Ladies and gentlemen, thank you for standing by. Welcome to Quidel Corporation third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. Later instructions will be given for the question-and-answer session. If anyone has difficulty hearing the conference, please press star zero for operator assistance. I'd now like to turn the call over to Mr. Ruben Argueta, Quidel's Director of Investor Relations. Please go ahead.
Thank you, operator. Good afternoon, everyone, and thank you for joining today's call. With me today is our President and Chief Executive Officer, Doug Bryant, and Randy Steward, our Chief Financial Officer. Our third quarter 2020 earnings release is now available on ir.quidel.com, our investor relations website. We will also post our prepared remarks on the presentations tab of our IR website following the conclusion of this call on October 29th, for a period of 24 hours. Please note that this conference call will include forward-looking statements within the meaning of federal securities laws, including our anticipated revenues for Q4 2020. Forward-looking statements, by their nature, involve material risks, assumptions, and uncertainties. In particular, our expectations and assumptions around the impact of the COVID-19 pandemic on our business, results of operations and financial condition, and that of our suppliers, customers, and other business partners are uncertain and subject to change.
Many possible events or factors could affect our future financial results and performance, such that our actual results and performance may differ materially from those in the forward-looking statements. For a discussion of such factors, please review Quidel's most recent annual report on Form 10-K, including the section titled Risk Factors, registration statements, and subsequent quarterly reports on Form 10-Q, as filed with the SEC. Furthermore, this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, October 29, 2020. Quidel undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call, except as required by law. Today, Quidel released financial results for the three and nine months ended September 30, 2020.
If you have not received our news release, or if you would like to be added to the company's distribution list, please contact me at 858-646-8023. Following Doug's comments, Randy will briefly discuss our financial results, then we'll open the call to take your questions. I'll now hand the call over to Doug for his comments.
Thanks, Ruben, and good afternoon, everybody. Welcome to my 47th consecutive quarterly earnings call. I hope that you and your families are well and safe during these challenging and uncertain times. At the moment, America faces the prospect of a third wave of COVID-19 infections, as indicated by a rise in the number of daily cases, now up to 23 infections per 100,000 residents. The spread of the novel coronavirus has migrated from metropolitan centers to suburban areas and even to the countryside. The weather is getting colder, and the flu season is still looming. As we face the potential for a third wave and another rise in infections, our company understands the need for increased testing and continues to rise to the challenge in the fight against COVID-19 by expanding access to affordable, highly accurate diagnostic testing throughout our communities.
I couldn't be more proud of our people, those deemed essential as well as those working from home, with the way that they've embodied the Quidel spirit through dedication, determination, perseverance, singular focus, quick problem-solving ability, and a team-first mentality, all the qualities that are a bedrock of our company's culture and allow us to tackle a challenge like COVID-19 head-on. We had a record quarter in terms of revenue, consistent with our pre-announcement, and a record in terms of profit for the quarter. To be efficient, I'll let Randy provide more detail on revenue and margin in a minute. Here are the revenue drivers for Q3 at a high level and what we can expect in Q4. First, the rapid point-of-care operations and supply chain teams in San Diego exceeded expectations.
Line two was converted to SARS antigen production, and the nasal foam swab issue that slowed the kitting process has been resolved, which together enabled us to reach the level of 2.1 million kitted Sofia SARS antigen tests per week. We believe we can sustain that level of production throughout the fourth quarter. While shipments in Q3 of Sofia Influenza should have been, and were, lower than the prior year quarter, we have manufactured and shipped several million dollars of our Sofia Influenza tests already this quarter, as well as several million dollars of our Sofia ABC combination tests. We expect at this point to move to 80% ABC combination tests and 20% SARS antigen tests in December. We placed approximately 5,000 Sofia 2 instruments in Q3 and expect to exit the year with about 75,000 analyzers on the ground.
