QuidelOrtho Corporation (QDEL) Earnings Call Transcript & Summary

Good afternoon, everyone. I'm Bryan Brokmeier, Vice President of Investor Relations, and welcome to the QuidelOrtho Investor Day. I would like to thank everyone who is able to join us here in New York as well as those of you logged on to the webcast. Before we begin, I want to call your attention to the cautionary language. During the course of the presentation today, we will make statements about the company's future expectations, plans and prospects that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which provides a safe harbor for such statements. Our use of Forward-looking statements is subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied. In these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors identified under Risk Factors in our quarterly report on Form those factors at the 10-Q filed with the SEC on August 5, 2022. The subsequent reports filed with the -- and subsequent reports filed with the SEC. Please refer to our SEC filings for a more detailed discussion of forward-looking statements and the risks and uncertainties of such statements. Forward-looking statements represent management's judgment and expectations as of today, except as required by law. We undertake no obligation to update any forward-looking statement or any time-sensitive information to reflect future events, developments or changed circumstances for any reason. Also, during today's presentations to facilitate a discussion of the company's operating performance for the trailing 12 months and a comparison of our performance from 2021 to 2022, we'll be discussing supplemental revenue and other supplemental adjusted operating results as if Quidel and Ortho had been combined for the applicable period. We will refer to this information as our supplemental combined information. This supplemental combined information as well as other certain -- this supplemental combined information other items do not conform to U.S. generally accounted --U.S. generally accepted accounting principles or GAAP, please refer to slide 3 for list of non-GAAP measures. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the appendix to the applicable presentation, which will be available on the investor relations page QuidelOrtho website shortly after the conclusion of today's presentation. Lastly unless stated otherwise. Our Year-over-year revenue growth rates, including revenue growth ranges given in today's presentation are given on a comparable constant currency basis. With that, it's my pleasure to turn it over to Quidel's President and CEO, Douglas Bryant.

Anybody want me to read back through the safe harbor.it's a pleasure to be here. Welcome. Nice to see you all. I was just thinking, I've been doing this for 13 years now. So if I didn't recognize a number of you in the audience, probably would be your problem. But it's nice to see so many recognizable faces, and I hope to catch up with you later after we finish. In a few minutes, I'll introduce the presenters. But before I do that, I've also got other people from the team here, and I think the team is the theme here who won't be presenting but they're back here and I would encourage you to say hello to them during the break or during the reception afterwards. We've got let's see Bill Binger here. He's our Vice President of FP&A. Ruben Argueta, whom many of you already know, is now my Chief of Staff and Vice President of the company. Louise Randy is our Chief Information Officer. She's in the back here as well. So any technical IT questions that you might have, you can save for her. Michelle Hodges, our General Counsel, is here. Rotecalier, our Vice President, Strategy and Portfolio Management is here as well. Lisa Hayes, who's Head of Corporate Marketing and Communications, is here with her entire -- I don't know if it's the entire team, but it's many of the team. They are the folks who are responsible for -- mostly for putting this on. So thank Thanks, Lisa. thanks team for doing all this. It doesn't just happen. I don't know how we got the instruments in the building. They didn't come in the elevator I did. So -- but well done, and thanks -- so it's honor to be here presenting for the first time as QuidelOrtho at an Analyst Day. This is the first time we've ever done it this way, and I'll explain. Typically, we've stood up here in years past, and we water-boarded you for about 3 hours. And then we stopped and said, what questions do you have? And by then, you can't remember most of the questions that you would have had. What we thought here today, though, is each one of the presenters will present briefly and then we'll have time for you to ask a couple of questions right away. And the reason I'm doing it that way is because there's a lot of companies that know how to put products together ship products manufacture product and all that. But when you're talking about a longer-term discussion like we're having today, the future of QuidelOrtho over the next 3 years, understanding the team that's actually doing and I think is so important. And so I rather than you concluding that they present pretty well, I would rather have you ask whatever question you want to and see how they react to it. And then I think you will conclude as I have that I've got a pretty good team. I can't decide whether I'm a musical conductor or the Moroccan soccer coach, where apparently all those guys individually are pretty darn good as it turns out. So,by the way, we're laughing over here because none of what I just said was in my script. I usually don't look at the slides at all. I did I hit the green button, I got a new slide up. But our objectives for today are to relate to you that we do indeed have a strong business. And that's why I've invited the business unit leaders to actually carry a lot of the water here for this presentation. You'll hear from them individually about what they're doing in their particular businesses. And I think they're the ones that you really want to ask the good questions about where they're at with each of their programs. We'll also talk about integration. The good news is that we're running well ahead of schedule and concerns that we may have had with respect to integration risk have been [ waged ]. And we're firmly on a path of uniting these 2 companies in a unique way. We have multiple growth drivers, as you'll see. And we're in attractive growth segments. And you even heard some of our employees on the video talk about. There's no product overlap. So we didn't have to make a decision about are we going to keep this product versus that product? We're going to take all the products and all the programs and march forward. We do have a strong financial profile. We're doing extremely well. Joe, of course, we'll walk us through all of that. And as I said a couple of minutes ago, we've got an experienced management team. And I think you're going to be really impressed -- so here's who you will hear from today. Pat Klein is our Chief Administrative Officer. He and Joe Busky. -- and a number of folks, including Luis, of course, very heavily engaged in integration. So I know you're going to want to hear what's going on there. Rob will give you a thought or 2 about the segments in which we compete and why they're important. What's the future of diagnostics before he lets his team explain what they're doing. Bryan Hanson is the leader of our labs business, Bill Ferenczy, has been in the industry for actually longer than I. And I hope you don't mind, Bill, when I tell people that I've been in this industry for almost 40 years. And you've been in it longer -- it's incredible, right? And he looks good, too. So Bill, walk us through point of care. Bill knows about as much about point of care is any man on the planet. Andrew Corkum runs our transfusion medicine business. He's going to tell you. I'll tell you in advance, we're the #1 transfusion medicine company on the planet, both on the donor screening side as well as the IH side. And then also, we'll have Dr. Tammi Ranalli who heads up our molecular business unit. I'll tell you about her business, but obviously, you'll want to know about Savanna because we're right in the middle of going with that particular launch as well. So Dr. Kroll Werner will talk to you about some of the things that he thinks about moving forward. And then finally, Mike Iskra, our Chief Commercial Officer; and Joe Busky, will wrap it up. But I will say in the future, Mike, maybe we have one of your region guys or 2, maybe Joan from Europe or Mike Abney from the U.S. talk about how they think about their go-to-market strategies and how they're going to compete moving forward. I won't spend a lot of time here because I think you've seen this slide before. This is the 5 pillars that we talked about immediately after we closed. We used them in our earnings call recently. We're acutely focused on integration and culture. You'll hear me say many times that I believe strongly that happy people are more productive. And I would also tell you that the way that we've put the company together by having business units being such a big driver, along with the commercial organization and the regions of the world, that's the most likely recipe for success. But at the same time, it's also the most difficult. It's like watching a process offense, right? It's about -- I shouldn't say that in every audience, but I think you all get it. It didn't go well last week in France. But in any it, communication, collegiality, super important. And so this team works as well as any team I've seen. And I think that we're on a really good path to continue. And you heard some comments. These comments are super common from our employees. Innovation is a big topic. You'll hear all of the folks and diagnostics talk about it. But at the end of the day, getting products across the finish line and getting them cleared by whatever regulatory agency is the key. -- commercial excellence, Mike is going to talk to you about that in some detail. Never before has operational excellence been important. I've never lived in my 40-year career in a situation where it's easy to create demand for your product. It's hard to make what everybody wants. And then capital deployment we have cash, and Joe will tell you about how we're going to spend it. So I think that might be the end of my formal presentation. I do want to acknowledge, though, now that I'm able to see, I've got a couple of board members that are going to join us as well. Dr. Mary Lake Polan is in there in the back. She's our longest-serving board member. I won't say how long were you like. But she was definitely here before I arrived, and we've had an outstanding relationship. Joe welcomes us here, too, -- there he is. Joe used to run commercial for Beckman. -- among other things he's doing. He's our newest Board member. And very happy to have you here. But these 2, you can corner during the break, if you want as well. And we were expecting Bobby Schmidt from Carlyle too, but I don't see that he is in the room. Go ahead. Okay, I'll stop. Anybody have a quick question and how much time do I have, Bryan?

For a question to two.

Question or two, okay. Perfect.

Great. Andrew Cooper from Raymond James. Just quickly, you brought the CEO and Chairman roles together with the deal last night announced you're splitting them again. So just can you give us a little sense for sort of the rationale and the timing behind that decision?

Yes. Thanks, Andrew. That's almost a bit of an elephant in the room. So I'm glad to have the question right out of the bat. We're not signaling anything, first of all. That's the most important thing I can tell you. I'm not ill. If President Biden wants to challenge me to push up contest, I will accept, right? I may not be the fittest person in the room, but I'm in the top quartile, right? So and I'm not going to retire. So I have no plans to retire. I am super energized by what we're doing. I feel fully committed to our employees. They're counting on. I tell them all the time. I'm interested in your happiness, but I'm also interested in your careers, your ability to move to positions of increasing responsibility and ultimately, to create a financial to create financial well-being for you and your family such that if you choose to send your child to college, you can. And so I'm committed to what we're doing, but I'm also committed to our employees, and so I'm not going anywhere. I do serve at the pleasure of the Board, of course. But my relationship with the Board has never been better. So I'll start there. And then I'll also just suggests that -- there are a little bit of -- a couple of nuances at play here. One is that since the beginning, when I took over as CEO in 2009, it was always clear that the Board fully valued the independence of the Chairman role. And so if that were not true, I would just suggest to you that in those 13 or 14 years that I've been doing this, you can imagine that I have asked before because it would be logical for me too, right, but never have they. And the only consequence that change that is when we put these 2 companies together because when Chris Smith and I negotiated the deal. The notion was a merger of equals, on 1 was going to be Chairman. But the deal changed over time, and we can talk at a break or at the reception later about some of those things that changed over time. But at the end, my Board was equally concerned with a number of things. One is would they still have the same level of influence on the strategic direction of the company. Would we be able to -- would we be able to speak with 1 voice to the Street and to our employees, would we be able to integrate the companies as effectively. And so -- and at the end of the day,they always suggested that they reserve their right to revert back to the way it was. And frankly speaking, I don't have a problem with it. And I don't think it's a bad idea. So we now have Ken Buechler, who was my Chairman and then my Independent Director and now my Chairman again. He's the same guys, the same guy I'm having lunch with tomorrow. And it's the same great relationship. I have a terrific relationship with the Board that I brought to the party, but I also have a good relationship with the former Ortho directors as well. So I'm not ill. I'm not retiring. I'm not unhappy. I'm we're all going to be fine. My job has not changed. Did I over-answer Andrew? Okay. All right.

Andrew Brackmann from William Blair. You commissioned a pretty large perception study earlier this year. Can you just maybe talk about some of the key inception study?

I think you might be referring to the employee happiness survey.

Investor.

The investor survey. Well, I'll let Bryan touch on that here when we get to the Q&A because he would have some facts and figures for you. Next up is Pat Klein. Pat going to talk to us about integration in his world.

