SOURCE: Bio-Rad Laboratories

Bio-Rad Laboratories

February 23, 2017 16:26 ET

Bio-Rad Reports Fourth-Quarter and Full-Year 2016 Financial Results

HERCULES, CA--(Marketwired - Feb 23, 2017) - Bio-Rad Laboratories, Inc. (NYSE: BIO) (NYSE: BIO.B), a global provider of life science research and clinical diagnostic products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2016.

Fourth-quarter 2016 reported revenues were $571.5 million, an increase of 0.2 percent compared to $570.6 million reported for the fourth quarter of 2015. On a currency-neutral basis, quarterly revenues increased 0.8 percent compared to the same period in 2015. Fourth-quarter gross margin was 55.0 percent compared to 54.1 percent during the fourth quarter in 2015.

Life Science segment net sales for the fourth quarter were $206.8 million, a decrease of 5.2 percent compared to the same period in 2015. On a currency-neutral basis, Life Science segment sales decreased by 4.3 percent. As noted during our third-quarter 2016 earnings conference call, revenues were unusually low for the third quarter of 2015 due to the rollout of our ERP system in our Life Science segment. As a result, performance in the fourth quarter of 2015 was unusually strong; this atypical situation results in a difficult year-over-year comparison for the same period in 2016. Underlying this comparison was good growth of Droplet Digital PCR and food testing products.

Clinical Diagnostics segment net sales for the fourth quarter were $360.8 million, an increase of 3.5 percent compared to the same period in 2015. On a currency-neutral basis, net sales were up 4.0 percent. Results from the fourth quarter were primarily attributed to growth in diabetes, immunology, and quality control product lines.

The fourth quarter of 2016 showed a net loss of $20.6 million, or $0.70 per share on a diluted basis, compared to net income of $49.5 million, or $1.68 per share during the same period in 2015. The decrease in net income was largely due to several non-cash charges including $59.9 million goodwill and in-process research & development (IPR&D) impairment, increases in expenses related to the revaluation of contingent consideration, and increases in certain legal reserves. 

The following table compares these items from Q4 2016 to Q4 2015:

         
 
(in millions)
Q4 2016   Q4 2015
  Purchase accounting amortization and contingent consideration $8.0   $3.4
  Certain legal-related reserves $10.9   $5.5
  Impairment of goodwill and long-lived assets $59.9   -
  Total impact to income from operations $78.8   $8.9
         

The effective tax rate for the fourth quarter of 2016 was 27.0 percent compared to 8.7 percent for the same period in 2015. The lower effective tax rate in 2015 was due to the tax benefit of foreign repatriations and the permanent reinstatement of the federal R&D credit in the fourth quarter of 2015.

Full Year 2016 Results

For the full year of 2016, net sales were $2,068.2 million compared to $2,019.4 million in 2015, an increase of 2.4 percent. On a currency neutral basis, sales increased by 4.0 percent. Full-year gross margin was 55.0 percent compared to 55.5 percent reported in 2015. Full-year reported sales for the Life Science segment were $730.7 million, an increase of 5.1 percent compared to the same period in 2015. On a currency-neutral basis, full-year sales increased 6.5 percent. Full-year reported revenues for the Clinical Diagnostics segment were $1,323.3 million, an increase of 1.0 percent compared to the same period in 2015, or an increase of 2.6 percent on a currency-neutral basis.

Full-year net income in 2016 was $28.1 million, or $0.95 per share on a fully diluted basis, compared to $113.1 million, or $3.85 per share in 2015. The year-over-year decrease in net income was primarily the result of lower margins, $62.3 million in non-cash impairment of goodwill and long-lived assets, increased SG&A expenses associated with various legal matters, $11.7 million in restructuring costs associated with the upcoming implementation of our global ERP system in Western Europe, and increased purchase accounting.

