Cover Page
Cover Page - shares | 6 Months Ended | |
Jul. 02, 2023 | Aug. 01, 2023 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jul. 02, 2023 | |
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, $0.001 Par Value | |
Trading Symbol | QDEL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 66,790,619 | |
Entity Central Index Key | 0001906324 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus (Q1,Q2,Q3,FY) | Q2 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 178.6 | $ 292.9 |
Marketable securities | 45.1 | 52.1 |
Accounts receivable, net | 246.7 | 453.9 |
Inventories | 542.2 | 524.1 |
Prepaid expenses and other current assets | 295.5 | 252.1 |
Total current assets | 1,308.1 | 1,575.1 |
Property, plant and equipment, net | 1,376.2 | 1,339 |
Marketable securities | 24.7 | 21 |
Right-of-use assets | 177.4 | 181 |
Goodwill | 2,470.9 | 2,476.8 |
Intangible assets, net | 3,035.7 | 3,123.8 |
Deferred tax asset | 16.1 | 16.4 |
Other assets | 141.2 | 122.7 |
Total assets | 8,550.3 | 8,855.8 |
Current liabilities: | ||
Accounts payable | 225.9 | 283.3 |
Accrued payroll and related expenses | 81.5 | 139.2 |
Income tax payable | 2.1 | 51.6 |
Current portion of borrowings | 207.4 | 207.5 |
Other current liabilities | 273.1 | 325.4 |
Total current liabilities | 790 | 1,007 |
Operating lease liabilities | 181.2 | 186.4 |
Long-term borrowings | 2,308.5 | 2,430.8 |
Deferred tax liability | 199.6 | 213.2 |
Other liabilities | 68.5 | 83.8 |
Total liabilities | 3,547.8 | 3,921.2 |
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 2, 2023 and January 1, 2023 | 0 | 0 |
Common stock, $0.001 par value per share; 126.2 shares authorized; 66.8 and 66.4 shares issued and outstanding at July 2, 2023 and January 1, 2023, respectively | 0.1 | 0 |
Additional paid-in capital | 2,825.2 | 2,804.3 |
Accumulated other comprehensive loss | (16.3) | (67.6) |
Retained earnings | 2,193.5 | 2,197.9 |
Total stockholders’ equity | 5,002.5 | 4,934.6 |
Total liabilities and stockholders’ equity | $ 8,550.3 | $ 8,855.8 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 02, 2023 | Jan. 01, 2023 |
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 | 126,200,000 |
Common stock, shares issued (in shares) | 66,800,000 | 66,400,000 |
Common stock, shares outstanding (in shares) | 66,800,000 | 66,400,000 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Income Statement [Abstract] | ||||
Total revenues | $ 665,100,000 | $ 613,400,000 | $ 1,511,200,000 | $ 1,615,700,000 |
Cost of sales, excluding amortization of intangibles | 368,700,000 | 275,900,000 | 766,200,000 | 536,200,000 |
Selling, marketing and administrative | 179,100,000 | 118,400,000 | 381,500,000 | 203,200,000 |
Research and development | 62,800,000 | 34,200,000 | 125,100,000 | 60,600,000 |
Amortization of intangible assets | 51,400,000 | 21,000,000 | 102,200,000 | 28,100,000 |
Acquisition and integration costs | 24,200,000 | 80,200,000 | 53,900,000 | 83,200,000 |
Other operating expenses | 5,800,000 | 4,000,000 | 9,600,000 | 4,000,000 |
Operating (loss) income | (26,900,000) | 79,700,000 | 72,700,000 | 700,400,000 |
Interest expense, net | 36,500,000 | 10,300,000 | 73,200,000 | 11,300,000 |
Loss on extinguishment of debt | 0 | 24,000,000 | 0 | 24,000,000 |
Other expense, net | 1,000,000 | 2,500,000 | 3,900,000 | 1,600,000 |
(Loss) income before income taxes | (64,400,000) | 42,900,000 | (4,400,000) | 663,500,000 |
(Benefit from) provision for income taxes | (11,200,000) | 23,600,000 | 0 | 164,300,000 |
Net (loss) income | $ (53,200,000) | $ 19,300,000 | $ (4,400,000) | $ 499,200,000 |
Basic (loss) earnings per share | $ (0.80) | $ 0.37 | $ (0.07) | $ 10.62 |
Diluted (loss) earnings per share | $ (0.80) | $ 0.36 | $ (0.07) | $ 10.47 |
Weighted-average shares outstanding - basic | 66.8 | 52.2 | 66.7 | 47 |
Weighted-average shares outstanding - diluted | 66.8 | 52.9 | 66.7 | 47.7 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (53.2) | $ 19.3 | $ (4.4) | $ 499.2 |
Other comprehensive income (loss) | ||||
Changes in cumulative translation adjustment, net of tax | 7.4 | (66.1) | 38.1 | (66) |
Changes in unrealized (losses) gains from investments, net of tax | (0.1) | (0.2) | 0.1 | (0.6) |
Net unrealized gains on derivative instruments | 40 | 4.4 | 23.1 | 4.6 |
Reclassification of net realized (gains) losses on derivative instruments included in net (loss) income | (4.3) | 1 | (10) | 0.9 |
Total change in unrealized gains from cash flow hedges, net of tax | 35.7 | 5.4 | 13.1 | 5.5 |
Comprehensive (loss) income | $ (10.2) | $ (41.6) | $ 46.9 | $ 438.1 |
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 (loss) income | Retained earnings |
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 | 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 income (loss), net of tax | (0.2) | (0.2) | |||
Net (loss) 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 (loss) 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 | 0.8 | |||
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 income (loss), net of tax | (60.9) | (60.9) | |||
Net (loss) 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 |
Balance (in shares) at Jan. 01, 2023 | 66.4 | ||||
Balance at Jan. 01, 2023 | 4,934.6 | $ 0 | 2,804.3 | (67.6) | 2,197.9 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of common stock under equity compensation plans (in shares) | 0.3 | ||||
Issuance of common stock under equity compensation plans | 3.9 | $ 0.1 | 3.8 | ||
Stock-based compensation expense | 10.4 | 10.4 | |||
Tax withholdings related to vesting of stock-based awards (in shares) | (0.1) | ||||
Tax withholdings related to vesting of stock-based awards | (9.5) | (9.5) | |||
Other comprehensive income (loss), net of tax | 8.3 | 8.3 | |||
Net (loss) income | 48.8 | 48.8 | |||
Balance (in shares) at Apr. 02, 2023 | 66.6 | ||||
Balance at Apr. 02, 2023 | 4,996.5 | $ 0.1 | 2,809 | (59.3) | 2,246.7 |
Balance (in shares) at Jan. 01, 2023 | 66.4 | ||||
Balance at Jan. 01, 2023 | 4,934.6 | $ 0 | 2,804.3 | (67.6) | 2,197.9 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net (loss) income | (4.4) | ||||
Balance (in shares) at Jul. 02, 2023 | 66.8 | ||||
Balance at Jul. 02, 2023 | 5,002.5 | $ 0.1 | 2,825.2 | (16.3) | 2,193.5 |
Balance (in shares) at Apr. 02, 2023 | 66.6 | ||||
Balance at Apr. 02, 2023 | 4,996.5 | $ 0.1 | 2,809 | (59.3) | 2,246.7 |
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 | 5.5 | $ 0 | 5.5 | ||
Stock-based compensation expense | 13.7 | 13.7 | |||
Tax withholdings related to vesting of stock-based awards (in shares) | 0 | ||||
Tax withholdings related to vesting of stock-based awards | (3) | (3) | |||
Other comprehensive income (loss), net of tax | 43 | 43 | |||
Net (loss) income | (53.2) | (53.2) | |||
Balance (in shares) at Jul. 02, 2023 | 66.8 | ||||
Balance at Jul. 02, 2023 | $ 5,002.5 | $ 0.1 | $ 2,825.2 | $ (16.3) | $ 2,193.5 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 6 Months Ended | |
Jul. 02, 2023 | Jul. 03, 2022 | |
OPERATING ACTIVITIES | ||
Net (loss) income | $ (4.4) | $ 499.2 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization | 228.7 | 62.8 |
Stock-based compensation expense | 25.2 | 23.3 |
Net change in operating lease right-of-use assets and liabilities | 0.2 | 9.9 |
Payment of accreted interest on contingent and deferred consideration | (9.7) | (10.4) |
Loss on extinguishment of debt | 0 | 24 |
Other non-cash, net | (0.7) | 13.7 |
Changes in assets and liabilities: | ||
Accounts receivable | 214.5 | 232.3 |
Inventories | (86) | (36.1) |
Prepaid expenses and other current and non-current assets | (37.8) | (9.8) |
Accounts payable | (35) | (46.8) |
Accrued payroll and related expenses | (57) | (9.1) |
Income taxes payable | (46.3) | 1.6 |
Other current and non-current liabilities | (33.4) | (29) |
Net cash provided by operating activities | 158.3 | 725.6 |
INVESTING ACTIVITIES | ||
Acquisitions of property, plant, equipment and intangibles | (117.3) | (48.7) |
Acquisition of businesses, net of cash and restricted cash acquired | 0 | (1,511.4) |
Proceeds from government assistance allocated to fixed assets | 2.8 | 10.4 |
Purchases of marketable securities | (50.6) | (33.6) |
Proceeds from sale of marketable securities | 53.9 | 28.2 |
Net cash used for investing activities | (111.2) | (1,555.1) |
FINANCING ACTIVITIES | ||
Proceeds from issuance of common stock | 7.3 | 4.4 |
Proceeds from long-term borrowings, net of debt issuance costs | 0 | 2,734.8 |
Payments on long-term borrowings and extinguishment costs | (123.8) | (2,284.4) |
Payments of tax withholdings related to vesting of stock-based awards | (12.5) | (7.5) |
Principal payments of acquisition contingent consideration | 0 | (4.2) |
Principal payments of deferred consideration | (30.3) | (33.4) |
Net cash (used for) provided by financing activities | (159.3) | 409.7 |
Effect of exchange rates on cash | (2.1) | (2.4) |
Net decrease in cash, cash equivalents and restricted cash | (114.3) | (422.2) |
Cash, cash equivalents and restricted cash at beginning of period | 293.9 | 802.8 |
Cash, cash equivalents and restricted cash at end of period | 179.6 | 380.6 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION | ||
Purchase of property, equipment and intangibles by incurring current liabilities | 18.6 | 2.8 |
Capital expenditures to be reimbursed under a government contract | 0 | 1.4 |
Transfer of instrument inventories to fixed assets | 67.3 | 12.1 |
Reduction of other current liabilities upon issuance of restricted share units | $ 1.9 | $ 2.9 |
Basis of Presentation and Summa
Basis of Presentation and Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 02, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Consolidated Financial Statements of QuidelOrtho Corporation and its subsidiaries (the “Company” or “QuidelOrtho”) have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The information at July 2, 2023, and for the three and six months ended July 2, 2023 and July 3, 2022, is unaudited. For further information, refer to the Company’s Consolidated Financial Statements and notes thereto for the fiscal year ended January 1, 2023 included in QuidelOrtho’s 2022 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 2023 and 2022, the Company’s fiscal year will end or has ended on December 31, 2023 and January 1, 2023, respectively. For 2023 and 2022, the Company’s second quarter ended on July 2, 2023 and July 3, 2022, respectively. The three and six months ended July 2, 2023 and July 3, 2022 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. Recent Accounting Pronouncements There have been no accounting pronouncements issued or adopted during the six months ended July 2, 2023 that are expected to have a material impact on the Company’s financial statements. |