So I thought I should just get up and say the integration is going really, and then get off. but maybe we'll go into a few details. It's great to be here today. I'm pleased to be presenting and sharing with you where we are in the integration journey, a bit about our employees and our culture. And to talk about how we're accelerating our innovation. So one of the things I wanted to do, let's talk a bit about my role, so I have responsibility to oversee our integration program, our people and talent strategies. And then some of our digital innovation and business transformation. So this role will continue to push the company forward even after we're done with the technical elements of the integration. So we've been managing the program in a very structured way. And as you can imagine, and there's a lot of moving parts and pieces and as Doug said we feel like we are on track and we are actually exceeding our expectations where we thought we would be at this point in time. We continue to work with the combined teams in operations, R&D commercial to drive that product innovation and to provide our differentiated customer service and commercial excellence and we are doing that by harmonizing the teams and so the first stage that we've been through is the harmonization process. We're now moving into full integration. Today, I'm going to focus on the overall integration as we march forward. So the first part, we -- the first 30 days, we were able to establish the program management office. We announced the executive team and then we moved right forward with announcing the various levels of our business leadership teams and the models that we would use going forward regionally and with our leadership structures. We also moved very quickly to begin to pull processes together and we found in that that we had a lot of collaboration across the organization, and that's something we're very proud of as well is the collaboration, the collegial nature of the company has really come through. One of the commitments we made was to keep business as usual to keep moving forward and make sure that we are meeting our objectives. We've been able to do that. We move towards interim state. Interstate for us is something that we have been targeting Q1 of '23 on track with that. And in interim state, what we had hoped to do was to achieve the combination of the various -- the 2 organizations in all the various operating levels. And we've been able to do that. We've hit our milestones. And we are now looking towards future state and what future state for us is as we move forward is that transformation activity that will take us through '23, '24. And then in this whole process, we've really seen the team engagement and how they really embraced the culture that we've set out and challenge, right, because everybody says it's merger of equals, everybody says our cultures are the same. Well, those aren't actually exactly true, right? There's always differences. What we've done is we've blended together really seamlessly. And so what's come out is the combination of Quidel and Ortho has been able to take the very complex and make it much more simple. Some of the highlights as we move through the integration is we're not consolidating our manufacturing facilities -- we are -- we don't have product overlap. And we also are not having to cannibalize any product sales in order to represent another product. So those things are very complementary. And so our teams felt energized by that and really supported. You might wonder how are we doing this? How are we moving this forward? And that's through our culture. And we spend a lot of time defining what the QuidelOrtho way is. And what's really important about this is a rallying statement. This is something that we're activating around the globe in order to get everybody on the same page to be moving in the same direction to be part of something bigger than themselves. And so one of the things that we've done with this is we've stated our purpose and our values and our focus. And that covers our employees. It covers our customers. It covers our investors, our partners and the communities with which we work. And it was designed to be a story guide so that our folks can mimic behaviors and support one another as they move forward. We also feel very committed to and Doug alluded to this, is happy employees. And that's something that we really look to, if we have happy employees that are excited to be here, that, that will lead to positive outcomes. And they'll be able to act as an accelerant as we move forward and to go that extra mile. And one of the things that we did, and people might say we were crazy was -- oh, I'm sorry, we'll get to the gate serve in a second. But where we are. So where are our employees today? This is our employee population, 6,000 people. We're operating in 130 countries, and we're leveraging our global reach so that we are operating regionally and locally where we need to, but also leveraging the global teams to support what we're doing in each of these areas. One of the things that we did was we measured our employee engagement, and this was really important to us. And we did this early on in the integration so that we could see where people were, what were they thinking? Where are they coming from? We had a really positive response across our entire population. So we have over 75% of the employees who responded to the survey was a blind survey. And the overall positive sentiment exceeded 70%. And for anybody who's been through an integration, that's a pretty good statistic that early in the process where there's a lot of change going on, there's a lot of uncertainty. And so we felt really good about that. We felt like we're -- our messages were hitting and people are feeling engaged in the process. We're also really pleased about the statistic around their intention to stay with us exceeding 80% -- 81%, that's huge. So people are really looking at QuidelOrtho as the future that they can continue to grow their careers. They can continue to be excited about what they're doing and they see opportunities. That was something that we're really excited to see come out of the survey. And our employee turnover continues to be at a very expected low level. And we are -- we're seeing retention at over 8%. And that's something that, for us, it was also a bellwether, really important that people were wanting to remain engaged and part of the organization. And that helps us execute on our strategies and our priorities, and it will help us with our ongoing growth. And then what we'll do over time is we'll do pulse surveys now going forward to benchmark how we're doing. And so we'll do a couple of those in '23. But overall, we really feel solid about where our employees are with the integration and where we're headed. And what we want to do going forward is to ride that positive momentum, right? We don't want to go backwards now. So we are really going to use the structures that we have in place as the foundation. We'll enhance those structures over time as we move towards that transformation and optimization across the company. Our executive team is aligned, we are working together in an incredible way in a very collegial environment. We are building strong teams and those strong teams help us to focus on collaboration. So there's not this -- us versus them. It's a real collaborative environment. And our business models are ready to go to support our strategies, and we are ready to move into '23 with enthusiasm. And as a result of moving forward, we do believe that we will be able to represent this one QuidelOrtho to our customers, our employees and especially to our investors. So that's our integration story and where we stand. I'd be happy to take some questions.

Liza Garcia, UBS. So last quarter, you guys announced that you'd identified about $50 million in synergy opportunities, which is obviously ahead of kind of where you originally were for 2023. If you could kind of help us understand that gap. And then, I guess, kind of what your confidence is in the number at this point? And the potential for any incremental pull forward?

So Joe is actually going to talk about the numbers for sure, presentation a little bit later. But suffice is to say that we are still on track. We're pacing ahead of where we're headed. So our synergy, both revenue and cost synergies are on track for sure.

Alex Nowak from Craig-Hallum. Maybe a question around the integration of the sales teams, both the U.S., Europe and APAC, and maybe this is -- should be safe for a later section. But maybe speak to what would happen specifically in the U.S. around the 2 sales teams, Quidel and Ortho, does that ever become one unified sales team? And the geographies like Europe and APAC, where Quidel salesperson might not exist today. How does the transition of adding the Quidel products to the bag and tying to roll that out in those other geographies start to take place?

So I love these questions because I can defer them to other people. But no, Mike will definitely address significant portions of your question for sure in his presentation. I would say that we've already merged the North American commercial organization together that was recently announced. We are also cross-training our regional teams on the products. So if it was Ortho sales team, they're learning Quidel products and vice versa, and that's going exceptionally well, a lot of enthusiasm there. And the rest in terms of our pacing, we feel like the commercial organization is set up for '23 and we're ready to move forward. We don't see any hiccups in front of us there at all Sure. So I appreciate it. I am very, very pleased to introduce our next speaker, which is Rob Bujarski, who's our COO, and he's been talking about moving the business forward...

Well, first off, everyone, thanks so much for your time today and your interest. We're greatly appreciated that you spend your time with us here getting close to the holidays. So I really just wanted to share with you how do we feel about our company, right? Really simple. How do we feel? What are we thinking? And I want to start off with just kind of 3 key messages. First, how do we feel about the industry, and we feel great. And we'll talk about that here in a minute. We feel great about where we're positioned, how we're going to compete within that industry. And as Doug mentioned, a big reason for why we full great is because we've got incredible people, and we feel great about the talent we have on board. So you're going to hear that theme kind of again and again throughout the day and hopefully kind of get the feel for -- from the business unit leaders and the people that are running the strategy and running the company, why we have that confidence in our organization. So our industry and the world and the world we've experienced over the last few years, obviously, the need for health care is not decreasing, it's increasing. The importance of diagnostics in that is straightforward, right? If the pandemic hasn't shown that even consumers, et cetera, the importance of getting a diagnostic, getting it right, making sure you're getting the right therapy, the right treatment, you're staying home when you're sick, that kind of thing, very, very clear. So one of the reasons we feel really, really good about the industry is that we're in as the demographics, the numbers, et cetera, support its growth. Technology. Technology, we've seen, again, in the last couple of years, look at the growth of telehealth. The interesting thing about our business is there's so many technologies today that exist that just need to be brought into our world and be deployed better, right? So working through, again, privacy issues and regulation and things like that. But the technologies exist today, and it's been -- and it has been and it will continue to be an accelerant for growth of our industry -- so hitting on those same themes, the demand, I think, again, is pretty straightforward. And the numbers and the demographics, et cetera, support continued growth in health care and diagnostics. Resources though is an interesting point where I just want to spend a bit of time. Our industry is one that has been under pressure in connection with making sure we've got enough workers. And you hear that in the diagnostic space, you have trouble finding medtech to support the lab. You felt the resource strains over the last few years in health care as a whole. So one of the things that we think about, and you'll hear from Dr. Kroll on the R&D side when it comes to innovation is making things easier, simpler, faster, -- it's how we think. It's how we're wired, right? And so you'll hear some of those things also from the business unit leaders in terms of automation solutions. On the point-of-care side, again, those are 4 -- the things that we think about all the time for main criteria, better, faster, simpler, easier to use. So it's how we think, it's how we go about innovating. This is a slide 20. We've been using it for decades. I think at least 20 years. And we talk about, again, the importance of diagnostics. It's a pretty simple slide, and we talk about diagnostics drives 70% of the decisions in health care. We also used to say with this slide, there was some amount of spend associated with it. It's 2%. So 70% of decisions but 2% is spent. So we also used to say we're undervalued. Diagnostics is undervalued. We feel like the step child from time to time to pharma. I think, again, the importance of diagnostics is really, really clear to most folks now, particularly going through the pandemic. So this is an interesting thing, and this is where, again, I love the positioning of our company and where we sit. So decentralized testing point of care or at home and Bill Ferenczy will tell you a little bit about our thoughts about point of care. But this push and pull that we used to feel at times prior to doing the deal was a decentralized versus centralized -- and this constant kind of conversation about, well, does one cannibalize the other and there's kind of that back and forth. Where we sit today, we're just in a great spot because we're one of not too many companies that has the ability to say we can meet your needs. Dear customer, whatever you might need, we can meet them. If you believe you want to run something decentralized, it makes sense, it's cost-effective. You're getting an answer faster where you need that answer. We have a solution for you. If your high volume and you're looking -- you have a different process, we have a solution for you. So again, really uniquely positioned as a company being able to deliver across those segments. And this is really the same point we're making, and you're going to hear this from the business units, so I don't want to spend too much time here. But you see the interplay of our business units and where they deliver across the continuum of care. So we believe as a company, we are, again, in great shape. We've got the right technologies. We've got the right commercial team. We've got global presence. So we have an ability to execute across these segments like not too many other companies in the industry. So really well positioned. This is another slide where you're going to see this slide from a number of the business unit leaders. Joe will address various aspects of this slide as well. The key takeaway that I want to make for everyone now is just we feel very good about the business units, and they're operating within an opportunity that's meaningful and with good growth rates. And then finally, the final point, again, is just like -- we'll have the team come up here in a minute and get a chance to really tell you about what they're doing and some of the exciting things that they have going on. But I can tell you, we -- even preparing for this meeting, it's funny. We spent a lot of time getting ready and people get anxious you get nervous, you write scripts. Doug, 3 versions of the script, and I can honestly tell you, you didn't go off the script at all, right? It never does actually. I used to be the General Counsel at used to make me not, but true. And the beautiful thing about the folks to my right, is they have incredible experience, right? You're going to see that they're engaged. We know our business, we know our industry, we know our competition. We get excited every day. We get up every day and we do what we do and we go to work, and we're actually super lucky. -- right? We're lucky because we get it to work at a place where we try to make people's lives better, and you're going to get a chance to feel that. So I'll stop rambling. -- otherwise, I'm going to get in trouble, but I want to introduce Bryan Hanson, who leads our Labs business unit. On the Q&A side, you'll get a chance after each one of them to follow up with questions.

