Quidel at 45th Annual William Blair Growth Stock Conference: Strategic Moves and Financial Goals

On Wednesday, 04 June 2025, Quidel Corporation (NASDAQ:QDEL) presented at the 45th Annual William Blair Growth Stock Conference. The company outlined its strategic initiatives, focusing on customer experience, innovation, and sustainable growth. While announcing the acquisition of Lex Diagnostics, Quidel also addressed the discontinuation of its Savanna platform due to clinical trial results. The company remains committed to financial targets, including margin expansion and debt reduction.

Key Takeaways

• Quidel aims to reduce its net leverage ratio to between 2.5 and 3.5 times.
• The acquisition of Lex Diagnostics is set to enhance point of care molecular diagnostics.
• The discontinuation of the Savanna platform allows a focus on high-growth platforms.
• The company targets $30 million to $50 million in cost savings for 2025.
• Global revenue distribution: 58% North America, 20% EMEA and Latin America, 22% Japan, Asia Pacific, and China.

Financial Results

• Full year 2024 revenue reached approximately $2.8 billion.
• The labs business contributed $1.4 billion, accounting for 50% of total revenue.
• Immunohematology business revenue was $523 million, excluding donor screening.
• Point of Care business generated $694 million, while molecular diagnostics accounted for $24 million.
• Q1 revenue growth, excluding COVID and donor screening, was 6%.
• Adjusted EBITDA margin improved by 450 basis points year-over-year.
• Adjusted diluted earnings per share increased by 68% compared to the prior year.

Operational Updates

• Labs: Stable mid-single-digit growth, focusing on integrated analyzers.
• Transfusion Medicine: U.S. donor screening business winding down by year-end, with immunohematology expected to grow in low single digits.
• Point of Care: Expected mid-single-digit growth, driven by the Sofia 2 platform and cardiac assay menu.
• Molecular Diagnostics: Acquisition of Lex Diagnostics aims to expand capabilities.

Future Outlook

• Strategic priorities include profitable growth in attractive market segments and enhancing ROIC.
• Focus on expanding the menu beyond flu and COVID for the Lex platform.
• Reaffirmed full year 2025 financial guidance.

Conclusion

For a detailed overview, readers are encouraged to refer to the full transcript.

Full transcript - 45th Annual William Blair Growth Stock Conference:

Andrew Brechtman, Diagnostics Analyst, William Blair: All right. Hi, everyone. Good morning. Welcome to the second day of the William Blair Grossdoc Conference. If you don’t know me, I’m Andrew Brechtman.

I’m the diagnostics analyst here at William Blair who covers Quidel Ortho. We’re very pleased to have the management team joining us here this morning. We have the CEO, Brian Blazer CFO, Joe Buskey in the front row from Investor Relations, Julie at Cunningham. I am required to tell you that for a full list of research disclosures, please visit williamblair.com. The format for today will be a thirty minute formal presentation in this room, and then we’ll go upstairs for the breakout afterwards.

With that, I’ll turn it over to Brian. Thanks, Brian. Thanks for being here.

Brian Blazer, CEO, Quidel Ortho: Alright. Thanks, Andrew. Good morning, everyone. I’m very pleased to be with you here today. I’d like to start by describing our business, taking you through our market opportunities, how we’re positioned to grow and capture share in each of our business units.

And then I’d like to cover the initiatives we are deploying and how we see this business evolving over the next few years. Before we get started though, I would point out that we will be making forward looking statements during the presentation and we will refer to non GAAP financial measures. So please refer to the description of these financial measures and statements in the presentation including factors that could cause materially different outcomes. So, you know, just to start with a little history, Quidel and Ortho Clinical Diagnostics combined in May of twenty twenty two to create Quidel Ortho. Today, we are focused around four major business areas that serve market segments of roughly $20,000,000,000 labs, transfusion medicine, point of care and molecular diagnostics.

Our global product portfolio includes more than three thirty different products. And for the full year 2024, we reported revenue of approximately $2,800,000,000 20 20 4 was an important year for the company where we made several changes that will position us for near and longer term growth. We are a global company with approximately 6,600 employees covering 130 different countries. North America is our largest market with 58% of our overall revenues. EMEA and Latin America, 20 Percent of our revenues.

And then Japan, Asia Pacific and China represent 22% of our revenue of which China is roughly 11% of our total company revenues. Our commercial team includes nearly 3,000 customer facing sales and service professionals who serve over 65,000 customers. Our global regions are fully aligned with our business units to leverage the scale of our global commercial team, capitalize on growth opportunities and provide the best possible customer service. Since I joined the company in May of twenty twenty four, a key priority has been strengthening our leadership team and aligning our organization for speed and effectiveness. So last fall, we announced a change in the organization model that enables a flatter, more efficient organization that’s focused on our key customer segments and regions.

