Cover Page
Cover Page - shares | 6 Months Ended | |
Jul. 03, 2022 | Jul. 27, 2022 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 03, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-41409 | |
Entity Registrant Name | QUIDELORTHO CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 87-4496285 | |
Entity Address, Address Line One | 9975 Summers Ridge Road | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92121 | |
City Area Code | 858 | |
Local Phone Number | 552-1100 | |
Title of 12(b) Security | Common Stock, $0.001 Par Value | |
Trading Symbol | QDEL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 66,952,942 | |
Entity Central Index Key | 0001906324 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 379 | $ 802.8 |
Marketable securities | 52.5 | 25.7 |
Accounts receivable, net | 379.2 | 378 |
Inventories | 552.7 | 198.8 |
Prepaid expenses and other current assets | 195.7 | 35 |
Total current assets | 1,559.1 | 1,440.3 |
Property, plant and equipment, net | 1,110.1 | 349.2 |
Marketable securities | 15.2 | 37.9 |
Right-of-use assets | 168.9 | 127.6 |
Goodwill | 2,589.6 | 337 |
Intangible assets, net | 3,194.9 | 98.7 |
Deferred tax asset | 32.5 | 20.1 |
Other assets | 152.1 | 19.6 |
Total assets | 8,822.4 | 2,430.4 |
Current liabilities: | ||
Accounts payable | 247.3 | 101.5 |
Accrued payroll and related expenses | 116.9 | 40.4 |
Income tax payable | 69.1 | 66.9 |
Current portion of borrowings | 207.8 | 0.3 |
Other current liabilities | 258.9 | 114.4 |
Total current liabilities | 900 | 323.5 |
Operating lease liabilities | 168.2 | 128.6 |
Long-term borrowings | 2,533.3 | 0.4 |
Deferred tax liability | 214 | 0 |
Other liabilities | 87.3 | 48.5 |
Total liabilities | 3,902.8 | 501 |
Commitments and contingencies (Note 10) | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value per share; 5.0 shares authorized; none issued or outstanding at July 3, 2022 and January 2, 2022 | 0 | 0 |
Common stock, $0.001 par value per share; 126.2 and 97.5 shares authorized; 67.0 and 41.7 shares issued and outstanding at July 3, 2022 and January 2, 2022, respectively | 0 | 0 |
Additional paid-in capital | 2,831.9 | 279.8 |
Accumulated other comprehensive (loss) income | (60.7) | 0.4 |
Retained earnings | 2,148.4 | 1,649.2 |
Total stockholders’ equity | 4,919.6 | 1,929.4 |
Total liabilities and stockholders’ equity | $ 8,822.4 | $ 2,430.4 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 03, 2022 | Jan. 02, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 126,200,000 | 97,500,000 |
Common stock, shares issued (in shares) | 67,000,000 | 41,700,000 |
Common stock, shares outstanding (in shares) | 67,000,000 | 41,700,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Income Statement [Abstract] | ||||
Total revenues | $ 613.4 | $ 176.6 | $ 1,615.7 | $ 551.9 |
Cost of sales, excluding amortization of intangibles | 275.9 | 68.6 | 536.2 | 140.2 |
Selling, marketing and administrative | 118.4 | 54.2 | 203.2 | 102.9 |
Research and development | 34.2 | 22.6 | 60.6 | 45.9 |
Amortization of intangible assets | 21 | 6.8 | 28.1 | 13.6 |
Acquisition and integration costs | 80.2 | 1.1 | 83.2 | 1.8 |
Other operating expenses | 4 | 0 | 4 | 0 |
Operating income | 79.7 | 23.3 | 700.4 | 247.5 |
Interest expense, net | 10.3 | 1.4 | 11.3 | 3.4 |
Loss on extinguishment of debt | 24 | 0 | 24 | 0 |
Other expense, net | 2.5 | 0.2 | 1.6 | 0.6 |
Income before provision for income taxes | 42.9 | 21.7 | 663.5 | 243.5 |
Provision for income taxes | 23.6 | 2.6 | 164.3 | 46.3 |
Net income | $ 19.3 | $ 19.1 | $ 499.2 | $ 197.2 |
Basic earnings per share | $ 0.37 | $ 0.46 | $ 10.62 | $ 4.74 |
Diluted earnings per share | $ 0.36 | $ 0.45 | $ 10.47 | $ 4.64 |
Weighted average shares outstanding - basic | 52.2 | 41.7 | 47 | 41.6 |
Weighted average shares outstanding - diluted | 52.9 | 42.4 | 47.7 | 42.5 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 19.3 | $ 19.1 | $ 499.2 | $ 197.2 |
Other comprehensive (loss) income | ||||
Changes in cumulative translation adjustment, net of tax | (66.1) | 0.3 | (66) | (0.6) |
Changes in unrealized losses from investments, net of tax | (0.2) | 0 | (0.6) | 0 |
Net unrealized gains on derivative instruments | 4.4 | (0.2) | 4.6 | 0.1 |
Reclassification of net realized (gains) losses on derivative instruments included in net income | 1 | 0.8 | 0.9 | 1.9 |
Total change in unrealized gains (losses) from cash flow hedges, net of tax | 5.4 | 0.6 | 5.5 | 2 |
Comprehensive (loss) income | $ (41.6) | $ 20 | $ 438.1 | $ 198.6 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity Statement - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Retained earnings |
Balance (in shares) at Jan. 03, 2021 | 42.3 | ||||
Balance at Jan. 03, 2021 | $ 1,332.7 | $ 0 | $ 388.1 | $ (0.4) | $ 945 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under equity compensation plans (in shares) | 0.4 | ||||
Issuance of common stock under equity compensation plans | 6.4 | $ 0 | 6.4 | ||
Stock-based compensation expense | 5.9 | 5.9 | |||
Tax withholdings related to vesting of stock-based awards (in shares) | (0.2) | ||||
Tax withholdings related to vesting of stock-based awards | (33.9) | (33.9) | |||
Other comprehensive loss, net of tax | 0.5 | 0.5 | |||
Net income | 178.1 | 178.1 | |||
Balance (in shares) at Apr. 04, 2021 | 42.5 | ||||
Balance at Apr. 04, 2021 | 1,489.7 | $ 0 | 366.5 | 0.1 | 1,123.1 |
Balance (in shares) at Jan. 03, 2021 | 42.3 | ||||
Balance at Jan. 03, 2021 | 1,332.7 | $ 0 | 388.1 | (0.4) | 945 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 197.2 | ||||
Balance (in shares) at Jul. 04, 2021 | 41.6 | ||||
Balance at Jul. 04, 2021 | 1,411.1 | $ 0 | 267.9 | 1 | 1,142.2 |
Balance (in shares) at Apr. 04, 2021 | 42.5 | ||||
Balance at Apr. 04, 2021 | 1,489.7 | $ 0 | 366.5 | 0.1 | 1,123.1 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under equity compensation plans (in shares) | 0.1 | ||||
Issuance of common stock under equity compensation plans | 0.5 | 0.5 | |||
Stock-based compensation expense | 5.8 | 5.8 | |||
Tax withholdings related to vesting of stock-based awards (in shares) | 0 | ||||
Tax withholdings related to vesting of stock-based awards | (1.5) | (1.5) | |||
Repurchases of common stock (in shares) | (1) | ||||
Repurchases of common stock | (103.4) | (103.4) | |||
Other comprehensive loss, net of tax | 0.9 | 0.9 | |||
Net income | 19.1 | 19.1 | |||
Balance (in shares) at Jul. 04, 2021 | 41.6 | ||||
Balance at Jul. 04, 2021 | 1,411.1 | $ 0 | 267.9 | 1 | 1,142.2 |
Balance (in shares) at Jan. 02, 2022 | 41.7 | ||||
Balance at Jan. 02, 2022 | 1,929.4 | $ 0 | 279.8 | 0.4 | 1,649.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under equity compensation plans (in shares) | 0.2 | ||||
Issuance of common stock under equity compensation plans | 6.4 | $ 0 | 6.4 | ||
Stock-based compensation expense | 6.2 | 6.2 | |||
Tax withholdings related to vesting of stock-based awards (in shares) | (0.1) | ||||
Tax withholdings related to vesting of stock-based awards | (6.8) | (6.8) | |||
Other comprehensive loss, net of tax | (0.2) | (0.2) | |||
Net income | 479.9 | 479.9 | |||
Balance (in shares) at Apr. 03, 2022 | 41.8 | ||||
Balance at Apr. 03, 2022 | 2,414.9 | $ 0 | 285.6 | 0.2 | 2,129.1 |
Balance (in shares) at Jan. 02, 2022 | 41.7 | ||||
Balance at Jan. 02, 2022 | 1,929.4 | $ 0 | 279.8 | 0.4 | 1,649.2 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 499.2 | ||||
Balance (in shares) at Jul. 03, 2022 | 67 | ||||
Balance at Jul. 03, 2022 | 4,919.6 | $ 0 | 2,831.9 | (60.7) | 2,148.4 |
Balance (in shares) at Apr. 03, 2022 | 41.8 | ||||
Balance at Apr. 03, 2022 | 2,414.9 | $ 0 | 285.6 | 0.2 | 2,129.1 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under equity compensation plans (in shares) | 0.1 | ||||
Issuance of common stock under equity compensation plans | 0.8 | $ 0 | 0.8 | ||
Stock-based compensation expense | 14.7 | 14.7 | |||
Issuance of shares in connection with the Combinations (in shares) | 25.1 | ||||
Issuance of shares in connection with the Combinations | 2,495.4 | 2,495.4 | |||
Issuance of equity replacement awards in connection with the Combinations | (36.1) | 36.1 | |||
Tax withholdings related to vesting of stock-based awards (in shares) | 0 | ||||
Tax withholdings related to vesting of stock-based awards | (0.7) | (0.7) | |||
Other comprehensive loss, net of tax | (60.9) | (60.9) | |||
Net income | 19.3 | 19.3 | |||
Balance (in shares) at Jul. 03, 2022 | 67 | ||||
Balance at Jul. 03, 2022 | $ 4,919.6 | $ 0 | $ 2,831.9 | $ (60.7) | $ 2,148.4 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jul. 03, 2022 | Jul. 04, 2021 | |
OPERATING ACTIVITIES: | ||
Net income | $ 499.2 | $ 197.2 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 62.8 | 24.6 |
Stock-based compensation expense | 23.3 | 11.7 |
Net change in operating lease right-of-use assets and liabilities | 9.9 | 1.8 |
Payment of accreted interest on contingent and deferred consideration | (10.4) | (8.2) |
Loss on extinguishment of debt | 24 | 0 |
Other non-cash, net | 13.7 | 5.8 |
Changes in assets and liabilities: | ||
Accounts receivable | 232.3 | 451.2 |
Inventories | (36.1) | (104.8) |
Prepaid expenses and other current and non-current assets | (9.8) | (21.1) |
Accounts payable | (46.8) | (10.1) |
Accrued payroll and related expenses | (9.1) | (16.1) |
Income taxes payable | 1.6 | (126) |
Other current and non-current liabilities | (29) | 1.5 |
Net cash provided by operating activities | 725.6 | 407.5 |
INVESTING ACTIVITIES | ||
Acquisitions of property, equipment, investments and intangibles | (48.7) | (153.5) |
Acquisition of businesses, net of cash and restricted cash acquired | (1,511.4) | 0 |
Proceeds from government assistance allocated to fixed assets | 10.4 | 23.2 |
Purchases of marketable securities | (33.6) | 0 |
Proceeds from sale of marketable securities | 28.2 | 0 |
Net cash used for investing activities | (1,555.1) | (130.3) |
FINANCING ACTIVITIES | ||
Proceeds from issuance of common stock | 4.4 | 4.9 |
Proceeds from long-term borrowings, net of debt issuance costs | 2,734.8 | 0 |
Payments on long-term borrowings and extinguishment costs | (2,284.4) | (0.3) |
Payments of tax withholdings related to vesting of stock-based awards | (7.5) | (35.4) |
Repurchases of common stock | 0 | (103.4) |
Principal payments of acquisition contingent consideration | (4.2) | (4.7) |
Principal payments of deferred consideration | (33.4) | (35.1) |
Net cash provided by (used for) financing activities | 409.7 | (174) |
Effect of exchange rates on cash | (2.4) | 0.1 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (422.2) | 103.3 |
Cash, cash equivalents and restricted cash at beginning of period | 802.8 | 489.9 |
Cash, cash equivalents and restricted cash at end of period | 380.6 | 593.2 |
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING TRANSACTIONS: | ||
Purchase of property, equipment and intangibles by incurring current liabilities | 2.8 | 31.2 |
Capital expenditures to be reimbursed under a government contract | 1.4 | 13.6 |
Transfer of instrument inventories to fixed assets | 12.1 | 0 |
Reduction of other current liabilities upon issuance of restricted share units | $ 2.9 | $ 2 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 03, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Organization and Business On May 27, 2022, pursuant to a Business Combination Agreement entered into as of December 22, 2021 (the “BCA”), by and among Quidel Corporation (“Quidel”), Ortho Clinical Diagnostics Holdings plc (“Ortho”), QuidelOrtho ™ Corporation (formerly Coronado Topco, Inc.) (“QuidelOrtho” and collectively with its subsidiaries, the “Company”), Orca Holdco, Inc., Laguna Merger Sub, Inc. (“U.S. Merger Sub”), and Orca Holdco 2, Inc., Quidel and Ortho consummated a business combination (the “Combinations”) by way of (i) a scheme of arrangement undertaken by Ortho under Part 26 of the U.K. Companies Act 2006 (the “Ortho Scheme”), pursuant to which each issued and outstanding share of Ortho was acquired by a nominee of QuidelOrtho, such that Ortho became a wholly owned subsidiary of QuidelOrtho, and (ii) a merger of U.S. Merger Sub with and into Quidel, with Quidel surviving the merger as a wholly owned subsidiary of QuidelOrtho. The High Court of Justice of England and Wales (the “Court”) sanctioned the Ortho Scheme on May 26, 2022 and a sealed order of the Court was delivered to the Registrar of Companies at Companies House on May 27, 2022, satisfying the final condition to closing. The results of operations of Ortho have been included in our consolidated financial statements from the date of acquisition. See Note 2 for further information related to the Combinations. The Company’s mission is to develop and manufacture accurate and affordable diagnostic testing technologies across the continuum of healthcare testing needs to create better patient outcomes. The Company’s expertise in clinical chemistry, immunoassay and molecular testing helps clinicians and patients make better informed decisions across the globe. The Company’s global infrastructure and commercial reach support its customers across more than 130 countries and territories with quality diagnostics, a broad test portfolio and market leading service. Basis of Presentation The accompanying unaudited Consolidated Financial Statements of the Company h ave been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) for interim financial information and with the general instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain footnotes or other financial information required by GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The information at July 3, 2022, and for the three and six months ended July 3, 2022 and July 4, 2021, is unaudited. For further information, refer to the unaudited Consolidated Financial Statements and notes thereto for the year ended January 2, 2022 included in Quidel’s 2021 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. The Company follows the concept of a fiscal year that ends on the Sunday nearest to the end of the month of December, and fiscal quarters that end on the Sunday nearest to the end of the months of March, June, and September. For 2022 and 2021, the Company’s fiscal year will end or has ended on January 1, 2023 and January 2, 2022, respectively. For 2022 and 2021, the Company’s second quarter ended on July 3, 2022 and July 4, 2021, respectively. The three and six-month periods ended July 3, 2022 and July 4, 2021 each included 13 and 26 weeks, respectively. