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QuidelOrtho (QDEL) - 2024 Q4 - Earnings Call Transcript
QDELQuidelOrtho (QDEL)2025-02-13 00:50
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Financial Data and Key Metrics Changes - Total reported revenue in Q4 2024 was 708million,adecreaseof4708 million, a decrease of 4% year-over-year due to declines in COVID and flu testing revenues [10][20] - Adjusted EBITDA for Q4 2024 was 150 million, representing a 21% adjusted EBITDA margin, compared to 195millionintheprioryearperiod[13][26]−Fullyear2024totalreportedrevenuewas195 million in the prior year period [13][26] - Full year 2024 total reported revenue was 2.8 billion, including 2.3billioninnon−respiratoryrevenue,withadjusteddilutedearningspershareat2.3 billion in non-respiratory revenue, with adjusted diluted earnings per share at 1.85 [18][19] Business Line Data and Key Metrics Changes - Labs business, approximately 50% of total revenues, achieved 4% growth on a reported and constant currency basis, excluding COVID and non-core revenue [11] - Immunohematology business within transfusion medicine grew 4% in Q4 2024, while donor screening revenue declined by 40% [23] - Q4 respiratory revenue declined 18% year-over-year, with 44millioninCOVIDrevenue[24]MarketDataandKeyMetricsChanges−Fourthquarterconstantcurrencyrevenueperformancewasledbythe"otherregion"(Japan,AsiaPacific,LatinAmerica),whichgrew1344 million in COVID revenue [24] Market Data and Key Metrics Changes - Fourth quarter constant currency revenue performance was led by the "other region" (Japan, Asia Pacific, Latin America), which grew 13% [20] - China grew 11%, driven by strong labs performance, partially offset by softness in cardiac point of care products [21] - North America declined by 11% due to anticipated declines in respiratory revenue and donor screening revenue [22] Company Strategy and Development Direction - The company is focusing on improving its cost structure and prioritizing high-impact opportunities to drive profitable growth [8][14] - Key priorities include enhancing customer experience, executing on high-impact programs, and driving sustainable growth through improved R&D productivity [13] - The company plans to implement cost reduction initiatives, targeting 100 million in annualized savings, with 50millionexpectedinthefirsthalfof2025[36]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedoptimismabouttheprogressmadeinthesecondhalfof2024andexpectscontinuedmomentuminto2025[17][30]−Thecompanyanticipatesfullyear2025totalreportedrevenuebetween50 million expected in the first half of 2025 [36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the progress made in the second half of 2024 and expects continued momentum into 2025 [17][30] - The company anticipates full year 2025 total reported revenue between 2.6 billion and 2.81billion,withadjustedEBITDAbetween2.81 billion, with adjusted EBITDA between 575 million and 615million[31]−ManagementnotedthattheriskofadditionalVBPpressureinChinahaslargelypassed,butcompetitiveintensityhasincreased[48][82]OtherImportantInformation−ThecompanyfinishedQ42024with615 million [31] - Management noted that the risk of additional VBP pressure in China has largely passed, but competitive intensity has increased [48][82] Other Important Information - The company finished Q4 2024 with 98 million in cash and 198millioninborrowingsonits198 million in borrowings on its 800 million revolver [28] - Adjusted free cash flow for Q4 2024 was 68million,representing4568 million, representing 45% of adjusted EBITDA [29] - The effective adjusted income tax rate for 2024 was 24% [27] Q&A Session Summary Question: Guidance on free cash flow conversion - Management acknowledged that free cash flow conversion is expected to improve to 25% to 30% of adjusted EBITDA in 2025, with a long-term goal of reaching at least 50% [44] Question: Update on the China region and pricing - Management indicated that the risk of additional VBP pressure has largely passed for 2025, with competitive intensity increasing but no significant actions expected [48][82] Question: Cost savings and EBITDA drivers - Management highlighted that 50 million of cost savings from previously announced initiatives will benefit the first half of 2025, with additional savings expected from procurement [55] Question: Respiratory revenue expectations - Management expects respiratory revenue to grow in the low single digits for 2024 and 2025, with a focus on flu, RSV, and strep [59] Question: Long-term margin expansion - Management targets adjusted EBITDA margins greater than 25% over the next two to three years, with progress expected as direct procurement savings materialize [87] Question: Timing for Savanna trials - Management confirmed that Savanna trials started in January, with expectations for market entry later in the year if trials are successful [98] Question: Donor screening revenue guidance - Management expects U.S. donor screening revenue to be 40millionto40 million to 50 million in 2025, down significantly from 2024 [100]