QuidelOrtho Corp 10-Q

ITEM 1. Financial Statements QUIDELORTHO CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions, except par value) March 30, 2025 December 29, 2024 ASSETS Current assets: Cash and cash equivalents $ 127.1 $ 98.3 Accounts receivable, net 286.0 282.4 Inventories 563.2 533.7 Prepaid expenses and other current assets 239.8 262.4 Assets held for sale 42.1 42.1 Total current assets 1,258.2 1,218.9 Property, plant and equipment, less accumulated depreciation and amortization of $ 784.7 and $ 726.2 at March 30, 2025 and December 29, 2024, respectively 1,399.4 1,380.2 Right-of-use assets 165.0 168.7 Goodwill 670.9 649.5 Intangible assets, less accumulated amortization of $ 767.1 and $ 718.1 at March 30, 2025 and December 29, 2024, respectively 2,697.9 2,735.6 Other assets 270.2 270.7 Total assets $ 6,461.6 $ 6,423.6 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 230.9 $ 246.0 Accrued payroll and related expenses 135.3 116.9 Income tax payable 5.8 5.4 Current portion of borrowings 393.8 341.8 Other current liabilities 281.4 288.7 Total current liabilities 1,047.2 998.8 Operating lease liabilities 163.3 167.2 Long-term borrowings 2,105.9 2,141.3 Deferred tax liabilities 78.2 76.5 Other liabilities 69.8 55.3 Total liabilities 3,464.4 3,439.1 Commitments and contingencies (Note 9) Stockholders’ equity: Preferred stock, $ 0.001 par value per share; 5.0 shares authorized; none issued or outstanding at March 30, 2025 and December 29, 2024 — — Common stock, $ 0.001 par value per share; 126.2 shares authorized; 67.5 and 67.3 shares issued and outstanding at March 30, 2025 and December 29, 2024, respectively 0.1 0.1 Additional paid-in capital 2,897.8 2,884.8 Accumulated other comprehensive loss ( 23.8 ) ( 36.2 ) Retained earnings 123.1 135.8 Total stockholders’ equity 2,997.2 2,984.5 Total liabilities and stockholders’ equity $ 6,461.6 $ 6,423.6 See accompanying notes. 3 QUIDELORTHO CORPORATION CONSOLIDATED STATEMENTS OF LOSS (Unaudited) (In millions, except per share data) Three Months Ended March 30, 2025 March 31, 2024 Total revenues $ 692.8 $ 711.0 Cost of sales, excluding amortization of intangibles 349.5 378.9 Selling, marketing and administrative 187.0 204.7 Research and development 53.2 59.2 Amortization of intangible assets 48.0 51.7 Integration related costs 16.1 22.6 Goodwill impairment charge — 1,743.9 Other operating expenses 6.4 8.0 Operating income (loss) 32.6 ( 1,758.0 ) Interest expense, net 40.0 39.0 Other expense, net 1.4 1.9 Loss before income taxes ( 8.8 ) ( 1,798.9 ) Provision for (benefit from) income taxes 3.9 ( 92.9 ) Net loss $ ( 12.7 ) $ ( 1,706.0 ) Basic loss per share $ ( 0.19 ) $ ( 25.50 ) Diluted loss per share $ ( 0.19 ) $ ( 25.50 ) Weighted-average shares outstanding - basic 67.5 66.9 Weighted-average shares outstanding - diluted 67.5 66.9 See accompanying notes. 4 QUIDELORTHO CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (In millions) Three Months Ended March 30, 2025 March 31, 2024 Net loss $ ( 12.7 ) $ ( 1,706.0 ) Other comprehensive income (loss) Changes in cumulative translation adjustment, net of tax 32.3 ( 20.8 ) Changes in unrealized (losses) gains from cash flow hedges, net of tax: Net unrealized (losses) gains on derivative instruments ( 16.2 ) 30.5 Reclassification of net realized gains on derivative instruments included in net income ( 3.7 ) ( 5.9 ) Total change in unrealized (losses) gains from cash flow hedges, net of tax ( 19.9 ) 24.6 Comprehensive loss $ ( 0.3 ) $ ( 1,702.2 ) See accompanying notes. 5 QUIDELORTHO CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Unaudited) (In millions) Common Stock Additional paid-in capital Accumulated other comprehensive (loss) income Retained earnings Total stockholders’ equity Shares Par Balance at December 29, 2024 67.3 $ 0.1 $ 2,884.8 $ ( 36.2 ) $ 135.8 $ 2,984.5 Issuance of common stock under equity compensation plans 0.2 — 3.0 — — 3.0 Stock-based compensation expense — — 11.4 — — 11.4 Tax withholdings related to vesting of stock-based awards — — ( 1.4 ) — — ( 1.4 ) Other comprehensive income, net of tax — — — 12.4 — 12.4 Net loss — — — — ( 12.7 ) ( 12.7 ) Balance at March 30, 2025 67.5 $ 0.1 $ 2,897.8 $ ( 23.8 ) $ 123.1 $ 2,997.2 Common Stock Additional paid-in capital Accumulated other comprehensive (loss) income Retained earnings Total stockholders’ equity Shares Par Balance at December 31, 2023 66.7 $ 0.1 $ 2,848.0 $ ( 30.0 ) $ 2,187.8 $ 5,005.9 Issuance of common stock under equity compensation plans 0.2 — 0.8 — — 0.8 Stock-based compensation expense — — 9.0 — — 9.0 Tax withholdings related to vesting of stock-based awards ( 0.1 ) — ( 5.8 ) — — ( 5.8 ) Other comprehensive income, net of tax — — — 3.8 — 3.8 Net loss — — — — ( 1,706.0 ) ( 1,706.0 ) Balance at March 31, 2024 66.8 $ 0.1 $ 2,852.0 $ ( 26.2 ) $ 481.8 $ 3,307.7 See accompanying notes. 