NEW YORK – Bio-Rad Laboratories reported Thursday after the close of the market that its second quarter revenues decreased 6 percent year over year. Executives attributed the decline to ongoing destocking among the firm's process chromatography customers and a more modest pace of recovery in the biopharma sector than anticipated.
For the three months ended June 30, Bio-Rad reported net sales of $638.5 million compared to $681.1 million a year ago and below analysts' average estimate of $645.8 million. On a currency-neutral basis, Q2 revenues decreased approximately 5 percent.
On a call with investors to discuss the quarterly results, Norman Schwartz, president and CEO of Bio-Rad, said the firm had a "solid quarter" in line with expectations.
"We view our strategy and focus for the future growth of the company to be really very much intact," Shwartz said.
Life science segment revenues dropped approximately 17 percent in Q2 to $250.5 million. On the call, CFO Roop Lakkaraju said this compares to life science business revenues in Q3 2023 of $300 million and represents an approximately 16 percent decline on a currency-neutral basis.
Excluding sales in the firm's process chromatography business — which supplies specialty resins to support therapeutics developers — core life science revenue declined approximately 12 percent, Lakkaraju said. The process chromatography decline was related to reduced purchasing among a handful of large customers who had previously stocked up on the critical component, he said.
Bio-Rad Chief Operating Officer Andrew Last said on the call that sales of consumables and reagents in Bio-Rad's Droplet Digital PCR franchise, which is also within the life science business, grew in the low single digits.
However, the prior-year quarter also saw increased revenues related to a reduction of back orders as supply chain pressures eased, Last said. Excluding a one-time licensing fee in the prior-year quarter — which the firm described in Q3 2023 as approximately $6 million related to ddPCR intellectual property — revenue for ddPCR declined in the mid-single-digit range, Last said.
The firm is also experiencing "softness on recovery in qPCR instrumentation" following an uplift in sales during COVID, Last also said.
Clinical diagnostics segment revenues, meanwhile, increased approximately 2 percent to $387.9 million. Lakkaraju said on the call that this compares to revenues of approximately $380 million in the prior year quarter, and that the growth was driven by increased demand for quality control and blood typing products.
The overall Q2 decline is partially related to Bio-Rad's unique product mix, both Lakkaraju and Last said on the call.
Lakkaraju joined Bio-Rad in April following the departure of former CFO Ilan Daskal. The firm also brought on Anette Engelhardt as executive VP and president of the clinical diagnostics business last month following Dara Wright's departure. Meanwhile, Last is scheduled to depart Bio-Rad next month, and Schwartz said that the firm has narrowed its search for a new COO, focusing in part on "succession planning."
In the quarter, Bio-Rad repurchased 346,226 shares of stock for about $100 million at an average purchase price of about $289 per share, Lakkaraju said. The firm's board of directors also recently authorized increasing the amount available under the company's 2023 share repurchase program such that a total of approximately $578 million is now available for repurchases.
Bio-Rad recorded a Q2 net loss of $2.17 billion, or $76.26 per share, compared to a net loss of $1.16 billion, or $39.59 per share, a year ago. On an adjusted basis, net income in Q2 was $3.11 per share, beating analysts' average estimate of $2.01 per share. A change in the fair market value of its investment in Sartorius was a major contributor to the reported net loss, Lakkaraju said.
Bio-Rad's R&D spending declined 9 percent in the quarter to $58.9 million from $65.0 million a year ago, while its SG&A expenses declined 6 percent to $194.7 million from $207.8 million.
Bio-Rad exited the quarter with $406.9 million in cash and cash equivalents and $1.21 billion in short-term investments.
Industry-wide supply chain issues began impacting Bio-Rad in the second quarter of 2021, followed by decreases in biopharma funding, leading to a series of announcements lowering the firm's annual guidance. The firm has continued to assert the soundness of its business in the long term, however.
On Thursday, Bio-Rad again lowered its full-year 2024 outlook.
Bio-Rad had previously guided for non-GAAP currency-neutral revenue growth of approximately 1.0 to 2.5 percent, but now anticipates its non-GAAP revenue to decline by approximately 2.5 to 4.0 percent on a currency-neutral basis.
In Friday morning trading on the Nasdaq, Bio-Rad shares were up around 3 percent at $351.39.