Business Combination
Business Combination | 6 Months Ended |
Jul. 02, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combination | Business Combination 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 (formerly Coronado Topco, Inc.), Orca Holdco, Inc., Laguna Merger Sub, Inc. and Orca Holdco 2, Inc., Quidel and Ortho consummated a business combination (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 enhance the Company’s revenue profile and expand the Company’s geographic footprint and product diversity. The Combinations were completed for a total consideration of approximately $4.3 billion, which included 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 Company funded the cash portion of the purchase price with cash on its balance sheet and a portion of the Term Loan proceeds from the Financing (each as defined in Note 8). The Combinations have been accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their fair value as of the date of the consummation of the Combinations, with Quidel considered the accounting and the legal acquirer. The assessment of the fair value of assets acquired and liabilities assumed was finalized in the second quarter of 2023. Measurement period adjustments decreased goodwill by $23.9 million in the six months ended July 2, 2023, reflecting (i) an increase of $22.3 million to deferred tax liability, (ii) an increase of $2.9 million to income tax payable and (iii) a decrease of $1.3 million in deferred tax asset. The related impact to net earnings that would have been recognized in previous periods if the adjustments were recognized as of the date of the consummation of the Combinations is immaterial to the Company’s consolidated financial statements. 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: Three Months Ended Six Months Ended (In millions) 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 income (loss) 22.3 (13.0) 500.8 116.7 This unaudited supplemental pro forma financial information is presented for informational 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 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; • decreases in interest expense 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 the change in amortization of deferred financing fees; • the removal of loss on extinguishment of debt from Ortho’s results in fiscal year 2021 and the reclassification of loss on extinguishment of debt in fiscal years 2021 and 2022; • the reclassification of expense related to the accelerated vesting of certain stock awards of Ortho’s former chief executive officer; and • tax impacts related to the above adjustments. |
Computation of Earnings Per Sha
Computation of Earnings Per Share | 6 Months Ended |
Jul. 02, 2023 | |
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 (loss) 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 and unvested restricted stock units (“RSUs”). 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 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Basic weighted-average shares of common stock outstanding 66.8 52.2 66.7 47.0 Dilutive potential shares issuable from stock options and RSUs (1) — 0.7 — 0.7 Diluted weighted-average shares of common stock outstanding 66.8 52.9 66.7 47.7 (1) In the three and six months ended July 2, 2023, all potential shares of common stock issuable for stock options and RSUs were excluded from the dilutive calculations above because the effect of including them would have been anti-dilutive. The dilutive effect of potential shares of common stock issuable for stock options and RSUs on the weighted-average number of shares of common stock outstanding would have been as follows: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 2, 2023 Basic weighted-average shares of common stock outstanding 66.8 66.7 Dilutive potential shares issuable from stock options and RSUs 0.4 0.5 Diluted weighted-average shares of common stock outstanding 67.2 67.2 Stock options and RSUs where the combined exercise price and unrecognized stock-based compensation was greater than the average market price for the Company’s common stock were not included in the computations of diluted weighted-average |
Revenue
Revenue | 6 Months Ended |
Jul. 02, 2023 | |
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 (a “contract asset”). Contract assets are included within Prepaid expenses and other current 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 as of July 2, 2023 and January 1, 2023 was $59.3 million and $49.6 million, respectively. The contract asset balance consisted of the following components, all of which related to agreements acquired by the Company in connection with the Combinations: • a customer supply agreement under which the difference between the timing of invoicing and revenue recognition resulted in a contract asset of $5.7 million and $6.8 million as of July 2, 2023 and January 1, 2023, respectively; • 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 $44.7 million and $38.5 million as of July 2, 2023 and January 1, 2023, respectively; and • one of the Company’s contract manufacturing agreements that recognizes revenue as the products are manufactured resulted in a contract asset of $8.9 million and $4.3 million as of July 2, 2023 and January 1, 2023, respectively. 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 and six months ended July 2, 2023. 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 $41.2 million as of July 2, 2023 and $76.4 million as of January 1, 2023. 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 $13.5 million and $9.4 million as of July 2, 2023 and January 1, 2023, respectively, and was included in Other liabilities in the Consolidated Balance Sheets. The amount of deferred revenue as of January 1, 2023 that was recorded in Total revenues during the three and six months ended July 2, 2023 was $19.5 million and $68.5 million, respectively. Joint Business with Grifols 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 agreed to 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 $6.1 million and $29.7 million during the three and six months ended July 2, 2023, respectively, and $5.6 million during the three and six months ended July 3, 2022. This included the Company’s portion of the pre-tax net profit of $5.5 million and $6.7 million during the three and six months ended July 2, 2023, respectively, and $3.6 million during 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 included revenue from collaboration and royalty agreements of $0.6 million and $23.0 million during the three and six months ended July 2, 2023, respectively, and $2.0 million during the three and six months ended July 3, 2022, which is presented on a net basis within Total revenues. Disaggregation of Revenue The following table summarizes Total revenues by business unit: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Labs $ 361.4 $ 157.4 $ 732.1 $ 170.7 Transfusion Medicine 163.3 68.2 319.2 68.2 Point of Care 134.2 367.1 442.3 1,310.1 Molecular Diagnostics 6.2 20.7 17.6 66.7 Total revenues $ 665.1 $ 613.4 $ 1,511.2 $ 1,615.7 Concentration of Revenue and Credit Risk For the six months ended July 2, 2023, no customers individually accounted for more than 10% of Total revenues. For the six months ended July 3, 2022, one customer and one distributor represented 37% and 11%, respectively, of Total revenues. As of July 2, 2023, customers with a balance due in excess of 10% of Accounts receivable, net totaled $30.7 million. As of January 1, 2023, customers with balances due in excess of 10% of Accounts receivable, net totaled $161.9 million. Revenue related to our respiratory products accounted for 13% and 23% of Total revenues for the three and six months ended July 2, 2023, respectively, and 54% and 78% for the three and six months ended July 3, 2022, respectively. |
Segment and Geographic Informat
Segment and Geographic Information | 6 Months Ended |
Jul. 02, 2023 | |
Industry And Geographic Information [Abstract] | |
Segment and Geographic Information | Segment and Geographic Information Total revenues by reportable segment are as follows: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 North America $ 378.8 $ 438.2 $ 961.6 $ 1,399.7 EMEA 80.6 42.1 161.9 57.3 China 81.3 73.6 151.9 82.3 Other 124.4 59.5 235.8 76.4 Total revenues $ 665.1 $ 613.4 $ 1,511.2 $ 1,615.7 In the fourth quarter of 2022, the Company revised the internal allocation of certain global costs primarily between the North America segment and Corporate to better align costs that impact the Company as a whole. Prior periods have been revised to align with the current period presentation. The following table sets forth Adjusted EBITDA by segment and the reconciliations to (Loss) income before income taxes for the three and six months ended July 2, 2023 and July 3, 2022: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 North America $ 176.3 $ 239.2 $ 454.7 $ 952.6 EMEA 5.3 12.7 12.5 16.2 China 30.2 35.4 58.7 39.2 Other 36.3 24.8 58.1 34.3 Total segment Adjusted EBITDA 248.1 312.1 584.0 1,042.3 Corporate (1) (134.8) (93.9) (225.4) (183.2) Interest expense, net (36.5) (10.3) (73.2) (11.3) Depreciation and amortization (114.5) (47.5) (228.7) (62.8) Acquisition and integration costs (24.2) (80.2) (53.9) (83.2) Amortization of deferred cloud computing implementation costs (1.5) (1.3) (3.1) (2.3) EU medical device regulation transition costs (2) (0.7) (0.4) (1.5) (0.4) Impairment of long-lived assets (0.5) — (1.0) — Loss on investments (0.2) (0.8) (0.2) (0.8) Tax indemnification income 0.4 — 0.1 — Loss on extinguishment of debt — (24.0) — (24.0) Unwind inventory fair value adjustment — (11.2) — (11.2) Employee compensation charges and other costs — (0.5) (1.5) (0.5) Change in fair value of acquisition contingencies — (0.1) — (0.1) Derivative mark-to-market gain — 1.0 — 1.0 (Loss) income before income taxes $ (64.4) $ 42.9 $ (4.4) $ 663.5 (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 onwards. The chief operating decision maker 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. |