And we’ve acquired key talent and assembled a team of highly experienced industry leaders to deliver an excellent customer experience, improve our performance and prioritize profitable growth. We have a very broad product portfolio of instrumentation that spans the entire continuum of care from hospital reference labs to point of care testing. Our overarching mission is to improve customer and patient outcomes in each care setting at every step of the healthcare journey. Our product portfolio is uniquely suited for both centralized and decentralized testing. We serve patients from prevention to diagnose diagnosis and in treatment to monitoring.

There are very few companies in our space that have this breadth and that’s particularly exciting to me because of what it represents in terms of opportunity for growth and impact. The in vitro diagnostics market is a large market, $50,000,000,000 in size, growing in the mid single digits. Of this, we serve market segments of approximately $20,000,000,000 spanning the entire continuum of care. So I’ll take a few minutes here to go through some of the details about each of our businesses. So our our labs business has a large global installed base with highly loyal customers with long term five to seven year contracts, an average tenure of more than twelve years.

Our highly reliable BITROs platforms enable small to medium sized hospitals and hospital networks to cost effectively run more than a 75 unique tests. And among its competitive strengths are dry chemistry which requires no special lab plumbing and a low total cost of ownership with higher first pass yields and excellent customer service. Our commercial emphasis has been on placing integrated analyzers that can do both routine clinical chemistry and immunoassay testing. Only about 30% of our installed base is integrated, so we have a long runway for growth in this area. Our labs business is a stable consistent mid single digit growth business that represent represented about 50% of our revenue at $1,400,000,000 in 2024.

Our transfusion medicine business consists of immunohematology and donor screening. We have the number one global brand in immunohematology with an extensive installed base of 7,400 systems running more than three fifty unique tests in hospitals and blood banks worldwide. We’ve announced that we are winding down The U. S. Donor Screening business, which we expect to be largely completed by the end of this year.

Excluding donor screening, the immunohematology business generated $523,000,000 in revenue in 2024 and we expect this business to grow in the low single digits in the near and medium term while there are opportunities to increase the growth rate over time with incremental investment in our platforms. We are the leader in respiratory testing in The United States with our Sofia two platform in the professional setting with cumulative placements of 97,000 instruments. Sofia two is a portable benchtop analyzer designed to deliver rapid to physician offices, labs and clinics for a range of infectious disease and chronic health conditions. In addition, we have QuickView which is a line of rapid tests for professional and home traction with our Sofia flu and COVID combo test over the past two years. This test has consistently represented over 50% of our total flu revenue.

And our Triage Meter Pro platform offers an extensive cardiac assay menu that’s primarily used in emergency departments for patients presenting with cardiac symptoms. Point of care contributed $694,000,000 in revenue in 2024 and is expected to grow in the mid single digits overall. We are developing an emerging molecular diagnostics business to target the fastest and most attractive market segment in the IBD space. Molecular diagnostics was $24,000,000 in revenue in 2024 and we see molecular as our largest near term opportunity for incremental growth over the next few years. So I’ll turn now to the news that we announced yesterday about Lex Diagnostics.

And and and you know, maybe just to put a point on this, that this is something that we would have wanted to announce on our q one earnings call, but we we just weren’t quite at the point where all of the data was in and and we had thorough thoroughly reviewed it. So we held off a little bit, but we are pleased to to announce that yesterday. You know, since joining the company a year ago, I’ve been working with our management team on a disciplined comprehensive review of our strategy to improve profitability, growth and shareholder value. And so yesterday, we announced what I consider to be a significant step toward reshaping our product portfolio and redirecting our investments for the future. So we intend to acquire full ownership of Lex Diagnostics on FDA clearance for closing consideration of approximately a hundred million dollars.

As part of our evaluation and after careful consideration, we decided to discontinue the development of our Savanna platform. Despite our our best efforts there, the results we achieved in our recent clinical trial for the respiratory panel did not meet our high standards for performance and in considering the incremental time, cost, risk associated with further development of Savannah, we decided that this was just not an effective use of company resources. We recently invested in Lex Diagnostics in December 2023 with the exclusive option to acquire the company up to or shortly after it receives U. S. FDA clearance.

Lex is expecting to file a dual five ten and CLIA waiver submission to the FDA in the coming days with clearance expected late this year or early twenty twenty six depending on the FDA review process. So I’ll provide a little background here on the technology. Lex is a UK based molecular diagnostics company that’s focused on delivering fast and highly accurate test results at the point of care. Lexus innovative molecular platform can deliver results in minutes. It takes about six minutes for a positive result on its respiratory panel that can detect and differentiate flu A, flu B and COVID, all with excellent performance.

