Quidel at Baird Healthcare: Strategic Moves and Market Insights

On Wednesday, 10 September 2025, Quidel Corporation (NASDAQ:QDEL) presented at the Baird Global Healthcare Conference 2025, offering insights into its strategic initiatives and financial performance. The company reported positive developments in margin improvements and growth prospects, while also addressing challenges such as declining COVID-19 revenues and operational shifts.

Key Takeaways

• Quidel Ortho achieved a 400+ basis point margin improvement in Q2 2025.
• The company is focusing on expanding its Lex product line, anticipating FDA approval soon.
• COVID-19 revenues are expected to stabilize between $70 million to $100 million annually.
• A significant workforce reduction aims to save $100 million annually.
• Debt refinancing has been completed to enhance financial flexibility.

Financial Results

• Margin Improvement: Quidel Ortho reported a significant 400+ basis point improvement in margins compared to the previous year, reflecting effective cost management and operational efficiencies.
• COVID Revenue: The company anticipates COVID-19 related revenues to stabilize between $70 million and $100 million annually, as the pandemic’s impact wanes.
• EBITDA Margin Target: Quidel aims for adjusted EBITDA margins in the mid to high 20% range by mid-2027, up from a 22% target for 2025.
• Debt Leverage Ratio: The company targets a debt leverage ratio of 2.5x to 3.5x by late 2026 to early 2027.
• Cost Savings: A 9% reduction in workforce is projected to generate $100 million in annualized savings, complemented by an indirect procurement initiative expected to save $30 million to $50 million.

Operational Updates

• Facility Closure: The closure of a manufacturing facility in Raritan, New Jersey, is part of Quidel’s strategy to improve operating margins over the next few years.
• Product Development Pivot: The company is pivoting its molecular product development from Savannah to Lex, a UK-based business, pending FDA approval.
• Lex Commercialization: A limited commercial launch of the Lex product is targeted for the first half of 2026, with a full rollout anticipated by late 2026 or early 2027.
• China Strategy: Quidel leverages its dry slide technology to minimize the impact of volume-based procurement initiatives in China.

Future Outlook

• Lex Approval and Expansion: Quidel expects FDA approval for the Lex respiratory panel later this year, with plans to expand the menu to include RSV, strep, women’s health, and STI applications.
• Manufacturing Capacity: Investments are planned to increase Lex manufacturing capacity, potentially in the UK or the US.
• R&D Focus: Led by Brian Blazer, the company is implementing a culture of focus and prioritization in R&D to enhance productivity.
• M&A Strategy: Quidel does not foresee the need for significant mergers and acquisitions to achieve its growth and margin improvement goals, focusing instead on distribution or licensing agreements.

Q&A Highlights

• Clinical Chemistry Strategy: The company focuses on small to mid-sized hospitals and labs with integrated analyzers that perform both routine chemistry and immunoassays.
• China Market Dynamics: Quidel’s dry slide technology offers a competitive edge, reducing the impact of volume-based procurement policies.
• Automation Importance: Automation is crucial for customers, with the growth of the automation installed base in high single digits to low double digits.
• Lex Acquisition: The pivot to Lex is driven by the faster and less costly menu expansion compared to previous strategies.

In conclusion, Quidel Corporation’s presentation at the Baird Global Healthcare Conference 2025 highlighted its strategic focus on margin improvement and product development. For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - Baird Global Healthcare Conference 2025:

Katherine Schulte, Analyst, Baird: Go ahead and get started, I’m Katherine Schulte, I cover life sciences and diagnostics here at Baird. Very excited to have Quidel Ortho joining us today. From the company we have the CFO, Joe Buske. So Joe, thanks so much for joining us. I think we’re gonna dive right into Q and A so if anyone has a question, feel free to send them to session3rwbear dot com and I will pass them along.

So Joe, thought maybe we could just start at a high level. Can you just talk about key takeaways from the quarter and maybe how your strategic vision for the company is unfolding here?

Joe Buske, CFO, Quidel Ortho: Sure. And by the way, thanks, Katherine. Thanks for having us to the conference. It’s been great. And as far as that first question on highlights from Q2, I would say that we’ve now had two good quarters in a row to start off 2025 with good margin improvement of 400 plus basis point margin improvement over the prior year.

