NEW YORK – Six months after incoming CEO Brian Blaser suspended guidance to thoroughly review the business, QuidelOrtho has resumed offering an outlook to investors. The in vitro diagnostics and lab test maker elaborated on in-process restructuring it believes will support long-term profitability on a call to discuss third quarter earnings on Thursday after the close of the market.
Investors reacted positively to the news, sending shares of QuidelOrtho up nearly 17 percent to $45.45 in Friday mid-morning trading on the Nasdaq.
Among other changes, the firm will eliminate the role of chief commercial officer currently held by Mike Iskra and that of chief operating officer currently held by Rob Bujarski, Blaser and CFO Joe Busky said during the call.
"Mike and Rob did a great job for the business, had a really significant impact on our team, especially as we went through the CEO transition earlier in the year," Blaser said. "The decision to eliminate our [CCO and COO] roles was all about flattening our organization, improving our speed and efficiency, and getting closer to our customers."
On the heels of a full-year guidance and revenue miss and stock tumble in February — and the board's termination of long-time CEO Doug Bryant the next day — Bujarski and Iskra along with Busky had helmed an interim "Office of the CEO" to lead QuidelOrtho.
In March, the trio executed planned workforce reductions and affirmed QuidelOrtho's prior expectations for 2024 revenues related to sales of its newly launched Savanna molecular diagnostics instrument and herpes virus panel, but noted that the anticipated clearance and CLIA waiver of the Savanna respiratory panel, dubbed RVP4+, would catalyze placement.
Having previously guided for $30 million to $50 million of revenues related to uptake of the Savanna system, which was in turn expected to be driven by the US launch of its RVP4 respiratory panel, in April QuidelOrtho withdrew its US Food and Drug Administration submission for the respiratory panel, stating that the RVP4+ data — which had been submitted to the FDA in February 2024 — initially showed great promise but ultimately did not meet the firm's expectations.
Blaser assumed the role of CEO in May, and the firm initiated further workforce cuts, announced it would exit the donor screening business, and also suspended its guidance to offer him a chance to review the business.
At that time, QuidelOrtho said it expected Savanna revenue to be immaterial in 2024, with no US respiratory revenue contribution in the 2024-2025 respiratory season.
On Thursday's call, Blaser and Busky re-tied the firm's fortunes to Savanna, at least in part.
"While Savanna is only one of our initiatives, we believe Savanna — and molecular in general — is an important driver of future profitable revenue growth," Blaser said. "We plan to enter clinical trials with our respiratory panel as the respiratory season develops and to be in market in the later part of 2025."
However, Blaser reiterated that the firm is also not expecting any significant revenue impact from the RVP4+ panel in 2025. "Most of the ramp up will be in 2026 and 2027," he said.
Without operations and commercial heads, Blaser said the firm's business unit and global regional leaders will report directly to him. "The alignment of our leadership team is designed to improve the way we run the business and enable us to achieve consistently improved performance over time," he said.
In addition to "flattening the org structure," as Busky put it on the call, QuidelOrtho hired a new chief technology officer last month — Jonathan Siegrist, who most recently spent a dozen or so years at Cepheid — and a new chief of human resources, Lee Bowman.
In addition to reducing the size of the C-suite, Blaser said the firm will reorganize its sales structure from five regions to three regions and consolidate business units from four to two. Blaser and Busky also suggested that the firm intends to increase cross-selling of its products, potentially by converting some sales activities from distributors to its own sales team.
For the quarter ended Sept. 30, QuidelOrtho reported that revenues were down approximately 2 percent year over year to $727.1 million from $744.0 million but well above analysts' average estimate of $643.5 million. The revenue decline was attributed to higher COVID-19 and influenza revenue in the prior-year period.
The firm's Q3 respiratory revenues fell 11 percent to $165.4 million from $185.4 million. Non-respiratory revenues grew approximately 1 percent in the quarter to $561.7 million from $558.6 million.
The firm's labs business revenues increased 4 percent to $355.9 million from $341.4 million, while the immunohematology business revenues increased 2 percent to $132.0 million from $128.9 million. Point-of-care test business revenues were down 12 percent to $205.6 million from $233.1 million, while molecular diagnostics revenues were flat at $5.6 million.
The firm's net loss in the quarter was $19.9 million, or $.30 per share, compared to a net loss of $12.7 million, or $.19 per share, in Q3 2023. Adjusted EPS was $.85, well above analysts' average estimate for an EPS of $.32.
QuidelOrtho ended the quarter with $143.7 million in cash and cash equivalents.
For full-year 2024, QuidelOrtho is guiding for $2.75 billion to $2.80 billion in total revenues and adjusted diluted EPS of $1.69 to $1.91.
This assumes full-year 2024 COVID-19 revenue will be in the range of $160 million to $170 million, including approximately $17 million in government contracts in 2024, Busky said on the call.
It also assumes cost savings of at least $50 million in the second half of 2024 as part of the firm's $100 million annualized cost-savings target, a 30 percent year-over-year drop in respiratory revenue, and a $30 million charge attributed to bonus accruals that were not included in the prior-year period since the firm did not meet its performance targets last year, Busky said.