QuidelOrtho Outperforms on Respiratory Revenue; Profitability Progress a Positive Despite COVID-19 Headwinds
11-2-23 (by: Scott Gleason) QuidelOrtho announced its financial results for the third quarter ending October 1, 2023 following its earlier pre-release with revenues of $744 million compared to their pre-release range of $738 to $744 million and consensus forecasts of $723.2 million. Non-respiratory revenue increased by 2% with the company noting its laboratory diagnostic business drove the increase. The company noted instrument placements increased 19% relative to the 3Q22 which is a positive leading indicator for future growth. Respiratory revenue, on the other hand, decreased by 21% but was stronger than anticipated due to COVID-19 activity in the 3Q23. The company also noted the launch of syphilis to its POC STD offering and plans continued menu expansion looking ahead. The company noted it received a $29 million COVID-19 testing award from the government, significantly smaller than awards in previous years.
Adjusted diluted earnings per share (EPS) was $0.90 and adjusted EBITDA was $169 million, resulting in an adjusted EBITDA margin of 23%, which marked a substantial increase from 17% in the second quarter of 2023. Street forecasts called for adjusted EPS of $0.60 so profitability in the quarter was clearly positive despite the lower COVID-19 contribution. Management noted that it is working to achieve $130 million in cost synergies over three years.
QuidelOrtho maintained its full year outlook despite the 3Q23 revenue beat with total revenues (reported) are expected to be in the range of $2.88 to $3.08 billion. At the mid-point, guidance implies total 4Q23 revenue of $675 million which seems conservative given typical seasonality with the business around the cold and flu season. Non-respiratory revenue is projected to fall between $2.27 and $2.31 billion and respiratory revenue is estimated to be in the range of $610 to $775 million. Adjusted EBITDA is anticipated to range from $800 to $830 million and adjusted diluted EPS is expected to be in the range of $4.85 to $5.30.
QuidelOrtho President and CEO, Douglas Bryant, expressed his satisfaction with the strong finish to the third quarter. He attributed their results to higher-than-expected demand for respiratory products, coupled with the strength of their Labs business and improved operational efficiencies. He highlighted the significance of multiplexed syndromic testing solutions, such as Savanna, in the context of the persistent presence of multiple circulating viruses. QuidelOrtho is making steady progress on this front.