QUIDEL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands; unaudited)

Nine months ended September 30,
2018 2017
OPERATING ACTIVITIES:
Net income (loss) $ 41,704
$ (3,077 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and other 34,323
17,813
Stock-based compensation expense 9,190
5,938
Amortization of debt discount and deferred issuance costs 3,355
4,129
Change in fair value of acquisition contingencies 745
—
Accretion of interest on deferred consideration 7,686
—
Amortization of inventory step-up to fair value 3,650
—
Change in deferred tax assets and liabilities —
101
Loss on extinguishment of debt 8,262
—
Changes in assets and liabilities:
Accounts receivable 257
(16,582 )
Inventories 155
2,751
Income taxes receivable (6,802 ) (1,123 )
Prepaid expenses and other current and non-current assets (13,526 ) (667 )
Accounts payable 633
2,128
Accrued payroll and related expenses (24 ) 982
Other current and non-current liabilities 3,520
4,091
Net cash provided by operating activities: 93,128
16,484
INVESTING ACTIVITIES:
Acquisitions of property, equipment and intangibles (22,875 ) (12,767 )
Acquisition of other businesses, net of cash acquired —
(14,388 )
Proceeds from sale of Summers Ridge Property 146,644
—
Net cash provided by (used for) investing activities: 123,769
(27,155 )
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 16,031
15,246
Payment of debt issuance costs (513 ) —
Payments on Revolving Credit Facility (10,000 ) —
Payments on lease obligation (93 ) (70 )
Repurchases of common stock (3,790 ) (541 )
Payments on acquisition contingent consideration (6,294 ) (498 )
Payments of deferred consideration (46,000 ) —
Payments of Term Loan (161,813 ) —
Transaction costs related to debt exchange (2,002 ) —
Net cash (used for) provided by financing activities: (214,474 ) 14,137
Effect of exchange rates on cash 185
20
Net increase in cash and cash equivalents 2,608
3,486
Cash and cash equivalents, beginning of period 36,086
169,508
Cash and cash equivalents, end of period $ 38,694
$ 172,994
QUIDEL CORPORATION

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Purchase of property, equipment and intangibles by incurring current liabilities $ 1,650
$ 653
Reduction of other current liabilities upon issuance of restricted share units $ —
$ 903
Extinguishment of Convertible Senior Notes through issuance of common stock $ 200,217
$ —
Principal amount of Term Loan exchanged for Revolving Credit Facility $ 83,188
$ —
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands; unaudited)



	Common Stock
	Shares		Par		Additional paid-in capital			Accumulated other comprehensive (loss) income			Retained earnings		Total stockholders’ equity
Balance at December 31, 2018	39,386		$	39	$	363,921		$	(139	)	$	61,763	$	425,584
Issuance of common stock under equity compensation plans	444		1		8,816			—			—		8,817
Stock-based compensation expense	—		—		2,887			—			—		2,887
Repurchases of common stock	(24	)	—		(1,476		)	—			—		(1,476		)
Changes in cumulative translation adjustment, net of tax	—		—		—			(248		)	—		(248		)
Change in fair value of cash flow hedges, net of tax	—		—		—			290			—		290
Net income	—		—		—			—			24,844		24,844
Balance at March 31, 2019	39,806		$	40	$	374,148		$	(97	)	$	86,607	$	460,698



	Common Stock
	Shares		Par		Additional paid-in capital			Accumulated other comprehensive income		Retained earnings (accumulated deficit)			Total stockholders’ equity
Balance at December 31, 2017	34,540		$	35	$	239,489		$	—	$	(12,420	)	$	227,104
Issuance of common stock under equity compensation plans	516		—		5,652			—		—			5,652
Stock-based compensation expense	—		—		2,936			—		—			2,936
Issuance of shares in exchange for Convertible Senior Notes	2,428		2		118,073			—		—			118,075
Reduction for equity component of Convertible Senior Notes exchanged	—		—		(53,867		)	—		—			(53,867		)
Repurchases of common stock	(73	)	—		(3,232		)	—		—			(3,232		)
Changes in cumulative translation adjustment, net of tax	—		—		—			20		—			20
Net income	—		—		—			—		33,958			33,958
Balance at March 31, 2018	37,411		$	37	$	309,051		$	20	$	21,538		$	330,646



QUIDEL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands; unaudited)
	Three months ended March 31,
	2019			2018
OPERATING ACTIVITIES:
Net income	$	24,844		$	33,958
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other	11,971			12,075
Stock-based compensation expense	3,588			2,936
Amortization of debt discount and deferred issuance costs	602			1,671
Accretion of interest on deferred consideration	2,343			2,793
Amortization of inventory step-up to fair value	—			3,650
Loss on extinguishment of debt	—			4,567
Changes in assets and liabilities:
Accounts receivable	(10,682		)	(25,205		)
Inventories	682			5,471
Prepaid expenses and other current and non-current assets	3,995			(1,842		)
Accounts payable	1,802			(595		)
Accrued payroll and related expenses	(6,969		)	(5,988		)
Other current and non-current liabilities	721			2,323
Net cash provided by operating activities:	32,897			35,814
INVESTING ACTIVITIES:
Acquisitions of property and equipment	(4,993		)	(4,949		)
Proceeds from sale of Summers Ridge Property	—			146,644
Net cash (used for) provided by investing activities:	(4,993		)	141,695
FINANCING ACTIVITIES:
Proceeds from issuance of common stock	6,847			5,652
Payments on Revolving Credit Facility	(20,000		)	(10,000		)
Payments on finance lease obligation	(38		)	(29		)
Repurchases of common stock	(1,476		)	(3,232		)
Payments of acquisition contingent consideration	(12		)	(1,017		)
Payments of Term Loan	—			(101,813		)
Transaction costs related to debt exchange	—			(1,357		)
Net cash used for financing activities:	(14,679		)	(111,796		)
Effect of exchange rates on cash	18			13
Net increase in cash and cash equivalents	13,243			65,726
Cash and cash equivalents, beginning of period	43,695			36,086
Cash and cash equivalents, end of period	$	56,938		$	101,812



SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Purchase of property and equipment by incurring current liabilities	$	1,728	$	2,067
NON-CASH FINANCING ACTIVITIES:
Reduction of other current liabilities upon issuance of restricted share units	$	1,970	$	—
Extinguishment of Convertible Senior Notes through issuance of common stock	$	—	$	118,075

See accompanying notes.

Quidel Corporation

Notes to Consolidated Financial Statements

(Unaudited)

Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited consolidated financial statements of Quidel Corporation and its subsidiaries (the “Company”) have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included.

The information at ~~September 30, 2018,~~March 31, 2019, and for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ is unaudited. For further information, refer to the Company’s consolidated financial statements and notes thereto for the year ended December 31, ~~2017~~2018 included in the Company’s ~~2017~~2018 Annual Report on Form 10-K. Operating results for any quarter are historically seasonal in nature and are not necessarily indicative of the results expected for the full year.

For ~~2018~~2019 and ~~2017,~~2018, the Company’s fiscal year will end or has ended on December 29, 2019 and December 30, 2018, ~~and December 31, 2017,~~ respectively. For ~~2018~~2019 and ~~2017,~~2018, the Company’s ~~third~~first quarter ended on ~~September 30,~~March 31, 2019 and April 1, 2018, ~~and October 1, 2017,~~ respectively. For ease of reference, the calendar quarter end dates are used herein. The ~~three and nine month~~three-month periods ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ each included 13 ~~and 39 weeks, respectively.~~weeks.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~Significant Accounting Policies~~

During the three and nine months ended September 30, 2018, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, except as described below.

~~Revenue Recognition~~

The Company records revenues primarily from product sales. These revenues are recorded net of rebates and other discounts. These rebates and discounts are estimated at the time of sale, and are largely driven by various customer program offerings, including special pricing agreements, promotions and other volume-based incentives. Revenue is recognized when control of the products is transferred to the customers in an amount that reflects the consideration the Company expects to receive from the customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract and the contract price, allocating the contract price to the distinct performance obligations in the contract and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. A performance obligation is considered to be satisfied once the control of a product is transferred to the customer or the service is provided to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service. The Company recognizes revenue for satisfied performance obligations only when there are no uncertainties regarding payment terms or transfer of control.

A portion of product sales includes revenues for diagnostic kits, which are utilized on leased instrument systems under the Company’s “reagent rental” program. The reagent rental program provides customers the right to use the instruments at no separate cost to the customer in consideration for a multi-year agreement to purchase annual minimum amounts of consumables (“reagents” or “diagnostic kits”). When an instrument is placed with a customer under a reagent rental agreement, the Company

retains title to the equipment and it remains capitalized on the Company’s Consolidated Balance Sheets as property, plant and equipment, net. The instrument is depreciated on a straight-line basis over the lower of the lease term or life of the instrument. Depreciation expense is recorded in cost of sales included in the Consolidated Statements of Operations. Instrument and consumables under the reagent rental agreements are deemed two distinct performance obligations. Though the instrument and consumables do not have any use to customers without one another, they are not highly interdependent because they do not significantly affect each other. The Company would be able to fulfill its promise to transfer the instrument even if its customers did not purchase any consumables and the Company would be able to fulfill its promise to provide the consumables even if customers acquired instruments separately. The contract price is allocated between these two performance obligations based on the relative standalone selling prices. The instrument is considered an operating lease and revenue allocated to the instrument will be separately disclosed, if material.

~~Reclassifications~~

The Company recorded a reclassification of $1.8 million and $5.1 million for the three and nine months ended September 30, 2017 from amortization of intangible assets from acquired businesses and technology to cost of sales expense as previously reported in the Consolidated Statements of Operations. In addition, the Company recorded a reclassification of $0.7 million and $2.1 million for the three and nine months ended September 30, 2017 from amortization of intangible assets from acquired businesses and technology to sales and marketing expense to conform to current year presentation. These reclassifications did not impact the net income (loss) as previously reported or any prior amounts reported on the Consolidated Balance Sheets, Statements of Cash Flows or Statements of Comprehensive Income (Loss).

