FY 2022 Q1 Could Be the Last Hurrah for the COVID Earnings Surge
Most diagnostics companies experienced modest, flat, or negative top-line revenue growth rates in the first quarter of 2022.
The earnings correction that most expected to start at the end of 2021 has finally begun in the first quarter of 2022, with most diagnostics companies experiencing modest, flat, or negative top-line revenue growth rates. The basic narrative: COVID-19 revenues are falling faster than core testing revenues are recovering. Here’s a briefing on the 2022 Q1 big picture.
Revenues Creep Back to Post-COVID Reality
Pandemic and unprecedented demand for COVID-19 tests, platforms, supplies, and services drove spectacular growth in Q1 2021, establishing revenue baselines that would be almost impossible to match in 2022. Sure enough, 11 of the 40 companies that had reported their earnings when we went to press posted negative or flat (i.e., 1% or less) top-line revenue growth in Q1 2022. Decliners included testing giants Quest Diagnostics (-4%), LabCorp (-6%), PerkinElmer (-4%), and Hologic (-7%).
On the positive side, the glass was nearly ¾ full, with 29 of 40 companies reporting top-line growth. But at least on a sequential basis, the trajectory is down, with a number of companies experiencing significantly lower rates of growth, as compared to the previous quarter.
2022 Q1 Sequential Revenue Growth
| Company | 2022 Q4 Revenue Growth | 2021 Q4 Revenue Growth |
|---|---|---|
| Abbott | 3% | 29% |
| Becton Dickinson | -6% | 26% |
| Bio-Rad | -7% | 27% |
| Danaher | 21% | 39% |
| Hologic | -9% | 89% |
| LabCorp | -10% | 52% |
| PerkinElmer | <1% | 68% |
| Quest | -9% | 56% |
| Quidel | -21% | 500% |
| Thermo Fisher Scientific | 1% | 54% |
The other silver lining is that the slowdown was far less than Wall Street was expecting. Discounting European firms Siemens Healthineers, DiaSorin, and Roche, only six companies missed their top-line earnings targets during Q1. However, two of those missers were Quest and LabCorp. By contrast, the other billion-dollar companies met or exceeded and, in some cases, crushed their Wall Street targets:
2022 Q1 Actual vs Wall Street Expected Revenues (in Billions)
| Company | Actual Revenues | 2021 Q4 Revenue Growth |
|---|---|---|
| Abbott | $11.90 | $10.99 |
| Becton Dickinson | $5.01 | $4.85 |
| Danaher | $7.69 | $7.54 |
| Hologic | $1.44 | $1.29 |
| Illumina | $1.22 | $1.22 |
| LabCorp | $3.90 | $4.00 |
| PerkinElmer | $1.26 | $1.18 |
| Quest | $2.61 | $2.63 |
| Thermo Fisher Scientific | $11.82 | $10.63 |
Other companies that missed their Wall Street earnings targets include Invitae, NanoString Technologies, Opko Health, and Ortho Clinical Diagnostics.
The Outlook
Even though COVID-19 products and testing fell off significantly in Q1, they continued to generate positive revenues, lifting Hologic, Qiagen, Abbott, Thermo Fisher Scientific, Roch,e and others to better than expected earnings. But the surge is pronouncedly weaker and won’t likely last much longer. Demand for COVID-19 testing will decline for the rest of the year, companies are warning.
Even so, growth is expected to continue as core businesses recover. Thus, no fewer than 16 of the 40 reported companies raised their full year guidance for 2022, including Quest, Agilent Technologies, Becton Dickinson, Hologic, Siemens Healthineers, and Thermo Fisher Scientific.
