PART I—FINANCIAL INFORMATION [ITEM 1. Financial Statements (unaudited)](index=3&type=section&id=ITEM%201.%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited consolidated financial statements of QuidelOrtho Corporation, including balance sheets, statements of (loss) income, comprehensive (loss) income, stockholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific account details for the three months ended March 31, 2024, and comparative periods [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20March%2031%2C%202024%20and%20December%2031%2C%202023) This section presents the company's financial position, showing a significant decrease in total assets primarily due to a goodwill impairment charge Consolidated Balance Sheet Highlights (In millions) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Total assets | $6,703.3 | $8,563.1 | | Total liabilities | $3,395.6 | $3,557.2 | | Total stockholders' equity | $3,307.7 | $5,005.9 | - Total assets decreased by **$1,859.8 million**, primarily due to a significant goodwill impairment charge[11](index=11&type=chunk)[57](index=57&type=chunk)[60](index=60&type=chunk) [Consolidated Statements of (Loss) Income](index=5&type=section&id=Consolidated%20Statements%20of%20%28Loss%29%20Income%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%20April%202%2C%202023) This section details the company's financial performance, reporting a substantial net loss driven by a goodwill impairment charge Consolidated Statements of (Loss) Income Highlights (In millions, except per share data) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Total revenues | $711.0 | $846.1 | | Operating (loss) income | $(1,758.0) | $99.6 | | Net (loss) income | $(1,706.0) | $48.8 | | Basic (loss) earnings per share | $(25.50) | $0.73 | | Diluted (loss) earnings per share | $(25.50) | $0.73 | - The company reported a significant net loss of **$1,706.0 million** for Q1 2024, primarily driven by a **$1,743.9 million** goodwill impairment charge[14](index=14&type=chunk)[60](index=60&type=chunk) [Consolidated Statements of Comprehensive (Loss) Income](index=6&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%20April%202%2C%202023) This section outlines the company's comprehensive loss, including net loss and other comprehensive income adjustments Consolidated Statements of Comprehensive (Loss) Income Highlights (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Net (loss) income | $(1,706.0) | $48.8 | | Total change in unrealized gains (losses) from cash flow hedges, net of tax | $24.6 | $(22.6) | | Comprehensive (loss) income | $(1,702.2) | $57.1 | [Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%20April%202%2C%202023) This section details changes in stockholders' equity, reflecting the impact of the net loss on retained earnings Consolidated Statements of Stockholders' Equity Highlights (In millions) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Total stockholders' equity | $3,307.7 | $5,005.9 | | Retained earnings | $481.8 | $2,187.8 | | Net loss impact on retained earnings | $(1,706.0) | N/A | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20three%20months%20ended%20March%2031%2C%202024%20and%20April%202%2C%202023) This section summarizes cash inflows and outflows, showing a shift from cash generation to cash usage in operating activities Consolidated Statements of Cash Flows Highlights (In millions) | Activity | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Net cash (used for) provided by operating activities | $(0.7) | $188.9 | | Net cash used for investing activities | $(20.2) | $(68.9) | | Net cash used for financing activities | $(18.5) | $(59.6) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(40.5) | $61.0 | | Cash, cash equivalents and restricted cash at end of period | $79.0 | $354.9 | - Operating activities shifted from providing **$188.9 million** in cash in Q1 2023 to using **$0.7 million** in Q1 2024, despite a large non-cash goodwill impairment charge[23](index=23&type=chunk)[134](index=134&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the unaudited financial statements [Note 1. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the preparation basis for interim financial statements and key accounting policies - The unaudited Consolidated Financial Statements are prepared in accordance with GAAP for interim financial information and Form 10-Q instructions[26](index=26&type=chunk) - Operating results for any quarter are historically seasonal and not necessarily indicative of full-year results[27](index=27&type=chunk) - No accounting pronouncements issued or adopted during Q1 2024 are expected to have a material impact[30](index=30&type=chunk) [Note 2. Computation of Earnings Per Share](index=9&type=section&id=Note%202.%20Computation%20of%20Earnings%20Per%20Share) This note details the calculation of basic and diluted earnings per share, including the treatment of potential dilutive shares Weighted-Average Shares Outstanding (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Basic weighted-average shares | 66.9 | 66.6 | | Dilutive potential shares | — | 0.5 | | Diluted weighted-average shares | 66.9 | 67.1 | - All potential shares from stock options and RSUs were excluded from dilutive EPS calculations for Q1 2024 because their effect would have been anti-dilutive[32](index=32&type=chunk) [Note 3. Revenue](index=10&type=section&id=Note%203.