QuidelOrtho Corporation

Welcome to the Quindel Ortho first quarter 2025 fiscal financial results conference call and webcast. At this time, all participant lines are in listen mode only. For those of you participating in the conference call, there will be an opportunity for questions at the end of the prepared remarks. Please note this conference call is being recorded. An audio replay for the conference call will be available on the company's website shortly after this call. I would now like to turn the call over to Juliet Cunningham, Vice President of Investor Relations.

Thank you. Good afternoon, everyone, and thanks for joining the Fidel Ortho First Quarter 2025 Financial Results Conference Call. Joining me today are Brian Blazer, President and Chief Executive Officer, and Joe Buskey, Chief Financial Officer. This conference call is being simultaneously webcast on the Investor Relations page of our website. To aid in the presentation, we also posted supplemental information on the Investor Relations page that will be referenced throughout this call. This conference call and supplemental information contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, statements that are not strictly historical, including the company's expectations, plans, financial guidance, future performance, and prospects are forward-looking statements that are subject to certain risks, uncertainties, assumptions, and other factors. This includes the expected impact of tariffs and macroeconomic conditions. Actual results may vary materially from those expressed or implied in these forward-looking statements. Information about potential factors that could affect our actual results is available in our annual report on Form 10-K for the 2024 fiscal year and subsequent reports filed with the SEC, including the risk factors section. Forward-looking statements are made as of today, May 7, 2025, and we assume no obligation to update any forward-looking statement except as required by law. In addition, today's call includes discussion of certain non-GAAP financial measures. Tables reconciling these non-GAAP measures to their most directly comparable GAAP measures are available in our earnings release and the supplemental information, which are on the investor relations page of our website at quidelortho.com. Lastly, unless stated otherwise, all year-over-year revenue growth rates given on today's call are on a constant currency basis. Now I'd like to turn the call over to our CEO, Brian Blazer.

Thanks, Juliette, and good afternoon, everyone. As I reflect on my first anniversary since joining the company, I first want to thank all our employees and our leadership team for their unwavering support as we implemented difficult but necessary changes to our business over the last year. Together, we refocused the organization on a narrow set of priorities and set in motion key initiatives to improve our performance and our cost structure. Our business faced unique challenges and increasingly dynamic environment. The organization came together around our common mission with our customers at the center of everything we do. The team's efforts played a critical role in the strong results we delivered in Q1, reinforcing my confidence in our strategy and operational discipline. Let me start by taking a closer look at our first quarter results, followed by my thoughts on the evolving tariff situation. During Q1, we delivered solid mid-single-digit revenue growth of 6%, excluding COVID and donor screening. This performance was primarily driven by our labs business, as well as stable growth in immunohematology and a strong flu season. We also recognize cost savings from our previously announced initiatives that drove a 450 basis point year-over-year improvement in adjusted EBITDA margin and a 68% increase in adjusted diluted earnings per share compared to the prior year period. From a business unit perspective, our labs business, which was 54% of total company revenue in Q1, achieved revenue growth of 7% with strength in both clinical chemistry and immunoassay testing. Our immunohematology business continued its global leadership position and consistent trajectory with 4% growth during the quarter. Our point of care business represented 25% of our Q1 revenue and grew 8%, excluding COVID. Q1 COVID testing was down compared to the prior year period, but flu sales were strong, resulting in 18% year-over-year growth. This performance was led by our COVID flu combo test, which has continued to deliver durable revenue. And our molecular diagnostics business grew 11% excluding COVID, albeit off a smaller revenue base. We are currently in the last stages of the clinical trial for our Savannah respiratory panel and are completing verification and validation testing. Once our trial data has been fully successfully finalized, we expect to make our submission to the FDA this summer. Our Q1 performance is further proof that the initiatives we launched in 2024 are having a positive impact on the performance of the business. As we look forward to the balance of 2025, we continue to be focused on our narrow set of strategic initiatives, including increasing the content and utility of our platforms, expanding margins, and commercial and operational execution. Our commercial teams are more focused than ever before on driving profitable growth by targeting the most attractive customers of market segments where we can drive value with our unique solutions. And we are on track to realize the remainder of the $100 million in annualized cost savings we defined in 2024 with $50 million in cost savings expected in the first half of 2025. And while much of our work last year was focused on staffing reductions, we have expanded our efforts to improve cash flow generation with initiatives targeting direct and indirect procurement, inventory utilization, capital expense management, and optimization of our cash conversion cycle. We expect these initiatives to yield an incremental 30 to 50 million in cost savings in 2025. I'd now like to turn to the evolving developments at the macro level including the expected impact on our business and the actions we're taking to address these challenges. Obviously, this is a very dynamic situation, so my comments reflect our assessment based on current information. Our business is based on a recurring revenue model with more than 90% of our sales coming from consumables and a small percentage coming from instrument placements. The majority of our manufacturing is based in the United States, and over the past three years, we have invested nearly a billion dollars in US-based manufacturing and R&D. Over half our employees are based in the US, and over the next several years, we expect to continue to invest and expand our capabilities to support the growth of our business, both domestically and globally. We also have company and third-party manufacturing located in the UK, China, Europe, and Mexico. These locations further our strategy of being close to our important customers, as well as reinforcing our business continuity objectives. With our global operating footprint, we estimate the potential tariff headwinds prior to mitigations is roughly $30 to $40 million of impact in 2025. But since the discussion of tariffs began in 2024, we have been diligently working on plans to mitigate potential impacts. These plans include changing the origin of source materials, repositioning inventory, shifting our supply chain to alternate suppliers, as well as implementing select pricing actions and additional reductions to our controllable costs. Collectively, we believe the incremental actions we are taking are sufficient to fully offset the tariff impacts as they stand today. And while the environment can always change, we are maintaining our full year 2025 financial guidance based on our current business outlook. We remain focused on our key priorities and achieving our previously communicated cost savings initiatives over and above any tariff related offsets. So to wrap up, we are pleased with the strength of our first quarter results and the progress we have made in our key priorities over the last 12 months. We remain focused on supporting our customers and believe we are well positioned to continue to drive consistent growth while also expanding our profitability and value for shareholders in 2025 and beyond. So thank you for your time and continued support. And with that, I'll now turn the call over to Joe to take you through our first quarter financials in more detail.