Inside the Lab Industry

Resurgence of COVID-19 Cases Threatens to Derail Recovery of Core Business

Back on July 1, the perception was that the demand for COVID-19 testing was falling off faster than predicted. The silver lining to this cloud was the stronger than expected recovery of core non-COVID-19 revenues. The Q2 earnings reflect both of these trends. But now, more than halfway into Q3, things have changed dramatically as a result of the delta variant and surge of new COVID-19 cases. This plus the downward pressure that the previous outbreak exerted on the FY 2020 Q2 year-over-year baseline means that the analysis of the 2021 Q2 earnings trends must be taken with a large grain of salt.

Growth Continues but at a Slower Pace

Of the 37 diagnostics firms (not counting DiaSorin, Roche and Siemens Healthineers) that had reported their 2021 Q2 earnings as of press time, only five missed their top-line Wall Street earnings targets—Berkeley Lights, Fulgent Genetics, Meridian Biosciences, Opko Health and Quidel. Fourteen different companies increased their revenues projections for the remainder of 2021, including Fulgent Genetics which fell short of Q2 projections.

However, while COVID-19 tests, collection kits and instruments continued to fuel growth in diagnostics revenues, demand fell off noticeably starting in May. This trend is reflected when Q2 top-line growth rates are compared sequentially to Q1 growth rates. Examples:

Sequential FY 2021 Quarterly Revenue Growth Rates

Company Q2 Rate Q1 Rate
Danaher 34 percent 58 percent
Hologic 42 percent 104 percent
Meridian Biosciences -25 percent 48 percent
Opko Health 47 percent >200 percent
PerkinElmer 51 percent 100 percent
Qiagen 28 percent 52 percent
Quidel -12 percent 115 percent
Thermo Fisher Scientific 34 percent 59 percent

Abbott, Quest and LabCorp also saw their sequential growth rates fall back, albeit at a lesser rate.

The Falloff in COVID-19 Test Demands

As in Q1, increased sales of rapid point-of-care (POC) and antigen COVID-19 testing partially offset the declines in molecular PCR-based tests. However, POC products also delivered results below expectations. Thus, for example, Abbott reported seeing lower demand in the US for COVID-19 testing volumes in the US for both RT-PCR testing and rapid testing; slightly higher than expected demand in international markets helped make up for the US losses. But this wasn’t enough to keep Abbott from reducing its full-year and Q3 and Q4 revenue projections for 2021. Qiagen and Quidel were among other companies projecting lower COVID-19 revenues for the rest of the year.

The Continued Rebound of Core Markets

Just as coronavirus testing gains came at the expense of core products, the fall off in COVID-19 products was accompanied by a recovery in base business. For the first time since the public health emergency began, companies began reporting gains in genomics, immunoassays, cancer, reproductive health and other non-COVID-19 businesses devastated by the pandemic. In some cases, growth was above 2019 rates and wiped out pandemic-related losses.

Unfortunately, the bottom line was somewhat less positive, with 12 companies missing their Wall Street earnings per share targets, as compared to just eight in Q1.

The Post-Q2 Resurgence of Demand for COVID-19 Tests

Regrettably, Q3 will probably not continue the theme of goodbye, COVID, hello business as usual. The sad irony is that the 90 percent decline in COVID-19 testing demand experienced in Q2 feels like a lost memory from a long bygone era. Thanks to soaring cases and the reopening of schools, the U.S. is once again facing a COVID-19 test shortage as companies like Abbott that shut down production lines and destroyed hundreds of thousands of test cards seek to rebuild and remobilize their COVID-19 production capacities. Meanwhile, non-COVID-19 testing activities that were just starting to regain their legs face an uncertain future.

Diagnostics Earning Reports for 2021 Q2 (period ended June 30, 2021)
(Companies with at least $15 million in sales)

