Q3 Diagnostics Revenues Remain Strong Despite Fall in COVID-19 Testing
Lab companies posted another outstanding quarter of growth in Q3, with the recovery of core markets more than offsetting declines in COVID-19 tests and testing products. While lower on a sequential basis, growth was significant and widespread across a large number of companies, including those not in the COVID-19 space. Here’s a rundown of the key earnings trends from Q3. Top Line Growth Of the 39 diagnostics firms (not counting foreign firms BioMérieux, DiaSorin, Roche and Siemens Healthineers) that had reported their 2021 Q3 earnings as of press time, only three missed their top-line Wall Street earnings targets—Invitae, Nanostring Technologies and NeoGenomics, the latter of which just barely fell short. Nearly half of the companies (16) raised their revenues guidance for Q4 and the remainder of 2021, including heavyweights PerkinElmer, Quest, Roche and Thermo Fisher Scientific. Continuing Q2 trends, most of the firms that reported positive top line growth in Q3 experienced growth at significantly reduced rates. Notable examples: Sequential FY 2021 Quarterly Revenue Growth Rates Company Q3 Rate Q2 Rate Q1 Rate Danaher 23 percent 34 percent 58 percent Hologic -2 percent 42 percent 104 percent Lab Corp 4 percent 39 percent 52 percent Opko Health -10 percent 47 […]
Lab companies posted another outstanding quarter of growth in Q3, with the recovery of core markets more than offsetting declines in COVID-19 tests and testing products. While lower on a sequential basis, growth was significant and widespread across a large number of companies, including those not in the COVID-19 space. Here’s a rundown of the key earnings trends from Q3.
Top Line Growth
Of the 39 diagnostics firms (not counting foreign firms BioMérieux, DiaSorin, Roche and Siemens Healthineers) that had reported their 2021 Q3 earnings as of press time, only three missed their top-line Wall Street earnings targets—Invitae, Nanostring Technologies and NeoGenomics, the latter of which just barely fell short. Nearly half of the companies (16) raised their revenues guidance for Q4 and the remainder of 2021, including heavyweights PerkinElmer, Quest, Roche and Thermo Fisher Scientific.
Continuing Q2 trends, most of the firms that reported positive top line growth in Q3 experienced growth at significantly reduced rates. Notable examples:
Sequential FY 2021 Quarterly Revenue Growth Rates
While sequential growth is typically affected by seasonal issues, in 2021, it’s also a reflection of year-over-year declines in COVID-19 demand. Thus, while COVID-19 products of all types flew off the shelves during Q3 of 2020, sales were far slower this year, with the exception of rapid, point-of-care products.
Bottom Line Disappoints
Another key earnings trend that continued was lower than expected net profits and wider than expected net losses. For the second straight quarter, 12 companies missed their bottom line Wall Street targets in Q3, as compared to just eight in Q1. Companies with disappointing earnings per share included:
Companies that Missed on Q3 Net Earnings
However, the bottom line losses were mostly absorbed by smaller, less mature companies; all 10 testing firms that reported 9-figure revenues easily met and exceeded their Q3 EPS targets, including Abbott, Agilent Technologies, Becton Dickinson, Danaher, Hologic, Lab Corp, PerkinElmer, Quest and Thermo Fisher Scientific.
Core Markets Creep Back to Near Pre-Pandemic Levels
One of the positive trends of Q3 was the continued recovery of core products. While genomics, immunoassays, cancer, reproductive health and other non-COVID-19 businesses have been slowly inching up since FY 2020 Q4, the turnaround became widespread in Q2. This upward trajectory not only kept but increased momentum in Q3, with companies inside and outside the COVID-19 testing market reporting strong, albeit not quite pre-pandemic level, growth in core testing, life sciences and instrumentation products and services.
The Uncertain Future
While almost all companies have felt comfortable enough to issue guidance for the coming Q4 and full 2021 year revenues, the future beyond December remains uncertain. Even before reports of the new omicron SARS-CoV-2 variant began to appear, there were new, disturbing signs of a winter surge of flu-demic pairing COVID-19 with seasonal influenza. While that would go a long way toward restoring COVID-19 revenues, it could wreak devastation on base sectors just beginning to get their pre-pandemic legs back. Meanwhile, labs face the perennial reimbursement challenges, including ever deeper PAMA Part B Medicare cuts and growing resistance from private payors.
