FY 2022 Q2 Earnings Trend Down, but Much Less than Predicted
While not nearly as robust as a year ago, diagnostic companies’ revenues held up surprisingly well in Q2 2022.
- Supply shortages
- Inflation
- Rising labor costs
- Shrinking demand for COVID-19 testing
- Lockdowns in China
With challenges such as these, the second quarter of 2022 was bound to be a rough one for diagnostics companies’ earnings. And, so it was—but only a little. While not nearly as robust as a year ago, revenues held up surprisingly well in Q2 2022. Here’s an overview of the quarter and its key trends.
Revenue Declines Not as Big as Expected
To put the earnings picture into perspective, it’s essential to keep in mind that reported revenues reflect a year-over-year (YOY) comparison to Q2 2021 when COVID-19 products fueled spectacular and, ultimately, unsustainable growth. Against this baseline, it’s hardly surprising that 14 of 34 companies reported flat or negative growth for the period, including testing mega-firms:
- Quest: down 4%
- Labcorp: down 3.7%
- Hologic: down 14%
- Siemens Healthineers: down 6%
- Becton Dickinson (BD): up less than 1%
- PerkinElmer: up less than 1%.
But the declines were less than feared. Thus, of the decliners and flat liners, all but six met their Wall Street targets on the top line, including BD, Cue Health, Fulgent Genetics, Hologic, PerkinElmer, Qiagen, and Quest.
While relatively high as compared to previous quarters, only slightly over 25 percent of reporting companies came in short of their Wall Street revenue estimates. Most of the misses were reported by smaller companies, with only two—Illumina and Labcorp—having revenues in the billions.
2022 Q2 Companies that Missed Their Wall Street Revenue Targets
| Company | Actual Revenues | Target Revenues |
|---|---|---|
| BioRad | $691.1 million | $704.6 million |
| CareDx | $80.6 million | $81.9 million |
| Illumina | $1.16 billion | $1.22 billion |
| Invitae | $136.6 million | $136.85 million |
| Labcorp | $3.70 billion | $3.82 billion |
| Lumira | $44.7 million | $46.7 million |
| NanoString | $32.2 million | $32.3 million |
| Opko Health | $309.9 million | $326.9 million |
COVID-19 Testing Continues to Tell the Story
Continuing the patterns of the past two years, the narrative for Q2 2022 was COVID-19. Most companies reported significant declines in COVID-19 testing revenues, both YOY and sequentially. However, declines weren’t as substantial as predicted. A few companies offering rapid, point-of-care tests even saw their COVID earnings increase, including Abbott, where sales of the at-home BinaxNOW SARS-CoV-2 antigen tests drove 33 percent growth in overall diagnostics revenues, and Gingko Bioworks’ subsidiary Concentric, where K-12 school COVID-19 YOY testing revenues ballooned from $21.6 million to $96.5 million.
Even more positively, rebounds in core revenues continue to offset COVID-19 declines.
2022 Q2 YOY Earnings: Core Lab vs COVID-19
| Company | COVID-19 Testing | Base, Excluding COVID |
|---|---|---|
| Becton Dickinson | -400% | +6% |
| Danaher | -100% | +13% |
| Exact Sciences | -58% | +26% |
| Labcorp | -7.8% | +2.1% |
| Qiagen | -42% | +4% |
| Quest | -41% | +3% |
It was much the same story at Hologic where the $172.9 million in COVID-19 revenue was down significantly YOY but not as low as expected and was enough to help the company generate total earnings of $1 billion, thanks to 15 percent core growth.
The Outlook
Even though COVID-19 products are still making money at a higher-than-expected rate, just about everybody, including Abbott, Labcorp, and Quest, is bracing for a massive decline in demand by year’s end.
At the same time, core products have and will continue to rebound beyond pre-pandemic levels. During Q2, 12 different companies raised their guidance for full year 2022, including Abbott, Agilent Technologies, BD, PerkinElmer, Qiagen, and Quest. Labcorp and Illumina were the only industry heavy hitters to go the other way and reduce their earnings guidance.
