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.

Gainers
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.

Decliners
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)

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