6 QUIDELORTHO CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Three Months Ended March 30, 2025 March 31, 2024 OPERATING ACTIVITIES Net loss $ ( 12.7 ) $ ( 1,706.0 ) Adjustments to reconcile net loss to net cash provided by (used for) operating activities: Depreciation and amortization 107.1 114.9 Goodwill impairment charge — 1,743.9 Stock-based compensation expense 11.6 9.0 Change in deferred tax assets and liabilities ( 0.1 ) ( 73.9 ) Other non-cash, net 5.1 ( 2.3 ) Changes in assets and liabilities: Accounts receivable 2.2 26.4 Inventories ( 53.1 ) ( 37.7 ) Prepaid expenses and other current and non-current assets 3.1 ( 0.8 ) Accounts payable ( 1.3 ) ( 10.7 ) Accrued payroll and related expenses 17.0 25.7 Income taxes payable 3.6 ( 27.7 ) Other current and non-current liabilities ( 16.9 ) ( 61.5 ) Net cash provided by (used for) operating activities 65.6 ( 0.7 ) INVESTING ACTIVITIES Acquisitions of property, plant, equipment, investments and intangibles ( 56.2 ) ( 66.1 ) Purchases of marketable securities — ( 7.2 ) Proceeds from sale of marketable securities — 63.1 Other payments — ( 10.0 ) Net cash used for investing activities ( 56.2 ) ( 20.2 ) FINANCING ACTIVITIES Proceeds from issuance of common stock 3.0 0.5 Short-term borrowings, net — ( 1.3 ) Revolving credit facility, net 52.0 40.0 Payments on long-term borrowings ( 36.0 ) ( 51.9 ) Payments of tax withholdings related to vesting of stock-based awards ( 1.4 ) ( 5.8 ) Net cash provided by (used for) financing activities 17.6 ( 18.5 ) Effect of exchange rates on cash 1.7 ( 1.1 ) Net increase (decrease) in cash, cash equivalents and restricted cash 28.7 ( 40.5 ) Cash, cash equivalents and restricted cash at beginning of period 98.5 119.5 Cash, cash equivalents and restricted cash at end of period $ 127.2 $ 79.0 SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Purchase of property, equipment and intangibles by incurring current liabilities $ 10.1 $ 7.6 Transfer of instrument inventories to fixed assets $ 29.9 $ 37.8 Reduction of accrued payroll and related expenses upon issuance of restricted share units $ — $ 0.3 See accompanying notes. 7 QuidelOrtho Corporation Notes to Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited Consolidated Financial Statements of QuidelOrtho Corporation and its subsidiaries (the “Company” or “QuidelOrtho”) have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring accruals) have been included. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report for definitions of terms used throughout this Quarterly Report. The information at March 30, 2025, and for the three months ended March 30, 2025 and March 31, 2024, is unaudited. For further information, refer to the Company’s Consolidated Financial Statements and notes thereto for fiscal year ended December 29, 2024 included in QuidelOrtho’s Annual Report. Operating results for any quarter are historically seasonal in nature and are not necessarily indicative of the results expected for the full year. The Company follows the concept of a fiscal year that ends on the Sunday nearest to the end of the month of December, and fiscal quarters that end on the Sunday nearest to the end of the months of March, June and September. For 2025 and 2024, the Company’s fiscal year will end or has ended on December 28, 2025 (“fiscal year ended 2025”) and December 29, 2024 (“fiscal year ended 2024”), respectively. For fiscal years ended 2025 and 2024, the Company’s first quarter ended on March 30, 2025 and March 31, 2024, respectively. The three months ended March 30, 2025 and March 31, 2024 each included 13 weeks. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the related disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements There have been no accounting pronouncements issued or adopted during the three months ended March 30, 2025 that are expected to have a material impact on the Company’s Consolidated Financial Statements. Note 2. Computation of Earnings Per Share The following table presents the calculation of the weighted-average shares used in computing basic and diluted EPS in the respective periods: Three Months Ended (In millions) March 30, 2025 March 31, 2024 Basic weighted-average shares of common stock outstanding 67.5 66.9 Dilutive potential shares issuable from stock options and RSUs (1) — — Diluted weighted-average shares of common stock outstanding 67.5 66.9 (1) In the three months ended March 30, 2025 and March 31, 2024, all potential shares of common stock issuable for stock options and RSUs were excluded from the dilutive calculations above because the effect of including them would have been anti-dilutive. The dilutive effect of potential shares of common stock issuable for stock options and RSUs on the weighted-average number of shares of common stock outstanding would have been as follows: Three Months Ended (In millions) March 30, 2025 March 31, 2024 Basic weighted-average shares of common stock outstanding 67.5 66.9 Dilutive potential shares issuable from stock options and RSUs 0.4 0.4 Diluted weighted-average shares of common stock outstanding 67.9 67.3 Stock options and RSUs where the combined exercise price and unrecognized stock-based compensation was greater than the average market price for the Company’s common stock were not included in the computations of diluted weighted-average 8 shares because the effect would have been anti-dilutive under the treasury stock method. These stock options and RSUs represented 1.5 million and 1.9 million shares of common stock for the three months ended March 30, 2025 and March 31, 2024, respectively. Note 