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Diagnostics Earning Reports for 2022 Q1 (period ended March 31, 2022) (Companies with at least $20 million in sales)
| Company | FY 2022 Q1 | DX Segment Performance | ||
|---|---|---|---|---|
| Total Revenue (vs Wall Street) | YOY Revenues | EPS (vs Wall Street) | ||
| Abbott Laboratories | $11.90 billion ($10.99 billion) | +14% | Adjusted +$1.73 (+$1.47) | DX up 32% to $5.29 billion driven by rapid COVID-19 tests. Core DX flat at $1.18 billion; Molecular down 6% to $420 million; Rapid diagnostics up 58% to $3.55 billion; Point of care down 1% to $128 million; Excluding COVID testing, total DX sales up 12% driven by Alinity platform rollout |
| Adaptive Biotech | $38.6 million ($37.7 million) | +0.5% | Net -$.44 (-$.45) | Immune medicine revenues up 4% to $20.8 million; offset by 3% decline in minimal residual disease revenues at $17.8 million, mostly due to lower milestone payments |
| *Becton Dickinson (FY 2022 Q2) | $5.01 billion ($4.85 billion) | +2% | Adjusted +$3.18 (+$2.99) | As in Q1, COVID-19 revenues declined sharply, from $474 million to $214 million, but base revenues, excluding COVID-19, were up 8% to $4.80 billion; Life sciences down 6% to $1.49 billion due to fall in COVID testing; Medical segment up 5% to $2.42 billion; Interventional segment up 10% to $1.11 billion, driven by urology and critical care |
| Bio-Rad Laboratories | $700.1 million ($675.1 million) | -4% (-1% currency neutral) | Non-GAAP +$4.94 (+$3.40) | Life sciences down 5% to $347.2 million due to reduced COVID-19 revenues but offset by growth in Droplet Digital PCR and process media; $45 million in total COVID-19 sales; Clinical DX down 2% to $351.8 million (+1% currency neutral) due to recovery in immunohematology |
| Bio-Techne (2022 Q3) | $290.4 million ($279.3 million) | +19% | Adjusted +$2.14 (+$2.00) | DX & genomics up 34% to $77.7 million; Protein sciences up 15% to $213.2 million; Double-digit growth in EcoDxProstate (EPI) test; Reagents up, driven by recovery in hematology, coagulation, and clinical chemistry testing |
| *Bruker | $595.0 million ($572.6 million) | +7% | Adjusted +$0.49 (+$0.42) | Broad growth in demand across all sectors; CALID group, which houses life science mass spectrometry, up 6% to $203.2 million; Nano group up 16% to $178.5 million; BEST group up 14% to $59.7 million; BioSpin down 1% to $157.8 million |
| CareDx | $79.4 million ($78.9 million) | +18% | Adjusted -$0.13 (-$0.05) | Testing services up 12% to $66.4 million; Product revenues up 17% to $6.8 million; 42,600 test results for AlloMap Heart and AlloSure Kidney in March, record month; MedAction Plan and Transplant Pharmacy acquisitions drive more than doubling of digital and other revenues to $6.2 million |
| *Castle Biosciences | $26.9 million ($25.2 million) | +18% | Net -$0.97 (-$0.72) | Decision Dx-Melanoma test reports delivered up 48% to 6,023; Decision Dx-UM test reports up 35% to 456; Decision Dx-SCC tests more than double to 1,142 |
| Cue Health | $179.4 million ($175.2 million) | +178% | Net -$0.02 (-$0.05) | Product revenues up 175% to $179.4 million with 72,000 Cue Readers shipped; $2.0 million in grant and other revenues as compared to none in Q1 2021 |
| Danaher | $7.69 billion ($7.54 billion) | +12% | Non-GAAP +$2.76 (+$2.66) | Life sciences continues to drive growth, increasing 9% to $3.55 billion; Newly acquired Aldevron revenues up 40%; Diagnostics up 21% to $2.64 billion, driven by over 50% growth in Cepheid, including mid-single digit growth for non-COVID-19 products; Respiratory testing contributes $900 million but tailed off toward end of Q1 due to Omicron; Non-respiratory testing grows by double digits driven by hospital-acquired infection, virology, and infectious diseases assays |
