Healthcare diagnostics company QuidelOrtho (NASDAQ:QDEL) met Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 2.6% year on year to $692.8 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $2.71 billion at the midpoint. Its non-GAAP profit of $0.74 per share was 24.9% above analysts’ consensus estimates.
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QuidelOrtho (QDEL) Q1 CY2025 Highlights:
- Revenue: $692.8 million vs analyst estimates of $689.8 million (2.6% year-on-year decline, in line)
- Adjusted EPS: $0.74 vs analyst estimates of $0.59 (24.9% beat)
- Adjusted EBITDA: $159.8 million vs analyst estimates of $149.4 million (23.1% margin, 7% beat)
- The company reconfirmed its revenue guidance for the full year of $2.71 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $2.32 at the midpoint
- EBITDA guidance for the full year is $595 million at the midpoint, in line with analyst expectations
- Operating Margin: 4.7%, up from -247% in the same quarter last year
- Market Capitalization: $2.09 billion
StockStory’s Take
QuidelOrtho’s first quarter results were shaped by growth in its core laboratories segment, stable immunohematology performance, and a robust flu testing season, offset by lower COVID-related and donor screening revenues. CEO Brian Blaser highlighted that the labs business, now over half of total revenue, delivered 7% year-over-year growth, while immunohematology grew 4%. Blaser credited the company’s ongoing cost reduction initiatives—including staffing cuts and procurement efficiencies—for a 450 basis point improvement in adjusted EBITDA margin. The company also benefited from increased sales of its COVID-flu combination tests, which Blaser described as showing “very stable performance,” helping mitigate the broader decline in COVID-only testing volumes. Management characterized the quarter as further evidence that its 2024 operational changes are positively impacting profitability and business stability.
Looking ahead, QuidelOrtho’s management sees its narrowed set of strategic priorities—expanding platform content, margin improvement, and targeted commercial execution—as key drivers for 2025. Blaser emphasized the company’s plans to fully offset anticipated tariff headwinds, noting, “We believe the incremental actions we are taking are sufficient to fully offset the tariff impacts as they stand today.” The company expects recurring revenues from consumables to underpin stability, supported by a diversified manufacturing footprint. CFO Joe Busky added that visibility into labs and immunohematology growth in China supports a mid- to high-single-digit outlook for that market, assuming the tariff environment remains unchanged. Management remains focused on delivering cost savings and maintaining profitability targets, while monitoring for potential shifts in COVID and flu testing demand.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to solid growth in non-COVID segments, benefits from prior cost-reduction actions, and strong execution in the labs and flu testing businesses.
- Labs business momentum: Core laboratories led growth, with consistent demand in clinical chemistry and immunoassay testing, representing over half of Q1 revenue.
- Immunohematology stability: The immunohematology segment maintained its global leadership with steady 4% growth, particularly benefiting from strength in the Europe, Middle East, and Africa region.
- Flu and combo testing resilience: Sales of flu tests and the COVID-flu combination test remained strong, offsetting the expected decline in pure COVID testing. The durability of the combo product contributed to recurring revenue streams.
- Cost savings initiatives: Operational changes—including staff reductions, procurement efficiencies, and expense controls—were credited with expanding non-GAAP margins and reducing operating costs. Management expects further incremental savings in 2025.
- Tariff mitigation efforts: The company outlined a multi-pronged strategy to counter expected $30–40 million tariff headwinds. Actions include re-sourcing materials, adjusting supply chains, selective pricing, and ongoing inventory repositioning. Management stated these steps are expected to fully neutralize tariff effects on financial results.
Drivers of Future Performance
QuidelOrtho’s outlook for 2025 is anchored by recurring revenue growth in core segments, ongoing cost control, and strategies to manage external headwinds such as tariffs.
- Recurring consumables revenue: Management highlighted that over 90% of sales stem from consumables, providing a stable revenue foundation less susceptible to one-time instrument sales volatility. The company expects this model to drive consistent growth, especially in labs and immunohematology.
- Cost discipline and savings: The company is on track to realize the remainder of its $100 million annualized cost savings program, with additional procurement and cash flow initiatives expected to deliver a further $30–50 million in savings during 2025. These efforts are intended to support margin expansion even as the company faces external cost pressures.
- Tariff and macro environment management: Expected tariff headwinds are being addressed through supply chain adjustments, selective price increases, and cost reductions. Management expressed confidence that these measures will allow QuidelOrtho to maintain its guidance even if the tariff situation evolves, but noted that ongoing monitoring is required due to the dynamic nature of global trade policy.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) the pace at which cost savings and procurement initiatives translate into sustained margin gains, (2) the impact of tariff mitigation actions on both supply chain flexibility and pricing power, and (3) any changes in demand for respiratory testing—particularly the COVID-flu combination test. Progress on Savanna respiratory panel submission and broader product pipeline developments will also serve as key signposts for tracking execution.
QuidelOrtho currently trades at a forward P/E ratio of 12.1×. At this valuation, is it a buy or sell post earnings? The answer lies in our full research report (it’s free).
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