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Quidel (QDEL) Q2 Earnings Fall Shy of Estimates, Margins Down

Quidel Corporation QDEL delivered adjusted earnings per share (“EPS”) of 75 cents in the second quarter of 2021, down 59.7% year over year. The figure lagged the Zacks Consensus Estimate by 37.5%.

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

GAAP EPS for the quarter was 45 cents a share, reflecting a 70.9% fall from the year-earlier figure.

Revenues in Detail

Quidel registered revenues of $176.6 million in the second quarter, down 12.5% year over year. The figure surpassed the Zacks Consensus Estimate by 1.9%.

The year-over-year revenue decline was due to lower demand for Sofia and polymerase chain reaction (“PCR”) COVID-19 assays, as well as for influenza products. However, this decline was partially offset by increased demand for QuickVue COVID-19 tests, robust growth of Cardiometabolic Immunoassay product sales and favorable foreign exchange impacts.

Excluding COVID-19 and influenza products, revenues for the core business grew 24% year over year to $91.5 million.

Segments in Detail

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

In the second quarter, Rapid Immunoassay revenues declined 25.5% from the year-ago quarter to $60.1 million due to lower revenues for the company’s Sofia SARS Antigen and influenza products. However, this was partially offset by $28.6 million in incremental QuickVue SARS Antigen product sales.

Cardiometabolic Immunoassay revenues were up 32.2% year over year to $71.7 million, primarily resulting from strong demand for the products.

Molecular Diagnostic Solutions revenues were $34.5 million, down 37.6% year over year due to a $25.5 million fall in sales of Lyra PCR assays for COVID-19 diagnosis. This was partially offset by incremental revenues from Quidel’s Solana SARS-CoV-2 assay.

Revenues from Specialized Diagnostic Solutions declined 11.6% year over year to $10.4 million, which resulted from lower demand for respiratory testing.

Quidel Corporation Price, Consensus and EPS Surprise

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

Margin Trend

In the quarter under review, Quidel’s gross profit plummeted 28.6% to $106.2 million. Gross margin contracted by a huge 1360 basis points (bps) to 60.1%.

Sales and marketing expenses rose 38.2% to $38.1 million. Research and development expenses went up 7.8% year over year to $22.6 million while general and administrative expenses climbed up 34.8% year over year to $21.1 million. Adjusted operating expenses of $81.9 million increased 27.5% year over year.

Adjusted operating profit totaled $24.3 million, reflecting a 71.2% decline from the prior-year quarter. Adjusted operating margin in the second quarter contracted a huge 2812 bps to 13.8%.

Financial Position

Quidel exited the second quarter of 2021 with cash and cash equivalents of $593.2 million compared with $981.1 million at the end of the first quarter. Total debt (including current portion) at the end of the second quarter of 2021 was $4.3 million compared with $4.5 million at the end of the first quarter.

2021 Guidance

Quidel has not provided any financial outlook for the year or the third quarter as it remains uncertain about its ability to offset continued competition and pricing volatility despite witnessing surge in demand for the Delta variant testing.

Our Take

Quidel ended the second quarter of 2021 with lower-than-expected results. Its dismal year-over-year top- and bottom-line performances are concerning. Decline in revenues across 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.

On a positive note, Quidel recorded strong Cardiometabolic Immunoassay revenues, along with robust demand for QuickVue SARS Antigen product and Solana SARS-CoV-2 assay, which is impressive. Quidel’s receipt of a host of regulatory approvals over the past few months raises our optimism on the stock. Its slew of tie-ups over the past few months also augurs well for the company.

Zacks Rank and Stocks to Consider

Quidel currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader medical space that have announced their quarterly results are Encompass Health Corporation EHC, West Pharmaceutical Services, Inc. WST and Bio-Rad Laboratories, Inc. BIO.

Encompass Health, carrying a Zacks Rank #2 (Buy), reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Second-quarter revenues of $1.3 billion outpaced the consensus mark by 1.5%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Second-quarter revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.

Bio-Rad reported second-quarter 2021 adjusted EPS of $3.54, surpassing the Zacks Consensus Estimate by 86.3%. Revenues of $715.9 million surpassed the Zacks Consensus Estimate by 17.3%. It currently sports a Zacks Rank #1.


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