COMPANY FY 2021 Q2 DX Segment Performance
Total Revenue
(vs. Wall Street)
YOY Revenues EPS
(vs.
Wall Street)
**Abbott Laboratories $10.22 billion ($9.69 billion) +39%( +35% organic) Adjusted +$1.17( +$1.02) DX up from $1.99 to $3.25 billion. Core DX up 33% to $1.31 billion as base business continues to recover; Molecular down 19% to $290 million; Rapid diagnostics up over 100% to $1.51 billion; Point of care drops 16% to $137 million; COVID testing revenues of $1.3 billion, including $1.0 billion from BinaxNow, Panbio and ID Now rapid testing platforms—but steady decline in COVID demand leads to downward adjustment of projected earnings
Adaptive Biotech $38.5 million ($31.3 million) +83% Net -$.35( -$.42) Sequencing revenues continue rebound more than doubling to $18.6 million due to COVID, test volume for ClonoSeq up 75%, 15% sequentially; Development revenues up 54% to $20.0 million driven by higher demand for biopharma services
*Agilent Technologies(FY 2021 Q3) $1.59 billion($1.54 billion) +26% Adjusted +$1.10( +$0.99) Diagnostics and genomics up 44% to $346 million; Life sciences and applied market groups up 22% to $680 million
*Becton Dickinson (FY 2021 Q3)
$4.89billion($4.51 billion) +27% Adjusted +$2.74( +$2.44) Life sciences up 51% to $1.43 billion; Biosciences up 33% to $316 million, including $300 million from COVID testing on BD Veritor Plus ($212 million) and BD Max Systems ($88 million); But pandemic -related costs and manufacturing variances negatively affect gross margins
Berkeley Lights $19.3 million ($19.6 million) +82% Net -$0.27( -$0.24) Product revenues up 43% to $13.0 million; Direct platform revenues, including instruments, license agreements and platform support, up 51% to $11.4 million
*Bio -Rad Laboratories $715.9 million($631.8 million) +33% Adjusted +$3.54( +$2.66) Life Sciences up 33% to $334.2 million driven by qPCR and Droplet Digital PCR products in response to COVID; Clinical DX rebounds from Q1 decline with 34% increase to $380.2 million driven by recovery across all product lines; $68 million in COVID revenues with expectation of $210 million for year
Bio -Techne (2021 FY Q4) $259.0 million($244.6 million) +47% Adjusted +$1.87( +$1.70) DX & Genomics up 38% to $67.1 million; Protein Sciences up 51% to $192.3 million
*Bruker $570.8 million ($538.3 million) +34% Adjusted +$0.44( +$0.38) CALID group, which houses life science mass spectrometry, up 46% to $193.3 million driven by strong demand for high -performance instruments; BioSpin group up 19% to $148.5 million; Nano group up 40% to $175.3 million; COVID PCR testing contributes $6 million
*CareDx $74.2 million($67.6 million) +77% Adjusted +$0.11( +$0.02) Testing services nearly double to $64.9 million driven by increase in AlloSure Kidney and AlloMap Heart sales; Products sales up 23% to $5.8 million; Digital and other revenues up $200,000 to $2.4 million
Co -Diagnostics $27.4 million($20.8 million) +14% Net +$0.33( +$0.22) Continuing strong demand for Logix Smart COVID -19 test in US and Europe generates lion’s share of revenues
Danaher $7.22 billion ($6.72 billion) +37% Adjusted +$2.46( +$2.05) Growth driven by life sciences, which increased 41% to $3.73 billion; Diagnostics also up 41% to $2.34 billion, driven by 50% growth in Cepheid unit; Leica Biosystems and Beckman Diagnostics each up more than 30% as patient volume and clinical diagnostic activity returns to pre -pandemic levels; Non -COVID bioprocessing up in low double digits
DiaSorin $295.4 million +20% CLIA test revenues up 25% to $172 million; ELISA test revenues up 4% to $16.7 million; Molecular up 23% to $81.6 million; Instruments down 7% to $22.1 million
*Exact Sciences $434.8 million($421.3 million) +62% Net -$0.45( -$0.76) Screening revenues, including Cologuard (60,000 tests, a new high) and Biomatrica, double to $263.9 million; Precision oncology, including Oncotype products, which were up just 1% in Q1, increase 34% to $137.8 million; COVID testing drops 4% to $33.1 million
Fluidigm $31.0 million($30.6 million) +19% Adjusted -$0.12( -$0.20) Product revenues up 30% to $22.6 million; Service revenues up 29% to $6.6 million; Lower COVID revenues projected; Mass cytometry continues steady recovery driven by suspension and imaging applications
*Fulgent Genetics $153.6 million($197.3 million) Up nearly 9 -fold Adjusted +$2.55( +$2.81) Billable tests increase from 181,000 to 1.86 million but COVID RT -PCR test demand falls faster than expected—but that was before the surge
