Q2 2024 QuidelOrtho Corp Earnings Call

Unknown Executive: Those few participating on the conference call, there'll be an opportunity for your questions at the end of today's prepared remarks. Please note this conference call is being recorded. An audio replay of the conference call will be available on the company's website shortly after this call.

<unk> conference call there'll be an opportunity for your questions at the end of today's prepared remarks.

Please note this conference call is being recorded.

<unk> replay of the conference call will be available on the Companys website. Shortly after this call I would now like to turn the call over to Juliet Cunningham, Vice President of Investor Relations.

Juliet Cunningham: I would now like to turn the call over to Juliet Cunningham, Vice President of Investor Relations.

Juliet Cunningham: Thank you. Good afternoon, everyone, and thanks for joining the Quidel for the second quarter of 2024 financial results conference call. With me today are Brian Blaser, President and Chief Executive Officer, and Joe Busky.

Unknown Executive: Thank you. Good afternoon, everyone. And thanks for joining us.

Unknown Executive: And thanks for joining the Quidel Orgo's second quarter 2024 financial results conference call. With me today are Brian Blaser, President and Chief Executive Officer, and Joe Busky. This conference call.

Juliet Cunningham: Thank you good afternoon, everyone and thank you for joining the <unk> second quarter 2024 financial results Conference call with me today are Brian Blazer, President and Chief Executive Officer, and Joe Bergstein.

Unknown Executive: Thank you. Good afternoon, everyone.

Juliet Cunningham: This conference, we've posted some supplemental presentations on the investor relations page that will be referenced throughout this call. This conference call contains forward looking statements within the meeting of the crowd. Private Security's Litigation Reform Act of 1995 statements that are not strictly historical, including the company's expectations, plans, future performance and process, are forward-looking statements that are subject to certain risks, uncertainties, assumptions, and other factors. Actual results may vary materially from those expressed or implied in these forward-looking statements. Information about potential factors that put affect our actual results is available in our annual report on Forms 10-K for the 2023 fiscal year and subsequent reports filed with the SEC, including risk factor sections.

Juliet Cunningham: This conference.

Speaker Change: We posted a supplemental presentation on the Investor relations page that will be referenced throughout this call.

Unknown Executive: We've posted a supplemental presentation on the investor relations page that will be referenced throughout this call. This conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not strictly historical, including the company's expectations, plans, future performance, and prospects, are forward-looking statements that are subject to certain risks, uncertainties, assumptions, and other factors. The actual results may vary materially from those expressed or implied in these forward-looking statements.

Unknown Executive: Information about potential factors that could affect our actual results is available in our annual report on Form 10-K for the 2023 fiscal year and subsequent reports filed with the SEC, including risk factor sections. Forward-looking statements are made as of today, July 31st, 2024, and we assume no obligation to update any forward-looking statement, except as required by law. In addition, today's call will include a discussion of certain non-GAAP financial measures.

Speaker Change: This conference call contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Speaker Change: Statements that are not strictly historical including the company's expectations plans future performance and prospects are forward looking statements that are subject to certain risks uncertainties assumptions and other factors.

Speaker Change: Actual results may vary materially from those expressed or implied.

Speaker Change: And these forward looking statements.

Speaker Change: Information about potential factors that could affect our actual results is available in our annual report on Form 10-K for the 2023 fiscal year and subsequent reports filed with the SEC, including risk factors sections.

Juliet Cunningham: Forward-looking statements are made as of today, July 31, 2024, and we assume no obligation to update any forward-looking statement, except as required by law. In addition, today's call will include a discussion of certain non-GAF financial measures. Tables reconciling these non-GAAP measures to their most directly comparable GAAP measures are available in our earnings release. In addition, we assume no obligation to update any forward-looking statement, except as required by law. Today, we reported a second quarter revenue of $637 million and adjusted EBITDA of $90 million, which are in line with our expectations across our businesses and global geographies.

Speaker Change: Forward looking statements are made as of today July 31, 2024, and we assume no obligation to update any forward looking statement, except as required by law.

Unknown Executive: Tables reconciling these non-GAAP measures to their most directly comparable GAAP measures are available in our earnings release and the supplemental presentation, which are on the investor relations page of our website at quidelorthos.com. Lastly, unless stated otherwise, all year over year revenue growth rates given on today's call are given on a comparable constant currency basis. And now, I'd like to turn the call over to our CEO, Brian Blaser

Speaker Change: In addition, today's call will include a discussion of certain non-GAAP financial measures.

Speaker Change: Tables reconciling these non-GAAP measures to their most directly comparable GAAP measures are.

Speaker Change: Are available in our earnings release, and the supplemental presentation, which are on the Investor Relations page of our website at quite out ortho dotcom.

Speaker Change: <unk>.

Speaker Change: Lastly, unless stated otherwise all year over year revenue growth rates given on today's call are given on a comparable constant currency basis.

Speaker Change: And now I'd like to turn the call over to our CEO, Brian Blazer.

Brian J. Blaser: Thanks, Juliet. Good afternoon, everyone.

Brian J. Blaser: Thanks, Julia good afternoon, everyone I'm pleased to be here with you to discuss our second quarter results.

Speaker Change: Today, we reported second quarter revenue of $637 million and adjusted EBITDA of $90 million, which are in line with our expectations across our businesses and global geographies.

Brian Blaser: Joe will cover our detailed quarterly financials later in this call, but I'd like to start by providing some observations from my nearly 90 days here at Quite a Little or though, as well as outline our key priorities as we move forward. During times of change, it's important to take a step back and assess where we are versus where we need to be, and we began that process in earnest when I arrived in early May, and I can assure you we are leaving no stone unturned. The leadership team and I have been reviewing every aspect of our business fundamentals and product portfolio to define our mission critical your term program.

Brian J. Blaser: I'm pleased to be here with you to discuss our second quarter results. Today, we've reported second quarter revenue of $637 million and adjusted EBITDA of $90 million, which are in line with our expectations across our businesses and global geographies. Joe will cover our detailed quarterly financials later in this call, but I'd like to start by providing some observations from my nearly 90 days here at Quidel Ortho, as well as outline our key priorities as we move forward. During times of change, it's important to take a step back and assess where we are versus where we need to be. And we began that process in earnest when I arrived in early May.

Speaker Change: Joe will cover our detailed quarterly financials later in this call, but I would like to start by providing some observations from my nearly 90 days here at quite El Arco as well as outline our key priorities as we move forward.

Brian J. Blaser: And I can assure you we are leaving no stone unturned. The leadership team and I have been reviewing every aspect of our business fundamentals and product portfolio to define our mission critical near term program. We believe these programs will yield the highest returns in growth and profitability. After completing many of these reviews, it is clear to me that our value proposition is strong, our underlying business is stable, and we see a clear pathway to our adjusted even margin expansion goal in the mid to high 20% range over the next two to three years.

Joe: During times of change, it's important to take a step back and assess where we are versus where we need to be and.

Joe: We began that process in earnest when I arrived in early May and I can assure you we are leaving no stone unturned.

Joe: The leadership team and I have been reviewing every aspect of our business fundamentals and product portfolio to define our mission critical near term programs.

Brian Blaser: Williams. We believe these programs will yield the highest returns in growth and profitability. After completing many of these reviews, it is clear to me that our value proposition is strong. Our underlying business is stable, and we see a clear pathway to our adjusted even a merchant expansion goal in the mid to high 20% range over the next two to three years. Let me provide some context and why I have confidence that we can achieve this goal. First, Quidel Ortho's broad product portfolio spans the entire continuum of care from hospital reference labs to near patient point of care testing.

We believe these programs will yield the highest returns and growth and profitability.

Joe: After completing many of these reviews. It is clear to me that our value proposition is strong our underlying business is stable and we see a clear pathway to our adjusted EBITDA margin expansion goal in the mid to high 20% range over the next two to three years, let me provide some context on why I have.

Brian J. Blaser: Let me provide some context and why I have confidence that we can achieve this goal. First, Quidel Ortho's broad product portfolio spans the entire continuum of care from hospital reference labs to near patient point of care testing. In vitro diagnostics is a $48 billion industry, and Quidel Ortho directly serves segments of approximately $19 billion, growing at mid single-digit rates.

Joe: Confidence that we can achieve this goal.

