Quidel Corporation (NASDAQ: QDEL), a provider of rapid
diagnostic testing solutions, cellular-based virology assays and
molecular diagnostic systems, announced today financial results for
the third quarter ended September 30, 2018.
Third Quarter 2018 Highlights
- Total revenue was $117.4 million as
compared to $50.9 million in the third quarter of 2017.
- Cardiac Immunoassay revenue was $65.3
million.
- Influenza revenue was $21.6 million as
compared to $23.1 million in the third quarter of 2017.
- Reported GAAP EPS of $0.27 per
diluted share in the third quarter of 2018, as compared
to $(0.16) per share in the third quarter of 2017. Excluding
the one-time costs associated with the loss on extinguishment of
debt, diluted EPS was $0.30 for the third quarter of 2018. Reported
non-GAAP EPS of $0.59 per diluted share in the third quarter
of 2018, as compared to $0.17 per diluted share in the third
quarter of 2017.
- Received FDA clearance and CLIA waiver
for Sofia® 2 Lyme FIA from finger-stick whole blood specimens.
- Received FDA clearance for Solana®
Bordetella Complete® molecular diagnostic assay for pertussis
(whooping cough), parapertussis infections.
Third Quarter 2018 Results
Total revenue for the third quarter of 2018 was $117.4 million,
versus $50.9 million for the third quarter of 2017. The 131%
increase in sales from the third quarter of 2018 was driven by
incremental revenue from the acquired Cardiac Immunoassay business
and 60% revenue growth from our Molecular Diagnostic Solutions.
This was slightly offset by a 3% decline in the Rapid Immunoassay
business, due to the timing of Influenza orders in the third
quarter of 2018 as compared to the third quarter of 2017.
Cardiac Immunoassay revenue, which includes revenue from the
Triage, Triage Toxicology and Beckman BNP products acquired in
October 2017, totaled $65.3 million in the third quarter of 2018,
growing 4% from the third quarter of 2017. Rapid Immunoassay
product revenue (which includes QuickVue, Sofia and Eye Health
products) decreased 3% in the third quarter of 2018 to $35.4
million, primarily due to a $1.5 million decrease in Influenza
revenue from the third quarter of 2017. Molecular Diagnostic
Solutions revenue increased 60% to $4.5 million, led by 88% revenue
growth from Solana, our instrumented molecular diagnostic system.
Specialized Diagnostic Solutions revenue, which includes revenue
from Virology/DHI, Specialty and Other, increased 5% from the third
quarter of 2017 to $12.3 million.
“We delivered another strong quarter, with continued commercial
traction in the Cardiac Immunoassay product segment. In addition,
integration of the acquired businesses is going well, and the
programs to deliver operational synergies remain on track," said
Douglas Bryant, president and CEO of Quidel Corporation. "We saw
growth in Sofia and Molecular, and a 19% increase year-over-year in
influenza outsales from distributors to our customers. As a result,
inventories at distribution are low, which positions us nicely for
Q4 influenza revenue in advance of the season. Importantly, we also
launched our CLIA-waived Sofia 2 Lyme whole blood diagnostic assay.
Although approval was received late in the Lyme season, the early
indications from the market are positive, and we expect to build on
that momentum going into the 2019 Lyme season. As we move into the
fourth quarter, we are well positioned and remain focused on
delivering long-term growth.”
Gross Profit in the third quarter of 2018 increased to $69.6
million, driven by the addition of the Cardiac Immunoassay products
from the acquisition of the Triage and BNP Businesses in October
2017. Overall, gross margin for the quarter was 59% as compared to
58% for the same period last year, due to lower amortization of
intangibles on our legacy Quidel business. R&D expense
increased by $5.6 million in the third quarter as compared to the
same period last year, primarily due to incremental expense for the
Triage business, as well as increased investment in the Savanna
molecular diagnostic platform. Sales and Marketing expense
increased by $12.9 million in the third quarter of 2018, as
compared to the third quarter of 2017, largely due to expenses
associated with the global infrastructure for the Triage business.
