A beaten-down diagnostics stock is quietly tightening margins and drawing fresh institutional conviction—here’s what that means for long-term investors.On November 14, New York City-based Newtyn Management disclosed a purchase of 994,332 shares of QuidelOrtho Corporation (QDEL), increasing its stake by approximately $30.4 million.What HappenedAccording to a filing with the Securities and Exchange Commission dated November 14, Newtyn Management reported buying 994,332 additional shares of QuidelOrtho Corpora ...

PresentationPatrick DonnellyCitigroup Inc., Research Division We can look to get started. Thank you for joining us. I'm Patrick Donnelly, the tools and diagnostics analyst here at Citi. Happy to have Joe Busky, here from Quidel. Thanks for being here, Joe. Thanks for coming down. Maybe just chat a little bit. I was a little surprised by the stock reaction after 3Q. Any interesting feedback you heard from investors or the pushback on the quarter? Again, the sell-off was pretty steep. It's bounced back nicel ...

QuidelOrtho (NasdaqGS:QDEL) FY 2025 Conference December 03, 2025 01:00 PM ET Company ParticipantsJoe Busky - CFOConference Call ParticipantsPatrick Donnelly - Tools and Diagnostic AnalystPatrick DonnellyWe can look to get started. Thank you for joining us. I'm Patrick Donnelly, the tools and diagnostics analyst here at Citi. Happy to have Joe Busky here from QuidelOrtho. Thanks for being here, Joe. Thanks for coming down. We were just chatting a little bit. I was a little surprised by the stock reaction aft ...

Financial Data and Key Metrics Changes - The company is tracking towards an Adjusted Free Cash Flow guidance of 25%-30% of Adjusted EBITDA for the full year, despite a hiccup in Q3 due to system conversion delays [10][11] - The long-term target for cash flow is to reach 50% of Adjusted EBITDA by 2027, with expected progress in 2026 [11] - Total revenue growth, excluding COVID and donor screening revenue, was reported at 5% for the quarter and year-to-date [15][16] Business Line Data and Key Metrics Changes - The Labs business grew at 4% in constant currency, while Immunohematology and Triage grew at 5% and 7% respectively, indicating solid performance across the base business [15][16] - The immunoassay to integrated analyzer ratio has improved from 25% to 30%, with a target of reaching 50% in the future, which is expected to enhance margins [22][23] Market Data and Key Metrics Changes - The Chinese market is expected to grow at a mid-single digit rate for the full year 2025, with the company feeling optimistic about opportunities despite previous reimbursement issues [29][32] - The immunohematology business holds the number one market position globally, with a growth rate of 5% in Q3, although Q4 growth may be lower due to shipment timing [33] Company Strategy and Development Direction - The company is focusing on optimizing its portfolio by exiting the U.S. donor screening market, which is expected to improve margins once fully wound down [39][40] - The strategy includes enhancing the integrated analyzer base to drive higher-margin immunoassay revenue, with a long runway for growth in this area [22][23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving mid-single digit growth in the Labs and Immunohematology segments, with expectations for stable performance in the face of market challenges [15][16][29] - The company anticipates a good Q4 and is optimistic about the overall market dynamics, particularly in China and the point-of-care segment [29][41] Other Important Information - The company has achieved $140 million in cost savings since mid-2024, primarily through staffing reductions and indirect procurement initiatives [62] - The leverage ratio at the end of Q3 was reported at 4.4, with a target to reduce it to 2.5-3.5 times by early 2027 [70][71] Q&A Session Summary Question: Feedback from investors post-Q3 earnings call - Management noted that the stock reaction was perplexing, attributing it to high short interest, put option exposure, and cash flow timing issues related to ERP conversions [7][10] Question: Cash flow guidance and visibility - The company confirmed that cash flow guidance remains unchanged, with expectations for a strong Q4 as cash receipts from Q3 are collected [10][12] Question: Growth drivers in the Labs business - The Labs business is expected to maintain a mid-single digit growth trajectory, supported by consistent win rates and a stable contract structure [16][18] Question: Competitive dynamics in China - Management indicated that the company has been less affected by Chinese government actions compared to competitors, expecting mid-single digit growth in the Chinese market [28][32] Question: Margin improvement initiatives - The company is targeting 100-200 basis points of margin improvement in 2026, contingent on continued mid-single digit growth in the base business [62][65] Question: Future of the LEX acquisition - The company expects to complete the acquisition of LEX following FDA approval, with a limited commercial rollout anticipated in the first half of 2026 [51][56]

