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, 2020.
Third Quarter 2020 Highlights
- Total revenue increased 276% to $476.1 million, from $126.5
million in the third quarter of 2019.
- Total sales of COVID-19 products were $375.7 million.
- Reported GAAP EPS of $5.33 per diluted share in the third
quarter of 2020, compared with $0.38 per diluted share in the third
quarter of 2019.
- Reported non-GAAP EPS of $5.78 per diluted share in the third
quarter of 2020, compared with $0.70 per diluted share in the third
quarter of 2019.
Third Quarter 2020 Results
Total revenue for the third quarter of 2020 was $476.1 million,
versus $126.5 million for the third quarter of 2019. The 276%
increase in sales from the third quarter of 2019 was driven by
growth in Rapid Immunoassay and Molecular Diagnostic Solutions
product categories, the result of strong demand for the newly
launched Sofia® SARS Antigen and Lyra® SARS-CoV-2 tests. This
growth in revenue was minimally offset by declines in Specialized
Diagnostic Solutions and Cardiometabolic Immunoassay revenues.
Currency exchange had a favorable impact of $0.5 million.
Rapid Immunoassay product revenue increased by $294.5 million in
the third quarter of 2020 to $337.0 million, primarily due to
$317.9 million in revenue for our Sofia SARS Antigen test.
Cardiometabolic Immunoassay revenue totaled $64.8 million in the
third quarter of 2020, a decline of 3% from the third quarter of
2019, driven by reduced hospital visits by chest pain patients
stemming from the COVID-19 pandemic. Molecular Diagnostic Solutions
revenue increased $58.3 million to $63.0 million due to Lyra®
SARS-CoV-2 assay revenue of $57.8 million. Specialized Diagnostic
Solutions revenue decreased 10% from the third quarter of 2019 to
$11.2 million.
“Our strong third quarter results serve as preamble for what
will be a truly remarkable finish to 2020,” said Douglas Bryant,
president and chief executive officer of Quidel Corporation. “It is
a story of creativity, innovation and grit that stretches from our
research labs to our regulatory affairs, supply chain management
and test manufacturing to benefit the lives and livelihoods of
millions of Americans.
“The entire Quidel Team has risen to the challenge of this
pandemic,” Mr. Bryant added. “We were the first to develop and
scale a rapid antigen test that democratized COVID-19 testing by
providing affordable, highly accurate results in minutes at diverse
points of care in tens of thousands of communities throughout the
United States. As we enter both Q4 and flu season, Quidel is once
again extending our innovation leadership with the first
FDA-authorized ‘ABC’ rapid antigen test capable of detecting and
distinguishing between Influenza A + B and COVID-19 from a single
nasal swab in just 15 minutes. This real-time diagnostic tool will
significantly enhance medical effectiveness in treating and
containing the dangerous twin pandemic of COVID-19 and virulent
flu.”
Gross Profit in the third quarter of 2020 increased to $383.6
million, driven by the demand for the new Sofia SARS Antigen and
Lyra SARS-CoV-2 products. Increased spend, required to expedite the
production ramp, was offset by higher absorption related to the
increased production volumes. Gross margin improvement versus last
year was due to the same factors. R&D expense increased by $9.5
million in the third quarter as compared to the same period last
year, due primarily to increased spending on Savanna, Sofia
instrument upgrade and next-generation instrument development
projects. We also incurred incremental labor and material costs
associated with COVID-19 product development. Sales and Marketing
expense increased by $10.8 million in the quarter, due primarily to
higher compensation costs driven by increased headcount and
improved performance in the quarter, as well as bad debt expense.
This was partially offset by reduced travel, meeting and trade show
costs due to the COVID-19 travel restrictions. G&A expense
increased by $4.3 million in the quarter due to higher compensation
costs. Acquisition and integration costs of $0.4 million for the
three months ended September 30, 2020 related to professional
service fees, while the $4.5 million for the three months ended
September 30, 2019 consisted primarily of global operation
integration costs and evaluation of new business development
opportunities.
In the third quarter of 2020, the Company recorded an income tax
expense of $63.5 million, as compared with $1.3 million in the same
quarter last year. The higher tax expense for the three months
ended September 30, 2020 compared to the same period in the prior
year is a result of higher pre-tax profits and lower proportional
discrete tax benefits recorded in 2020 for excess tax benefits of
stock-based compensation.
Net income for the third quarter was $232.3 million, or $5.33
per diluted share, as compared to a net income of $16.2 million, or
$0.38 per diluted share, for the third quarter of 2019. On a
non-GAAP basis, net income for the third quarter of 2020 was $252.0
million, or $5.78 per diluted share, as compared to net income of
$30.1 million, or $0.70 per diluted share, for the same period in
2019.