G&A expense increased by $4.0 million in the quarter, primarily
due to additional costs associated with the Triage business. As a
percentage of revenue, operating expenses before integration costs
were 43% in the third quarter of 2018 as compared to 54% in the
third quarter of 2017. Acquisition and Integration Costs in the
quarter decreased by $2.1 million to $2.5 million, as more of the
global operations become fully integrated into the business. The
loss on extinguishment of debt represents one-time costs of $1.3
million related to the partial write off of unamortized debt
issuance costs related to the Senior Credit Facility.
Net income for the third quarter of 2018 was $10.8 million, or
$0.27 per diluted share, as compared to a net loss of $5.5 million,
or $(0.16) per share, for the third quarter of 2017. Excluding the
one-time costs associated with the loss on extinguishment of debt,
diluted EPS was $0.30 for the third quarter of 2018. On a non-GAAP
basis, net income for the third quarter of 2018 was $25.5 million,
or $0.59 per diluted share, as compared to net income of $5.9
million, or $0.17 per diluted share, for the same period in
2017.
Results for the Nine Months Ended September 30, 2018
Total revenue for the nine-month period ended September 30, 2018
was $389.7 million, versus $162.9 million for the same period in
2017. The 139% increase in sales was driven by incremental revenue
from the acquired Cardiac Immunoassay business, 14% revenue growth
from the Rapid Immunoassay business and 48% revenue growth from our
Molecular Diagnostic Solutions.
Cardiac Immunoassay revenue, which includes revenues from the
Triage, Triage Toxicology and Beckman BNP products acquired in
October 2017, totaled $203.6 million in the nine-month period ended
September 30, 2018. Rapid Immunoassay product revenue increased 14%
in the nine-month period ended September 30, 2018 to $132.7
million, led by a 60% rise in Sofia revenue, while QuickVue sales
declined 28% from the same period of 2017. Molecular Diagnostic
Solutions revenue increased 48% to $13.5 million for the nine-month
period ended September 30, 2018, led by 120% revenue growth from
Solana, our instrumented molecular diagnostic system. Specialized
Diagnostic Solutions revenue increased 6% from the nine-month
period ended September 30, 2018 to $39.9 million.
Influenza revenue for the nine months ended September 30, 2018
increased 24% to $91.7 million as compared to $74.0 million in the
first nine months of 2017.
Gross Profit in the nine-month period ended September 30, 2018
increased to $233.6 million, the result of increased sales revenue
from the acquired Triage and BNP Businesses and improved product
mix, with a higher mix of Influenza products in the current year.
Gross margin for the nine-month period ended September 30, 2018 was
flat to prior year, at 60%. Included in the 2018 gross margin is
the one-time impact of the Triage/BNP inventory step-up of fair
value which reduced the consolidated gross margin by one percentage
point. R&D expense increased by $16.0 million in the nine-month
period ended 2018 as compared to the same period last year,
primarily due to additional expenses associated with the acquired
Triage business, and additional investments in the Savanna
molecular diagnostic platform. Sales and Marketing expense
increased by $41.7 million in the nine-month period ended 2018, as
compared to the same period in 2017, largely due to incremental
costs associated with the Triage business, as well as higher
compensation costs associated with improved company performance.
G&A expense increased by $12.2 million, primarily due to costs
associated with Triage and BNP Businesses, as well as higher
professional fees and compensation expenses. As a percentage of
revenue, operating expenses before integration costs were 40% in
the nine months ended September 30, 2018 as compared to 52% for the
comparable nine-month period in the prior year. Acquisition and
Integration Costs were $10.9 million in the period. The loss on
extinguishment of debt includes one-time costs of $6.0 million
related to the partial write-off of unamortized debt issuance costs
related to the Senior Credit Facility, and $2.3 million loss
associated with the Convertible Senior Note exchange
agreements.
