Bio-Rad Labs cuts annual revenue forecast on weak demand for diagnostics products

Bio-Rad Laboratories

01/08/2024 22:53

Aug 1 (Reuters) - Bio-Rad Laboratories  BIO.N  cut its
annual revenue growth forecast on Thursday, dragged down by weak
demand for clinical diagnostics products from biotech clients.
        Shares of the diagnostics company fell 20% after the
bell. 
  
    Bio-Rad expects its full-year 2024 adjusted revenue to
decline by about 2.5% to 4% on a currency-neutral basis,
compared to its previous estimate of 1.0% to 2.5%. 
    "We continue to experience constraints in biotech and
biopharma customer spending and, as a result, expect a more
modest pace of market recovery than originally anticipated,"
said CEO Norman Schwartz.
    The company sells laboratory apparatus, instruments,
diagnostics to drug manufacturers, biotechs and food testing
clients. 
   Like contract drug manufacturers, suppliers of lab
instruments to biotechs have seen sluggish demand as
cash-strapped drug developers remain wary of spending amid
multi-decade-high interest rates.
    The public funding environment for early-stage biotechs is
expected to improve in the second half of 2024, on hopes of
interest rate cuts from the U.S. Federal Reserve in September.
    Some analysts have noted that funding for biotechs could
stabilize in near future as a higher number of regulatory
approvals was offered to these companies in 2023.
    Peer Waters Corp  WAT.N , in July, also lowered annual
profit forecast, anticipating lower demand for its products and
services used in drug development and research. 
    Sales from Bio-Rad's life science unit fell 16.5% to $250.5
million during the quarter, hurt by ongoing weakness in the
biotech and biopharma end-markets.
    The company reported second-quarter revenue of $638.5
million, missing analysts' estimate of $645.8 million, according
to LSEG data. 
    On an adjusted basis, Bio-Rad recorded a profit of $3.11 per
share in the quarter ended June, above analysts' estimate of
$2.01. 
       
  

 (Reporting by Sruthi Narasimha Chari and Sneha S K in
Bengaluru; Editing by Mohammed Safi Shamsi)
 ((SruthiNarasimha.Chari@thomsonreuters.com;))