NEW YORK – Ortho Clinical Diagnostics reported after the close of the market on Wednesday that its fourth quarter revenues rose 1 percent year over year.
For the three months ended Jan. 2, the Raritan, New Jersey-based firm reported revenues of $521.0 million compared to $516.6 million in Q4 2020, in line with preliminary revenues of $520 million to $522 million announced in January but short of analysts' average estimate of $521.2 million.
Excluding SARS-CoV-2 assay revenues, Ortho's Q4 revenues rose 5 percent year over year on a constant currency basis.
The firm posted Q4 core revenues, excluding contract manufacturing and collaboration revenues, of $518.9 million, up 4 percent year over year from $501.0 million. Excluding SARS-CoV-2 revenues, Q4 core revenues rose 8 percent on a constant currency basis.
Ortho announced in December that it is being acquired by Quidel for $6 billion.
"We believe shareholder value will be enhanced by the combination of Quidel and Ortho to establish a diagnostics company with an expanded global presence and robust product offering serving a wide range of customers," Chris Smith, Ortho's chairman and CEO, said in a statement.
The combination of Quidel and Ortho will establish "a diagnostic company with an enhanced competitive position, expanded global presence, and robust product offering serving a wide range of customers and markets with a total addressable market of approximately $50 billion," Smith said during a conference call to discuss the financial results.
The deal is expected to close in the first half of this year, and sales synergies greater than $100 million per year are expected by the end of 2025, Smith said.
The global reach of Ortho's commercial team and penetration in the hospital testing segment can help stabilize the combined company's revenues, he said, adding, "Quidel's business has historically been heavily tied to the [US flu season] and more recently to COVID trends."
In Q4, Ortho's clinical laboratories revenues grew 5 percent year over year, driven primarily by strong sales of clinical chemistry tests and immunoassays, while transfusion medicine sales grew 4 percent year over year, driven by strength in the US and China, Joseph Busky, the firm's CFO, said on the call.
It's Q4 core revenue growth was driven primarily by growth in recurring revenues for its clinical laboratories and transfusion medicine businesses, but instrument revenues declined 19 percent year over year because of supply chain issues, Busky said.
Ortho posted a Q4 net loss of $9.9 million, or $.04 per share, compared to a net loss of $40.9 million, or $.28 per share, in Q4 2020. Its fourth quarter adjusted EPS was $.18, beating analysts' average estimate of $.15.
The company, which went public in late January 2021, used 236.6 million shares to calculate its loss per share figure in the recently completed quarter compared to 146.6 million shares a year ago.
In Q4, Ortho's Q4 R&D expenses rose 13 percent year over year to $34.8 million from $30.8 million and its selling, marketing, and administrative expenses rose 2 percent year over year to $144.0 million from $141.7 million.
For full fiscal year 2021, Ortho reported revenues of $2.04 billion, up 15 percent year over year from $1.77 billion, in line with its previously announced 2021 preliminary revenues as well as analysts' average estimate. Excluding SARS-CoV-2 assay revenues, Ortho's full-year 2021 revenues also rose 15 percent year over year on a constant currency basis.
The company posted 2021 core revenue of $2.01 billion, up 16 percent year over year from $1.73 billion. Excluding SARS-CoV-2 revenues, its 2021 core revenues rose 16 percent on a constant currency basis.
The company posted a net loss for 2021 of $54.3 million, or $.24 per share, compared to a net loss of $211.9 million, or $1.45 per share, in 2020. Ortho's 2021 adjusted EPS was $.80, beating analysts' average estimate of $.77.
Ortho used 228.2 million shares to calculate its loss per share figure for full-year 2021 compared to 146.3 million shares in full-year 2020.
The company's 2021 R&D expenses rose 12 percent year over year to $126.2 million from $112.9 million and its selling, marketing, and administrative expenses rose 13 percent year over year to $555.0 million from $489.6 million.
Ortho ended the fourth quarter with $309.7 million in cash and cash equivalents.
Looking ahead, excluding COVID-19 assay revenues, Ortho expects to see mid-single-digit core revenue growth in 2022, Busky said.
In a research note on Wednesday, Evercore ISI analyst Vijay Kumar said that Ortho's shares are trading at about 32 percent below the acquisition price.
While "some of this is market related … current levels seem egregious to us," he said.
The investment bank set a new price target of $21 for Ortho's shares and upgraded the shares to Outperform, having downgraded them to In Line following the announcement of the acquisition.
In Thursday morning trading on the Nasdaq, Ortho's shares were up less than 1 percent to $16.36.