Quidel (QDEL) Inks Buyout Deal to Solidify Its Diagnostics Arm
Quidel's (QDEL) latest buyout is expected to expand its point-of-care diagnostics portfolio as well as geographic footprint.
Quidel Corporation QDEL recently entered into a definitive agreement to acquire Ortho Clinical Diagnostics Holdings plc OCDX. The transaction, which is subject to approval of both the companies’ shareholders, as well as customary closing conditions and regulatory approvals, is expected to close in the first half of 2022.
The deal to acquire Ortho Clinical Diagnostics, a well-known in-vitro diagnostics player, is to be completed using a combination of cash and newly issued shares in the combined company.
The buyout is expected to significantly boost Quidel’s global position in the diagnostics space by combining highly complementary diagnostic portfolios with enhanced technologies and platforms spanning high-throughput systems to near-patient and at-home testing.
Rationale Behind the Acquisition
The buyout is expected to significantly expand Quidel’s point-of-care diagnostics portfolio with access to Ortho Clinical Diagnostics’ broad global reach across many countries. This, in turn, will likely accelerate growth for Quidel’s existing product portfolio and provide exposure to new and emerging markets.
Per Quidel’s management, this latest buyout will also likely boost the combined company’s R&D capabilities, provide a more diverse product pipeline and expand its geographic footprint.
Ortho Clinical Diagnostics’ management believes that the takeover will enable the combined company to continue making progress in diagnostic solutions, improving patient outcomes and providing economic benefits to the healthcare system.
The consolidated company is expected to bring together better technologies and platforms to benefit customers by providing expanded access to clinical chemistry, immunoassay, molecular diagnostics, immunohematology, donor screening and point-of-care diagnostics offerings. The combined company will also be poised to meet patient testing needs at all points of the care continuum, including reference labs, hospitals, physicians’ offices, urgent care centers and at-home / retail locations.
Financial Implications of the Deal
Quidel’s buyout of Ortho Clinical Diagnostics is expected to generate substantial synergies on both the top and bottom lines. Quidel projects that the combined company will realize approximately $90 million of run-rate cost-related synergies (excluding one-time costs) by the end of year three. This is likely to be driven primarily from operational efficiencies, supply chain optimization and shared administrative functions, including public company costs.
Quidel, owing to Ortho Clinical Diagnostics’ enhanced global commercial reach and expansive product portfolio, expects to drive strong cross-selling revenue synergies exceeding $100 million by 2025 and substantial adjusted EBITDA benefits. This, in turn, will likely enable Quidel to pursue organic and inorganic growth.
Per a report by MarketsandMarkets, the global point of care diagnostics market is projected to reach $50.6 billion by 2025 from $29.5 billion in 2020 at a CAGR of 11.4%. Factors like technological advancements in POC devices, rising incidence of infectious diseases and growing investments by key players are likely to drive the market.
Given the market potential, the latest takeover is expected to significantly strengthen Quidel’s business worldwide.
In November, the company reported third-quarter 2021 results where it recorded robust top-line performance. Total sales of COVID-19 and Influenza products were also strong during the quarter. Quidel also received the CE Mark for Savanna multiplex molecular analyzer and Savanna RVP4 assay in the third quarter.
Among the notable developments, Quidel, in September, had announced that it would make its non-prescription QuickVue At-Home OTC COVID-19 Test available to consumers at more than 7,000 CVS Health’s pharmacy locations across the United States as well as online at cvs.com.
Shares of Quidel have gained 15.4% in the past six months against the industry’s 7.7% fall. The S&P 500 rose 10.5% in the same time frame.
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Zacks Rank & Other Key Picks
Currently, Quidel carries a Zacks Rank #1 (Strong Buy).
LabCorp, flaunting a Zacks Rank #1, has an estimated long-term growth rate of 10.6%. LH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%. You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp has gained 48.1% compared with the industry’s 15.2% rise over the past year.
Thermo Fisher has an estimated long-term growth rate of 14%.TMO’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.02%. It currently carries a Zacks Rank #2 (Buy).
Thermo Fisher has gained 42.1% compared with the industry’s 10.2% rise over the past year.
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Laboratory Corporation of America Holdings (LH): Free Stock Analysis Report
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Quidel Corporation (QDEL): Free Stock Analysis Report
Ortho Clinical Diagnostics Holdings PLC (OCDX): Free Stock Analysis Report
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