McIntyre Partnerships: QuidelOrtho ($QDEL) Investment Case

In their Q1 2026 investor letter, McIntyre Partnerships details QuidelOrtho Corporation ($QDEL) as the fund’s largest position and its third-ever “significantly concentrated” investment, sized at more than 20% of capital. Chris McIntyre describes QDEL’s current price as a “once-in-five-to-ten-year opportunity,” while noting the fund purchased put options that limit total loss on the position to under 20%. The firm acknowledges Q1 2026 was a difficult quarter, with results of approximately -19% gross and -20% net versus the Russell 2000 Value’s +5%, driven largely by a pullback in life science tools and medical device stocks and stock-specific issues at QDEL, which alone lost over 500bps. McIntyre draws a parallel to the fund’s two prior concentrated bets, CC (2019) and GTX (2021), which also saw large drawdowns at initiation but became the fund’s two largest winners, and states the QDEL thesis rests on the business results and the accuracy of his estimates rather than near-term price action.

Investment Highlight: QuidelOrtho Corporation ($QDEL)

Business Overview

• McIntyre describes QDEL as a healthcare diagnostics tools company focused on routine blood testing (primarily at hospitals and central labs) and point-of-care (POC) respiratory testing
• The firm characterizes it as a razor/razorblade model, where machines are sold or leased upfront at minimal cost and customers commit to high-margin consumables; McIntyre notes ~95% of sales are consumables
• According to the letter, the labs and immunohematology businesses account for over 75% of sales, carry 5-7-year contracts, and boast a >95% contract renewal rate
• McIntyre notes diagnostics companies typically post >25% EBITDA margins, though he says specific issues have held QDEL at ~22-24% recently

The Core Thesis and Mispricing

• McIntyre frames QDEL as a growing, stable business where one large issue (the end of the COVID pandemic) has collided with smaller, largely one-time problems to create what he views as significant mispricing
• The firm believes QDEL can earn ~$4 in 2028 FCF per share with 2-3x net leverage, and notes comparable companies (Siemens Healthineers, ABT, Roche, DHR) trade at >20x P/E
• With shares at ~$11 at the time of writing, McIntyre argues a 20x multiple would imply ~$80
• McIntyre attributes the mispricing to a “where there’s smoke, there’s fire” dynamic, arguing the issues primarily impact QDEL’s respiratory and China divisions (combined ~25% of 2025 sales) while the “core” ~75% grew ~6% in 2025

Sector Backdrop

• Before the QDEL detail, McIntyre highlights a broad YTD decline across life science and diagnostics tools, which he attributes partly to fears that AI will change drug development
• The firm notes QDEL fell -40% in Q1 (and -52% from its January peak) versus a -16% average decline (-24% from peak) for a comp group including ABT, TMO, DHR, and others
• McIntyre argues QDEL has almost nothing to do with drug development and views a recovery in the comp group as a favorable backdrop for the investment

The Five Big Issues

• McIntyre identifies five distinct issues investors must understand: the COVID testing decline since 2023, the ERP implementation failure, flu seasonality, Chinese reimbursement rate changes, and the earnings drag from the LEX respiratory product launch
• On COVID, the firm notes sales surged from $534MM (2019) to ~$1.7B (2020-2021) before collapsing ~95% over three years, with restructuring charges weighing on FCF as QDEL closes COVID-era capacity
• On the ERP system, McIntyre notes A/R rose from ~$295MM (Q3 2024) to $387MM (Q3 2025), causing QDEL to miss 2025 FCF guidance (~17% of EBITDA vs. a 25% target); he says ~half the A/R increase was recovered in Q1 and expects full recovery within a year
• On flu, the firm attributes a ~46% Q1 flu revenue decline to a ~30% drop in flu-symptom doctor visits, channel-fill issues, and slight share loss, characterizing it as one-time and tied to the flu’s inherent volatility
• On China, McIntyre calls the reimbursement change the one “real negative,” notes China revenues fell ~15% in Q1, and models a conservative $70MM EBITDA hit—while excluding China entirely from his ~$550MM core 2027 EBITDA estimate
• On LEX, the firm frames the next-generation molecular POC tool as currently a ~$50MM profit drag until its 2027 ramp, but sizes the molecular respiratory market at ~$3B and argues even 5% share would meaningfully boost QDEL’s ~$400MM respiratory sales

Valuation and Strategic Levers

• McIntyre estimates the “core” businesses can generate 2027 revenues of $2.2B and ~$550MM in EBITDA (25%+ margin), yielding ~$250MM in fully taxed unlevered FCF
• On the healthy businesses alone, the firm believes it is paying ~6x EV/EBITDA and ~13x EV/ulFCF, a discount to peers trading at >10x and >20x, respectively
• McIntyre points to several levers: unwinding the captive leasing business (a potential ~$250MM pre-tax cash swing), a possible sale of the immunohematology segment (estimated ~$1.7B at a 12x multiple), and an asset-backed loan against ~$1B of leased equipment
• The firm notes even a conservative 1x EV/Sales on the troubled respiratory and China units would roughly equal QDEL’s entire current market cap

Leverage and Downside

• McIntyre describes QDEL as ~4.1x levered—high but, in his view, manageable given the recurring model
• The firm notes QDEL recently refinanced with no maturities before 2030, generated ~$600MM 2025 EBITDA, and guides ~$615-$630MM for 2026 versus $170-$200MM interest and $130-$150MM capex (maintenance closer to $100MM)
• McIntyre notes the Term Loan B trades at par and argues QDEL has ample capacity to cover interest costs

Concentration Philosophy and Catalysts

• McIntyre reiterates the fund’s guardrails for a concentrated position and explains why he believes QDEL meets each: a deep moat/predictable cash flows, sufficient liquidity, a clear differentiated view, reasonable growth, substantial upside, a reasonable timeframe, catalysts, technical/panic selling, and no real potential for permanent capital loss
• On upside, the firm targets at least 15x its 2028 estimate of $4 (~$60/share), which McIntyre calculates as a ~97% IRR over a 2.5-year hold
• The firm identifies its largest 12-month catalysts as China finalizing reimbursement rates, positive FCF in H2 2026 and FY2027, and a potential relief rally in life science tools if AI fears prove unfounded
• McIntyre notes QDEL fell >30% in a day following its Q1 2026 pre-announcement, with ~40% of shares outstanding trading in the following week

Risks

• McIntyre acknowledges that if his analysis is wrong, the investment could result in a large but survivable loss
• The firm treats the China reimbursement change as a genuine negative that slightly lowers its upside, and notes the policy is difficult to model as it is not yet finalized
• McIntyre recognizes the ~4x leverage as high and the stacked, concurrent nature of the five issues as the source of both the risk and the opportunity
• On permanent capital loss, the firm calls it a judgment call but argues the mission-critical, contracted nature of the business, prior Ortho acquisition multiples of 11x and 14x EBITDA versus an implied sub-5x valuation, and the fund’s put hedges give McIntyre confidence the odds are effectively zero

McIntyre Partnerships views QDEL as a rare opportunity for substantially outsized gains with what the firm believes is no realistic risk of permanent capital loss, arguing the market is incorrectly treating a highly predictable diagnostics franchise as unpredictable because five largely unrelated, one-time issues have surfaced at once. The firm believes that as these issues resolve over the next two years—particularly China rule-making and a return to positive FCF in H2 2026—QDEL shares can materially re-rate toward McIntyre’s $60+ estimate, while the fund’s put options cap downside at under 20% of capital.

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