Guardant Health $92.1million($84.6 million) +39% Net -$0.61( -$0.87) Oncology testing up 42% to $72.6 million; Development services up 27% to $19.5 million; Liquid biopsy recovers but still not back to pre -COVID levels
Hologic (FY 2021 Q3) $1.17 billion($1.04 billion) +42% (as opposed to 104% in Q2) Adjusted +$1.33( +$1.12) COVID surge slows with total DX up 25% (vs. 233% in Q2) to $665.5 million, including 17% (vs. 391% in Q2) growth in molecular diagnostics to $460.3 million; Cytology and perinatal revenues up 81% (vs. 3%) to $64.1 million; Non -COVID segments recover, including Breast Health (up 56% to $349.0 million), Gyn surgical (up 148% to $127.9 million) and Skeletal health (up 70% to $25.9 million)
*Illumina $1.13 billion($1.01 billion) +78% Net +$1.87 +$1.35 Sequencing accounts for 91% of total revenues, with sequencing systems more than doubling to $189 million and sequencing consumables up 82% to $704 million; Sequencing services and other revenues up 41% to $128 million due, in part to one -time recognition of royalties income; COVID surveillance testing above expectations, contributing $40 million in consumables and $20 million in instruments
*Invitae $116.3 million($108.3 million) +152% Non GAAP -$0.85( -$0.65) Testing more than doubles at $111.5 million driven by 154% increase in billable test volume (287,000 tests billed); Other revenues up over 400% to $4.8 million
*LabCorp $3.84 billion($3.61 billion) +39% Adjusted +$6.13( +$5.57) Pace of growth continues to decline slightly with DX up 40% to $2.36 billion and molecular COVID testing flat at $440 million (average 54,000 tests per day); Organic base business up 38%; Covance up 37% to $1.50 billion
Meridien Biosciences (FY 2021, Q3) $63.5 million($77.2 million) -25% After doubling in Q2, life sciences fell 49% to $32.3 million due to decline in demand for COVID testing reagents; $12.5 million from COVID molecular and $2 million from COVID immunological products; But DX bounces back from Q2 decline of 9% with 44% growth to $31.2, with molecular assays down 39% to $4.4 million and non -molecular assays flat at $27.6 million
Myriad Genetics $189.4 million($165.4 million) More than doubled (vs +6% in last quarter) Adjusted -$0.12( -$0.09) Huge quarter with Molecular DX up 115% (vs. 6% increase in last quarter) to $178.7 million); Hereditary cancer reverses previous quarters’ declines to post 116% growth to $86 million; Prenatal up 77% to $29.4 million; Tumor profiling up 178% to $29.2 million driven by Prolaris and myChoiceCDx; Vectra, which Myriad just sold to LabCorp, up 40% to $10.2 million
*Nanostring Technologies $33.8 million ($32.4 million) +50% AdjustedNot given( -$0.54) Growth driven by instruments (up 21% to $11.8 million, including $7.4 from GeoMx Digital Spatial Profiler) and consumables (up over 100% to $18 million, with NGS readout systems accounting for 2/3 revenues on GeoMx systems)
*Natera $142.0 million($127.5 million) +64% Net -$1.32( -$1.08) Fastest YOY growth quarter since Natera went public thanks to higher than expected 61% increase in test volumes (375,700 tests), which leads firm to increase its guidance for the rest of 2021
NeoGenomics $121.7 million($118.2 million) +40% Adjusted -$0.01( -$0.06) Growth driven by 37% increase in clinical services (up 41% excluding COVID PCR testing) to $101.4 million; average revenue per test up 3% to $360; Pharma services up 55% to $20.3 million due to increase in clinical trials and informatics
Opko Health $442.4 million($456.4 million) +47%(vs. 200% increase in Q1) Pro forma -$0.03( -$0.02) COVID and genomic testing drives increase in Services from $251 million to $397.2 million, including 32% increase in BioReference Laboratories’ test volumes; Solid -tumor, hematological liquid tumor and cancer genomics testing more than doubled, as compared to pre -COVID revenues; Product revenues up 22% to $35.7 million
OraSure Technologies $57.6 million($56.7 million) +97% Net -$0.02( +$0.04) Continued recovery in core businesses, including Molecular DX, up 103% to $38.3 million, driven by tripling of genomics collection kits to $19.7 million; Sample collection devices for COVID testing up 36% to $11.5 million (vs. $15.9 million in Q1); COVID PCR test volume declines significantly but total infectious diseases up 79% to $15.6 million
