Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures: We have performed an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of January 1, 2023 at a reasonable assurance level to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.
Changes in internal control over financial reporting: As of January 1, 2023, management is in the process of integrating the internal controls of the acquired Ortho business into our existing operations as part of planned integration activities. There were no other changes in our internal control over financial reporting during the fiscal quarter ended January 1, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management’s report on internal control over financial reporting: Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such terms are defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) , issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control—Integrated Framework , our management concluded that our internal control over financial reporting was effective as of January 1, 2023.
In accordance with SEC guidance, we have excluded from the scope of our assessment of internal control over financial reporting the operations and related assets of Ortho, which we acquired on May 27, 2022. At January 1, 2023 and for the period from acquisition through January 1, 2023, total assets and total revenues subject to Ortho’s internal control over financial reporting represented 22% and 36%, respectively, of our consolidated total assets and total revenues as of and for the fiscal year ended January 1, 2023.
The effectiveness of our internal control over financial reporting as of January 1, 2023 has been audited by Ernst & Young LLP, our independent registered public accounting firm, as stated in their report, which is included in this Item 9A.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of QuidelOrtho Corporation
Opinion on Internal Control over Financial Reporting
We have audited QuidelOrtho Corporation’s internal control over financial reporting as of January 1, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), (the COSO criteria). In our opinion, QuidelOrtho Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of January 1, 2023, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Ortho which is included in the 2022 consolidated financial statements of the Company and constituted 22% of total assets as of January 1, 2023 and 36% of revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Ortho.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 1, 2023 and January 2, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for each of the three years in the period ended January 1, 2023, and the related notes and our report dated February 23, 2023 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Diego, California
February 23, 2023
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Item 9B. Other Information
Effective on February 22, 2023, the Board approved a change of the Company’s registered agent and registered office. The Company filed a Change of Registered Agent and/or Registered Office (the “Certificate of Change”) with the Secretary of State of the State of Delaware to change the Company’s registered agent to Registered Agent Solutions, Inc. and its registered office to 838 Walker Road, Suite 21-2, Dover, County of Kent, Delaware 19904. The Certificate of Change was approved by the Board in accordance with Delaware law and has the effect of amending Section 2 of the Company’s Charter.
A copy of the Certificate of Change is attached as Exhibit 3.3 to this Annual Report and incorporated herein by reference.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
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Part III
Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is incorporated herein by reference to our 2023 proxy statement to be filed with the SEC within 120 days of the year ended January 1, 2023 (the “2023 Proxy Statement”), including under the headings “Board of Directors and Corporate Governance,” “Information about our Executive Officers,” “Business Ethics and Compliance” and “Delinquent Section 16(a) Reports,” if applicable.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference to our 2023 Proxy Statement, including under the headings “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is incorporated herein by reference to our 2023 Proxy Statement, including under the headings “Securities Available for Issuance under our Equity Compensation Plans” and “Security Ownership of Certain Beneficial Owners and Management.”
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is incorporated herein by reference to our 2023 Proxy Statement, including under the headings “Review and Approval of Related Party Transactions,” “Related Party Transactions” and “Director Independence.”
Item 14. Principal Accountant Fees and Services
The information required by this item is incorporated herein by reference to our 2023 Proxy Statement, including under the heading “Independent Registered Public Accounting Firm.”
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Part IV
Item 15. Exhibits and Financial Statement Schedules
The following documents are filed as part of this Form 10-K:
(a) (1) Financial Statements
The Consolidated Financial Statements required by this Item are submitted in Part II, Item 8 of this Annual Report.
(2) Financial Statement Schedules
Financial Statement Schedules have been omitted because of the absence of conditions under which they are required or because the required information is included in the Consolidated Financial Statements or the Notes thereto.
(3) Exhibits
See Item 15(b) below.
(b) Exhibits
The Exhibit Index immediately following this Item 15 is filed as part of, and incorporated by reference into, this Annual Report.
(c) Financial Statements required by Regulation S-X which are excluded from this Annual Report by Rule 14(a)-3(b).
Not applicable.