Joe: First quite el or those broad product portfolio.

Joe: Spans the entire continuum of care from hospital reference labs to near patient point of care testing.

Brian Blaser: In vitro diagnostics is a $48 billion industry, and Quidel Ortho directly serves segments of approximately $19 billion, growing at mid single digits. Our overarching mission is to improve patient outcomes in each care setting at every step of the healthcare journey, and our product portfolio is uniquely suited for both centralized and decentralized testing settings. We serve the patient from prevention to diagnosis and in treatment to monitoring. A few companies in our space have this breadth, and this is particularly exciting because of what it represents in terms of opportunity for growth and impact. Of course, most opportunities can present themselves initially as challenges, and Quidel Ortho has certainly had a share of these over the last several months.

Joe: In vitro diagnostics is a $48 billion industry quite out ortho directly serve segments of approximately $19 billion.

Joe: Growing at mid single digits.

Brian J. Blaser: Our overarching mission is to improve patient outcomes in each care setting at every step of the healthcare journey, and our product portfolio is uniquely suited for both centralized and decentralized testing settings. We serve the patient from prevention to diagnosis and in treatment to monitoring. Few companies in our space have this breadth, and this is particularly exciting because of what it represents in terms of opportunity for growth and impact. Of course, most opportunities can present themselves initially as challenges, and Quidel Ortho has certainly had its share of these over the last several months. In my view, our challenges are not structural to our business.

Joe: Our overarching mission is to improve patient outcomes in each care setting at every step of the health care journey.

Joe: Our product portfolio is uniquely suited for both centralized and decentralized testing settings.

Joe: We serve the patient from prevention to diagnosis and treatment to monitoring the few companies in our space have this breadth and this is particularly exciting because of what it represents in terms of opportunity for growth and impact.

Joe: Of course, most opportunities can present themselves initially as challenges and quite a quite all ortho has certainly had its share of these over the last several months.

Brian Blaser: In my view, our challenges are not structural to our business; rather, they are mainly internal cost execution and process issues, which are largely under our control. We are taking aggressive action targeted to resolve these issues as quickly as possible. I see many corollaries to similar challenges I previously faced in my years in the diagnostics industry and the journey we are on today. Over the last few months, I've had the opportunity to meet with and gather insights from many key customers, suppliers, employees, and investors, which have helped us align our near-term priorities. And from these conversations, it is clear that our highest priority remains delivering on our customer commitments at the highest levels of quality and compliance.

Joe: In my view, our challenges are not structural to our business.

Brian J. Blaser: Rather, they are mainly internal cost execution and process issues which are largely under our control. We are taking aggressive action to resolve these issues as quickly as possible. I see many corollaries to similar challenges I previously faced in my years in the diagnostics industry and the journey we are on today. Over the last few months, I've had the opportunity to meet with and gather insights from many key customers, suppliers, employees, and investors, which have helped us align our near-term priorities.

Joe: Rather they are mainly internal cost execution and process issues, which are largely under our control. We are taking aggressive action targeted to resolve these issues as quickly as possible I see many corollaries to similar challenges I previously faced in my years in the diagnostics industry and the journey we are on today.

Joe: Over the last few months I've had the opportunity to meet with and gather insights from many key customers suppliers employees investors, which have helped us align our near term priorities and from these conversations it is clear that our highest priority remains delivering on our customer commitments.

Brian J. Blaser: And from these conversations, it is clear that our highest priority remains delivering on our customer commitments at the highest levels of quality and compliance. Then we must improve the way we run the business and our financial performance with a critical eye on consistency. And lastly, we must be steadfast in driving our product timelines and delivering on our portfolio commitments. Savannah is a perfect example.

Joe: At the highest levels of quality and compliance then we must improve the way we run the business at our financial performance with a critical eye on consistency.

Brian Blaser: Then we must improve the way we run the business and our financial performance with a critical eye on consistency. And lastly, we must be steadfast in driving our product timelines and delivering on our portfolio commitments.

Joe: And lastly, we must be steadfast in driving our product timelines and delivering on our portfolio and commitments.

Brian Blaser: Savannah is the perfect example after multiple delays and disappointments. Savannah is admittedly late to the party. But despite being late, we see Savannah continuing to provide significant competitive advantages in the molecular point-of-care market, both today and well into the future.

Speaker Change: Savannah is the perfect example.

Brian J. Blaser: After multiple delays and disappointments, Savannah is admittedly late to the party. But despite being late, we see Savannah continuing to provide significant competitive advantages in the molecular point-of-care market, both today and well into the future. A successful U.S. launch of Savannah will offer incremental revenue and margin growth opportunities for us, and we are committed to getting it across the finish line. Building on the Savannah Instrument and HSV panel approvals in the U.S., we expect to enter clinical trials on a respiratory panel later this year.

Speaker Change: After multiple delays and disappointments savanna is admittedly late to the party.

Joe: But despite being late we see savanna continuing to provide significant competitive advantages in the molecular point of care market, both today and well into the future.

Brian Blaser: A successful U.S. launch of Savannah will offer incremental revenue and margin growth opportunities for us, and we are committed to getting it across the finish line. Building on the Savannah instrument and HSV panel approvals in the U.S., we expect to enter clinical trials on our respiratory panel later this year. And while we won't attempt to predict regulatory timelines, our goal is to be in the market with both the respiratory panel and the SDI panel in 2025.

Joe: Successful U S launch of Savannah will offer incremental revenue and margin growth opportunities for us and we are committed to getting it across the finish line.

Joe: Building on the savanna instrument and HSV panel approvals in the U S. We expect to enter clinical trials on our respiratory panel later this year and while we won't attempt to predict regulatory timelines. Our goal is to be in the market with both the respiratory panel and the STI panel in 2025.

Brian J. Blaser: And while we won't attempt to predict regulatory timelines, our goal is to be in the market with both the respiratory panel and the SDI panel in 2025. In parallel, we are realigning our cost structure to support improved profitability and achieve durable long-term growth. We executed on our previously announced $100 million in annualized cost savings initiatives, primarily through staffing reductions. We expect to realize savings of approximately $50 million in the second half of this year and the remainder in the first half of 2025.

Brian Blaser: In parallel, we are realigning our cost structure to support improved profitability and achieve durable long-term growth. We executed on our previously announced $100 million in annualized cost savings initiatives, primarily through staffing reductions. We expect to realize savings of approximately $50 million in the second half of this year and the remainder in the first half of 2025. Business efficiency with initiatives and procurement, supply chain, manufacturing quality, and IT. And these initiatives are expected to show incremental margin contribution in 2025 and 26.

Joe: In parallel we are realigning our cost structure to support improved profitability and achieve durable long term growth we executed on our previously announced $100 million in annualized cost savings initiatives, primarily through staffing reductions.

Joe: We expect to realize savings of approximately $50 million in the second half of this year and the remainder in the first half of 2025.

Brian J. Blaser: And we are not stopping there. We are in the early stages of improving our overall business efficiency with initiatives in procurement, supply chain, manufacturing, quality, and IT. And these initiatives are expected to show incremental margin contribution in 2025 and 2026. I look forward to providing more details over the coming quarters as we move forward. And finally, let me reiterate that the underlying health and fundamentals of our business remain intact. We are focused on challenging every aspect of the business to improve our performance while balancing the needs to invest for future growth.

Joe: And we are not stopping there we are in the early stages of improving our overall business efficiency with initiatives in procurement supply chain manufacturing quality.

Joe: And these initiatives are expected to show incremental margin contribution in 2025 and 26.

Brian Blaser: I look forward to providing more details over the coming quarters as we move forward. And finally, let me reiterate that the underlying health and fundamentals of our business remain intact. We are focused on challenging every aspect of the business to improve our performance while balancing the needs to invest for future growth.

Joe: Look forward to providing more details over the coming quarters as we move forward.

Joe: And finally, let me reiterate that the underlying health and fundamentals of our business remain intact. We are focused on challenging every aspect of the business to improve our performance while balancing the needs to invest for future growth.

Brian Blaser: Before I turn the call over to Joe, I'd like to thank our employees around the globe, without whom we could not meet our goals. I realize that periods of major change, including leadership changes and staffing reductions, are never easy. However, these changes are needed to become a stronger, more efficient company. They can better serve our customers and shareholders, as well as to get a great place for employees to work and grow their careers.