QuidelOrtho (NasdaqGS:QDEL) FY Conference December 02, 2025 10:00 AM ET Company ParticipantsJoe Busky - CFOConference Call ParticipantsVijay Kumar - AnalystVijay KumarGreat. Thanks, everyone, for joining us this morning. I'm Vijay Kumar, the Life Science Diagnostics Med Device Analyst at Evercore. A pleasure to have with us quite a lot of. We have with us Joe Busky, the CFO, and we have Juliet Cunningham from Investor Relations. Joe, thank you for the time this morning.Joe BuskyThanks, Vijay. Thanks for hav ...

Core Insights - QuidelOrtho Corporation, a leader in in vitro diagnostics, will participate in two upcoming investor conferences, enhancing its engagement with the investment community [1][5]. Company Overview - QuidelOrtho Corporation specializes in various diagnostic solutions, including clinical chemistry, immunoassay, immunohematology, and molecular testing, aimed at improving patient outcomes [3]. - The company is committed to advancing diagnostics to support a healthier future, reflecting its dedication to innovation and collaboration with healthcare providers [2][3]. Upcoming Events - Management will participate in the Evercore ISI 8th Annual Healthcare Conference on December 2, 2025, at 10:00 a.m. ET [5]. - Additionally, they will engage in the Citi Global Healthcare Conference on December 3, 2025, at 1:00 p.m. ET [5].

Core Insights - QuidelOrtho Corporation (QDEL) reported adjusted earnings per share (EPS) of 80 cents for Q3 2025, a decrease from 85 cents in the previous year, but exceeding the Zacks Consensus Estimate by 56.9% [1] - The company experienced a GAAP loss per share of $10.78, compared to a loss of 30 cents per share in the same quarter last year [1] Revenue Performance - QuidelOrtho's total revenues for Q3 2025 were $699.9 million, down 3.8% year-over-year on a reported basis and 4.6% at constant exchange rates (CER), but still above the Zacks Consensus Estimate by 5.3% [2] - Respiratory revenues fell to $112.3 million, a decline of 32.1% on a reported basis and 32.2% at CER, while Non-Respiratory revenues increased to $587.6 million, up 4.6% on a reported basis and 3.5% at CER [2] Business Unit Breakdown - QuidelOrtho's revenues are derived from five business units: Labs, Immunohematology, Donor Screening, Point of Care, and Molecular Diagnostics [3] - Labs revenues were $373.8 million, reflecting a 5% increase on a reported basis and 4.4% at CER [3] - Immunohematology revenues reached $142 million, up 7.7% on a reported basis and 5.2% at CER, while Donor Screening revenues dropped to $14.7 million, down 47.3% on a reported basis and at CER [4] - Point of Care revenues were $164.6 million, down 20% on a reported basis and 20.3% at CER, and Molecular Diagnostics revenues totaled $4.8 million, down 14.3% on a reported basis and 14.8% at CER [5][4] Geographical Revenue Distribution - North America revenues were $381.4 million, reflecting a decline of 12.6% on a reported basis and 12.5% at CER [6] - EMEA revenues increased to $91.8 million, up 9.3% on a reported basis and 2.4% at CER [6] - Revenues from China amounted to $84.6 million, reflecting a 5.2% increase on a reported basis and 4.8% at CER [7] - Other regions generated $142.1 million in revenues, up 12.3% on a reported basis and 12% at CER [9] Margin and Expense Analysis - Adjusted gross profit declined 4.6% year-over-year to $341 million, with an adjusted gross margin contracting 50 basis points to 48.7% [10] - Adjusted operating profit totaled $119.6 million, reflecting a 0.1% improvement from the prior-year quarter, with an adjusted operating margin expanding 70 basis points to 17.1% [11] Financial Position - QuidelOrtho ended Q3 2025 with cash and cash equivalents of $98.1 million, down from $151.7 million at the end of Q2 2025 [12] - Total debt at the end of Q3 2025 was $2.66 billion, compared to $2.61 billion at the end of Q2 2025 [12] - Cumulative net cash used in operating activities was $26.7 million, compared to net cash provided of $19.3 million a year ago [12] Guidance and Outlook - QuidelOrtho reiterated its financial outlook for 2025, projecting total revenues in the range of $2.68 billion to $2.74 billion, with the Zacks Consensus Estimate at $2.71 billion [13] - The company expects stable growth across most business lines, particularly in Labs and Immunohematology, with mid-single-digit growth anticipated in China [14] - For the full year, COVID-19 revenues are projected to be between $70 million and $100 million, with adjusted EPS expected to be between $2.00 and $2.15, compared to the Zacks Consensus Estimate of $2.28 [15] Overall Performance - QuidelOrtho's Q3 2025 results exceeded expectations, with both earnings and revenues beating the Zacks Consensus Estimate, driven by strong performance in Labs and Immunohematology [16] - However, the decline in respiratory revenues and decreases in Donor Screening, Point of Care, and Molecular Diagnostics units present challenges [17]