EXHIBIT INDEX
Exhibit Number Description
2.1+
Business Combination Agreement, dated as of December 22, 2021, by and among Quidel Corporation, Ortho Clinical Diagnostics Holdings plc, Coronado Topco, Inc., Orca Holdco, Inc., Laguna Merger Sub, Inc. and Orca Holdco 2, Inc. (incorporated by reference to Annex A to the joint proxy statement/prospectus forming part of the Registration Statement on Form S-4 filed by Coronado Topco, Inc. with the SEC on January 31, 2022)
3.1
Amended and Restated Certificate of Incorporation of QuidelOrtho Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on May 27, 2022)
3.2
Amended and Restated Bylaws of QuidelOrtho Corporation (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K filed on December 13, 2022)
3.3*
Certificate of Change of Registered Agent
4.1
Specimen Stock Certificate (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
4.2*
Description of QuidelOrtho Corporation’s Securities Registered Pursuant to Section 12 of the Exchange Act of 1934
10.1(1)
Summary of Certain Compensation Arrangements for Executive Officers (incorporated by reference to the Registrant’s Form 8-K filed on June 6, 2022)
10.2
Principal Stockholders Agreement, dated as of December 22, 2021, by and among Coronado Topco, Inc., Quidel Corporation, Ortho Clinical Diagnostics Holdings plc and the Initial Carlyle Stockholder (as defined therein) (incorporated by reference to Annex B to the joint proxy statement/prospectus forming part of the Registration Statement on Form S-4 filed by Coronado Topco, Inc. with the SEC on January 31, 2022)
119
Exhibit Number Description
10.3+
Credit Agreement, dated May 27, 2022, by and among QuidelOrtho Corporation, each lender from time to time party thereto, each L/C Issuer (as defined therein), and Bank of America, N.A., as Administrative Agent and Swing Line Lender (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K filed on May 27, 2022)
10.4
Increase Joinder No. 1, dated August 4, 2022, by and among QuidelOrtho Corporation, JPMorgan Chase Bank, N.A., as New Revolving Credit Lender, a Lender and a L/C Issuer, the Guarantors party thereto, and Bank of America, N.A., as the Administrative Agent (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
10.5(1)
QuidelOrtho Corporation Amended and Restated 2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Form 8-K filed on May 27, 2022)
10.6(1)
Form of Restricted Stock Unit Award Grant Notice (incorporated by reference to Exhibit 10.6 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
10.7(1)
Form of Restricted Stock Unit Award Grant Notice (Performance-based) (incorporated by reference to Exhibit 10.7 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
10.8(1)
Form of Restricted Stock Unit Award Grant Notice (Time-based) (incorporated by reference to Exhibit 10.8 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
10.9(1)
Form of Restricted Stock Unit Award Grant Notice (Deferred) (incorporated by reference to Exhibit 10.9 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
10.10(1)
Form of Notice of Grant of Nonqualified Stock Options and Option Agreement (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
10.11(1)
Form of Phantom Stock Unit Award Grant Notice (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 10-Q for the quarter ended July 3, 2022 filed on August 5, 2022)
10.12(1)
QuidelOrtho Corporation Amended and Restated 1983 Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Form 8-K filed on May 27, 2022)
10.13(1)
Employment Agreement, dated January 16, 2009, between Quidel Corporation and Douglas C. Bryant (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Quidel Corporation with the SEC on January 20, 2009)
10.14(1)
Employment Offer Letter, dated June 5, 2008, between Quidel Corporation and Robert J. Bujarski (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Quidel Corporation with the SEC on June 6, 2008)
10.15(1)
Employment Offer Letter, dated April 24, 2014, between Quidel Corporation and Werner Kroll (incorporated by reference to Exhibit 10.1 to the Form 10-Q for the quarter ended June 30, 2014 filed by Quidel Corporation with the SEC on July 24, 2014)
10.16(1)
Enhanced Minimum Severance Letter, dated June 30, 2020, between Ortho-Clinical Diagnostics, Inc. and Joseph M. Busky (incorporated by reference to Exhibit 10.19 to the Form S-1 filed by Ortho Clinical Diagnostics Holdings plc with the SEC on January 4, 2021)
10.17(1)
