Bio-Rad last week reported a 3 percent uptick in fourth-quarter 2011 revenues in its overall business and Life Science segment, the latter driven primarily by strong sales in its core markets of electrophoresis, imaging, and real-time PCR-based gene expression.
In addition, Bio-Rad executives said that the digital PCR platform the company acquired in October along with biotech firm QuantaLife is expected to generate $20 million in sales in 2012; and that an increased investment in the platform would likely also drive up R&D costs at the company.
In a conference call following the release of Bio-Rad's Q4 and full-year 2011 earnings, CFO Christine Tsingos remarked that year-over-year growth in Q4 "was fueled by continued progress for both our life science and clinical diagnostics segment with specific strength in our real-time PCR and imaging product lines, as well as quality control, blood typing and microbiology products." However, she added that Bio-Rad's top-line growth "continues to be challenged by slowness in Europe."
For the fourth quarter ended Dec. 31, 2011, Bio-Rad's sales rose 3 percent year over year to $550.2 million from $533.7 million in Q4 2010. Sales grew 2.4 percent on a currency-neutral basis and fell short of consensus analyst expectations of $562.1 million. Full-year 2011 sales rose 7 percent to $2.07 billion from $1.93 billion in 2010, also short of analyst expectations of $2.09 billion.
Meantime, the company's Life Science segment in Q4 logged 3 percent growth — or 2.3 percent on a currency-neutral basis — to $198.9 million from the year-ago period. For the full year, the Life Science group recorded a 7.2 percent increase in revenues from 2010, or a 3.4 percent currency-neutral increase.
Higher sales in Life Science "were primarily fueled by growth in our core markets of electrophoresis, imaging, and gene expression; as well as good growth in the Americas and Asia-Pacific," Tsingos said during the call.
Tsingos recapped Bio-Rad's October acquisition of QuantaLife for $162 million (PCR Insider, 10/6/2011), telling analysts that the company has begun shipping QuantaLife's QX100 Droplet Digital PCR system to customers, and that "while it will take time to build the top-line scale, we are very excited about the long-term potential for this new generation of PCR in the lab."
In Bio-Rad's Q3 earnings call in November, Tsingos noted that the QuantaLife acquisition was expected in the short term to be an operating drag, but that the company expected to begin ramping up product sales in 2012. In last week's call, Tsingos told analysts that the company in Q4 booked "very little" in QuantaLife revenues — on the order of $400,000 or $500,000.
Bio-Rad's R&D expenses in 2011 rose 8 percent to $186.4 million, representing about 9 percent of sales. This R&D figure included approximately $2.5 million in QuantaLife expenses incurred in Q4. "Historically, we have targeted R&D to be in the [range of] 9 to 10 percent of sales," Tsingos said. "Looking to 2012, these expenses may be closer to the 10 percent number primarily related to our increased investment in digital PCR."
Tsingos said that in 2012 Bio-Rad expects across-the-board sales growth of between 3.5 percent and 4.5 percent on a currency-neutral basis. Digital PCR sales are expected to contribute approximately $20 million to this growth, "likely back-end loaded in the year," she said.
Bio-Rad CEO Norman Schwartz added that the QuantaLife technology "is poised to take DNA amplification to the next generation;" and that even though the acquisition and integration "will temporarily dampen our margins … it will bode well for Bio-Rad in the longer term, both in terms of top-line and certainly bottom-line expansion." Schwartz had previously told analysts during the company's Q3 earnings call that the digital PCR market could be worth "several hundred million dollars."
Aside from its burgeoning digital PCR play, Bio-Rad also introduced "a record number of new platforms and consumables" in 2011, including its new line of touch-screen real-time PCR systems, the CFX96 Touch, CFX384 Touch, and C1000 Touch; and its compact T100 thermal cycler.
In other financial results, Bio-Rad's Clinical Diagnostics segment sales increased 3 percent year over year during Q4 to $347.3 million, or 2.5 percent on a currency-neutral basis. For the full year, Clinical Diagnostic sales increased 8 percent to $1.36 billion, a 2.9 percent spike on a currency-neutral basis.
The company posted a Q4 profit of $59.2 million, or $2.08 per share, compared to $67.9 million, or $2.41 per share, a year ago. Net income for 2011 was $178.2 million, or $6.26 per share, compared to $185.5 million, or $6.59 per share, a year ago.
2011 results included a net $7 million in operating costs, including about $2.5 million of amortization expenses, resulting from the QuantaLife acquisition; while 2010 results include a tax provision benefit of $10.7 million.