QuidelOrtho Q1 2025 Earnings Report

QuidelOrtho EPS Results

• Actual EPS: $0.74
• Consensus EPS: $0.61
• Beat/Miss: Beat by +$0.13
• One Year Ago EPS: $0.44

QuidelOrtho Revenue Results

• Actual Revenue: $692.80 million
• Expected Revenue: $694.97 million
• Beat/Miss: Missed by -$2.17 million
• YoY Revenue Growth: -2.60%

QuidelOrtho Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 5:00PM ET

QuidelOrtho (NASDAQ:QDEL) provides diagnostic testing solutions. The company operates through Labs, Transfusion Medicine, Point-of-Care, and Molecular Diagnostics business units. The Labs business unit provides clinical chemistry laboratory instruments and tests that measure target chemicals in bodily fluids for the evaluation of health and the clinical management of patients; immunoassay laboratory instruments and tests, which measure proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health; testing products to detect and monitor disease progression across a spectrum of therapeutic areas; and specialized diagnostic solutions. The Transfusion Medicine business unit offers immunohematology instruments and tests used for blood typing to ensure patient-donor compatibility in blood transfusions; and donor screening instruments and tests used for blood and plasma screening for infectious diseases. The Point-of-Care business unit provides instruments and tests to provide rapid results across a continuum of point-of-care settings. The Molecular Diagnostics business unit offers polymerase chain reaction thermocyclers; amplification systems; and sample-to-result molecular instruments and tests for syndromic infectious disease diagnostics. The company sells its products directly to end users through a direct sales force; and through a network of distributors for professional use in physician offices, hospitals, clinical laboratories, reference laboratories, urgent care clinics, universities, retail clinics, pharmacies, wellness screening centers, blood banks, and donor centers, as well as for individual, non-professional, and over-the-counter use. It operates in North America, Europe, the Middle East, Africa, China, and internationally. The company was incorporated in 1979 and is headquartered in San Diego, California.

QuidelOrtho Q1 2025 Earnings Call Transcript

Key Takeaways

• In Q1 the company delivered mid single-digit revenue growth of 6% (ex-COVID/donor screening), achieved a 450 basis point improvement in adjusted EBITDA margin, and reported a 68% increase in adjusted diluted EPS year-over-year.
• By segment, the Labs business grew 7%, Immunohematology rose 4%, Point of Care advanced 8% (ex-COVID) driven by a strong flu season, and Molecular Diagnostics climbed 11% (ex-COVID).
• The Savanna respiratory panel is in final clinical verification and validation stages with an FDA submission expected this summer.
• The company anticipates $30–40 million of 2025 tariff headwinds but expects to fully offset these via origin sourcing changes, inventory repositioning, alternate suppliers, selective pricing and further cost reductions, allowing it to maintain unchanged full-year guidance.
• Cost savings initiatives are on track, with $50 million of the $100 million annualized target realized in H1 2025 and an incremental $30–50 million expected through procurement, inventory, capex and cash cycle optimization.

Presentation

[Operator]

Welcome to the Quintel Ortho First Quarter twenty twenty five Financial Results Conference Call and Webcast. At this time, all participant lines are in listen mode only. For those of you participating in the conference call, there will be an opportunity for questions at the end of the prepared remarks. Please note this conference call is being recorded. An audio replay for the conference call will be available on the company's website shortly after this call.

[Operator]

I would now like to turn the call over to Juliet Cunningham, Vice President of Investor Relations.

[Juliet Cunningham, Vice President-Investor Relations at QuidelOrtho]

Thank you. Good afternoon, everyone, and thanks for joining the SpyDell Ortho's first quarter twenty twenty five financial results conference call. Joining me today are Brian Blazer, President and Chief Executive Officer and Joe Buske, Chief Financial Officer. This conference call is being simultaneously webcast on the Investor Relations page of our website. To aid in the presentation, we also posted supplemental information on the Investor Relations page that will be referenced throughout this call.