The following table compares certain non-cash or non-recurring items from 2016 to 2015:

       
 
(in millions)
2016   2015
  Purchase accounting amortization and contingent consideration $32.6   $29.4
  Europe restructuring $11.7   -
  Certain legal-related reserves $21.0   $7.4
  Impairment of goodwill and long-lived assets $62.3   -
  Total impact from operations $127.6   $36.8
       

The effective tax rate in 2016 was 32.3 percent compared to 22.5 percent in 2015. The effective tax rate for 2016 and 2015 included a tax benefit of $16.8 million and $6.3 million, respectively, for foreign repatriations. The effective tax rate for 2016 included additional tax liabilities for unrecognized tax benefits of $17.5 million related to the non-deductibility of interest expense in foreign jurisdictions. 

"We are encouraged by our overall topline performance for the year, which was higher than our guidance," said Norman Schwartz, Bio-Rad President and Chief Executive Officer. "All of this growth is organic and represents good progress for the year. Although our continued investment in our operations coupled with unusual expenses during the year affected our profitability, these investments are necessary to support growth and improved profitability for the years to come."

2016 Full-Year Highlights

  • Full-year sales were $2,068.2 million compared to $2,019.4 million in 2015. After normalizing for the impact of currency, full year sales increased 4.0 percent.
  • Year-over-year net income in 2016 was $28.1 million, or $.95 per share on a fully diluted basis, compared to $113.1.million, or $3.85 per share in 2015.
  • In January 2016, Bio-Rad and Illumina, Inc. (NASDAQ: ILMN) announced an exclusive partnership to develop the most comprehensive next-generation sequencing (NGS) workflow for single-cell analysis. The Illumina®  Bio-Rad® Single-Cell Sequencing Solution launched in early 2017 and enables high-throughput sequencing of thousands of individual cells, traditionally a challenging, costly, and time-consuming process.
  • Also during the first quarter of 2016, Bio-Rad acquired a high performance analytical flow cytometer platform from Propel Labs that will enable advanced and novice users to perform basic and multi-parameter cytometry for a wide range of applications and chemistries. Bio-Rad expects to launch the instrument in 2017. 
  • In February, the Company announced it had received CE IVD marking for its QX200 Droplet Digital PCR (ddPCR) System, the first digital PCR system with the CE IVD mark for use as an in vitro diagnostic (IVD) in the European Union. With the CE IVD mark, medical practitioners in Europe can use the QX200 system for highly-accurate detection and quantification of nucleic acids, aiding clinical decision-making in the treatment of diseases ranging from cancer to transplant rejection and viral infection.
  • In April, Bio-Rad announced the launch of five Droplet Digital PCR Multiplex Mutation Screening Kits for detecting multiple cancer mutations. The combination of ddPCR and multiplexing technologies increases the throughput of genetic analysis to give clinical researchers more information per patient sample.
  • During both the second and third quarters, Bio-Rad added to its Amplichek line of infectious disease quality controls for the molecular diagnostic testing market with Amplichek I and Amplichek II.
  • During the third quarter, Bio-Rad announced the launch of two residual DNA quantification (RDQ) kits designed for use with the Company's Droplet Digital PCR Systems. The kits simplify the quantification of host-cell DNA (HCD) in process development, quality control, and biomanufacturing processes.
  • In October, Bio-Rad announced that it had received clearance from the U.S. Food and Drug Administration (FDA) for its IH-1000 blood typing instrument along with approvals for a wide range of associated gel cards and reagents for the U.S. blood typing market. The system offers full automation and reliability, allowing laboratories to more efficiently manage their blood testing workload. 
  • Also in October, Bio-Rad released Nuvia IMAC Resin, a chromatography resin optimized for use from lab scale to process-scale manufacturing.

In January, 2017 Bio-Rad announced that it had entered into a definitive agreement to purchase RainDance Technologies, Inc. Bio-Rad completed the transaction in February, acquiring RainDance for an estimated $87 million plus certain assumed net liabilities. RainDance's intellectual property portfolio and product lines encompass a wide range of biological reactions in droplets, with applications in life science research and clinical research. These genomic tools provide ultra-sensitive detection of genetic variations in cancer as well as inherited and infectious diseases, enabling research in areas such as non-invasive liquid biopsy.

"We welcome the opportunity to expand our product offering with RainDance products and technologies," Mr. Schwartz said. "Our combined droplet-based solutions will enable life science and clinical diagnostics customers to implement a broad range of applications that include digital PCR and next-generation sequencing." 