Brian J. Blaser: Before I turn the call over to Joe, I'd like to thank our employees around the world, without whom we could not meet our goals. I realize that periods of major change, including leadership changes and staffing reductions, are never easy. However, these changes are needed to become a stronger, more efficient company that can better serve our customers and shareholders, as well as be a great place for employees to work and grow their careers. And so, with that, I'll hand it over to Joe.

Joe: Before I turn the call over to Joe I'd like to thank our employees around the globe without whom we could not meet our goals.

Speaker Change: I realize that periods of major change, including leadership leadership changes in staffing reductions are never easy. However, these changes are needed to become a stronger more efficient company that can better serve our customers and shareholders as well as to be a great place for employees to work and grow their careers.

Brian Blaser: And so, with that, I'll hand it over to Joe.

Speaker Change: So with that I'll hand, it over to Joe.

Joseph M. Busky: Thanks, Bryan. Before I get into the second quarter numbers, I'd like to share how great it has been for the entire management team to have Bryan on board. He's led the portfolio review and deep dive into every aspect of our business to help identify areas to improve efficiency and productivity. I firmly believe the changes we are making now will enable us to become a significantly stronger company in the future. Now, let's begin with details of our second quarter results on slide four of the earnings presentation, which is posted on our IR website.

Joe Busky: Thanks, Brian.

Joe: Thanks, Brian before I get into the second quarter numbers I'd like to share how great. It's been for the entire management team to have Brian on board. He's led the portfolio review and deep dive into every aspect of our business to help identify areas to improve efficiency and productivity.

Joe Busky: Before I get into the second quarter numbers, I'd like to share how great it's been for the entire management team to have Brian on board. He's led the portfolio review and deep dive into every aspect of our business to help identify areas to improve efficiency and productivity. I firmly believe the changes we are making now will enable us to become a significantly stronger company in the future.

Brian J. Blaser: I firmly believe the changes we are making now will enable us to become a significantly stronger company in the future.

Joe Busky: Now let's begin with details of our second quarter results on slide four of the earnings presentation, which is posted on our IR website. Unless they've been otherwise, all year year revenue growth rates on today's call are provided on a comparable constant currency basis. During the second quarter of 2024, we performed in line with our expectations, and we continue to drive business momentum. As a reminder, the second quarter is typically the seasonally lowest revenue quarter of the year for our business. Total reported revenue of 637 million was driven by solid performance across all geographies. Total recurring revenue, which we define as revenues from sales of our assay and reagents, consumables, and services, and excludes instrument sales.

Speaker Change: Now, let's begin with details of our second quarter results on slide four of the earnings presentation, which is posted on our IR website unless stated otherwise all year over year revenue growth rates on today's call are provided on a comparable constant currency basis.

Joseph M. Busky: Unless stated otherwise, all year-over-year revenue growth rates on today's call are provided on a comparable constant currency basis. During the second quarter of 2024, we performed in line with our expectations, and we continue to drive business momentum. As a reminder, the second quarter is typically the seasonally lowest revenue quarter of the year for our business. Total reported revenue of $637 million was driven by solid performance across all geographies.

Joe: During the second quarter of 2024, we performed in line with our expectations and we continue to drive business momentum.

Joe: As a reminder, the second quarter is typically the seasonally lowest revenue quarter of the year for our business.

Joe: Total reported revenue of $637 million was driven by solid performance across all geographies.

Joseph M. Busky: Total recurring revenue, which we define as revenue from sales of our assays, reagents, consumables, and services and excludes instrument sales, grew 5% in constant currency compared to the prior year period. This figure excludes COVID-19 and U.S. donor screening revenue, which is a business we are exiting. Our non-respiratory business, which includes labs, transfusion medicine, and portions of point-of-care, grew 2% in constant currency year over year. However, our lab's instrument revenue declined 15% due to higher instrument revenue in the prior period as we addressed the significant lab instrument backlog last year. We saw continued strength, however, in labs recurring revenue growth compared to the prior year period of 4%, although after resolving the 2023 supply chain issues.

Joe: Total recurring revenue, which we define as revenues from sales of our assay reagents consumables and services and excludes instrument sales.

Joe Busky: This grew 5% in constant currency compared to the prior year period. This figure excludes COVID-19 and US donor screen revenue, which is a business we are exiting. Our non-respiratory business, which includes labs, trenches, and medicine, and portions of point of care. We've got our group 2% in constant currency year over year. Our labs instrument revenue declined 15% due to higher instrument revenue in the prior period as we addressed the significant labs instrument backlog last year. We saw continued strength, however, in labs recurring revenue growth compared to the prior year period of 4%. After resolving the 2023 supply chain issues, Q2 2024 in Stuart Revenue was in line with our prior and normalized levels.

Joe: Grew 5% in constant currency compared to the prior year period.

Joe: This figure excludes COVID-19, and U S donor screening revenue, which is a business we are exiting.

Joe: Our non respiratory business, which includes labs transfusion medicine and portions of point of care.

Joe: Grew 2% in constant currency year over year.

Joe: Our labs instrument revenue declined 15% due to higher instrument revenue in the prior period as we address the significant labs instrument backlog last year.

Joe: We saw continued strength however in labs recurring revenue growth compared to the prior year period of 4%.

Joe: After resolving the 2023 supply chain issues Q2, 2020 for instrument revenue was in line with our prior of normalized levels.

Joseph M. Busky: Q2 2024 instrument revenue was in line with our prior normalized levels. Within our labs, installed base integrated and auto analyzers grew seven and 16%, respectively, compared to the prior year period. And immunohematology revenue grew 2% compared to the prior year period, in line with market growth and our expectations. The respiratory side of the business had a good quarter with strong contribution from flu testing on the SOFIA platform in the professional setting. In addition, our combo product exceeded 50% of our Q2 flu revenue in the U.S. once again.

Joe Busky: Within our labs' installed base, integrated in Auditor's Group 7 and 16% respectively compared to the prior year period. And Immutal Himmetology revenue grew 2% compared to the prior year period, in line with market growth and our expectations. The respiratory side of the business had a good quarter with strong contribution from flu testing on the Sophia platform in the professional setting. In addition, our combo product exceeded 50% of our Q2 flu revenue in the US once again. Excluded COVID-19 revenue, respiratory revenue grew 18% in Q2 2024. As a reminder, the COVID-19 public health emergency in the US ended in May of 2023, and we continue to see strong sales throughout the quarter of 2023.

Joe: Within our labs installed base integrated in <unk>.

Joe: <unk> grew 7% and 16% respectively compared to the prior year period.

Joe: And immuno hematology revenue grew 2% compared to the prior year period in line with market growth and our expectations.

Joe: The respiratory side of the business had a good quarter with strong contribution from flu testing on the Sofia platform in a professional setting.

Joe: In addition, our combo product exceeded 50% of our Q2 flu revenue in the U S. Once again.

Joseph M. Busky: Excluding COVID-19 revenue, respiratory revenue grew 18% in Q2 2024. As a reminder, the COVID-19 public health emergency in the U.S. ended in May of 2023, and we continue to see strong sales throughout the second quarter of 2023. COVID-19 revenue was $19 million in Q2 of this year, compared to $56 million in the prior year period, and year to date COVID-19 revenue was approximately $70 million, which puts us nearly halfway to our full year forecast of $150 million. And we continue to see good pull through of respiratory consumables into the third quarter.

Joe: Excluding covering COVID-19 revenue respiratory revenue grew 18% in Q2 2024.

Joe: As a reminder, the COVID-19 public health emergency in the U S ended in May of 2023, and we continue to see strong sales throughout the second quarter of 2023.

Joe Busky: COVID-19 revenue was 19 million in Q2 of this year compared to 56 million in the prior year period. And year-to-date COVID-19 revenue was approximately 70 million, which puts us nearly halfway to our four-year forecast of 150 million. And we continue to see good pull through a respiratory consumables into the third quarter.

Joe: COVID-19 revenue was $19 million in Q2 of this year compared to $56 million in the prior year period.

Joe: And year to date COVID-19 revenue was approximately $70 million, which puts us nearly halfway to our full year forecast of $150 million.

Joe: And we continue to see good pull through of respiratory consumables into the third quarter.

