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QuidelOrtho Corporation (QDEL - Free Report) delivered adjusted earnings per share (EPS) of $2.12 in the second quarter of 2022, up by a huge 123.2% year over year. The figure missed the Zacks Consensus Estimate by 42.6%.
The adjustments include expenses related to amortization of intangibles, and acquisition and integration costs, among others.
GAAP EPS for the quarter was 36 cents, reflecting a 20% decline from the year-earlier figure.
Revenues in Detail
QuidelOrtho registered revenues of $613.4 million in the second quarter, which jumped 247.3% year over year. The figure surpassed the Zacks Consensus Estimate by 7.1%.
Supplemental combined revenues in the reported quarter were $898.5 million, up by 37.5% at constant exchange rate (CER) and 9% on a reported basis, excluding COVID-19 revenue.
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.
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 second quarter, POC revenues surged 181% and grew 19%, excluding COVID-related revenues, from the year-ago quarter’s level, primarily driven by COVID-19 and pull-through of the company’s respiratory menu.
Labs revenues were up 3% and grew 6% (excluding COVID-related revenues), largely driven by strength in clinical chemistry and non-COVID-19 immunoassay.
MDx revenues fell 40% in the quarter but improved 45% (excluding COVID-related revenues), primarily driven by strength in Lyra, Savanna and Solana product lines.
Revenues from TM improved by 9%, driven by strength in Donor Screening, notably plasma.
Geographical Distribution
Geographically, QuidelOrtho derives revenues from North America, EMEA, China and Other regions (which include Latin America, Japan and other Asia-Pacific markets).
Revenues from North America grew 59% and 16% (excluding COVID-related revenue) at CER, which was driven by strength in POC, Labs and TM.
EMEA grew 6% and 8% (excluding COVID-related revenue) at CER on the back of strong growth in Labs.
China grew 25% but declined 10% (excluding COVID-related revenue) at CER. The growth was driven by strong performances in Labs and COVID-19 within POC.
Other regions grew 2% and 5% at CER on the back of broad-based strength in TM and to a lesser extent growth in Labs.
QuidelOrtho Corporation Price, Consensus and EPS Surprise
In the quarter under review, QuidelOrtho’s gross profit surged 212.5% to $337.5 million. However, gross margin contracted by a huge 613 basis points (bps) to 55%.
Selling, marketing and administrative expenses rose 118.5% to $118.4 million. Research and development expenses went up 51.3% year over year to $34.2 million. Adjusted operating expenses of $152.6 million increased 98.7% year over year.
Adjusted operating profit totaled $184.9 million, reflecting a 492.6% jump from the prior-year quarter’s level. Adjusted operating margin in the second quarter expanded a huge 1248 bps to 30.1%.
Financial Position
QuidelOrtho exited second-quarter 2022 with cash and cash equivalents of $379 million compared with $1.28 billion at the end of first quarter. Total debt (including short-term debt) at the end of second-quarter 2022 was $2.74 billion compared with $0.5 million at the end of first quarter.
Cumulative net cash flow from operating activities at the end of second quarter was $725.6 million compared with $407.5 million a year ago.
Guidance
QuidelOrtho has provided its financial outlook for the full-year 2022.
The company anticipates its total revenue for the full year in the range of $3.78-$3.91 billion, reflecting growth of 3-6% at CER.
Supplemental combined full-year revenues, excluding COVID-related sales, are expected to be in the range of $2.49 billion-$2.57 billion, reflecting growth of 6-9% at CER. The Zacks Consensus Estimate for the same stands at $2.59 billion.
COVID-related revenues are likely to be within $1.29 billion-$1.34 billion in 2022.
Adjusted EPS is expected to lie within $11.80-$12.75. The Zacks Consensus Estimate for the same stands at $15.44.
Our Take
QuidelOrtho ended the second quarter of 2022 with better-than-expected revenues. Its robust overall top-line performance was impressive. The company recorded strong revenues from majority of its four business units, along with robust geographical performances, which is encouraging. Solid revenues from QuidelOrtho’s three categories (Recurring, Instrument and QuickVue) were also promising. Expansion of adjusted operating margin bodes well for the stock.
However, lower-than-expected earnings in the reported quarter are disappointing. The decline in combined revenues in its MDx business unit is discouraging. Contraction of gross margin also does not bode well. QuidelOrtho continued to face supply-chain challenges, raising our apprehensions.
Zacks Rank and Other Key Picks
QuidelOrtho currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, and Alkermes plc (ALKS - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.8%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
BD, having a Zacks Rank #2, reported third-quarter fiscal 2022 adjusted EPS of $2.66, which beat the Zacks Consensus Estimate by 6.8%. Revenues of $4.64 billion outpaced the consensus mark by 4%.
BD has an estimated long-term growth rate of 6.6%. BDX’s earnings surpassed estimates in all the trailing four quarters, the average being 11.9%.
Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.
Alkermes has an estimated long-term growth rate of 24.9%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.