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related 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. Reclassifications Certain prior period amounts were reclassified to conform to the current period presentation, including separate presentation of Amortization of intangible assets and Interest expense, net, the combination of Selling, marketing and administrative expense, and reclassification of Other current liabilities and Other liabilities, which did not change the reported amounts of Total current liabilities or Total liabilities. Cost of sales, excluding amortization of intangibles for the three and six months ended July 4, 2021 excludes $1.8 million and $3.6 million, respectively, of intangibles amortization expense, formerly included in Cost of sales, which has been reclassified to Amortization of intangible assets. Selling, marketing and administrative expense for the three and six months ended July 4, 2021 excludes $5.0 million and $10.0 million, respectively, of intangibles amortization expense, formerly included in Sales and marketing expense, which has been reclassified to Amortization of intangible assets. The reclassifications did not have an impact on net assets, Operating income, Net income, Basic or Diluted earnings per share, or cash flows. Recent Accounting Pronouncements In October 2021, the Financial Accounting Standards Board issued guidance codified in Accounting Standards Update 2021-08, Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers . Under new guidance, an acquirer is required to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers . For public business entities, this guidance is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company early adopted the guidance during the first quarter of 2022 with no material impact to the Company’s unaudited Consolidated Financial Statements. Significant Accounting Policies During the six months ended July 3, 2022, there have been no changes to the Company’s significant accounting policies as described in Quidel’s 2021 Annual Report on Form 10-K, except the addition of certain policies related to the Combinations which are discussed below and within the notes. Business Combinations The cost of an acquired business is assigned to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of the estimated fair values at the date of acquisition. We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including, but not limited to, an income approach and a market approach such as the estimation of future cash flows of the acquired business and current selling prices of similar assets. Fair value of the assets acquired and liabilities assumed, including intangible assets, in-process research and development (IPR&D), and contingent payments, are measured based on the assumptions and estimations with regards to variable factors such as the amount and timing of future cash flows for the asset or liability being measured, appropriate risk-adjusted discount rates, nonperformance risk, or other factors that market participants would consider. Upon acquisition, we determine the estimated economic lives of the acquired intangible assets for amortization purposes, which are based on the underlying expected cash flows of such assets. When applicable, adjustments to inventory are based on the fair market value of inventory and amortized into income based on the period in which the underlying inventory is sold. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that is not individually identified and separately recognized. Actual results may vary from projected results and assumptions used in the fair value assessments. Defined benefit plans and other post-employment benefits In connection with the Combinations, the Company assumed Ortho’s defined benefit plans in certain countries and a retiree healthcare reimbursement plan for certain U.S. employees. Defined benefit plans specify an amount of pension benefit that an employee will receive on retirement, usually dependent on factors such as age, years of service and compensation. The net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of the future benefits that employees have earned in return for their service in the current and prior periods. These benefits are then discounted to determine the present value of the obligations and are then adjusted for the impact of any unamortized prior service costs. The net obligation is then determined with reference to the fair value of the plan assets (if any). The discount rate used is the yield on bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates approximating the terms of the obligations. The calculations are performed by qualified actuaries using the projected unit credit method. |
Business Combination
Business Combination | 6 Months Ended |
Jul. 03, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Business Combination On May 27, 2022, pursuant to the BCA, Quidel and Ortho consummated the Combinations and each of Quidel and Ortho became a wholly owned subsidiary of QuidelOrtho. As a result of the Combinations, QuidelOrtho became the successor issuer to Quidel. The Combinations have been accounted for as a business combination using the acquisition method of accounting in conformity with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations , with Quidel considered the accounting and the legal acquirer. The Combinations enhance the Company’s revenue profile and expand the Company’s geographic footprint and product diversity. The Combinations were completed for total consideration of approximately $4.3 billion, which includes the fair value of equity issued based on the May 26, 2022 closing price of $99.60 per share of Quidel common stock. Former Ortho shareholders received $7.14 in cash and 0.1055 shares of QuidelOrtho common stock for each Ortho ordinary share. The total purchase consideration was calculated as follows (in millions, except value per share data and Ortho Exchange Ratio): Total Ortho shares subject to exchange 237.487 Ortho Exchange Ratio 0.1055 QuidelOrtho shares issued 25.055 Value per Quidel share as of May 26, 2022 $ 99.60 Fair value of stock consideration $ 2,495.5 Fair value of replacement equity awards (1) 47.9 Cash consideration (2) 1,747.7 Total purchase consideration $ 4,291.1 (1) Represents the fair value of replacement stock options (which include options with time-based, performance-based, and both performance- and market-based vesting conditions), restricted stock units (“RSUs”) and restricted stock outstanding as of May 27, 2022 that are attributable to service prior to the Combinations. The terms of the replacement awards are substantially similar to the former Ortho equity awards for which they were exchanged. The portion of the fair value of the replacement equity awards attributable to service after the Combinations is $46.6 million and will be recognized as compensation expense based on the vesting terms of the replacement equity awards. (2) Represents cash consideration of $7.14 per share paid to Ortho shareholders and holders of vested Ortho stock options on the closing date of the Combinations for 237.5 million outstanding Ortho shares and 7.3 million vested Ortho stock options. The Company funded the cash portion of the purchase price with cash on its balance sheet and a portion of the Term Loan (as defined in Note 8) proceeds from the Financing (as defined in Note 8). See Note 8 for further information regarding the Company’s debt. The components of the preliminary purchase price allocation on the closing date of the Combinations are as follows (in millions): Cash and cash equivalents $ 234.5 Accounts receivable 240.6 Inventories 386.8 Property, plant and equipment 767.5 Goodwill 2,291.3 Intangible assets 3,133.0 Prepaid expenses and other assets 287.9 Total assets 7,341.6 Accounts payable (135.0) Accrued payroll and related expenses (80.7) Long-term borrowings, including current portion (1) (2,268.4) Deferred tax liability (215.4) Other current and non-current liabilities (351.0) Total liabilities (3,050.5) Total purchase consideration $ 4,291.1 (1) Immediately following the closing of the Combinations, the Company repaid long-term borrowings assumed, which consisted of $1,608.4 million aggregate principal amount related to Ortho’s Dollar Term Loan and Euro Term Loan Facilities, $240.0 million aggregate principal amount of 7.375% Senior Notes due 2025 and $405.0 million aggregate principal amount of 7.250% Senior Notes due 2028. The Senior Notes outstanding were fully discharged following the Combinations. The Company recorded a $23.5 million loss on extinguishment in connection with the Combinations, representing the difference between the reacquisition value, inclusive of $35.9 million of redemption premium, and the net carrying value of the extinguished debt. The fair value estimates for the assets acquired and liabilities assumed were based on preliminary calculations, and the Company’s estimates and assumptions are subject to change, including the valuation of inventory, property, plant and equipment, intangible assets, income taxes and legal contingencies, among other items, to reflect any additional information related to facts and circumstances that existed as of the closing date of the Combinations that, if known, would have affected the measurement of the amounts recognized as of that date. The Company is continuing to obtain and evaluate information relevant to the estimated future cash flows to value certain intangible assets, as well as replacement cost and relevant market transaction information to value acquired plant, property, and equipment. As a result, the preliminary related amounts presented above may change. The Company expects to finalize the valuation as soon as practicable, but no later than one year after the closing date of the Combinations. Inventories acquired included raw materials, work in progress and finished goods. Inventories were recorded at their estimated fair values. The inventory was valued at the estimated selling price less the estimated costs to be incurred to complete and sell the inventory, the associated margins on these activities and holding costs. A preliminary step-up in value of inventory of $64.1 million was recorded in connection with the Combinations. The step-up value will be recorded in Cost of sales, excluding amortization of intangibles in the Consolidated Statements of Income as the inventory is sold to customers and is expected to be fully recognized in approximately six months. In each of the three and six months ended July 3, 2022, $11.2 million of the fair value step-up of inventory was recognized in the unaudited Consolidated Statements of Income. Goodwill represents the excess of the total purchase consideration over the estimated fair value of the net assets acquired, and is primarily attributable to synergies which are expected to expand the Company’s revenue profile and product diversity, as well as Ortho’s assembled workforce. Goodwill is not deductible for tax purposes. The preliminary assignment of goodwill by reportable segment is as follows (in millions): North America $ 1,172.9 EMEA 436.3 China 140.7 Other 541.4 $ 2,291.3 The following table sets forth the amounts assigned to the identifiable intangible assets acquired (in millions, except years): Intangible Asset Amortization period Fair value of assets acquired Customer relationships 20 years $ 1,679.0 Developed technology 15 years 903.0 Trademarks 15 years 373.0 In-process research and development Not amortized 178.0 $ 3,133.0 The fair value of customer relationships and in-process research and development (“IPR&D”) was estimated using the Multi-Period Excess Earnings Method, which is a form of the income approach. The significant assumptions include: (i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset, contributory asset charges and the applicable tax rate, and (ii) the discount rate. The fair value of developed technology and trademarks was estimated using the Relief from Royalty Method, which is another form of the income approach. The significant assumptions include: (i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset, the probability of use of the asset, the royalty rate and the applicable tax rate, and (ii) the discount rate. Intangible assets are amortized on a straight-line basis over the amortization periods noted above, which reflects the estimated useful life of the underlying assets. The amortization of IPR&D will begin at the related product launch and will be tested annually for potential impairment. In the three and six months ended July 3, 2022, the Company incurred $43.7 million and $45.9 million, respectively, of transaction costs related to the Combinations, which primarily consisted of financial advisory, legal, accounting and valuation-related expenses. These expenses were recorded in Acquisition and integration costs in the unaudited Consolidated Statements of Income. The following unaudited supplemental pro forma financial information shows the combined results of operations of the Company as if the Combinations had occurred on January 4, 2021, the beginning of the periods presented: (In millions) Three Months Ended Six Months Ended July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Pro forma total revenues $ 898.5 $ 669.1 $ 2,400.9 $ 1,551.2 Pro forma net (loss) income 22.3 (13.0) 500.8 116.7 This unaudited supplemental pro forma financial information is presented for information purposes only and is not indicative of the results of operations that would have been achieved had the Combinations been completed at the beginning of fiscal year 2021. In addition, the unaudited supplemental pro forma financial information is not a projection of the Company’s future results of operations, nor does it reflect the expected realization of any synergies or cost savings associated with the Combinations. The unaudited supplemental pro forma financial information includes adjustments for: • Incremental intangible assets amortization expense to be incurred of $6.3 million, $15.5 million, $8.8 million and $17.6 million in the three and six months ended July 3, 2022 and the three and six months ended July 4, 2021, respectively, based on the preliminary fair values of the identifiable intangible assets acquired; • Incremental cost of sales related to the fair value step-up of inventory which is reflected by an adjustment to decrease expense by $11.2 million in each of the three and six months ended July 3, 2022 and an adjustment to increase expense by $32.0 million and $64.1 million in the three and six months ended July 4, 2021, respectively; • Decreases in interest expense of $4.5 million, $11.2 million, $6.7 million and $20.6 million in the three and six months ended July 3, 2022 and the three and six months ended July 4, 2021, respectively, associated with the issuance of debt to finance the Combinations and to repay Ortho’s then-outstanding indebtedness, including the net impact of the removal of the amortization of the discount on Ortho’s indebtedness and change in amortization of deferred financing fees; • The removal of $50.3 million of loss on extinguishment of debt from Ortho’s results for the six months ended July 4, 2021 and the reclassification of $24.0 million of loss on extinguishment of debt incurred during each of the three and six months ended July 3, 2022 to the six months ended July 4, 2021; • The reclassification of $12.8 million of expense related to the accelerated vesting of certain stock awards of Ortho’s former Chief Executive Officer from the three and six months ended July 3, 2022 to the six months ended July 4, 2021; and • Tax impacts related to the above adjustments. From the closing date of the Combinations through July 3, 2022, the acquired results of operations of Ortho contributed total revenues of $213.7 million and net loss of $40.1 million to the Company’s consolidated results, which included amortization of acquired intangible assets of $14.1 million and recognition in Cost of sales, excluding amortization of intangibles of the fair value step-up of inventory of $11.2 million. |
Computation of Earnings Per Sha
Computation of Earnings Per Share | 6 Months Ended |
Jul. 03, 2022 | |
Earnings Per Share [Abstract] | |
