DX Earnings Report

Strong Q1 Earnings Belie the True Financial Devastation of COVID-19

The bad news is that COVID-19 is very, very bad for business; the good news—sort  of—is that the pandemic had just the last few weeks of March to wreak havoc on 2020 Q1 earnings reports. And even that flimsiest of silver linings doesn’t apply to diagnostics firms that do heavy business in China and other East Asian markets where the virus first hit in January.

Gainers

Many companies were able to get the fiscal year off to a strong start and build up enough of a cushion in January and February to finish Q1 with positive growth. Thus, of the 39 companies that had published earnings results for the quarter as of the time we went to press, all but 10 had higher 2020 Q1 revenues, as compared to the same period in 2019. Gainers included not only emerging genetic and molecular testing firms with relatively low revenues but also mature giants like Abbott, Danaher, LabCorp, Roche and Thermo Fisher. Alas, Quest posted a 4% year over year decline but did top its Wall Street targets on both the top and bottom lines.

Among companies with reported Wall Street earnings estimates, 28 hit their targets and only eight came up short. But three companies in the latter group—Fluidigm, Pacific Biosciences and Waters—actually reported higher than expected earnings per share.

The Pandemic Effect

Once the pandemic hit, all hell broke loose. Labs stood hopelessly by as doctors, clinics and other key customers temporarily shut down or severely curtailed their operations. As just about all forms of non-urgent testing came to a screeching halt, being in the COVID-19 space became pretty much the only way for labs to make money. However, most lab companies weren’t positioned to provide COVID-19 testing, which must be performed by Level 2 labs on platforms costing anywhere from $250,000 to $1 million, to say nothing of scarce supplies like cotton swabs, reagents, PPE and, of course, trained testing personnel.

In addition, while the demand for COVID-19 testing is unprecedented, the reimbursement is rather modest. Thus, even the companies with the wherewithal and resources to offer COVID-19 testing, including big companies like Abbott, LabCorp and Quest, couldn’t make enough to offset the massive overall volume losses in other areas.

The Pandemic Positives

On the bright side, there were a few firms that were able to take maximum advantage of the unprecedented demand for COVID-19 tests, instruments, platforms, reagents and other related products and services, including BioMérieux whose BioFire FilmArray products grew 67% year over year thanks to “exceptionally high” use of its respiratory and pneumonia panels. Sales for DNA/RNA extraction instruments and reagents were also off the charts.

The severe flu season and subsequent COVID-19 was also good for business at Danaher, where diagnostics revenues increased 6% to $1.63 billion driven by 40% growth in revenues for Cepheid point-of-care respiratory testing.

Another company that made hay on COVID-19 was Meridian Bioscience. After five quarters of decline in a row, Meridian’s diagnostics division turned things around by posting positive growth of 4%. And while most companies were withdrawing their 2020 financial guidance due to COVID-19 uncertainty, Meridien not only stuck with but increased its guidance based on expectations of greater demand for its molecular and serology SARS-CoV-2 reagents.

Other companies that posted a strong Q1 either because of or despite the pandemic:

  • Qiagen, one of the few companies where coronavirus revenues offset the losses in other businesses and which is dramatically ramping up production of its COVID-19 reagents and RNA extraction kits;
  • Natera, whose diagnostics division been enjoying its biggest sequential quarter-on-quarter segment growth in company history before the pandemic, and which was able to minimize COVID-19 disruption by making fast and effective improvements to its remote ordering capabilities; and
  • GenMark Diagnostics, where revenues increased 80% and which raised its guidance after the FDA gave Emergency Use Authorization for its ePlex SARS-CoV-2 Test run on the firm’s ePlex system.

Takeaway

According to several reports, the COVID-19 revenue losses that began in March continued into April and the first two weeks of May. As reopening progresses and elective surgeries and non-urgent health care services resume, the rebound will likely continue, albeit at a modest rate through June and July. Thus, the true extent of the economic horrors will become clear not in Q1 but the earnings reports for Q2. No wonder so many firms have withdrawn their financial guidance.