With recent increases in instrument production, we expect to satisfy most of the pent-up demand from the traditional laboratory segment by the middle of Q1 2021 and can then begin providing instruments more routinely to newer market segments and opportunities, which are endless. I will mention QuickVue SARS antigen when I talk about pipeline, but we're expecting a meaningful revenue contribution from this new product in Q4 as well. Second, the molecular operations and supply chain teams in Athens, Ohio were rock solid in Q3, and poised to both meet increasing demand for Lyra SARS in the fourth quarter, and to ramp up production of Solana SARS following EUA clearance from the FDA for that new product. Third quarter revenue of Lyra SARS, driven by orders from just over 120 North American customers and a handful of international sites, was better than we had suggested.
Fourth quarter Lyra SARS revenue looks to be about a third higher sequentially. We're expecting a meaningful revenue contribution from Solana SARS in the fourth quarter as well. In terms of our ongoing COVID pipeline, we will go into some detail at our Investor Day, which is scheduled for November 12th. In the meantime, here are a few high-level notes. First, in Q4, we expect to launch our Sofia Serology assay, another first of its kind, into a limited number of sites to do studies with the intent to demonstrate the clinical utility of the point-of-care finger-stick combination assay that tests for IgG antibodies to the nucleocapsid protein, and to two distinct epitopes, S1 and S2, of the spike protein in just minutes. We also expect to launch QuickVue SARS, which promisingly has shown similar performance in terms of agreement with PCR and Sofia SARS antigen.
We are executing on a plan that should get us to a manufacturing capacity of 50 million QuickVue SARS tests at some point, per month in 2021. In terms of molecular products, we are expecting to launch Solana SARS and Lyra ABC in Q4. Initially, we intend to manufacture about one million Solana SARS tests per month for about 700 or so of our existing Solana customers. Each Solana instrument can perform 12 Solana SARS assays at once in 25 minutes. The data generated by the Solana SARS isothermal molecular assay show remarkable agreement with extracted PCR. We expect that demand for a complex assay with this speed and performance to be quite high. In terms of our core business and pipeline, I'll save that for the Investor Day, which should allow more time for your questions today.
During our time together on November 12th, a few members of our executive team and I will cover three topics. First, we'll take you through what our long-range plan looked like before COVID, a plan that resulted in 12% compounded revenue growth over a six-year period. I'll provide an overview. We'll jump into the details. Dr. Tammi Ranalli and Dr. Johannes Kehle will bring you up to speed on the Savanna program. As you'll see, Savanna is destined to become the next flagship product for Quidel, and is expected to be a key growth driver for the company. Bill Ferenczy, who heads up our Cardiometabolic Business Unit, will provide an update on TriageTrue, our high-sensitivity troponin assay, and Dr. Werner Kroll will talk about our non-COVID Sofia product line.
I'll summarize by talking about the longer-term collateral benefits of what we're doing with COVID, and how that de-risks our longer-term growth plans. Next, we'll provide an update on the entire COVID pipeline, and we'll describe our expectations for those products over the next couple of years. Karen Gibson will give you an update on the Sniffles program, and we'll talk about use cases for the product and the market segments that seem to be the best fit. Finally, we will talk about bigger and more aspirational ideas. Dr. Werner Kroll will discuss Project Leapfrog, and how this advanced technology could address many diagnostic testing needs at the point of care, or even at home. We'll talk about our vision for at-home testing and the democratization of point-of-care testing for many routine conditions.
Randy Steward, our CFO, will talk about our financials over the LRP and our thinking around capital deployment. It should be a great half day, and I look forward to bringing you all under the tent, so to speak. In summary, the 1,300 employees at Quidel had a great quarter, and we're poised for a great year-end and an even better 2021. I realize that some of our larger competitors dismiss us and think we are punching way above our weight. This company was built for what we're doing today. We have extraordinary strategic, technical, and commercial competencies, and the ability to scale to much greater heights. Most important, we are happy. Randy.
