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    QDEL
    Earnings call· Jun 2026(Q2 FY26)

    QuidelOrtho Q2 FY26 earnings call QDEL

    Aug 6, 2026 Source

    Executive summary

    QuidelOrtho Q2 FY26 — Core Business Strength Amid China Headwinds and Softer Respiratory Season

    QuidelOrtho reported mixed Q2 FY26 results, demonstrating strong underlying performance in its core businesses and geographies outside of China, which drove 6% revenue growth and significant EBITDA margin expansion. However, persistent headwinds in China due to IVD pricing uncertainty and a more cautious outlook for the respiratory season led to a downward revision of full-year financial guidance and the withdrawal of free cash flow guidance. Management is intensely focused on improving cash conversion and reducing leverage.

    Highlights

    5

    • Total revenue increased 2% on a constant currency basis in Q2 FY26.

    • Revenue outside of China grew 6% year-over-year in Q2 FY26.

    • Adjusted EBITDA increased 21% to $129 million in Q2 FY26.

    • Adjusted EBITDA margin expanded 310 basis points to 20% of revenue in Q2 FY26.

    • Labs revenue outside of China grew 9%, Immunohematology revenue outside of China increased 5%, and Triage expanded by 9%.

    Concerns

    5

    • China revenue declined 23% year-over-year in Q2 FY26 due to IVD pricing uncertainty.

    • Full-year 2026 revenue guidance revised down to $2.52 billion to $2.60 billion.

    • Full-year 2026 adjusted EBITDA guidance revised down to $540 million to $560 million.

    • Operating cash flow was negative $111 million and free cash flow was negative $136 million in Q2 FY26.

    • Free cash flow guidance for 2026 was withdrawn due to market uncertainties.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $2.52 billion to $2.60 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $540 million to $560 million
    high materiality
    High
    Full-year 2026 Adjusted EBITDA Margin
    21% to 22%
    medium materiality
    High
    Full-year 2026 Adjusted EPS
    $0.65 to $0.90
    high materiality
    High
    Full-year 2026 Free Cash Flow
    Withdrawn
    high materiality
    Low
    H2 FY26 Core Laboratory and Immunohematology Growth (outside China)
    3% to 5%
    medium materiality
    Medium
    Respiratory Season Assumption
    Consistent with muted activity experienced during H1 FY26
    high materiality
    High

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Total Company (excluding China)
    Reflects broad-based strength across core franchises and regions on a constant currency basis.
    		—6%——
    Labs (excluding China)
    Strong contribution to overall growth.
    		—9%——
    Immunohematology (excluding China)
    Strong contribution to overall growth.
    		—5%——
    Triage
    Expanded performance.
    		—9%——
    China
    Significant headwind due to uncertainty related to proposed IVD pricing guidelines.
    		—-23%——
    North America
    Largest region, with strong contributions from labs and triage point of care business.
    		—6%——
    J-PAC
    Driven by strong performance in Japan and India.
    		—10%——
    Latin America
    Notable strength in Brazil and Central America.
    		—8%——

    Operational metrics

    9
    Adjusted EBITDA
    $129 millionup 21% YoY
    Q2 FY26

    Reported for the quarter.

    Adjusted EBITDA Margin
    20%expanded 310 bps YoY
    Q2 FY26

    Margin expansion during seasonally weakest quarter.

    Adjusted Gross Margin
    44.4%down 130 bps YoY
    Q2 FY26

    Impacted by unfavorable geographic mix associated with lower China volumes.

    Non-GAAP SG&A and R&D Operating Expenses
    $219 millionincreased 2% YoY
    Q2 FY26

    Combined operating expenses.

    Cash and Investments Balance
    $123 million
    Q2 FY26 end

    Balance at the end of the quarter.

    Borrowings Outstanding (Revolving Credit Facility)
    $250 million
    Q2 FY26 end

    Amount outstanding under the revolving credit facility.

    Payment to Griffles (JBA Termination)
    $25 million
    Q2 FY26

    Payment associated with the termination of the joint business arrangement.

    LECS Acquisition Cash Deployment
    $97 million
    Q2 FY26

    Cash deployed for the LECS acquisition, reported in investing activities.

    Net Debt Leverage
    4.3x
    Q2 FY26 end

    Leverage ratio at the end of the second quarter.

    Industry KPIs

    5
    MetricValueDetails
    System utilizationProductive commercial engine
    New product launch rampSteady momentum
    FCF conversion leverage guidance4.3xx
    Installed base system placementsGrowing installed base
    Segment franchise organic growth6%%

    Product announcements

    1
    ProductTypeDetails
    NULEXA (Lex Point of Care Molecular Platform)launch

    Deals & partnerships

    2
    GrifflesTermination of joint business arrangement$25 million

    A $25 million payment was made in Q2 FY26 as part of the termination of the joint business arrangement. Remaining payments are scheduled for 2027 and 2028.

    LECSAcquisition of Lex Point of Care Molecular Platform$97 million

    The acquisition of the Lex Point of Care Molecular Platform was completed in April, with $97 million in cash deployed during Q2 FY26.

    Risks & headwinds

    3
    Uncertainty related to China IVD pricing guidelinesPersisting through the remainder of 2026.

    China revenue declined 23% year-over-year in Q2 FY26. The second draft of guidelines differs meaningfully from the preliminary draft and expands pilot implementation from three to six provinces.