Results for the Nine Months Ended September 30, 2020
Total revenue for the nine months ended September 30, 2020 was
$852.5 million, versus $382.7 million for the same period in 2019.
The 123% increase in sales was driven by greater Rapid Immunoassay
and Molecular Diagnostics Solutions revenue associated with
COVID-19, as well as a stronger flu season in the first quarter of
2020 versus the prior year. This was partially offset by lower
Cardiometabolic Immunoassay revenue. Foreign exchange had a
negative impact of $0.7 million for the nine months ended September
30, 2020. The majority of the foreign currency headwind impacted
the Cardiometabolic Immunoassay business.
Rapid Immunoassay product revenue increased 305% in the nine
months ended September 30, 2020 to $513.6 million. This was led by
a 468% growth in Sofia revenue to $472.3 million, while QuickVue
sales decreased 4% from the same period of 2019 to $38.5 million.
Cardiometabolic Immunoassay revenue totaled $172.9 million in the
nine months ended September 30, 2020, representing a 14% decline
from 2019. Molecular Diagnostic Solutions revenue increased $111.9
million to $126.5 million, led by $113.6 million in revenue growth
from Lyra. Specialized Diagnostic Solutions revenue for the nine
months ended September 30, 2020 was $39.5 million, down 3% from
prior year.
“As important as quarterly financial performance metrics are, I
find the Quidel team is principally focused on the higher purpose
of defeating this coronavirus and helping restore the economic
well-being of our nation,” Mr. Bryant noted. “It is a spirit that
continues to fill our pipeline with innovative new products that
ultimately benefit the health and reopening of communities around
the globe,” Mr. Bryant concluded.
Gross Profit in the nine months ended September 30, 2020
increased to $647.4 million, was driven by the demand for the new
Sofia SARS Antigen, Lyra SARS-CoV-2 and influenza products, which
drove improved product mix. In addition, higher production volumes
contributed to increased manufacturing overhead absorption, which
offset increases in spend. Gross margin improved compared to the
same period in the prior year due to the same factors. R&D
expense increased by $21.2 million in the nine months ended
September 30, 2020 as compared to the same period last year, due
primarily to increased spending on Sofia, Savanna and
next-generation instrument development projects. We also incurred
higher labor, material and clinical trials spend associated with
COVID-19 product development. Sales and Marketing expense increased
by $12.6 million in the nine months ended September 30, 2020, as
compared to the same period in 2019, primarily due to higher
employee-related costs, freight and bad debt expense, partially
offset by reduced travel, meeting and trade show costs due to the
COVID-19 travel restrictions. G&A expense increased by $8.0
million, primarily due to increased compensation costs from global
expansion and improved performance in 2020. The increase was
partially offset by lower professional service fees incurred in the
period. Acquisition and integration costs of $3.2 million for the
nine months ended September 30, 2020 primarily related to the
evaluation of new business development opportunities. Acquisition
and integration costs of $9.1 million for the nine months ended
September 30, 2019 consisted primarily of global operation
integration costs.
Net income for the nine months ended September 30, 2020 was
$340.2 million, or $7.82 per diluted share, as compared to net
income of $42.3 million, or $1.02 per diluted share, for the same
period in 2019. On a non-GAAP basis, net income for the nine months
ended September 30, 2020 was $385.6 million, or $8.85 per diluted
share, as compared to net income of $84.4 million, or $1.96 per
diluted share, for the same period in 2019.
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, foreign exchange losses and
certain non-recurring items on net income and 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, adjusted net earnings per
share, and constant currency revenue 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. Constant currency revenue is calculated by
translating current period revenues using prior period exchange
rates, net of any hedging effect recognized in the current period.
Constant currency revenue growth (expressed as a percentage) is
calculated by determining the change in current period constant
currency revenues over prior period revenues. 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 2020 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.
Investors may either join the live call by telephone, or join
via webcast:
- To participate in the live call by telephone from the U.S.,
please dial 833-968-2118, or from outside the U.S. dial
778-560-2849, and request either the “Quidel Q3 2020 Earnings Call”
when prompted by the conference call operator, or dial conference
ID 688-9542.
- To join the live webcast, participants may click on the
following link directly:
https://event.on24.com/wcc/r/2625296/E75E2243C47118925001E5956E2A2D04,
or via the Investor Relations section of the Quidel website
(http://ir.quidel.com).
The website replay will be available for 1 year. The telephone
replay will be available for 14 days beginning at 8:00 p.m. Eastern
Time (5:00 p.m. Pacific Time) on October 29th, 2020 by dialing
800-585-8367 from the U.S., or by dialing 416-621-4642 for
international callers, and entering pass code 688-9542.
