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 second quarter ended June 30, 2018.
Second Quarter 2018 Highlights
- Total revenue was $103.2 million as
compared to $38.3 million in the second quarter of 2017.
- Cardiac Immunoassay revenue was $69.9
million.
- Influenza revenue was $5.5 million as
compared to $10.1 million in the second quarter of 2017.
- Reduced debt by an additional $98.6
million through convertible note exchange and accelerated
Senior Credit Facility debt payment.
- Reported GAAP EPS of $(0.08) per
share in the second quarter of 2018, as compared to $(0.35)
per share in the second quarter of 2017 and reported non-GAAP EPS
of $0.36 per diluted share in the second quarter of 2018, as
compared to $(0.12) per share in the second quarter of 2017.
Second Quarter 2018 Results
Total revenue for the second quarter of 2018 was $103.2 million,
versus $38.3 million for the second quarter of 2017. The 170%
increase in sales from the second quarter of 2018 was driven by
incremental revenue from the acquired Cardiac Immunoassay business,
that was partially offset by a 24% decline in the Rapid Immunoassay
business, due to an earlier end to the Influenza season in 2018
than in 2017.
Cardiac Immunoassay revenue, which includes revenue from the
Triage, Triage Toxicology and Beckman BNP products acquired in
October 2017, totaled $69.9 million in the second quarter of 2018.
Rapid Immunoassay product revenue (which includes QuickVue, Sofia
and Eye Health products) decreased 24% in the second quarter of
2018 to $16.7 million, due in large part to a $4.5 million decrease
in Influenza revenue from the second quarter of 2017. Molecular
Diagnostic Solutions revenue increased 22% to $3.9 million, led by
103% revenue growth from Solana, our instrumented molecular
diagnostic system. Specialized Diagnostic Solutions revenue, which
includes revenue from Virology/DHI, Specialty and Other, decreased
3% from the second quarter of 2017 to $12.7 million.
“We delivered another successful quarter, marked by strong
demand for our Cardiac Immunoassay products internationally and
better-than-expected performance from our Cardiac business overall.
As anticipated, demand for Respiratory Immunoassay products was
lower as the Influenza season came to an end,” said Douglas Bryant,
president and CEO of Quidel Corporation.
"Operationally, we achieved a number of milestones during the
second quarter. First, we shipped our 10,000th Sofia 2 instrument,
a testament to the demand for the new system and the power of the
Sofia brand. Sofia 2 now accounts for about a third of all Sofia
placements in the field. Second, integration of the acquired Triage
businesses remains on track, highlighted by the grand opening of
our shared service center in Galway, Ireland, which will support
our customers and commercial teams across the EMEA region, allowing
us to roll off transition service agreements in more than 30
countries and strengthen our international presence. Third, we
further de-levered the business by retiring $38.6 million in debt
through the exchange of convertible notes for shares, and by an
accelerated payment of $60.0 million in cash on our Senior Credit
Facility. We are optimistic as we enter the second half of the year
and remain focused on delivering long-term growth and creating
value for our shareholders.”
Gross Profit in the second quarter of 2018 increased to $57.7
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 56% as compared to
49% for the same period last year, due to improved product mix and
increased production volumes. Amortization of intangibles reduced
the gross margin by 2 percentage points, and the Triage/BNP
inventory step-up of fair value did not impact the consolidated
gross margin. R&D expense increased by $5.7 million in the
second quarter as compared to the same period last year, primarily
due to incremental expense for the Triage and Beckman BNP
Businesses, as well as increased investment for the Savanna
molecular diagnostic platform. Sales and Marketing expense
increased by $14.5 million in the second quarter of 2018, as
compared to the second quarter of 2017, largely due to incremental
personnel costs associated with the international Triage business.
G&A expense increased by $4.7 million in the quarter, primarily
due to additional costs associated with the Triage and BNP
Businesses, change in fair value of acquisition contingencies of
$0.7 million, increased compensation costs and legal fees.
Acquisition and Integration Costs were $4.9 million, driven by
integration activities associated with the Triage and BNP
Businesses. The loss on extinguishment of debt includes one-time
costs of $1.6 million related to the partial write down of
unamortized debt issuance costs related to the Senior Credit
Facility, and $0.8 million loss associated with the Convertible
Senior Note exchange agreements.
