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, 2020.
Second Quarter 2020 Highlights
- Total revenue increased 86% to $201.8 million, from $108.3
million in the second quarter of 2019.
- Total sales of COVID-19 products were $109.0 million.
- Reported GAAP EPS of $1.55 per diluted share in the second
quarter of 2020, compared with $0.03 per diluted share in the
second quarter of 2019.
- Reported non-GAAP EPS of $1.86 per diluted share in the second
quarter of 2020, compared with $0.36 per diluted share in the
second quarter of 2019.
- Received Emergency Use Authorization (EUA) from the U.S. Food
and Drug Administration (FDA) for Sofia® SARS Antigen FIA for use
with Sofia® and Sofia® 2 instruments.
- Received EUA from the FDA for Lyra® Direct SARS-CoV-2
Assay.
- Repurchased 247,172 shares of Quidel stock for $42.2
million.
Second Quarter 2020 Results
Total revenue for the second quarter of 2020 was $201.8 million,
versus $108.3 million for the second quarter of 2019. The 86%
increase in sales from the second 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 was
partially offset by declines in Specialized Diagnostic Solutions
and Cardiometabolic Immunoassay revenues. Currency exchange had an
unfavorable impact of $0.6 million.
Rapid Immunoassay product revenue increased 270% in the second
quarter of 2020 to $80.6 million, primarily due to $56.3 million in
revenue for our Sofia SARS Antigen test. Cardiometabolic
Immunoassay revenue totaled $54.2 million in the second quarter of
2020, a decline of 20% from the second quarter of 2019, driven by
reduced hospital visits by chest pain patients stemming from the
COVID-19 pandemic. Molecular Diagnostic Solutions revenue increased
$51.0 million to $55.2 million due to Lyra® SARS-CoV-2 assay
revenue of $52.7 million. Specialized Diagnostic Solutions revenue
decreased 18% from the second quarter of 2019 to $11.8 million.
“Our strong second quarter results were driven by significant
demand for COVID-19 diagnostic products, and reflected our
organization's ability to quickly develop and scale diagnostic
products that are making a difference in people's lives,” said
Douglas Bryant, president and chief executive officer of Quidel
Corporation. “In the quarter, we also made excellent progress on
our product pipeline and on our sourcing and manufacturing capacity
initiatives. As a point-of-care diagnostics leader, we are proud to
expand access to affordable testing, and provide answers to some of
the most vulnerable.”
Gross Profit in the second quarter of 2020 increased to $148.8
million, driven by the demand for the new Sofia SARS Antigen and
Lyra SARS-CoV-2 products. In addition, higher volumes contributed
to increased manufacturing overhead absorption. Gross margin
improvement versus last year was due to the same factors. R&D
expense increased by $9.2 million in the second quarter as compared
to the same period last year, due primarily to increased spending
on Sofia, Savanna and next-generation platform development
projects. We also incurred higher material and labor costs
associated with COVID-19 product development. Sales and Marketing
expense increased by $0.6 million in the quarter, due primarily to
increased headcount and higher compensation costs driven by
improved performance in the quarter. This was partially offset by
reduced travel, meeting and trade show costs due to the COVID-19
travel restrictions. G&A expense increased by $2.8 million in
the quarter due to higher compensation costs. Acquisition and
integration costs of $0.9 million for the three months ended June
30, 2020 were primarily related to the evaluation of new business
development opportunities, while acquisition and integration costs
of $1.8 million for the three months ended June 30, 2019 consisted
primarily of global operation integration costs.
In the second quarter of 2020, the Company recorded an income
tax expense of $12.5 million, as compared with $0.7 million tax
benefit in the same quarter last year. The higher tax expense for
the three months ended June 30, 2020 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 second quarter was $67.7 million, or $1.55
per diluted share, as compared to a net income of $1.3 million, or
$0.03 per diluted share, for the second quarter of 2019. On a
non-GAAP basis, net income for the second quarter of 2020 was $81.6
million, or $1.86 per diluted share, as compared to net income of
$15.4 million, or $0.36 per diluted share, for the same period in
2019.
Results for the Six Months Ended June 30, 2020
Total revenue for the six months ended June 30, 2020 was $376.4
million, versus $256.2 million for the same period in 2019. The 47%
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 2020 versus the prior year.
This was partially offset by lower Cardiometabolic Immunoassay
revenue. Foreign exchange had a negative impact of $1.2 million for
the six months ended June 30, 2020. The majority of the foreign
currency headwind impacted the Cardiometabolic Immunoassay
business.
Rapid Immunoassay product revenue increased 109% in the six
months ended June 30, 2020 to $176.5 million. This was led by a
158% growth in Sofia revenue to $140.4 million, while QuickVue
sales increased 26% from the same period of 2019 to $34.5 million.
