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Ortho Clinical Diagnostics Q1 Revenues Dip 1 Percent

NEW YORK – Ortho Clinical Diagnostics reported after the close of the market on Wednesday that its first quarter revenues fell 1 percent year over year.

For the three months ended April 3, the Raritan, New Jersey-based firm reported revenues of $500.1 million compared to $506.8 million in Q1 2021, missing analysts' average estimate of $508.2 million.

The firm's Q1 core revenues, which exclude contract manufacturing and collaboration revenues, also fell 1 percent year over year to $495.0 million compared to $499.3 million a year ago. Excluding SARS-CoV-2 sales, both net and core revenues grew by 4 percent.

On a conference call to discuss the company's financial results, Ortho Chairman and CEO Chris Smith said COVID-19 assay revenues totaled $12 million, down from $29 million in Q1 2021.

Its Clinical Labs segment posted Q1 revenues of $321.3 million, down 5 percent year over year from $338.0 million, and its Transfusion Medicine segment posted revenues of $173.6 million, up 8 percent from $161.4 million. The Clinical Labs business saw strength in the immunoassay business that was slightly offset by softness in clinical chemistry, while Transfusion Medicine growth was driven by strength in immunohematology and donor screening, Ortho CFO Joseph Busky said on the call.

Non-core revenues declined 32 percent as a result of the completion of some contract manufacturing arrangements, he added. Instrument revenues dropped by 16 percent due to supply chain issues.

The company saw 3 percent growth in its installed base and 14 percent growth in its integrated system installed base but exited the quarter with open orders for 600 instruments due to challenges with the supply chain. To mitigate some of those issues, Ortho is working on raising prices and adding surcharges in some areas, as well as exploring different components to reduce its dependence on the chips impacted by supply chain issues, Smith said. It is also prioritizing the delivery of analyzers to customers that need to meet testing demand and new customers.

"We continued to penetrate the market with double-digit growth in our integrated instruments and pull-through recurring revenues," Smith said in a statement. "We believe revenue growth would have been two to three percentage points higher if we had been able to ship all the products that had been negatively affected by supply chain challenges."

The company posted a Q1 net income of $14.8 million, or $.06 per share, compared to a net loss of $39.1 million, or $.19 per share, in Q1 2021. Ortho's adjusted EPS was $.23, beating the analysts' average estimate of $.20.

Ortho's Q1 R&D expenses rose 11 percent year over year to $32.2 million from $28.9 million, and its SG&A expenses fell 2 percent year over year to $129.5 million from $131.5 million.

Ortho ended Q1 2022 with $281.1 million in cash and cash equivalents.

The firm is holding off on providing detailed financial guidance for the full year until its pending $6 billion acquisition by Quidel is complete, but Busky said it expects a negative impact due to increases in the cost of materials, although that may be partially offset by price increases and surcharges.

Ortho did not provide an update on the proposed Quidel deal during the call.