[Juliet Cunningham, Vice President-Investor Relations at QuidelOrtho]

This conference call and supplemental information contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not strictly historical, including the company's expectations, plans, financial guidance, future performance and prospects are forward looking statements that are subject to certain risks, uncertainties, assumptions and other factors. This includes the expected impact of tariffs and macroeconomic conditions. Actual results may vary materially from those expressed or implied in these forward looking statements. Information about potential factors that could affect our actual results is available in our annual report on Form 10 ks for the 2024 fiscal year and subsequent reports filed with the SEC, including the Risk Factors section.

[Juliet Cunningham, Vice President-Investor Relations at QuidelOrtho]

Forward looking statements are made as of today, 05/07/2025, and we assume no obligation to update any forward looking statement, except as required by law. In addition, today's call includes discussion of certain non GAAP financial measures. Tables reconciling these non GAAP measures to their most directly comparable GAAP measures are available in our earnings release and the supplemental information, which are on the Investor Relations page of our website at quidelortho.com. Lastly, unless stated otherwise, all year over year revenue growth rates given on today's call are on a constant currency basis. Now I'd like to turn the call over to our CEO, Brian Blazer.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Thanks, Juliet, and good afternoon, everyone. As I reflect on my first anniversary since joining the company, I first want to thank all our employees and our leadership team for their unwavering support as we implemented difficult but necessary changes to our business over the last year. Together, we refocused the organization on a narrow set of priorities and set in motion key initiatives to improve our performance and our cost structure. Our business faced unique challenges and increasingly dynamic environment. The organization came together around our common mission with our customers at the center of everything we do.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

The team's efforts played a critical role in the strong results we delivered in Q1, reinforcing my confidence in our strategy and operational discipline. Let me start by taking a closer look at our first quarter results followed by my thoughts on the evolving tariff situation. During Q1, we delivered solid mid single digit revenue growth of 6% excluding COVID and donor screening. This performance was primarily driven by our labs business as well as stable growth in immunohematology and a strong flu season. We also recognized cost savings from our previously announced initiatives that drove a four fifty basis point year over year improvement in adjusted EBITDA margin and a 68% increase in adjusted diluted earnings per share compared to the prior year period.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

From a business unit perspective, our Labs business, which was 54% of total company revenue in Q1, achieved revenue growth of 7% with strength in both clinical chemistry and immunoassay testing. Our Immunohematology business continued its global leadership position and consistent trajectory with 4% growth during the quarter. Our Point of Care business represented 25% of our Q1 revenue and grew 8% excluding COVID. Q1 COVID testing was down compared to the prior year period, but flu sales were strong resulting in 18% year over year growth. This performance was led by our COVID flu combo test, which has continued to deliver durable revenue.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

And our Molecular Diagnostics business grew 11% excluding COVID, albeit off a smaller revenue base. We are currently in the last stages of the clinical trial for our Savanna respiratory panel and are completing verification and validation testing. Once our trial data has been fully successfully finalized, we expect to make our submission to the FDA this summer. Our Q1 performance is further proof that the initiatives we launched in 2024 are having a positive impact on the performance of the business. As we look forward to the balance of 2025, we continue to be focused on our narrow set of strategic initiatives, including increasing the content and utility of our platforms, expanding margins and commercial and operational execution.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Our commercial teams are more focused than ever before on driving profitable growth by targeting the most attractive customers and market segments where we can drive value with our unique solutions. And we are on track to realize the remainder of the $100,000,000 in annualized cost savings we define in 2024, with $50,000,000 in cost savings expected in the first half of twenty twenty five. And while much of our work last year was focused on staffing reductions, we have expanded our efforts to improve cash flow generation with initiatives targeting direct and indirect procurement, inventory utilization, capital expense management and optimization of our cash conversion cycle. We expect these initiatives to yield an incremental 30,000,000 to $50,000,000 in cost savings in 2025. I'd now like to turn to the evolving developments at the macro level, including the expected impact on our business and the actions we're taking to address these challenges.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Obviously, this is a very dynamic situation, so my comments reflect our assessment based on current information. Our business is based on a recurring revenue model with more than 90% of our sales coming from consumables and a small percentage coming from instrument placements. The majority of our manufacturing is based in The United States. And over the past three years, we have invested nearly $1,000,000,000 in U. S.-based manufacturing and R and D.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Over half our employees are based in The U. S. And over the next several years, we expect to continue to invest and expand our capabilities to support the growth of our business both domestically and globally. We also have company and third party manufacturing located in The UK, China, Europe and Mexico. These locations further our strategy of being close to our important customers as well as reinforcing our business continuity objectives.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