Cardiometabolic Immunoassay revenue totaled $108.1 million in the
six months ended June 30, 2020. Molecular Diagnostic Solutions
revenue increased $53.6 million to $63.5 million, led by $53.8
million in revenue growth from Lyra. Specialized Diagnostic
Solutions revenue for the six months ended June 30, 2020 was $28.2
million.
Gross Profit in the six months ended June 30, 2020 increased to
$263.7 million, 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 volumes contributed to
increased manufacturing overhead absorption. Gross margin improved
compared to the same period in the prior year due to the same
factors. R&D expense increased by $11.7 million in the six
months ended June 30, 2020 as compared to the same period last
year, due primarily to increased spending on Sofia and
next-generation platform development projects, Savanna instrument
development costs, higher labor and material costs associated with
COVID-19 related product development and higher employee-related
costs. Sales and Marketing expense increased by $1.8 million in the
six months ended June 30, 2020, as compared to the same period in
2019, primarily due to higher employee-related costs, partially
offset by reduced travel, meeting and trade show costs due to the
COVID-19 travel restrictions. G&A expense increased by $3.7
million, primarily due to increased compensation costs from global
expansion and improved performance during the current period. The
increase was partially offset by lower professional service fees
incurred in the period. Acquisition and integration costs of $2.8
million for the six months ended June 30, 2020 primarily related to
the evaluation of new business development opportunities.
Acquisition and integration costs of $4.7 million for the six
months ended June 30, 2019 consisted primarily of global operation
integration costs.
Net income for the six months ended June 30, 2020 was $107.9
million, or $2.48 per diluted share, as compared to net income of
$26.1 million, or $0.65 per diluted share, for the same period in
2019. On a non-GAAP basis, net income for the six months ended June
30, 2020 was $134.3 million, or $3.08 per diluted share, as
compared to net income of $54.3 million, or $1.28 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, constant currency revenue and currency revenue growth
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
second 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 Q2 2020 Earnings Call”
when prompted by the conference call operator, or dial conference
ID 336-5909.
- To join the live webcast, participants may click on the
following link directly:
https://event.on24.com/wcc/r/2399366/554769F2DE954BE74E6A85BD876C70DF,
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 July 30th, 2020 by dialing
800-585-8367 from the U.S., or by dialing 416-621-4642 for
international callers, and entering pass code 336-5909.
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;
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, 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, 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 sales of our
influenza diagnostic tests; our reliance on a limited number of key
distributors; our exposure to claims and litigation, including the
ongoing litigation between the Company 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; 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; 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; failures in our
information technology or storage systems; 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 multiple product registration
requirements, compliance with U.S. and foreign import/export laws,
tariffs, 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, increased financial accounting
and reporting burdens. 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 manage our growth strategy and identify and integrate acquired
companies or technologies; risks relating to the acquisition and
integration of the Triage and BNP Businesses; that we may have to
write off goodwill relating to our acquisitions; the level of our
indebtedness and deferred payment obligations; our ability to
generate sufficient cash flow to meet our debt service and deferred
payment obligations; that we may incur additional indebtedness;
that the Senior Credit Facility is secured by substantially all of
our assets; 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;
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:
2020
2019
Total revenues
$
201,754
$
108,252
Cost of sales
53,003
49,073
Gross profit
148,751
59,179
Research and development
20,970
11,723
Sales and marketing
27,567
26,926
General and administrative
15,679
12,876
Acquisition and integration costs
872
1,836
Total operating expenses
65,088
53,361
Operating income
83,663
5,818
Other expense, net
Interest and other expense, net
(3,467
)
(4,505
)
Loss on extinguishment of debt
—
(748
)
Total other expense, net
(3,467
)
(5,253
)
Income before income taxes
80,196
565
Provision (benefit) for income taxes
12,544
(705
)
Net income
$
67,652
$
1,270
Basic earnings per share
$
1.61
$
0.03
Diluted earnings per share
$
1.55
$
0.03
Shares used in basic per share
calculation
42,117
40,209
Shares used in diluted per share
