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QuidelOrtho (QDEL) Q4 Earnings and Sales Miss, Margins Fall
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QuidelOrthoCorporation (QDEL - Free Report) delivered adjusted earnings per share (EPS) of $1.17 in the fourth quarter of 2023, down by 33.5% year over year. The figure missed the Zacks Consensus Estimate by 42.1%.
The adjustments include expenses related to the amortization of intangibles, and acquisition and integration costs, among others.
GAAP loss per share for the quarter was 10 cents against the year-ago EPS of 45 cents.
Price Performance
QDEL’s shares have declined 12.5% in the past six months against the industry’s growth of 2.3%. The broader S&P 500 Index has gained 11.8% in the same time frame.
Image Source: Zacks Investment Research
Revenues in Detail
QuidelOrtho registered revenues of $743 million in the fourth quarter, which decreased 14.3% year over year both on a reported basis and at a constant exchange rate (CER). The figure missed the Zacks Consensus Estimate by 7%.
In the fourth quarter, Respiratory revenues were $174.6 million (down 49.2% on a reported basis and 49.3% at CER), while Non-Respiratory revenues were $568 million (up 8.7% on a reported basis and 9% at CER).
Segments in Detail
QuidelOrtho now derives revenues from four business units — Labs, Transfusion Medicine (TM), Point-Of-Care (POC) and Molecular Diagnostics (MDx).
In the fourth quarter, Labs revenues were $351.9 million, up 11.8% and 12.3% on a reported basis and at CER, respectively.
TM revenues were $165.4 million in the fourth quarter, up 1.8% and 2.2% on a reported basis and at CER, respectively.
POC revenues amounted to $216.8 million in the fourth quarter, reflecting a decline of 42.1% and 42.2% on a reported basis and at CER, respectively.
MDxrevenues totaled $8.5million in the fourth quarter, down 41.8% on bothreported basis and at CER.
Geographical Distribution
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 Americaamounted to $450.3 million, reflecting a decline of 27.3% and 26.8% on a reported basis and at CER, respectively.
EMEA revenues amounted to $90.9million, reflecting an uptick of 19.9% and 18.1% on a reported basis and at CER, respectively.
Revenues from China amounted to $77.1 million, reflecting an improvement of 35.5% on a reported basis and 37.9% at CER.
Revenues from Other regions amounted to $124.3million, reflecting an uptick of 8.5% on a reported basis and 7% at CER.
Margin Trend
In the quarter under review, QuidelOrtho’s gross profit declined 15.1% to $381.3 million. The gross margin contracted 50 basis points (bps) to 51.3%.
Selling, marketing and administrative expenses fell 12.2% to $187.6 million. Research and development expenses declined 7.8% year over year to $59.3 million. Adjusted operating expenses of $247 million decreased 11.1% year over year.
Operating income totaled $40.1 million, reflecting a 53.6% decline from the prior-year quarter’s level. Operating margin in the third quarter contracted 460 bps to 5.4%.
Financial Position
QuidelOrtho exited fourth-quarter 2023 with cash and cash equivalents of $119 million compared with $149.3 million at the end of the third quarter. Total debt (including short-term debt) at the end of fourth-quarter 2023 was $2.41 billion compared with $2.47 billion at the third-quarter end.
Cumulative net cash provided by operating activities at the end of fourth-quarter 2023 was $280.2 million compared with $885.3 million a year ago.
Full-Years Results
QuidelOrtho recorded total revenues of $3 billion in 2023, down 9.1% year over year. Adjusted EPS for 2023 was $4.13 compared with $13.80 in the year-ago quarter.
2024 Guidance
QuidelOrtho has provided its financial outlook for 2024.
Total revenues are expected to be in the range of$2.76 billion-$3.07 billion. The Zacks Consensus Estimate stands at $2.95 billion.
Non-respiratory revenues are expected to be between $2.30 billion and $2.34 billion.
Respiratory revenues for the full year are expected to lie in the range of $460 million-$730 million.
Adjusted EPS is expected to be between $2.40 and $3.07. The Zacks Consensus Estimate stands at $4.97.
