QuidelOrtho Corporation Q1 FY2026 earnings call

• First quarter results impacted by softer respiratory season (ILI visits down ~30%, milder and shorter than Q1 2025), macroeconomic and geopolitical headwinds (slowed sales in China ahead of IVD pricing guidelines, delays in orders/tenders due to Middle East disruption). • Completed acquisition of Lex Diagnostics in April, adding ultra-fast molecular platform strengthening point of care. • Launched high sensitivity troponin assay in US, strong demand with shipping to over 300 U.S. customers. • Began rolling out vitros 450 platform in select international markets, successor to vitros 350 designed for emerging markets, initial shipments to J-PAC, followed by LATAM and EMEA with CE mark received. • Strategy is sound, innovation pipeline strong, focused on executing with discipline for sustainable, profitable growth.

Total reported revenue was $620 million. Labs revenue declined 8% due to softer respiratory season, ILI visits down ~30%, termination of joint business agreement with Griffles. Immunohepatology grew 3% driven by North America, China, and JPEG. Triage declined by $3 million due to slower distributor sales in China. Respiratory revenue was $68 million, down significantly due to ~30% lower ILI visits. Non-respiratory revenue was $552 million (or $544 million excluding donor screening). Adjusted gross profit margin was 44%, a decrease of 630 basis points due to product mix. Adjusted EBITDA was $109 million, 18% margin. Labs business represents over half of revenue and is expected to have mid-single-digit revenue growth with product launches like high sensitivity troponin assay in US and vitros 450 platform rollout in international markets.

• Total reported revenue expected to be 2.7 to 2.75 billion, tethered to low end of previous range due to China distributor reactions to pending pricing guidelines and weaker North America respiratory revenue in Q1. • Full year 2026 adjusted EBITDA expected $615 to $630 million, 23% margin, 100 basis point improvement over 2025. • Adjusted diluted earnings per share $1.80 to $2. • Free cash flow expected $100 to $120 million. • Sequential revenue, adjusted EBITDA, and adjusted EPS in Q2 roughly in line with Q1 2026 but year-over-year growth across all three metrics. • Second half of year expected to have improving operating performance, ramping up of Lex diagnostics business.

• Soft respiratory season impacting revenue as ILI visits, severity, hospitalizations, duration all weaker. • Macroeconomic and geopolitical headwinds including slowed sales in China due to pending IVD pricing guidelines and delays in orders/tenders due to Middle East disruption. • Reimbursement changes in China being a headwind, only impacting about half sales there but still a risk. • Potential impact of respiratory season variability on revenue not following historical trends post Q1 decline. • Inventory increases during respiratory season and preparation for product launches affecting cash flow.

Q: Walk us through the guide for second quarter growth by segment and P&L margins.

A: Expect sequentially Q2 relatively flat with Q1 but year-over-year growth from core business like labs, IH, triage.

Q: How big of a headwind in 2026 from China NHSA and how arrived at number?

A: Updated revenue guide tethered to low end due to China distributors pausing purchases due to pending pricing guidelines, roughly $75 million headwind at midpoint, split ~45-30 between respiratory and China.

Q: Levers for EBITDA margin ramp in Q3 and Q4?

A: Revenue growth picking up in second half as China impacts in first half, labs, IH, triage growth, average respiratory season in second half, new product launches contributing.

Q: Switching costs for Lex platform?

A: Low barriers, plug and play instrument with low capital outlay, ease of use, value proposition on speed, turnaround time, costs.

Q: Commitment to China side and risk comfort?

A: Reimbursement changes impact about half sales, no plans to walk away, business accretive to margin, changes not fully implemented until mid next year, will take actions to offset.

Q: Cost side levers for margin EBITDA build?

A: Taken out close to a thousand positions, donor screening exit to start 50-100 basis point improvement in second half 2026, indirect and direct procurement efforts, shutdown of Raritan facility, optimization in OUS regions, higher margin immunoassay volume, Lex molecular margins higher.

Q: China distributor behavior and margin target timeline?

A: Distributors spooked by reimbursement change, working on rebates/discounts, mitigation in next couple months, margin target mid to high 20s by mid-2027 still on track with procurement, site consolidation initiatives and time until China reimbursement changes enacted