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Date

May 5, 2026, 5 p.m. ET

Call participants

  • President and Chief Executive Officer — Brian J. Blaser
  • Chief Financial Officer — Joseph M. Busky
  • Vice President, Investor Relations — Juliet C. Cunningham

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Risks

  • Brian J. Blaser stated, "Our first quarter results were impacted by a significantly softer respiratory season compared to Q1 of last year, with influenza-like illness, or ILI, visits down approximately 30%."
  • Joseph M. Busky confirmed, "first quarter 2026 cash flow declined year over year primarily due to lower EBITDA related to the weaker respiratory season and the timing of accounts payable and accrued interest."
  • Brian J. Blaser noted, "sales slowed in March ahead of the anticipated national IVD pricing guidelines as distributors exercised caution on inventory purchases in light of potential future pricing declines."
  • Delays in orders and tenders occurred due to "ongoing disruption in the Middle East," with management's expectation contingent on regional stabilization.

Takeaways

  • Total Revenue -- $620 million, driven by $552 million non-respiratory revenue and $68 million respiratory revenue, with $544 million non-respiratory revenue excluding donor screening.
  • Labs Business Revenue -- Declined 8%, impacted by a significantly milder and shorter respiratory season and the end of the joint business agreement with Grifols.
  • Respiratory Revenue -- $68 million, substantially down, directly attributed to approximately 30% lower influenza-like illness (ILI) visits.
  • Non-GAAP Operating Expenses -- Decreased 2%, primarily due to R&D efficiencies.
  • Adjusted Gross Margin -- 44%, declining 630 basis points due to product mix shift and lower respiratory revenue contribution.
  • Adjusted EBITDA -- $109 million, producing an 18% adjusted EBITDA margin.
  • Adjusted Diluted Loss Per Share -- $0.40.
  • Cash Flow -- Operating cash flow was negative $33 million, and free cash flow was negative $67 million, impacted by lower EBITDA and timing of accounts payable and accrued interest.
  • Inventory -- Increased as a result of the weak respiratory season and preparations for multiple new product launches.
  • Accounts Receivable Collections -- $54 million collected with a $22 million reduction in capital expenditures compared to the prior-year period.
  • Cash and Debt Position -- $140 million in cash and $130 million in borrowings under the revolving credit facility at period-end.
  • Net Debt to Adjusted EBITDA Leverage -- 4.1x, inclusive of pro forma adjustments under the credit agreement.
  • Full-Year Revenue Guidance -- New range of $2.0 billion to $2.75 billion, reflecting revised assumptions for China and weaker-than-expected respiratory revenue.
  • China Revenue Headwind -- Impact estimated at approximately $30 million midpoint, attributed to distributor pauses due to pending national IVD pricing guidelines.
  • Full-Year Adjusted EBITDA Guidance -- $615 million to $630 million, representing a 23% margin and a 100 basis point improvement over the prior year.
  • Free Cash Flow Guidance -- Full-year expected range of $100 million to $120 million, with anticipated positive cash flow resuming in the second half.
  • Second Quarter Outlook -- Sequential performance expected to be roughly flat with the first quarter, with year-over-year growth anticipated in revenue, adjusted EBITDA, and adjusted EPS.
  • Lex Diagnostics Acquisition -- Completed in April; brings an ultrafast molecular platform to point-of-care, with first orders secured, manufacturing ramping in the UK, and measurable assay pull-through forecast for early 2027.
  • Labs Product Launches -- High-sensitivity troponin assay shipped to over 300 U.S. customers and VITROS 450 platform deployed in select international markets with CE Mark approval in EMEA.
  • Margin Expansion Actions -- Targeted staffing reductions, indirect and direct procurement programs, and facility consolidation including Raritan site shutdown are in progress.
  • Respiratory Market Share -- Maintained stable share and unchanged testing protocols despite industry-wide volume declines.