Computation of Earnings Per Share | Computation of Earnings Per Share Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of shares of common stock outstanding. Diluted EPS is computed based on the sum of the weighted-average number of shares of common stock and potentially dilutive shares of common stock outstanding during the period. Potentially dilutive shares of common stock consist of shares issuable from stock options, unvested RSUs and restricted stock. Potentially dilutive shares of common stock from outstanding stock options and unvested RSUs are determined using the average share price for each period under the treasury stock method. The following table presents the calculation of the weighted-average shares used in computing basic and diluted EPS: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Basic weighted-average shares of common stock outstanding 52.2 41.7 47.0 41.6 Dilutive potential shares issuable from stock options and unvested RSUs 0.7 0.7 0.7 0.9 Diluted weighted-average shares of common stock outstanding 52.9 42.4 47.7 42.5 Potentially dilutive shares excluded from calculation due to anti-dilutive effect 1.4 0.2 1.3 0.1 Potentially dilutive shares excluded from the calculation above represent stock options when the combined exercise price and unrecognized stock-based compensation are greater than the average market price for the Company’s common stock because their effect is anti-dilutive. |
Revenue
Revenue | 6 Months Ended |
Jul. 03, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Contract Balances Timing of revenue recognition may differ from timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing a customer (“contract asset”). Contract assets are included within Prepaid expenses and other current assets or Other assets in the Company’s unaudited Consolidated Balance Sheets and are transferred to accounts receivable when the right to payment becomes unconditional. The balance of contract assets recorded in the Company’s unaudited Consolidated Balance Sheets were as follows: (In millions) July 3, 2022 Prepaid expenses and other current assets $ 54.4 Other assets 0.5 Total contract assets $ 54.9 The contract asset balance as of July 3, 2022 consists of the following components, all of which were acquired by the Company in connection with the Combinations; therefore, no balance existed at January 2, 2022: • a customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $10.3 million, of which $9.8 million as of July 3, 2022 was recorded in Prepaid expenses and other current assets and $0.5 million was included in Other assets; and • contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents; however, control of the goods transfers to the customers upon shipment or delivery of the products, as determined under the terms of the contract. Using the expected value method, the Company estimates the number of reagents that will generate a reportable result. The Company records the revenue upon shipment and an associated contract asset, and relieves the contract asset upon completion of the invoicing. The balance of the contract asset related to these arrangements was $44.6 million as of July 3, 2022 and was recorded in Prepaid expenses and other current assets. The Company reviews contract assets for expected credit losses resulting from the collectability of customer accounts. Expected losses are established based on historical losses, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts. No credit losses related to contract assets were recognized during the three months ended July 3, 2022. The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”). The Company’s contract liabilities consist of deferred revenue primarily related to customer service contracts. The Company classifies deferred revenue as current or non-current based on the timing of the transfer of control or performance of the service. The balance of the Company’s current deferred revenue was $33.2 million as of July 3, 2022, and $1.9 million as of January 2, 2022. The Company has one arrangement with a customer where the revenue is expected to be recognized beyond one year. The balance of the deferred revenue included in long-term liabilities was $9.7 million as of July 3, 2022 and was included in Other liabilities in the unaudited Consolidated Balance Sheets. Grifols / Novartis Vaccines and Diagnostics, Inc. In connection with the Combinations, the Company acquired the ongoing collaboration arrangement (the “Joint Business”) between Ortho and Grifols Diagnostic Solutions, Inc. (“Grifols”), under which Ortho and Grifols pursue a collaboration relating to Ortho’s Hepatitis and HIV diagnostics business. The governance of the Joint Business is shared through a supervisory board made up of equal representation by Ortho and Grifols, which is responsible for all significant decisions relating to the Joint Business that are not exclusively assigned to either Ortho or Grifols, as defined in the Joint Business agreement. The Company’s portion of the pre-tax net profit shared under the Joint Business was $5.6 million during each of the three and six months ended July 3, 2022. This includes the Company’s portion of the pre-tax net profit of $3.6 million during each of the three and six months ended July 3, 2022 on sales transactions with third parties where the Company is the principal. The Company recognized revenues, cost of sales, excluding amortization of intangibles, and operating expenses, on a gross basis on these sales transactions in their respective lines in the unaudited Consolidated Statements of Income. The Company’s portion of the pre-tax net profit also includes revenue of $2.0 million from collaboration and royalty agreements during the three and six months ended July 3, 2022, which is presented on a net basis within Total revenues. Disaggregation of Revenue Following the Combinations, the Company generates product revenue in the following business units: • Labs—Focused on (i) clinical chemistry laboratory instruments and tests, which measure target chemicals in bodily fluids for the evaluation of health and the clinical management of patients, (ii) immunoassay laboratory instruments and tests, which measure proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health, (iii) testing to detect and monitor disease progression across a broad spectrum of therapeutic areas, (iv) other product revenues primarily from contract manufacturing, (v) specialized diagnostic solutions and (vi) collaboration and license agreements pursuant to which the Company derives collaboration and royalty revenues. • Transfusion Medicine—Focused on (i) immunohematology instruments and tests used for blood typing to help ensure patient-donor compatibility in blood transfusions and (ii) donor screening instruments and tests used for blood and plasma screening for infectious diseases for customers primarily in the U.S. • Point-of-Care—Focused on tests to provide rapid results across a broad continuum of point-of-care settings, including tests for professional healthcare providers and tests that can be taken at home. Includes (i) tests for a range of benchtop analyzers and (ii) tests that can be visually read. • Molecular Diagnostics—Includes (i) Polymerase Chain Reaction (“PCR”) thermocyclers with reduced process time and ready-to-use reagent configurations and (ii) analyzer and amplification systems with the ability to run multiple assays at one time. The following table summarizes Total revenues by business unit for the three and six months ended July 3, 2022 and July 4, 2021: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Labs $ 157.4 $ 10.4 $ 170.7 $ 21.3 Transfusion Medicine 68.2 — 68.2 — Point-of-Care 367.1 131.8 1,310.1 435.9 Molecular Diagnostics 20.7 34.4 66.7 94.7 Total revenues $ 613.4 $ 176.6 $ 1,615.7 $ 551.9 Concentration of Revenue and Credit Risk The Company had sales to individual customers in excess of 10% of Total revenues as follows: Six Months Ended July 3, 2022 July 4, 2021 Customer: A 37 % — % B 11 % 18 % C 6 % 11 % 54 % 29 % As of July 3, 2022 and January 2, 2022, customers with balances due in excess of 10% of Accounts receivable, net totaled $73.8 million and $267.3 million, respectively. For the six months ended July 3, 2022 and July 4, 2021, sales of COVID-19 products accounted for 70% and 64% of Total revenues, respectively. For the six months ended July 3, 2022 and July 4, 2021, sales of influenza products accounted for 8% and 3% of Total revenues, respectively. |
Balance Sheet Account Details
Balance Sheet Account Details | 6 Months Ended |
Jul. 03, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Account Details | Balance Sheet Account Details Cash, Cash Equivalents and Restricted Cash (In millions) July 3, 2022 January 2, 2022 Cash and cash equivalents $ 379.0 $ 802.8 Restricted cash included in Other assets 1.6 — Cash, cash equivalents and restricted cash $ 380.6 $ 802.8 Marketable Securities The following table is a summary of marketable securities: July 3, 2022 January 2, 2022 (In millions) Amortized Cost Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Losses Fair Value Corporate bonds $ 45.5 $ (0.7) $ 44.8 $ 22.3 $ — $ 22.3 Commercial paper 2.2 — 2.2 — — — Corporate asset-backed securities 5.6 (0.1) 5.5 3.4 — 3.4 Total marketable securities, current 53.3 (0.8) 52.5 25.7 — 25.7 Corporate bonds, non-current 6.5 — 6.5 26.8 (0.1) 26.7 Corporate asset-backed securities, non-current 6.9 (0.1) 6.8 11.2 — 11.2 Foreign and other 1.9 — 1.9 — — — Total marketable securities $ 68.6 $ (0.9) $ 67.7 $ 63.7 $ (0.1) $ 63.6 Accounts Receivable, Net Accounts receivables primarily consist of trade accounts receivables with maturities of one year or less and are presented net of reserves: (In millions) July 3, 2022 January 2, 2022 Accounts receivable $ 445.5 $ 430.4 Allowance for contract rebates and discounts (59.7) (50.7) Allowance for doubtful accounts (6.6) (1.7) Total accounts receivable, net $ 379.2 $ 378.0 Inventories Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Inventories consisted of the following: (In millions) July 3, 2022 January 2, 2022 Raw materials $ 219.7 $ 103.2 Work-in-process (materials, labor and overhead) 75.7 36.1 Finished goods (materials, labor and overhead) 296.8 59.5 Total inventories $ 592.2 $ 198.8 Inventories $ 552.7 $ 198.8 Other assets (1) 39.5 — Total inventories $ 592.2 $ 198.8 (1) Other assets includes inventory expected to remain on hand beyond one year. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: (In millions) July 3, 2022 January 2, 2022 Other receivables $ 39.1 $ 15.8 Contract assets 54.4 — Prepaid expenses 45.3 14.6 Income taxes and other tax receivables 42.0 — Derivatives 13.8 0.1 Other 1.1 4.5 Total prepaid expenses and other current assets $ 195.7 $ 35.0 Other Current Liabilities Other current liabilities consist of the following: (In millions) July 3, 2022 January 2, 2022 Accrued commissions and rebates $ 39.7 $ 15.9 Deferred consideration 38.1 41.9 Deferred revenue 33.2 1.9 Operating lease liabilities 22.2 10.0 Accrued other taxes payable 16.9 10.2 Derivatives 11.0 0.3 Contingent consideration 0.1 6.0 Payables under transition services agreements — 10.9 Other 97.7 17.3 Total other current liabilities $ 258.9 $ 114.4 |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 03, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company calculates its interim income tax provision in accordance with ASC 270, Interim Reporting , and ASC 740, Accounting for Income Taxes . At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to its ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur. For the three months ended July 3, 2022 and July 4, 2021, the Company recognized a Provision for income taxes of $23.6 million and $2.6 million, respectively, in relation to Income before provision for income taxes of $42.9 million and $21.7 million, respectively, resulting in effective tax rates of 55% and 12%, respectively. As compared to the federal statutory rate of 21%, the effective tax rates in both periods were impacted primarily by income taxes owed in U.S. states. For the three months ended July 4, 2021, the effective tax rate was partially offset by benefits from the discrete impact of excess tax deductions from stock-based compensation, R&D credits and corporate deductions attributable to Foreign Derived Intangible Income (“FDII”), which were immaterial to the effective tax rate in the three months ended July 3, 2022. For the six months ended July 3, 2022 and July 4, 2021, the Company recognized a Provision for income taxes of $164.3 million and $46.3 million, respectively, in relation to Income before provision for income taxes of $663.5 million and $243.5 million, respectively, resulting in effective tax rates of 25% and 19%, respectively. As compared to the federal statutory rate of 21%, the effective tax rates in both periods were impacted primarily by income taxes owed in U.S. states. For the six months ended July 4, 2021, the effective tax rate was partially offset by benefits from the discrete impact of excess tax deductions from stock-based compensation, R&D credits and corporate deductions attributable to FDII, which were immaterial to the effective tax rate in the six months ended July 3, 2022. The Company is subject to periodic audits by domestic and foreign tax authorities. Due to the carryforward of unutilized credits, the Company’s federal tax years from 2012 and forward are subject to examination by the U.S. authorities. The Company’s state and foreign tax years for 2001 and forward are subject to examination by applicable tax authorities. The Company believes that it has appropriate support for the income tax positions taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax laws applied to the facts of each matter. The balance of unrecognized tax benefits at July 3, 2022, not including interest and penalties, was $45.5 million, of which $33.2 million would affect the effective income tax rate in future periods, if recognized. The Company also recognizes interest and penalties related to unrecognized tax benefits in tax expense. At July 3, 2022, the Company had approximately $8.4 million of interest and penalties accrued related to unrecognized tax benefits. The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, will decrease by $3.0 million. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jul. 03, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Issuances of Common Stock A summary of the status of stock option activity for the six months ended July 3, 2022 is as follows: (In millions, except price data) Shares Weighted-average Outstanding at January 2, 2022 0.7 $ 62.71 Granted 0.2 100.60 Stock options assumed in the Combinations 1.2 96.10 Exercised (0.1) 37.75 Outstanding at July 3, 2022 2.0 $ 86.18 A summary of the status of RSU activity for the six months ended July 3, 2022 is as follows: (In millions, except price data) Shares Weighted-average Non-vested January 2, 2022 0.6 $ 95.81 Granted 0.7 98.38 Vested (0.2) 80.55 Non-vested at July 3, 2022 1.1 $ 100.12 Stock-Based Compensation The expense related to the Company’s stock-based compensation plans included in the accompanying unaudited Consolidated Statements of Income was as follows: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Cost of sales $ 0.6 $ 0.6 $ 1.3 $ 1.2 Research and development 1.3 0.9 2.4 1.9 Sales, marketing and administrative 8.0 4.3 13.3 8.6 Acquisition and integration costs 6.0 — 6.3 — Total stock-based compensation expense $ 15.9 $ 5.8 $ 23.3 $ 11.7 As of July 3, 2022, total unrecognized compensation expense was $105.1 million, which is expected to be recognized over a weighted-average period of approximately 2.7 years. The estimated fair value of each stock option was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the option grants, including grants related to options assumed in the Combinations presented separately: Assumed on Six Months Ended May 27, 2022 (1) July 3, 2022 July 4, 2021 Risk-free interest rate 2.28 % 1.99 % 0.42 % Expected option life (in years) 1.78 4.89 5.01 Volatility rate 64 % 58 % 53 % Dividend rate 0 % 0 % 0 % Weighted-average grant date fair value $40.57 $50.86 $115.78 (1) The replacement stock options granted to Ortho option holders on the Combinations date were issued consistent with the vesting conditions of the replaced award. The fair value on the Combinations date attributed to post-combination service, adjusted for estimated forfeitures, is recognized as expensed on a straight-line basis over the remaining vesting period. The fair value of the replacement stock options were valued utilizing the Black-Scholes option valuation model. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jul. 03, 2022 | |
