QuidelOrtho (QDEL) - 2026 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION ITEM 1. Financial Statements QuidelOrtho reported a widened net loss in Q2 2025, reflecting asset decrease and significant restructuring charges Consolidated Financial Statements This section presents key financial performance, balance sheet, and cash flow summaries Key Financial Performance (Q2 & YTD 2025 vs 2024) | Metric | Three Months Ended June 29, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 29, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $613.9M | $637.0M | $1,306.7M | $1,348.0M | | Operating Loss | $(180.7)M | $(117.5)M | $(148.1)M | $(1,875.5)M | | Net Loss | $(255.4)M | $(147.7)M | $(268.1)M | $(1,853.7)M | | Diluted Loss Per Share | $(3.77) | $(2.20) | $(3.97) | $(27.67) | Consolidated Balance Sheet Summary | Account | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,281.5M | $1,218.9M | | Total Assets | $6,379.1M | $6,423.6M | | Total Current Liabilities | $1,142.1M | $998.8M | | Total Liabilities | $3,586.4M | $3,439.1M | | Total Stockholders' Equity | $2,792.7M | $2,984.5M | Consolidated Cash Flow Summary (Six Months Ended) | Cash Flow Activity | June 29, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $18.8M | $(98.6)M | | Net cash used for investing activities | $(89.2)M | $(55.5)M | | Net cash from financing activities | $120.9M | $144.0M | | Net increase (decrease) in cash | $53.2M | $(12.0)M | Note 3. Revenue This note details revenue breakdown by business unit and highlights significant customer concentration Revenue by Business Unit (Three Months Ended) | Business Unit | Q2 2025 Revenue | Q2 2024 Revenue | % Change | | :--- | :--- | :--- | :--- | | Labs | $369.7M | $354.2M | +4.4% | | Immunohematology | $132.3M | $126.9M | +4.3% | | Donor Screening | $13.3M | $34.3M | -61.2% | | Point of Care | $93.0M | $117.2M | -20.6% | | Molecular Diagnostics | $5.6M | $4.4M | +27.3% | | Total Revenues | $613.9M | $637.0M | -3.6% | - For the six months ended June 29, 2025, one customer represented 11% of total revenues[38] Note 4. Segment and Geographic Information This note provides a breakdown of revenue and Adjusted EBITDA by geographic segment Segment Revenue (Three Months Ended) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | % Change | | :--- | :--- | :--- | :--- | | North America | $310.7M | $350.1M | -11.3% | | EMEA | $87.3M | $81.1M | +7.6% | | China | $83.4M | $81.6M | +2.2% | | Other | $132.5M | $124.2M | +6.7% | Segment Adjusted EBITDA (Three Months Ended) | Segment | Q2 2025 Adj. EBITDA | Q2 2024 Adj. EBITDA | % Change | | :--- | :--- | :--- | :--- | | North America | $159.7M | $185.6M | -14.0% | | EMEA | $18.3M | $12.1M | +51.2% | | China | $42.1M | $35.7M | +17.9% | | Other | $37.9M | $34.0M | +11.5% | Note 7. Borrowings This note details the company's borrowing components and compliance with financial covenants Components of Borrowings | Component | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Term Loan | $2,213.9M | $2,282.7M | | Revolving Credit Facility | $390.0M | $198.0M | | Total Borrowings | $2,606.3M | $2,483.1M | - As of June 29, 2025, availability under the Revolving Credit Facility was $397.3 million[57] - The company was in compliance with all financial covenants[58] Note 9. Commitments and Contingencies This note outlines ongoing legal proceedings, including class action and derivative lawsuits, with no estimable loss - The company is defending a putative class action lawsuit filed in April 2024, alleging violations of federal securities laws related to statements about COVID-19 diagnostic test sales and the Savanna RVP4 assay[60] - Two related stockholder derivative complaints were also filed and have been consolidated and stayed[61] - The company disputes all allegations and cannot estimate a possible range of loss[62] Note 13. Restructuring, Integration and Other Charges This note details significant Q2 2025 restructuring charges from the Optimization Plan and Savanna platform discontinuation - The company recorded $178.9 million in restructuring charges in Q2 2025, primarily related to a new 'Optimization Plan' and the discontinuation of the Savanna platform development ('Savanna Exit')[81][83] Q2 2025 Restructuring Charges Breakdown | Charge Category | Amount (in millions) | | :--- | :--- | | Provision for restructuring (Optimization Plan) | $6.6 | | Savanna exit charges | $149.6 | | Integration expenses & other | $23.7 | | Total Charges | $179.9 | - The Optimization Plan is expected