Good afternoon, everyone. How are we doing Good. All right. I thank you for the time today to talk about the growth strategy for the Labs business unit. As Rob outlined, in the Diagnostics continuum, the Labs business unit predominantly operates in the centralized portion. We serve the core labs of hospitals, health systems, clinics and reference labs around the world. With over 75% of all testing occurring in the core lab environment, we think it's mission critical to have a strong labs business unit. As we look at the KPIs for the Labs business unit, I would like to start with our installed base. We have 14,000 analyzers spread throughout the world in 125 different countries. We have strong, predictable reoccurring revenue of over 94%. And the nice thing about that revenue is almost split evenly 50-50. The 52% of it been in North America and 48% of it being outside the U.S. One of the critical KPIs that we're going to talk to you a lot about and talked a lot about today is our integrated installed base and our automation installed base. Integration for QuidelOrtho integration for the Labs business unit really is solutions that run both our clinical chemistry portfolio and our Immunoassay portfolio. It really is that customer that runs everything that we have. In 2019, our integrated installed base before the launch of the Vitro 7600 was approximately 2,500. Today, that integrated install base is over 4,000 units and growing strong. As Rob mentioned, we believe that the global lab market is at an inflection point. There are nearly 14 billion tests performed every single year. And as Rob highlighted, over 70% of all medical decisions are influenced by diagnostic test. However, at the same time, we also know that half of the world's population, half the world's population does not yet have access to proper diagnostic testing. So we believe strongly that you're going to continue to see volumes go up as access improves. However, here's where the inflection point comes in. The inflection point comes in because resources are down. In the United States alone, there are 25,000 med tech openings. These laboratories are being asked to do more with less. And these laboratories are coming to us and saying, we need your help. We need your solutions. We need to help improve our quality because we have to get the test. We have to get the answer right the first time, right? They need help with their reliability of their equipment. They need to make sure that these analyzers are up and running and producing results because they don't have time, right? They need to make sure that they're efficient and effective and productive, right, because they don't have the resources. They need to have the lowest total cost of ownership because their budgets aren't expanding and probably most important because of the changes occurring within this industry, they need a partner for life. They need somebody who's going to be with them now and be with them in the future. We believe both at Quidel and the Labs business unit that the Vitro's portfolio solutions is that partner. We feel very strongly about our automation solutions, our integrated solutions and our stand-alone solutions can solve the needs of the laboratory today, tomorrow and into the future. What's interesting is that we love this market. This market is a fabulous market. It's $28 billion and growing between 5% and 6% a year, really being led by extremely strong amino assay growth, and we'll talk about that a little bit more in the next slide. Within that market, we've carved out a very attractive sweet spot. And I'll talk about our sweet spot as this. It's really the intersection of where ortho to ortho believes there's value and where our customers believe our solution matches their needs the best. That market is about 70% of the overall Clin labs market, valued at today about $21 billion to $22 billion. And we're 1 of 5 global players who really have the opportunity to serve both the clinical chemistry and the immunoassay side of that marketplace. I had the opportunity at the demo or to talk a lot about immunoassay. Immunoassay really is going to be the growth engine for the Labs business unit in the next 10 years. As you look at this chart, the right-hand chart shows really the market. If the market is $28 billion, 68% of that market is Immunoassay. However, on the other side, our revenue mix today, only 42% of our revenue is Immunoassay. It is critically important that we close this gap. So how has this gap created? Our predominant focus in the past was specializing in clinical chemistry and infectious disease. As the market moved away from a specialization model to a consolidated model, we had menu gaps. In 2015, our immunoassay portfolio only had 50 tests in comparison to our competition, between 60 and 70. And it wasn't just about those 60 those 60 tests or this 10 test difference is we're missing key menu like HIV combo and vitamin D. Today, we have 65 tests in our amino assay portfolio. And by 2027, we're going to add an additional 25 to have 90 total tests in our immunoassay portfolio. We believe we will have an industry-leading immunoassay portfolio that we feel very strong to work anywhere across the world. The second reason we have this revenue disparity between IAA and clinical chemistry is where we've been placing our analyzers. Historically, because of our specialization in clinical chemistry and the lack of a comprehensive menu, you'll see that over 90% of our placements are below 1 million tests a year. What you're seeing here on this chart really is our 14,000 units spread throughout stand-alone integrated and stand-alone IIA. Our job now that we have this comprehensive menu that we launched the vitro 7600 and that we are launching automation and IT solutions is the push up market. As we push up market, we believe significant revenue expansion will occur. So where are we going? Werner Kroll is going to talk with you a little bit about our long-term R&D pipeline. What I'm going to talk with you about is some short-term and midterm things that we're working on. Outside, it's right in the last slide, we spoke about the need to push up market, right? And to do that, we're really doing 2 things. Number one is we're refreshing our Vitro's portfolio. You can see the new industrial design. With that as well, will be new software, and we're launching e-calibration as a productivity solution for our customers. Additional to that, we are launching the Vitro's Duo and Duo Plus, which is a tailored automation solution for those dual 7,600, those dual 5,600 customers who need more automation to support their declining workforce. Additional to that, in 2023, we know the importance of China, both as a holistic view for quiet ortho, but also for the Labs business unit. We are extremely close to 2 localization strategies. Number one is localizing our instruments in China; and number two is an assay development project that will allow us to speed up to market that critical Immunoassay portfolio that will not only allow us to go deeper within China's stat laboratory environment, but also penetrate up into the routine market. At the end of 2024, we'll be launching by the end of 2024. We'll be launching 20 to 25 additional assays and development of a next-generation automation system and IT portfolio that's going to allow us to really push upmarket further. Lastly, 2025, we are developing low-cost, low volume platforms for both emerging markets and developed markets. We're going to be launching the vitro 450 of our 14,000 installed base, about 50% of our installed base is stand-alone chemistry, the Vitro 450 is targeted to replace that analyzer. But what we also know is that within that installed base within that installed base, the vast majority does not have amino assay, capability running at a quiet ortho product. We will also be developing a sister product, low-volume integrated that will attach and become a modular design version of that analyzer really allowing us both to replace or extend those customers, but not only with chemistry but also with Immunoassay. By 2027, we'll launch 30 to 35 new tests. And by the end of the decade, we're going to revamp our drive side to make it more scalable and develop modular-based programs that will allow us to fill that full marketplace. Key takeaways. Number one, we are in a large, attractive market. Second, we believe we have significant revenue upside. In the near term with launches in automation and informatics and the refresh in China, we believe strongly that we can grow mid-single digits in the near term. In the mid -- sorry, in the near term. In the midterm, with launches of our low-volume integrated Vitro 450 platforms, additional IA, we believe we can grow mid-single to high single digits. And in the long term, with innovation of driveside and modular-based systems, we believe that we'll grow high single digits to low double digits. Questions?

Patrick Donnelly from Citi. Bryan, I guess you talked about kind of this larger installed base throughout COVID. Obviously, you're not the only one who experienced that. These labs bought a ton of systems across a bunch of different vendors. I guess what is your conference level or what gives you confidence that you guys are going to be one of the net winners as these labs look to consolidate back down to maybe less suppliers after they bought kind of everything I can get their hands on during COVID. Just kind of curious because again, we hear from a lot of companies, the installed base is up, what gives you the confidence in kind of that visibility to stick with the customers and again, drive good utilization of that?

Sure. Make sure I got your question. So during COVID, there was an increase in installed base and are we properly using that installed base into the future. Is that the question?

Yes.

Yes. So I think, first of all, it's a great question. Our 14,000 unit installed base and predominantly the integrated systems and the 3,600 systems were placed to help fight the pandemic. I think unlike a lot of businesses, we -- those customers who bought those that equipment, most of them are still leveraging and utilizing that equipment. We really didn't see a lot of customers say, we're just going to run that test or buy that and return it. There were a handful, right? I don't want to get you on the rehandful, but we're really not in that position in the labs business. Most of the 14,000 units we have in the 4,000 integrated analyzers are being leveraged to a good capacity.

Alex Nowak from Craig-Hallum. Maybe speak to the menu gap that formed over the years, was this due to, would you say, underinvestment in R&D? Was there any limitations to the dry slide technology that ultimately got you there. And then maybe speak to the menu expansion that you want to take place. A couple of the key assays, anything around high sensitivity to a I think on the molecular side in the labs business.

There's a lot of questions. All right. So I think if you think back to the market, 15 or 20 years ago, it really was a specialization market, meaning best-of-breed, right? I want best chemistry, I want the best infectious disease. I want the best IA solutions, right? And really, what's happened at that time, our focus was predominantly on infectious disease in immunoassay, and it was on -- is on chemistry. And as that market -- as the market began to consolidate equipment, we just didn't catch up, right? And then when we knew there was an issue, we were part of Johnson & Johnson, and yes, we'd probably get the level of investment that we needed at that time. But since then, we've had, I think, a really steadfast vision of where we want to go. And one of the areas where I'm most excited about this acquisition and merger of 2 companies is the level of R&D investment that's coming into the labs business and specifically going to design and develop this immunoassay that's in dismiss testing. So that was the first question, right? And then the areas where we're developing in the future. So I think it's interesting -- there's a couple -- sorry, high-sensitivity troponin is within -- we launched it ex U.S. a couple of years ago. It's within the FDA right now. We hope to hear back hopefully within the next 30 to 90 days. I would say a lot of it is our menu gaps in Europe are around like our thyroids and some oncology tests that are required for large tenders. It's really specialized testing. We're at the point now where the menu gaps that we're talking about aren't overly specific. They're really general tests that are going to help us enable and win larger degrees of tenders and not have to bring on subsystems or third-party systems that connect in, right? I think what you're going to see with our China JV that we're going to announce, -- it's really focused on oncology, right? In the Chinese market, we believe there's a significant opportunity in oncology in the routine market. We're going to take those tests, develop those tests there and then pick what tests we want and then bring them back to the rest of the portfolio. And then molecular, yes, at some point in the quarter out.

All right.

All right. They're pulling me off. We'll talk outside -- all right. So I got excited there. I'm really excited to announce or bring forward Bill Ferenczy, the Head of our Point of Care business unit.

