EARNINGS REPORTS

Diagnostics Earnings Show Gains in 1st Q

The laboratory industry is off to a strong start in 2017. Although growth rates varied, most firms were up for the quarter. Here’s an overview of 1Q 2017 based on the earnings reports we’ve seen so far.

Gainers

Gainers outnumbered decliners by a staggering 22 to 1. And the gains were largely significant. Only two firms missed their Wall Street revenue estimates for the quarter:

  • Becton Dickinson (BD), which came up just $10 million shy of its $3.07 billion target; and
  • Veracyte, which grew 21% but still missed its $17.7 million target by $1.3 million.

All of the billion-dollar firms posted increases in diagnostics revenues, in most cases substantial increases:

  • Danaher’s diagnostics business grew 17%;
  • Roche’s diagnostics revenues were up 6% to $2.80 billion;
  • LCA’s YOY revenues increased from $1.59 billion to $1.72 billion;
  • Abbott’s revenues grew 4% to $1.16 billion;
  • Thermo Fisher’s lab products and services sales increased 3% to $1.70 billion; and
  • Quest was up 2% with diagnostics revenues of $1.90 billion.

It was a strong quarter for influenza products thanks to the year’s harsh and prolonged respiratory disease season which featured circulation of a virulent H3N2 influenza strain. Among the biggest benefactors was Quidel, a leader in influenza products including Sofia, QuickVue and Solana. The company saw flu sales surge 112% to $40.8 million, one factor in the firm’s overall 46% YOY increase for the quarter.

Decliners

BD was the only company to report a year-over-year decrease for the quarter, at -3%. But even that figure is misleading since it was largely the result of currency exchange losses and divestiture of DB’s respiratory solutions business. BD’s revenues for the quarter were actually up 5% on a currency-neutral basis. And diagnostics systems revenues were up a robust 10%, fueled by sales of flu-related products.

Sticking with the earnings-don’t-tell-the-whole-story theme, several companies that posted big gains still had to lower their guidance estimates for the year. Examples:

  • NeoGenomics, which despite 3% revenue growth, reduced its full-year 2017 revenue and earnings per share guidance resulting in a 12% decline of its shares on Nasdaq; and
  • Pacific Biosciences, which grew 30% but had to reduce its 2017 growth guidance from 40%-60% to 35%-45% due to “U.S. budget uncertainties.”
COMPANY QUARTERLY REVENUES DIAGNOSTICS SEGMENT
PERFORMANCE
Total YOY Wall Street
Estimate
Abbott Laboratories $1.16 billion Dx revenue +4% NA Dx sales up 5% due to “above-market performance” in core lab and point-of-care
Becton Dickinson $2.97 billion -3% $3.07 billion Dx growth fueled by flu-and core microbiology products including blood cultures and Kiestra system
BioMérieux €568 million +16% NA 11% growth in microbiology products including BacT/Alert blood culture line
Bruker $384.9 million +3% $372.2 million Mass spec revenues down but microbiology orders “stabilize”
Danaher $4.21 billion +7% $4.17 billion Dx revenues up 17% including double-digit core revenue growth from Cepheid
Epigenomics $4.6 million +102% NA Firm separately announces acceptance of takeover bid Blitz F16-83, subsidiary of Cathay Fortune International
Exact Sciences $48.4 million +226% $37.3 million Growth driven by 150% increase in Cologuard colon cancer tests
GenMark Diagnostics $12.5 million +13% $12.5 million Growth driven by strong sales of XT-8 molecular diagnostics system
Illumina $598.0 million +5% $590.8 million Firm received 135 orders for its new NovaSeq instruments
Laboratory Corp. of America $2.41 billion net +5% $2.41 billion Dx revenues of $1.72 billion vs. $1.59 billion Q1 2016
Luminex $77.8 million +23% $74.2 million Nanosphere Verigene molecular product sales up 59% YOY at $10.5 million
Meridian Bioscience $54.1 million +6% $51.2 million Life science division up 18% to $16.4 million but revenues of newly acquired Magellan Diagnostics flat at $3.6 million
Myriad Genetics $196.9 million +3% $189.1 million Molecular diagnostic testing up 4% to $185.2 million despite 10% drop in hereditary cancer and 9% drop in Vectra DA rheumatoid arthritis tests
NeoGenomics $61.7 million +3% $61.4 million Clinical genetic tests performed up 15% to 155,567 generating 5% increase in testing revenues to $55.1 million
OncoCyte Firm did not report its revenues) $4.7 million net loss Net loss up 60% NA Company placing its hopes in lung cancer test to be launched in  second half of 2017
Pacific Biosciences $24.9 million +30% $24.6 million Despite increase, PacBio lowers its 2017 growth guidance from 40-60% to 35-45% due to “U.S. budget uncertainties”
Qiagen $307.7 million +3% $306.9 million Molecular diagnostics up 3% to $142.0 million, or 46% of total sales, despite fall of HPV test sales in U.S.
Quest Diagnostics $1.90 billion +2% $1.87 billion Growth driven by genetic carrier screening, prescription drug monitoring, hepatitis C and interferon tuberculosis testing
Quidel $73.7 million +46% $62.0 million Growth driven by molecular, immunoassay, influenza and specialty products
Roche $2.80 billion in Dx revenues +6% NA Point-of-care grew 8% and generated the most Dx revenue; immunoassays grew 13%
Thermo Fisher Scientific $4.77 billion +11% $4.68 billion Laboratory products and services up 3% to $1.70 billion
Veracyte $16.4 million +21% $17.7 million Afirma Gene Expression Classifier test volume up 9% to 5,834 tests
Waters $498 million +5% $488.6 million Growth fueled by 9% increase in sales to pharmaceutical industry customers
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