QuidelOrtho Corporation
Q1 2021 Earnings Call Transcript

Published: 6 May 2021

[Operator:]

Welcome to the Quidel Corporation First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, instructions will be given for the question-and-answer session. I'd now like to turn the call over to Mr. Ruben Argueta, Quidel's Director of Investor Relations. Please go ahead.

[Ruben Argueta:]

Thank you, operator. Good afternoon, everyone, and thank you for joining today's call. With me today is our President and Chief Executive Officer, Doug Bryant; and Randy Steward our Chief Financial Officer. Our first quarter 2021 earnings release is now available on ir.quidel.com, our Investor Relations website. We will also post our prepared remarks on the Presentations tab of our IR website following the conclusion of this call on May 6 for a period of 24 hours.

[Doug Bryant:]

Thank you, Ruben, and good afternoon, everyone. Thank you all for being with us. I know it's quite late for many of you, but your time and your interest in our company are appreciated. As you saw in our press release, our first quarter 2021 results showcase a very strong performance, execution and capital discipline of our Quidel team. We delivered a 115% increase in revenue, a 163% increase in gross profit and an approximately 340% increase in net income and earnings per share compared with the same period one year ago. We achieved this growth, while simultaneously launching new products, expected to have high impact, like our QuickVue at-home OTC rapid antigen test and Solana SARS-CoV-2, completing the construction of a new distribution center, continuing to establish our new manufacturing facility in Carlsbad, managing a challenging supply chain, negotiating regulatory clearances and advancing innovative new product platforms that will give us the foundation to capitalize on mass market opportunities that will serve Quidel well into 2021 and beyond.

[Randy Steward:]

Thank you, Doug. Good afternoon, everyone. As Doug stated, we saw very strong year-over-year growth in the first quarter. We continue to make great strides to develop, introduce and scale new COVID-19 assays, as well as progress on our longer-term goals and strategy, which involves the rest of our product portfolio. As reported, total revenues for the first quarter were $375.3 million, compared to $174.7 million in the first quarter of 2020. This 115% increase in revenue was driven by significant growth in our rapid immunoassay and molecular categories due to strong demand for rapid antigen and PCR COVID-19 diagnostic products and to a lesser extent demand for our Solana isothermal molecular products. In the quarter, we also saw solid growth for our cardio and metabolic line while our specialized diagnostic solutions product category saw a modest decline. Foreign currency had a positive impact of $2.1 million in the quarter. It's interesting to note that for the first time in 10 years the CDC's IOI data never crossed a 2% threshold, 4% positive cases, illustrating the fact that there effectively was no influenza season. Our all-in flu revenue for the quarter was $5.2 million compared to $79.6 million in the first quarter of last year.

[Operator:]

And your first question comes from Alex Nowak with Craig-Hallum.

[Alex Nowak:]

Great. Good afternoon, everyone. The biggest question…

[Doug Bryant:]

Good afternoon Alex.

[Alex Nowak:]

Hey Doug. I think the biggest question that everyone has here is how do you quantify all these new markets to sales in both in the near and the long-term? It sounds good you got testing going from the professional market. You got to go into asymptomatic you have to go at-home you're making these distribution deals. But of all the deals out there, just how decisive is that revenue? And how can the company take all of these announcements, all these potential channels that I could go into and quantify them by year and put them into a financial model? I think we're just looking for some clarity and some -- how to define ultimately what the revenue could look like this year?

[Doug Bryant:]

