QuidelOrtho (QDEL) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $637 million, down 3–4% year-over-year, mainly due to lower COVID-19 and respiratory product sales; recurring revenue grew 5% in constant currency, excluding COVID-19 and U.S. Donor Screening revenue.

• YTD 2024 revenue reached $1.35 billion, down 10–11% year-over-year, with recurring revenue up 7% in constant currency, excluding COVID-19, a one-time settlement, and U.S. Donor Screening revenue.

• $100 million in annualized cost-saving initiatives, including a 7% workforce reduction and facility sales, are expected to benefit the second half of 2024 and first half of 2025.

• A $1.7 billion non-cash goodwill impairment charge was recorded for North America, reflecting revised revenue and EBITDA forecasts.

• Leadership is focused on operational reviews, cost structure realignment, and margin expansion to mid- to high-20% Adjusted EBITDA over 2–3 years.

Financial highlights

• Adjusted EBITDA for Q2 was $90 million (14% margin), down from $113 million (17%) in the prior year; YTD adjusted EBITDA was $222 million (16% margin).

• Adjusted diluted loss per share for Q2 was $0.07, compared to EPS of $0.26 in the prior year; GAAP diluted loss per share was $2.20.

• Gross margin for Q2 2024 was 43–44.2%, down year-over-year due to lower high-margin COVID-19 sales.

• Cash and cash equivalents at June 30, 2024 were $107 million; total debt was $2.6 billion; consolidated leverage ratio at 3.4x.

• Net loss for Q2 2024 was $147.7–$148 million, primarily due to the goodwill impairment.

Outlook and guidance

• Expect to be at or slightly below the low end of previously communicated 2024 guidance for revenue, Adjusted EBITDA, and EPS; guidance remains suspended, with plans to reinstate on the Q3 call.

• Full-year COVID-19 revenue forecast remains $150 million; business expected to deliver mid-single-digit growth in 2025, excluding COVID-19 and U.S. Donor Screening.

• Cost structure improvements and R&D focus on high-growth areas are strategic priorities for the second half of 2024.

• Management expects current liquidity and credit facilities to be sufficient for near-term capital and operating needs.

• Demand for both respiratory and non-respiratory products is expected to fluctuate due to seasonality, competition, and evolving disease patterns.