Dx Earnings Report: Strong Q4 as Lab Companies End Year with a Bang

Big PAMA cuts may lay ahead in 2017, but the diagnostics industry had a robust 2017. While the entire year was strong, success was the most widespread in the fourth quarter with all but a few companies posting gains at levels above Wall Street expectations.

Of the 28 companies to report final or preliminary Q4 earnings as of the date we went to press, all but two reported growth during the period. Among the gainers, only one failed to make its Wall Street target, Oxford Immunotec, which downgraded its expected earnings to between $24.9 and $25.4 million, below both previous guidance of $26.4 million and the consensus Wall Street estimate of $26.1 million.

Among the 21 companies with fiscal years coinciding with the calendar year, 20 reported growth for the entire year. The lone exception was Fluidigm which was down 2% in 2017 despite robust 11% growth in the fourth quarter. Of the companies reporting up years, only one posted annual growth below expectations: Quidel, which despite riding the Triage acquisition to 118% growth in the fourth quarter and 45% for the entire year, came in slightly below estimated annual revenues—$277.7 million vs. $278.0 million.

The Big Boys
For the fourth straight quarter, almost all of the billion-dollar labs at least met, and in a few cases, smashed their expected gains. The latter included:

  • Thermo Fisher which followed a spectacular Q3 with an even more impressive fourth quarter featuring 22% growth at $6.05 billion, (vs. the Wall Street target of $5.7 billion) and ending the year with 14% growth at $20.92 billion;
  • Abbott Laboratories which got a lift from the Alere acquisition to the tune of 52% growth and $7.59 billion in revenues ($200 million above Wall Street estimates) but also posted solid comparable operation basis growth of 7%;
  • PerkinElmer which posted fourth quarter and yearly revenues comfortably ahead of estimates thanks not only to the Euroimmun acquisition but also strong growth in organic revenues; and
  • Danaher which posted 11% overall growth including an eye-popping 13% increase in diagnostic revenues to beat its $4.98 billion target by $21 million.

For the third straight quarter, almost all of the billion-dollar labs at least met, and in a few cases, smashed their expected gains. The latter included:

  • Thermo Fisher which had a monster Q3 featuring not only 14% growth at $5.12 billion, (vs. the Wall Street target of $5.03 billion) but completion of the $7.2 billion Patheon acquisition;
  • LabCorp which exceeded its $2.55 billion target by $11 million—while strategic acquisition revenues lifted the figures, the firm also posted a 10% gain in diagnostic sales;
  • Danaher which posted 10% overall growth including an eye-popping 20% increase in diagnostic revenues, allowing it to beat its $4.47 target by $6 million.

LabCorp and Quest were also able to meet their Q4 and 2017 Wall Street revenue targets but just barely.

Only two labs posted revenue declines in Q4: Myriad Genetics and Pacific Biosciences. But even these clouds came with silver linings:

Other companies that struggled in terms of revenues:

  • Although down 1% for the quarter, Myriad’s losses were much less than projected allowing the firm to beat its Wall Street revenue projections—$ 194 million posted vs. $188.8 million expected; and
  • Pacific Biosciences’ $24.9 million in Q4 revenues, though down 3% year over year, were $3 million ahead of Wall Street; moreover, the firm was up 3% for the entire year and at a higher than expected rate ($93.5 million posted vs. $90.3 million projected).

Diagnostics Earning Reports 4Q 2017, Total 2017
(At least $10 million in sales—of companies to report as of press date)

