- Q4 2024 Revenue: $708 million, decreased by 4% year-over-year.
- Full Year 2024 Revenue: $2.8 billion, including $2.3 billion in non-respiratory revenue.
- Q4 2024 Adjusted EBITDA: $150 million, representing a 21% adjusted EBITDA margin.
- Full Year 2024 Adjusted EBITDA: $543 million, with a 19.5% adjusted EBITDA margin.
- Q4 2024 Adjusted Diluted EPS: $0.63.
- Full Year 2024 Adjusted Diluted EPS: $1.85.
- Q4 2024 Gross Profit Margin: 47%.
- Full Year 2024 COVID Revenue: $185 million.
- Q4 2024 COVID Revenue: $44 million.
- Q4 2024 Labs Business Growth: 4% excluding COVID and non-core revenue.
- Q4 2024 Immunohematology Growth: 4%.
- Q4 2024 Cardiac Revenue Decline: 9%.
- Q4 2024 Respiratory Revenue Decline: 18% year-over-year.
- Q4 2024 Adjusted Free Cash Flow: $68 million.
- Q4 2024 Cash Balance: $98 million.
- 2025 Revenue Guidance: $2.6 billion to $2.81 billion.
- 2025 Adjusted EBITDA Guidance: $575 million to $615 million, with a 22% adjusted EBITDA margin.
- 2025 Adjusted Diluted EPS Guidance: $2.07 to $2.57.
- 2025 COVID Revenue Guidance: $110 million to $140 million.
- Warning! GuruFocus has detected 7 Warning Signs with QDEL.
Release Date: February 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- QuidelOrtho Corp (NASDAQ:QDEL) achieved solid top-line results in 2024, aligning with their financial guidance.
- The company reported over 90% of Q4 sales as recurring, driven by reagents, consumables, and service.
- The Labs business, which constitutes about 50% of total company revenues, showed a growth of 4% excluding COVID and non-core revenue.
- QuidelOrtho Corp (NASDAQ:QDEL) initiated clinical trials for the Savanna Respiratory Panel, aiming to complete them in the upcoming months.
- The company is implementing cost reduction initiatives, expecting to drive margin growth over the next few years to achieve benchmark levels of profitability.
Negative Points
- Total reported revenue in Q4 2024 decreased by 4% year-over-year due to expected declines in COVID and flu testing revenues.
- Adjusted EBITDA for Q4 2024 was $150 million, down from $195 million in the prior year period.
- North America revenue declined by 11% in Q4 2024, impacted by the decline in respiratory revenue and U.S. donor screening revenue.
- Adjusted gross profit margin decreased to 47% in Q4 2024 from 52% in the prior year period, primarily due to lower COVID and flu sales.
- The company faces challenges in China due to competitive intensity and reimbursement changes, impacting cardiac point of care products.
Q & A Highlights
Q: The forecast for free cash flow conversion is at 25% to 30% of adjusted EBITDA. Previously, it was closer to 50%. Can you discuss where you think this can go over time and what a more normalized level might look like? A: Joseph Busky, CFO: We ended 2024 at 20% free cash flow as a percentage of EBITDA. For 2025, we expect it to be between 25% to 30%. Our goal is to achieve at least 50% conversion of adjusted EBITDA to free cash flow over the next couple of years, aligning with our margin improvement goals.
Q: Can you provide an update on the China region, given some market uncertainties? What is your view on pricing and exposure to any VBP programs? A: Brian Blaser, CEO: China remains an attractive but complex market. We believe the risk of additional VBP pressure has largely passed for 2025. We have seen some impacts on cardiac reimbursement, but no significant actions on VBP or reimbursement are expected. Competitive intensity has increased, so we are tempering our growth expectations to mid-single digits.
Q: Can you discuss the cost savings initiatives and how they are impacting EBITDA margins? A: Joseph Busky, CFO: EBITDA margins are expected to improve by 250 basis points from 2024 to 2025. This includes $50 million from previously implemented cost savings and an additional $30 million to $50 million in 2025, primarily from procurement. These savings will mostly impact OpEx, with direct procurement savings benefiting gross profit in 2026.
Q: What are the expectations for respiratory revenue in 2025, and how does Savanna fit into this? A: Joseph Busky, CFO: COVID revenue is expected to decrease due to non-repeating government contracts and lower retail sales. Professional COVID revenue is expected to remain flat, indicating an endemic level. Respiratory revenue is projected to grow in the low single digits. Savanna trials have started, and while no significant revenue is expected in 2025, it will contribute in the future.
Q: Can you provide more detail on the procurement savings and their impact on margins? A: Brian Blaser, CEO: Procurement savings are broad-based, covering supply chain, logistics, travel, IT services, and more. These indirect savings are more actionable in the short term, while direct procurement savings, which require design changes and regulatory submissions, will take longer to realize.
Q: What is the outlook for the labs business, and are there any factors that could impact growth? A: Brian Blaser, CEO: The labs business is stable with mid-single-digit growth, supported by long-term customer relationships and high renewal rates. While China is dynamic, we do not foresee major swings in our labs business. Menu expansion could drive incremental growth in the future.
Q: How are you balancing cost structure improvements with funding innovation for long-term growth? A: Brian Blaser, CEO: Margin expansion efforts are directly linked to our ability to invest in new product development. We are defining innovation roadmaps for each business, focusing on assays and new systems. The stable business model supports mid-single-digit growth, with new systems and assays providing additional opportunities.
Q: Can you provide guidance on the U.S. Donor Screening business for 2025? A: Joseph Busky, CFO: We expect U.S. Donor Screening revenue to be $40 million to $50 million in 2025, down from $115 million in 2024. The business is winding down, with minimal residual revenue expected in 2026.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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