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QuidelOrtho (QDEL) Q2 Earnings Miss, Provides FY22 View
QuidelOrtho Corporation (QDEL - Free Report) delivered adjusted earnings per share (EPS) of $2.12 in the second quarter of 2022, up by a huge 123.2% year over year. The figure missed the Zacks Consensus Estimate by 42.6%.
The adjustments include expenses related to amortization of intangibles, and acquisition and integration costs, among others.
GAAP EPS for the quarter was 36 cents, reflecting a 20% decline from the year-earlier figure.
Revenues in Detail
QuidelOrtho registered revenues of $613.4 million in the second quarter, which jumped 247.3% year over year. The figure surpassed the Zacks Consensus Estimate by 7.1%.
Supplemental combined revenues in the reported quarter were $898.5 million, up by 37.5% at constant exchange rate (CER) and 9% on a reported basis, excluding COVID-19 revenue.
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.
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 second quarter, POC revenues surged 181% and grew 19%, excluding COVID-related revenues, from the year-ago quarter’s level, primarily driven by COVID-19 and pull-through of the company’s respiratory menu.
Labs revenues were up 3% and grew 6% (excluding COVID-related revenues), largely driven by strength in clinical chemistry and non-COVID-19 immunoassay.
MDx revenues fell 40% in the quarter but improved 45% (excluding COVID-related revenues), primarily driven by strength in Lyra, Savanna and Solana product lines.
Revenues from TM improved by 9%, driven by strength in Donor Screening, notably plasma.
Geographical Distribution
Geographically, QuidelOrtho derives revenues from North America, EMEA, China and Other regions (which include Latin America, Japan and other Asia-Pacific markets).
Revenues from North America grew 59% and 16% (excluding COVID-related revenue) at CER, which was driven by strength in POC, Labs and TM.
EMEA grew 6% and 8% (excluding COVID-related revenue) at CER on the back of strong growth in Labs.
China grew 25% but declined 10% (excluding COVID-related revenue) at CER. The growth was driven by strong performances in Labs and COVID-19 within POC.
Other regions grew 2% and 5% at CER on the back of broad-based strength in TM and to a lesser extent growth in Labs.
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 surged 212.5% to $337.5 million. However, gross margin contracted by a huge 613 basis points (bps) to 55%.
Selling, marketing and administrative expenses rose 118.5% to $118.4 million. Research and development expenses went up 51.3% year over year to $34.2 million. Adjusted operating expenses of $152.6 million increased 98.7% year over year.
Adjusted operating profit totaled $184.9 million, reflecting a 492.6% jump from the prior-year quarter’s level. Adjusted operating margin in the second quarter expanded a huge 1248 bps to 30.1%.
Financial Position
QuidelOrtho exited second-quarter 2022 with cash and cash equivalents of $379 million compared with $1.28 billion at the end of first quarter. Total debt (including short-term debt) at the end of second-quarter 2022 was $2.74 billion compared with $0.5 million at the end of first quarter.
Cumulative net cash flow from operating activities at the end of second quarter was $725.6 million compared with $407.5 million a year ago.
Guidance
QuidelOrtho has provided its financial outlook for the full-year 2022.
The company anticipates its total revenue for the full year in the range of $3.78-$3.91 billion, reflecting growth of 3-6% at CER.
Supplemental combined full-year revenues, excluding COVID-related sales, are expected to be in the range of $2.49 billion-$2.57 billion, reflecting growth of 6-9% at CER. The Zacks Consensus Estimate for the same stands at $2.59 billion.
COVID-related revenues are likely to be within $1.29 billion-$1.34 billion in 2022.
Adjusted EPS is expected to lie within $11.80-$12.75. The Zacks Consensus Estimate for the same stands at $15.44.
Our Take
QuidelOrtho ended the second quarter of 2022 with better-than-expected revenues. Its robust overall top-line performance was impressive. The company recorded strong revenues from majority of its four business units, along with robust geographical performances, which is encouraging. Solid revenues from QuidelOrtho’s three categories (Recurring, Instrument and QuickVue) were also promising. Expansion of adjusted operating margin bodes well for the stock.
However, lower-than-expected earnings in the reported quarter are disappointing. The decline in combined revenues in its MDx business unit is discouraging. Contraction of gross margin also does not bode well. QuidelOrtho continued to face supply-chain challenges, raising our apprehensions.
Zacks Rank and Other Key Picks
QuidelOrtho currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated (DGX - Free Report) , Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, and Alkermes plc (ALKS - Free Report) .
Quest Diagnostics, carrying a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.8%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.
BD, having a Zacks Rank #2, reported third-quarter fiscal 2022 adjusted EPS of $2.66, which beat the Zacks Consensus Estimate by 6.8%. Revenues of $4.64 billion outpaced the consensus mark by 4%.
BD has an estimated long-term growth rate of 6.6%. BDX’s earnings surpassed estimates in all the trailing four quarters, the average being 11.9%.
Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.
Alkermes has an estimated long-term growth rate of 24.9%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.