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QuidelOrtho Q2 Revenues Dip 4 Percent as Firm Beats Revenue, EPS Estimates

NEW YORK – QuidelOrtho announced after the close of the market on Wednesday that its second quarter revenues declined approximately 4 percent year over year primarily due to lower COVID revenues.

For the three months ended June 30, the San Diego-based firm reported total revenues of $637 million, down from $665.1 million in the prior-year quarter but well above analysts' average estimate of $613.5 million. At constant currency, QuidelOrtho's Q2 revenues fell 3 percent.

"During the second quarter we performed in line with our expectations across all segments and geographies while concurrently undertaking a significant review of our assets, operations, and opportunities for further company-wide savings," Brian Blaser, president and CEO of QuidelOrtho, said in a statement.

In the quarter, QuidelOrtho's non-respiratory revenues increased approximately 1 percent year over year, or approximately 2 percent at constant currency. Respiratory revenues were down nearly 35 percent, driven by lower COVID-19 revenues compared to the second quarter of 2023.

Within the firm's labs business unit, revenues declined 2 percent to $354.2 million from $361.4 million. Transfusion medicine revenues were down 1 percent to $161.3 million from $163.3 million. QuidelOrtho's point-of-care business unit revenues dropped 13 percent to $117.1 million from $134.2 million, while revenues in the molecular diagnostics business fell 29 percent to $4.4 million from $6.2 million.

On a call with investors to discuss the Q2 results, Blaser offered an update on QuidelOrtho's Savanna molecular diagnostics instrument.

"After multiple delays and disappointments, Savanna is admittedly late to the party," he said, "But despite being late, we see Savanna continuing to provide significant competitive advantages in the molecular point-of-care market both today and well into the future." A successful US launch of Savanna will offer incremental revenue and margin growth opportunities, he said, adding, "We are committed to getting it across the finish line."

The firm plans to be in the market with a respiratory panel and sexually transmitted infections panel on Savanna in 2025, Blaser said.

On a reported basis, the firm's research and development expenses decreased 10 percent year over year to $56.3 million from $62.4 million, while its SG&A costs increased 5 percent to $188.2 million from $179.1 million.

QuidelOrtho CFO Joseph Busky said on the call that the firm achieved $100 million in annualized cost-savings initiatives that will benefit the second half of 2024 and the first half of 2025. The savings primarily involved staffing reductions of approximately 7 percent of the company's global workforce compared to the end of 2023, he said.

As part of the business efficiency efforts, the firm will also consolidate its real estate footprint, Busky said.

Specifically, it will sell a manufacturing and administration building in Raritan, New Jersey, and its McKellar Court, San Diego, facility. The Raritan facility manufactures IVD donor screening and immunohematology products, according to a 10-K filed at the end of last year. QuidelOrtho is planning to exit its donor screening business.

The McKellar Court site, meanwhile, consists of labs and production areas. The firm noted that it has "invested in a high degree of automated equipment for the assembly and inspection processes" at the site. As previously reported, in 2021 Quidel purchased a general partner's interest in McKellar Court for a net purchase price of $28.9 million.

Second quarter 2024 results included a $57 million asset impairment charge, which Busky said was related to the sale of these assets amid "the unfavorable San Diego commercial real estate market driven by excess capacity."

QuidelOrtho's net loss in the quarter ballooned to $147.7 million, or $2.20 per share, compared to a net loss of $53.2 million, or $.80 per share, in Q2 2023. Adjusted loss per share was $.07, above analysts' average estimate for a loss of $.23 per share.

Blaser took over the helm three months ago, at which time the firm suspended its guidance in order to give him time to assess the business.

On the call, Busky said that the firm hasn't definitively determined when it will unsuspend guidance, but it will likely be next quarter.

QuidelOrtho ended the quarter with $107.0 million in cash and cash equivalents.

In early morning Thursday trading on the Nasdaq, shares of QuidelOrtho were up nearly 3 percent at $40.33.