Industry And Geographic Information [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information In connection with the Combinations, the manner in which the chief operating decision maker (“CODM”) reviews the Company’s performance and allocates resources changed, resulting in three geographically-based reportable segments: North America; Europe, the Middle East and Africa (“EMEA”); and China. Although all three segments are engaged in the marketing, distribution and sale of diagnostic instruments and assays for hospitals, retailers, distributors, laboratories and/or blood and plasma centers worldwide, each region is managed separately to better align with the market dynamics of the specific geographic region. Latin America, Japan and Asia Pacific are immaterial operating segments that are not considered reportable segments and are included in “Other.” Previously, the Company operated as a single reportable segment. Prior periods have been revised to align with the current period presentation. Total revenues by reportable segment are as follows: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 North America $ 438.2 $ 122.0 $ 1,399.7 $ 435.4 EMEA 42.1 17.9 57.3 39.0 China 73.6 17.8 82.3 31.3 Other 59.5 18.9 76.4 46.2 Total revenues $ 613.4 $ 176.6 $ 1,615.7 $ 551.9 Beginning in the second quarter of 2022, in connection with the Combinations, the basis by which the Company measures segment profit or loss changed to Segment Adjusted EBITDA in order to manage the Company’s business to better align with the market dynamics of the specific geographic regions in which the Company operates. Prior periods have been revised to align with the current period presentation. The following table sets forth the reconciliations of Segment Adjusted EBITDA to Income before provision for income taxes for the three and six months ended July 3, 2022 and July 4, 2021: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 North America $ 285.0 $ 94.4 $ 1,029.9 $ 374.8 EMEA 12.8 7.3 16.3 18.3 China 35.4 9.3 38.7 15.4 Other 24.5 7.9 34.1 28.1 Total Segment Adjusted EBITDA 357.7 118.9 1,119.0 436.6 Corporate (1) (139.5) (81.1) (259.9) (161.3) Depreciation and amortization (47.5) (12.3) (62.8) (24.6) Interest expense, net (10.3) (1.4) (11.3) (3.4) Acquisition and integration costs (80.2) (1.1) (83.2) (1.8) Loss on extinguishment of debt (24.0) — (24.0) — Unwind inventory fair value adjustment (11.2) — (11.2) — Amortization of deferred cloud computing (1.3) (1.2) (2.3) (1.9) Derivative mark-to-market gain 1.0 — 1.0 — Loss on investments (0.8) — (0.8) — Employee compensation charges and other costs (0.5) — (0.5) — EU medical device regulation transition costs (2) (0.4) — (0.4) — Change in fair value of acquisition contingencies (0.1) (0.1) (0.1) (0.1) Income before provision for income taxes $ 42.9 $ 21.7 $ 663.5 $ 243.5 (1) Primarily consists of costs related to executive and staff functions, including certain finance, human resources, manufacturing and information technology (“IT”) functions, which benefit the Company as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. The Company’s corporate function also includes debt and stock-based compensation associated with all employee stock-based awards. (2) Represents incremental consulting costs and research and development (“R&D”) manufacturing site costs to align compliance of Ortho’s existing, on-market products that were previously registered under the European In Vitro Diagnostics Directive regulatory framework with the requirements under the EU’s In Vitro Diagnostic Regulation, which generally apply from May 2022. The CODM does not review capital expenditures, total depreciation and amortization or assets by segment, and therefore this information has been excluded as it does not comprise part of management’s key performance metrics. |
Long-term Borrowings
Long-term Borrowings | 6 Months Ended |
Jul. 03, 2022 | |
Debt Disclosure [Abstract] | |
Long-term Borrowings | Long-term Borrowings The components of borrowings were as follows: (In millions) July 3, 2022 January 2, 2022 Term Loan $ 2,750.0 $ — Revolving Credit Facility — — Financing lease obligation 1.2 0.7 Other long-term borrowings 1.9 — Unamortized deferred financing costs (12.0) — Total borrowings 2,741.1 0.7 Less: current portion (207.8) (0.3) Long-term borrowings $ 2,533.3 $ 0.4 On May 27, 2022, the Company entered into a credit agreement (the “Credit Agreement”) by and among the Company, as borrower, Bank of America, N.A., as administrative agent and swing line lender (“Bank of America”), and the other lenders and L/C issuers party thereto (together with Bank of America, the “Lenders”). Pursuant to the Credit Agreement and in connection with the consummation of the Combinations, the Lenders provided the Company with a $2,750.0 million senior secured term loan facility (the “Term Loan”) and a $750.0 million revolving credit facility (the “Revolving Credit Facility” and with the Term Loan, the “Financing”). Effective August 4, 2022, pursuant to the Increase Joinder No. 1 to the Credit Agreement, the Revolving Credit Facility increased by $50.0 million to $800.0 million. The Financing is guaranteed by certain material domestic subsidiaries of the Company (the “Guarantors”) and is secured by liens on substantially all of the assets of the Company and the Guarantors, excluding real property and certain other types of excluded assets. Loans under the Credit Agreement will bear interest at a rate per annum equal to the Term SOFR or Base Rate plus the Applicable Rate (each as defined in the Credit Agreement). On the closing date of the Credit Agreement, the Company borrowed the entire amount of the Term Loan, and the effective interest rate as of July 3, 2022 was 2.97%. As of July 3, 2022, letters of credit issued under the Revolving Credit Facility totaled $33.2 million, which reduced the available amount under the Revolving Credit Facility to $716.8 million. In connection with the Credit Agreement, the Company incurred $15.2 million of debt issuance costs, of which $11.9 million was related to the Term Loan and $3.3 million was related to the Revolving Credit Facility. Debt issuance costs related to the issuance of the Term Loan were recorded as a reduction of the principal amount of the borrowings and are being amortized using the effective interest method as a component of Interest expense, net over the life of the Term Loan. Debt issuance costs related to the Revolving Credit Facility were recorded as Other assets and are being amortized on a straight-line basis over the term of the Revolving Credit Facility. The Term Loan is subject to quarterly amortization of the principal amount on the last business day of each fiscal quarter of the Company (commencing on September 30, 2022) in such amounts as are set forth in the Credit Agreement. The Term Loan and the Revolving Credit Facility will mature on May 27, 2027. The Company must prepay loans outstanding under the Credit Agreement in an amount equal to the Net Cash Proceeds (as defined in the Credit Agreement) from (i) certain property dispositions and (ii) the receipt of certain other amounts not in the ordinary course of business, such as certain insurance proceeds and condemnation awards, in each case, if not reinvested within a specified time period as contemplated in the Credit Agreement. The Credit Agreement contains affirmative and negative covenants that are customary for credit agreements of this nature. The negative covenants include, among other things, limitations on asset sales, mergers, indebtedness, liens, investments and transactions with affiliates. The Credit Agreement contains two financial covenants: (i) a maximum Consolidated Leverage Ratio (as defined in the Credit Agreement) as of the last day of each fiscal quarter of (a) 4.50 to 1.00 for the first four fiscal quarters ending after the closing date of the Credit Agreement (the “Initial Measurement Period”), (b) 4.00 to 1.00 for the first four fiscal quarters ending after the Initial Measurement Period and (c) 3.50 to 1.00 for each fiscal quarter thereafter; and (ii) a minimum Consolidated Interest Coverage Ratio (as defined in the Credit Agreement) of 3.00 to 1.00 as of the end of any fiscal quarter for the most recently completed four fiscal quarters. The Company was in compliance with the financial covenants as of July 3, 2022. The Credit Agreement was entered into in connection with the Combinations in order to fund a portion of the cash portion of the purchase price as well as repay substantially all of Ortho’s then-outstanding indebtedness. See Note 2 for more information related to the Combinations. In connection with the closing of the Combinations, Quidel terminated its previous $175.0 million revolving credit facility and related credit agreement on May 27, 2022, which did not have an outstanding balance. The following table provides the detailed amounts within Interest expense, net for the three and six months ended July 3, 2022 and July 4, 2021: Three Months Ended Six Months Ended July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Term Loan $ 8.4 $ — $ 8.4 $ — Revolving Credit Facility 0.3 — 0.4 0.1 Amortization of deferred financing costs 0.2 0.1 0.3 0.2 Derivative instruments and other 1.8 1.4 2.9 3.3 Interest income (0.4) (0.1) (0.7) (0.2) Interest expense, net $ 10.3 $ 1.4 $ 11.3 $ 3.4 |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 03, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesFrom time to time, the Company is involved in litigation and other legal proceedings, including matters related to product liability claims, commercial disputes and intellectual property claims, as well as regulatory, employment, and other claims related to our business. The Company accrues for legal claims when, and to the extent that, amounts associated with the claims become probable and are reasonably estimable. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from these matters are inherently difficult to predict. The actual costs of resolving legal claims may be substantially higher or lower than the amounts accrued for those claims. For those matters as to which we are not able to estimate a possible loss or range of loss, we are not able to determine whether the loss will have a material adverse effect on our business, financial condition or results of operations or liquidity.Management believes that all such current legal actions, in the aggregate, will not have a material adverse effect on the Company. However, the resolution of, or increase in any accruals for, one or more matters may have a material adverse effect on the Company’s results of operations and cash flows. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 03, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods: July 3, 2022 January 2, 2022 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 2.5 $ 4.2 $ — $ 6.7 $ 204.7 $ 6.6 $ — $ 211.3 Marketable securities — 67.7 — 67.7 — 63.6 — 63.6 Derivative assets — 25.9 — 25.9 — 0.1 — 0.1 Total assets measured at fair value $ 2.5 $ 97.8 $ — $ 100.3 $ 204.7 $ 70.3 $ — $ 275.0 Liabilities: Derivative liabilities $ — $ 12.2 $ — $ 12.2 $ — $ 0.3 $ — $ 0.3 Contingent consideration — — 0.1 0.1 — — 6.1 6.1 Deferred consideration — 38.1 — 38.1 — 78.4 — 78.4 Total liabilities measured at fair value $ — $ 50.3 $ 0.1 $ 50.4 $ — $ 78.7 $ 6.1 $ 84.8 There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the three and six-month periods ended July 3, 2022 and the year ended January 2, 2022. Cash equivalents consist of funds held in money market accounts that are valued using quoted prices in active markets for identical instruments and highly liquid corporate debt securities with maturities within three months from purchase. Marketable securities consist of investment-grade corporate and government debt securities, corporate asset-backed securities and commercial paper. Derivative financial instruments are based on observable inputs that are corroborated by market data. Observable inputs include broker quotes, daily market foreign currency rates and forward pricing curves . In connection with the acquisition of the B-type Natriuretic Peptide (“BNP”) assay business run on Beckman Coulter analyzers (“BNP Business”) from Alere Inc., the Company will pay annual installments of up to $48.0 million each year through April 2023. The fair value of the payments treated as deferred consideration i s calculated based on the net present value of cash payments using an estimated borrowing rate based on a quoted price for a similar liability. The fair value of the payments treated as contingent consideration is calculated using a discounted probability weighted valuation model. Discount rates used in such calculation are a significant assumption that are not observed in the market and, therefore, the resulting fair value represents a Level 3 measurement. Changes in estimated fair value of contingent consideration liabilities from January 2, 2022 through July 3, 2022 were as follows: (In millions) Contingent consideration liabilities Balance at January 2, 2022 $ 6.1 Cash payments (6.0) Balance at July 3, 2022 $ 0.1 Financial Instruments Not Measured at Fair Value The estimated fair value of the Company’s borrowings under the Term Loan was $2,567.8 million at July 3, 2022, compared to the carrying amount, excluding debt issuance costs, of $2,750.0 million. The estimate of fair value is generally based upon the quoted market prices for similar issuances of long-term debt with the same maturities, which is classified as a Level 2 input. As of January 2, 2022, there were no Long-term borrowings outstanding. