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QuidelOrtho (QDEL) - 2025 Q1 - Earnings Call Transcript
QDELQuidelOrtho (QDEL)2025-05-07 22:00

Financial Data and Key Metrics Changes - Total reported revenue for Q1 2025 was 693million,downfrom693 million, down from 711 million in the prior year, primarily due to lower COVID and donor screening revenue [19][20] - Excluding COVID and donor screening, revenue growth was 6%, driven by the labs business and a strong flu season [7][19] - Adjusted EBITDA was 160million,comparedto160 million, compared to 132 million in the prior year, with an adjusted EBITDA margin of 23%, reflecting a 450 basis point improvement [25][28] - Adjusted diluted EPS increased by 68% year over year to 0.74[25]BusinessLineDataandKeyMetricsChanges−Labsbusiness,accountingfor540.74 [25] Business Line Data and Key Metrics Changes - Labs business, accounting for 54% of total revenue, achieved 7% growth, with strong performance in clinical chemistry and immunoassay testing [8][20] - Immunohematology business grew by 4%, maintaining its global leadership position [8][22] - Point of Care business represented 25% of Q1 revenue and grew 8% excluding COVID [8] - Molecular Diagnostics business grew 11% excluding COVID, with ongoing clinical trials for the Savanna respiratory panel [10] Market Data and Key Metrics Changes - Revenue from the "Other" region (Japan, Asia Pacific, Latin America) grew by 12%, driven by a 17% increase in Labs revenue [20] - North America revenue declined by 6% due to lower COVID revenue and the wind down of donor screening, but grew by 5% excluding these factors [20] - Europe, Middle East, and Africa grew by 9%, supported by labs and immunohematology contributions [20] - China revenue was flat year over year, with labs revenue growing by 2% [21] Company Strategy and Development Direction - The company is focused on a narrow set of strategic initiatives, including increasing platform utility, expanding margins, and enhancing commercial execution [10][11] - Plans to realize 100 million in annualized cost savings, with 50millionexpectedinthefirsthalfof2025[11][28]−Thecompanyaimstomaintainarecurringrevenuemodel,withover9050 million expected in the first half of 2025 [11][28] - The company aims to maintain a recurring revenue model, with over 90% of sales from consumables [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategy and operational discipline, highlighting strong Q1 results and ongoing initiatives [6][7] - The company is navigating a dynamic macro environment, with expected tariff impacts of 30 million to 40millionin2025,whichtheybelievecanbefullymitigated[14][28]−Fullyear2025financialguidanceremainsunchanged,withexpectationsfortotalreportedrevenuebetween40 million in 2025, which they believe can be fully mitigated [14][28] - Full year 2025 financial guidance remains unchanged, with expectations for total reported revenue between 2.6 billion and 2.81billion[28][30]OtherImportantInformation−Thecompanyhasinvestednearly2.81 billion [28][30] Other Important Information - The company has invested nearly 1 billion in U.S.-based manufacturing and R&D over the past three years [12] - Adjusted free cash flow for Q1 was $47 million, representing 29% of adjusted EBITDA [26] Q&A Session Summary Question: Can you elaborate on the tariff impact and pricing actions? - Management indicated that selective pricing actions are being considered to offset tariffs, but competitive market conditions must be taken into account [37][38] Question: Will tariff impacts affect long-term manufacturing plans? - Management does not expect changes to the overall manufacturing footprint, emphasizing the importance of their global manufacturing network [39] Question: Can you quantify tariff exposures and confidence in offsets? - Most products are manufactured in the U.S., with the largest tariff impacts on immunoassay products from the U.K. Management is confident in their mitigation strategies [43][45] Question: What underpins confidence in China's growth rate? - Despite some softness in Triage sales, strong growth in labs and immunohematology supports the mid to high single-digit growth target for China [49][51] Question: What is the status of the Savanna program? - The company is focused on completing the RBP4x submission to the FDA and remains committed to the molecular diagnostics segment [46][62] Question: Are there timing impacts from mitigation efforts? - Management does not anticipate significant timing impacts from mitigation actions, although some softness in China revenue is expected in Q2 due to shipment delays [70][71]