Net income for the nine-month period ended September 30, 2018
was $41.7 million, or $1.08 per diluted share, as compared to net
loss of $3.1 million, or $(0.09) per share, for the same period in
2017. Excluding the one-time costs associated with the loss on
extinguishment of debt, diluted EPS was $1.24 for the nine-month
period ended September 30, 2018. On a non-GAAP basis, net income
for the nine months ended September 30, 2018 was $95.2 million, or
$2.24 per diluted share, as compared to net income of $17.2
million, or $0.50 per diluted share, for the same period in
2017.
Non-GAAP Financial Information
The Company is providing non-GAAP financial information to
exclude the effect of stock-based compensation, amortization of
intangibles, non-cash interest expense, impact of the valuation
allowance for deferred tax assets and certain non-recurring items
on income and net earnings per share as a supplement to its
consolidated financial statements, which are presented in
accordance with generally accepted accounting principles in the
U.S., or GAAP.
Management is providing the adjusted gross profit, adjusted
operating income, adjusted net income and adjusted net earnings per
share information for the periods presented because it believes
this enhances the comparison of the Company’s financial performance
from period-to-period, and to that of its competitors. This press
release is not meant to be considered in isolation, or as a
substitute for results prepared in accordance with GAAP. A
reconciliation of the non-GAAP financial measures to the comparable
GAAP measures is included in this press release as part of the
attached financial tables.
Conference Call Information
Quidel management will host a conference call to discuss the
third quarter 2018 results as well as other business matters today
beginning at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time).
During the conference call, management may answer questions
concerning business and financial developments and trends. Quidel’s
responses to these questions, as well as other matters discussed
during the conference call, may contain or constitute material
information that has not been previously disclosed.
To participate in the live call by telephone from the U.S., dial
877-930-5791, or from outside the U.S. dial 253-336-7286, and enter
the audience pass code 802-9037.
A live webcast of the call can be accessed on the Investor
Relations section of the Quidel website (http://ir.quidel.com). The website replay will be
available for 14 days. The telephone replay will be available for
48 hours beginning at 8:00 p.m. Eastern Time (5:00 p.m. Pacific
Time) today by dialing 855-859-2056 from the U.S., or by dialing
404-537-3406 for international callers, and entering pass code
802-9037.
About Quidel Corporation
Quidel Corporation serves to enhance the health and
well-being of people around the globe through the development of
diagnostic solutions that can lead to improved patient outcomes and
provide economic benefits to the healthcare system. Marketed under
the Sofia®, QuickVue®, D3® Direct Detection, Thyretain®, Triage®
and InflammaDry® leading brand names, as well as under the new
Solana®, AmpliVue® and Lyra® molecular diagnostic brands, Quidel’s
products aid in the detection and diagnosis of many critical
diseases and conditions, including, among others, influenza,
respiratory syncytial virus, Strep A, herpes, pregnancy, thyroid
disease and fecal occult blood. Quidel's recently
acquired Triage® system of tests comprises a comprehensive test
menu that provides rapid, cost-effective treatment decisions at the
point-of-care (POC), offering a diverse immunoassay menu in a
variety of tests to provide diagnostic answers for quantitative
BNP, CK-MB, d-dimer, myoglobin, troponin I and qualitative TOX Drug
Screen. Quidel’s research and development engine is also developing
a continuum of diagnostic solutions from advanced immunoassay to
molecular diagnostic tests to further improve the quality of
healthcare in physicians’ offices, hospital and reference
laboratories, and other alternate sites, like urgent care centers
and retail clinics, where healthcare is provided. For more
information about Quidel’s comprehensive product portfolio, visit
quidel.com.
