Q4 Diagnostics Revenues Remain Strong Despite Fall in COVID-19 Testing
The COVID-19 bubble hasn’t yet burst; but it’s definitely begun to leak. Because of Omicron, declines in COVID-19 revenues weren’t as dramatic as expected in Q4 2021. But it’s only a matter of time before COVID-19 demand falls off the cliff, warn Quest and LabCorp. The Q4 earnings reports offer only a taste of the losses to come. And, yet, the outlook remains positive. Here’s a high-level overview of revenue trends, both COVID-19 and non-COVID-19 related. Revenue Growth Slows Dramatically What a difference a year makes. In Q4 2020, COVID-19 demand was cresting and lab companies with COVID-19 products were posting record—and ultimately unsustainable—revenue growth. Compared to this baseline, 15 of the 31 companies that had reported their earnings when we went to press posted negative or flat (i.e., 2% or less) top line revenue growth in Q4 2021. Q4 Year Over Year Revenue Growth Other companies reporting negative or flat growth: Exact Sciences (+2%), Fulgent Genetics (-14%), Meridian Biosciences (-5%), NeoGenomics (-1%), OraSure Technologies (+1%), and Ortho Clinical Diagnostics (+1%). The Positive News It could have been much uglier on both the top and bottom lines. Every company, including those with negative or flat Q4 growth, reported positive growth […]
The COVID-19 bubble hasn’t yet burst; but it’s definitely begun to leak. Because of Omicron, declines in COVID-19 revenues weren’t as dramatic as expected in Q4 2021. But it’s only a matter of time before COVID-19 demand falls off the cliff, warn Quest and LabCorp. The Q4 earnings reports offer only a taste of the losses to come. And, yet, the outlook remains positive. Here’s a high-level overview of revenue trends, both COVID-19 and non-COVID-19 related.
Other companies reporting negative or flat growth: Exact Sciences (+2%), Fulgent Genetics (-14%), Meridian Biosciences (-5%), NeoGenomics (-1%), OraSure Technologies (+1%), and Ortho Clinical Diagnostics (+1%).
Despite declining growth rates, all but four companies wound up meeting or exceeding their Wall Street Q4 top line revenues targets. The companies that came up short: Myriad Genetics, Ortho Clinical Diagnostics, Pacific Biosciences, and 10x Genomics. Only two companies missed their net earnings targets: Exact Sciences and 10x Genomics.
In addition, even as the industry braces for the precipitous decline in COVID-19 revenues, no fewer than six major companies raised their full year guidance for 2022: Agilent Technologies, Becton Dickinson, Hologic, Siemens Healthineers, Thermo Fisher Scientific, and Hologic.
Revenue Growth Slows Dramatically
What a difference a year makes. In Q4 2020, COVID-19 demand was cresting and lab companies with COVID-19 products were posting record—and ultimately unsustainable—revenue growth. Compared to this baseline, 15 of the 31 companies that had reported their earnings when we went to press posted negative or flat (i.e., 2% or less) top line revenue growth in Q4 2021.Q4 Year Over Year Revenue Growth
| Company | 2021 Q4 Revenue Growth | 2020 Q4 Revenue Growth |
|---|---|---|
| Abbott | 3% | 29% |
| Becton Dickinson | -6% | 26% |
| BioRad | -7% | 27% |
| Danaher | 21% | 39% |
| Hologic | -9% | 89% |
| LabCorp | -10% | 52% |
| Perkin Elmer | <1% | 68% |
| Quest | -9% | 56% |
| Quidel | -21% | 500% |
| Thermo Fisher Scientific | 1% | 54% |
The Positive News
It could have been much uglier on both the top and bottom lines. Every company, including those with negative or flat Q4 growth, reported positive growth for the full year, often at very robust levels (excluding companies that are into Q1 of their 2022 fiscal year).2021 Q4 vs Full Year Top Line Revenue Growth
| Company | 2021 Q4 Revenue Growth | 2021 Full Year Growth |
|---|---|---|
| Abbott | 3% | 25% |
| BioRad | -7% | 15% |
| Exact Sciences | 2% | 19% |
| Fulgent Genetics | -14% | 19% |
| LabCorp | -10% | 15% |
| Myriad Genetics | 4% | 24% |
| OraSure Technologies | 1% | 36% |
| Ortho Clinical Diagnostics | 1% | 15% |
