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What changed in QuidelOrtho Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of QuidelOrtho Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+515 added−598 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-23)

Top changes in QuidelOrtho Corp's 2024 10-K

515 paragraphs added · 598 removed · 410 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

110 edited+29 added−19 removed114 unchanged
Biggest changeVITROS Platform Seven clinical chemistry, immunoassay and integrated (combined chemistry and immunoassay) systems for use in centralized, higher-throughput (hospitals and laboratories) and decentralized, lower-throughput (physician offices, clinics and specialty settings) testing sites VITROS XT Platform VITROS XT 7600 integrated system and VITROS XT 3400 clinical chemistry analyzer for use with new XT chemistry slides, combining two tests that are frequently used together, offering advancements over prior generations: • 40% greater test throughput when using XT slides; • 96% first-pass yield on test results; and • designed to offer high reliability with a 98% up-time guarantee for e-connected U.S. customers VITROS Automation Solutions A flexible and scalable track-based system that combines VITROS analyzers with a number of robotic modules to help laboratories enhance their operations by reducing or eliminating repetitive and redundant laboratory tasks and the total number of human interventions required to complete typical laboratory testing Testing Menu Anemia, Bone Disease, Cardiac, Diabetes, Drugs of Abuse, General Chemistry, Hepatic, Immunosuppressant Drugs, Infectious Diseases, Inflammatory, Lipids, Nutritional Assessment, Oncology, Pancreatic, Prenatal, Renal, Reproductive Endocrinology, Respiratory, Sepsis, Spinal, Therapeutic Drug Monitoring, Thyroid/Metabolic, Toxicology, Urine 7 MOLECULAR DIAGNOSTICS Product Primary Application Lyra Open platform, real-time PCR assays for high throughput, high quality molecular testing to detect and identify infectious diseases, offering room-temperature storage, reduced processing time, and ready-to-use reagent configurations Solana Simplified molecular testing platform using our proprietary isothermal helicase-dependent amplification (“HDA”) technology that is easy to run and can process 12 patient samples at the same time Savanna CE-marked, multiplex, real-time PCR platform, with customizable flexible syndromic panels that run up to 12 unique analytes from a single patient sample in less than 25 minutes Savanna RVP4 assay offers simultaneous qualitative detection and differentiation of influenza A, influenza B, respiratory syncytial virus (“RSV”), and SARS-CoV-2 RNA isolated from human nasal or nasopharyngeal swabs Testing Menu Adenovirus, Bordetella, Clostridium Difficile (organism), HSV 1+2/VZV, Influenza A+B, Parainfluenza Virus, RSV, Respiratory Viral Panel (Flu A+B, RSV, hMPV), Respiratory Viral Panel 4 (Flu A+B), SARS-CoV-2, Strep A, Strep B, Strep Complete, Trichomonas 8 POINT OF CARE Product Primary Application Rapid Immunoassay Sofia, Sofia 2 and Sofia Q Easy-to-use, rapid testing using lateral-flow technology and advanced fluorescent immunoassay (“FIA”) chemistry Combines unique software and Sofia FIA tests to yield automatic, objective results that are readily available on the instrument’s screen, in a hard-copy printout and in a transmissible electronic form that can network via a lab information system to hospital and medical center databases Different operational modes to accommodate both small and large laboratories, as well as other features designed to facilitate use in a variety of healthcare settings, including hospitals, medical centers and small clinics Sofia 2 systems include additional benefits and features, such as enhanced optics for improved performance and speed, at a cost point that better addresses the lower-volume segment of the diagnostic testing market Emergency use authorization (“EUA”) to market Sofia Q platform that offers similar features and benefits as the other Sofia analyzers in a smaller and less expensive format QuickVue Broad portfolio of rapid, visually read, lateral flow immunoassay products to diagnose a wide variety of infectious diseases and medical conditions, including the QuickVue At-Home OTC COVID-19 test, a leading at-home COVID-19 product available through many retail and online outlets InflammaDry and AdenoPlus Rapid, lateral-flow-based POC products for the detection of infectious and inflammatory diseases and conditions of the eye Cardiometabolic Immunoassay Triage and Triage MeterPro® Portable, rapid testing platform offering a comprehensive menu of tests for diagnosis of critical diseases and health conditions, as well as the detection of certain drugs of abuse Aids in the diagnosis, assessment and risk stratification of patients having critical care issues, including congestive heart failure, acute coronary syndromes and acute myocardial infarction, and can reduce hospital admissions and improve clinical and economic outcomes Triage B-type Natriuretic Peptide (“BNP”) test for use on Beckman Coulter (“Beckman”) lab analyzers (“BNP Business”) in connection with the transition of the BNP Business to Beckman Testing Menu Cardiac BNP, Creatine Kinase-MB, D-Dimer, hsTroponin, Myoglobin, Troponin I ES Drugs of Abuse Amphetamines, Barbiturates, Benzodiazepines, Cocaine, Methadone Metabolite (EDDP), Methamphetamines, Opiates, PCP, THC/Cannabinoids, Tricyclic Antidepressants Eye Health Acute Conjunctivitis, MMP-9 (a key inflammatory marker for dry eye) Infectious Diseases Adenoviral Conjunctivitis, Anti-SARS-CoV-2 IgG, Campylobacter, Chlamydia, Clostridium Difficile (organism), H. pylori Ab, H. pylori Ab (stool), Influenza A+B, Influenza A+B & SARS-CoV-2 Ag, Legionella, Lyme Disease, RSV, S. pneumoniae, Strep A Inflammatory Lactoferrin Oncology Colorectal Cancer Reproductive Endocrinology Human Chorionic Gonadotrophin, Placental Growth Factor 9 TRANSFUSION MEDICINE Product Primary Application Immunohematology ORTHO VISION Platform Flagship immunohematology analyzers that automate blood typing, antibody identification and crossmatching for patient and donor blood banks Models include ORTHO VISION, ORTHO VISION Max, and next-generation ORTHO VISION Swift and ORTHO VISION Swift Max, which are designed to be faster, quieter and even more cyber-secure than previous generations Ortho Workstation Semi-automated immunohematology benchtop analyzer for lower-volume blood centers or centers that need semi-automated testing Ortho Optix Semi-automated testing platform used to read manual test results, designed with improved software and ability to integrate with laboratory information systems and offers improved workflow and 99% concordance with ORTHO VISION test results ID-Micro Typing System (ID-MTS) Gel Cards Test consumables that utilize column agglutination technology (“CAT”) for our immunohematology instruments sold in the U.S., designed to provide reliable test results and simplify test workflow BIOVUE Cassettes Test consumables that utilize CAT for our immunohematology instruments sold outside of the U.S., designed to provide reliable test results and simplify test workflow Ortho Sera Reagents Comprehensive immunohematology test menu that we believe covers more than 99% of most tested blood antigens regularly required for transfusion screening globally Donor Screening ORTHO VERSEIA Integrated Processor (“VIP”) Automated pipetting and processing system that combines the ORTHO VERSEIA pipettor and ORTHO Summit Processor to enable end-to-end pipetting and processing for tests used for blood and plasma screening for infectious diseases Donor Testing Serology Comprehensive set of infectious disease screens, including important tests for tropical diseases like Chagas that are critical for care in emerging markets Services and Informatics In addition to the products we provide, our services and informatics are a critical element of how we deliver value to our customers.
Biggest changeIt is focused on automating a number of repetitive manual tasks such as sample auto-validation, quality control management, moving averages, STAT sample management, sample archiving, and the development and deployment of advanced rules to help laboratories easily manage their patient populations Vitros Automation Solutions A flexible and scalable track-based system that combines Vitros analyzers with a number of robotic modules to help laboratories enhance their operations by reducing or eliminating repetitive and redundant laboratory tasks and the total number of human interventions required to complete typical laboratory testing Testing Menu Anemia, Bone Disease, Cardiac, Diabetes, Drugs of Abuse, General Chemistry, Hepatic, Immunosuppressant Drugs, Infectious Diseases, Inflammatory, Lipids, Nutritional Assessment, Oncology, Pancreatic, Prenatal, Renal, Reproductive Endocrinology, Respiratory, Sepsis, Spinal, Therapeutic Drug Monitoring, Thyroid/Metabolic, Toxicology, Urine 7 MOLECULAR DIAGNOSTICS Product Primary Application Lyra Open platform, real-time PCR assays for high throughput, high quality molecular testing to detect and identify infectious diseases, offering room-temperature storage, reduced processing time, and ready-to-use reagent configurations Solana Simplified molecular testing platform using our proprietary isothermal helicase-dependent amplification technology that is easy to run and can process 12 patient samples at the same time Savanna CE-marked, 510(k) approved, multiplex, real-time PCR platform, with customizable flexible syndromic panels that run up to 12 unique analytes from a single patient sample in less than 25 minutes Savanna RVP4 assay offers simultaneous qualitative detection and differentiation of influenza A, influenza B, respiratory syncytial virus (“RSV”), and SARS-CoV-2 RNA isolated from human nasal or nasopharyngeal swabs Testing Menu Respiratory Adenovirus, Bordetella Pertussis, Influenza A+B, Parainfluenza Virus, RSV, Respiratory Viral Panel (Flu A+B, RSV, hMPV), Respiratory Viral Panel 4 (Flu A+B), SARS-CoV-2, Strep A, Strep Complete Non-respiratory Clostridium Difficile (organism), HSV 1+2/VZV, Group Strep B, Trichomonas 8 POINT OF CARE Product Primary Application Rapid Immunoassay Sofia and Sofia 2 Easy-to-use, rapid testing using lateral-flow technology and advanced fluorescent immunoassay (“FIA”) chemistry Combines unique software and Sofia FIA tests to yield automatic, objective results that are readily available on the instrument’s screen, in a hard-copy printout and in a transmissible electronic form that can network via a lab information system to hospital and medical center databases Different operational modes to accommodate both small and large laboratories, as well as other features designed to facilitate use in a variety of healthcare settings, including hospitals, medical centers and small clinics Sofia 2 systems include additional benefits and features, such as enhanced optics for improved performance and speed, at a cost point that better addresses the lower-volume segment of the diagnostic testing market QuickVue Broad portfolio of rapid, visually read, lateral flow immunoassay products to diagnose a wide variety of infectious diseases and medical conditions, including the QuickVue At-Home OTC COVID-19 test, a leading at-home COVID-19 product available through many retail and online outlets InflammaDry and AdenoPlus Rapid, lateral-flow-based POC products for the detection of infectious and inflammatory diseases and conditions of the eye Cardiometabolic Immunoassay Triage and Triage MeterPro Portable, rapid testing platform offering a comprehensive menu of tests for diagnosis of critical diseases and health conditions, as well as the detection of certain drugs of abuse Aids in the diagnosis, assessment and risk stratification of patients having critical care issues, including congestive heart failure, acute coronary syndromes and acute myocardial infarction, which may reduce hospital admissions and potentially improve clinical and economic outcomes Triage B-type Natriuretic Peptide (“BNP”) test for use on Beckman Coulter (“Beckman”) lab analyzers (“BNP Business”) in connection with the transition of the BNP Business to Beckman Testing Menu Cardiac BNP, NT-proBNP, Creatine Kinase-MB, D-Dimer, hsTroponin, Myoglobin, Troponin I ES Drugs of Abuse Amphetamines, Barbiturates, Benzodiazepines, Cocaine, Methadone Metabolite (EDDP), Methamphetamines, Opiates, PCP, THC/Cannabinoids, Tricyclic Antidepressants Eye Health Acute Conjunctivitis, MMP-9 (a key inflammatory marker for dry eye) Respiratory Infectious Diseases Anti-SARS-CoV-2 IgG, Influenza A+B, Influenza A+B & SARS-CoV-2 Ag, RSV, Strep A Non-respiratory Infectious Diseases Adenoviral Conjunctivitis, Campylobacter, Chlamydia, Clostridium Difficile (organism), H. pylori Ab, H. pylori Ab (stool), Legionella, Lyme Disease, S. pneumoniae Inflammatory Lactoferrin Oncology Colorectal Cancer Reproductive Endocrinology Human Chorionic Gonadotrophin, Placental Growth Factor 9 TRANSFUSION MEDICINE Product Primary Application Immunohematology ORTHO VISION Platform Flagship immunohematology analyzers that automate blood typing, antibody identification and crossmatching for patient and donor blood banks Models include ORTHO VISION, ORTHO VISION Max, and next-generation ORTHO VISION Swift and ORTHO VISION Swift Max, which are designed to be faster, quieter and even more cyber-secure than previous generations Ortho Workstation Semi-automated immunohematology benchtop analyzer for lower-volume blood centers or centers that need semi-automated testing Ortho Optix Semi-automated testing platform used to read manual test results, designed with improved software and ability to integrate with laboratory information systems and offers improved workflow and 99% concordance with ORTHO VISION test results ID-Micro Typing System (ID-MTS) Gel Cards Test consumables that utilize column agglutination technology (“CAT”) for our immunohematology instruments sold in the U.S., designed to provide reliable test results and simplify test workflow BIOVUE Cassettes Test consumables that utilize CAT for our immunohematology instruments sold outside of the U.S., designed to provide reliable test results and simplify test workflow Ortho Sera Reagents Comprehensive immunohematology test menu that we believe covers more than 99% of most tested blood antigens regularly required for transfusion screening globally Donor Screening ORTHO VERSEIA Integrated Processor (“VIP”) Automated pipetting and processing system that combines the ORTHO VERSEIA pipettor and ORTHO Summit Processor to enable end-to-end pipetting and processing for tests used for blood and plasma screening for infectious diseases Donor Testing Serology Comprehensive set of infectious disease screens, including important tests for tropical diseases like Chagas that are critical for care in emerging markets Global Services In addition to the products we provide, our services are a critical element of how we deliver value to our customers.
Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA; • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters. • the federal Physician Payments Sunshine Act which requires certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under certain federal healthcare programs, to monitor and report to CMS, certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers, including physician assistants and nurse practitioners, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices, and regulates device marketing; • U.S. federal consumer protection and unfair competition laws, which broadly regulate marketplace activities that potentially harm customers; and 19 • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to item or services reimbursed by any third-party payor, including commercial insurers; state laws requiring device companies to comply with specific compliance standards, restrict payments made to healthcare providers and other potential referral sources, and report information related to payments and other transfers of value to healthcare providers or marketing expenditures and state laws related to insurance fraud in the case of claims involving private insurers.
Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA; • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which, in addition to privacy protections applicable to healthcare providers and other entities, prohibits, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; • the federal Physician Payments Sunshine Act which requires certain applicable manufacturers of drugs, devices, biologics and medical supplies for which payment is available under certain federal healthcare programs, to monitor and report to CMS, certain payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare providers, including physician assistants and nurse practitioners, and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices, and regulates device marketing; • U.S. federal consumer protection and unfair competition laws, which broadly regulate marketplace activities that potentially harm customers; and • state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply to item or services reimbursed by any third-party payor, including commercial insurers; state laws requiring device companies to comply with specific compliance standards, restrict payments made to healthcare providers and other potential referral sources, and report information related to payments and other transfers of value to healthcare 19 providers or marketing expenditures and state laws related to insurance fraud in the case of claims involving private insurers.
Food and Drug Administration (“FDA”)-cleared bioassay, Thyretain, which is used for the differential diagnosis of an autoimmune disease called Graves’ Disease Specialty Products Variety of biomarkers for bone health Clinical and research products for the assessment of osteoporosis and the evaluation of bone resorption/formation, which, including our metabolic bone markers, are used to monitor the effectiveness of therapy in pharmaceutical and related research Enzyme-linked immunosorbent assays and reagents for the detection of activation products from the three main complement pathways in autoimmune disease Assays developed on a microwell platform and marketed to clinicians and researchers under the Quidel and MicroVue brands Clinical Chemistry Unique, postage-stamp-sized, dry slide technology that combines the spreading, masking, scavenger and reagent layers into one slide, which provides: • high-quality results quickly, efficiently and economically; • improved storage, with longer shelf life and less shelf space required; • an eco-friendly design that eliminates water usage and reduces chemical waste and biohazards; and • a comprehensive menu covering 24 therapeutic areas and approximately 90% of a typical laboratory’s testing needs Immunodiagnostics Enhanced chemiluminescent technology provides precision and accuracy along with a wide, dynamic testing range across over 60 immunoassay tests.
Food and Drug Administration (“FDA”)-cleared bioassay, Thyretain, which is used for the differential diagnosis of an autoimmune disease called Graves’ Disease Specialty Products Variety of biomarkers for bone health Clinical and research products for the assessment of osteoporosis and the evaluation of bone resorption/formation, which, including our metabolic bone markers, are used to monitor the effectiveness of therapy in pharmaceutical and related research Enzyme-linked immunosorbent assays and reagents for the detection of activation products from the three main complement pathways in autoimmune disease Assays developed on a microwell platform and marketed to clinicians and researchers under the Quidel and MicroVue brands 6 Clinical Chemistry Unique, postage-stamp-sized, dry slide technology that combines the spreading, masking, scavenger and reagent layers into one slide, which provides: • high-quality results quickly, efficiently and economically; • improved storage, with longer shelf life and less shelf space required; • an eco-friendly design that eliminates water usage and reduces chemical waste and biohazards; and • a comprehensive menu covering 24 therapeutic areas and approximately 90% of a typical laboratory’s testing needs Immunodiagnostics Enhanced chemiluminescent technology provides precision and accuracy along with a wide, dynamic testing range across over 60 immunoassay tests.
For example, in the U.S.: • the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”) implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; • the Budget Control Act of 2011 reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020, through March 31, 2022, unless additional Congressional action is taken; • the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), enacted in 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual 21 updates and a new system of incentive payments that are based on various performance measures and physicians’ participation in alternative payment models such as accountable care organizations; and • certain provisions of the Protecting Access to Medicare Act of 2014 (“PAMA”) were implemented by CMS in 2018, which made substantial changes to the way in which clinical laboratory services are paid under Medicare.
For example, in the U.S.: • the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “PPACA”) implemented payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; • the Budget Control Act of 2011 reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020, through March 31, 2022, unless additional Congressional action is taken; • the Medicare Access and CHIP Reauthorization Act of 2015 (“MACRA”), enacted in 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments that are based on various performance measures and physicians’ participation in alternative payment models such as accountable care organizations; and • certain provisions of the Protecting Access to Medicare Act of 2014 (“PAMA”) were implemented by CMS in 2018, which made substantial changes to the way in which clinical laboratory services are paid under Medicare.
Specific health-care laws and regulations that we are subject to include: • the federal Physician Self-Referral Law, which prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and prohibits the entity from presenting or causing to be presented claims to Medicare for those referred services; • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, where one purpose is to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as Medicare and Medicaid.
Specific health-care laws and regulations that we may be subject to include: • the federal Physician Self-Referral Law, which prohibits a physician from making referrals for certain designated health services payable by Medicare to an entity with which he or she (or an immediate family member) has a financial relationship, and prohibits the entity from presenting or causing to be presented claims to Medicare for those referred services; • the federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, where one purpose is to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as Medicare and Medicaid.
We fulfill this commitment through a variety of measures, including internal and external posting of job openings, hiring, training and promoting employees without regard to race, color, religion, gender identity or expression, pregnancy, national origin, ancestry, citizenship, military or veteran status, disability, medical condition, marital or domestic partner status, sexual orientation, age or any other considerations made unlawful by federal, state or local law.
We fulfill this commitment through a variety of measures, including internal and external posting of job openings, hiring, 23 training and promoting employees without regard to race, color, religion, gender identity or expression, pregnancy, national origin, ancestry, citizenship, military or veteran status, disability, medical condition, marital or domestic partner status, sexual orientation, age or any other considerations made unlawful by federal, state or local law.
Other potential consequences include, among other things: restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market, product recalls, fines, warning letters, untitled letters, clinical holds on clinical studies, refusal of the FDA to approve pending applications or supplements to approved applications, product seizures or detention, refusal to permit the import or export of products, consent decrees, corporate integrity agreements, the issuance of corrective information, injunctions, or the imposition of civil or criminal penalties.
Other potential consequences include, among other things: restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market, product recalls, fines, warning letters, untitled letters, clinical holds on clinical studies, refusal by the FDA to approve pending applications or supplements to approved applications, product seizures or detention, refusal to permit the import or export of products, consent decrees, corporate integrity agreements, the issuance of corrective information, injunctions, or the imposition of civil or criminal penalties.
Innovation and research and development (“R&D”) capabilities that address unmet needs in new and existing market segments. We intend to continue to invest in the next generation of instrumentation for each of our business units while keeping abreast of emerging technologies and use-cases, some of which may lead to new business units or revenue streams.
Innovation and research and development (“R&D”) capabilities that address unmet needs in new and existing market segments. We intend to invest in the next generation of instrumentation for each of our business units while keeping abreast of emerging technologies and use-cases, some of which may lead to new business units or revenue streams.
Department of Health and Human Services (“HHS”) has made a declaration of emergency justifying authorization of emergency use. An EUA allows use in an emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions caused by emerging infectious disease threats when there are no adequate, approved and available alternatives.
Department of Health and Human Services (“HHS”) has made a declaration of emergency justifying authorization of emergency use. An EUA allows use in a public health emergency to diagnose, treat or prevent serious or life-threatening diseases or conditions caused by emerging infectious disease threats when there are no adequate, approved and available alternatives.
Labeling and promotional activities are also subject to scrutiny by the FDA and, in certain circumstances, by the Federal Trade Commission (“FTC”). Current FDA enforcement policy prohibits the marketing of approved medical devices for unapproved uses. U.S. Regulation of Biological Products Certain of our blood screening products are regulated by the FDA as biological products, also called biologics.
Labeling 16 and promotional activities are also subject to scrutiny by the FDA and, in certain circumstances, by the Federal Trade Commission (“FTC”). Current FDA enforcement policy prohibits the marketing of approved medical devices for unapproved uses. U.S. Regulation of Biological Products Certain of our blood screening products are regulated by the FDA as biological products, also called biologics.