I think we also showed that we’ve made some strategic decisions in line with what Brian and I said we were wanna do fifteen months ago when he started. And, examples of that would be we we announced that we’re closing a very large manufacturing facility in Raritan, New Jersey, which is gonna provide some real nice operating margin improvement in a couple years. And we made the decision to pivot from Savannah development of molecular product to Lex, which is a business in UK that we’re going to purchase once they get FDA approval for their first respiratory panel. And so again these decisions are just all around margin improvement and making the company more productive and more efficient. Again, things that Brian and I said we were gonna do last year when he when he started.

I guess the last thing I’d mention is that the base business continues to grow in at the rate which we said it would grow, you know, in that sort of mid single digit growth for labs and immunohematology.

Katherine Schulte, Analyst, Baird: Yeah, I want to get into Lexin a bit, but maybe starting on the lab side of the business. You know, to your point, recurring revenue growth remained solid to start the year. You know, where do you think you’re winning in the clinical chemistry business?

Joe Buske, CFO, Quidel Ortho: Yeah, the strategy with labs continues a strategy that was started probably about five or so years ago, and that is to focus on the small to mid size hospital and labs, which we define as our sweet spot. You know, we’re doing quite well there. I would say the other strategy is to focus on leading with integrated analyzers that runs both routine chemistry and immunoassays. And, you know, that strategy continues to be the one that we’re gonna employ and it’s it’s working quite well. And, you know, the growth in the labs business continues to be right where we said it would be in that mid single digit growth range.

Katherine Schulte, Analyst, Baird: What about on the instrumentation side? You know, how’s the current capital equipment environment?

Joe Buske, CFO, Quidel Ortho: Yeah, I don’t see a lot of impact of customers pausing on placing analyzers due to the macro. And I think it’s mainly because the the value of the analyzers we’re placing is much less than, say, an MRI or imaging piece of equipment that’s, you know, millions and millions of dollars. I think I think our purchase the equipment purchases that our customers are making kind of fly below the radar to some extent. We also offer, like our competitors do, an alternative to to buying an instrument, and that is a reagent rental where we can place an analyzer at a customer location and charge them the cost of the box over the life of the contract in the form of a surcharge on the consumables. So that’s a way of kind of getting around maybe CapEx limitations that a customer may have.

Katherine Schulte, Analyst, Baird: And how important is the automation element to customers? You know, how has your integrated analyzer kind of helped in this environment? And I think it’s around a third of your installed base now, so how do you think that will track over time?

Joe Buske, CFO, Quidel Ortho: Yeah, for sure automation and the integrated analyzers are super important to our customers and to our strategy of growing the labs business. In fact, you look at the automation, or I should say the growth in the automation and installed base over the last several years, it’s typically been in the high single digits and low double digits as indicative of the strategy working. You know, we continue to lead with that integrated analyzer which is going to drive more higher margin immunoassay revenue growth for us. And that’s important because if you look at our business relative to where the market is, our mix of immunoassay and routine chemistry is inverted from where the overall market is. And so there’s lots of room for us to grow that immunoassay side of the business.

And in fact, if you look at our percentage of installed base that’s integrated versus nonintegrated, if you go back to when Ortho Clinical Diagnostics went public in 2021, we were around 24% of the base was integrated, and now we’re sitting at around 30% of that base, installed base, being integrated. So you can kind of get a feel for the pace of which we’re moving and employing that strategy and you can also get a feel for how much room is left to run, how much we can run this strategy out. There’s plenty of runway left.

Katherine Schulte, Analyst, Baird: And in terms of that kind of immunoassay mix, I guess where do you see the biggest opportunities in the portfolio to keep driving that?

Joe Buske, CFO, Quidel Ortho: Yeah, good question. I think that if you look at where the labs growth is, you know, in the more developed markets of The US and Western Europe, you’ll see more, you know, low to mid single digit growth. But when you look in less developed areas like Latin America and Asia Pacific and Eastern Europe, you’ll see more high single digits, sometimes low double digit growth. And so we I I look towards those lesser developed markets of Eastern Europe and Asia Pac as the areas where I think there’s lots of opportunity for us to to grow that integrated analyzer base and grow that immunoassay business.