Thanks, Bryan, and thanks to everybody. So you got to get my slide up here. Thanks to everybody attending today. It's a great opportunity to speak about my passion point of care and the strategy for it. You already know how old I am because already gave that away. But I've only been in the point of care world for about 30 years, all right? And during that time, I have learned that point of care means different things to different people. So I want to kind of start out by clarifying what the definition of point-of-care testing is at least as we define it because that ultimately dictates how we design products -- and then it's also important to understand that they also fit in different segments that might not be as intuitive. And so we design them, we design our products to meet the toughest condition, true point-of-care testing, which is done outside of the laboratory by near the patient, non-laboratory sometimes even non-medical people are running that test. It needs to be worthwhile we're going to do at point of care. So it needs to deliver a result that can lead to an action, some kind of a decision for the patient or the doctor. And then it's also critical to be fast and the faster the better because you want to have the patient wait so you can take that action why they're still there. And so that is the way we drive it. Obviously, if you design products that meet that, you can easily meet the needs in true point of care. But the part that gets missed a lot is the really large opportunity to use these products inside the laboratory but in low volume scenarios. And that's always been a key place. So even in small hospitals and the like where the testing is really low volume. And it's just easier to do it with a point-of-care platform. My analogy is if you're only going to drink 1 or 2 cups of coffee a day, it's better to have a Keurig then they set up a great big coffeemaker, right? There's no setup and there's no cleanup. And so that's the other key segment. And likewise, if you do develop a novel biomarker, having it on a point-of-care platform is a great way to deliver it to the market because you can move it out quickly and you can do it to any site that wants it with very little capital. So with that definition in mind, let's go back to the diagnosis continuum from the point of care perspective. And what you can see is it's kind of the opposite end of the range from where Bryan just spoke, it's the decentralized world, but it's also a really wide array of different settings ranging from the hospital all the way to people's homes here. And it's important to understand they differ to a great degree in terms of the kind of patients they see, how sick they are, the kind of staffing, whether there's a lab or not and a number of other variables here. They do tend to be smaller, lower volume sites by nature, but there's a lot of them. And so if you look at the nonhospital sites just in the U.S., there's well over 150,000 places to go, and that's not even including home testing, right, which expands that greatly. It does make sense to give a little attention again, kind of back to the hospital here. When you look at the hospital targeting for what we do with point of care, we have a lot of targets in the small and medium hospital based on what I told you. You target the lab and the volume of testing is low. When you go into the bigger hospitals, what you're targeting is putting it at the point of care in the emergency department or the ICU. And the driver there is the need to get the answer quickly, and that can't be met readily by the lab in a lot of places. In those settings, the volume and the related revenue can be very high. They can be significantly higher than what you'd expect in the smaller settings. So a snapshot here of the business unit today, and I'll just start by saying the last several years, we've clearly been focused on the COVID side. And this year, that will be over $1 billion. What I'm going to focus on here today is the roughly $0.5 billion of non-COVID core products because those are really the foundation for where we're going to grow our business. That business today, there is driven by both Sofia and Triage. You can see we have nearly 100,000 placements between those 2 systems. The footprint for both of those is still growing nicely. And you could see on the kind of bottom left, the business is spread nicely across both of those systems today. On the far right, you can see nicely that also that a lot of the business is tied to the instrument placement. So it's recurring repeat business, not transactional. In the center there, you can see today, most of the business is in the U.S., but with the expanded and stronger organization, especially outside the U.S., we expect that to change over time. So I've been in this business a long time. And I can tell you that there's never been a point during the 30 years where the opportunity from a point of care standpoint looks this good. We already felt that things were going in the right direction even back in 2018 at our Investor Day, where we showed decentralization of care and the associated growth in point-of-care testing happening. Obviously, you all know what happened when COVID hit, is it radically drove that and expanded it very quickly. It created all this awareness and demand on the part of patients. It was met. I mean I think the industry responded made the test widely available. And what's happened is there's now a clear acceptance of the value of having point-of-care test for what for wide use. I've noticed a few things, right? For the first time in my life, I hear in the normal common lingo of America, people talking about PCR and antigen that would a bit have unheard of, but it's more at home. My neighbors actually know what I do for a living now for the first time in 40 years. So the nice thing, I think, and we've been able to analyze this is that the impact is not just COVID, it's not just infectious disease, the impact and the awareness here of the value of getting tests more readily is going to drive the business in not only the segments where we play today, but the broader set of segments that are adjacent areas that we intend to penetrate over the duration. So the opportunity is clearly here, right, for point of care. The nice thing is that the combined QuidelOrtho is really perfectly positioned here to exploit this for a number of factors that work in combination. So obviously, particularly on the Quidel side, we've got a long history here in point of care of developing the right kind of analyzers. We've got underlying proven technologies in the form of lateral flow and microfluidics and as proven through the COVID the ability to scale up and manufacture at high volume and at high quality. The other piece though -- and this is really a function of the integration is this broader portfolio. I've always -- in the sales world, when I was there, while said it is really nice when your customer has multiple choices and they're all you. And prior to the merger, we couldn't say that. But now in here that lets us address wider ranges in terms of test volume at different sites. -- we have and can combine immunoassay, molecular chemistry all together and what it does is it lets us focus on solving customer and very nice on that standpoint. The combined company now has technologies and development expertise beyond the traditional immunoassay that we've done. And a good example here that we're looking at is the ability to take the vitro dry chemistry capability and miniaturize that into a point-of-care system and to do the same with some of the other modalities share to create and integrate it with the immunoassay capability today to create these multi-mobile things that are super valuable. And again, that lets us move beyond kind of the traditional focus where we are today to a much wider range of testing. And then the last piece here is, obviously, we're a much, much stronger global commercial team here. We have more people. We have way more power outside the U.S. We're better aligned and can be focused on key customer segments and engage those customers there while retaining the strong distributor relations we've always had. And I think the perfect example here is what the ortho side brings in terms of strength and relationship in the labs, which is much stronger than what we traditionally had as a point-of-care company on the Quidel side. So as you look here, how this will play out over the next few years in the short term, real key here is just continuing to capitalize on what's now the triple demic or triple epidemic that everybody is hearing about, that's not only an opportunity for sales today, but it's really creating an awareness that it's not coded testing that's important. It's respiratory virus testing that's important. And that plays into our strengths of having multiple products, including some combination panels that we have and ones we're developing that will let us go in here and really secure what we have and continue to grow things. We obviously also need to maintain our position in relationship with some of the key OTC retailers, both with our branded product and private label. On the Triage side, it's really leveraging the broader commercial team outside the U.S., driving our high-sense troponin that's on triage. In the U.S., we've already identified a number of real nice cross-selling opportunities between the vitro line and what we have on, in particular, Triage. As we move out a little further, we've got all these Sofias out there. We got to grow the broader menu with both our current assays and with some GI assays that are going to be coming pretty soon. On the U.S. side or on the Triage side, we have a real nice opportunity to kind of revitalize things because we have multiple launches coming on Triage, the Hisense for U.S., a PLGF test that's placental growth factor for preeclampsia and then a toxicology panel that fits in with our current offering and with the vitro offerings. And then longer term, it's about development of platforms. We're going to put toxicology, a family of products on to Sofia, which will take us into a market today that we don't play in very much, but it's huge. We're going to -- we're working on what we call leapfrog, which is a next-generation ultra-high sensitivity, multiplex immunoassay system, but we're going to integrate other modalities into it to make that super attractive in the critical care segment. And then we've got a number of other platform developments and new platform is underway to cover the broader range of stuff. If we get those platforms in place, then we have the potential, obviously, to grow to drive a lot of biomarker growth beyond where we are today. And our focus and what guides us here is we really look at the different needs in 3 kind of key areas, critical care, which is that emergency room environment or urgent care or freestanding emergency room, primary care, the broad range of that and then obviously the home testing. So kind of the key takeaways here could have said it more simply. There's more opportunity. We got the right team and we got the right products I'll flip it to questions at that point.

Conor McNamara, RBC. One of your competitors recently talked about a muted flu season. And I just wanted to get your take on what you're seeing this year as part of the flu.

Yes. It's not what we see. And I know we have a lot of data we capture it on it, but we've continued to see it be pretty strong, right, in terms of overall respiratory. You had RSV running at the same time, Encode kind of resurging. But I just saw a headline the other day about record flu hospitalizations, the highest in like 12 years. So again, we haven't seen it. Yes, if you got some of that data, Nick?

Okay. Thank you. I'm pretty sure I know who made the comment. And in a larger company, I can tell you because I used to be in one, that person would be the last person under lost share. So the fact that their customers aren't ordering flu product, I understand because we took 6,000 other customers. So he's going to figure it out, but some of who's going to be -- somebody in that organization needs to be brave enough to tell them. That's the answer.

Casey Woodring from JPMorgan. So there's been a lot of buzz around GI on the molecular side, but curious as to what that market looks like for Sofia. You noted that, that's sort of the next area of growth for Sofia in the pipeline over the next 18 to 24 months. So curious as to what the demand looks like from your customers there? And if you could size that market opportunity for Sofia?

Yes. I don't know that I want to give you -- or can give you the exact dollar amount, but probably most heavily driven by C. difficile, right, which we plan to bring into the it kind of fits in with molecular versus competes with molecular. I think we were all around whenever it was when we first developed molecular Nine years ago, told over and what we've learned is that it's the ability to define the bug with the molecular, but the patients that need to be treated are the ones that you find with that. So we feel pretty good that we can -- because we're putting it on Sofia and we're simplifying it versus kind of the market leader that we can do well. And that can pull through some of the other things there. I mean it's not a COVID-sized market. But I think it will be pretty nice. And it's another one of those examples. If you -- particularly you look at C. diff, that's going to be in our presence today and that market is obviously a lot better. Okay. All right. Can I interest to Andrew [indiscernible], who's going to talk to you about transfusion medicine.

Good afternoon. Thank you for being here today. I'm happy to walk you through our transfusion medicine strategy. Transfusion Medicine operates in the centralized spectrum of the hospital testing. So we're from hospital -- smallest hospitals right up to the largest hospitals, reference labs, donor centers, national reference labs, commercial labs. Doug kind of stole my thunder earlier by saying I was going to let you guys know that we are the global leader in immunohematology, and we are. We are the global leader in transfusion medicine, #1 in immunohematology globally, #1 in North America in donor screening. We've pioneered blood banking. We have a long history of thought leadership and innovation, and we're well positioned to grow this market. We operate in 2 different yet overlapping segments of transfusion medicine. So on the donor testing side, we look for unexpected viruses, HIV, hepatitis, syphilis. We also do immunohematology testing on those units of blood that get donated. On the patient testing side, immunohematology, we're looking for unexpected antibodies relative for ABO/Rh. And then we're doing the important thing of crossmatching this patient with the donor unit to ensure that blood unit is compatible to them. Because if it's not, it could cause a delay in hemolytic transfusion reaction, which could essentially be failed to them. Every year, there are over 118 million blood donations globally. That relates to about 354 units of transfused into patients. We test approximately 30% to 40% of those. We have a very stable perpetual business and growing at about 2% to 3% per year in the immunohematology market in blood screening market. On the plasma side, much greater growth at about 15% to -- 10% to 15%. We have a razor-razorblade model, which we go -- with a big base of automated instruments globally and we're positioned in about 130 countries and a big opportunity for us is to grow our base, not only our core business with adding more menu and reagents to our current platforms, but also looking at expanding that global footprint. Over the past 8 years, we've had a lot of innovation as we've risen to the challenges and needs of the market. For example, we are the first to introduce an RH immunoglobulin back in 1947, which has saved millions of babies' lives over the past few years. We're the first with the introduction of the hepatitis C virus marker, we're the first with an FDA license, HIV-1/2 assay. We're the first to have CE Mark with HIV combo. And most recently, we're the first with EUA approval on our COVID assays, which was used for the convalescent plasma programs. Our total revenue is nearing $700 million a year. We have an installed base of over 6,700 units, automated units, but tens of thousands of semi-automated units that are placed throughout the world. Our 55% of our revenue is in North America market. if that means there's a lot of opportunity for growth outside of the North American market as some of the emerging markets become more sophisticated in their testing profiles. A large opportunity of growth for us. If you look at the chart to the right to the left is in this segment, the automate it, the networks and the commercial labs. This is where we're driving the majority of our revenue, yet were least penetrated in those markets. These markets are underserved. They need a much higher throughput analyzer that is currently available on the market today. And this is an area of opportunity for us where we intend to exploit. So our growth drivers. As we look to the future, 2023 and beyond, we're going to continue to drive and grow our base, our core business by offering more and more automated menu and assays that will create retention and stickiness as we move to the future. We're heavily investing in a donor screening, ultra-high-volume instrument to reach that blood donor -- centralized blood donor and particularly the plasma market, which is growing at the 10% to 15% CAGR. We're going to invest in immunohematology, modular ultra-high-volume analyzer as well because we feel that segment is underserved currently, and it's a great opportunity for us to capture more market share -- but we're also launching our latest optics reader, which is a fully automated reader, which is democratizing testing. So adding the same quality and standard of testing, as you'll see in the larger hospitals, but driving it down to the smaller labs. And then finally, our digital solutions, which will link all of our platforms together. So that if you're looking at an IDN hub-and-spoke model, you'll be able to link them all together and the main hub will be able to look at all of the results that go through their system. So the key takeaways, again, I think I mentioned it earlier, we are #1. We are the market leaders in immunohematology, we're market leaders in donor screening. We intend to stay there. We have very strong brand equity. We have great opportunities to expand our portfolio with reagents and assays and digitalization -- and we have significant opportunity to grow our core with the ultra-high-volume analyzers in both donor screen blood and plasma as well as immunohematology large hospital segment... Any questions?

Conor Noel McNamara, RBC. Just can you comment on the market who you're competing with and how you differentiate yourself in transfusion medicine, please?

Sure. Great question. Thanks, Conor. We compete against Immucor against Bio-Rad, Grifols. We're differentiated. Our platforms offer much more automated menu than our competitors do. We also compete on service and support. We are the leader in transfusion medicine with many innovations. It's thought leadership transfusion medicine is a very technical cell. So we have a very competent group of individuals that sell our products globally. We're also positioned in over 130 countries. So that's a big difference from our competitors. Any other questions? I will now introduce Dr. Tamara Ranalli, Head of our Molecular business unit.

