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Bio-Rad (BIO) Q1 Earnings Surpass Estimates, Margins Up

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Bio-Rad Laboratories, Inc. BIO posted first-quarter 2022 adjusted earnings per share (EPS) of $4.94, which surpassed the Zacks Consensus Estimate by 76.4%. However, the bottom line fell 5.2% from the prior-year quarter.

The quarter’s adjustments eliminate the impacts of certain non-recurring items like amortization of purchased intangibles, legal charges, restructuring costs and others.

GAAP loss of the company was $112.57 per share in the first quarter against GAAP earnings of $32.38 in the year-ago quarter.

Revenues in Detail

Revenues of $700 million in the quarter surpassed the Zacks Consensus Estimate by 3.3%. Moreover, revenues declined 3.7% from the year-ago quarter (down 0.8% at constant exchange rate or CER).

Segmental Analysis

Sales at the Life Science segment in the first quarter totaled $347.2 million, down 5.3% year over year and 2.5% at CER. The CER sales decline was primarily attributed to lower qPCR product revenues due to the decline in COVID-related demand.

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

Net sales at the Clinical Diagnostics segment totaled $351.8 million, down 1.9% on a year-over-year basis and up 1.1% at CER. A recovery in Immunohematology business primarily drove the increase.

Margins

In the quarter under review, Bio-Rad’s gross profit rose 0.7% to $403.6 million. Gross margin expanded 252 basis points (bps) to 57.7%. Per the company, adjusted gross margin was 57.6%, contracting 250 bps.

Operating expenses were $260 million in the first quarter, down 13.2% year over year. Operating profit totaled $143.4 million, reflecting an increase of 42.2% from the prior-year quarter. Further, operating margin in the first quarter expanded 661 bps to 20.5%.

Company-adjusted operating margin was 22%, down 380 bps year over year.

Financial Update

Bio-Rad exited the first quarter of 2022 with cash and cash equivalents (including short-term investments) of $2.08 billion compared with $875.5 million at the end of the fourth quarter of 2021. Total debt (including current maturities) at the end of the first quarter of 2022 was $1.19 billion compared with $11 million at the end of the fourth quarter of 2021.

Cumulative net cash flow from operating activities at the end of first-quarter 2022 was $463.2 million compared with the year-ago figure of $113.6 million.

2022 Guidance

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

The company anticipates currency-neutral revenue growth of nearly 1-2%. The Zacks Consensus Estimate for revenues is pegged at $2.88 billion.

Our Take

Bio-Rad exited the first quarter of 2022 with better-than-expected earnings and revenues. The company continued to experience recovery in most of its key global markets with strong growth of Process Media and Droplet Digital PCR products. Further, strength in its key product lines across major geographic regions buoys optimism. Within the Diagnostics business, the company witnessed recovery in its Immunohematology business. Expansion of both margins is an added plus.

However, Bio-Rad’s Life Sciences arm registered a year-over-year decline, primarily attributed to lower qPCR product revenues due to the decline in COVID-related demand. The year-over-year rise in operating costs is worrying. Further, foreign-exchange woes, stiff competition and pandemic-led macroeconomic troubles persist.

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 Qiagen N.V. QGEN, UnitedHealth Group Incorporated UNH and Centene Corporation CNC.

Qiagen, carrying a Zacks Rank #2 (Buy), reported first-quarter 2022 adjusted EPS of 80 cents, which beat the Zacks Consensus Estimate by 12.7%. Revenues of $628.4 million outpaced the consensus mark by 6.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Qiagen has an estimated long-term growth rate of 11.5%. QGEN’s earnings surpassed estimates in the trailing four quarters, the average surprise being 11.7%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 14.2%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

Centene reported first-quarter 2022 adjusted EPS of $1.83, which surpassed the Zacks Consensus Estimate by 8.9%. First-quarter revenues of $80.1 billion outpaced the Zacks Consensus Estimate by 1.9%. It currently has a Zacks Rank #2.

Centene has an estimated long-term growth rate of 14.2%. CNC has an earnings yield of 6.6% compared with the industry’s 5.6%.


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