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 25% 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 (25% 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 Constant Currency Revenue fell 1.1% year on year (-15.5% in the same quarter last year) Market Capitalization: $1.75 billion

“We delivered solid first quarter performance driven by growth in our Labs business and the strength of our recurring revenue business model,” said Brian J. Blaser, President and Chief Executive Officer, QuidelOrtho.

Company Overview

Born from the 2022 merger of Quidel and Ortho Clinical Diagnostics, QuidelOrtho (NASDAQ:QDEL) develops and manufactures diagnostic testing solutions for healthcare providers, from rapid point-of-care tests to complex laboratory instruments and systems.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can have short-term success, but a top-tier one grows for years. Luckily, QuidelOrtho’s sales grew at an excellent 23.3% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.QuidelOrtho Quarterly Revenue

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. QuidelOrtho’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 5.7% over the last two years.QuidelOrtho Year-On-Year Revenue Growth

We can better understand the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 8.9% year-on-year declines. Because this number is lower than its normal revenue growth, we can see that foreign exchange rates have boosted QuidelOrtho’s performance.

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QuidelOrtho Constant Currency Revenue Growth

This quarter, QuidelOrtho reported a rather uninspiring 2.6% year-on-year revenue decline to $692.8 million of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to decline by 1.3% over the next 12 months. While this projection is better than its two-year trend, it's tough to feel optimistic about a company facing demand difficulties.

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Operating Margin

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

QuidelOrtho was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.9% was weak for a healthcare business.

Looking at the trend in its profitability, QuidelOrtho’s operating margin decreased by 40.8 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 16.5 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.QuidelOrtho Trailing 12-Month Operating Margin (GAAP)

This quarter, QuidelOrtho generated an operating profit margin of 4.7%, up 252 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for QuidelOrtho, its EPS declined by 8.1% annually over the last five years while its revenue grew by 23.3%. This tells us the company became less profitable on a per-share basis as it expanded.QuidelOrtho Trailing 12-Month EPS (Non-GAAP)

Diving into the nuances of QuidelOrtho’s earnings can give us a better understanding of its performance. As we mentioned earlier, QuidelOrtho’s operating margin improved this quarter but declined by 40.8 percentage points over the last five years. Its share count also grew by 55.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.QuidelOrtho Diluted Shares Outstanding

In Q1, QuidelOrtho reported EPS at $0.74, up from $0.44 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects QuidelOrtho’s full-year EPS of $2.15 to grow 19.3%.

Key Takeaways from QuidelOrtho’s Q1 Results

We were impressed by how significantly QuidelOrtho blew past analysts’ EPS and EBITDA expectations this quarter. On the other hand, its full-year EPS guidance and constant currency revenue fell short of Wall Street’s estimates. Zooming out, we think this was a decent quarter featuring some areas of strength but also some blemishes. The stock traded up 7.6% to $27.79 immediately after reporting.

Should you buy the stock or not? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.

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