The processes are highly automated with state-of-the-art systems and key processes are executed in an environmentally controlled area. By utilizing electronic batch records, each product is manufactured with high quality and consistency. This facility is certified to ISO 13485 and MDSAP medical device standards, ISO 14001 and ISO 14 45001.
The processes are highly automated with state-of-the-art systems and key processes are executed in an environmentally controlled area. By utilizing electronic batch records, each product is manufactured with high quality and consistency. This facility is certified to ISO 13485 and MDSAP medical device standards, ISO 14001 and ISO 45001.
Easier implementation using collaborative software to keep up to date with real-time progress reports, customized dashboards and status updates. • Merged Reality−Enables product experts to provide remote ‘side by side’ assistance to field service engineers and customers through mobile devices, including smart glasses.
Easier implementation using collaborative software to keep up to date with real-time progress reports, customized dashboards and status updates. 10 • Merged Reality−Enables product experts to provide remote ‘side by side’ assistance to field service engineers and customers through mobile devices, including smart glasses.
Warehousing, direct shipping and shipping logistics with cold chain storage capability are handled at this facility with products transported to our distribution facilities for onward handling to end customers. Our Rochester, New York facility consists of three sites for slide manufacturing, fluid manufacturing and CNP equipment manufacturing.
Warehousing, direct shipping and shipping logistics with cold chain storage capability are handled at this facility with products transported to our distribution facilities for onward handling to end customers. Our Rochester, New York facility consists of three sites for slide manufacturing, fluid manufacturing and CNP microwell and equipment manufacturing.
In the short term, our strategy is to invest in R&D to offer a broader test menu to more settings for more patients. Both routine and novel tests are important for leveraging our large and growing installed base of instruments in both laboratories and POC settings.
In the short term, our strategy is to invest in R&D to offer a broader test menu to more care settings for more patients. Both routine and novel tests are important for leveraging our large and growing installed base of instruments in both laboratories and POC settings.
Any biologics manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic 17 reporting, product sampling and distribution, and advertising and promotion of the product.
Any biologics manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.
In addition, we review Company programs, policies, procedures and activities with diversity and inclusion in mind. We have established newly defined core behaviors based on the QuidelOrtho Way, which define our core values as a company and our ways of working together.
In addition, we review Company programs, policies, procedures and activities with diversity and inclusion in mind. We have established defined core behaviors based on the QuidelOrtho Way, which define our core values as a company and our ways of working together.
These include: 20 ◦ China’s Cybersecurity Law, including data localization requirements that require operators of critical information infrastructure (“CIIOs”) to store personal information and important data collected and generated from the critical information infrastructure within China.
These include: ◦ China’s Cybersecurity Law, including data localization requirements that require operators of critical information infrastructure (“CIIOs”) to store personal information and important data collected and generated from the critical information infrastructure within China.
We reached significant new markets as we introduced our QuickVue ® At-Home OTC COVID-19 test for at-home consumer use, school districts, health departments and many other locations.
We reached new markets as we introduced our QuickVue ® At-Home OTC COVID-19 test for at-home consumer use, school districts, health departments and many other locations.
Our principal trademarks and the products they cover are discussed above in the section entitled “Business Units and Products.” Under many of our contractual agreements that involve the sale of our products, we have agreed to indemnify the counterparty against costs and liabilities arising out of any patent infringement claims and other intellectual property claims asserted by a third party relating to our products sold under those agreements.
Our principal trademarks and the products they cover are discussed above in the section entitled “Business Units and Products.” Under many of our contractual agreements that involve the sale of our products, we have agreed to indemnify the counterparty against costs and liabilities arising out of any patent infringement claims and other intellectual property claims asserted by a third party attributable to our products sold under those agreements.
Federal Food, Drug, and Cosmetic Act (the “FDCA”) and the regulations promulgated thereunder, the FDA regulates the preclinical and clinical testing, manufacture, labeling, distribution and promotion of medical devices.
Federal Food, Drug, and Cosmetic Act (the “FDCA”) and the regulations promulgated 15 thereunder, the FDA regulates the preclinical and clinical testing, manufacture, labeling, distribution and promotion of medical devices.
In the U.S., biologics are subject to regulation under the FDCA and the Public Health Service Act (“PHSA”), and other federal, state, local and foreign statutes and regulations.
In the U.S., biologics are subject to regulation under the FDCA and the Public Health Service Act, and other federal, state, local and foreign statutes and regulations.
Over our more than 80 years supporting the IVD testing needs of our customers, we have developed deep and enduring relationships with our customers. Our ORTHOCARE service program allows us to retain and grow our customer base by providing an industry-leading customer experience driven by quality of service, continuous innovation and access to a diverse product portfolio. 2.
Over our more than 80 years supporting the IVD testing needs of our customers, we have developed deep and enduring relationships with our customers. Our service program allows us to retain and grow our customer base by providing an industry-leading customer experience driven by quality of service, innovation and access to a diverse product portfolio. 2.
EU regulations and directives generally classify healthcare products either as medicinal products, medical devices or IVD. In order for medical devices to be placed on the European market or put into service, they must bear a CE marking. The CE marking may only be affixed if the product meets the essential safety and performance requirements.
EU regulations and directives generally classify healthcare products either as medicinal products, medical devices or IVDs. In order for medical devices to be placed on the European market or put into service, they must bear a CE marking. The CE marking may only be affixed if the product meets the essential safety and performance requirements.
Further, the California Privacy Rights Act, which amends the CCPA, became operative on January 1, 2023 and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for certain higher risk data processing, and opt outs for certain transfers of personal information and uses of sensitive data.
Further, the California Privacy Rights Act (“CPRA”), which amends the CCPA, became fully operative on January 1, 2023 and imposes additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for certain higher risk data processing, and opt outs for certain transfers of personal information and uses of sensitive data.
Accordingly, we use a mix of competitive base salary, cash-based annual incentive compensation, equity compensation awards and other employee benefits. Some of our key employee benefits include eligibility for health insurance, vacation time, a retirement plan with an employer match, an employee assistance program and life and disability coverage.
Accordingly, we use a mix of competitive base salary, cash-based annual incentive compensation, equity compensation awards and other employee benefits, when applicable. Some of our key employee benefits include eligibility for health insurance, vacation time, a retirement plan with an employer match, an employee assistance program and life and disability coverage.
Our key strengths include new assay format development, new instrument systems development and the complex integration of the two. In addition, to create new opportunities, manage costs and adapt to a rapidly changing industry, we also enter into strategic partnerships as part of our R&D process. 11 3.
Our key strengths include new assay format development, new instrument systems development and the complex integration of the two. In addition, to create new opportunities, manage costs and adapt to a rapidly changing industry, we may also enter into strategic partnerships as part of our R&D process. 3.
In light of these changing requirements, we could suffer additional costs, complaints, regulatory investigations or fines, and if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the manner in which we provide our services and the geographical location or segregation of our relevant systems and operations, which could adversely affect our financial results, including because we rely on third parties in other countries; • evolving privacy laws on cookies and e-marketing.
In light of these changing requirements, we could suffer additional costs, complaints, regulatory investigations or fines, and if we are otherwise unable to transfer personal data between and among countries and regions in which we operate, it could affect the 20 manner in which we provide our services and the geographic location or segregation of our relevant systems and operations, which could adversely affect our financial results, including because we rely on third parties in other countries; • evolving privacy laws on cookies and e-marketing.
If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.
If regulatory approval of a product is granted, such approval will be granted for particular indications and may include limitations on the indicated uses for which such product may be marketed. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications.
Our call center team and laboratory specialists serve as the first line of contact for our customers and are available to provide customer training and ongoing customer support. In addition, our network of field engineers is responsible for installing our instruments and providing onsite customer support if necessary.
Our call center team and field application specialists serve as the first line of contact for our customers and are available to provide customer training and ongoing customer support. In addition, our network of field engineers is responsible for installing our instruments and providing onsite customer support if necessary.
This facility supports the manufacturing of our molecular nucleic acid amplification products, our living tissue cell culture and antibody-based products, as well as our enzyme linked immunosorbent assays (ELISA). We use a wide variety of biological and chemical supplies in our manufacturing processes.
This facility supports the manufacturing of our molecular nucleic acid amplification products, our living tissue cell culture and antibody-based products, as well as our enzyme linked immunosorbent assays (“ELISA”). We use a wide variety of biological and chemical supplies in our manufacturing processes.
These benefits are designed to offer employees a menu of options so that each employee can select benefits most meaningful to their personal situation. We consider our employee benefits to be an important component of total compensation for our employees.
These benefits are designed to offer employees a menu of options so that each employee can select benefits most meaningful to their personal situation. We consider our employee benefits to be an important component of total rewards and compensation for our employees.
Our Raritan, New Jersey facility manufactures our in vitro diagnostic donor screening and immunohematology products that are distributed globally. Manufacturing processes consist of formulation, filtration, filling, labeling, chemistry analysis, serological and microbial testing, as well as packaging. The product filling process occurs in a microbially controlled filling area using highly automated equipment and systems.
Our Raritan, New Jersey facility manufactures our IVD donor screening and immunohematology products that are distributed globally. Manufacturing processes consist of formulation, filtration, filling, labeling, chemistry analysis, serological and microbial testing, as well as packaging. The product filling process occurs in a microbially controlled filling area using highly automated equipment and systems.
While the text of the ePrivacy Regulation is still under development, a recent European court decision and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. In the U.S., the FTC and many state laws have increasingly focused on the collection and use of behavioral data, including geolocation and biometric information.
While the text of the ePrivacy Regulation is still under development, European court decisions and regulators’ recent guidance are driving increased attention to cookies and tracking technologies. In the U.S., the FTC and many state laws have increasingly focused on the collection and use of behavioral data, including geolocation and biometric information.
Solely for convenience, in some cases, the trademarks, service marks and trade names referred to in this Annual Report are listed without the applicable ® and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to these trademarks, service marks and trade names. 5 Following the Combinations, we generate product revenue in the following business units: Business Unit Focus Labs Clinical chemistry laboratory instruments and tests, which measure target chemicals in bodily fluids for the evaluation of health and the clinical management of patients Immunoassay laboratory instruments and tests, which measure proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health Testing to detect and monitor disease progression across a broad spectrum of therapeutic areas Other product revenues primarily from contract manufacturing Specialized diagnostic solutions Collaboration and license agreements pursuant to which we derive collaboration and royalty revenues Molecular Diagnostics Tests for Polymerase Chain Reaction (“PCR”) thermocyclers with reduced process time and ready-to-use reagent configurations Molecular amplification systems with the ability to run multiple assays at the same time and tests for infectious disease diagnostics Sample-to-result molecular instruments and tests for syndromic infectious disease diagnostics Point of Care Instruments and tests to provide rapid results across a broad continuum of POC settings, including tests for professional healthcare providers and tests that can be taken at home Tests that are run on a range of portable, POC analyzers Tests that are visually read Transfusion Medicine Immunohematology instruments and tests used for blood typing and antibody identification to help ensure patient-donor compatibility in blood transfusions Donor screening instruments and tests used for blood and plasma screening for infectious diseases for global customers The products and platforms under each business unit are described below.
Solely for convenience, in some cases, the trademarks, service marks and trade names referred to in this Annual Report are listed without the applicable ® and ™ symbols, but we intend to enforce our rights to these trademarks, service marks and trade names. 5 We generate product revenue in the following business units: Business Unit Focus Labs Clinical chemistry laboratory instruments and tests, which measure target chemicals in bodily fluids for the evaluation of health and the clinical management of patients Immunoassay laboratory instruments and tests, which measure proteins as they act as antigens in the spread of disease, antibodies in the immune response spurred by disease, or markers of proper organ function and health Testing to detect and monitor disease progression across a broad spectrum of therapeutic areas Other product revenues primarily from contract manufacturing Specialized diagnostic solutions Collaboration and license agreements pursuant to which we derive collaboration and royalty revenues Molecular Diagnostics Tests for Polymerase Chain Reaction (“PCR”) thermocyclers with reduced process time and ready-to-use reagent configurations Molecular amplification systems with the ability to run multiple assays at the same time and tests for infectious disease diagnostics Sample-to-result molecular instruments and tests for syndromic infectious disease diagnostics Point of Care Instruments and tests to provide rapid results across a broad continuum of POC settings, including tests for professional healthcare providers and tests that can be performed at home Tests that are run on a range of portable, POC analyzers Tests that are visually read Transfusion Medicine Immunohematology instruments and tests used for blood typing and antibody identification to help confirm patient-donor compatibility in blood transfusions Donor screening instruments and tests used for blood and plasma screening for infectious diseases for global customers The products and platforms under each business unit are described below.
The FDA may also waive otherwise applicable cGMPs requirements to accommodate emergency response needs. Products subject to an EUA must still comply with the conditions of the EUA, including labeling and marketing requirements.
The FDA may also waive otherwise applicable cGMP requirements to accommodate emergency response needs. Products subject to an EUA must still comply with the conditions of the EUA, including labeling and marketing requirements.
This service offering provides actionable insights into demand for new products, services and workflow. • Global Technical Solution Center−Seven technical solution centers delivering first-line support in over 15 languages, meaning we can resolve service issues remotely without an on-site visit approximately two-thirds of the time. • Smart Service Mobile App−First-in-class technology enabled on iPhone and Android devices that allows our service teams to receive up-to-date analyzer health checks, proactive alerts and performance monitoring to help ensure the highest level of reliability is achieved. 10 • Training and Education−Flexible educational resources for the lifetime of the customer relationship, including virtual technical training, continuing education and professional development. • Smart Start−Concierge implementation program led by certified project managers.
This service offering provides actionable insights into demand for new products, services and workflow. • Global Technical Solution Center−Seven technical solution centers delivering first-line support in over 15 languages, meaning we can resolve service issues remotely without an on-site visit approximately two-thirds of the time. • Smart Service Mobile App−First-in-class technology enabled on iPhone and Android devices that allows our service teams to receive up-to-date analyzer health checks, proactive alerts and performance monitoring to help achieve the highest levels of reliability. • Training and Education−Flexible educational resources for the lifetime of the customer relationship, including virtual technical training, continuing education and professional development. • Smart Start−Concierge implementation program led by certified project managers.
Leadership team dedicated to preserving a culture of employee focus and happiness. We understand that our success relies upon the talent and dedication of our employees. That is why we are committed to attracting, retaining and developing the best talent in the industry. Our culture puts our team members first and prioritizes actions that support happiness, inspiration and engagement.
Leadership team dedicated to preserving a culture of continuous improvement and employee happiness. We understand that our success relies upon the talent and dedication of our employees. That is why we are committed to attracting, retaining and developing the best talent in the industry. Our culture puts our team members first and prioritizes actions that support happiness, inspiration and engagement.
Operational scale driven by recent investments in U.S. manufacturing capabilities and an extensive and balanced global commercial footprint across more than 130 countries. We leverage our global footprint of approximately 2,800 commercial sales, service and regional marketing teammates to facilitate successful delivery of innovative solutions to meet our customers’ needs in both developed and emerging markets. 4.
Operational scale driven by investments in U.S. manufacturing capabilities and an extensive and balanced global commercial footprint across more than 130 countries. We leverage our global footprint of approximately 2,900 commercial sales, service and regional marketing teammates to facilitate successful delivery of innovative solutions to meet our customers’ needs in both developed and emerging markets. 11 4.
Our principal competitors include, among others, Abbott Laboratories, Thermo Fisher Scientific, Danaher, Siemens Healthineers, Diasorin, Bio-Rad, Hologic, Qiagen, bioMérieux and PerkinElmer. Some of these competitors have substantially greater financial, marketing and other resources than we have.
Some of our principal competitors include, among others, Abbott Laboratories, Roche, Thermo Fisher Scientific, Danaher, Siemens Healthineers, Diasorin, Bio-Rad, Hologic, Qiagen, bioMérieux and Revitty. Some of these competitors have substantially greater financial, marketing and other resources than we have.
During the fiscal year ended January 1, 2023, the revenue associated with the use of this patented intellectual property was less than 1% of our total revenues and the expense associated with the antigens supplied to us by Grifols was less than 2% of our cost of goods sold.
During the fiscal year ended December 31, 2023, the revenue associated with the use of this patented intellectual property was less than 1% of our total revenues and the expense associated with the antigens supplied to us by Grifols was less than 2% of our cost of goods sold.
Biologic manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose certain procedural and documentation requirements upon us and our third-party manufacturers.
Biologic manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which imposes certain procedural and 17 documentation requirements upon us and our third-party manufacturers.
As a global organization, our unique perspectives, diverse backgrounds and collective strengths drive creative solutions, breakthrough innovation and highly productive teams. In September 2022, we invited all of our employees to participate in a confidential, global survey to gather feedback and gain insights on key cultural and engagement factors.
As a global organization, our unique perspectives, diverse backgrounds and collective strengths drive creative solutions, breakthrough innovation and highly productive teams. In September 2022, we invited all employees to participate in a confidential, global survey to gather feedback and gain insights on key cultural and engagement factors and approximately 75% of our global employees participated in the survey.
Our Strategic Capabilities and Competitive Strengths There is significant competition in the development and marketing of IVD products, and innovation, product development, regulatory clearance to market and commercial introduction of new IVD technologies can occur rapidly.
Our Strategic Capabilities and Competitive Strengths There is significant competition in the development and marketing of in vitro diagnostic (“IVD”) products, and innovation, product development, regulatory clearance to market and commercial introduction of new IVD technologies can occur rapidly.
Among other things, these laws and others generally (a) prohibit the provision of anything of value in exchange for the referral of patients or for the purchase, order, or recommendation of any item or service reimbursed by a federal healthcare program, including Medicare and Medicaid; (b) require that claims for payment submitted to federal healthcare programs be truthful; and (c) require the maintenance of certain government licenses and permits.
Among other things, these laws and others generally: (1) prohibit the provision of anything of value in exchange for the referral of patients or for the purchase, order, or recommendation of any item or service reimbursed by a federal healthcare program, including Medicare and Medicaid; (2) require that claims for payment submitted to federal healthcare programs be truthful; and (3) require the maintenance of certain government licenses and permits.
This facility manufactures the slides and fluids used for clinical diagnostic assays run on our VITROS analyzers. Manufacturing capabilities include formulation, lyophilization, filling, coating, slitting, custom featuring, assembly and packaging, all under cGMPs. This facility is certified to ISO 13485:2016 and MDSAP medical device standards and ISO 14001 and is part of the OSHA VPP program for safety.
The Rochester sites manufacture the slides, microwells and fluids used for clinical diagnostic assays run on our Vitros analyzers. Manufacturing capabilities include formulation, lyophilization, filling, coating, slitting, custom featuring, assembly and packaging, all under cGMPs. This facility is certified to ISO 13485:2016 and MDSAP medical device standards and ISO 14001 and is part of the OSHA VPP program for safety.
Data Privacy and Security Laws We are subject to data privacy and security laws and regulations in numerous jurisdictions, as well as customer-imposed controls, as a result of having access to and processing confidential, personal and/or sensitive data in the course of our business.
Privacy, Data Security and Data Protection Laws We are subject to privacy, data security and data protection laws and regulations in numerous jurisdictions, as well as customer-imposed requirements, as a result of having access to and processing confidential, personal and/or sensitive information in the course of our business.
The compliance deadlines for the EU MDR and EU IVDR were May 2021 and May 2022, respectively. The transition period provided for in the EU MDR for existing certifications issued under the previous Medical Devices Directive will end on May 26, 2024. The EU IVDR has been applicable since May 26, 2022.
The compliance deadlines for the EU MDR and EU IVDR were May 2021 and May 2022, respectively. The transition period provided for in the EU MDR for existing certifications issued under the previous Medical Devices Directive will end on May 26, 2024.
As of January 1, 2023, we had approximately 1,000 service teammates globally. We employ highly trained service professionals, including laboratory specialists with advanced qualifications.
As of December 31, 2023, we had approximately 1,000 service teammates globally. We employ highly trained service professionals, including laboratory specialists with advanced qualifications.
GDPR”), which govern the processing of information in those jurisdictions, and could result in significant fines (up to the greater of €20 million / £17.5 million or 4% of total annual revenue), regulatory investigations, reputational damage, orders to cease or change our processing of our data, enforcement notices or assessment notices (for a compulsory audit), civil claims including representative actions and other class action type litigation; • E.U. and U.K. rules with respect to cross-border transfers of personal data out of the European Economic Area (the “EEA”) and the U.K., respectively, which are in flux, including in light of a decision by the Court of Justice of the E.U. invalidating the E.U.-U.S.
Data Protection Act 2018, which govern the processing of personal data in those jurisdictions, and could result in significant fines (up to the greater of €20 million / £17.5 million or 4% of total worldwide annual turnover of the preceding financial year), regulatory investigations, reputational damage, orders to cease or change our processing of our data, enforcement notices or assessment notices (for a compulsory audit), civil claims including representative actions and other class action type litigation; • E.U. and U.K. rules with respect to cross-border transfers of personal data out of the European Economic Area (the “EEA”) and the U.K., respectively, which are in flux, including in light of a decision by the Court of Justice of the E.U. invalidating the E.U.-U.S.
Historically, sales of our influenza products have varied from year to year in 15 volume and timing based, in large part, on the severity, length and timing of the onset of the cold and flu season. In addition, the SARS-CoV-2 virus may have similar seasonal demands and impacts on our revenues in the future. Government Regulations U.S.
Historically, revenues from our influenza products have varied from year to year based, in large part, on the severity, length and timing of the onset of the cold, flu and RSV seasons. In addition, the SARS-CoV-2 virus may have similar seasonal demands and impacts on our revenues in the future. Government Regulations U.S.
Class III devices generally pose the highest risks, such as life sustaining, life supporting or some implantable devices, and are typically subject to premarket approval to ensure their safety and effectiveness. Our current products are all Class I or II.
Class III devices generally pose the highest risks, such as life sustaining, life supporting or some implantable devices, and are typically subject to premarket approval to ensure their safety and effectiveness. Our current products are generally Class I or II. Certain of our Vitros immunodiagnostics are Class III.
