Bio-Rad executives said this week that first-quarter sales of the firm's digital PCR platform and related products increased year over year, helping to drive approximately 1 percent year-over-year and 2.5 percent sequential growth in the company's Life Science segment.
The uptick in Life Science sales buoyed Bio-Rad's overall revenues, which crept up 3 percent year over year but fell short of consensus analyst estimates on the top and bottom lines due to what the company called "softness" in research markets.
Bio-Rad's Life Science segment, which contains the company's PCR instruments and consumables — including the QX100 Droplet Digital PCR system — posted sales of $156.3 million in Q1 compared to $154.8 million in Q1 2012.
On a currency-neutral basis, Life Science segment sales increased 2.5 percent compared to Q1 2012. Results from the first quarter benefitted from increased sales of Droplet Digital PCR products, the ProteOn XPR36 protein interaction array system and reagents, and antibodies and reagents resulting from the company's acquisition of AbD Serotec in January.
More specifically, sales of new antibody products from Serotec were $6.2 million in Q1. Excluding these sales and currency effects, the Life Science organic top line declined 1.6 percent year over year, Christine Tsingos, Bio-Rad's CFO and executive vice president, said during an earnings call this week.
"This decline in our base business was driven by a very challenging research funding environment in the US and Europe, as well as a tough compare for our process media division," Tsingos said. "We estimate that sequestration may have negatively impacted Life Science sales by approximately $2 million in the quarter, while sales in Europe declined by more than 10 percent for the group. Overall, segment profit for Life Science was negative for the quarter, reflecting increased acquisition-related expenses, unfavorable product mix, continued pricing pressure, and additional legal-related accruals."
Asked by an analyst to provide specific sales figures for the QX100 Droplet Digital PCR system — which Bio-Rad acquired along with QuantaLife in October 2011 — Tsingos said that the company will no longer break out those numbers because they are considered part of Bio-Rad's organic business now. However, she noted that the business was up "double digits" year over year.
Further detailing uptake of the QX100 platform, Brad Crutchfield, executive vice president of the Life Science group, noted that the product portfolio did experience growth in Q1, but it was "certainly impacted overall by the slowness in some of the grants being released." However, Crutchfield added, "the acceptance of this technology is still very, very strong and is a big part of our future plans in both growing and where we invest in the business."
Overall, revenues at Bio-Rad totaled $499.7 million, up from $486.3 million a year ago, but below the average Wall Street estimate of $506.3 million. The company's Clinical Diagnostics segment had $339.9 million in sales, up 4 percent from a year ago, driven by the entire product line but especially quality controls and diabetes products, and the BioPlex 2200 system.
Bio-Rad's net income in the first quarter fell to $19.5 million, or $.68 per share, compared to net income of $31.0 million, or $1.09 per share, a year ago, and well short of the $1.06 that Wall Street expected on average.
The company said that lower gross profit, as well as higher SG&A costs led to the reduced net income. A decrease in other income due to higher realized gains on the sale of equity investments during the first quarter of 2012 also led to the lower profit figure for Q1 2013.
Bio-Rad's R&D spending narrowed 2 percent to $51.9 million from $52.9 million a year ago, while its SG&A costs increased 9 percent to $185.9 million from $171.3 million, resulting from employee costs associated with acquisitions and investments in new systems, Bio-Rad said.
Bio-Rad finished the quarter with $368.6 million in cash and cash equivalents, as well as short-term investments of $468.2 million.