Katherine Schulte, Analyst, Baird: And if we move on to molecular, you know, how does the planned Flex acquisition kind of expand your footprint there and maybe talk through the strategic rationale for pursuing that route instead of continuing with Savannah.

Joe Buske, CFO, Quidel Ortho: Yeah, it was a really tough decision that we made back in June to pivot from developing Savannah to Lex. Savannah had been a product that Quidel had been working on prior to the combination with ortho for many years and it’s it’s it’s a great product. Savannah, I think, has a lot of potential competitive advantages in the marketplace, but Lex also has some very distinct competitive advantages in the marketplace where we intend to sell it and those advantages I would say are focused on turnaround time, ease of use and cost. And so the decision was made to pivot to Lex primarily because if you look at the amount of time it would take to fill out the menu, the amount of cost it would take to fill out the menu, and the level of technical risk, which is much less in a product like Lex, we decided to discontinue Savannah and focus our resources on Lex because again, we think we can get that menu filled out much faster and for much less cost and a lot less risk. And so we believe that the first panel which was submitted to the FDA which is a respiratory panel in June, we believe that we will get approval for that panel sometime later this year.

Katherine Schulte, Analyst, Baird: And maybe what’s the timeline for menu expansion there into other respiratory or women’s health applications? Just curious, you know, how much there is an opportunity outside of that initial panel.

Joe Buske, CFO, Quidel Ortho: Yeah, there’s lots of opportunity to fill out that menu. I think first we’ll focus on RSV and strep being added to the panel and then women’s health and STI will be next. More to come on specific timelines but yeah, there’s plenty of opportunity to fill up that menu and expand.

Katherine Schulte, Analyst, Baird: And how do you think about, you know, the overlap with kind of the rest of your portfolio? Is there any potential cannibalization for Sofia?

Joe Buske, CFO, Quidel Ortho: The good news is is that the Lex product can be commercialized through the existing sales force. So there’s no need to add any resources to commercialize Lex as we move into early twenty six. They’re based on the customer research that we’ve done, the KOLs we’ve talked to, we believe there’s plenty of room for both a rapid antigen test like Sofia and a molecular product like Lex. And there is some some overlap but I would say it’s not not significant at all. It’s probably, you know, 10% or less of of overlap and and even that amount of overlap is not overly concerning for us because if there are customers who’d rather use Lex rather than Savannah, the Lex margins are higher.

And so that would be some minor amounts of cannibalization that I’d probably welcome from a margin perspective.

Katherine Schulte, Analyst, Baird: And you’ve talked about kind of reinvesting some of your Savannah dollars into Lex, you know, where are those investments mainly concentrated this year and kinda what additional steps are you taking to prepare for that kind of limited commercial launch in the first half of next year?

Joe Buske, CFO, Quidel Ortho: Yeah, we’re definitely excited about getting approval on that first panel later this year so we can start a limited commercialization in this first and second quarter twenty six respiratory season. As I said a minute ago, really no need for any additional commercial resources. We’ve got everything we need. Being the leader in respiratory testing in The US, we’ve got all the commercial resources that we need to sell that product. I guess the most near term investments might be in the form of not too significant CapEx that will be needed to increase the manufacturing capacity for Lex.

There is a line that the company has in The UK right now but will need an additional line either somewhere in The UK again or in The US. Haven’t decided that yet but that will be something that will stand up pretty early in ’26 so that we can hit the late in the ’26, early twenty seven respiratory season with a much more fulsome rollout and commercialization.

Katherine Schulte, Analyst, Baird: Okay. And then on point of care, you you lowered the 2025 outlook for COVID revenue coming out of the second quarter. Can you just remind us of the seasonality baked in for the third and fourth quarter and maybe just given the trends that you’ve seen so far this year, you know, how you think about forecasting, you know, endemic COVID revenues longer term?

Joe Buske, CFO, Quidel Ortho: Yeah. COVID’s been been quite the ride. And I I know that there’s been a lot of focus on the on the decline of the COVID revenue over the last several years, but I do believe that as a headline conclusion, we’ve digested most of that decline. When you think about where we were in ’21 and ’22 with a billion 4 of COVID revenue that’s dropped to 400,000,000 and then a 185,000,000 last year, you know, the guidance this year is for 70 to a 100. And if you just pick the midpoint of of that, somewhere you in the mid eighties, I think that’s a realistic, very realistic point of of where where the declines end.

