QuidelOrtho (QDEL)

Healthcare diagnostics company QuidelOrtho (NASDAQ:QDEL) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 2.2% year on year to $723.6 million. The company’s full-year revenue guidance of $2.8 billion at the midpoint came in 1.1% above analysts’ estimates. Its non-GAAP profit of $0.46 per share was 8.8% above analysts’ consensus estimates.

Company Overview

Born from the 2022 merger of Quidel and Ortho Clinical Diagnostics, QuidelOrtho (NASDAQ:QDEL) develops and manufactures diagnostic testing solutions for healthcare providers, from rapid point-of-care tests to complex laboratory instruments and systems.

The medical devices and supplies industry, particularly those specializing in imaging and diagnostics, operates with a comparatively stable yet capital-intensive business model. Companies in this space benefit from consistent demand driven by the essential nature of diagnostic tools in patient care, as well as recurring revenue streams from consumables, service contracts, and equipment maintenance. However, the industry faces challenges such as significant upfront development costs, stringent regulatory requirements, and pricing pressures from hospitals and healthcare systems, which are increasingly focused on cost containment. Looking ahead, the industry should enjoy tailwinds from advancements in technology, including the integration of artificial intelligence to enhance diagnostic accuracy and workflow efficiency, as well as rising demand for imaging solutions driven by aging populations. On the other hand, headwinds could arise from a rethinking of healthcare costs potentially resulting in reimbursement cuts and slower capital equipment purchasing. Additionally, cybersecurity concerns surrounding connected medical devices could introduce new risks and complexities for manufacturers.

QuidelOrtho competes with several major players in the diagnostic testing market, including Abbott Laboratories (NYSE:ABT), Roche (OTC:RHHBY), Thermo Fisher Scientific (NYSE:TMO), Danaher (NYSE:DHR), and Siemens Healthineers (OTC:SMMNY).

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $2.73 billion in revenue over the past 12 months, QuidelOrtho has decent scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.

A company’s long-term sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. QuidelOrtho’s demand was weak over the last five years as its sales fell at a 4.4% annual rate. This wasn’t a great result and suggests it’s a low quality business.

Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. QuidelOrtho’s annualized revenue declines of 4.6% over the last two years align with its five-year trend, suggesting its demand has consistently shrunk.

QuidelOrtho also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales averaged 3.8% year-on-year declines. Because this number aligns with its normal revenue growth, we can see that QuidelOrtho has properly hedged its foreign currency exposure.

This quarter, QuidelOrtho reported modest year-on-year revenue growth of 2.2% but beat Wall Street’s estimates by 3.2%.

Looking ahead, sell-side analysts expect revenue to grow 1.3% over the next 12 months. While this projection suggests its newer products and services will fuel better top-line performance, it is still below the sector average.

QuidelOrtho’s high expenses have contributed to an average operating margin of negative 6.2% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Analyzing the trend in its profitability, QuidelOrtho’s operating margin decreased by 70.1 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 38.3 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

QuidelOrtho’s operating margin was negative 9.2% this quarter. The company's consistent lack of profits raise a flag.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for QuidelOrtho, its EPS declined by 36.1% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

We can take a deeper look into QuidelOrtho’s earnings to better understand the drivers of its performance. As we mentioned earlier, QuidelOrtho’s operating margin expanded this quarter but declined by 70.1 percentage points over the last five years. Its share count also grew by 55.9%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q4, QuidelOrtho reported adjusted EPS of $0.46, down from $0.63 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 8.8%. Over the next 12 months, Wall Street expects QuidelOrtho’s full-year EPS of $2.12 to grow 18.3%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

QuidelOrtho has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.6% over the last five years, slightly better than the broader healthcare sector.

Taking a step back, we can see that QuidelOrtho’s margin dropped by 22.7 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

QuidelOrtho’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 8.3%, slightly better than typical healthcare business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, QuidelOrtho’s ROIC has unfortunately decreased significantly. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

QuidelOrtho reported $169.8 million of cash and $2.80 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $597 million of EBITDA over the last 12 months, we view QuidelOrtho’s 4.4× net-debt-to-EBITDA ratio as safe. We also see its $83.1 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing QuidelOrtho beat analysts’ revenue expectations this quarter. We were also glad its full-year revenue guidance slightly exceeded Wall Street’s estimates. On the other hand, its full-year EPS guidance missed. Zooming out, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 2.6% to $28.05 immediately following the results.

Updated: February 11, 2026 at 11:08 PM EST

Before deciding whether to buy QuidelOrtho or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

We cheer for all companies helping people live better, but in the case of QuidelOrtho, we’ll be cheering from the sidelines. For starters, its revenue has declined over the last five years. While its solid free cash flow generation gives it reinvestment options, the downside is its diminishing returns show management's prior bets haven't worked out. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

QuidelOrtho’s P/E ratio based on the next 12 months is 11.7x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $38.33 on the company (compared to the current share price of $28.05).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.