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Bio-Rad (BIO) Q3 Earnings Surpass Estimates, 2021 View Raised

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Bio-Rad Laboratories, Inc. (BIO - Free Report) posted third-quarter 2021 adjusted earnings per share (EPS) of $3.71, which surpassed the Zacks Consensus Estimate by 61.3%. Moreover, the bottom line rose 23.7% 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 acquisition-related one-time benefits.

GAAP EPS of the company was $129.96 per share in the quarter, up 197.8% from the year-ago figure.

Revenues in Detail

Revenues of $747 million in the quarter surpassed the Zacks Consensus Estimate by 11.3%. Moreover, revenues improved 15.4% from the year-ago quarter (up 13.8% at constant exchange rate or CER).

The company witnessed growth across both the Life Science and Clinical Diagnostics segments during the third quarter.

Segmental Analysis

Sales at the Life Science segment in the third quarter totaled $373.5 million, up 15.3% year over year and 13.9% at CER. Growth at CER was primarily driven by a rise in Droplet Digital PCR and Process Media product line. A significant portion of the Life Science segment growth came from products used to support COVID-19 research and testing as well. Geographically, the company’s quarterly growth at CER grew across Americas and Asia but declined in Europe.

Net sales at the Clinical Diagnostics segment totaled $372.2 million, up 15.5% on a year-over-year basis and 13.7% at CER. The increase was primarily driven by growth in all product lines and across all regions, mainly backed by higher utilization in lab operations as businesses recover from the COVID-19 pandemic.

Margins

In the quarter under review, Bio-Rad’s gross profit rose 19.1% to $437.4 million. Gross margin expanded 181 basis points (bps) to 58.6%. Per the company, adjusted gross margin was 57.9%, expanding 40 bps.

BioRad Laboratories, Inc. Price, Consensus and EPS Surprise

Operating expenses were $280.6 million in the third quarter, up 8.9% year over year. Operating profit totaled $156.8 million, reflecting a surge of 43.1% from the prior-year quarter. Further, operating margin in the third quarter expanded 406 bps to 20.9%.

Company-adjusted operating margin was 19.4%, expanding 60 bps year over year.

Financial Update

Bio-Rad exited the third quarter of 2021 with cash and cash equivalents (including short-term investments) of $1.34 billion compared with $1.17 billion at the end of second-quarter 2021.Total debt (including current maturities) at the end of the third quarter was $12.4 million compared with $12.5 million at the end of the last-reported quarter.

Cumulative net cash flow from operating activities at the end of the third quarter was $498.6 million compared with the year-ago figure of $290.6 million.

2021 Guidance

Bio-Rad has updated its guidance for full-year 2021.

The company now anticipates revenue growth of 12-13% for full-year 2021 compared with the previous guidance of 10-10.5%. The Zacks Consensus Estimate for the same is pegged at $2.84 billion.

Our Take

Bio-Rad exited the third quarter of 2021 with better-than-expected results. The company witnessed solid top-and bottom-line growth in the reported quarter. Increase in demand for Droplet Digital PCR products along with core qPCR business growth driven by strong uptake of the latest generation CFX Opus platform is encouraging. Further, strength in its key product lines across major geographic regions buoys optimism. The uptick in the Clinical Diagnostics arm driven by higher utilization in lab operations as businesses recover from the COVID-19 pandemic is encouraging as well. The raised 2021 revenue guidance is indicative of the continuation of this bullish trend.

However, the year-over-year rise in operating cost is worrying. Further, foreign-exchange woes, stiff competition and pandemic-led macroeconomic troubles persist.

Zacks Rank and Stocks to Consider

Bio-Rad currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Medpace Holdings, Inc. (MEDP - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) .

Medpace, currently carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

West Pharmaceutical Services, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the consensus mark by 3.2%.

Thermo Fisher Scientific reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently carries a Zacks Rank #2.