And, you know, and I can say that with with some confidence because all of the the government order revenue is is gone and the retail business is is fairly small at this point. There’s not a whole lot lot left. So most of what’s left is the professional use space revenue which has proven to be somewhat consistent and durable. And so we do think that that, you know, call it that midpoint of the 70 to a 100 is probably a good place to think that not only we’re gonna end up this year, but where we’re gonna go for the next next several years with COVID revenue. So I think all of these views of revenue of ex COVID that we’ve done for the past couple years, think we’re we’re really getting to the end of that, which is great news, I know, the buy side and sell side.

Katherine Schulte, Analyst, Baird: Yep. Absolutely. Maybe any thoughts on the upcoming flu season? Are there any clues from the Southern Hemisphere around, you know, what this upcoming season could look like relative to historical trends?

Joe Buske, CFO, Quidel Ortho: Yeah. The flu season in the Southern Hemisphere is always a good data point for us and that flu season has turned out to be one that I would define as more typical or average. And so that’s good because that’s what we’ve said all along this year is that our guidance for flu revenue is gonna be a typical or average season. And we define that as flu season in terms of volume, 50 to 55,000,000 tests, and the combo test mix being greater than 50% and steady market share. So the new model that we’ve gone to to project the flu revenue that we went to in ’24 has proven out to be a good one.

You know, we very close, almost I would say spot on to what we guided the street to for the first half of the year for flu revenue. And so we have a lot of confidence that where we are for the second half of this year is going to be pretty close as well. And and, you know, what we’re seeing is that the the patterns for the flu season are getting back to more predictable pre pandemic patterns. The the level of testing is up versus pre pandemic mainly because of the combo test, and we think that combo test is pretty durable given that it’s been over 50% of our flu revenue now for two plus years. And so, you know, I think that flu season is, the flu season revenue is getting a little more predictable.

So we feel good about where the guidance is for the second half of the year.

Katherine Schulte, Analyst, Baird: Yeah. Maybe shifting to transfusion medicine, you know, how should we think about that business following the U. Donor screening wind down and, you know, what’s your view on the growth outlook there?

Joe Buske, CFO, Quidel Ortho: Yeah, so as a reminder, the transfusion medicine business unit for us is comprised of the donor screening business, which is primarily the business of screening for infectious disease in the blood supply donations. And we decided to shut down, wind down that business last year because it is a small market, It’s lower growth and it’s it’s got lower margins compared to the rest of our businesses. So we decided to wind it down last year. And, you know, last year we did about a 120,000,000 of revenue. This year it’ll be probably 40 to 50,000,000 of revenue.

And this business will be fully wound down in early twenty six. And so again, that revenue headwind of the donor screening wind down, which we’ve had all year, which is down about 40% in the first half of the year, that headwind will go away in the first half of next year and we won’t be dealing with that anymore. And the top line revenue growth will be made up more of the base business, which we see as a mid single digit growth business. The other business within transfusion medicine is immunohematology, and that’s a business that we really like. That business is global.

We’re the global number one in terms of market share with that business and we do intend to continue to invest in that business going forward.

Katherine Schulte, Analyst, Baird: Yeah. Okay. And maybe on China, there’s been a lot of noise there for diagnostics companies, particularly this quarter. It sounds like you’ve been relatively insulated from some of the unbundling and VBP headwinds that others are seeing. Is that right?

And are there any parts of your business that are seeing pressure there?

Joe Buske, CFO, Quidel Ortho: I was waiting for the China questions. I knew they were coming. The we spent a lot of time on this on our last earnings call. Brian, I think, did a great job of of talking about why our business is different from others in our space in in China. And I know a lot of folks like to paint a broad brush with with the China risk, but our business is different, and here’s why.

First of all, we use a dry slide technology on our lab side, which none of our competitors do, and so the volume based procurement initiatives have provisions in them that say that any impacts have to be to competitive businesses. And since we’re the only ones using the dry slide technology, our business is not deemed competitive. So it’s been outside of the volume based procurement initiatives for the most part. That’s the first first thing. The the second is is that most of our business in China is routine chemistry in stat environments or urgent care, emergency rooms.

