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Bio-Rad Laboratories Q1 Revenues Decline 4 Percent, Beat Estimates

This article has been updated to correct Andrew Last's title.

NEW YORK – Bio-Rad Laboratories reported on Thursday after the close of the market that its first quarter revenues decreased 4 percent year over year.

For the three months ended March 31, 2022, Bio-Rad reported revenues of $700.1 million compared to $726.8 million a year ago, well ahead of analysts' average expectation of $675.1 million.

On a currency-neutral basis, Q1 revenues decreased approximately 1 percent year over year, the company said.

First quarter Life Science segment sales fell 5 percent year over year to $347.2 million from $366.5 million, or 3 percent on a currency-neutral basis. The company said declines in this segment were primarily driven by reduced COVID-related demand, offset by strong growth in process media and Droplet Digital PCR (ddPCR) products.

On a call with investors, Chief Operating Officer Andrew Last said that localized COVID surges in China drove higher-than-anticipated PCR instrument demand, but lockdowns in China are also creating uncertainty in logistics and near-term demand that could adversely affect Q2 sales.

"Overall, we still expect that our COVID-related sales will continue to ramp down quickly compared to the last two years," Last said.

Ilan Daskal, Bio-Rad's CFO, added that COVID sales in the quarter totaled approximately $45 million, reflecting an elevated demand that the firm expects to taper significantly going forward. Excluding COVID-related sales, core revenues increased approximately 7 percent on a currency-neutral basis, Daskal said.

Simon May, president of the Life Science Group, noted that demand for Bio-Rad's digital PCR products overall "remains pretty strong" and that the firm has "a pretty bullish outlook on the full year" for the ddPCR business.

Clinical Diagnostics segment sales decreased 2 percent to $351.8 million from $358.5 million in Q1 2021, and increased 1 percent on a currency-neutral basis, driven by recovery in the firm's immunohematology business.

The impact of the pandemic on supply chains remains significant, Last said, and Bio-Rad is experiencing "ongoing difficulty in securing raw materials, especially electronic components," as well as increased logistics costs. "We do not see this easing until the second half of the year and continue to carry an order backlog, primarily on instruments, as a result," he said.

Daskal specified that supply chain constraints for the Life Science group are likely to ease starting midyear, but that the Diagnostics segment will not see improvements until the end of 2022.

Dara Wright, president of Bio-Rad's Clinical Diagnostics Group, noted that the additional supply challenges faced in diagnostics are related to the fact that the space is more highly regulated, so it is more difficult to source and replace electronic components.

"The demand is good, we're supporting our customers, but it does provide a bit of headwind for a bit longer throughout the year," she said.

Bio-Rad reported a net loss of $3.37 billion, or $112.57 per share, in Q1 compared to a net income of $977.4 million, or $32.38 per share, in the year-ago period. On an adjusted basis, net income was $149.1 million, or $4.94 per share, beating analysts' average EPS estimate of $3.40. Bio-Rad said that the net loss and income amounts were primarily impacted by the recognition of changes in the fair market value of equity securities related to the holdings of its investment in Sartorius.

Bio-Rad's Q1 R&D expenditures decreased 15 percent year over year to $62.5 million from $73.9 million, while its SG&A spending decreased 13 percent to $197.6 million from $225.9 million a year ago.

The company ended the quarter with $802.3 million in cash and cash equivalents and $1.28 billion in short-term investments.

For full year 2022, Bio-Rad continues to anticipate currency-neutral revenue growth of approximately 1 to 2 percent. By business segment, Daskal said that Bio-Rad expects full-year core growth of 2 to 3 percent for the Diagnostics group, which is lower than prior guidance of 3 to 4 percent due to supply chain constraints. For the Life Science group, Bio-Rad now expects 2022 core growth of 16 to 18 percent, at the high end of prior guidance.

Bio-Rad CEO Norman Schwartz noted that the firm continues to evaluate larger M&A opportunities, as well as tuck-ins.

In Friday morning trading on the Nasdaq, Bio-Rad stock was up 4 percent to $535.23.