Summary

QuidelOrtho Corporation (QDEL 6.12%) navigated a challenging first quarter, marked by a 30% decline in U.S. influenza-like illness visits and a resultant drop in respiratory diagnostic revenues. Management revised full-year revenue guidance to a range of $2.0 billion to $2.75 billion, lowering expectations due to soft respiratory trends and reduced China distributor activity ahead of looming national pricing changes. The company completed the acquisition of Lex Diagnostics, advancing expansion in molecular point-of-care testing and setting the stage for new revenue streams in 2027. Product launches in core lab diagnostics, such as the high-sensitivity troponin assay and VITROS 450 platform, are expected to drive growth within the labs segment, which constitutes more than half the company’s revenue. Cost containment efforts, facility consolidations, and procurement initiatives are underway to support EBITDA margin goals, with 23% adjusted EBITDA margins targeted for the full year.

  • Management stated the China pricing overhaul would affect only half of local sales, and implementation is not expected before mid-2027, allowing time for mitigation efforts.
  • Joseph M. Busky emphasized, "we are confident in our EBITDA margin goals and the timeline for them. There is no change to that."
  • Lex Diagnostics’ molecular system is designed as "plug-and-play," minimizing customer switching costs and offering result turnaround in six to ten minutes.
  • The company noted an 8% year-over-year decline in labs revenue, additionally impacted by the conclusion of the Grifols joint business agreement and Triage sales softness in China.
  • Planned mid- to high-20s EBITDA margin targets remain unchanged, based on procurement, footprint optimization, and ramping contribution from Lex Diagnostics.

Industry glossary

  • IVD: In Vitro Diagnostic; laboratory tests performed on biological samples to detect diseases, conditions, or infections.
  • CE Mark: Regulatory certification indicating conformity with health, safety, and environmental protection standards for products sold within the European Economic Area (EEA).
  • Assay Pull-Through: The recurring revenue generated from the sale of consumables or tests following the placement of a diagnostic instrument.
  • Immunohematology (IH): The study and diagnostic testing of blood antigens and antibodies relevant to transfusion medicine and blood compatibility.
  • Reagent Rental: An equipment placement model where the customer leases an instrument at low or no upfront cost, with the obligation to purchase reagent consumables from the vendor.
  • VITROS: A proprietary platform for clinical chemistry and immunoassay testing offered by QuidelOrtho Corporation.
  • JPAC: Japan and Asia Pacific region sales geography, as referenced by company management.

Full Conference Call Transcript

Juliet C. Cunningham: Afternoon, everyone, and thanks for joining us today. With me are Brian J. Blaser, President and Chief Executive Officer, and Joseph M. Busky, Chief Financial Officer. This conference call is being simultaneously webcast on the Investor Relations page of our website. To assist in the presentation, we also posted supplemental information on our Investor Relations page that will be referenced in this call. This conference call and supplemental information may contain forward-looking statements which are made as of today, 05/05/2026. We assume no obligation to update any forward-looking statement except as required by law.

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, uncertainty, assumptions, and other factors. Actual results may vary materially from those expressed or implied in these forward-looking statements. Please refer to our SEC filings for a description of potential risks. 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 supplemental information on the Investor Relations page of our website. Lastly, unless stated otherwise, all year-over-year revenue growth rates given on today's call are on a constant currency basis.

I will now turn the call over to our CEO, Brian J. Blaser.

Brian J. Blaser: Thanks, Juliet, and good afternoon, everyone. I will start today with a brief perspective on the first quarter and then discuss details of our business performance more broadly. Our first quarter results were impacted by a significantly softer respiratory season compared to Q1 of last year, with influenza-like illness, or ILI, visits down approximately 30% as reported by the CDC in April. While ILI visits are one indicator, the season was also notably weaker across other key measures including severity of illness, hospitalizations, and duration. Overall, the respiratory season was both significantly milder and shorter than in Q1 2025. We also experienced broader macroeconomic and geopolitical headwinds during the first quarter.