Income Taxes
Income Taxes | 6 Months Ended |
Jul. 02, 2023 | |
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 2, 2023, the Company recognized an income tax benefit of $11.2 million in relation to loss before income taxes of $64.4 million, resulting in an effective benefit tax rate of 17.4%. For the three months ended July 3, 2022, the Company recognized a provision for income taxes of $23.6 million in relation to income before income taxes of $42.9 million, resulting in an effective tax rate of 55.0%. For the three months ended July 2, 2023, the effective tax rate for the period differs from the U.S. federal statutory rate primarily due to non-U.S. earnings being taxed at rates that are different than the U.S. statutory rate, operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances, R&D credits and foreign tax credits, partially offset by foreign exchange losses and Global Intangible Low-Tax Income. For the three months ended July 3, 2022, the effective tax rate was impacted primarily by income taxes owed in U.S. states. For the six months ended July 2, 2023, the recognized amount of income tax benefit was not material in relation to loss before income taxes of $4.4 million, resulting in an effective benefit tax rate of 0.7%. For the six months ended July 3, 2022, the Company recognized a provision for income taxes of $164.3 million in relation to income before income taxes of $663.5 million, resulting in an effective tax rate of 24.8%. For the six months ended July 2, 2023, the effective tax rate for the period differs from the U.S. federal statutory rate primarily due to net operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances and Global Intangible Low-Tax Income, partially offset by U.S. earnings being taxed at rates that are different than the U.S. statutory rate, R&D credit, Foreign Tax Credits and foreign exchange losses. For the six months ended July 3, 2022, the effective tax rate was primarily impacted by incomes taxes owed in the U.S. states. The balance of unrecognized tax benefits at July 2, 2023, not including interest and penalties, was $38.8 million, of which $27.6 million could 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 2, 2023, the Company had approximately $8.1 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 $14.3 million. 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 onwards are subject to examination by the U.S. authorities. The Company’s state and foreign tax years for 2001 and onwards 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. Indemnification Assets |
Balance Sheet Account Details
Balance Sheet Account Details | 6 Months Ended |
Jul. 02, 2023 | |
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 2, 2023 January 1, 2023 Cash and cash equivalents $ 178.6 $ 292.9 Restricted cash included in Other assets 1.0 1.0 Cash, cash equivalents and restricted cash $ 179.6 $ 293.9 Marketable Securities The following table is a summary of marketable securities: July 2, 2023 January 1, 2023 (In millions) Amortized Cost Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Losses Fair Value Corporate bonds $ 34.7 $ (0.3) $ 34.4 $ 40.5 $ (0.5) $ 40.0 Corporate asset-backed securities 8.7 — 8.7 6.7 — 6.7 U.S. government securities — — — 2.0 — 2.0 Agency bonds — — — 1.0 — 1.0 Sovereign government bonds 2.0 — 2.0 1.9 — 1.9 Foreign and other — — — 0.5 — 0.5 Total marketable securities, current 45.4 (0.3) 45.1 52.6 (0.5) 52.1 Corporate bonds, non-current 17.6 (0.1) 17.5 13.3 (0.1) 13.2 Corporate asset-backed securities, non-current 5.8 (0.1) 5.7 7.9 (0.1) 7.8 Agency bonds, non-current 1.5 — 1.5 — — — Total marketable securities $ 70.3 $ (0.5) $ 69.8 $ 73.8 $ (0.7) $ 73.1 Accounts Receivable, Net Accounts receivables primarily consisted of trade accounts receivables with maturities of one year or less and are presented net of reserves: (In millions) July 2, 2023 January 1, 2023 Accounts receivable $ 317.9 $ 543.0 Allowance for contract rebates and discounts (58.5) (77.1) Allowance for doubtful accounts (12.7) (12.0) Total accounts receivable, net $ 246.7 $ 453.9 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 2, 2023 January 1, 2023 Raw materials $ 203.2 $ 185.2 Work-in-process (materials, labor and overhead) 107.2 82.7 Finished goods (materials, labor and overhead) 273.2 295.1 Total inventories (1) $ 583.6 $ 563.0 Inventories $ 542.2 $ 524.1 Other assets (2) 41.4 38.9 Total inventories $ 583.6 $ 563.0 (1) Includes adjustment of approximately $39 million in the six months ended July 2, 2023 due to changes in estimates to decrease inventory obsolescence reserves from the prior period. (2) Other assets includes inventory expected to remain on hand beyond one year. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: (In millions) July 2, 2023 January 1, 2023 Prepaid expenses $ 95.9 $ 96.7 Income taxes and other tax receivables 81.5 38.6 Contract assets 59.3 49.6 Other receivables 39.1 44.3 Derivatives 16.6 22.0 Other 3.1 0.9 Total prepaid expenses and other current assets $ 295.5 $ 252.1 Goodwill Changes in goodwill were as follows: (In millions) North America EMEA China Other Total Balance at January 1, 2023 $ 1,547.7 $ 358.6 $ 118.1 $ 452.4 $ 2,476.8 Purchase accounting adjustments (13.4) (4.1) (1.3) (5.1) (23.9) Foreign currency translation 0.3 10.2 (5.7) 13.2 18.0 Balance at July 2, 2023 $ 1,534.6 $ 364.7 $ 111.1 $ 460.5 $ 2,470.9 Other Current Liabilities Other current liabilities consisted of the following: (In millions) July 2, 2023 January 1, 2023 Deferred revenue $ 41.2 $ 76.4 Accrued commissions and rebates 51.3 55.1 Accrued other taxes payable 34.0 9.3 Operating lease liabilities 26.3 24.4 Derivatives 10.5 19.7 Deferred consideration — 39.3 Other 109.8 101.2 Total other current liabilities $ 273.1 $ 325.4 |
Long-term Borrowings
Long-term Borrowings | 6 Months Ended |
Jul. 02, 2023 | |
Debt Disclosure [Abstract] | |
Long-term Borrowings | Long-term Borrowings The components of borrowings were as follows: (In millions) July 2, 2023 January 1, 2023 Term Loan $ 2,523.8 $ 2,646.9 Financing lease obligation 0.6 0.8 Other long-term borrowings 0.8 1.2 Unamortized deferred financing costs (9.3) (10.6) Total borrowings 2,515.9 2,638.3 Less: current portion (207.4) (207.5) Long-term borrowings $ 2,308.5 $ 2,430.8 The credit agreement, dated May 27, 2022, by and among the Company, as borrower, Bank of America, N.A., as administrative agent and swing line lender, and the other lenders and L/C issuers party thereto (the “Credit Agreement”) consists of a $2,750.0 million senior secured term loan facility (the “Term Loan”) and an $800.0 million revolving credit facility (the “Revolving Credit Facility” and with the Term Loan, the “Financing”). As of July 2, 2023 and January 1, 2023, there were no amounts outstanding under the Revolving Credit Facility. As of July 2, 2023, letters of credit issued under the Revolving Credit Facility totaled $12.9 million, which reduced the available amount under the Revolving Credit Facility to $787.1 million. During the six months ended July 2, 2023, the Company made $123.1 million in payments on the Term Loan, including a voluntary prepayment of $20.0 million. 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 2, 2023. The following table provides the detailed amounts within Interest expense, net for the three and six months ended July 2, 2023 and July 3, 2022: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Term Loan $ 44.2 $ 8.4 $ 85.1 $ 8.4 Revolving Credit Facility 0.5 0.3 1.0 0.4 Amortization of deferred financing costs 0.8 0.2 1.6 0.3 Derivative instruments and other (7.2) 1.8 (11.7) 2.9 Interest income (1.8) (0.4) (2.8) (0.7) Interest expense, net $ 36.5 $ 10.3 $ 73.2 $ 11.3 |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jul. 02, 2023 | |
Equity [Abstract] | |
Stock-Based Compensation | Stock-based Compensation Stock-based compensation expense was as follows: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Cost of sales $ 1.1 $ 0.6 $ 2.1 $ 1.3 Research and development 1.3 1.3 2.6 2.4 Selling, marketing and administrative 10.0 8.0 17.2 13.3 Acquisition and integration costs 4.6 6.0 9.1 6.3 Total stock-based compensation expense $ 17.0 $ 15.9 $ 31.0 $ 23.3 The table above includes compensation expense related to liability-classified awards of $2.8 million and $5.8 million for the three and six months ended July 2, 2023, respectively, and $10.9 million for the three and six months ended July 3, 2022, which has been or is expected to be settled in cash. These awards represent the $7.14 per share cash settled portion of the replacement awards issued in connection with the Combinations. The Company granted 253 thousand stock options during the six months ended July 2, 2023. As of July 2, 2023, total unrecognized compensation expense related to stock options was approximately $25.4 million and the related weighted-average period over which it is expected to be recognized is approximately 2.0 years. The maximum contractual term of the Company’s stock options is ten 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: Six Months Ended July 2, 2023 July 3, 2022 Risk-free interest rate 3.52 % 1.99 % Expected option life (in years) 5.53 4.89 Volatility rate 57 % 58 % Dividend rate 0 % 0 % Weighted-average grant date fair value $48.17 $50.86 In January 2023, the Compensation Committee of the Company’s Board of Directors approved a modification to the vesting terms of certain stock options that were previously granted by Ortho to certain Ortho employees, such that the stock options will vest on December 31, 2023. The modification resulted in an additional $3.1 million and $5.1 million of stock-based compensation expense recognized during the three and six months ended July 2, 2023, respectively. The total unrecognized expense relating to unvested shares for these stock options as of July 2, 2023 was $6.0 million and will be recognized through December 31, 2023. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jul. 02, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies From 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 its 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 the Company is not able to estimate a possible loss or range of loss, the Company is not able to determine whether the loss will have a material adverse effect on its business, financial condition, results of operations or liquidity. Management believes that all such current legal actions, in the aggregate, are not expected to 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. 02, 2023 | |