With our global operating footprint, we estimate the potential tariff headwinds prior to mitigations is roughly 30 to $40,000,000 of impact in 2025. But since the discussion of tariffs began in 2024, we have been diligently working on plans to mitigate potential impacts. These plans include changing the origin of source materials, repositioning inventory, shifting our supply chain to alternate suppliers as well as implementing select pricing actions and additional reductions to our controllable costs. Collectively, we believe the incremental actions we are taking are sufficient to fully offset the tariff impacts as they stand today. And while the environment can always change, we are maintaining our full year 2025 financial guidance based on our current business outlook. We remain focused on our key priorities and achieving our previously communicated cost savings initiatives over and above any tariff related offsets.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

So to wrap up, we are pleased with the strength of our first quarter results and the progress we have made on our key priorities over the last twelve months. We remain focused on supporting our customers and believe we are well positioned to continue to drive consistent growth while also expanding our profitability and value for shareholders in 2025 and beyond. So thank you for your time and continued support. And with that, I'll now turn the call over to Joe to take you through our first quarter financials in more detail. Joe?

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Okay. Thanks, Brian, and hello, everyone. I'll start by walking through our first quarter results, which are detailed on Slide three of the supplemental information available on the Investor Relations page of our website. And unless otherwise noted, all year over year revenue growth figures discussed today are presented on a constant currency basis. As Brian noted, our first quarter performance was in line with our expectations and we anticipate continued momentum through the rest of 2025, particularly with our Labs business where we see strong recurring revenue with long contracts and a loyal customer base.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Let me begin by taking you through our first quarter performance followed by a discussion of our full year 2025 financial guidance, which remains unchanged. After that, we'll open up the call for questions. Total reported revenue for the first quarter of twenty twenty five was $693,000,000 compared to $711,000,000 in the prior year period. The year over year decrease in total revenue was primarily due to lower COVID revenue and lower donor screening revenue related to the planned wind down of that business. Excluding COVID and donor screening revenue, we achieved mid single digit revenue growth of 6%.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

This performance was primarily driven by strength in our labs business as well as consistent growth in immunohematology and the strong flu season. Foreign currency translation had an unfavorable impact of 150 basis points during the first quarter. From a regional perspective, our Q1 revenue performance was led by our other region which is comprised of Japan, Asia Pac and Latin America with 12% growth driven by strong 17% growth in Labs revenue. And looking at our other regions, North America declined by 6% compared to the prior year period due to the year over year decrease in COVID revenue and the ongoing wind down of our donor screening business. But absent these headwinds, America grew by 5%.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Europe, Middle East and Africa grew 9% driven by strong contribution from labs and immunohematology. Finally, China revenue was flat compared to the prior year period primarily related to order timing and a decrease in Triage revenue related to lower reimbursement rates for certain cardiac markers. Labs revenue in China grew 2% with strong contribution from Clin Chemistry testing. We continue to expect mid to high single digit growth in China for the full year, assuming no change in the current tariff situation. Now looking at our non respiratory business.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

In the first quarter of twenty twenty five, revenue grew 2%. Now within that non respiratory category, our Labs business grew 7% driven by good performance in both Clin Chemistry and immunoassay testing. We had strong recurring revenue growth, which was partially offset by an approximately $8,000,000 decline in instrument revenue due to order timing. Non core revenue was flat year over year with an increase in collaboration revenue offset by a timing of contract manufacturing revenue. In transfusion medicine, immunohematology revenue continued its consistent growth of 4% with particular strength in Europe, Middle East and Africa.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Toner Screening revenue declined by 62% due to the continued wind down of that business as expected. And then lastly, our Triada business performed nice, up 9% year over year. Turning now to our Respiratory business. Revenue of $120,000,000 grew 11% excluding COVID. We saw strong flu sales in Q1 with year over year growth of 18%.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

