QuidelOrtho (US:QDEL)2024-08-01 19:13Revenue Performance - Total revenues for the six months ended June 30, 2024, decreased by 11% to $1,348.0 million compared to $1,511.2 million for the same period in the prior year, primarily due to variability in U.S. respiratory products[73] - Revenues from respiratory products accounted for approximately 14% of total revenues for the six months ended June 30, 2024, down from 23% in the same period of the prior year[73] - Labs revenue for the six months ended June 30, 2024, decreased by $21.0 million, primarily due to a $19.2 million settlement award from a third party in the prior year[79] - Point of Care revenue decreased by $184.6 million for the six months ended June 30, 2024, primarily due to a COVID-19 government award in the prior year[79] - Total revenues for North America were $350.1 million for the three months ended June 30, 2024, a decrease of 8% from $378.8 million for the same period in 2023[93] - Total revenues for EMEA increased by 1% to $81.1 million for the three months ended June 30, 2024, compared to $80.6 million for the same period in 2023[94] - Total revenues for China were $81.6 million for the three months ended June 30, 2024, a slight increase from $81.3 million in the same period in 2023[96] Expenses and Costs - Cost of sales for the three months ended June 30, 2024, was $361.0 million, or 56.7% of total revenues, compared to $368.6 million, or 55.4% of total revenues, for the same period in the prior year[80] - Selling, marketing, and administrative expenses for the three months ended June 30, 2024, increased by 5.1% to $188.2 million, primarily due to employee compensation costs[82] - Research and development expenses for the three months ended June 30, 2024, decreased by 9.8% to $56.3 million, primarily due to lower compensation costs and outside services[83] - Integration related costs for the three months ended June 30, 2024, were $30.9 million, an increase from $24.2 million in the same period of the prior year[85] Impairment Charges - The company recognized a non-cash goodwill impairment charge of $1.7 billion for the North America reporting unit during the six months ended June 30, 2024[86] - An impairment charge of $56.9 million related to long-lived assets classified as assets held for sale was recognized during the three and six months ended June 30, 2024[87] - The company recorded a non-cash goodwill impairment charge of $1.7 billion in the first quarter of 2024 for the North America reporting unit, representing a full impairment of goodwill allocated to that unit[111] Cash Flow and Financing - As of June 30, 2024, the company had $107.0 million in cash and cash equivalents, a decrease of $11.9 million from December 31, 2023[98] - The amount available to borrow under the Revolving Credit Facility was $534.0 million as of June 30, 2024, down from $787.1 million at the end of 2023[98] - Cash used for operating activities was $98.6 million for the six months ended June 30, 2024, reflecting a net loss of $1,853.7 million and non-cash adjustments of $1,971.1 million[102] - Cash provided by financing activities was $144.0 million for the six months ended June 30, 2024, primarily from net proceeds of $253.0 million from the Revolving Credit Facility[102] - Cash used for investing activities was $55.5 million for the six months ended June 30, 2024, primarily related to purchases of property, plant, equipment, and intangibles[102] Future Outlook and Strategy - The company plans to wind down its U.S. donor screening portfolio, specifically the ORTHO VERSEIA Integrated Processor platform and microplate assays, due to lower growth and margin profiles[74] - The company expects overall demand for its products to continue to fluctuate, with pricing pressures persisting due to increased supply and seasonal demands[75] - The company anticipates that current cash and cash equivalents, along with cash from operations and available credit, will be sufficient to fund near-term capital and operating needs for at least the next 12 months[105] - The company plans to increase the number of reagent rental placements in developed markets to enhance recurring revenue and cash flows[105] - The company is focused on integrating the Ortho business and realizing cross-selling revenue synergies to enhance product offerings[106] Financial Ratios - The maximum Consolidated Leverage Ratio is set to decrease from 4.50 to 1.00 to 3.75 to 1.00 over the next fiscal quarters, indicating improved financial flexibility[1] Adjusted EBITDA - Adjusted EBITDA for North America was $173.9 million for the three months ended June 30, 2024, slightly down from $176.3 million in the prior year[93] - Adjusted EBITDA for EMEA was $11.4 million for the three months ended June 30, 2024, a significant increase of 115% from $5.3 million in the prior year[94] - Adjusted EBITDA for China was $35.8 million for the three months ended June 30, 2024, up 19% from $30.2 million in the prior year[96] Fair Value Assessment - The estimated fair values of EMEA, Latin America, and JPAC reporting units exceeded their carrying values by approximately 30% to 150%[112]