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Diagnostics Earning Reports for 2022 Q2 (period ended June 30, 2022)
(Companies with at least $20 million in sales)
| Company | FY 2022 Q2: Total Revenue (vs Wall Street) | YOY Revenues | EPS (vs Wall Street) | DX Segment Performance |
|---|---|---|---|---|
| *Abbott Laboratories | $11.26 billion ($10.29 billion) | +10% | Adjusted +$1.43 (+$1.12) | DX up 33% to $4.32 billion driven by rapid COVID tests. Core DX down 7% to $1.22 billion; Molecular down 27% to $212 million; Rapid diagnostics up 82% to $2.75 billion; Point of care up 1% to $139 million |
| Adaptive Biotech | $43.7 million ($43.3 million) | +13% | Net -$.44 (-$.45) | Immune medicine revenues down 3% to $22.4 million; offset by 38% increase in minimal residual disease revenues at $21.3 million; clonoSEQ test volume up 53% |
| *Agilent Technologies (FY 2022 Q3) | $1.72 billion ($1.59 billion) | +8% | Non-GAAP +$1.39 (+$1.16) | Diagnostics and Genomics down 2% to $340 million; Core revenues up 3%; Life Sciences and Applied Markets up 14% to $1.02 billion |
| *Becton Dickinson (FY 2022 Q3) | $4.64 billion ($4.46 billion) | +0.7% | Adjusted +$2.66 (+$2.49) | COVID revenues continue to decline, from $300 million to $76 million, expected to drop to $25 million in Q4; but base revenues rebound; strong sales in China; Medical segment up 4% to $2.191 billion; Life Sciences down 8.7% to $1.309 billion |
| Bio-Rad Laboratories | $691.1 million ($704.6 million) | -3% | Non-GAAP +$3.38 (+$3.08) | COVID revenues down 52% to $33 million (and $45 million in Q1); Life Sciences down 4% to $322.4 million due to reduced COVID revenues; Clinical DX down 3% to $367.8 million |
| Bio-Techne (2022 Q4) | $288.2 million ($287.1 million) | +11% | Adjusted +$2.05 | DX & Genomics up 7% to $71.7 million; Protein Sciences up 13% to $217.0 million; Double digit growth in EcoDxProstate (EPI) test |
| **CareDx | $80.6 million ($81.9 million) | +9% | Adjusted -$0.13 (-$0.11) | Testing services up 3% to $67.1 million, up 6.1% sequentially; Product revenues down 3% to $6.7 million, despite strong results for AlloSure Lung, also reflecting high baseline from Q2 2021 |
| Cue Health | $87.7 million ($52.9 million) | -36% (vs +178% in Q1) | Net -$0.02 (-$0.05) | Product revenues down from $137.4 million to $84.4 million; Disposable test cartridge revenues of $82.9 million |
| Danaher | $7.75 billion ($7.30 billion) | +8% | Non-GAAP +$2.76 (+$2.35) | Diagnostics up 10%, 13% core growth, driven by over 30% growth in Cepheid; other diagnostics business up in mid-single digits; continued high demand for COVID products, including Cepheid 4-in-1 test for SARS-CoV-2, RSV and influenza A and B; Total $1 billion in COVID revenues expected for 2022, as opposed to $2 billion in previous years, falling to $500 million in 2023 |
| DiaSorin | €327.8 million ($333.9 million) | +32% | Net profit of €58.5 million (vs. €75.3 million in Q2 2021) | After falling 5% in Q1, non-COVID molecular tests nearly triple to €50.3 million; COVID products drop 30% to €53.0 million; newly acquired Luminex drives growth in licensed technologies, including xMap instruments and consumables |
| Exact Sciences | $521.6 million ($495.6 million) | +20% | Net -$0.94 (-$1.07) | Total revenue, excluding COVID testing, up 26%; Screening up 34% to $353.9 million; Precision Oncology up 12% to $154.0 million, an increase of 12%, COVID testing down 58% to $13.8 million |
| *Fulgent Genetics | $125.3 million ($123 million) | -18% (second straight quarter of negative growth) | Adjusted +$0.78 (+$0.73) | Declines due to drop in demand for COVID testing; Core revenues excluding COVID up 102% to $45.3 million; over 1.3 million billable tests, vs 1.6 million in Q2 2021 |
| *Gingko Bioworks | $144.6 million ($77.6 million) | +231% | Net -$0.41 (-$0.04) | Growth fueled by Biosecurity, which includes COVID testing, from Concentric subsidiary ($96.5 million vs $21.6 million in Q2 2021) driven by K-12 school COVID testing; Cell engineering revenues more than double to $44.2 million |
