QuidelOrtho Corporation ( QDEL Quick Quote QDEL - Free Report) delivered adjusted earnings per share (EPS) of $1.80 in the first quarter of 2023, down by 84.4% year over year. The figure topped the Zacks Consensus Estimate by 28.6%.
The adjustments include expenses related to the amortization of intangibles, and acquisition and integration costs, among others.
Our projection of adjusted EPS was $1.39.
Supplemental combined adjusted EPS for the quarter was $1.80, down 77.6% year over year.
GAAP EPS for the quarter was 73 cents, reflecting a 93.5% plunge from the year-earlier figure.
Revenues in Detail
QuidelOrtho registered revenues of $846.1 million in the first quarter, which decreased 15.6% year over year. The figure surpassed the Zacks Consensus Estimate by 0.1%.
The first-quarter revenues compare to our estimate of $753.5 million.
Supplemental combined revenues in the reported quarter were $846.1 million, down by 43.7% on a reported basis and down 43.6% at constant exchange rate (CER).
Including Respiratory revenues impact, supplemental combined revenues were down 50.4%. Including Non-Respiratory revenues at CER, supplemental combined revenues were up 6.8%.
The year-over-year decline in supplemental combined revenues primarily reflected the strong flu and COVID-related revenues in the prior-year quarter.
Segments in Detail
QuidelOrtho now derives revenues from four business units — Point-Of-Care (POC), Labs, Transfusion Medicine (TM) and Molecular Diagnostics (MDx).
In the first quarter, POC revenues amounted to $308.1 million, reflecting a decline of 67.3% on a reported basis and down 67.2% at CER.
Labs revenues were $370.7 million in the first quarter, up 9.1% and 11.2% on a reported basis and at CER, respectively.
MDx revenues totaled $11.4 million in the first quarter, down 75.2% and 75.4% on a reported basis and at CER, respectively.
TM revenues were $155.9 million in the first quarter, down 10.2% and 8% on a reported basis and at CER, respectively.
This compares to our first-quarter projections of $297.9 million, $294.1 million, $15 million and $146.6 million, respectively.
Geographically, QuidelOrtho derives revenues from North America, Europe, the Middle East and Africa (EMEA), China and Other regions (which includes Latin America, Japan and other Asia-Pacific markets).
Revenues from North America amounted to $582.8 million, reflecting a decline of 52.9% and 52.8% on a reported basis and at CER, respectively.
EMEA revenues amounted to $81.3 million, reflecting a decline of 3.2% on a reported basis but up 0.3% at CER.
Revenues from China amounted to $70.6 million, reflecting an uptick of 11.5% on a reported basis and 19.9% at CER.
Revenues from Other regions amounted to $111.4 million, reflecting a decline of 5% on a reported basis and 1.6% at CER.
This compares to our first-quarter projections of $511.9 million, $68.8 million, $69.3 million and $103.6 million, respectively.
In the quarter under review, QuidelOrtho’s gross profit declined 39.5% to $448.6 million. The gross margin contracted by a huge 2101 basis points (bps) to 53%.
We had projected 52% of gross margin for the first quarter.
Selling, marketing and administrative expenses rose 138.7% to $202.4 million. Research and development expenses went up 135.9% year over year to $62.3 million. Adjusted operating expenses of $264.7 million surged 138% year over year.
Adjusted operating profit totaled $183.9 million, reflecting a 70.8% decline from the prior-year quarter’s level. Adjusted operating margin in the first quarter contracted a huge 4120 bps to 21.7%.
QuidelOrtho exited first-quarter 2023 with cash and cash equivalents of $353.9 million compared with $292.9 million at the end of 2022. Total debt (including short-term debt) at the end of first-quarter 2023 was $2.59 billion compared with $2.64 billion at the end of 2022.
Net cash flow from operating activities at the end of first-quarter 2023 was $188.9 million compared with $500.9 million a year ago.
QuidelOrtho has revised its financial outlook for 2023.
Total revenues are now expected to lie within $2.87 billion to $3.18 billion, up from the earlier guidance of $2.8 billion-$3.1 billion. The Zacks Consensus Estimate for the same stands at $2.94 billion.
Non-respiratory revenues are now expected to be between $2.26 billion and $2.31 billion (up 4.5-6.5% at CER from 2022 levels), up from the earlier projections of $2.21 billion to $2.25 billion (up 4-6% at CER from 2022 levels)
Respiratory revenues for the full year are continued to be expected to lie within $610 million-$875 million. The respiratory revenues include COVID-related revenue of $300 million-$500 million, rapid flu revenue of $230 million-$270 million and other respiratory revenue of $80 million-$105 million.
Adjusted EPS is now expected to lie within $5.15 to $5.70, up from the prior guidance of $5.00-$5.60. The Zacks Consensus Estimate for the same stands at $5.19.
QuidelOrtho ended the first quarter of 2023 with better-than-expected results. It registered robust revenues from its Labs segment and China region, which were encouraging. The company also recorded solid revenues from its Instrument revenue category, which was promising.
QuidelOrtho’s uptick in its Vitros System’s integrated installed base and Sofia Platform’s cumulative installed base were also promising. In March, the company received De Novo FDA clearance for Sofia 2 SARS Antigen+ FIA, raising our optimism further. The company raising its total revenue and non-respiratory revenue outlook for the year augur well.
However, dismal top-line and bottom-line results and lower supplemental combined revenues were disappointing. The decline in the majority of its business units and geographies was discouraging. The decline in QuickVue and Recurring revenues was also worrying. The contraction of both margins also does not bode well. QuidelOrtho continued to face broader macroeconomic and supply-chain challenges, raising our apprehensions.
Zacks Rank and Key Picks
QuidelOrtho currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are
Edwards Lifesciences Corporation ( EW Quick Quote EW - Free Report) , Intuitive Surgical, Inc. ( ISRG Quick Quote ISRG - Free Report) and Merit Medical Systems, Inc. ( MMSI Quick Quote MMSI - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.9%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Merit Medical reported first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.