Thank you, Doug. Good afternoon, everyone. As Doug stated, we had another very strong quarter that exceeded our own expectations. Our employees have truly risen to the COVID-19 challenge by delivering new products to markets and continuing to expand production for newly launched COVID-19 antigen and PCR products, making a profound difference in people's lives and livelihoods. Through the dedication and hard work of our organization, we've positioned the company for a strong end of the year and beyond. As reported, total revenues for the third quarter of 2020 were $476.1 million. This compares to $126.5 million in the third quarter of 2019. The 276% increase in revenue was driven by significant growth in our rapid immunoassay and molecular categories, driven by considerable demand for our COVID-19 diagnostic products. We did realize minimal declines in demand for the cardiometabolic and specialized diagnostic solutions product categories.
Foreign currency had a positive impact of $500,000 in the quarter. Rapid immunoassay product revenues increased $294.5 million to $337 million in the third quarter of 2020. Within this category, Sofia products grew from $303.2 million to $331.9 million, of which $317.9 million was attributed to Sofia SARS antigen sales. QuickVue product revenues decreased $8.7 million to $4 million. In September, we did not realize the ramp-up of distributor purchases of influenza, strep, and RSV heading into the respiratory season, as we have seen in previous years. We intentionally prioritize our production and shipments towards the SARS antigen test. As a result, influenza rapid immunoassay revenue was $7.9 million, with approximately 90% of that revenue derived from the Sofia platform. For the cardiometabolic immunoassay business, revenue was $64.8 million, a 3% decrease versus the third quarter of 2019.
More importantly, this category was up $10.6 million sequentially, and we are optimistic that the cardiometabolic category has stabilized. Of the $64.8 million in revenue in the third quarter, $32.7 million was derived from the Triage business and $32.1 million from the Beckman BNP business. Year-over-year, the revenue decline was realized in two of the three major geographies. However, sequentially, growth was observed in these three major geographies, a very encouraging sign. Revenue in the specialized diagnostic solutions category decreased 10%, or $1.2 million, in the third quarter to $11.2 million. Mostly driven by a decline in our respiratory products from our cell culture business. Our molecular diagnostic solutions category increased $58.3 million in the quarter to $63 million driven by $57.8 million in sales of our Lyra and Lyra Direct SARS-CoV-2 products.
Despite these being gap-filling products in the sense that these reagents have no proprietary instrument and are used as a second or third option, we are seeing good growth from these products and believe that we will continue to see added growth as more small and mid-size labs continue to bring PCR testing in-house. In the quarter, total influenza revenue, which includes rapid immunoassay, DHI respiratory, and molecular diagnostics, was $9 million. Gross profit in the third quarter increased $307.8 million to $383.6 million, and gross profit margin was 81%. This improvement was driven by the demand for the SARS-CoV-2 assays, which drove improved product mix. In addition, higher volumes contributed to increased manufacturing overhead absorption. In the third quarter, as in the second quarter, we realized a significant improvement in our profitability profile because over the short term, we do not incur material variable operating cost increases.
In the third quarter, total operating expenses measured as a percent of revenue declined by 28 percentage points versus last year and sequentially declined by 16 percentage points to 16% of revenues, helping improve our operating income in the quarter to 65% of revenues. We see this trend continuing into the fourth quarter as well. We continue to invest in R&D with the goal of launching additional COVID-19 diagnostic assays, advancing on our Savanna initiatives, as well as introducing new Sofia assays and next generation platforms, such as our internally named Project Sniffles. We will also continue to invest in our sales and marketing organization as we expand training in new markets such as nursing homes and occupational health, and significantly broadening our customer base.
For the full year, we're currently estimating R&D spend to be in the range of $80 million-$85 million. Our G&A spend for the full year should be in the range of $65 million-$70 million. In the quarter, we recorded a $10.4 million loss on extinguishment of debt. This was a result of retiring in cash $5.9 million in principal of our convertible notes. The current principal outstanding balance on the convertible notes is $6.8 million. As it relates to the provision for income taxes, we recorded $63.5 million in income tax provision in the quarter. The effective tax rate was 21%. All items adjusting our tax had an insignificant impact, including discrete tax benefits from excess stock compensation. We are currently estimating a full-year effective tax rate between 21% and 22%.