Recent Accounting Pronouncements

~~In May 2014, the Financial Accounting Standards Board (“FASB”) issued guidance codified in~~ Accounting Standards Update (“ASU”) ~~2014-09,~~ ~~Revenue from Contracts with Customers, which amends the guidance in former~~ ~~ASC 605, Revenue Recognition~~ (“2016-02 and ASU 2014-09”). The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies are required to use more judgment and make more estimates than under prior authoritative guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The FASB has issued several amendments to the new standard, which include clarification of accounting guidance related to identification of performance obligations, intellectual property licenses and principal vs. agent considerations. ASU 2014-09 and all subsequent amendments2018-11 (collectively, “ASC ~~606”~~842”) ~~were effective for public entities for annual reporting periods beginning after December 15, 2017, including interim periods therein.~~

The Company adopted ASC 606 on January 1, 2018, using the modified retrospective transition method applied to those contracts which were not completed as of that date. The cumulative effect of applying the new revenue standard to all incomplete contracts as of January 1, 2018 was not material and, therefore, did not result in an adjustment to retained earnings. The adoption of ASC 606 did not have a material impact on the Company's consolidated financial position, results of operations, equity or cash flows as of the adoption date or for the three and nine months ended September 30, 2018.

~~In February 2016, the FASB issued guidance codified in ASU 2016-02 (Topic 842),~~ ~~Leases. The guidance~~ requires a lessee to recognize a lease liability for the obligation to make lease payments and a ~~right-to-use~~ROU asset representing the right to use the underlying asset for the lease term on the balance sheet. Deferred rent, recorded in other current liabilities and other non-current liabilities, is derecognized. The ~~guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those years. Under ASU 2016-02,~~Company adopted ASC 842 as of January 1, 2019 using the ~~standard will be adopted on a modified retrospective~~alternative transition ~~basis for leases existing at, or entered into after,~~method to apply the ~~beginning~~guidance. The Company elected the package of practical expedients which, among other things, allows the Company to carry forward its historical lease classifications.

The following table presents the effect of the ~~earliest comparative period presented~~change in the financial statements. The FASB issued ASU 2018-11 in July 2018 which allows for an alternative method to adopt the lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. While the Company is continuing to assess the effects of adoption, the Company believes the new standard will have a material effectaccounting principle on the ~~consolidated financial statements and disclosures. We expect substantially all real-estate operating lease commitments to be recognized~~Company’s Consolidated Balance Sheets as lease liabilities with corresponding right-of-use assets upon adoption, resulting in a significant increase in the assets and liabilities on the consolidated balance sheet. The Company is currently evaluating the impact of ~~Topic 842 on the consolidated financial statements as it relates to other aspects of its business.~~January 1, 2019:



Consolidated Balance Sheet (in thousands)	January 1, 2019		Effect of Change in Accounting Principle			After change in Accounting Principle
ASSETS
Operating lease right-of-use asset	$	—	$	87,086		$	87,086
Total assets	$	806,371	$	87,086		$	893,457

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of operating lease liability	$	—	$	5,290		$	5,290
Other current liabilities	12,992		(448		)	12,544
Total current liabilities	159,735		4,842			164,577
Operating lease liability	—		84,866			84,866
Other non-current liabilities	9,577		(2,622		)	6,955
Total liabilities and stockholders’ equity	$	806,371	$	87,086		$	893,457

In January 2017, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued guidance codified in ASU 2017-04, Intangibles-Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). Under this new guidance, an entity will no longer determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Instead, an entity will compare the

fair value of a reporting unit with its carrying amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting ~~unit's~~unit’s fair value. The Company adopted the guidance during the three months ended March 31, 2019 with no impact to the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables. The standard is effective for ~~fiscal years~~the Company beginning ~~after December 15, 2019 including interim periods therein. The Company is currently evaluating the impact of this guidance and expects to adopt the standard~~ in the first quarter of ~~2020.~~2020, with early adoption permitted. We are currently evaluating the expected impact of ASU 2016-13 on our consolidated financial statements.

Significant Accounting Policies

During the three months ended March 31, 2019, there have been no changes to our significant accounting policies as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 except as described below and in Note 10. Derivatives and Hedging.

Leases - Lease liabilities represent the obligation to make lease payments and right-of-use (“ROU”) assets represent the right to use the underlying asset during the lease term. Lease liabilities and ROU assets are recognized at the commencement date of the lease based on the present value of lease payments over the lease term at the commencement date. When the implicit rate is unknown, an incremental borrowing rate based on the information available at the commencement date is used in determining the present value of the lease payments. Options to extend or terminate the lease are included in the determination of the lease term when it is reasonably certain that the Company will exercise such options.

For certain classes of assets, the Company accounts for lease and non-lease components as a single lease component. Variable lease payments, including those related to changes in the consumer price index, are recognized in the period in which the obligation for those payments are incurred and are not included in the measurement of the ROU assets or lease liabilities. Short-term leases are excluded from the calculation of the ROU assets and lease liabilities.

Operating leases are included in operating lease ROU assets, current portion of operating lease liabilities and operating lease liabilities in the Consolidated Balance Sheet. Finance leases are included in property and equipment, other current liabilities and other non-current liabilities.

