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Business Combination | 12 Months Ended
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Dec. 29, 2024
Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract] |
Business Combination | Business Combination On May 27, 2022, pursuant to the BCA, Quidel and Ortho consummated the Combinations and each of Quidel and Ortho became a wholly owned subsidiary of QuidelOrtho. As a result of the Combinations, QuidelOrtho became the successor issuer to Quidel. The Combinations enhance the Company’s revenue profile and expand the Company’s geographic footprint and product diversity. The Combinations were completed for a total consideration of $4.3 billion, which included the fair value of equity issued based on the May 26, 2022 closing price of $99.60 per share of Quidel common stock. Former Ortho stockholders received $7.14 in cash and 0.1055 shares of QuidelOrtho common stock for each Ortho ordinary share. The total purchase consideration was calculated as follows (in millions, except value per share data and Ortho Exchange Ratio):
Total Ortho shares subject to exchange | 237.487
Ortho Exchange Ratio | 0.1055
QuidelOrtho shares issued | 25.055
Value per Quidel share as of May 26, 2022 | $ | 99.60 |
Fair value of stock consideration | $ | 2,495.5 |
Fair value of replacement equity awards (1) | 47.9 |
Cash consideration (2) | 1,747.7 |
Total purchase consideration | $ | 4,291.1 |
(1) Represents the fair value of replacement stock options (which include options with time-based, performance-based, and both performance- and market-based vesting conditions), RSUs and restricted stock outstanding as of May 27, 2022 that are attributable to service prior to the Combinations. The terms of the replacement awards are substantially similar to the former Ortho equity awards for which they were exchanged. The portion of the fair value of the replacement equity awards attributable to service after the Combinations is $46.6 million and will be recognized as compensation expense based on the vesting terms of the replacement equity awards. (2) Represents cash consideration of $7.14 per share paid to Ortho stockholders and holders of vested Ortho stock options on the closing date of the Combinations for 237.5 million outstanding Ortho shares and 7.3 million vested Ortho stock options. The Company funded the cash portion of the purchase price with cash on its balance sheet and a portion of the Term Loan proceeds from the Financing. In 2023, the Company recognized measurement period adjustments to Goodwill of $19.9 million resulting from finalization of tax-related matters. The purchase price allocation resulted in the following amounts being allocated to the assets acquired and liabilities assumed at the acquisition date based upon their respective fair values summarized below:
(In millions) |  |  |  |  |  | Purchase Price Allocation
Cash and cash equivalents |  |  |  |  |  | $ | 234.5 |
Accounts receivable |  |  |  |  |  | 240.6 |
Inventories (1) |  |  |  |  |  | 384.4 |
Property, plant and equipment |  |  |  |  |  | 948.9 |
Goodwill |  |  |  |  |  | 2,158.5 |
Intangible assets |  |  |  |  |  | 3,168.0 |
Prepaid expenses and other assets |  |  |  |  |  | 270.4 |
Total assets |  |  |  |  |  | 7,405.3 |
Accounts payable |  |  |  |  |  | (135.0) |
Accrued payroll and related expenses |  |  |  |  |  | (81.1) |
Long-term borrowings, including current portion (2) |  |  |  |  |  | (2,268.4) |
Deferred tax liability |  |  |  |  |  | (260.1) |
Other current and non-current liabilities |  |  |  |  |  | (369.6) |
Total liabilities |  |  |  |  |  | (3,114.2) |
Total purchase consideration |  |  |  |  |  | $ | 4,291.1 |
(1) Includes an estimated fair value adjustment to inventory of $61.7 million, which was fully recognized in the Consolidated Statements of (Loss) Income in fiscal year ended 2022. (2) Immediately following the closing of the Combinations, the Company repaid long-term borrowings assumed, which consisted of $1,608.4 million aggregate principal amount related to Ortho’s Dollar Term Loan and Euro Term Loan Facilities, $240.0 million aggregate principal amount of 7.375% Senior Notes due 2025 and $405.0 million aggregate principal amount of 7.250% Senior Notes due 2028. The 7.375% and 7.250% Senior Notes were fully discharged following the Combinations. The Company recorded a $23.5 million loss on extinguishment in connection with the Combinations, representing the difference between the reacquisition value, inclusive of $35.9 million of redemption premium, and the net carrying value of the extinguished debt. Goodwill represents the excess of the total purchase consideration over the estimated fair value of the net assets acquired, and is primarily attributable to synergies which are expected to expand the Company’s revenue profile and product diversity, as well as Ortho’s assembled workforce. Goodwill is not deductible for tax purposes. Refer to “—Note 9. Goodwill and Intangible Assets, Net” for further information. The following table sets forth the amounts assigned to the identifiable intangible assets acquired (in millions, except years):
Intangible Asset | Amortization Period |  | Fair Value of Assets Acquired
Customer relationships (1) | 20 years |  | $ | 1,907.0 |
Developed technology (2) | 15 years |  | 888.0 |
Trademarks (2) | 15 years |  | 373.0 |
|  |  | $ | 3,168.0 |
(1) The fair value was estimated using the Multi-Period Excess Earnings Method, which is a form of the income approach. Significant assumptions include: (i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset, contributory asset charges and the applicable tax rate, and (ii) the discount rate. (2) The fair value was estimated using the Relief from Royalty Method, which is another form of the income approach. Significant assumptions include: (i) the estimated annual net cash flows, which are a function of expected earnings attributable to the asset, the probability of use of the asset, the royalty rate and the applicable tax rate, and (ii) the discount rate. Intangible assets are amortized on a straight-line basis over the amortization periods noted above, which reflects the estimated useful life of the underlying assets. For fiscal year ended 2022, the Company incurred $46.9 million of transaction costs related to the Combinations, which primarily consisted of financial advisory, legal, accounting and valuation-related expenses. These expenses were recorded in Acquisition and integration costs in the Consolidated Statements of (Loss) Income. The following supplemental pro forma financial information shows the combined results of operations of the Company as if the Combinations had occurred on January 4, 2021, the beginning of the periods presented:
| Fiscal Year Ended
(In millions) (unaudited) | 2022 |  | 2021
Pro forma total revenues | $ | 4,051.2 |  |  | $ | 3,741.4 |
Pro forma net income | 589.3 |  |  | 613.2 |
This supplemental pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved had the Combinations been completed at the beginning of fiscal year ended 2021. In addition, the supplemental pro forma financial information is not a projection of the Company’s future results of operations, nor does it reflect the expected realization of any synergies or cost savings associated with the Combinations. The supplemental pro forma financial information includes adjustments for: •incremental intangible assets amortization expense based on the preliminary fair values of the identifiable intangible assets acquired; •incremental cost of sales related to the fair value step-up of inventory; •decreases in interest expense associated with the issuance of debt to finance the Combinations and to repay Ortho’s then-outstanding indebtedness, including the net impact of the removal of the amortization of the discount on Ortho’s indebtedness and the change in amortization of deferred financing fees; •the removal of loss on extinguishment of debt from Ortho’s results in fiscal year ended 2021 and the reclassification of loss on extinguishment of debt in fiscal years ended 2021 and 2022; •the reclassification of expense related to the accelerated vesting of certain stock awards of Ortho’s former CEO; and •tax impacts related to the above adjustments. From the acquisition date through January 1, 2023, the acquired results of operations of Ortho contributed total revenues of $1,165.2 million and net loss of $126.2 million to the Company’s consolidated results, which included amortization of acquired intangible assets of $104.7 million and recognition in Cost of sales, excluding amortization of intangibles of the fair value step-up of inventory of $60.6 million.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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