%20Revenue) This note provides a breakdown of contract balances and total revenues by business unit, highlighting changes in respiratory product sales Contract Balances (In millions) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Contract assets | $41.9 | $46.2 | | Current deferred revenue | $33.9 | $36.8 | | Long-term deferred revenue | $14.2 | $13.9 | Total Revenues by Business Unit (In millions) | Business Unit | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Labs | $356.9 | $370.7 | | Transfusion Medicine | $160.3 | $155.9 | | Point of Care | $186.6 | $308.1 | | Molecular Diagnostics | $7.2 | $11.4 | | **Total revenues** | **$711.0** | **$846.1** | - Revenue from respiratory products accounted for **19% of total revenues** in Q1 2024, down from **31%** in Q1 2023[39](index=39&type=chunk) [Note 4. Segment and Geographic Information](index=11&type=section&id=Note%204.%20Segment%20and%20Geographic%20Information) This note presents financial data segmented by geographic region and business unit, including Adjusted EBITDA - The company operates in three reportable segments: North America, EMEA, and China, with Latin America and JPAC included in 'Other'[40](index=40&type=chunk)[41](index=41&type=chunk) Total Revenues by Reportable Segment (In millions) | Segment | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | North America | $433.9 | $582.8 | | EMEA | $84.8 | $81.3 | | China | $76.1 | $70.6 | | Other | $116.2 | $111.4 | | **Total revenues** | **$711.0** | **$846.1** | Adjusted EBITDA by Segment (In millions) | Segment | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | North America | $218.8 | $278.4 | | EMEA | $12.8 | $7.2 | | China | $24.7 | $28.5 | | Other | $32.0 | $21.8 | | **Total segment Adjusted EBITDA** | **$288.3** | **$335.9** | [Note 5. Income Taxes](index=12&type=section&id=Note%205.%20Income%20Taxes) This note details income tax information, including the effective tax rate and the impact of non-deductible goodwill impairment charges Income Tax Information (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | (Loss) income before income taxes | $(1,798.9) | $60.0 | | (Benefit from) provision for income taxes | $(92.9) | $11.2 | | Effective tax rate | 5.2% | 18.7% | - The effective tax rate for Q1 2024 was **5.2% (a benefit)**, primarily due to goodwill impairment charges that are nondeductible for tax purposes[46](index=46&type=chunk) - Unrecognized tax benefits (excluding interest/penalties) were **$28.8 million** as of March 31, 2024, with **$21.6 million** potentially affecting future effective tax rates[47](index=47&type=chunk) [Note 6. Balance Sheet Account Details](index=13&type=section&id=Note%206.%20Balance%20Sheet%20Account%20Details) This note provides specific details for selected balance sheet accounts, including cash, marketable securities, and inventories Selected Balance Sheet Account Details (In millions) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $78.5 | $118.9 | | Marketable securities | $— | $55.8 | | Accounts receivable, net | $271.7 | $303.3 | | Total inventories | $618.3 | $623.1 | | Total prepaid expenses and other current assets | $279.1 | $262.1 | | Total other current liabilities | $250.7 | $303.3 | - The company had no marketable securities outstanding as of March 31, 2024, compared to **$55.8 million** at December 31, 2023[51](index=51&type=chunk) [Note 7. Goodwill and Intangible Assets, Net](index=14&type=section&id=Note%207.%20Goodwill%20and%20Intangible%20Assets%2C%20Net) This note explains the goodwill balance and the significant impairment charge recorded for the North America reporting unit Goodwill Balance (In millions) | Segment | December 31, 2023 | Impairment Charge | March 31, 2024 | | :-------------------------------- | :---------------- | :---------------- | :------------- | | North America | $1,743.9 | $(1,743.9) | $— | | EMEA | $582.4 | — | $574.3 | | China | $85.7 | — | $84.7 | | Other | $80.0 | — | $75.8 | | **Total** | **$2,492.0** | **$(1,743.9)** | **$734.8** | - A non-cash goodwill impairment charge of **$1.7 billion** was recorded for the North America reporting unit in Q1 2024, representing a full impairment[57](index=57&type=chunk)[60](index=60&type=chunk) - Triggering events for the impairment assessment included a sustained decline in stock price and market capitalization, a faster-than-expected decline in COVID-19 and flu markets, and a delay in Savanna commercialization[59](index=59&type=chunk) [Note 8. Borrowings](index=16&type=section&id=Note%208.%20Borrowings) This note details the company's debt structure, including term loans and revolving credit facilities, and related interest expenses Components of Borrowings (In millions) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Term Loan | $2,368.6 | $2,420.2 | | Revolving Credit Facility | $40.0 | $— | | Total borrowings | $2,402.1 | $2,414.6 | | Long-term borrowings | $2,241.0 | $2,274.8 | - The company was in compliance with financial covenants under its Credit Agreement as of March 31, 2024[68](index=68&type=chunk) Interest Expense, Net (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Term Loan | $44.5 | $40.9 | | Revolving Credit Facility | $1.8 | $0.5 | | Derivative instruments and other | $(7.2) | $(4.5) | | **Interest expense, net** | **$39.0** | **$36.7** | [Note 9. Stock-based Compensation](index=17&type=section&id=Note%209.%20Stock-based%20Compensation) This note outlines the stock-based compensation expense allocated across various operating categories Stock-based Compensation Expense (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Cost of sales | $1.2 | $1.0 | | Selling, marketing and administrative | $5.1 | $7.2 | | Research and development | $1.0 | $1.3 | | Acquisition and integration costs | $1.8 | $4.5 | | **Total stock-based compensation expense** | **$9.1** | **$14.0** | [Note 10. Commitments and Contingencies](index=17&type=section&id=Note%2010.