Human Capital and ESG Strategies Human Capital Resources As of January 1, 2023, we had approximately 7,000 employees worldwide, with approximately 4,200 employees in the U.S. and approximately 2,800 employees outside of the U.S. We employ approximately 1,700 manufacturing employees and approximately 2,800 employees in commercial sales, service and regional marketing positions worldwide, including approximately 1,000 service teammates.
Human Capital and ESG Strategies Human Capital Resources As of December 31, 2023, we had approximately 7,100 employees worldwide, with approximately 4,200 employees in the U.S. and approximately 2,900 employees outside of the U.S. We employ approximately 1,800 manufacturing employees and approximately 2,900 employees in commercial sales, service and regional marketing positions worldwide, including approximately 1,000 service teammates.
In the E.U., regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive will be replaced by an E.U. regulation known as the ePrivacy Regulation which will significantly increase fines for non-compliance.
In the E.U., regulators are increasingly focusing on compliance with requirements in the online behavioral advertising ecosystem, and current national laws that implement the ePrivacy Directive will be replaced by an E.U. regulation known as the ePrivacy Regulation.
We plan to conduct periodic pulse surveys with employees throughout 2023 to measure progress and focus on continuous improvement. We are committed to maintaining an environment of equal employment opportunities for all job applicants and members of our team.
We plan to conduct periodic pulse surveys with employees throughout 2024 to measure progress and focus on further improvements. We are committed to maintaining an environment of equal employment opportunities for all job applicants and members of our team.
We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs, which vary by country, and may include flexible spending accounts, hospital care, accident insurance, prepaid legal benefits, backup childcare, family forming benefits, homework support for students, student loan benefits, tuition reimbursement and a wellness program.
We also offer a variety of voluntary benefits that allow employees to select the options that meet their needs, which vary by country, and may include flexible spending accounts, hospital care, accident insurance, prepaid legal benefits, family forming benefits, tuition reimbursement and a wellness program.
In January 2022, the European Parliament and the Council adopted a staggered extension of its transition period, ranging from May 26, 2025 for high risk in vitro diagnostics to May 26, 2027 for lower risk in vitro diagnostics, and to May 26, 2028 for certain provisions concerning devices manufactured and used in health institutions (Regulation (EU) 2022/112).
In January 2022, the European Parliament and the Council adopted a staggered extension of its transition period, for certain existing certifications, ranging from May 26, 2025 for high risk IVDs, May 26, 2026 for medium risk IVDs, May 26, 2027 for lower risk IVDs, and to May 26, 2028 for certain provisions concerning devices manufactured and used in health institutions (EU 2022/112).
Laboratories using our assays must obtain a CLIA certificate. Waived testing is designated by CLIA as simple testing that carries a low risk for an incorrect result. The CLIA-waived designation is critical for most of our products that are intended for POC settings.
Waived testing is designated by CLIA as simple testing that carries a low risk for an incorrect result. The CLIA-waived designation is critical for most of our products that are intended for POC settings.
Given the rapid pace of change and deep expertise needed within some of these areas, we expect to leverage third-party partnerships and acquisitions to reduce some of the technical and commercial risks and potentially increase our speed to market with innovative offerings. As a result of the Combinations, we have increased leverage, cash and optionality.
Given the rapid pace of change and deep expertise needed within some of these areas, we expect to leverage third-party partnerships and acquisitions to reduce some of the technical and commercial risks and potentially increase our speed to market with innovative offerings.
Certain products and platforms are not available in all regions where we do business. 6 LABS Product Primary Application Virology Wide variety of traditional cell lines, specimen collection devices, media and controls for use in laboratories that culture and test for human viruses, including, among others, respiratory and herpes family viruses Cell-based products under the FreshCells brand in multiple formats, including tubes, shell vials and multi-well plates U.S.
LABS Product Primary Application Virology Wide variety of traditional cell lines, specimen collection devices, media and controls for use in laboratories that culture and test for human viruses, including, among others, respiratory and herpes family viruses Cell-based products under the FreshCells brand in multiple formats, including tubes, shell vials and multi-well plates U.S.
For more information related to our supply chain, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of the COVID-19 Pandemic—Supply Chains,” Part I, Item 1A, “Risk Factors—Risks Relating to Our Business, Strategy and Operations—The COVID-19 global pandemic has adversely affected, and may continue to adversely affect, our business operations, strategy, financial performance and results of operations, the extent of which is uncertain and difficult to predict” and Part I, Item 1A, “Risk Factors—Risks Relating to Our Business, Strategy and Operations—Interruptions and delays in the supply of raw materials, components, equipment and other products and services could adversely affect our operations and financial results.” Collaboration Arrangements We have various collaboration arrangements, which provide us with the rights to develop, produce and market products using certain know-how, technology and patent rights maintained by our collaborative partners.
For more information related to our supply chain, see Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Supply Chains” and Part I, Item 1A, “Risk Factors—Risks Relating to Our Business, Strategy and Operations—Interruptions and delays in the supply of raw materials, components, equipment and other products and services could adversely affect our operations and financial results.” Collaboration Arrangements We have various collaboration arrangements, which provide us with the rights to develop, produce and market products using certain know-how, technology and patent rights maintained by our collaborative partners.
Privacy Shield Framework, and the European Commission’s recent publishing of revised standard contractual clauses, which we must now consider and apply, where applicable.
Privacy Shield Framework, and the European Commission’s publishing of revised standard contractual clauses (“SCCs”) in 2021, which we must consider and apply, where applicable.
Seasonality Sales of our respiratory products are subject to, and significantly affected by, the seasonal demands of the cold and flu seasons, typically prevalent during the fall and winter.
Seasonality Revenues from our respiratory products are subject to, and significantly affected by, the seasonal demands of the cold, flu and RSV seasons, which are typically more prevalent during the fall and winter.
Our highly valued suite of ORTHOCARE service offerings includes: • Guarantee 98% up-time to our e-connected U.S. customers−High instrument reliability and a proactive maintenance program. • E-CONNECTIVITY Remote Monitoring Software−More than 80% of our installed base of VITROS 5600, XT 7600 and ORTHO VISION platforms are e-connected, enabling remote monitoring and improved analyzer availability. • Laboratory Informatics−Solutions designed to deliver incremental value to the laboratory, including inventory planning, laboratory productivity metrics and technical documentation. • ValuMetrix−A highly valued consulting service proven to increase laboratory workflow, productivity and laboratory service levels utilizing lean principles and process excellence.
Our highly valued suite of solutions include: • Guarantee 98% up-time to our e-connected U.S. customers−High instrument reliability and a proactive maintenance program. • E-CONNECTIVITY Remote Monitoring Software−More than 80% of our installed base of Vitros 5600, XT 7600 and ORTHO VISION platforms are e-connected, enabling remote monitoring and improved analyzer availability. • ValuMetrix−A highly valued consulting service proven to increase laboratory workflow, productivity and laboratory service levels utilizing lean principles and process excellence.
In addition, this facility has production areas dedicated to creating and processing plastic components that are subsequently transformed into finished devices (cardiac and drugs of abuse products) using customized manufacturing equipment, including specialized automation. This facility is certified to ISO 13485:2016 and MDSAP medical device standards.
This facility has production areas dedicated to creating and processing plastic components that are subsequently transformed into finished devices (cardiac and drugs of abuse products) using customized manufacturing equipment, including specialized automation. This facility is certified to ISO 13485:2016 and MDSAP medical device standards. Most of the products are packaged and subsequently distributed by our San Diego distribution center.
As of January 1, 2023, 43% of our U.S. employees identified as female and 39% of our U.S. employees identified as having a racial and ethnic background other than white. As of January 1, 2023, our executive management team consisted of 8 members, of whom 25% identified as female.
As of December 31, 2023, 42% of our U.S. employees identified as female and 37% of our U.S. employees identified as having a racial and ethnic background other than white. As of December 31, 2023, our executive management team consisted of 8 members, of whom 25% identified as female.
We seek to protect our trade secrets and proprietary technologies in many ways, including by entering into confidentiality agreements with employees and third parties with which we do business (such as potential licensees, customers, vendors, strategic partners and consultants).
In addition to seeking patent protection where appropriate, we also protect some of our intellectual property as trade secrets. We seek to protect our trade secrets and proprietary technologies in many ways, including by entering into confidentiality agreements with employees and third parties with which we do business (such as potential licensees, customers, vendors, strategic partners and consultants).
Sales, Marketing and Distribution Our current business strategy is designed to serve the continuum of healthcare delivery needs globally, from POC clinicians located in doctor’s office practices, to moderately complex POLs, and to highly complex hospitals, laboratories and blood and plasma centers.
We anticipate significant investment of our financial resources to product and technology R&D in the foreseeable future. Sales, Marketing and Distribution Our current business strategy is designed to serve the continuum of healthcare delivery needs globally, from POC clinicians located in doctor’s office practices, to moderately complex POLs, and to highly complex hospitals, laboratories and blood and plasma centers.
Most of the products are packaged and subsequently distributed by our San Diego distribution center. Our Athens, Ohio facility consists of a variety of clean room and chemistry laboratories and customized reagent filling and packaging areas to support the manufacturing at the facility of all products under current good manufacturing practices (“cGMPs”).
Our Athens, Ohio facility consists of a variety of clean room and chemistry laboratories and customized reagent filling and packaging areas to support the manufacturing at the facility of all products under current good manufacturing practices (“cGMPs”).
It has been our policy to file for patent protection in the U.S. and other countries with significant markets for our products, such as Western European countries and Japan, if the economics are deemed to justify such filing and our patent counsel advises that relevant patent protection may be obtained.
The resolution of issues such as these and their effect on our long-term success are also indeterminable. 22 It has been our policy to file for patent protection in the U.S. and other countries with significant markets for our products, such as Western European countries and Japan, if the economics are deemed to justify such filing and our patent counsel advises that relevant patent protection may be obtained.
In addition, we have implemented certain security measures in our laboratories and offices to protect the confidential and proprietary nature of these technologies. 22 In addition to patent and trade secret protection, we have also registered or applied to register certain trademarks and service marks in the U.S. and in foreign countries that are used in our business and in conjunction with the sale of our products.
In addition to patent and trade secret protection, we have also registered or applied to register certain trademarks and service marks in the U.S. and in foreign countries that are used in our business and in conjunction with the sale of our products.
Our charitable giving programs and activities in the U.S. consist of the following: • Matching gifts−We match charitable contributions by full-time, regular employees to qualifying non-profit organizations of up to $250 per employee annually. • Volunteer incentive program−When an employee volunteers at an organization for a minimum of 20 hours in a calendar year, we donate $100 to that organization. • General QCARES fund−We may donate up to $2,000 to an organization proposed by an employee. • Community partnerships−As part of our commitment to expanding equitable access to healthcare, we have partnered with several major organizations to donate COVID-19 testing products to various communities across the nation to promote increased testing within communities to help prevent the spread of COVID-19.
Our charitable giving programs and activities in the U.S. consist of the following: 24 • Matching gifts−We match charitable contributions made by active employees to qualifying non-profit organizations of up to $200 per employee annually. • Volunteer incentive program−When an employee volunteers at a qualifying organization for a minimum of 20 hours in a calendar year, we donate $100 to that organization. • General grant fund−We may donate up to $2,000 to a qualifying organization proposed by an employee. • Community partnerships−As part of our commitment to expanding equitable access to healthcare, we have partnered with several major organizations to donate COVID-19 testing products to various communities across the nation to promote increased testing within communities to help prevent the spread of COVID-19. • Community initiatives and philanthropic programs−We contribute to a variety of community initiatives and philanthropic programs, including research partnerships, blood drive sponsorships, COVID-19 testing drives, medical supply donations, scholarship and internship programs, as well as STEM programs with educational institutions.
Digital Solutions and Innovation We are developing a growing portfolio of digital and data solutions, which we believe improve our customers’ clinical and operational outcomes. Our focus is on enabling our customers to deliver smart, connected care across various clinical environments.
Digital Solutions and Innovation We are building our enterprise digital product strategy, platform and portfolio, which we believe helps improve our customers’ clinical and operational outcomes. Our focus is on enabling our customers to deliver smart, connected care across a variety of clinical environments.
Chinese regulations require registration of diagnostic products with China’s National Medical Products Administration (“NMPA,” formerly CFDA), including NMPA’s Announcement (No. 104, 2020), which provides an accelerated pathway for the localization of imported medical devices and IVD products in China by permitting (for certain classes or products) the same medical approval license previously approved by the mainland authorities to apply to provincial domestic enterprises in China, providing for the same product design and equivalent quality system that is traceable to the imported licensed product.
Failure to meet these regulatory requirements could adversely impact our business in the EU and other regions that tie their product registrations to the EU requirements. 18 Chinese regulations require registration of diagnostic products with China’s National Medical Products Administration (“NMPA,” formerly CFDA), including NMPA’s Announcement (No. 104, 2020), which provides an accelerated pathway for the localization of imported medical devices and IVD products in China by permitting (for certain classes or products) the same medical approval license previously approved by the mainland authorities to apply to foreign invested enterprises established in China by the licensee of such medical approval license, providing for the same product design and equivalent quality system that is traceable to the imported licensed product.
These sales generate a high proportion of our recurring revenues. Our sales team is comprised of highly skilled and experienced professionals. We sell products globally and market and distribute products worldwide in a variety of ways, including through a mix of direct, indirect and hybrid distribution strategies. Across our global footprint, we operate a region-specific sales model.
We sell products globally and market and distribute products worldwide in a variety of ways, including through a mix of direct, indirect and hybrid distribution strategies. Across our global footprint, we operate a region-specific sales model.
We provide diagnostic testing solutions under various brand names, including, among others, the following: AdenoPlus ™ , BIOVUE ® , D3 ® , ELVIRA ® , ELVIS ® , FastPoint ® , FreshCells ™ , InflammaDry ® , Lyra ® , MicroVue ™ , Ortho ® , Ortho Clinical Diagnostics ® , Ortho Vision ™ , Quidel ® , QuickVue, QuickVue+ ® , QVue ™ , ReadyCells ® , Savanna ® , Sofia ® , Solana ® , Thyretain ® , Triage ® , Virena ® and Vitros ® .
Segment and Geographic Information.” Business Units and Products We provide diagnostic testing solutions under various brand names, including, among others, the following: AdenoPlus ™ , BIOVUE ® , FreshCells ™ , InflammaDry ® , Lyra ® , MeterPro ® , MicroVue ™ , Ortho ® , Ortho Clinical Diagnostics ® , Ortho Connect ™ , Ortho Plus ® , Ortho Vision ® , QuickVue, Quidel ® , QuidelOrtho ™ , QVue ™ , Savanna ® , Sofia ® , Solana ® , Thyretain ® , Triage ® , Virena ® and Vitros ® .
In the future, we expect that we will require or desire additional licenses from other parties in order to refine our products further and to allow us to develop, manufacture and market commercially viable or superior products effectively. In addition to seeking patent protection where appropriate, we also protect some of our intellectual property as trade secrets.
In the future, we expect that we will require or desire additional licenses from other parties in order to refine our products further and to allow us to develop, manufacture and market commercially viable or superior products effectively.
Failure to comply with PIPL can result in fines of up to RMB 50 million or 5% of the prior year’s total annual revenue for the personal information processor and/or a suspension of services or data processing activities, among other fines and criminal liabilities, including ones that can be placed on responsible personnel; and ◦ several regulations and draft regulations for public comments, promulgated by the People’s Republic of China, which are designed to provide further supplemental guidance in accordance with the laws mentioned above; • self-regulatory standards that privacy advocacy groups, the technology industry and other industries have established or may establish and various new, additional or different self-regulatory standards that may place additional burdens on us.
Failure to comply with PIPL can result in fines of up to RMB 50 million or 5% of the prior year’s total annual revenue for the personal information processor and/or a suspension of services or data processing activities, among other fines and criminal liabilities, including ones that can be placed on responsible personnel; and ◦ several regulations and draft regulations for public comments, promulgated by the People’s Republic of China, which are designed to provide further supplemental guidance in accordance with the laws mentioned above; • Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”), which governs data protection in the private sector with specific requirements around health privacy and consumer protection.
Item 1. Business All references to “the Company,” “we,” “our” and “us” in this Annual Report refer to QuidelOrtho Corporation (“QuidelOrtho”) and its subsidiaries. References to “fiscal year 2022” in this Annual Report refer to the Company’s fiscal year ended January 1, 2023.
Item 1. Business All references to “the Company,” “we,” “our” and “us” in this Annual Report refer to QuidelOrtho Corporation (“QuidelOrtho”) and its subsidiaries. References to “fiscal year 2023” in this Annual Report refer to the Company’s fiscal year ended December 31, 2023. Overview Our vision is to advance diagnostics to power a healthier future.
For example, the speed, accuracy and consistency in application of the law in a patent office within any particular jurisdiction are beyond our control and can be unpredictable. The resolution of issues such as these and their effect on our long-term success are also indeterminable.
For example, the speed, accuracy and consistency in application of the law in a patent office within any particular jurisdiction are beyond our control and can be unpredictable.
Laws Governing Reimbursement Activities Healthcare providers that purchase medical devices generally rely on third-party payors, including the Medicare and Medicaid programs and private payors, such as indemnity insurers, employer group health insurance programs and managed care plans, to reimburse all or part of the cost of the products.
Like other companies in our industry, our manufacturing and research activities involve the purchase, storage, movement, use and disposal of substances regulated under environmental, health and safety laws, including those related to hazardous or potentially hazardous substances. 21 Laws Governing Reimbursement Activities Healthcare providers that purchase medical devices generally rely on third-party payors, including the Medicare and Medicaid programs and private payors, such as indemnity insurers, employer group health insurance programs and managed care plans, to reimburse all or part of the cost of the products.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factors Summary The following is a summary of the principal risks that could adversely affect our business, results of operations and financial condition: • risks related to the consummation of the Combinations, including (i) failure to integrate successfully the businesses of Quidel and Ortho in the expected timeframe, or at all; (ii) the synergies attributable to the Combinations may vary from expectations; (iii) continued incurrence of significant transaction and merger-related costs; (iv) disruption of our business relationships; and (v) business issues of Quidel or Ortho prior to the Combinations being imputed to the other; • outbreaks of contagious diseases and other adverse public health developments, such as the COVID-19 global pandemic; • the highly competitive nature of our industry and market segment; • failure to research and successfully develop new technologies, products and services and develop new markets; • adverse developments in global market, macroeconomic and geopolitical conditions; • fluctuations or a decline in sales of our COVID-19 and influenza diagnostics tests; • the loss of any key distributor or the failure to retain or expand our customer relationships; • interruptions and delays in the supply of raw materials, components, equipment and other products and services provided to us, and manufacturing or warehousing problems or delays; • the failure of our collaboration partners to fulfill their obligations to us; • our inability to meet demand for our products and services; • decreases in the number of surgical procedures performed, and the resulting decrease in blood demand; • fluctuations in our cash flows as a result of our reagent rental model; • our inability to achieve market acceptance of our products; • significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs; • consolidation of our customer base and the formation of group purchasing organizations; • inability to realize the anticipated benefits of acquisitions and divestitures; • the occurrence of natural disasters, public health crises, geopolitical crises and other catastrophic events that may adversely affect our results of operations; • risks associated with our non-U.S. operations and international sales, including currency translation risks, the impact of possible new tariffs, trade embargoes or trade wars and compliance with applicable trade measures; • our inability to protect our information systems from cyber-based attacks, security breaches or privacy violations and failure to protect our cloud-based solutions; • our inability to develop, obtain and protect our proprietary technology rights or defend against intellectual property infringement suits against us by third parties; • the loss of EUA by the FDA on our COVID-19 products; • our inability to obtain or maintain required clearances or approvals for our products, including approval requirements of the foreign countries in which we sell our products; • our ability to adequately manage our clinical studies; • failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals; • disruptions at government agencies that prevent new or modified products from being developed, cleared or approved or commercialized in a timely manner; • inability to procure government contracts, including due to government-sponsored tendering requirements, lack of funding and compliance and possible sanctions risks associated with our contracts with government entities; • liability claims and harm to our reputation resulting from claims that our products are defective; 26 • failure to comply with laws and regulations, including healthcare regulations, laws and regulations associated with our use of hazardous materials, anti-corruption laws and regulations, and federal, state and foreign data protection laws and regulations; • risks related to changes in U.S. and foreign income tax laws and regulations; • changes in our tax rates or exposure to additional income tax liabilities or assessments; • need to raise additional funds to finance our future capital or operating needs or other business purposes; • risks related to our indebtedness, which as of January 1, 2023, includes indebtedness of $2,638.3 million, as well as remaining availability under our Revolving Credit Facility (as defined in this Annual Report) of $786.9 million (net of $13.1 million of outstanding letters of credit); • our ability to generate cash flow to service our debt obligations; • restrictions imposed under the agreements governing our indebtedness from time to time, which may limit our operating flexibility; • difficulty attracting, motivating and retaining executives and other key employees; • unexpected payments to any pension plans applicable to our employees; • work stoppages, union negotiations, labor disputes and other matters associated with our labor force; • the outcomes of legal proceedings instituted against us; • risks that the insurance we maintain may not fully cover any or all potential exposures; • certain provisions of our amended and restated certificate of incorporation (our “Charter”), Delaware law and our amended and restated bylaws (our “Bylaws”) that may make takeover attempts difficult, which could depress the price of our common stock, or limit our stockholders’ ability to obtain a favorable judicial forum for disputes; • additional costs and new risks associated with ESG matters; • the volatility of the market price of our common stock; • risks associated with future sales of our common stock by us or our stockholders in the public market; and • failure to develop or maintain an effective system of internal controls.