Diagnostics Earning Reports for 2021 Q3 (period ended September 30, 2021)
(Companies with at least $20 million in sales)
| Company | Q3 Rate | Q2 Rate | Q1 Rate |
|---|---|---|---|
| Danaher | 23 percent | 34 percent | 58 percent |
| Hologic | -2 percent | 42 percent | 104 percent |
| Lab Corp | 4 percent | 39 percent | 52 percent |
| Opko Health | -10 percent | 47 percent | >200 percent |
| PerkinElmer | 21 percent | 51 percent | 100 percent |
| Qiagen | 11 percent | 28 percent | 52 percent |
| Thermo Fisher Scientific | 9 percent | 34 percent | 59 percent |
| Company | Wall Street Target EPS | Actual Q3 EPS |
|---|---|---|
| Cue Health (Net) | +$1.48 | +$0.14 |
| Exact Sciences (Net) | -$0.85 | -$0.95 |
| Guardant Health (Net) | -$0.96 | -$1.06 |
| Invitae (Non GAAP) | -$0.71 | -$0.81 |
| Natera (Net) | -$1.27 | -$1.63 |
| Twist Bioscience (Net) | -$0.74 | -$0.84 |
| COMPANY | FY 2021 Q3 | DX Segment Performance | ||
|---|---|---|---|---|
| Total Revenue (vs. Wall Street) | YOY Revenues | EPS (vs. Wall Street) | ||
| Abbott Laboratories | $10.93 billion ($9.56 billion) | +24%( +22% organic) | Adjusted +$1.40 ( +$0.94) | DX up 48% to $3.91 billion. Core DX up 9% to $1.29 billion as base business continues to recover; Molecular down again, this time 25% to $345 million; Rapid diagnostics up 145% to $2.14 billion; After Q2 dip, point of care up 3% to $135 million; COVID testing revenues of $1.9 billion (vs. $881 million in Q3 2020) |
| Adaptive Biotech | $39.5 million ($36.6 million) | 50% | Net -$.27 ( -$.42) | Sequencing revenues continue rebound nearly doubling to $22.1 million, with test volume for ClonoSeq up 47%; Development revenues up 16% to $17.4 million driven by higher demand for biopharma services |
| Agilent Technologies(FY 2021 Q4) | $1.66 billion($1.47 billion) | 12% | Adjusted +$1.21 ( +$1.04) | Genomics up 16% (vs 44% in Q3) to $341 million; Life sciences and applied market groups up 11% (vs 22% in Q3) to $747 million; Agilent Cross Lab up 10% to $572 million |
| Becton Dickinson (FY 2021 Q4) | $5.14 billion($4.91 billion) | +7% (vs. 27% in Q3) | Adjusted +$2.59 ( +$2.46) | Recovery in demand for specimen management products and microbiology solutions drives life sciences up 3% to $1.53 billion, despite modest decline in integrated DX solutions, with Biosciences up 16% to $352 million; BD Max up 20% to $110 million |
| Berkeley Lights | $24.3 million ($23.1 million) | +34% (vs. 82% in Q2) | Net -$0.30 ( -$0.24) | Product revenues up 18% to $16.7 million; Service revenues jump 86% to $7.6 million; Direct platform revenues, including instruments, license agreements and platform support, up 14% to $14.1 million |
| *BioMérieux | $1.02 billion | +11%( +12% organic) | Clinical applications up 11% to €756.6 million, including 14% increase in microbiology to €269.8 million, driven by reagent sales, 6% increase in molecular biology to €338 million, driven by 19% uptick in BioFire reagent sales and growth of BioFire Film Array installed base (now at 21,400 systems); Immunoassays up 8% to €120.3 million | |
| Bio -Techne (2022 Q1) | $257.7 million($252.4 million) | +26% (vs. 47% in Q4) | Adjusted +$1.83 ( +$1.72) | DX & Genomics up 22% to $61.0 million; Protein Sciences up 28% to $197.2 million; Broad growth in proteomic research reagents and analytical tools |
| *Bruker | $608.9 million ($575.2 million) | +19% (vs. 34% in Q2) | Adjusted +$0.63 ( +$0.44) | CALID group, which houses life science mass spectrometry, up 13% to $194.2 million driven by strong demand for high -performance instruments and sales of timsTOF mass spec and MALDI -TOF platforms; Molecular COVID testing continues decline with $5 million in sales |