Joe Busky: From a regional perspective, excluding COVID-19, we achieved the following Q2 constant currency growth rates. First, North America grew 2%, and recurring revenue, which excludes US donor screen, grew 5% driven by consumables and our combo product on the Sophia platform. Amia grew 2%, which is driven by higher immunomotology reagents, largely offset by lower instrument revenue. China grew 4%, which is driven by labs growth of 8%, partially offset by timing factors and other lines of business. We continue to expect high single-digit growth in China for the full year. And finally, for the rest of the world, which includes Japan, Asia Pacific, and Latin America, we grew 3%.

Joseph M. Busky: From a regional perspective, excluding COVID-19 revenue, we achieved the following Q2 constant currency growth rates: First, North America grew 2%, and recurring revenue, which excludes US donor screening, grew 5%, driven by consumables and our combo product on the Sophia platform. AMIA grew 2%, which is driven by higher immunohematology reagents revenue, largely offset by lower instrument revenue. China grew 4%, which is driven by lab growth of 8%, partially offset by timing factors and other lines of business. We continue to expect high single-digit growth in China for the full year. And finally, for the rest of the world, which includes Japan, Asia-Pacific, and Latin America, we grew 3%.

Joe: From a regional perspective, excluding COVID-19 revenue we achieved the following Q2 constant currency growth rates first North America grew 2%.

Joe: Recurring revenue, which excludes U S donor screen grew 5% driven by consumables and our combo product on the Sofia platform.

Joe: EMEA grew 2%, which was driven by higher immuno immuno hematology reagents, largely offset by lower instrument revenue.

Joe: China grew 4%, which was driven by lab growth of 8%, partially offset by timing factors in other lines of business. We continue to expect high single digit growth in China for the full year.

Joe: And finally for rest of World, which includes Japan Asia Pacific and Latin America, we grew 3%.

Joe Busky: Moving down the P&L, slide 6 shows second quarter 2024 adjusted growth profit margin of 44.2% versus 45.6% in the prior year period. The 140 basis point decrease was primarily driven by lower COVID-19 product sales, which are high margin contributors. Non-GAP total operating expenses in the second quarter of 24 compared to the prior year period were roughly flat in absolute dollars but increased by 200 basis points as a percentage of revenue due to the higher COVID-19 revenue in the prior period. On a sequential basis, however, total operating expenses decreased by 13 million dollars in absolute dollars.

Joseph M. Busky: Moving down the P&L, slide six shows second quarter 2024 adjusted gross profit margin of 44.2%, versus 45.6% in the prior year period. The 140 basis point decrease was primarily driven by lower COVID-19 product sales, which are high margin contributors. Non-GAAP total operating expenses in the second quarter of 24 compared to the prior year period were roughly flat in absolute dollars but increased by 200 basis points as a percentage of revenue due to the higher COVID-19 revenue in the prior period. On a sequential basis, however, total operating expenses decreased by $13 million in absolute dollars.

Joe: Moving down the P&L slide six shows second quarter 2024, adjusted gross profit margin of 44, 2%.

Joe: Versus 45, 6% in the prior year period.

Joe: 140 basis point decrease was primarily driven by lower COVID-19 product sales, which are high margin contributors.

Joe: non-GAAP total operating expenses in the second quarter of 24 compared to the prior year period or roughly flat in absolute dollars, but increased by 200 basis points.

Joe: As a percentage of revenue due to the higher COVID-19 revenue in the prior period.

Joe: On a sequential basis, however, total operating expenses decreased by $13 million in absolute dollars.

Joe Busky: And we continue to expect continued margin improvement in the second half of 2024 from the cost savings actions we've taken.

Joseph M. Busky: And we continue to expect continued margin improvement in the second half of 2024 from the cost savings actions we've taken. As Brian mentioned, we executed $100 million in annualized cost savings measures in 2024, which primarily involve staffing reductions of approximately 7% of our global workforce compared to the end of 2023. We expect the benefits from these cost-saving measures to be realized in the second half of 2024 and the first half of 2025.

Joe: And we continue to expect continued margin improvement in the second half of 2024 from the cost savings actions we've taken.

Joe Busky: and Brian. As Brian mentioned, we have executed 100 million in annualized cost savings measures in 2024, which primarily involves staffing reductions that are approximately 7% of our global workforce compared to the end of 2023. We expect the benefits from these cost savings measures to be realized in the second half of '24 and the first half of 2025. As part of our ongoing business efficiency efforts, and as previously communicated, we reviewed our real estate footprint and are consolidating where it makes sense to do so. As a result, we expect to sell two of our facilities: one, Marriott and New Jersey manufacturing and administrative building, which we expect to lease back; and our McKellor San Diego manufacturing facility.

Joe: As Brian mentioned, we have executed $100 million in annualized cost savings measures in 2024, which primarily involved staffing reductions of approximately 7% of our global workforce compared to the end of 2023.

Brian J. Blaser: We expect the benefits from these cost saving measures to be realized in the second half of 'twenty four and the first half of 2025.

Joseph M. Busky: As part of our ongoing business efficiency efforts, and as previously communicated, we reviewed our real estate footprint and are consolidating where it makes sense to do so. As a result, we expect to sell two of our facilities, One Mareritan, New Jersey Manufacturing and Administrative Building, which we expect to lease back, and Elmer Keller San Diego Manufacturing Facility.

Joe: As part of our ongoing business efficiency efforts and.

Speaker Change: And as previously communicated we reviewed our real estate footprint and are consolidating where it makes sense to do so as a result.

Speaker Change: We expect to sell two of our facilities.

Speaker Change: One the Raritan, New Jersey manufacturing and administrative building, which.

Speaker Change: Which we expect to lease back and now Mike Keller, San Diego manufacturing facility the facility sales, which we expect to occur by year end will generate cash and decrease ongoing operating costs.

Joe Busky: These facility sales that we expect to occur by year-end will generate cash and decrease ongoing operating costs. Due to our decision to sell these properties, we have moved these assets on our balance sheet to a line called Assets Held for Sale. We have also recognized a non-cash accounting book loss of $57 million related to the sale of these two properties. This loss is primarily driven by the purchase accounting step up two years ago in the unfavorable San Diego commercial real estate market driven by excess capacity. Adjusted EBITDA was $90 million compared to $113 million in the prior year period, and adjusted EBITDA margin was 14% compared to 17% in the prior period, mainly due to the factors mentioned above.

Joseph M. Busky: These facility sales, which we expect to occur by year end, will generate cash and decrease ongoing operating costs. Due to our decision to sell these properties, we have moved these assets on our balance sheet to a line called assets held for sale. We have also recognized a non-cash accounting book loss of $57 million related to the sale of these two properties.

Speaker Change: Due to our decision to sell these properties. We have moved these assets on our balance sheet to align called assets held for sale.

Speaker Change: We have also recognized a noncash accounting book loss.

Speaker Change: $57 million related to the sale of these two properties.

Joseph M. Busky: This loss is primarily driven by the purchase accounting step-up two years ago and the unfavorable San Diego commercial real estate market driven by excess capacity. Adjusted EBITDA was $90 million compared to $113 million in the prior year period. And the adjusted EBITDA margin was 14% compared to 17% in the prior period, mainly due to the factors mentioned above. Adjusted diluted loss per share was seven cents compared to annualized diluted EPS.

Speaker Change: This loss is primarily driven by the purchase accounting step up two years ago, and the unfavorable San Diego commercial real estate market driven by excess capacity.

Speaker Change: Adjusted EBITDA was $90 million compared to $113 million in the prior year period and.

Speaker Change: And adjusted EBITDA margin was 14% compared to 17% in the prior period, mainly due to the factors mentioned above.

Joe Busky: Adjusted deluded loss per share of $0.7 compared to annualized deluded EPS of $0.26 in the prior year period. Again, this year of your change was primarily due to the lower COVID-19 revenue in 2024. Our second quarter affected effective adjusted net income tax rate was 23%, which was consistent with the prior year and in line with our current year full year expectations.

Speaker Change: Adjusted diluted loss per share was <unk> seven compared to annualized diluted EPS of <unk> 26 cents in the prior year period.