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 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, COVID-19, influenza,
respiratory syncytial virus, Strep A, lyme, herpes, pregnancy,
thyroid disease and fecal occult blood. Quidel's 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 and hospital and reference laboratories. For
more information about Quidel’s comprehensive product portfolio,
and to explore exciting employment opportunities, visit
quidel.com.
Forward-looking Statements
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:
the impact of the novel virus (COVID-19) global pandemic; funding
and compliance risks relating to government contracts, including
the ability to meet key deliverables and milestones under our NIH
RADx-ATP contract; adverse changes in competitive conditions, 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, our reliance on sales of our influenza and COVID-19
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 other respiratory or novel viruses and the related
potential impact on humans from such viruses, 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, acquisition and protection of proprietary technology
rights; our development of new technologies, products and markets;
our reliance on a limited number of key distributors; our exposure
to claims and litigation that could result in significant expenses
and could ultimately result in an unfavorable outcome for us,
including the ongoing litigation between us and Beckman Coulter,
Inc.; 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; failures or delays in receipt of
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 or other adverse actions by
regulatory authorities; changes in government policies; costs of
and adverse operational impact from 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 and potential cost constraints; 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 or shortages in our supply of raw materials and other
components; product defects; business risks not covered by
insurance; costs and disruptions from failures in our information
technology and storage systems; our exposure to data corruption,
cyber-based attacks, security breaches and privacy violations;
competition for and loss of management and key personnel;
international risks, including but not limited to, compliance with
product registration requirements, compliance with legal
requirements, tariffs, exposure to currency exchange fluctuations
and foreign currency exchange risk, longer payment cycles, lower
selling prices and greater difficulty in collecting accounts
receivable, reduced protection of intellectual property rights,
social, political and economic instability, increased financial
accounting and reporting burdens and complexities, taxes, and
diversion of lower priced international products into U.S. markets;
changes in tax rates and exposure to additional tax liabilities or
assessments; our ability to identify and successfully acquire and
integrate potential acquisition targets; that we may have to write
off goodwill relating to our acquisitions; our ability to manage
our growth strategy and identify and integrate acquired companies
or technologies and our ability to obtain financing; the level of
our indebtedness and deferred payment obligations; that our
Revolving Credit Facility is secured by substantially all of our
assets; the agreements for our indebtedness place operating and
financial restrictions on us and our ability to operate our
business; that an event of default could trigger acceleration of
our outstanding indebtedness; 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:
2020
2019
Total revenues
$
476,058
$
126,492
Cost of sales
92,439
50,633
Gross profit
383,619
75,859
Research and development
21,448
11,976
Sales and marketing
37,413
26,599
General and administrative
16,410
12,146
Acquisition and integration costs
389
4,456
Total operating expenses
75,660
55,177
Operating income
307,959
20,682
Other expense, net
Interest and other expense, net
(1,797
)
(3,152
)
Loss on extinguishment of debt
(10,384
)
—
Total other expense, net
(12,181
)
(3,152
)
Income before income taxes
295,778
17,530
Provision for income taxes
63,510
1,349
Net income
$
232,268
$
16,181
Basic earnings per share
$
5.52
$
0.39
Diluted earnings per share
$
5.33
$
0.38
Shares used in basic per share
calculation
42,105
41,642
Shares used in diluted per share
calculation
43,596
43,206
Gross profit as a % of total revenues
81
%
60
%
Research and development as a % of total
revenues
5
%
9
%
Sales and marketing as a % of total
revenues
8
%
21
%
General and administrative as a % of total
revenues
3
%
10
%
Consolidated net revenues by product
category are as follows:
Rapid Immunoassay
$
337,042
$
42,534
Cardiometabolic Immunoassay
64,810
66,820
Specialized Diagnostic Solutions
11,213
12,455
Molecular Diagnostic Solutions
62,993
4,683
Total revenues
$
476,058
$
126,492
Condensed balance sheet data:
9/30/2020
12/31/2019
Cash and cash equivalents
$
77,547
$
52,775
Accounts receivable, net
$
353,154
$
94,496
Inventories
$
95,221
$
58,086
