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Bio-Rad (BIO) Q2 Earnings Surpass Estimates, Gross Margin Up

·5-min read

Bio-Rad Laboratories, Inc. BIO posted second-quarter 2022 adjusted earnings per share (EPS) of $3.38, which surpassed the Zacks Consensus Estimate by 37.4%. However, the bottom line fell 4.5% from the prior-year quarter.

Our projection of adjusted EPS was $2.46.

The quarter’s adjustments eliminate the impacts of certain non-recurring items like amortization of purchased intangibles, (gains) losses from the change in the fair market value of equity securities and loan receivable, restructuring costs and others.

GAAP loss of the company was $31.12 per share in the second quarter against GAAP earnings of $30.32 in the year-ago quarter.

Revenues in Detail

Revenues of $691.1 million in the quarter surpassed the Zacks Consensus Estimate by 3.9%. However, revenues declined 3.5% from the year-ago quarter (up 0.5% at the constant exchange rate or CER). The company reported COVID-related revenues of $33 million, a significant decline from $69 million reported a year ago.

Our estimate for second-quarter revenues was $753.9 million.

Segmental Analysis

Sales at the Life Science segment in the second quarter totaled $322.4 million, down 3.5% year over year but up 0.5% at CER. The CER sales increase was primarily attributed to increased sales of Process Chromatography and Protein Quantitation products.

Our projection for the Life Science segment’s Q2 sales was $349.5 million.

Net sales at the Clinical Diagnostics segment totaled 367.8 million, down 3.3% on a year-over-year basis but up 0.7% at CER. Growth in the Quality Controls and Immunohematology businesses primarily drove the increase.

For the Clinical Diagnostics segment, we estimated $389.6 million of revenues in the second quarter.

Margins

In the quarter under review, Bio-Rad’s gross profit fell 1.4% to $395.9 million. Yet, gross margin expanded 120 basis points (bps) to 57.3%. Per the company, the adjusted gross margin was 57.9%, expanding 100 bps year over year.

BioRad Laboratories, Inc. Price, Consensus and EPS Surprise

BioRad Laboratories, Inc. Price, Consensus and EPS Surprise
BioRad Laboratories, Inc. Price, Consensus and EPS Surprise

BioRad Laboratories, Inc. price-consensus-eps-surprise-chart | BioRad Laboratories, Inc. Quote

We projected an adjusted gross margin of 55.1% for Q2.

Operating expenses were $275.8 million in the second quarter, down 0.4% year over year. Operating profit totaled $120.2 million, reflecting a 3.7% decline from the prior-year quarter. The operating margin in the second quarter contracted a marginal 3 bps to 17.4%.

Meanwhile, the company-adjusted operating margin was 18.8%, down 30 bps year over year.

The adjusted operating margin, according to our model, was 12.9% for Q2.

Financial Update

Bio-Rad exited the second quarter of 2022 with cash and cash equivalents (including short-term investments) of $1.97 billion compared with $2.08 billion at the end of the first quarter of 2022. Total debt (including current maturities) at the end of the second quarter of 2022 was $1.19 billion, marginally unchanged from the first quarter of 2022.

Cumulative net cash flow from operating activities at the end of second-quarter 2022 was $96.5 million compared with the year-ago figure of $268.2 million.

2022 Guidance

Bio-Rad has updated its guidance for full-year 2022.

The company anticipates currency-neutral revenue growth to be at the high end of the earlier-projected band of 1-2%. Covid-related revenues are now expected to be $93 million compared with the earlier projection of $70 million. The Zacks Consensus Estimate for revenues is pegged at $2.86 billion.

The adjusted operating margin projection for the full year was reiterated at 19%.

Our Take

Bio-Rad exited the second quarter of 2022 with better-than-expected earnings and revenues.On a currency-neutral basis, sales improved, reflecting an elevated level of demand particularly in Asia as a result of the ongoing outbreaks in China.

Overall, demand for both Life Science and Clinical Diagnostics continued to be strong on localized surges of COVID-19. China in particular drove higher-than-expected PCR instrument demand. However, the lockdown in China had a negative impact on local sales during the quarter.

Core revenues in Asia declined, which negatively impacted the company’s diagnostics business during the quarter.

Zacks Rank and Key Picks

Bio-Rad currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Quest Diagnostics Incorporated DGX, Medpace Holdings, Inc. MEDP and Neogen Corporation NEOG.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Quest Diagnostics has an earnings yield of 7.2% compared with the industry’s 3.3%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Medpace Holdings, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $1.46, which beat the Zacks Consensus Estimate by 8.9%. Revenues of $351.2 million outpaced the consensus mark by 1.3%.

Medpace Holdings has an estimated growth rate of 22.7% for full-year 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 17.3%.

Neogen reported fourth-quarter fiscal 2022 adjusted EPS of 18 cents, which surpassed the Zacks Consensus Estimate by 12.5%. Fiscal fourth-quarter revenues of $140.1 million outpaced the Zacks Consensus Estimate by 1.3%. It currently has a Zacks Rank #2.

Neogen has an estimated growth rate of 1.6% for fiscal 2023. NEOG’s earnings surpassed estimates in two of the trailing four quarters, lagged the same in one and broke even in the other, the average surprise being 1.5%.


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