Joseph M. Busky: 26 cents in the prior year period. Again, this year-over-year change was primarily due to lower COVID-19 revenue in 2024. Our second quarter effective adjusted net income tax rate was 23 percent, which was consistent with the prior year and in line with our current year full year expectations. Turning now to the balance sheet on slide 7, we finished the quarter with $107 million of cash. As expected, given the seasonality of the business and the timing of the benefit of the cost reductions, we drew $253 million on our $800 million revolver year to date. Recurring free cash flow is negative $66 million, as anticipated given seasonally lower second quarter revenue.

Speaker Change: Again this year over year change was primarily due to the lower COVID-19 revenue in 2024.

Speaker Change: Our second quarter effected effective adjusted net income tax rate was 23%.

Speaker Change: Which was consistent with the prior year and in line with our current year full year expectations.

Joe Busky: Turning out to the balance sheet on slide seven, we finished the quarter with $107 million of cash, as expected given the seasonality of the business and the timing of the benefit of the cost reductions. We drew a 253 million on our 800 million revolver year to date. Recurring free cash flow was negative 66 million, as anticipated given seasonally lower second quarter revenue. We expect cash flow generation to improve in the second half of 2024 as our cost saving initiatives take up, along with seasonally higher revenue expected in Q4. We continue to expect full year recurring free cash flow generation to be positive.

Speaker Change: Turning now to the balance sheet on slide seven we finished the quarter with $107 million of cash.

Speaker Change: As expected given the seasonality of the business and the timing of the benefit of the cost reductions, we drew $253 million on our $800 million revolver a year to date.

Speaker Change: Recurring free cash flow was negative $66 million as anticipated given seasonally lower second quarter revenue.

Joseph M. Busky: We expect cash flow generation to improve in the second half of 2024 as our cost-saving initiatives take off, along with seasonally higher revenue expected in Q4. We continue to expect full year recurring free cash flow generation to be positive. In the second quarter of 2024, our consolidated leverage ratio was 3.4 times, including pro forma EBITDA adjustments as permitted and defined under our credit agreement for staffing reductions, business sufficiency, and integration costs.

Speaker Change: And we expect cash flow generation to improve in the second half of 2024 as our cost saving initiatives taken along with seasonally higher revenue expected in Q4.

Speaker Change: We continue to expect full year recurring free cash flow generation to be positive.

Joe Busky: During the second quarter of 2024, our consolidated leverage ratio was 3.4 times, including performance EBITA adjustments, as permitted and defined under our credit agreement for staffing reductions, business efficiencies, and immigration cost. Based on our current expectations, we expect our consolidated leverage ratio to remain flat to current levels at year end, including the performance EBITA adjustments. Excellence, compared to the four-and-a-quarter maximum leverage ratio specified in the amended credit agreement.

Speaker Change: During the second quarter of 2020 for our consolidated leverage ratio was three four times, including pro forma EBITDA adjustments as permitted and defined under our credit agreement for staffing reductions business efficiencies and integration cost.

Joseph M. Busky: Based on our current expectations, we expect our consolidated leverage ratio to remain flat to current levels at year-end, including the pro forma EBITDA adjustments, compared to the four and a quarter maximum leverage ratio specified in the amended credit agreement. I'd also like to now address a 10K amendment that we will file later today. Ernst & Young, our independent auditor, underwent a regulatory inspection of their audit of Quidel Corp. In response to this inspection, EY determined that an additional critical audit matter should have been included in the EY auditor report, followed by our 2023 10k. Apart from the additional paragraphs, there were no changes to the unqualified opinion in the EY Auditor Report or to the reported financial statements. Lastly, as you know, with Brian coming on board in early May.

Speaker Change: Based on our current expectations, we expect our consolidated leverage ratio to remain flat to current levels at year end include.

Speaker Change: Including the pro forma EBITDA adjustments compared to the four in a quarter maximum leverage ratio specified in the amended credit agreement.

Joe Busky: I'd also like to now address a 10-K amendment that we will file later today. Ernst & Young are independent auditors who underwent a regulatory inspection of their audit of Kodalwortham. In response to this inspection, Ernst & Young determined that an additional critical audit matter should have been included in the EY auditor report filed with our 2023 10-K. Apart from the additional paragraphs, there were no changes to the unqualified opinion in the EY auditor report or to the reported financial statements.

Speaker Change: I'd also like to now address a 10-K amendment.

Speaker Change: That we will file later today.

Speaker Change: Ernst <unk> young our independent auditors underwent a regulatory inspection of their audit of Codell with them.

Speaker Change: In response to this.

Speaker Change: Inspection Ernst <unk> young determined that an additional critical audit matter should have been included in the UI Auditor report filed with our 2023 10-K.

Speaker Change: Apart from the additional paragraph there were no changes to the unqualified opinion in the UI Auditor report or to the reported financial statements.

Joe Busky: Lastly, as you know, with Brian coming on board in early May, we suspended our 2020 full financial guidance on our first quarter earnings call to give him an opportunity to assess the business and evaluate our plans for the rest of the year. Our Q2 performance was in line with our expectations, and this reinforces what we articulated in our February fall. That is that we continue to expect to be at or slightly below the low end of our previously communicated 2024 financial guidance changes for revenue, adjusted EBITDA, and adjusted EPS. We recall that this view factored in removing U.S.

Speaker Change: Lastly, as you know Bryan coming on board in early May we.

Joseph M. Busky: We suspended our 2020 full financial guidance on our first quarter earnings call to give him an opportunity to assess the business and evaluate our plans for the rest of the year. Our Q2 performance was in line with our expectations. And this reinforces what we articulated in our February call, that is, we continue to expect to be at or slightly below the low end of our previously communicated 2024 financial guidance ranges for revenue, adjusted EBITDA, and adjusted EPS.

Bryan: We suspended our 2024 financial guidance.

Bryan: On our first quarter earnings call to give him an opportunity to assess the business and evaluate our plans for the rest of the year.

Bryan: Our Q2 performance was in line with our expectations.

Bryan: And this reinforces what we articulated in our February call.

Bryan: That is that we continue to expect to be at.

Speaker Change: Or slightly below the low end of our previously communicated 2024 financial guidance ranges for revenue adjust.

Speaker Change: Adjusted EBITDA and adjusted EPS.

Joseph M. Busky: Recall that this view factored in removing U.S. Savannah revenue and lowering our COVID-19 revenue forecast to $150 million for the full year. In addition, our first half 2024 performance reinforces our belief that going into 2025, our business is a solid mid-single-digit growth company excluding COVID-19 and U.S. donor screening revenue. Over time, however, with the expected addition of Savannah respiratory and CLIA waiver regulatory approvals in the U.S., as well as anticipated menu expansion, we believe we can achieve incremental revenue growth. As Brian said, we expect to provide additional color on our margin improvement plans and milestones in the coming quarters. I would now like to ask the operator to please open up the call for questions.

Speaker Change: Recall that this view factored in removing U S Savannah revenue.

Joe Busky: Savannah revenue and lowering our COVID-19 revenue forecast to 150 million from the full year. In addition, our first half 2024 performance reinforces our belief that going into 2025, our business is a solid mid-single-digit growth company excluding COVID-19 and U.S. donor screening revenue. Over time, however, with the expected addition of Savannah respiratory and clear waiver regulatory rules on the U.S. as well as anticipated menu expansion, we believe we can achieve incremental revenue growth.

Speaker Change: And lowering our COVID-19 revenue forecast to $150 million for the full year.

Speaker Change: In addition, our first half 2020 for performance.

Speaker Change: Reinforces our belief that going into 2025, our business is a solid mid single digit growth company, excluding COVID-19, and U S donor screening revenue over time, however, with the expected addition of Savannah, respiratory and CLIA waiver regulatory approvals on the U S as well as anticipated menu.

Speaker Change: <unk>.

Speaker Change: We believe we can achieve incremental revenue growth.

Joe Busky: As Brian said, we expect to provide additional color on our margin improvement plans and milestones in the coming quarters.

Speaker Change: As Brian said, we expect to provide additional color on our margin improvement plans and milestones in the coming quarters I would now like to ask the operator to please open up the call.

Unknown Executive: I would now like to ask the operator to please open up the call for questions. Thank you. If you would like to ask a question, please press star for word by one on your telephone keypad now. If you change your mind, please press star for word by two to exit the queue. In the interest of taking as many of your questions as possible, please limit yourself to one question each. And finally, when preparing to ask your question, please ensure that your phone is unmuted locally.