Our Take
QuidelOrtho’s earnings and revenues missed the Zacks Consensus Estimate for the fourth quarter of 2023. However, growth was seen in the company’s Non-Respiratory revenues. The company registered robust revenues from its Labs segment and China and Other regions, which were encouraging. QuidelOrtho also recorded strong revenue growth in the EMEA region on a reported basis, which buoys optimism.
The company also recorded solid revenues from its Instrument and Recurring revenue categories, which were promising. The continued uptick in Sofia instruments and growth in QuidelOrtho’s integrated installed base and automation were encouraging.
In December 2023, the company received an FDA clearance for the Savanna PCR platform and Savanna HSV 1+2/VZV in vitro diagnostic test for the detection and differentiation of Herpes virus type 1. The clearance allows QuidelOrtho to market and sell the Savanna multiplex molecular platform and the Savanna HSV 1+2/VZV assay to laboratories performing moderate or high complexity diagnostic testing in the United States.
In September 2023, QuidelOrtho received a CLIA Waiver from the FDA, which applies to its new Sofia 2 SARS Antigen+ FIA (fluorescent immunoassay). The test, intended for prescription use only, can be used in CLIA-waived point-of-care settings. This looked promising for the stock.
However, dismal top-line and bottom-line results were disappointing. Lower Respiratory revenues during the quarter were also not promising. The decline in its POC and MDx segments and geographically in North America was discouraging.
QuidelOrtho Corporation Price, Consensus and EPS Surprise
QuidelOrtho currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Elevance Health, Inc (ELV - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. UHS’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’s shares have gained 1.9% in the past six months against the industry’s 5% decline.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 43.5% in the past year against the industry’s 3.7% decline.
Elevance Health, carrying a Zacks Rank of 2, reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.
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QuidelOrtho (QDEL) Q4 Earnings and Sales Miss, Margins Fall
QuidelOrtho Corporation (QDEL - Free Report) delivered adjusted earnings per share (EPS) of $1.17 in the fourth quarter of 2023, down by 33.5% year over year. The figure missed the Zacks Consensus Estimate by 42.1%.
The adjustments include expenses related to the amortization of intangibles, and acquisition and integration costs, among others.
GAAP loss per share for the quarter was 10 cents against the year-ago EPS of 45 cents.
Price Performance
QDEL’s shares have declined 12.5% in the past six months against the industry’s growth of 2.3%. The broader S&P 500 Index has gained 11.8% in the same time frame.
Image Source: Zacks Investment Research
Revenues in Detail
QuidelOrtho registered revenues of $743 million in the fourth quarter, which decreased 14.3% year over year both on a reported basis and at a constant exchange rate (CER). The figure missed the Zacks Consensus Estimate by 7%.
In the fourth quarter, Respiratory revenues were $174.6 million (down 49.2% on a reported basis and 49.3% at CER), while Non-Respiratory revenues were $568 million (up 8.7% on a reported basis and 9% at CER).
Segments in Detail
QuidelOrtho now derives revenues from four business units — Labs, Transfusion Medicine (TM), Point-Of-Care (POC) and Molecular Diagnostics (MDx).
In the fourth quarter, Labs revenues were $351.9 million, up 11.8% and 12.3% on a reported basis and at CER, respectively.
TM revenues were $165.4 million in the fourth quarter, up 1.8% and 2.2% on a reported basis and at CER, respectively.
POC revenues amounted to $216.8 million in the fourth quarter, reflecting a decline of 42.1% and 42.2% on a reported basis and at CER, respectively.
MDxrevenues totaled $8.5million in the fourth quarter, down 41.8% on bothreported basis and at CER.
Geographical Distribution
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 Americaamounted to $450.3 million, reflecting a decline of 27.3% and 26.8% on a reported basis and at CER, respectively.
EMEA revenues amounted to $90.9million, reflecting an uptick of 19.9% and 18.1% on a reported basis and at CER, respectively.
Revenues from China amounted to $77.1 million, reflecting an improvement of 35.5% on a reported basis and 37.9% at CER.