| Perkin Elmer | <1% | 34% |
| Quest | -9% | 14% |
| Quidel | -21% | 2% |
| Thermo Fisher Scientific | 1% | 22% |
Labs Will Overcome Loss of COVID-19 Revenues
While it’s awkward to say, the truth is that the rise of the coronavirus has been an economic windfall for many lab companies, driving billions in new revenues. Those bounteous times are about to end. But the inevitable falloff in COVID-19 revenues will be far less disruptive to the industry than the pandemic was. For one thing, unlike the outbreak of coronavirus which caught the industry (along with everybody else in the world) by surprise, lab companies have had time to prepare for the falloff in COVID-19 demand. More significantly, as the pandemic recedes, people and institutions are getting back to the testing they had to defer. The return to normalcy is reflected in the Q4 numbers, with almost all companies reporting significant recovery in their core non-COVID-19 businesses, in many cases not only meeting but also exceeding pre-pandemic levels.| Company | FY 2021 Q4 Total Revenue (vs Wall Street) | FY 2021 Q4 YOY Revenues | FY 2021 Q4 EPS (vs Wall Street) | DX Segment Performance |
|---|---|---|---|---|
| Abbott Laboratories | $11.47 billion ($10.71 billion) | +7% (+25% full year) | Adjusted +$1.32 (+$1.21) | DX up 3% to $4.47 billion driven by rapid COVID tests. Core DX up 2% to $1.35 billion as base business continues to recover; Molecular down again, this time 29% to $345 million; Rapid diagnostics up 10% to $2.64 billion; Point of care up 5% to $135 million; Global COVID testing revenues of $2.3 billion, $2.21 billion of which from rapid tests |
| Adaptive Biotech | $37.9 million ($36.7 million) | +26% (+57% full year) | Net -$.43 (-$.45) | Sequencing revenues up 81% to $23.1 million, with test volume for ClonoSeq up 41% to 6,356 tests; Development revenues down 15% to $14.9 million due to lower amortization of Genentech upfront payment |
| *Agilent Technologies (FY 2022 Q1) | $1.67 billion ($1.46 billion) | +8% | Adjusted +$1.21 (+$1.03) | DX and genomics up 15% to $339 million; Life sciences and applied market groups up 6% to $976 million; Agilent Cross Lab up 8% to $359 million; Pathology up 10% |
| *Becton Dickinson (FY 2022 Q1) | $5.0 billion ($4.76 billion) | -6% | Adjusted +$3.64 (+$2.85) | COVID revenues decline from $866 million to $185 million but base revenues up 8% to $4.81 billion; Life sciences down 25% to $1.48 billion due to fall in COVID testing but base revenues of segment up 17% |
| Bio-Rad Laboratories | $732.8 million ($732.0 million) | -7% (+15%) | Non-GAAP +$3.21 (+$2.85) | Life sciences down 24% due to reduced COVID qPCR revenues; $46 million in total COVID sales; Clinical DX up 13% driven by recovery in routine testing |
| Bio-Techne (2022 Q1) | $269.3 million ($266.6 million) | +20% (+17% organic) | Adjusted +$1.88 (+$1.79) | DX & Genomics up 23% to $64.5 million; Protein Sciences up 19% to $205.0 million; Double digit growth in EcoDxProstate (EPI) test, which is now back to pre-pandemic levels; First quarter in company history to achieve over $1 billion in trailing 12 months revenues |
| Bruker | $683.5 million ($663.5 million) | +9% (+22% full year) | Adjusted +$0.59 (+$0.58) | CALID group, which houses life science mass spectrometry, up 14% to $239.7 million driven by strong demand for high-performance instruments and sales of timsTOF mass spec and MALDI-TOF platforms; $6 million in COVID revenues; Nano group up 18% to $163.4 million; BEST group up 6% to $57.8 million; BioSpin down 3% to $196.6 million |
| Danaher | $8.15 billion ($7.92 billion) | +21% (+32% full year) | Adjusted +$2.69 (+$2.54) | Life Sciences continues to drive growth, increasing 21% to $4.05 billion; Diagnostics up 29% to $2.88 billion, driven by Cepheid COVID test products--19 million respiratory tests shipped in Q4, and 60 million for full year |
| Exact Sciences | $473.8 million ($449 million) | +2% (+19% full year) | Net -$1.28 (-$1.09) | Screening revenues, including Cologuard, up 11% to $277.7 million; Precision oncology, including Oncotype products continue strong rebound, up 27% to $149 million; COVID testing drops 52% to $47.1 million |
