Although national labs Quest Diagnostics and LabCorp struggled with boosting their sales during the second quarter, San Diego-based speciality players Illumina and Sequenom had no such problems, although concerns about the latter’s eventual profitability persist.Illumina reported net income for the second quarter ending June 30 of $36 million, up 55 percent from the $23 million reported during the second quarter of 2012. Revenue jumped 23 percent, to $346 million from $281 million. The company revised earnings guidance upward for 2013 as a result.
Illumina Chief Executive Officer Jay Flatley reported strong growth among all product platforms, which included both equipment and various assays. Consumer demand for personal genetic testing has been strong, and the company says consumer sales will approach $50 million for the calendar year. Overall, 2,500 genomes were sequenced during the quarter, more than triple the figure from a year ago. Genotyping and sequencing revenue grew 50 percent compared to the second quarter of 2012, due in part to the recent acquisition of Verinata.
Net income for the first half of 2013 was $13.3 million, compared to $49.6 million for the first half of 2012. The decline is mostly attributable to a $115 million verdict against the company in June related to a patent infringement case.
Sequenom Reports Loss
Sequenom reported a loss of $31 million for the quarter ending June 30, up from the $29.6 million loss reported during the second quarter of 2012. However, revenue nearly doubled, to $34.9 million, compared to $18.3 million for the year-ago quarter. Although the genetic analysis book of business mostly remained unchanged, diagnostic services revenue more than tripled and now accounts for about 75 percent of the company’s business.
| Illumina and Sequenom Earnings |
|
Sequenom
|
Illumina
|
| Second Quarter 2013 Revenues |
$34.9 million |
$346.0 million |
| Second Quarter 2013 Net Income |
-$31.0 million |
$36.0 million |
| Six Month 2013 Revenues |
$73.3 millon |
$677.1 million |
| Six Month 2013 Net Income |
-$60.4 million |
$13.3 million |
| Sources: Company Reports |
However, Sequenom Chief Financial Officer Paul V. Maier said the lack of concrete payment methodologies for molecular testing hampered revenue significantly during the quarter, although the company declined to give specific figures. Revenue is expected to grow more once all the pricing for new molecular codes is finalized, company officials said.
For the first six months of 2013, Sequenom reported a loss of $60.4 million, up from the $54 million loss reported for the first half of 2012. However, revenues more than doubled, to $73.3 million from $33.2 million.
Analysts are unsure when Sequenom will reach profitability, a goal it has yet to reach in more than a decade of operation. Five of the eight analysts covering the company rate the stock as a hold or buy. Standard & Poor’s rates the stock as a “c”—its lowest ranking for a company that is not in financial reorganization.
Analysts are more bullish regarding Illumina. Seven of 25 analysts have buy ratings for its stock. S&P analyst Jeffrey Loo projects earnings per share to reach $1.74 but noted that the company was rocked by a recent hostile takeover bid by pharmaceutical giant Roche. “We would not be surprised if Roche makes another bid for the company,” Loo said.
Takeaway: Although national laboratories are struggling with flat growth, some specialty players are experiencing rapid increases in revenues; still, profitability is elusive for some.