Total YOY Wall Street
Abbott Laboratories $7.59 billion +52% (7% on comparable operation basis) $7.39 billion $27.39 billion, up 32% on reported basis and 5% on comparable operations basis Report numbers incorporate revenues from newly acquired Alere; Dx up 4% to $1.22 billion driven by 9% growth in core lab tests to $1.1 billion, 7% growth in POC tests to $145 million and 4% growth in molecular tests to $122 million
Becton Dickinson $3.08 billion +5% $3.05 billion Sept. to Dec. 2017 = Q1 of FY 2018 Dx revenues up 14% to $381 million driven by molecular and core microbiology
BioMérieux €613.8 million +4% NA €2.29 billion, up roughly 10% 32% growth in molecular bio driven by BioFire FilmArray line
Bio-Techne $154.2 million +17% $146.3 million Sept. to Dec. 2017 = Q2 of FY 2018 Dx revenues declined 4%
Bruker $530.5 million +13% $504.0 million $1.77 billion, up 10% and above Wall Street estimate of $1.74 billion Organic growth of 4% net of 4% in acquisition boosts and 5% in positive foreign currency effects
$12.3 to $12.5 million +13% to 15% $12.1 million $48.1 to $48.3 million, up 18% to 19% Significant growth in Dx revenues from $7.4 to $8.4 million in Q4 expected fueled by Oct. launch of AlloSure transplant test
Danaher $5.09 billion +11% $4.98 billion $18.33 billion, up 9% YOY and above Wall Street’s $18.22 billion estimate Dx revenues up 13% to $1.62 billion driven by strong immunoassay, urinalysis and clinical chemistry
Exact Sciences
$86.9 to $87.9 million +148% $65.0 million   Expected 115% increase in Cologuard colon cancer tests
Fluidigm $27.7 million +11% NA $101.9 million, down 2% Losses in single-cell genomics instruments nullify gains in high-throughput genomics and mass cytometry
Foundation Medicine
$48.9 million +70% $39.2 million $152.9 million, up 31% Molecular information services expected to generate $117.1 million of 2017 revenues
GenMark Diagnostics
$16.0 million +7% $15.2 million $52.5 million, up 6% and above Wall Street estimate of $51.7 million Strong sales of newly FDA approved ePlex and eSensor XT-8 molecular Dx systems
Hologic $791.1 million +8% $785.9 million Sept. to Dec. 2017 = Q1 of FY 2018 Total Dx revenues fall 13% to $284.6 million—double rate of decline in Q4, mainly due to effects of divested blood screen business which counteracted strength of Aptima women’s health line in molecular segment
Illumina $778 million +26% $750.2 million $2.75 billion, up 15% and ahead of $2.73 billion Wall Street estimate NovaSeq instruments and 30% increase in sequencing consumables, including NovaSeq consumables drive growth
Invitae $25.4 million +170% $24.6 million $60 million Driven by recent acquisitions, including $4 million from Good Start Genetics and $2 million from CombiMatrix
Laboratory Corp. of America $2.70 billion +13% $2.69 billion $10.21 billion, up 8% and beating $10.19 average estimate Acquisitions contribute 10% but organic revenues also grew 3%, including 9% growth in Dx
Luminex $78.2 million +8% $77.0 million $306.6 million, up 13% and above $305.3 million Wall Street estimate Driven by 31% growth in MDx sample-to-answer portfolio
MDxHealth Not yet broken out     $40.5 million, up 35% ConfirmMDx for prostate cancer accounts for 91% of sales; also launched AssureMDx for Bladder Cancer, liquid biopsy bladder cancer test
Meridian Bioscience $52.3 million +12% $49.0 million Sept. to Dec. 2017 = Q1 of FY 2018 Dx revenues up 11% to $33.8 million driven by strong respiratory season and double-digit growth in foodborne and H. pylori lines
Myriad Genetics $194.0 million -1% $188.8 million Sept. to Dec. 2017 = Q2 of FY 2018 Molecular tests down 3% to $179.2 million and hereditary cancer sales down about 8% to $126.9 million
NanoString Technologies
$21 million     $113 to $115 million, which would beat $112.5 million Wall Street estimate Prosigna IVD kits fuel growth; in Q4, company eliminated 30 positions to refocus on development of new platforms
NeoGenomics $67.8 million +12% $66.3 million $258.6 million, up 6% and over $257.2 million consensus Wall Street estimate Driven by 19% growth in genetic testing and 7% growth in overall clinical testing to $59.1 million; PAMA losses anticipated to be only 0.4%, <$1 million
OraSure Technologies $52.0 million +46% $47.8 million $167.1 million, up 30% above Wall Street estimate of $163.4 million Infectious disease testing up 3% ($14 million), risk assessment testing down 5% ($3.1 million), molecular collection systems up roughly 350% ($29.8 million)
Oxford Immunotec
$24.9 to $25.4 million   $26.1 million   Projected earnings downgrade from earlier guidance; no reasons provided but may be due to sharper than expected decline in tick-borne disease testing revenues
Pacific Biosciences $24.9 million -3% $21.9 million $93.5 million, up 3% and above $90.3 million Wall Street estimate Company unable to make up for roughly $12.6 million in 2016 contract revenues lost in 2017
PerkinElmer $641.6 million +13% $618.6 million $2.26 billion, up 7% and above Wall Street estimate of $2.23 billion Organic revenues, i.e., excluding Euroimmun acquisition, up 6% including 23% bump in Dx to $193.4 million (counting Euroimmun)
Qiagen $396.9 million +8% $393.3 million $1.42 billion, up 6% and beating average estimate of $1.41 billion Driven by OmicSoft acquisition although growth of 5% on adjusted basis; Molecular DX up 4% to $193 million, over 50% firm’s total sales; applied testing up 9%
Quest Diagnostics $1.94 billion +4% +4% $7.71 billion, up 3% and above $7.69 billion consensus Wall Street estimate PAMA cuts expected to cut 2018 revenues 4%, some of which company will look to offset via new acquisitions and recent tax law changes
Quidel $114.9 million +118% $114.7 million $277.7 million, up 45% but below consensus estimate of $278.0 million Spike result of Triage acquisition; Molecular Dx up 67% to $4.5 million driven by 221% growth in Solana; Specialized Dx also up 4% to $14.2 million
Roche (Dx Division) $3.51 billion +4% NA $12.93 billion, up from $12.29 billion in 2016 Growth driven by 4% increase in molecular Dx, 15% increase in HPV and 1% increase in blood screening
Thermo Fisher Scientific $6.05 billion +22% $5.7 billion $20.92 billion, up 14% and just over consensus estimate of $20.59 billion Acquisitions contribute 11% growth but organic revenues also up 8%, including 10% increase in Specialty Dx led by transplant; Labs up 43% to $2.4 billion, thanks, in part, to Patheon acquisition
Waters $687 million +9% $669 million $2.31 billion, up 7% and above $2.29 billion Wall Street estimate Balanced growth with especially strong sales in mass spec business

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


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