Biggest changeRisk Factors Summary The following is a summary of the principal risks that could adversely affect our business, results of operations and financial condition: • the highly competitive nature of our industry and market segment; • failure to research and successfully develop new technologies, products and services and develop new markets; • adverse developments in global market, macroeconomic and geopolitical conditions; • fluctuations or a decline in sales of our respiratory products; • the loss of any key distributor or the failure to retain or expand our customer relationships; • interruptions and delays in the supply of raw materials, components, equipment and other products and services provided to us, and manufacturing or warehousing problems or delays; • the failure of our collaboration partners to fulfill their obligations to us; • decreases in the number of surgical procedures performed, and the resulting decrease in blood demand; • fluctuations in our cash flows as a result of our reagent rental model; • our inability to achieve market acceptance of our products; • significant changes in the healthcare industry and related industries that we serve, in an effort to reduce costs; • consolidation of our customer base and the formation of group purchasing organizations; • inability to realize the anticipated benefits of acquisitions, divestitures or discontinuances of certain business operations; • risks associated with our non-U.S. operations and international sales, including currency translation risks, the impact of possible new tariffs, trade embargoes or trade wars and compliance with applicable trade measures; • failure to integrate successfully the businesses of Quidel and Ortho in the expected timeframe; • continued incurrence of significant transaction and merger-related costs; • our inability to protect our information systems and personal and confidential information from data corruption, cyber-attacks and security breaches; • interruptions to our third-party IT service providers and/or the inability of our digital solutions to interoperate with certain operating systems; • our inability to develop, obtain and protect our proprietary technology rights or defend against intellectual property infringement suits against us by third parties; • the loss of EUAs on our respiratory products; • our inability to obtain or maintain required clearances or approvals for our products, including approval requirements of the foreign countries in which we sell our products; • our ability to adequately manage our clinical studies; • failure to comply with applicable regulations, which may result in significant costs or the suspension or withdrawal of previously obtained clearances or approvals; • disruptions at government agencies that prevent them from performing normal business functions or prevent new or modified products from being developed, cleared, approved or commercialized in a timely manner, or at all; • inability to procure government contracts, including due to government-sponsored tendering requirements, lack of funding and compliance and possible sanctions risks associated with our contracts with government entities; • liability claims and harm to our reputation resulting from claims that our products are defective; • failure to comply with laws and regulations, including healthcare regulations, laws and regulations associated with our use of hazardous materials, anti-corruption laws and regulations, and federal, state and foreign privacy, data security and data protection laws and regulations; • risks related to changes in U.S. and foreign income tax laws and regulations; 26 • need to raise additional funds to finance our future capital or operating needs or other business purposes; • risks related to our indebtedness; • our ability to generate cash flow to service our debt obligations; • restrictions imposed under the agreements governing our indebtedness from time to time, which may limit our operating flexibility; • difficulty attracting, motivating and retaining executives and other key employees; • unexpected payments to any defined benefit plans or other post-employment benefit plans applicable to our employees; • work stoppages, union negotiations, labor disputes and other matters associated with our labor force; • the outcomes of legal proceedings instituted against us; • additional costs and new risks associated with ESG matters, including evolving legal standards and regulations concerning such matters; • risks that the insurance we maintain may not fully cover any or all potential exposures; • certain provisions of our amended and restated certificate of incorporation (our “Charter”), our amended and restated bylaws (our “Bylaws”) and Delaware law that may make takeover attempts difficult, which could depress the price of our common stock, or limit our stockholders’ ability to obtain a favorable judicial forum for disputes; • the volatility of the market price of our common stock; • risks associated with future sales of our common stock by us or our stockholders in the public market; and • failure to develop or maintain an effective system of internal controls.
Our operating results could be materially and adversely affected if: • customers and potential customers believe our competitors’ products and services better address their needs and expectations through product performance, product offerings, cost, automation or work-flow efficiencies, and even if we can demonstrate that our products meet their needs and expectations, they may resist changing to our products; • our competitors take market share from our products, or we may not win opportunities because our competitors have or are perceived to have more effective servicing or marketing or greater or more timely product availability; • our competitors are able to obtain regulatory approvals for products or services or otherwise bring competing products to market earlier than us; or • our competitors offer more competitive pricing or we fail to manufacture, in a cost-effective way, or at all, sufficient quantities of our products to meet customer demand.
Our operating results could be materially and adversely affected if: • customers and potential customers believe our competitors’ products and services better address their needs and expectations through product performance, product offerings, cost, automation or work-flow efficiencies, and even if we can demonstrate that our products and services meet their needs and expectations, they may resist changing to our products; • our competitors take market share from our products, or we may not win opportunities because our competitors have or are perceived to have more effective servicing or marketing or greater or more timely product availability; • our competitors are able to obtain regulatory approvals for products or services or otherwise bring competing products to market earlier than us; or • our competitors offer more competitive pricing or we fail to manufacture, in a cost-effective way, or at all, sufficient quantities of our products to meet customer demand.
We may incur unanticipated costs or expenses, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, litigation and other liabilities. We also may encounter difficulties in integrating acquisitions with our operations, applying our internal controls processes to these acquisitions, retaining key technical and management personnel, complying with regulatory requirements, or in managing strategic investments.
We may incur unanticipated costs or expenses, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, litigation and other liabilities. We also may encounter difficulties in integrating acquisitions with our operations, applying our internal controls processes to these acquisitions, retaining key technical and management personnel, complying with regulatory requirements, or managing strategic investments.
Failure to obtain or maintain adequate protection of our intellectual property rights for any reason, including failure to file patent or trademark applications successfully or at all, failure to obtain licenses on commercially reasonable terms if at all, failure to retain intellectual property rights upon termination of our licenses or collaboration agreements, or failure to police our intellectual property through our licensees, could have a material adverse effect on our business, results of operations and financial condition.
Failure to obtain or maintain adequate protection of our intellectual property rights for any reason, including failure to file patent or trademark applications successfully or at all, failure to obtain licenses on commercially reasonable terms if at all, failure to retain intellectual property rights, including upon termination of our licenses or collaboration agreements, or failure to police our intellectual property, including through our licensees, could have a material adverse effect on our business, results of operations and financial condition.
These EUA standards for marketing authorization are lower than if the FDA had reviewed our tests under its traditional marketing authorization pathways, and we cannot assure you that our tests would be cleared or approved under those more onerous clearance and approval standards.
These EUA standards for marketing authorization are lower than if the FDA had reviewed our tests under its traditional marketing authorization pathways, and we cannot assure you that our EUA-approved tests would be cleared or approved under those more onerous clearance and approval standards.
Due to the potential for changes to tax laws (or changes to the interpretation thereof) and the ambiguity of tax laws, the subjectivity of factual interpretations, the complexity of our foreign operations and intercompany arrangements and other factors, our estimates of income tax assets or liabilities may differ from actual payments, assessments or receipts.
Due to the potential for changes to tax laws (or changes to the interpretation thereof) and the ambiguity and complexity of tax laws, the subjectivity of factual interpretations, the complexity of our foreign operations and intercompany arrangements and other factors, our estimates of income tax assets or liabilities may differ from actual payments, assessments or receipts.
Risks Relating to Our Employees We may have difficulty attracting, motivating and retaining executives and other key employees. Our success will depend in part upon our ability to attract, retain and motivate executives and sales, marketing, manufacturing, technical, scientific, technology and other key personnel.
Risks Relating to Our Employees We may have difficulty attracting, motivating and retaining executives and other key employees. Our success will depend in part upon our ability to attract, motivate and retain executives and sales, marketing, manufacturing, technical, scientific, technology and other key personnel.
Specifically, our higher level of debt could have important consequences to us and our stockholders, including: • making it more difficult for us to satisfy our obligations with respect to our debt, and if we fail to comply with these obligations, an event of default could result and our credit worthiness may be impacted; • limiting our ability to refinance or obtain additional financing to fund future working capital, capital expenditures, investments or other general corporate requirements; • limiting us from making strategic acquisitions or causing us to make non-strategic divestitures; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments and other general corporate purposes; • exposing us to the risk of increased interest rates as our borrowings under the credit facilities are at variable rates of interest; • the Credit Agreement contains, and any agreements to refinance our debt likely will contain, financial and other restrictive covenants, and our failure to comply with them may result in an event of default, which, if not cured or waived, could have a material adverse effect on us; 46 • increasing our vulnerability to, and reducing our flexibility to respond to, changes in our business and industry, general economic downturns and adverse industry and business conditions; • to the extent the debt we incur requires collateral to secure such indebtedness, exposing our assets to risks and limiting our flexibility related to such assets; • any default under our Credit Agreement may result in proceedings against collateral we have used to secure the credit facilities, including substantially all of our and our guarantor subsidiaries’ assets; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete and to changing business and economic conditions; • placing us at a disadvantage compared to less leveraged competitors and affecting our ability to compete; and • increasing our cost of borrowing.
Specifically, our higher level of debt could have important consequences to us and our stockholders, including: • making it more difficult for us to satisfy our obligations with respect to our debt, and if we fail to comply with these obligations, an event of default could result and our credit worthiness may be impacted; • limiting our ability to refinance or obtain additional financing to fund future working capital, capital expenditures, investments or other general corporate requirements; • limiting us from making strategic acquisitions or causing us to make non-strategic divestitures; • requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, investments and other general corporate purposes; • exposing us to the risk of increased interest rates as our borrowings under the credit facilities are at variable rates of interest; • the Credit Agreement contains, and any agreements to refinance our debt likely will contain, financial and other restrictive covenants, and our failure to comply with them may result in an event of default, which, if not cured or waived, could have a material adverse effect on us; 43 • increasing our vulnerability to, and reducing our flexibility to respond to, changes in our business and industry, general economic downturns and adverse industry and business conditions; • to the extent the debt we incur requires collateral to secure such indebtedness, exposing our assets to risks and limiting our flexibility related to such assets; • any default under our Credit Agreement may result in proceedings against collateral we have used to secure the credit facilities, including substantially all of our and our guarantor subsidiaries’ assets; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete and to changing business and economic conditions; • placing us at a disadvantage compared to less leveraged competitors and affecting our ability to compete; and • increasing our cost of borrowing.
Compliance with such laws and regulations requires significant effort and costs. For example, our R&D and manufacturing activities involve the controlled use of hazardous materials that may be 43 subject to federal statutes commonly known as the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, and the Clean Water Act, among other laws and regulations.
Compliance with such laws and regulations requires significant effort and costs. For example, our R&D and manufacturing activities involve the controlled use of hazardous materials that may be subject to federal statutes commonly known as the Comprehensive Environmental Response, Compensation, and Liability Act, the Resource Conservation and Recovery Act, and the Clean Water Act, among other laws and regulations.
If the FDA disagrees with our determinations and requires us to submit a new 510(k), PMA or PMA supplement, or BLA or BLA supplement for any product modification, we may be required to cease marketing such product or to recall the modified product until we obtain clearance, and we may be subject to civil, criminal, monetary and non-monetary penalties and damage to our reputation.
If the FDA disagrees with our determinations and requires us to submit a new 510(k), PMA or PMA supplement, or BLA or BLA supplement for any product modification, we may be required to cease marketing such product or to recall the modified product until we obtain clearance or approval, and we may be subject to civil, criminal, monetary and non-monetary penalties and damage to our reputation.
Since we may not exercise exclusive control over our current or 33 future collaboration arrangements, we may not be able to require our collaboration arrangement partners to take actions that we believe are necessary to implement our business strategy. Disputes between us and our collaboration arrangement partners could also result in litigation, which can be expensive and time-consuming.
Since we may not exercise exclusive control over our current or future collaboration arrangements, we may not be able to require our collaboration arrangement partners to take actions that we believe are necessary to implement our business strategy. Disputes between us and our collaboration arrangement partners could also result in litigation, which can be expensive and time-consuming.
The risk of a product liability claim is also heightened for at-home tests that may be purchased and administered by the end-user customer and not a medical professional and our 42 communication of risk information, benefits or claims, which is highly regulated by the FTC and the FDA could be alleged to be misleading or erroneous.
The risk of a product liability claim is also heightened for at-home tests that may be purchased and administered by the end-user customer and not a medical professional and our communication of risk information, benefits or claims, which is highly regulated by the FTC and the FDA, could be alleged to be misleading or erroneous.
The development, manufacture and sale of diagnostic products and services and new technologies require a significant investment of 30 resources, such as employee time, offices and R&D and manufacturing facilities, and development of new partners and channels. Furthermore, developing and manufacturing new products and services require us to anticipate customers’ and patients’ needs and emerging technology trends accurately.
The development, manufacture and sale of diagnostic products and services and new technologies require a significant investment of resources, such as employee time, offices and R&D and manufacturing facilities, and development of new partners and channels. Furthermore, developing and manufacturing new products and services require us to anticipate customers’ and patients’ needs and emerging technology trends accurately.
Our immunohematology business in particular is subject to the risk of product liability claims, as even the slightest inaccuracies in a specimen’s analysis can lead to critical outcomes in the life of a patient, thereby leaving little to no room for error in the precision and accuracy of such testing.
Our immunohematology business in particular is subject to the risk of product liability claims, as even the slightest inaccuracies in a specimen’s analysis 39 can lead to critical outcomes in the life of a patient, thereby leaving little to no room for error in the precision and accuracy of such testing.
If we fail to comply with applicable regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products or injunctions against our distribution of products, termination of our service agreements by our customers, disgorgement of money, operating restrictions and criminal prosecution.
If we fail to comply with applicable regulatory requirements, we may be subject to fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products or injunctions 38 against our distribution of products, termination of our service agreements by our customers, disgorgement of money, operating restrictions and criminal prosecution.
Our systems may prove inadequate to our business needs and necessary upgrades may not be available or operate as designed, which could result in excessive costs or disruptions in portions of our business. These risks may be heightened as we integrate the combined systems and operations of Quidel and Ortho.
Our information systems may prove inadequate to our business needs and necessary upgrades may not be available or operate as designed, which could result in excessive costs or disruptions in portions of our business. These risks may be heightened as we integrate the combined systems and operations of Quidel and Ortho.
We may also be bound by contractual obligations with our customers relating to privacy, data protection and information security that are more stringent than applicable privacy laws and regulations, and some companies often will not contract with vendors that do not meet more rigorous standards.
We may also be bound by contractual obligations with our customers relating to privacy, data protection and data security that are more stringent than applicable privacy, data security and data protection laws and regulations, and some companies often will not contract with vendors that do not meet more rigorous standards.
Additionally, differences in views among collaboration arrangement partners may result in delayed decisions or failures to agree on major issues. If these differences cause our collaboration arrangements to deviate from our business strategy, our results of operations could be materially adversely affected.
Additionally, 30 differences in views among collaboration arrangement partners may result in delayed decisions or failures to agree on major issues. If these differences cause our collaboration arrangements to deviate from our business strategy, our results of operations could be materially adversely affected.
Furthermore, many of our local businesses generate revenues and incur costs in a currency other than their functional currency, which can impact the operating results for these operations if we are unable to mitigate the impact of foreign currency fluctuations.
Furthermore, many of our local businesses generate revenues and incur costs in a currency other than their functional currency, 33 which can impact the operating results for these operations if we are unable to mitigate the impact of foreign currency fluctuations.
Intellectual property risks and third-party claims of infringement, misappropriation of proprietary rights or other claims against us could adversely affect our ability to market our products and services, require us to redesign our products or services or attempt to seek licenses from third parties, and materially adversely affect our operating results.
Intellectual property risks, third-party claims of infringement, misappropriation or violation of proprietary rights and other claims against us could adversely affect our ability to market our products and services, require us to redesign our products or services or attempt to seek licenses from third parties, and materially adversely affect our operating results.
If our operations are found to be in violation of any of the federal and state laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil and administrative penalties, damages, fines, exclusion from participation in government programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, oversight if we become subject to a consent decree or corporate integrity agreement, and disgorgement, and we could be required to curtail, restructure or cease our operations.
If our operations are found to be in violation of any of the federal, state or foreign laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to significant penalties, including significant criminal, civil and administrative penalties, damages, fines, exclusion from participation in government programs, such as Medicare and Medicaid, imprisonment, contractual damages, reputational harm, oversight if we become subject to a consent decree, corporate integrity agreement or other government resolution, and disgorgement, and we could be required to curtail, restructure or cease our operations.
If our relationships with such customers are terminated, or such customers do not renew their contracts with us, or substantially reduce or stop ordering from us, and if we do not add new large customers over time, our business could be harmed.
If our relationships with these customers are terminated, or such customers do not renew their contracts with us, or substantially reduce or stop ordering from us, and if we do not add new large customers over time, our business could be harmed.
These individuals or contractors may use third-party information in connection with performing services for us or otherwise reveal this third-party information to us. For these and other reasons, we could be sued for misappropriation of proprietary information and trade secrets.
These individuals or contractors may use third-party information in connection with performing services for us or otherwise reveal third-party information to us. For these and other reasons, we could be sued for misappropriation of proprietary information and trade secrets.
If the results of clinical studies required to gain regulatory approval to sell our products are not available when expected, or do not demonstrate the safety and effectiveness of those products, we may be unable to sell those products.
If the results of clinical studies required to gain regulatory approval to sell our products are not available when expected, or do not demonstrate the safety and effectiveness of those products, we may be unable to obtain regulatory approval and sell those products.
In addition, to the extent that individuals or contractors apply technical or scientific information independently developed by them to our projects, disputes may arise as to the proprietary rights to such data and may result in litigation.
In addition, to the extent that individuals or contractors apply technical or scientific information independently developed by them to our projects, disputes may arise as to the proprietary rights to such technical or scientific information and may result in litigation.
The global supply of some of our products depends on the uninterrupted efficient operation of our manufacturing facilities, and the continued performance of our contract manufacturers, suppliers of raw materials and other third-party vendors under our contractual arrangements.
The global supply of some of our products depends on the uninterrupted efficient operation of our manufacturing facilities, and the continued performance of our contract manufacturers, suppliers of raw materials and other third-party vendors under our supply arrangements.
Moreover, an adverse determination in any of these types of disputes could prevent us from developing, using, manufacturing or selling some of our products or processes; limit or restrict the type of work that employees involved with such products may perform for us; require us to obtain a license on the disputed rights, which may not be available on commercially reasonable 39 terms, if at all; subject us to significant liability in the form of royalty payments, penalties, special and punitive damages and attorneys’ fees; cause our distributors or end users to reduce or terminate purchases of our products; or require us to re-design our products or processes, any of which could materially and adversely affect our business, financial condition and results of operations.
Moreover, an adverse determination in any of these types of disputes could prevent us from developing, using, manufacturing or selling some of our processes or products and services; limit or restrict the type of work that employees involved with such products may perform for us; require us to obtain a license on the disputed rights, which may not be available on commercially reasonable terms, if at all; subject us to significant liability in the form of royalty payments, penalties, special and punitive 36 damages and attorneys’ fees; cause our distributors or end users to reduce or terminate purchases of our products; or require us to re-design our products or processes, any of which could materially and adversely affect our business, financial condition and results of operations.
One example is in the area of “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates.
One example is in the area of “base erosion and profit shifting,” where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower 42 tax rates.
In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness. 47 The terms of the Credit Agreement impose restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests and may limit our ability to make payments on our indebtedness.
In the event that we do not receive distributions from our subsidiaries, we may be unable to make required principal and interest payments on our indebtedness. 44 The terms of the Credit Agreement impose restrictions that may limit our current and future operating flexibility, particularly our ability to respond to changes in the economy or our industry or to take certain actions, which could harm our long-term interests and may limit our ability to make payments on our indebtedness.
If total revenues from some of our significant customers were to decrease or not continue in any material amount in the future, or if we are not successful in growing our current or new customer relationships or timely transitioning our business from a lost or terminated distributor to one or more new distributors, our business, operating results and financial condition could be materially and adversely affected.
If total revenues from some of our significant customers were to decrease or not continue in any material amount in the future, or if we are not successful in growing our current or new customer relationships or timely transitioning our business from a lost or terminated distributor to one or more new distributors or to direct sales, our business, operating results and financial condition could be materially and adversely affected.
Our customers may also be sued by other parties that claim that our products have infringed their patents or misappropriated their proprietary rights or that may seek to invalidate one or more of our patents. The defense and prosecution of patent and trade secret claims are both costly and time consuming and could divert management’s attention from other business concerns.
Our customers may also be sued by other parties that claim that our products have infringed their patents or misappropriated their proprietary rights or that may seek to invalidate one or more of our patents. The defense and prosecution of patent and trade secret claims are both costly and time-consuming and could divert management’s attention from other business matters.
A number of our competitors have competitive advantages, such as substantially greater financial, managerial, technical, R&D, clinical, manufacturing, and regulatory resources, capabilities and experience, and larger, more established marketing, sales, distribution and service organizations and other resources than we have. Moreover, some competitors offer broader product lines and have greater name recognition than we have.
A number of our competitors have competitive advantages, such as substantially greater financial, managerial, technical, R&D, clinical, manufacturing, and regulatory resources, capabilities and experience, and more established, larger and broader coverage in marketing, sales, distribution and service organizations and other resources than we have. Moreover, some competitors offer broader product lines and have greater name recognition than we have.
We continue to monitor the evolving data protection landscape to support our efforts to comply with the requirements in the countries in which we do business. We are subject to U.S. and foreign tax laws, and changes to such tax laws or differing interpretation of those laws by the relevant governmental authorities could adversely affect us. The U.S.
We continue to monitor the evolving privacy, data security and data protection landscape to support our efforts to comply with the requirements in the countries in which we do business. We are subject to U.S. and foreign tax laws, and changes to such tax laws or differing interpretation of those laws by the relevant governmental authorities could adversely affect us.
This process is conducted in various stages, and each stage presents the risk that we will not achieve our goals. In addition, innovations may not be accepted quickly in the marketplace because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursements.
This process is conducted in various stages, and each stage presents the risk that we will not achieve our goals. In addition, innovations may not be accepted quickly in the marketplace, or at all, because of, among other things, entrenched patterns of clinical practice or uncertainty over third-party reimbursements.
In addition, in a number of cases, our success depends on technicians’ acceptance and confidence in the effectiveness and ease-of-use of our products, including our new products.