%20Commitments%20and%20Contingencies) This note discusses legal proceedings, including class action lawsuits, and the company's assessment of potential losses - Two putative class action lawsuits (Bristol County Complaint and Whitfield Complaint) were filed in April 2024 against the company and executives[72](index=72&type=chunk)[73](index=73&type=chunk) - The lawsuits assert claims related to statements regarding sales of COVID-19 diagnostic tests and the 510(k) submission for the Savanna RVP4 assay[72](index=72&type=chunk)[73](index=73&type=chunk) - The company believes the claims are without merit and cannot estimate a possible loss or range of loss at this time[74](index=74&type=chunk) [Note 11. Fair Value Measurements](index=18&type=section&id=Note%2011.%20Fair%20Value%20Measurements) This note provides fair value measurements for assets and liabilities, including marketable securities and derivative instruments Fair Value of Assets and Liabilities (In millions) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Marketable securities | $— | $55.8 | | Derivative assets | $29.5 | $6.9 | | Derivative liabilities | $9.5 | $27.5 | | Contingent consideration | $0.1 | $0.1 | - The estimated fair value of the Term Loan was **$2,356.8 million** at March 31, 2024, compared to its carrying amount of **$2,368.6 million**[79](index=79&type=chunk) [Note 12. Derivative Instruments and Hedging Activities](index=18&type=section&id=Note%2012.%20Derivative%20Instruments%20and%20Hedging%20Activities) This note describes the company's use of derivative instruments for interest rate and foreign currency risk management - The company uses interest rate swaps to hedge variable rate debt and foreign currency forward contracts to manage currency risk exposures[82](index=82&type=chunk)[85](index=85&type=chunk) Notional Amounts of Derivative Instruments (In millions) | Instrument | Notional Amount (March 31, 2024) | | :-------------------------------- | :------------------------------- | | Interest rate swaps (total) | $1,800.0 | | Foreign currency forward contracts (Cash Flow Hedge) | $331.4 | | Foreign currency forward contracts (Non-designated) | $726.6 | - Pre-tax unrealized gains of **$20.5 million** from interest rate derivatives are expected to be reclassified from OCI to earnings in the next 12 months[83](index=83&type=chunk) [Note 13. Accumulated Other Comprehensive Loss](index=21&type=section&id=Note%2013.%20Accumulated%20Other%20Comprehensive%20Loss) This note details the changes in accumulated other comprehensive loss, including cash flow hedges and foreign currency translation adjustments Changes in Accumulated Other Comprehensive Loss (AOCI) (In millions) | Component | Balance at Dec 31, 2023 | Net Change (Q1 2024) | Balance at Mar 31, 2024 | | :-------------------------------- | :---------------------- | :------------------- | :-------------------- | | Pension and Other Post Employment Benefits | $(1.3) | $— | $(1.3) | | Cash Flow Hedges | $(9.8) | $24.6 | $14.8 | | Unrealized Foreign Currency Translation Adjustments | $(18.9) | $(20.8) | $(39.7) | | **Total AOCI** | **$(30.0)** | **$3.8** | **$(26.2)** | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations for the three months ended March 31, 2024. It covers revenue performance by business unit and segment, operating expenses, liquidity, capital resources, and critical accounting estimates, highlighting the impact of a significant goodwill impairment charge and changes in respiratory product demand [Future Uncertainties and Forward-Looking Statements](index=22&type=section&id=Future%20Uncertainties%20and%20Forward-Looking%20Statements) This section highlights the inherent risks and uncertainties associated with forward-looking statements in the report - The report contains forward-looking statements subject to significant known and unknown risks and uncertainties, including supply chain disruptions, integration challenges, and macroeconomic factors[96](index=96&type=chunk) - Investors should not rely on forward-looking statements as predictions of future events due to inherent assumptions and speculative nature[96](index=96&type=chunk) [Information Available on Our Website](index=22&type=section&id=Information%20Available%20on%20Our%20Website) This section informs readers about the availability of company reports on its official website - Periodic and current reports, including amendments, are available free of charge on the company's website (www.quidelortho.com) and investor relations site (https://ir.quidelortho.com/)[97](index=97&type=chunk) [Overview](index=22&type=section&id=Overview) This section provides a high-level summary of QuidelOrtho's business vision and key financial performance for the quarter - QuidelOrtho's vision is to advance diagnostics for a healthier future, leveraging expertise in immunoassay, molecular testing, clinical chemistry, and transfusion medicine across over 130 countries[98](index=98&type=chunk) - Total revenues decreased by **16% to $711.0 million** for Q1 2024, primarily due to variability in U.S. respiratory products, with currency exchange rates having an unfavorable 100 basis points impact[100](index=100&type=chunk) - Revenues from respiratory products accounted for approximately **19% of total revenues** in Q1 2024, down from **31%** in Q1 2023[100](index=100&type=chunk) [Planned Wind-Down of U.S. Donor Screening Portfolio](index=22&type=section&id=Planned%20Wind-Down%20of%20U.S.