And a lot of the other initiatives around reimbursement changes and the unbundling initiatives to control health care costs have been focused on the immunoassay side of the business. And so our business, again, not immune to these impacts, but it’s been less impacted than others in our space. And so we will obviously keep a very close eye on China. It’s a very complex place to do business, but at this point the impacts of our business have been much less than our competitors have seen.

Katherine Schulte, Analyst, Baird: Yeah. And maybe just given some of these recent policy changes, you know, does that impact how you think about the long term opportunity in China? And maybe just remind us what you expect for long term growth in that region.

Joe Buske, CFO, Quidel Ortho: Yeah. China, as I said a minute ago, is it’s complex. And, you know, we have a great team on the ground there, and, our view is that the, the opportunities at this point definitely outweigh any risks there given the fact that our immunoassay business is less than a lot of what our competitors have there, we we actually see that as an opportunity. You know, we believe that we can grow our immunoassay business there and and that is definitely a great opportunity for us going forward and to enhance the growth rate there.

Katherine Schulte, Analyst, Baird: Yeah, okay. Maybe moving to margins, you’ve talked about driving adjusted EBITDA margin into the mid to high 20% range by mid twenty seven and that’s versus the 22% that you’re targeting this year. You know, what gives you confidence in that goal and maybe what kind of top line growth will be needed in order to achieve that?

Joe Buske, CFO, Quidel Ortho: Yeah. There’s a there’s been a lot of focus on this area within the business. You know, it is it’s definitely a prioritized area for us, and that is getting the margins back to where they should be. You know, our business was very negatively impacted by the higher than normal inflation that the global economy saw in ’22 and ’23. And at that time, we were much more focused on integrating the two companies and not dropping the ball with customers that we delayed going after taking those costs out of the business.

Last year, we really started the efforts to pull those costs out of the business. And it started with a fairly significant staffing reduction of about 9% of our workforce, which generated a $100,000,000 annualized savings, which is now in the numbers. We saw that hit the second half of last year and the first half of this year. We we also embarked on a indirect procurement initiative which is gonna generate 30 to 50,000,000 of savings primarily in the second half of this year, primarily in the opex. And and we’ve made good progress there and and, you know, we fully expect that that’s gonna be realized.

And that’s a big part of with the staffing, how we go from 19 and a half percent EBITDA in ’24 to 22% EBITDA in ’25 for the full year. Now as you move into ’26, we’ve already said that we expect the margins to again expand about a 100 to 200 basis points primarily driven by direct procurement initiatives which are already in flight in progress. And again, we’ll see those benefits start to hit the p and l next year to grow our margins even further. And then as you move into ’27, we have the announced closure of that manufacturing facility in New Jersey which will generate close to another point of margin improvement in ’27 and, and then the further margin enhancement areas are gonna be the accretive impact of shutting down the donor screening business and the accretive impacts of the Lex business, the molecular business getting up to scale. Both of those are I would look at as more 2027 initiatives.

So that’s the road map for how we go from 19.5% EBITDA margin last year into that mid to high twenties range that we’ve talked about.

Katherine Schulte, Analyst, Baird: Yep. Okay. Great. Maybe on capital allocation, you know, how does your recent debt refinancing kind of help you achieve some of the leverage targets that you’ve set out to hit? And then maybe how should we think about financial flexibility going forward?

Joe Buske, CFO, Quidel Ortho: Yeah. We were pleased to be able to get that debt refinancing done when we did. It it offers it a lot of benefits to the business. The, the maturities are more staggered out now. We’ve got a term loan a with a five year maturity.

We’ve got a term loan b facility with a seven year maturity. The financial covenants, particularly the leverage ratio are much are much more friendlier, for the business and give us a lot more, room to maneuver. The, the the debt the required amortization are much less with the term loan B structure that we have in place. And you know the downside being the interest rates are a little bit higher than what we had in the previous stack of debt. But with the term loan B, it’s inherent in that structure that I can go out and reprice that term loan b six months after we close the deal.

So sometime in mid twenty six, assuming rates do start to come down in the economy and assuming we continue to execute, I do plan to go out and reprice reprice that term loan b and hopefully bring the rates down even even further. So we’re pretty happy about where that refinance ended up.

Katherine Schulte, Analyst, Baird: And any change to timeline on kinda when you get to that two and a half to three times target that you’ve laid out?