In addition, in a number of cases, our success depends on technicians’ acceptance and confidence in the effectiveness and ease-of-use of our products and services, including our new products.
A defect or claim of a defect in the design or manufacture of our products could also have a material adverse effect on our reputation in the industry and decrease sales of our products, and we could also face additional regulatory enforcement action, including FDA warning letters, untitled letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.
A defect or claim of a defect in the design or manufacture of our products could also have a material adverse effect on our reputation in the industry and decrease sales of our products, and we could also face additional regulatory enforcement action, including FDA warning letters, untitled letters, product seizures, injunctions, administrative penalties, or civil or criminal fines.
Our operations and financial condition may be adversely affected to the extent that we are required to (i) make any additional payments to any relevant defined benefit pension plans in excess of the amounts assumed in our current projections and assumptions or (ii) report higher pension plan expenses under relevant accounting rules.
Our operations and financial condition may be adversely affected to the extent that we are required to (i) make any additional payments to any relevant Benefit Plans in excess of the amounts assumed in our current projections and assumptions or (ii) report higher Benefit Plan expenses under relevant accounting rules.
Because of these restrictions, we may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. In addition, we conduct all of our operations through our subsidiaries, some of which are not guarantors of our indebtedness.
Because of these restrictions, we may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations when due. In addition, we conduct all of our operations through our subsidiaries, some of which are not guarantors of our indebtedness.
Average review times at the FDA have fluctuated in recent years as a result of these factors. In addition, government funding of other government agencies that fund R&D activities is subject to the political process, which is inherently fluid and unpredictable.
Average review times at the FDA have fluctuated in recent years as a result of these factors. In addition, government funding of other government agencies, such as those that fund R&D activities, is subject to the political process, which is inherently fluid and unpredictable.
If regulators disagree with the manner in which we have sought to comply with applicable laws and regulations, we could be subjected to substantial civil and criminal penalties, as well as corrective actions, product recalls, seizures or injunctions with respect to the sale of our products.
If regulators disagree with the manner in which we have sought to comply with applicable laws and regulations, we could be subject to substantial civil and criminal penalties, as well as corrective actions, product recalls, seizures or injunctions with respect to the sale of our products.
In 2018, CMS implemented certain provisions of PAMA, which made substantial changes to the way in which clinical laboratory services are paid under Medicare. The revised reimbursement methodology under PAMA results in relatively lower reimbursement under Medicare for clinical diagnostic lab tests than has been historically available.
For example, CMS implemented certain provisions of PAMA, which made substantial changes to the way in which clinical laboratory services are paid under Medicare. The revised reimbursement methodology under PAMA results in relatively lower reimbursement under Medicare for clinical diagnostic lab tests than has been historically available.
We are exposed to business risk which, if not covered by insurance, could have an adverse effect on our results of operations. We face a number of business risks, including exposure to product liability, property, business interruption and cybersecurity claims.
We are exposed to business risk which, if not fully covered by insurance, could have an adverse effect on our results of operations. We face a number of business risks, including exposure to product liability, property, business interruption and cybersecurity risks.
The loss of any key distributor or an unsuccessful effort by us to directly distribute our products could lead to reduced sales. In addition to distributors, we also have a number of other customers who are significant.
The loss of any key distributor or an unsuccessful effort by us to directly distribute our products could lead to reduced sales. In addition to distributors, we also have a number of direct customers who are significant.
Any shortfall in our supply of raw materials, equipment or components, or our inability to quickly and cost-effectively obtain alternative sources for this supply, could have a material adverse effect on our business, financial condition and operating results.
Any shortage in our supply of raw materials, equipment or components, or our inability to quickly and cost-effectively obtain alternative sources for this supply, could have a material adverse effect on our business, financial condition and operating results.
In addition, our marketing of monitoring services may cause us to be subjected to various product liability or other claims, including, among others, claims that inaccurate monitoring results lead to injury or death, or, in the case of our toxicology monitoring services, the imposition of criminal sanctions.
In addition, our marketing of monitoring services may cause us to be subject to various product liability or other claims, including, among others, claims that inaccurate monitoring results lead to injury or death, or, in the case of our toxicology monitoring services, the imposition of criminal sanctions.
Because many of these laws and regulations are new, it is also generally unclear how the laws will be interpreted and enforced in practice by the relevant government authorities as many of the laws are drafted broadly and leave great discretion to the relevant government authorities to exercise.
Because many of these laws and regulations are recent, it is also generally unclear how the laws will be interpreted and enforced in practice by the relevant government authorities as many of the laws are drafted broadly and leave great discretion to the relevant government authorities to exercise.
Our Credit Agreement governs our senior secured credit facilities, which consists of (i) a Term Loan in an original amount of $2,750.0 million and (ii) a $800.0 million Revolving Credit Facility (each capitalized term as defined in this Annual Report).
Our Credit Agreement governs our senior secured credit facilities, which consist of (i) a Term Loan in an original amount of $2,750.0 million and (ii) an $800.0 million Revolving Credit Facility (each capitalized term as defined in this Annual Report).
If our current contract manufacturers, suppliers of raw materials and other third-party vendors are unable or unwilling to manufacture or supply our products or components or requirements for raw materials in required volumes and at required quality levels or renew existing terms under supply agreements, we may be required to replace such manufacturers, suppliers and vendors and may be unable to do so in a timely or cost-effective manner, or at all.
If our current contract manufacturers, suppliers of raw materials and other third-party vendors are unable or unwilling to manufacture or supply our products or components or requirements for raw materials in required volumes and at required quality levels or renew or continue existing terms under supply arrangements, we may be required to replace such manufacturers, suppliers and vendors and may be unable to do so in a timely or cost-effective manner, or at all.
We have significant operations in California, near major earthquake faults and areas vulnerable to wildfire, which make us susceptible to earthquake and fire risk. We also have significant operations in Rochester, New York, Raritan, New Jersey, Pencoed, Wales and Pompano Beach, Florida.
We have significant operations in California, near major earthquake faults and areas vulnerable to wildfire, which make us susceptible to earthquake and fire risk. We also have significant operations in Rochester, New York, Raritan, New Jersey, Pencoed, Wales, Pompano Beach, Florida, and Athens, Ohio.
We could also be required in some jurisdictions to make accelerated payments up to the full buy-out deficit in our defined benefit pension plans, which would likely be far higher than the normal ongoing funding cost of the plans.
We could also be required in some jurisdictions to make accelerated payments up to the full buy-out deficit in our Benefit Plans, which would likely be far higher than the normal ongoing funding cost of the plans.
The loss or termination of our relationship with any of these key distributors could significantly disrupt our business unless suitable alternatives are timely found or lost sales to a distributor are taken up by another distributor.
The loss or termination of our relationship with any of these key distributors could significantly disrupt our business unless suitable alternatives are timely found or lost sales to a distributor are taken up by another distributor or in direct sales.
These requirements complicate our business and increase our compliance burden. The failure to meet key deliverables, milestones or compliance requirements could harm our reputation and might have a materially adverse impact on our business operations and our financial position or results of operations.
These requirements complicate our business and increase our compliance burden. The failure to meet key deliverables, milestones or compliance requirements could harm our reputation and may have a materially adverse impact on our business operations and our financial position or results of operations.
In jurisdictions where the defined benefit pension plans are intended to be funded with assets in a trust or other funding vehicle, we expect that, while not significant, the liabilities will exceed the corresponding assets in each of the plans.
In jurisdictions where the Benefit Plans are intended to be funded with assets in a trust or other funding vehicle, we expect that, while not significant, the liabilities will exceed the corresponding assets in each of the plans.
Various factors, such as changes in actuarial estimates and assumptions (including in relation to life expectancy, discount rates and rates of return on assets), as well as actual return on assets, can increase the expenses and liabilities of the defined benefit pension plans.
Various factors, such as changes in actuarial estimates and assumptions (including in relation to life expectancy, discount rates and rates of return on assets), as well as actual return on assets, can increase the expenses and liabilities of the Benefit Plans.
The assets and liabilities of the plans must be valued from time to time under applicable funding rules and as a result we may be required to increase the cash payments we make in relation to these defined benefit pension plans.
The assets and liabilities of the plans must be valued from time to time under applicable funding rules and, as a result, we may be required to increase the cash payments we make in relation to these Benefit Plans.
We might not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.
In addition, our manufacturing processes may require complex and specialized equipment, which can be expensive to maintain, repair or replace with required lead times of up to a year. The manufacturing of certain of our products is concentrated in one or more of our manufacturing plants or those of our suppliers, with no or limited alternate facilities.
In addition, our manufacturing processes may require complex and specialized equipment, which can be expensive to maintain, repair or replace with required lead times of up to a year. The manufacturing of certain of our products is concentrated in one or more of our manufacturing plants or those of our contract manufacturers, with no or limited alternate facilities.
If we do not capture sales at the levels anticipated in our budget, our total revenues will not be at the levels that we expect and the costs we incur or have incurred may be disproportionate to our sales levels.
If we do not capture sales at the levels anticipated, our total revenues will not be at the levels that we expect and the costs we incur or have incurred may be disproportionate to our sales levels.
Although we maintain insurance for a number of these risks, we may face claims for types of damages, or for amounts 49 of damages, that are not covered by our insurance, or our insurance coverage may not be sufficient to offset the costs of any losses, lost sales or increased costs experienced during business interruptions.
Although we maintain insurance for a number of these risks, we may face claims for types of damages, or for amounts of damages, that are not covered by our insurance, or our insurance coverage may not be sufficient to offset the costs of any payments or other losses, lost sales or increased costs experienced during business interruptions.
We may incur 41 significant costs to comply with these laws and regulations.
We may incur significant costs to comply with these laws and regulations.
In addition, any government contract that we have entered into or will enter into may expose us to higher potential liability than do other types of contracts due to government funding shortfalls, the government’s right to terminate for convenience, heightened legal compliance requirements, and our inability to meet key deliverables and milestones.
In addition, any government contract that we have entered into or will enter into may expose us to higher potential liability than do other types of contracts due to government funding shortfalls, the government’s right to terminate for convenience, heightened legal compliance requirements, challenges from other industry participants, and our inability to meet key deliverables and milestones.
As a result of the COVID-19 pandemic, we may also face increased cybersecurity risks due to our reliance on internet technology and the number of our employees with flexible work arrangements, which may create additional opportunities for cybercriminals to exploit vulnerabilities.
As a result of the increased number of our employees with flexible work arrangements, we may also face increased cybersecurity risks due to our reliance on internet technology, which may create additional opportunities and vulnerabilities for cybercriminals to exploit.
These legislative changes in the U.S., healthcare austerity measures in Europe and other potential global healthcare reform changes and government austerity measures may reduce the amount of government funding or reimbursement available to customers or end-customers of our products and services and/or the volume of medical procedures using our products and services.
Such changes in the U.S., healthcare austerity measures in Europe and other potential global healthcare reform changes and government austerity measures may reduce the amount of government funding or reimbursement available to customers or end-customers of our products and services and/or the volume of medical procedures using our products and services.
Office of Inspector General (“OIG”), the U.S. Department of Justice (“DOJ”), the state attorney generals and other foreign and domestic government agencies. Responding to investigations can be time- and resource-consuming and can divert management’s attention from the business.
Department of Health and Human Services Office of Inspector General (“OIG”), the U.S. Department of Justice (“DOJ”), the state attorney generals and other foreign and domestic government agencies. Responding to investigations can be time- and resource-consuming and can divert management’s attention from the business.
If this happens, our revenues could decline and our business could suffer, and we may need to make significant further investments to protect data and infrastructure.
If this happens, our revenues could decline and our business could suffer, and we may need to make significant further investments to protect our information systems, data and infrastructure.
Failure to effectively educate and train our technician end-users, continue to develop relationships with leading healthcare professionals or achieve market acceptance from healthcare providers or other customers with respect to the use of our diagnostic products could result in less frequent acceptance or recommendations of our products, which may adversely affect our sales and profitability.
Failure to effectively educate and train our technician end-users, continue to develop relationships with leading healthcare professionals or achieve market acceptance from healthcare providers or other customers with respect to the use of our diagnostic products could result in lower acceptance or fewer recommendations of our products, which may adversely affect our sales and profitability.
Any change in our relationship with our contract manufacturers, suppliers of raw materials and other third-party vendors or changes to contractual terms of our agreements with any of them could adversely affect our financial condition and results of operations.
Any change in our relationship with our contract manufacturers, suppliers of raw materials and other third-party vendors or changes to terms of our arrangements with any of them could adversely affect our financial condition and results of operations.
The advertising, marketing and labeling of medical devices is highly regulated by the FDA and FTC. Our efforts to promote our products, including via direct-to-consumer marketing or social media initiatives, could subject us to additional scrutiny of our communication of risk information, benefits or claims by the FDA, FTC or both.
In addition, the advertising, marketing and labeling of medical devices are highly regulated by the FDA and FTC. Our efforts to promote our products, including via direct-to-consumer marketing or social media initiatives, could subject us to additional scrutiny of our communication of risk information, benefits or claims by the FDA, FTC or both.
Third-party providers of corporate responsibility ratings and reports have increased in number to meet growing investor demand for measurement of ESG performance. The criteria by which our corporate responsibility practices are assessed must be continuously monitored and may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.
Third-party providers of corporate responsibility ratings and reports have also increased in number to meet growing stakeholder demand for measurement of ESG performance. The criteria by which our corporate responsibility practices are assessed must be routinely monitored and may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria.
Our collection, use and disclosure of personal information, including health information, is subject to federal and state privacy and security regulations, as well as data privacy and security laws outside the U.S., including in the EEA, the U.K. and the People’s Republic of China, and our failure to comply with those laws and regulations or to adequately secure the information we hold could result in significant liability or reputational harm.
Our collection, use and disclosure of personal information, including health information, and confidential information is subject to federal and state privacy, data security and data protection regulations, as well as privacy, data security and data protection laws outside the U.S., including in the EEA, the U.K. and the People’s Republic of China, and our failure to comply with those laws and regulations or to adequately secure this information could result in significant liability or reputational harm.
Any of the foregoing consequences will negatively affect our business, financial condition and results of operations. We use hazardous materials in our business that may result in substantial compliance costs or claims against us relating to handling, storage or disposal.
Any of the foregoing consequences will negatively affect our business, financial condition and results of operations. 40 Certain Other Regulations Relating to Our Business We use hazardous materials in our business that may result in substantial compliance costs or claims against us relating to handling, storage or disposal.
We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs. As of January 1, 2023, we had approximately 7,000 employees located around the world consisting of commercial, supply chain, quality, regulatory and compliance, R&D and general administrative personnel.
We are subject to work stoppages, union negotiations, labor disputes and other matters associated with our labor force, which may adversely impact our operations and cause us to incur incremental costs. As of December 31, 2023, we had approximately 7,100 employees located around the world consisting of commercial, supply chain, quality, regulatory and compliance, R&D and general administrative personnel.
Shares of our common stock covered by registration rights represent approximately 19% of our outstanding shares as of January 1, 2023. Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement.
Shares of our common stock covered by registration rights represent approximately 19% of our outstanding shares as of December 31, 2023. Registration of any of these outstanding shares of common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement.
Our global business is adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending, increases in unemployment rates, the inflationary environment, rising interest rates, the recessionary environment, and budgeting constraints of governmental entities.
Our global business is adversely affected by decreases in the general level of economic activity, such as decreases in business and consumer spending, increases in unemployment rates, the inflationary environment, rising interest rates, a recessionary environment, instability in financial institutions and budgeting constraints of governmental entities.
We are subject to income taxes in the U.S. and in various non-U.S. jurisdictions. In addition, the amount of income taxes we pay is subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. tax authorities.
In addition, the amount of income taxes we pay is subject to ongoing audits by U.S. federal, state and local tax authorities and by non-U.S. tax authorities.
The FDA has also established certain conditions that must be met in order to maintain authorization under these EUAs. The requirements that apply to the manufacture and sale of these products may be unclear and are subject to change. The FDA may also waive otherwise applicable Consumer Good Manufacturing Practice requirements to accommodate emergency response needs.
The FDA has also established certain conditions that must be met in order to maintain authorization under these EUAs. The requirements that apply to the manufacture and sale of these products may be unclear and are subject to change. The FDA may also waive otherwise applicable cGMP requirements to accommodate emergency response needs.
Approximately 15% of our employees globally are covered by a union, collective bargaining agreement or works council. Historically, we have not experienced work stoppages; however, in the future, we may be subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes.
As of such date, approximately 15% of our employees globally were covered by a union, collective bargaining agreement or works council. Historically, we have not experienced work stoppages; however, in the future, we may be subject to potential union campaigns, work stoppages, union negotiations and other potential labor disputes.
If we experience a significant technology incident, such as a serious product vulnerability or security breach, or any other disruptions, delays or deficiencies from our enterprise resource planning systems, it could adversely affect our ability to, among other matters, process orders, procure supplies, manufacture and ship products, track inventory, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
If we experience a significant incident, such as a serious product vulnerability or security breach, or any other disruptions, delays or deficiencies from our ERP systems, it could adversely affect our ability to, among other processes, process orders, procure supplies, manufacture and ship products, track inventory, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.
Complying with these various laws, regulations, standards and contractual obligations could cause us to incur substantial costs, require us to change our business practices in a manner adverse to our business (including limiting our ability to collect, control, process, share, disclose and otherwise use personal data (including health and medical information which are subject to strict requirements)), reduce demand for certain of our digital solutions, restrict our ability to offer certain digital solutions in certain jurisdictions or subject us to sanctions, investigations, fines, penalties or other inquiries by U.S., federal, state and foreign data protection regulations, all of which could negatively impact our business or reputation.
Complying with these various laws, regulations, standards and contractual obligations could cause us to incur substantial costs, require us to change our business practices in a manner that does not align with our business objectives (including limiting our ability to collect, control, process, share, disclose and otherwise use personal information (including health and medical information that are subject to strict requirements)), reduce demand for certain of our digital solutions, restrict our ability to offer certain digital solutions in certain jurisdictions or subject us to inquiries by U.S., federal, state and foreign data protection regulatory agencies, all of which could result in sanctions, investigations, fines, penalties or otherwise negatively impact our business or reputation.
The foregoing changes in the healthcare industry and related industries that we serve may cause participants in the healthcare industry to purchase fewer of our products and services, reduce the prices they are willing to pay for our products or services, reduce the amounts of reimbursement and funding available for our products or services from governmental agencies or third-party payors, reduce the volume of medical procedures that use our products and services and increase our compliance and other costs.
Such changes may cause participants in the healthcare industry to purchase fewer of our products and services, reduce the prices they are willing to pay for our products or services, reduce the amounts of reimbursement and funding available for our products or services from governmental agencies or third-party payors, reduce the volume of medical procedures that use our products and services and increase our compliance and other costs.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeHowever, in anticipation of our growth strategy, we may pursue additional facilities. 52 Item 3. Legal Proceedings The information set forth in “Litigation and Other Legal Proceedings” in Note 12 to the Consolidated Financial Statements is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 53 Part II
Biggest changeHowever, in anticipation of our growth strategy, we may pursue additional facilities. Item 3. Legal Proceedings The information set forth in Part II, Item 8, “Financial Statements and Supplementary Data—Note 12. Commitments and Contingencies—Litigation and Other Legal Proceedings” is incorporated herein by reference. Item 4. Mine Safety Disclosures Not applicable. 51 Part II
Properties At January 1, 2023, our material operating locations, which we define as the facilities we lease with more than 75,000 square feet plus all owned facilities of more than 20,000 square feet, were as follows: Location Status Lease Term Square Footage Primary Use Raritan, NJ Owned N/A 569,000 Administrative offices, R&D and manufacturing Rochester, NY (513 Technology Blvd) Owned N/A 438,628 Manufacturing San Diego, CA (Summers Ridge) Leased 2033 - options to extend for two additional 5-year periods 316,531 Administrative offices, sales and marketing, R&D and manufacturing (principal executive offices) Rochester, NY (100 Indigo Creek) Owned N/A 260,221 Office, R&D Pencoed, Wales Owned N/A 198,380 Office, manufacturing Athens, OH Leased 2027 132,993 Administrative offices, sales and marketing, R&D and manufacturing Carlsbad, CA (Rutherford) Leased 2036 - options to extend for two additional 5-year periods 128,745 Manufacturing Memphis, TN Leased 2026 116,500 Warehouse San Diego, CA (Waples Ct.) Leased 2031 - options to extend for two additional 5-year periods 106,412 Office, light manufacturing, storage, packaging, assembly and distribution Rochester, NY (130 Indigo Creek) Owned N/A 103,138 Office, R&D Strasbourg, France Owned N/A 97,951 Warehouse, service Ibaraki, Japan Leased 2023 92,988 Land Rochester, NY (1000 Lee Road) Leased 2024 89,114 Manufacturing San Diego, CA (McKellar) Owned N/A 72,863 Administrative offices, R&D and manufacturing Pompano Beach, FL Owned N/A 21,500 Manufacturing We believe that our facilities are adequate for our current needs, and we currently do not anticipate any material difficulty in renewing any of our leases as they expire or securing additional or replacement facilities, in each case, on commercially reasonable terms.
