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Bio-Rad's Q4 Revenues Rise 12 Percent on Strong Life Science, Clinical Dx Performance

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Bio-Rad last week reported that record sales in its Life Science segment during the fourth quarter boosted total revenue at the company 11.6 percent to $343.1 million.
 
The Life Science division houses Bio-Rad’s proteomics business including its protein analysis reagents and the Surface Enhanced Laser Desorption Ionization (SELDI) business purchased from Ciphergen Biosystems in November [See PM 11/16/06].
 
For the three months ended Dec. 31, 2006, Life Science sales rose 13 percent to $159 million, compared to year-ago figures. On a currency-neutral basis, sales in the division rose 8.8 percent year-over-year, said Christina Tsingos, vice president and CFO of Bio-Rad.
 
“This increase reflects continued strong sales of amplification products, process chromatography media, and protein expression products,” she said during a conference call with analysts accompanying the earnings release.
 
For full-year 2006, the company’s Life Science sales grew 4.7 percent year-over year to $575.6 million.
 
Last year, Bio-Rad sought to widen its footprint in the protein-identification and analysis space. Last February, the company acquired ProteOptics, expanding its proteomics portfolio beyond protein identification into protein analysis [See PM 03/02/06].
 
In addition, during the second half of the year, the company released its ProteOn XPR36 Protein Interaction Array System and purchased Ciphergen’s proteomics business for $20 million in cash plus an additional $3 million equity investment in Ciphergen. 
 
During the conference call, Tsingos signaled the last two developments as potentially key money makers for the future.
 
ProteOn “represents a significant step forward for researchers making the study of protein interactions go faster and much more reproducible,” she said. While she said the SELDI business is relatively small, “We view it as very strategic and a key addition to our lineup of protein analysis tools.”
 
For 2007, Bio-Rad CEO Norman Schwartz again hinted that acquisitions may be in the company’s future. At the JP Morgan Healthcare Conference in January, Schwartz said Bio-Rad was evaluating the purchases of unnamed companies with annual sales of $200 million.
 
Last week, he did not give an idea about the size of potential deals that the company may have its eyes on. While suggesting that the M&A market may be overpriced in some cases, he, nonetheless, left open the possibility that Bio-Rad could still be active on that front in 2007.
 
“We all continue to be surprised with the prices that some of these things are going for, but having said that, I do think there continue to be opportunities,” Schwartz said. “We are regularly looking at things and [are] encouraged by what we see and what we might be able to do.
 
For the three months ended Dec. 31, 2006, Bio-Rad said profits rose 23.8 percent to $16.6 million from $13.5 million a year ago. R&D spending rose to $33.3 million, compared to $31.1 million a 7.1 percent climb.
 
In full-year 2006, total sales rose to $1.3 billion, a 7.8 percent increase from $1.2 billion recorded in full-year 2005. Income rose 26.7 percent to $103.3 million from $81.6 million a year ago.
 
The company’s other segment, Clinical Diagnostics, saw sales growth of 10.6 percent in the fourth quarter, year-over-year, to $180.1 million. Full-year sales increased to $684.9 million, up 10.8 percent year-over-year.
 
For 2007, total sales are expected to grow in the mid-single digits, percentage-wise, Tsingos said. Operating income is expected to fall below 2006’s $103.3 million, however, due to a number of factors including $10 million in expenses related to the consolidation and integration of businesses purchased in 2006. Profitability of the company’s BSE tests, also part of the Life Science, division is also expected to shrink by $10 million to $15 million this year.
 
“For 2007 we are looking [at] fairly modest year-over-year sales growth and [at] challenging operation margins … really largely due to the one-time upsides we experienced in 2006, and some of the one-time costs coming in 2007,” Schwartz said.

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