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    QuidelOrtho Corp (QDEL)

    QDEL Q1 2025: Offsetting $30-40M Tariffs, Aiming 25% EBITDA

    Reported on Jun 10, 2025 (After Market Close)
    Pre-Earnings Price$25.85Last close (May 7, 2025)
    Post-Earnings Price$28.66Open (May 8, 2025)
    Price Change
    $2.81(+10.87%)

    What went well

    • Effective Tariff Mitigation: Management is addressing a $30–40 million gross tariff impact through targeted pricing actions, supply chain adjustments, and cost controls, indicating that incremental measures can fully offset these impacts.
    • Robust Operational Improvements: The discussion highlighted significant operational efficiencies—including strong cost savings and margin improvements—that support higher adjusted EBITDA and EPS, reinforcing the company’s disciplined execution.
    • Resilient Revenue Growth: Key segments such as Labs and the respiratory area (notably the durable COVID flu combo test) are driving stability and growth, with China expected to deliver mid- to high single-digit growth despite macro headwinds.

    What went wrong

    • Tariff Headwinds Uncertainty: Despite management's mitigation strategies, the fluid nature of tariff impacts—gross impact estimated at $30-40 million in 2025—raises concerns that further adverse adjustments or ineffective pass-through pricing could pressure margins and revenue.
    • Regulatory and Execution Risks Around Savanna Respiratory Panel: The ongoing clinical trial process and reliance on an imminent FDA submission create uncertainty; any delay or unfavorable data outcome in the submission process could result in lost growth opportunities in a fast-growing segment.
    • Dependence on COVID Revenue Recovery: The significant decline in COVID revenue, paired with expectations of a summer rebound, introduces volatility. A failure for COVID revenues to recover as predicted could pressure overall respiratory revenue performance.

    Q&A Summary

    1. Tariff Exposure
      Q: What is the current tariff impact level?
      A: Management reported a $30–40M gross tariff impact for 2025 that is fully offset through targeted pricing actions and cost reductions.

    2. Margin Outlook
      Q: Will tariffs affect future margins or linger?
      A: They expect only minor timing effects—with slight Q2 softness in China—but full-year guidance remains intact and they target mid- to high-20% adjusted EBITDA margins without lingering 2026 impacts.

    3. China Revenue
      Q: How did China perform this quarter?
      A: In China, overall revenue was flat with 2% labs growth, and while some shipments were delayed, the long-term outlook remains steady.

    4. Reagent Pricing
      Q: Can tariffs be offset via pricing adjustments?
      A: Management noted that selective price pass-through on reagent rentals helped mitigate tariff costs, similar to strategies used during the pandemic.

    5. Manufacturing Impact
      Q: Will tariffs affect manufacturing build-out plans?
      A: Executives confirmed no changes to their global manufacturing footprint, continuing reliance on facilities in the U.S., U.K., China, and Mexico.

    6. Savanna Program
      Q: What’s the status on the Savanna submission?
      A: They are in the final trial stages and plan to submit to the FDA this summer, underscoring their strong focus on respiratory diagnostics.

    7. Respiratory Trends
      Q: How are respiratory test sales evolving?
      A: Respiratory revenue reached $120M with 11% growth (excluding COVID), driven by a durable flu combo test despite lower COVID sales.

    8. Savanna Data
      Q: Have trial results for Savanna been successful?
      A: Management refrained from detailed data commentary, simply confirming positive progress and readiness for FDA submission.

    9. China Tariff Specifics
      Q: Why are few China shipments subject to tariffs?
      A: They explained that only a small subset of shipments incur tariffs, as most products are currently exempt under existing measures.

    10. China Shipment Clarification
      Q: Any risk of increased tariffs on China shipments?
      A: Management sees no indication of a broader tariff application at this time, though they remain alert to any market changes.

    11. US vs. UK Production
      Q: What is the split between US and UK production?
      A: Most immunoassay products are manufactured in the U.K., with a limited capacity operating out of the U.S. Rochester facility.

    12. China Market Penetration
      Q: How is penetration of integrated instruments in China?
      A: The market primarily uses stand-alone clinical chemistry instruments, with significant opportunity to expand immunoassay adoption.

    13. Core Lab Strength
      Q: How is core lab performance across hospitals?
      A: Performance in the Labs segment was robust, growing 7% overall, reflecting strong customer demand even amid funding uncertainties.

    14. Mass Spec Competition
      Q: Is Roche’s mass spec a major threat?
      A: Management regards Roche’s new mass spec offering as targeting niche areas that do not directly challenge their core lab technology.

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