Speaker Change: Four questions.

Operator: Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two to exit the queue. In the interest of taking as many of your questions as possible, please limit yourself to one question each. And finally, when preparing to ask your question, please ensure that your phone is unmuted. And our first question today is from the line of Jack Meehan of Nephron Research. Please go ahead. Your line is open.

Speaker Change: Thank you if you would like to ask a question. Please press star followed by one on your telephone keypad now.

Speaker Change: If you could change your mind. Please press star followed by two to exit the cute.

Speaker Change: In the interest of taking as many of your questions as possible. Please limit yourself to one question each.

Speaker Change: Finally, when preparing to ask a question. Please ensure that youll find it on mute locally.

Jack Meehan: And our first question today is from the line of Jack Meaghan of Mephan Research. Please go ahead; your line is open. Thank you. Good afternoon, everyone. Solid results here. For Brian, I wanted to start. You talked about no stone unturned when it comes to the margin initiatives.

Speaker Change: And our first question today is from the line of Jack Meehan of Nephron Research. Please go ahead. Your line is open.

Jack Meehan: Solid results here; was wondering, you know, as you look at them relative to the hundred million, in terms of the staffing reduction, do you think collectively some of these other opportunities can be in that zip code, or just any relative framing for, you know, the opportunities beyond the initial cost targets you'd like?

Jack Meehan: Thank you good afternoon, everyone.

Speaker Change: Solid results here.

Speaker Change: For Brian I wanted to start you talked about no stone unturned when it comes to the margin initiatives.

Brian Blaser: I was wondering, you know, as you look at them relative to the 100 million in terms of the staffing reduction, do you think collectively some of these other opportunities can be in that zip code or just any relative framing for, you know, the opportunities beyond the initial cost targets you played. Yeah. Hi, Jack. Thanks for the question. You know, as I said in my prepared remarks, we've achieved $100 million in savings. We're not stopping there. You know, most of that initial round of savings was from staffing reductions. You know, we took about a seven percent staffing reduction.

Speaker Change: A bunch of different opportunities.

Jack Meehan: I was wondering as you look at them relative to the 100 million.

Brian J. Blaser: In terms of the staffing reduction do you think collectively some of these other opportunities can be.

Speaker Change: In that ZIP code or just any relative framing for the opportunities beyond the initial cost targets you played out.

Brian J. Blaser: Yeah. Hi Jack.

Speaker Change: Yes, Hi, Jack Thanks for the question.

Brian J. Blaser: Thanks for the question. You know, as I said in my prepared remarks, we've achieved 100 million dollars in savings. We're not stopping there. You know, most of that initial round of savings was from staffing reductions. We took about a seven percent staffing reduction. We're going to see somewhere in the order of ten to twelve hitting the bottom line just because of the mix of the higher-level positions there.

Speaker Change: As I said.

Jack: In my prepared remarks, we we've achieved $100 million in savings, we're not stopping there.

Jack: Most of that initial round of savings was from staffing reductions.

Jack: We took about a 7% staffing reduction we're going to see somewhere in the order of 10 to 12.

Joe Busky: We're going to see somewhere in the order of 10 to 12 hitting the bottom line just because of the mix of the higher level positions there. But, you know, we're in terms of leaving no stone unturned. We're very aggressively going after additional savings in operations, supply chain, procurement, IT, really every corner of the company. And, you know, I think where we're at is we're going to continue to provide updates on the savings position as we go through the years and the coming quarters. But it is significant. Yeah.

Speaker Change: Hitting the bottom line, just because of the mix of the.

Speaker Change: The higher level positions there, but we're in terms of leaving no stone unturned were very aggressively going after additional savings.

Brian J. Blaser: But, you know, we're in terms of leaving no stone unturned. We're very aggressively going after additional savings in operations, supply chain, procurement, I.T., really every corner of the company. And, you know, I think where we are is we're going to continue to provide updates on the savings position as we go through the years in the coming quarters. But it is significant.

Speaker Change: In operations supply chain and procurement.

Speaker Change: Every every corner of the company and.

Speaker Change: I think where we're at is we're going to continue to provide updates on the savings position as we go through the years in the coming quarters, but it is significant.

Joseph M. Busky: Yeah, and Jack, I would add on to that, just to reiterate what Brian said in the prepared remarks. So, you know, you can do the math on that, and we'll obviously provide more updates as we move through the next several quarters.

Speaker Change: Yes.

Joe Busky: And, and, and, and Jack, I would add on to that just to reiterate what Brian said in the prepared remarks. You know, we do believe that we will get this company to mid to high 20s adjusted EBITDA margin over the next two to three years. So, you know, you can, you can do the math on that. And, and we'll obviously provide more updates as we move to the next several quarters.

Jack Meehan: Jack I would add onto that just to reiterate what Brian said in the prepared remarks, we do believe that we will get this company to the mid to high <unk> adjusted EBITDA margin over the next two to three years. So.

Jack Meehan: You can you can do the math on that and we will.

Jack Meehan: Obviously provide more updates as we move through the next several quarters.

Casey Woodring: Thank you. Our next question today is from the line of Casey Woodring of JP Morgan. Please go ahead. Your line is now open. Great. Thank you for taking my questions. I just wanted to walk through the cash flow in the quarter. The negative 66 million and three cash.

Operator: Thank you. Our next question today is from the line of Casey Woodring of J.P. Morgan. Please go ahead. Your line is now open.

Speaker Change: Thank you. Our next question today is from the line of Casey Woodring of Jpmorgan. Please go ahead. Your line is now might be.

Casey Rene Woodring: Great. Thank you for taking my questions I, just wanted to walk through the cash flow in the quarter.

Casey Rene Woodring: Negative $66 million in free cash maybe if you could just provide some guideposts on how we should think about number for that number for the rest of the year. I think you said you expect positive free cash in the quarter, but anything to add to that and then also just on leverage can you just elaborate on the draw in the quarter.

Joe Busky: Maybe if you could just provide some guideposts on how we should think about number for that number for the rest of the year, I think you said you expect positive free cash in the quarter. But, you know, anything to add to that.

Joe Busky: And then also just on leverage, can you just elaborate on the draw in the quarter? You brought that up. We'll get to 2.6 billion versus the last quarter. So confidence in just maintaining the leverage ratio to the rest of the year.

Speaker Change: Brought that up we'll get to $2 6 billion versus last quarter, So province, and just maintaining the leverage ratio through rest of the year.

Casey Rene Woodring: Yeah.

Joe Busky: Yeah, he can see it's Joe. So, we had always expected that the recurring free cash flow for Q2 would be negative, primarily based on the fact that it is seasonally our lowest revenue quarter of the year, typically. And the fact that the cost savings initiatives that we have executed will largely impact the second half of the year. So, the draw on the revolver and the negative 66 recurring free cash flow is honestly in line with our expectations. And frankly, a little bit better because we did perform well in the P&L. Capax was right where we expected it to be.

Joe: Yeah, Hey, Casey, it's Joe so.

Joe: We had always expected that.

Speaker Change: Recurring free cash flow for Q2 would be negative.

Joseph M. Busky: primarily based on the fact that it is typically our lowest revenue quarter of the year, typically, and the fact that the cost-saving initiatives that we have executed will largely impact the second half.

Casey Rene Woodring: Primarily based on the fact that it is seasonally our lowest revenue quarter of the year typically.

Speaker Change: And the fact that the cost saving initiatives that we have executed well.

Speaker Change: Will largely impact the second half.

Speaker Change: The year so.

Speaker Change: The draw on the revolver and the negative 66 recurring free cash flow was honestly.

Speaker Change: In line with our expectations and frankly, a little bit better because we did perform well in the P&L.

Speaker Change: Capex was right, where we expected it to be.

Joe Busky: No surprises there. And I would say the same with operating cash flow and working capital; you know, no surprises there. We did pay down 52 million on the debt as provided in the credit agreement. So, again, that's in line; no surprise there.

Speaker Change: No surprises there and I would say the same with operating cash flow and working capital no surprises there we did pay down $52 million on the debt as provided in the credit agreement. So again that's in line no surprise there we do expect in the second half, but we will.

