United States securities and exchange commission logo
March 1, 2022
Joseph M. Busky
Chief Financial Officer
Ortho Clinical Diagnostics Holdings plc
1001 Route 202
Raritan, New Jersey 08869
Re: Ortho Clinical
Diagnostics Holdings plc
Form 10-K For the
fiscal year ended January 3, 2021
Filed March 19,
2021
File No. 001-39956
Dear Mr. Busky:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K For the fiscal year ended January 3, 2021
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Use of Non-GAAP Financial Measures, page 66
1. We note your non-GAAP
Adjusted EBITDA measures for the year ended January 3, 2021
and the nine months
ended September 27, 2020 include an adjustment for the upfront
payment to Quotient in
the amount of $7.5 million that was recorded as a charge to
research and
development expense in those periods. Please provide us a comprehensive
analysis of why you
believe your adjustment is consistent with Question 100.01 of the
Non-GAAP Financial
Measures Compliance and Disclosure Interpretations, including
why you believe this
expense is not a "normal, recurring, cash operating expense
necessary to operate
[your] business."
2. We note your non-GAAP
measure titled "Adjusted EBITDA" includes an adjustment for
EU medical device
regulation transition costs. Please tell us why you believe the
Joseph M. Busky
FirstName LastNameJoseph M. Busky
Ortho Clinical Diagnostics Holdings plc
Comapany
March NameOrtho Clinical Diagnostics Holdings plc
1, 2022
March2 1, 2022 Page 2
Page
FirstName LastName
adjustment for these costs is consistent with Question 100.01 of the
Non-GAAP Financial
Measures Compliance and Disclosure Interpretations given that costs to
comply with
regulations appear to be normal, recurring, cash operating expenses
necessary to operate
[your] business. As part of your response, provide us a detailed
description of these costs
and how it relates to your revenue stream in the EU. To the extent you
are able to support
that this adjustment is appropriate, revise your footnote to more
clearly disclose the nature
of the expenses including how they relate to your ongoing revenue
streams as well as the
extent to which you expect them to continue.
3. We note your non-GAAP measure Adjusted EBITDA includes an adjustment
for other,
under note (f), and your measure Management EBITDA includes an
adjustment (g) which
includes a number of items. Please address the following:
Provide us with further description and quantification for the
adjustments underlying
these amounts;
Revise your disclosure to break out individually significant
adjustments; and
Clearly tell us how you determined that your adjustments for the
impact of adoption
of accounting standards and costs in connection with COVID-19 are
appropriate
under Item 10(e) of Regulation S-K.
Audited Financial Statements of Ortho Clinical Diagnostics Holdings plc, page
F-1
4. Please address the following regarding your Joint Business:
We note on page F-21 that Collaborations and other revenue is
included as part of
Net Revenue and on page 60 that profit share expense related to
your Joint Business,
a collaboration arrangement, is included as Other operating
expense, net. Please
clarify how you determined that these revenues and expenses are
presented
consistently in your statements of operations. In this regard, we
note one line item is
above the Gross profit line item and the other is below it.
You disclose on page F-35 that your portion of the pre-tax net
profit shared under the
Joint Business was $55.6 million, $70.7 million and $68.7 million
during the past
three fiscal years. Please revise your disclosure to provide a
breakdown of the related
activity of your Joint Business and where such amounts are
classified in your
financial statements.
5. It appears that your gross profit line item does not reflect all the
costs of revenue in that it
excludes the amortization of intangible assets. Please tell us how you
determined that your
presentation is appropriate and complies with Staff Accounting
Bulletin Topic 11.B.
Otherwise, revise your presentation to remove the gross profit line
item or to present gross
profit that reflects all costs of revenue.
Segments and geographic information, page F-50
6. Your presentation of Management EBITDA for the annual period and
Adjusted EBITDA
for the subsequent interim periods on an aggregate basis do not appear
to comply with the
reconciliation requirements of ASC 280-10-50-30(b). Please remove your
presentation of
Joseph M. Busky
Ortho Clinical Diagnostics Holdings plc
March 1, 2022
Page 3
aggregate Management EBITDA from the footnote disclosure and provide a
reconciliation
consistent with ASC 280-10-50-30(b). Likewise, please remove aggregate
Adjusted
EBITDA from the interim financial statements and provide a
reconciliation consistent
with ASC 280-10-50-30(b).
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
You may contact Michael Fay at 202-551-3812 or Kevin Vaughn, Accounting
Branch
Chief, at 202-551-3494 with any questions.
FirstName LastNameJoseph M. Busky Sincerely,
Comapany NameOrtho Clinical Diagnostics Holdings plc
Division of
Corporation Finance
March 1, 2022 Page 3 Office of Life
Sciences
FirstName LastName