Yahoo Finance QuidelOrtho (QDEL) Q4 Earnings Top Estimates, Margins Down
QuidelOrtho Corporation QDEL delivered adjusted earnings per share (EPS) of $1.76 in the fourth quarter of 2022, down by 75.4% year over year. The figure topped the Zacks Consensus Estimate by 25.7%.
The adjustments include expenses related to the amortization of intangibles, and acquisition and integration costs, among others.
Supplemental combined adjusted EPS for the quarter was $1.76, down 65.6% year over year.
GAAP EPS for the quarter was 45 cents, reflecting a 93.4% plunge from the year-earlier figure.
Full-year adjusted EPS was $14.91, down 13.4% compared to the end of 2021.
Revenues in Detail
QuidelOrtho registered revenues of $866.5 million in the fourth quarter, which climbed 36% year over year. The figure surpassed the Zacks Consensus Estimate by 0.7%.
Supplemental combined revenues in the reported quarter were $866.5 million, down by 25.2% on a reported basis and down 23.4% at constant exchange rate (CER). Excluding COVID-19 revenue, supplemental combined revenues at CER improved 18.6%.
The year-over-year revenue surge was primarily led by the consummation of the business combination that occurred on May 27, 2022, between Quidel Corporation and Ortho Clinical Diagnostics Holdings plc.
Full-year revenues were $3.27 billion, reflecting a 92.3% improvement from the comparable 2021 period.
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 fourth quarter, POC revenues amounted to $374.7 million, reflecting a decline of 34.7% on a reported basis and down 34.4% at CER. However, excluding COVID-19 revenue, POC revenues at CER improved 137.5%.
Labs revenues were $314.7 million in the fourth quarter, down 13.4% and 10.9% on a reported basis and at CER, respectively. Excluding COVID-19 revenue, Labs revenues at CER declined 9.6%.
MDx revenues totaled $14.6 million in the fourth quarter, down 71.4% and 70.9% on a reported basis and at CER, respectively. However, excluding COVID-19 revenue, MDx revenues at CER increased 45.3%.
TM revenues were $162.5 million in the fourth quarter, down 4.2% on a reported basis but up 1.2% 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 America amounted to $619.2 million, reflecting a decline of 28.2% and 28.3% on a reported basis and at CER, respectively. However, excluding COVID-19 revenue, revenues at CER improved 38.3%.
EMEA revenues amounted to $75.8 million, reflecting a decline of 14.6% on a reported basis and 7.8% at CER. Excluding COVID-19 revenue, EMEA revenues at CER also declined 3.3%.
Revenues from China amounted to $56.9 million, reflecting a decline of 34.2% on a reported basis and down 27.3% at CER.
Revenues from Other regions amounted to $114.6 million, reflecting a decline of 4.9% on a reported basis but up 2.6% at CER. Excluding COVID-19 revenue, revenues at CER improved 7%.
QuidelOrtho Corporation Price, Consensus and EPS Surprise
QuidelOrtho Corporation price-consensus-eps-surprise-chart | QuidelOrtho Corporation Quote
Margin Trend
In the quarter under review, QuidelOrtho’s gross profit declined 8.6% to $449 million. The gross margin contracted by a huge 2531 basis points (bps) to 51.8%.
Selling, marketing and administrative expenses rose 189.8% to $213.6 million. Research and development expenses went up 146.4% year over year to $64.3 million. Adjusted operating expenses of $277.9 million surged 178.5% year over year.
Adjusted operating profit totaled $171.1 million, reflecting a 56.3% decline from the prior-year quarter’s level. Adjusted operating margin in the fourth quarter contracted a huge 4171 bps to 19.7%.
Financial Position
QuidelOrtho exited full-year 2022 with cash and cash equivalents of $292.9 million compared with $802.8 million at the end of 2021. Total debt (including short-term debt) at the end of 2022 was $2.64 billion compared with $0.7 million at the end of 2021.
Cumulative net cash flow from operating activities at the end of the full-year 2022 was $885.3 million compared with $805.9 million a year ago.
Guidance
QuidelOrtho has initiated its financial outlook for the full-year 2023.
Total revenues are expected to lie within $2.8 billion-$3.1 billion. The Zacks Consensus Estimate for the same stands at $2.77 billion.
Total revenue, excluding respiratory sales, is expected to lie within $2.21 billion-$2.25 billion. At CER, it is likely to register an improvement of 4-6%.
Respiratory revenues for the full year are 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 expected to lie within $5.00-$5.60. The Zacks Consensus Estimate for the same stands at $5.10.
Our Take
QuidelOrtho ended the fourth quarter of 2022 with better-than-expected results. Its robust overall top-line performance was impressive. The company recorded strong revenues in the majority of its business units at CER, excluding COVID-19 revenues. Excluding COVID-19 revenues, geographical results also improved in two regions, which is impressive.
Strong Recurring revenues (including reagents, service and other consumables) which were up including and excluding COVID-19 revenues and solid Instrument revenue (driven by strong cash instrument sales in QuidelOrtho’s TM business, including a few nice large wins in North America), were encouraging.
Continued strength in QuidelOrtho’s comprehensive product portfolio and expanded global commercial footprint also raise optimism about the stock. The progress made by the company regarding the integration of its QuidelOrtho business is also promising.
However, dismal bottom-line results and lower supplemental combined revenues are disappointing. The decline in all its business units and geographies on a reported basis is discouraging. The decline in QuickVue revenues (including COVID-19 revenues) is also worrying. The contraction of both margins also does not bode well. QuidelOrtho continued to face inflation 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 Cardinal Health, Inc. CAH, McKesson Corporation MCK and Hologic, Inc. HOLX.
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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