3. Revenue Contract Balances Timing of revenue recognition may differ from timing of invoicing to customers. The Company records an asset when revenue is recognized prior to invoicing a customer (a “contract asset”). Contract assets are included within Prepaid expenses and other current assets in the Company’s Consolidated Balance Sheets and are transferred to accounts receivable when the right to payment becomes unconditional. The contract asset balance consisted of contractual arrangements with certain customers under which the Company invoices the customers based on reportable results generated by its reagents; however, control of the goods transfers to the customers upon shipment or delivery of the products, as determined under the terms of the contract. Using the expected value method, the Company estimates the number of reagents that will generate a reportable result. The Company records the revenue upon shipment and an associated contract asset, and relieves the contract asset upon completion of the invoicing. The balance of the contract asset related to these arrangements was $ 32.9 million and $ 32.5 million as of March 30, 2025 and December 29, 2024, respectively. The Company reviews contract assets for expected credit losses resulting from the collectability of customer accounts. Expected losses are established based on historical losses, customer mix and credit policies, current economic conditions in customers’ country or industry, and expectations associated with reasonable and supportable forecasts. No credit losses related to contract assets were recognized during the three months ended March 30, 2025 and March 31, 2024. The Company recognizes a contract liability when a customer pays an invoice prior to the Company transferring control of the goods or services (“contract liabilities”). The Company’s contract liabilities consist of deferred revenue primarily related to customer service contracts. The Company classifies deferred revenue as current or non-current based on the timing of the transfer of control or performance of the service. The balance of the Company’s current deferred revenue was $ 34.4 million and $ 33.5 million as of March 30, 2025 and December 29, 2024, respectively, and was included in Other current liabilities in the Consolidated Balance Sheets. The Company has one arrangement with a customer where the revenue is expected to be recognized beyond one year. The balance of the deferred revenue included in long-term liabilities was $ 17.2 million and $ 17.3 million as of March 30, 2025 and December 29, 2024, respectively, and was included in Other liabilities in the Consolidated Balance Sheets. The amount of deferred revenue as of December 29, 2024 that was recorded in Total revenues during the three months ended March 30, 2025 was $ 16.8 million. Joint Business with Grifols The Company has an ongoing Joint Business between Ortho and Grifols, under which Ortho and Grifols agreed to pursue a collaboration relating to Ortho’s Hepatitis and HIV diagnostics business. The governance of the Joint Business is shared through a supervisory board made up of equal representation by Ortho and Grifols, which is responsible for all significant decisions relating to the Joint Business that are not exclusively assigned to either Ortho or Grifols, as defined in the Joint Business agreement. The Company’s portion of the pre-tax net profit shared under the Joint Business was $ 15.9 million and $ 8.1 million during the three months ended March 30, 2025 and March 31, 2024, respectively. These amounts included the Company’s portion of the pre-tax net profit of $ 2.6 million and $ 5.0 million during the three months ended March 30, 2025 and March 31, 2024, respectively, on sales transactions with third parties where the Company is the principal. The Company recognized revenues, cost of sales, excluding amortization of intangibles, and operating expenses, on a gross basis on these sales transactions in their respective lines in the Consolidated Statements of Loss. The Company’s portion of the pre-tax net profit also included revenue from collaboration and royalty agreements of $ 13.3 million and $ 3.1 million during the three months ended March 30, 2025 and March 31, 2024, respectively, which is presented on a net basis within Total revenues. 9 Disaggregation of Revenue The following table summarizes Total revenues by business unit: Three Months Ended (In millions) March 30, 2025 March 31, 2024 Labs $ 373.1 $ 356.9 Immunohematology (1) 128.5 127.0 Donor Screening (1) 12.8 33.3 Point of Care 170.8 186.6 Molecular Diagnostics 7.6 7.2 Total revenues $ 692.8 $ 711.0 (1) For presentation purposes, as a result of the wind-down of the U.S. donor screening portfolio, the previously reported Transfusion Medicine business unit is shown in its two product categories: Immunohematology and Donor Screening. Prior periods have been revised to align with the current period presentation. Concentration of Revenue and Credit Risk For the three months ended March 30, 2025 and March 31, 2024, one customer represented 13 % and 11 % of Total revenues, respectively. Revenues related to the Company’s respiratory products accounted for 17 % and 19 % for