calculation
43,746
41,429
Gross profit as a % of total revenues
74
%
55
%
Research and development as a % of total
revenues
10
%
11
%
Sales and marketing as a % of total
revenues
14
%
25
%
General and administrative as a % of total
revenues
8
%
12
%
Consolidated net revenues by product
category are as follows:
Rapid Immunoassay
$
80,606
$
21,772
Cardiometabolic Immunoassay
54,191
67,982
Specialized Diagnostic Solutions
11,780
14,286
Molecular Diagnostic Solutions
55,177
4,212
Total revenues
$
201,754
$
108,252
Condensed balance sheet data:
6/30/2020
12/31/2019
Cash and cash equivalents
$
72,589
$
52,775
Accounts receivable, net
$
111,027
$
94,496
Inventories
$
92,618
$
58,086
Total assets
$
972,931
$
910,867
Short-term debt
$
40,616
$
13,135
Long-term debt
$
4,113
$
4,375
Stockholders’ equity
$
611,709
$
559,820
QUIDEL CORPORATION
(In thousands, except per share
data; unaudited)
Six months ended June
30,
Consolidated Statements of
Operations:
2020
2019
Total revenues
$
376,407
$
256,220
Cost of sales
112,665
106,114
Gross profit
263,742
150,106
Research and development
37,349
25,653
Sales and marketing
58,305
56,515
General and administrative
30,011
26,307
Acquisition and integration costs
2,786
4,660
Total operating expenses
128,451
113,135
Operating income
135,291
36,971
Other expense, net
Interest and other expense, net
(6,274
)
(9,087
)
Loss on extinguishment of debt
—
(748
)
Total other expense, net
(6,274
)
(9,835
)
Income before income taxes
129,017
27,136
Provision for income taxes
21,128
1,022
Net income
$
107,889
$
26,114
Basic earnings per share
$
2.56
$
0.65
Diluted earnings per share
$
2.48
$
0.65
Shares used in basic per share
calculation
42,086
39,957
Shares used in diluted per share
calculation
43,574
42,315
Gross profit as a % of total revenues
70
%
59
%
Research and development as a % of total
revenues
10
%
10
%
Sales and marketing as a % of total
revenues
15
%
22
%
General and administrative as a % of total
revenues
8
%
10
%
Consolidated net revenues by product
category are as follows:
Rapid Immunoassay
$
176,536
$
84,266
Cardiometabolic Immunoassay
108,092
133,854
Specialized Diagnostic Solutions
28,239
28,140
Molecular Diagnostic Solutions
63,540
9,960
Total revenues
$
376,407
$
256,220
QUIDEL CORPORATION
Reconciliation of Non-GAAP
Financial Information
(In thousands, except per share
data; unaudited)
Three months ended June
30,
Gross Profit
Operating Income
Net Income
Diluted EPS
2020
2019
2020
2019
2020
2019
2020
2019
GAAP Financial Results
$
148,751
$
59,179
$
83,663
$
5,818
$
67,652
$
1,270
Interest expense on Convertible Senior
Notes, net of tax
179
—
Net income used for diluted earnings per
share, if-converted method
67,831
1,270
$
1.55
$
0.03
Adjustments:
Interest expense on Convertible Senior
Notes (a)
—
862
Non-cash stock compensation expense
435
262
5,130
3,372
5,130
3,372
Amortization of intangibles
1,905
1,926
7,041
6,967
7,041
6,967
Amortization of debt issuance costs on
credit facility
101
101
Non-cash interest expense for deferred
consideration
1,717
2,161
Loss on extinguishment of Convertible
Senior Notes
—
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
872
1,836
872
1,836
Foreign exchange loss
146
776
Income tax impact of adjustments (b)
(3,218
)
(3,315
)
Adjusted (c)
$
151,091
$
61,367
$
97,554
$
18,619
$
81,552
$
15,404
$
1.86
$
0.36
(a) Interest expense on Convertible Senior Notes and related tax
impact are not adjusted for the purposes of calculated GAAP diluted
earnings per share as the Convertible Notes are anti-dilutive.
(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 2020 and 2019.
(c) Adjusted net earnings per share for the three months ended
June 30, 2019 was calculated using an adjusted diluted weighted
average shares outstanding of 43.0 million shares. Adjustments from
GAAP diluted weighted average shares outstanding consisted of 1.6
million potentially dilutive shares issuable from Convertible
Senior Notes.
QUIDEL CORPORATION
Reconciliation of Non-GAAP
Financial Information
(In thousands, except per share
data; unaudited)
Six months ended June
30,
Gross Profit
Operating Income
Net Income
Diluted EPS
2020
2019
2020
2019
2020
2019
2020
2019
GAAP Financial Results
$
263,742
$
150,106
$
135,291
$
36,971
$
107,889
$
26,114
Interest expense on Convertible Senior
Notes, net of tax
360
1,489
Net income used for diluted earnings per
share, if-converted method
108,249
27,603
$
2.48
$
0.65
Adjustments:
Non-cash stock compensation expense
693
542
9,008
6,960
9,008
6,960
Amortization of intangibles
3,863
3,851
14,103
13,948
14,103
13,948
Amortization of debt issuance costs on
credit facility
202
202
Non-cash interest expense for deferred
consideration
3,612
4,504
Loss on extinguishment of Convertible
Senior Notes
—
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
2,786
4,660
2,786
4,660
Foreign exchange loss
506
1,275
Income tax impact of adjustments (a)
(6,108
)
(6,255
)
Adjusted
$
268,298
$
154,499
$
162,036
$
63,165
$
134,290
$
54,271
$
3.08
$
1.28
(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 19% for 2020 and 2019.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005962/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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