| DiaSorin | €358 million | +34% | Net profit of €82.3 million | COVID serology and molecular tests down 5% (including 50% dip in molecular test revenues) to €96.7 million; excluding COVID-19, immunodiagnostics up 10% to €159.9 million |
| *Exact Sciences | $486.6 million ($461.7 million) | +21% | Net -$1.04 (-$1.07) | COVID-19 revenues down 15% to $27.4 million; Precision oncology, including Oncotype DX—record 40,000+ tests performed during Q1—and Oncomap therapy selection products up 18% to $152.6 million; Screening up 28% to $306.5 million, with most of the revenue coming from Cologuard |
| *Fulgent Genetics | $320.3 million ($270.9 million) | -11% | Adjusted +$5.08 (+$3.86) | Declines due to drop in demand for COVID-19 testing; Core revenues excluding COVID-19 up 59% to $25.1 million; 3.2 million billable tests delivered, YOY 16% decline |
| *Gingko Bioworks | $168.4 million ($105.7 million) | +282% | Net -$0.06 (-$0.03) | Growth fueled by biosecurity, which includes COVID-19 testing, from Concentric subsidiary ($133.0 million vs $15.8 million in Q1 2021); Cell engineering revenues dip from $22.5 million to $21.5 million |
| Guardant Health | $96.1 million ($95.7 million) | +22% | Net -$1.09 (-$1.09) | Precision oncology up 32% to $84.1 million driven by 47% increase in clinical testing (27,100 tests) and 45% increase in biopharma testing (5,100 tests); Development services and other revenues up 20% to $12.0 million |
| *Hologic (FY 2022 Q2) | $1.44 billion ($1.29 billion) | -7% | Non-GAAP +$2.07 (+$1.60) | COVID-19 revenues down 14%, taking into account $584.1 million in assays and $73.5 million from discontinued products; Total DX down 7% to $987.1 million; Molecular DX down 8% to $862.5 million; Cytology and perinatal down 2% to $115.4 million; Blood screening down 23% to $9.2 million; Breast health down 8% to $310.4 million |
| Illumina | $1.22 billion ($1.22 billion) | +12% | Net +$1.07 +$0.90 | Most revenues come from Core Illumina—although Grail contributes $10 million in Galleri tests; Products up 12% to $1.07 billion; Sequencing consumables up 13% to $784 million, driven by NovaSeq sales; TruSight Oncology tests up 120% and COVID-19 genomic surveillance contributes $7 million in instruments and $53 million in consumables; Sequencing services generated $111 million, fueled by growth in instrument service contracts |
| Invitae | $123.7 million ($128.1 million) | +19% | Adjusted -$0.78 (-$0.76) | COVID-19 headwinds thwarted growth; Testing increased 20% to $119.5 million; Other revenues fell 2% to $4.2 million; Invitae puts the brake on genomic test development to focus on oncology, reproductive health, rare diseases, and pediatrics |
| *LabCorp | $3.90 billion ($4.00 billion) | -6% | Adjusted +$6.11 (+$5.98) | DX down 12% to $2.45 billion with 15% drop in COVID-19 testing partially offset by 3% gain in core base testing volume; total test volume, as measured by requisitions, down 5%, with COVID-19 volume down 9% and base volume up 3%; Covance drug development up 1% to $1.46 billion |
| Lumira | $126.4 million ($113.1 million) | +18% | Net -$0.13 (-$0.06) | Growth driven by COVID-19 sales, including $77.5 million from antigen test strips and $38.3 million from Fast Lab Solutions |