In China, sales slowed in March ahead of the anticipated national IVD pricing guidelines as distributors exercised caution on inventory purchases in light of potential future pricing declines. While final guidelines have not yet been issued following the comment period, our updated full-year 2026 guidance reflects the estimated impact based on the current draft. And as is expected, this estimate may change once the final guidelines and implementation timeline are announced, and accordingly, we are preparing mitigation actions to help offset these headwinds.

Moving into 2027, the proposed pricing changes would impact only about half our sales in China, and even with the new guidelines, that business is certainly not going away and will continue to be a meaningful component of our revenues. Notably, even after these pricing changes are implemented, we believe our China business will continue to be accretive to the company margin profile. We do not think the changes will be fully implemented until the middle of next year, which gives us time to work on mitigating actions. Shifting back to Q1 results, we also saw delays in some orders and tenders due to the ongoing disruption in the Middle East.

Assuming conditions stabilize, we expect these orders and tenders to resume during the remainder of the year. Importantly, our underlying business remains strong and durable. Our core labs and immunohematology franchises are performing well, and we are executing against our priorities. As a result, we believe we are well positioned to deliver on our objectives to expand our adjusted EBITDA margin and improve cash flow in 2026. We are also making solid progress in advancing our strategy.

We completed the acquisition of Lex Diagnostics in April, adding a highly differentiated ultrafast molecular platform that strengthens our position in point of care, an area we believe will be a meaningful driver of future growth and reinforces our ability to deliver integrated diagnostic solutions across the continuum of care. We are already seeing strong customer interest and have secured our first orders. Customer insights reinforce this opportunity. Approximately 90% of Sofia customers currently use both antigen and molecular testing systems, and many have indicated a willingness to switch to our more competitive molecular platform. Their priorities are clear: better ease of use, faster time to result, and lower cost. Lex is designed to deliver all three.

To support launch readiness, we are expanding manufacturing capacity at our site in the UK, and we expect to begin placing instruments this quarter with measurable assay pull-through and associated revenue beginning in early 2027. Turning to our labs business, we launched our high sensitivity troponin assay in the U.S., strengthening our cardiac portfolio and enhancing our clinical value proposition. We are seeing strong demand, and we are now shipping to more than 300 U.S. customers. We also began rolling out the VITROS 450 platform in select international markets, expanding access to our diagnostic solutions. As a successor to the VITROS 350, this platform is designed to meet the needs of emerging markets requiring low-volume, cost-effective solutions.

Initial shipments are targeted for JPAC followed by LATAM and EMEA, where we recently received the CE Mark. Importantly, the combination of VITROS 450 and VITROS ECL enables us to deliver a comprehensive solution across clinical chemistry and immunoassays in attractive international markets. We expect these product launches to support our mid-single-digit revenue growth expectations for the labs business, which represents over half of our revenue. In summary, we are navigating near-term headwinds, but our strategy is sound, our innovation pipeline is strong, and we remain focused on executing with discipline to deliver sustainable, profitable growth. I will now turn the call over to Joe.

Joseph M. Busky: Okay. Thanks, Brian. I will walk through the key financials for 2026. Unless otherwise noted, all comparisons are to the prior-year period on a constant currency basis. Total reported revenue was $620 million. Of that, non-respiratory revenue was $552 million, or $544 million excluding the donor screening business. Labs revenue declined 8%, primarily due to the factors Brian discussed. In addition, the termination of our joint business agreement with Grifols reduced Q1 labs revenue and created a difficult year-over-year comparison. Immunohematology grew 3%, driven by North America, China, and JPAC. Triage declined by $3 million, primarily due to slower distributor sales in China.

