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Quidel (QDEL) Q4 Earnings Top Estimates, Margins Decline

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Quidel Corporation QDEL delivered adjusted earnings per share (“EPS”) of $7.29 in the fourth quarter of 2021, down 34.1% year over year. The figure surpassed the Zacks Consensus Estimate by 49.1%.

The adjustments include expenses related to amortization of intangibles and non-cash stock compensation expenses, among others.

GAAP EPS for the quarter was $6.85, reflecting a 36.5% fall from the year-earlier figure.

Full-year adjusted EPS was $17.72, reflecting an 11% decrease from the year-ago period. The metric surpassed the Zacks Consensus Estimate by 18.6%.

Revenues in Detail

Quidel registered revenues of $636.9 million in the fourth quarter, down 21.3% year over year. The figure surpassed the Zacks Consensus Estimate by 0.3%.

The year-over-year revenue decline was due to a fall in revenues from the Sofia 2 Flu + SARS antigen fluorescent immunoassay (“FIA”) in the reported quarter compared with the year-ago period. Also, a shift in product mix for Quidel’s Rapid Immunoassay COVID-19 products from the higher-priced Sofia products sold in the professional market to the lower-priced QuickVue products sold in the retail, pharmacy and employer testing markets dragged down quarterly revenues.

Total revenues from COVID-19 products increased 26.3% year over year to $511.8 million. Total revenues from Influenza products were $40.5 million, including $11.5 million of Sofia Flu revenues and $24.6 million of Sofia SARS combo test revenues).

Full-year revenues were $1.69 billion, reflecting a 2.2% improvement from the year-ago period. The metric topped the Zacks Consensus Estimate by 8.3%.

Segments in Detail

Quidel derives revenues from four product categories — Rapid Immunoassay, Cardiometabolic Immunoassay, Molecular Diagnostic Solutions and Specialized Diagnostic Solutions.

In the fourth quarter, Rapid Immunoassay revenues fell 17.5% from the year-ago quarter’s level to $520.9 million, primarily due to a plunge in Sofia sales during the quarter, which amounted to $92.8 million. Lower sales of the Sofia product line resulted from lower Sofia 2 Flu + SARS Antigen FIA revenues, along with customer shift to the QuickVue At-Home COVID-19 test. However, this was offset by an uptick in QuickVue At-Home OTC (over-the-counter) COVID-19 test sales, which were $427 million in the quarter compared with $9.8 million in the prior-year period.

Quidel Corporation Price, Consensus and EPS Surprise

Quidel Corporation Price, Consensus and EPS Surprise
Quidel Corporation Price, Consensus and EPS Surprise

Quidel Corporation price-consensus-eps-surprise-chart | Quidel Corporation Quote

Cardiometabolic Immunoassay revenues were down 24.6% year over year to $52.8 million. This decline resulted due to the impact of the transition and settlement agreements with Beckman Coulter for the B-type Naturietic Peptide or BNP assay business in July 2021. The segment included revenues of $30.3 million from the Triage business (down 4.1% year over year), with strong growth in China offset by weakness in the United States.

Molecular Diagnostic Solutions revenues were $50.9 million, down 47.2% year over year due to a fall in Lyra SARS-CoV-2 assay revenues. This was partially offset by an increase in Solana product revenues.

Revenues from Specialized Diagnostic Solutions improved 5.8% year over year to $12.2 million.

Margin Trend

In the quarter under review, Quidel’s gross profit plunged 30.2% to $489.3 million. Gross margin contracted by 985 basis points (bps) to 76.8%.

Sales and marketing expenses rose 47% to $56.2 million. Research and development expenses went up 2.4% year over year to $26.1 million, while general and administrative expenses climbed 11.5% year over year to $22.5 million. Adjusted operating expenses of $104.8 million increased 24.9% year over year.

Adjusted operating profit totaled $384.5 million, reflecting a 37.7% decline from the prior-year quarter’s level. Adjusted operating margin in the fourth quarter contracted a huge 1594 bps to 60.4%.

Financial Position

Quidel exited full-year 2021 with cash and cash equivalents of $802.8 million compared with $489.9 million at the end of 2020. Total debt (including short-term debt) at the end of full-year 2021 was $0.6 million compared with $4.3 million at the end of 2020.

Our Take

Quidel ended the fourth quarter of 2021 with better-than-expected results. The company recorded strong Specialized Diagnostic Solutions revenues, along with robust demand for the QuickVue At-Home COVID-19 test, which is impressive. Robust revenues from sale of COVID-19 products are also promising. Launch of the Savanna MDx instrumented system in select ex-U.S. markets during the quarter is impressive. Quidel also entered into a definitive agreement to acquire Ortho Clinical Diagnostics Holdings plc in December 2021, raising our optimism.

Its dismal year-over-year top- and bottom-line performances are concerning. Decline in revenues across the majority of its product categories is discouraging as well. Contraction of both margins also does not bode well. The company not providing any financial outlook raises our apprehensions.

Zacks Rank and Other Key Picks

Quidel currently flaunts a Zacks Rank #1 (Strong Buy).

Some other stocks worth considering in the broader medical space, which have announced quarterly results, are Baxter International Inc. BAX, West Pharmaceutical Services, Inc. WST and Henry Schein, Inc. HSIC.

Baxter, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2021 adjusted EPS of $1.04, which beat the Zacks Consensus Estimate by 0.9%. Revenues of $3.51 billion outpaced the consensus mark by 4.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Baxter has an estimated long-term growth rate of 9.5%. BAX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 9.1%.

West Pharmaceutical reported fourth-quarter 2021 adjusted EPS of $2.04, which surpassed the Zacks Consensus Estimate by 6.3%. Fourth-quarter revenues of $730.8 million outpaced the Zacks Consensus Estimate by 3.1%. It currently carries a Zacks Rank #2.

West Pharmaceutical has an estimated long-term growth rate of 27.6%. WST’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 26.3%.

Henry Schein reported fourth-quarter 2021 adjusted EPS of $1.07, which surpassed the Zacks Consensus Estimate by 18.9%. Fourth-quarter revenues of $3.33 billion outpaced the Zacks Consensus Estimate by 4.7%. It currently has a Zacks Rank #2.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%.


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