the three months ended March 30, 2025 and March 31, 2024, respectively. As of March 30, 2025, no customers had a balance due in excess of 10% of Accounts receivable, net. As of December 29, 2024, customers with a balance due in excess of 10% of Accounts receivable, net totaled $ 33.7 million. Note 4. Segment and Geographic Information In the fourth quarter of 2024, the Company revised the internal allocation of certain global costs primarily between the North America segment and Corporate to better align costs that impact the Company as a whole. Prior periods have been revised to align with the current period presentation. The following table presents the results of operations of the Company’s reportable segments for the three months ended March 30, 2025 and March 31, 2024: Three Months Ended March 30, 2025 (In millions) North America EMEA China Other Total Total revenues $ 406.7 $ 88.9 $ 75.0 $ 122.2 $ 692.8 Less (1) : Cost of sales, excluding amortization of intangibles 128.4 47.3 34.2 70.0 279.9 Selling, marketing and administrative 43.6 22.9 10.6 22.0 99.1 Research and development 0.4 0.6 0.9 0.8 2.7 Other expense, net — 1.6 — ( 0.2 ) 1.4 Total segment Adjusted EBITDA $ 234.3 $ 16.5 $ 29.3 $ 29.6 309.7 Reconciliation of segment Adjusted EBITDA Corporate (2) ( 149.9 ) Depreciation and amortization ( 107.1 ) Interest expense, net ( 40.0 ) Integration related costs ( 16.1 ) Amortization of deferred cloud computing implementation costs ( 4.3 ) EU medical device regulation transition costs (3) ( 0.2 ) Other adjustments ( 0.9 ) Loss before income taxes $ ( 8.8 ) 10 Three Months Ended March 31, 2024 (In millions) North America EMEA China Other Total Total revenues $ 433.9 $ 84.8 $ 76.1 $ 116.2 $ 711.0 Less (1) : Cost of sales, excluding amortization of intangibles 147.7 44.4 38.5 59.9 290.5 Selling, marketing and administrative 49.1 27.7 10.4 23.9 111.1 Research and development 0.4 0.6 1.1 0.8 2.9 Other expense, net 0.1 0.5 — 0.1 0.7 Total segment Adjusted EBITDA $ 236.6 $ 11.6 $ 26.1 $ 31.5 305.8 Reconciliation of segment Adjusted EBITDA Corporate (2) ( 173.8 ) Depreciation and amortization ( 114.9 ) Interest expense, net ( 39.0 ) Integration related costs ( 22.6 ) Goodwill impairment charge ( 1,743.9 ) Employee compensation charges ( 5.6 ) Amortization of deferred cloud computing implementation costs ( 2.9 ) EU medical device regulation transition costs (3) ( 0.6 ) Other adjustments ( 1.4 ) Loss before income taxes $ ( 1,798.9 ) (1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. (2) Primarily consists of costs related to executive and staff functions, including certain finance, human resources, manufacturing and IT functions, which benefit the Company as a whole. These costs are primarily related to the general management of these functions on a corporate level and the design and development of programs, policies and procedures that are then implemented in the individual segments, with each segment bearing its own cost of implementation. The Company’s corporate function also includes debt and stock-based compensation associated with all employee stock-based awards. (3) Represents incremental consulting costs and R&D manufacturing site costs to align compliance of the Company’s existing, on-market products that were previously registered under the European In Vitro Diagnostics Directive regulatory framework with the requirements under the EU’s In Vitro Diagnostic Regulation, which generally apply from May 2022 onwards. The CODM reviews the segment adjusted EBITDA results against the forecast to assess segment performance and determine how to allocate resources. The CODM does not review and is not provided capital expenditures, total depreciation and amortization or assets by segment, and therefore this information has been excluded as it does not comprise part of management’s key performance metrics. Note 5. Income Taxes The Company calculates its interim income tax provision in accordance with ASC 270, Interim Reporting , and ASC 740, Accounting for Income Taxes . At the end of each interim period, the Company estimates its annual effective tax rate and applies that rate to its ordinary quarterly earnings to calculate the tax related to ordinary income. The tax effects for other items that are excluded from ordinary income are discretely calculated and recognized in the period in which they occur. For the three months ended March 30, 2025, the Company recognized a provision for income taxes of $ 3.9 million in relation to loss before income taxes of $ 8.8 million, resulting in a negative effective tax rate of 44.3 %. For the three months ended March 31, 2024, the Company recognized an income tax benefit of $ 92.9 million in relation to loss before income taxes of $ 1,798.9 million, resulting in an effective tax rate of 5.2 %. For the three months ended March 30, 2025, the effective tax rate differed from the U.S. federal statutory rate primarily due to the impacts of operating losses in certain subsidiaries not being benefited due to the establishment of valuation allowances. For the three months ended March 31, 2024, the effective tax rate differed from the U.S. federal statutory rate primarily due to goodwill impairment charges that are nondeductible for tax purposes. 