Quidel Reports First Quarter 2019 Financial Results

SAN DIEGO–(BUSINESS WIRE)–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 first
quarter ended March 31, 2019.

First Quarter 2019 Highlights

  • Total revenue was $148.0 million as compared to $169.1 million in the
    first quarter of 2018.
  • Total revenue on a constant currency basis was $150.2 million in the
    first quarter of 2018.
  • Influenza revenue was $47.2 million as compared to $64.6 million in
    the first quarter of 2018.
  • Cardiac Immunoassay revenue was $65.9 million on a reported basis, or
    $68.0 million on a constant currency basis.
  • Molecular Diagnostic Solutions revenue was $5.7 million, 12% growth
    from the first quarter of 2018.
  • Reported GAAP EPS of $0.60 per diluted share in the first quarter of
    2019, as compared to $0.86 per diluted share in the first quarter of
    2018. Reported non-GAAP EPS of $0.91 per diluted share in the first
    quarter of 2019, as compared to $1.29 per diluted share in the first
    quarter of 2018.
  • Paid down $20.0 million on the Revolving Credit Facility.

First Quarter 2019 Results

Total revenue for the first quarter of 2019 was $148.0 million, versus
$169.1 million for the first quarter of 2018. The 13% decrease in sales
from the first quarter of 2019 was primarily driven by a decline in the
Rapid Immunoassay business revenue from the record first quarter of
2018, due to the robust Influenza season that was not repeated in 2019.
Foreign exchange had a negative impact of $2.2 million in the quarter.
The majority of the foreign currency headwind impacted the Cardiac
Immunoassay business, which also contributed to the decrease. This was
partially offset by increased revenue from Molecular Diagnostic
Solutions.

Rapid Immunoassay product revenue, which includes QuickVue, Sofia and
Eye Health products, decreased 23% in the first quarter of 2019 to $62.5
million, primarily due to a $17.4 million decrease in Influenza revenue
from the first quarter of 2018. Cardiac Immunoassay revenue, which
includes revenue from the Triage, Triage Toxicology and Beckman BNP
products acquired in October 2017, totaled $65.9 million in the first
quarter of 2019, declining 4% from the first quarter of 2018. Excluding
the foreign exchange impact, Cardiac revenue was $68.0 million,
comparable to last year. Molecular Diagnostic Solutions revenue
increased 12% to $5.7 million, led by 24% revenue growth from Solana,
our instrumented molecular diagnostic system. Specialized Diagnostic
Solutions revenue, which includes revenue from Virology/DHI, Specialty
and Other, decreased 7% from the first quarter of 2018 to $13.9 million.

“In Q1 of this year, we benefited significantly from the respiratory
disease season, delivering the second-largest quarter for influenza
revenue in the company’s history after Q1 of 2018. Cardiovascular
revenue, at $68 million on a constant currency basis, was well within
the $64 million to $69 million that we suggested for the early quarters
of 2019,” said Douglas Bryant, president and CEO of Quidel Corporation.
“With Q1 now behind us, we believe that a 2019 revenue target of $535
million on a constant currency basis seems appropriate.”

Gross Profit in the first quarter of 2019 decreased to $90.9 million,
primarily the result of lower sales of Rapid Immunoassay products
relative to last year’s robust flu season in the first quarter of 2018.
Overall, gross margin for the quarter was 61% as compared to 63% for the
same period last year, as a result of lower flu revenues, less favorable
geographic and product mix, as well as lower factory overhead absorption
due to lower production volumes. R&D expense increased by $1.3 million
in the first quarter as compared to the same period last year, primarily
due to incremental expense for the Savanna molecular diagnostic platform
and Sofia assays that was partially offset by decreased spend in the
Triage business. Sales and Marketing expense increased by $1.0 million
in the first quarter of 2019, as compared to the first quarter of 2018,
largely due to higher marketing expenses and other consultative costs.
G&A expense increased by $2.9 million in the quarter, primarily due to
additional facility expenses and professional service fees in the
period. Acquisition and Integration Costs in the quarter decreased by
$0.6 million to $2.8 million, as global operations become fully
integrated into the business.

Net income for the first quarter of 2019 was $24.8 million, or $0.60 per
diluted share, as compared to net income of $34.0 million, or $0.86 per
diluted share, for the first quarter of 2018. On a non-GAAP basis, net
income for the first quarter of 2019 was $38.9 million, or $0.91 per
diluted share, as compared to net income of $54.2 million, or $1.29 per
diluted share, for the same period in 2018.