2017 Financial Outlook
For the full year 2017, the Company anticipates continued strength with currency neutral revenue growth of approximately 4 percent, and improved profitability with a currency neutral operating margin of 7 percent. This current estimate does not include the impacts of the recent acquisition of RainDance. Management will discuss this outlook in greater detail on the fourth-quarter and full-year 2016 financial results conference call. 

"While 2017 will be another year of relatively modest operating margin, we are committed to successfully completing these foundational investments, which will allow us to realize significant improvement in profitability in the medium term and drive sustainable shareholder value over the long term," Mr. Schwartz said.

Management will discuss these results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) February 23, 2017. Interested parties may access the call at 855-779-9068 within the U.S. or 631-485-4862 outside the U.S., conference ID: 56053006. You may also listen to the conference call via a webcast that is available in the "Investor Relations" section of our website under "Quarterly Results" at www.bio-rad.com. The webcast will be available for up to a year. 

About Bio-Rad
Bio-Rad Laboratories, Inc. (NYSE: BIO) (NYSE: BIO.B) develops, manufactures, and markets a broad range of innovative products and solutions for the life science research and clinical diagnostic markets. The company is renowned for its commitment to quality and customer service among university and research institutions, hospitals, public health and commercial laboratories, as well as the biotechnology, pharmaceutical, and food safety industries. Founded in 1952, Bio-Rad is based in Hercules, California, and serves more than 100,000 research and healthcare industry customers through its global network of operations. The Company employs more than 8,250 people worldwide and had revenues exceeding $2 billion in 2016. For more information, please visit www.bio-rad.com.

This release may be deemed to contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements we make regarding estimated future financial performance or results, the growth of our business, expectations regarding operational investments, realizing significant improvement in profitability in the medium term, driving sustainable shareholder value over the long term, our release of new products and our expectations regarding our products. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "believe," "expect," "anticipate," "may," "will," "intend," "estimate," "continue," or similar expressions or the negative of those terms or expressions, although not all forward-looking statements contain these words. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. These risks and uncertainties include our ability to develop and market new or improved products, difficulties in implementing our global enterprise resource planning system, our ability to compete effectively, foreign currency exchange fluctuations, product quality and liability issues, recent and planned changes to our global organizational structure and executive management team, our ability to integrate acquired companies, products or technologies into our company successfully, international legal and regulatory risks, reductions in government funding or capital spending of our customers, supply chain issues, changes in the healthcare industry, global economic conditions, and natural disasters and other catastrophic events beyond our control. For further information regarding the Company's risks and uncertainties, please refer to the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's public reports filed with the Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2016, and its Annual Report on Form 10-K for the fiscal year ended December 31, 2016 to be filed with the SEC. The Company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. Bio-Rad Laboratories, Inc. disclaims any obligation to update these forward-looking statements.

   
Bio-Rad Laboratories, Inc.  
Condensed Consolidated Statements of Income  
                         
(in thousands, except per share data)  
(UNAUDITED)  
                         
                         
                         
                         
    Three Months Ended
December 31,
    Year Ended
December 31,
 
    2016     2015     2016     2015  
Net sales   $ 571,453     $ 570,557     $ 2,068,172     $ 2,019,441  
  Cost of goods sold     257,096       262,042       930,085       897,771  
Gross profit     314,357       308,515       1,138,087       1,121,670  
                                 
  Selling, general and administrative expense     220,020       193,145       816,724       761,990  
  Research and development expense     57,543       55,887       205,864       192,972  
  Impairment losses on goodwill and long-lived assets     59,945       -       62,305       -  
(Loss) income from operations     (23,151 )     59,483       53,194       166,708  
                                 
  Interest expense     5,096       6,034       21,942       21,692  
  Foreign currency exchange losses, net     966       1,339       4,542       10,249  
  Other (income) expense, net     (1,026 )     (2,088 )     (14,850 )     (11,080 )
(Loss) income before income taxes     (28,187 )     54,198       41,560       145,847  
                                 
  Benefit from (provision for) income taxes     7,617       (4,716 )     (13,435 )     (32,754 )
Net (loss) income   $ (20,570 )   $ 49,482     $ 28,125     $ 113,093  
                                 
