Dive Brief:
- Quidel is set to beat analyst expectations in the fourth quarter on the back of rising demand for COVID-19 tests that brought revenues up to around $635 million.
- The preliminary fourth-quarter revenue result is more than 35% above the consensus estimate of analysts. At $510 million, the quarter's COVID-19 revenues are higher than the estimate for the entire company, although they are still down from Quidel's strong end to 2020.
- Quidel is now seeking to build on the momentum provided by the pandemic, identifying the U.S. introduction of its Savanna multiplex molecular analyzer and the close of its $6 billion buyout of Ortho Clinical Diagnostics as growth drivers that will come online this year. William Blair analysts in a Friday note commented that the test maker's update "serves as another proof point that when COVID-19 testing demand is elevated, Quidel does extraordinarily well" but "questions on the durability of COVID demand are valid."
Dive Insight:
Quidel's fortunes have ridden the U.S. COVID-19 waves up and down throughout the pandemic. After seeing the delta variant drive up demand in late summer and into the fall, Quidel had expected the final reporting period of 2021 to "look a bit like" the third quarter. Cases were below the delta wave for most of the fourth quarter but Quidel still saw sales grow sequentially.
With preliminary fourth-quarter revenues falling in the $633 million to $637 million range, Quidel is set to blast past the $509.7 million it brought in across the third quarter. COVID-19 tests alone generated $510 million in the fourth quarter.
While COVID-19 sales are down compared to the $678.7 million Quidel generated in the fourth quarter of 2020, the company hailed the past three months as its best ever from a volume perspective. Quidel sold around 65 million QuickVue COVID-19 antigen tests and over 4 million Sofia SARS antigen tests over the final three months of 2021.
The record volumes were enabled by the expansion of Quidel's manufacturing capacity and increased demand for antigen tests in the U.S. In September, the Department of Defense awarded Quidel a $284.2 million contract for 25.6 million test kits. The DoD expected to start receiving shipments from Quidel in October, suggesting the contract contributed to fourth-quarter volumes.
"New customer classes continue to serve as sources of demand, including a growing number of states that are calling for COVID-19 products (more than 30 at last count), employers who want to test employees and even customers, and the federal government (most of its initial 100 million QuickVue units on order remain unfilled)," William Blair analysts wrote, adding that "this should help provide some cushion when the inevitable slowdown in testing demand takes place."
Craig-Hallum analysts in a Friday note said "new capacity and continuous demand should support Q1" and raised their first quarter estimates to "properly account for ongoing demand for QuickVue."
Quidel has yet to comment on first quarter COVID-19 sales but, with omicron driving U.S. cases to record highs, the company looks well placed to make a fast start to the year, even if there are doubts about the sensitivity of antigen tests against the variant.
Rather than discuss COVID-19, Quidel CEO Douglas Bryant focused his forward-looking statements on how the company is seeking to expand its business, specifically through the launch of Savanna and acquisition of Ortho. Savanna, which received a CE mark last year, is designed to analyze up to 12 pathogens from a single sample in less than 25 minutes.