Yeah. The short answer Alex, although I feel your pain and it's the reason we don't give guidance and will not be giving guidance on revenue or capacity is, that it's essentially not forecastable. So recognizing that you would like to build a model for your clients for most situations, I guess that would make a lot of sense. But for this new paradigm of COVID testing at retail, which is new for employers, which is new for schools, which is new sports and entertainment venues as well and travel, all of which are new it's impossible for us to model at this stage. So I would say to you all on the phone, our colleagues and analysts, how can you model it? It's just not possible. So I feel, your pain Alex in that. You try to bucket each one of these opportunities. And see what you think the opportunity looks like. But if you just take school testing for a second. You've got some states that are already out there, they have already definitively decided what they're doing and they did so without an RFP, we have several of those which will be announced shortly. In addition we have states that are just starting an RFP process to determine what's possible. And then you have some states that are living the superintendents of the schools, make the decision. So just that bucket alone, how am I suppose to figure it out at this stage with the actual demand is going to be. I can make some wild guesses, but I can't. Later, if folks want to talk about all of the different categories, I can tell you we're at, with each one of them. But at the end of the day, it's just super difficult to define, how big it could actually be. Let's -- just to provide just a little bit more color on the question. I do appreciate the question. An employer testing, we have two very, very, very large global employers that are imminent and will have impact in this quarter. They're large enough to be material. And so therefore, we will be required to announce. But we also have numerous other employers, that aren't quite so big. And they're in process as well. But how many employers can actually do it, at what price point? How big of an employer, do you actually have to be? And what sort of appetite, do you have? You've got some people to think the vaccines are the answer. Others like, my own company. We're testing twice a week, because we know we need to protect our employees. And we're not going to bring our employees back, until we know that we can say definitively for them, that they safe. Sporting venues, several are in the works. I'm not going to name them. But the pod grades, because we went public is a good example of what we're doing there. We're testing not only the employees of the park and the vendors who support the games and all that, the front office, the back office. But we're testing potentially a number of people who are showing up to quite delegate at the park to be tested. I would say to you that there are numerous other sports franchises that have reached out. And we're in active discussions with them. How big could that be? I don't really know. We talked about schools early travel. We're providing tests for a couple of countries right now, where they are testing inbound passengers upon their arrival. I suspect other companies will do something similar moving forward. In fact we've had a number of conversations with respect to that type of testing as well. Pharmacy, Retail Pharmacy is a big, big channel. But how much demand really is there. I don't know. Certainly, McKesson and Walgreens think that there is. So we've partnered with those two and have -- those have been out. But we also have several others that are going to fall shortly. And it won't be just the big name of our retailers, it'll be grocery store chains that have pharmacies in their stores. So we have a number of those in the order. So I apologize, Alex, that we don't have anything definitive that we could tell you by the major buckets, but it also is why it's just impossible to forecast.

[Alex Nowak:]

I appreciate the answer, Doug. Thank you. And then, just the second question here. Now, that you've gotten this beachhead established with an over-the-counter test. I guess what other assays do you want to add to that platform on QuickVue, what does Walgreens really want you to add? Have they signaled anything? And then, the same question, but I guess over to Sofia, you had a really big menu lined up launch on Sofia back in, when we're talking 2019, is going to launch in 2020. Just where does that pipeline stand for Sofia? And then, again anything on QuickVue and OTC?

[Doug Bryant:]

We're still progressing very rapidly with Sofia assay new development. And I won't go through all those on the call here now, but if you refer back to the Analyst Day, we did a pretty good job of reviewing all those things. Are they moving at the speed that we would expect in a non-COVID year? No. The FDA clearly is prioritizing EUAs versus 510(k)s or other things. So there is a noticeable delay at the FDA, understandably, not their fall, right? So you asked about other products. I think, in places like Walgreens, I won't speak for Walgreens or in the other big box retail pharmacy chains. But I would say that we've had in a number of conversations where these folks think that this could be an important sea change in terms of diagnostic testing. So we're going to move from telemedicine to what we're calling telediagnostics, right? So I think that the retail pharmacy segment is a bit mixed, but there are some larger folks talking already about, could you do flu at home, could you do strep, or could you do lyme disease at home. And so, I think there is an opportunity for diagnostic companies, whether it's us or Abbott or somebody else, to begin to build a market for diagnostic testing that is accessible for those folks who want to test at home, whether aided by the accounting of their physician or other healthcare provider or not. We certainly see that that could be an opportunity. I mean think about what happened in pregnancy testing or glucose testing, completely over-the-counter. I think it is an opportunity. We're certainly planning as if there is an opportunity. And I think that that is an additional market segment that could be very helpful for us moving forward.

[Alex Nowak:]

All right. Excellent. Appreciate the update. Thank you.

[Doug Bryant:]

Thank you, Alex.

[Operator:]

And your next question comes from the line of Brian Weinstein with William Blair.

[Griffin Soriano:]

Hi, guys. Good afternoon. This is Griffin on Brian. Just a quick one on the Walgreens announcement. Can you clarify what your pricing is into the channel? And then maybe what you think that pricing is going to end up being to the end user? And then, on the -- and second one here. Are you shipping directly to Walgreens and revenue recognition? Is there a right of return, or is it revenue recognized on shipments?

[Doug Bryant:]

Yes. We're recognizing revenue directly into Walgreens. So that's the short answer to that question. What am I missing the first part?

[Unidentified Analyst:]

Pricing to the end user.