Core Insights - QuidelOrtho's shares fell 12.8% after disappointing Q3 financial results and a reduced full-year earnings forecast [1] - The company's Q3 revenue was $699.9 million, a 3.7% decrease year-over-year, despite adjusted earnings per share of $0.80 beating Wall Street expectations [1] - A significant GAAP net loss, including a non-cash goodwill impairment charge, raised investor concerns [1] - QuidelOrtho lowered its adjusted earnings per share guidance for the full year by 10.6% at the midpoint [1] Market Reaction - QuidelOrtho's shares have shown extreme volatility, with 35 moves greater than 5% in the past year, indicating significant market impact from recent news [3] - The previous notable stock movement occurred 17 days prior, when shares gained 5.5% following positive news regarding the company's commitment to transfusion medicine and FDA approval of a new product [4] Stock Performance - Since the beginning of the year, QuidelOrtho's stock has declined by 47.9%, currently trading at $23.47, which is 50.7% below its 52-week high of $47.61 [5] - An investment of $1,000 in QuidelOrtho shares five years ago would now be worth $82.80 [5]

Revenue Performance - Total revenues for the nine months ended September 28, 2025, decreased by 3% to $2,006.6 million compared to $2,075.1 million for the same period in the prior year [110]. - Revenue from respiratory products accounted for 14% of total revenues for the nine months ended September 28, 2025, down from 17% in the prior year [110]. - Labs revenue increased by 5% for the nine months ended September 28, 2025, primarily due to growth in reagents, consumables, and services [125]. - Donor Screening revenue decreased by 57% for the nine months ended September 28, 2025, primarily due to the wind-down of the U.S. donor screening business [125]. - Point of Care revenue decreased by 23% for the nine months ended September 28, 2025, driven by a decline in sales of QuickVue and Sofia SARS Antigen assays [125]. - Total revenues for North America were $1,098.8 million for the nine months ended September 28, 2025, down 10% from $1,220.2 million for the same period in 2024 [148]. - Total revenues for EMEA increased by 9% to $91.8 million for the three months ended September 28, 2025, compared to $84.0 million for the same period in 2024 [151]. - Total revenues for the nine months ended September 28, 2025, were $268.0 million, a 7.4% increase from $249.9 million for the same period in 2024, driven by growth in Immunohematology and Point of Care revenues [152]. - In China, total revenues for the three months ended September 28, 2025, were $84.6 million, a 5.2% increase from $80.4 million in the same period of 2024, driven by a 7% increase in Labs revenues [154]. - Total revenues for the nine months ended September 28, 2025, in China were $243.0 million, a 2% increase from $238.1 million in 2024, supported by a 6% increase in Labs revenues [156]. - Total revenues for Other segments for the three months ended September 28, 2025, were $142.1 million, a 12.3% increase from $126.5 million in the same period of 2024 [157]. Cost and Expenses - Cost of sales, excluding amortization of intangible assets, decreased to $364.3 million, or 52.1% of total revenues, for the three months ended September 28, 2025 [126]. - Cost of sales decreased to $1,052.8 million, or 52.5% of total revenues, for the nine months ended September 28, 2025, down from $1,114.7 million, or 53.7% of total revenues, for the same period in 2024 [127]. - Selling, marketing, and administrative expenses for the nine months ended September 28, 2025, decreased by $27.4 million, or 4.7%, to $551.9 million from $579.3 million for the same period in 2024 [130]. - Research and development expenses for the nine months ended September 28, 2025, decreased by $31.0 million, or 18.1%, to $140.4 