Looking at our respiratory revenue, as was widely reported, the North America respiratory market showed an atypical decline versus the prior-year period. This was an industry-wide trend, not unique to QuidelOrtho Corporation, and is supported by KOLs and competitor reports. As a result, our respiratory revenue was $68 million, down significantly, as noted in our preannouncement, due to the approximately 30% lower ILI visits compared to Q1 2025. Keep in mind that our large global installed base of the Sofia platform and QuickVue has demonstrated growth over time, and importantly, during 2026, we saw no change in testing protocols, and our market share remained stable. Lastly, on revenue, foreign currency exchange was favorable by 210 basis points during the quarter.

Now, moving down the P&L, non-GAAP OpEx decreased by 2%, primarily due to R&D efficiencies. Adjusted gross profit margin was 44%, a decrease of 630 basis points due to product mix with lower respiratory revenue contribution. Our adjusted EBITDA was $109 million, representing an 18% adjusted EBITDA margin, and diluted adjusted loss per share was $0.40. We expect to continue to drive adjusted EBITDA margin expansion for the full year with targeted staffing reductions, procurement, and facility consolidation cost savings initiatives. Now, turning to the balance sheet. At March, we had cash of $140 million and borrowings of $130 million under our revolving credit facility.

From a cash flow standpoint, operating cash flow was negative $33 million and free cash flow was negative $67 million. While we expected cash flow to be negative in the first half, which is consistent with our historical seasonality, first quarter 2026 cash flow declined year over year primarily due to lower EBITDA related to the weaker respiratory season and the timing of accounts payable and accrued interest. Inventory also increased due to the weaker respiratory season as well as in preparation for multiple upcoming product launches.

On the positive side, we delivered strong accounts receivable cash collections of $54 million and reduced our CapEx by $22 million compared to the prior-year period, the result of lower systems and manufacturing capacity spend. We remain focused on improving cash flow generation and still expect positive cash flow for the full year, now expected to be in the range of $100 million to $120 million, with positive cash flow driven by higher revenue in the second half of the year. Lastly, net debt to adjusted EBITDA leverage was 4.1x, including pro forma adjustments allowable under our credit agreement.

We continue to expect pro forma leverage under the terms of our credit agreement to be at 3.25x to 3.5x by the end of this year. To wrap up, first quarter results reflected the impact of lower respiratory volumes, macro and geopolitical pressure, and continued investment in our strategic initiatives including molecular diagnostics. I will now cover our full-year 2026 outlook at a high level. For a full list of assumptions, please refer to Page 6 of our first quarter 2026 earnings presentation. Importantly, we are providing a new guidance range. As noted in our Q1 preannouncement, we are tethered to the low end of our previously provided range, which was purposely wide to account for respiratory season variability.

We now expect total reported revenue of $2.0 billion to $2.75 billion, which is driven by two changes: our first quarter performance and the expected lower full-year revenue in China, which takes into consideration distributor reactions to the pending China national IVD pricing guidelines as currently drafted, and in North America, first quarter respiratory revenue reflecting a weaker ILI trend. Looking back over the past ten years and excluding pandemic years, in periods where ILI declined in Q1 versus the prior year, trends rebounded over the remainder of the year, resulting in higher ILI on a full-year basis.

Despite this empirical data, to be prudent, we are continuing to plan for an average respiratory season and forecasting a flat second half without a bump up and an 8% decline in respiratory revenue for full-year 2026. These two revenue impacts flow from the top line to the bottom line. Therefore, we now expect full-year 2026 adjusted EBITDA of $615 million to $630 million, still representing an adjusted EBITDA margin of 23%, which reflects a 100 basis point improvement over full-year 2025. We expect adjusted diluted earnings per share of $0.80 to $2.00. We expect to deliver free cash flow of $100 million to $120 million.

Note that the second quarter has historically been our seasonally lowest quarter, consistent with this pattern, we expect sequential revenue, adjusted EBITDA, and adjusted EPS to be roughly in line with Q1 2026 but still reflecting year-over-year growth across all three metrics. Our updated outlook reflects improving operating performance in the second half of the year as well as continued disciplined execution and the ramping up of the Lex Diagnostics business. With that, we will now open the call for questions.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from Tycho Peterson of Jefferies. Your line is open. Please go ahead.