    Mitigation: Working closely with teams, customers, and distribution partners in China to adapt commercial and operating plans; focused on protecting the install base, maintaining customer engagement, and aligning commercial resources with the evolving reimbursement environment.

    Softer respiratory market and below-average flu season forecastSecond half of 2026.

    Positivity rates are down markedly compared with 2025. Early indicators are pointing to a below-average 2026-2027 flu season.

    Mitigation: Assuming first-half softness continues and modeling second-half respiratory revenues accordingly; taking a more conservative approach to forecasting and aligning cost structure.

    High net debt leverageCurrent.

    Net debt leverage was 4.3 times adjusted EBITDA at the end of Q2 FY26.

    Mitigation: Improving cash conversion, optimizing returns on instrument investments, enhancing working capital efficiency, rationalizing capital expenditures, and maintaining a disciplined approach to capital allocation.

    What to watch in Q3 FY26

    4

    China IVD pricing guidelines impact

    Next quarter (Q3 FY26 results)
    CurrentChina revenue declined 23% YoY in Q2 FY26 due to uncertainty.
    TargetStabilization of demand and clarity on guidelines.

    Why it matters

    The ongoing uncertainty and demand pressure in China are significant headwinds impacting overall revenue and profitability; resolution is key for business recovery in a major market.

    While the guidelines and their implementation timelines are not yet final, we believe the uncertainty regarding the guidelines is already impacting customer behavior. As we reviewed market performance data that became available after quarter end, we observed customers adjusting their purchasing and inventory levels more quickly and significantly than we had anticipated.

    Q&A highlights

    4

    What proactive steps are being taken to improve balance sheet leverage?

    The new CFO, Micah Young, stated his priorities are improving cash conversion, reducing leverage, and increasing returns on invested capital. Specific actions include improving working capital (reducing inventory), optimizing returns on instrument investments, rationalizing capital expenditures, and directing capital towards high-return geographies and businesses.

    “I'm focused with this team is on improving working capital, reducing the capital that's tied up into inventory, optimizing the returns on our instrument investments, and rationalizing capital expenditures, and directing capital towards the geographies and businesses generating the highest returns.”

    asked by Jack Meehan · answered by Micah Young

    2 min read7 chapters

    Detailed Narrative

    01

    Q2 Performance Highlights and Geographic Strength

    QuidelOrtho reported a 2% constant currency revenue increase for Q2 FY26, with revenue outside of China growing a robust 6% year-over-year. This growth was broad-based, with Labs revenue outside China up 9%, Immunohematology up 5%, and Triage expanding by 9%. Geographically, North America grew 6%, J-PAC (Japan and India) increased 10%, and Latin America (Brazil and Central America) saw 8% growth, underscoring the strength of the diversified global business.

    02

    Profitability and Operational Efficiency

    The company demonstrated strong profitability, with adjusted EBITDA increasing 21% to $129 million and adjusted EBITDA margin expanding 310 basis points to 20% of revenue. This margin expansion, achieved during a seasonally weakest quarter, highlights the effectiveness of operational improvement initiatives, disciplined expense management, and strategic resource allocation towards high-return opportunities.

    03

    NULEXA Commercialization Progress

    Following the acquisition of LECS in April, QuidelOrtho is on track with the commercialization of the Lex Point of Care Molecular Platform, now branded NULEXA. The teams have made substantial progress in manufacturing scale-up, supply chain readiness, and commercial launch capabilities. Early customer engagement is encouraging, and the company expects NULEXA to gain steady momentum in placements and test utilization as the respiratory season approaches, serving as a scalable platform for future menu expansion.

    04

    Significant China Headwinds

    China revenue declined 23% year-over-year, representing a significant headwind. This decline is attributed to uncertainty surrounding proposed IVD pricing guidelines, which have impacted customer buying behavior and inventory levels. The second draft of these guidelines, released in June, differs significantly from the preliminary version and expands pilot implementation to six provinces, creating ongoing market uncertainty🌐.

    05

    Cautious Respiratory Season Outlook

    The respiratory market remained softer in Q2 FY26, with positivity rates markedly down compared to 2025. Early indicators suggest a potentially below-average 2026-2027 flu season. Consequently, the company has adopted a more prudent forecasting approach, modeling second-half respiratory revenues based on continued first-half softness rather than assuming a typical seasonal uptick.

    06

    Revised Guidance and Cash Flow Withdrawal

    Due to the persistent challenges in China and the cautious respiratory season forecast, QuidelOrtho revised its full-year 2026 guidance downwards for revenue ($2.52B-$2.60B), adjusted EBITDA ($540M-$560M), and adjusted EPS ($0.65-$0.90). Additionally, free cash flow guidance for 2026 was withdrawn, reflecting the current market dynamics and their impact on working capital, though improving cash performance remains a key priority.

    07

    New CFO Priorities: Cash Conversion and Leverage Reduction

    New CFO Micah Young outlined his top priorities: improving cash conversion, reducing leverage (currently 4.3x net debt leverage), and increasing returns on invested capital. He emphasized evaluating opportunities to enhance working capital efficiency, optimize instrument investments, rationalize capital expenditures, and maintain a disciplined capital allocation framework to strengthen the balance sheet.

    AI-generated summary of the company’s earnings call. Not investment advice.