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 2, 2023 January 1, 2023 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 6.1 $ — $ — $ 6.1 $ 0.6 $ 2.1 $ — $ 2.7 Marketable securities — 69.8 — 69.8 2.0 71.1 — 73.1 Derivative assets — 32.6 — 32.6 — 22.0 — 22.0 Total assets measured at fair value $ 6.1 $ 102.4 $ — $ 108.5 $ 2.6 $ 95.2 $ — $ 97.8 Liabilities: Derivative liabilities $ — $ 10.5 $ — $ 10.5 $ — $ 21.8 $ — $ 21.8 Contingent consideration — — 0.1 0.1 — — 0.1 0.1 Deferred consideration — — — — — 39.3 — 39.3 Total liabilities measured at fair value $ — $ 10.5 $ 0.1 $ 10.6 $ — $ 61.1 $ 0.1 $ 61.2 There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the three and six months ended July 2, 2023 and fiscal year 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 paid its last annual installment of $40.0 million during the three months ended July 2, 2023. Financial Instruments Not Measured at Fair Value The estimated fair value of the Company’s borrowings under the Term Loan was $2,476.4 million at July 2, 2023, compared to the carrying amount, excluding debt issuance costs, of $2,523.8 million. The estimate of fair value is generally based on the quoted market prices for similar issuances of long-term debt with the same maturities, which is classified as a Level 2 input. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jul. 02, 2023 | |
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 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 its interest rate swaps as cash flow hedges. The Company records gains and losses due to changes in fair value of the derivatives within Other comprehensive income (loss) (“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. Pre-tax unrealized gains of $29.4 million are expected to be reclassified from OCI to earnings in the next 12 months. The following table summarizes the Company’s interest rate derivative agreements as of July 2, 2023, all of which were interest rate swaps: Notional Amount (In millions) (1) Description Hedge Designation Effective Date Expiration Date $ 500.0 Pay 1.58% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge May 29, 2022 December 31, 2023 $ 397.2 Pay 3.765% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 144.4 Pay 3.7725% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 216.7 Pay 3.7675% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 288.9 Pay 3.7575% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 252.8 Pay 3.7725% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 (1) The notional value of interest rate swap contracts with an effective date of December 30, 2022 is expected to increase to $1.8 billion on December 29, 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 and may use 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, Euro, Indian Rupee, Japanese Yen, Mexican Peso, 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 Total revenues and 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 $5.4 million within OCI as of July 2, 2023 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 and 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 in earnings within Other expense, net. The following table provides details of the currency hedging instruments outstanding as of July 2, 2023: Description Notional Amount Hedge Designation Foreign currency forward contracts $ 275.1 Cash Flow Hedge Foreign currency forward contracts $ 589.9 Non-designated The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within Accumulated other comprehensive (loss) income (“AOCI”) for the three and six months ended July 2, 2023: Designated Hedging Instruments (In millions) Amount of Loss (Gain) Recognized in OCI on Hedges Location of Amounts Reclassified From AOCI Into Income Amount of Loss (Gain) Reclassified From AOCI Into Income Three Months Ended July 2, 2023 Foreign currency forward contracts (sales) $ (0.4) Total revenues $ 1.8 Foreign currency forward contracts (purchases) $ (2.1) Cost of sales, excluding amortization of intangibles $ 1.3 Interest rate derivatives $ (47.0) Interest expense, net $ (7.4) Six Months Ended July 2, 2023 Foreign currency forward contracts (sales) $ 1.7 Total revenues $ 0.9 Foreign currency forward contracts (purchases) $ (2.1) Cost of sales, excluding amortization of intangibles $ 1.7 Interest rate derivatives $ (26.1) Interest expense, net $ (12.6) Gains and losses from designated derivative and non-derivative instruments within AOCI for the three and six months ended July 3, 2022 were not material. Fair value gains on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were $3.2 million and $0.5 million for the three and six months ended July 2, 2023, respectively. Fair value gains and losses that do not qualify for hedge accounting treatment were not material for the three and six months ended July 3, 2022. The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the unaudited Consolidated Balance Sheets as of July 2, 2023 and January 1, 2023: (In millions) July 2, 2023 January 1, 2023 Designated cash flow hedges Interest rate derivatives: Prepaid expenses and other current assets $ 9.4 $ 15.9 Other assets $ 16.0 $ — Other liabilities $ — $ 2.1 Foreign currency forward contracts: Prepaid expenses and other current assets $ 3.6 $ 4.6 Other current liabilities $ 7.7 $ 14.3 Non-designated hedging instruments Foreign currency forward contracts: Prepaid expenses and other current assets $ 3.6 $ 1.5 Other current liabilities $ 2.8 $ 5.4 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jul. 02, 2023 | |
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 partnered with Quotient to commercialize, when approved, Quotient’s next generation product in immunohematology, a transfusion diagnostic patient immunohematology microarray intended for use with Quotient’s MosaiQ ® instruments. Under the Letter Agreement, the Company was required to make certain milestone payments to Quotient as specified milestones and benchmarks were achieved. Quotient subsequently revised its business strategy to pause development and commercialization of its MosaiQ testing solutions |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 6 Months Ended |
Jul. 02, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Loss | Accumulated Other Comprehensive Loss The balance of Accumulated Other Comprehensive Loss, net of tax, was as follows for the three and six months ended July 2, 2023 and July 3, 2022: Three Months Ended July 2, 2023 (In millions) Pension and Other Post- Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income Balance at April 2, 2023 $ 0.7 $ (21.1) $ (0.3) $ (38.6) $ (59.3) Current period deferrals (1) — 40.0 (0.1) 7.4 47.3 Amounts reclassified to net income — (4.3) — — (4.3) Net change — 35.7 (0.1) 7.4 43.0 Balance at July 2, 2023 $ 0.7 $ 14.6 $ (0.4) $ (31.2) $ (16.3) Six Months Ended July 2, 2023 Pension and Other Post- Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income Balance at January 1, 2023 $ 0.7 $ 1.5 $ (0.5) $ (69.3) $ (67.6) Current period deferrals (1) — 23.1 0.1 38.1 61.3 Amounts reclassified to net income — (10.0) — — (10.0) Net change — 13.1 0.1 38.1 51.3 Balance at July 2, 2023 $ 0.7 $ 14.6 $ (0.4) $ (31.2) $ (16.3) Three Months Ended July 3, 2022 (In millions) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance at April 3, 2022 $ 0.1 $ (0.5) $ 0.6 $ 0.2 Current period deferrals (2) 4.4 (0.2) (66.1) (61.9) Amounts reclassified to net income 1.0 — — 1.0 Net change 5.4 (0.2) (66.1) (60.9) Balance at July 3, 2022 $ 5.5 $ (0.7) $ (65.5) $ (60.7) Six Months Ended July 3, 2022 Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance at January 2, 2022 $ — $ (0.1) $ 0.5 $ 0.4 Current period deferrals (2) 4.6 (0.6) (66.0) (62.0) Amounts reclassified to net income 0.9 — — 0.9 Net change 5.5 (0.6) (66.0) (61.1) Balance at July 3, 2022 $ 5.5 $ (0.7) $ (65.5) $ (60.7) (1) Includes tax impact of $9.5 million and $3.4 million related to cash flow hedges for the three and six months ended July 2, 2023, respectively. |
Basis of Presentation and Sum_2
Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 02, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited Consolidated Financial Statements of QuidelOrtho Corporation and its subsidiaries (the “Company” or “QuidelOrtho”) have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. The information at July 2, 2023, and for the three and six months ended July 2, 2023 and July 3, 2022, is unaudited. For further information, refer to the Company’s Consolidated Financial Statements and notes thereto for the fiscal year ended January 1, 2023 included in QuidelOrtho’s 2022 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 2023 and 2022, the Company’s fiscal year will end or has ended on December 31, 2023 and January 1, 2023, respectively. For 2023 and 2022, the Company’s second quarter ended on July 2, 2023 and July 3, 2022, respectively. The three and six months ended July 2, 2023 and July 3, 2022 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. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There have been no accounting pronouncements issued or adopted during the six months ended July 2, 2023 that are expected to have a material impact on the Company’s financial statements. |
Business Combination (Tables)
Business Combination (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
