REVENUES

DX Earnings Report: Lab Companies Continue to Grow but at a Slower Rate

The diagnostics industry got off to a so-so start with PAMA reimbursement cuts, a weak flu season relative to 2018 and currency translation slowing the pace of year-over-year revenue growth.

Gainers

Of the 40 companies in our sample, 30 reported at least some growth during the period. But growth rates were mostly below what they were in the same period last year among not only mature labs like Abbott (17% in Q1 2018 v. 2% in Q1 2019), Illumina (31% v. 8%), PerkinElmer (25% v. less than 1%), Roche (5% v. less than 1%) and Thermo Fisher (23% v. 5%).

Six companies reported flat sales, i.e., gains or declines of less than 1%, including billion-dollar companies Becton Dickinson, Quest and Roche. The other two firms with flat revenues were Bio-Rad and Luminex.

Although 26 of 35 companies hit or exceeded average Wall Street revenues estimates, that ratio is significantly below Q1 2018 when 31 of 35 companies accomplished the same feat. And one of the 26 companies that met Wall Street targets in the previous quarter (OraSure Technologies) actually had revenue losses of 28%, which was just slightly less than the 29% losses analysts were expecting.

The Hottest Companies

Ten companies raised their 2019 full year earnings guidance on the basis of Q1 sales, including Bruker, CareDx, Exact Sciences, Guardant Health, Hologic, NeoGenomics, PerkinElmer, Thermo Fisher, Twist Bioscience and Veracyte. Other strong performers during the quarter included:

  • Bio-Techne which grew 14% thanks to continued strength in genomic testing sales;
  • Fluidigm whose revenues increased 19% thanks to surging sales of its Helios and Hyperion imaging mass cytometry systems
  • Consumer genetic testing firm Invitae which posted 47% growth despite the 10% headwinds effect of PAMA Medicare cuts; and
  • NeoGenomics where genetic cancer and other testing volume continues to grow by double digits almost every quarter.

Decliners

Companies on the list of decliners included mammoths like LabCorp (-2%) and Becton Dickinson (down less than 1%). The seven other firms with lower YOY revenues were Enzo Biochem (-22%), Meridian Bioscience (-11%), OpkoHealth (-13%), OraSure Technologies (-28%), Pacific Bioscience (-15%), Quidel (-13%) and Waters (-3%).

Diagnostics Earning Reports for Q1 (period ended March 31, 2019)
(At least $10 million in sales)

COMPANY 1st QUARTER DIAGNOSTICS SEGMENT PERFORMANCE
Total YOY Wall Street
Abbott Laboratories $7.51 billion +2% (7% on organic basis) $7.47 billion DX revenues flat at $1.84 billion with core lab up 4% to $1.06 billion, molecular down 8% to $108 million, POC up 5% to $135 million, rapid diagnostics (mostly Alere) down 4% to $537 million
Agilent Technologies $1.28 billion +6% $1.27 billion DX & Genomics up 13% to $235.0 million thanks to strong pharma + clinical markets
Becton Dickinson (FY Q2) $4.20 billion flat $4.24 billion DX systems down 5% at $389; overall life sciences down 4% to $1.05 billion due in part to relatively mild flu season as compared to 2018
Bio-Mérieux €632.5 million ($707.8 million) +4% (8% currency neutral basis) NA Clinical applications, including microbio, molecular bio and immunoassays up 4% to €525.9 million with microbio growth driven by strong BacT/Alert blood culture and Vitek sales
Bio-Rad Laboratories $554 million flat $550 Clinical DX down 5% to $334.1 million despite strong autoimmune and blood typing product sales
Bio-Techne (FY Q3) $184.9 million +13% $164.0 million DX & Genomics up 15% to $47.1 million driven by Advanced Cell Diagnostics RNAscope product sales; EPI tests performed up 14%
Bruker $461.4 million +7% $450.1 million CALID, including mass spectrometry and microbio, up 13% to $148.2 million
CareDx $26.0 million +84% $24.3 million Testing services up 103% to $21.5 million driven by AlloSure and AlloMap sales
Danaher $4.88 billion +5% $4.79 billion Growth driven by 10% increase in life sciences to $1.63 billion; DX core revenues up in mid-single digits led by immunoassays and automation; Cepheid slightly down due to relatively weak flu season as compared to 2018
Enzo Biochem $19.7 million -22% NA Clinical services down 34% to $11.7 million due to reduced reimbursement rates, higher insurance claims rejections and changes to payor protocols for genetic testing

Exact Sciences

$162.0 million +79% $153.0 million Cologuard colon cancer tests up 79% to 334K for Q1 (4.6% market share) and 934K for year—although average revenue per test down $2 to $483 and average cost per test increased $4 to $128
Fluidigm $30.1 million +19% $29.2 million Mass cytometry more than doubles at $18.8 million 48% to $19.1 million thanks to strong demand for Helios and Hyperion systems, which offsets 30% dip in microfluidics-related revenues to $11.4 million