[Doug Bryant:]

Yes. So I'm going to answer it two different ways. First I'll start by saying price is interesting because in Q1 we didn't actually see any change in price. Moving forward though other than to say we believe our products can command premium pricing we aren't really going to be very specific. But I would say this that the QuickVue -- the OTC QuickVue product is faster and easier to run than our competitors. Therefore, we believe that we should be priced to the end user at slightly higher. And so wherever they go we will be slightly higher. That's my view.

[Unidentified Analyst:]

Okay. And then just one more here on the non-COVID side. There are about six months removed from your last Analyst Day where you gave some pretty specific revenue targets one of which was core non-COVID revenue to grow at about an 18% CAGR from 2019-2024. Is there any reason to think that there's a change there, or are you still endorsing those revenue targets from the Analyst Day?

[Doug Bryant:]

Yes. We believe those are solid. You heard Randy talk about the cardiometabolic segment. We're poised to continue to do well there and to grow I would say low to mid single-digits. With the prospect of growing more rapidly when we introduced high sense troponin. As I mentioned when we started clinical trials in April. We think that that's a pretty big opportunity. Obviously that would be huge growth beyond what you're talking about. And then PLGF, we're going to submit to the FDA the data and we'll see what the intended use claim is. But at minimum I would say that we'll get a claim for that product that says it's useful in assessing placental health. If we got something that was a little bit better you could say that physicians could use this as an aid in diagnosis of pre-eclampsia or to be used as a predictor of pre-eclampsia. And so if we were to get clearance for that product I see that as being a huge growth driver as well. And then on top of that what I see is the next big flagship product for this company. Sofia was a home run, I think, Savanna is going to be a grand slam. And so we -- as you heard Randy say, we're spending another $200 million of ramping up cartridge manufacturing because we firmly believe we've got a product that is going to be best in market.

[Unidentified Analyst:]

Great. Thanks, Doug.

[Doug Bryant:]

Thank you.

[Randy Steward:]

Thank you.

[Operator:]

And your next question comes from Tycho Peterson with JPMorgan.

[Unidentified Analyst:]

Hi, guys. This is Casey on for Tycho.

[Doug Bryant:]

Hi, Casey.

[Unidentified Analyst:]

Yes. Hi. How is it going?

[Doug Bryant:]

Good.

[Unidentified Analyst:]

Going back to a comment you made earlier regarding guidance so you're not giving 2021 guidance obviously. But I think I heard that you're not giving capacity guidance anymore. Just wanted to clarify so the 240 million unit run rate for Sofia and 600 million QuickVue by the end of the year should we still think about that how you're tracking towards that, or maybe that one just…

[Doug Bryant:]

I'd just tell you we already know we're going to beat those numbers. We're running ahead of that now, but I'm not going to get into the nitty grid because there's so many moving parts from week to week. One week this number. And the next week it's another. You guys think it's simple but it's not. It's a highly complex supply chain. It's a highly complex set of people doing a lot of things for us that are outside the company. And we don't always have control of absolutely everything. So, it's very difficult for us to save one number and then come in on that number. It's just way too hard. But what I would tell you right now, the important component of the manufacturing process is the pouching of strips and we're running ahead of schedule, pretty significantly. Now can we catch up with all the other stuff? I don't know. It looks like we could. Fingers crossed, but you guys don't want to hear fingers crossed. You want to hear a number but I don't have a number for you.

[Unidentified Analyst:]

Got you. Okay. That makes sense. Going back to Savanna, following up on the previous question. Is Savanna still tracking towards a 3Q launch here? And then maybe what sort of early conversations you're having with customers given the scale by new competitors in the space you think of Mesa Helix thinks that's starting to become sort of crowded in that space. So maybe just talk to a little bit about how you can differentiate here.

[Doug Bryant:]

Yes I'll start by saying the companies you mentioned are tiny. They are – I mean tiny has not been a good word, microscopic. So their ability to ramp and to compete with the big players like Cepheid and others, I don't see as imminent. We on the other hand are ramping up manufacturing pretty dramatically in order to put out a number of cartridges into the space. The other thing these other companies lack that we possess is menu. We already have six products, multiplex products that we're going to be launching into the market. They're going to be in clinical trials this year. So we've already submitted the EUA for RVP4. So we're way, way ahead of those companies, so not only in terms of product quality but in terms of our ability to ramp and to manufacture. Plus we have a commercial organization. So I don't want to sound defensive here. I hope I sound offensive, okay because we intend – we don't intend to worry about those guys. We are worried about what Cepheid's reaction is going to be.