Diagnostics Earning Reports for Q1 (period ended March 31, 2020)
 (At least $10 million in sales)

COMPANY FY 2020 Q1 DX Segment Performance
Total Revenue
(vs. Wall Street)
YOY Revenues

EPS

(vs.

Wall Street)

Abbott Laboratories $7.73 billion
($7.34 billion)
+3%
(+4% organic)
Adjusted
+$0.65
(+$0.58)
DX down 1% to $1.83 billion, wit core lab revenues down 7% at $989 million, molecular up 29% to $139 million, POC up 2% to $138 million, rapid diagnostics up 4% to $560 million
Adaptive Biotech $20.9 million ($22.7 million) +65% Net
-$.25
(-$.21)
Test volumes started quarter strong but fell dramatically due to COVID-19 pandemic; ClonoSeq testing up 75% to 3,518 tests
Agilent Technologies (FY 2Q) $1.24 billion
($1.21 billion)
-2% Adjusted +$0.71
(+$0.61)
Diagnostics and Genomic Group up 4% to $263 million, Life Sciences and Applied Markets down 1% to $526 million due to lower equipment purchases during pandemic; CrossLab group down 1% to $449 million
Becton Dickinson (FY Q2) $4.25 billion
($4.16 billion)
+1% Adjusted
+$2.55
(+$2.36)
Pandemic-fueled decline in elective testing and non-urgent hospital procedures results in at least $40 million in DX revenues lost
Bio-Mérieux $836.6 million +22% (+21% organic) Not reported Molecular biology up 70% to $319.5 driven by not only unprecedented demand for COVID-19 testing which also led to abnormally high sales of DNA/RNA extraction instruments and reagents
Bio-Rad Laboratories $571.6 million
($554.9 million)
+3% Non-GAAP
+$1.91
(+$1.61)
Strong quarter with DX up 2% to $340.3 million driven by quality controls and blood typing, which offset losses in immunology and diabetes products; net loss of $258.8 million as a result of investment losses
Bio-Techne (FY Q3) $194.7 million
($185.4 million)
+5% Adjusted
+$1.39
(+$1.15)
Despite pandemic headwinds, DX & Genomics up %5 to $49.4 million and Protein Sciences up 6% to $145.5 million
CareDx $38.4 million
($38.0 million)
+48% -$0.14
(-$0.03)
Testing services up 46% to $31.4 million driven by 50% increase in AlloSure and AlloMap sales
Centogene (FY Q4) $16.4 million
($15.05 million)
+52% Net Loss of $5.45 million Diagnostics up 16% to over $7 million
Danaher $4.34 billion ($4.29 billion) +3% Adjusted
+$1.05
(+$1.01)
DX up 6% to $1.63 billion; Cepheid point-of-care up over 40% driven by severe flu season followed by COVID-19 outbreak; Beckman Coulter DX revenues up in high-single digits