And the Lex platform integrates seamlessly into point of care workflow workflows. It brings a sensitivity of PCR with its proprietary thermal cycling technology to urgent acute care settings, physician office labs, hospitals and other decentralized settings. It provides a highly competitive value proposition centered on speed, performance and cost. We expect to see near term opportunity to expand the menu beyond flu and COVID moving further into the respiratory space as well as applications in women’s health and other assays. Since our initial investment, our team has conducted a comprehensive review of Lexis technology alongside the Savanna platform with a focus on critical factors such as clinical performance, the incremental investment required and market potential.

And after an extensive review, we concluded that Lex offers important performance advantages for our customers and provides the clearest pathway to growth. The Lex platform will fit perfectly within our point of care portfolio and offers an expedient route to commercialization to create long term value for our customers and shareholders. So I’ll step back here and talk about the broader strategy for the company moving on from Lex. We have three central priorities, delivering an exceptional experience for our customers, prioritizing execution on a small number of high impact programs, and driving profitable sustainable growth. So I’ll take a minute to expand on each of these.

You know, first, we have a great brand that’s built on highly reliable systems and an exceptional level of customer service. Historically, this has always been a a key differentiator and strength for us. But during the pandemic, this took a a bit of a hit as we experienced significantly challenging supply and quality issues. So on coming on board this last year, we have redoubled our efforts here. We’ve taken steps to align the entire organization around operating at the highest levels of quality, improving our supply and quality management management capabilities and creating a continuous improvement culture across the organization.

And secondly, we are centering our team around a narrow set of innovation and cost structure improvement initiatives that will have the highest impact for the business in the short term. And this includes improving R and D productivity and the competitive competitiveness of assay menus on key platforms, as well as delivering on key cost reduction initiatives that will return our margins to benchmark levels. And lastly, we are prioritizing profitable growth by aligning our energy and resources to the fastest growing and most attractive segments where we have competitive differentiation. In addition to driving growth and improved EBITDA margins, we are also focused on improving ROIC and are aligning our internal incentive programs accordingly. Our efforts here are already paying off.

We identified over $100,000,000 of cost savings in 2024 with an additional $30,000,000 to $50,000,000 expected in 2025. And as we are aggressively pursuing additional opportunities across every corner of the business, much of our savings in 2024 was focused on staffing reductions. We’re now looking at deeper improvements in direct and indirect procurement, supply chain, manufacturing quality and IT. And in addition, we have challenged the organization to offset the potential tariff impacts through greater operational efficiency and reducing additional controllable costs. So we expect these initiatives to enable us to operate more effectively and deliver incremental margin contribution in 2025 and beyond.

So kind of turning to our Q1 highlights. In Q1, we delivered solid mid single digit revenue growth of 6% excluding COVID and donor screening. This performance was primarily driven by our labs business as well as stable growth in immunohematology and a strong flu season. We also recognized cost savings from our previously announced initiatives that drove a four fifty basis point year over year improvement in adjusted EBITDA and a 68% increase in adjusted diluted earnings per share compared to the prior year period. Our Q1 performance is further proof that the initiatives that we launched in 2024 are having a positive impact on the performance of the business.

And as we look forward to the balance of 2025, we continue to be focused on our narrow set of strategic initiatives, including increasing the content and utility of our platforms, expanding margins and commercial and operational execution. I think our commercial teams are more focused than ever before on driving profitable growth by targeting the most attractive customers and market segments where we can drive value with our solutions. So turning now to the balance sheet and cash flow generation. We are prioritizing return on invested capital, cash generation and debt pay down in 2025. Our goal is to bring our net leverage ratio down to a range of 2.5 to 3.5 times over the roughly same time horizon as our margin expansion goals.

And touching briefly on 2025 guidance, we reaffirmed our full year 2025 financial guidance yesterday based on our current business outlook. This includes our intention to acquire Lex Diagnostics as well as our view on the current macroeconomic situation. Joe and I have been around for a long time and based on our experience with other companies in our industry, we believe a range in the mid to high 20s adjusted EBITDA margin is a reasonable benchmark for this business. We see nothing in the structural underlying nature of this business that would prevent us from achieving these levels of profitability. And we will continue our cost savings initiatives and work through procurement and other business efficiencies in 2025 to achieve our margin expansion targets.

Our capital allocation priorities remain unchanged. We continue to prioritize the needs of the business first, including menu expansion, our molecular strategy for incremental revenue growth and enhancing our overall company productivity and efficiency. We remain focused on cash generation and reducing our debt leverage in 2025. We do have some final integration work to complete this year, including consolidation of our ERP systems and our IT infrastructure, but most of this work should be largely complete by the end of this year. So I’ll wrap up by saying that Quidel Ortho is an exciting company with significant opportunities ahead.

We believe that our value proposition is strong. Our underlying business is stable and we see a clear pathway to profitable growth. And I look forward to updating you on our progress over the coming quarters. Thank you very much.

Andrew Brechtman, Diagnostics Analyst, William Blair: Thanks, Brian. We’ll stop here and then head to the breakout in January. Thanks, everyone.

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