*Ortho Clinical Diagnostics $492.5 million($475.9 million) +26% Adjusted +$0.16( +$0.14) Core revenues, excluding contract manufacturing and other licensing, up 26% to $487.5 million with solid growth in all segments
Pacific Biosciences $30.6 million($29.9 million) +79% Net -$0.21( -$0.20) Second straight quarter of growth driven by Instrument to $14.3; Consumables more than double to $12.2 million, with 85% coming from sales for Sequel II and IIe systems; 38 Sequel II and IIe systems placed, increasing overall total to 282 (vs. 148 in Q2 2020)
PerkinElmer $1.23 billion($1.12 billion) +51%(vs. 100% in Q1) Adjusted +$2.83( +$2.41) After COVID boom, growth slows to pre -pandemic levels with DX up 70% to $715.6 million driven by over 100% growth in immunodiagnostics and strong rebound of Euroimmun; Applied genomics up over 20% on non -COVID demand
Qiagen $567.3 million($554.4 million) +28% (vs. 52% in Q1) Adjusted +$0.67( +$0.62) COVID products down 17% to $159.7 million; Non -COVID products continue recovery, growing 52% to $407.6 million, or 72% of total sales; Molecular DX up 28% to $272 million; Life sciences up 20% to $296 million; Sample technologies down 3% to $203 million as COVID kits decline and non -COVID kits bring in 70% of segment’s revenue
Quest Diagnostics $2.55 billion($2.38 billion) +40%(vs. 49% in Q1) Adjusted +$3.18( +$2.86) Base testing up 7% (2% excluding acquisitions) and exceeds 2019 levels for first time since pandemic began, and growth is robust as compared to 2019; Test volume up 45% but revenue per requisition down 4%; Strong recovery in routine testing, especially general health, cardiometric and advanced diagnostics; Prescription drug monitoring and toxicology remain sluggish and below pre -pandemic levels
Quidel $176.6 million($194.5 million) -12%(vs. 115% growth in Q1) Adjusted +$0.75( +$1.46) Losses driven by falling demand for Sofia and PCR COVID testing and influenza products; Molecular DX down 38% to $34.5 million, with sharp declines in Lyra PCR tests only partially offset by increases in Solana; Core products, excluding COVID and influenza, up 24% to $91.5 million, including Cardiometabolic immunoassays up 32% to $71.7 million; Specialized DX continues slide, falling 12% to $10.4 million
Roche Diagnostics(FY 2021, H1) $33.4 billion +51% Net $11.52 (down 3% YOY) Total DX up 49% to $9.86 billion, including $2.73 billion from COVID products; Core lab revenues up 32% to $4.07 billion driven by recovery in routine testing; Immunodiagnostics up 40% and clinical chemistry up 25%; Molecular DX up 42% to $2.42 billion driven by COVID testing; Virology up 60% and Point of Care Solutions more than triple to $1.77 billion
Siemens Healthineers (FY 2021, Q3) $5.94 billion 51% Adjusted +$0.66 DX up 98% to $2.03 billion, driven by $708 million in rapid SARS -CoV -2 antigen tests; Continued recovery in core non -COVID businesses, with roughly 30% growth
*Thermo Fisher Scientific $9.27 billion($8.77 billion) +34%(vs. 59% in Q1) Adjusted +$5.60 ( +$5.49) Life sciences up 37% (vs. 137% in Q1) to $3.56 billion; Specialty DX up 25% (about vs. 69% in Q1) to $1.62 billion; Analytical instruments up 26% to $1.24 billion; Laboratory products and services revenues up 29% to $3.58 billion
*Twist Bioscience (FY 2021, Q3) $35.0 million($32.3 million) +65%(vs. 62% in Q1) Net -$0.82( -$0.75) Next -generation sequencing revenues, including SNP microarray conversions and liquid biopsy panels more than double to $18.7 million, topping Synthetic biology revenues (up 21% to $14.3 million) for third quarter in a row
Veracyte $55.1 million($48.1 million) +166%(vs. 18% in Q1) Net -$0.13( -$0.25) Overall testing up 230% to $50.8 million driven by urologic and thyroid cancer; Product revenues, which were down in Q1, rose 59% to $2.7 million; Test volume more than triples (nearly 21,000 tests); including 14% decline in Prosigna (2,144 tests)
Waters $681.6 million($621.5 million) +31% Non -GAAP +$2.60( +$2.24) Second quarter in a row with 31% growth and easily exceeding Wall Street projections; Growth driven by Pharma and Industrial; Services and consumables up 22% to $367.2 million; Instruments up 43% to $314.5 million
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

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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