Basic earnings per share:                                
  Net (loss) income per basic share   $ (0.70 )   $ 1.69     $ 0.96     $ 3.87  
                                 
  Weighted average common shares - basic     29,552       29,321       29,440       29,186  
                                 
Diluted earnings per share:                                
  Net (loss) income per diluted share   $ (0.70 )   $ 1.68     $ 0.95     $ 3.85  
                                 
  Weighted average common shares - diluted     29,552       29,470       29,646       29,409  
                                 
                                 
  Note: As a result of the net loss for the three months ended December 31, 2016, all potentially issuable common shares have been excluded from the diluted shares used in the computation of earnings per share as their effect was anti-dilutive.  
                                 
 
Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets
 
(in thousands)
(UNAUDITED)
         
         
         
    December 31,   December 31,
    2016   2015
             
Current assets:            
  Cash and cash equivalents   $ 456,264   $ 457,549
  Short-term investments     387,736     332,928
  Accounts receivable, net     372,348     391,485
  Inventories, net     524,961     490,224
  Other current assets     103,215     105,410
    Total current assets     1,844,524     1,777,596
             
Property, plant and equipment, net     488,614     437,690
Goodwill, net     477,115     495,948
Purchased intangibles, net     161,609     214,026
Other investments     830,790     719,840
Other assets     47,852     64,618
    Total assets   $ 3,850,504   $ 3,709,718
             
             
Current liabilities:            
  Accounts payable, accrued payroll and employee benefits   $ 296,473   $ 280,248
  Current maturities of long-term debt     334     298
  Income and other taxes payable     28,124     29,339
  Other current liabilities     146,391     131,466
    Total current liabilities     471,322     441,351
             
Long-term debt, net of current maturities     434,186     433,883
Other long-term liabilities     358,237     343,981
    Total liabilities     1,263,745     1,219,215
             
    Total stockholders' equity     2,586,759     2,490,503
    Total liabilities and stockholders' equity   $ 3,850,504   $ 3,709,718
             
   
Bio-Rad Laboratories, Inc.  
Condensed Consolidated Statements of Cash Flows  
   
(in thousands)  
(UNAUDITED)  
             
             
             
    Year Ended
December 31,
 
             
    2016     2015  
                 
Cash flows from operating activities:                
  Cash received from customers   $ 2,074,024     $ 1,956,084  
  Cash paid to suppliers and employees     (1,810,844 )     (1,730,062 )
  Interest paid, net     (21,318 )     (20,793 )
  Income tax payments, net     (38,442 )     (31,715 )
  Other operating activities     13,013       12,696  
  Net cash provided by operating activities     216,433       186,210  
                 
Cash flows from investing activities:                
  Payments for acquisition and long-term investment     (14,165 )     (4,356 )
  Other investing activities     (199,715 )     (162,513 )
  Net cash used in investing activities     (213,880 )     (166,869 )
                 
Cash flows from financing activities:                
  Payments on long-term borrowings     (303 )     (282 )
  Other financing activities     9,323       8,863  
  Net cash provided by financing activities     9,020       8,581  
                 
Effect of foreign exchange rate changes on cash     (12,858 )     16,376  
                 
Net (decrease) increase in cash and cash equivalents     (1,285 )     44,298  
Cash and cash equivalents at beginning of year     457,549       413,251  
Cash and cash equivalents at end of year   $ 456,264     $ 457,549  
                 
                 
Reconciliation of net income to net cash provided by operating activities:                
Net income   $ 28,125     $ 113,093  
Adjustments to reconcile net income to net cash provided by operating activities:                
    Depreciation and amortization     142,897       131,848  
    Impairment losses on goodwill and long-lived assets     62,305       -  
    Changes in working capital     (10,367 )     (51,821 )
    Other     (6,527 )     (6,910 )
Net cash provided by operating activities   $ 216,433     $ 186,210  
                 

Contact Information

  • Investor and Financial Contacts:
    Christine Tsingos
    Executive Vice President and Chief Financial Officer
    Ron Hutton
    Vice President and Treasurer
    Bio-Rad Laboratories, Inc.
    510-724-7000
    Email Contact