Net loss for the second quarter of 2018 was $3.1 million, or
$(0.08) per diluted share, as compared to net loss of $11.8
million, or $(0.35) per diluted share, for the second quarter of
2017. On a non-GAAP basis, net income for the second quarter of
2018 was $15.4 million, or $0.36 per diluted share, as compared to
net loss of $4.0 million, or $(0.12) per diluted share, for the
same period in 2017.
Results for the Six Months Ended June 30, 2018
Total revenue for the six-month period ended June 30, 2018 was
$272.3 million, versus $112.0 million for the same period in 2017.
The 143% increase in sales was driven by $138.3 million in
incremental revenue from the acquired Cardiac Immunoassay business,
as well as 22% revenue growth from the Rapid Immunoassay business,
primarily driven by $70.2 million in sales of Influenza immunoassay
products.
Cardiac Immunoassay revenue, which includes revenues from the
Triage, Triage Toxicology and Beckman BNP products acquired in
October 2017, totaled $138.3 million in the six-month period ended
June 30, 2018. Rapid Immunoassay product revenue increased 22% in
the six-month period ended June 30, 2018 to $97.4 million. This was
led by a 92% rise in Sofia revenue, while QuickVue sales declined
32% from the same period of 2017. Molecular Diagnostic Solutions
revenue increased 43% to $9.1 million, led by 141% revenue growth
from Solana, our instrumented molecular diagnostic system.
Specialized Diagnostic Solutions revenue increased 6% from the
six-month period ended June 30, 2018 to $27.6 million.
Gross Profit in the six-month period ended June 30, 2018
increased to $163.9 million, the result of increased sales volumes
associated with the acquired Triage and BNP Businesses and Rapid
Immunoassay products, as well as favorable product mix. Gross
margin for the six-month period ended June 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 1 additional
percentage point. R&D expense increased by $10.4 million in the
six-month period ended 2018 as compared to the same period last
year, primarily due to the acquired Triage business, and additional
investments made on the Savanna molecular diagnostic platform.
Sales and Marketing expense increased by $28.8 million in the
six-month period ended 2018, as compared to the same period in
2017, largely due to incremental costs associated with the
international Triage business, as well as higher compensation costs
associated with improved company performance. G&A expense
increased by $8.1 million, primarily due to costs associated with
Triage and BNP Businesses, higher compensation costs, and legal
fees. Acquisition and Integration Costs were $8.4 million in the
period and represented integration costs associated with the Triage
and BNP Businesses. The loss on extinguishment of debt includes
one-time costs of $4.7 million related to the partial write down 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 six-month period ended June 30, 2018 was
$30.9 million, or $0.81 per diluted share, as compared to net
income of $2.4 million, or $0.07 per diluted share, for the same
period in 2017. On a non-GAAP basis, net income for the six months
ended June 30, 2018 was $69.7 million, or $1.65 per diluted share,
as compared to net income of $11.3 million, or $0.33 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 net income (loss) and
adjusted net earnings (loss) 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
second 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 485-7326.
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
485-7326.
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 healthcare providers with 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 June 30, Consolidated
Statements of Operations: 2018 2017 Total
revenues $ 103,155 $ 38,267 Cost of sales 45,487 19,441
Gross profit 57,668 18,826 Research and
development 13,284 7,627 Sales and marketing 27,545 13,064 General
and administrative 11,500 6,783 Acquisition and integration costs
4,935 2,379 Total costs and expenses 57,264
29,853 Operating income (loss) 404 (11,027 ) Other expense,
net: Interest expense, net (6,839 ) (2,778 ) Loss on extinguishment
of debt (2,398 ) — Total other expense, net (9,237 ) (2,778
) (Loss) income before income taxes (8,833 ) (13,805 ) (Benefit)
provision for income taxes (5,757 ) (1,963 ) Net (loss) income $
(3,076 ) $ (11,842 ) Basic and diluted loss per share $
(0.08 ) $ (0.35 ) Shares used in basic and diluted per share
calculation 37,925 33,500 Gross profit as a % of total
revenues 56 % 49 % Research and development as a % of total
