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QuidelOrtho Suspends Guidance After Lowering Full-Year Expectations on COVID, Savanna MDx Platform


NEW YORK – QuidelOrtho said Wednesday that it will suspend its financial guidance to allow its new CEO to assess the state of the company. On a call with investors to review its first quarter earnings, executives also lowered estimates for revenues from COVID-19 testing and its Savanna molecular diagnostics system.

QuidelOrtho CFO Joe Busky said on the call that the suspended guide will now allow CEO Brian Blaser to assess the business and evaluate plans for the year. The firm will resume guidance at some point in 2024, Busky said.

Blaser was appointed CEO of QuidelOrtho last week, replacing the team of three executives that headed the firm for the past two months after it fired CEO Douglas Bryant.

"I've been here three days, and the amount of information that I had available to me as I did my due diligence was somewhat limited," Blaser said on the call. However, having served as executive VP of diagnostic products at Abbott Laboratories for many years until his retirement — excepting a recent brief stint as CEO of Talis Biomedical — Blaser said his familiarity with the market landscape and business model provide a jump-start.

According to Blaser, there are clear opportunities to improve QuidelOrtho's business, particularly in the areas of product development and productivity.

Blaser also said that the firm's postponed Investor Day will be rescheduled before the end of the year, noting that he is "anxious to get out in front of investors."

The firm also lowered its full-year guidance, with Busky noting during the call that investors should expect numbers at or slightly below the low end of previously stated full-year revenue guidance of $2.76 billion to $3.07 billion.

Having previously guided for $225 million in COVID-19 testing revenues in 2024, Busky said that the firm now expects $150 million.

And, having previously guided for $30 million to $50 million of revenues related to uptake of the Savanna system — which was in turn expected to be driven by the US launch of its RVP4 respiratory panel — Busky said Savanna revenue will now be "immaterial in 2024, with no expected US respiratory revenue contribution in the 2024-2025 respiratory season."

Excluding COVID sales and at constant currency, the firm saw 6 percent growth overall in the quarter, booking $711 million in total Q1 revenues. This included 4 percent growth in its labs business, 38 percent growth in its point-of-care business, 6 percent growth in its respiratory testing business, and 15 percent growth in molecular diagnostics, Chief Commercial Officer Mike Iskra said during the call.

Including COVID testing revenues, results were more mixed. Total revenues were down 16 percent and respiratory revenues dropped 48 percent, while molecular revenues decreased 37 percent and point-of-care revenues decreased 39 percent. Ex-COVID, point-of-care revenues increased 38 percent. The latter result was driven by strong sales of the firm's Sofia immunoassay system, Iskra said.

In an effort to reduce costs, QuidelOrtho has laid off 6 percent of its workforce, which Busky said amounted to approximately 500 employees. Those targeted for elimination are in higher level positions, he said, so removing them will yield a 10 percent to 12 percent savings in compensation and benefits, totaling $100 million over one year.

To prevent the "overcall" of respiratory testing estimates that led the firm's stock value to be trimmed by one-third on Valentine's Day, the firm has also implemented a new modeling algorithm to guide its influenza sales estimates. The approach incorporates estimates of market size, market share, and product mix, Busky said. The firm is also implementing an "early warning system" to proactively monitor key performance indicators and be able to react more quickly, Iskra said on the call.

QuidelOrtho also amended a credit agreement in April to increase its maximum consolidated leverage ratio, which Busky said was a precautionary measure and part of a plan to "maintain operating flexibility."

QuidelOrtho reported a Q1 net loss of $1.71 billion, or $25.50 per share, compared to net income of $48.8 million, or $.73 per share, in the year-ago period. On an adjusted basis, earnings per share was $.44, beating analysts' average EPS estimate of $.39.

In a note to investors, Casey Woodring at JP Morgan maintained an Underweight rating for QuidelOrtho. "All in, while the base business had a solid quarter in 1Q, the commentary around 2024 guidance … served as a negative update and there remains little visibility into the core top-line growth and margin profiles of the business," Woodring said.

Shares of QuidelOrtho were up more than 4 percent in early Thursday morning trading to $44.50.