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: Three Months Ended Six Months Ended (In millions) 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 income (loss) 22.3 (13.0) 500.8 116.7 |
Computation of Earnings Per S_2
Computation of Earnings Per Share (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
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 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Basic weighted-average shares of common stock outstanding 66.8 52.2 66.7 47.0 Dilutive potential shares issuable from stock options and RSUs (1) — 0.7 — 0.7 Diluted weighted-average shares of common stock outstanding 66.8 52.9 66.7 47.7 (1) In the three and six months ended July 2, 2023, all potential shares of common stock issuable for stock options and RSUs were excluded from the dilutive calculations above because the effect of including them would have been anti-dilutive. The dilutive effect of potential shares of common stock issuable for stock options and RSUs on the weighted-average number of shares of common stock outstanding would have been as follows: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 2, 2023 Basic weighted-average shares of common stock outstanding 66.8 66.7 Dilutive potential shares issuable from stock options and RSUs 0.4 0.5 Diluted weighted-average shares of common stock outstanding 67.2 67.2 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table summarizes Total revenues by business unit: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Labs $ 361.4 $ 157.4 $ 732.1 $ 170.7 Transfusion Medicine 163.3 68.2 319.2 68.2 Point of Care 134.2 367.1 442.3 1,310.1 Molecular Diagnostics 6.2 20.7 17.6 66.7 Total revenues $ 665.1 $ 613.4 $ 1,511.2 $ 1,615.7 |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
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 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 North America $ 378.8 $ 438.2 $ 961.6 $ 1,399.7 EMEA 80.6 42.1 161.9 57.3 China 81.3 73.6 151.9 82.3 Other 124.4 59.5 235.8 76.4 Total revenues $ 665.1 $ 613.4 $ 1,511.2 $ 1,615.7 |
Schedule of Segment Reporting Information, by Segment | The following table sets forth Adjusted EBITDA by segment and the reconciliations to (Loss) income before income taxes for the three and six months ended July 2, 2023 and July 3, 2022: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 North America $ 176.3 $ 239.2 $ 454.7 $ 952.6 EMEA 5.3 12.7 12.5 16.2 China 30.2 35.4 58.7 39.2 Other 36.3 24.8 58.1 34.3 Total segment Adjusted EBITDA 248.1 312.1 584.0 1,042.3 Corporate (1) (134.8) (93.9) (225.4) (183.2) Interest expense, net (36.5) (10.3) (73.2) (11.3) Depreciation and amortization (114.5) (47.5) (228.7) (62.8) Acquisition and integration costs (24.2) (80.2) (53.9) (83.2) Amortization of deferred cloud computing implementation costs (1.5) (1.3) (3.1) (2.3) EU medical device regulation transition costs (2) (0.7) (0.4) (1.5) (0.4) Impairment of long-lived assets (0.5) — (1.0) — Loss on investments (0.2) (0.8) (0.2) (0.8) Tax indemnification income 0.4 — 0.1 — Loss on extinguishment of debt — (24.0) — (24.0) Unwind inventory fair value adjustment — (11.2) — (11.2) Employee compensation charges and other costs — (0.5) (1.5) (0.5) Change in fair value of acquisition contingencies — (0.1) — (0.1) Derivative mark-to-market gain — 1.0 — 1.0 (Loss) income before income taxes $ (64.4) $ 42.9 $ (4.4) $ 663.5 (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. |
Balance Sheet Account Details (
Balance Sheet Account Details (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash (In millions) July 2, 2023 January 1, 2023 Cash and cash equivalents $ 178.6 $ 292.9 Restricted cash included in Other assets 1.0 1.0 Cash, cash equivalents and restricted cash $ 179.6 $ 293.9 |
Marketable Securities | The following table is a summary of marketable securities: July 2, 2023 January 1, 2023 (In millions) Amortized Cost Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Losses Fair Value Corporate bonds $ 34.7 $ (0.3) $ 34.4 $ 40.5 $ (0.5) $ 40.0 Corporate asset-backed securities 8.7 — 8.7 6.7 — 6.7 U.S. government securities — — — 2.0 — 2.0 Agency bonds — — — 1.0 — 1.0 Sovereign government bonds 2.0 — 2.0 1.9 — 1.9 Foreign and other — — — 0.5 — 0.5 Total marketable securities, current 45.4 (0.3) 45.1 52.6 (0.5) 52.1 Corporate bonds, non-current 17.6 (0.1) 17.5 13.3 (0.1) 13.2 Corporate asset-backed securities, non-current 5.8 (0.1) 5.7 7.9 (0.1) 7.8 Agency bonds, non-current 1.5 — 1.5 — — — Total marketable securities $ 70.3 $ (0.5) $ 69.8 $ 73.8 $ (0.7) $ 73.1 |
Accounts Receivable, Net | Accounts receivables primarily consisted of trade accounts receivables with maturities of one year or less and are presented net of reserves: (In millions) July 2, 2023 January 1, 2023 Accounts receivable $ 317.9 $ 543.0 Allowance for contract rebates and discounts (58.5) (77.1) Allowance for doubtful accounts (12.7) (12.0) Total accounts receivable, net $ 246.7 $ 453.9 |
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 2, 2023 January 1, 2023 Raw materials $ 203.2 $ 185.2 Work-in-process (materials, labor and overhead) 107.2 82.7 Finished goods (materials, labor and overhead) 273.2 295.1 Total inventories (1) $ 583.6 $ 563.0 Inventories $ 542.2 $ 524.1 Other assets (2) 41.4 38.9 Total inventories $ 583.6 $ 563.0 (1) Includes adjustment of approximately $39 million in the six months ended July 2, 2023 due to changes in estimates to decrease inventory obsolescence reserves from the prior period. (2) Other assets includes inventory expected to remain on hand beyond one year. |
Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following: (In millions) July 2, 2023 January 1, 2023 Prepaid expenses $ 95.9 $ 96.7 Income taxes and other tax receivables 81.5 38.6 Contract assets 59.3 49.6 Other receivables 39.1 44.3 Derivatives 16.6 22.0 Other 3.1 0.9 Total prepaid expenses and other current assets $ 295.5 $ 252.1 |
Goodwill | Changes in goodwill were as follows: (In millions) North America EMEA China Other Total Balance at January 1, 2023 $ 1,547.7 $ 358.6 $ 118.1 $ 452.4 $ 2,476.8 Purchase accounting adjustments (13.4) (4.1) (1.3) (5.1) (23.9) Foreign currency translation 0.3 10.2 (5.7) 13.2 18.0 Balance at July 2, 2023 $ 1,534.6 $ 364.7 $ 111.1 $ 460.5 $ 2,470.9 |
Other Current Liabilities | Other current liabilities consisted of the following: (In millions) July 2, 2023 January 1, 2023 Deferred revenue $ 41.2 $ 76.4 Accrued commissions and rebates 51.3 55.1 Accrued other taxes payable 34.0 9.3 Operating lease liabilities 26.3 24.4 Derivatives 10.5 19.7 Deferred consideration — 39.3 Other 109.8 101.2 Total other current liabilities $ 273.1 $ 325.4 |
Long-term Borrowings (Tables)
Long-term Borrowings (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The components of borrowings were as follows: (In millions) July 2, 2023 January 1, 2023 Term Loan $ 2,523.8 $ 2,646.9 Financing lease obligation 0.6 0.8 Other long-term borrowings 0.8 1.2 Unamortized deferred financing costs (9.3) (10.6) Total borrowings 2,515.9 2,638.3 Less: current portion (207.4) (207.5) Long-term borrowings $ 2,308.5 $ 2,430.8 |
Schedule of Interest Expense | The following table provides the detailed amounts within Interest expense, net for the three and six months ended July 2, 2023 and July 3, 2022: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Term Loan $ 44.2 $ 8.4 $ 85.1 $ 8.4 Revolving Credit Facility 0.5 0.3 1.0 0.4 Amortization of deferred financing costs 0.8 0.2 1.6 0.3 Derivative instruments and other (7.2) 1.8 (11.7) 2.9 Interest income (1.8) (0.4) (2.8) (0.7) Interest expense, net $ 36.5 $ 10.3 $ 73.2 $ 11.3 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Equity [Abstract] | |
Compensation Expense Related to Stock-Based Compensation Plans | Stock-based compensation expense was as follows: Three Months Ended Six Months Ended (In millions) July 2, 2023 July 3, 2022 July 2, 2023 July 3, 2022 Cost of sales $ 1.1 $ 0.6 $ 2.1 $ 1.3 Research and development 1.3 1.3 2.6 2.4 Selling, marketing and administrative 10.0 8.0 17.2 13.3 Acquisition and integration costs 4.6 6.0 9.1 6.3 Total stock-based compensation expense $ 17.0 $ 15.9 $ 31.0 $ 23.3 |
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: Six Months Ended July 2, 2023 July 3, 2022 Risk-free interest rate 3.52 % 1.99 % Expected option life (in years) 5.53 4.89 Volatility rate 57 % 58 % Dividend rate 0 % 0 % Weighted-average grant date fair value $48.17 $50.86 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Fair Value Disclosures [Abstract] | |
Assets and 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 2, 2023 January 1, 2023 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 6.1 $ — $ — $ 6.1 $ 0.6 $ 2.1 $ — $ 2.7 Marketable securities — 69.8 — 69.8 2.0 71.1 — 73.1 Derivative assets — 32.6 — 32.6 — 22.0 — 22.0 Total assets measured at fair value $ 6.1 $ 102.4 $ — $ 108.5 $ 2.6 $ 95.2 $ — $ 97.8 Liabilities: Derivative liabilities $ — $ 10.5 $ — $ 10.5 $ — $ 21.8 $ — $ 21.8 Contingent consideration — — 0.1 0.1 — — 0.1 0.1 Deferred consideration — — — — — 39.3 — 39.3 Total liabilities measured at fair value $ — $ 10.5 $ 0.1 $ 10.6 $ — $ 61.1 $ 0.1 $ 61.2 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
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 2, 2023, all of which were interest rate swaps: Notional Amount (In millions) (1) Description Hedge Designation Effective Date Expiration Date $ 500.0 Pay 1.58% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge May 29, 2022 December 31, 2023 $ 397.2 Pay 3.765% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 144.4 Pay 3.7725% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 216.7 Pay 3.7675% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 288.9 Pay 3.7575% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 252.8 Pay 3.7725% fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 (1) The notional value of interest rate swap contracts with an effective date of December 30, 2022 is expected to increase to $1.8 billion on December 29, 2023. |
Schedule of Currency Hedging Instruments | The following table provides details of the currency hedging instruments outstanding as of July 2, 2023: Description Notional Amount Hedge Designation Foreign currency forward contracts $ 275.1 Cash Flow Hedge Foreign currency forward contracts $ 589.9 Non-designated |