Note 2. Computation of Earnings ~~(Loss)~~ Per Share

Basic earnings ~~(loss)~~ per share ~~("EPS"~~(“EPS”) is computed by dividing net income ~~(loss)~~ by the weighted-average number of common shares outstanding, including restricted stock units (“RSUs”) vested during the period. Diluted EPS is computed based on the sum of the weighted average number of common shares and potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of shares issuable from stock options, unvested RSUs and the 3.25% Convertible Senior Notes due 2020 (“Convertible Senior Notes”). Potentially dilutive common shares from outstanding stock options and unvested RSUs are determined using the average share price for each period under the treasury stock method. Potentially dilutive shares from the Convertible Senior Notes are determined using the if-converted method. Under the provisions of the if-converted method, the Convertible Senior Notes are assumed to be converted and included in the denominator of the EPS calculation and the interest expense, net of tax, recorded in connection with the Convertible Senior Notes is added back to net ~~income (loss).~~income.

The Convertible Senior Notes have a dilutive impact when the average market price of the Company’s common stock exceeds the applicable conversion price of the notes. The Senior Convertible Notes became convertible on March 31, 2018 and remained convertible through ~~September 30, 2018. The Senior Convertible Notes were not convertible during the nine months ended September 30, 2017.~~March 31, 2019.

The following table reconciles net income ~~(loss)~~ and the weighted-average shares used in computing basic and diluted earnings per share in the respective periods (in thousands):


	Three month ended September 30,					Nine months ended September 30,					Three months ended March 31,
	2018		2017			2018		2017			2019		2018
Numerator:
Net income (loss) used for basic earnings per share	$	10,822	$	(5,525	)	$	41,704	$	(3,077	)
Net income used for basic earnings per share											$	24,844	$	33,958
Interest expense on Convertible Senior Notes, net of tax	791		—			4,152		—			791		2,144
Net income (loss) used for diluted earnings per share, if-converted method	$	11,613	$	(5,525	)	$	45,856	$	(3,077	)
Net income used for diluted earnings per share, if-converted method											$	25,635	$	36,102

Basic weighted-average common shares outstanding	39,290		33,913			37,490		33,538			39,704		35,236
Potentially dilutive shares issuable from Convertible Senior Notes, if-converted	1,825		—			3,193		—			1,825		4,957
Potentially dilutive shares issuable from stock options and unvested RSUs	1,774		—			1,784		—			1,378		1,755
Diluted weighted-average common shares outstanding, if-converted	42,889		33,913			42,467		33,538			42,907		41,948
Potentially dilutive shares excluded from calculation due to anti-dilutive effect	—		—			161		1,121			149		193

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws that involve material risks, assumptions and uncertainties. Many possible events or factors could affect our future financial results and performance, such that our actual results and performance may differ materially from those that may be described or implied in the forward-looking statements. As such, no forward-looking statement can be guaranteed. Differences in actual results and performance may arise as a result of a number of factors including, without limitation: our reliance on sales of our influenza diagnostic tests; fluctuations in our operating results resulting from the timing of the onset, length and severity of cold and flu seasons, seasonality, government and media attention focused on influenza and the related potential impact on humans from novel influenza viruses, adverse changes in competitive conditions in domestic and international markets, the reimbursement system currently in place and future changes to that system, changes in economic conditions in our domestic and international markets, lower than anticipated market penetration of our products, our reliance on sales of our influenza diagnostic tests, fluctuations in our operating results resulting from the timing of the onset, length and severity of cold and flu seasons, seasonality, government and media attention focused on influenza and the related potential impact on humans from novel influenza viruses, the quantity of our product in our distributors’ inventory or distribution channels, changes in the buying patterns of our distributors, and changes in the healthcare market and consolidation of our customer base; our development, acquisition and protection of proprietary technology rights; our development of new technologies, products and markets; our reliance on a limited number of key distributors; our exposure to claims and litigation that could result in significant expenses and could ultimately result in an unfavorable outcome for us, including the ongoing litigation between us and Beckman Coulter, Inc.; intellectual property risks, including but not limited to, infringement litigation; our need for additional funds to finance our capital or operating needs; the financial soundness of our customers and suppliers; acceptance of our products among physicians and other healthcare providers; competition with other providers of diagnostic products; ~~adverse actions~~failures or delays in receipt of new product reviews or related to currently-marketed products by the U.S. Food and Drug Administration (the “FDA”) or other regulatory authorities or loss of any previously received regulatory approvals or ~~clearances;~~clearances or other adverse actions by regulatory authorities; changes in government policies; ~~our exposure to claims and litigation, including litigation currently pending against us;~~ costs of ~~or our~~and adverse operational impact from failure to comply with government regulations in addition to FDA regulations; compliance with government regulations relating to the handling, storage and disposal of hazardous substances; third-party reimbursement ~~policies;~~policies and potential cost constraints; our failure to comply with laws and regulations relating to billing and payment for healthcare services; our ability to meet demand for our products; interruptions in our supply of raw materials; product defects; business risks not covered by insurance; costs and disruptions from failures in our information technology and storage systems; our exposure to data corruption, cyber-based attacks, security breaches and ~~security breaches;~~privacy violations; competition for and loss of management and key personnel; international risks, including but not limited to, compliance with product registration requirements, compliance with legal requirements, tariffs, exposure to currency exchange fluctuations and foreign currency exchange risk, ~~sharing arrangements,~~ longer payment cycles, lower selling prices and greater difficulty in collecting accounts receivable, reduced protection of intellectual property rights, social, political and economic instability, increased financial accounting and reporting burdens and complexities, taxes, and diversion of lower priced international products into U.S. markets; changes in tax rates and exposure to additional tax liabilities or assessments; risks relating to ~~the~~our acquisition and integration of the Triage MeterPro Cardiovascular and toxicology business and B-type Naturietic Peptide assay business (the “Triage and BNP ~~Businesses;~~Businesses”); Alere’s failure to perform under various transition agreements relating to our acquisition of the Triage and BNP Businesses; that we may incur substantial costs to build our information technology infrastructure to transition the Triage and BNP Businesses; that we may have to write off goodwill relating to our acquisition of the Triage and BNP Businesses; our ability to manage our growth strategy; the level of our ~~indebtedness; the amount of,~~indebtedness and deferred payment obligations; our ability to generate sufficient cash to meet our debt service and deferred contingent payment obligations and our ability to repay, renew or extend, our outstanding debt and its impact on our operations and our ability to obtain financing; that ~~substantially the~~our Senior Credit Facility is secured by substantially all of our assets; ~~our prepayment requirements under the Senior Credit Facility;~~ the agreements for our indebtedness place operating and financial restrictions on ~~the Company;~~us and our ability to operate our business; that an event of default could trigger acceleration of our outstanding indebtedness; ~~the effect on our operating results from the trigger of the conditional conversion feature of our Convertible Senior Notes;~~ that we may incur additional indebtedness; increases in interest rate relating to our variable rate debt; dilution resulting from future sales of our equity; volatility in our stock price; provisions in our charter documents, Delaware law and the indenture governing our Convertible Senior Notes that might delay or impede stockholder actions with respect to business combinations or similar transactions; ~~and~~ our intention of not paying ~~dividends.~~dividends; and our ability to identify and successfully acquire and integrate potential acquisition targets. Forward-looking statements typically are identified by the use of terms such as “may,” “will,” “should,” “might,” “expect,” “anticipate,” “estimate,” “plan,” “intend,” “goal,” “project,” “strategy,” “future,” and similar words, although some forward-looking statements are expressed differently. Forward-looking statements in this Quarterly Report include, among others, statements concerning: our outlook for the remainder of ~~2018~~2019 regarding our strategy, revenue growth, gross margins and earnings, including the sources of expected growth; that we expect to continue to make substantial expenditures for research and development activities; projected capital expenditures for the remainder of ~~2018~~2019 and our source of funds for such expenditures; the sufficiency of our liquidity and capital resources; our strategy, goals, initiatives and objectives; ~~the impact of new accounting standards;~~ our exposure to, and defenses against, claims and litigation; the sufficiency of our liquidity and our short-term needs