[Unidentified Analyst:]

Got it. And then maybe if I can just sneak one last one in. On the combo test for Sofia, obviously flu didn't materialize this year. But given a more normalized environment, how should we think about the split between stand-alone and combo? I know previously you've talked about potentially as much as 80% of the Sofia COVID going to the combo. Maybe just wondering some updated thoughts on that. And then maybe longer term, how will that combo test potentially maybe cannibalize the regular food business with flu and COVID being tested together moving forward. Just how should we think about that. Thank you.

[Doug Bryant:]

Sure. Well I'll start Keith was saying that we do have inventory of the combo product and so we're ready to roll in the fourth quarter, if indeed we need to ship product. We were asked to develop that product by folks in the administration. We did so. We were asked to manufacture a lot of the product. We did. And then we had no food. So of course, we have the . And so I wouldn't see us manufacturing significantly more at this stage. And moving forward that's a really good question. I can see a world in the future, where you're going to be looking at a respiratory panel that includes the flu RSV and COVID. If you want to throw another one in there that's probably more prevalent than us you probably should have human melanoma virus on there too. So our ability to do that, I think is going to be great timing as we move into future respiratory seasons. And so people with sentence of fever and a cough, which could be almost anything these days anything that's indicative of the viral infection you kind of want to test on a panel, I think. So I do think that – I don't know, if you'd call it cannibalize necessarily, but I do think that our influencer products will be part of a combination of whether it's on Sofia by the way, where we're doing a combo assay two that includes those things, or if it's by a molecular method. And we're in a position I think that's great from a customer perspective and from a commercial organization's perspective as well. When we go in to see a customer we ask them what they want and we give it to them. We don't debate whether moleculars better or immunoassay is better. They're both better depending on what you're looking at. Are you looking at speed, or are you looking at affordability? Are you looking at sensitivity and performance? And so we are one of the few companies, I could name the other ones but we're one of the few companies that obviously goes in and see what the customer wants and we give it to them. And I see Savanna with the panel now, making that even more so the case, because we have a product that basically will go just about anywhere that testing is done.

[Operator:]

And your next question comes from the line of Steven Mah with Piper Sandler & Co.

[Steven Mah:]

Hi, guys. Thanks for the question.

[Doug Bryant:]

Hey, Steve.

[Steven Mah:]

And you might have discussed these already. And if so I apologize. But my one question just a follow-on to Savanna. So – and maybe you can just bundle that in with an update on timing of Sofia Q as well. And then my question was what is the CapEx going to be to support the Sofia Q launch and the Savanna launch? And how should we think about timing of that CapEx spend?

[Doug Bryant:]

We'll start with the CapEx question, Steve. We already said in the script that we were doing $200 million – $200 million total between now and year-end, and I did just sign a fairly a big chunk of an RSN CE this morning. It was obviously big enough that require my signature. So we've got some – I would say, it's pretty evenly distributed between the quarters the $200 million. So you want – $70 million, $70 million, $70 million something like that. That would be about right, if you're trying to bucket into – bucket it into the quarter. Regarding Sofia Q, we're in great shape there we've already submitted to the FDA. They have the data package they're reviewing it right now. Or as they like to say, it's under active review, which means they're looking at the data, they're sending back questions. It's kind of like the chess clock, right? We send data back and then we hit the button et cetera, et cetera. So does that answer what you were looking for Steve?

[Steven Mah:]

Yeah, that's right. And then Savanna is set to launch in Q3 still?

[Doug Bryant:]

No, no, no it's never been Q3, it's Q4.

[Steven Mah:]

Q4, sorry.

[Doug Bryant:]

Q4 launch. And obviously, we've done some things to pull it forward given things that we had to solve for along the way. So I'm pretty proud of the fact that we're still sticking to Q4.

[Steven Mah:]

Okay. Got it. Perfect. And next question, yes, I saw congrats on the Walgreen for OTC. Do you have timing for the other big box retailers?

[Doug Bryant:]

Soon. Very soon. Amen-Amen.

[Steven Mah:]

All right. Fair enough. And then a final question on the -- I know there is this government contract out there to deliver 60 million at-home tests by the summer and I know things are impossible to forecast. But can you give any color on that and confirm if you guys are in the mix for that at all?

[Doug Bryant:]

Is it 60 million school kids, Steve? Is that what you're asking about?

[Steven Mah:]

No, this is that government contract that's like -- they got like a $230 million grant?

[Doug Bryant:]

No, no, no. That's not what that means, they were funded in order to ramp up manufacturing capacity.

[Steven Mah:]

Yes, this is the 60 million at home.