| Fulgent Genetics | $251.7 million ($191.1 million) | -14% (+ >100% full year) | Adjusted +3.48 (+$2.61) | 2.5 million billable tests delivered vs 3.2 million in Q4 2021; $212 million from COVID PCR testing; $41.1 million from core business |
| Guardant Health | $108.1 million ($82.6 million) | +38% (+30% full year) | Net -$1.06 (-$0.96) | Precision oncology up 37% to $88.7 million driven by 40% increase in clinical testing—25,600 clinical tests and 6,600 biopharma tests; Development services up 43% to $19.4 million |
| *Hologic (FY 2022 Q1) | $1.47 billion ($1.18 billion) | -9% | Adjusted +$2.17 (+$1.28) | $523 million in COVID revenues and 26 million tests shipped vs $745 million and 30 million tests in Q1 2021; Excluding COVID, organic revenues up 9%; Total DX down 16% to $950.4 million, but organic DX, excluding COVID, up 10% to $320.8 million; Molecular DX down 18% to $813.3 million; Cytology and perinatal up 5% to $130.7 million; Blood screening down 21% to $6.4 million |
| Illumina | $1.20 billion ($1.13 billion) | +26% (+40% full year) | Net +$0.75 +$0.49 | Core Illumina up 25% to $1.19 billion driven by record shipments of instruments; Sequencing consumables up 32% to $792 million driven by record NovoSeq (consumables), which also fueled 35% increase in instruments to $191 million; COVID surveillance contributes $42 million to consumables and $8 million in incremental instruments; newly acquired Grail contributes $10 million |
| LabCorp | $4.06 billion ($3.90 billion) | -10% (+15% full year) | Adjusted +$6.77 (+$5.79) | DX down 17% to $2.62 billion with 15% drop in COVID testing partially offset by 5% gain in base testing; test volume down 9%; Covance drug development up 4% to $1.45 billion |
| *Meridian Bioscience (FY 2022 Q1) | $88.3 million | -5% (from record Q1, FY 2021) | Adjusted +$0.35 | DX up 10% to $33.2 million, including 4% increase in molecular DX to $4.8 million, and 11% increase in immunoassays and blood chemistry assays to $28.5 million; Gastrointestinal assays account for most of DX revenues with $21.6 million; Life Sciences down 12% to $55.1 million; Immunological reagents up 42% to $23.6 million |
| Myriad Genetics | $160.8 million ($163.4 million) | +4% (+24% full year) | Adjusted -$0.02 (-$0.02) | All revenues from Molecular DX, no revenues from Pharma and Clinical Services; Within Molecular DX, hereditary cancer tests MyRisk, BRACAnalysis, and BRACAnalysis CDx down 5% at $74.8 million; GeneSight pharmacogenic tests up 63% to $29.4 million; ForeSight and Prequel prenatal tests up 43% to $30.1 million |
| NeoGenomics | $125.7 million ($125.8 million) | Flat (+9% full year) | Adjusted -$0.14 (-$0.14) | Excluding COVID PCR testing, revenues increased 7%; Clinical services down 3% to $104.1 million, with average revenue per test up 4% to $383; Pharma services up 13% to $21.7 million |
| OraSure Technologies | $63.6 million ($62.0 million) | +1% (+36% full year) | Net -$0.14 (+$0.16) | DX up 58% to $32.7 million driven by $14.9 million in InteliSwab revenues; Molecular down 27% to $30.9 million due to 65% decrease in COVID collection kits ($8 million)—excluding such revenues, Molecular grew 19% |
| Ortho Clinical Diagnostics | $521.0 million ($521.2 million) | +1% (+15% full year) | Adjusted +$0.18 (+$0.15) | Revenues up 5%, excluding COVID; Core revenues up 4% to $518.9 million, driven by recurring revenues from clinical lab and transfusions; Clinical lab up 5%, driven by clinical chemistry and immunoassays |
| Pacific Biosciences | $36.0 million ($36.1 million) | +33% (+65% full year) | Net -$0.30 (-$0.28) | Fourth straight quarter of solid growth; Product revenues up 19% to $31.2 million, including $16.2 million in Instruments and $15.0 million in Consumables (up 82%); 48 Sequel II and IIe systems placed, accounting for 82% of consumables revenues |
