QuidelOrtho's Strategic Deleveraging: A Path to Peer Revaluation

McIntyre Partnerships, an investment firm based in the U.S., maintained a stable performance in the initial half of 2026, registering a 0% gross return and a -1% net return. This contrasts with the Russell 2000 Value Index's 23% increase over the same period. The second quarter, however, marked a significant turnaround for the firm's portfolio, which surged by 23.0% gross and 23.3% net, outperforming the index's 17.3%. This boost was attributed to broader market trends and positive developments within its investment holdings. Since its inception, the fund has generated an average annual return of approximately 16% gross and 12% net, exceeding the benchmark's roughly 9% annual return. Despite the high concentration of its portfolio, with QuidelOrtho Corporation (QDEL) being its most substantial holding and a source of volatility, the firm retains confidence in its investments, particularly viewing QDEL as a prime opportunity for growth. Further expansion is expected from several key investments, supported by promising catalysts.

In their investor correspondence for the second quarter of 2026, McIntyre Partnerships spotlighted QuidelOrtho Corporation (NASDAQ: QDEL), a company specializing in diagnostic testing solutions across various sectors, including laboratories, transfusion medicine, point-of-care, and molecular diagnostics. As of August 7, 2026, QuidelOrtho Corporation's shares closed at $12.28, giving it a market capitalization of $837.72 million. The company experienced a one-month return of -837.72%, with its shares declining by 46.55% over the preceding 52 weeks.

McIntyre Partnerships articulated its perspective on QuidelOrtho Corporation (NASDAQ: QDEL) in its Q2 2026 investor letter, reiterating a core tenet from its Q1 letter: QuidelOrtho Corporation is fundamentally an amalgamation of three distinct operational segments under one corporate umbrella, suggesting that divesting one of these divisions could aid in debt reduction. This strategy appears to be materializing, as reports indicate QDEL is exploring the sale of its Point-of-Care (POC) division for an estimated $1.5 billion. The POC segment represents the original Quidel enterprise, and such a transaction would effectively reverse the merger of Quidel and Ortho from 2022. Should the sale proceed near the rumored valuation, the remaining QuidelOrtho entity (RemainCo) would see its leverage reduced to approximately 2.5 times and would primarily comprise the enduring Ortho business. A critical aspect highlighted is that the persistent underperformance of QDEL over the past three years has largely stemmed from the legacy Quidel business, whereas the legacy Ortho operations have consistently performed robustly, despite recent regulatory challenges in China during Q1. It is anticipated that once these Chinese regulations are finalized in the upcoming months, the legacy Ortho business will revert to its historical trajectory of consistent high single-digit EBITDA growth.

Furthermore, the firm believes that Q2 will represent the nadir for cash flow generation, a point frequently raised by critics. As QuidelOrtho diminishes its debt and disentangles itself from the unpredictable flu and COVID-19 related business, the stock is expected to be re-evaluated and aligned more closely with its industry peers, potentially reaching an 11-15x Enterprise Value to EBITDA multiple. Absent this re-rating, the company could become an acquisition target for private equity firms. Valuing the RemainCo at a 12x multiple based on the firm's 2029 EBITDA projections would yield an estimated share price of around $100.

In essence, McIntyre Partnerships forecasts a positive future for QuidelOrtho Corporation. The planned divestiture of its Point-of-Care division is seen as a pivotal step towards financial deleveraging and a refocusing on the more stable and consistently growing legacy Ortho business. This strategic realignment aims to mitigate past performance issues and reposition QDEL favorably within the market, potentially leading to a significant revaluation of its stock or even a private equity acquisition, signaling strong confidence in its long-term potential.