ITEM 4. Controls and Procedures

Evaluation of disclosure controls and procedures: We have performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 30, 2018~~March 31, 2019 at a reasonable assurance level to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in internal control over financial reporting: There was no change in our internal control over financial reporting during the quarter ended ~~September 30, 2018~~March 31, 2019 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

ITEM 1. Legal Proceedings

The information set forth in the section entitled “Litigation and Other Legal Proceedings” under Note 98 of the Notes to the Consolidated Financial Statements, included in Part I, Item I of this Quarterly Report, is incorporated herein by reference.

ITEM 1A. Risk Factors

There has been no material change in our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018. For a detailed description of our risk factors, refer to Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The table below sets forth information regarding repurchases of our common stock by us during the three months ended ~~September 30, 2018.~~March 31, 2019.

Period
Total number
of shares
purchased (1)

Average
price paid
per share

Total number
of shares purchased
as part of publicly
announced plans or programs

Approximate dollar
value of shares that
may yet be
purchased
under the plans or programs (2)
July 2, 2018 - July 29, 2018 —
$ —
—
$ —
July 30, 2018 - August 26, 2018 316
70.76
—
—
August 27, 2018 - September 30, 2018 2,202
73.18
—
—
Total 2,518
$ 72.87
—
$ —



Period	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs (2)
December 31, 2018 - January 27, 2019	1,573	$	52.99	—	$	50,000,000
January 28, 2019 - February 24, 2019	20,262	60.01		—	50,000,000
February 25, 2019 - March 31, 2019	2,625	67.16		—	50,000,000
Total	24,460	$	60.33	—	$	50,000,000

(1) We withheld ~~2,518~~24,460 shares of common stock from employees in connection with payment of minimum tax withholding obligations relating to the lapse of restrictions on certain RSUs during the three months ended ~~September 30, 2018.~~March 31, 2019.

(2) ~~Our prior share~~On December 12, 2018, the Board of Directors authorized a new stock repurchase program, ~~expired~~pursuant to which up to $50.0 million of the Company’s shares of common stock may be purchased through December 12, 2020. The Company announced

the stock repurchase program on ~~January 25, 2018 and was not renewed.~~December 18, 2018.

ITEM 3. Defaults Upon Senior Securities

None.

