EACH TIME A MAJOR IN VITRO DIAGNOSTICS (IVD) COMPANY reports its quarterly earnings, clinical lab executives and pathologists gain useful new perspectives as to how the COVID-19 pandemic is fueling demand for IVD instruments, tests, and lab consumables.
In this round-up of the most recent quarterly earnings reports, we provide details about Thermo Fisher Scientific, Agilent Technologies, bioMerieux, Bio-Rad, and Sysmex Corporation.
IVD companies with products that are used in routine clinical care experienced a decline in orders and revenue for the second quarter, ending on July 31. IVD firms with products that support SARSCoV-2 testing reported strong increases in revenue. The IVD executives typically provide useful insights about how the lab testing marketplace is changing during their earnings calls with analysts.
Thermo Fisher Scientific: Qaigen Acquisition Canceled, ‘Extraordinary Quarter’ Because of COVID Testing
Since the COVID-19 outbreak began spreading worldwide in February, it has been an interesting roller-coaster ride for ThermoFisher Scientific of Waltham, Mass. On March 3—amidst the earliest weeks of the SARS-CoV-2 outbreak— Thermo and Qaigen NV of Venlo, Netherlands, announced an agreement for Thermo to pay $11.5 billion to acquire Qaigen.
Qaigen, with sales of $1.5 billion in2019, is familiar to clinical lab administrators and pathologists because of its presence in molecular and genetic testing. It has product lines for specimen handling and preparation, diagnostic assays, and bioinformatics software.
But this merger was stopped by some Qaigen investors who thought the company was worth much more than the approximately $46 per share that was the basis of the original agreement. Leading opposition to the acquisition was Qaigen investor Davidson Kempner Capital Management.
Executives at ThermoFisher disclosed on Aug. 13 that the merger agreement between the two companies was canceled. Only 47% of Qaigen shares were tendered and this fell short of the number of shares required for the transaction to move to a closing. As part of the original merger agreement, Qaigen will pay Thermo $95 million as a break-up fee.
Earlier, on July 22, Thermo announced its second quarter revenue grew by 10% year-over-year to $6.92 billion, according to a news release. The financial performance during the height of the coronavirus pandemic came somewhat as a surprise to company leaders.
“We were prepared for the most difficult quarter we’ve seen in the 18 years I’ve been with Thermo Fisher, and we successfully navigated the environment to deliver truly extraordinary performance,” Marc Casper, Thermo Fisher Chairman, President, and CEO, told investors during a Q2 earnings call in late July.
“We met incredible demand for COVID-19 testing and were able to deliver growth of just over 70% in Q2. We’re providing customers with our proprietary diagnostic test kits, instrumentation, and viral transport media, as well as reagents used for laboratory-developed tests,” said Casper.
In its coverage of Thermo’s earnings report, Motley Fool wrote, “There was one primary factor behind Thermo Fisher’s Q2 success—COVID-19. The company said that it generated around $1.3 billion in revenue related to the COVID-19 pandemic.” Thermo’s best-performing division was life sciences, with products used in SARS-CoV-2 testing. It saw Q2-20 revenue of $2.6 billion, a year-over-year increase of 52%.
During the earnings call, Thermo executives disclosed that the company is developing a total antibodies serology test in collaboration with WuXi Diagnostics and Mayo Clinic.
Agilent Technologies: Revenues Declined by 1% Overall, Diagnostics Down 8%
Based in Santa Clara, Calif., Agilent Technologies, Inc.’s third quarter ended on July 31. In a news release, the company announced Q3-20 revenue of $1.26 billion, down 1% compared to Q3 2019. Agilent says it “serves the life sciences, diagnostics and applied chemical markets… and has three business segments: lifesciences and applied markets business, diagnostics and genomics business, and Agilent CrossLab business.”
Because many of its molecular and genetics products are used in standard care, the dramatic fall-off in patient visits to hospitals and physicians’ offices following the outbreak of SARS-CoV-2 in March and April was a major factor in the lack of revenue growth during Agilent’s third quarter.
During the earnings call with financial analysts, Agilent President and CEO, Mike McMullen, shared insights on how the COVID-19 pandemic is evolving in different regions throughout the world. “In all regions, we see improvements in lab access for our customers and increased non-COVID-19 testing volumes. There are, however, regional market differences in the pacing of improvement,” he said.
