NEW YORK – Bio-Rad Laboratories on Thursday reported flat Q4 revenues but said it expects to see growth in 2023 as well as new product launches.
For the quarter ended Dec. 31, Bio-Rad reported revenues were essentially flat at $730.3 million compared to $732.8 million a year ago, and below the Wall Street estimate of $742.3 million.
Life science revenues in the quarter were $359.7, up 10 percent year over year or 16 percent on a currency-neutral basis. Excluding COVID-related sales, life science revenue increased 28 percent primarily driven by Droplet Digital PCR, process chromatography, western blotting, and qPCR products.
"We also saw good growth for our qPCR products in part driven by the uptake of our new CFX Opus platform," Bio-Rad CFO Ilan Daskal said, adding that the firm has also experienced "strong initial customer interest and demand" for the recently introduced QX600 ddPCR system.
"We expect the more meaningful revenue contribution from this platform in 2023," he said.
Clinical diagnostics revenues were $369.6 million, a decrease of approximately 9 percent from the year-ago quarter, Bio-Rad said, or 3 percent on a currency-neutral basis. Excluding COVID-related sales, clinical diagnostics revenue decreased approximately 2 percent on a currency-neutral basis primarily driven by continuing supply chain constraints impacting instrument placements and sales of related consumables.
Net income for the fourth quarter of 2022 was $827.7 million, or $27.78 per share, versus a net loss of $1.57 billion, or $52.54 per share, on a diluted basis, during the same period in 2021. This was mainly impacted by the recognition of changes in the fair market value of equity securities related to the holdings of the company's investment in Sartorius AG.
On an adjusted basis, net income in Q4 2022 was $3.31 per share, below analysts' average estimate of $3.45 per share.
In addition, Bio-Rad executives said on an earnings call that supply chain constraints coupled with delays in the full transition of certain manufacturing plants from France to Singapore have led the company to carry higher levels of raw materials needed to make instruments and components. This excess inventory, they noted, will take eight quarters to normalize.
Inventory at the end of Q4 reached $719.3 million from $685.9 million in the prior quarter, Daskal said on the call, adding that it is expected to decrease going forward.
"As we anticipate further easing in our supply chain constraints in 2023, we would expect to lower inventory levels over the next eight quarters," Daskal said. The high inventory was in part a long-term plan to keep elevated levels of raw material due to supply chain issues, he said, noting that the materials will be stable for more than one year.
"I do not see any risk of any write-offs for those, since these are all for instrument buildup," Daskal said.
Andrew Last, Bio-Rad's chief operating officer, said the higher inventory is also somewhat related to a delay in the full transition of the firm's clinical manufacturing facilities from France to Singapore. The move has been delayed by two to three quarters but is in the final stages, Last said, noting that the plant in Singapore is now up and running.
For the time being, however, "we still have our French plants operating," he said, adding, "We've kept them open because of the backorder reduction challenges that we have."
Operating plants on two sides of the world has led to "some double down on inventory that we'll then have to also burn through," Last said. Bio-Rad expects to keep the plant in France open through the end of Q2.
Despite improvements in the supply chain, Bio-Rad also ended the quarter with an elevated order backlog of approximately $50 million, of which it expects to retain about $30 million, Daskal said.
In 2022, Bio-Rad expanded its portfolio of qPCR instruments with the CFX Duet Real-Time PCR and CFX Opus Deepwell Systems, and acquired "sample-to-result" rapid PCR technology from Curiosity Diagnostics for syndromic infectious disease testing. It also introduced the QX600 Droplet Digital PCR platform and secured an exclusive licensing agreement with NuProbe to develop next-generation, highly multiplexed digital PCR assays for oncology applications.
On the call, Last said that one initial adopter of the QX600 is Biodesix, which is using the platform to develop a minimum risk residual disease oncology test from Memorial Sloan Kettering Cancer Center on the platform.
"We have now developed a strong pipeline across multiple customer segments for the QX600, and, in conjunction with our portfolio of many thousands of assays, we expect to see continued strong growth of our Droplet Digital PCR portfolio in 2023," he said.
Daskal also emphasized that the supply chain and inventory issues do not impact the longer-term goals Bio-Rad laid out in an investor day presentation last year.
For the full-year 2022, Bio-Rad reported revenues 0f $2.80 billion, down 4 percent from $2.92 billion in 2021 and below the Wall Street estimate of $2.82 billion. Revenues were essentially flat on a currency-neutral basis, and grew approximately 2 percent when excluding a royalty-related legal settlement totaling $32 million in 2021.
Bio-Rad also said that COVID-related sales for the full year were approximately $109 million, compared to $266 million in the year-ago period. Excluding these sales as well as the settlement, full-year 2022 revenue increased 7 percent year-over-year on a currency-neutral basis.
Life science revenues in 2022 were $1.35 billion, which the firm said was a 3 percent increase year over year on a currency-neutral basis. Excluding COVID-related sales and the royalty-related settlement in 2021, life science revenue increased 15 percent on a currency-neutral basis.
Clinical diagnostics revenues were $1.45 billion, flat compared to 2021 on a currency-neutral basis, Bio-Rad said. Excluding COVID-related sales, clinical diagnostics revenue for the full-year 2022 grew 1 percent compared to 2021 on a currency-neutral basis.
Net loss for 2022 was $3.63 billion, or $121.79 per share on a diluted basis, compared to net income of $4.25 billion, or $140.83 per share, in 2021.
On an adjusted basis, net income in 2022 was $14.42 per share, above analysts' average estimate of $14.40 per share.
Bio-Rad ended the year with $434.2 million in cash and cash equivalents and $1.36 billion in short-term investments.
In early morning trading on the Nasdaq shares of Bio-Rad were up 4 percent to $472.45.