Properties At December 31, 2023, our material operating locations, which we define as the facilities we lease with more than 75,000 square feet plus all owned facilities of more than 20,000 square feet, were as follows: Location Status Lease Term Square Footage Primary Use Raritan, NJ Owned N/A 569,000 Administrative offices, R&D and manufacturing Rochester, NY (513 Technology Blvd) Owned N/A 438,628 Manufacturing San Diego, CA (Summers Ridge) Leased 2033 - options to extend for two additional 5-year periods 316,531 Administrative offices, sales and marketing, R&D and manufacturing (principal executive offices) Rochester, NY (100 Indigo Creek) Owned N/A 260,221 Office, R&D Pencoed, Wales Owned N/A 198,380 Office, manufacturing Athens, OH Leased 2027 149,240 Administrative offices, sales and marketing, R&D and manufacturing Carlsbad, CA (Rutherford) Leased 2036 - options to extend for two additional 5-year periods 128,745 Manufacturing Memphis, TN Leased 2026 116,500 Warehouse San Diego, CA (Waples Ct.) Leased 2031 - options to extend for two additional 5-year periods 106,412 Office, light manufacturing, storage, packaging, assembly and distribution Rochester, NY (130 Indigo Creek) Owned N/A 103,138 Office, R&D Strasbourg, France Owned N/A 97,951 Warehouse, service Rochester, NY (1000 Lee Road) Leased 2024 89,114 Manufacturing San Diego, CA (McKellar) Owned N/A 72,863 Administrative offices, R&D and manufacturing Pompano Beach, FL Owned N/A 21,500 Manufacturing We believe that our facilities are adequate for our current needs, and we currently do not anticipate any material difficulty in renewing any of our leases as they expire or securing additional or replacement facilities, in each case, on commercially reasonable terms.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOn August 17, 2022, the Board authorized a stock repurchase program, allowing the Company to repurchase up to $300.0 million of its common stock through August 17, 2024. 54 STOCKHOLDER RETURN PERFORMANCE GRAPH Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock with the cumulative total returns of the Nasdaq Composite Index and Nasdaq Health Care Index for the five years ended January 1, 2023.
Biggest changeDuring the three months ended December 31, 2023, the Company repurchased 120,000 shares of outstanding common stock under the Stock Repurchase Program for approximately $7.2 million. 52 STOCKHOLDER RETURN PERFORMANCE GRAPH Set forth below is a line graph comparing the yearly percentage change in the cumulative total stockholder return on our common stock with the cumulative total returns of the Nasdaq Composite Index and Nasdaq Health Care Composite Index for the five years ended December 31, 2023.
The graph represents stock price performance of Quidel, from fiscal year 2018 through May 27, 2022, and QuidelOrtho following the closing date of the Combinations. The stock price performance of our common stock depicted in the graph represents past performance only and is not necessarily indicative of future performance.
The graph represents stock price performance of Quidel, from fiscal year 2019 through May 27, 2022, and QuidelOrtho following the closing date of the Combinations. The stock price performance of our common stock depicted in the graph represents past performance only and is not necessarily indicative of future performance.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market under the symbol “QDEL.” As of February 10, 2023 , we had approximately 69 common stockholders of record and we do not anticipate paying any cash dividends in the foreseeable future.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is traded on the Nasdaq Global Select Market under the symbol “QDEL.” As of February 22, 2024, we had approximately 88 common stockholders of record and we do not anticipate paying any cash dividends in the foreseeable future.
The graph assumes (i) an initial investment of $100 as of the market close on December 29, 2017 in our common stock, the Nasdaq Composite Index and the Nasdaq Health Care Index and (ii) reinvestment of dividends.
The graph assumes (i) an initial investment of $100 as of the market close on December 31, 2018 in our common stock, the Nasdaq Composite Index and the Nasdaq Health Care Composite Index and (ii) reinvestment of dividends.
Issuer Purchases of Equity Securities The table below sets forth information regarding repurchases of our common stock by us during the three months ended January 1, 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 3, 2022 - October 30, 2022 931 $ 78.45 — $ 225,677,460 October 31, 2022 - November 27, 2022 4,632 88.23 — 225,677,460 November 28, 2022 - January 1, 2023 1,103 89.99 — 225,677,460 Total 6,666 $ 87.16 — $ 225,677,460 (1) Includes shares surrendered, if any, to the Company to satisfy the payment of minimum tax withholding obligations.
Issuer Purchases of Equity Securities The table below sets forth information regarding repurchases of our common stock by us during the three months ended December 31, 2023: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (2) October 2, 2023 - October 29, 2023 3,674 $ 66.64 — $ 225,677,460 October 30, 2023 - November 26, 2023 121,783 60.28 120,000 218,444,460 November 27, 2023 - December 31, 2023 858 70.68 — 218,444,460 Total 126,315 $ 60.54 120,000 $ 218,444,460 (1) Includes shares surrendered, if any, to the Company to satisfy the payment of minimum tax withholding obligations.
(2) On December 18, 2018, Quidel announced a stock repurchase program to repurchase up to $50.0 million of its common stock, which was authorized by Quidel’s board of directors (the “Quidel Board”) on December 12, 2018.
(2) On August 17, 2022, the Board authorized a stock repurchase program, allowing the Company to repurchase up to $300.0 million of its common stock through August 17, 2024 (the “Stock Repurchase Program”).
COMPARISON OF 5 YEAR TOTAL CUMULATIVE RETURN Among QuidelOrtho Corporation, the Nasdaq Composite and the Nasdaq Health Care Composite Indices Base Period Company/Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 QuidelOrtho Corporation $ 100.00 $ 112.62 $ 173.08 $ 414.42 $ 311.40 $ 197.62 Nasdaq Composite Index $ 100.00 $ 97.16 $ 132.81 $ 192.47 $ 235.15 $ 158.65 Nasdaq Health Care Composite Index $ 100.00 $ 96.37 $ 121.99 $ 159.49 $ 154.53 $ 123.77 Item 6. [Reserved]
COMPARISON OF 5 YEAR TOTAL CUMULATIVE RETURN Among QuidelOrtho Corporation, the Nasdaq Composite and the Nasdaq Health Care Composite Indices Base Period Company/Index 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 QuidelOrtho Corporation $ 100.00 $ 153.69 $ 367.98 $ 276.51 $ 175.48 $ 150.96 Nasdaq Composite Index $ 100.00 $ 135.23 $ 194.24 $ 235.78 $ 157.74 $ 226.24 Nasdaq Health Care Composite Index $ 100.00 $ 125.83 $ 163.63 $ 157.82 $ 125.58 $ 133.80 Item 6. [Reserved]
Removed
On August 28, 2020, the Quidel Board authorized an increase of an additional $150.0 million to Quidel’s existing stock repurchase program authorization, which was announced on September 1, 2020. The Quidel Board also extended the stock repurchase program through August 28, 2022. In connection with the consummation of the Combinations, Quidel’s $150.0 million stock repurchase program was terminated.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

89 edited+39 added−78 removed37 unchanged
Biggest changeOperating Expenses The following table summarizes operating expenses for fiscal years 2022, 2021 and 2020: Fiscal Year Ended (Dollars in millions) 2022 % of Total Revenues 2021 % of Total Revenues 2020 % of Total Revenues Selling, marketing and administrative $ 621.0 19.0 % $ 239.6 14.1 % $ 180.7 10.9 % Research and development 190.5 5.8 % 95.7 5.6 % 84.3 5.1 % Amortization of intangible assets 132.5 4.1 % 27.4 1.6 % 27.3 1.6 % Acquisition and integration costs 136.0 4.2 % 9.6 0.6 % 3.7 0.2 % Other operating expense, net 12.3 0.4 % — — % — — % Selling, Marketing and Administrative Expenses Selling, marketing and administrative expenses for fiscal year 2022 increased by $381.4 million, or 159.2%, to $621.0 million from $239.6 million for the prior year, driven primarily by the Combinations which contributed $326.5 million in increased expense, freight expense due to higher sales volume and expedited shipping, product promotional spend associated with the QuickVue At-Home OTC COVID-19 test, professional fees and employee-related costs.
Biggest changeSelling, marketing and administrative expenses for fiscal year 2022 increased by $381.4 million, or 159.2%, to $621.0 million from $239.6 million for the prior year, primarily driven by the Combinations which contributed $326.5 million in increased expense, freight expense due to higher sales volume and expedited shipping, product promotional spend associated with the QuickVue At-Home OTC COVID-19 test, professional fees and higher employee-related costs.
The Point of Care business unit contributed to revenue growth, driven primarily by an increase of $586.1 million in sales of QuickVue SARS Antigen assays, partially offset by lower sales of Sofia assays and $46.7 million lower BNP sales due to the transition of the BNP Business to Beckman.
The Point of Care business unit contributed to revenue growth, primarily driven by an increase of $586.1 million in sales of QuickVue SARS Antigen assays, partially offset by lower sales of Sofia assays and $46.7 million lower BNP sales due to the transition of the BNP Business to Beckman.
The increase in cost of sales, excluding amortization of intangible assets, was driven primarily by a large increase in sales of QuickVue SARS Antigen assays in 2022, as well as new product sales in the Labs and Transfusion Medicine business units as a result of the Combinations.
The increase in cost of sales, excluding amortization of intangible assets, was primarily driven by a large increase in sales of QuickVue SARS Antigen assays in 2022, as well as new product sales in the Labs and Transfusion Medicine business units as a result of the Combinations.
Research and Development Expense Research and development expense for fiscal year 2022 increased by $94.8 million, or 99.1%, to $190.5 million from $95.7 million for the prior year, primarily due to the Combinations which contributed $86.0 million in increased expense, as well as increased costs related to SARS, Sofia and Savanna projects, and increased costs related to compensation driven by increased headcount and clinical trials.
Research and development expense for fiscal year 2022 increased by $94.8 million, or 99.1%, to $190.5 million from $95.7 million for the prior year, primarily due to the Combinations which contributed $86.0 million in increased expense, as well as increased costs related to SARS, Sofia and Savanna projects, and increased costs related to compensation driven by increased headcount and clinical trials.
For these same reasons, the reagent rental model also benefits our commercial strategy in emerging markets. We believe that the shift in our sales strategy will grow our installed base, thereby increasing sales of higher-margin assays, reagents and other consumables over the life of the customer contracts and enhancing our recurring revenue and cash flows.
For these same reasons, the reagent rental model also benefits our commercial strategy in emerging markets. We believe that the shift in our sales strategy will grow our installed base, thereby 62 increasing sales of higher-margin assays, reagents and other consumables over the life of the customer contracts and enhancing our recurring revenue and cash flows.
In addition, we benefited from collections on accounts receivables, which contributed $150.2 million to Cash provided by operating activities, partially offset by net cash outflows related to inventories, prepaid and other current and non-current assets and liabilities as well as income taxes payable and other current and non-current liabilities.
In addition, we benefited from collections on accounts receivables, which contributed $150.2 million to Cash provided by operating activities, offset by net cash outflows related to inventories, prepaid and other current and non-current assets and liabilities as well as income taxes payable and other current and non-current liabilities.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. 67 Reserve for Contractual Rebates We record revenues primarily from product sales.
We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Reserve for Contractual Rebates We record revenues primarily from product sales.
We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including, but not limited to, an income 68 approach and a market approach, such as the estimation of future cash flows of the acquired business and current selling prices of similar assets.
We assess fair value, which is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, using a variety of methods including, but not limited to, an income 64 approach and a market approach, such as the estimation of future cash flows of the acquired business and current selling prices of similar assets.
Because our business environment is highly competitive, our long-term growth and profitability will depend in part on our ability to retain and grow our current customers and attract new customers through developing and delivering new and improved products and services that meet our customers’ needs and expectations, including with respect to product performance, product offerings, cost, automation and other work-flow efficiency.
Because our business environment is highly competitive, our long-term growth and profitability will depend in part on our ability to retain and grow our current customers and attract new customers through developing and delivering new and improved products and services that meet our customers’ needs and expectations, including with respect to product performance, product offerings, cost, automation and other work-flow efficiencies.
We also recorded $60.6 million of expense related to the amortization of the inventory fair value adjustment related to the Combinations during fiscal year 2022. There were also increases in supply chain and other indirect manufacturing costs, which were only partially offset by increased absorption driven by higher production volumes.
We also recorded $60.6 million of expense related to the unwind of the inventory fair value adjustment related to the Combinations during fiscal year 2022. There were also increases in supply chain and other indirect manufacturing costs, which were only partially offset by increased absorption driven by higher production volumes.
Adjusted EBITDA consists of Net income before Interest expense, net, Provision for (benefit from) income taxes and depreciation and amortization and eliminates (i) certain non-operating income or expense items, and (ii) impacts of certain noncash, unusual or other items that are included in net income and that we do not consider indicative of our ongoing operating performance.
Adjusted EBITDA consists of Net (loss) income before Interest expense, net, (Benefit from) provision for income taxes and depreciation and amortization and eliminates (i) certain non-operating income or expense items, and (ii) impacts of certain non-cash, unusual or other items that are included in Net (loss) income and that we do not consider indicative of our ongoing operating performance.
The decrease in revenues related to the transition of the BNP Business did not materially impact our gross profit. Molecular Diagnostics sales decreased by $103.8 million, driven primarily by lower demand and pricing of the Lyra SARS Antigen assay. Currency exchange rate had an unfavorable impact of approximately 300 basis points on the growth rate for fiscal year 2022.
The decrease in revenues related to the transition of the BNP Business did not materially impact our gross profit. 55 Molecular Diagnostics revenue decreased by $103.8 million, primarily driven by lower demand and pricing of the Lyra SARS Antigen assay. Currency exchange rates had an unfavorable impact of approximately 300 basis points on the growth rate for fiscal year 2022.
Under the RPA, Ortho FinanceCo I may sell receivables in amounts up to a $75.0 million limit, subject to certain conditions, including that, at any date of determination, the aggregate capital paid to Ortho FinanceCo I does not exceed a “capital coverage amount,” equal to an adjusted net receivables pool balance minus a required reserve.
Under the RPA, as amended, Ortho FinanceCo I may sell receivables in amounts up to a $150.0 million limit, subject to certain conditions, including that, at any date of determination, the aggregate capital paid to Ortho FinanceCo I does not exceed a “capital coverage amount,” equal to an adjusted net receivables pool balance minus a required reserve.
Ortho, in its capacity as Master Servicer under the RPA, is responsible for administering and collecting the receivables and has made customary representations, warranties, covenants and indemnities. The Company has also provided a performance guaranty for the benefit of Ortho FinanceCo I to cause the due and punctual performance by Ortho of its obligations as Master Servicer.
Ortho Inc., in its capacity as Master Servicer under the RPA, is responsible for administering and collecting the receivables and has made customary representations, warranties, covenants and indemnities. We have also provided a performance guaranty for the benefit of Ortho FinanceCo I to cause the due and punctual performance by Ortho Inc. of its obligations as Master Servicer.
Our primary short-term needs for capital, which are subject to change, include expenditures related to: • interest on and repayments of our long-term borrowings, deferred consideration, contingent consideration and lease obligations; • acquisitions of equipment and other fixed assets in support of our manufacturing facility expansion; • the continued advancement of R&D efforts; • our integration of the Ortho business arising from the Combinations; • support of commercialization efforts related to our current and future products, including support of our direct sales force and field support resources; and • potential strategic acquisitions and investments.
Our primary short-term needs for capital, which are subject to change, include expenditures related to: • interest on and repayments of our long-term borrowings and lease obligations; • acquisitions of property, equipment and other fixed assets in support of our manufacturing facility expansions; • the continued advancement of R&D efforts; • our integration of the Ortho business arising from the Combinations; • support of commercialization efforts related to our current and future products, including support of our direct sales force and field support resources; and • potential strategic acquisitions and investments.
Any adjustments identified after the measurement period are recorded in the Consolidated Statements of Income. Inventories We periodically review inventory for both potential obsolescence and potential declines in anticipated selling prices.
Any adjustments identified after the measurement period are recorded in the Consolidated Statements of (Loss) Income. Inventory Valuations We periodically review inventory for both potential obsolescence and potential declines in anticipated selling prices.
Results of Operations Comparison of fiscal years ended 2022, 2021 and 2020 Our fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31. Fiscal years 2022 and 2021 were 52 weeks and fiscal year 2020 was 53 weeks.
Results of Operations Comparison of fiscal years ended 2023, 2022 and 2021 Our fiscal year is the 52 or 53 weeks ending the Sunday closest to December 31. Fiscal years 2023, 2022 and 2021 were 52 weeks.
Cash used for financing activities was $173.1 million for fiscal year 2021, and was primarily related to repurchases of common stock of $103.5 million, payments of tax withholdings for vesting of stock-based awards of $37.1 million, and the payment of deferred and contingent consideration of $39.8 million, partially offset by proceeds of $7.6 million from the issuance of common stock under the ESPP and pursuant to stock option exercises.
Cash used for financing activities was $173.1 million for fiscal year 2021, and was primarily related to repurchases of common stock of $103.5 million, payments of tax withholdings for vesting of stock-based awards of $37.1 million, and the payment of deferred and contingent consideration of $39.8 million, partially offset by proceeds of $7.6 million from the issuance of common stock under the ESPP (as defined in this Annual Report) and pursuant to stock option exercises.
In addition, we routinely evaluate our supply chain for potential gaps and continue to take other steps intended to help address continuity. In our distribution operations, we are investing in automation capabilities to help improve accuracy and timeliness of customer shipments.
In addition, we routinely evaluate our supply chain for potential gaps and continue to take other steps intended to help address continuity. In our distribution operations, we have been investing in and implementing automation capabilities to help improve accuracy and timeliness of customer shipments.
Cash provided by financing activities was $252.0 million for fiscal year 2022, and was primarily related to proceeds from long-term borrowings, net of debt issuance costs of $2,734.5 million, payments on long-term borrowings and extinguishment costs of $2,388.3 million, repurchases of common stock of $74.3 million and payments of $37.7 million for contingent and deferred consideration.
Business Combination” for further discussion regarding the Combinations. 61 Cash provided by financing activities was $252.0 million for fiscal year 2022, and was primarily related to proceeds from long-term borrowings, net of debt issuance costs of $2,734.5 million, payments on long-term borrowings and extinguishment costs of $2,388.3 million, repurchases of common stock of $74.3 million and payments of $37.7 million for contingent and deferred consideration.
As of January 1, 2023, we had a valuation allowance of $251.3 million, which represents the portion of our deferred tax assets that management believes is not more likely than not to be realized. We will continue to assess the need for a valuation allowance on our deferred tax assets by evaluating both positive and negative evidence that may exist.
As of December 31, 2023, we had a valuation allowance of $274.7 million, which represents the portion of our deferred tax assets that management believes is not more likely than not to be realized. We will continue to assess the need for a valuation allowance on our deferred tax assets by evaluating both positive and negative evidence that may exist.
Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”).
Basis of Presentation and Summary of Significant Accounting Policies.” Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”).
Loss on Extinguishment of Debt Loss on extinguishment of debt was $24.0 million for fiscal year 2022, and was related to the extinguishment of the senior notes and former term loans and the revolving credit facility of Ortho in connection with the Combinations.
Loss on Extinguishment of Debt Loss on extinguishment of debt was $24.0 million for fiscal year 2022, and was related to the satisfaction and discharge of the senior notes and termination of the former term loans and revolving credit facility of Ortho, which occurred in connection with the consummation of the Combinations.
To mitigate these supply chain challenges, we are (i) partnering with suppliers to invest in additional capacity and raw material inventory, (ii) diversifying our supply base, where possible, to minimize reliance on a single source of supply for key raw materials and components and (iii) creating redundancy in our global supply chain.
To mitigate these supply chain challenges, we continue to (i) partner with suppliers to invest in additional capacity and raw material inventory, (ii) diversify our supply base, where possible, to minimize reliance on a single source of supply for key raw materials and components and (iii) create redundancy in our global supply chain.
Non-operating Expenses The following table summarizes non-operating expenses, net for fiscal years 2022, 2021 and 2020: Fiscal Year Ended (Dollars in millions) 2022 2021 2020 % Change 2022 vs. 2021 % Change 2021 vs. 2020 Interest expense, net $ 75.7 $ 5.8 $ 8.5 N/M (31.8) % Loss on extinguishment of debt 24.0 — 10.4 N/M (100.0) % Other expense (income), net 8.1 (0.1) 1.1 N/M N/M * N/M - Not meaningful Interest Expense, Net Interest expense, net was $75.7 million, $5.8 million and $8.5 million for fiscal years 2022, 2021 and 2020, respectively.
Non-operating Expenses The following table summarizes non-operating expenses, net for fiscal years 2023, 2022 and 2021: Fiscal Year Ended (Dollars in millions) 2023 2022 2021 % Change 2023 vs. 2022 % Change 2022 vs. 2021 Interest expense, net $ 147.6 $ 75.7 $ 5.8 95.0 % N/M Loss on extinguishment of debt — 24.0 — (100.0) % N/M Other expense (income), net 20.6 8.1 (0.1) 154.3 % N/M * N/M - Not meaningful Interest Expense, Net Interest expense, net was $147.6 million, $75.7 million and $5.8 million for fiscal years 2023, 2022 and 2021, respectively.
The Stock Repurchase Program does not obligate the Company to acquire any specific number of shares. Under the Stock Repurchase Program, shares of common stock may be repurchased using a variety of methods, including privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, as part of accelerated stock repurchases and other methods.
Under the Stock Repurchase Program, shares of common stock may be repurchased using a variety of methods, including privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act, as part of accelerated stock repurchases and other methods.
The key indicators that we monitor are as follows: • Total revenues — This measure is discussed in the section entitled “Results of Operations.” • Adjusted EBITDA — Adjusted EBITDA by reportable segment is used by our management to measure and evaluate the internal operating performance of our reportable segments.
Our operations in Latin America, Japan and Asia Pacific are immaterial operating segments that are not considered reportable segments and are included in “Other.” The key indicators that we monitor are as follows: • Total revenues — This measure is discussed in the section entitled “Results of Operations.” • Adjusted EBITDA — Adjusted EBITDA by reportable segment is used by our management to measure and evaluate the internal operating performance of our reportable segments.
During fiscal year 2022, we transferred $73.7 million of instrument inventories from Inventories to Property, plant and equipment, net, further increasing our investment in property, plant and equipment.
During fiscal year 2023, we transferred $154.6 million of instrument inventories from Inventories to Property, plant and equipment, net, further increasing our investment in property, plant and equipment.
Long-term Liquidity Outlook Our future capital requirements and the adequacy of our available funds to service any long-term debt outstanding and to fund working capital expenditures and business development efforts will depend on many factors, including: • our ability to successfully integrate the recently acquired Ortho business and realize cross-selling revenue synergies; • our ability to realize revenue growth from our new technologies and create innovative products in our markets; • outstanding debt and covenant restrictions; • our ability to leverage our operating expenses to realize operating profits as we grow revenue; • competing technological and market developments; and • our entry into strategic collaborations with other companies or acquisitions of other companies or technologies to enhance or complement our product and service offerings. 66 Contractual Obligations Principal payments required on our long-term debt outstanding as of January 1, 2023 are $207.5 million in fiscal year 2023, $310.2 million in fiscal years 2024 to 2025 and $2,131.2 million in fiscal years 2026 to 2027.