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jul. 03, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities The Company selectively uses derivative and non-derivative instruments to manage market risk associated with changes in interest rates and foreign currency exchange rates. The use of derivatives is intended for hedging purposes only, and the Company does not enter into derivative transactions for speculative purposes. Credit risk represents the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract. The Company generally enters into master netting arrangements that reduce credit risk by permitting net settlement of transactions with the same counterparty. The Company does not have any derivative instruments with credit-risk related contingent features that would require it to post collateral. Interest Rate Hedging Instruments The Company’s interest rate risk relates primarily to interest rate exposures on variable rate debt, including the Revolving Credit Facility and Term Loan. See Note 8 for additional information on the currently outstanding components of the Revolving Credit Facility and Term Loan. The Company entered into interest rate cap and swap agreements to hedge the related risk of the variability to the Company’s cash flows due to the rates specified for these credit facilities. The Company designates certain interest rate derivative instruments as cash flow hedges, including the outstanding interest rate swap. The Company records gains and losses due to changes in fair value of the derivatives within Other comprehensive (loss) income (“OCI”) and reclassifies these amounts to Interest expense, net in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated. The pre-tax unrealized gain of $3.1 million within OCI as of July 3, 2022 is expected to be reclassified to earnings in the next 12 months. The following table summarizes the Company’s interest rate derivative agreements as of July 3, 2022: Instrument Notional amount (1) (In millions) Description Hedge designation Effective date Expiration date Interest rate cap $ 1,000.0 Interest rate cap amount of 3.4% Non-designated May 29, 2022 December 31, 2023 Interest rate swap $ 1,000.0 Pay 1.58% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge May 29, 2022 December 31, 2023 (1) The notional value of these instruments is expected to be $500.0 million in 2023. Currency Hedging Instruments The Company has currency risk exposures relating primarily to foreign currency denominated monetary assets and liabilities and forecasted foreign currency denominated intercompany and third-party transactions. The Company uses foreign currency forward contracts, option contracts and cross currency swaps to manage its currency risk exposures. The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Singapore Dollar, Swiss Franc and the Thai Baht. The Company designates certain foreign currency forward contracts as cash flow hedges. The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Cost of sales, excluding amortization of intangibles in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated. The pre-tax unrealized loss of $2.4 million within OCI as of July 3, 2022 is expected to be reclassified to earnings in the next 12 months. The Company also enters into foreign currency forward contracts that are not part of designated hedging relationships, which are intended to mitigate exchange rate risk of monetary assets and liabilities and related forecasted transactions. The Company records these non-designated derivatives at mark-to-market with gains and losses recognized currently in earnings within Other expense, net. The following table provides details of the currency hedging instruments outstanding as of July 3, 2022: Description Notional amount Hedge designation Foreign currency forward contracts $ 252.4 Cash Flow Hedge Foreign currency forward contracts 487.0 Non-designated The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of July 3, 2022 and January 2, 2022: (In millions) July 3, 2022 January 2, 2022 Designated cash flow hedges Interest rate derivatives: Other assets $ 12.1 $ — Foreign currency forward contracts: Prepaid expenses and other current assets 9.2 0.1 Other current liabilities 5.8 0.2 Non-designated hedging instruments Interest rate derivatives: Other liabilities 1.2 — Foreign currency forward contracts: Prepaid expenses and other current assets 4.6 — Other current liabilities 5.2 0.1 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jul. 03, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Quotient Limited As a result of the consummation of the Combinations, the Company acquired Ortho’s Letter Agreement (the “Letter Agreement”), entered into in September 2020, with Quotient Limited (“Quotient”), in which Ortho has partnered with Quotient to commercialize, when approved, the next generation product in immunohematology (“IH”), a transfusion diagnostic patient IH microarray intended for use with Quotient’s MosaiQ instruments (the “IH3 Microarray”), that enables a high level of multiplexing and addresses the ultra-high throughput market. Under the Letter Agreement, Ortho will have the right to distribute, market and sell the IH3 Microarrays in the European Economic Area, the U.K. and Switzerland (collectively, the “European Territory”) and the U.S., solely for use in testing the immunohematological profile of the blood of medical patients in the course of their care of treatment. Quotient retains the right to distribute, market and sell the IH3 Microarrays for use in blood donor testing worldwide and in the patient testing market outside of the European Territory and the U.S. Ortho’s rights in respect of the IH3 Microarray are exclusive as long as Ortho satisfies its obligation to meet annual minimum purchase volume requirements in each territory. Under the Letter Agreement, Ortho also has the non-exclusive right to sell and distribute MosaiQ instruments in the U.S. and the European Territory for use in testing the immunohematological profile of blood of medical patients in the course of their care or treatment. Under the Letter Agreement, Ortho is also required to purchase the IH3 Microarrays, and the instruments, controls and reagents required for their use, only from Quotient at specified prices. Ortho is also required to make milestone payments to Quotient as specified milestones and benchmarks are achieved. Ortho will be obligated to make up to $60 million of milestone payments to Quotient upon its achievement of certain regulatory milestones and the achievement by Ortho of commercial sales benchmarks related to MosaiQ , including a milestone payment of up to $25 million upon the achievement by Ortho of certain cumulative gross revenue hurdl es. The Company did not make such payments during the three and six months ended July 3, 2022 and does not anticipate making any such payments for the remainder of fiscal year 2022. Due to the Company’s equity method investment held in Quotient, the Company concluded that Quotient is a related party of the Company. Under a separate supply agreement between Ortho and Quotient, which was also acquired by the Company as a result of the consummation of the Combinations, the Company purchased inventories from a subsidiary of Quotient amounting to $2.1 million during the three and six months ended July 3, 2022. As of July 3, 2022, Accounts payable included amounts related to purchases from the Quotient subsidiary of $2.5 million. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive (Loss) Income | 6 Months Ended |
Jul. 03, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive (Loss) Income | Accumulated Other Comprehensive (Loss) Income The balance of accumulated OCI, net of tax, were as follows for the three and six months ended July 3, 2022: Three Months Ended July 3, 2022 Six Months Ended July 3, 2022 (In millions) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Beginning balance $ 0.1 $ (0.5) $ 0.6 $ 0.2 $ — $ (0.1) $ 0.5 $ 0.4 Current period 4.4 (0.2) (66.1) (61.9) 4.6 (0.6) (66.0) (62.0) Amounts reclassified 1.0 — — 1.0 0.9 — — 0.9 Net change 5.4 (0.2) (66.1) (60.9) 5.5 (0.6) (66.0) (61.1) Ending balance $ 5.5 $ (0.7) $ (65.5) $ (60.7) $ 5.5 $ (0.7) $ (65.5) $ (60.7) Amounts related to the prior year periods were not material for the three and six months ended July 4, 2021. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 03, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Consolidated Financial Statements of the Company h ave been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) for interim financial information and with the general instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain footnotes or other financial information required by GAAP have been condensed or omitted. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The information at July 3, 2022, and for the three and six months ended July 3, 2022 and July 4, 2021, is unaudited. For further information, refer to the unaudited Consolidated Financial Statements and notes thereto for the year ended January 2, 2022 included in Quidel’s 2021 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. The Company follows the concept of a fiscal year that ends on the Sunday nearest to the end of the month of December, and fiscal quarters that end on the Sunday nearest to the end of the months of March, June, and September. For 2022 and 2021, the Company’s fiscal year will end or has ended on January 1, 2023 and January 2, 2022, respectively. For 2022 and 2021, the Company’s second quarter ended on July 3, 2022 and July 4, 2021, respectively. The three and six-month periods ended July 3, 2022 and July 4, 2021 each included 13 and 26 weeks, respectively. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related 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. |
Regulatory Accounting | Significant Accounting Policies During the six months ended July 3, 2022, there have been no changes to the Company’s significant accounting policies as described in Quidel’s 2021 Annual Report on Form 10-K, except the addition of certain policies related to the Combinations which are discussed below and within the notes. |
Business Combinations Policy | Business Combinations The cost of an acquired business is assigned to the tangible and identifiable intangible assets acquired and liabilities assumed on the basis of the estimated fair values at the date of acquisition. We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including, but not limited to, an income approach and a market approach such as the estimation of future cash flows of the acquired business and current selling prices of similar assets. Fair value of the assets acquired and liabilities assumed, including intangible assets, in-process research and development (IPR&D), and contingent payments, are measured based on the assumptions and estimations with regards to variable factors such as the amount and timing of future cash flows for the asset or liability being measured, appropriate risk-adjusted discount rates, nonperformance risk, or other factors that market participants would consider. Upon acquisition, we determine the estimated economic lives of the acquired intangible assets for amortization purposes, which are based on the underlying expected cash flows of such assets. When applicable, adjustments to inventory are based on the fair market value of inventory and amortized into income based on the period in which the underlying inventory is sold. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that is not individually identified and separately recognized. Actual results may vary from projected results and assumptions used in the fair value assessments. |
Pension and Other Postretirement Plans, Pensions, Policy | Defined benefit plans and other post-employment benefitsIn connection with the Combinations, the Company assumed Ortho’s defined benefit plans in certain countries and a retiree healthcare reimbursement plan for certain U.S. employees. Defined benefit plans specify an amount of pension benefit that an employee will receive on retirement, usually dependent on factors such as age, years of service and compensation. The net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of the future benefits that employees have earned in return for their service in the current and prior periods. These benefits are then discounted to determine the present value of the obligations and are then adjusted for the impact of any unamortized prior service costs. The net obligation is then determined with reference to the fair value of the plan assets (if any). The discount rate used is the yield on bonds that are denominated in the currency in which the benefits will be paid and that have maturity dates approximating the terms of the obligations. The calculations are performed by qualified actuaries using the projected unit credit method. |
Government Assistance | Government AssistanceIn connection with the Combinations, the Company acquired a previously established agreement between Ortho and the Biomedical Advanced Research and Development Authority (“BARDA”), a division of the U.S. Department of Health and Human Services, which provided funding for Ortho to build manufacturing space and production support equipment to increase COVID-19 assay production capacity, as well as to build a manufacturing facility to produce certain analyzers needed to support COVID-19 testing. Amounts received from BARDA under this grant are recorded as a reduction to the carrying value of the related assets. A portion of the grant will be for purposes of reimbursement of certain general and administrative expenses related to the project, which will not be capitalized as part of the equipment constructed in connection with the project and will be recorded as a reduction to the related expense. The Company received $10.4 million during the six months ended July 3, 2022, which was recorded as a reduction to the carrying value of the related assets. |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The total purchase consideration was calculated as follows (in millions, except value per share data and Ortho Exchange Ratio): Total Ortho shares subject to exchange 237.487 Ortho Exchange Ratio 0.1055 QuidelOrtho shares issued 25.055 Value per Quidel share as of May 26, 2022 $ 99.60 Fair value of stock consideration $ 2,495.5 Fair value of replacement equity awards (1) 47.9 Cash consideration (2) 1,747.7 Total purchase consideration $ 4,291.1 (1) Represents the fair value of replacement stock options (which include options with time-based, performance-based, and both performance- and market-based vesting conditions), restricted stock units (“RSUs”) and restricted stock outstanding as of May 27, 2022 that are attributable to service prior to the Combinations. The terms of the replacement awards are substantially similar to the former Ortho equity awards for which they were exchanged. The portion of the fair value of the replacement equity awards attributable to service after the Combinations is $46.6 million and will be recognized as compensation expense based on the vesting terms of the replacement equity awards. (2) Represents cash consideration of $7.14 per share paid to Ortho shareholders and holders of vested Ortho stock options on the closing date of the Combinations for 237.5 million outstanding Ortho shares and 7.3 million vested Ortho stock options. The components of the preliminary purchase price allocation on the closing date of the Combinations are as follows (in millions): Cash and cash equivalents $ 234.5 Accounts receivable 240.6 Inventories 386.8 Property, plant and equipment 767.5 Goodwill 2,291.3 Intangible assets 3,133.0 Prepaid expenses and other assets 287.9 Total assets 7,341.6 Accounts payable (135.0) Accrued payroll and related expenses (80.7) Long-term borrowings, including current portion (1) (2,268.4) Deferred tax liability (215.4) Other current and non-current liabilities (351.0) Total liabilities (3,050.5) Total purchase consideration $ 4,291.1 (1) Immediately following the closing of the Combinations, the Company repaid long-term borrowings assumed, which consisted of $1,608.4 million aggregate principal amount related to Ortho’s Dollar Term Loan and Euro Term Loan Facilities, $240.0 million aggregate principal amount of 7.375% Senior Notes due 2025 and $405.0 million aggregate principal amount of 7.250% Senior Notes due 2028. The Senior Notes outstanding were fully discharged following the Combinations. The Company recorded a $23.5 million loss on extinguishment in connection with the Combinations, representing the difference between the reacquisition value, inclusive of $35.9 million of redemption premium, and the net carrying value of the extinguished debt. |