GenMark Diagnostics

$21.5 million +4% $20.9 million  ePlex systems up 72% to $15.7 million (39 new systems placed during quarter)
Genomic Health $108.8 million +17% $106.7 million Invasive breast cancer testing up 12% to $79.8 million; prostate cancer testing up 47% to $8.5 million; test results delivered up 16% to 37,580
Guardant Health $36.7 million +120% $31.7 million Precision oncology up 103% to $28.8 million; development services up from $2.5 million to $7.8 million driven by companion Dx program with AstraZeneca
Hologic $818.4 million +4% $806.1 million Global DX up 6% to $296.7 million driven by 11% growth in molecular diagnostics to $167.8 million + 19% growth in blood screening to $13.4 million which offset 2% dip in cytology + perinatal ($115.5 million)
Illumina $846 million +8% NA Consumables up 14% to $481 million but Microarrays down 3.3% to $147 million
Invitae $40.6 million +47% $47.2 million 10% decline in Medicare reimbursement for cancer testing due to PAMA and lower average revenue per test ($455)
Laboratory Corp. of America $2.79 billion -2% $2.83 billion DX down 3% to $1.72 billion due in large part to PAMA reimbursement cuts although sales up 0.4% on organic basis; Covance flat at $1.07 billion
Luminex $82.4 million Flat $83.1 million Lower than expected respiratory product sales and loss of women’s health products to LabCorp as well as weak flu season
Meridian Bioscience (FY Q2) $50.2 million -11% $51.7 million DX down 16% to $33.5 million, including 29% dip in molecular tests to $7.1 million and 11% dip in immunoassay and blood chemistry to $26.4 million
Myriad Genetics (FY Q3) $216.6 million +18% $217.5 million Molecular DX up 18% to $200.5 million driven by 4% growth in hereditary cancer ($117.6 million) + 7% growth in newly acquired (via Counsyl acquisition) prenatal testing $30.6 million; Prolaris prostate cancer test revenues up 8% to $6.9 million; EndoPredict breast cancer test up 22% to $2.8 million; Declining products included GeneSight (-3%) and Vectra DA(-25%)
NantHealth $23.7 million +6% NA Sequencing and molecular tests down from $840K to $814K; GPS molecular DX and Liquid GPS tests down due in part to new policy restricting access without promise of insurance reimbursement or patient direct payment
Natera $66.8 million +7% $65.5 million Driven by 12% growth in Panorama to $37.2 million and 24% growth in Horizon to $22.7 million; total tests processed up 22% to 200,194
NeoGenomics $95.6 million +51% $90.6 million Test orders up 48% to 155,963, tests performed up 31% to 234,317 and average revenues per test up 15% to $368
OpkoHealth $222.5 million -13% $241.3 million 4Kscore prostate cancer tests down 8% and PAMA cuts hurt BioReference Laboratories business
OraSure Technologies $30.1 million -28% $29.9 million Molecular collection systems down 42% to $10.6 million; genomics down 53% to $8.0 million; infectious disease testing down 13% to $12.3 million due to 11% decline in OraQuick tests for HIV and HCV; declines primarily result of previously announced loss of major consumer genetics customer
Pacific Bioscience $16.4 million -15% $21.6 million $13.5 million in product and $3.0 million in service revenues
PerkinElmer

$648.7 million

Flat $645.1 million DX up 5% to $259.9 million driven by prevalence of infectious and autoimmune diseases, especially in emerging markets, but Discovery & Analytical Solutions down 2% to $388.8 million
Qiagen $348.7 million +2% $350.7 million Molecular DX up 10% to $168 million and life sciences up 3% to $181 million
Quanterix $12.3 million +64% $10.2 million Neurology firm expands into oncology space which now accounts for 17% of revenues
Quest Diagnostics $1.89 billion flat $1.87 billion Test volume up 4% driven by tuberculosis, Cardio IQ, drug monitoring and hemapathology blood cancer testing which helped offset 10% reimbursement losses from PAMA cuts
Quidel $148.0 million -13% $155.2 million Hurt by weak flu season; Cardiac immunoassay down 4% to $65.9 million; Rapid immunoassay down 23% to $62.5 million including $17.4 million decrease in flu revenue; Molecular DX up 12% to $5.7 million, including 24% increase in Solana sales; Specialized DX down 7% to $13.9 million
Roche Diagnostics $2.90 billion flat NA DX sales up 1% including 3% growth in immunodiagnostics and 7% growth in molecular diagnostics which offset 2% decline in clinical chemistry and 12% decline in point of care. Strong performers included cervical cancer diagnosis (up 52%) and blood screening (up 14%)
Siemens Healthineers (FY Q2) $3.93 billion +9% NA DX up 5% to $1.16 billion driven by sales of Atellica Solution platform (780 shipped during quarter)
Thermo Fisher Scientific $6.12 billion +5% $6.02 billion Specialty DX up 1% to $960 million; Lab products + services up 4% to $2.51 billion
Twist Bioscience $13.6 million +119% $12 million $8 million from synthetic biology + $5.5 million from genomics and targeted NGS
Veracyte $29.5 million +47% $20.0 million Genomic test volume up 33% to 9,162 tests
Waters $513.9 million -3% $545.3 million Hurt by currency translation and weak TA instruments sales in China and Europe
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* Bold face: Companies that met or exceeded average Q1 Wall Street revenue estimates

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