Long-term Liquidity Outlook Our future capital requirements and the adequacy of our available funds to service any long-term debt outstanding and to fund working capital expenditures and business development efforts will depend on many factors, including: • our ability to successfully integrate the recently acquired Ortho business and realize cross-selling revenue synergies; • our ability to realize revenue growth from our new technologies and create innovative products in our markets; • outstanding debt and covenant restrictions; • our ability to leverage our operating expenses to realize operating profits as we grow revenue; • competing technological and market developments; and • our entry into strategic collaborations with other companies or acquisitions of other companies or technologies to enhance or complement our product and service offerings.
In addition, the determination of such adjustments includes estimating rebate percentages which are dependent on estimated end-user sales mix and customer contractual terms, which vary across customers, the related balance of which was $40.0 million of our rebate reserves at January 1, 2023. Our total rebate reserve was $73.5 million at January 1, 2023.
In addition, the determination of such adjustments includes estimating rebate percentages which are dependent on estimated end-user sales mix and customer contractual terms, which vary across customers, the related balance of which was $31.3 million of our rebate reserves at December 31, 2023.
Liquidity and Capital Resources As of January 1, 2023 and January 2, 2022, the principal sources of liquidity consisted of the following: (Dollars in millions) January 1, 2023 January 2, 2022 Cash and cash equivalents $ 292.9 $ 802.8 Marketable securities, current 52.1 25.7 Marketable securities, non-current 21.0 37.9 Total cash, cash equivalents and marketable securities $ 366.0 $ 866.4 Amount available to borrow under the Revolving Credit Facility $ 786.9 $ 175.0 Working capital including cash and cash equivalents and marketable securities, current $ 568.1 $ 1,116.8 As of January 1, 2023, we had $292.9 million in Cash and cash equivalents, a $509.9 million decrease from January 2, 2022.
Liquidity and Capital Resources As of December 31, 2023 and January 1, 2023, the principal sources of liquidity consisted of the following: (Dollars in millions) December 31, 2023 January 1, 2023 Cash and cash equivalents $ 118.9 $ 292.9 Marketable securities, current 48.4 52.1 Marketable securities, non-current 7.4 21.0 Total cash, cash equivalents and marketable securities $ 174.7 $ 366.0 Amount available to borrow under the Revolving Credit Facility $ 787.1 $ 786.9 Working capital including cash and cash equivalents and marketable securities, current $ 476.7 $ 568.1 As of December 31, 2023, we had $118.9 million in Cash and cash equivalents, a $174.0 million decrease from January 1, 2023.
While we believe that we have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcome of examinations by tax authorities in determining the adequacy of our provision for income taxes. See Note 6 to our Consolidated Financial Statements for more information on income taxes.
While we believe that we have appropriate support for the positions taken on our tax returns, we regularly assess the potential outcome of examinations by tax authorities in determining the adequacy of our provision for income taxes. See Part II, Item 8, “Financial Statements and Supplementary Data—Note 6. Income Taxes” for more information on income taxes.
The lower tax expense for fiscal year 2022 compared to the prior year was primarily due to a decrease in pre-tax profits and state taxes, foreign income taxed at rates other than the applicable U.S. rate, and an increased deduction for foreign derived intangible income (FDII), partially offset by increases in non-deductible executive compensation, Global Intangible Low-Taxed Income and acquisition-related costs. 60 We recognized an income tax provision of $196.1 million, resulting in an effective tax rate of 21.8% for fiscal year 2021.
The lower tax expense for fiscal year 2022 compared to the prior year was primarily due to a decrease in pre-tax profits and state taxes, foreign income taxed at rates other than the applicable U.S. rate, and an increased deduction for FDII, partially offset by increases in non-deductible executive compensation, GILTI and acquisition-related costs.
China Total revenues and Adjusted EBITDA for China were as follows: Fiscal Year Ended (Dollars in millions) 2022 2021 2020 % Change 2022 vs. 2021 % Change 2021 vs. 2020 Total revenues $ 220.0 $ 58.0 $ 62.4 279 % (7) % Adjusted EBITDA $ 104.1 $ 24.1 $ 30.5 332 % (21) % Total revenues were $220.0 million for fiscal year 2022, compared to Total revenues of $58.0 million for fiscal year 2021.
China Total revenues and Adjusted EBITDA for China were as follows: Fiscal Year Ended (Dollars in millions) 2023 2022 2021 % Change 2023 vs. 2022 % Change 2022 vs. 2021 Total revenues $ 310.1 $ 220.0 $ 58.0 41 % 279 % Adjusted EBITDA $ 129.1 $ 104.1 $ 24.1 24 % 332 % Total revenues were $310.1 million for fiscal year 2023, compared to $220.0 million for fiscal year 2022.
Liquidity Outlook Short-term Liquidity Outlook Our primary source of liquidity, other than our holdings of Cash and cash equivalents, has been cash flows from operations. Cash generated from operations provides us with the financial flexibility we need to meet normal operating, investing and financing needs.
Refer to Part II, Item 8, “Financial Statements and Supplementary Data—Note 10. Stockholders’ Equity.” Liquidity Outlook Short-term Liquidity Outlook Our primary source of liquidity, other than our holdings of Cash and cash equivalents, has been cash flows from operations. Cash generated from operations provides us with the financial flexibility we need to meet normal operating, investing and financing needs.
Goodwill and Intangible Assets The useful lives of intangible assets with definite lives are based on the expected number of years the asset will generate revenue or otherwise be used by us and the related amortization is based on the straight-line method.
Our total rebate reserve was $75.6 million at December 31, 2023. 63 Goodwill and Intangible Assets The useful lives of intangible assets with definite lives are based on the expected number of years the asset will generate revenue or otherwise be used by us and the related amortization is based on the straight-line method.
North America Total revenues and Adjusted EBITDA for North America were as follows: Fiscal Year Ended (Dollars in millions) 2022 2021 2020 % Change 2022 vs. 2021 % Change 2021 vs. 2020 Total revenues $ 2,536.5 $ 1,500.2 $ 1,460.7 69 % 3 % Adjusted EBITDA $ 1,614.6 $ 1,028.5 $ 1,205.2 57 % (15) % Total revenues wer e $2,536.5 million for fiscal year 2022, compared to Total revenues of $1,500.2 million for fiscal year 2021.
North America Total revenues and Adjusted EBITDA for North America were as follows: Fiscal Year Ended (Dollars in millions) 2023 2022 2021 % Change 2023 vs. 2022 % Change 2022 vs. 2021 Total revenues $ 1,877.1 $ 2,536.5 $ 1,500.2 (26) % 69 % Adjusted EBITDA $ 949.2 $ 1,614.6 $ 1,028.5 (41) % 57 % Total revenues were $1,877.1 million for fiscal year 2023, compared to $2,536.5 million for fiscal year 2022.
In addition, our discussion of QuidelOrtho’s financial condition and results of operation 55 s in this Item 7 should be read in conjunction with our Consolidated Financial Statements and the related Notes included elsewhere in this Annual Report.
In addition, our discussion of QuidelOrtho’s financial condition and results of operation 53 s in this Item 7 should be read in conjunction with our Consolidated Financial Statements and the related Notes included elsewhere in this Annual Report. Overview Our vision is to advance diagnostics to power a healthier future.
Income Taxes For fiscal years 2022 and 2021, we recognized income tax provisions of $187.2 million in relation to income before taxes of $735.9 million, and $196.1 million in relation to income before taxes of $900.3 million, respectively, resulting in effective tax rates of 25.4% and 21.8%, respectively.
Income Taxes For fiscal years 2023 and 2022, we recognized income tax benefits of $19.0 million in relation to loss before taxes of $29.1 million and income tax provisions of $187.2 million in relation to income before taxes of $735.9 million, resulting in effective tax rates of 65.3% and 25.4%, respectively.
Revenues The following table compares Total revenues by business unit for fiscal years 2022, 2021 and 2020: Fiscal Year Ended (Dollars in millions) 2022 2021 2020 % Change 2022 vs. 2021 % Change 2021 vs. 2020 Labs $ 820.2 $ 44.8 $ 50.9 1,731 % (12) % Transfusion Medicine 393.8 — — N/A N/A Point of Care 1,955.3 1,453.3 1,387.8 35 % 5 % Molecular Diagnostics 96.7 200.5 223.0 (52) % (10) % Total revenues $ 3,266.0 $ 1,698.6 $ 1,661.7 92 % 2 % For fiscal year 2022, Total revenues increased to $3,266.0 million from $1,698.6 million for the prior year.
Revenues The following table compares Total revenues by business unit for fiscal years 2023, 2022 and 2021: Fiscal Year Ended (Dollars in millions) 2023 2022 2021 % Change 2023 vs. 2022 % Change 2022 vs. 2021 Labs $ 1,425.4 $ 820.2 $ 44.8 74 % 1,731 % Transfusion Medicine 648.5 393.8 — 65 % N/M Point of Care 892.2 1,955.3 1,453.3 (54) % 35 % Molecular Diagnostics 31.7 96.7 200.5 (67) % (52) % Total revenues $ 2,997.8 $ 3,266.0 $ 1,698.6 (8) % 92 % * N/M - Not meaningful For fiscal year 2023, Total revenues decreased to $2,997.8 million from $3,266.0 million for the prior year.
While the revenues and financial results from our COVID-19 products are uncertain, we intend to continue our focus on prudently managing our business and delivering improved financial results, while at the same time striving to introduce new products and services into the market.
While we expect the revenues and financial results from our respiratory products to be affected by the seasonal demands of the respiratory seasons, we intend to continue our focus on prudently managing our business and delivering improved financial results, while at the same time striving to introduce new products and services into the market.
The timing, manner, price and amount of any repurchases are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. For the fiscal year ended January 1, 2023, the Company repurchased 953,468 shares of outstanding common stock under the Stock Repurchase Program for approximately $74.3 million.
The timing, manner, price and amount of any repurchases are determined by us in our 60 discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions. For the fiscal year ended December 31, 2023, we repurchased 120,000 shares of outstanding common stock under the Stock Repurchase Program for approximately $7.2 million.
During fiscal year 2022, the impact of the Combinations contributed $607.3 million to Total revenues. The remaining increase of $429.0 million was driven primarily by increased demand for the QuickVue SARS Antigen assays and non-SARS related rapid tests, partially offset by a decrease in revenues for the Sofia SARS Antigen assay.
The remaining increase of $429.0 million was primarily driven by increased demand for QuickVue SARS Antigen assays and non-SARS related rapid tests, partially offset by a decrease in revenues for the Sofia SARS Antigen assay. Adjusted EBITDA was $949.2 million for fiscal year 2023, compared to $1,614.6 million for fiscal year 2022.
During fiscal year 2021, Adjusted EBITDA decreased $6.4 million, driven primarily by lower revenues. 62 Other Total revenues and Adjusted EBITDA for Other, which includes our Latin America, Japan and Asia Pacific operating segments, were as follows: Fiscal Year Ended (Dollars in millions) 2022 2021 2020 % Change 2022 vs. 2021 % Change 2021 vs. 2020 Total revenues $ 302.7 $ 70.8 $ 45.7 328 % 55 % Adjusted EBITDA $ 92.7 $ 43.0 $ 28.0 116 % 54 % Total revenues w ere $302.7 million for fiscal year 2022, compared to Total revenues of $70.8 million for fiscal year 2021.
Other Total revenues and Adjusted EBITDA for Other, which includes our Latin America, Japan and Asia Pacific operating segments, were as follows: Fiscal Year Ended (Dollars in millions) 2023 2022 2021 % Change 2023 vs. 2022 % Change 2022 vs. 2021 Total revenues $ 483.3 $ 302.7 $ 70.8 60 % 328 % Adjusted EBITDA $ 116.3 $ 92.7 $ 43.0 25 % 116 % 59 Total revenues w ere $483.3 million for fiscal year 2023, compared to $302.7 million for fiscal year 2022.
Latin America, Japan and Asia Pacific are immaterial operating segments that are not considered reportable segments and are included in “Other.” We generate our revenue primarily in the following business units: Labs, Transfusion Medicine, Point of Care and Molecular Diagnostics. For fiscal year 2022, Total revenues increased by 92% to $3,266.0 million as compared to the prior year.
Latin America, Japan and Asia Pacific are immaterial operating segments that are not considered reportable segments and are included in “Other.” We generate our revenue primarily in the following business units: Labs, Transfusion Medicine, Point of Care and Molecular Diagnostics.
The increase in amortization expense in fiscal year 2022 compared to the prior year periods was primarily due to the Combinations. 59 Acquisition and Integration Costs Acquisition and integration costs were $136.0 million, $9.6 million and $3.7 million for fiscal years 2022, 2021 and 2020, respectively.
The increases in amortization expense in fiscal year 2023 compared to fiscal year 2022 and fiscal year 2022 compared to fiscal year 2021 were primarily due to the Combinations. 56 Acquisition and Integration Costs Acquisition and integration costs were $113.4 million, $136.0 million and $9.6 million for fiscal years 2023, 2022 and 2021, respectively.
This effective tax rate is comparable to the effective tax rate of 22.1% for fiscal year 2020.
This effective tax rate is comparable to the effective tax rate of 21.8% for fiscal year 2021.
During fiscal year 2022, the impact of the Combinations contributed $161.3 million to Total revenues. The remaining increase of $0.7 million was primarily driven by increased Point of Care revenues, partially offset by lower BNP sales due to the transition of the BNP Business to Beckman.
The increase was primarily driven by the impact of the Combinations, which contributed $146.2 million to Total revenues, partially offset by lower Point of Care revenue due to lower BNP sales from the transition of the BNP Business to Beckman. Adjusted EBITDA was $58.3 million for fiscal year 2023, compared to $31.7 million for fiscal year 2022.
We continue to monitor these developments, as well as other international developments, including the Russia-Ukraine conflict, rising tensions between China and Taiwan and localization efforts, and the impact of such factors on our business. We cannot currently predict the frequency, duration or scope of these supply, production, logistics, distribution and labor disruptions and challenges.
We continue to monitor these macroeconomic and geopolitical developments and the impact of such factors on our business. We cannot currently predict the frequency, duration or scope of these supply, production, logistics, distribution and labor disruptions and challenges.
Adjusted EBITDA was $1,614.6 million for fiscal year 2022, compared to Adjusted EBITDA of $1,028.5 million for fiscal year 2021. During fiscal year 2022, the impact of the Combinations contributed $260.7 million to Adjusted EBITDA.
During fiscal year 2022, the impact of the Combinations contributed $260.7 million to Adjusted EBITDA.
Adjusted EBITDA was $31.7 million for fiscal year 2022, compared to Adjusted EBITDA of $28.1 million for fiscal year 2021. During fiscal year 2022, the impact of the Combinations contributed $18.1 million to Adjusted EBITDA. The remaining decrease of $14.5 million was driven primarily by lower revenues and increased selling costs.
The increase was primarily driven by incremental revenues from the Combinations, partially offset by lower Point of Care revenue and increased selling and distribution costs. Adjusted EBITDA was $31.7 million for fiscal year 2022, compared to $28.1 million for fiscal year 2021.
During fiscal year 2022, the impact of the Combinations contributed $250.5 million to Total revenues. The remaining decrease of $18.6 million was primarily due to lower Point of Care revenues, driven primarily by lower demand for QuickVue SARS Antigen and Sofia assays.
The increase was primarily driven by the impact of the Combinations, which contributed $250.5 million to Total revenues, partially offset by lower Point of Care revenue, driven by lower demand for QuickVue SARS Antigen and Sofia assays. Adjusted EBITDA was $116.3 million for fiscal year 2023, compared to $92.7 million for fiscal year 2022.
Recent Accounting Pronouncements Information about recently adopted and proposed accounting pronouncements is included in Note 1 to our Consolidated Financial Statements set forth in Part II, Item 8 of this Annual Report.
Recent Accounting Pronouncements Information about recently adopted and proposed accounting pronouncements is included in Part II, Item 8, “Financial Statements and Supplementary Data—Note 1.
Our cash requirements fluctuate as a result of numerous factors, including cash generated from operations, progress in R&D, capital expansion projects and acquisition and business development activities.
Our cash requirements fluctuate as a result of numerous factors, including cash generated from operations, progress in R&D, capital expansion projects and acquisition and business development activities. We believe our organizational structure allows us the necessary flexibility to move funds throughout our subsidiaries to meet our operational working capital needs.
These revenues are recorded net of rebates that are estimated at the time of sale, and are largely driven by various customer program offerings, including special pricing agreements and promotions.
These revenues are recorded net of rebates that are estimated at the time of sale, and are largely driven by various customer program offerings, including special pricing agreements and promotions. Rebates are calculated based on historical experience, estimated distributor inventory balances, contractual and statutory requirements and other relevant information, and are recorded as a reduction of sales.
Recent Developments On May 27, 2022, pursuant to the BCA, Quidel and Ortho consummated the Combinations and each of Quidel and Ortho became a wholly owned subsidiary of QuidelOrtho. For additional information about the Combinations, see Note 1 under the section “Organization and Business” and Note 2 under the section “Business Combination” to the Consolidated Financial Statements.
On May 27, 2022, pursuant to the BCA, Quidel and Ortho consummated the Combinations and each of Quidel and Ortho became a wholly owned subsidiary of QuidelOrtho. Our Consolidated Financial Statements for 2023 include a full year of Ortho operations. For additional information about the Combinations, see Part II, Item 8, “Financial Statements and Supplementary Data—Note 2.
As of January 1, 2023, we had approximately $225.7 million available under the Stock Repurchase Program. 64 Cash Flow Summary Fiscal Year Ended (In millions) 2022 2021 2020 Net cash provided by operating activities: $ 885.3 $ 805.9 $ 629.7 Net cash used for investing activities: (1,644.2) (319.5) (63.3) Net cash provided by (used for) financing activities: 252.0 (173.1) (130.3) Effect of exchange rates on cash (2.0) (0.4) 1.0 Net (decrease) increase in cash, cash equivalents and restricted cash $ (508.9) $ 312.9 $ 437.1 Fiscal Year Ended January 1, 2023 Cash provided by operating activities was $885.3 million for fiscal year 2022, and reflected net income of $548.7 million and non-cash adjustments of $389.8 million, primarily associated with depreciation and amortization, stock-based compensation expense, deferred income taxes, loss on extinguishment of debt and amortization of the inventory fair value step up initially recorded in connection with the Combinations.
Cash Flow Summary Fiscal Year Ended (In millions) 2023 2022 2021 Net cash provided by operating activities $ 280.2 $ 885.3 $ 805.9 Net cash used for investing activities (187.6) (1,644.2) (319.5) Net cash (used for) provided by financing activities (265.8) 252.0 (173.1) Effect of exchange rates on cash (1.2) (2.0) (0.4) Net (decrease) increase in cash, cash equivalents and restricted cash $ (174.4) $ (508.9) $ 312.9 Fiscal Year Ended December 31, 2023 Cash provided by operating activities was $280.2 million for fiscal year 2023, and reflected a net loss of $10.1 million and non-cash adjustments of $485.2 million, primarily associated with depreciation and amortization, stock-based compensation expense and accretion of interest on deferred consideration.
Other Expense (Income), Net Other expense (income), net was $8.1 million, $(0.1) million and $1.1 million for fiscal years 2022, 2021 and 2020, respectively. Other expense, net in fiscal year 2022 compared to income in fiscal year 2021 was primarily related to net foreign currency losses and loss on investment, partially offset by fair value gains in interest rate caps.
See Part II, Item 8, “Financial Statements and Supplementary Data—Note 6. Income Taxes” for more information related to our indemnification assets. The change in Other expense (income), net in fiscal year 2022 compared to fiscal year 2021 was primarily related to net foreign currency losses and loss on investment, partially offset by fair value gains in interest rate caps.
Other Operating Expense, Net Other operating expense, net was $12.3 million for fiscal year 2022, which was related to the profit share expense for our Joint Business with Grifols acquired in connection with the Combinations.
Costs for fiscal year 2021 were primarily related to the evaluation of new business development opportunities, including the Combinations. Other Operating Expenses Other operating expenses were $27.1 million and $12.3 million for fiscal years 2023 and 2022, respectively, which were primarily related to the profit share expense for our Joint Business with Grifols acquired in connection with the Combinations.
Fiscal Year Ended January 3, 2021 Cash provided by operating activities was $629.7 million for fiscal year 2020, and reflected net income of $810.3 million and non-cash adjustments of $70.6 million, primarily associated with depreciation and amortization, stock-based compensation expense, deferred taxes, loss on extinguishment of debt and accretion of interest on deferred consideration.
Fiscal Year Ended January 1, 2023 Cash provided by operating activities was $885.3 million for fiscal year 2022, and reflected net income of $548.7 million and non-cash adjustments of $389.8 million, primarily associated with depreciation and amortization, stock-based compensation expense, deferred income taxes, loss on extinguishment of debt and the unwind of the inventory fair value step up initially recorded in connection with the Combinations.
Adjusted EBITDA was $92.7 million for fiscal year 2022, compared to Adjusted EBITDA of $43.0 million for fiscal year 2021. During fiscal year 2022, the impact of the Combinations contributed $62.9 million to Adjusted EBITDA. The remaining decrease of $13.2 million was driven primarily by lower revenues.
The increase was primarily driven by approximately $37 million of incremental impact of the Combinations, partially offset by lower Point of Care revenue. Adjusted EBITDA was $92.7 million for fiscal year 2022, compared to $43.0 million for fiscal year 2021.