Revenues from Other regions amounted to $124.3million, reflecting an uptick of 8.5% on a reported basis and 7% at CER.
Margin Trend
In the quarter under review, QuidelOrtho’s gross profit declined 15.1% to $381.3 million. The gross margin contracted 50 basis points (bps) to 51.3%.
Selling, marketing and administrative expenses fell 12.2% to $187.6 million. Research and development expenses declined 7.8% year over year to $59.3 million. Adjusted operating expenses of $247 million decreased 11.1% year over year.
Operating income totaled $40.1 million, reflecting a 53.6% decline from the prior-year quarter’s level. Operating margin in the third quarter contracted 460 bps to 5.4%.
Financial Position
QuidelOrtho exited fourth-quarter 2023 with cash and cash equivalents of $119 million compared with $149.3 million at the end of the third quarter. Total debt (including short-term debt) at the end of fourth-quarter 2023 was $2.41 billion compared with $2.47 billion at the third-quarter end.
Cumulative net cash provided by operating activities at the end of fourth-quarter 2023 was $280.2 million compared with $885.3 million a year ago.
Full-Years Results
QuidelOrtho recorded total revenues of $3 billion in 2023, down 9.1% year over year. Adjusted EPS for 2023 was $4.13 compared with $13.80 in the year-ago quarter.
2024 Guidance
QuidelOrtho has provided its financial outlook for 2024.
Total revenues are expected to be in the range of$2.76 billion-$3.07 billion. The Zacks Consensus Estimate stands at $2.95 billion.
Non-respiratory revenues are expected to be between $2.30 billion and $2.34 billion.
Respiratory revenues for the full year are expected to lie in the range of $460 million-$730 million.
Adjusted EPS is expected to be between $2.40 and $3.07. The Zacks Consensus Estimate stands at $4.97.
Our Take
QuidelOrtho’s earnings and revenues missed the Zacks Consensus Estimate for the fourth quarter of 2023. However, growth was seen in the company’s Non-Respiratory revenues. The company registered robust revenues from its Labs segment and China and Other regions, which were encouraging. QuidelOrtho also recorded strong revenue growth in the EMEA region on a reported basis, which buoys optimism.
The company also recorded solid revenues from its Instrument and Recurring revenue categories, which were promising. The continued uptick in Sofia instruments and growth in QuidelOrtho’s integrated installed base and automation were encouraging.
In December 2023, the company received an FDA clearance for the Savanna PCR platform and Savanna HSV 1+2/VZV in vitro diagnostic test for the detection and differentiation of Herpes virus type 1. The clearance allows QuidelOrtho to market and sell the Savanna multiplex molecular platform and the Savanna HSV 1+2/VZV assay to laboratories performing moderate or high complexity diagnostic testing in the United States.
In September 2023, QuidelOrtho received a CLIA Waiver from the FDA, which applies to its new Sofia 2 SARS Antigen+ FIA (fluorescent immunoassay). The test, intended for prescription use only, can be used in CLIA-waived point-of-care settings. This looked promising for the stock.
However, dismal top-line and bottom-line results were disappointing. Lower Respiratory revenues during the quarter were also not promising. The decline in its POC and MDx segments and geographically in North America was discouraging.
QuidelOrtho Corporation Price, Consensus and EPS Surprise
QuidelOrtho Corporation price-consensus-eps-surprise-chart | QuidelOrtho Corporation Quote
Zacks Rank and Key Picks
QuidelOrtho currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Universal Health Services (UHS - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and Elevance Health, Inc (ELV - Free Report) .
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. UHS’s earnings surpassed estimates in all the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UHS’s shares have gained 1.9% in the past six months against the industry’s 5% decline.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 43.5% in the past year against the industry’s 3.7% decline.
Elevance Health, carrying a Zacks Rank of 2, reported fourth-quarter 2023 adjusted EPS of $5.62, beating the Zacks Consensus Estimate by 1.3%. Revenues of $42.45 billion outpaced the consensus mark by 1.5%.
Elevance Health has a long-term estimated growth rate of 12%. ELV’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.1%.