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Bio-Rad Laboratories Q2 Revenues Climb 33 Percent, Beat Estimates

NEW YORK – Bio-Rad Laboratories reported Thursday after the close of the market that its second quarter revenues increased 33 percent year over year, primarily due to strong performance in both its life science and clinical diagnostics divisions.

For the three months ended June 30, Bio-Rad reported revenues of $715.9 million compared to $536.9 million a year ago, beating analysts' average estimate of $631.8 million. On a currency-neutral basis, Q2 revenues increased about 28 percent.

"We are pleased to see the gradual recovery in our end markets across the business and in all regions after the significant downturn last year with the onset of COVID-19," Norman Schwartz, Bio-Rad president and CEO, said in a statement.

On a call with investors following the results, Andrew Last, Bio-Rad's chief operating officer, noted that the firm is currently coping with global shortages in plastics and electronics, as well as increased raw materials costs related to the pandemic. Additionally, the firm says the emergence of the Delta variant may continue to create challenges. "We are maintaining vigilance and flexibility as a result," Last said.

Life Science segment revenues increased approximately 33 percent in Q2 to $334.2 million, or 27 percent on a currency-neutral basis. Growth in this segment was primarily attributable to sales of western blotting, qPCR, Droplet Digital PCR, and process media products across all sales regions, the firm said.

Clinical Diagnostics segment revenues, meanwhile, increased 34 percent to $380.2 million, or 28 percent on a currency-neutral basis. Bio-Rad said that sales in this segment were driven by ongoing recovery across product lines in all regions.

Bio-Rad garnered more than $68 million in COVID-19-related revenues in the quarter, CFO Ilan Daskal said on the call, and the firm expects to realize $210 million in COVID sales for the year.

It is also seeing "a healthy uptick" in wastewater testing products, he said. Last further noted that there is potential for the wastewater market to become the more durable piece of the COVID-19 business.

However, overall for COVID, "the majority of our revenues were driven by instrumentation, and we do view that market as becoming very saturated in terms of capacity right now," Last said.

The firm's settlement with 10x Genomics which Daskal said could net Bio-Rad up to $140 million by 2030 and gives the firm broad freedom to operate in the single-cell market now allows it to push ahead on its development of single-cell sequencing technology in its Celsee business. Annette Tumolo, president of Bio-Rad's life sciences group, said that Bio-Rad expects to debut a product in early 2022.

As part of the 10x settlement, the firm also expects to receive payments of $32 million in the third quarter of 2021 for "back royalties owed to Bio-Rad for the period from November 2018 through December 2020 as well as for settlement fees and interest," Daskal said.

Tumolo highlighted that the firm's QX One Droplet Digital PCR, which launched last year, is seeing "really strong demand in pharma and biopharma." Bio-Rad is also seeing increased demand for the QX 200 systems, particularly in wastewater testing.

In the quarter, Bio-Rad also inked a diagnostics development deal with Seoul, South Korea-based Seegene.

Regarding mergers and acquisition, Schwartz commented on the call that Bio-Rad continues "to evaluate a robust number of both tuck-in and technology opportunities and, candidly, to look for something more transformational."

Net income in Q2 was $914.1 million, or $30.32 per share, compared to $966.4 million, or $32.15 per share, a year ago.

On an adjusted basis, net income in Q2 was $3.54 per share, beating analysts' average estimate of $2.66 per share.

Bio-Rad's Q2 R&D spending rose 22 percent to $63.4 million compared to $52.0 million a year ago, while its SG&A expenses rose 13 percent to $213.4 million from $189.3 million.

Bio-Rad exited the quarter with $732.8 million in cash and cash equivalents and $434.1 million in short-term investments.

The company also updated it financial outlook for 2021. Bio-Rad had previously guided for non-GAAP currency-neutral revenue growth of approximately 5.5 to 6.0 percent, but now anticipates growth between 10.0 and 10.5 percent.

In Friday morning trading on the Nasdaq, Bio-Rad shares were up 4 percent to $736.81.

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