This rate is approximately two percentage points higher than previous estimates due to the increase in pre-tax income versus prior years. We successfully completed this quarter our contract with the NIH in support of increasing our manufacturing capacity. The total contract value is for up to $65 million. The contract has a performance period of one year beginning July 2020, with key deliverables and milestones that would directly support the addition of new immunoassay manufacturing lines, as well as outfitting a new distribution center. As part of the agreement, the company will provide to NIH Sofia 2 instruments and COVID-19 assays. As of the end of September, we had $77.5 million in cash and cash equivalents. During the third quarter, the company generated $70.5 million in cash flow from operations.
This number would've been larger had it not been for the approximately $244 million investment in accounts receivable and inventory as we accelerate our growth to support increased production of SARS assays. In the quarter, company also invested $22.7 million in capital expenditures. At the end of the current fiscal year, we anticipate having in excess of $500 million in cash on the balance sheet, no convertible debt outstanding, and no outstanding balance on our revolving credit facility. In short, we have a very strong capital structure, access to credit, good cash flow, which places us in a great position to support our future initiatives. Those initiatives include increasing our R&D investment, strengthening and expanding our supply chain, aggressively ramping up our manufacturing capacity, and pursuing M&A. With that, we conclude our formal comments for today. Operator, we're now ready to open the call for questions.
Thank you. At this time, if you would like to ask a question, please press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. One moment while I compile the Q&A roster. Your first question is from the line of Brian Weinstein with William Blair. Please go ahead.
Hey, guys. Good afternoon. This is Andrew Brackmann on for Brian. Thanks for the questions and for all the color. Just to start, for housekeeping, I may have missed this, but did you give guidance for Q4? If so, could you just break down Sofia Antigen as part of that?
We said previously, actually in the pre-announcement, that revenue for the fourth quarter will be at least $800 million. We've not broken out the contribution of Sofia SARS Antigen or the ABC product, I can tell you that we do anticipate manufacturing on average around two million tests per week, and that would be inclusive of all the products. Whether it's the combination assay or it's SARS Antigen only, the total would be 2.1 million tests per week.
Okay, thanks for that. Recognizing it's the end of October and a number of crosswinds to consider, but as we sit here right now and thinking about 2021, the outlook there, should we be assuming sort of demand for COVID testing across your portfolio sort of persist at least through 2021? Along with that, should pricing remain relatively stable?
It seems to be the question of the day and the week, Andrew. I would say there's not enough known yet about this virus, about immunity. In particular, we don't know enough about reinfection. I could say, though, that we're certainly being asked by a number of folks, including the government, to ramp up production to really high levels. I think it's the expectation that this is going to persist well beyond 2021, whether it's 2022, 2023, I couldn't say at this stage. At this point, it feels to me like this will not abate in terms of the level of tests required, certainly until sometime in 2022 and beyond.
Okay, that's helpful. I don't want to steal your thunder for a couple of weeks from now, but as we think about the end market dynamics here, how should we be thinking about the use case for antigen testing between symptomatic and asymptomatic testing sort of evolving over time? I guess along with that, how should we be thinking about any potential asymptomatic claims for your products here moving forward? Thanks.
Well, two questions in one there, but I see asymptomatic testing becoming more routine. I think we're seeing in the Pac-12 and the Big Ten, as an example, comfort around daily testing and the desire on the part of both conferences to keep their contact sport athletes safe. I think we're going to see data coming out of the University of Arizona that may be published sometime soon. We'll see some studies that we're working on with the NIH
That will be published as well. I do think that, as a country, we're going to get comfortable with the idea that even though I don't have symptoms, routinely testing is probably a pretty good idea, whether it's folks going to school, whether it's grandma and grandpa who need to know whether they can safely have their kids come visit, whether it's our employees. Currently, we're testing every Wednesday. I got swabbed yesterday. I assumed that I didn't get a call, so I guess I'm negative. We're testing everybody who comes in here every Wednesday, and right now the prevalence is low. I guess we have actually had one positive. We think that that's what we need to do to keep our employees safe, and I see that going on for some period of time. Asymptomatic testing seems like a reasonably good strategy.