| Perkin Elmer | $1.36 billion ($1.27 billion) | +1% (+34% full year) | Adjusted +$2.56 (+$2.19) | DX revenues down 17% to $709 million due to decline in COVID tests, which drove down Applied Genomics and Immunodiagnostics; Excluding COVID, DX up 14%; Discovery and Analytical Solutions up 30% to $655 million |
| Qiagen | $582.4 million ($461.3 million) | +2% (+20% full year) | Adjusted +$0.74 (+$0.53) | Non-COVID up 8% to $400 million; COVID down 9% to $183 million, accounting for 31% of total sales; Consumables up 5% to $517 million; Instruments down 16% to $65 million; Molecular DX up 9% to $313; Life sciences down 5% to $269 million; PCR/nucleic acid amplification up 3% to $98 million |
| Quest Diagnostics | $2.74 billion ($2.67 billion) | -9% (+14% full year) | Adjusted +$3.33 (+$3.18) | Sharp decline in year-over-year COVID testing as compared to Q3 2020; Testing volumes up 1% but revenues per test down 10%, mostly due to decline in molecular test revenues, reduction of test pooling, and additional costs to meet increase in demands for rapid COVID tests from “nontraditional channels” |
| Quidel | $636.9 million ($567.2 million) | -21% (+2% full year) | Adjusted +$7.29 (+$5.61) | COVID revenues down from $511.1 million to $405.3 million; Rapid immunoassays down 17% to $521 million due to shift from higher-priced Sofia products to lower-priced QuickVue; Cardiac immunoassays down 25% to 52.8 million; Specialized DX up 6% to $12.2 million; Molecular DX down 47% to $50.9 million due to lower volume and prices for COVID qPCR tests |
| Roche Diagnostics | CHF 17.76 billion (full-year diagnostics revenues) | +29% (+8% full year) | Core EPS +CHF 19.81 | For full 2021 year, Core Lab up 21% to CHF 7.47 billion driven by immunodiagnostics, especially infectious diseases and cardiology tests; Molecular Lab up 28% to CHF 4.81 billion driven by high-throughput COVID PCR testing; Point of Care more than doubles to CHF 2.58 billion due to rollout of new rapid antigen COVID test |
| *Siemens Healthineers (FY 2022 Q1) | €5.07 billion | +31% | Adjusted +€0.55 | DX up 23% to €1.45 billion, driven by €329 million in rapid SARS-CoV-2 antigen tests; Excluding COVID tests revenue, DX up 3%; Continued recovery in core non-COVID businesses |
| *Thermo Fisher Scientific | $10.70 billion ($9.29 billion) | +1% (+22% full year) | Adjusted +$6.54 (+$5.27) | Life sciences down 5% (8% organically) to $4.15 billion due to declines in genetic sciences; Specialty DX down 27% to $1.45 billion due to decline in COVID testing, which wipes out gains in transplant DX and immunodiagnostics; Analytical instruments up 5% to $1.73 billion; Laboratory products and biopharma services revenues up 16% to $4.20 billion |
| 10x Genomics | $143.5 million ($148.5 million) | +28% (+64% full year) | Net -$0.16 (-$0.09) | Return of COVID headwinds, which impact sales to academic labs; Consumables up 27% to $122.4 million; Instruments up 38% to $19.4 million, driven by launch of Chromium X; Services up 6% to $1.8 million |
| 23andMe (FY 2021 Q3) | $56.9 million | +3% | Net -$0.21 | Revenue gains driven by higher subscription sales and addition of 2 months of revenues from Nov. acquisition of Lemonaid Health |
| *Twist Bioscience (FY 2022 Q1) | $42.0 million ($38.3 million) | +49% | Net -$0.91 (-$1.06) | Next-generation sequencing revenues, including SNP microarray conversions and liquid biopsy panels up from $15.6 million to $19.2 million, topping synthetic biology revenues ($18 million) for fifth quarter in a row; Biopharma revenues up $3.8 million to $4.8 million |
| Waters | $836.4 million ($821.0 million) | +6% (+18% full year) | Adjusted +$3.67 (+$3.47) | Pharma up 8%; Government and academic up 5%; Sales to industrial markets up 7%; Instrument platforms up 12%; Recurring revenues up 3% |
Bold face: Companies that met or exceeded average or consensus Q4 Wall Street revenue estimates
* Companies that raised their revenue or EPS guidance during Q4
** Companies that lowered their revenue or EPS guidance during Q4
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