EMEA Total revenues and Adjusted EBITDA for EMEA were as follows: Fiscal Year Ended (Dollars in millions) 2022 2021 2020 % Change 2022 vs. 2021 % Change 2021 vs. 2020 Total revenues $ 206.8 $ 69.6 $ 92.9 197 % (25) % Adjusted EBITDA $ 31.7 $ 28.1 $ 55.5 13 % (49) % Total revenues were $206.8 million for fiscal year 2022, compared to Total revenues of $69.6 million for fiscal year 2021.
The remaining increase of $325.4 million was primarily driven by increased revenues, partially offset by increased distribution and selling costs. 58 EMEA Total revenues and Adjusted EBITDA for EMEA were as follows: Fiscal Year Ended (Dollars in millions) 2023 2022 2021 % Change 2023 vs. 2022 % Change 2022 vs. 2021 Total revenues $ 327.3 $ 206.8 $ 69.6 58 % 197 % Adjusted EBITDA $ 58.3 $ 31.7 $ 28.1 84 % 13 % Total revenues were $327.3 million for fiscal year 2023, compared to $206.8 million for fiscal year 2022.
In connection with the Combinations, the Company acquired a receivables purchase agreement (the “RPA”), entered into on June 11, 2021, by and among Ortho-Clinical Diagnostics US FinanceCo I, LLC (“Ortho FinanceCo I”), a wholly owned receivables financing subsidiary of the Company, Wells Fargo Bank, N.A., as administrative agent (the “Agent”), Ortho-Clinical Diagnostics, Inc.
On March 31, 2023, we entered into an amendment to our existing receivables purchase agreement (the “RPA”), by and among Ortho-Clinical Diagnostics US FinanceCo I, LLC (“Ortho FinanceCo I”), as Seller, our wholly owned receivables financing subsidiary, Wells Fargo Bank, N.A., as administrative agent (the “Agent”), Ortho-Clinical Diagnostics, Inc., as the Master Servicer and as an Originator (“Ortho Inc.”), Quidel Corporation, as an Originator, and certain Purchasers.
Total revenues wer e $1,500.2 million for fiscal year 2021, compared to Total revenues of $1,460.7 million for fiscal year 2020. The increase of $39.5 million was driven primarily by increased demand for the QuickVue SARS Antigen assays, offset by a decrease in revenues for the Sofia SARS Antigen assay.
The decrease was primarily driven by lower demand for QuickVue and Sofia SARS Antigen assays, partially offset by incremental revenues of $433.8 million from the Combinations. Total revenues wer e $2,536.5 million for fiscal year 2022, compared to $1,500.2 million for fiscal year 2021. During fiscal year 2022, the impact of the Combinations contributed $607.3 million to Total revenues.
Cost of sales, excluding amortization of intangible assets, increased to $420.3 million, or 24.7% of Total revenues, for fiscal year 2021, compared to $305.4 million, or 18.4% of Total revenues, for fiscal year 2020.
Cost of Sales, Excluding Amortization of Intangible Assets Cost of sales, excluding amortization of intangible assets, increased to $1,503.4 million, or 50.2% of Total revenues, for fiscal year 2023, compared to $1,330.0 million, or 40.7% of Total revenues, for fiscal year 2022.
The increase in interest expense, net in fiscal year 2022 compared to the prior year periods was primarily related to the new Term Loan under the Credit Agreement entered into in connection with the Combinations. See Note 8 to the Consolidated Financial Statements for more information related to our Term Loan.
The increases in interest expense, net in fiscal year 2023 compared to fiscal year 2022 and fiscal year 2022 compared to fiscal year 2021 were primarily related to the Term Loan under the Credit Agreement entered into in connection with the Combinations. See Part II, Item 8, “Financial Statements and Supplementary Data—Note 8.
See Note 5 to the Consolidated Financial Statements for a reconciliation of Adjusted EBITDA by reportable segment to Income before provision for income taxes.
See Part II, Item 8, “Financial Statements and Supplementary Data—Note 5. Segment and Geographic Information” for a reconciliation of Adjusted EBITDA by reportable segment to (Loss) income before income taxes.
Favorable currency exchange rate impact for fiscal year 2021 had a minimal impact on the growth rate. 58 Cost of Sales, Excluding Amortization of Intangible Assets Cost of sales, excluding amortization of intangible assets, increased to $1,330.0 million, or 40.7% of Total revenues, for fiscal year 2022, compared to $420.3 million, or 24.7% of Total revenues, for fiscal year 2021.
We also recorded $60.6 million of expense related to the unwind of the inventory fair value adjustment related to the Combinations during fiscal year 2022. Cost of sales, excluding amortization of intangible assets, increased to $1,330.0 million, or 40.7% of Total revenues, for fiscal year 2022, compared to $420.3 million, or 24.7% of Total revenues, for fiscal year 2021.
Currency exchange rates had an unfavorable impact of 300 basis points on our growth rate. For fiscal year 2021 , Total revenues increased by 2% to $1,698.6 million as compared to the prior year. Currency exchange rates had a minimal impact on the growth rate. Our revenues can be highly concentrated over a small number of products.
Currency exchange rates had an unfavorable impact of 100 basis points and 300 basis points on our growth rate for fiscal years 2023 and 2022, respectively. Our revenues can be highly concentrated over a small number of products, including certain of our respiratory products.
The increases in Labs and Transfusion Medicine were primarily related to new revenues from the Combinations.
For fiscal year 2022, Total revenues increased to $3,266.0 million from $1,698.6 million for the prior year. The increases in Labs and Transfusion Medicine were primarily related to new revenues from the Combinations.
Rebates are calculated based on historical experie nce, estimated distributor inventory balances, contractual and statutory requirements and other relevant information, and are recorded as a reduction of sales with offsets to trade accounts receivable. The allowance for contractual rebates involves estimating adjustments to revenue based on a high volume of data including inputs from third-party sources.
These rebates are presented as either an offset to trade accounts receivable or a liability based on forms of settlement. The allowance for contractual rebates involves estimating adjustments to revenue based on a high volume of data including inputs from third-party sources.
For 2023, we expect demand for our COVID-19 testing products to fluctuate and pricing pressures to continue as a result of a number of factors, including increased supply, emergence and spread of new variants, effectiveness of global containment efforts and other mitigation efforts.
We expect demand for our respiratory products to continue to fluctuate and pricing pressures on certain products to persist as a result of a number of factors, including increased supply, emergence and spread of new variants, and the seasonal demands of the respiratory seasons, which are typically more prevalent during the fall and winter.
Research and development expense for fiscal year 2021 increased by $11.4 million, or 13.5%, to $95.7 million from $84.3 million for the prior year, primarily due to increased costs related to the Savanna and QuickVue OTC projects, partially offset by decreased spending on Sofia projects.
Research and Development Expense Research and development expense for fiscal year 2023 increased by $56.3 million, or 29.6%, to $246.8 million from $190.5 million for the prior year, primarily due to the incremental impact of the Combinations, as well as increased costs related to the development of Savanna, QuickVue OTC assays and Sofia products.
Total revenues w ere $70.8 million for fiscal year 2021, compared to Total revenues of $45.7 million for fiscal year 2020. During fiscal year 2021, Total revenues increased $25.1 million, primarily due to higher Point of Care revenues, driven by higher demand for QuickVue SARS Antigen and Sofia assays.
The increase was primarily driven by incremental revenues of $177.1 million from the Combinations and higher Labs revenue, partially offset by lower Point of Care revenue. Total revenues w ere $302.7 million for fiscal year 2022, compared to $70.8 million for fiscal year 2021.
Adjusted EBITDA was $104.1 million for fiscal year 2022, compared to Adjusted EBITDA of $24.1 million for fiscal year 2021. During fiscal year 2022, the Combinations were the primary driver of the increase, which contributed $80.7 million to Adjusted EBITDA. Adjusted EBITDA was $24.1 million for fiscal year 2021, compared to Adjusted EBITDA of $30.5 million for fiscal year 2020.
The increase was primarily driven by the impact of the Combinations, which contributed $161.3 million to Total revenues. Adjusted EBITDA was $129.1 million for fiscal year 2023, compared to $104.1 million for fiscal year 2022.
Total revenues were $58.0 million for fiscal year 2021, compared to Total revenues of $62.4 million for fiscal year 2020. The decrease of $4.4 million was primarily due to decreased Point of Care revenues, driven by lower BNP sales due to the transition of the BNP Business to Beckman.
The increase was primarily driven by incremental revenues of $95.0 million from the Combinations, partially offset by lower Point of Care revenue, primarily related to decreased demand for QuickVue SARS Antigen assays. Total revenues were $220.0 million for fiscal year 2022, compared to $58.0 million for fiscal year 2021.
The remaining increase of $325.4 million was driven primarily by increased revenues, partially offset by increased distribution and selling costs. 61 Adjusted EBITDA was $1,028.5 million for fiscal year 2021, compared to Adjusted EBITDA of $1,205.2 million for fiscal year 2020. The decrease of $176.7 million was driven primarily by increased distribution and selling costs.
The decrease was primarily driven by lower demand for QuickVue and Sofia SARS Antigen assays, partially offset by decreased distribution costs and approximately $160 million of incremental impact of the Combinations. Adjusted EBITDA was $1,614.6 million for fiscal year 2022, compared to $1,028.5 million for fiscal year 2021.
The increase in costs in fiscal year 2022 was primarily due to transaction and integration-related costs attributable to the Combinations. Costs in the prior year periods were primarily related to the evaluation of new business development opportunities, including the Combinations.
The decrease in costs in fiscal year 2023 compared to fiscal year 2022 was primarily due to acquisition costs attributable to the Combinations, partially offset by higher integration-related costs. The increase in costs in fiscal year 2022 compared to fiscal year 2021 was primarily due to acquisition and integration-related costs attributable to the Combinations.
We also incurred higher labor, materials and clinical trials costs as a result of the COVID-19 product development. Amortization of Intangible Assets Amortization of intangible assets for fiscal years 2022, 2021 and 2020 was $132.5 million, $27.4 million and $27.3 million, respectively.
Amortization of Intangible Assets Amortization of intangible assets for fiscal years 2023, 2022 and 2021 was $204.8 million, $132.5 million and $27.4 million, respectively.
Outlook Our financial performance and results of operations will depend on future developments and other factors that are highly uncertain, continuously evolving and unpredictable, including the occurrence, spread, severity and duration of any new outbreaks and resurgences of COVID-19, the emergence and spread of new variants of COVID-19, and the ongoing supply, production and logistics challenges. 57 Demand for our COVID-19 testing products declined in the second half of 2022 compared to both the first half of 2022 and the second half of 2021, which may indicate the beginning of a transition to an endemic environment.
Despite our mitigation efforts, such disruptions and challenges have materially affected and could further materially affect our ability to timely manufacture and distribute our products and could unfavorably impact our results of operations depending on the nature and duration of such disruptions and challenges. 54 Outlook Our financial performance and results of operations will depend on future developments and other factors that are highly uncertain, continuously evolving and unpredictable, including the occurrence, spread, severity, duration and emergence of new variants of respiratory diseases, including flu, strep, RSV and COVID-19, as well as ongoing supply, production and logistics challenges.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAlthough we continually evaluate our investments, our cash equivalents as of January 1, 2023 consisted 69 primarily of government money market funds and other high credit quality debt securities. These funds provide daily liquidity and may be subject to interest rate risk and decrease in value if market interest rates increase.
Biggest changeOur current investment policy with respect to our cash and cash equivalents focuses on maintaining acceptable levels of interest rate risk and liquidity. Although we continue to evaluate our investments, our cash equivalents as of December 31, 2023 consisted primarily of government money market funds and other high credit quality debt securities.
We have policies governing our use of derivative instruments, and we do not enter into financial instruments for trading or speculative purposes. Interest Rate Risk We are subject to interest rate market risk in connection with our long-term debt. Our principal interest exposure relates to outstanding amounts under our Credit Agreement.
We have policies governing our use of derivative instruments, and we do not enter into financial instruments for trading or speculative purposes. Interest Rate Risk We are subject to interest rate risk in connection with our long-term debt. Our principal interest exposure relates to outstanding amounts under our Credit Agreement.
We do not expect our operating results or cash flows to be affected to any significant degree by a sudden change in market interest rates. Foreign Currency Exchange Risk We are exposed to foreign currency exchange risk by virtue of our international operations.
We do not expect our operating results or cash flows to be affected to any significant degree by a sudden change in market interest rates. 65 Foreign Currency Exchange Risk We are exposed to foreign currency exchange risk by virtue of our international operations.
For further discussion of the risks related to our Credit Agreement, see “Risk Factors—Corporate Finance Risks—Our substantial indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations and prevent us from fulfilling our obligations under our indebtedness” in Part I, Item 1A, “Risk Factors” of this Annual Report.
For further discussion of the risks related to our Credit Agreement, see “Risk Factors—Risks Relating to Corporate Finance—Our indebtedness could adversely affect our financial condition, limit our ability to raise additional capital to fund our operations and prevent us from fulfilling our obligations under our indebtedness” in Part I, Item 1A, “Risk Factors” of this Annual Report.
Assuming facilities under the Credit Agreement are fully drawn, each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense on our outstanding borrowings under the Credit Agreement by approximately $4.3 million per year before considering the impact of derivative instruments.
Assuming facilities under the Credit Agreement are fully drawn, each one-eighth percentage point increase or decrease in the applicable interest rates would correspondingly change our interest expense on our outstanding borrowings under the Credit Agreement by approximately $4.0 million per year before considering the impact of derivative instruments.
The foreign currency gains/losses in each period primarily consist of unrealized gains/losses related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries. We may enter into derivative instruments to manage our foreign currency exposure on these intercompany loans in the future.
The foreign currency gains/losses in each period primarily consist of unrealized gains/losses related to intercompany loans denominated in currencies other than the functional currency of the affected subsidiaries. We have entered into and may in the future enter into derivative instruments to manage our foreign currency exposure on these intercompany loans in the future.
These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany balances with foreign subsidiaries and transactions denominated in currencies other than the functional currency of the local jurisdiction. We derived approximately 25% of our Total revenues for the fiscal year ended January 1, 2023, from operations outside the U.S.
These risks include the translation of local currency balances of foreign subsidiaries, transaction gains and losses associated with intercompany balances with foreign subsidiaries and transactions denominated in currencies other than the functional currency of the local jurisdiction. We derived approximately 39% of our Total revenues for the fiscal year ended December 31, 2023, from operations outside the U.S.
In the fourth quarter of 2022, we entered into interest rate swap contracts, commencing on December 30, 2022, with a total notional value of $1.3 billion through December 29, 2023 and $1.8 billion subsequently, to hedge future interest rate exposures on variable rate debt, including the Revolving Credit Facility and Term Loan.
We entered into interest rate swap contracts, commencing on December 30, 2022, with a total notional value of $1.3 billion, which increased to $1.8 billion on December 29, 2023, to hedge future interest rate exposures on variable rate debt, including the Revolving Credit Facility and Term Loan.
Foreign currency forward contracts that qualified and were designated for hedge accounting are recorded at their fair value as of January 1, 2023 and the unrealized loss of $7.9 million is reported as a component of Other comprehensive income (loss), all of which is expected to be reclassified to earnings in the next 12 months.
Foreign currency forward contracts that qualified and were designated for hedge accounting are recorded at their fair value as of December 31, 2023 and the pre-tax unrealized loss of $6.7 million is reported as a component of Other comprehensive income (loss) (“OCI”), all of which is expected to be reclassified to earnings in the next 12 months.
In many instances, the intercompany loans are denominated in currencies other than the functional currency of the affected subsidiaries. Where intercompany loans are not a component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the subsidiaries’ functional currency against other currencies will affect our results of operations.
Where intercompany loans are not a component of permanently invested capital of the affected subsidiaries, increases or decreases in the value of the subsidiaries’ functional currency against other currencies can affect our results of operations.
We have entered into foreign currency forward contracts to manage our foreign currency exposures on foreign currency denominated firm commitments and forecasted foreign currency denominated intercompany and third-party transactions. We had forward contracts outstanding with total notional amount of $1,023.3 million as of January 1, 2023, with maturity dates through December 2023.
We have entered into foreign currency forward contracts to manage our foreign currency exposures on foreign currency denominated firm commitments and forecasted foreign currency denominated intercompany and third-party transactions. We had forward contracts outstanding with a total notional amount of $1,252.2 million as of December 31, 2023, with maturity dates through December 2024.
For translation of operations in non-U.S. Dollar currencies, the local currency of most entities is the functional currency. Foreign exchange effects from the translation of our balance sheet resulted in a comprehensive loss of $69.8 million for the fiscal year ended January 1, 2023.
For translation of operations in non-U.S. Dollar currencies, the local currency of most entities is the functional currency. Foreign exchange effects from the translation of our balance sheet resulted in comprehensive income of $50.4 million and a comprehensive loss of $69.8 million for the fiscal years ended December 31, 2023 and January 1, 2023, respectively.
During the fiscal year ended January 1, 2023, we recorded net foreign currency exchange loss of $6.0 million. Net foreign currency exchange impact was not material for the fiscal year ended January 2, 2022.
During the fiscal years ended December 31, 2023 and January 1, 2023, we recorded net foreign currency exchange losses of $2.6 million and $6.0 million, respectively. Net foreign currency exchange impact was not material for the fiscal year ended January 2, 2022.
Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions are incurred. Actual gains upon settlement recognized in earnings during the fiscal year ended January 1, 2023 were $3.5 million.
Actual gains (losses) upon settlement will be recognized in earnings, within the line item impacted, during the estimated time in which the transactions are incurred. Actual losses upon settlement recognized in earnings during the fiscal year ended December 31, 2023 were $6.2 million.
We selectively use derivative instruments to reduce market risk associated with changes in interest rates. The use of derivatives is intended for hedging purposes only, and we do not enter into derivative instruments for speculative purposes. We have entered into an interest rate swap agreement, which fixed a portion of the variable interest due on our variable rate debt.
We selectively use derivative instruments to reduce market risk associated with changes in interest rates. The use of derivatives is intended for hedging purposes only, and we do not enter into derivative instruments for speculative purposes.
The magnitude of the impact is dependent on our business volumes in the U.K., forward contract hedge positions, cross currency volume and the exchange rate. Additionally, in order to fund the purchase price for the assets and capital stock of certain non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain non-U.S. subsidiaries.
Additionally, in order to fund the purchase price for the assets and capital stock of certain non-U.S. entities, a combination of equity contributions and intercompany loans were utilized to capitalize certain non-U.S. subsidiaries. In many instances, the intercompany loans are denominated in currencies other than the functional currency of the affected subsidiaries.
In the majority of our jurisdictions, we earn revenue and incur costs in the currency used in such jurisdiction. We incur significant costs in foreign currencies, including Brazilian Real, British Pound, Chinese Yuan/Renminbi, Euro, Indian Rupee, Japanese Yen, Mexican Peso, and the Swiss Franc.
We incur significant costs in foreign currencies, including Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, South Korean Won, Swiss Franc, Danish Krone, Czech Koruna and Thai Baht.
Actual losses/gains upon settlement recognized in earnings during the fiscal year ended January 2, 2022 were not material. See Note 14 to our Consolidated Financial Statements for additional information related to such forward contracts, which information is incorporated herein by reference. 70
Actual gains upon settlement recognized in earnings during the fiscal year ended January 1, 2023 were $3.5 million. Actual losses/gains upon settlement recognized in earnings during the fiscal year ended January 2, 2022 were not material.
Removed
Under the terms of the agreement, we will pay a fixed rate of 1.58% and receive a variable rate of interest based on the USD-SOFR rate from the counterparty, which is reset every month through December 31, 2023. As of January 1, 2023, the notional amount of the interest rate swap was $500.0 million.
Added
These funds provide daily liquidity and may be subject to interest rate risk and decrease in value if market interest rates increase.
Removed
During the fourth quarter of 2022, we terminated our non-designated $1.0 billion notional value 3.428% interest rate cap. Our current investment policy with respect to our cash and cash equivalents focuses on maintaining acceptable levels of interest rate risk and liquidity.
Added
In the majority of our jurisdictions, we earn revenue and incur costs in the currency used in such jurisdiction.
Added
The magnitude of the impact is dependent on our level of operations and business volumes in the U.K., forward contract hedge positions, cross currency volume and the exchange rate.
Added
A sensitivity to changes in the value of the U.S. dollar on foreign currency denominated derivatives and investments indicated that if the U.S. dollar uniformly weakened by 10% against all currency exposures of the Company at December 31, 2023, (Loss) income before income taxes would have declined by approximately $4.4 million in fiscal year 2023.
Added
Because the Company was in a net short (payable) position relative to its major foreign currencies after consideration of forward contracts, a uniform weakening of the U.S. dollar will yield the largest overall potential net loss in earnings due to exchange.
Added
This measurement assumes that a change in one foreign currency relative to the U.S. dollar would not affect other foreign currencies relative to the U.S. dollar. Although not predictive in nature, the Company believes that a 10% threshold reflects reasonably possible near-term changes in the Company’s major foreign currency exposures relative to the U.S. dollar.
Added
The cash flows from these contracts are reported as operating activities in the Consolidated Statements of Cash Flows. The Company also uses forward exchange contracts to hedge a portion of its net investment in foreign operations against movements in exchange rates. The forward contracts are designated as hedges of the net investment in a foreign operation.
Added
The 66 unrealized gains or losses on these contracts are recorded in foreign currency translation adjustment within OCI, and remain in Accumulated other comprehensive loss (“AOCI”) until either the sale or complete or substantially complete liquidation of the subsidiary.
Added
The Company excludes certain portions of the change in fair value of its derivative instruments from the assessment of hedge effectiveness (excluded components). Changes in fair value of the excluded components are recognized in OCI. The Company recognizes in earnings the initial value of the excluded components on a straight-line basis over the life of the derivative instrument.
Added
The cash flows from these contracts are reported as investing activities in the Consolidated Statement of Cash Flows. See Part II, Item 8, “Financial Statements and Supplementary Data—Note 14. Derivative Instruments and Hedging Activities” for additional information related to such forward contracts, which information is incorporated herein by reference. 67

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