| Guardant Health | $109.1 million ($104.8 million) | +19% | Net -$2.25 (-$1.25) | Precision oncology up 27%, driven by increases of 40% in clinical testing volume and 65% in biopharma sample volume; Development services and other revenues down 12%, due to change in collaboration projects with biopharm customers for companion diagnostic development and regulatory approval services, and discontinuation of Guardant-19 tests in August 2021 |
| *Hologic (FY 2022, Q3) | $1.00 billion ($989 million) | -14% (-7% in Q2) | Non-GAAP +$0.95 | Total global revenues up 15%, excluding COVID, which dipped to $172.9 million; Molecular DX, excluding COVID, up 22% to $435.3 million, driven by STI, vaginitis, and respiratory assays; Cytology & Perinatal up 3.5% to $115.9 million; Blood Screening down 32.6% to $8.9 million; Breast Health down 18.9% to $282.8 million, due primarily to semiconductor chip shortage |
| **Illumina | $1.16 billion ($1.22 billion) | +2.7% | Net -$3.40 +$0.63 | Sequencing Consumables up 6% to $744 million, driven by 20% growth in oncology testing; Sequencing Instrument revenues for core Illumina up 1% to $119 million, driven by 23% growth in NovaSeq shipments, offset by 14% decline in the mid-throughput shipments; Grail contributes $12 million |
| Invitae | $136.6 million ($136.85 million) | +18% | Adjusted -$10.87 (-$0.74) | Oncology business drives growth, including $81 million (14% growth) from germline testing, therapy selection, personalized cancer monitoring, and companion diagnostics; women’s health up 27% to $27 million |
| **Labcorp | $3.70 billion ($3.82 billion) | -3.7% | Adjusted +$4.96 (+$4.67) | DX down for second quarter in a row by 4.7% to $2.26 billion, due to 7.8% decrease in COVID testing, partially offset by 2.1% increase in the Base Business; Total volume (measured by requisitions) down 2.7%, including 3.1% dip in organic volume resulting from 5.6% decrease in COVID testing, partially offset by 2.6% increase in Base Business; Decrease in adjusted operating income and adjusted operating margin was primarily due to a reduction in COVID testing, higher personnel expense, and other inflationary costs |
| Lumira | $44.7 million ($46.7 million) | -49% | Net -$0.58 (-$0.26) | Losses driven by decline in COVID demand; $28 million from test strips on the LumiraDx platform; Fast Lab Solutions’ molecular reagents delivered $10 million, almost entirely from COVID products |
| *Myriad Genetics | $179.3 million | +7% | Adjusted +$0.04 (+$0.02) | Total test volumes up 9% in the quarter to 260,000 tests; Molecular Diagnostics flat (+0.3%) at $179.3 million, including 8% dip in Hereditary Cancer to $79.4 million, partially offset by 46% increase in Pharmacogenomics Testing to $33.1 million; Tumor Profiling up 11% to $33.5 million; Prenatal Testing up 13% to $33.3 million |
| **NanoString Technologies | $32.2 million ($32.3 million) | -5% (second negative quarter in a row) | Net Not reported (-$0.68) | Product and service revenue down 5% to $32.0 million; Instruments revenues down 19% to $9.5 million; Consumables flat at $17.8 million |
| *Natera | $198.2 million ($194.1 million) | +40% | Net -$1.50 (-$1.47) | Product revenue up 39% to $194.6 million driven by higher test volumes, with approximately 499,900 tests processed, a 33.1% increase |
| 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 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 | $309.9 million ($326.9 million) | -30% (vs. -40% in Q1) | Net -$0.14 (+$0.01) | DX revenues down 53% to $186.8 million due to declines in COVID testing; Company completes sale of GeneDx to Sema4 for $322 million in cash and stock |
| OraSure Technologies | $80.2 million ($70.1 million) | +39% | Net -$0.26 (-$0.13) | 95% increase (as compared to Q1) in IntelliSwab COVID rapid test revenues to $43.1 million; Excluding COVID and IntelliSwab, DX base business down 10% to $17.3 million |
