Quidelortho Corporation ((QDEL)) has held its Q4 earnings call. Read on for the main highlights of the call.
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QuidelOrtho Corporation recently conducted its earnings call, presenting a mixed sentiment. While there are noteworthy operational highlights such as solid growth in the labs business and effective cost reduction initiatives, challenges remain due to a decrease in total revenue, particularly in North America and cardiac products. The company is strategically focusing on cost savings and margin expansion to navigate towards profitability amidst these challenges.
Solid Labs Business Growth
The Labs business, which makes up about half of QuidelOrtho’s total revenues, achieved a notable growth of 4% on both a reported and constant currency basis, excluding COVID and non-core revenue. This performance underscores a durable and predictable business model, highlighting the company’s strength in its core operations.
Immunohematology and China Growth
The immunohematology segment showed stable growth of 4% in the fourth quarter, while the Chinese market experienced an impressive 11% growth, driven largely by robust performance in the labs sector. This indicates strong international market dynamics contributing to the company’s overall performance.
Cost Reduction Initiatives
QuidelOrtho is making significant strides in cost reduction, projecting $50 million in savings for the first half of 2025 and an additional $30 million to $50 million primarily through procurement-related activities. These initiatives aim to enhance profitability and operational efficiency.
Adjusted EBITDA and Margin Expansion
For the fourth quarter of 2024, the company reported an adjusted EBITDA of $150 million with a 21% margin. Looking forward, a 250 basis point improvement is targeted for 2025, reflecting the company’s commitment to enhancing its financial performance.
Revenue Decline in Q4
The total reported revenue for the fourth quarter of 2024 was $708 million, marking a 4% decline compared to the previous year. This decrease was mainly attributed to lower year-over-year revenues from COVID and flu-related products.
Cardiac Revenue Decline
The cardiac segment faced a 9% revenue decline in the fourth quarter, primarily due to order timing issues in North America. For the entire year, cardiac revenue saw a decline of approximately 2%, highlighting a sector facing challenges.
Gross Profit Margin Decrease
The adjusted gross profit margin for the fourth quarter of 2024 decreased to 47% from 52% in the prior year, mainly due to higher COVID and flu sales in the previous period, reflecting pressures on profitability.
Challenges in North America
In North America, revenue declined by 11% from the previous year, due to anticipated declines in respiratory revenue and timing issues with cardiac sales. This signifies challenges in maintaining revenue streams in key markets.
Forward-Looking Guidance
For 2025, QuidelOrtho projects total reported revenue between $2.6 billion and $2.81 billion, with adjusted EBITDA expected to range from $575 million to $615 million, translating to a 22% margin. The company plans significant cost savings from procurement, while respiratory and COVID revenues are anticipated to contribute significantly. The company is focusing on operational efficiency and cost structure improvements to support long-term growth and profitability.
In summary, QuidelOrtho Corporation’s earnings call highlighted a mixed sentiment with strong growth in some sectors but challenges in others, particularly in North America and cardiac products. The company’s strategic focus on cost savings and margin expansion aims to drive profitability and sustain growth despite revenue pressures.