Assignment of Goodwill by Reportable Segment | The preliminary assignment of goodwill by reportable segment is as follows (in millions): North America $ 1,172.9 EMEA 436.3 China 140.7 Other 541.4 $ 2,291.3 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table sets forth the amounts assigned to the identifiable intangible assets acquired (in millions, except years): Intangible Asset Amortization period Fair value of assets acquired Customer relationships 20 years $ 1,679.0 Developed technology 15 years 903.0 Trademarks 15 years 373.0 In-process research and development Not amortized 178.0 $ 3,133.0 |
Pro Forma Financial Information | The following unaudited supplemental pro forma financial information shows the combined results of operations of the Company as if the Combinations had occurred on January 4, 2021, the beginning of the periods presented: (In millions) Three Months Ended Six Months Ended July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Pro forma total revenues $ 898.5 $ 669.1 $ 2,400.9 $ 1,551.2 Pro forma net (loss) income 22.3 (13.0) 500.8 116.7 |
Computation of Earnings Per S_2
Computation of Earnings Per Share (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of the weighted-average shares used in computing basic and diluted EPS: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Basic weighted-average shares of common stock outstanding 52.2 41.7 47.0 41.6 Dilutive potential shares issuable from stock options and unvested RSUs 0.7 0.7 0.7 0.9 Diluted weighted-average shares of common stock outstanding 52.9 42.4 47.7 42.5 Potentially dilutive shares excluded from calculation due to anti-dilutive effect 1.4 0.2 1.3 0.1 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Contract with Customer, Contract Asset, Contract Liability, and Receivable | The balance of contract assets recorded in the Company’s unaudited Consolidated Balance Sheets were as follows: (In millions) July 3, 2022 Prepaid expenses and other current assets $ 54.4 Other assets 0.5 Total contract assets $ 54.9 |
Disaggregation of Revenue | The following table summarizes Total revenues by business unit for the three and six months ended July 3, 2022 and July 4, 2021: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Labs $ 157.4 $ 10.4 $ 170.7 $ 21.3 Transfusion Medicine 68.2 — 68.2 — Point-of-Care 367.1 131.8 1,310.1 435.9 Molecular Diagnostics 20.7 34.4 66.7 94.7 Total revenues $ 613.4 $ 176.6 $ 1,615.7 $ 551.9 |
Concentration of revenue and credit risk | The Company had sales to individual customers in excess of 10% of Total revenues as follows: Six Months Ended July 3, 2022 July 4, 2021 Customer: A 37 % — % B 11 % 18 % C 6 % 11 % 54 % 29 % |
Balance Sheet Account Details (
Balance Sheet Account Details (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash (In millions) July 3, 2022 January 2, 2022 Cash and cash equivalents $ 379.0 $ 802.8 Restricted cash included in Other assets 1.6 — Cash, cash equivalents and restricted cash $ 380.6 $ 802.8 |
Marketable Securities | The following table is a summary of marketable securities: July 3, 2022 January 2, 2022 (In millions) Amortized Cost Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Losses Fair Value Corporate bonds $ 45.5 $ (0.7) $ 44.8 $ 22.3 $ — $ 22.3 Commercial paper 2.2 — 2.2 — — — Corporate asset-backed securities 5.6 (0.1) 5.5 3.4 — 3.4 Total marketable securities, current 53.3 (0.8) 52.5 25.7 — 25.7 Corporate bonds, non-current 6.5 — 6.5 26.8 (0.1) 26.7 Corporate asset-backed securities, non-current 6.9 (0.1) 6.8 11.2 — 11.2 Foreign and other 1.9 — 1.9 — — — Total marketable securities $ 68.6 $ (0.9) $ 67.7 $ 63.7 $ (0.1) $ 63.6 |
Accounts Receivable, Net | Accounts receivables primarily consist of trade accounts receivables with maturities of one year or less and are presented net of reserves: (In millions) July 3, 2022 January 2, 2022 Accounts receivable $ 445.5 $ 430.4 Allowance for contract rebates and discounts (59.7) (50.7) Allowance for doubtful accounts (6.6) (1.7) Total accounts receivable, net $ 379.2 $ 378.0 |
Inventory | Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Inventories consisted of the following: (In millions) July 3, 2022 January 2, 2022 Raw materials $ 219.7 $ 103.2 Work-in-process (materials, labor and overhead) 75.7 36.1 Finished goods (materials, labor and overhead) 296.8 59.5 Total inventories $ 592.2 $ 198.8 Inventories $ 552.7 $ 198.8 Other assets (1) 39.5 — Total inventories $ 592.2 $ 198.8 (1) Other assets includes inventory expected to remain on hand beyond one year. |
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consist of the following: (In millions) July 3, 2022 January 2, 2022 Other receivables $ 39.1 $ 15.8 Contract assets 54.4 — Prepaid expenses 45.3 14.6 Income taxes and other tax receivables 42.0 — Derivatives 13.8 0.1 Other 1.1 4.5 Total prepaid expenses and other current assets $ 195.7 $ 35.0 |
Other Current Liabilities | Other current liabilities consist of the following: (In millions) July 3, 2022 January 2, 2022 Accrued commissions and rebates $ 39.7 $ 15.9 Deferred consideration 38.1 41.9 Deferred revenue 33.2 1.9 Operating lease liabilities 22.2 10.0 Accrued other taxes payable 16.9 10.2 Derivatives 11.0 0.3 Contingent consideration 0.1 6.0 Payables under transition services agreements — 10.9 Other 97.7 17.3 Total other current liabilities $ 258.9 $ 114.4 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Equity [Abstract] | |
Share-based Payment Arrangement, Option, Activity | A summary of the status of stock option activity for the six months ended July 3, 2022 is as follows: (In millions, except price data) Shares Weighted-average Outstanding at January 2, 2022 0.7 $ 62.71 Granted 0.2 100.60 Stock options assumed in the Combinations 1.2 96.10 Exercised (0.1) 37.75 Outstanding at July 3, 2022 2.0 $ 86.18 |
Schedule of Nonvested Share Activity | A summary of the status of RSU activity for the six months ended July 3, 2022 is as follows: (In millions, except price data) Shares Weighted-average Non-vested January 2, 2022 0.6 $ 95.81 Granted 0.7 98.38 Vested (0.2) 80.55 Non-vested at July 3, 2022 1.1 $ 100.12 |
Compensation Expense Related to Stock-Based Compensation Plans | The expense related to the Company’s stock-based compensation plans included in the accompanying unaudited Consolidated Statements of Income was as follows: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Cost of sales $ 0.6 $ 0.6 $ 1.3 $ 1.2 Research and development 1.3 0.9 2.4 1.9 Sales, marketing and administrative 8.0 4.3 13.3 8.6 Acquisition and integration costs 6.0 — 6.3 — Total stock-based compensation expense $ 15.9 $ 5.8 $ 23.3 $ 11.7 |
Estimated Fair Value of Each Stock Option Award | The estimated fair value of each stock option was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions for the option grants, including grants related to options assumed in the Combinations presented separately: Assumed on Six Months Ended May 27, 2022 (1) July 3, 2022 July 4, 2021 Risk-free interest rate 2.28 % 1.99 % 0.42 % Expected option life (in years) 1.78 4.89 5.01 Volatility rate 64 % 58 % 53 % Dividend rate 0 % 0 % 0 % Weighted-average grant date fair value $40.57 $50.86 $115.78 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Industry And Geographic Information [Abstract] | |
Revenue from External Customers by Geographic Areas | Total revenues by reportable segment are as follows: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 North America $ 438.2 $ 122.0 $ 1,399.7 $ 435.4 EMEA 42.1 17.9 57.3 39.0 China 73.6 17.8 82.3 31.3 Other 59.5 18.9 76.4 46.2 Total revenues $ 613.4 $ 176.6 $ 1,615.7 $ 551.9 |
Schedule of Segment Reporting Information, by Segment | The following table sets forth the reconciliations of Segment Adjusted EBITDA to Income before provision for income taxes for the three and six months ended July 3, 2022 and July 4, 2021: Three Months Ended Six Months Ended (In millions) July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 North America $ 285.0 $ 94.4 $ 1,029.9 $ 374.8 EMEA 12.8 7.3 16.3 18.3 China 35.4 9.3 38.7 15.4 Other 24.5 7.9 34.1 28.1 Total Segment Adjusted EBITDA 357.7 118.9 1,119.0 436.6 Corporate (1) (139.5) (81.1) (259.9) (161.3) Depreciation and amortization (47.5) (12.3) (62.8) (24.6) Interest expense, net (10.3) (1.4) (11.3) (3.4) Acquisition and integration costs (80.2) (1.1) (83.2) (1.8) Loss on extinguishment of debt (24.0) — (24.0) — Unwind inventory fair value adjustment (11.2) — (11.2) — Amortization of deferred cloud computing (1.3) (1.2) (2.3) (1.9) Derivative mark-to-market gain 1.0 — 1.0 — Loss on investments (0.8) — (0.8) — Employee compensation charges and other costs (0.5) — (0.5) — EU medical device regulation transition costs (2) (0.4) — (0.4) — Change in fair value of acquisition contingencies (0.1) (0.1) (0.1) (0.1) Income before provision for income taxes $ 42.9 $ 21.7 $ 663.5 $ 243.5 (1) Primarily consists of costs related to executive and staff functions, including certain finance, human resources, manufacturing and information technology (“IT”) functions, which benefit the Company as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. The Company’s corporate function also includes debt and stock-based compensation associated with all employee stock-based awards. |
Long-term Borrowings (Tables)
Long-term Borrowings (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The components of borrowings were as follows: (In millions) July 3, 2022 January 2, 2022 Term Loan $ 2,750.0 $ — Revolving Credit Facility — — Financing lease obligation 1.2 0.7 Other long-term borrowings 1.9 — Unamortized deferred financing costs (12.0) — Total borrowings 2,741.1 0.7 Less: current portion (207.8) (0.3) Long-term borrowings $ 2,533.3 $ 0.4 |
Schedule of Interest Expense | The following table provides the detailed amounts within Interest expense, net for the three and six months ended July 3, 2022 and July 4, 2021: Three Months Ended Six Months Ended July 3, 2022 July 4, 2021 July 3, 2022 July 4, 2021 Term Loan $ 8.4 $ — $ 8.4 $ — Revolving Credit Facility 0.3 — 0.4 0.1 Amortization of deferred financing costs 0.2 0.1 0.3 0.2 Derivative instruments and other 1.8 1.4 2.9 3.3 Interest income (0.4) (0.1) (0.7) (0.2) Interest expense, net $ 10.3 $ 1.4 $ 11.3 $ 3.4 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Fair Value Disclosures [Abstract] | |
Liabilities Measured at Fair Value on Recurring Basis | The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods: July 3, 2022 January 2, 2022 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 2.5 $ 4.2 $ — $ 6.7 $ 204.7 $ 6.6 $ — $ 211.3 Marketable securities — 67.7 — 67.7 — 63.6 — 63.6 Derivative assets — 25.9 — 25.9 — 0.1 — 0.1 Total assets measured at fair value $ 2.5 $ 97.8 $ — $ 100.3 $ 204.7 $ 70.3 $ — $ 275.0 Liabilities: Derivative liabilities $ — $ 12.2 $ — $ 12.2 $ — $ 0.3 $ — $ 0.3 Contingent consideration — — 0.1 0.1 — — 6.1 6.1 Deferred consideration — 38.1 — 38.1 — 78.4 — 78.4 Total liabilities measured at fair value $ — $ 50.3 $ 0.1 $ 50.4 $ — $ 78.7 $ 6.1 $ 84.8 |
Changes in Estimated Fair Value of Contingent Consideration Liabilities | Changes in estimated fair value of contingent consideration liabilities from January 2, 2022 through July 3, 2022 were as follows: (In millions) Contingent consideration liabilities Balance at January 2, 2022 $ 6.1 Cash payments (6.0) Balance at July 3, 2022 $ 0.1 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Interest Rate Derivatives | The following table summarizes the Company’s interest rate derivative agreements as of July 3, 2022: Instrument Notional amount (1) (In millions) Description Hedge designation Effective date Expiration date Interest rate cap $ 1,000.0 Interest rate cap amount of 3.4% Non-designated May 29, 2022 December 31, 2023 Interest rate swap $ 1,000.0 Pay 1.58% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge May 29, 2022 December 31, 2023 (1) The notional value of these instruments is expected to be $500.0 million in 2023. |
Schedule of Currency Hedging Instruments | The following table provides details of the currency hedging instruments outstanding as of July 3, 2022: Description Notional amount Hedge designation Foreign currency forward contracts $ 252.4 Cash Flow Hedge Foreign currency forward contracts 487.0 Non-designated |
Schedule of Derivative Assets at Fair Value | The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of July 3, 2022 and January 2, 2022: (In millions) July 3, 2022 January 2, 2022 Designated cash flow hedges Interest rate derivatives: Other assets $ 12.1 $ — Foreign currency forward contracts: Prepaid expenses and other current assets 9.2 0.1 Other current liabilities 5.8 0.2 Non-designated hedging instruments Interest rate derivatives: Other liabilities 1.2 — Foreign currency forward contracts: Prepaid expenses and other current assets 4.6 — Other current liabilities 5.2 0.1 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive (Loss) Income (Tables) | 6 Months Ended |
Jul. 03, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The balance of accumulated OCI, net of tax, were as follows for the three and six months ended July 3, 2022: Three Months Ended July 3, 2022 Six Months Ended July 3, 2022 (In millions) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Beginning balance $ 0.1 $ (0.5) $ 0.6 $ 0.2 $ — $ (0.1) $ 0.5 $ 0.4 Current period 4.4 (0.2) (66.1) (61.9) 4.6 (0.6) (66.0) (62.0) Amounts reclassified 1.0 — — 1.0 0.9 — — 0.9 Net change 5.4 (0.2) (66.1) (60.9) 5.5 (0.6) (66.0) (61.1) Ending balance $ 5.5 $ (0.7) $ (65.5) $ (60.7) $ 5.5 $ (0.7) $ (65.5) $ (60.7) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Accounting Policies [Abstract] | ||||
Amortization of intangible assets | $ 21 | $ 6.8 | $ 28.1 | $ 13.6 |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amortization of intangible assets | $ 21 | 6.8 | $ 28.1 | 13.6 |
Cost of sales | ||||
Accounting Policies [Abstract] | ||||
Amortization of intangible assets | 1.8 | 3.6 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amortization of intangible assets | 1.8 | 3.6 | ||
Selling, Marketing, and Administrative Expense | ||||
Accounting Policies [Abstract] | ||||
Amortization of intangible assets | 5 | 10 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amortization of intangible assets | $ 5 | $ 10 |
Business Combination - Narrativ
Business Combination - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||
