NEW YORK – QuidelOrtho reported after the close of the market Wednesday that its first quarter revenues fell 16 percent year over year.
QuidelOrtho reported total Q1 sales of $846.1 million, down from $1.00 billion in Q1 2022, but above the analysts' average estimate of $794.1 million. The first quarter results include significant one-time charges related to the integration of Quidel and Ortho Clinical Diagnostics, whom Quidel acquired in May 2022.
Non-respiratory revenue was $580.5 million, up 5 percent on a supplemental combined basis from $555.1 million in the prior-year quarter, driven by the Labs business unit, which saw heightened instrument delivery and testing demand, the company said in a statement. Respiratory revenue was $265.6 million, down 72 percent from $947.3 million year over year.
QuidelOrtho reported its Labs business revenue rose 9 percent to $370.7 million from $339.7 million in the year-ago period, and the integrated installed base of Vitros instruments was up 11 percent, CEO Doug Bryant said on a conference call to discuss the firm's financial results. The firm was able to reduce its instrument backlog by more than 20 percent and ship more instruments than previously anticipated, which will have a modest positive impact in 2023 once those instruments are online, he said.
CFO Joe Busky noted on the call that QuidelOrtho has a backlog of about 500 instruments and that the firm expects the elevated open orders to persist into 2024 as it continues to work on the backlog.
New customer orders increased 11 percent from the end of Q4 2022 to the end of Q1 2023, which is an indicator of future reagent growth in the second half of 2023 and into 2024, Bryant added. The company also plans to launch between 20 and 25 "new and refreshed assays" for the Vitros system by the end of 2024, along with new automation and informatics launches, he said.
Among its other business units, Transfusion Medicine revenue fell 10 percent to $155.9 million from $173.7 million. According to Bryant, the business was affected by declining blood donations in the US, and continued softness is expected throughout 2023 for the segment due to ongoing blood donation shortages.
The firm's Point-of-Care sales declined 67 percent to $308.1 million from $943.0 million in Q1 2022, although the business exceeded expectations, Bryant said. The company shipped more COVID-19 tests to the US government, and consumers acquired more at-home COVID-19 tests than expected due to the upcoming expiration of the public health emergency. Busky added that the firm shipped $143 million worth of COVID-19 tests as a result of two government contracts and shipped the remaining $4 million worth of tests on those contracts in April. The firm doesn't anticipate further government revenue for the rest of 2023, he said.
Molecular Diagnostics sales were down 75 percent to $11.4 million from $46.0 million due to weakness in Lyra sales as higher-volume laboratory COVID-19 testing declined, Bryant said. That weakness was modestly offset with revenue from early Savanna adopters, he added.
The Savanna molecular instrument, which is currently available in Europe, is expected to launch globally before the next respiratory season. The firm is preparing stock for both the instrument and its RVP4 cartridge for respiratory viruses and working to build inventory in anticipation of the US launch. The instrument's initial test menu will include the RVP4 and RVP11 respiratory viral panels, a sexually transmitted infection panel, a herpes simplex virus/varicella zoster virus lesion panel, two gastrointestinal panels, a pharyngitis panel, and a vaginitis panel, Bryant said.
Geographically, sales in North America decreased 52 percent to $582.8 million from $1.24 billion, while sales in Europe, the Middle East, and Africa declined 3 percent to $81.3 million from $84.0 million. Sales in China increased nearly 12 percent to $70.6 million from $63.3 million, and sales in the other regions, including Japan, South America, and elsewhere, were down 5 percent to $111.4 million from $117.3 million.
China sales grew due to an increase in testing demand from hospitals after COVID-19-related lockdowns ended in the country as patient visits resumed and selective surgery volumes increased, Busky said. There was also a "COVID-19 halo impact" of about $4 million early in the first quarter as patients arrived at hospitals with COVID-19 symptoms and underwent additional testing, he said.
QuidelOrtho posted Q1 net income of $48.8 million, or $.73 per share, compared to net income of $479.9 million, or $11.31 per share, for the first quarter of 2022. Its adjusted EPS for the quarter was $1.80 on a supplemental combined basis, beating analysts' average estimate of $1.49 per share.
QuidelOrtho finished the quarter with $353.9 million in cash and cash equivalents, and $42.8 million in marketable securities.
The company also raised its financial guidance for the rest of 2023 as instrument supply issues are expected to alleviate, Savanna volumes are expected to ramp up in Europe, and the upcoming end of the public health emergency is anticipated to create stronger demand for at-home COVID-19 tests. Busky said the company is forecasting between $2.87 billion and $3.18 billion in total revenue, up from the previously announced $2.80 billion to $3.10 billion. Non-respiratory revenue is expected to be between $2.26 billion and $2.31 billion, compared to previous guidance of $2.21 billion to $2.25 billion, Busky added.
Respiratory revenue guidance was unchanged and is forecast to be between $610 million and $875 million, with COVID-19-related revenue between $300 million and $500 million, influenza revenue between $230 million and $270 million, and other respiratory testing revenue between $80 million and $105 million.