All right. Good afternoon, everyone. I am super excited today to be able to be here to speak to you about our molecular diagnostic strategy and update you guys on Savanna. So the Savanna platform and our molecular solutions target a wide swath of the diagnostics continuum. We reach all the way down into the true point of care, which Bill described. So going all the way into physician office segment and then all the way up through hospitals, both in the small- to medium-sized hospital segment to also the larger hospitals, again, especially around decentralization of testing. So while we may not be in the core lab in a very large hospital, we could be placed within those emergency rooms and decentralized locations and even into the small- to medium-sized reference labs. So it takes a large portion of that diagnostic continuum for the Savanna platform. I'll tell you exactly how we're going to do this with Savanna in a few slides. But first, I wanted to briefly discuss the current state of our molecular business and then our aspirational goals with Savanna. So currently, the Molecular Diagnostics business is about $133 million of revenue, and that is primarily to date driven by our Lira and Solana platforms and with our COVID testing solutions. We are one of the first molecular COVID solutions brought out during the pandemic. And these relationships we forged with those labs are going to be really critical with the launch of Savanna. On the second part of the slide, you'll see our 3-year Savanna installed base target of 6,000 boxes and our 3-year Savanna run rate target, which is greater than $250 million in revenue. This is a slight adjustment to what you may have seen previously. The number of installed base target is a little bit lower. However, the pull-through in those installed bases is a little bit higher, right? And this is based on the data that we're seeing with our current launch in Europe. So fewer boxes placed, but those boxes are running at a higher rate than our original estimation. So Bill discussed at length about the impact of the pandemic on diagnostic testing. It made everyone and their brother aware of molecular testing, PCR antigen testing that became the vocabulary everyone was accustomed to using. This created a huge amount of visibility for diagnostics and also elevated the importance and awareness of molecular testing within that paradigm. However, that demand is not just limited to respiratory, right? We like to talk a lot about respiratory testing. It's never going away, right, even outside of the pandemic, people are always going to have to be tested for influenza-like illness every year, right? Coke did a great job of making the average person understand the value of that, but outside of respiratory testing, there's a lot of tremendous growth in testing for other disease states. And these are areas that we're going to focus on in addition to respiratory testing with the Savanna platform. So you see this great growth rate for sexual health, double-digit growth rate for blood culture identification. So sepsis identification. GI testing in molecular, again, mentioned the 15% CAGR and vaginitis. So all of these key areas are growing at a tremendous rate, and we're not even discussing the concept of decentralization, which is trying to grow even faster than just even growth rate overall. The pandemic also did a great job of showing the unprecedented need for flexibility and testing. We all see the pictures of people who are waiting in line to get tested and then gaining 3 to 4 days to get their results back. That is not sustainable for diagnostics. People want to be able to get their results very quickly, right? And whether it's being done in a physician office or within a small clinic or urgent care or even in the hospital, the need for faster results is critical. And what Bryan had mentioned, the need to do more with less, right? There's the constant pressure because there's fewer technicians available. There's less money available. They're always trying to find better solutions that are cost-effective and quick regardless of where the testing is being done within the continuum. However, one size fits all has not been a good solution for testing within these different segments. Many of our competitors have been on the market for many years, right? They developed their platforms 10 to 15 years ago. They've been out there for quite a while, and those platforms were developed for testing that was needed and a customer segment that existed a long time ago. The differentiation with Savanna is that we've developed this platform to address the needs, not just within the lab but also outside of the lab and do so in a way that is cost effective and fast. So some of the key features that I wanted to briefly discuss with our platform, less than 25 minutes from sample to result. No hands on time in preparing the cartridges or dealing with the sample. You basically place the sample into the cartridge and the cartridge into the device, and you receive your results. This turnaround time is a key feature that makes it very attractive for point of care. Point of care test can't take an hour to 1.5 hours long to get a result or even 45 minutes. Speed matters. However, accuracy is also important. A very fast answer that is not correct is not helpful. In addition, we placed a test select feature, which causes flexibility in the panel. So what is test-like Test Select allows the end user to determine which analytes on the panel, they would like to see results for. And so with the larger panels that we're developing, we have panels up to 12 different tests. The end user can then determine whether or not they want to see a subset of those results. And then they have 48 hours after that to go back without having to rerun any of those tests and unblind that data. So this allows -- let's take the case for respiratory testing. In the outside of the winter season, when you have a panel of you don't necessarily need to be testing for flu perhaps in the middle of July. It's not that common. However, you can then run a subset. So you can run your adenoviruses, your vinyl viruses and maybe your RSVs and then blind the rest of those results because those are viruses that are circulating more frequently in the summer. Again, all with the same panel, which is great. different testing for different settings. If you're testing in a pediatric hospital versus testing in adult clinic, pediatric hospitals care a lot about RSV and even human metapneumovirus. Those viruses make kids very, very sick. They don't make most adults very ill. So again, this flexibility is unique for Savanna and a key feature that allows us to be relevant in multiple segments. In addition, the last thing I wanted to mention from a future perspective is the unique menu. So while we will have some of the more common analytes like everyone has a respiratory panel, everyone has GI testing. We also have focused in on some tests that will help drive adoption. And those tests that are unique are tests like including syphilis and a legion panel. There's no current molecular syphilis diagnostic tests out there. So we'll be a leader in bringing that testing into the molecular world as well as the farangitis panel. I don't know how many of you are aware, there's a huge group strip-out break in Europe that's actually killing small children tends to be unheard of. But our panel doesn't just include group-based strep. We include other bacterial causes of pharyngitis, and this is a differentiation that will allow us to be able to displace culture testing and move it to molecular because we're actually able to detect the forming causes of bacterial pharyngitis which are treatable by antibiotics. And then when you talk about competition, and so we've left our competitors' names off of the slide to protect the innocent. But when you're comparing against a lab point-of-care competitor, you've got broader analyte coverage with fewer cartridges. So you have to run fewer tests in order to get the same amount of information. We've got a faster time to result that really helps push the testing out of the lab into the decentralized setting and no price prohibitive service contracts. Some of the service contracts are so costly with some of the equipment that within 3 years, you're actually purchasing a new platform. With a syndromic panel competitor, we have a faster time to result. So you get that clinically relevant syndromic test in far less time. And then 2 sample to answer. Again, as I mentioned, there's no hands on time. You're just adding that patient specimen into the cartridge and then putting the cartridge into the device. And then Test Select, which many of the syndromic panels don't offer, you're either having to run that complete panel, all or nothing. We allow the end user to dictate what's important to them. And then with a rapid point-of-care competitor, True molecular PCR sensitivity, broader analyte coverage per testing. Many of the isothermal tests are only able to run a single analyte at a time, which means if you want to run a panel of RVP 4, you're forced to run 3 different tests. So even though they may be faster, you're going to end up taking longer time to get to the same amount of information -- all right. So where are we today? As I mentioned, we've done a small targeted global launch in Europe with the CE marking of our product last year. We see marked at the end of last year. This was done in 3 specific countries in Europe. We piloted it in Austria, Germany and Italy. We decided to do this while we were scaling our manufacturing capabilities for both the platform and the cartridge. We've just recently brought online our low-volume lines and are capable of expanding the launch. So we are currently working through an expansion of our launch in CE Mark territories. We'll next be expanding the launch to include North America when we received the EUA or 510(k) clearance of the platform and RVP 4. We will then expand into other regions such as Latin America and Asia Pacific as we complete registrations as the combined QuidelOrtho company in those regions. In addition, I've got the product pipeline of all of the products that are currently actively in development below, there are a total of 7 or 8 different panels that are actively being worked on, including an STI panel, the pharyngitis panel that I mentioned. We also have a vaginitis panel, the full respiratory panel of 11 and 2 different GI panels. We have a wide variety of other panels that were in earlier stages of development targeting such unique areas like meningitis testing, as well as antimicrobial resistance, which is one of those areas which is becoming increasingly important post pandemic. There's a lot of antimicrobial resistance out there and it's going to be a key problem going forward in molecular diagnostics. So finally, I'd like to summarize with molecular as one of our high-growth businesses. We have a unique ability to flex throughout the continuum of diagnostic care. We're targeting a variety of very high-growth markets with this. And Savanna, we feel, offers a very unique platform in order to address these markets. We think we're very well positioned to be able to take share from these older, more entrenched platforms with the features and attributes of the Savanna platform. And so our current launch trajectory is expanding our EU launch in this quarter. We have clinical trials planned for 6 different panels for next year, and the U.S. launch for RVP4 and our herpes panel. And then 2024 is when we broadly launch those 6 additional panels into the crowded market of respiratory players, diversifying our capabilities worldwide. And I will take questions.

Eliza Garcia, UBS. So I guess just thinking about kind of the different customer bases that you're targeting within molecular, particularly maybe the emergency rooms in the reference labs. How are you thinking about that in terms of menu and kind of what they're looking for? I think, obviously, they'll have a reference lab as well. They'll have a choice of a higher volume kind of product. So where are you seeing kind of the growth opportunity there?

Yes, so each -- and that's a great question, thank you for asking. It's really interesting because each segment is going to have very different menu requirements. And so we're hitting different -- in the ED, they really care a lot about STI testing, right, getting that result very rapidly, and respiratory testing. Those are kind of 2 key areas of focus. In more of a reference lab setting, a lot of the GI panels and some of the more esoteric tests become more important there. They're also not necessarily tremendously high volume. What also we've seen, and this has been shown in Europe, is that the Savanna platform is also a platform that can be used for some of the low-volume stat testing that's done in the core lab, but not during the shifts where they have high volume. So we'll bring it in and put the testing in during the weekends and third shift because it's so simple, they don't need their sophisticated techs to use it. So they'll run respiratories on a larger volume platform during the day, and then at night, they'll run it on the Savanna.

Patrick Donnelly with Citi. It might be 1 for you, and then I don't know if Doug wants to add a little bit. But I know you guys had talked about pretty confidently kind of a $300 million number in that 3-year time frame. It's now $250 million. You talked a little bit about kind of systems coming down, pull-through coming up. I guess can you just talk about what changed in the last few months? Is it slower adoption in Europe? Is it the fact that U.S. got pushed out again on the quarter? There was more discussion of kind of shifting resources to Europe that doesn't change anything in terms of the revenue trajectory. So just trying to, again, get the moving pieces there and make sure we understand it.

Yes. Primarily, it's been the pushout of the U.S. launch that has impacted that. Obviously, you can see from the data that the vast majority of our business in the model is based on the U.S. So having that capability prior to this respiratory season. would drive that. But we're also looking through, with the expansion of the QuidelOrtho team internationally, how we can push international registrations in order to make up some of that gap as well.

I could add on that, Patrick. I would say that I mean the number that Tammi showed was 250 or better. And remember that -- I have too many mics now, sorry. That's 3 years post the U.S. launch. So at some time, call it mid- to late '23, 3 years beyond that is where you'll see that number. I would argue it's largely the same number, Patrick. I mean, it's greater than 250, it's probably slightly lower in how we present it because of the delay in the EUA or 510(k) for the U.S. I think that's primarily the major driver. The fact that we've got more information now from this limited launch we've been doing in Europe has allowed us to get smarter and refine the model. And I actually think we have a much better model now. It's more informed. And we do think that the flow-through per box will be higher. And then that means less boxes placed to get to that number. So personally, I think it derisks the number. So instead of talking about 15,000 boxes before, and we're talking about 6,000. So I just think we've just learned a lot more in the last 6 months than we knew then and it's just a more refined model.

I am very pleased to introduce Dr. Werner Kroll, our Head of R&D, who will be speaking about the future of diagnostic technology.

Thanks, Tammi, for the introduction. In my part of the presentation, I'd like to update you on our view on key health care and macro trends that lead us on specifying future product needs and respective R&D activities to develop these products. These trends range from decentralization of care and testing to increasing digitalization and automation. Bryan, Bill, Andrew and Tammi showed you our path forward for the midterm time frame, and my talk will be on longer-term future and I will focus on the 2 areas of decentralization of testing and the increasing digitalization and automation influencing IVD testing. During COVID, we have seen a massive acceleration towards decentralized health care, from decentralized testing at drive-through testing stations, at physician offices, and at home, to physician visits via telehealth to increased care at home. We believe this trend will stay with us and expand in the future. Three major enablers for this trend come together: product demand from customer and patients; enablement of access through change in regulations by the FDA; and enablement of products through technical innovations. Once patients realize advantages like easy and convenient access to testing; easy, fast and convenient access to physician consultation via telehealth; or care at home for post-acute treatment, they will stay with it. If we look at the development of telehealth, we can imagine the potential for decentralized point of care or at-home testing going along with it. In 2019, Medicare alone had 840,000 telehealth visits. And in 2020, these were already 52.7 million. Besides the measurement of physical data using wearables, there will be an increasing need to have specific biochemical market concentrations going along with it. And that's where we are positioned well to deliver the specificity and sensitivity needed at the point of care. We also introduced and apply technologies in our products that enable lower manufacturing costs and more reproducible product lots. Last but not least, we adopted our development process to ensure that the new product designs and materials are optimally applied to reduce development time lines and development risk. While these developments all happened for acute products for the detection of viruses and bacteria, this area here, we see the future is in areas like protein concentrations that reflect chronic disease states. One of our first products in this area is high sensitivity troponin that we launched outside the U.S. to support the acute needs like in or excluding myocardial infarction with our quantitative triage assay. While high-sensitivity troponin is still an assay targeting ERs, monitoring treatment responses or health status will be a great at-home testing opportunity. For these targets, we have multiple developments in our pipeline. An at-home version of our Sofia 2 fluorescent point-of-care readout instrument; the use of our VITROS micro slide clinical chemistry assays on a point-of-care platform, Bill was already referring to; and the high sensitivity digital immunoassay Leapfrog platform, enabling the multiplex determination of protein concentrations at the point of care at double-digit femtogram per mL levels. From a chronic disease perspective, we see multiple areas where there is meaningful overlap of our technologies, clinical utility and patient needs. In the second part of my presentation, I'd like to focus on the increasing digitalization and automation in the field of in vitro diagnostics and how QuidelOrtho and QuidelOrtho R&D in specific will address this trend. One of the main drivers for automation is a limited skilled technician availability to manage the growing demand in the labs. Systems have to be easy to use, handling the entire process from sample to result. This applies to both lab platforms as well as point-of-care platforms. Software is the key that unlocks improved usability and efficiency of an automation process. Within QuidelOrtho R&D, this importance is reflected organizationally by creating a separate functional group for software on the same level as hardware or assay development. Improved data collection, integration of data from different sources, analyzing and interpreting data through new mathematical models like machine learning or artificial intelligence, and communication of data in real time are key features of our middleware initiative, as well as our platform system revamp Bryan was talking already about. Improved data handling and communication are the key features in line with digital transformation, the next disruption in diagnostics and health care after the genomic revolution. With our platforms, we will support the convergence of health consumers and technology. As part of our long-term activities, software improvements are becoming essential components of the new design concepts of our platforms. This includes modular concept, seamless scalability, application of new materials and technologies from consumer and other industries, seamless scalability of instrumentation features like throughput, sample handling, data integration and data communication. Key platform features are easier and faster access to the data for the user, lab or individual, improved features to validate data within a health care setting, and inclusion of data from along the patient journey. At QuidelOrtho and QuidelOrtho R&D, we see ourselves well positioned to address the future IVD product requirements efficiently. We develop required products with innovative features, employing agile processes that allow short development time lines and easier adjustment of features even during the development process and win on the market. Last but not least, we integrate the manufacturing and scalability of products from hardware, assays and software aspects into our new instrument designs. They will be as flexible as possible within the regulatory constraints and changing customer requirements. Flexibility will be key, as well as dedicated and rigorous development process. The integration of Quidel and Ortho cultures to the new QuidelOrtho brought these traits together and we are living it now. And with that, I'd like to open for a few questions.

