57 Finally, we expect incremental cost savings of $25 between 30,000,000 to $50,000,000 primarily related to indirect procurement efforts.

This is in addition to any tariff related offsets. Our continued operational improvements played a meaningful role in our performance this quarter, particularly on margin and EPS. We are proactively navigating the challenging macro environment and believe our current business outlook is in line with our 2025 full year financial guidance. We remain focused on execution, commercial excellence and cost savings initiatives to deliver profitable growth. And despite recent tariff impacts, we continue to see a clear pathway to our adjusted EBITDA margin goal in the mid- to high 20% range by mid-twenty seven.

With that, I’ll ask the operator to please open up the line for questions.

Conference Operator: Our first question comes from Andrew Breckham with the company William Blair. Andrew, your line is now open.

Maggie Bowie, Analyst, William Blair: Hey, everyone. This is Maggie Bowie on for Andrew today. Thanks for taking our questions. Maybe first, just to start, can you walk through just your respiratory expectations for the remainder of the year, and just how you got to where your current COVID guidance is? Do you feel that you’ve, you know, kind of gotten your guide to a more conservative a place given the can’t it could be a lighter season?

Thanks.

Joe Buske, Chief Financial Officer, Quidel Ortho: Yeah. Hey, Maggie. It’s Joe. So first of all, it’s probably worth stating. I know I’m not sure I said it in the prepared prepared remarks, but we’re we’re not changing any of our flu assumptions.

The flu guidance is exactly the same as it was when we started the year. There is no change there. The only change in our respiratory revenue guidance is on COVID. And as I said in the remarks, we are seeing a rise in positivity in COVID as we speak. However, ED visits and hospitalizations are lower, which points to less disease severity and likely less testing as a result.

So year to date, we’ve had about $33,000,000 in COVID revenue. We do expect higher revenue in the second half, but we so probably not as much as we assumed for Q3. So we are bringing the range down from 110,000,000 to 140 to 70 to 100 for the full year for COVID.

Maggie Bowie, Analyst, William Blair: Okay. That’s helpful. Thank you, Joe. And then just maybe one on China. Can I know you mentioned in the prepared remarks the visibility you have that gave you comfort in narrowing that range to mid single digit growth for 2025?

So can you walk us through how that’s the right number? Is there where does the potential risk lie there? And then just how are you thinking about the revenue growth opportunity in China over the longer term? Thanks.

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Yeah. So thanks, Maggie, for the question. You know, I’ll I’ll just double click into China, for a minute here. So, you know, our business in China is a little different than, most of our peers there. We have a mostly clinical chemistry business, where we have, you know, very good pricing due to our dry slide technology.

We’re also underpenetrated in immunoassays, which generally have higher prices and margins. And so that’s a real opportunity for us. And we continue to, see China as an important market for us as long as the economics, you know, continue and notwithstanding any anything crazy that happens with, tariffs or otherwise. The market has seen a number of pricing and volume actions taking place. There have been a couple of BBP actions that took place in infectious disease and hormone.

Some tumor markers were impacted by that. Those had relatively minimal, impact on us. There was also a unified reimbursement plan for, some additional cardiac, assays. And that also had kind of a relatively minor impact to our business there. And of course, they’ve gone through this panel debundling process or DRG process, which has had some impact to our volume there.

But because we’re largely a a stat lab focused placement there, those panels are generally not debundled when they’re running a stat lab that you’re you’re generally looking for a broad indications of what’s going on. And so, you know, you you don’t tend to to unbundle, you know, those those tests. So we’ve been maybe less impacted, you know, by that. I would say, you know, that most of the the VBP, the the this reimbursement, the unbundling actions, these have kind of already happened. And we don’t really see any actions on the immediate horizon that would impact the remainder of 2025.

So, we are expecting higher growth in the back half of the year that would bring us to the mid single digit, level for the full full year and, you know, just monitoring the environment carefully as as you always have to do in in that region.

Maggie Bowie, Analyst, William Blair: Great. Thanks so much.

Conference Operator: Our next question comes from Patrick Donnelly with the company Citi. Patrick, your line is now open.

Patrick Donnelly, Analyst, Citi: Hey, guys. Thank you for the question. Joe, it sounds like maybe a few moving pieces on the EBITDA side, maybe a little less COVID and then better on the Savannah piece and maybe the tariffs. You just talk through the moving pieces? Obviously, when Savannah got discontinued, it felt like you guys had some room.