%20Donor%20Screening%20Portfolio) This section details the company's strategic decision to discontinue its U.S. donor screening portfolio due to its lower profitability - In February 2024, the company initiated a plan to wind down its U.S. donor screening portfolio (VIP platform and microplate assays) due to their lower growth and margin profile[101](index=101&type=chunk) - This wind-down will not affect donor screening portfolios outside of the U.S., and the company will continue to support existing customers and honor contractual commitments[102](index=102&type=chunk) [Outlook](index=23&type=section&id=Outlook) This section discusses the company's future financial performance expectations, emphasizing R&D investments and strategic opportunities - Financial performance is highly uncertain, dependent on future developments of respiratory diseases (flu, strep, RSV, COVID-19), supply chain, and pricing pressures[103](index=103&type=chunk)[104](index=104&type=chunk) - The company plans to maintain emphasis on R&D investments for long-term growth, including next-generation platforms and assays, and evaluate strategic opportunities[105](index=105&type=chunk) [Seasonality](index=23&type=section&id=Seasonality) This section explains how seasonal demands for respiratory products impact the company's revenues - Revenues from respiratory products are significantly affected by the seasonal demands of cold, flu, and RSV seasons, typically more prevalent during the fall and winter[107](index=107&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's financial results, including revenues, cost of sales, and operating expenses [Revenues](index=23&type=section&id=Revenues) This subsection provides a detailed breakdown of total revenues by business unit and the factors influencing changes Total Revenues by Business Unit (In millions) | Business Unit | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | % Change | | :-------------------------------- | :-------------------------------- | :------------------------------- | :------- | | Labs | $356.9 | $370.7 | (4)% | | Transfusion Medicine | $160.3 | $155.9 | 3 % | | Point of Care | $186.6 | $308.1 | (39)% | | Molecular Diagnostics | $7.2 | $11.4 | (37)% | | **Total revenues** | **$711.0** | **$846.1** | **(16)%** | - Point of Care revenue declined by **$121.5 million**, primarily due to a **$156.4 million** decrease in QuickVue SARS Antigen sales (impacted by a prior year government award), partially offset by a **$35.2 million** increase in Sofia SARS Antigen sales[108](index=108&type=chunk) - Labs revenue decreased by **$13.8 million**, mainly due to a **$20.7 million** settlement award from a third party in the prior year period[108](index=108&type=chunk) [Cost of Sales, Excluding Amortization of Intangible Assets](index=24&type=section&id=Cost%20of%20Sales%2C%20Excluding%20Amortization%20of%20Intangible%20Assets) This subsection analyzes the cost of sales and its percentage of total revenues Cost of Sales (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Cost of sales, excluding amortization of intangibles | $378.9 | $397.5 | | As % of Total revenues | 53.3% | 47.0% | - The decrease in cost of sales was driven by a prior year COVID-19 government award and corresponding inventory release of **$39 million**, partially offset by increased Sofia SARS Antigen sales[109](index=109&type=chunk) [Operating Expenses](index=24&type=section&id=Operating%20Expenses) This subsection details the various operating expenses, including the significant goodwill impairment charge Operating Expenses (In millions) | Expense Category | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Selling, marketing and administrative | $204.7 | $202.4 | | Research and development | $59.2 | $62.3 | | Amortization of intangible assets | $51.7 | $50.8 | | Acquisition and integration costs | $22.6 | $29.7 | | Goodwill impairment charge | $1,743.9 | $— | | Other operating expenses | $8.0 | $3.8 | - A non-cash goodwill impairment charge of **$1.7 billion** was recognized for the North America reporting unit in Q1 2024[115](index=115&type=chunk) - Acquisition and integration costs decreased by **$7.1 million**, primarily due to lower consulting costs and compensation-related charges[114](index=114&type=chunk) [Non-operating Expenses](index=25&type=section&id=Non-operating%20Expenses) This subsection covers interest expense and other non-operating expenses Non-operating Expenses (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Interest expense, net | $39.0 | $36.7 | | Other expense, net | $1.9 | $2.9 | [Income Taxes](index=25&type=section&id=Income%20Taxes) This subsection explains the company's income tax provision and effective tax rate Income Tax Information (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | (Loss) income before income taxes | $(1,798.9) | $60.0 | | (Benefit from) provision for income taxes | $(92.9) | $11.2 | | Effective tax rate | 5.2% | 18.7% | - The Q1 2024 effective tax rate of **5.2% (benefit)** differed from the U.S. federal statutory rate primarily due to non-deductible goodwill impairment charges[119](index=119&type=chunk) [Segment Results](index=25&type=section&id=Segment%20Results) This section provides a detailed analysis of financial performance across the company's geographic segments [North America](index=25&type=section&id=North%20America) This subsection details the revenue and Adjusted EBITDA performance for the North America segment North America Segment Performance (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | % Change | | :-------------------------------- | :-------------------------------- | :------------------------------- | :------- | | Total revenues | $433.9 | $582.8 | (26)% | | Adjusted EBITDA | $218.8 | $278.4 | (21)% | - Revenue and Adjusted EBITDA decreased primarily due to a COVID-19 government award in the prior year period, partially offset by increased Sofia SARS Antigen assay revenues[120](index=120&type=chunk)[121](index=121&type=chunk) [EMEA](index=26&type=section&id=EMEA) This subsection details the revenue and Adjusted EBITDA performance for the EMEA segment EMEA Segment Performance (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | % Change | | :-------------------------------- | :-------------------------------- | :------------------------------- | :------- | | Total revenues | $84.8 | $81.3 | 4 % | | Adjusted EBITDA | $12.8 | $7.2 | 78 % | - Revenue and Adjusted EBITDA increased, driven by growth in Labs and Transfusion Medicine revenues[122](index=122&type=chunk)[123](index=123&type=chunk) [China](index=26&type=section&id=China) This subsection details the revenue and Adjusted EBITDA performance for the China segment China Segment Performance (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | % Change | | :-------------------------------- | :-------------------------------- | :------------------------------- | :------- | | Total revenues | $76.1 | $70.6 | 8 % | | Adjusted EBITDA | $24.7 | $28.5 | (13)% | - Revenue increased due to Labs, but Adjusted EBITDA decreased primarily due to the impact from changes in product mix[124](index=124&type=chunk)[125](index=125&type=chunk) [Other](index=26&type=section&id=Other) This subsection details the revenue and Adjusted EBITDA performance for the "Other" geographic segment Other Segment Performance (In millions) | Item | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | % Change | | :-------------------------------- | :-------------------------------- | :------------------------------- | :------- | | Total revenues | $116.2 | $111.4 | 4 % | | Adjusted EBITDA | $32.0 | $21.8 | 47 % | - Revenue and Adjusted EBITDA increased, primarily driven by Labs revenues and product mix[126](index=126&type=chunk)[127](index=127&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet its financial obligations and fund operations Liquidity Sources (In millions) | Item | March 31, 2024 | December 31, 2023 | | :-------------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $78.5 | $118.9 | | Marketable securities, current | $— | $48.4 | | Marketable securities, non-current | $— | $7.4 | | Total cash, cash equivalents and marketable securities | $78.5 | $174.7 | | Amount available to borrow under the Revolving Credit Facility | $747.0 | $787.1 | | Working capital | $432.6 | $476.7 | [Debt Capitalization](index=27&type=section&id=Debt%20Capitalization) This subsection details the company's debt structure and compliance with financial covenants - The Credit Agreement includes a **$2,750.0 million** Term Loan and an **$800.0 million** Revolving Credit Facility, with **$747.0 million** available under the Revolving Credit Facility as of March 31, 2024[130](index=130&type=chunk) - An amendment to the Credit Agreement on April 25, 2024, adjusted the maximum Consolidated Leverage Ratio for future fiscal quarters[131](index=131&type=chunk) - The company was in compliance with all financial covenants as of March 31, 2024[131](index=131&type=chunk) [Capital Expenditures](index=27&type=section&id=Capital%20Expenditures) This subsection outlines the company's investments in property, plant, and equipment - Capital expenditures, including investments, totaled **$66.1 million** for Q1 2024, primarily for manufacturing capacity expansion and facility improvements[132](index=132&type=chunk)[141](index=141&type=chunk) - The company is increasing investment in a reagent rental model, transferring **$37.8 million** of instrument inventories to property, plant, and equipment in Q1 2024, to grow its installed base and recurring revenue[142](index=142&type=chunk) [Cash Flow Summary](index=27&type=section&id=Cash%20Flow%20Summary) This subsection summarizes the company's cash flows from operating, investing, and financing activities Cash Flow Summary (In millions) | Activity | Three Months Ended March 31, 2024 | Three Months Ended April 2, 2023 | | :-------------------------------- | :-------------------------------- | :------------------------------- | | Net cash (used for) provided by operating activities | $(0.7) | $188.9 | | Net cash used for investing activities | $(20.2) | $(68.9) | | Net cash used for financing activities | $(18.5) | $(59.6) | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(40.5) | $61.0 | - Cash used for operating activities in Q1 2024 was **$0.7 million**, reflecting a net loss of **$1,706.0 million** offset by **$1,791.6 million** in non-cash adjustments (primarily goodwill impairment)[134](index=134&type=chunk) - Cash used for investing activities decreased to **$20.2 million** in Q1 2024 from **$68.9 million** in Q1 2023, mainly due to marketable securities sales[135](index=135&type=chunk)[137](index=137&type=chunk) [Liquidity Outlook](index=28&type=section&id=Liquidity%20Outlook) This subsection provides management's perspective on the company's future liquidity and capital needs - The company anticipates that current cash, operating cash flows, and the Revolving Credit Facility will be sufficient to fund near-term capital and operating needs for at least the next 12 months[139](index=139&type=chunk) - Long-term capital requirements depend on factors such as Ortho business integration, revenue growth from new technologies, outstanding debt, and strategic collaborations or acquisitions[143](index=143&type=chunk)[144](index=144&type=chunk) [Recent