This press release contains forward-looking statements within
the meaning of the federal securities laws that involve material
risks, assumptions and uncertainties. Many possible events or
factors could affect our future financial results and performance,
such that our actual results and performance may differ materially
from those that may be described or implied in the forward-looking
statements. As such, no forward-looking statement can be
guaranteed. Differences in actual results and performance may arise
as a result of a number of factors including, without limitation;
our reliance on sales of our influenza diagnostic tests;
fluctuations in our operating results resulting from the timing of
the onset, length and severity of cold and flu seasons,
seasonality, government and media attention focused on influenza
and the related potential impact on humans from novel influenza
viruses, adverse changes in competitive conditions in domestic and
international markets, the reimbursement system currently in place
and future changes to that system, changes in economic conditions
in our domestic and international markets, lower than anticipated
market penetration of our products, the quantity of our product in
our distributors’ inventory or distribution channels, changes in
the buying patterns of our distributors, and changes in the
healthcare market and consolidation of our customer base; our
development and protection of proprietary technology rights; our
development of new technologies, products and markets; our reliance
on a limited number of key distributors; intellectual property
risks, including but not limited to, infringement litigation; our
need for additional funds to finance our capital or operating
needs; the financial soundness of our customers and suppliers;
acceptance of our products among physicians and other healthcare
providers; competition with other providers of diagnostic products;
adverse actions or delays in new product reviews or related to
currently-marketed products by the U.S. Food and Drug
Administration (the “FDA”) or other regulatory authorities or loss
of any previously received regulatory approvals or clearances;
changes in government policies; our exposure to claims and
litigation, including litigation currently pending against us;
costs of or our failure to comply with government regulations in
addition to FDA regulations; compliance with government regulations
relating to the handling, storage and disposal of hazardous
substances; third-party reimbursement policies; our failure to
comply with laws and regulations relating to billing and payment
for healthcare services; our ability to meet demand for our
products; interruptions in our supply of raw materials; product
defects; business risks not covered by insurance; our exposure to
cyber-based attacks and security breaches; competition for and loss
of management and key personnel; international risks, including but
not limited to, compliance with product registration requirements,
exposure to currency exchange fluctuations and foreign currency
exchange risk sharing arrangements, longer payment cycles, lower
selling prices and greater difficulty in collecting accounts
receivable, reduced protection of intellectual property rights,
political and economic instability, taxes, and diversion of lower
priced international products into U.S. markets; changes in tax
rates and exposure to additional tax liabilities or assessments;
risks relating to the acquisition and integration of the Triage and
BNP Businesses; Alere’s failure to perform under various transition
agreements relating to our acquisition of the Triage and BNP
Businesses; that we may incur substantial costs to build our
information technology infrastructure to transition the Triage and
BNP Businesses; that we may have to write off goodwill relating to
our acquisition of the Triage and BNP Businesses; our ability to
manage our growth strategy; the level of our indebtedness; the
amount of, and our ability to repay, renew or extend, our
outstanding debt and its impact on our operations and our ability
to obtain financing; that substantially the Senior Credit Facility
is secured by substantially all of our assets; our prepayment
requirements under the Senior Credit Facility; the agreements for
our indebtedness place operating and financial restrictions on the
Company; that an event of default could trigger acceleration of our
outstanding indebtedness; the effect on our operating results from
the trigger of the conditional conversion feature of our
Convertible Senior Notes; that we may incur additional
indebtedness; increases in interest rate relating to our variable
rate debt; dilution resulting from future sales of our equity;
volatility in our stock price; provisions in our charter documents,
Delaware law and the indenture governing our Convertible Senior
Notes that might delay or impede stockholder actions with respect
to business combinations or similar transactions; and our intention
of not paying dividends. Forward-looking statements typically
are identified by the use of terms such as “may,” “will,” “should,”
“might,” “expect,” “anticipate,” “estimate,” “plan,” “intend,”
“goal,” “project,” “strategy,” “future,” and similar words,
although some forward-looking statements are expressed differently.
The risks described in reports and registration statements that we
file with the Securities and Exchange Commission (the “SEC”) from
time to time, should be carefully considered. You are cautioned not
to place undue reliance on these forward-looking statements, which
reflect management’s analysis only as of the date of this press
release. Except as required by law, we undertake no obligation to
publicly release the results of any revision or update of these
forward-looking statements, whether as a result of new information,
future events or otherwise.