Schedule of Derivative Instruments, Effect on Other Comprehensive (Loss) Income | The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within Accumulated other comprehensive (loss) income (“AOCI”) for the three and six months ended July 2, 2023: Designated Hedging Instruments (In millions) Amount of Loss (Gain) Recognized in OCI on Hedges Location of Amounts Reclassified From AOCI Into Income Amount of Loss (Gain) Reclassified From AOCI Into Income Three Months Ended July 2, 2023 Foreign currency forward contracts (sales) $ (0.4) Total revenues $ 1.8 Foreign currency forward contracts (purchases) $ (2.1) Cost of sales, excluding amortization of intangibles $ 1.3 Interest rate derivatives $ (47.0) Interest expense, net $ (7.4) Six Months Ended July 2, 2023 Foreign currency forward contracts (sales) $ 1.7 Total revenues $ 0.9 Foreign currency forward contracts (purchases) $ (2.1) Cost of sales, excluding amortization of intangibles $ 1.7 Interest rate derivatives $ (26.1) Interest expense, net $ (12.6) |
Schedule of Derivative Assets at Fair Value | The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the unaudited Consolidated Balance Sheets as of July 2, 2023 and January 1, 2023: (In millions) July 2, 2023 January 1, 2023 Designated cash flow hedges Interest rate derivatives: Prepaid expenses and other current assets $ 9.4 $ 15.9 Other assets $ 16.0 $ — Other liabilities $ — $ 2.1 Foreign currency forward contracts: Prepaid expenses and other current assets $ 3.6 $ 4.6 Other current liabilities $ 7.7 $ 14.3 Non-designated hedging instruments Foreign currency forward contracts: Prepaid expenses and other current assets $ 3.6 $ 1.5 Other current liabilities $ 2.8 $ 5.4 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 6 Months Ended |
Jul. 02, 2023 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The balance of Accumulated Other Comprehensive Loss, net of tax, was as follows for the three and six months ended July 2, 2023 and July 3, 2022: Three Months Ended July 2, 2023 (In millions) Pension and Other Post- Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income Balance at April 2, 2023 $ 0.7 $ (21.1) $ (0.3) $ (38.6) $ (59.3) Current period deferrals (1) — 40.0 (0.1) 7.4 47.3 Amounts reclassified to net income — (4.3) — — (4.3) Net change — 35.7 (0.1) 7.4 43.0 Balance at July 2, 2023 $ 0.7 $ 14.6 $ (0.4) $ (31.2) $ (16.3) Six Months Ended July 2, 2023 Pension and Other Post- Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive (Loss) Income Balance at January 1, 2023 $ 0.7 $ 1.5 $ (0.5) $ (69.3) $ (67.6) Current period deferrals (1) — 23.1 0.1 38.1 61.3 Amounts reclassified to net income — (10.0) — — (10.0) Net change — 13.1 0.1 38.1 51.3 Balance at July 2, 2023 $ 0.7 $ 14.6 $ (0.4) $ (31.2) $ (16.3) Three Months Ended July 3, 2022 (In millions) Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance at April 3, 2022 $ 0.1 $ (0.5) $ 0.6 $ 0.2 Current period deferrals (2) 4.4 (0.2) (66.1) (61.9) Amounts reclassified to net income 1.0 — — 1.0 Net change 5.4 (0.2) (66.1) (60.9) Balance at July 3, 2022 $ 5.5 $ (0.7) $ (65.5) $ (60.7) Six Months Ended July 3, 2022 Cash Flow Hedges Available-for-Sale Investments Unrealized Foreign Currency Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance at January 2, 2022 $ — $ (0.1) $ 0.5 $ 0.4 Current period deferrals (2) 4.6 (0.6) (66.0) (62.0) Amounts reclassified to net income 0.9 — — 0.9 Net change 5.5 (0.6) (66.0) (61.1) Balance at July 3, 2022 $ 5.5 $ (0.7) $ (65.5) $ (60.7) (1) Includes tax impact of $9.5 million and $3.4 million related to cash flow hedges for the three and six months ended July 2, 2023, respectively. |
Business Combination - Narrativ
Business Combination - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions | 6 Months Ended | |
May 26, 2022 | Jul. 02, 2023 | |
Business Acquisition [Line Items] | ||
Measurement period adjustments of goodwill | $ (23.9) | |
Goodwill adjustment, increase to deferred tax liabilities | 22.3 | |
Goodwill adjustment, increase to income taxes payable | 2.9 | |
Goodwill adjustment, decrease to deferred tax assets | $ 1.3 | |
Ortho | ||
Business Acquisition [Line Items] | ||
Business Combination, Consideration Transferred | $ 4,300 | |
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 shares) | 0.1055 |
Business Combination - Pro Form
Business Combination - Pro Forma Information (Details) - Ortho - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
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 | $ 898.5 | $ 669.1 | $ 2,400.9 | $ 1,551.2 |
Pro forma net income (loss) | $ 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) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Earnings Per Share [Abstract] | ||||
Basic weighted-average shares of common stock outstanding | 66.8 | 52.2 | 66.7 | 47 |
Dilutive potential shares issuable from stock options and RSUs | 0 | 0.7 | 0 | 0.7 |
Diluted weighted-average shares of common stock outstanding | 66.8 | 52.9 | 66.7 | 47.7 |
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 0.4 | 0.5 | ||
PotentialWeightedAverageNumberOfDilutedSharesOutstandingDiluted weighted-average shares of common stock outstanding | 67.2 | 67.2 |
Computation of Earnings Per S_4
Computation of Earnings Per Share - Narrative (Details) - shares shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Statement [Line Items] | ||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 0.4 | 0.5 | ||
Share-Based Payment Arrangement | ||||
Statement [Line Items] | ||||
Potentially dilutive shares excluded from calculation due to anti-dilutive effect | 1.2 | 1 | 1.1 | 0.9 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | Jan. 01, 2023 | |
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue, current | $ 41.2 | $ 41.2 | $ 76.4 | ||
Deferred revenue, noncurrent | 13.5 | 13.5 | 9.4 | ||
Deferred revenue, revenue recognized | 19.5 | 68.5 | |||
Accounts receivable, net | $ 246.7 | $ 246.7 | 453.9 | ||
Revenue Benchmark | Product Concentration Risk | Respiratory | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of risk concentration | 13% | 54% | 23% | 78% | |
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement | |||||
Disaggregation of Revenue [Line Items] | |||||
Gross Profit | $ 6.1 | $ 5.6 | $ 29.7 | $ 5.6 | |
Revenue | 0.6 | 2 | 23 | 2 | |
Collaborative Arrangement, Transaction with Party to Collaborative Arrangement and Third Party | |||||
Disaggregation of Revenue [Line Items] | |||||
Gross Profit | 5.5 | $ 3.6 | 6.7 | $ 3.6 | |
Prepaid expenses and other current assets | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract assets | 59.3 | 59.3 | 49.6 | ||
Customer 1 | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract assets | 5.7 | 5.7 | 6.8 | ||
Expected Value Contract Customers | Prepaid expenses and other current assets | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract assets | 44.7 | 44.7 | 38.5 | ||
Customer 2 | |||||
Disaggregation of Revenue [Line Items] | |||||
Contract assets | 8.9 | 8.9 | 4.3 | ||
Customer A | Sales | Customer Concentration Risk | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of risk concentration | 37% | ||||
Customer B | Sales | Customer Concentration Risk | |||||
Disaggregation of Revenue [Line Items] | |||||
Percentage of risk concentration | 11% | ||||
Customers With Balances Due In Excess of 10% Of Accounts Receivable | Accounts Receivable | Customer Concentration Risk | |||||
Disaggregation of Revenue [Line Items] | |||||
Accounts receivable, net | $ 30.7 | $ 30.7 | $ 161.9 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 665.1 | $ 613.4 | $ 1,511.2 | $ 1,615.7 |
Labs | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 361.4 | 157.4 | 732.1 | 170.7 |
Transfusion Medicine | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 163.3 | 68.2 | 319.2 | 68.2 |
Point of Care | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | 134.2 | 367.1 | 442.3 | 1,310.1 |
Molecular Diagnostics | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenues | $ 6.2 | $ 20.7 | $ 17.6 | $ 66.7 |
Segment and Geographic Inform_3
Segment and Geographic Information - Total Revenues by Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | $ 665.1 | $ 613.4 | $ 1,511.2 | $ 1,615.7 |
North America | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | 378.8 | 438.2 | 961.6 | 1,399.7 |
EMEA | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | 80.6 | 42.1 | 161.9 | 57.3 |
China | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | 81.3 | 73.6 | 151.9 | 82.3 |
Other | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Total revenues | $ 124.4 | $ 59.5 | $ 235.8 | $ 76.4 |
Segment and Geographic Inform_4
Segment and Geographic Information - Reconciliation to Income (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | $ 248.1 | $ 312.1 | $ 584 | $ 1,042.3 |
Corporate | (134.8) | (93.9) | (225.4) | (183.2) |
Interest expense, net | (36.5) | (10.3) | (73.2) | (11.3) |
Depreciation and amortization | (114.5) | (47.5) | (228.7) | (62.8) |
Acquisition and integration costs | (24.2) | (80.2) | (53.9) | (83.2) |
Amortization of deferred cloud computing implementation costs | (1.5) | (1.3) | (3.1) | (2.3) |
EU medical device regulation transition costs | (0.7) | (0.4) | (1.5) | (0.4) |
Impairment of long-lived assets | (0.5) | 0 | (1) | 0 |
Loss on investments | (0.2) | (0.8) | (0.2) | (0.8) |
Tax indemnification income | 0.4 | 0 | 0.1 | 0 |
Loss on extinguishment of debt | 0 | (24) | 0 | (24) |
Unwind inventory fair value adjustment | 0 | (11.2) | 0 | (11.2) |
Employee compensation charges and other costs | 0 | (0.5) | (1.5) | (0.5) |
Change in fair value of acquisition contingencies | $ 0 | $ (0.1) | $ 0 | $ (0.1) |
Derivative, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | (Loss) income before income taxes | (Loss) income before income taxes | (Loss) income before income taxes | (Loss) income before income taxes |
Derivative mark-to-market gain | $ 0 | $ 1 | $ 0 | $ 1 |
(Loss) income before income taxes | (64.4) | 42.9 | (4.4) | 663.5 |
North America | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | 176.3 | 239.2 | 454.7 | 952.6 |