Accounting Pronouncements](index=29&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the impact of new accounting standards on the company's financial statements - No accounting pronouncements issued or adopted during Q1 2024 are expected to have a material impact on the company's financial statements[146](index=146&type=chunk) [Critical Accounting Estimates](index=29&type=section&id=Critical%20Accounting%20Estimates) This section highlights key accounting estimates, particularly the goodwill impairment assessment - A key critical accounting estimate is goodwill impairment, which led to a **$1.7 billion** non-cash charge for the North America reporting unit in Q1 2024[148](index=148&type=chunk)[150](index=150&type=chunk) - Triggering events for the impairment included a sustained decline in stock price, faster-than-expected decline in COVID-19 and flu markets, and a delay in Savanna commercialization[149](index=149&type=chunk) - The goodwill impairment assessment used income (discounted cash flow) and market (guideline public company) approaches, relying on assumptions for revenue growth, EBITDA margins, discount rates, and market multiples[152](index=152&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there has been no material change in the company's exposure to market risk compared to what was previously disclosed in its Annual Report - No material change in market risk exposure from that described in the Annual Report[154](index=154&type=chunk) [ITEM 4. Controls and Procedures](index=30&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section confirms that the company's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures, concluding they were effective as of March 31, 2024. It also states there were no material changes in internal control over financial reporting during the quarter - Disclosure controls and procedures were evaluated and deemed effective at a reasonable assurance level as of March 31, 2024[155](index=155&type=chunk) - No material changes in internal control over financial reporting occurred during the fiscal quarter ended March 31, 2024[156](index=156&type=chunk) PART II—OTHER INFORMATION [ITEM 1. Legal Proceedings](index=31&type=section&id=ITEM%201.%20Legal%20Proceedings) This section refers to Note 10 of the financial statements for detailed information regarding legal proceedings and commitments - Information on legal proceedings is incorporated by reference from Note 10. Commitments and Contingencies in Part I—Financial Information[158](index=158&type=chunk) [ITEM 1A. Risk Factors](index=31&type=section&id=ITEM%201A.%20Risk%20Factors) This section states that there have been no material changes to the company's risk factors since its last Annual Report - No material change in risk factors as previously disclosed in the Annual Report[159](index=159&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase program, noting that no shares were repurchased during the first quarter of 2024, with a significant amount remaining authorized - The company has a Stock Repurchase Program authorized for up to **$300.0 million** through August 17, 2024[160](index=160&type=chunk) - As of March 31, 2024, approximately **$218.4 million** remained available under the program[160](index=160&type=chunk) - No shares of common stock were repurchased during the fiscal quarter ended March 31, 2024[160](index=160&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=31&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[161](index=161&type=chunk) [ITEM 4. Mine Safety Disclosures](index=31&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable[162](index=162&type=chunk) [ITEM 5. Other Information](index=31&type=section&id=ITEM%205.%20Other%20Information) This section confirms that there were no changes in Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements by directors or officers during the last fiscal quarter - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the last fiscal quarter[164](index=164&type=chunk) [ITEM 6. Exhibits](index=32&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, amendments to credit agreements, employment letters, and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Amendment No. 2 to Credit Agreement, Employment Offer Letter, and certifications by Principal Executive and Financial Officers[165](index=165&type=chunk) [Summary of Abbreviated Terms](index=33&type=section&id=Summary%20of%20Abbreviated%20Terms) This section provides a comprehensive glossary of key financial and operational terms used throughout the report - Provides a glossary of abbreviated terms used throughout the Quarterly Report, including definitions for key financial and operational terms[169](index=169&type=chunk) [Signatures](index=34&type=section&id=Signatures) This section formally certifies the report through the signatures of the company's principal executive and financial officers - The report is duly signed by Brian J. Blaser, President and Chief Executive Officer, and Joseph M. Busky, Chief Financial Officer, on May 8, 2024[172](index=172&type=chunk)

Exhibit 99.1 May 8, 2024 QuidelOrtho Reports First Quarter 2024 Financial Results - Global year-over-year revenue growth of 5% as reported and 6% in constant currency, excluding COVID-19 revenue - - Cost reduction initiatives well underway, headcount reductions expected to deliver approximately $100 million in annualized savings - - Company suspends 2024 financial guidance while it assesses business under new President and Chief Executive Officer - First Quarter 2024 Results and Recent Highlights SAN DIEGO, ...

