QuidelOrtho (US:QDEL)2022-11-03 02:10Financial Data and Key Metrics Changes - The underlying base business grew 6% year-over-year despite industrywide headwinds, with constant currency revenue growth, excluding COVID-related revenue, growing 3% [8][49] - Adjusted EBITDA margin was 29%, and adjusted EPS was $1.85, reflecting strong operating leverage and solid earnings for the quarter [9][63] - Total revenue for Q3 was $784 million, a year-over-year decrease of 22% in constant currency, primarily due to a decline in COVID-related revenue [49][59] Business Line Data and Key Metrics Changes - Point-of-care revenue declined 39% in the quarter but grew 29% when excluding COVID-related revenue, driven by increased respiratory testing [50] - Labs revenue declined 5% in the quarter, and molecular diagnostics revenue declined 72%, with a focus on Savanna in Europe and select CE Mark countries [51][52] - Transfusion medicine revenue grew 1%, with mid-single-digit growth in donor screening driven by plasma demand [51] Market Data and Key Metrics Changes - North America revenue declined 29%, while EMEA grew 1% and China declined 13% [52] - Excluding COVID-related revenue, North America revenue grew 6%, driven by point-of-care and transfusion medicine [53] - In EMEA, the underlying base business grew 6% year-over-year, excluding COVID-related revenue [54] Company Strategy and Development Direction - The company is focused on integration and corporate culture, product innovation, global commercial excellence, operational excellence, and capital deployment [10][11] - Cost synergies identified are at least $50 million, exceeding the $30 million target for 2023 [19] - The company is managing approximately 100 R&D projects, prioritizing resources for the most important projects [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the integration process and the potential for strong growth in the point-of-care market [76] - The company expects to see strong non-COVID recurring revenue pull-through due to a large base of Sofia instrument placements [68] - Challenges in China and global supply chains are acknowledged, but the company remains optimistic about future growth in the region [56][70] Other Important Information - The company announced a $300 million share repurchase authorization, reflecting confidence in its long-term growth strategy [43] - The company ended the quarter with cash and marketable securities of $284.3 million and total debt of $2.7 billion [66] - Adjusted free cash flow for the second half of 2022 is expected to be in the range of $130 million to $150 million [64] Q&A Session Summary Question: Update on Savanna timelines - Management indicated that while U.S. shipments may be delayed, they will focus on European sales where demand is strong, with no significant changes to revenue expectations [80][81] Question: Thoughts on cost basis and margins - Management noted that as COVID moves to an endemic stage, margins on COVID-related products are expected to align more closely with other respiratory panels, maintaining historical gross margins [86][87] Question: Instrument supply chain issues - Management acknowledged that the backlog of 600 units is primarily on the lab side, with expectations to make significant progress in winding it down throughout 2023 [92][95] Question: High single-digit growth expectations for 2023 - Management confirmed that high single-digit growth is still expected, driven by various business units, with EBITDA estimates remaining in the $850 million to $900 million range [99][100] Question: Endemic market numbers for COVID testing - Management provided a conservative estimate of $150 million to $200 million for the endemic stage, focusing on respiratory season demand rather than asymptomatic testing [106][107]