revenues 13 % 20 % Sales and marketing as a % of total revenues 27
% 34 % General and administrative as a % of total revenues 11 % 18
%
Consolidated net revenues by product category are as
follows: Rapid Immunoassay $ 16,689 $ 21,983 Cardiac
Immunoassay 69,850 — Specialized Diagnostic Solutions 12,694 13,070
Molecular Diagnostic Solutions 3,922 3,214 Total
revenues $ 103,155 $ 38,267
Condensed
balance sheet data: 6/30/2018 12/31/2017 Cash and
cash equivalents $ 38,675 $ 36,086 Accounts receivable, net 44,703
67,046 Inventories 59,714 67,078 Total assets 763,501 935,251
Short-term debt 53,421 20,184 Long-term debt 84,729 381,110
Stockholders’ equity 368,908 227,104
Six Months
Ended June 30, Consolidated Statements of Operations:
2018 2017 Total revenues $ 272,298 $ 111,959
Cost of sales 108,359 44,634 Gross profit 163,939
67,325 Research and development 25,905 15,502 Sales
and marketing 56,103 27,287 General and administrative 22,032
13,903 Acquisition and integration costs 8,402 2,431
Total costs and expenses 112,442 59,123 Operating
income 51,497 8,202 Other expense, net: Interest expense, net
(14,689 ) (5,603 ) Loss on extinguishment of debt (6,965 ) —
Total other expense, net (21,654 ) (5,603 ) Income before income
taxes 29,843 2,599 (Benefit) provision for income taxes (1,039 )
151 Net income $ 30,882 $ 2,448 Basic
earnings per share $ 0.84 $ 0.07 Diluted earnings per share $ 0.81
$ 0.07 Shares used in basic per share calculation 36,586 33,351
Shares used in diluted per share calculation 42,255 34,295
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 % 24 % General and administrative as a
% of total revenues 8 % 12 %
Consolidated net revenues by
product category are as follows: Rapid Immunoassay $ 97,374 $
79,516 Cardiac Immunoassay 138,294 — Specialized Diagnostic
Solutions 27,565 26,118 Molecular Diagnostic Solutions 9,065
6,325 Total revenues $ 272,298 $ 111,959
QUIDEL CORPORATION
Reconciliation of Non-GAAP Financial
Information
(In thousands, except per share data;
unaudited)
Three months ended June 30, Six months
ended June 30, 2018 2017 2018
2017 (unaudited) (unaudited) Net (loss) income - GAAP
$ (3,076 ) $ (11,842 ) $ 30,882 $ 2,448 Interest expense on
Convertible Senior Notes, net of tax (a) — — 3,361
— Net (loss) income used for diluted earnings per
share, if-converted method (3,076 ) (11,842 ) 34,243 2,448
Add: Interest expense on Convertible Senior Notes (a) 1,497
1,375 — 2,741 Non-cash stock compensation expense 3,479 2,138 6,415
4,059 Amortization of intangibles 6,998 2,515 14,859 4,885
Amortization of debt discount and issuance costs on credit facility
284 — 615 — Non-cash interest expense for deferred consideration
2,608 — 5,401 — Loss on extinguishment of Convertible Senior Notes
766 — 2,304 — Loss on extinguishment of Senior Credit Facility
1,631 — 4,660 — Amortization of inventory step-up of fair value — —
3,650 — Change in fair value of acquisition contingencies 745 — 745
— Acquisition and integration costs 4,935 2,379 8,402 2,431 Income
tax impact of adjustments (a) (4,355 ) (2,940 ) (8,940 ) (4,940 )
Income tax impact of valuation allowance for deferred tax assets
(79 ) 2,359 (2,622 ) (326 ) Adjusted net income (loss) for
diluted earnings per share, if-converted method $ 15,433 $
(4,016 ) $ 69,732 $ 11,298 Diluted (loss) earnings
per share:
Net (loss) earnings per share - GAAP
$ (0.08 ) $ (0.35 ) $ 0.81 $ 0.07
Adjusted net earnings (loss) per share
(b)
$ 0.36 $ (0.12 ) $ 1.65 $
0.33
(a) Due to the net loss incurred in the second quarter of 2018,
interest expense on Convertible Senior Notes and related tax impact
are not adjusted for the purposes of calculating GAAP diluted loss
per share as the Convertible Seniors Notes are anti-dilutive. The
if-converted method was not applicable during 2017 as the
Convertible Senior Notes were not convertible.
(b) Adjusted net earnings per share for the second quarter of
2018 was calculated using an adjusted diluted weighted average
shares outstanding of 42,562 thousand shares. Adjustments from GAAP
diluted weighted average shares outstanding consisted of 2,817
thousand potentially dilutive shares issuable from Convertible
Senior Notes and 1,820 thousand potentially dilutive shares
issuable from stock options and unvested RSUs.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180807005818/en/
Quidel Contact:Quidel CorporationRandy StewardChief Financial
Officer858.552.7931orMedia and Investors Contact:Quidel
CorporationRuben Argueta858.646.8023rargueta@quidel.com
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