ITEM 4. Mine Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

ITEM 6. Exhibits




3.1		Restated Certificate of Incorporation of Quidel Corporation. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on February 27, 2015.)
3.2		Certificate of Amendment to the Restated Certificate of Incorporation of Quidel Corporation. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on May 6, 2015.)
3.3		Amended and Restated Bylaws of Quidel Corporation. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on February 27, 2015.)
4.1		Certificate of Designations of Series C Junior Participating Preferred Stock. (Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-Q for the quarter ended September 30, 2010.)
10.110.1(1)		~~Amended~~Agreement Re: Change in Control, entered into on February 11, 2019 between the Registrant and Restated Credit Agreement, by and among the Company, as Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A. as Syndication Agent, Bank of America Merrill Lynch and JP Morgan Chase Bank, N.A. as Joint Lead Arrangers and Joint Lead Bookrunners, dated as of August 31, 2018. Karen Gibson.
31.1*		Certification by Principal Executive Officer of Registrant pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification by Principal Financial Officer of Registrant pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certifications by Principal Executive Officer and Principal Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Label Linkbase Document
101.PRE*		XBRL Taxonomy Presentation Linkbase Document

___________________________

* Filed herewith.

** Furnished herewith.

(1) Indicates a management plan or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




Date: ~~November 7, 2018~~May 8, 2019	QUIDEL CORPORATION

	/s/ DOUGLAS C. BRYANT
	Douglas C. Bryant
	President and Chief Executive Officer (Principal Executive Officer)

	/s/ RANDALL J. STEWARD
	Randall J. Steward
	Chief Financial Officer (Principal Financial Officer)

Exhibit Index



Exhibit Number
3.1		Restated Certificate of Incorporation of Quidel Corporation. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on February 27, 2015.)
3.2		Certificate of Amendment to the Restated Certificate of Incorporation of Quidel Corporation. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on May 6, 2015.)
3.3		Amended and Restated Bylaws of Quidel Corporation. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on February 27, 2015.)
4.1		Certificate of Designations of Series C Junior Participating Preferred Stock. (Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-Q for the quarter ended September 30, 2010.)
10.110.1(1)		~~Amended~~Agreement Re: Change in Control, entered into on February 11, 2019 between the Registrant and Restated Credit Agreement, by and among the Company, as Borrower, Bank of America, N.A. as Administrative Agent, Swing Line Lender and L/C Issuer, JPMorgan Chase Bank, N.A. as Syndication Agent, Bank of America Merrill Lynch and JP Morgan Chase Bank, N.A. as Joint Lead Arrangers and Joint Lead Bookrunners, dated as of August 31, 2018.Karen Gibson.
31.1*		Certification by Principal Executive Officer of Registrant pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification by Principal Financial Officer of Registrant pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certifications by Principal Executive Officer and Principal Financial Officer of Registrant pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema Document
101.CAL*		XBRL Taxonomy Calculation Linkbase Document
101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		XBRL Taxonomy Label Linkbase Document
101.PRE*		XBRL Taxonomy Presentation Linkbase Document

___________________________

* Filed herewith.

** Furnished herewith.

(1) Indicates a management plan or compensatory plan or arrangement.

3027



Delaware		94-2573850
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value	QDEL	NASDAQ Global Market



Large accelerated filer	x	Accelerated filer	¨

Non-accelerated filer	¨	Smaller reporting company	¨
		Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the ~~Securities~~Exchange Act.			¨



PART I—FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited)
Consolidated Balance Sheets as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018	3
Consolidated Statements of ~~Operations~~Income for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	4
Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	5
Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2019 and 2018	6
Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~	67
Notes to Consolidated Financial Statements	78
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk	2623
ITEM 4. Controls and Procedures	2723
PART II—OTHER INFORMATION
ITEM 1. Legal Proceedings	2723
ITEM 1A. Risk Factors	2723
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds	2724
ITEM 3. Defaults Upon Senior Securities	2724
ITEM 4. Mine Safety Disclosures	2724
ITEM 5. Other Information	2824
ITEM 6. Exhibits	2825
Signatures	2926


	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	38,694		$	36,086		$	56,938		$	43,695
Accounts receivable, net	66,845			67,046			69,234			58,677
Inventories	63,309			67,078			66,647			67,379
Assets held for sale	—			146,644
Prepaid expenses and other current assets	31,301			14,375			18,823			23,646
Total current assets	200,149			331,229			211,642			193,397
Property, plant and equipment, net	70,235			61,585			75,356			73,901
Right-of-use assets							85,907			—
Goodwill	337,025			337,028			337,019			337,021
Intangible assets, net	181,985			203,827			168,120			175,029
Deferred tax asset—non-current							22,102			22,192
Other non-current assets	4,490			1,582			5,709			4,831
Total assets	$	793,884		$	935,251		$	905,855		$	806,371
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,700		$	27,279		$	26,827		$	25,171
Accrued payroll and related expenses	17,118			15,926			10,969			19,210
Current portion of operating lease liabilities							5,385			—
Current portion of contingent consideration	3,848			6,293			3,971			3,983
Current portion of deferred consideration	44,000			46,000			44,000			44,000
Current portion of Revolving Credit Facility	—			10,000
Current portion of Convertible Senior Notes	53,885			—			54,880			54,379
Current portion of Term Loan	—			10,184
Other current liabilities	13,898			12,666			13,521			12,992
Total current liabilities	158,449			128,348			159,553			159,735
Convertible Senior Notes	—			149,868
Term Loan	—			227,394
Operating lease liabilities							83,818			—
Revolving Credit Facility	83,188			—			33,188			53,188
Deferred consideration	140,845			177,158			145,501			143,158
Contingent consideration	14,904			18,008			15,129			15,129
Other non-current liabilities	8,044			7,371			7,968			9,577
Commitments and contingencies (see Note 9)
Commitments and contingencies (see Note 8)
Stockholders’ equity:
Preferred stock, $.001 par value per share; 5,000 shares authorized; none issued or outstanding at September 30, 2018 and December 31, 2017	—			—
Common stock, $.001 par value per share; 97,500 shares authorized; 39,326 and 34,540 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively	39			35
Preferred stock, $.001 par value per share; 5,000 shares authorized; none issued or outstanding at March 31, 2019 and December 31, 2018							—			—
Common stock, $.001 par value per share; 97,500 shares authorized; 39,806 and 39,386 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively							40			39
Additional paid-in capital	359,186			239,489			374,148			363,921
Accumulated other comprehensive loss	(55		)	—			(97		)	(139		)
Retained earnings (accumulated deficit)	29,284			(12,420		)
Retained earnings							86,607			61,763
Total stockholders’ equity	388,454			227,104			460,698			425,584
Total liabilities and stockholders’ equity	$	793,884		$	935,251		$	905,855		$	806,371