Analyst: Yeah, hi. This is Jack on for Tycho. Thanks for the question. Could you just walk us through the guide for second quarter growth by segment? And then also down the P&L, what are margins going to look like?

Joseph M. Busky: Yeah. Jack, as noted in the prepared remarks, we do expect that sequentially Q2 will be relatively flat with Q1, but will provide growth year over year. The growth is going to come from the core business as you think about the labs business and the IH business and the Triage business, that growth versus prior year.

Analyst: Okay, that is helpful. Then on China, NHSA, can you tell us exactly how big of a headwind that is in 2026, what you are assuming in the guidance, and just a little bit more detail on how you arrived at that number?

Joseph M. Busky: Yeah, sure. As you think about the updated revenue guide, which, again, is tethered to the low end of the previous revenue guide, there are really only two changes that we made to the revenue guide. I want to be really clear with that. One is the respiratory season weakness we saw in Q1, and then the impacts that we are seeing in China from our distributors pausing on their purchases due to the pending new national pricing guidelines, which we expect to come out in the next couple of months.

I would say if you look at the new revenue guide, Jack, it is down roughly $75 million at the midpoint, and it is probably split almost 50/50 between respiratory and China, maybe a little bit less on China and a little bit more on respiratory, maybe 45 respiratory and 30 China kind of thing. That is where we are seeing it. We have pretty good visibility, as you would imagine, from our local team and the good relationships we have with our customer base. So we feel pretty good about this new guide for 2026.

Operator: Your next question comes from the line of Andrew Brackmann of William Blair. Your line is open. Please go ahead.

Analyst: Hey, guys, good afternoon. Thanks for taking the question. I wanted to pick up off of Jack’s first question with respect to Q2. If you are sequentially sort of flattish to Q1, I think that implies a pretty significant ramp in adjusted EBITDA margin in Q3 and Q4. Can you talk about some of the levers you see there, not just on the revenue side, but also on the cost side as well?

Joseph M. Busky: Hey, Andrew. What we are looking at in the guide, as you think about first half versus second half, is that we are expecting the revenue growth to pick up quite a bit in the second half. That is really a function of our expectation that the China impacts we talked about in the prepared remarks generally are going to happen in the first half of the year and not so much in the second half of the year. In addition, we are expecting continued growth with labs, IH, and Triage.

We are planning for an average respiratory season in the second half of the year, so we are not expecting growth in the second half for respiratory year over year, but we do expect it to be flat, so I do not expect it to be a headwind. All those factors, including what Brian mentioned with new products coming out—the 450, the high-sensitivity troponin—and you are going to have some Lex revenue in the second half, all contribute to higher revenue in the second half versus the first half, which will drop down and drive higher EBITDA, EPS, and cash flow.

Analyst: Thanks for all that. And then, Brian, with respect to Lex, it sounds like some folks in your customer base are pretty interested. Can you maybe remind us about switching dynamics and any barriers as you roll this out?

Brian J. Blaser: We are excited about Lex and are working actively, as I mentioned, to build additional capacity at our site in the UK to support the ramp-up. At this point, we are expecting to place a few hundred instruments this year, followed by a more significant ramp-up in 2027 that will begin to create meaningful assay pull-through. We are doing everything we can to bring on additional capacity as quickly as possible because more than anything, we will probably be capacity constrained versus demand constrained given what we are seeing with the product. Most of these instruments will be placed in customers on a reagent rental basis, meaning there is no real capital outlay from a switching cost standpoint.

The ease-of-use profile is strong; this is truly a plug-and-play instrument that requires sample in, answer out in six to ten minutes. So the switching costs are really very low, and the value proposition across speed, turnaround time, and cost is going to position this platform well.

Operator: Your next question comes from the line of Patrick Donnelly of Citi. Your line is open. Please go ahead.