Is that just COVID being high margin, moving down a little bit? What are the levers there? And again, it sounds like you’re still confident in the midterm guide, ’26 and beyond. But, yeah, maybe just walk us through the margins, the moving pieces to keep it here. You know, it felt like maybe there’s some room.

Is there conservatism still? Curious how you’re thinking about it.

Joe Buske, Chief Financial Officer, Quidel Ortho: Yeah. Sure, Patrick. So so again, on maybe for the full year guidance on the revenue side, it it’s actually pretty simple. The COVID numbers are coming down a little bit. It’s being offset by less FX impact.

So therefore, the revenue guide for the full year is is unchanged. And then when you move down to adjusted EBITDA and adjusted EPS, we are, looking at the the COVID revenue range coming down on the low and the high end by 40,000,000 due to the reasons I just outlined in response to Maggie earlier. And that’s, you know, that’s probably a 20,000,000 to $25,000,000 impact on on gross profit and adjusted EBITDA. And then the good guys offsetting that are we have less less tariff impacts, to the tune of 15,000,000 to $20,000,000 and then we have the discontinuation of the Savannah development that is is gonna provide 5,000,000 to $10,000,000 of upside. And so all those really, those three things net out and get us back to the same number for the bottom line adjusted EBITDA and adjusted EPS.

Patrick Donnelly, Analyst, Citi: Okay. Got it. And then maybe a quick follow-up on China. You know, I know you it sounds like you trimmed the guy from mid mid to high single to just a mid single. Is that just the cardiac piece?

And then again, it sounded like some of the shipments that were on hold in February have already shipped. Can you just talk about the confidence in the 2H piece? Is a lot of that driven by the timing? Or are there other variables that we should

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: be keeping an eye on? Yes.

Joe Buske, Chief Financial Officer, Quidel Ortho: Patrick, I think the narrowing of the China full year guidance to mid single digits is just really based on the fact that we’ve got two quarters behind us, and there’s only two quarters to go. And and this business, it’s it’s mostly a labs business. I mean, there’s some IH business there. There’s some triage business there, but it’s mostly labs. And the labs business is is a pretty predictable business for us, not only in China, but around the world.

And so it’s really just the the the visibility we have and the fact that, like Brian said, most of those those impacts we think are behind us. And and therefore, we we don’t expect any more any more of those downsides. And so it’s just it’s just good visibility. We can we can narrow the range down to a a a pretty small range.

Patrick Donnelly, Analyst, Citi: Understood. Thank you, guys.

Conference Operator: Our next question comes from Tycho Peterson with the company Jefferies. Your line is now open.

Jack, Analyst, Jefferies: Yeah. Hi. This is Jack on for Tycho. Appreciate the question, and congrats on the good quarter. Just want to touch on point of care.

I know you talked through Triage a little bit, but that was, I believe, down 2% in the quarter, but I wanna touch on the other elements there and and Sofia and sort of what happened in the quarter.

Joe Buske, Chief Financial Officer, Quidel Ortho: Yeah. This is, Jack, this is Joe. You know, the as we’ve said a couple times, q two is the is our lowest respiratory quarter. So the the rest the the respiratory revenue ex COVID was was pretty flat. We did already mention that COVID was down fifty two percent.

And so the the other piece in there, there’s this this other cardiac revenue, which I noted in the in the prepared remarks, was was down about $10,000,000 year over year in the quarter, but it’s all timing within the quarter. So we expect to totally make that up in the second half of the year. So it was a bit of a headwind in Q2 for sure, but it’s totally timing with the second half of the year. And those are the those are all the pieces that’ll get you to the point of care point of care numbers.

Jack, Analyst, Jefferies: Okay. And then, I guess, any color on, Sofia specifically?

Joe Buske, Chief Financial Officer, Quidel Ortho: Yeah. Again, Sofia, that’s the flu revenue, and it’s it was pretty small in the quarter, and it was flat year over year. Yeah.

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Okay. And if I could

Jack, Analyst, Jefferies: just sneak one more in. I guess as as we think about China, I appreciate the colors on EDP and DRG. It sounds like you’re still bundling a lot of these assays at the stat labs, I guess. How should we think about sort of like the go forward exposure to DRG if that were to, I guess, turn adversely?

