Key Takeaways
QuidelOrtho Corporation lowered its full-year 2026 forecast after a mild respiratory season drove a 30 percent drop in flu-related clinic visits, depressing sales of its diagnostic tests and pushing first-quarter results to an adjusted loss of $0.40 per share.
"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%," Brian J. Blaser, President and Chief Executive Officer, said on the company's May 5 earnings call.
The diagnostics company reported total revenue of $620 million for the first quarter. Respiratory revenue was just $68 million, while the larger labs business saw revenue decline 8 percent year-over-year. Adjusted EBITDA was $109 million, representing an 18 percent margin, down 630 basis points from the prior year.
Management cut its full-year revenue guidance by approximately $75 million at the midpoint, attributing the revision to the weak respiratory results and an estimated $30 million headwind from distributors in China pausing orders ahead of new government pricing policies.
CFO Joseph M. Busky said the impact from distributor caution in China is expected to be concentrated in the first half of the year. The pending national in-vitro diagnostic (IVD) pricing guidelines have created uncertainty, causing the company's partners to reduce inventory.
CEO Brian J. Blaser noted that the company has no plans to exit the Chinese market, stating that even after the pricing changes are implemented, the business is expected to remain accretive to the company's overall margin profile. He added that the changes would likely not be fully implemented until mid-2027, giving QuidelOrtho time to enact mitigation strategies.
Despite the near-term challenges, QuidelOrtho highlighted progress on several strategic fronts. The company completed its acquisition of Lex Diagnostics in April, which adds an ultrafast molecular testing platform to its portfolio. Management expects to begin placing the new instruments this year, with revenue contribution starting in early 2027.
The company is also rolling out new products in its core labs business, including a high-sensitivity troponin assay in the U.S. and its VITROS 450 platform in international markets. These launches are expected to support mid-single-digit growth in the labs business, which accounts for more than half of total revenue.
The guidance cut shows the impact of lower-than-expected respiratory testing demand and policy-driven uncertainty in China. Investors will watch for stabilization in Chinese distributor ordering in the second half of the year and the initial uptake of the new Lex Diagnostics platform. The company's next catalyst will be its second-quarter earnings report, where it expects sequential performance to be roughly flat with the first quarter.
This article is for informational purposes only and does not constitute investment advice.
