DX Earnings Report: Lab Companies Finish 2018 Strong but Growth Slows for Established Firms

The diagnostics industry capped a robust 2018 with most companies posting strong fourth quarter results. Of course, every silver lining has a cloud. While widespread, gains were smaller than in 2017, particularly among the blue blood establishment. This includes testing behemoths like Abbott, LabCorp and Quest that felt the sting of PAMA and other reimbursement cuts.

Of the 28 companies that had reported Q4 earnings by the date we went to press, all but three reported growth during the period. And although only two of the firms reporting Q4 growth fell short of their average Wall Street estimate, they were notable, including Abbott, which reported flattish 1% growth in molecular diagnostics sales, and Qiagen which is still settling in after divesting business lines to concentrate on core NGS and molecular testing.

Some of the firms that met their Wall Street targets had a less than stellar Q4, including Luminex which despite exceeding its $79.4 million top-line target by a solid $1.7 million, shocked the market by coming in way short on the bottom line with $0.04 rather than the expected $0.09 earnings per share. It was also a relatively tough quarter for LabCorp which hit its $2.79 billion target on the nose thanks to 10% growth in its recently acquired Covance drug development business which offset a 3% decline in core diagnostics revenues.

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Recent acquisitions also helped Becton Dickinson (C.R. Bard), Danaher (Cepheid), Myriad Genetics (Counsyl) and PerkinElmer (Euroimmun) post double-digit growth (exception: Danaher grew 5%). Arguably, though, the most impressive performances came in the form of organic growth by the relatively small molecular and genomics test firms including:

  • Exact Sciences which grew 71% for the year ($454.5 million) thanks to the red-hot Cologuard colon cancer test;
  • Consumer genetic testing firm Invitae which posted 78% growth for the quarter and over 200% growth for the year;
  • NeoGenomics where genetic cancer and other testing volume continues to grow by double digits almost every quarter; and
  • Veracyte which increased sales by 32% for the quarter and 28% for the year and is now just under $100 million in revenues.

Three companies had declining sales in the quarter, including:

  • Meridian Bioscience was down 2% to $51.5 million overall (2% in diagnostics), which company officials attributed to “volume pressures in molecular products and pricing in certain gastrointestinal lines” which offset the modest gains in immunoassay and blood chemistry diagnostics revenues;
  • Quest Diagnostics declined 1% thanks to PAMA Medicare price cuts, increased payor denials and uncollectible patient balances—although Quest did grow 2% for the overall year, its $7.53 billion in revenues came below the Wall Street estimate of $7.57 billion; and
  • OraSure Technologies fell 3% in the quarter which belied its solid 9% growth for the entire year ($181.7 million, or $2.4 million above the $179.3 million average Wall Street estimate).

Keep in mind that the reported results don’t include perennial revenue loser Pacific Biosciences which is in the process of being acquired by Illumina.

Diagnostics Earning Reports 4Q 2018, Total 2018
(At least $10 million in sales—of companies to report as of press date)