“Lab access improved through the quarter, although still not at pre-COVID-19 levels. Globally lab access was limited in academia, non-COVID-19 research, and [non-COVID] testing labs.”
bioMÉRIEUX: Pandemic Boosted Molecular Testing in Second Quarter
bioMérieux, based in Marcy-l’Étoile, France, issued a short statement about Q2-20 earnings on July 9 and will release a detailed Q2-20 earnings report on Sept. 2. The company, a major global player in infectious disease testing, reported sales of US$1.74 billion for the first six months of 2020, which is up 15.7% from 2019. “In the second quarter, bioMérieux recorded solid growth of nearly 11% compared with the same period of 2019,” said the press release.
bioMérieux said that, during the second quarter, lower patient traffic in hospitals due to the pandemic contributed to an “adverse impact” in the year-over-year performance of the microbiology and immunoassay product lines. Two high points in bioMérieux’s short statement about Q2-20 earnings were that “the BioFire FilmArray syndromic testing line made a major contribution to the Group’s solid performance, with 62% growth compared with the second quarter of 2019. Other molecular biology product lines related to COVID-19 epidemic saw a strong demand as well.”
Sysmex Corporation: Sales Down 12%, Antibody Measurement Technologies Developed
Sysmex Corporation, with its head office in Hyogo, Japan, said sales in the Americas fell 12% compared to the same time last year. “In North America, instrument sales were up in the hemostasis field. However, sales in the region were down due to lower sales of instruments, reagents, and maintenance services in the hematology field mainly due to the spread of the COVID-19 pandemic,” company executives wrote in Sysmex’s financial results report released Aug. 5.
Forbes called it a “rough” quarter for Sysmex as it experienced revenues falling 12% or $569 million, while profit plunged 33% to $42 million. Sysmex also reported this news:
• Establishing four antibody technologies for IgG and IgM antibodies and launch of lab assay service using the testing technology.
• Launch of a lab assay service for research on cytokines and SARS-CoV-2 treatment effects.
When Sysmex reported results for the full year 2019, the company posted revenue of $2.77 billion. It also noted that there are 3,800 blood-analyzing instruments in the United States.
Bio-Rad Laboratories: Robust Pandemic Sales Make Up for Other Product Slowdowns
Bio-Rad Laboratories, Inc., Hercules, Calif., reported net sales in Q2-20 of $536.9 million, a decrease of 6.2% compared to Q2 2019, a statement noted. “While sales of many of our core products across Life Science and Clinical Diagnostics were slow, sales of products associated with the coronavirus pandemic were robust and provided some counterbalance,” said Norman Schwartz, Bio-Rad President and CEO in a news release.
“We estimate that the COVID-19-related sales were about $71 million in the quarter. Sales of the Life Science Group in the second quarter of 2020 were $252.1 million compared to $212.4 million in Q2 of 2019, which is an 18.7% increase on a reported basis and a 20% increase on a currency-neutral basis,” said the press release.
Bio-Rad’s statement called attention to an interesting application of their PCR (polymerase chain reaction) products, stating “the majority of the year-over-year growth in the second quarter was driven by our core PCR products—Droplet Digital PCR and Process Media.”
Ilan Daskal, Bio-Rad’s CFO, said in the statement, “During the current pandemic, these products are being deployed to monitor SARS-CoV-2 prevalence in wastewater streams,” adding, “sales of the Clinical Diagnostics products in the second quarter were $283.2 million compared to $357.1 million in Q2 of 2019, which is a 20.7% decline on a reported basis and an 18.7% decline on a currency-neutral basis.”
“During the second quarter, Clinical Diagnostics segment experienced weakness across all of its product lines due to the reduced demand from lower noncritical hospital and clinic visits,” continued Daskal. “On a geographic basis, the Diagnostics Group posted declines across all regions. We continue to execute on our new product development strategies as well.”
Understanding IVD Marketplace
The Dark Report is now providing business intelligence about in vitro diagnostics (IVD) companies and lab informatics firms to help lab administrators understand which companies are doing well and which may be struggling. This is to help inform buying decisions when labs and pathology groups purchase instruments, tests, informatics systems, and services.