Conor McNamara, RBC. Can you just talk about any technologies or products specifically that you're excited about over the next 3 to 5 years?

So one of the key ones is digital immunoassays. So what we are looking for is increasing sensitivity in specific areas, so we can support markers in neurological health and in other chronic disease states that we can monitor patients efficiently. And if we are starting on a low level of a marker at a relatively healthy status of a patient following through, we need very sensitive assays. Coming to drugs like Aduhelm that is treating Alzheimer's, we would like to support these treatments with monitoring the patients using, for example, markers like tau and phospho tau, and the technologies we are applying will allow us to utilize markers out of blood rather than CSF, which then would really differentiate these products. So in total, I would say, focusing on chronic disease markers, monitoring at home as well as in the lab, and supplementing this monitoring with the diagnosis in larger settings with VITROS instrumentation.

Alex Nowak from Craig Hallum. We were all given a quick view at-home test. And I know we went through all the segments here today, and I think we talked on point of care, but I was hoping we could expand a little bit on the at-home segment and what the vision for Quidel is more on the at-home side. You mentioned just at-home right there. But is there a viewpoint, other infectious diseases? You mentioned chronic diseases. Maybe just a little bit more on the at-home angle, and allow others to answer as well.

Sure. Definitely, we are looking for expansion of infectious disease testing at home, looking at flexibility that is increasing at the FDA, allowing for, hopefully soon, better approvability or clearance of products like RSV or flu testing. And secondly, I would say we are looking definitely into monitoring, as I said earlier, of chronic diseases at home. This will require quantitation of these assays. It's not anymore a yes/no answer. And this is where we are heavily working on. Quantitation also requires small instrumentation. I mentioned one of those that we have a Sofia 2 like instrument that can be used at home for these type of testing, and this is where one of the focus areas will be in the future for us.

Okay. We're going to take a 13-minute break and start back up at 3:00 Eastern Time. Thank you. [Break]

I know some of you are walking back in, but I think we would like to get started and keep things moving. I know we have a few folks that have joined us virtually.

My name is Mike Iskra. I'm the Chief Commercial Officer here at QuidelOrtho. And I've been 30 years in the industry in diagnostics, the last 7 with this company. I came into the Ortho organization shortly after the acquisition by Carlyle. So I've had a very exciting few years but a long run in diagnostics and in commercial organizations. Really excited to talk to you guys today about our program here at Ortho that we call Commercial Excellence and what we do to go to market across the globe. And our primary objective, as you would imagine, is to maximize profitable revenue growth to the best of our ability, taking all the products and services you heard about from the group earlier and bringing those to market. And in doing that, we have a strategy we focus on. It's called Retain, Grow, Win. And it's not very complicated. And in fact, I think that's one of the things I hope you would take away from me and my presentation is our approach is not very complicated. It's pretty basic, pretty practical, but the key is execution. So with Retain, Grow, Win, it starts with Retain. This is our growth equation. And it's very interesting. I get a question a lot. Well, growth is about growth, it's about adding new revenue, it's about all these other things. Why do you say it starts with Retain? Well, the key in this business is the better job you do keeping your customers, then as you bring out new products, you a, have more customers to sell to; and b, you're not filling a gap that you have because you lost customers. So number one, every day for our organization, is retain our customers. How we do it is what we call customer excellence, and you can see on the slides here in front of you. This is our focus. There's a method. It's intentional, and it's something we work very hard at. On the left side of the chart what you're going to see is a stack rank of us and our primary competitors in the U.S. market, and you'll see that we've been #1 in service for 7 years in a row. This is the result of an intentional effort, a lot of work to become number one. While this represents the U.S., the fact of the matter is we don't just win awards in the United States. And some of our strongest areas, countries and regions are in places like China, in India, in other places in LatAm and Europe, where we do very well with service and have won awards. So this is a global effort and focus for us. How we do it is what you see over here on the right. These are the key differentiators. Again, they make a lot of sense. Number one is increased analyzer uptime. It's very simple. If our customers' instruments don't go down, they are very happy. They don't need service. We don't have to spend a lot of time and money and effort. So we are industry-leading in uptime with our instruments, and that's something that we expect to maintain. That's key. But sometimes an instrument does go down. And when it does go down, the key is how fast can you get the issue resolved. So we spent a lot of effort in having fast resolution, not just getting there quick and solving it, but solving it right the first time. So a lot of effort there. Over the last several years, we've been focusing a lot more on self-service capabilities, and we're not alone in doing that. You'll hear that from many of our competitors. But I think one of the key things when we talk about self-service capabilities that we try to discern is, are we shifting the burden to our customers of service? Or are we enabling them to prevent things or handle it on their own? Which is it, right? Because we do see some of our competitors, to save cost of money, they're putting more on the customers. That's not going to keep that customer for them for a long time. But if we do the right things for our customers to enable them, and it's easy for them, then it will help us. And we do all this with an eye on lowest total cost of ownership. Now this is mutually beneficial. For us, the goal is, how do we reduce cost for our customers. You've heard about it from all 4 of our business units. It's in our industry. We have to do that. But sometimes, many times, when we do things that reduce cost for our customer, it reduced cost for us as a company. So we're able to keep, maybe take some of that money, invest it in things that are future forward, that we'd like to do. And those areas come in the bottom 2 sections. These are the enablers. It's technology and leveraging our combined service model across the globe. I'll talk for a second about technology, a number of different things in here we've talked about, but artificial intelligence. A lot of different discussion about AI, how do you use it? Where does it have value? You look at projects, some get really, really big and broad and they're hard to land the plane. Let me give you an example of what we're doing and how this makes sense. Again, pretty simple. We have 300,000 service events a year, okay? So 300,000 -- I just told you, we try not to have any, but we have 300,000. 300,000 issues every year. Now what happens is for every one of those issues, guess what else we have? Resolution, right? Every issue, there's a resolution. We track that data. We have the conversations between the customer and the TSE. We have the notes from the FE. We have all this data, all this information. And so by using AI, we're able to take that information, find the fastest path, the clearest path between the issue and the resolution. And then we use that to enable our field engineers and our phone support people to get there faster. This is a big benefit for us from a speed of resolution, and when we look forward, it's also an opportunity for us to take that tool and put that in the hands of our customers after we refine it. So that's one example of how we use technology, how we're using technology to move forward on service. The next major area for us in our commercial excellence would be what we call commercial enablement. How do we set our teams up to win? How do we make them successful? And here, you'll see 3 levels. And where I'll start is what we call Edge. Edge is our base level. It's our base package. This is an expectation and the standard we have across every region and across the globe. This is where we start with the market first. You heard some of the conversations from the team about where we best fit with our products. We do a market assessment. We see where the sweet spot is where the opportunity is, and we start there and then we deploy against that. We don't have the luxury of being all things to all people. So we need to be very focused and disciplined with our go-to-market approach. And starting in the market is the best thing for us to do. As we've done integration, I know there's a question on that earlier, as we've done integration, we've taken a step back and we looked at many of our markets to better understand with our new portfolio did anything change. And when things did change, how do we change how we deploy, where we focus and what else we need to add as far as capabilities to hit our sweet spot in the market across all of our business units. So you should expect that everywhere that QuidelOrtho does business. Level 2 is what we call Evolution. This is where theory meets reality, right? There's a lot of great plans when we do the edge. We do the market assessments. We get some information from consultants. But now in this phase, we're out there, we're actually seeing customers. We're asking the questions, and we're seeing how does the truth hold up against what we thought. In this particular phase, we need to be nimble. We need to focus on continuous improvement, and we can't be so married to some of our ideas that we initiated that we don't change. Again, very simple but not easy. This is where I'd say a lot of our competitors fall down. They roll something out and they stick with it no matter what. We are built to evolve and change as we go to market. The last one is really the North Star. It's what we're aiming for. And we call that the 360 -- 360-degree of a customer. Here, what I want you to think about is commercial delivery, commercial go-to-market that is best-in-class forget diagnostics. But think about any industry in the world, what is best-in-class. Best-in-class is when you have a full 360-degree view of how your company shows up in front of a customer, instead of looking at it from a functional point of view, as a company out to your customer, you're looking at it from the customer's perspective back on the company. This is what we're trying to build together. This is where we're trying to go enterprise-wide and make sure that we have the best information to interact with our customer in the most efficient manner. I'll talk a little bit about integration and how we're deployed. Pat showed a slide earlier, 6,000 people in the company, 130 countries, same 130 countries. But here now, what we're talking about is our commercial team, our customer-facing resources. Roughly half of our organization is in our commercial organization, 2,800-plus people. You can see the dispersion across the globe. And one of the things that you'll notice here is while -- some of the slides you saw in revenue are very heavy in North America and U.S., a little bit easier to serve that market because it is very similar across a large geography. Here, you're going to see almost 2/3 of our people are ex U.S., OUS as we might refer to. And when you hear Bill Ferenczy talk about it and Tammy, these are great opportunities. These are people that we already have in place that are in region, in country and ready to go on the full set of our product portfolio. We are progressing on integration. I'll answer a question that was brought up earlier. Pat, you did a great job, but to add some to that. We have completed our road maps in every region. We expect January 1 that we will be in close to 100% of our revenue countries be in the market as QuidelOrtho. There are a few small distributed countries where we have distributor arrangements that need to be resolved, and we have to wait for contracts that are up and a few regulatory type challenges. But for the most part, as a company, we will be in the market in January as QuidelOrtho. And we're very excited about it. Not only am I excited about the fact that we're hitting that time line. I will say, in most countries, U.S., China, EMEA, we ran ahead of schedule, right? The team's laid out a plan. They thought it was daunting. And what they found as they got into it is just we could knock a lot of things down if we're just committed to making decisions. And the team did it. Very proud of them and excited to see what we do. So I'll end by talking a little bit about how we expect this to show up or how you might expect this to show up. And I'll work left to right on this. And the first one is revenue creation through cross-selling opportunities. Again, it makes a lot of sense. If you take the 2 companies, you combine and you look at a market and you say, hey, let's put the customer list together, how do we sell new products to existing customers. So our biggest opportunity is here when we look at it, you can see listed 2, maybe I'll highlight one is China. From the ortho perspective in China, we have a great presence in the stat labs. These are the stat area or specific laboratories that are in some of the top-tier hospitals in China. That position is the perfect place for the Quidel products and portfolio for us to introduce, particularly on point of care. So we're already there. It's another product in the bag. It's not a new call point. We expect to leverage that immediately. Also in China, for those of you that are familiar and aware, I mean, China is doing a lot to bring more health care to their community, so to speak, they're trying to build that mid-tier of hospitals, which is our sweet spot. And so that's been a strategic area of focus for that team. Now as we plan that out, instead of showing up with part of the offering, as the team has shared with you, we're able to show the entire continuum of care and help those community health care providers, which don't just include hospitals, but may include clinics and things like that, we have a stronger bag to present to them. In the U.S. is the other example I shared. So we took the 2 lists together for the hospital segment. And if you look at that continuum, one area that you'll see that across all 4 business units we align on is the hospital segment. So it's very, very important for us in our business. So we took the hospital list from both companies, put them together and we saw some overlap with customers, 45% of the customers by products that were Ortho and were Quidel. So they now buy QuidelOrtho products. But that means that there's 55% of our customer list that do business with us that like us. And we have an opportunity, we have an upside to go sell them, cross-sell them products. So obviously, that's one of the first areas we're pursuing out of the gates. The middle area is enhanced distribution capabilities and probably 3 things I think about here that are meaningful. One like the U.S., both companies did business -- a good amount of business with distributors, pretty much the same group of distributors. But now with that distributor, combining the product portfolio, we have more weight with that distributor. We produce more revenue for that distributor, and we are now in a better position with that distributor to be first out of bag, okay? We can leverage that. We can use that -- we can use that for more airtime with their reps at their meetings, things like that. It's very good for us in the U.S. There are other areas I use Panama as an example where both companies had different distributors that were using in the market. And now as we get to assess, we're looking for best of breed. Who is best fit for us? It doesn't matter who was doing business with them as a legacy, but we now have exposure to other distributors that we think may give us better capabilities on one side of the business where we weren't using them. Panama as an example, we're in process on that now. And then I think the last one isn't really a specific -- country specific. But when you think about the OUS business, a lot of that was being run and managed by HQ or corporate, far away. Now on that map that I showed, we have people not just in region to manage these distributors and work with them from a regional point of view, but we actually have in country. So now we're in, we're understanding the distributor. We're doing a better job educating them on our products. We're doing a better job answering their questions and challenges that they have. And we're doing a better job driving them on the business. That is something that may be a little harder to quantify, but something that we expect to make an immediate difference with as well. The last area is just the overall strengthening of the customer reach. And here, when you think about this, we heard a couple of areas for OUS. We've got Savanna coming. We're working with Tammy and team to identify certain markets where we could get in regulatory-wise sooner than was in the original plan, and we have teams on the ground to help us with that triage. I will tell you, probably the #1 item that we've heard from the regions as far as where they think the first near-term opportunity is triage. You heard from Brian that we still have some ortho legacy, has some stand-alone chemistry placements that are out there. They may need some testing that we could bring a triage for. So we're putting these list together. We're using these as the target areas, and this is what we're chasing. And I think the last thing that I'd say to you as you think about all these things, I mean, it's really, really clear to me that we have an immediate impact from this global commercial organization to get going with the new combined portfolio for QuidelOrtho. We're set up, we're in place for all the future products that are coming in. It's a fast path. And in fact, I think it's going to be a faster path because the local presence helps give the insight for the teams to prioritize and it helps get the regulatory information we need to get through and get to market faster. So I think it's going to help us there. And last but not least is -- and Joe is going to talk about uses of cash, but one of them on there is M&A. And so when you think forward, it's probably likely at some point in time that we're going to do something. And when you have roughly 3,000 people across the globe, ready to go and get those products in the market, that's a capability that the company didn't have before, and we now have. So with that, I hope you guys will see that not only is our commercial organization, something that's a competitive advantage for us right now today, and we've been leveraging over the last several years, but we are well positioned for the future to continue to drive growth. Doug said it. We're in a new environment. I'm very confident in the team. I will make one last comment on the team, which is it's shocking to me that we're only 6 months into this integration because a lot of the folks that you've seen today, we've been traveling together. We've been working together, my regional heads, the business unit heads. And in 6 months, I think we have one of the highest functioning matrix organizations I've ever seen. And I'm going to have to figure out the secret to that because we've got something going on here pretty cool, and we're off to a great start. So that's it for me, and I'll be happy to take any Q&A.