Severance Letter Agreement with Michael Iskra, dated May 2021 (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Ortho Clinical Diagnostics Holdings plc with the SEC on May 25, 2021)
10.18(1)
Form of Retention/Loyalty Bonus Opportunity Agreement (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Ortho Clinical Diagnostics Holdings plc with the SEC on January 18, 2022)
10.19(1)
Amended and Restated Special Advisor Agreement, dated April 3, 2022, between Christopher Smith and QuidelOrtho Corporation (incorporated by reference to Exhibit 99.4 to the Form 8-K filed by Ortho Clinical Diagnostics Holdings plc with the SEC on April 7, 2022)
10.20(1)
Letter Agreement, dated April 3, 2022, between Ortho Clinical Diagnostics Holdings plc and Christopher Smith (incorporated by reference to Exhibit 99.3 to the Form 8-K filed by Ortho Clinical Diagnostics Holdings plc with the SEC on April 7, 2022)
10.21(1)
Form of Integration and Retention Bonus Letter (incorporated by reference to Exhibit 10.4 to the Form 8-K filed by Quidel Corporation with the SEC on February 4, 2022)
10.22(1)
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.10 to the Registrant’s Form 8-K filed on May 27, 2022)
120
Exhibit Number Description
10.23(1)
Form of Change in Control Agreement (incorporated by reference to Exhibit 10.11 to the Registrant’s Form 8-K filed on May 27, 2022)
10.24(1)
Individual Retirement Program for Werner Kroll (incorporated by reference to Exhibit 10.3 to the Form 8-K filed by Quidel Corporation with the SEC on February 4, 2020)
10.25
Summers Ridge Lease (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Quidel Corporation with the SEC on January 9, 2018)
10.26
Master Agreement, dated as of July 24, 2021, by and among Quidel Corporation, Quidel Cardiovascular, Inc., and Beckman Coulter, Inc. (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Quidel Corporation on July 26, 2021)
21.1*
Subsidiaries of QuidelOrtho Corporation
23.1*
Consent of Independent Registered Public Accounting Firm
31.1*
Certification by Principal Executive Officer of QuidelOrtho Corporation pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
Certification by Principal Financial Officer of QuidelOrtho Corporation pursuant to Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**
Certifications by Principal Executive Officer and Principal Financial Officer of QuidelOrtho Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101* The following financial statements from the Registrant’s Annual Report on Form 10-K for the year ended January 1, 2023, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104 The cover page from the Registrant’s Annual Report on Form 10-K for the year ended January 1, 2023, formatted in Inline XBRL (included as Exhibit 101).
* Filed herewith.
** Furnished herewith.
(1) Indicates a management plan or compensatory plan or arrangement.
+ Certain identified information has been omitted by means of marking such information with asterisks in reliance on Items 601(b)(2)(ii) and 601(b)(10)(iv) of Regulation S-K, as applicable, because it is both (i) not material and (ii) the type that the registrant treats as private or confidential.
Item 16. Form 10-K Summary
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Q UIDELORTHO C ORPORATION
By /s/ D OUGLAS C. B RYANT
Date: February 23, 2023
Douglas C. Bryant
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ D OUGLAS C. B RYANT
Director, President and Chief Executive Officer
(Principal Executive Officer) February 23, 2023
Douglas C. Bryant
/s/ J OSEPH M. B USKY
Chief Financial Officer
(Principal Financial and Accounting Officer) February 23, 2023
Joseph M. Busky
/s/ K ENNETH F. B UECHLER
Chairman of the Board February 23, 2023
Kenneth F. Buechler
/s/ E VELYN S. D ILSAVER
Director February 23, 2023
Evelyn S. Dilsaver
/s/ E DWARD L. M ICHAEL
Director February 23, 2023
Edward L. Michael
/s/ M ARY L AKE P OLAN
Director February 23, 2023
Mary Lake Polan
/s/ A NN D. R HOADS
Director February 23, 2023
Ann D. Rhoads
/s/ R OBERT R. S CHMIDT
Director February 23, 2023
Robert R. Schmidt
/s/ C HRISTOPHER M. S MITH
Director February 23, 2023
Christopher M. Smith
/s/ M ATTHEW W. S TROBECK
Director February 23, 2023
Matthew W. Strobeck
/s/ K ENNETH J. W IDDER
Director February 23, 2023
Kenneth J. Widder
/s/ J OSEPH D. W ILKINS J R .
Director February 23, 2023
Joseph D. Wilkins Jr.
/s/ S TEPHEN H. W ISE
Director February 23, 2023
Stephen H. Wise
122