Bio-Rad this week reported record revenues of $204.2 million for its Life Sciences segment in the fourth quarter driven by strong sales of nucleic acid amplification reagents, process media, and sales of its QX100 digital PCR system and associated products, company executives said.
The Life Sciences segment revenues were a 2.7 percent increase over the prior-year period, or a 3.7 percent increase excluding foreign currency effects, the company said. On a geographic basis, sales in Latin America and the US were especially robust, the company said.
For all of 2012, Bio-Rad's Life Sciences group posted revenues of $688.4 million, down 0.9 percent from 2011, but up 1.5 percent on a currency-neutral basis. This growth was also primarily fueled by Bio-Rad's digital PCR products; although receipts from the business came in slightly lower than the guidance previously provided by the company.
During a conference call discussing Bio-Rad's Q4 and full-year financial results, Christine Tsingos, executive vice president and CFO, declined an analyst's request to disclose exact sales figures for the digital PCR business, noting the company's policy to not break out revenues for specific product lines.
"Now that we've kind of rounded our one-year anniversary on QuantaLife being part of our results in the fourth quarter, we consider it organic to our business, so it's not a specific number that we're going to be disclosing," Tsingos said.
Bio-Rad acquired QuantaLife and that company's digital PCR technology for $162 million in October 2011 (PCR Insider, 10/6/2011). In March 2012, concurrent to announcing its Q4 and full-year 2011 revenues, Bio-Rad said that it expected QuantaLife to generate approximately $20 million in sales in 2012 (PCR Insider, 3/1/2012).
During this week's call, company executives did not provide a great amount of additional detail on recent developments surrounding its digital PCR business, but noted that the company's R&D investment in both Q4 and 2012 was substantially higher than the prior year. In Q4 2012, R&D expense was $59.8 million, or 10.4 percent of sales, compared to $50 million, or 9.1 percent of sales in Q4 2011.
Meanwhile, Bio-Rad's R&D expenses in 2012 totaled $214 million, or 10.3 percent of sales, compared to $186.4 million, or 9 percent of sales in 2011.
"This increase is a direct reflection of our investment in digital PCR and cell biology, as well as new product development in the diagnostics segment," Tsingos said. "Looking to 2013, R&D expenses as a percentage of sales will likely stay at that 10 percent level as we move a number of investments through the product-development pipeline."
One of the highlights of Bio-Rad's integration of QuantaLife occurred in August, when the company opened a Digital Biology Center in Pleasanton, Calif., just a few miles away from its Hercules, Calif., headquarters, to focus on developing new applications for the QX100 and new products based on the platform's droplet-partitioning technology.
For the three months ended Dec. 31, Bio-Rad recorded $573.8 million in revenues, up 4.3 percent from $550.2 million in Q4 2011. On a currency-neutral basis, quarterly revenues increased 6.1 percent.
"During the quarter, we experienced good currency-neutral sales growth in our diabetes monitoring, quality controls, and BioPlex 2200 product line, as well as many of our Life Science product lines, most notably, process chromatography, amplification consumables, and sales of our QX100 digital PCR system," Tsingos said. "The overall quarterly growth was tempered somewhat by continued sluggishness in Europe."
Net income for the fourth quarter was $47.5 million, or $1.65 per share, compared to $59.2 million, or $2.08 per share, in Q4 2011. Bio-Rad said that the results included a one-time gain of $4.3 million resulting from the sale of real estate.
For the full year, sales tallied $2.07 billion, essentially flat compared to 2011, but up 3.6 percent on a currency-neutral basis. Full-year net income was $169.2 million, or $5.91 per share, compared to $178.2 million, or $6.26 per share, in 2011.
The decrease in net income, Bio-Rad noted, reflected lower gross margins and increasing R&D expenses.
Earnings were favorably impacted by a $16.1 million reduction in the valuation of contingent consideration associated with the QuantaLife acquisition, as well as an increase in other income resulting from certain investment gains, the company said.
Bio-Rad's other business segment, Clinical Diagnostics, brought in $365.9 million in the quarter — a 5 percent uptick in revenues year over year, or an 8 percent increase on a currency-neutral basis — and $1.37 billion in revenues for the full year — essentially flat compared to 2011, but up 5 percent on a currency-neutral basis.
Bio-Rad ended 2012 with $463.4 million in cash and cash equivalents.