Quidel

 
Asset Management, Companies and Industries November 12, 2020

Quidel

Quidel (tkr: QDEL) is a relatively small, U.S.-based company that aims to make healthcare more efficient by focusing on point-of-care (POC) diagnostic testing. POC testing is done right on the spot, as opposed to obtaining samples to be sent to a lab elsewhere. Quidel is the market leader in POC infectious disease testing using its installed base of 42,000 Sofia-branded analyzers. Quidel was the first company to have a SARSCoV-2 antigen test approved under the FDA’s Emergency Use Authorization, which drove the stock price to over $300 per share. On August 30, when Abbott announced that its rapid antigen test had been approved, Quidel’s stock price fell to $163 per share, as investors became concerned about the increased competition. We saw this as an opportunity to buy Quidel, since we believe the theme of POC testing will endure beyond the pandemic. Quidel was founded in 1979 and launched its first product, a dipstick pregnancy test, in 1983. The company is headquartered in San Diego and employs about 1,250 people. All manufacturing is done in the U.S. Quidel has a strong position in the development, manufacturing, and marketing of rapid diagnostic testing solutions, even against larger competitors such as Thermo Fisher, Becton Dickinson, Danaher and Abbott. Quidel offers four product categories: rapid immunoassays, cardiac immunoassays, specialized diagnostic solutions, and molecular diagnostic solutions. Products are sold directly to end users and distributors for professional use in physician offices, hospitals, clinical labs, reference labs, university health centers, urgent care clinics, retail clinics, pharmacies, and wellness screening centers. POC testing for certain diseases or diagnoses has become an accepted adjunct to central lab and self-testing because it leads to fast and accurate results, greater cost-effectiveness, and more satisfied patients.

In past years, over one-quarter of Quidel’s revenue has come from rapid-result influenza testing. This has become important because there are drugs available to mitigate the more serious symptoms of influenza. In the fall of 2020, distinguishing between COVID-19 and influenza will be particularly crucial given their similar and overlapping symptoms. Quidel’s other big source of revenue is cardiac immunoassays, which allow healthcare providers to use a portable testing platform to quickly assess and risk-stratify patients with heart disease. This portion of the business has been hurt by the pandemic, as patients have been reluctant to seek care, even when experiencing potentially life-threatening symptoms. However, this type of testing is already beginning to recover.

Although Quidel is a relatively small company, it is financially healthy, has no debt outstanding, and was growing revenues at a 26% compound annual growth rate even before the pandemic. We like that it is U.S.-based, its products are U.S.-manufactured, and that the company makes healthcare more efficient and affordable with its POC testing solutions. The company is also small enough to be a possible acquisition target, while large enough to continue doing well on its own.

 

 

 

Individual investment positions detailed in this post should not be construed as a recommendation to purchase or sell the security. Past performance is not necessarily a guide to future performance. There are risks involved in investing, including possible loss of principal. This information is provided for informational purposes only and does not constitute a recommendation for any investment strategy, security or product described herein. Employees and/or owners of Nelson Roberts Investment Advisors, LLC may have a position securities mentioned in this post. Please contact us for a complete list of portfolio holdings. For additional information please contact us at 650-322-4000.

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