11 The balance of unrecognized tax benefits at March 30, 2025, not including interest and penalties, was $ 184.3 million, of which $ 17.2 million could affect the effective income tax rate in future periods, if recognized. The Company also recognizes interest and penalties related to unrecognized tax benefits in income tax expense. At March 30, 2025, the Company had approximately $ 1.6 million of interest and penalties accrued related to unrecognized tax benefits. The Company estimates that within the next 12 months, its uncertain tax positions, excluding interest, should decrease by $ 5.1 million. The Company is subject to periodic audits by domestic and foreign tax authorities. Due to the carryforward of unutilized credits, the Company’s federal tax years from 2014 and onwards are subject to examination by the U.S. authorities. The Company’s state and foreign tax years for 2001 and onwards are subject to examination by applicable tax authorities. The Company believes that it has appropriate support for the income tax positions taken on its tax returns and that its accruals for tax liabilities are adequate for all open years based on an assessment of many factors, including past experience and interpretations of tax laws applied to the facts of each matter. Note 6. Balance Sheet Account Details Cash, Cash Equivalents and Restricted Cash (In millions) March 30, 2025 December 29, 2024 Cash and cash equivalents $ 127.1 $ 98.3 Restricted cash included in Other assets 0.1 0.2 Cash, cash equivalents and restricted cash $ 127.2 $ 98.5 Accounts Receivable, Net Accounts receivables primarily consist of trade accounts receivables with maturities of one year or less and are presented net of reserves: (In millions) March 30, 2025 December 29, 2024 Accounts receivable $ 383.7 $ 382.0 Allowance for contract rebates and discounts ( 83.0 ) ( 85.3 ) Allowance for doubtful accounts ( 14.7 ) ( 14.3 ) Total accounts receivable, net $ 286.0 $ 282.4 Inventories Inventories are stated at the lower of cost (first-in, first-out) or net realizable value. Inventories consisted of the following: (In millions) March 30, 2025 December 29, 2024 Raw materials $ 219.5 $ 211.8 Work-in-process (materials, labor and overhead) 92.3 90.6 Finished goods (materials, labor and overhead) 312.3 291.6 Total inventories $ 624.1 $ 594.0 Inventories $ 563.2 $ 533.7 Other assets (1) 60.9 60.3 Total inventories $ 624.1 $ 594.0 (1) Other assets includes inventory expected to remain on hand beyond one year. 12 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following: (In millions) March 30, 2025 December 29, 2024 Income taxes and other tax receivables $ 100.3 $ 112.1 Prepaid expenses 76.3 77.3 Contract assets 32.9 32.5 Other receivables 17.8 24.3 Derivatives 11.2 15.1 Other 1.3 1.1 Total prepaid expenses and other current assets $ 239.8 $ 262.4 Goodwill Changes in goodwill were as follows: (In millions) North America EMEA China Other Total Balance at December 29, 2024 $ — $ 566.0 $ 66.6 $ 16.9 $ 649.5 Foreign currency translation — 20.6 0.3 0.5 21.4 Balance at March 30, 2025 $ — $ 586.6 $ 66.9 $ 17.4 $ 670.9 The gross goodwill balance was $ 2,493.5 million and $ 2,472.1 million as of March 30, 2025 and December 29, 2024, respectively. Accumulated goodwill impairment losses were $ 1,822.6 million as of March 30, 2025 and December 29, 2024. Other Current Liabilities Other current liabilities consisted of the following: (In millions) March 30, 2025 December 29, 2024 Accrued commissions, rebates and returns $ 72.6 $ 67.4 Deferred revenue 34.4 33.5 Operating lease liabilities 31.2 31.1 Professional services 22.6 21.4 Accrued other taxes payable 21.6 20.9 Accrued interest 13.5 39.0 Derivatives 6.8 4.0 Other 78.7 71.4 Total other current liabilities $ 281.4 $ 288.7 Note 7. Borrowings The components of borrowings were as follows: (In millions) March 30, 2025 December 29, 2024 Term Loan $ 2,248.3 $ 2,282.7 Revolving Credit Facility 250.0 198.0 Financing lease obligation 6.3 7.9 Unamortized deferred financing costs ( 4.9 ) ( 5.5 ) Total borrowings 2,499.7 2,483.1 Less: current portion ( 393.8 ) ( 341.8 ) Long-term borrowings $ 2,105.9 $ 2,141.3 The Credit Agreement consists of a $ 2,750.0 million Term Loan and an $ 800.0 million Revolving Credit Facility. Availability under the Revolving Credit Facility, after deducting letters of credit of $ 12.7 million and $ 250.0 million borrowings 13 outstanding, was $ 537.3 million as of March 30, 2025. During the three months ended March 30, 2025, the Company (i) made $ 34.4 million in payments on the Term Loan and (ii) borrowed $ 110 million and made $ 58 million in payments on the Revolving Credit Facility. The Credit Agreement contains affirmative and negative covenants that are customary for credit agreements of this nature. The negative covenants include, among other things, limitations on asset sales, mergers, indebtedness, liens, investments and transactions with affiliates. The Company was in compliance with the financial covenants as of March 30, 2025. The following table provides the detailed amounts within Interest expense, net for the three months ended March 30, 2025 and March 31, 2024: Three Months