| Myriad Genetics | $164.9 million ($156.6 million) | +5% | Adjusted -$0.03 (-$0.07) | All revenues from molecular DX, which grew 3% to $156.6 million; Within molecular DX, hereditary cancer tests MyRisk, BRACAnalysis, and BRACAnalysis CDx down 7% at $70.9 million; GeneSight pharmacogenetic tests up 66% to $29.3 million; ForeSight and Prequel prenatal tests up 35% to $31.9 million; MyChoice CDX, Prolaris, and EndoPredict up 5% to $32.5 million; Vectra DA, which is being sold to LabCorp, down 97% to $300,000 |
| **NanoString Technologies | $31.1 million ($33.6 million) | -2% | Net -$0.86 (-$0.56) | Product and service revenue down $600K to $30.8 million; Instruments revenues of $9.1 million; Consumables up 9% to $17.5 million |
| *Natera | $194.1 million ($176.6 million) | +28% | Net -$1.45 (-$1.48) | Product revenue up 58% to $190.0 million driven by higher test volumes, with 489,300 tests processed vs 248,200 in Q1 2021; Licensing and other revenues fall off cliff, from $31.9 million to $4.1 million |
| NeoGenomics | $117.2 million ($116.7 million) | +1% | Adjusted -$0.20 (-$0.23) | Clinical services up 2% to $98.8 million—up 4% excluding COVID-19 PCR testing; Clinical test volume up 2% to 266,035 tests; 2% increase in average revenue per test to $371 but costs per test up 11% to $229 |
| Opko Health | $329.2 million ($332.6 million) | -40% | Net -$0.08 (+$0.06) | DX revenues down 43% to $286.6 million due to declines in COVID-19 testing, with BioReference processing 2 million tests, as compared to 4.1 million in Q1 2021; partially offset by modest gains in clinical and genomic testing volumes |
| OraSure Technologies | $67.7 million ($60.2 million) | +16% | Net -$0.05 (+$0.09) | 21% growth in non-COVID-19 revenues offset significant declines in COVID-19; DX molecular down 68% to $8.9 million due to falloff in COVID-19 test volumes, but genomics up 40% to $15.1 million, including 50% growth in genomic sample collection business; Domestic HIV down 29% to $3.8 million, but global HIV up 26% to $4.4 million; Total HCV testing up 38% to $3.3 million |
| Ortho Clinical Diagnostics | $500.1 million ($508.2 million) | -1% | Adjusted +$0.23 (+$0.20) | Revenues up 4%, excluding COVID-19; Core revenues, excluding contract manufacturing and collaborations, down 1% to $495.0 million; $12 million in COVID-19 tests, vs $29 million in Q1 2021; Clinical labs down 4% to $321.3 million, despite strong immunoassays sales; Instrument revenues down 16%, due to supply chain issues |
| Pacific Biosciences | $33.2 million ($32.8 million) | +14% | Net -$0.37 (-$0.31) | Fifth straight quarter of solid growth; Instruments up $700K to $15.6 million; Consumables up from $10.4 to $12.7 million; 50 Sequel II and IIe systems placed, accounting for 82% of consumables revenues |
| *PerkinElmer | $1.26 billion ($1.18 billion) | -4% | Adjusted +$2.41 (+$2.08) | DX revenues down 23% to $657 million, due to decline in COVID-19 tests, which was partially offset by 20% organic growth in applied genomics; Immunodiagnostics grows in mid-single digits despite COVID-19 headwinds; Excluding COVID-19, DX up 10%; discovery and analytical solutions up 32% to $602 million |
| *Qiagen | $628 million ($516.4 million) | +11% | Adjusted +$0.80 (+$0.65) | Non-COVID-19 up 10% to $400 million; COVID-19 also up 13% to $229 million; Consumables up 13% to $561 million; Instruments down 2% to $67 million; Molecular DX up 28% to $357 million; Life sciences down 6% to $272 million; Sample technologies up 17% to $265 million; DX solutions up 16% to $174 million; Genomics/NGS group up 11% to $56 million |