Andrew Cooper from Raymond James. Maybe just quickly on kind of the integration of the 2 businesses, a little bit of a different product portfolio when we think about the instrument base for Sofia. So how do you take some of what you are doing on the Ortho side historically and apply it to a different end market, a little bit different of a product set?

Yes. So great question. The process that I laid out to you, Edge, Evolution, 360, they don't change. It's a method. The method doesn't change. It's not specific to a product. It's specific to how do you go to market, looking at the market first. In fact, when I mentioned we did some of this in the integration, we took a step back. I mean, particular areas we did deep dive U.S., China, parts of Western Europe, Japan and parts of Asia Pac, where we think that there's a difference that if we just approach these markets, taking what was already there, we were going to miss something. So we did that step. We took that same approach to make sure that we're highly targeted. We use that to create a priority list that goes back to that team and our operations team to say, "Hey, yes, we're commercial. We want everything, we want it now, but we can tell you where the priorities are because we think those are the best opportunities". All right. So thank you, everybody. I appreciate the time. With that, I want to introduce our CFO, Joe Busky.

It's a pleasure to follow you, Mike. I think I know everyone in the room, I'm Joe Busky, but if I haven't met you, I'm -- I was the CFO at Ortho and came over with the deal when the deal closed. And I echo what Mike said, this is a highly functioning team right now. It's -- we got along really well. So it definitely helps quite a bit. I am -- I can -- okay. I am happy to go over the financials of all of the areas that my colleagues have discussed earlier today. And I'm going to start with key messages. I think a lot of the guys ended with key messages, and I'm going to start with key messages. The first point is, all of us heard each of the business unit heads talk about the drivers of growth now and near term that will propel this company to high single-digit growth on the top line. Second point is this company, and I'll show you this in a minute, I think most of you know this already. This company does have a healthy balance sheet and substantial cash flow generation. And that balance sheet and that cash flow will continue to allow us to invest in the business and maintain that growth for the midterm and the long term. This slide is really a reminder of the Q3 earnings call we did a little over a month ago. And for me, on the top part of the slide, the most important point to note is that 8% revenue growth, excluding COVID. It's a pretty solid number. And it's even more impressively -- if you were to exclude the Beckman BNP transition impact, which will end at the end of this year as a headwind. It was actually 10% for the year-to-date results. And again, that's ex-COVID. So that's the base business. That's what we've been talking about all day. At the bottom part of the slide, we talk about our guidance. Again, I think it's impressive that we have guided to a full year 7% to 9% ex-COVID top line growth. And we're well on our way for that. EBITDA at $1.5 billion and adjusted EPS at $13.50 at the midpoint of our guidance. One other areas we talked about, and we've talked about this a lot today, so I'm not the first was integration and the cost synergies. We did talk about a $50 million identification of cost synergies for 2023 on the call. And that's compared to a target of $30 million. So I do want to mention, and we said this on the call as well, that's an identification of synergies. So we still have to execute on these. We've got a really good start thus far, but we still have some work to do. It's not easy. A lot of the identified and executed synergies thus far have been in the SG&A or as you can see on the left side of that slide, we've listed out a lot of the things that we've gone after or will go after soon. As you move into '24 and '25, I believe that a higher proportion of the synergy achievement on the cost side will come from the commercial and operations areas as we get further down the line in the planning of those synergies. And Keep in mind that we've put out an external target of $90 million of cost synergies, internally, our number is higher than that, of course. And so we are -- someone asked earlier, about the overachievement. We are aiming internally to overachieve that $90 million for sure. And I'm not saying we will right now. But internally, we're running pretty hard and fast to get there. All right. One more Q3 slide. This is a good slide to remind us of the strength of the balance sheet of the company heading into 2023. We have nearly $300 million of cash and investments on the balance sheet at Q3. We have a 1.4x net leverage ratio, and we've generated over $700 million of recurring free cash flow for the -- through the first 3 quarters of the year. So pretty good stuff. All right. We talked a bit about capital deployment. And Doug mentioned it earlier, I thought I'd just give you a little more color around each of these items. At the very top of the list of capital deployment or the priorities of capital deployment is absolutely going to be investing back into the business. Werner presented earlier. He and I are very close. Our offices are right next to each other. We talk quite a bit. We will invest in R&D to support the menu expansion that the business unit heads need to grow their businesses. We're going to develop innovative new instruments and platforms over time. And that will be achieved through funding R&D in the range of 6.5% to 7.5% of total revenue with COVID at an endemic level. So we will continue to fund R&D. The next item on the list again, it's investing back in the business, and this is more an operational excellence area. We will invest CapEx. We are investing. We will continue to invest CapEx into the business to increase the manufacturing capacity. I think Doug said this earlier, too, we don't have so much of a demand problem right now. We have a supply problem. We got to get more products. And so we are putting more money into the business to develop that manufacturing capacity. We're also developing the expertise to be -- or to develop -- I'm sorry, a supply chain competitive advantage in our space. We think we can do that. And so some of the examples there are, like, for instance, in 2023, we're putting 2 new vitro slides and manufacturing lines in Rochester for the labs line. We've already got up and running the Savanna low-volume line. In 2023, we'll get the high-volume line up and running as you move into the second half of the year. We're going to continue to invest money in inventory to put safety stock on our balance sheet, so we don't stock out and we can continue to produce products. Third item, the debt paydown, super important to us. We will maintain a sound and flexible balance sheet with appropriate levels of leverage. We will pay down at least $200 million of debt in the next 2 years. We have locked in through our swaps, our derivative swaps. We've locked in at least 70% of our loan at a fixed rate, which makes us feel pretty good about that. And we've got visibility to a near-term net leverage ratio of 2.5 -- approximately 2.5% as we exit 2023 next year. All right. Share repurchase is next on the list. I think everyone knows we had put in place a $300 million share repurchase authorization with our board in August of this year. And in Q3, we took advantage of that authorization to take advantage of what we saw as a dislocation in the market with our share price. And we will use that as we see fit going forward. And finally, strategic M&A. Priorities here are going to be expanding the molecular business unit, establishing digital health credentials. It's going to be expanding our specialty immunoassay business, Brian, it's going to be leveraging the trends in home testing that we're all seeing. And unless anyone get nervous, we're not going to get distracted from integrating these 2 businesses. We understand that's first and foremost. And there's work to be done there. We've had a really good start. There's work to be done. So the M&A that we're looking at will likely be in the strategic tuck-in variety and adjacent areas of business that we already operate in. Next slide talks about how we see what will be the continuing long-term value creation for our shareholders. And this isn't really complicated. It's kind of what Mike said. This isn't complicated. I think you guys could probably do this slide without me. We want to continue to grow the top line. We want to continue to grow that installed base and get more revenue per box, bring out more assays, more menu expansion. We're going to expand our EBITDA margin. And quite simply, that's easily set as we're going to grow the top line faster than our G&A line. That's simply how we're going to do it, and that will create that margin expansion. We're going to delever. In fact, I talked about us being at approximately 2.5x levered net -- on a net leverage ratio at the end of '23, at the end of '24 I anticipate us being around 2x lever. So about a 0.5x reduction as you move through 2024. And then finally, the strategic M&A that I just mentioned on the previous slide to continue our growth. Okay. So this slide -- I think Rob showed a version of it earlier, each of the business unit heads touched on it. This is the summary slide that I want to hit. We have a near $50 billion addressable market in all of the areas, as you can see on this slide that will deliver 5% to 7% growth. Now what's interesting about this slide is that -- and it's not on the slide, but I'll tell you, if you were to take our current mix of business within this addressable market, it would actually translate to 4% to 6% growth. And so if as a company, we can grow at market at this 5% to 7%, we're actually taking share. And if we can grow greater than that at market 5% to 7%, again, given our current mix within the addressable market, we're doing pretty well. That would be great for Mike and his team to be hitting those numbers. So having said that, now the next page, left side of the page is our strategic priorities that we've talked about earlier. Right side of the page is the 3-year outlook. I understand some of you maybe thought I was going to do 2023 guidance today, but you're going to have to wait until the Q4 earnings call for that. We're providing a 3-year outlook today. And that 3-year outlook is on the right side of the page here. We're looking at 6% to 9% top line growth, and that's excluding COVID, of course. So that is, as I said, on the last slide, that's going to be above that market growth. We're looking for 27% to 29% 2025 adjusted EBITDA margin. And where we land in that range will most likely depend on where uncontrollable areas such as inflation and FX end up over the next 2 to 3 years. In other words, we've seen a lot of inflation recently. We've seen a lot of FX headwinds recently. And if those 2 areas can subside over the next 2 or 3 years, we believe we can be at the upper end of that range. If they get worse, we'd probably be a little lower end of that range. Adjusted EBITDA. We do think we can expand the margin 25 to 50 basis points a year. And that's really going to be driven through 3 areas. We're going to continue the commercial excellence program, leading with integrated analyzers, which drives more immunoassay revenue, which is higher margin and is accretive. We're going to focus on the Savanna launch and execute that well because as that launch continues and further along the line that Tammy presented earlier, that will improve margins. Everyone, I assume you all know, when you introduce the product and the volumes are low, margins are not the best when you first introduced the product because volumes are low. But once the launch gets going, it gets into more geographies, more panels introduced. We believe that, that's going to drive some margin expansion as we launch Savanna. And then finally, the realization of the cost synergies, of course. We see that adjusted free cash flow will be in the range of 60% to 65% of EBITDA. And in the near term, I would say that's more a range of 50% to 65%. And that's because we are investing back in the business, as I said earlier, investing back into manufacturing capacity. So there's some CapEx we're spending there. So near term, 50% to 65% further out in the horizon, 60% to 65%. And then finally, on the bottom line, we do see adjusted EPS growing at a double-digit CAGR when you go '19 to '25, and we do see that to 2025 adjusted EPS will be in that $6 to $7 range. So my final slide, and then we'll go into some Q&A. We still believe that the Quidel stock is undervalued versus our peers. I mean, Doug and I get that question I think every time we meet with all of you, typically the first question like what is driving this. We still believe we're undervalued versus our peers. And what I've tried to show here -- and by the way, this data on the right is as of a week ago. So it's -- I think it's still very relevant and fresh. But on the left side, you can see our revenue growth versus peers consensus. And what I just showed you, the EBITDA margins are very comparable to our peers. And yet on the right, you can see the EV EBITDA multiple it's -- there's a separation in the 17 versus 11. And if you look at this slide or look at this data on a P/E ratio, you get the same answer. It's 24 versus 18. So again, we still believe that we're undervalued versus our peers. So with that, Doug, I think I'm going to invite you back up and we're going to go into a more general Q&A session.