| *CareDx | $75.6 million($74.1 million) | +42% (vs. 77% in Q2) | Adjusted +$0.07 ( +$0.01) | After nearly doubling in Q2, testing services up 46% to $66.5 million with testing volumes up 86%, including 40,000 AlloSure blood and AlloMapHeart transplant tests returned; Product revenues up 20% to $6.5 million |
| Castle Biosciences | $23.5 million($23.0 million) | 54% | Net -$0.47 ( -$0.40) | Top line growth driven by 62% increase in gene expression profile tests delivered to 7,727 and comes despite -$100,000 in reverse accounting adjustments |
| Cue Health | $223.7 million($200.3 million) | Over hundred -fold | Net +$0.13 ( +$1.48) | Product revenues go from $2.1 million to $222.6 million, driven by 74% sequential quarterly growth in disposable test cartridges to $179.0 million |
| Danaher | $7.23 billion ($7.00 billion) | 23% | Adjusted +$2.39 ( +$2.15) | Life sciences continues to drive growth, increasing 25% to $3.73 billion; Diagnostics up from $1.89 to $2.45 billion, including 60% growth in Cepheid unit—16 million respiratory cartridges shipped, 80% for COVID only test and 20% for SARS -CoV -2 4 -in -1 test |
| DiaSorin | €343.5 million ($393.9 million) | 51% | Strong recovery in non -COVID revenues, which grew 8.4%, excluding newly acquired Luminex; CLIA test revenues up 23% to €140.4 million; ELISA test revenues down 11% to €14.5 million; Molecular up 6% to €82.1 million; Instruments down 21% to €15.4 million | |
| *Exact Sciences | $456.4 million($430.0 million) | +12% (vs. 62% in Q2) | Net -$0.97 ( -$0.85) | Screening revenues up 31% to $280.4 million, despite weaker than expected growth in Cologuard due to rise in Delta variant; Precision oncology, including Oncotype products continue strong rebound, up 59% to $145.4 million, while COVID testing continues decline with 70% drop to $30.6 million |
| Guardant Health | $94.8 million($92.6 million) | +27% (vs. 39% in Q2) | Net -$1.06 ( -$0.96) | Precision oncology up 31% to $79.3 million driven by 27% increase in clinical testing; Development services up 9% to $15.5 million; Overall test volume up 35% to 22,806 total tests |
| Hologic (FY 2021 Q4) | $1.32 billion($1.04 billion) | -2% (vs. +42% in Q3) | Adjusted +$1.61 ( +$1.01) | Product revenues down 5% to $1.14 billion; Services up 24% to $178.7 million; Total DX, excluding divested blood screening, down 12% (vs. +25% in Q3 and +233% in Q2) to $820.5 million, with 14% decline in molecular diagnostics to $704.5 million, 4% increase in cytology and perinatal to $116.0 million; Outside DX, Breast Health up 16% to $334.2 million and Gyn surgical up 22% to $122.0 million; 167 Panther molecular DX instruments placed in quarter |
| *Illumina | $1.11 billion($1.05 billion) | +40% (vs. +78% in Q2) | Net +$1.45 +$1.14 | Core Illumina accounts for almost all revenues with newly acquired Grail contributing $2 million; Product revenues of $978 million and Other revenues of $130 million |
| **Invitae | $114.4 million($126.6 million) | +66% (vs. +152% in Q2) | Non GAAP -$0.81 ( -$0.71) | Testing up 66% to $111.7 million driven by 89% increase in billable test volume (296,000 tests billed); Other revenues nearly double to $2.7 million; Oncology up 64% to $69 million; Women’s health up nearly doubles to $21 million |
| *LabCorp | $4.06 billion($3.65 billion) | +4% (vs. 39% in Q2) | Adjusted +$6.82 ( +$4.92) | DX goes from 40% growth in Q2 to 3% decline in Q3 ($2.62 billion), as 6% increase in base testing offset by 10% decline in COVID testing; 85,000 SARS -CoV -2 tests per day, vs. 54,000 per day in Q2; Covance up 18% to $1.46 billion, vs. 37% growth in Q2 |