[Doug Bryant:]

Yes. What they're doing is the government has agreed to buy those in order to fund the manufacturing capacity ramp-up.

[Steven Mah:]

Okay. Got it. Yes. I know they had mentioned there's going to be like six or seven companies, but they only announced one. Okay. So that's completely separate.

[Doug Bryant:]

Yes. So we're not in that group because we're more like the larger companies. Although we're not as large as obviously, Abbott, Roche and others. But we don't need funding in order to ramp up manufacturing capacity. We did get some funding as you know to ramp up Sofia manufacturing. I think the number there was...

[Randy Steward:]

72.

[Doug Bryant:]

72 right? And that was...

[Steven Mah:]

That was Rad at 70.

[Doug Bryant:]

And then we're still doing minus 10 and 11 on our own. And then for the Rutherford facility in Carlsbad that's all self-funded as well. So unlike these smaller companies we don't need the funding.

[Steven Mah:]

Okay. Got it. Thanks for clarifying. All right. Thank you.

[Doug Bryant:]

Cheers.

[Operator:]

And your next question comes from Andrew Cooper with Raymond James.

[Andrew Cooper:]

Hi, guys. Thanks for the time. A lot has already been asked. Maybe one and I appreciate that things aren't necessarily signed yet. But just when we think about the state and kind of the schools and what this can look like. Can you help firm up what the structure is? Obviously the spaces in that are getting the money from the federal government. Are you having more conversations where it's a hunting license? And if the school wants to buy or school district wants to buy it's sort of a right to buy, or is it direct sales to the state or school district level? And how are those conversations really shaping out?

[Doug Bryant:]

Yes. Let me repeat or maybe I'll just say it again and then maybe to be clear at the second time. So schools have -- I'm sorry states have received funding. And most states already have access to the funds, some states are implementing state-wide testing and have they held their own plan. They're looking for turnkey solutions, which we're providing in a number of cases. There are also states that are early in the process and have therefore just now begun sending out RFPs. So there are some states running way ahead of others and are embracing it and there are others that are involved in the RFP process and are sort of trying to see which way things are going. And then there are states that are basically allowing the individual school superintendents to make the decisions on how the testing will be done, when it will be done when it will start when it will stop and they have a bunch of school superintendents doing that. So you have two approaches; one, the latter being the bottom up and the other thing somewhat top down. And it's easier for us to obviously work with the states that are top-down because we go to them and we pursue a proposal on how we would do that for them and that they engage with us. And we have at least three states that fit that particular profile that are already committed to using our product as a platform. So what I would say is, it's impossible at the states to predict the magnitude of all those. But I would say that, we hear the wind blowing and we see signs that the trees are beginning to move.

[Andrew Cooper:]

Okay. Helpful. And maybe just -- you said there's three states that are committed to using your product in the top-down way. Is that exclusively or in conjunction with whether it's lab-based or other sort of point-of-care products? Can you help us think about what that is?

[Doug Bryant:]

I would call it practically exclusively. So you might have a state where this chunk is going to you and the other may not yet be decided. So it is pretty darn complex. We've got a whole team of people that are just doing schools right now. And because every state is so far a little bit different not dramatically different, but they're all just a little bit different.

[Andrew Cooper:]

Okay. Helpful. And then maybe just one on sort of the pacing of the quarter and the comment you made around kind of April looking more like February and March. Can you give a little bit of granularity? Obviously you had a tremendous amount of inventory in the channel as systematics were coming down in January.

[Doug Bryant:]

Andrew, I think you misunderstood the comment in the script about the month. What we were talking about there was the testing for COVID in the symptomatic professional segment right? I think I just said professional segment which you may not have connected the people who are getting sick, right? So that base level testing that is for people who have fever and cough that group.

[Andrew Cooper:]

Okay. I understand that. I guess you were talking more about kind of end market utilization not necessarily the revenue trajectory to quite out. Is that a fair comment?