Analyst: Hey, guys. Thank you for taking the question. Maybe one on the China side. I am sure you saw this morning a competitor of sorts that walked away from their China diagnostics business and sold it, which was rewarded, given that it has been an overhang on a lot of the companies. What is your commitment on the China side and visibility given some of these recent changes? It just feels like a slippery slope over there. How are you framing up that risk and the comfort level going forward on that business?

Brian J. Blaser: Thanks, Patrick. Clearly, the reimbursement changes are a headwind there, but the way we are looking at it, the reimbursement changes themselves will only impact about half our sales. We have no plans to walk away from China, and even after these changes are implemented, we believe the business continues to be accretive to our company margin profile. We also have time to address this. We think that the changes will not be fully implemented until probably mid next year, and so we will be taking actions to offset that.

We will continue to monitor the environment in China after these changes are made, but as long as the economics continue to be favorable, we intend to remain in that market. Over the very long term, it continues to be an attractive growth market for health care and diagnostic testing in particular.

Analyst: Okay, that is helpful. And then on the margin side, the EBITDA build, can you talk about some of the actions you are taking on the cost side, not only this year, but the base heading forward? You have given some longer-term targets—how are you thinking about the key levers as we work through the year and into next year?

Brian J. Blaser: We continue to do a lot of heavy lifting on the margin side of the business. We have taken out close to a thousand positions in the organization. A lot of that work pushed us into the low-20s adjusted EBITDA margin. We are going to see a 50 to 100 basis point improvement starting in 2026 from our donor screening exit. We have a rich portfolio of projects across our indirect and direct procurement efforts. We have the shutdown of our Raritan facility in progress, and we have a lot of opportunity outside the U.S. to optimize our profitability in our OUS regions. Additionally, we continue to benefit from placing more immunoassay volume that is at higher margin.

Moving forward, we see the benefit of Lex and molecular margins being typically much higher than immunoassay margins as well. We get into that mid-20s range solidly with our procurement initiatives and the Raritan footprint optimization, and with some targeted staff reductions, we think we can push into the higher-20s as Lex becomes a bigger component of the business over the next few years.

Operator: Your next question comes from the line of Lu Li of UBS. Your line is open. Please go ahead.

Analyst: Great, thank you for taking my questions. I want to go back to China. You mentioned that in the guide you are assuming the China impacts are basically happening in the first half and not the second half. Can you provide a little more color on that? Are you still seeing distributors pausing sales in April and May as well?

Joseph M. Busky: We have seen some of that pressure, and over the next couple of months we expect that behavior in the first order to begin to mitigate, and that will stabilize over time.

Analyst: Got it. And then my second question, just to double confirm your margin target. Are you still hoping to get to mid- to high-20s by mid-2027, or does that margin target get a little delayed given potential changes in China and other macro factors?

Joseph M. Busky: Hey, Lu, it is Joe. Brian touched on this a minute ago, but to reiterate, we are confident in our EBITDA margin goals and the timeline for them. There is no change to that. That is because we still have all these initiatives around procurement and site consolidation in flight that we expect to complete as we move through this year and into early next year. On China, we do have some time. We do not think that these potential reimbursement changes will be enacted until you get more into mid-2027. So we have about a year to implement cost mitigation actions to offset any potential price declines that we may see in 2027.

Because of all that, we still feel really good about the margin goals and the timing that we have communicated in the past.

Operator: If you would like to ask a question, please press 1 to raise your hand. To withdraw your question, press 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. There are no further questions at this time. I will now turn the call back to Brian J. Blaser, President and Chief Executive Officer, for closing remarks.

Brian J. Blaser: Thank you, operator. In closing, stepping back from the first quarter and the headwinds that we saw in the respiratory season and China, this really does not change our direction. We are executing well. Our strategy is working, and we are strengthening the business in the right areas. We expect a stronger second half and remain focused on delivering consistent, profitable growth. Thank you for your interest in the company, and we look forward to updating you in the quarters ahead.

Operator: This concludes today's call. Thank you.