Joe Busky: We do expect in the second half that we will generate recurring free cash flow. I will say it's probably a little more heavily weighted into Q4. Again, primarily related to Q4B in our seasonally heaviest quarter for revenue typically. And I do expect us to bring down the draw amount drawn on that revolver quite a bit by year end. And I do expect that the leverage ratio will be in a relatively consistent place to where we are right now under the credit agreement. With, again, plenty of cushion versus that four-to-quarter leverage ratio covenant in the credit agreement.

Speaker Change: Generate recurring free cash flow I will say, it's probably a little more heavily weighted into Q4 again, primarily related to Q4 being our seasonally heaviest quarter for revenue typically.

Speaker Change: And I do expect us to bring down the but the draw.

Speaker Change: The amount drawn on that revolver quite a bit by year end and I do expect that the the leverage ratio will be in a relatively consistent place to where we are right now under the credit agreement.

Speaker Change: Again plenty of cushion versus that four in a quarter.

Speaker Change: Leverage ratio covenant and the credit agreement.

Andrew Brackmann: Thank you. Our next question today is from the line of Andrew Brackmann of William Blair. Please, go ahead; your lines are. Hi everyone, this is Maggie on for Andrew today. Thanks for taking our questions. Maybe just to expand on the cost savings initiatives a little bit that you've talked about in the past. I think an area that you were taking a look at was R&D, so recognize that it still might be a little bit early.

Operator: Thank you. Our next question today is from the line of Andrew Brackmann from William Blair. Please go ahead. Your line's open.

Speaker Change: Thank you. Our next question today is from the line of Andrew pregnant of William Blair. Please go ahead. Your line is open.

Speaker Change: Hi, everyone. This is Maggie on for Andrew today, Thanks for taking our question.

Speaker Change: Maybe just to expand on the cost savings initiatives, a little bit that you've talked about in the past I think.

Speaker Change: An area that you were taking a look at with R&D. So recognize that it's still might be a little bit early here to get <unk>.

Brian Blaser: I really hear to give details on specifics, but at a high level, can you talk about the specific criteria you're going to use when looking at the spend there and just any areas of prioritization for the team. Thanks.

Speaker Change: Details on specifics, but at a high level can you talk about the specific criteria you are going to use when looking at the spend there and just any areas of prioritization for the team.

Brian Blaser: Yeah, so maybe I'll answer that question a little more broadly. Really, what we've done is take the last couple of months that come on board to focus the business sound to really poor critical priorities. The first is, you know, we have to operate this business to achieve the very highest level of customer satisfaction and efficiency possible. So that's job one. Second is, as we've discussed, going after this cost structure to get our cost structure in line with competitive benchmarks. And then, you know, as you're discussing, we've been focusing our R&D organization down on the very critical few programs that we deliver and execute on. Really, it is a matter of creating focus and getting the job done.

Speaker Change: Yes, so maybe I'll answer that question a little more broadly really what we've done is take the <unk>.

Speaker Change: Last couple of months come onboard to focus the business down to really four critical priorities. The first is we have to operate this business to achieve the very highest level of customer satisfaction and efficiency where possible. So that's job one second as is.

Speaker Change: As we've discussed going after this cost structure.

Speaker Change: To get our cost structure in line with competitive benchmarks and then as you are.

Speaker Change: Discussing <unk>.

Speaker Change: Been focusing our R&D.

Speaker Change: Organization down on the the very critical few programs that we need to deliver and execute on really is a matter of creating focusing.

Speaker Change: Getting the job done and those have been in the areas of.

Brian Blaser: And that those have been in the areas of, you know, Savannah, making sure that we can get that across the finish line, menu expansion for our point care and our lab products, and then a number of life cycle management tasks that are critical to maintaining our on-market products at a very high level of quality.

Speaker Change: Savannah, making sure that we can get that across the finish line.

Speaker Change: Menu expansion for.

Speaker Change: Our point of care in our lab products and then a number of lifecycle management task that are critical to maintaining our on market products at a very high level of quality and then the fourth thing is refreshing our commercial growth strategies.

Brian Blaser: And then the fourth thing is refreshing our commercial growth strategies. You know, both in the US and outside the US. And so working with the commercial team there. So every area of the business we focus down, including our R&D group, which has meant that we have taken some resource out of that area of the business. But I think we've really doubled down in the areas that are the most important for us, you know, in that segment of our business. And so if you extend. The line in the S.G.A. line and again, it will be more heavily weighted in the second half.

Speaker Change: Both in the U S and outside the U S and so working with the commercial team there so.

Speaker Change: Every area of the business, we focus down including our R&D group.

Speaker Change: <unk> has meant that we have taken some resource out of out of that.

Speaker Change: The business, but I think we've really doubled down in the areas that are the most important for us.

Speaker Change: In that segment of our business.

Joseph M. Busky: And so if you extend the feedback line and the SG&A line. And again, it'll be more heavily weighted in the second half. We got some benefit in Q2, small, most of it being the second half and first half, but it will be hitting several of those line items on the P&L.

Speaker Change: And so if you extend.

Speaker Change: Feedback.

Speaker Change: Your line and the SG&A line and again it will be more heavily weighted in the second half we got some benefit in Q2 small.

Brian Blaser: If we get some benefit in Q2 small, most of being the second half and first half, but it will be hitting several of those line items on the planet on the piano.

Speaker Change: Most of the B in the second half than first half, but it will be hitting several of those line items on the <unk> on the P&L.

Unknown Executive: Thank you.

Speaker Change: Thank you. Our next question today is from the line of Patrick Donnelly of Citi.

Patrick Donnelly: Our next question today is from the line of Patrick Dunnelly of City. Patrick, please go ahead. Your lines are. Hey guys, thanks for taking the questions. Maybe another one general on the margins that apologize for the focus here. Just when you think about the past to that mid to high 20% margin. And there's a certain level of revenue that you need in particular on the rest of the course side that you guys knew after the incremental segment of their pretty important. I do think about just the top line profile to reach that. And again, if its revenue is a little bit slower, maybe just talking about the key levers that you have there to lean on to get the margin story.

Speaker Change: Please go ahead your line is open.

Patrick Bernard Donnelly: Hey, guys. Thanks for taking the questions.

Patrick Bernard Donnelly: Another one Cheryl on the margin side apologize for the focus here, just where do you think about the path to that mid to high 20% margins.

Speaker Change: Is there a certain level of revenue that you need, particularly on the respiratory side that you guys view onto the Incrementals Decrementals there are pretty important.

Speaker Change: Do you think about just the top line profile to reach that.

Speaker Change: And again, if revenue was a little bit slower, but maybe just talk about the key levers that you have more acuity to lean on to get the margin story Marvel storytelling. Thank you guys.

Joe Busky: Marvel story don't thank you guys.

Joe Busky: Hey Patrick, yeah, thanks for the question. So, you know, every every margin improvement. The improvement story is typically a combination of cost reductions as well as revenue growth. It's usually not done with only one. It is going to be a combination. So, you know, we are going to continue to identify efficiencies and productivity, as we've said several times on the call today. We're not done. We're going to instill a continuous improvement culture here, led by Brian, to find those efficiencies. And productivity. But it's also about the revenue, to your point. And I said in the scripted remarks, you know, we are a mid single digit top line growth company now with the products we have.

Speaker Change: Hey, Patrick yes, thanks for the question.

Speaker Change: So every every margin improvement story is is typically a combination of <unk>.

Speaker Change: Cost reductions as well as revenue growth.

Speaker Change: It's usually not done with one only one it is going to be a combination. So we are going to continue to identify efficiencies and productivity as we've said several times on the call today and we're not done we're going to instill a continuous improvement culture here led by Brian.

Speaker Change: To find those efficiencies and productivity.

Speaker Change: But it's also about the revenue to your point, though and as I said in the scripted remarks.

Speaker Change: We are a a mid single digit top line growth company now with the products. We have we certainly have aspirations to be a higher growth.

Joe Busky: We certainly have that have aspirations to be a higher growth company. And, you know, we believe it's Savannah that once we've got the panel filled out and approved in the US and we have a full launch. We believe that we can add to that mid single-digit growth profile. That will certainly help us move closer to that mid to high 20 adjusted, even larger profile for sure.