QUIDEL CORPORATION
(In thousands, except per share data;
unaudited)
Three Months Ended September 30, Consolidated
Statements of Operations: 2018 2017 Total
revenues $ 117,399 $ 50,894 Cost of sales 47,757 21,204
Gross profit 69,642 29,690 Research and
development 13,103 7,468 Sales and marketing 26,504 13,588 General
and administrative 10,620 6,580 Acquisition and integration costs
2,521 4,591 Total costs and expenses 52,748
32,227 Operating income (loss) 16,894 (2,537 ) Other
expense, net: Interest expense, net (4,786 ) (2,784 ) Loss on
extinguishment of debt (1,297 ) — Total other expense, net
(6,083 ) (2,784 ) Income (loss) before income taxes 10,811 (5,321 )
(Benefit) provision for income taxes (11 ) 204 Net income
(loss) $ 10,822 $ (5,525 )
Basic earnings (loss) per share
$ 0.28 $ (0.16 )
Diluted earnings (loss) per share
$ 0.27 $ (0.16 ) Shares used in basic per share calculation 39,290
33,913 Shares used in diluted per share calculation 42,889 33,913
Gross profit as a % of total revenues 59 % 58 % Research and
development as a % of total revenues 11 % 15 % Sales and marketing
as a % of total revenues 23 % 27 % General and administrative as a
% of total revenues 9 % 13 %
Consolidated net revenues by
product category are as follows: Rapid Immunoassay $ 35,366 $
36,458 Cardiac Immunoassay 65,287 — Specialized Diagnostic
Solutions 12,294 11,655 Molecular Diagnostic Solutions 4,452
2,781 Total revenues $ 117,399 $ 50,894
Condensed balance sheet data: 9/30/2018
12/31/2017 Cash and cash equivalents $ 38,694 $ 36,086
Accounts receivable, net 66,845 67,046 Inventories 63,309 67,078
Total assets 793,884 935,251 Short-term debt 54,046 20,184
Long-term debt 86,912 381,110 Stockholders’ equity 388,454 227,104
Nine Months Ended September 30,
Consolidated Statements of Operations: 2018
2017 Total revenues $ 389,697 $ 162,853 Cost of sales
156,116 65,838 Gross profit 233,581 97,015
Research and development 39,008 22,970 Sales and marketing
82,607 40,875 General and administrative 32,652 20,483 Acquisition
and integration costs 10,923 7,022 Total costs and
expenses 165,190 91,350 Operating income 68,391 5,665
Other expense, net: Interest expense, net (19,475 ) (8,387 ) Loss
on extinguishment of debt (8,262 ) — Total other expense,
net (27,737 ) (8,387 ) Income before income taxes 40,654 (2,722 )
(Benefit) provision for income taxes (1,050 ) 355 Net income
$ 41,704 $ (3,077 )
Basic earnings (loss) per share
$ 1.11 $ (0.09 )
Diluted earnings (loss) per share
$ 1.08 $ (0.09 ) Shares used in basic per share calculation 37,490
33,538 Shares used in diluted per share calculation 42,467 33,538
Gross profit as a % of total revenues 60 % 60 % Research and
development as a % of total revenues 10 % 14 % Sales and marketing
as a % of total revenues 21 % 25 % General and administrative as a
% of total revenues 8 % 13 %
Consolidated net revenues by
product category are as follows: Rapid Immunoassay $ 132,740 $
115,974 Cardiac Immunoassay 203,581 — Specialized Diagnostic
Solutions 39,859 37,731 Molecular Diagnostic Solutions 13,517
9,148 Total revenues $ 389,697 $ 162,853
QUIDEL CORPORATION
Reconciliation of Non-GAAP Financial
Information
(In thousands, except per share data;
unaudited)
Three months ended September 30, Gross Profit
Operating Income Net Income
Diluted EPS 2018 2017 2018
2017 2018 2017 2018
2017 GAAP Financial Results $ 69,642 $ 29,690
$ 16,894 $ (2,537 ) $ 10,822 $ (5,525 ) Interest expense on
Convertible Senior Notes, net of tax (a) 791 —
Net income (loss) used for diluted
earnings per share, if-converted method
11,613 (5,525 ) $ 0.27 $ (0.16 ) Adjustments:
Interest expense on Convertible Senior Notes (a) — 1,388 Non-cash
stock compensation expense 255 117 2,775 1,879 2,775 1,879
Amortization of intangibles 1,998 2,030 7,031 2,720 7,031 2,720
Amortization of debt discount and issuance costs on credit facility
145 — Non-cash interest expense for deferred consideration 2,285 —
Loss on extinguishment of Senior Credit Facility 1,297 —
Acquisition and integration costs 2,521 4,591 2,521 4,591 Income
tax impact of adjustments (a)(b) (3,050 ) (3,700 ) Income tax
impact of valuation allowance for deferred tax assets
836 4,590 Adjusted (c) $
71,895 $ 31,837 $ 29,221 $ 6,653 $
25,453 $ 5,943 $ 0.59 $ 0.17
(a) The if-converted method was not applicable during 2017 as
the Convertible Senior Notes were not convertible.
