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Bio-Rad Q3 Revenues Drop 11 Percent

NEW YORK (GenomeWeb) — Bio-Rad reported after the close of the market Tuesday an 11 percent decrease in third quarter revenues, including a 13 percent decrease in sales for its Life Science segment.

For the three months ended Sept. 30, Bio-Rad reported revenues of $470 million compared to $530.6 million in the year-ago period, and below analysts’ consensus estimate of $495.6 million. On a currency-neutral basis, Bio-Rad's Q3 revenues decreased 2.2 percent year over year.

The currency headwind to sales was more than $49 million for the quarter, CFO Christine Tsingos said during a conference call recapping the company's earnings.

"On our second quarter earnings call we cautioned that the continued challenges in Europe, coupled with seasonality, could make for a tough quarter, especially for our diagnostics group, and that certainly was the case," Tsingos said. 

Bio-Rad's Life Science segment recorded net sales of $150.4 million, a 13 percent year-over-year decrease that was offset by sales of the company's Droplet Digital PCR, V3 Western Workflow western blotting products, and iQ-Check food science products. Life Science sales dropped 6 percent on a currency-neutral basis.

"Our Life Science group also faced challenges primarily related to a slowing of growth in various emerging markets as well as systems and productivity challenges associated with the go-live of our new ERP," Tsingos said.

This temporary disruption in productivity associated with adapting to the firm's second deployment of SAP ERP is not atypical, Tsingos said, but she noted that the impact on revenue was sizeable, especially in North America. 

Sales for its Clinical Diagnostics segment decreased 11 percent to $316.2 million in Q3. On a currency-neutral basis, Clinical Diagnostics sales decreased a fraction of 1 percent.

The Hercules, California-based firm reported net income of $17.4 million, or $.59 per share, compared to net income of $11.5 million, or $.39 per share, for the same period last year. On average, analysts had expected EPS of $.0.54. The increased net income was due primarily to the absence of nonrecurring expenses accrued during Q3 2014.

Bio-Rad spent $43.3 million on R&D in Q3 compared to $52.8 million in the same quarter last year, and the company's SG&A expenses decreased nearly 8 percent to $187.4 million versus $202.6 million in Q3 of 2014.

The R&D decrease reflects a decline in spending associated with the completion of key projects as well as some reduction related to currency translation, Tsingos noted.

"Going forward we expect R&D expense to continue to be in the 9 to 10 percent of sales range," she said. 

Bio-Rad finished the quarter with $507.3 million in cash and cash equivalents, and $278.7 million in short-term investments.

The firm continues to anticipate strong currency headwinds to the top line for the remainder of the year, which has been more than $146 million year to date.

Year-to-date sales growth is 1.2 percent, below the firm's original annual guidance of 3 percent. "Given the third quarter results and the continuing market challenges in Europe, coupled with our own systems-related issues in our Life Science group, we now expect full-year currency-neutral sales growth in the one to one-and-a-half percent range for the full year," Tsingos said.

"The slowdown in our supply chain process is likely a matter of timing and not lost sales, but it may take us into early next year to fully regain the tempo in recognized revenue ... [and] sales in the fourth quarter of last year were substantial, which could make for a tougher comparison," she added.