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Why Investors Didn't Leap for Joy After Quidel's Strong Q4 Performance

By Keith Speights - Feb 19, 2021 at 6:05AM

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The diagnostics company delivered impressive top- and bottom-line growth. But it wasn't enough to fire up investors.

Shares of Quidel (QDEL 3.87%) skyrocketed 139% last year. The stock got off to a great start in 2021 as well, but has given up much of its gain. 

It seems likely that Quidel could extend its downtrend. The diagnostics company announced its fourth-quarter results after the market close on Thursday, and the healthcare stock fell as much as 7% in after-hours trading. Here are highlights from Quidel's fourth quarter.

Physician holding a nasal swab in a patient's nose

Image source: Getty Images.

By the numbers

Revenue in the fourth quarter was $809.2 million, a 432% jump from the prior-year total of $152.2 million. It also squeaked by the consensus Wall Street estimate of $809.1 million.

The company announced net income of $470.1 million, or $10.78 per share, in the fourth quarter based on generally accepted accounting principles (GAAP). Quidel posted GAAP earnings of $30.6 million, or $0.71 per share, in the prior-year period.

It was a similar story with the company's bottom line, with adjusted earnings of $11.07 per share in the fourth quarter, a huge jump from $1.00 per share in the same quarter of 2019. It also easily beat the average analyst estimate of $10.14.

Behind the numbers

Quidel's strong year-over-year revenue growth was driven primarily by its COVID-19 tests. Revenue for these products in the fourth quarter was $678.7 million, nearly 84% of the company's total.

The big jump was in rapid immunoassay products, with fourth-quarter revenue increasing by a whopping $566.3 million from the prior-year period to $631.3 million. Quidel's Sofia COVID-19 test and its Sofia combo COVID-19/flu test fueled this growth.

Revenue from molecular diagnostics solutions soared by $89.4 million to reach $96.4 million in the fourth quarter. This remarkable increase stemmed from the company's Lyra SARS-CoV-2 assay, which pulled in $87.2 million.

Outside of COVID-19, the picture wasn't as impressive. Cardiometabolic immunoassay revenue rose 6% year over year to $70 million. Specialized diagnostics solutions revenue fell 20% to $11.5 million.

Why did Quidel's shares fall in after-hours trading after the company turned in a very strong fourth-quarter performance? It could be in part because revenue was essentially in line with analysts' estimates and didn't wow Wall Street. But investors are also almost certainly concerned that COVID-19 testing revenue might decline rapidly as more people receive vaccines.

Looking ahead

CEO Douglas Bryant pointed to two new product launches on the way in his comments on the quarterly update. He noted that the company plans to soon launch its Savanna multiplex molecular analyzer and the Sofia Q analyzer, a really small product that could serve new markets such as telemedicine.

But the main thing to watch with Quidel is what happens with COVID-19 testing demand. The emergence of new coronavirus variants could be a real wild card. If these variants, especially the South African one, become more prevalent and vaccines aren't as effective against them, Quidel's financial outlook could be stronger than many expect.

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