Ended (In millions) March 30, 2025 March 31, 2024 Term Loan $ 37.0 $ 44.5 Revolving Credit Facility 5.3 1.8 Amortization of deferred financing costs 0.8 0.8 Derivative instruments and other ( 2.5 ) ( 7.2 ) Interest income ( 0.6 ) ( 0.9 ) Interest expense, net $ 40.0 $ 39.0 Note 8. Stock-based Compensation Stock-based compensation expense was as follows: Three Months Ended (In millions) March 30, 2025 March 31, 2024 Cost of sales, excluding amortization of intangibles $ 1.4 $ 1.2 Selling, marketing and administrative 8.2 5.1 Research and development 0.8 1.0 Integration related costs 0.7 1.8 Total stock-based compensation expense $ 11.1 $ 9.1 The table above includes compensation expense related to liability-classified awards, which has been or is expected to be settled in cash. Amounts related to the three months ended March 30, 2025 and March 31, 2024 were not material. Note 9. Commitments and Contingencies On April 12, 2024, a purported stockholder of the Company filed a putative class action complaint under the federal securities laws against the Company and three of its current and former executives. The complaint, which is captioned Bristol County Retirement System v. QuidelOrtho Corporation, et al., Case No. 1:24-cv-02804-JAV (S.D.N.Y.) (the “Bristol County Complaint”), asserts claims for violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder related to statements regarding sales of the Company’s COVID-19 diagnostic tests and the 510(k) submission for its Savanna RVP4 assay. The Bristol County Complaint seeks a judgment determining that the lawsuit can be maintained as a class action and awarding the plaintiff and putative class damages, pre- and post-judgment interest, attorneys’ and experts’ fees, and costs. On December 16, 2024, the court appointed Central States, Southeast and Southwest Areas Health and Welfare Fund and Teamsters Local 710 Pension Fund (“Teamsters Funds”) as lead plaintiffs in the action, and approved their selection of lead counsel. Teamsters Funds filed an amended complaint on February 7, 2025, and added as additional defendants three current and former executives of the Company not previously named in the Bristol County Complaint. On April 4, 2025, defendants filed a motion to dismiss the amended complaint. On April 25, 2024, and June 21, 2024, two purported stockholders of the Company filed separate stockholder derivative complaints, purportedly on behalf of the Company, against the current and certain former members of the Board and three of the Company’s current and former executives. The complaints, which are captioned Matthew Whitfield v. Kenneth F. Buechler, Ph.D., et al., Case No. 1:24-cv-03176-JAV (S.D.N.Y.) (the “Whitfield Complaint”), and Steven Pinkney v. Douglas Bryant, et al., Case No. 1:24-cv-4753-JAV (S.D.N.Y.) (the “Pinkney Complaint”), assert claims for violations of Sections 10(b), 14(a), and 20(a) of the Exchange Act and Rules 10b-5 and 14a-9 promulgated thereunder, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets related to statements regarding sales of the Company’s COVID-19 diagnostic tests and the 510(k) submission for its Savanna 14 RVP4 assay. The Whitfield and Pinkney Complaints seek judgments awarding compensatory and punitive damages against the individual defendants, directing an accounting by the individual defendants, directing the Company and the individual defendants to take actions to improve the Company’s governance and procedures, and awarding the costs and disbursements of the action, including attorneys’ fees, accountants’ and experts’ fees, costs, and expenses. On December 16, 2024, the court consolidated the Whitfield and Pinkney Complaints into a single action and stayed the consolidated derivative action. The Company disputes the allegations of wrongdoing and intends to defend itself vigorously in these matters. The Company is not able to estimate a possible loss or range of loss that may result from these lawsuits or to determine whether such loss, if any, would have a material adverse effect on its business, financial condition, results of operations or liquidity. From time to time, the Company is involved in litigation and other legal proceedings, including matters related to product liability claims, commercial disputes and intellectual property claims, as well as regulatory, employment, and other claims related to its business. The Company accrues for legal claims when, and to the extent that, amounts associated with the claims become probable and are reasonably estimable. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. When determining the estimated loss or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded. Estimates of probable losses resulting from these matters are inherently difficult to predict. The actual costs of resolving legal claims may be substantially higher or lower than the amounts accrued for those claims. For those matters as to which the Company is not able to estimate a possible loss or range of loss, the Company is not able to determine whether the loss will have a material adverse effect on its business, financial condition, results of operations or liquidity. Management believes that all current legal actions, to which the Company is able to estimate a possible loss or range of loss, in the aggregate, are not expected to have a material adverse effect on the Company. However, the resolution of, or increase in any accruals for, one or more matters may have a material adverse effect on the Company’s results of operations and cash flows. Note 10. Fair Value Measurements The following table presents the Company’s hierarchy for its assets and liabilities measured at fair value on a recurring basis as of the following periods: March 30, 2025 December 29, 2024 (In millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets: Derivative assets $ — $ 15.2 $ — $ 15.2 $ — $ 36.6 $ — $ 36.6 Liabilities: Derivative liabilities $ — $ 20.1 $ — $ 20.1 $ — $ 5.4 $ — $ 5.4 There were no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy during the three months ended March 30, 2025 and fiscal year ended 2024. Financial Instruments Not Measured at Fair Value The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,217.4 million at March 30, 2025, compared to the carrying amount, excluding debt issuance costs, of $ 2,248.3 million. The estimated fair value of the Company’s borrowings under the Term Loan was $ 2,254.2 million at December 29, 2024, compared to the carrying amount, excluding debt issuance costs, of $ 2,282.7 million. The estimate of fair value is generally based on the quoted market prices for similar issuances of long-term debt with the same maturities, which is classified as a Level 2 input. Note 11. Derivative Instruments and Hedging Activities The Company selectively uses derivative and non-derivative instruments to manage market risk associated with changes in interest rates and foreign currency exchange rates. The use of derivatives is intended for hedging purposes only, and the Company does not enter into derivative transactions for speculative purposes. Credit risk represents the Company’s gross exposure to potential accounting loss on derivative instruments that are outstanding or unsettled if all counterparties failed to perform according to the terms of the contract. The Company generally enters into master netting arrangements that reduce credit risk by permitting net settlement of transactions with the same counterparty. The Company does not have any derivative instruments with credit-risk related contingent features that would require it to post collateral. 15 Interest Rate Hedging Instruments The Company’s interest rate risk relates primarily to interest rate exposures on variable rate debt, including the Revolving Credit Facility and Term Loan. Refer to “—Note 7. Borrowings” for additional information on the currently outstanding components of the Revolving Credit Facility and Term Loan. The Company entered into interest rate swap agreements to hedge the related risk of the variability to the Company’s cash flows due to the rates specified for these credit facilities. The Company designates its interest rate swaps as cash flow hedges. The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Interest expense, net in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated. Pre-tax unrealized gain of $ 2.7 million as of March 30, 2025 is expected to be reclassified from OCI to earnings in the next 12 months. The following table summarizes the Company’s interest rate derivative agreements as of March 30, 2025, all of which were interest rate swaps: Notional Amount (In millions) Description Hedge Designation Effective Date Expiration Date $ 550.0 Pay 3.765 % fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 200.0 Pay 3.7725 % fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 300.0 Pay 3.7675 % fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 400.0 Pay 3.7575 % fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 $ 350.0 Pay 3.7725 % fixed, receive floating rate (1-month USD-SOFR) Designated cash flow hedge December 30, 2022 May 27, 2027 Currency Hedging Instruments The Company has currency risk exposures relating primarily to foreign currency denominated monetary assets and liabilities and forecasted foreign currency denominated intercompany and third-party transactions. The Company uses foreign currency forward contracts and may use option contracts and cross currency swaps to manage its currency risk exposures. The Company’s foreign currency forward contracts are denominated primarily in Australian Dollar, Brazilian Real, British Pound, Canadian Dollar, Chilean Peso, Chinese Yuan/Renminbi, Colombian Peso, Czech Koruna, Danish Krone, Euro, Indian Rupee, Japanese Yen, Mexican Peso, Philippine Peso, Singapore Dollar, South Korean Won, Swedish Krona, Swiss Franc and Thai Baht. The Company designates certain foreign currency forward contracts as cash flow hedges. The Company records gains and losses due to changes in fair value of the derivatives within OCI and reclassifies these amounts to Total revenues and Cost of sales, excluding amortization of intangibles in the same period or periods for which the underlying hedged transaction affects earnings. In the event the Company determines the hedged transaction is no longer probable to occur or concludes the hedge relationship is no longer effective, the hedge is prospectively