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three months ended September 30,						Nine months ended September 30,						Three months ended March 31,
	2018			2017			2018			2017			2019			2018
Total revenues	$	117,399		$	50,894		$	389,697		$	162,853		$	147,968		$	169,143
Cost of sales	47,757			21,204			156,116			65,838			57,041			62,872
Gross profit	69,642			29,690			233,581			97,015			90,927			106,271
Research and development	13,103			7,468			39,008			22,970			13,930			12,621
Sales and marketing	26,504			13,588			82,607			40,875			29,589			28,558
General and administrative	10,620			6,580			32,652			20,483			13,431			10,532
Acquisition and integration costs	2,521			4,591			10,923			7,022			2,824			3,467
Total operating expenses	52,748			32,227			165,190			91,350			59,774			55,178
Operating income (loss)	16,894			(2,537		)	68,391			5,665
Operating income													31,153			51,093
Other expense, net:
Interest expense, net	(4,786		)	(2,784		)	(19,475		)	(8,387		)	(4,582		)	(7,850		)
Loss on extinguishment of debt	(1,297		)	—			(8,262		)	—			—			(4,567		)
Total other expense, net	(6,083		)	(2,784		)	(27,737		)	(8,387		)	(4,582		)	(12,417		)
Income (loss) before income taxes	10,811			(5,321		)	40,654			(2,722		)
(Benefit) provision for income taxes	(11		)	204			(1,050		)	355
Net income (loss)	$	10,822		$	(5,525	)	$	41,704		$	(3,077	)
Basic earnings (loss) per share	$	0.28		$	(0.16	)	$	1.11		$	(0.09	)
Diluted earnings (loss) per share	$	0.27		$	(0.16	)	$	1.08		$	(0.09	)
Income before income taxes													26,571			38,676
Provision for income taxes													1,727			4,718
Net income													$	24,844		$	33,958
Basic earnings per share													$	0.63		$	0.96
Diluted earnings per share													$	0.60		$	0.86
Shares used in basic per share calculation	39,290			33,913			37,490			33,538			39,704			35,236
Shares used in diluted per share calculation	42,889			33,913			42,467			33,538			42,907			41,948



SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS:
Purchase of property, equipment and intangibles by incurring current liabilities	$	1,650	$	653
Reduction of other current liabilities upon issuance of restricted share units	$	—	$	903
Extinguishment of Convertible Senior Notes through issuance of common stock	$	200,217	$	—
Principal amount of Term Loan exchanged for Revolving Credit Facility	$	83,188	$	—



	Three month ended September 30, 2018		Nine months ended September 30, 2018
Principal amount settled	$	35	$	108,808
Number of shares of common stock issued	1		3,699
Loss on extinguishment of debt	$	—	$	2,303



	Number of Shares		Weighted- average exercise price per share
Outstanding at December 31, 2018	1,877		$	21.53
Granted	168		59.18
Exercised	(355	)	17.77
Cancelled	(2	)	37.37
Outstanding at March 31, 2019	1,688		$	26.06



	Shares		Weighted-average grant date fair value
Non-vested at December 31, 2018	676		$	30.75
Granted	220		59.45
Vested	(68	)	21.45
Forfeited	(2	)	42.51
Non-vested at March 31, 2019	826		$	39.11



	Three months ended September 30,				Nine months ended September 30,
	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
Cost of sales	$	255	$	117	$	751	$	354
Research and development	539		396		1,732		1,212
Sales and marketing	686		434		2,199		1,341
General and administrative	1,295		932		4,508		3,031
Total stock-based compensation expense	$	2,775	$	1,879	$	9,190	$	5,938



	Three months ended
	March 31, 2019
Finance lease ROU asset amortization	$	63
Finance lease interest expense	209
Total finance lease costs	272
Operating lease costs	2,505
Total lease costs	$	2,777

Cash paid for amounts included in the measurement of operating lease liabilities
Operating cash flows from operating leases	$	2,280
Operating cash flows from finance leases	$	209
Right-of-use assets obtained in exchange for new lease liabilities
Operating leases	$	328
Finance leases	$	1,326