[Doug Bryant:]

Yes. But then again, there's two components right now. This is this a little bit more complicated than last year when we were only testing people who were either symptomatic or they have been in contact with somebody who's symptomatic or they were just awarded right? Here there's that underlying demand and that demand looks a lot like those months, right? So when you look at April, it looks a little bit like the back half of the first quarter, right? So it didn't change much. We're now seeing it an uptick. And what we're pointing out is that inventory that we talked about that was in the channel, we're now starting to bleed through that. And so we're now seeing reorders in the back half of this quarter, which we had not necessarily anticipated. We had hoped that that would be the case. But right now we see positivity rates from various states decreasing up. We see some states where at least one-fourth of the cases are on kids and kids obviously haven't been vaccinated. So, kids are spreading infections primarily at the stage. So that's the point we were trying to make Andrew, was that the underlying demand is always going to be there for some period of time, because we're not going to be able to eradicate COVID. It's going to be at a certain level. And we thought that that had flattened, but now we're actually seeing it start to tick back up and we are starting to actually see reorders for our traditional professional product. That's what that meant. Now, on top of that, of course, you now have this transition into asymptomatic testing. And that's I think where much of the volume is going to be at least in 2021 and probably 2022 as well.

[Andrew Cooper:]

Understood. Thanks a lot. I’ll stop there.

[Doug Bryant:]

Sure. Thank you, Andrew.

[Operator:]

Your next question comes from Jack Meehan with Nephron Research.

[Jack Meehan:]

Hey. Good afternoon.

[Doug Bryant:]

Hey, Jack.

[Jack Meehan:]

I was wondering if you could give us an update on your progress with employers around back to work testing. I think you had previously said you would have, hope you have had something announced by now. How are those conversations going? And how do you feel kind of with your capacity the ability to build out some of those relationships?

[Doug Bryant:]

Yes. I think maybe there's so many of us that are connecting calls today as has just jumped down a little while ago. Early in the call I said that with employer testing, we have two very, very large global employers that are imminent. And I would add a little bit more color on to say that we're in the final throws, and it's the back and forth. It's when are you going to get your approval in India, so that we can do testing for our employees there, and so these are global employers that are significant. And if we can get it done in time, they're going to have a material impact in the coming quarter. And there's numerous other smaller employers as well. So, I would say we're in the -- at the point where we are expecting to announce one or more of these imminently.

[Jack Meehan:]

Great.

[Doug Bryant:]

In fact the larger of the two, I believe we've already shipped product. Is that right guys? A small amount in order to get started right, but we have begun shipping. Yes.

[Jack Meehan:]

Great. Then on Savanna, I know you had started the clinical trials last quarter. Can you give us an update on the status there and what the data looks like just in terms of the performance of Savanna in the field?

[Doug Bryant:]

I can tell you that things look great at this time, but we haven't tested every single one of the six cartridges. We're doing it in a phased approach. And obviously we have data on the RVP product as we've already submitted it and it looks very good.

[Jack Meehan:]

Is the plan with the initial approval for it to still be for moderately complex settings? And how do you think the demand is going to look like from hospitals to add new equipment in the fall as it kind of pertains for COVID testing?

[Doug Bryant:]

So we intend Jack to be both 510(k) and CLIA-waived. We could have made a decision to link those together which would have given us a more predictable time line with the FDA. Rather we've decided to separate it and go 510(k) in order to get the instruments into the hospitals as quickly as possible. And we also want CLIA waiver though because we want those larger integrated delivery networks to be able to democratize testing in other words decentralize it out to their clinics where do they want to that. For example, a lot of folks would tell you that it's really handy to have STI or GI testing pallet into the clinics and they're not actually able to do that at this stage very, very easily. And so it's that sort of thinking that causes us to believe that having a CLIA-waived product will be very important.

[Jack Meehan:]

Makes sense. And if I can do one last one. I know it's obviously difficult to model right now. I did have a question about one specific product. Lyra as it goes for the COVID sales, how is the funnel there in terms of demand? Just any commentary around what you're thinking there for 2Q?

[Doug Bryant:]

Well Lyra looks pretty solid I have to tell you I hear other companies talking about the demise of PCR testing, but we're not seeing it. I do think we're taking some customers to them. We have some targets that we're actively working, but we haven't seen the falloff that others -- it's reasonably stable at this point. I think there has been a decline -- if you want to look at it as a same-store sales you see a decline, but we're offsetting that with gains particularly in the regional reference lab segment.

[Jack Meehan:]

Thank you, Doug.

[Doug Bryant:]

Thanks, Jack.

[Operator:]

That is all the time we have today. Please proceed with your presentation or any closing remarks.

[Doug Bryant:]

Well I'll just conclude by saying thanks everybody for your support and your interest in Quidel. We had an excellent first quarter, not necessarily the best forecasting on the planet, but we're in good shape to achieve our growth objectives over the next few years. We feel great about it very optimistic and we're not done yet. So thanks again for being on the call.

[Operator:]

Ladies and gentlemen we thank you for your participation and ask that you please disconnect your lines. Goodbye.