COVID revenue was $23,000,000 during the quarter, which was a 53% year over year decline. Moving down the P and L, Q1 twenty twenty five adjusted gross profit margin was 50.1 versus 47.5% in the prior year period. The year over year increase was primarily driven by product mix with higher margin contribution from flu and COVID flu combo test. Non GAAP operating expenses of $233,000,000 including SG and A and R and D decreased by net $18,000,000 compared to the prior year period, which resulted primarily from our ongoing cost savings actions. The primary areas of savings included staffing reductions, decreased travel and lower outside service expense.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Adjusted EBITDA was $160,000,000 compared to $132,000,000 in the prior year period. Adjusted EBITDA margin was 23%, a four fifty basis point improvement, which again reflects the cost savings actions we have taken. And adjusted diluted EPS was $0.74 compared to $0.44 in the prior year period, which is a 68% year over year improvement. Okay. Turning now to the balance sheet on slide five.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

We finished the quarter with $127,000,000 in cash and $250,000,000 in borrowings on our 800,000,000 revolving credit facility. Reminder, our capital allocation priority continues to be debt paydown. Our first quarter twenty twenty five adjusted free cash flow was $47,000,000 which represents 29% of our adjusted EBITDA and 94% of adjusted net income in the quarter. This is in line with our previously communicated targets. During Q1, our net debt to adjusted EBITDA ratio decreased sequentially from 4.4x at year end twenty twenty four to 4.2x. Our consolidated leverage ratio including pro form a EBITDA adjustments was 3.4x as permitted and defined under our credit agreement. Now turning to slide six. Based on our current business outlook, we are maintaining our full year 2025 financial guidance as follows: We expect gross tariff impacts of 30,000,000 to $40,000,000 to be neutral to our overall financial results based on the expected mitigation plans that Brian discussed earlier. We continue to expect full year 2025 total reported revenue of between $2,600,000,000 and $2,810,000,000 Note that the U.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

S. Dollar has weakened since year end twenty twenty four creating an opportunity for FX tailwinds of approximately $26,000,000 However, we are leaving total reported revenue guidance unchanged at this time due to current currency volatility. We continue to expect COVID revenue of between $110,000,000 to 140,000,000 This assumes that we see a summer cycle COVID activity as we've seen in the past two years. And of course, we will monitor this closely and we'll look to mitigate any impact with further cost reductions if the seasonal cases don't materialize as expected. We expect adjusted EBITDA between $575,000,000 and $615,000,000 which equates to 22% adjusted EBITDA margin, which is a two fifty basis point improvement over full year 2024.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

And we expect adjusted diluted EPS of between $2.07 and $2.57 Other key points related to our assumptions for full year 2025 guidance include, we assume a typical quarterly seasonality with Q2 revenue being our lowest quarter, Q4 being our highest quarter for revenue and margins. And further, we expect Q2 performance in China to be lower compared to the prior year period due to our decision to delay some shipments early in this quarter as the tariff situation evolved. Since then, regular shipments to China have resumed and we do not expect any impact on our full year 2025 guidance. Again, this is timing only between Q2 and second half twenty twenty five. We assume cost savings of approximately $50,000,000 in the first half of twenty twenty five as part of our previously implemented $100,000,000 of annualized cost savings initiatives. We continue to expect incremental cost savings in 2025 between 30,000,000 to $50,000,000 primarily related to procurement efforts. And again, this is in addition to any tariff related offsets.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

