San Diego diagnostic company, QuidelOrtho, will sell its Sorrento Mesa manufacturing facility as it commits to further slashing operating expenses.
The company, which makes an at-home COVID-19 test and other diagnostic health care tools, has been taking decisive cost-saving measures this year, including reevaluating its real estate footprint. Among recent changes – QuidelOrtho fired its CEO of 15 years and reduced its headcount by about 500 employees, or 7 percent, to save $100 million.
The company said Wednesday during its second quarter earnings call with investors that it will sell a facility in New Jersey and one in San Diego. It will cost QuidelOrtho a non-accounting book loss of $57 million related to the sale of these two properties.
The local site being put up for sale is at 10165 McKellar Court in Sorrento Mesa, off of Pacific Center Boulevard and next to a cluster of Qualcomm offices. It’s a roughly 72,000 square foot industrial building that Quidel purchased in 1999, according to public records.
The facility houses administrative offices, research and development, and manufacturing activities, according to QuidelOrtho’s annual report.
The global company is headquartered in San Diego, and it has another local manufacturing facility in Carlsbad. QuidelOrtho had 7,100 employees worldwide, with 4,200 workers based in the United States as of Dec. 31.
Joseph Busky, QuidelOrtho’s chief financial officer, said during Wednesday’s earnings call that the sale of these properties is expected to be complete by year end and “will generate cash and decrease ongoing operating costs.”
Busky said one of the reasons QuidelOrtho will have to record a loss is due to “the unfavorable San Diego commercial real estate market driven by excess capacity.”
In the past year, more companies in San Diego’s core life science neighborhoods have subleased their offices or cut ties completely with buildings. In turn, there’s been more available life science space on the market than companies want to occupy.
For diagnostic health care companies like QuidelOrtho, there’s the added financial pressure of declining sales and revenue from COVID-19 related products. Founded in 1979, QuidelOrtho also produces tools for laboratories and tests that detect illnesses such as influenza and strep throat.
Brian J. Blaser, QuidelOrtho’s new CEO as of May, said the company is leaving “no stone unturned” as it seeks to cut operating expenses and improve profit margins.
“We are in the early stages of improving our overall business efficiency with initiatives in procurement, supply chain, manufacturing quality and IT,” Blaser said. “And finally let me reiterate that the underlying health and fundamentals of our business remain intact. We are focused on challenging every aspect of the business to improve our performance, while balancing the needs to invest for future growth.”
In response to investor questions, Blaser explained further that the company is focusing more on advancing its Savanna diagnostic platform, expanding its menu of tests and improving the management of its products on the market.
During the second quarter, QuidelOrtho reported a net loss of $147.7 million, compared to the previous year’s loss of $53.2 million. Total revenue for the quarter was $637 million, down about 4 percent from a year ago. The company attributed the decline primarily to a drop in orders for COVID-19 test kits.
QuidelOrtho declined to comment on the cost-saving measures Thursday beyond what was said during its most recent earnings calls.
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