| *PerkinElmer | $1.23 billion ($1.20 billion) | 0% | Adjusted +$2.32 (+$2.02) | DX revenues down 21% to $569 million due to decline in COVID tests; Discovery and Analytical Solutions up 29% to $513 million |
| *Qiagen | $515.5 million ($488.7 million) | -9% (vs. +11% in Q1) | Adjusted +$0.51 (+$0.54) | Non-COVID up 4% to $423 million, and now constitute 80% of all sales; after increasing in Q1, COVID declines 42% to $92 million; Molecular Diagnostics (representing 49% of net sales) down 6% to $255 million; Life Sciences (51% of total revenues) down 12% to $261 million |
| *Quest Diagnostics | $2.45 billion ($2.34 billion) | -4% | Adjusted +$2.36 (+$2.30) | COVID revenues YOY drop from $511 million to $355 million (down 41% vs Q1); Base Business excluding COVID up 3% YOY to $2.10 billion—total expected 2022 COVID revenues of $1.15 to $1.30 billion; about half of all COVID testing volume comes from partnerships with retailers like CVS, Walmart, and Rite Aid |
| QuidelOrtho | $898.5 million (NA) | +38% | Adjusted +$2.12 (NA) | Newly combined company with estimates based on models of combined earnings before merger; 9% growth in core revenues, excluding COVID revenues; Labs business flat at $342.0 million; Transfusion Medicine up 4% to $168.8 million; Point of Care nearly triples to $367 million, driven by QuickVue COVID At-Home antigen test and Sofia immunoassays; Molecular DX down 40% to $20.7 million but, excluding COVID, up 45%, driven by sales of Lyra, Savanna, and Solana products |
| Roche Diagnostics | CHF 32.30 billion ($33.21 billion) | +5% | Adjusted +CHF 11.76 | DX increases 10% due to COVID sales but momentum has and will continue to slow; Core lab up 3% to CHF 3.88 billion; Immunodiagnostics business up 6% and clinical chemistry up 8%, driven by routine testing in immunoassays and cardiac tests; Molecular down 1% to CHF 1.98 billion; Virology up 4 percent during H1, with Cobas instruments placed during the pandemic being used for testing beyond COVID; Point of Care up 45% to CHF 2.61 billion, driven by SARS-CoV-2 Rapid Antigen test |
| Siemens Healthineers (FY 2022, Q3) | €5.19 billion | -6% (vs +38% in Q2) | Adjusted +€0.32 | DX down 24% (vs 43% increase in Q2) due to sharp decline in SARS-CoV-2 antigen tests, which fell YOY from €600 million to €300 million; Even excluding COVID tests revenue, core DX fell 8% due to lockdowns in China |
| Thermo Fisher Scientific | $10.97 billion ($9.84 billion) | +19% | Adjusted +$5.51 (+$4.92) | Growing demand for immunodiagnostics and microbiology partly offset COVID testing declines; Organic revenues up 3% and acquisitions revenue up 19%; $630 million in COVID testing revenues; core organic growth of 13%; Specialty DX declines 11% due to COVID testing decreases, which weren’t as dramatic as feared |
| *Twist Bioscience (FY 2022, Q3) | $56.1 million ($51.5 million) | +54% | Net -$1.08 (-$1.31) | Next-generation sequencing revenues, including SNP microarray conversions and liquid biopsy panels up 50% to $27.8 million; Synthetic biology up 54% to $22.1 million; Biopharma revenues more than triple from $3.0 million to $6.2 million |
| Veracyte | $72.9 million ($68.0 million) | +32% | Net -$0.13 (-$0.22) | Testing revenue up 18% to $59.7 million, driven by urology portfolio, including Decipher tests for prostate and bladder cancer; Overall test volume up 19% to 24,904; Product revenue up 16% to $3.1 million; Biopharma and other revenue ballooned from $1.6 million to $10.0 million, due to acquisition of HalioDx |
| *Waters | $714.3 million ($707.0 million) | +5% | Adjusted +$2.75 (+$2.66) | Instrument sales up 12%, driven by double digit growth in mass spectrometry, liquid chromatography, and thermal analysis products; service sales up 2% to $244.7 million |
Bold face: Companies that met or exceeded average or consensus Q2 Wall Street revenue estimates
* Companies that raised their revenue or earnings per share (EPS) guidance during Q2
** Companies that lowered their revenue or EPS guidance during Q2
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