Joe Buske, CFO, Quidel Ortho: Yeah, we’re, you know, our debt leverage ratio is where we expect it be right now. There’s no surprises for us, but we don’t like where it is. We don’t like it above four. You know, we were a touch above four at the end of Q two. For end of year this year, we do think that there’s we can get it in to a three and a half to four range, probably the high end of that range.

And as you move through ’26 with the increases in EBITDA that we expect with the margin improvement, we do expect to get back into that targeted range of two and a half to three and a half. So I would say the leverage ratio targets of two and a half to three and a half are largely in line with the margin improvement target timeline. So, you know, as you move through the ’26 into early twenty seven.

Katherine Schulte, Analyst, Baird: Yep. Maybe as we get on the other side of the Lex deal, you know, how should we think about the portfolio? Are there other areas where you would look to acquire or potentially divest?

Joe Buske, CFO, Quidel Ortho: Yeah, we’re pretty happy with where the product portfolio is right now. You know, the combination of Quidel and Ortho deal thesis was to create a company that could serve the whole continuum of healthcare from home testing all the way through a reference lab testing. And that’s still intact. You know, so we’re happy with the product portfolio and where it is right now. There is no need for any significant m and a for this company to hit our goals for revenue growth as well as margin improvement.

And all areas of potential menu gaps that we may have in various portfolio or business units can be solved through distribution agreements or license agreements or really small tuck ins. So no need for any big changes in the product portfolio.

Katherine Schulte, Analyst, Baird: Maybe from an internal R and D standpoint, you know, what kind of steps have you taken around improving R and D productivity and any incremental changes that you have planned over the coming year?

Joe Buske, CFO, Quidel Ortho: I think the biggest change there is really the new culture that Brian Blazer has brought in and that is a culture of focus and prioritization and productivity. And and and Brian has also you know, his reputation in the space, having run Abbott Diagnostics for several years, has has allowed us to really strengthen the team. And one of those new team members is a person by the name of Jonathan Sekristen. He’s running our technology and R and D and he is really good at what he does and I think he’s bringing a culture of productivity and accountability into our R and D team. And so I do think that, you know, as Jonathan strengthens his team below him and we get a little further along into next year, I think you’ll start to see the benefits of Brian’s culture and the benefits of having Jonathan on board.

They’re the big reason why we’re gonna be more productive in R and D.

Katherine Schulte, Analyst, Baird: Okay, we’ve got a few minutes left, maybe a couple questions to end it. You think about the next kind of twelve to eighteen months, what do you view as the two biggest opportunities for your business and maybe the two biggest challenges?

Joe Buske, CFO, Quidel Ortho: Yeah, the biggest opportunity by far is gonna be Lex. Lex is a product that we’re very excited about and we do think with its competitive advantages and with our position in respiratory in The US that it is for sure our nearest growth and highest growth potential for this business over the next twelve to eighteen months. So we’re pretty excited about that. As far as what are the things that that I worry about? Is that is

Katherine Schulte, Analyst, Baird: that Challenges.

Joe Buske, CFO, Quidel Ortho: Challenges. Okay. I would say it’s still the macro. You know, we the macro has been interesting to say the least over the last several quarters. And so, you know, I think that’s that’s that’s that’s would be the biggest challenge for us.

It’s just continuing to execute on our margin improvement goals and our debt leverage reduction goals in in this challenging macro.

Katherine Schulte, Analyst, Baird: And as you think about your story, you know, what’s something that investors and or analysts don’t ask you about often but you wish that they would?

Joe Buske, CFO, Quidel Ortho: I would say it’s the fact that if you look at our base business and the business units that within the company, I think if you look at the labs business and the immunohematology business, which is about 75% of our revenue, it is a very stable and predictable business with five to seven year contracts and in growth rates that, you know, we’ve been hitting pretty consistently for for many quarters now. So I know a lot of people like to focus on China. I get it. A lot of people like to focus on respiratory. I get it.

But I I I do think there’s a very, very solid base within this company that, I wish people would spend a little more time thinking about.

Katherine Schulte, Analyst, Baird: Yeah. Alright. Well, great. With that, I think we’re out of time. But thanks everyone for joining, and Joe, thanks for being here.

Joe Buske, CFO, Quidel Ortho: Thank you so much.

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