Exact Sciences

$347.8 million
($350.4 million)
+115% -$0.71
(-$0.61)
Precision oncology up 18% to $128.4 million despite 36% drop in Cologuard test volume in final 3 weeks of quarter—9,000 new providers ordered assay during quarter
Fluidigm $27.6 million
($29.0 million)
-8% Adjusted
-$0.13
(-$0.15)
Pandemic hurts sales of both mass cytometry (down 26% to $11.5 million) and microfluidics products (down 20% to $7.5 million)
GenMark Diagnostics* $38.7 million
($29.8 million)
+80% Net
-$0.12
(-$0.14)
 Pandemic drives 119% increase in ePlex systems to $34.3 million (54 new systems placed during quarter)
Guardant Health $67.5 million
($56.5 million)
+84% Net
-$0.29
(-$0.39)
Precision oncology up 109% to $60.2 million with 60% increase in clinical test volume (15,257 test results); development services down 7% to $7.3 million driven by new companion Dx products for biopharma
Hologic
(FY Q2)
$756.1 million
($745.9 million)
-8% Adjusted
+$0.57
(+$0.57)
Global DX up 8% to $319.2 million driven by 14% growth in molecular diagnostics to $190.6 million, best Q since 2012 for that segment,and blood screening up 14% to $15.2 million but cytology + perinatal down 2% at $113.4 million
Illumina $859 million
($854 million)
+2% +$1.17
(+$1.25)
Strong demand for COVID-19 testing reagents fuels growth in sequencing consumables and service revenues but is offset by decline in sequencing services revenues
Invitae $64.2 million
($59.4 million)
+58% Non GAAP
-$0.80
(-$0.76)
Strong start of Q provides cushion for 50% decline in testing volume in March; 154,000 samples accessioned in total for Q vs. 94,000 in Q1 2019
LabCorp $2.82 billion
($2.74 billion)
+1% Adjusted
+$2.37
(+$1.95)
Growth driven by acquisitions which contributed 3%; organic revenue down 2% due to PAMA produces (-1% impact) and pandemic (-5%); overall demand for testing down 50%, despite surging demand for COVID-19 testing organic volume up less than 1% with managed care contracting changes producing -1% impact
Luminex $90.4 million
($84.1 million)
+10% Net
+$0.01
(-$0.03)
Assays revenue up 26% to $43.7 million; molecular DX up 28% to $45.2 million; flow cytometry down 42% to $6.5 million
Meridian Bioscience (FY Q2)* $57.3 million

($49.3 million)

+14% Adjusted
+$0.23
(+$0.08)
DX up 4% to $34.9 million, first YOY growth for division in 5 quarters, including 2% growth in molecular tests to $7.2 million, and 5% growth in immunoassay and blood chemistry to $27.7 million driven by demand for COVID-19 testing; gastrointestinal products biggest contributor within DX with $14 million in revenues
Myriad Genetics (FY Q3) $164 million
($167.2 million)
-24% Adjusted
-$0.08
(-$0.02)
Overall testing volumes down between 20% and 75% across all segments due to COVID-19, with molecular DX down 25% to $150.5 million, including 28% drop in hereditary cancer ($85.2 million), 31% decline in GeneSight ($20.4 million), 7% decline in Vectra ($10.5 million), 1% drop in Prolaris ($6.8 million); EndoPredict actually up 25% to $3.5 million; ($2.3 million); but prenatal testing up 30% to $23.5 million and Prolaris up 5% to $6.2 million
NanoString Technologies $26.6 million
($25.4 million)
-4% Net
-$1.04
(-$1.04)
Pandemic drives 15% increase in product and service revenues to $24.5 million and more than doubles instruments revenue to $9.8 million, including $6.5 million from newly launched GeoMx system
Natera $94 million
($85 million)
+41% Net
-$0.45
(-$0.56)
Biggest sequential Q-on-Q segment growth in company history despite COVID-19 disruption in March; lab has operated without disruption, processing 222,400 of total 235,000 tests thanks to improvements to remote ordering capabilities
NeoGenomics $106 million

($104.6 million))

+11% Adjusted
-$0.02
(+$0.02)
Clinical service revenues up 8% growth to $93 million and pharma services up 39% to $13 million, despite COVID-19 disruptions to both divisions; requisitions up 5% to 144,319, tests performed up 7% to 250,376 and average revenues per test up 1% to $371
Oxford Immunotec $13.9 million
($13.5 million)
-6% Pro forma
-$0.23
(-$0.15)
Asian revenues down 22% due to impact of pandemic in China; US revenues start strong but fall off severely in March as a result of declining test volumes
Pacific Biosciences $15.6 million
($20.1 million)
-5% Net
-$0.01
(-$0.16)
Pandemic severely hurts instruments sales across all geographic regions
PerkinElmer $652.4 million
($652.7 million)
+1% +$0.67
(+$0.55)
DX down 2% to $254 million with weakness in immunodiagnostics + reproductive health more than offsetting strength in applied genomics; COVID-19 exerts $46 million drag on overall revenues
Personalis $19.2 million