May 27, 2022 | May 26, 2022 | Jul. 03, 2022 | Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Business Acquisition [Line Items] | |||||||
Amortization of intangible assets | $ 21 | $ 6.8 | $ 28.1 | $ 13.6 | |||
Ortho | |||||||
Business Acquisition [Line Items] | |||||||
Total purchase consideration | $ 4,291.1 | ||||||
Closing price of Quidel Common Stock (in usd per share) | $ 99.60 | ||||||
Cash paid to former Ortho stockholders per Ortho Share (in usd per share) | 7.14 | ||||||
Ortho Exchange Ratio (in usd per share) | 0.1055 | ||||||
Step-Up, Inventory, Value | $ 64.1 | $ 11.2 | 11.2 | 11.2 | |||
Transaction costs | 43.7 | 45.9 | |||||
Amortization of intangible assets | 14.1 | ||||||
Pro forma net (loss) income | $ 40.1 | 22.3 | (13) | 500.8 | 116.7 | ||
Ortho | Amortization Expense | |||||||
Business Acquisition [Line Items] | |||||||
Pro forma net (loss) income | (6.3) | (8.8) | (15.5) | (17.6) | |||
Ortho | Cost of sales | |||||||
Business Acquisition [Line Items] | |||||||
Pro forma net (loss) income | (11.2) | (32) | (11.2) | (64.1) | |||
Ortho | Interest Expense | |||||||
Business Acquisition [Line Items] | |||||||
Pro forma net (loss) income | (4.5) | $ (6.7) | (11.2) | (20.6) | |||
Ortho | Loss on Extinguishment of Debt | |||||||
Business Acquisition [Line Items] | |||||||
Pro forma net (loss) income | (24) | (24) | (24) | ||||
Ortho | Share-Based Compensation Expense | |||||||
Business Acquisition [Line Items] | |||||||
Pro forma net (loss) income | $ (12.8) | (12.8) | $ (12.8) | ||||
Ortho | Ortho | |||||||
Business Acquisition [Line Items] | |||||||
Ortho Exchange Ratio (in usd per share) | $ 0.1055 | ||||||
Ortho | Ortho | Loss on Extinguishment of Debt | |||||||
Business Acquisition [Line Items] | |||||||
Pro forma net (loss) income | $ 50.3 |
Business Combination - Purchase
Business Combination - Purchase Price by Exchange Ratio (Details) - Ortho - USD ($) $ / shares in Units, $ in Millions | May 27, 2022 | May 26, 2022 |
Business Acquisition [Line Items] | ||
Ortho Exchange Ratio (in usd per share) | $ 0.1055 | |
Value per Quidel share as of May 26, 2022 (in usd per share) | $ 99.60 | |
Fair value of stock consideration | $ 2,495.5 | |
Fair value of replacement equity awards | 47.9 | |
Cash consideration | 1,747.7 | |
Total purchase consideration | $ 4,291.1 | |
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable, After Combination | $ 46.6 | |
Cash paid to former Ortho stockholders per Ortho Share (in usd per share) | $ 7.14 | |
Business Acquisition, Number of Common Stock Shares Acquired | 237,500,000 | |
Business Acquisition, Number of Vested Stock Options Acquired | 7,300,000 | |
Ortho | ||
Business Acquisition [Line Items] | ||
Total Ortho shares subject to exchange (in shares) | 237,487,000 | |
Ortho Exchange Ratio (in usd per share) | $ 0.1055 | |
QuidelOrtho | ||
Business Acquisition [Line Items] | ||
QuidelOrtho shares issued (in shares) | 25,055,000 |
Business Combination - Summary
Business Combination - Summary of Purchase Price (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
May 27, 2022 | Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | Jan. 02, 2022 | |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 2,589.6 | $ 2,589.6 | $ 337 | |||
Loss on extinguishment of debt | $ (24) | $ 0 | $ (24) | $ 0 | ||
Gain (Loss) On Redemption Premium | $ 35.9 | |||||
Ortho | ||||||
Business Acquisition [Line Items] | ||||||
Cash and cash equivalents | 234.5 | |||||
Accounts receivable | 240.6 | |||||
Inventories | 386.8 | |||||
Property, plant and equipment | 767.5 | |||||
Goodwill | 2,291.3 | |||||
Intangible assets | 3,133 | |||||
Prepaid expenses and other assets | 287.9 | |||||
Total assets | 7,341.6 | |||||
Accounts payable | (135) | |||||
Accrued payroll and related expenses | (80.7) | |||||
Long-term borrowings, including current portion (1) | (2,268.4) | |||||
Deferred tax liability | (215.4) | |||||
Other current and non-current liabilities | (351) | |||||
Total liabilities | (3,050.5) | |||||
Total purchase consideration | 4,291.1 | |||||
Repayments of Debt | 1,608.4 | |||||
Loss on extinguishment of debt | 23.5 | |||||
Ortho | Senior Notes Due 2025 | Senior Notes | ||||||
Business Acquisition [Line Items] | ||||||
Long-term borrowings | $ 240 | |||||
Stated interest rate | 7.375% | |||||
Ortho | Senior Notes Due 2028 | Senior Notes | ||||||
Business Acquisition [Line Items] | ||||||
Long-term borrowings | $ 405 | |||||
Stated interest rate | 7.25% |
Business Combination - Goodwill
Business Combination - Goodwill Allocation (Details) - USD ($) $ in Millions | Jul. 03, 2022 | May 27, 2022 | Jan. 02, 2022 |
Business Combination Segment Allocation [Line Items] | |||
Goodwill | $ 2,589.6 | $ 337 | |
Ortho | |||
Business Combination Segment Allocation [Line Items] | |||
Goodwill | $ 2,291.3 | ||
Ortho | North America | |||
Business Combination Segment Allocation [Line Items] | |||
Goodwill | 1,172.9 | ||
Ortho | EMEA | |||
Business Combination Segment Allocation [Line Items] | |||
Goodwill | 436.3 | ||
Ortho | China | |||
Business Combination Segment Allocation [Line Items] | |||
Goodwill | 140.7 | ||
Ortho | Other | |||
Business Combination Segment Allocation [Line Items] | |||
Goodwill | $ 541.4 |
Business Combination - Purcha_2
Business Combination - Purchase Price Allocation of Intangible Assets (Details) - Ortho $ in Millions | May 27, 2022 USD ($) |
Business Acquisition [Line Items] | |
Intangible Assets | $ 3,133 |
Tangible Assets | 3,133 |
In-process research and development | |
Business Acquisition [Line Items] | |
In-process research and development | $ 178 |
Customer relationships | |
Business Acquisition [Line Items] | |
Amortization period | 20 years |
Intangible Assets | $ 1,679 |
Developed technology | |
Business Acquisition [Line Items] | |
Amortization period | 15 years |
Intangible Assets | $ 903 |
Trademarks | |
Business Acquisition [Line Items] | |
Amortization period | 15 years |
Intangible Assets | $ 373 |
Business Combination - Pro Form
Business Combination - Pro Forma Information (Details) - Ortho - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items] | |||||
Pro forma total revenues | $ 213.7 | $ 898.5 | $ 669.1 | $ 2,400.9 | $ 1,551.2 |
Pro forma net (loss) income | $ 40.1 | $ 22.3 | $ (13) | $ 500.8 | $ 116.7 |
Computation of Earnings Per S_3
Computation of Earnings Per Share - Calculation of Basic and Diluted Earnings Per Share (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jul. 03, 2022 | Apr. 03, 2022 | Jul. 04, 2021 | Apr. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Earnings Per Share [Abstract] | ||||||
Net income | $ 19.3 | $ 479.9 | $ 19.1 | $ 178.1 | $ 499.2 | $ 197.2 |
Basic weighted-average shares of common stock outstanding | 52.2 | 41.7 | 47 | 41.6 | ||
Dilutive potential shares issuable from stock options and unvested RSUs | 0.7 | 0.7 | 0.7 | 0.9 | ||
Diluted weighted-average shares of common stock outstanding | 52.9 | 42.4 | 47.7 | 42.5 | ||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 1.3 | 0.1 | ||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 1.3 | 0.1 | ||||
Stock options | ||||||
Earnings Per Share [Abstract] | ||||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 1.4 | 0.2 | ||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 1.4 | 0.2 |
Revenue - Contract Assets (Deta
Revenue - Contract Assets (Details) $ in Millions | Jul. 03, 2022 USD ($) |
Disaggregation of Revenue [Line Items] | |
Total contract assets | $ 54.9 |
Prepaid expenses and other current assets | |
Disaggregation of Revenue [Line Items] | |
Total contract assets | 54.4 |
Other assets | |
Disaggregation of Revenue [Line Items] | |
Total contract assets | $ 0.5 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 03, 2022 | Jul. 04, 2021 | Jan. 02, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Contract assets | $ 54.9 | $ 54.9 | ||
Deferred revenue, current | 33.2 | 33.2 | $ 1.9 | |
Deferred Revenue, Noncurrent | 9.7 | 9.7 | ||
Credit Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Accounts receivable | 73.8 | $ 73.8 | $ 267.3 | |
Revenue Benchmark | Product Concentration Risk | COVID-19 | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of risk concentration | 70% | 64% | ||
Revenue Benchmark | Product Concentration Risk | Influenza | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of risk concentration | 8% | 3% | ||
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | ||||
Disaggregation of Revenue [Line Items] | ||||
Gross Profit | 5.6 | $ 5.6 | ||
Revenue from Contract with Customer, Including Assessed Tax | 2 | 2 | ||
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement and Third Party | ||||
Disaggregation of Revenue [Line Items] | ||||
Gross Profit | 3.6 | 3.6 | ||
Prepaid expenses and other current assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | 54.4 | 54.4 | ||
Other assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | 0.5 | 0.5 | ||
Customer 1 | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | 10.3 | 10.3 | ||
Customer 1 | Prepaid expenses and other current assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | 9.8 | 9.8 | ||
Customer 1 | Other assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | 0.5 | 0.5 | ||
Expected Value Contract Customers | Prepaid expenses and other current assets | ||||
Disaggregation of Revenue [Line Items] | ||||
Contract assets | $ 44.6 | $ 44.6 | ||
Customer A | Sales | Customer Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of risk concentration | 37% | 0% | ||
Customer B | Sales | Customer Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of risk concentration | 11% | 18% | ||
Customer C | Sales | Customer Concentration Risk | ||||
Disaggregation of Revenue [Line Items] | ||||
Percentage of risk concentration | 6% | 11% |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 613.4 | $ 176.6 | $ 1,615.7 | $ 551.9 |
Labs | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 157.4 | 10.4 | 170.7 | 21.3 |
Transfusion Medicine | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 68.2 | 0 | 68.2 | 0 |
Point-of-Care | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 367.1 | 131.8 | 1,310.1 | 435.9 |
Molecular Diagnostics | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 20.7 | $ 34.4 | $ 66.7 | $ 94.7 |
Revenue - Concentrations of Rev
Revenue - Concentrations of Revenue and Credit Risk (Details) - Sales - Customer Concentration Risk | 6 Months Ended | |
Jul. 03, 2022 | Jul. 04, 2021 | |
Customer A | ||
Concentration Risk [Line Items] | ||
Percentage of risk concentration | 37% | 0% |
Customer B | ||
Concentration Risk [Line Items] | ||
Percentage of risk concentration | 11% | 18% |
Customer C | ||
Concentration Risk [Line Items] | ||
Percentage of risk concentration | 6% | 11% |
Customers In Excess of 10% Total Revenue | ||
Concentration Risk [Line Items] | ||
Percentage of risk concentration | 54% | 29% |
Balance Sheet Account Details C
Balance Sheet Account Details Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 | Jul. 04, 2021 | Jan. 03, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||
Cash and cash equivalents | $ 379 | $ 802.8 | ||
Restricted Cash, Noncurrent | 1.6 | 0 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 380.6 | $ 802.8 | $ 593.2 | $ 489.9 |
Balance Sheet Account Details M
Balance Sheet Account Details Marketable Securities (Details) - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 |
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | $ 68.6 | $ 63.7 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.9) | (0.1) |
Marketable securities, current | 52.5 | 25.7 |
Marketable securities | 15.2 | 37.9 |
Marketable Securities | 67.7 | 63.6 |
Corporate Debt Securities | ||
Marketable Securities [Line Items] | ||
Marketable securities, current | 44.8 | 22.3 |
Marketable securities | 6.5 | 26.7 |
Asset-backed Securities | ||
Marketable Securities [Line Items] | ||
Marketable securities, current | 5.5 | 3.4 |
Marketable securities | 6.8 | 11.2 |
Commercial Paper | ||
Marketable Securities [Line Items] | ||
Marketable securities, current | 2.2 | 0 |
Foreign and Other | ||
Marketable Securities [Line Items] | ||
Marketable securities | 1.9 | 0 |
Short-term Investments | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 53.3 | 25.7 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.8) | 0 |
Short-term Investments | Corporate Debt Securities | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 45.5 | 22.3 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.7) | 0 |
Short-term Investments | Asset-backed Securities | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 5.6 | 3.4 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.1) | 0 |
Short-term Investments | Commercial Paper | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 2.2 | 0 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 |
Long-Term Investments | Corporate Debt Securities | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 6.5 | 26.8 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | (0.1) |
Long-Term Investments | Asset-backed Securities | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 6.9 | 11.2 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.1) | 0 |
Long-Term Investments | Foreign and Other | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 1.9 | 0 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | $ 0 | $ 0 |
Balance Sheet Account Details A
Balance Sheet Account Details Accounts Receivable (Details) - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Accounts receivable | $ 445.5 | $ 430.4 |
Allowance for contract rebates and discounts | (59.7) | (50.7) |
Allowance for doubtful accounts | (6.6) | (1.7) |
Total accounts receivable, net | $ 379.2 | $ 378 |
Balance Sheet Account Details I
Balance Sheet Account Details Inventory (Details) - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 |
Inventory, Net [Abstract] | ||
Raw materials | $ 219.7 | $ 103.2 |
Work-in-process (materials, labor and overhead) | 75.7 | 36.1 |
Finished goods (materials, labor and overhead) | 296.8 | 59.5 |
Inventories, including noncurrent portion, net | 592.2 | 198.8 |
Inventories | 552.7 | 198.8 |
Inventory, Noncurrent | $ 39.5 | $ 0 |
Balance Sheet Account Details P
Balance Sheet Account Details Prepaid expenses and other current assets (Details) - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Other receivables | $ 39.1 | $ 15.8 |
Contract assets | 54.4 | 0 |
Prepaid expenses | 45.3 | 14.6 |
Income taxes and other tax receivables | 42 | 0 |
Derivatives | 13.8 | 0.1 |
Other | 1.1 | 4.5 |
Total prepaid expenses and other current assets | $ 195.7 | $ 35 |
Balance Sheet Account Details O
Balance Sheet Account Details Other Current Liabilities (Details) - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 |
Other Liabilities Disclosure [Abstract] | ||
Accrued commissions and rebates | $ 39.7 | $ 15.9 |
Deferred consideration | 38.1 | 41.9 |
Deferred revenue | 33.2 | |
Operating lease liabilities | 22.2 | 10 |
Accrued other taxes payable | 16.9 | 10.2 |
Derivatives | 11 | 0.3 |
Contingent consideration | 0.1 | 6 |
Payables under transition services agreements | 0 | 10.9 |
Other | 97.7 | 17.3 |
Total other current liabilities | $ 258.9 | $ 114.4 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Provision for income taxes | $ 23.6 | $ 2.6 | $ 164.3 | $ 46.3 |