| Myriad Genetics | $167.3 million($165.0 million) | 15% | Adjusted -$0.02 ( -$0.02) | Molecular DX up 23% (vs. 115% increase in last quarter) to $167.3 million); Hereditary cancer back down 1% after 2Q 116% growth, to $79.4 million; Prenatal up 42% to $23.6 million; Tumor profiling up 94% to $32.9 million driven by Prolaris and myChoiceCDx; Mental health, including GeneSight test, more than doubles to $24.1 million |
| **Nanostring Technologies | $37.2 million ($37.8 million) | +17% (vs. +50% in Q2) | Instruments up 13% to $14.5 million, including 14% growth in GeoMx Digital Spatial Profiler and 11% growth in nCounter Analysis System sales; Consumables up over 32%; Services up 22% to $4.4 million | |
| *Natera | $158.1 million($151.4 million) | 61% | Net -$1.63 ( -$1.27) | Product revenues up 62% to $150.7 million, driven by 55% increase in test volumes (407,300 tests), with strength in women’s health, oncology and transplant |
| **NeoGenomics | $121.3 million($125.1 million) | -3% (vs. +40% in Q2) | Adjusted -$0.08 ( -$0.09) | Excluding 2020 Q3 COVID revenues, revenue would have increased 12%; Clinical services down 6% to $102.2 million; average revenue per test up 4% to $375; Pharma services up 14% to $2.4 million |
| Opko Health | $385.8 million($302.3 million) | -10%(vs. 47% increase in Q2) | Pro forma +$0.04 ( -$0.01) | Fall off in COVID testing drives 11% drop in DX Services to $340.1 million; Losses partially offset by 125% increase in genomics testing and greater recoveries of COVID reimbursements; Hematology and NGS drive 20% growth in oncology; Product revenues up 29% to $28.7 million |
| *OraSure Technologies | $53.9 million($47.5 million) | +12% (vs. up 97% in Q2) | Net -$0.02 ( +$0.04) | Excluding 2020 Q3 COVID revenues, revenue would have grown 37%; Molecular down 4% to $30.3 million, despite 125% growth in genomics collection kits to $19.0 million; Sample collection devices for COVID testing down 67% to $6.3 million; OraSure and OraQuick tests for HIV and Hepatitis C down 2% to $12.7 million |
| Pacific Biosciences | $34.9 million($33.2 million) | 83% | Net -$0.23 ( -$0.22) | Third straight quarter of solid growth; Product revenues nearly double to $30.5 million, including $15.9 million in Instruments and $14.6 million in Consumables (up 82%); 44 Sequel II and IIe systems placed, nearly doubling total instruments placed to 326 |
| *PerkinElmer | $1.17 billion($1.04 billion) | +21%(vs. +51% in Q2) | Adjusted +$2.31 ( +$1.73) | DX revenues of $654 million vs. $540 million in Q3 2020; Discovery and Analytical Solutions with $513 million vs. $424 million; Non -COVID organic revenues up 16% vs. 12% expected; Within DX, immunodiagnostics up over 40%, with Euroimmun up 20% organically |
| *Personalis | $22.3 million($22.2 million) | 12% | Net -$0.40 ( -$0.42) | Revenues from VA sequencing services government contract down 3% to $13.7 million but revenues from other clients up 51% to record -high of $8.6 million |
| *Qiagen | $534.7 million($435.6 million) | +11% (vs. 28% in Q2) | Adjusted +$0.58 ( +$0.47) | Non -COVID revenues up 17% to $376 million, while COVID products continue decline, dipping 4% to $159 million; Consumables up 13% to $473 million; Instruments down 3% to $62 million; Molecular up 18% to $279 million; PCR/nucleic acid amplification up 3% to $98 million |
| Quanterix | $27.7 million($24.0 million) | -12% | Product revenues up 77% to $20.7 million but Services and Other Revenues fall 10% to $5.9 million | |