Total YOY Wall Street
$7.77 billion +2%
(7% on comparable operation basis)
$7.82 billion $30.58 billion, up 12% but below $30.65 billion Wall Street estimate DX Q4 revenues up 3% (7% organic) to $1.96 billion; Yearly DX revenues up 34% (7% organic) to $7.50 billion with 5% growth in molecular + 8% growth in core lab
$1.28 billion +6% $1.27 billion Results are for firm’s Q1 2019 DX & Genomics up 13% to $235.0 million thanks to strong pharma + clinical markets
$4.16 billion +35% (counting newly acquired C.R. Bard) $4.11 billion Results are for firm’s Q1 2019 DX systems relatively flat at $382 million despite strength in instrumented microbiology platforms, including blood culture and ID-AST, and BD Max molecular platform
$174.5 million +13% $170.2 million Results are for firm’s Q1 2019 DX & Genomics up 6% to $39.3 million with inclusion of Exosome Diagnostics EPI assay in NCCN guidelines poised to drive further growth
Danaher $5.36 billion +5% $5.32 billion $19.89 billion, up 9% and above Wall Street $19.84 billion estimate DX for year up 7% to $6.26 billion driven by double-digit Cepheid growth and strong sales in China
$143.0 million +64% $134.8 million $454.5 million, up 71% and above Wall Street $445.7 million estimate Cologuard colon cancer tests up to 292K for Q4 (4.1% market share) and 934K for year—although average revenue per test down 2% to $486 in Q4
Fluidigm $32.3 million +17% $30.6 million $113.0 million, up 11% and above $111.2 million Wall Street estimate Mass cytometry grows 48% to $19.1 million offsetting 11% dip in microfluidics instruments, consumables and services to $13.2 million
$19.4 million +21% $19.1 million $70.8 million, up 35% and above $70.4 million Wall Street estimate  ePlex systems up 110% to $12.1 million for Q4 (42 placed)
$104.6 million +22% $101.5 million $394.1 million, up 18% and above $391.1 million Wall Street estimate Increases attributable in part to switch to ASC 606 accounting standard; Oncotype tests up to 35,530 v. 31,990 in Q4 and 136,380 vs. 126,730 for year
Hologic $830.7 million +5% $817.9 million Results are for firm’s Q1 2019 DX revenues up 4% to $296.6 million driven by 11% growth in molecular diagnostics ($164.3 million) + 13% growth in blood screening ($14.2 million) which offset 4% dip in cytology + perinatal ($118.1 million)
Illumina $867 million +11% $863.5 million $3.33 billion, up 22% Sequencing systems up 21% to $159 million for Q4 including 100+ NovaSeq instruments + $466 million in sequencing consumables
Invitae $45.4 million +78% $40.8 million $147.7 million, more than double 2017 + above $143.1 million Wall Street estimate Q4 Average revenue per test up $518 vs. $490 in Q3; 290K billable tests accounting for $144.6 million in revenues for year
Corp. of
$2.79 billion +2% $2.79 billion $11.33 billion, up 8% including $7.03 DX (up 2%) Q4 DX revenues hurt by PAMA (100 basis points), bad weather + divestitures; Covance up 25% to $4.31 billion for year
Luminex(1) $81.1 million +4% $79.1 million $315.8 million, up 3% and above $313.6 million Wall Street estimate Assay revenues for Q4 dip 11% to $37 million; net losses for quarter driven by loss of LabCorp Women’s Health + costs of closing MilliporeSigma deal
$51.5 million -2% $53.1 million Results are for firm’s Q1 2019 DX down 2% to $36.7, including 16% dip in molecular tests and pricing pressure on GI products; immunoassay + blood chemistry up testing up 2%
$216.8 million +15% $216.7 million Results are for firm’s Q2 2019 Molecular DX up 17% to $203 million driven by 4% growth in hereditary cancer ($126.7 million) + 12% growth in newly acquired (via Counsyl acquisition) prenatal
NeoGenomics(2) $76.5 million +25% $71.4 million $276.7 million, up 15% + above $271.3 million Wall Street estimate Testing up 23% ($65.9 million) in Q4 and 14% ($241.9 million) for year thanks to volume growth, including Genoptix
$50.2 million -3% $47.8 million $181.7 million, up 9% + above $179.3 Wall Street estimate Q4 loss due to dips in product sales including molecular collection systems (-15%, $24 million) + genomics (-18%, $23.5 million); for year, molecular collection grew 15% to $86.5 million, genomics grew 11% to $79.8 million + microbiome grew 92% to $6.7 million  
PerkinElmer $756.3 million +18% $746.6 million $2.78 billion, up 23% + above $2.77 billion Wall Street estimate 4Q DX up 53% to $296.5 million driven by reproductive health, immunodiagnostics + Euroimmun acquisition; yearly DX up 59% to $1.69 billion
Qiagen $403.2 million +2% $408.6 million $1.50 billion, up 6% but just below $1.51 billion Wall Street estimate Molecular DX up 5% to $194 million in Q4 + up 8% to $732 million for year; applied testing for year flat at $137 million
$1.84 billion -1% $1.88 billion $7.53 billion, up 2% but below $7.57 billion Wall Street estimate 5.5% dip in revenues per requisition in Q4 due to PAMA, increased payor denials, uncollectible patient balances + accounting adjustment; test volume for year up 1.1% and lab pricing headwinds just below 1.5%
Quidel $132.6 million +15% $132.1 million $522.3 million, up 88% and above $521.6 million Wall Street estimate In Q4, cardiac immunoassay up 34% ($62.9 m), rapid immunoassay up 3% ($50.4 m), molecular DX up 30% ($5.8 m); for full year, cardiac immunoassay up from $47 to $266.5 m, rapid immunoassay up 11% ($165.1 m), molecular DX up 43% ($19.4 m)
$3.5 billion +10% NA $12.88 billion, up 7% Yearly growth driven by increases of 5% in molecular DX ($2.02 billion), 4% in virology (especially HIV screening), 9% in blood screening + 8% in HPV screening
$3.76 billion +3% NA Results are for firm’s Q1 2019 DX up 4% to $1.096 billion driven by sales of Atellica Solution platform
$6.51 billion +8% $6.23 billion $24.36 billion, up 16% + above $24.08 billion Wall Street estimate In Q4, Specialty DX up 4% (5% organic) to $950 million led by transplant DX + Immuno-DX while Lab products + services up 8% to $2.6 billion; for year, Specialty DX up 7% to $3.72 billion + Lab products + services up 28% to $10.04 billion
$11.5 million +267% $9.7 million Results are for firm’s Q1 2019 $7.7 million from synthetic biology + $3.8 million from genomics
Veracyte $25.8 million +32% $24.4 million $92.0 million, up 28% and above $90.6 million Wall Street estimate Genomic test volume up 28% in Q4 + 22% for year (31,710 tests)
Waters $715 million +4% $702.8 million $2.42 billion, up 5% and above $2.41 billion Wall Street estimate Growth driven by demand for liquid chromatography systems which offset flat mass spectrometry sales

* Bold face: Companies that met or exceeded average Q4 Wall Street revenues estimates

(1) While beating Wall Street average estimates for revenues, Luminex’s $0.04 EPS for Q4 surprisingly missed the Wall Street target of $0.09, sending share prices sharply down
(2) NeoGenomics’ high growth partly attributable to acquisition of Genoptix


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