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Well, I I I think it’s the way I characterized it. Again, you know, most of our business there is is in the labs space and a significant portion of that business is is in stat labs. And we continue to position our systems in stat labs and distributed testing environments where I think they’re less likely to to do unbundling, just because of the nature of how they’re treating patients. So, you know, I I think we’ll we’ll see some of it moving forward, but, I don’t I don’t I wouldn’t expect it to turn, sharply, for any reason.

Connor McNamara, Analyst, RBC Capital Markets: Okay. Thank you.

Conference Operator: Our next question comes from Connor McNamara with the company RBC Capital Markets. Connor, your line is now open.

Connor McNamara, Analyst, RBC Capital Markets: Great. Thanks for the question, guys. And and sorry, Joe. Just one more housekeeping item on on the guidance, just to follow-up on on what Patrick was asking. So it looks like revenue for you know, you took out about 50,000,000 in revenue between COVID and and China.

And then

Joe Buske, Chief Financial Officer, Quidel Ortho: No. Hey, Connor. Just to maybe be clear, the the China revenue in the guide is not changing. It’s not changing at all. I wanna be really clear about that.

We just narrowed the range for for everyone. What came down what came did come down, yeah, was was COVID revenue range, and that was $40,000,004.00 on the top and the bottom. And that’s really fully offset by the now change in FX assumption where FX is neutral for the year.

Connor McNamara, Analyst, RBC Capital Markets: Okay. Got it. Thanks for that. And Yes. Just on molecular, can you just talk about you know, obviously, it’s it’s still ways off,

Andrew Cooper, Analyst, Raymond James: but can you just talk

Connor McNamara, Analyst, RBC Capital Markets: about the the opportunity there and your strategy when you do go to market? Is is, you know, is is the early placements of those gonna be with current Sofia customers, or is there is there a greenfield opportunity to go after new accounts? And who’s gonna be driving the the sales there? Is that the legacy Quidel plus or are are you gonna be able to you know, is this part of what what the legacy Orbito sales rep brings to the table? If you could just expand on that, that’d be great.

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Yeah. Well, the you know, I I it’s a really compelling platform. You know, as I described it, it’s a it’s basically ultra fast real time PCR, you know, six minutes to a result on their respiratory panel. You know, it has a a low cost profile for both the instrument, and the the cartridges. It has a direct swab option.

It’s got room temperature reagents. And and, really, I mean, super simple sample to answer workflow. And, you know, I won’t won’t, single out any, specific competitors, but if you look at that our platform against any of the competitive platforms out there, there are different elements of our value proposition that compete nicely against each of those competitive platforms. And so we think there’s, you know, plenty of opportunity, you know, to to take share from existing competitors. But also, you know, there’s there’s still is some greenfield opportunity there.

You know, it in in terms of the channel, it’ll be a combination of the the current channel that we use for Sofia. But also, there are professional applications for this, so we we expect to utilize the ortho commercial team, the legacy ortho commercial team to to place those instruments as well. And, you know, I think, we’re just we’re just very excited about the the platform. It’s, in active review right now with FDA. And as we understand it, the review is, going as well as, you would would hope.

And, you know, we’re looking forward to getting it on the market. When we do, get approval, assuming again, that happens by the end of the year, We’ll be making placements, probably with a lot of existing customers, but I I would expect some new customers as well so that we can get a a full range of input on the performance of the platform. And our objective will be to scale placements as quickly as we possibly can. And and and I I think, importantly, also to expand expand the menu of the platform beyond just the respiratory space, but into other areas like women’s health and STI as I I mentioned in the prepared remarks. So, again, very, very excited about the platform and, you know, looking forward to to seeing a a successful approval sometime later this year, hopefully.

Connor McNamara, Analyst, RBC Capital Markets: Thanks. And one final question, if you don’t mind. Just with one of your competitors changing hands, you know, do you see an opportunity to potentially take take some market share if there’s any disruption there, or is it too early to tell if that’s an opportunity for you guys?

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Well, you know, anytime there’s, you know, disrupt disruptive activity in the market, it’s generally a good opportunity for competitors. And, you know, we’ll we’ll certainly look to exploit that the best we can just like they would if it if we were going through it. So, yeah, we’ll we’ll be we’ll be looking at that carefully.

Connor McNamara, Analyst, RBC Capital Markets: Got it. Thanks thanks for the questions. Appreciate it.

Conference Operator: Our next question comes from Casey Woodring with the company JPMorgan. Casey, your line is now open.