We assume positive adjusted free cash flow for the full year 2025 to be approximately 25% to 30% of adjusted EBITDA conversion and approximately 100% of adjusted net income. We expect higher cash flow in the second half of twenty twenty five, which is in line with seasonally higher revenue and the realization of our cost savings. And we continue to target free cash flow conversion of 50% of adjusted EBITDA on the same time line as our margin improvement. We also continue to expect our net debt leverage ratio to between 3.5 times and four times by year end. And since our credit facility matures in May of twenty twenty seven, we plan to refinance the debt sometime in the second half of twenty twenty five or early twenty twenty six.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Timing of this refinancing of course depends upon market conditions. So in summary, our continued operational improvements played a meaningful role in our performance this quarter. We're actively navigating a fluid macro environment and believe our current business outlook is in lockstep with our 2025 full year financial guidance. Looking ahead, we remain focused on execution, commercial excellence and cost savings initiatives to deliver profitable growth. And despite recent macro challenges and the impact of tariffs, we continue to see a clear pathway to our adjusted EBITDA margin goal in the mid- to high 20% range over the next couple of years.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

With that, I'll ask the operator to please open up the line for questions.

[Operator]

Our first question is from Connor McNamara with RBC. Your line is now open.

[Conor McNamara, Equity Research Analyst at RBC Capital Markets]

Hey, guys. Thanks for taking the question and congrats on a solid quarter. Just wanted to dig into the tariff impact a little bit more. Can you you've got a lot of business that's on reagent rental contracts. So to the extent that you're able to pass through pricing, how much of the tariffs can you offset with that if they are to get worse, from here? I'll start there.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Hey, Connor. Thanks for the question. Yeah. We are looking at selected pricing actions, where we can take them. But these are competitive markets, and we have to be concerned, about the impact there.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

I would say the business has had some experience in doing this, during the pandemic when, the business went through some high inflation time period and we were able to pass some of that through. So I think we'll be doing it on a selective basis as we can.

[Conor McNamara, Equity Research Analyst at RBC Capital Markets]

Great. Thanks for that. And then, again, appreciate the color on plans for mitigating some of the tariff impacts. But longer term, will this is this likely to impact any of your longer term manufacturing build out plans, by region?

[Brian Blaser, President, CEO & Director at QuidelOrtho]

At this point, I don't expect any change in our overall manufacturing footprint. Obviously, it's a fluid situation, so we need to understand how things develop. We have, as we said, major manufacturing centers in The United States, The UK, China and some third party manufacturing in Mexico. Those sources and that global footprint has served us well as we tried to get closer to our customers and also manage some of our supply continuity risk. So we'll continue to utilize that network and as we always do make modifications, as we see the dynamics change here.

[Conor McNamara, Equity Research Analyst at RBC Capital Markets]

Great. Thanks for the questions, Appreciate it.

[Operator]

Our next question is from Patrick Donnelly with Citi. Your line is now open.

[Patrick Donnelly, Managing Director at Citi]

Hey guys, thank you for taking the questions. Joe, maybe another one just on the tariff side, again, encouraging to see the offsets here. Can you just talk about the exposures? Obviously, the China to U. S.

[Patrick Donnelly, Managing Director at Citi]

Or U. S. To China piece, I should say, was a big concern coming in. How are you thinking about just quantifying that? And again, how the offsets, the confidence level that you guys can get there.

[Patrick Donnelly, Managing Director at Citi]

Again, I think maintaining the guidance was a good outcome here.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Hey, Patrick. Thanks for the question. Yes. As we said in the remarks, most of our products are actually manufactured in The U. S.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

And so our largest tariff impacts are immunoassay products that are manufactured in The U. K. And shipped to The U. S. We also ship products to China, but we're only seeing that a small portion of these are being subject to tariffs.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

And then finally, I would say we have some impact of some subcomponent materials that are purchased around the world that are being surcharges as we come in. So that is what makes up the gross 30,000,000 to $40,000,000 tariff impact that we just mentioned. That again is fully mitigated through identifying incremental controllable cost that we can take down as well as passing on where it's appropriate some of these tariffs to our customers and moving, realigning inventories and changing suppliers. So through all those actions that we feel really comfortable with and confident in because we've identified them all and we've implemented them all, that we feel we can fully mitigate the tariff impacts and leave our financial guidance as is.