Global Operations - QuidelOrtho operates globally with manufacturing facilities in the U.S. and U.K., serving customers in over 130 countries[17]. - The company operates in over 130 countries with approximately 2,900 commercial sales, service, and regional marketing teammates, supporting a broad global footprint[34]. - The company manages its business geographically, with reportable segments including North America, EMEA, and China[18]. Product Offerings and Innovation - The company generated revenue primarily from Labs, Transfusion Medicine, Point of Care, and Molecular Diagnostics business units[21]. - The QuickVue At-Home OTC COVID-19 test was introduced to new markets, including school districts and health departments[18]. - The Vitros XT 7600 integrated system offers 40% greater test throughput and a 98% up-time guarantee for e-connected U.S. customers[23]. - The Savanna platform can run up to 12 unique analytes from a single patient sample in less than 25 minutes[25]. - The Triage platform aids in diagnosing critical conditions, potentially reducing hospital admissions and improving clinical outcomes[26]. - QuidelOrtho's molecular diagnostics include the Lyra and Solana platforms, which provide high-quality testing for infectious diseases[25]. - The company completed a business combination with Ortho Clinical Diagnostics, enhancing its diagnostic capabilities[18]. - QuidelOrtho's product portfolio includes over 60 immunoassay tests, utilizing enhanced chemiluminescent technology for precision[23]. - The strategic focus includes expanding into the at-home testing market, with plans for additional tests such as for flu and RSV, reflecting a response to evolving healthcare needs[37]. Research and Development - R&D expenses increased to $246.8 million for fiscal year 2023, up from $190.5 million in 2022 and $95.7 million in 2021, indicating a strong commitment to innovation and product development[41]. - The company aims to leverage third-party partnerships and acquisitions to enhance R&D capabilities and accelerate time to market for innovative offerings[39]. Supply Chain and Manufacturing - The company operates multiple manufacturing facilities in the U.S. and internationally, all certified to ISO 13485:2016 and MDSAP medical device standards, ensuring compliance with quality management systems[52][53][54][55][56][57][58]. - The company is diversifying its supply base and creating redundancy in its global supply chain to mitigate supply chain challenges[61]. - In fiscal years 2023 and 2022, the company faced increasing pressures on raw material pricing, although the pressures were less severe in 2023 compared to 2022[61]. Regulatory Compliance - The company’s diagnostic products are primarily marketed in the U.S. under 510(k) clearances and PMA approvals, which are subject to rigorous FDA regulations[70][73]. - The FDA can authorize emergency use of unapproved medical products during public health emergencies, which has applied to some of the company's respiratory products[71]. - The company must adhere to various healthcare-related laws regulating fraud, abuse, and marketing practices[87]. - The company is subject to various privacy, data security, and data protection laws, including HIPAA and GDPR, which impose significant compliance obligations and potential fines of up to €20 million or 4% of total worldwide annual turnover[90]. - The company is subject to routine inspections by the FDA and other regulatory agencies to ensure compliance with applicable requirements, including the FDA's Quality System Regulation[189]. Financial Performance and Market Risks - Sales of respiratory products accounted for approximately 24% of total revenues for the year ended December 31, 2023[127]. - A significant portion of revenues is generated from a limited number of product families, particularly respiratory products, which have higher gross margins compared to other core products[128]. - The company faces risks from global market conditions, including economic downturns, inflation, and geopolitical instability, which could adversely affect sales and profitability[125]. - The company relies on a small number of key distributors for sales, and the loss of any of these distributors could significantly disrupt business operations[129]. - The company may experience challenges in achieving market acceptance of new products, which could impact future sales levels[145]. Employee and Corporate Governance - As of December 31, 2023, the company had approximately 7,100 employees worldwide, with 4,200 in the U.S. and 2,900 outside the U.S.[101]. - Approximately 15% of global associates are covered by a union or collective bargaining agreement, with no work stoppages reported to date[101]. - The executive management team consists of 8 members, with 25% identifying as female, and the board of directors has 27% female representation[107]. - The company plans to conduct periodic pulse surveys throughout 2024 to measure employee engagement and satisfaction[103]. - Employee benefits include health insurance, retirement plans with employer match, and various voluntary benefits tailored to individual needs[108]. Environmental and Social Responsibility - The company is committed to maintaining compliance with environmental regulations, with no expected material impact on financial position from current compliance costs[110]. - The company aims to align corporate actions with environmental sustainability and social responsibility to positively impact communities and stakeholders[113]. - The company has established a charitable giving program that includes matching employee contributions up to $200 annually and donations for volunteer work[115]. Cybersecurity and Intellectual Property - Cybersecurity risks pose a threat to the company's information systems, which are critical for business operations and may lead to costly disruptions[164]. - The company employs various measures to mitigate cybersecurity risks, including technical, physical, and organizational security measures, but vulnerabilities remain due to evolving threats[166]. - The company holds significant intellectual property, including patents and trade secrets, which are crucial for maintaining competitive advantage in the diagnostic market[171]. - Failure to protect intellectual property rights could lead to loss of market share or the need to reduce prices due to competition from lower-priced products[172].

Supplemental Combined Financial Measures: This presentation contains unaudited supplemental combined financial information ("Supplemental Combined Information") that gives effect to the Combinations as if Quidel and Ortho had been combined for the applicable periods. Certain Supplemental Combined Information presented is based on the historical financial statements of Quidel and Ortho with reclassification adjustments only and do not include all of the pro forma adjustments required under Regulation S-X Art ...