Casey Woodring, Analyst, JPMorgan: Great. Thank you for taking my questions. I guess the first one is just can you walk us through how you’re thinking about free cash flow in the back half? 2Q took a step down given lower respiratory volumes. But just what’s your visibility into the 25% to 30% of adjusted EBITDA conversion guide for the year and that implied ramp I’m sorry, That implied ramp versus the I think it’s around 5% you did in the first half.

Joe Buske, Chief Financial Officer, Quidel Ortho: Yeah. Hey, Casey. It’s Joe. So that that 25% to 30% of adjusted EBITDA target, that that’s a recurring free cash flow number. And just to reiterate the numbers, we did, we’ve done 15,000,000 of recurring free cash flow in, the first two quarters of this year.

Last year, we actually used 79,000,000 of cash in in the first February of the year. And then, you know, we’ve been saying all along that our business is is very seasonal and that the the we will generate more cash in the second half of the year versus the first half of the year. And that was evident last year too. Last year, we generated a 189,000,000 of recurring free cash flow in the second half of the year. And so to get to our target of that 25% to 30% of adjusted EBITDA, we need to we need to be somewhere between about 140,000,000 to $160,000,000 of second half free cash flow.

So it’s totally reasonable based on what we did last year and the seasonality of the business. So we will definitely see more cash flow in the second half of this year to get us to that target. Got it. That’s helpful. And then

Casey Woodring, Analyst, JPMorgan: my follow-up, just on the 30,000,000 to $50,000,000 in incremental savings this year, you had previously said that, that would be back half weighted. Just any more color there? Is it closer to 50,000,000 or closer to 30,000,000 And do you have a better sense of the quarterly cadence that we should assume between 3Q and 4Q? Thank you.

Joe Buske, Chief Financial Officer, Quidel Ortho: Yeah. The 30 to 50 for this year, was primarily related to indirect procurement initiatives, and we are very much on track to realize that 30 to 50. I would say it’s it’s definitely more back end loaded and that we’ll see that savings, in the back half of the year. And and if you look at at the savings that we’ve seen in the first half of the year relative to last year, you can very much see from the margin improvement that we’re getting the impacts of the headcount, the $100,000,000 annualized headcount reduction that we did a year ago. And so you will also start to now see second half benefits as well, and that’s going to be mostly related to the indirect procurement benefits.

And it’ll be in that range of 30 to 50, Casey. More to come on that, I guess, on the next call. Got it. Thank you. Sure.

Conference Operator: Next question comes from Jack Liam with the company Nephron Research. Jack, your line is now open.

Juliet Cunningham, Vice President of Investor Relations, Quidel Ortho0: Thank you. Good afternoon. I wanted to talk about the guide the FDA guide for respiratory testing. So flu is unchanged. You brought COVID down a bit.

What I was curious about is what you’re assuming in terms of the ABC combo test as a percentage of mix, just the outlook for demand there?

Joe Buske, Chief Financial Officer, Quidel Ortho: Hey, Jack. Yes. No no change in that. We are still assuming that greater than fifty percent of, the mix of flu will be that combo test. You know, that combo testing, you know, going back even q one this year and two previous years, again, has been pretty durable.

And we expect the same as we move into q three and q four. No change.

Juliet Cunningham, Vice President of Investor Relations, Quidel Ortho0: Okay. And then either for Brian or Joe, as you’ve kind of reassessed the molecular strategy over the last couple of months between Savannah and Lex, I was actually curious what that means for the other parts of your molecular portfolio. You know, as Lex potentially comes in, how are you feeling about Solana and Lira and kind of their long term positioning?

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Yeah. We’re, you know, we’re kinda taking a step back and and and looking at that. You know, I I expect those to have a a place in our our portfolio. As you know, they’re smaller businesses. And, you know, really, we’re hanging our hat on most of our growth there on the future of of the Lex platform.

So that that’s kinda how we’re thinking of of the molecular space.

Joe Buske, Chief Financial Officer, Quidel Ortho: Okay. Sounds good. Thank you, guys.

Connor McNamara, Analyst, RBC Capital Markets: Alright. Thanks, Jack.

Conference Operator: Our next question comes from Lou Li with company UBS. Lou, your line is now open.

Juliet Cunningham, Vice President of Investor Relations, Quidel Ortho1: Great. Thank you for taking my questions. I think the first one on the mass, as you were planning for the commercialization, have you already started to do some kind of like commercial works like marketing? And even I remember like you probably need to move like some of the manufacturing to The U. S.

