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    QuidelOrtho (QDEL)

    QDEL Q4 2024: EBITDA Margin Plunges to 21%, Targets >25%

    Reported on Jun 10, 2025 (After Market Close)
    Pre-Earnings Price$39.94Last close (Feb 12, 2025)
    Post-Earnings Price$43.80Open (Feb 13, 2025)
    Price Change
    $3.86(+9.66%)
    • Margin Improvement & Free Cash Flow Expansion: Management expects free cash flow conversion to improve from 20% in 2024 to 25%-30% in 2025 with an eventual target of 50% conversion, supporting a sustained rise in margins and profitability.
    • Attractive Growth in Key Regions: Despite market challenges, China remains an attractive market with anticipated mid-single-digit growth as VBP pressures are expected to ease, bolstering overall revenue stability.
    • Cost Savings & Product Pipeline Progress: Significant cost savings initiatives—such as already achieving $50 million in early savings and targeting an additional $30-50 million—combined with strategic investments in new products like the Savanna respiratory panel trial, create a strong foundation for future revenue and margin expansion.
    • Revenue Vulnerabilities: The respiratory segment showed an 18% year-over-year decline in Q4 and the Donor Screening business is expected to decline steeply (to $40–50 million from around $115 million) which raises concerns over the stability of high-margin revenue streams.
    • Margin Pressure: There is evidence of margin compression with adjusted EBITDA margin dropping from 52% in the prior period to 21% in Q4 2024, driven by high-cost COVID/flu sales in the prior year and unfavorable product mix in the current period.
    • Macroeconomic Uncertainties: Uncertainty around tariff impacts—particularly with exposure to instruments sourced from Mexico—and potential negative impacts from foreign currency exchange (with a $55 million negative impact expected in 2025) add to the risk profile.
    1. Margin Outlook
      Q: What are the long-term margin targets?
      A: Management targets adjusted EBITDA margins >25% over a 2–3 year span, driven by procurement savings, exiting U.S. Donor Screening, and new product launches such as Savanna.

    2. Free Cash Flow Guidance
      Q: What free cash flow conversion improvements are expected?
      A: The company ended 2024 at about 20% free cash flow conversion, aiming for 25%–30% in 2025 with a longer-term goal of reaching 50% conversion.

    3. Cost Savings
      Q: How are cost savings driving performance?
      A: Incremental savings of $30–$50 million this year, mainly from procurement and indirect cost reductions, underpin a 250 basis point margin expansion from 2024 to 2025.

    4. China Exposure
      Q: What is the current outlook for China revenue?
      A: China remains attractive with expectations of mid-single digit growth as reduced VBP pressure and improved pricing conditions support sustained performance.

    5. Respiratory Revenue
      Q: What’s the guidance on respiratory revenue?
      A: Respiratory revenue is expected to grow in the low single digits, with COVID revenue flattening due to nonrecurring government contracts and retail making up less than 0.5% of total revenue.

    6. Tariff Exposure
      Q: How significant are tariffs on operations?
      A: Tariff impacts are being closely monitored; exposure is mainly through instruments sourced from Mexico, with current policies too unsettled to warrant major concern.

    Research analysts covering QuidelOrtho.