EMEA | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | 5.3 | 12.7 | 12.5 | 16.2 |
China | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | 30.2 | 35.4 | 58.7 | 39.2 |
Other | ||||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | ||||
Segment Adjusted EBITDA | $ 36.3 | $ 24.8 | $ 58.1 | $ 34.3 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | Jan. 01, 2023 | |
Income Tax Disclosure [Abstract] | |||||
(Benefit from) provision for income taxes | $ (11,200,000) | $ 23,600,000 | $ 0 | $ 164,300,000 | |
(Loss) income before income taxes | $ (64,400,000) | $ 42,900,000 | $ (4,400,000) | $ 663,500,000 | |
Effective income tax rate | 17.40% | 55% | 0.70% | 24.80% | |
Unrecognized tax benefits | $ 38,800,000 | $ 38,800,000 | |||
Unrecognized tax benefits the could impact effective tax rate | 27,600,000 | 27,600,000 | |||
Unrecognized tax benefits, income tax interest and penalties accrued | 8,100,000 | 8,100,000 | |||
Decrease in unrecognized tax benefits is reasonably possible | 14,300,000 | 14,300,000 | |||
Indemnification receivable | 16,400,000 | 16,400,000 | $ 16,800,000 | ||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense | $ 300,000 | $ 100,000 | $ 700,000 | $ 100,000 |
Balance Sheet Account Details C
Balance Sheet Account Details Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 | Jul. 03, 2022 | Jan. 02, 2022 |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents [Abstract] | ||||
Cash and cash equivalents | $ 178.6 | $ 292.9 | ||
Restricted Cash, Noncurrent | 1 | 1 | ||
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | $ 179.6 | $ 293.9 | $ 380.6 | $ 802.8 |
Balance Sheet Account Details M
Balance Sheet Account Details Marketable Securities (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | $ 70.3 | $ 73.8 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.5) | (0.7) |
Marketable securities | 45.1 | 52.1 |
Marketable securities | 24.7 | 21 |
Total marketable securities | 69.8 | 73.1 |
Short-term Investments | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 45.4 | 52.6 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.3) | (0.5) |
Marketable securities | 45.1 | 52.1 |
Short-term Investments | Corporate bonds | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 34.7 | 40.5 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.3) | (0.5) |
Marketable securities | 34.4 | 40 |
Short-term Investments | Corporate asset-backed securities | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 8.7 | 6.7 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 |
Marketable securities | 8.7 | 6.7 |
Short-term Investments | U.S. government securities | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 0 | 2 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 |
Marketable securities | 0 | 2 |
Short-term Investments | Agency bonds | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 0 | 1 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 |
Marketable securities | 0 | 1 |
Short-term Investments | Sovereign government bonds | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 2 | 1.9 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 |
Marketable securities | 2 | 1.9 |
Short-term Investments | Foreign and other | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 0 | 0.5 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 |
Marketable securities | 0 | 0.5 |
Long-Term Investments | Corporate bonds | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 17.6 | 13.3 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.1) | (0.1) |
Marketable securities | 17.5 | 13.2 |
Long-Term Investments | Corporate asset-backed securities | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 5.8 | 7.9 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | (0.1) | (0.1) |
Marketable securities | 5.7 | 7.8 |
Long-Term Investments | Agency bonds | ||
Marketable Securities [Line Items] | ||
Debt Securities, Available-for-sale, Amortized Cost | 1.5 | 0 |
Debt Securities, Available-for-sale, Accumulated Gross Unrealized Loss, before Tax | 0 | 0 |
Marketable securities | $ 1.5 | $ 0 |
Balance Sheet Account Details A
Balance Sheet Account Details Accounts Receivable (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Receivables, Net, Current [Abstract] | ||
Accounts receivable | $ 317.9 | $ 543 |
Allowance for contract rebates and discounts | (58.5) | (77.1) |
Allowance for doubtful accounts | (12.7) | (12) |
Total accounts receivable, net | $ 246.7 | $ 453.9 |
Balance Sheet Account Details I
Balance Sheet Account Details Inventories (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Inventory, Net [Abstract] | ||
Raw materials | $ 203.2 | $ 185.2 |
Work-in-process (materials, labor and overhead) | 107.2 | 82.7 |
Finished goods (materials, labor and overhead) | 273.2 | 295.1 |
Inventories, including noncurrent portion, net | 583.6 | 563 |
Inventories | 542.2 | 524.1 |
Inventory, Noncurrent | 41.4 | $ 38.9 |
Inventory Adjustments | $ 39 |
Balance Sheet Account Details P
Balance Sheet Account Details Prepaid expenses and other current assets (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Prepaid Expense and Other Assets, Current [Abstract] | ||
Prepaid expenses | $ 95.9 | $ 96.7 |
Income taxes and other tax receivables | 81.5 | 38.6 |
Contract assets | 59.3 | 49.6 |
Other receivables | 39.1 | 44.3 |
Derivatives | 16.6 | 22 |
Other | 3.1 | 0.9 |
Total prepaid expenses and other current assets | $ 295.5 | $ 252.1 |
Balance Sheet Account Details -
Balance Sheet Account Details - Goodwill Rollforward (Details) $ in Millions | 6 Months Ended |
Jul. 02, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | $ 2,476.8 |
Purchase accounting adjustments | (23.9) |
Foreign currency translation | 18 |
Goodwill, Ending Balance | 2,470.9 |
North America | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 1,547.7 |
Purchase accounting adjustments | (13.4) |
Foreign currency translation | 0.3 |
Goodwill, Ending Balance | 1,534.6 |
EMEA | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 358.6 |
Purchase accounting adjustments | (4.1) |
Foreign currency translation | 10.2 |
Goodwill, Ending Balance | 364.7 |
China | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 118.1 |
Purchase accounting adjustments | (1.3) |
Foreign currency translation | (5.7) |
Goodwill, Ending Balance | 111.1 |
Other | |
Goodwill [Roll Forward] | |
Goodwill, Beginning Balance | 452.4 |
Purchase accounting adjustments | (5.1) |
Foreign currency translation | 13.2 |
Goodwill, Ending Balance | $ 460.5 |
Balance Sheet Account Details O
Balance Sheet Account Details Other Current Liabilities (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Other Liabilities Disclosure [Abstract] | ||
Deferred revenue | $ 41.2 | $ 76.4 |
Accrued commissions and rebates | 51.3 | 55.1 |
Accrued other taxes payable | $ 34 | $ 9.3 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total other current liabilities | Total other current liabilities |
Operating lease liabilities | $ 26.3 | $ 24.4 |
Derivatives | 10.5 | 19.7 |
Deferred consideration | 0 | 39.3 |
Other | 109.8 | 101.2 |
Total other current liabilities | $ 273.1 | $ 325.4 |
Long-term Borrowings - Schedule
Long-term Borrowings - Schedule of Borrowings (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 | May 27, 2022 |
Debt Instrument [Line Items] | |||
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent | |
Financing lease obligation | $ 0.6 | $ 0.8 | |
Other long-term borrowings | 0.8 | 1.2 | |
Unamortized deferred financing costs | (9.3) | (10.6) | |
Total borrowings | 2,515.9 | 2,638.3 | |
Less: current portion | (207.4) | (207.5) | |
Long-term borrowings | 2,308.5 | 2,430.8 | |
Line of Credit | Term Loan | Credit Agreement | |||
Debt Instrument [Line Items] | |||
Long-term debt | $ 2,523.8 | $ 2,646.9 | $ 2,750 |
Long-term Borrowings - Narrativ
Long-term Borrowings - Narrative (Details) $ in Millions | 6 Months Ended | |||
Jul. 02, 2023 USD ($) covenant | Jan. 01, 2023 USD ($) | Aug. 04, 2022 USD ($) | May 27, 2022 USD ($) | |
Debt Instrument [Line Items] | ||||
Number of financial covenants | covenant | 2 | |||
Credit Agreement | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Covenant, Leverage Ratio, Maximum | 3.50 | |||
Debt instrument, Covenant, Leverage Ratio, Minimum | 1 | |||
Debt Instrument, Covenant, Interest Coverage Ratio, Maximum | 3 | |||
Debt Instrument, Covenant, Interest Coverage Ratio, Minimum | 1 | |||
Credit Agreement | Line of Credit | Ending after the closing date of the credit agreement | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Covenant, Leverage Ratio, Maximum | 4.50 | |||
Debt instrument, Covenant, Leverage Ratio, Minimum | 1 | |||
Credit Agreement | Line of Credit | Ending after initial measurement period | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Covenant, Leverage Ratio, Maximum | 4 | |||
Debt instrument, Covenant, Leverage Ratio, Minimum | 1 | |||
Term Loan | Credit Agreement | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | $ 2,523.8 | $ 2,646.9 | $ 2,750 | |
Payments of term loan | 123.1 | |||
Debt prepayment cost | 20 | |||
Revolving Credit Facility | Credit Agreement | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Line of credit, maximum borrowing capacity | $ 800 | |||
Remaining borrowing capacity | 787.1 | |||
Letter of Credit | Credit Agreement | Line of Credit | ||||
Debt Instrument [Line Items] | ||||
Proceeds from lines of credit | $ 12.9 |
Long-term Borrowings - Interest
Long-term Borrowings - Interest Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Debt Instrument [Line Items] | ||||
Amortization of deferred financing costs | $ 0.8 | $ 0.2 | $ 1.6 | $ 0.3 |
Derivative instruments and other | (7.2) | 1.8 | (11.7) | 2.9 |
Interest income | (1.8) | (0.4) | (2.8) | (0.7) |
Interest expense, net | 36.5 | 10.3 | 73.2 | 11.3 |
Line of Credit | Term Loan | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | 44.2 | 8.4 | 85.1 | 8.4 |
Line of Credit | Revolving Credit Facility | Credit Agreement | ||||
Debt Instrument [Line Items] | ||||
Interest expense, debt | $ 0.5 | $ 0.3 | $ 1 | $ 0.4 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense Related to Stock-Based Compensation Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | $ 17 | $ 15.9 | $ 31 | $ 23.3 |