Years ending December 31,	Operating			Finance
2019	$	6,918		$	989
2020	9,340			1,262
2021	9,576			1,270
2022	8,568			1,281
2023	8,184			1,291
Thereafter	76,566			3,129
Total lease payments	119,152			9,222
Less: imputed interest	(29,949		)	(4,076		)
Total	$	89,203		$	5,146
Less: current portion of operating lease liability	(5,385		)	(478		)
Non-current portion of operating lease liability	$	83,818		$	4,668

Weighted average remaining lease term (in years)	12.7			6.3
Weighted average discount rate	4		%	18		%


	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Raw materials	$	23,572	$	22,252	$	24,783	$	24,292
Work-in-process (materials, labor and overhead)	20,915		22,813		20,860		21,280
Finished goods (materials, labor and overhead)	18,822		22,013		21,004		21,807
Total inventories	$	63,309	$	67,078	$	66,647	$	67,379


	Three month ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2018		2017		2018		2017		2019		2018
Rapid Immunoassay	$	35,366	$	36,458	$	132,740	$	115,974	$	62,494	$	80,685
Cardiac Immunoassay	65,287		—		203,581		—		65,872		68,444
Specialized Diagnostic Solutions	12,294		11,655		39,859		37,731		13,854		14,871
Molecular Diagnostic Solutions	4,452		2,781		13,517		9,148		5,748		5,143
Total revenues	$	117,399	$	50,894	$	389,697	$	162,853	$	147,968	$	169,143



Cash consideration—Triage Business	$	399,798
Deferred consideration—BNP Business	220,550
Contingent consideration—BNP Business	19,700
Inventory related adjustment	205
Net consideration	$	640,253


	September 30, 2018								December 31, 2017								March 31, 2019								December 31, 2018
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Derivative assets																	$	—	$	361	$	—	$	361	$	—	$	—	$	—	$	—
Total assets measured at fair value																	$	—	$	361	$	—	$	361	$	—	$	—	$	—	$	—
Liabilities:
Contingent consideration	$	—	$	—	$	18,752	$	18,752	$	—	$	—	$	24,301	$	24,301	$	—	$	—	$	19,100	$	19,100	$	—	$	—	$	19,112	$	19,112
Deferred consideration	—		184,845		—		184,845		—		223,158		—		223,158		—		189,501		—		189,501		—		187,158		—		187,158
Total liabilities measured at fair value	$	—	$	184,845	$	18,752	$	203,597	$	—	$	223,158	$	24,301	$	247,459	$	—	$	189,501	$	19,100	$	208,601	$	—	$	187,158	$	19,112	$	206,270



	Contingent consideration liabilities (Level 3 measurement)
Balance at December 31, 2017	$	24,301
Cash payments	(6,294		)
Loss recorded for fair value adjustments	745
Balance at September 30, 2018	$	18,752



Prepaid expenses and other current assets	$	796
Assets held for sale	146,540
Inventories	52,205
Property, plant and equipment	10,608
Intangible assets	184,900
Goodwill	245,531
Other non-current assets	182
Total assets acquired	$	640,762
Other current liabilities	(509		)
Total net assets and liabilities acquired	$	640,253



	March 31, 2019
	Notional Amount		Fair Value, Net
Prepaid expenses and other current assets	$	14,121	$	361



Intangible Asset	Amortization period	Fair value of assets acquired
Purchased technology	10 years	$	52,400
Customer relationships	7 years	115,000
Trademarks	10 years	17,500
Total intangible assets		$	184,900


	Three months ended September 30,				Increase (Decrease)					Three months ended March 31,				Increase (Decrease)
	2018		2017		$			%		2019		2018		$			%
Rapid Immunoassay	$	35,366	$	36,458	$	(1,092	)	(3	)%	$	62,494	$	80,685	$	(18,191	)	(23	)%
Cardiac Immunoassay	65,287		—		65,287			N/A		65,872		68,444		(2,572		)	(4	)%
Specialized Diagnostic Solutions	12,294		11,655		639			5	%	13,854		14,871		(1,017		)	(7	)%
Molecular Diagnostic Solutions	4,452		2,781		1,671			60	%	5,748		5,143		605			12	%
Total revenues	$	117,399	$	50,894	$	66,505		131	%	$	147,968	$	169,143	$	(21,175	)	(13	)%



	For the nine months ended
	September 30,				Increase (Decrease)
	2018		2017		$		%
Rapid Immunoassay	$	132,740	$	115,974	$	16,766	14	%
Cardiac Immunoassay	203,581		—		203,581		N/A
Specialized Diagnostic Solutions	39,859		37,731		2,128		6	%
Molecular Diagnostic Solutions	13,517		9,148		4,369		48	%
Total revenues	$	389,697	$	162,853	$	226,844	139	%



	For the nine months ended September 30,
	2018				2017
	Operating expenses		As a % of total revenues		Operating expenses		As a % of total revenues		Increase (Decrease)
	Operating expenses		As a % of total revenues		Operating expenses		As a % of total revenues		$		%
Research and development	$	39,008	10	%	$	22,970	14	%	$	16,038	70	%
Sales and marketing	$	82,607	21	%	$	40,875	25	%	$	41,732	102	%
General and administrative	$	32,652	8	%	$	20,483	13	%	$	12,169	59	%
Acquisition and integration costs	$	10,923	3	%	$	7,022	4	%	$	3,901	56	%



	Three months ended March 31,
Currency	2019
Chinese Yuan	$	146
Euro	$	111