Dive Brief:
- Quidel late Thursday announced preliminary third-quarter results saying it expects total revenues to be between $505 million to $510 million, above the Street’s estimate of $186 million, fueled by coronavirus-related test sales of about $406 million.
- CEO Doug Bryant in a statement said Quidel has seen a "significant uptick in demand" for its COVID-19 tests in the third quarter due to the delta variant, with the company shipping more than 45 million SARS-CoV-2 diagnostics, an 135% increase over the third quarter of 2020. William Blair analysts noted the preliminary results did not include any coronavirus-related revenue from the first round of federal contracts, which came in at $284 million for the company.
- The Biden administration on Wednesday announced that it will spend an additional $1 billion, on top of the previous $2 billion outlay, to get more rapid at-home COVID-19 tests into the U.S. market. Abbott Laboratories, Becton Dickinson and Quidel are among the diagnostics companies analysts believe will benefit.
Dive Insight:
The White House is responding to nationwide shortages of rapid at-home COVID-19 tests amid a surge in demand from U.S. employers and school systems. Bryant said Quidel secured a 12-month contract worth an expected $284 million to supply up to 51.2 million QuickVue antigen tests to the federal government, though he added that the order quantities "have not yet been confirmed."
Diagnostics companies including Abbott and Quidel are scaling up production in an attempt to meet the demand but it will take weeks to months to boost testing output. Abbott CEO Robert Ford on Tuesday told Yahoo Finance it will soon be producing as many tests by the end of October as it was in 2020, prior to vaccines being available.
Quidel is expanding its manufacturing capacity for tests and expects to reach a run-rate of 70 million rapid antigen tests per month by the end of the year, with further expansion a possibility early in 2022, according to Bryant.
William Blair analysts noted Quidel is still waiting for a schedule on the 51.2 million QuickVue tests the federal government has so far ordered but they believe it is just the beginning.
"For perspective on the size of the first government deal, the team only produced 46 million tests across its portfolio in the entire third quarter. And with the government recently announcing an extra $1 billion investment in rapid at-home COVID-19 tests, it would seem likely for Quidel to benefit further," the analysts wrote.
However, Bryant has tried to temper expectations for the fourth quarter and beyond.
"Even with this incredible performance in the third quarter, we must reiterate that the SARS testing environment remains highly fluid, and we’ve learned that demand can change very quickly," Bryant warned.
Craig-Hallum analysts in a Friday note said that future coronavirus-related sales remain "unforecastable" while adding that COVID-19 testing "is not going away any time soon and the federal government seems to agree."
Quidel expects to issue full financial results for the third quarter in an as-yet-unnamed date in November.