Cost of sales | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 1.1 | 0.6 | 2.1 | 1.3 |
Research and development | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 1.3 | 1.3 | 2.6 | 2.4 |
Selling, marketing and administrative | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | 10 | 8 | 17.2 | 13.3 |
Acquisition and integration costs | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Total stock-based compensation expense | $ 4.6 | $ 6 | $ 9.1 | $ 6.3 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |||
May 26, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based liabilities paid | $ 2.8 | $ 10.9 | $ 5.8 | $ 10.9 | |
Stock options granted (in shares) | 253 | ||||
Increase to share based compensation from modification of vesting awards | 3.1 | $ 5.1 | |||
Unrecognized share based compensation expense relating to unvested shares | 6 | $ 6 | |||
RSUs granted (in shares) | 576 | ||||
Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock options, term (in years) | 10 years | ||||
Ortho | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Cash paid to former Ortho stockholders per Ortho Share (in usd per share) | $ 7.14 | ||||
Stock Options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense | 25.4 | $ 25.4 | |||
Expected weighted-average period of recognition for unrecognized compensation expense | 2 years | ||||
RSUs | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized compensation expense | $ 89.5 | $ 89.5 | |||
Expected weighted-average period of recognition for unrecognized compensation expense | 2 years 4 months 24 days | ||||
Weighted-Average Grant Date Fair Value, Granted (in USD per share) | $ 87.59 | $ 98.38 |
Stock-Based Compensation - Esti
Stock-Based Compensation - Estimated Fair Value of Each Stock Option Award (Details) - $ / shares | 6 Months Ended | |
Jul. 02, 2023 | Jul. 03, 2022 | |
Equity [Abstract] | ||
Risk-free interest rate | 3.52% | 1.99% |
Expected option life (in years) | 5 years 6 months 10 days | 4 years 10 months 20 days |
Volatility rate | 57% | 58% |
Dividend rate | 0% | 0% |
Weighted-average grant date fair value of stock options granted (in USD per share) | $ 48.17 | $ 50.86 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Assets: | ||
Cash equivalents | $ 6.1 | $ 2.7 |
Marketable securities | 69.8 | 73.1 |
Derivative assets | 32.6 | 22 |
Total assets measured at fair value | 108.5 | 97.8 |
Liabilities: | ||
Derivative liabilities | 10.5 | 21.8 |
Contingent consideration | 0.1 | 0.1 |
Deferred consideration | 0 | 39.3 |
Total liabilities measured at fair value | 10.6 | 61.2 |
Level 1 | ||
Assets: | ||
Cash equivalents | 6.1 | 0.6 |
Marketable securities | 0 | 2 |
Derivative assets | 0 | 0 |
Total assets measured at fair value | 6.1 | 2.6 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Contingent consideration | 0 | 0 |
Deferred consideration | 0 | 0 |
Total liabilities measured at fair value | 0 | 0 |
Level 2 | ||
Assets: | ||
Cash equivalents | 0 | 2.1 |
Marketable securities | 69.8 | 71.1 |
Derivative assets | 32.6 | 22 |
Total assets measured at fair value | 102.4 | 95.2 |
Liabilities: | ||
Derivative liabilities | 10.5 | 21.8 |
Contingent consideration | 0 | 0 |
Deferred consideration | 0 | 39.3 |
Total liabilities measured at fair value | 10.5 | 61.1 |
Level 3 | ||
Assets: | ||
Cash equivalents | 0 | 0 |
Marketable securities | 0 | 0 |
Derivative assets | 0 | 0 |
Total assets measured at fair value | 0 | 0 |
Liabilities: | ||
Derivative liabilities | 0 | 0 |
Contingent consideration | 0.1 | 0.1 |
Deferred consideration | 0 | 0 |
Total liabilities measured at fair value | $ 0.1 | $ 0.1 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Apr. 30, 2023 | Jan. 01, 2023 | May 27, 2022 |
BNP Business | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Installment payment | $ 40 | |||
Term Loan | Credit Agreement | Line of Credit | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Long-Term Debt, Fair Value | $ 2,476.4 | |||
Long-term debt | $ 2,523.8 | $ 2,646.9 | $ 2,750 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Narrative (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jul. 02, 2023 USD ($) | Jul. 02, 2023 USD ($) | |
Derivative [Line Items] | ||
Pre tax gain (loss) from reclassification | $ 29.4 | $ 29.4 |
Foreign Currency Cash Flow Hedge Gain (Loss) to be Reclassified During Next 12 Months | (5.4) | (5.4) |
Foreign Exchange Forward | Other Nonoperating Income (Expense) | ||
Derivative [Line Items] | ||
Fair value gain (loss) on derivative instruments not designated as hedging instruments | $ 3.2 | $ 0.5 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Schedule of Interest Rate Derivatives (Details) - Designated cash flow hedges - USD ($) $ in Millions | Dec. 29, 2023 | Jul. 02, 2023 |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 500 | |
Derivative, Fixed Interest Rate | 1.58% | |
Interest Rate Swap | Forecast | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 1,800 | |
Interest Rate Swap One | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 397.2 | |
Derivative, Fixed Interest Rate | 3.765% | |
Interest Rate Swap Two | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 144.4 | |
Derivative, Fixed Interest Rate | 3.7725% | |
Interest Rate Swap Three | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 216.7 | |
Derivative, Fixed Interest Rate | 3.7675% | |
Interest Rate Swap Four | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 288.9 | |
Derivative, Fixed Interest Rate | 3.7575% | |
Interest Rate Swap Five | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 252.8 | |
Derivative, Fixed Interest Rate | 3.7725% | |
Foreign Exchange Contract | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 275.1 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Schedule of Currency Hedging Instruments (Details) - Foreign Exchange Contract $ in Millions | Jul. 02, 2023 USD ($) |
Designated cash flow hedges | |
Derivative [Line Items] | |
Derivative, Notional Amount | $ 275.1 |
Non-designated hedging instruments | |
Derivative [Line Items] | |
Derivative, Notional Amount | $ 589.9 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activities - Schedule of Gain (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Jul. 02, 2023 | Jul. 02, 2023 | |
Foreign Exchange Contract | Sales | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of Loss (Gain) Recognized in OCI on Hedges | $ (0.4) | $ 1.7 |
Amount of Loss (Gain) Reclassified From AOCI Into Income | 1.8 | 0.9 |
Foreign Exchange Contract | Cost of sales | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of Loss (Gain) Recognized in OCI on Hedges | (2.1) | (2.1) |
Amount of Loss (Gain) Reclassified From AOCI Into Income | 1.3 | 1.7 |
Interest Rate Swap | Interest Expense | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Amount of Loss (Gain) Recognized in OCI on Hedges | (47) | (26.1) |
Amount of Loss (Gain) Reclassified From AOCI Into Income | $ (7.4) | $ (12.6) |
Derivative Instruments and He_7
Derivative Instruments and Hedging Activities - Schedule of Fair Value (Details) - USD ($) $ in Millions | Jul. 02, 2023 | Jan. 01, 2023 |
Derivative [Line Items] | ||
Derivative Asset, Current | $ 16.6 | $ 22 |
Derivative Liability, Current | $ 10.5 | $ 19.7 |
Interest Rate Swap | Designated cash flow hedges | ||
Derivative [Line Items] | ||
Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
Derivative Asset, Current | $ 9.4 | $ 15.9 |
Derivative Asset, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other assets | Other assets |
Derivative Asset, Noncurrent | $ 16 | $ 0 |
Derivative Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Derivative Liability, Noncurrent | $ 0 | $ 2.1 |
Foreign Exchange Contract | Designated cash flow hedges | ||
Derivative [Line Items] | ||
Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
Derivative Asset, Current | $ 3.6 | $ 4.6 |
Derivative Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Current | Other Liabilities, Current |
Derivative Liability, Current | $ 7.7 | $ 14.3 |
Foreign Exchange Contract | Non-designated hedging instruments | ||
Derivative [Line Items] | ||
Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration] | Prepaid expenses and other current assets | Prepaid expenses and other current assets |
Derivative Asset, Current | $ 3.6 | $ 1.5 |
Derivative Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Current | Other Liabilities, Current |
Derivative Liability, Current | $ 2.8 | $ 5.4 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 02, 2023 | Jul. 03, 2022 | Jul. 02, 2023 | Jul. 03, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | $ (59.3) | $ 0.2 | $ (67.6) | $ 0.4 |
Current period deferrals | 47.3 | (61.9) | 61.3 | (62) |
Amounts reclassified to net income | (4.3) | 1 | (10) | 0.9 |
Net change | 43 | (60.9) | 51.3 | (61.1) |
Ending balance | (16.3) | (60.7) | (16.3) | (60.7) |
Tax impact related to cash flow hedges | (9.5) | (3.4) | ||
Pension and Other Post- employment Benefits | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 0.7 | 0.7 | ||
Current period deferrals | 0 | 0 | ||
Amounts reclassified to net income | 0 | 0 | ||
Net change | 0 | 0 | ||
Ending balance | 0.7 | 0.7 | ||
Cash Flow Hedges | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (21.1) | 0.1 | 1.5 | 0 |
Current period deferrals | 40 | 4.4 | 23.1 | 4.6 |
Amounts reclassified to net income | (4.3) | 1 | (10) | 0.9 |
Net change | 35.7 | 5.4 | 13.1 | 5.5 |
Ending balance | 14.6 | 5.5 | 14.6 | 5.5 |
Available-for-Sale Investments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (0.3) | (0.5) | (0.5) | (0.1) |
Current period deferrals | (0.1) | (0.2) | 0.1 | (0.6) |
Amounts reclassified to net income | 0 | 0 | 0 | 0 |
Net change | (0.1) | (0.2) | 0.1 | (0.6) |
Ending balance | (0.4) | (0.7) | (0.4) | (0.7) |
Unrealized Foreign Currency Translation Adjustments | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (38.6) | 0.6 | (69.3) | 0.5 |
Current period deferrals | 7.4 | (66.1) | 38.1 | (66) |
Amounts reclassified to net income | 0 | 0 | 0 | 0 |
Net change | 7.4 | (66.1) | 38.1 | (66) |
Ending balance | $ (31.2) | $ (65.5) | $ (31.2) | $ (65.5) |