QDEL

• Executive Updates

  • New CFO Micah Young has joined the leadership team, bringing extensive medical technology industry and operational finance experience. His stated top priorities are improving cash conversion, reducing net leverage, optimizing cost structure, improving working capital efficiency, and maintaining disciplined capital allocation focused on high-return opportunities.
  • The company confirmed that despite near-term headwinds from China and a softer respiratory testing market, underlying core business performance remains strong.

• Core Business Performance

  • Organic growth across all core franchises and regions excluding China was broad-based, demonstrating solid customer demand and strong commercial execution.
  • The company's ongoing operational improvement initiatives are delivering tangible results, including improved productivity, disciplined expense management, and margin expansion even in the seasonally weakest quarter of the year.

• Neulixa (Lex Point-of-Care Molecular Platform) Update

  • Following the completion of the Lex acquisition in April 2026, the company has made substantial progress on manufacturing scale-up, supply chain readiness, and commercial launch preparation, and remains on track against all launch objectives.
  • Early customer engagement has been very encouraging. Neulixa addresses unmet market need by combining molecular accuracy, rapid turnaround, and simple point-of-care workflow, and it is a scalable platform that will support future test menu expansion leveraging the company's existing commercial infrastructure and customer relationships.
  • Customer placements and test utilization are expected to build steady momentum entering the 2026-2027 respiratory season, with the goal of entering the 2027-2028 season with a growing installed base and foundation for expansion.

• China Market Update

  • Uncertainty around proposed nationwide IVD pricing guidelines has led Chinese customers to sharply reduce inventory and pull back on purchasing, with a larger and faster adjustment than management initially anticipated. The second draft of the guidelines (released in late June 2026) expanded the pilot from 3 to 6 provinces, removed use-case and methodology differentiation, and included a broader set of products compared to the first draft.
  • Near-term priorities in China are protecting the existing installed base, maintaining customer engagement, and aligning commercial resources to the evolving reimbursement environment.

• Respiratory Market Update

  • The respiratory testing market remained soft through Q2 2026, with test positivity rates markedly lower than in 2025. Early indicators point to a below-average 2026-2027 respiratory/flu season, so management is modeling full-year 2026 respiratory revenue consistent with the soft demand seen in the first half of the year.

• Full-year 2026 revenue guidance was revised downward to a range of $2.52 billion to $2.6 billion, driven by expected persistent demand challenges in China and conservative assumptions for a softer-than-average 2026-2027 respiratory season. Core laboratory and immunohematology businesses outside of China are still expected to deliver 3% to 5% aggregate growth in the second half of 2026, so the downward revision does not reflect weakening performance in these core franchises.
• Full-year 2026 adjusted EBITDA guidance was revised to $540 million to $560 million, corresponding to an adjusted EBITDA margin range of 21% to 22%.
• Full-year 2026 adjusted EPS guidance was revised to $0.65 to $0.90.
• The company withdrew its full-year 2026 free cash flow guidance, due to insufficient clarity on the combined working capital impacts of China market uncertainty and variable respiratory season demand. This withdrawal is a prudent response to current conditions and does not change the company's commitment to improving cash performance and reducing leverage.

Total consolidated Q2 2026 revenue was $631 million, representing 2% year-over-year constant-currency growth. Revenue from outside of China, which contributes ~90% of total company revenue, grew 6% year-over-year. By business segment: 1) Labs: Revenue outside of China grew 9% year-over-year; 2) Immunohematology: Revenue outside of China grew 5% year-over-year; 3) Triage point-of-care: Revenue outside of China grew 9% year-over-year. By geographic region: North America (the company's largest region) grew 6%; JPAC grew 10% driven by strong performance in Japan and India; Latin America grew 8% driven by strength in Brazil and Central America; China declined 23% year-over-year. Adjusted EBITDA for the quarter was $129 million, up 21% year-over-year, with an adjusted EBITDA margin of 20% (expanded 310 basis points year-over-year). Adjusted gross margin was 44.4% (down 130 basis points year-over-year, pressured by unfavorable geographic mix from lower China volumes). Combined non-GAAP SG&A and R&D operating expenses were $219 million (up 2% year-over-year, and down 40 basis points as a percentage of revenue year-over-year). Adjusted diluted EPS was $0.13 for the quarter.

• Uncertainty around the final terms and implementation timeline of China's new IVD pricing guidelines has led to sharp, faster-than-expected declines in customer purchasing and inventory levels, creating significant near-term demand uncertainty in China. While the company is implementing mitigation plans, the final impact of the policy changes remains unclear.
• Respiratory testing demand is inherently volatile, and early indicators point to a below-average 2026-2027 respiratory/flu season, creating downside risk to second-half revenue and earnings.
• Elevated net debt leverage (4.3x adjusted EBITDA at quarter-end) creates balance sheet risk, and improving cash conversion to reduce leverage is a critical near-term priority.
• Actual results may differ materially from forward-looking statements due to the unresolved risks outlined above, per standard forward-looking statement disclosures.

Q: What proactive steps is management taking to reduce balance sheet leverage? / A: The new CFO confirmed that improving cash conversion, reducing leverage, and increasing returns on invested capital are top priorities. Key focused actions include improving working capital efficiency, reducing excess inventory, optimizing returns on instrument investments, rationalizing capital expenditure, and directing capital to the highest return geographies and business units. This aligns with management's goal of driving long-term shareholder value.\n\nQ: Can you comment on market speculation that QuidelOrtho is considering selling its point-of-care business? / A: Management declined to comment on specific market rumors. As a matter of standard governance, the board and management regularly evaluate a broad range of portfolio opportunities to strengthen the business and maximize long-term shareholder value. Current core priorities remain executing existing strategy, improving cash conversion, reducing leverage, and driving operational performance across the full portfolio.\n\nQ: What early indicators are pointing to a lower-than-average 2026-2027 respiratory season, and why did management change its forecasting approach? / A: Historically, the company used an average respiratory season as a guidance baseline; this year, it is assuming demand will hold at the lower end of historical ranges consistent with first-half softness. Current observed indicators include markedly lower U.S. test positivity rates than a year ago, and softer-than-average seasonal data from the Southern Hemisphere, which suggests either a later or softer upcoming season. Management noted that this more conservative forecasting approach is a prudent adjustment that will be aligned with ongoing cost structure optimization.\n\nQ: How is management approaching risk mitigation to absorb underperformance in segments like China, without major impacts to the full company? / A: Management highlighted that ~75% of the business consists of stable, recurring core laboratory and immunohematology operations, which deliver consistent mid-single-digit growth, have long customer contracts, large installed bases, and strong market positions that offset volatility in smaller or more cyclical segments. The company is also implementing aggressive cost mitigation steps in China and across the broader business, with additional cost improvement actions planned for the second half of 2026 to position the company to emerge stronger from the current headwinds.