Total assets
$
1,249,358
$
910,867
Short-term debt
$
6,986
$
13,135
Long-term debt
$
4,206
$
4,375
Stockholders’ equity
$
849,247
$
559,820
QUIDEL CORPORATION
(In thousands, except per share
data; unaudited)
Nine months ended September
30,
Consolidated Statements of
Operations:
2020
2019
Total revenues
$
852,465
$
382,712
Cost of sales
205,104
156,747
Gross profit
647,361
225,965
Research and development
58,797
37,629
Sales and marketing
95,718
83,114
General and administrative
46,421
38,453
Acquisition and integration costs
3,175
9,116
Total operating expenses
204,111
168,312
Operating income
443,250
57,653
Other expense, net
Interest and other expense, net
(8,071
)
(12,239
)
Loss on extinguishment of debt
(10,384
)
(748
)
Total other expense, net
(18,455
)
(12,987
)
Income before income taxes
424,795
44,666
Provision for income taxes
84,638
2,371
Net income
$
340,157
$
42,295
Basic earnings per share
$
8.08
$
1.04
Diluted earnings per share
$
7.82
$
1.02
Shares used in basic per share
calculation
42,093
40,520
Shares used in diluted per share
calculation
43,582
43,051
Gross profit as a % of total revenues
76
%
59
%
Research and development as a % of total
revenues
7
%
10
%
Sales and marketing as a % of total
revenues
11
%
22
%
General and administrative as a % of total
revenues
5
%
10
%
Consolidated net revenues by product
category are as follows:
Rapid Immunoassay
$
513,578
$
126,800
Cardiometabolic Immunoassay
172,902
200,674
Specialized Diagnostic Solutions
39,452
40,595
Molecular Diagnostic Solutions
126,533
14,643
Total revenues
$
852,465
$
382,712
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
2020
2019
2020
2019
2020
2019
2020
2019
GAAP Financial Results
$
383,619
$
75,859
$
307,959
$
20,682
$
232,268
$
16,181
Interest expense on Convertible Senior
Notes, net of tax
107
180
Net income used for diluted earnings per
share, if-converted method
232,375
16,361
$
5.33
$
0.38
Adjustments:
Non-cash stock compensation expense
539
265
5,553
3,124
5,553
3,124
Amortization of intangibles
1,901
1,925
7,129
6,965
7,129
6,965
Amortization of debt issuance costs on
credit facility
101
101
Non-cash interest expense for deferred
consideration
1,414
1,848
Loss on extinguishment of Convertible
Senior Notes
10,384
—
Acquisition and integration costs
389
4,456
389
4,456
Foreign exchange loss
(159
)
460
Income tax impact of adjustments (a)
(5,210
)
(3,222
)
Adjusted (b)
$
386,059
$
78,049
$
321,030
$
35,227
$
251,976
$
30,093
$
5.78
$
0.70
______________________________________________
(a) Income tax impact of adjustments represents the tax impact
related to the non-GAAP adjustments listed above and reflects an
effective tax rate of 21% for 2020 and 19% for 2019.
(b) Adjusted net earnings per share for the three months ended
September 30, 2019 was calculated using an adjusted diluted
weighted average shares outstanding of 43.2 million shares.
Adjustments from GAAP diluted weighted average shares outstanding
consisted of 0.4 million potentially dilutive shares issuable from
Convertible Senior Notes and 1.2 million potentially diluted 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
2020
2019
2020
2019
2020
2019
2020
2019
GAAP Financial Results
$
647,361
$
225,965
$
443,250
$
57,653
$
340,157
$
42,295
Interest expense on Convertible Senior
Notes, net of tax
457
1,669
Net income used for diluted earnings per
share, if-converted method
340,614
43,964
$
7.82
$
1.02
Adjustments:
Non-cash stock compensation expense
1,232
807
14,561
10,084
14,561
10,084
Amortization of intangibles
5,764
5,776
21,232
20,913
21,232
20,913
Amortization of debt issuance costs on
credit facility
303
303
Non-cash interest expense for deferred
consideration
5,026
6,352
Loss on extinguishment of Convertible
Senior Notes
10,384
748
Change in fair value of acquisition
contingencies
848
626
848
626
Change in fair value of derivative
liabilities - Convertible Senior Note
1,084
—
Acquisition and integration costs
3,175
9,116
3,175
9,116
Foreign exchange loss
347
1,735
Income tax impact of adjustments (a)
(11,962
)
(9,477
)
Adjusted (b)
$
654,357
$
232,548
$
483,066
$
98,392
$
385,612
$
84,364
$
8.85
$
1.96
_______________________________________________________
(a) Income tax impact of adjustments represents the tax impact
related to the non-GAAP adjustments listed above and reflects an
effective tax rate of 21% for 2020 and 19% for 2019.
(b) Adjusted net earnings per share for the nine months ended
September 30, 2019 was calculated using an adjusted diluted
weighted average shares outstanding of 43.1 million shares.
Adjustments from GAAP diluted weighted average shares outstanding
consisted of 1.3 million potentially dilutive shares issuable from
Convertible Senior Notes and 1.2 million potentially dilutive
shares issuable from stock options and unvested RSUs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201029006172/en/
Quidel Contact: Quidel Corporation Randy Steward Chief Financial
Officer 858.552.7931
Media and Investors Contact: Quidel Corporation Ruben Argueta
858.646.8023 rargueta@quidel.com
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