The number of people who are symptomatic could decline over time, and that would be helpful. I do see that asymptomatic testing is going to become pretty important moving forward. We don't know what's going to happen on the serology front. We still don't know really what the benefit of all that is at this stage, but we're going to learn more moving forward. Thanks for that question, Andrew.
Thanks, Doug.
Your next question is from the line of Steven Mah with Piper Sandler. Please go ahead.
Oh, great. Good afternoon. Thanks for taking the questions.
Sure, Steve.
Hey, maybe just to continue on this question about asymptomatic testing and how big the market could be. As I start seeing universities doing a lot more testing, back to work, you see Major League Baseball, sports teams doing this more, and it does seem like we are going to asymptomatic testing. What do you think the sort of the run rate is going to be? I've heard a lot of numbers thrown out by think tanks at three million to five million tests per day. If you get some color on what you think the run rate will be.
Yeah. I can only talk about the conversations we've had. I can't talk about ultimately what the total market might be. We certainly have not spent that amount of time, and frankly, I don't know if we're smart enough. I can tell you that from the calls that we've taken, and I've said this publicly before, just if I add up the number of tests being requested by different organizations, whether it's entertainment, sports, large employers, just that number of calls and the sum of that adds up to about 685 million tests per year. Is that real? I don't know. I'm just telling you that that's what we do know.
We've taken these calls from these types of people, and some people have sent us T-shirts and hats and all sorts of things, trying to get us to chat with them about how we could do this for them. 685 million is the number I have right now of who's requesting from me to do their testing. I hope that's helpful, Steven.
Yeah. No, that's helpful. Yeah, and I did notice there was a couple two million tests per day, a couple of weeks ago. My next question, it's a two-part question. More along the high throughput testing reimbursement, it seems that Medicare lowered the rate to $75 with a $25 kicker, if they can meet some performance parameters. Could you maybe address what you think if there's going to be similar pricing pressures on the low throughput side? The second part of the question, have you considered pricing of your combo assay and if you can give us some color on your thoughts on pricing?
Sure. On the first question regarding reimbursement, it is true that the laboratory reimbursement, the folks who are being reimbursed for actually running the test, is going to be reduced in some instances from $100 down to $75. By the way, just on that, I don't see how that has any impact whatsoever on pricing. Certainly hasn't had an impact on pricing on PCR tests at this stage. When you think about it, so in other words, that leaves a lot of margin for the lab after paying for labor, buying your product, performing the test, that still leaves a lot of margin for the lab. I see no impact on the pricing there. Similarly, I wouldn't see any impact on the low end as well. Right now, we certainly at $23 a test, are significantly below what the reimbursement is.
If the reimbursement were adjusted downwards slightly, I wouldn't see that that would have any impact there as well. At the end of the day, the price in the market today for these products isn't necessarily driven by reimbursement, it's just driven by demand. There's no reason to look at price differently. I think from our perspective, relative to other competitors in the market, we are priced appropriately. We're at the low end, I don't see any price pressure, particularly when you consider that we I know I'm biased, but I would suggest that Sofia SARS antigen is the premium brand. I think we're priced about right. I don't see any price pressure for us, certainly, and I don't see it for the PCR folks either.
Combo.
Pricing on the combo, which was your second, we've said before that we are going to be at end user somewhere around $35. Realize that net sales would be lower as we would obviously pay a rebate to our distributors. Net-net, we would be just under $30, I suspect.
Okay. Thank you.
Sure. You're welcome.
Your next question is from the line of Alex Nowak with Craig-Hallum Capital Group. Please go ahead, sir.
Great. Good afternoon, everyone. We've seen some big partnership announcements-
Yeah.
Hey, good afternoon. We've seen some big partnership announcements with Quidel and some others like, the Pac-12 and the Big Ten. I think the two places that make the most sense to see a Sofia in every single store is someone like a CVS or Walgreens. Maybe not those two directly, but could you just speak to any more of the retail-oriented partnerships that you're in discussions with?
