SAN FRANCISCO — At the 43rd annual JP Morgan Healthcare Conference here, QuidelOrtho CEO Brian Blaser noted in his presentation that in 2024 the company made changes to position the firm for near- and long-term growth, including flattening the organizational structure and reducing overhead costs.
Blaser last year took over for longtime CEO Douglas Bryant, who was fired after a string of disappointing financial results, and immediately began an intensive review process that led Blaser to eliminate certain C-suite positions and "align our organization for speed and effectiveness," he said during his presentation. The company also laid off approximately 9 percent of its workforce.
Blaser said the company has taken "very aggressive action" to improve profitability, which previously suffered due to supply chain issues, inflationary pressures, and the integration of the combined Quidel and Ortho Clinical Diagnostics businesses. He noted that in 2024 the firm identified more than $100 million in cost savings and is pursuing additional cost-saving opportunities "across every corner of this business."
He noted that the company is implementing innovation and cost structure improvement initiatives that will have the "highest impact for the business in the short term," such as launching the molecular Savanna instrument, improving research and development productivity and the competitiveness of its assay menus, and "delivering on key cost reduction initiatives."
In 2024, the firm focused on reducing staff to find savings, and while it will continue to evaluate staffing to improve the firm's productivity, QuidelOrtho will also look at indirect and direct procurement, supply chain, manufacturing, quality control, and information technology segments to reduce costs.
The firm will focus on both direct and indirect materials, including research and development expenses, regulatory expenses, contracted services, and travel.
For its labs business, Blaser said that the commercial emphasis is on placing integrated analyzers that can perform both routine clinical chemistry and immunoassays. Only about 30 percent of its installed base is integrated thus far, so QuidelOrtho has a "long runway for growth in this area." He also emphasized that the business is particularly stable because of the long instrument contracts and because QuidelOrtho has strong contract renewal rates. The average customer tenure is more than 12 years for the labs business, he added.
The firm is also in the process of winding down its US donor screening business, which it expects to have largely completed by the end of 2025.
QuidelOrtho's burgeoning molecular diagnostics business, led by its Savanna instrument, presents the largest near-term opportunity for growth, Blaser said. The Savanna respiratory virus panel has entered clinical trials, and the firm is working on a test for sexually transmitted infections that it expects to enter clinical trials this year.
Blaser noted that revenue for Savanna and its tests will likely not be material until 2026 or 2027 because regulatory approvals for other Savanna tests are expected to come late in 2025. However, he noted that QuidelOrtho is ramping Savanna "as quickly as we can to get the maximum benefit from it."
The company also announced its preliminary Q4 and full-year 2024 financial results on Monday, and Blaser said that the firm expects its segment-specific results to be in line with previous expectations. The labs business grew in the mid-single-digit percent range, immunohematology grew in the low-single-digit percent range, and the firm saw a decline in respiratory revenue. Blaser attributed the respiratory decline to a later ramp-up in the respiratory season for 2024-2025.
Blaser forecast that the labs business will likely see mid-single-digit growth in 2025, and immunohematology will likely continue with low-single-digit growth. The firm expects respiratory revenue to remain similar, although he noted that the SARS-CoV-2 testing revenue will be lower due to the expiration of a government contract.
Asked about potential competitors in the influenza and respiratory testing space, specifically with regards to Quidel's Sofia influenza A/B and SARS-CoV-2 combination test, Blaser said that there may be new entrants into the market but the Sofia combination test "continues to be very durable and stable in terms of its [market] share position."
QuidelOrtho also has a strong China business — approximately 11 percent of total company revenues — but the firm hasn't seen direct impact from last year's volume-based procurement program for the diagnostics industry. Blaser noted, however, that the company is seeing more significant cost pressure in the market, and the volume of local competitors has increased across all of QuidelOrtho's segments lately.