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Bio-Rad Q4 Revenues Spike 5 Percent

This story has been updated from a previous version to include comments from Bio-Rad's earnings call.

NEW YORK (GenomeWeb News) — Bio-Rad Laboratories reported after the close of the market today a 5 percent increase in fourth quarter revenues, driven by high-single-digit growth for its Life Science business.

The Hercules, Calif.-based company reported $602.6 million in revenues for the three months ended Dec. 31, 2013, up from $573.8 million a year ago, easily surpassing the average analyst estimate of $586.9 million.

Life Science revenues increased 8 percent year over year to $220.5 million from $204.2 million in the prior-year period. The company said this growth was primarily driven by sales of antibodies and reagents from its acquisition of AbD Serotec, the QX200 Droplet Digital PCR system, and other recently introduced products such as the NGC family of chromatography systems and the S3 cell sorter. On a currency-neutral basis, revenues in the segment increased about 9 percent, the company said.

The Clinical Diagnostics segment reported a 3 percent uptick in Q4 revenues to $377.9 million from $365.9 million in Q4 2012. On a currency-neutral basis, net sales saw an increase of closer to 4 percent.

Bio-Rad had a profit of $30.1 million, or $1.04 per diluted share in Q4, compared to a profit of $43.3 million, or $1.51 per share, in Q4 2012. Wall Street had a consensus profit estimate of $1.42 per share. Though the company does not provide adjusted EPS figures, analysts who cover the firm estimated the adjusted EPS for the quarter at $1.43 to $1.45.

The decrease in profit included an accrued expense of $15 million in connection with the Bio-Rad's efforts to resolve the previously disclosed investigation of the company in connection with the US Foreign Corrupt Practices Act, which was in addition to an accrued expense of $20 million in Q3 2013.

Its R&D spending in Q4 decreased about 5 percent to $55.8 million from $58.6 million a year ago, while SG&A costs rose nearly 14 percent to $214.6 million from $188.9 million a year ago.

For full-year 2013 Bio-Rad posted $2.13 billion in revenues, a 3 percent spike from $2.07 billion in 2012 and just above the average analyst estimate of $2.12 billion.

Life Science revenues in 2013 totaled $710 million, a 3 percent increase, or 4.5 percent spike on a currency neutral basis.

During a conference call to discuss the company's earnings, CFO Christine Tsingos noted that this growth included $24 million of sales contributed by the company's new antibody business, as well as "continued strong sales of our Digital PCR product line where the installed base now exceeds 500 units."

Clinical Diagnostics, meantime, had $1.41 billion in revenues in 2013, a 3 percent increase over 2012, or a nearly 4 percent increase on a currency-neutral basis.

The firm's net income in 2013 fell to $77.8 million, or $2.69 per diluted share, from $165.5 million, or $5.78 per share, in 2012.

The decline reflected higher SG&A expenses resulting from employee expenses associated with acquisitions; the aforementioned $35 million legal accrual, which included $5 million in interest; and expenses associated with enterprise resource planning implementation. In addition, 2012 earnings were favorably impacted by a $16.1 million reduction in the valuation of contingent consideration associated with the purchase of QuantaLife and an increase in other income from certain investment gains, Bio-Rad added.

"As we guided at the beginning of the year, the decline in net profit relates to our investment in new IT systems as well as the addition of AbD Serotec and the new cell-sorting technology," Tsingos said during the call.

Its 2013 R&D spending inched up to $211.0 million from $209.2 million in 2012, while SG&A spending ballooned 17 percent to $798.1 million from $681.8 million. R&D spending was equivalent to about 10 percent of sales and was "a direct reflection of our investment in new products for the diagnostic market, including blood typing [and] blood virus and diabetes monitoring," Tsingos said.

Bio-Rad ended 2013 with $331.6 million in cash and cash equivalents, and $277.4 million in short-term investments.

Looking to 2014, Tsingos said that Bio-Rad is seeing momentum in many of its Life Science product lines, which is "encouraging" for future growth.

"In addition, uncertainty in the research funding market seems to be clearing, at least a little," Tsingos said. "On the challenge side, we continue to face the decline in Europe for our Diagnostics group, fueled by price pressure and government tenders as well as laboratory consolidation in France, our largest European market."

Tsingos said that the net result is that the company expects growth in 2014 similar to that of 2013 — "around 2.5 percent on an organic currency-neutral basis for the full year."

In Friday morning trade on the New York Stock Exchange, shares of Bio-Rad were down a fraction of 1 percent at $130.40.