Dx Earnings Report: Strong Q2 Enables Lab Companies to Consolidate Q1 Gains

The lab industry consolidated its early 2017 gains with an almost equally strong Q2. Although there were some notable declines, most companies posted gains at or above Wall Street expectations. Here’s an overview based on firms with at least $10 million in sales for the quarter.

Gainers
Gainers outnumbered decliners by 26 to 10. And the gains were largely significant with only two gainers missing their Wall Street targets:

• PerkinElmer which fell $7 million short of its $554 million target despite overall 2% growth and 6% gains in diagnostics; and

• Genomic Health which came in $600,000 shy of its $86.1 million target despite an overall 4% gain for the quarter.

Repeating the pattern of Q1, all of the billion-dollar diagnostic companies posted overall and diagnostics segment gains for the quarter, including:

• Danaher which followed up last quarter’s 17% Dx growth with 14% increases in Q2 as the Cepheid acquisition continues to pay off;

• Roche whose total H1 diagnostics revenues were up 5% at $5.82 billion;

• LabCorp which posted 8% gains in Dx revenue for the quarter at $1.80 billion thanks to strong sales in women’s health and genetic reproduction products;

• Abbott which was just able to hit its overall Q2 $6.64 billion target thanks to 4% growth in core labs revenue ($1.02 billion);

• Thermo Fisher which followed Q1’s 3% Dx gains with 4% growth in Q2 ($1.79 billion); and

• Quest which grew Dx revenues 3% this quarter after posting 2% increases in Q1 ($1.86 billion).

Decliners
In Q1, being in flu testing was an advantage. This quarter, the tables were turned as the late flu season of 2016 led to aberrant testing revenues not duplicated this year. Quidel (-2% YOY) and GenMark Diagnostics (-1%) were among the companies adversely affected.

It was a tough quarter for NantHealth which had to lay off 300 employees as part of a major business reorganization after seeing revenues decline 17% and fending off negative publicity and shareholder lawsuits for supposedly misrepresenting a key $12 million deal with the University of Utah.

Things were even rougher for German firm Epigenomics which took an 81% hit in revenues thanks to declining sales of its Epi proColon colorectal cancer test. A bad situation got even worse in August when shareholders rejected a management-endorsed takeover bid by Chinese equity firms, leading the firm’s CEO to issue a statement casting doubt on Epigenomics’s liquidity.

Other companies posting year-over-year overall and Dx revenue losses in Q2:

• Fluidigm fell 15% overall thanks to genomics losses of 35%;

• Alere suffered 9% losses due to slumping cardiometabolic and infectious disease sales and had to cut its acquisition price tag to keep the Abbott merger alive; and

• Meridien Biosciences lost 4% in Dx revenues but only 1% overall, enabling the company to meet its Wall Street estimates and maintain its projected EPS of $.64 to $.69 for the year.

Diagnostics Earning Reports 2Q 2017 (At least $10 million in sales)

TotalYOYWall Street
Estimate