DX Earnings Report: Lab Companies Continue to Grow but at a Slower Rate

The diagnostics industry got off to a so-so start with PAMA reimbursement cuts, a weak flu season relative to 2018 and currency translation slowing the pace of year over year revenue growth. Here’s a look at the results from the first quarter of FY 2019 covering the period from January 1 to March 31, 2019.                                                                   

Gainers

Of the 40 companies in our sample, 30 reported at least some growth during the period. But growth rates were mostly below what they were in the same period last year among not only mature labs like Abbott (17% in Q1 2018 v. 2% in Q1 2019), Illumina (31% v. 8%), PerkinElmer (25% v. less than 1%), Roche (5% v. less than 1%) and Thermo Fisher (23% v. 5%).

Six companies reported flat sales, i.e., gains or declines of less than 1%, including billion-dollar companies Becton Dickinson, Quest and Roche. The other two firms with flat revenues were Bio-Rad and Luminex.

Although 26 of 35 companies hit or exceeded average Wall Street revenues estimates, that ratio is significantly below Q1 2018 when 31 of 35 companies accomplished the same feat. And one of the 26 companies that met Wall Street targets in the previous quarter (OraSure Technologies) actually had revenue losses of 28%, which was just slightly less than the 29% losses analysts were expecting.

The Hottest Companies

Ten companies raised their 2019 full year earnings guidance on the basis of Q1 sales, including Bruker, CareDx, Exact Sciences, Guardant Health, Hologic, NeoGenomics, PerkinElmer, Thermo Fisher, Twist Bioscience and Veracyte. Other strong performers during the quarter included:

• Bio-Techne which grew 14% thanks to continued strength in genomic testing sales;
• Fluidigm whose revenues increased 19% thanks to surging sales of its Helios and Hyperion imaging mass cytometry systems
• Consumer genetic testing firm Invitae which posted 47% growth despite the 10% headwinds effect of PAMA Medicare cuts; and
• NeoGenomics where genetic cancer and other testing volume continues to grow by double digits almost every quarter.

Decliners

Companies on the list of decliners included mammoths like LabCorp (-2%) and Becton Dickinson (down less than 1%). The seven other firms with lower YOY revenues were Enzo Biochem (-22%), Meridian Bioscience (-11%), OpkoHealth (-13%), OraSure Technologies (-28%), Pacific Bioscience (-15%), Quidel (-13%) and Waters (-3%).

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This article, along with a chart detailing the Q1 earnings reports of all 40 major DX companies, originally appeared in G2 Intelligence, Laboratory Industry Report, July 2019