Sure. That's a great question, Alex. It's a logical place for Sofia. It's a logical place for Sniffles as well, and we'll talk more about that at Investor Day. Please remember that when we started here, we said that we were going to do what we could do for the greater good to get testing democratized into the communities, closer to the patient, primarily at the onset to make sure that healthcare providers and first responders were being tested. Therefore, we felt obligated to be in the segment that we would call the professional segment. That's hospital labs, large clinics, urgent care, and all those who logically could provide that testing to folks who really, at the onset of all this, actually needed the testing. We were constrained, as you'll remember, Alex, by the number of boxes we were producing at the time.
We've now expanded our production from the instruments we get from Australia to about 2,500 a month. You would've seen that up, not so far from you all, in Wisconsin, we are manufacturing as many as 7,500 instruments per month there. For a total of 10,000. We're nearly there. We think we'll be at that level sometime in November. At that time, as I said in my prepared remarks, we should be able to move into those other segments like retail. You can imagine that we've been contacted by everybody that you can name and probably some that you don't even know about. We do think there is a robust retail segment. We think we have a product that fits that segment super well, and we will be pleased when we can actually ship them the instruments that they're asking for.
No, that's great. Very helpful. Expanding on the asymptomatic testing, assuming routine asymptomatic testing does take hold, clearly an at-home test is going to be necessary. You touched on it a little bit, but can you just expand on Quidel's plans for home testing, how that product would work, if it's going to be over the counter, and then when we could see something launched here by Quidel?
Step one is the QuickVue SARS antigen approval in the traditional point-of-care segment. Very quickly after that, we will conclude work in the at-home segment. It is our intent to be in that segment. It's one of the reasons why we feel like we need to make the investment to get to 50 million tests per month, and we're highly interested in it. I think it is a watershed moment in the evolution of diagnostic testing. I do think moving forward that you'll see more and more at-home applications for routine conditions, and we want to be at the forefront of that. I do know that there are others that are interested in it. They should be. We certainly are, and we plan to be there as quickly as we can get there. QuickVue will be our entry there. We're debating on Sniffles.
Do you really want an instrumented system at home? I suppose we could. We do have one very large retailer that I won't name today that has been chatting with us about our various instrument platforms, including Sniffles, and we'll see what transpires moving forward. We're not at the stage yet where we would announce exactly what our intent is, recognizing that our transcript gets routed around at every one of our competitors that we're aware of. Describing the game plan today, I'd love to, but I think it's just a little premature.
No, but understood. Maybe I'll ask, when would you expect to get to a $50 million run rate on QuickVue, if you're willing to share it?
I think there's some variability there, depending on the rate at which our engineering companies can fabricate the equipment that we need. We've placed orders. We're trying to find other folks that can scale to do the same thing. It's not really our effort or our timeline. It's more the timeline of the folks that are building the equipment for us. We certainly have an existing footprint right now that'll accommodate some of that. I think we can get to 100 million tests per year right away, so that's about 20% of what we need. What we need is the remaining 80%, and that's where we're at. I haven't named a month yet, just because we have a plan. I've seen the plan. We're executing the plan. Can we pull it forward? I hope so. It'll be sometime in 2021 when we're at that level.
That's great. Really appreciate it. Thank you.
You're welcome.
Once again, if you do have a question, please press star, then the number one on your telephone keypad. Your next question is from the line of Jack Meehan with Nephron Research. Please go ahead, sir.
Thank you. Good afternoon. Hey, Doug and Randy. I was wondering if you'd give a little bit more granularity, just bridging from the third quarter to your expectations for the fourth quarter for some of the key products. What are you expecting for the ABC test, the amount of conversion toward that? Do you have anything built in for QuickVue in the fourth quarter and Solana, the new assays coming in?
Yeah, thanks, Jack. I appreciate that question. Because we did say at least $800 million. The first bucket is Sofia SARS, Sofia ABC, and Sofia Influenza. There, again, we won't be making more than 2.1 million tests per week of any one of those or all of them. The max is 2.1 million. We'll spread it between those two. Obviously, we've made some flu product. We've made some combo product. There will be demand, obviously, for some people with legitimate reasons to run just the SARS product, so we're mindful of that. For example, customers that are serving the pre-surgical market, they don't need to run flu, so let's not make them buy a flu test. For folks that are symptomatic in the upcoming flu season, we're going to hope to persuade them to buy the combo product exclusively.