($17.2 million)

+36% Net
-$0.29
(-$0.25)
Able to record record earnings again despite COVID-19 thanks to expansion of US Dept of Veterans Affair contract revenues
Qiagen $372.1 million
($344.9 million)
+7% Adjusted
+$0.34
(+$0.27)
Steep demands for COVID-19 testing more than offsets losses in all other kinds of testing
Quanterix $15.7 million
($13.3 million)
+27% Not reported Services revenues more than double to $5.8 million thanks to increased use by lab customers experiencing COVID-19 disruptions; Products up 3% to $9.8 million
Quest Diagnostics $1.82 billion
($1.75 billion)
-4% Adjusted
+$0.94
(+$0.89)
COVID-19 causes 40% decline in last two weeks of DX Information Services revenues and $7.1 million loss for Q; Declines continue into April with expectation of bottoming out at 50% to 60%; meanwhile, higher reimbursement pressure causes 1.2% decline in revenue per requisition
Quidel $174.7 million
($158.1 million)
-13% Adjusted
+$1.22
(+$0.98)
Rapid immunoassays up 54% to $95.9 million driven by $30.3 million increase in influenza revenues; Cardiometabolic immunoassays down18% to $53.9 million;  Molecular DX up 45% to $8.5 million driven by 41% increase in Solana sales; Specialized DX up 1% to $13.9 million
Roche Diagnostics $15.65 billion +7% Not reported DX sales flat despite 22% growth in molecular flu and SARS-CoV-2 diagnostics. Centralized + point-of-care (POC) down 6% to $1.63 billion, including 4% decline in immunodiagnostics, flat clinical chemistry sales. Other strong segments included driven blood screening (up 6%) and cervical cancer microbiology (up 17%)
Siemens Healthineers (FY Q2) $4.0 billion +5% Net
+$0.45
COVID-19 blunts demand for testing in China and other markets and drags overall revenues down 4%, including 1% decline in DX revenues to $1.12 billion
10x Genomics $71.9 million
($73.4 million)
+34% Net
-$0.22
(-$0.13)
COVID-19 marginal bump in immune profiling and instruments more than offset by losses in consumables resulting from closure of 75% of customers in North America and Europe
Thermo Fisher $6.23 billion
($6.17 billion)
+2% Adjusted
+$2.81
(+$2.79)
Specialty DX flat at $958 million due to divestment of Anatomical Pathology business in June; Lab products + services up 9% (6% organic) to $2.73 billion driven by pharma services and research + safety
Twist Biosciences $19.3 million
($18.3 million)
+42% Net
+$0.85
(-$0.75)
Despite COVID-19, synthetic biology, including gene pools, libraries and oligo pools reached $11 million
Veracyte $31.1 million
($30.6 million)
+5% Net
-$0.24
(-$0.20)
Overall genomic testing volume up 15% to 10,559 tests, despite 50% decline in second half of March due to COVID-19; 17% spike in operating costs lead to 516% increase in net loss to $11.7 million
Waters $464.9 million
($488.5 million)
-10% Non-GAAP
+$1.15
(+1.47)
COVID-19 outbreak in China decreases sales in that market by 45% and 8% overall

Bold face: Companies that met or exceeded average or consensus Q1 Wall Street revenue estimates
Italics: Companies that missed average or consensus Q1 Wall Street revenue estimates
* Companies that raised their revenue or EPS guidance during Q1

CLOSE TO VIEW ARTICLE x

You have 2 articles left to view this month.

Your 3 Free Articles Per Month Goes Very Quickly!
Get a 3 month Premium Membership to
one of our G2 Newsletters today!

Click on one of the Newsletters below to sign up now and get unlimited access to all articles, archives, and tools for that specific newsletter!

Close

EMAIL ADDRESS


PASSWORD
EMAIL ADDRESS

FIRST NAME

LAST NAME

TITLE

COMPANY

PHONE

Try Premium Membership

(-00000g2)