million from $171.4 million for the same period in 2024 [132]. Impairment and Charges - Goodwill impairment charge recognized was $700.7 million for the three months ended September 28, 2025, compared to $1.7 billion for the nine months ended September 29, 2024 [135]. - In Q3 2025, the company recorded a non-cash goodwill impairment charge of $614.8 million for the EMEA unit, $68.1 million for China, and $17.8 million for Latin America, representing a full impairment of goodwill allocated to these units [182]. - The quantitative goodwill impairment assessment utilized a discounted cash flow method and market approach, incorporating significant assumptions such as future revenue growth rates and EBITDA margins [183]. - The projected future revenue growth rates and EBITDA margins are based on historical experience and internal annual operating plans, extrapolated over the forecast period [183]. - Discount rates for the impairment assessment were determined using a weighted average cost of capital adjusted for specific risk factors related to the reporting units [183]. - Market multiples were derived from comparable publicly traded companies using the guideline public company method [183]. - The company believes the assumptions used in the goodwill impairment assessment are reasonable and consistent with those used by other market participants [184]. Financial Position and Outlook - The Optimization Plan is expected to incur approximately $100 million in pre-tax charges through 2027, aiming for net cost savings of about $50 million [112]. - The planned wind-down of the U.S. donor screening portfolio is expected to be substantially complete by the first half of 2026 [111]. - The company expects overall demand for non-respiratory and respiratory products to continue to fluctuate due to various market factors [118]. - The company plans to continue evaluating strategic opportunities to expand product lines and improve operational efficiencies [119]. - Interest expense, net was $126.6 million for the nine months ended September 28, 2025, compared to $122.9 million for the same period in 2024, reflecting a 3% increase [139]. - Income tax benefit for the three months ended September 28, 2025, was $23.9 million, with an effective tax rate of 3.2%, compared to an income tax benefit of $8.9 million and an effective tax rate of 30.9% for the same period in 2024 [142]. - Adjusted EBITDA for North America was $604.8 million for the nine months ended September 28, 2025, a decrease of 10% from $670.2 million for the same period in 2024 [150]. - Adjusted EBITDA for EMEA increased by 89% to $24.4 million for the three months ended September 28, 2025, compared to $12.9 million for the same period in 2024 [151]. - Adjusted EBITDA for the nine months ended September 28, 2025, was $59.2 million, up 61.5% from $36.6 million in the prior year, primarily due to increased revenues and lower operating expenses [153]. - Adjusted EBITDA for China remained stable at $36.8 million for the three months ended September 28, 2025, compared to the same period in 2024 [155]. - Adjusted EBITDA for Other segments for the nine months ended September 28, 2025, was $111.7 million, a 14% increase from $97.9 million in the prior year [159]. - As of September 28, 2025, the company had $98.1 million in cash and cash equivalents, a slight decrease from $98.3 million as of December 29, 2024 [160]. - The company entered into a Credit Agreement on August 21, 2025, securing a total of $3.45 billion in loans, including a $1.15 billion Term Loan A and a $1.45 billion Term Loan B [161]. - Capital expenditures for the nine months ended September 28, 2025, were $136.4 million, focused on expanding manufacturing capabilities [166]. - There has been no material change in the company's exposure to market risk as described in the Annual Report [185].

