Quidel prelim Q4 revenue miss 'a big surprise' to Wall Street

Dive Brief:

Quidel projected preliminary fourth-quarter revenue on Thursday of between $808 million to $810 million in the final quarter of 2020, falling short of Wall Street forecasts.
While the revenue range is a more than $330 million-jump from the third quarter, a Craig-Hallum analyst was surprised by the low mark. The analyst wrote that the range misses Wall Street estimates of $820 million for the quarter and "comes as a big surprise as we thought sales could top $900M."
Quidel's stock price fell by nearly 4.5% when the market closed Thursday and continued to fall by over 1.5% after the market opened Friday.

Dive Insight:

The San Diego-based diagnostics company has delivered record profit and revenue over successive quarters in 2020, fueled by strong demand for its coronavirus tests. In the third quarter, Quidel reported revenue of over $476 million, a 276% increase compared to the same quarter in 2019.

However, the company's fourth-quarter miss was a combination of supply chain issues, lower demand for the rapid COVID-19/influenza combination test than expected, and late FDA authorizations for the QuickVue and Solana COVID-19 testing products, both of which received emergency use authorizations in December, according to Craig-Hallum.

William Blair analysts wrote that along with near-zero revenue contributions from the QuickVue and Solana products, supply chain issues rather than a lack of product demand drove the revenue miss.

"Demand for the company's products remains at extraordinary levels, and based on some catalysts we expect in the not too distant future, we believe demand will again take a step higher," the analysts wrote. "While of course we would have liked to avoid the small headache caused by a mid-trading session release and less confusion over why there was not more upside, we will remain above that noise for now."

Management decided not to ship the QuickVue and Solana products and fill "prebuilt inventory" due to the late FDA authorizations, which left out tens of millions of dollars in fourth-quarter revenue, according to William Blair. The analysts highlighted that if Quidel did not suffer manufacturing constraints, revenue could have been "well over" $1 billion in the quarter.

Both William Blair and Craig-Hallum analysts were confident that Quidel would continue its 2020 successes going forward despite the miss.

"We continue to be as convinced as ever that the testing dynamics, especially for rapid antigen tests, are likely to see significant demand throughout 2021 based on availability of OTC offerings and an emerging use-case being highlighted by many experts, including members of the incoming Biden administration," William Blair analysts wrote. "We believe Quidel is best positioned to take advantage of this."