QuidelOrtho Corporation (NASDAQ:QDEL) Q4 2023 Earnings Conference Call February 13, 2024 5:00 PM ET Company Participants Juliet Cunningham - VP, IR Douglas Bryant - President & CEO Joseph Busky - CFO Conference Call Participants Andrew Brackmann - William Blair Alex Nowak - Craig-Hallum Casey Woodring - JPMorgan Jack Meehan - Nephron Research Conor McNamara - RBC Andrew Cooper - Raymond James Patrick Donnelly - Citi John Sourbeer - UBS Operator Welcome to the QuidelOrtho Fourth Quarter and Full Year 2023 Fi ...

QuidelOrtho Corporation (NASDAQ:QDEL) Q3 2023 Earnings Conference Call November 1, 2023 5:00 PM ET Company Participants Juliet Cunningham - VP, IR Douglas Bryant - President and CEO Joseph Busky - CFO Conference Call Participants Patrick Donnelly - Citi Alex Nowak - Craig-Hallum Jack Meehan - Nephron Research Andrew Cooper - Raymond James John Sourbeer - UBS Operator Welcome to the QuidelOrtho Third Quarter 2023 Financial Results Conference Call and Webcast. At this time, all participant lines are in a list ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________ FORM 10-Q ____________________________________________________________________________ (Mark One) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 1, 2023 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Comm ...

November 1, 2023 QuidelOrtho 2023 Third Quarter 2023 Financial Results Forward-Looking Statements Forward-Looking Statements: This presentation of QuidelOrtho Corporation ("QuidelOrtho" or the "Company") contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include any statement contained herein that is not strictly historical, including, but not limited to, QuidelOrtho's commercial, regulatory and other strategic goals, financial ...

Forward-Looking Statements QuidelOrtho Financial Results 2Q 2023 Forward-Looking Statements: This presentation of QuidelOrtho Corporation ("QuidelOrtho" or the "Company") contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include any statements contained herein that are not strictly historical, including, but not limited to, the synergies and other benefits and results of the business combination (the "Combinations") of Quidel C ...

Financial Data and Key Metrics Changes - Total revenue decreased by 26% to $665 million, reflecting strong COVID-related revenue in Q2 2022 [18][24] - Gross profit margin for the quarter was 45.6%, slightly below expectations due to product mix and lower than expected COVID-related revenue [21][48] - Adjusted EBITDA declined year-over-year to $113.3 million, with an adjusted EBITDA margin of 17% [48][25] - Adjusted diluted EPS is now expected to be in the range of $4.85 to $5.30, down from prior guidance of $5.15 to $5.70 [25][26] Business Line Data and Key Metrics Changes - Labs business delivered 9% growth in non-respiratory revenue, with notable strength in clinical chemistry and immunoassay [36][124] - Point of Care business saw a decline in respiratory revenue due to the end of the COVID-19 public health emergency, with overall COVID-19 business facing challenges [37][44] - Triage business grew by 7% year-over-year, particularly strong in China, Asia Pacific, and Latin America [11][36] - Molecular Diagnostics business declined, partially offset by Savanna's performance, which showed modest year-over-year sales improvement [12][39] Market Data and Key Metrics Changes - Non-respiratory revenue in North America declined by 2%, while EMEA grew by 4% and China grew by 26% [134][46] - Instrument revenue grew by 10%, with a significant reduction in open labs instrument orders by approximately 40% [136][36] - In China, non-respiratory growth of 26% was driven by strong hospital demand [46] Company Strategy and Development Direction - The company is strategically positioned to capitalize on trends in the diagnostic industry, including aging populations and emerging infectious diseases [14][40] - Cost synergies of $130 million have been identified, expected to be realized over three years, improving business efficiency and cash generation [27][132] - The focus remains on long-term growth, with ongoing integration efforts and a commitment to improving cash flow and operational efficiency [42][41] Management's Comments on Operating Environment and Future Outlook - Management noted that COVID-19 is transitioning to an endemic state, impacting revenue expectations [18][24] - The company anticipates high-single-digit non-respiratory growth in Labs as supply issues alleviate [24] - The end of the public health emergency has led to a significant decline in retail COVID market revenue, affecting overall guidance [24][25] Other Important Information - The company ended the quarter with cash, cash equivalents, and marketable securities of $248 million and total debt of $2.5 billion [50] - The company expects to maintain flexibility for strategic M&A opportunities while reducing leverage to around two times net leverage by the end of 2024 [50] Q&A Session Summary Question: How has the Savanna manufacturing ramped up? - Management indicated that the second low volume manufacturing line for Savanna is operational and they are in good shape for upcoming launches [30][56] Question: What are the expectations for the flu season? - Management noted that they expect a more traditional flu season but cannot predict the exact timing of its onset [61][99] Question: How is the company addressing the decline in COVID-related revenue? - Management acknowledged the softness in COVID revenue, particularly in the Molecular segment, and indicated that they are offsetting some margin impacts with cost reductions [32][58] Question: What is the outlook for the respiratory revenue guidance? - The respiratory revenue guidance has been adjusted to $610 million to $775 million, reflecting a more conservative outlook due to market conditions [51][25] Question: How are the cost synergies expected to impact the P&L? - Management expects cost synergies to begin impacting the P&L positively, with a significant reduction in operating expenses anticipated [78][79]