Bio-Rad Laboratories (BIO 1.33%) appears to be headed for its best stock performance so far in this decade. Its shares have soared 44% year to date, trouncing the returns of most healthcare stocks.
The company announced its third-quarter results after the market closed on Thursday. Bio-Rad gave investors some good news, but also some bad news. Here are the highlights from the company's Q3 update.
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By the numbers
Bio-Rad announced third-quarter revenue of $560.6 million, up nearly 3% from the $545.1 million reported in the same quarter of the previous year. However, this result came in lower than the average analyst's revenue estimate of $565 million.
The company reported a net loss in Q3 of $258.8 million, or $8.68 per share, based on generally accepted accounting principles (GAAP). This reflected deterioration from the prior-year period GAAP net income of $269.3 million, or $8.89 per share.
Bio-Rad posted adjusted net income of $48.6 million, or $1.61 per share. This was a solid increase from adjusted earnings of $27.6 million, or $0.91 per share, in the same period in 2018. It also easily beat the average analyst's earnings estimate of $1.40 per share.
Behind the numbers
The company's life science segment generated net sales of $215.7 million in the third quarter, up 4.5% year over year. This growth was fueled by strong sales volumes for Bio-Rad's Droplet Digital PCR (polymerase chain reaction) system and its food safety products.
Bio-Rad's clinical diagnostics segment didn't perform quite as well. Net sales for the segment increased by 2.4% year over year, to $341.8 million. The company attributed this growth to higher sales for its quality control, blood typing, and immunology lines of products, with growth coming primarily in Asia and the Americas.
That GAAP earnings decline wasn't as bad as it might seem at first glance. Bio-Rad said the main culprit was a $390.6 million drop in the market value of equities that it owns, with most of this lower market value related to its investment in Sartorius AG.
The company's bottom line looked much better on an adjusted non-GAAP basis, thanks to the negative impact of the Sartorius investment being backed out. CEO Norman Schwartz emphasized that Bio-Rad's "operating performance reflects continued improvement compared to 2018."
Looking ahead
Bio-Rad projects that currency-neutral revenue growth for full-year 2019 will be between 4% and 4.5%. The company also expects non-GAAP operating margin will be between 12.5% and 13%.
Schwartz stated, "As we head into the end of the year, we anticipate 2019 will be another year of growth in many of our key product areas, with broad contribution from most of our geographies." He added, "Our operating performance has rebounded nicely so far in 2019 and we expect more of the same for the remainder of the year, reflecting substantial improvement in operating profit over 2018."