[Patrick Donnelly, Managing Director at Citi]

Okay. That's helpful. And then maybe just on Savannah. Just an update there, I guess, the commitment the ongoing commitment to that program. How are you thinking about that piece?

[Patrick Donnelly, Managing Director at Citi]

If there are additional pushouts, you guys walk away from it. What's the right way to think about just the commitment level and the confidence in some of those time lines? What should we be keeping an eye on that piece? Thank you, guys.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yeah. Thanks, Patrick. What I can say at this point is really, we are just so focused on getting our RBP4x submission into the FDA that I really don't want to speculate on outcomes beyond that. Molecular continues to be one of the fastest growing segments in Diagnostics. We want to participate in that and benefit from that.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

And so we're just laser focused on on getting the job done here. And, you know, we'll update you accordingly as we make make our progress.

[Patrick Donnelly, Managing Director at Citi]

Understood. Appreciate it, guys.

[Operator]

Our next question is from Andrew Brechner with William Blair. Your line is now

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Hi, guys. Good afternoon. Thanks for taking the questions. Joe, I think in the assumptions you said that China is still expected to grow mid to high single digits for the year. What sort of underpins your confidence in that growth rate?

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

And is there anything that you can share with respect to maybe what you've seen in the region in April which supports that? Thanks.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Yes. Hey, Andrew. Again, thanks for the question. We even though we're seeing some softness in the Triage sales due to the reimbursement rates on certain cardiac markers, we are seeing good growth in labs and immunohematology. And as you know those businesses have good visibility to us forecasting going forward.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

So that's really what gives us the confidence that our China Team can hit that mid to high single digit growth target for the full year. And again, as we've said many times, the BBB is not really having an impact on us as it is with others in our space. And so that's not really a concern for us right now. So, it's just really the visibility to that non respiratory business that we have in China that gives us the confidence that we can still hit those numbers.

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Okay. Appreciate that. And then maybe just a clarification to your answer to Patrick's question. I think you said only a small percentage of products being shipped to China are subject to tariffs right now. Are those exemptions that are specifically called out?

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Or any color on why you're not seeing those be subject to tariffs? Thank you.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yeah. Really, all we can say at this point is that, with all of the shipments that have gone into the country over the last couple of weeks since the tariffs went into effect, we're just we're really just seeing a small number of those, being subjected to the tariffs in practicality.

[Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C]

Okay. I got it. Thank you.

[Operator]

Our next question is from Jack Meehan with Nephron Research. Your line is now open.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

You. Good afternoon. Wanted to start by asking about the respiratory sales in the quarter. So you hit our forecast, but got there in a way, wasn't exactly expecting less COVID, more flu combo. Brian, I was curious, do you think we're seeing some sort of permanent shift here toward comboSofia?

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

And maybe for Joe, like, what are the implications for the guide? Like, if COVID came down, like, do you think you can make up for it kind of on the other respiratory piece?

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yes. Well, hi, Jack. Thanks for the question. We did see COVID down year over year and flu is up. I think we're still expecting that 110,000,000 to $140,000,000 range that we provided in the guidance, which includes the summer spike that's happened for the last couple of years.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

So we'll be monitoring that very carefully to see what happens here. But I would say on COVID flu question that test has just been very durable now for the last couple of years and we've just seen very stable performance from it.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Yeah. And Jack, I would just add to what Brian said. Even though we did see COVID come down in the quarter year over year, we did expect COVID to be less this year. We took it down from one hundred eighty five down to a midpoint of one hundred twenty five. And most of that decline was due to the lack of a government order fulfillment this year versus last year and then a decline in retail.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

But we so we expected a decline and we still think that our range is a reasonable place to be for the full year. But as I said in prepared remarks, we'll obviously keep a close eye on it as we move through the year.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

Got it. Okay. And I did want to follow-up on Patrick's question related to SAVANNAH. It sounds like the trial might be wrapping up. Was curious if you've seen any of the data.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