to incur cumulative pretax charges of approximately $100 million through 2027[82] ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses revenue decline, strategic initiatives, improved operating loss, and liquidity position Overview This section summarizes financial performance, strategic initiatives, and key operational changes - Six-month 2025 revenues decreased 3% to $1.31 billion, primarily due to lower COVID-19 revenues and the planned wind-down of the U.S. donor screening portfolio[91][92] - In Q2 2025, the company launched a multi-year 'Optimization Plan' to realign costs, expecting to incur ~$100 million in charges through 2027 to achieve ~$50 million in net savings[93] - The company announced a strategic refocus of its Molecular Diagnostics business, which includes discontinuing the development of the Savanna platform[94] Results of Operations This section analyzes revenue, cost of sales, and significant charges impacting operating results - Q2 2025 total revenues decreased 4% YoY to $613.9 million, driven by a 61% decline in Donor Screening and a 21% decline in Point of Care revenue[102][103] - Cost of sales as a percentage of revenue improved to 55.2% in Q2 2025 from 56.7% in Q2 2024, driven by procurement-related cost savings[106] - Restructuring, integration and other charges increased significantly to $178.9 million in Q2 2025 from $30.9 million in Q2 2024, due to the Optimization Plan and Savanna Exit[114] - The company recognized a non-cash goodwill impairment charge of $1.7 billion in the first six months of 2024, which did not recur in 2025[115] Segment Results This section details revenue and Adjusted EBITDA performance across geographic segments Q2 2025 vs Q2 2024 Segment Performance | Segment | Revenue Change | Adjusted EBITDA Change | | :--- | :--- | :--- | | North America | -11% | -14% | | EMEA | +8% | +51% | | China | +2% | +18% | | Other | +7% | +11% | - The decrease in North America was primarily driven by the wind-down of the U.S. donor screening business and lower sales of QuickVue and Sofia SARS Antigen assays[124] Liquidity and Capital Resources This section assesses cash position, operating cash flow, and available credit for future funding needs Liquidity Position | Source | June 29, 2025 | December 29, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $151.7M | $98.3M | | Available Revolving Credit | $397.3M | $589.0M | - For the first six months of 2025, net cash provided by operating activities was $18.8 million, a significant improvement from the $98.6 million used in the same period of 2024[144][145] - The company believes current cash, cash from operations, and available credit will be sufficient to fund needs for at least the next 12 months[150] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk No material change in market risk exposure from the 2024 Annual Report was reported - There has been no material change in the company's exposure to market risk from that described in its Annual Report[159] ITEM 4. Controls and Procedures Disclosure controls were ineffective due to material weaknesses, with remediation and SAP ERP implementation ongoing - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 29, 2025, due to previously reported material weaknesses in internal control over financial reporting[160] - Remediation efforts to address the material weaknesses are ongoing[162] - In June 2025, the company began migrating certain financial processing systems to a new SAP ERP system as part of its global integration efforts[163] PART II—OTHER INFORMATION ITEM 1. Legal Proceedings This section incorporates Note 9, detailing ongoing legal proceedings including class action and derivative lawsuits - Information regarding legal proceedings is incorporated by reference from Part I, Item 1, 'Financial Statements—Note 9. Commitments and Contingencies'[165] ITEM 1A. Risk Factors No material changes to risk factors previously disclosed in the Annual Report on Form 10-K - There has been no material change in the company's risk factors as previously disclosed in its Annual Report[166] Other Items (2, 3, 4, 5, 6) No unregistered sales, issuer repurchases, or defaults on senior securities were reported, with exhibits provided - The company reported no unregistered sales of equity securities, issuer purchases of equity securities, or defaults upon senior securities[167][168][169] - Item 6 provides a list of exhibits filed with the Form 10-Q, including certifications and financial statements in Inline XBRL format[173]