| *Quest Diagnostics | $2.77 billion($2.45 billion) | -1%(vs. + 40% in Q2) | Adjusted +$3.96 ( +$2.87) | Flat revenues result of sharp decline in COVID testing, as compared to Q3 2020; however, Base testing continues to recover, with volumes up 9% (4% excluding acquisitions) and exceeds 2019 levels for first time since pandemic began, and growth is robust as compared to 2019; Total requisitions up 5%, but revenues per requisition down 5% |
| Quidel | $509.7 million($376.8 million) | 7% | Adjusted +$5.36 ( +$3.52) | Growth driven by COVID DX tests led by Quick Vue At -Home OTC; Core businesses excluding COVID up 2% to $93.3 million; Molecular DX down 13% to $54.8 million due to $14.3 decline in Lyra PCR assays for COVID, partially offset by incremental revenues from Solana SARS -CoV -2 assay |
| *Roche Diagnostics | CHF 4.26 billion($4.65 billion) | 18% | For first 9 months of 2021, DX up 38% to CHF 13.31 billion, with CHF 3.5 billion in COVID sales; Core lab revenues up 26% to CHF 5.61 billion driven by immunodiagnostics, especially infectious diseases and cardiology tests; Molecular DX up 36% to $3.45 billion driven by COVID PCR testing; Pathology lab up 14% to CHF 889 million | |
| Sema4 | $43.2 million($42.7 million) | 12% | Net +$0.15 ( +$0.15) | Excluding COVID, revenues up 17%; DX up 9% to $41.4 million, although COVID tests decline 21% to $4.2 million; Just under 70,000 tests processed, not counting COVID |
| Siemens Healthineers (FY 2021, Q4) | €5.16 billion | 33% | Adjusted +€0.53 | DX up 23% to €1.28 billion, driven by €160 million in rapid SARS -CoV -2 antigen tests; DX up 7%, excluding COVID tests; Continued recovery in core non -COVID businesses |
| *Thermo Fisher Scientific | $9.33 billion($8.39 billion) | +9%(vs. 34% in Q2 and 59% in Q1) | Adjusted +$5.76 ( +$4.67) | Life sciences up 9% (vs. 137% in Q1 and 37% in Q2) to $3.72 billion; Specialty DX goes from 25% increase in Q2 and 69% in Q1 to 5% decline in Q3 to $1.36 billion; Analytical instruments up 11% (vs. 26% in Q2) to $1.48 billion; Laboratory products and services revenues up 12% (vs. 29% in Q2) to $3.11 billion |
| *10x Genomics | $125.3 million ($122.6 million) | 74% | Net -$0.15 ( -$0.20) | Consumables up 75% to $106.1 million, thanks to growth in numbers of instruments installed; Instruments up 77% to $17.1 million, driven by launch of Chromium X; Services up 30% to $2.1 million |
| Twist Bioscience (FY 2021, Q4) | $38.0 million($37.0 million) | 17% | Net -$0.84 ( -$0.74) | Next -generation sequencing revenues, including SNP microarray conversions and liquid biopsy panels of $21.4 million, topping Synthetic biology revenues ($13 million) for fourth quarter in a row; Biopharma revenues of $2.6 million |
| *Veracyte | $60.4 million($54.4 million) | 94% | Net -$0.20( -$0.16) | Overall testing revenues of $53.9 million with testing 79% growth in Affirma, Percepta and Envisia (just under 21,000 tests); Product revenues of $6.5 million |
| Waters | $659.2 million($656.5 million) | 11% | Non -GAAP +$2.66 ( +$2.35) | After 2 straight quarters of 31% growth, revenues continue up; Growth driven by double -digit spike in instruments and recurring revenues; Sales up in pharma market 16% and in industrial market 9% |
| Bold face: Companies that met or exceeded average or consensus Q2 Wall Street revenue estimates * Companies that raised their revenue or EPS guidance during Q2 ** Companies that lowered their revenue or EPS guidance during Q2 | ||||
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