Effective income tax rate | 55% | 12% | 25% | 19% |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | $ 42.9 | $ 21.7 | $ 663.5 | $ 243.5 |
Unrecognized Tax Benefits | 45.5 | 45.5 | ||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | 8.4 | 8.4 | ||
Unrecognized Tax Benefits that Would Impact Effective Tax Rate | 33.2 | 33.2 | ||
Decrease in Unrecognized Tax Benefits is Reasonably Possible | $ 3 | $ 3 |
Stockholders' Equity Stock-Base
Stockholders' Equity Stock-Based Compensation - Summary of Status of Stock Option Activity (Details) shares in Millions | 6 Months Ended |
Jul. 03, 2022 $ / shares shares | |
Shares | |
Stock options outstanding, beginning (in shares) | shares | 0.7 |
Granted (in shares) | shares | 0.2 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Shares Issued in Period | shares | 1.2 |
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Other Share Increase (Decrease) in Period, Weighted Average Exercise Price | $ / shares | $ 96.10 |
Exercised (in shares) | shares | (0.1) |
Stock options outstanding, ending (in shares) | shares | 2 |
Weighted-average exercise price per share | |
Stock options outstanding beginning, weighted average exercise price (in USD per share) | $ / shares | $ 62.71 |
Stock options granted, weighted average exercise price (in USD per share) | $ / shares | 100.60 |
Stock options exercised, weighted average exercise price (in USD per share) | $ / shares | 37.75 |
Stock options outstanding ending, weighted average exercise price (in USD per share) | $ / shares | $ 86.18 |
Stockholders' Equity Stock-Ba_2
Stockholders' Equity Stock-Based Compensation - Summary of Status of Stock Awards Activity (Details) shares in Millions | 6 Months Ended |
Jul. 03, 2022 $ / shares shares | |
Shares | |
Restricted stock outstanding, non-vested, beginning (in shares) | shares | 0.6 |
Granted (in shares) | shares | 0.7 |
Vested (in shares) | shares | (0.2) |
Restricted stock outstanding, non-vested, ending (in shares) | shares | 1.1 |
Weighted-average grant date fair value | |
Restricted stock outstanding, non-vested, beginning, weighted average fair value (in USD per share) | $ / shares | $ 95.81 |
Restricted stock granted, weighted average fair value (in USD per share) | $ / shares | 98.38 |
Restricted stock vested, weighted average fair value (in USD per share) | $ / shares | 80.55 |
Restricted stock outstanding, non-vested, ending, weighted average fair value (in USD per share) | $ / shares | $ 100.12 |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
Jul. 03, 2022 | Jul. 04, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted, weighted average fair value (in USD per share) | $ 98.38 | |
Restricted Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized compensation expense | $ 105.1 | |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected weighted-average period of recognition for unrecognized compensation expense | 2 years 8 months 12 days | |
RSUs | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock granted, weighted average fair value (in USD per share) | $ 98.38 | $ 204.50 |
Stockholders' Equity - Compensa
Stockholders' Equity - Compensation Expense Related to Stock-Based Compensation Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | $ 15.9 | $ 5.8 | $ 23.3 | $ 11.7 |
Cost of sales | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 0.6 | 0.6 | 1.3 | 1.2 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 1.3 | 0.9 | 2.4 | 1.9 |
Sales, marketing and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 8 | 4.3 | 13.3 | 8.6 |
Acquisition-related Costs | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | $ 6 | $ 0 | $ 6.3 | $ 0 |
Stockholders' Equity - Estimate
Stockholders' Equity - Estimated Fair Value of Each Stock Option Award (Details) - $ / shares | 6 Months Ended | ||
May 27, 2022 | Jul. 03, 2022 | Jul. 04, 2021 | |
Equity [Abstract] | |||
Risk-free interest rate | 2.28% | 1.99% | 0.42% |
Expected option life (in years) | 1 year 9 months 10 days | 4 years 10 months 20 days | 5 years 3 days |
Volatility rate | 64% | 58% | 53% |
Dividend rate | 0% | 0% | 0% |
Weighted-average grant date fair value of stock options granted (in USD per share) | $ 40.57 | $ 50.86 | $ 115.78 |
Segment and Geographic Inform_3
Segment and Geographic Information - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 USD ($) | Jul. 04, 2021 USD ($) | Jul. 03, 2022 USD ($) segment | Jul. 04, 2021 USD ($) | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Number of reportable segments | segment | 3 | |||
Total revenues | $ 613.4 | $ 176.6 | $ 1,615.7 | $ 551.9 |
Segment Adjusted EBITDA | 357.7 | 118.9 | 1,119 | 436.6 |
Depreciation and amortization | (47.5) | (12.3) | (62.8) | (24.6) |
Interest expense, net | (10.3) | (1.4) | (11.3) | (3.4) |
Acquisition and integration costs | (80.2) | (1.1) | (83.2) | (1.8) |
Loss on extinguishment of debt | (24) | 0 | (24) | 0 |
Unwind inventory fair value adjustment | (11.2) | 0 | (11.2) | 0 |
Amortization of deferred cloud computing implementation costs | (1.3) | (1.2) | (2.3) | (1.9) |
Derivative, Gain (Loss) on Derivative, Net | 1 | 0 | 1 | 0 |
Income (Loss) from Equity Method Investments | (0.8) | 0 | (0.8) | 0 |
Employee compensation charges and other costs | (0.5) | 0 | (0.5) | 0 |
EU medical device regulation transition costs (2) | (0.4) | 0 | (0.4) | 0 |
Change in fair value of acquisition contingencies | (0.1) | (0.1) | (0.1) | (0.1) |
Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest | 42.9 | 21.7 | 663.5 | 243.5 |
North America | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | 438.2 | 122 | 1,399.7 | 435.4 |
Segment Adjusted EBITDA | 285 | 94.4 | 1,029.9 | 374.8 |
EMEA | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | 42.1 | 17.9 | 57.3 | 39 |
Segment Adjusted EBITDA | 12.8 | 7.3 | 16.3 | 18.3 |
China | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | 73.6 | 17.8 | 82.3 | 31.3 |
Segment Adjusted EBITDA | 35.4 | 9.3 | 38.7 | 15.4 |
Other | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | 59.5 | 18.9 | 76.4 | 46.2 |
Segment Adjusted EBITDA | 24.5 | 7.9 | 34.1 | 28.1 |
Corporate and Other | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | $ 139.5 | $ 81.1 | $ 259.9 | $ 161.3 |
Long-term Borrowings - Schedule
Long-term Borrowings - Schedule of Borrowings (Details) - USD ($) $ in Millions | Jul. 03, 2022 | May 27, 2022 | Jan. 02, 2022 |
Debt Instrument [Line Items] | |||
Financing lease obligation | $ 1.2 | $ 0.7 | |
Other long-term borrowings | 1.9 | 0 | |
Unamortized deferred financing costs | (12) | 0 | |
Total borrowings | 2,741.1 | 0.7 | |
Less: current portion | (207.8) | (0.3) | |
Long-term borrowings | 2,533.3 | 0.4 | |
Line of Credit | Term Loan | Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term debt | 2,750 | $ 2,750 | 0 |
Line of Credit | Revolving Credit Facility | Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 0 | $ 750 | $ 0 |
Long-term Borrowings - Narrativ
Long-term Borrowings - Narrative (Details) - Line of Credit - USD ($) $ in Millions | Aug. 04, 2022 | Jul. 03, 2022 | May 27, 2022 | Jan. 02, 2022 |
Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Debt issuance costs | $ 15.2 | |||
Debt Instrument, Covenant, Leverage Ratio, Maximum | 3.50 | |||
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum | 3 | |||
Credit Agreement | Ending after the closing date of the credit agreement | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Covenant, Leverage Ratio, Maximum | 4.50 | |||
Credit Agreement | Ending after initial measurement period | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Covenant, Leverage Ratio, Maximum | 4 | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Extinguishment of Debt, Amount | $ 175 | |||
Revolving Credit Facility | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 0 | 750 | $ 0 | |
Proceeds from Lines of Credit | 33.2 | |||
Line of Credit Facility, Remaining Borrowing Capacity | 716.8 | |||
Debt issuance costs | 3.3 | |||
Revolving Credit Facility | Credit Agreement | Subsequent Event | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 800 | |||
Debt Instrument, Increase (Decrease), Net | $ 50 | |||
Term Loan | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 2,750 | $ 2,750 | $ 0 | |
Stated interest rate | 2.97% | |||
Debt issuance costs | $ 11.9 |
Long-term Borrowings - Interest
Long-term Borrowings - Interest Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 03, 2022 | Jul. 04, 2021 | Jul. 03, 2022 | Jul. 04, 2021 | |
Debt Instrument [Line Items] | ||||
Amortization of deferred financing costs | $ 0.2 | $ 0.1 | $ 0.3 | $ 0.2 |
Interest income | (0.4) | (0.1) | (0.7) | (0.2) |
Derivative instruments and other | 1.8 | 1.4 | 2.9 | 3.3 |
Interest expense, net | 10.3 | 1.4 | 11.3 | 3.4 |
Line of Credit | Term Loan | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | 8.4 | 0 | 8.4 | 0 |
Line of Credit | Revolving Credit Facility | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | $ 0.3 | $ 0 | $ 0.4 | $ 0.1 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions | Jul. 03, 2022 | Jan. 02, 2022 |
Assets: | ||
Total assets measured at fair value | $ 100.3 | $ 275 |
Liabilities: | ||
Total liabilities measured at fair value | 50.4 | 84.8 |
Money Market Funds, at Carrying Value | 6.7 | 211.3 |
Marketable Securities | 67.7 | 63.6 |
Derivative | ||
Assets: | ||
Derivative assets | 25.9 | 0.1 |
Liabilities: | ||
Financial Liabilities Fair Value Disclosure | 12.2 | 0.3 |
Contingent consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | 0.1 | 6.1 |
Deferred consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | 38.1 | 78.4 |
Level 1 | ||
Assets: | ||
Total assets measured at fair value | 2.5 | 204.7 |
Liabilities: | ||
Total liabilities measured at fair value | 0 | 0 |
Money Market Funds, at Carrying Value | 2.5 | 204.7 |
Marketable Securities | 0 | 0 |
Level 1 | Derivative | ||
Assets: | ||
Derivative assets | 0 | 0 |
Liabilities: | ||
Financial Liabilities Fair Value Disclosure | 0 | 0 |
Level 1 | Contingent consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | 0 | 0 |
Level 1 | Deferred consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | 0 | 0 |
Level 2 | ||
Assets: | ||
Total assets measured at fair value | 97.8 | 70.3 |
Liabilities: | ||
Total liabilities measured at fair value | 50.3 | 78.7 |
Money Market Funds, at Carrying Value | 4.2 | 6.6 |
Marketable Securities | 67.7 | 63.6 |
Level 2 | Derivative | ||
Assets: | ||
Derivative assets | 25.9 | 0.1 |
Liabilities: | ||
Financial Liabilities Fair Value Disclosure | 12.2 | 0.3 |
Level 2 | Contingent consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | 0 | 0 |
Level 2 | Deferred consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | 38.1 | 78.4 |
Level 3 | ||
Assets: | ||
Total assets measured at fair value | 0 | 0 |
Liabilities: | ||
Total liabilities measured at fair value | 0.1 | 6.1 |
Money Market Funds, at Carrying Value | 0 | 0 |
Marketable Securities | 0 | 0 |
Level 3 | Derivative | ||
Assets: | ||
Derivative assets | 0 | 0 |
Liabilities: | ||
Financial Liabilities Fair Value Disclosure | 0 | 0 |
Level 3 | Contingent consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | 0.1 | 6.1 |
Level 3 | Deferred consideration | ||
Liabilities: | ||
Nonfinancial Liabilities Fair Value Disclosure | $ 0 | $ 0 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Millions | Jul. 03, 2022 USD ($) |
Term Loan | Credit Agreement | Line of Credit | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Long-Term Debt, Fair Value | $ 2,567.8 |
Consideration B | BNP Business | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Installment payment in 2021 | 48 |
Installment payment in 2022 | $ 48 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Estimated Fair Value of Contingent Consideration Liabilities (Details) - Level 3 - USD ($) $ in Millions | 6 Months Ended | |
Jul. 03, 2022 | Jan. 02, 2022 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value | $ 0.1 | $ 6.1 |
Cash payments | $ (6) |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities (Details) - USD ($) $ in Thousands | Jul. 03, 2022 | Jan. 02, 2022 |
Derivative [Line Items] | ||
Interest Rate Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months, Net | $ 3,100 | |
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months | 2,400 | |
Interest Rate Cap | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 1,000,000 | |
Derivative, Cap Interest Rate | 3.40% | |
Interest Rate Swap | Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 1,000,000 | |
Derivative, Fixed Interest Rate | 1.58% | |
Interest Rate Contract | ||
Derivative [Line Items] | ||
Expected future derivative, notional amount | $ 500,000 | |
Foreign Exchange Contract | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | 487,000 | |
Foreign Exchange Contract | Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | 252,400 | |
Other Noncurrent Assets | Interest Rate Swap | Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative assets | 12,100 | $ 0 |
Other Current Assets | Foreign Exchange Contract | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative assets | 4,600 | 0 |
Other Current Assets | Foreign Exchange Contract | Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative assets | 9,200 | 100 |
Other Current Liabilities | Foreign Exchange Contract | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Financial Liabilities Fair Value Disclosure | 5,200 | 100 |
Other Current Liabilities | Foreign Exchange Contract | Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Financial Liabilities Fair Value Disclosure | 5,800 | 200 |
Other Noncurrent Liabilities | Interest Rate Cap | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Financial Liabilities Fair Value Disclosure | $ 1,200 | $ 0 |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jul. 03, 2022 USD ($) | Jul. 03, 2022 USD ($) | |
Quotient Subsidiary | ||
Related Party Transaction [Line Items] | ||
Payments For Inventory | $ 2.1 | $ 2.1 |
Accounts Payable | 2.5 | 2.5 |
Ortho | MosaicQ | Revenue Benchmark | ||
Related Party Transaction [Line Items] | ||
Collaborative Arrangement, Rights And Obligations, Maximum Aggregate Milestone Payments | 25 | 25 |
Ortho | Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | Quotient | ||
Related Party Transaction [Line Items] | ||
Collaborative Arrangement, Rights And Obligations, Maximum Aggregate Milestone Payments | $ 60 | $ 60 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jul. 03, 2022 | Jul. 03, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | $ 0.2 | $ 0.4 |
Current period deferrals | (61.9) | (62) |
Amounts reclassified to net income | 1 | 0.9 |
Net change | (60.9) | (61.1) |
Ending balance | (60.7) | (60.7) |
Cash Flow Hedges | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | 0.1 | 0 |
Current period deferrals | 4.4 | 4.6 |
Amounts reclassified to net income | 1 | 0.9 |
Net change | 5.4 | 5.5 |
Ending balance | 5.5 | 5.5 |
Available-for-Sale Investments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | (0.5) | (0.1) |
Current period deferrals | (0.2) | (0.6) |
Amounts reclassified to net income | 0 | 0 |
Net change | (0.2) | (0.6) |
Ending balance | (0.7) | (0.7) |
Unrealized Foreign Currency Translation Adjustments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Beginning balance | 0.6 | 0.5 |
Current period deferrals | (66.1) | (66) |
Amounts reclassified to net income | 0 | 0 |
Net change | (66.1) | (66) |
Ending balance | $ (65.5) | $ (65.5) |