Patrick Donnelly, City again. Joe, maybe just on the EBITDA side, you kind of just showed there the '23 numbers consensus is at 29%. As you pointed out, the guidance, I guess, is 27% to 29% over the next 3 years. Presumably, we start at the low end and work our way higher. Can you just talk, I guess, about how we think about that cadence? And then I believe your last kind of update when you talked about the combined companies was over [ 30% ] on the EBITDA side. So maybe just talk through the moving pieces. You mentioned inflation FX. Hopefully, that's transitory. But maybe just talk us through the moving pieces there. And then again, just the cadence we should think about as we work our way through that time line.

Yes. I think I had a bet with Brian that the first question would be somewhat related to '23 guidance. I'm really going to try to over giving '23 guidance on this at this call, but I can give you some color, Patrick. There are a lot of moving pieces within the margins within GP, within EBITDA margin more so than SG&A. And remember, those targets for EBITDA in the [ S-4 ] were put together over a year ago. And we've all seen a lot of inflation, a lot of headwinds -- and now we're in the process of working through our '23 AOP and working through a launch of a major product. And so there are a lot of puts and takes. I do believe we can get up into that high part of the range, but we have to work through some of those moving pieces and I do think that we look to get some relief from some of those headwinds like the FX and the inflation over that period. And we're doing everything we can to bill our customers to offset it as well as our supply chain group and getting new suppliers and renegotiating prices, but there's a lot of moving pieces in there. So I am hopeful we can get into that top part of the range in '23. I just -- we'll talk more about that in February.

Do you mind if I add something?

I would love for you to add something.

In my job description, Patrick, it says that I'm supposed to always assume that we're undervalued and to always recognize when your CFO is more conservative than you are, and I'm supposed to be the more upbeat. So I think we're going to do nicely in 2023. Well, that's my job, right?

I guess sticking on the margins piece. How should we think about demic COVID margins and how you're thinking about that piece? And then maybe if you could just touch on the Ortho side, the open orders and kind of the resolution of that and how we should think about that from a margin impact standpoint.

Okay. I can take the margins and then you can comment on the orders, if you want to. So we have -- as I'd like to break the COVID up into 3 pieces. And if you look at our 2022 COVID revenue guidance, it breaks down as follows roughly. It's about 50% of the revenue is related to government orders. And then there's about 20% in the retail and other -- and then the remaining 30% is in professional. We've been pretty clear to say we're not guiding going forward on government orders. I know we just got one and we can talk about that. But we've -- typically, when we talk about endemic COVID revenue levels, we don't include any government orders. That's more or less icing on the cake for us. So going forward, I would expect our mix to be more in the range of 80% professional, 20% retail kind of in that range going forward. Again, that's assuming there's no more government orders. Now the margins on the government orders, I think everyone saw they've been coming down. When you compare back to the original orders that we got a year or so ago, retail and professional, but holding fairly steady. We haven't seen a lot of decline there. But I do think as time moves on, my view is that, that COVID revenue will become more in line with our overall margins. And there's a reason I say that -- the reason I say that, and I think Bill may have mentioned this earlier when he was presenting, when we think about when all of us, this management team, when we think about our customer needs, we don't really think about it in terms of COVID and non-COVID. We think about it as a respiratory bucket. And we're the #1 leader in respiratory testing. It could be COVID, it could be flu, it could be a combo, it could be RSP, it could be strip. It doesn't really matter, quite honestly. And so we do tend to look at revenue in terms of that respiratory bucket. And that's why I do think that over time, as things -- as the world evolves into less COVID, non-COVID be more of respiratory nonrespiratory. I think those margins are going to come -- become more in line with the rest of the business.

Respiratory disease is endemic period. Whether it's RSP adeno, influenza, human metapneumo or whatever happens to be circulating. We see it. The average adult in the U.S. sees 3.5 respiratory infections a year. The average child over 5, right? The world has changed. So we don't really care much about which virus that is that's circulating. We just know that from a planning perspective that we should calculate some of that. And I think you're right in trying to model what the difference is when you have a mix of government orders. I like the government orders, though, because they keep the factory going, and they're not predictable. So we don't model them, but it's super helpful.

They create cash that we can use in that capital deployment strategy.

Well, yes, I think cash these days is pretty important right.

Yes. This is Casey Woodring from JPMorgan. So I think the prior LRP on the top line was 9% to 11% at the time of the deal, now it's 6% to 9%. Can you just kind of walk through what's changed?

I would say that, again, that LRP was put together well over a year ago, and we've gotten smarter about each line of business. There's also been FX impacts. There's also been issues with the Savanna EUA approval that we thought would be sooner.

Interruptions in supply chain.

Interruptions in supply...

Instrument back orders, slide back quarters, et cetera.

So again, we are -- this year, as I said on that, on the second slide I presented, year-to-date '22, we're at 8%, 10%, if you exclude that BNP transition issue with Beckman. So we're operating at that level of rate down. If anything, I would say we're being -- we're trying to be cautious with the model projections going forward.

Alex Nowak from Craig-Hallum. In that 6% to 9% growth assumptions, what are you assuming with regards to revenue synergies, we talked about cross-selling some of the distribution, the geographic expansion? What are the assumptions there?

Yes, really no change there. We've talked about a $100 million revenue synergy by the end of 2025, and that's built into the model.

Andrew Cooper, Raymond James. Maybe just on the margin side. When we think about flowing through at least a little bit lower floor for Savanna and the time frame of how that flows through the change on number of instruments versus utilization. How do we think about that on the gross margin front? What sort of gross margins do you think on a consolidated basis in that LRP? Just a little bit of color on that line would be great.

Yes. And that's the point I was trying to make earlier that we -- again, we've -- I think we've gotten smarter with that Savanna model. And I think it's a really good model right now, and I feel really good about what it's saying. I don't really want to get into, Andrew, too much of the gross margins within the 3-year CAGR because as I said a minute ago, answering Patrick's question, there's still a lot of moving pieces within GP. And for sure, that Savanna launch is a big one. As you think about the timing now, the rollout in the biggest market in the U.S., the margins will be lower than ultimately where they'll end up being in a couple of years on Savanna just -- it's just a math thing. You're just not pumping enough volume on the plants to get that price down. So I would say more to come on that on the gross margin. For sure, we'll get into that when we do the guidance for '23 on the February call.

Liza Garcia, UBS. Can you talk about China within kind of these longer-term targets guidance? There's a couple of moving pieces, I think, with the localization effort and kind of how you think about kind of the LRP growth in the region.

Yes, I can take that one. So obviously, China has had its issues this year with the rolling lockdowns and then the secondary issue of the by local impact on our business. I think Rob mentioned earlier or maybe it was Brian, we have plans in place to get local manufacturing fairly soon for both the reagents and the instruments. So that issue is not as big of an impact. The rolling lockdowns, that's a little tricker. Obviously, because nobody really knows what the Chinese government is going to do. For purposes of the model, though, we've assumed that those rolling lockdowns end.

And then we move more towards historic high single digits.

Correct. Yes. It's high single digit, low double digits in China. Correct.

Andrew Cooper, again, just maybe one more on that front. Thinking about longer-term pushing triage into China, I think, came up in one of the presentations. So just how do we think about the time frame to get to the biological requirements maybe on that product as opposed to you've been working on the ortho side for a while now.

Well, I'll turn to Bill on that. Where are you Bill? There he is. What's the latest on triage and in terms of biolocal?

Yes, we see a mix. I mean it's by province and a different area, but it hasn't really shown a lot of acceleration in the last few years. There's still a preference and we make our case, I think, in the really high-volume point-of-care scenarios there where they see the really, really sick people. It's really interesting when you look at the distribution of the business in China for triage. It's all at the high end big hospital side. I think Mike made reference that we can potentially move it more to the mid-zone over time, but right now, and there's clearly cases being made. We do have a product there that gives a big panel capability that differentiates it out from a lot of the other stuff.

That doesn't make it a different spill on a recent -- not so recent trip now, I guess, with a trip some time ago, I visited a number of hospitals in China, and it was interesting that the triages were all in the ED. And so does that placement change the dynamics a little bit.

Yes, it helps because, again, it's really there to deal with the critical patients that are coming in with suspected heart attack and heart failure. And I mean, again, in those who've looked the volumes are probably 10x U.S. average volume, if not even higher than that. And it's really driven, like I said, it's driven by the critical need, and we do have this product there, a 5-plex panel that really is the bulk of the business and it's pretty differentiated at this point.

Short and answer breadth.

Yes. Yes, the SOB panel. Yes, which is really covers a wide range. It's got pulmonary embolism and coronary syndrome and heart failure all in the same potential panel.

So it's a bit of a must-have.

Yes.

Okay. Thanks.

Last one for me. Liza Garcia, UBS. So you talked about kind of menu expansion on the immunoassay side. I think historically, when you upsell a customer, I think it was like 65% higher revenues that you saw as you kind of move them to integrated and then the automated was like 300%. I guess, given kind of all of the moving pieces you're talking about in terms of the R&D strategy. How should we think about those numbers kind of over the medium term?

I don't think they change. Although [ Hanson ] maybe -- yes, he's shaking his head, yes, it's there's no change to those numbers at this point.

Yes. First of all, great question. When you look at lifetime customer value, I know exactly the presentation slide that you're looking at. Yes. So this is a 65% increase moving from a stand-alone to and integrate a customer. But what you see next is as we launch more and more analyzers, more and more assays in between that and the automation, we're growing 3% to 5%, right, every single year with that customer. So over time, absolutely, a stand-alone customer might become 65% more revenue than it is today as we launch more and more tests to solve that problem. So we do see that number over time increasing as we launch those 30-plus immunoassay test that we talked about.

All right. Well, thanks, everybody, for coming. I hope this was valuable. Great seeing you all. We're super excited. Most importantly, I hope you see what I see and that we've got an extraordinary team of executives and the next level down below that is equally impressive. And I think we're poised to deliver what we said we were going to. It's with some modeling changes here and there. But overall, the optimism with which we entered into this arrangement is still there, and we feel good about it. I think the next thing is a reception. Okay. Happy to chat more as you want. Thank you.

Thanks, everyone. Appreciate it.