| *Quest Diagnostics | $2.61 billion ($2.63 billion) | -4% | Adjusted +$3.22 (+$2.97) | Diagnostic info services down 4% to $2.54 billion; COVID-19 testing down 28% to $599 million; Testing volumes up 1%, but revenues per test down 5%; HRSA decision to stop reimbursing COVID-19 tests from the uninsured in March left Quest with over $20 million in unbillable test work |
| Quidel | $1.0 billion ($891.0 million) | +167% | Adjusted +$11.66 (+$9.89) | COVID-19 revenues more than triple to $836.1 million, driven by rapid antigen tests, including QuickVue At-Home OTC, Sofia Influenza + SARS, and Sofia Influenza; Overall, rapid immunoassays increase $655.1 million to $892.8 million; Molecular DX down 23% to $60.3 million; Specialized DX up 22% to $13.3 million |
| Roche Diagnostics | CHF 16.45 billion ($17.16 billion) | +22% | DX increases 22% from CHF 4.33 billion to CHF 5.29 billion, with CHF 1.9 billion in COVID-19 sales; Core lab up 6% to CHF 1.90 billion, driven by 11% growth in immunodiagnostics, especially cardiology tests; Molecular lab up 19% to CHF 1.19 billion, driven by 31% growth in virology; Point of care up 82% to CHF 1.47 billion, driven by new rapid antigen COVID-19 tests | |
| Sema4 | $53.9 million ($52.9 million) | -16% | Net -$0.31 (-$0.31) | Decline due to discontinuation of COVID-19 business; DX revenue down 16% to $52.9 million; Other revenues slightly up to $1.4 million |
| *Siemens Healthineers (FY 2022 Q2) | €5.46 billion ($5.74 billion) | +38% | Adjusted +€0.67 | DX up 43% to €1.77 billion, driven by €680 million in rapid SARS-CoV-2 antigen tests, almost twice as much as Q1; Excluding COVID-19 test revenue, core DX flat; Continued recovery in core non-COVID businesses |
| 10x Genomics | $114.5 million ($113.3 million) | +8% | Net -$0.38 (-$0.31) | Consumables up 5% to $98 million thanks to strong sales in North America; Instruments up 30% to $14.4 million; Service revenues up 31% to $2.1 million |
| *Thermo Fisher Scientific | $11.82 billion ($10.63 billion) | +19% | Adjusted +$7.25 (+$6.18) | Gains come despite sharp decline in COVID-19 sales; Life sciences up 1% (-1% organically) to $4.23 billion, overcoming declines in genetic sciences; Specialty DX down 9% to $1.48 billion, due to decline in COVID testing, which wipes out gains in transplant DX and clinical DX; Analytical instruments up 5% to $1.73 billion; Laboratory products and biopharma services revenues up 51% to $5.44 billion, driven by research and safety and lab products businesses |
| *Twist Bioscience (FY 2022 Q2) | $48.1 million ($45.3 million) | +54% | Net -$1.13 (-$1.28) | Next-generation sequencing revenues, including SNP microarray conversions and liquid biopsy panels, up 36% to $23.1 million; Synthetic biology up 42% to $18.4 million; Biopharma revenues up over 500% to $6.6 million |
| *Veracyte | $67.8 million ($62.3 million) | +85% | Net -$0.20 (-$0.24) | Decipher urology portfolio drives 69% increase in testing revenues to $56 million, with overall testing volume up 61% to 23,245 tests; Product, including Prosigna breast cancer assays and nCounter Flex instruments down 3% to $3.0 million; HalioDx acquisition causes spike in Biopharma and other revenues to $8.8 million, vs $566K in Q2 2021 |
| Waters | $690.6 million ($632.8 million) | +13% | Adjusted +$2.62 (+$2.32) | Pharma up 15%; Sales to industrial markets up 14%; Instrument sales up 26% driven by mass spectrometry, liquid chromatography, and thermal analysis products |
Bold face: Companies that met or exceeded average or consensus Q1 Wall Street revenue estimates
* Companies that raised their revenue or EPS guidance during Q1
** Companies that lowered their revenue or EPS guidance during Q1
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