de-designated. Pre-tax unrealized gain of $ 4.4 million as of March 30, 2025 is expected to be reclassified from OCI to earnings in the next 12 months. The Company also enters into foreign currency forward contracts that are not part of designated hedging relationships and which are intended to mitigate exchange rate risk of monetary assets and liabilities and related forecasted transactions. The Company records these non-designated derivatives at mark-to-market with gains and losses recognized in earnings within Other expense, net. The following table provides details of the currency hedging instruments outstanding as of March 30, 2025: Description Notional Amount (In millions) Hedge Designation Foreign currency forward contracts $ 493.0 Cash Flow Hedge Foreign currency forward contracts $ 788.2 Non-designated 16 The following table summarizes pre-tax gains and losses from designated derivative and non-derivative instruments within AOCI for the three months ended March 30, 2025 and March 31, 2024: Designated Hedging Instruments (In millions) Amount of Loss (Gain) Recognized in OCI on Hedges Location of Amounts Reclassified from AOCI into Income Amount of (Gain) Loss Reclassified from AOCI into Income Three Months Ended March 30, 2025 Foreign currency forward contracts (sales) $ 2.6 Total revenues $ ( 1.1 ) Foreign currency forward contracts (purchases) $ 0.3 Cost of sales, excluding amortization of intangibles $ — Interest rate derivatives $ 13.5 Interest expense, net $ ( 2.6 ) Three Months Ended March 31, 2024 Foreign currency forward contracts (sales) $ ( 2.8 ) Total revenues $ 1.3 Foreign currency forward contracts (purchases) $ 0.8 Cost of sales, excluding amortization of intangibles $ — Interest rate derivatives $ ( 35.0 ) Interest expense, net $ ( 7.2 ) 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 exchange contracts are designated as hedges of the net investment in foreign operations. The unrealized gains or losses on these contracts are recorded in foreign currency translation adjustments within OCI, and remain in AOCI until either the sale or complete or substantially complete liquidation of the subsidiary. 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. The effect of the Company’s net investment hedges on OCI and the Consolidated Statements of Loss are shown below: Net Investment Hedging Relationships (In millions) Amount of Pre-tax Loss (Gain) Recognized in OCI Amount of Pre-tax (Gain) Loss Recognized in Other Expense, Net for Amounts Excluded from Effectiveness Testing Three Months Ended March 30, 2025 Foreign exchange contracts $ 12.3 $ ( 3.1 ) Three Months Ended March 31, 2024 Foreign exchange contracts $ ( 11.0 ) $ ( 2.0 ) Fair value losses on foreign currency forward contracts, as determined using Level 2 inputs, that do not qualify for hedge accounting treatment are recorded in Other expense, net and were $ 1.2 million for the three months ended March 30, 2025. Fair value gains and losses on foreign currency forward contracts that do not qualify for hedge accounting treatment were not material for the three months ended March 31, 2024. 17 The following table summarizes the fair value of designated and non-designated hedging instruments recognized within the Consolidated Balance Sheets as of March 30, 2025 and December 29, 2024: (In millions) March 30, 2025 December 29, 2024 Designated cash flow hedges Interest rate derivatives: Prepaid expenses and other current assets $ 0.9 $ 1.3 Other assets — 12.4 Other liabilities 3.7 — Foreign currency forward contracts: Prepaid expenses and other current assets 6.0 11.0 Other assets 4.0 9.1 Other current liabilities 2.2 3.3 Other liabilities 9.6 1.4 Non-designated hedging instruments Foreign currency forward contracts: Prepaid expenses and other current assets 4.3 2.8 Other current liabilities 4.6 0.7 Note 12. Accumulated Other Comprehensive Loss The following table summarizes the changes in AOCI by component: Three Months Ended March 30, 2025 (In millions) Foreign Currency Translation Adjustments Pension and Other Post- Employment Benefits Cash Flow Hedges Accumulated Other Comprehensive (Loss) Income Balance at December 29, 2024 $ ( 57.3 ) $ 1.5 $ 19.6 $ ( 36.2 ) Current period deferrals (1) 35.4 — ( 16.2 ) 19.2 Amounts reclassified to Net loss ( 3.1 ) — ( 3.7 ) ( 6.8 ) Net change 32.3 — ( 19.9 ) 12.4 Balance at March 30, 2025 $ ( 25.0 ) $ 1.5 $ ( 0.3 ) $ ( 23.8 ) Three Months Ended March 31, 2024 (In millions) Foreign Currency Translation Adjustments Pension and Other Post- employment Benefits Cash Flow Hedges Accumulated Other Comprehensive (Loss) Income Balance at December 31, 2023 $ ( 18.9 ) $ ( 1.3 ) $ ( 9.8 ) $ ( 30.0 ) Current period deferrals (2) ( 18.8 ) — 30.5 11.7 Amounts reclassified to Net loss ( 2.0 ) — ( 5.9 ) ( 7.9 ) Net change ( 20.8 ) — 24.6 3.8 Balance at March 31, 2024 $ ( 39.7 ) $ ( 1.3 ) $ 14.8 $ ( 26.2 ) (1) Includes tax impact of (i) $ 0.2 million related to cash flow hedges for the three months ended March 30, 2025. (2) Includes tax impact of (i) $ 6.5 million related to cash flow hedges for the three months ended March 31, 2024, and (ii) $ 2.0 million related to foreign currency translation adjustments for the three months ended March 31, 2024. 18