I wonder if you have already started to doing that.

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Hi, Lou. This is Brian. No. We have not started any, commercial efforts, whatsoever there. You know, we we’ve only announced the intent to acquire the the business.

They still have to get through their FDA approval. You know, we’re we are looking, at what we can do from an infrastructure standpoint ahead of of an approval, but nothing externally commercial with customers or in the marketplace whatsoever.

Juliet Cunningham, Vice President of Investor Relations, Quidel Ortho1: Got it. Makes sense. And then I guess, like, maybe focusing on some other kind of, like, business in terms of, like, portfolio refresh. Have you started, like, to identify any areas that you can potentially launch new products in 2026 or maybe even beyond that?

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: In in terms of New products. New new products. Well, you know, our in the short term, we’re very focused on really it’s it’s mostly a number of, I would say, menu gap fillers, a handful of of menu gap fillers across primarily the labs, platforms. We are at this at this point now starting to think about and envisioning concepts for next generation platforms. As you know, you know, you have to to stay relevant in this space and that’s important to us.

But over the, you know, the near term, it’s primarily gonna be content, and maybe some additional, feature capability on our existing systems, informatics, and maybe some automation upgrades on on existing platforms as well.

Juliet Cunningham, Vice President of Investor Relations, Quidel Ortho1: Got it. Thank you.

Conference Operator: Our next question comes from Andrew Cooper with the company Raymond James. Andrew, your line is now open.

Andrew Cooper, Analyst, Raymond James: Hey, everybody. Thanks for the question. Maybe just first, you know, a lot of talk about VBP. I I think we’ve covered kinda why you’re not impacted as much. But does this do anything in the competitive landscape when you think about that opportunity in immunoassay and and what you bring to the China market?

Or does it change the way you approach that in any way?

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: I I just I I I think it probably speaks more to our longer term opportunity as opposed to any, you know, radical upset of the of the competitive landscape there. I mean, it’s still it’s still a very competitive market, as you know, with, you know, not only, you know, large multinational corporations who participate, but also a lot of local suppliers in the immunoassay market. So we’re looking at, you know, how we shape the organization, how we shape our business to advance our penetration there and also preserve our economics while we do it.

Andrew Cooper, Analyst, Raymond James: Okay. Helpful. And then maybe just one kind of similar similar type question on the respiratory side. I know in the past, you guys have commented some on on share. Obviously, we’ve heard from some other folks saying some different things in the space.

So what’s the latest view on, you know, share in that respiratory setting? And I guess, in particular, in, you know, really those core settings for you in in primary care and acute care and and locations like that, has there been any change, and and kinda any update to to the thinking there would be great.

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Hey, Andrew. It’s Joe. Yeah.

Joe Buske, Chief Financial Officer, Quidel Ortho: And similar to what I said previously on the the flu guidance, there’s really no change to the flu guidance that we put out back in February. You know? And, again, just to remind everybody that the the the modeling that we do is based on market share, size of the market in terms of volume and the mix of that combo to stand alone flu AB testing. And, again, there there is no change to any of those assumptions. We’re still really in the same place.

The q one and q two from a respiratory perspective played out pretty much as we expected. And, you know, based on what we’re seeing from the Southern Hemisphere flu season, there’s no change to our guidance there for the full year on the flu. Not all those assumptions are in the same place.

Andrew Cooper, Analyst, Raymond James: Okay. I’ll leave it there. Thanks, everybody.

Joe Buske, Chief Financial Officer, Quidel Ortho: Thank you. Thank you.

Conference Operator: At this time, there are no more questions registered in queue. I’d like to pass the conference over to our host, Brian Blazer, for closing remarks.

Brian Blazer, President and Chief Executive Officer, Quidel Ortho: Thank you, operator, and thank all of you for your time today. I’d just say to wrap up, we’re pleased with our solid results in Q2 and the 2025 with adjusted EBITDA margin and adjusted EPS improvement resulting from our cost initiatives. The strength of our underlying business, with our recurring revenue model, long term contracts, good visibility gives us confidence that we’re on the right track and well positioned for continued growth. So we look forward to sharing our continued progress with you next quarter. Thank you.

Conference Operator: That will conclude today’s conference call. Thank you for your participation, and enjoy the rest of your day.

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