We are planning on even force converting, if we have to, a portion of the market. Clearly, there are some folks that need to run Sofia Influenza exclusively, or separately, if you will. That would be the Sofia 1 customers that haven't converted to Sofia 2 yet. Obviously, we have an obligation to get those people instruments, and we will. That's our intent. That's the major bucket of growth. The cardiovascular business, we expect to be nearly back to what it was before all of this, and I think we're going to do something in the mid-$60s, right? Maybe $65 million or so is what we have scheduled for the fourth quarter. That should be back in line. Another big increase, as you may have heard on my prepared remarks, is we're getting another third increase in terms of our sales of Lyra SARS.
I won't force you to figure the math out. We should come in somewhere around $80 million for Lyra as well. As you can see, that's a pretty big lift as well. We do have some new products. Sofia Serology, which I wouldn't model a lot there.
We don't intend to do anything more than the studies that we need to demonstrate the clinical utility of that particular product, recognizing that we are testing for antibodies, not only to the nucleo protein, but also to the two spike proteins. We think that's meaningful, but we're going to need to show it. We're running those tests. We're going to launch these two products, QuickVue SARS, and we do expect meaningful contribution from that product. That product is at the FDA under active review right now. Solana SARS, we're in the final stage of the validation data that we need to submit to the FDA. We're expecting a reasonably big contribution there to an audience that already has the instrument and essentially knows it's coming. The timing of that will affect where we're at.
Obviously, we've risk-adjusted all of that, and that's how we get to 800. I don't think it's going to start with a nine, so let's not get carried away, but I think we're comfortably going to start with an eight.
Thanks. That's all helpful. On the new product front, it'd be great to get an update as to where maybe the progress you've made since the second quarter on Savanna.
Well, we're-
He wants to hear.
I'm sorry, Randy, what were you saying?
No, he just wanted an update on Savanna, which we'll give in a lot more detail on the analyst.
We will provide. What I will tell you is this, just briefly. We have engineering confidence build units. We put all the sub-components through their paces. The instrument itself is performing extraordinarily well. We did have a little bit of a challenge with the drawer that receives the cartridge. You can imagine, remember the old CD days where you put a CD in and you just touch the drawer, and it pulls it in. You have a motor that's actuated by you pressing. You had to press a little too hard. We've changed that. We've changed the motor, we've changed all that. Other than that, everything else is going to move forward into the alpha units, and it's those units we're building now that we'll use in the clinical trials, will be in customer sites, and actually, in some cases, they'll just keep those instruments.
We expect to build 73, is it? 73 analyzers that will be doing clinical trials in at least three or four major sites throughout the country very early in the first quarter.
Sounds good.
More details to follow, Jack, when we talk to you on November 12th.
Okay. Looking forward to that. Randy, the build on the balance sheet for accounts receivable, I heard the commentary around cash flow for the year, but do you think that continues to build as sales expand, or is there an opportunity to, given your positioning in the market, to maybe pull that in a little bit and improve?
Jack, talk about the McKesson thing a little bit as well, Randy, because we had expanded.
Yeah. For a short time period, Jack, we had provided some extra terms to our distribution partners as they were ramping up as well. That now has gone back to more normal terms, we're going to get back to more normalized DSO terms that are in the 45- to 50-day period. That's where we will see, as a DSO perspective, a reduction here between now and December.
Thanks, Randy.
That is all the time we have today. Please proceed with your presentation or any closing remarks.
Well, that's all we had for you all today. I would just say, thanks, everybody, for your support and, of course, your interest in Quidel. We had an excellent third quarter, as you saw. We're expecting an even better fourth quarter, and we're in really good shape to achieve our growth objectives over the next few years. You'll see more detail on that on the 12th of November, and I'll just say thanks again for being with me on my 47th earnings call.
Congratulations, Doug.
Thanks. All right, we'll talk soon, everybody.
Thank you. Ladies and gentlemen, we thank you for your participation and ask that you please disconnect your lines. Goodbye.