Financial Data and Key Metrics Changes - Total reported revenue for Q3 2025 was $700 million, a 4% decrease from $727 million in the prior year, primarily due to lower COVID and donor screening revenue [13][14] - Adjusted EBITDA was $177 million, with an adjusted EBITDA margin of 25%, reflecting a 180 basis point improvement year-over-year [10][17] - Adjusted diluted EPS was $0.80 for Q3, representing a 36% growth year-to-date [17][24] Business Line Data and Key Metrics Changes - Labs business revenue grew by 4%, driven by solid demand for VITROS, ImmunoAssay, and clinical chemistry platforms [6][9] - Immunohematology business grew by 5%, supported by strong demand from blood banks and hospitals [7] - Point-of-care business, particularly the Triage product line, posted 7% growth, with significant contributions from international markets [8][9] Market Data and Key Metrics Changes - North America revenue decreased by 12% overall, but increased by 5% year-over-year when excluding respiratory revenue and the U.S. donor screening exit [9] - Latin America experienced a 21% overall growth, with labs growing by 22% [9] - Japan, Asia-Pacific, and China each grew approximately 5%, while Europe, Middle East, and Africa grew by 3% [9] Company Strategy and Development Direction - The company is focused on margin improvement initiatives, achieving over $140 million in cost savings, aiming for sustainable mid to high 20s EBITDA margins [5][10] - Continued investment in strategic areas to position for long-term growth, including R&D advancements and new product launches [10][11] - The company is preparing for the anticipated FDA clearance of Lex Diagnostics by late 2025 or early 2026, which is expected to impact future growth [12][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's progress and the path ahead, emphasizing a focus on sustainable, profitable growth [12][24] - The company anticipates a typical respiratory season, with revenue timing consistent with pre-pandemic patterns [21][24] - Management acknowledged challenges from tariff impacts but remains committed to offsetting these in 2025 [11][19] Other Important Information - The company recorded a $701 million goodwill impairment charge in Q3, resulting in no goodwill remaining on the balance sheet [20] - Adjusted recurring cash flow is expected to represent 25-30% of adjusted EBITDA for the full year [19][24] - The company expects full-year 2025 total reported revenue between $2.68 billion and $2.74 billion, with adjusted EBITDA guidance of $585 million to $605 million [21][24] Q&A Session Summary Question: Can you provide more details on competitive wins? - Competitive wins have been evenly distributed across geographies, with significant wins in North America, Latin America, and EMEA, focusing on profitable growth rather than just market share [26][27] Question: What is the growth outlook for China? - The company expects mid-single-digit growth in China, with some impact from BBP and debundling dynamics, but less than competitors due to a high proportion of instruments used in stat labs [30][31] Question: Can you elaborate on the 2025 guidance and margin expectations? - The company narrowed its guidance while maintaining the same midpoint, with expectations for slightly lower margins in Q4 due to higher instrument revenue and incentive compensation [34][35] Question: What is the performance of the Sophia franchise? - The Sophia install base remains stable and expanding, with solid performance expected for the flu combo test in the upcoming respiratory season [43][44] Question: How will Lex Diagnostics impact margins? - Lex is expected to have a diluted impact on margins initially, with a more significant rollout planned for the second half of 2026 [50][51]