Was it a success? And if it's too early for that, I was also curious with how the engagement's been with the FDA around submission. There's been some discussion around kind of turnover in the approval office. Was curious if you've seen any of that and just thoughts on if that could delay the approval at all.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yes. No, we're just, Jack, in the last stages of our process here before submission, doing some of our studies around reproducibility shelf life etcetera. We need to get those completed. We really haven't seen any sort of negative impact in terms of our interactions with FDA. We are hearing things in the industry that pre submission meetings are taking a while or being delayed, but nothing that is affecting the submission process itself.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

That's obviously something we're gonna, you know, have our finger on very carefully here as as we go through the process. But, you know, that's really what I can share at this point about where we're at in the process.

[Jack Meehan, Equity Research Analyst at Nephron Research LLC]

Okay. Appreciate all the feedback. Thank you.

[Operator]

The next question is from Lu Li with UBS. Your line is now open.

[Lu Li, Healthcare Equity Research, Director at UBS Group]

Great. Thank you for taking my questions. So on the mitigation effort, are we going to see some timing impact here? Like, maybe some of the mitigation impact are not going to show up in Q2 and then more in the second half. I was just wondering how the margin progression on this one.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Hey, Lou. It's Joe. Yeah. I don't think there's going to be a lot of timing impact, because I think we've got the mitigation actions pretty well paired up with the impacts of the tariffs, the gross impact of the tariffs. So I don't think there's any real timing impact there to speak of.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Maybe a little bit, but nothing significant. I do think that the only real timing impact is going to be in Q2 because we did slow down shipments to China early this quarter as we waited for the tariff situation to evolve. And we're doing our best to catch up on those shipments, but I don't think we're going to fully catch up. And I think so I do think there'll be we'll see some softness in China revenue in Q2 that will make up as timing in Q3 and Q4. I think that's really the only timing impact that we'll see from the tariffs.

[Lu Li, Healthcare Equity Research, Director at UBS Group]

Okay. Got it. And then I assume the 30% to 40% gross impact is mostly 2025 number. So I wonder if anything will lingering into twenty six percent? And then are you maintaining your 23% to 24% EBITDA margin that you presented a few months ago?

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Lou, good question. Yes, we the numbers that we talked about, the 30,000,000 to $40,000,000 that is a 2025 impact number. So obviously, the annualized impact would be a little larger than that. But the tariff impacts, the mitigation impacts, I should say, that we talked to will fully offset the annualized impacts as well. And so there's no change to our margin targets and where we expect to be for 2026 either. No change.

[Lu Li, Healthcare Equity Research, Director at UBS Group]

Thank you.

[Operator]

Our next question is from Casey Woodring with JPMorgan.

[Casey Woodring, Vice President - Equity Research at J.P. Morgan]

I'll just stick to one. Can you just elaborate on the shipments into China and only a small percentage of those subject to tariffs right now? Can you just why is that exactly? And what's your visibility into that continuing? And is there any kind of risk that a larger percentage would eventually get hit with tariffs here? Just kind of curious on that piece. Thank you.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yes.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Hi, Casey. Thank you for the question. Again, I can really only say that our experience here over the last several weeks in what has been a very fluid situation is that, we aren't experiencing the tariffs on the on the bulk of our products going in. It's very just a a small subset of where we're seeing that. And, you know, we'll we'll look to understand if that changes, but it it looks like, you know, that's gonna be the case for a while.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

Yeah. There's no indication that it's not the case at this point.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yep.

[Joseph Busky, Chief Financial Officer at QuidelOrtho]

And it's not gonna be permanent.

[Operator]

Our next question is from Andrew Cooper with Raymond James. Your line is now open.

[Andrew Cooper, VP - Equity Research at Raymond James Financial]

Great. Thanks for the question. Maybe first, just if I think back to a couple of years ago visiting the Rochester and did some IA manufacturing capacity, if I remember right, with COVID grants there. Can you just give us a sense of what are you able to manufacture in The U. S.

[Andrew Cooper, VP - Equity Research at Raymond James Financial]

For immunoassay versus relying on that Whales facility to support this country's utilization there?