(b) Income tax impact of adjustments represents the tax impact
related to the non-GAAP adjustments listed above and reflects an
effective tax rate of 19% for 2018 and 35% for 2017.
(c) Adjusted net earnings per share for the three months ended
September 30, 2018 was calculated using an adjusted diluted
weighted average shares outstanding of 42.9 million shares.
Adjustments from GAAP diluted weighted average shares outstanding
consisted of 1.8 million potentially dilutive shares issuable from
Convertible Senior Notes and 1.8 million potentially dilutive
shares issuable from stock options and unvested RSUs.
QUIDEL CORPORATION
Reconciliation of Non-GAAP Financial
Information
(In thousands, except per share data;
unaudited)
Nine months ended September 30, Gross Profit
Operating Income Net Income
Diluted EPS 2018 2017 2018
2017 2018 2017 2018
2017 GAAP Financial Results $ 233,581 $ 97,015
$ 68,391 $ 5,665 $ 41,704 $ (3,077 ) Interest expense on
Convertible Senior Notes, net of tax (a) 4,152 —
Net income (loss) used for diluted
earnings per share, if-converted method
45,856 (3,077 ) $ 1.08 $ (0.09 ) Adjustments:
Interest expense on Convertible Senior Notes (a) — 4,129 Non-cash
stock compensation expense 751 354 9,190 5,938 9,190 5,938
Amortization of intangibles 6,739 5,543 21,890 7,605 21,890 7,605
Amortization of debt discount and issuance costs on credit facility
760 — Non-cash interest expense for deferred consideration 7,686 —
Loss on extinguishment of Convertible Senior Notes 2,304 — Loss on
extinguishment of Senior Credit Facility 5,958 — Amortization of
inventory step-up of fair value 3,650 — 3,650 — 3,650 — Change in
fair value of acquisition contingencies 745 — 745 — Acquisition and
integration costs 10,923 7,022 10,923 7,022 Income tax impact of
adjustments (a)(b) (11,990 ) (8,640 ) Income tax impact of
valuation allowance for deferred tax assets
(1,786 ) 4,264 Adjusted (c) $ 244,721
$ 102,912 $ 114,789 $ 26,230 $ 95,186
$ 17,241 $ 2.24 $ 0.50
(a) The if-converted method was not applicable during 2017 as
the Convertible Senior Notes were not convertible.
(b) Income tax impact of adjustments represents the tax impact
related to the non-GAAP adjustments listed above and reflects an
effective tax rate of 19% for 2018 and 35% for 2017.
(c) Adjusted net earnings per share for the nine months ended
September 30, 2018 was calculated using an adjusted diluted
weighted average shares outstanding of 42.5 million shares.
Adjustments from GAAP diluted weighted average shares outstanding
consisted of 3.2 million potentially dilutive shares issuable from
Convertible Senior Notes and 1.8 million potentially dilutive
shares issuable from stock options and unvested RSUs.
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version on businesswire.com: https://www.businesswire.com/news/home/20181106005937/en/
Quidel Contact:Quidel CorporationRandy StewardChief Financial
Officer858.552.7931orMedia and Investors Contact:Quidel
CorporationRuben Argueta858.646.8023rargueta@quidel.com
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