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Quidel Preliminary Q1 Revenues Double But Fall Far Short of Expectations

NEW YORK – Quidel issued preliminary first quarter earnings on Thursday after the close of the market indicating its revenues more than doubled year over year. However, the figures fell short of estimates and guidance, which the firm attributed to volatility in SARS-CoV-2 testing and a very light influenza season.

For the quarter ended March 31, 2021, the San Diego, California-based diagnostics developer said its Q1 revenues increased approximately 114 percent to a range of $374 million to $376 million compared to $174.7 million in Q1 2020.

Quidel had previously guided for revenues of $450 million in the quarter, and on average analysts had estimated revenues of $465.7 million.

The firm shipped nearly 15 million SARS-CoV-2 tests in the first quarter, and COVID-19 revenues for the quarter were more than $280 million compared to $1 million for the first quarter of 2020, the firm said.

Quidel also noted that influenza revenues for the first quarter of 2021 were approximately $5 million compared to $79.6 million in the first quarter of 2020.

"As the COVID-19 pandemic response evolved, the operating environment was fluid, making it difficult to predict testing demand with certainty," said Douglas Bryant, Quidel's CEO. "In combination with the COVID-19 volatility, there was no circulating influenza in the community, and as a result, revenues came in well below our previous expectations," he added.

Nevertheless, Bryant said Quidel remains "incredibly well-positioned" with a robust portfolio and recent regulatory authorizations for serial asymptomatic screening with both its QuickVue over-the-counter test and Sofia rapid antigen tests for SARS-CoV-2.

"Management noted that the large bulk orders seen in December and January (had been on allocation until third week in January) did not come through in 1Q21, and have yet to come in 2Q21, something we are not surprised by, given our broader concerns around antigen testing," JP Morgan analyst Tycho Peterson wrote in a note to investors. He added that the bank has maintained an Underweight rating on Quidel's stock while cutting its price target on the shares to $95 from $120.

"Management also assumed they would sign large employer and school contracts during the quarter which did not occur," Piper Sandler analyst Steven Mah noted. "All in, we are disappointed with management continuing to 'count their chickens before they hatch' by including large events into guidance commentary despite limited visibility."

However, he added, "Despite our disappointment, we still think there is upside with large-scale surveillance testing to safely reopen schools and the economy." Piper Sandler remains Overweight on Quidel's stock but reduced its target to $140 from $265.

Quidel expects to issue its full Q1 results on May 6.

Separately, Quidel announced a distribution agreement with McKesson on Thursday intended to enable the firm to continue to supply existing customers in the professional segment while also reaching new markets as it introduces its over-the-counter COVID-19 antigen test.

McKesson will be the lead commercial partner in fulfilling QuickVue At-Home OTC COVID-19 rapid antigen test orders to individuals and businesses. The deal will give Quidel access to retailers, a network of 5,000 independent pharmacies that is part of McKesson's Health Mart franchise, as well as e-commerce support to help introduce products across sites such as Amazon, eBay, and McKesson’s home health e-commerce site, Simply Medical.

The QuickVue At-Home OTC COVID-19 Test obtained Emergency Use Authorization from the US Food and Drug Administration in March, the firm said. The antigen test can provide results in 10 minutes from nasal swab samples, and Quidel claims it has approximately 83.5 percent positive agreement with PCR and 99.2 negative percent agreement. The OTC test is authorized under the serial testing pathway for asymptomatic people to test twice over two or three days with at least 24 hours and no more than 36 hours between tests.

In Friday morning trading on the Nasdaq, Quidel's stock was down 8 percent to $111.87.