Speaker Change: Company, and we believe that Savannah that once we've got the panel filled out and approved in the U S and we have a full launch we believe that we can add to that mid single digit growth profile.

Speaker Change: That will certainly help us move.

Speaker Change: Those are two that mid to high <unk> adjusted EBITDA margin profile for sure.

Andrew Kippa: Thank you. Our next question today is from the line of Andrew Kippa of Raymond James. Please go ahead; your line is over.

Speaker Change: Thank you. Our next question today is from the line of Andrew Cooper with Raymond James. Please go ahead. Your line is open.

Brian Blaser: I think she's the time. Maybe just first, you know, Brian, now that you've dug a little bit deeper on Savannah and some of the moving parts there, would love your thoughts on sort of the menu trajectory there. And then how you think about RVP for specifically relative to, you know, maybe the larger panel and how you think about the menu and building a differentiated set of assays there in the molecular state. Yeah, sure, Andrew. Thank you for the question. And, you know, as I said, Savannah, you know, we know we're late in to the party here with the product.

Andrew Harris Cooper: Thanks, Thanks for the time.

Andrew Harris Cooper: Maybe just first Brian now that you've done a little bit deeper on Savannah, and some of the moving parts there would love your thoughts on.

Speaker Change: The menu trajectory there and then how you think about RVP four specifically relative to maybe the larger panel and how you think about the menu in building a differentiated.

Speaker Change: Set of assays there in the molecular space.

Speaker Change: Yeah.

Brian J. Blaser: Sure Andrew Thank you for the question and you know as I as I said Savannah.

Speaker Change: No relate.

Speaker Change: To the party here with with the product but.

Brian Blaser: But, you know, as I've looked at this product, I truly believe it's got a compelling value proposition. I think now and well into this. You know, our team is working tirelessly to get this product done and onto the market. And when you look at this product, you've got in the market, you've really got to have the right balance of workflow, turnaround time, the number of targets, you know, as well as the cost profile. And, you know, Savannah, we think that it offers advantages over many of the systems that are on the market and will be on the market in the future there.

Speaker Change: As I've looked at this product.

Speaker Change: Truly believe it's got a compelling value proposition I think now and well into the <unk>.

Speaker Change: Our team is working tirelessly to get this product done and onto the market.

Brian J. Blaser: And when you look at it this product you've got in the market you've really got to have the right balance of workflow turnaround time, the number of targets as well as the cost profile.

Brian J. Blaser: And.

Savannah: Savannah, we think that it offers.

Savannah: Advantages over many of the systems that are on the market and will be on the market.

Savannah: In the future there.

Brian Blaser: You know, if you look at workflow, you know, it's truly a sample in results out platform, turnaround time less than 30 minutes. You know, the menu and I'll discuss that more, but I think the menu when approved, you know, will be a real feature of the platform. And importantly, the cost of the test is positioned well below our competitors, I think, and that advantage, I think we'll hold for some time. You know, as you mentioned, we're on the market now with the herpes and shingles markers that were already approved. We have the RPB 4 assay that is, it will be entering trials in the fall. We hope to be in the market in 2025 with that.

Brian J. Blaser: If you look at workflow, it's truly a sample in result out platform turnaround time less than 30 minutes.

The menu: The menu and I'll discuss that more but I think with the menu when approved.

Brian J. Blaser: <unk>.

Brian J. Blaser: It will be a real feature of the of the platform and importantly, the cost of the test is positioned well below our competitors I think in that.

Brian J. Blaser: I think we'll hold for some time.

Speaker Change: As you mentioned, we are on the market now with the herpes and shingles.

Speaker Change: Markers that were already approved.

Speaker Change: We have the RP before.

Brian J. Blaser: assay that will be entering trials in the fall. We hope to be in the market in 2025 with that. Following that, we are already underway in clinicals with the STI panel, and should get it again without predicting regulatory timelines in 2025. And then, following that, we have a GI panel for both bacterial and viral vectors and also parasites. So, you know, we've got a nice string of content coming. We also, I didn't mention, have syphilis underway for approval there as well.

Speaker Change: That is.

Brian J. Blaser: It will be entering trials in the fall, we hope to be in the market in 2025 with that following that we are already underway and clinical's with the STI panel.

Brian Blaser: Following that, we are already underway, and clinicals with the SDI panel should get again without predicting regulatory timelines in 2025. And then following that, we have a GI panel for both bacterial and viral vectors and also parasites. So, you know, we've got a we've got a nice string of content coming. We also, I didn't mention we have a syphilis underway for approval there as well. So a nice group of content on the platform, I think, you know, competitive differentiation, and although, you know, it certainly had its challenges, we're very near the finish line here and, you know, truly focused on getting across the finish line.

Brian J. Blaser: Sure.

Brian J. Blaser: Again without predicting regulatory timelines in 2025, and then following that we have.

Brian J. Blaser: <unk> panel.

Brian J. Blaser: For both bacterial and viral vectors that also parasites.

Brian J. Blaser: So we've got a we've got a nice string of content coming we also I Didnt mentioned we have.

Brian J. Blaser: Syphilis underway.

Brian J. Blaser: For approval there as well so.

Brian J. Blaser: A nice.

Brian J. Blaser: Group of content.

Speaker Change: That form I think competitive differentiation and although it certainly had its challenges we're very near the finish line here and truly focused on getting across the finish line.

Brian J. Blaser: So a nice group of content on platform, I think, competitive differentiation. And although, you know, it certainly had its challenges, we're very near the finish line here and, you know, truly focused on getting across the finish line.

Unknown Executive: Thank you.

Panamax narrow: Thank you and our next question comes from the line of Panamax narrow of RBC. Please go ahead. Your line is open.

Conor Mcnamara: And our next question comes from the line of Conor McNamara of ABC. Please go ahead. Your line is open. Hey, thanks for the time. I'm just quickly on on guidance. Do you plan on reinstating guidance for 2024, and if so, is that going to be around an event? No, I don't think, Conor. We've said previously, and we can reiterate, first of all, that we said this in the prepared remarks that we believe that this was a good quarter for us. Nothing happened in this quarter that would meaningfully change what we said on the last earnings call, which was we think we are still at or slightly below the low end of the guidance provided back in February.

Brian J. Blaser: Yeah.

Panamax narrow: Hey, Thanks for the time, just a quick one on guidance do you plan on reinstating guidance for 2024, and if so is that going to be around an event.

Joseph M. Busky: No, I don't think, Conor, we've said previously, and we can we can reiterate, first of all, that, and we said this in the prepared remarks, that we believe that this was a good quarter for us. Nothing happened in this quarter that would meaningfully change what we said on the last earnings call, which was that we think we are still at or slightly below the low end of the guidance provided back in February for the full year. We are still in a suspended guidance mode, though, just to be clear, to give Brian time to assess the business, and it's most likely that we will unsuspend guidance on the Q3 earnings call.

Speaker Change: No I don't think.

Speaker Change: We've said previously and we can we can reiterate first of all that.

Speaker Change: We said this in the prepared remarks that we believe that.

Speaker Change: This was a good quarter for us nothing happened in this quarter that would meaningfully change what we said on the last earnings call, which was we think we are still at or slightly below the low end of the guidance provided back in February for the full year.

Joe Busky: For the full year, we are still in a suspended guidance model, just to be clear, to give Brian time to assess the business and it's most likely that likely that we will unsuspend guidance on the Q3 earnings call. Thank you.

Brian J. Blaser: We are still in a suspended guidance mogul just to be clear to give Brian time to assess the business and it's most likely that likely that we will.

Brian J. Blaser: Unsuspend guidance on the Q3 earnings call.

Operator: Thank you. And with no further questions in the queue at this time, this will conclude the Quidel-Ortho second round.

Speaker Change: Thank you and with no further questions in the queue. At this time this will conclude the call at all so second.

Unknown Executive: And with no further questions in the queue at this time, this will conclude the quite all those second 24 financial results conference call and webcast. Thank you all for joining. You may now disconnect your lines. Thank you.

Speaker Change: As you for financial results conference call and webcast.

Speaker Change: Thank you all for joining you may now disconnect your lines.

Brian J. Blaser: [music].

Brian J. Blaser: Hum.

Brian J. Blaser: [music].

Brian J. Blaser: Okay.