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yes. We do have some immunoassay manufacturing capacity, in our Rochester facility, but the bulk of it is in The U. K. At this point.

[Andrew Cooper, VP - Equity Research at Raymond James Financial]

Okay. And then maybe just to touch on China again as well. You called out the 2% growth and called out clinical chemistry especially. I know IA has historically been smaller for you in China, but any change in win rates there across, you know, chemistry versus IA? And then maybe can you give us a sense for the penetration of integrated instruments in China versus globally?

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Well, we get Andrew, we can start with, the penetration of integrated instruments that, you know, our our business there is primarily clinical chemistry. So, you know, most of what we have there, are stand alone, ClinChem boxes. And so we've got plenty of runway to to expand our immunoassay presence there. And in terms of the results that we saw in the quarter, our growth rate there was primarily impacted by Triage. We did see lower clinical chemistry growth, but I would say that some of that is kind of shift across the quarters and I wouldn't read too much into that.

[Andrew Cooper, VP - Equity Research at Raymond James Financial]

Okay. A lot's been covered. I'll stop there. Appreciate it.

[Operator]

Our next question is from Tycho Peterson with Jefferies. Your line is now open.

[Tycho Peterson, Managing Director, Global Equities at Jefferies Financial Group]

Hey, thanks. Wondering if you can maybe just talk a little bit more on, you know, some of the strength you're seeing on Core Lab and any noticeable change, you know, among your hospital customers given some of the funding uncertainties you had?

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yes. Tycho, thank you. Appreciate the question. We really saw across the board strong performance in labs, 7% overall growth. And then you look across North America, EMEA, our LatAm area, all reporting pretty strong growth there in the lab segment.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

We continue to have a very strong value proposition in the lower volume setting where customers value our technology value proposition with the dry slides as well as our immunoassay capabilities. So strong growth in Q1, no real significant competitive headwinds at this point. And we continue to really just drive our value proposition there to continue to drive growth.

[Tycho Peterson, Managing Director, Global Equities at Jefferies Financial Group]

And maybe a follow-up on that. On the competitive front, others have tried mass spec and not had much success. Roche is obviously going to try to go at this, I think, with 50 analytes at first, but they talked about scaling up to thousands. Maybe can you just touch on how you view mass spec as a competitive technology going forward?

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Yeah. I saw the launch of their new product. It's really focused on a testing segment that, is not mainstream and not in our sort of, you know, central area of of you know, competition. So it's not something that we're overly concerned about. It it seems to have a a specialty utilization.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

I do know they have aspirations for it, but, I think it's going to take some time for them to provide an alternative there that really competes with kind of mainstream core laboratory technology at this point.

[Tycho Peterson, Managing Director, Global Equities at Jefferies Financial Group]

Okay. Thank you.

[Operator]

We have no more questions waiting at this time. So I'll pass the call back over to Brian Blaser.

[Brian Blaser, President, CEO & Director at QuidelOrtho]

Well, you, operator, and thanks, everyone, for your interest in the company. We're very pleased with our first quarter results. We are going to keep focused on our key priorities, and we look forward to updating you on our progress in the coming quarters. So thank you very much.

[Operator]

That concludes the conference call. Thank you for your participation. Enjoy the rest of your day.

Participants

Executives

• Juliet Cunningham, Vice President-Investor Relations
• Brian Blaser, President, CEO & Director
• Joseph Busky, Chief Financial Officer

Analysts

• Conor McNamara, Equity Research Analyst at RBC Capital Markets
• Patrick Donnelly, Managing Director at Citi
• Andrew Brackmann, Equity Research Analyst at William Blair & Company, L.L.C
• Jack Meehan, Equity Research Analyst at Nephron Research LLC
• Lu Li, Healthcare Equity Research, Director at UBS Group
• Casey Woodring, Vice President - Equity Research at J.P. Morgan
• Andrew Cooper, VP - Equity Research at Raymond James Financial
• Tycho Peterson, Managing Director, Global Equities at Jefferies Financial Group