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 first
quarter 2019 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., dial
    877-930-5791, or from outside the U.S. dial 253-336-7286, and enter
    the audience pass code 628-7514.
  • To join the live webcast, the call can be accessed through the
    following link: https://edge.media-server.com/m6/p/oviwqsy7,
    or 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) on May 8th, 2019 by dialing 855-859-2056
from the U.S., or by dialing 404-537-3406 for international callers, and
entering pass code 628-7514.

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, influenzarespiratory
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 and hospital and reference
laboratories. 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: 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, 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, 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 in our supply of
raw materials; 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, 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; risks relating to
our acquisition and integration of the Triage MeterPro Cardiovascular
and toxicology business and B-type Naturietic Peptide assay business run
on Beckman Coulter analyzers (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
and deferred payment obligations; our ability to generate sufficient
cash to meet our debt service and deferred contingent payment
obligations and our ability to repay, renew or extend, our outstanding
debt and its impact on our operations and our ability to obtain
financing; that our Senior 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; our intention of not paying dividends; and our
ability to identify and successfully acquire and integrate other
potential acquisition targets. 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 March 31,
Consolidated Statements of Operations: 2019   2018
Total revenues $ 147,968 $ 169,143
Cost of sales 57,041   62,872  
Gross profit 90,927   106,271  
Research and development 13,930 12,621
Sales and marketing 29,589 28,558
General and administrative 13,431 10,532

Acquisition and integration costs

2,824   3,467  
Total costs and expenses 59,774   55,178  
Operating income 31,153 51,093
Other expense, net:
Interest expense, net (4,582 ) (7,850 )
Loss on extinguishment of debt   (4,567 )
Total other expense, net (4,582 ) (12,417 )
Income before income taxes 26,571 38,676
Provision for income taxes 1,727   4,718  
Net income $ 24,844   $ 33,958  
 
Basic earnings (loss) per share $ 0.63 $ 0.96
Diluted earnings (loss) per share $ 0.60 $ 0.86
Shares used in basic per share calculation 39,704 35,236
Shares used in diluted per share calculation 42,907 41,948
 
Gross profit as a % of total revenues 61 % 63 %
Research and development as a % of total revenues 9 % 7 %
Sales and marketing as a % of total revenues 20 % 17 %
General and administrative as a % of total revenues 9 % 6 %
 
Consolidated net revenues by product category are as follows:
Rapid Immunoassay $ 62,494 $ 80,685
Cardiac Immunoassay 65,872 68,444
Specialized Diagnostic Solutions 13,854 14,871
Molecular Diagnostic Solutions 5,748   5,143  
Total revenues $ 147,968   $ 169,143  
 
Condensed balance sheet data: 3/31/2019 12/31/2018
Cash and cash equivalents $ 56,938 $ 43,695
Accounts receivable, net 69,234 58,677
Inventories 66,647 67,379
Total assets 905,855 806,371
Short-term debt 55,358 54,550
Long-term debt 37,856 56,865
Stockholders’ equity 460,698 425,584
 

QUIDEL CORPORATION

Reconciliation of Non-GAAP Financial Information

(In thousands, except per share data; unaudited)

 
Three months ended March 31,
Gross Profit   Operating Income   Net Income   Diluted EPS
2019   2018 2019   2018 2019   2018 2019   2018
GAAP Financial Results $ 90,927 $ 106,271 $ 31,153   $ 51,093 $ 24,844 $ 33,958
Interest expense on Convertible Senior Notes, net of tax (a) 791   2,144  
Net income (loss) used for diluted earnings per share, if-converted
method
25,635   36,102   $ 0.60 $ 0.86
Adjustments:
Non-cash stock compensation expense 280 231 3,588 2,936 3,588 2,936
Amortization of intangibles 1,925 2,743 6,981 7,861 6,981 7,861
Amortization of debt discount and issuance costs on credit facility 101 331
Non-cash interest expense for deferred consideration 2,343 2,793
Amortization of inventory step-up of fair value 3,650 3,650 3,650
Loss on extinguishment of Convertible Senior Notes 1,538
Loss on extinguishment of Senior Credit Facility 3,029
Acquisition and integration costs 2,824 3,467 2,824 3,467
Foreign exchange loss (gain) 499 (168 )

Income tax impact of adjustments (a)(b)

(3,104 ) (4,833 )
Income tax impact of valuation allowance for deferred tax assets           (2,543 )    
Adjusted (b) $ 93,132   $ 112,895   $ 44,546   $ 69,007   $ 38,867   $ 54,163   $ 0.91   $ 1.29

(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 2019 and 2018.

 

(b)

Adjusted net earnings per share for the three months ended March
31, 2019 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 1.4 million potentially dilutive shares issuable
from stock options and unvested RSUs.

Contacts

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

error: Content is protected !!