Bio-Rad Laboratories (BIO) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales rose 2.8% year-over-year to $650 million, driven by Clinical Diagnostics growth, while Life Science sales declined due to ongoing biopharma market weakness.

• GAAP net income surged to $653 million ($23.34/share), primarily due to a $793 million gain from Sartorius AG equity; non-GAAP net income was $56 million ($2.01/share), down from $68 million ($2.33/share) in Q3 2023.

• Gross margin improved to 54.8% (GAAP) and 55.6% (non-GAAP), reflecting cost control and favorable product mix.

• R&D expense rose significantly due to a $29.5 million one-time acquired in-process R&D charge related to the Saber Bio acquisition.

• Clinical diagnostics business delivered broad-based year-over-year growth, especially in Asia-Pacific, while Life Science group saw modest recovery with ongoing soft demand in biotech, biopharma, and China.

Financial highlights

• Q3 2024 net sales: $650 million (+2.8% year-over-year); Clinical Diagnostics sales: $389 million (+5.6%); Life Science sales: $261 million (flat year-over-year).

• Q3 2024 GAAP net income: $653 million; non-GAAP net income: $56 million.

• Q3 2024 GAAP gross margin: 54.8%; non-GAAP gross margin: 55.6%.

• Adjusted EBITDA was $107 million (16.4% of sales), including a one-time in-process R&D expense.

• Free cash flow for Q3 was $123 million, up from $54 million a year ago; cash and short-term investments at September 30, 2024: $1.63 billion.

Outlook and guidance

• Full-year 2024 currency-neutral revenue expected to decline 2.5%-4% year-over-year.

• Increased full-year non-GAAP gross margin guidance to 55%-55.5% and operating margin to 12.75%-13.25%.

• Adjusted EBITDA margin expected between 18.5%-19%, including the Q3 in-process R&D expense.

• Free cash flow for 2024 expected at $300 million, with continued focus on inventory and supply chain improvements into 2025.

• Management expects continued headwinds in biopharma, small biotech, and China through 2025.