Direct Sales Deliver Biotage Growth

First quarter sales for Biotage climbed 10.2%, 9.3% excluding currency, to SEK 158.9 million ($18.8 million = SEK 8.46 = $1). Sales for all major product lines expanded, including double-digit sales growth for sample preparation, purification and industrial products. Continued demand for the Isolera purification system as well as for the updated V-10 Touch evaporation system also contributed to growth. Overall, flash purification sales were healthy, especially in Asia. The company continued to benefit from an augmented direct sales force in China, for which sales grew 46%. Japanese sales were also strong, climbing 24%. Both European and North American sales grew roughly in the mid-single digits. Overall, system and aftermarket sales accounted for 44% and 56% of revenues, respectively.

Gross profit margin expanded 160 basis points to 57.1% due to higher sales volume, currency and lower production costs. Adjusted operating profit climbed 518 basis points to 14.7% because of cost control measures and lower R&D spending.

Fluidigm Shows Steady Growth

Fluidigm’s first quarter sales expanded 8.5% to $29.0 million. The stronger-than-expected growth was driven by a 15% increase in sales of single-cell biology products as well as robust service revenue, which benefited from post-warranty contracts.

Product revenue grew 5.7% to $25.4 million to account for 87% of sales. Following a sales reorganization to target specific customers, the company now categorizes its product revenue by research and applied markets. Sales to applied customers, which include clinical laboratories, agbio, biopharmaceutical and CROs, grew 10% to account for 62% of Product revenue. Sales to research customers, primarily made up of academic centers, advanced 3% to make up 38% of Product revenue. Consumables sales rose 6.7%, including 30% revenue growth for production consumables. This growth was driven by robust demand for genomics analytical Integrated Fluidic Circuits (IFC), but was partially offset by lower sales of sample preparation IFCs. Despite lower placements of core genomics preparatory systems, Instrument revenue grew 4.9% due to a favorable mix of higher-priced Helios systems, as well as continued adoption of the Juno and Polaris systems. Adjusted Product gross margin slipped 139 basis points to 72.1% due to lower instrument capacity utilization.

Sales in Asia-Pacific and Europe grew 15.4% and 34.8% to account for 21% and 32% of revenues, respectively. In Asia-Pacific, sales in China soared 120.0%, while Japanese sales contracted 5% to make up 11% and 6%, respectively. US and Other sales declined 4.5% and 39.1% to represent 45% and 2%, respectively. Adjusted operating loss widened 82.5% to $10.9 million due to increased headcount. The company maintained its 2016 revenue outlook of $124–$128 million.

Currency and China Dent HORIBA Growth

For the first quarter, HORIBA’s Process and Environmental Instruments & Systems (P&E) sales declined 3.1% to ¥4.16 billion ($36.0 million = ¥115.35 = $1) to account for 10% of revenues. Excluding currency, P&E sales slipped roughly 1% due to weak demand from semiconductor customers as well as lower sales of analytical systems in Asia. This was partially offset by robust demand from petrochemical markets in the US. Sales in the Americas and Europe climbed 118.2% and 15.0% to make up 21% and 10% of segment revenue, respectively. Sales in Japan and other Asia declined 6.4% and 55.0% to account for 59% and 10% respectively. P&E operating margin advanced 83 basis points to 16.0%. P&E maintained its fiscal 2016 half-year revenue outlook of ¥8.9 billion ($80.9 million = ¥110.00 = $1), but raised its operating income forecast by 33% to ¥800 million ($7.3 million).

HORIBA’s Scientific Instruments & Systems (SI) sales declined 6.7%, roughly 3% organically, to ¥6.52 billion ($56.5 million) to account for 16% of company revenues. This decline was attributed to weakness in Europe and the Americas, for which sales contracted 15.5% and 16.9% to make up 24% and 20% of SI sales, respectively. Sales in Asia and Japan grew 1.5% and 2.7% to account for 20% and 37%, respectively. Excluding currency, sales in Asia grew in the 10% range due to healthy demand from the private sector. Segment operating margin fell 418 basis points to 3.4% as a result of slower sales volume and currency headwinds. SI’s half-year revenue outlook was unchanged at ¥13.7 billion ($124.5 million), but its operating profit forecast was reduced 67% to ¥200 million ($1.8 million).

Lower Instrument Sales for NanoString

First quarter sales for NanoString Technologies grew 26.8% to $14.7 million, including $2.6 million in Collaboration revenue. Product and Service revenues grew 12.0%, 13% excluding currency, to $12.1 million, which was below expectations. Instrument sales were negatively impacted by product mix of the lower-priced nCounter SPRINT Profiler system and timing of orders. The company placed eight SPRINT systems, which accounted for just under half of systems sold. Consumables sales were strong due to biopharmaceutical and CRO demand, for which sales jumped 80% to account for 40% of Consumables revenues.

Overall, sales in Asia Pacific were particularly strong, climbing 56.3% to make up 12% of revenues due to demand for the SPRINT system. US sales grew 34.0% to account for 69%. Sales in EMEA slipped 3.1% to represent 19%, primarily due to lower instrument sales in Europe. Operating loss narrowed 3.6% to $13.3 million. The company maintained its 2016 revenue guidance of $86–$90 million, including $15 million from collaborations. The Product and Service revenue outlook for 2016 was also unchanged at $71–$75 million. Second quarter Product and Service revenue is expected to be $15.5–$17.0 million, and collaboration revenue is projected to add $3.0–$3.5 million.

Oxford Falls on Industrial Demand

For the fiscal year ending March 31, Oxford Instruments sales declined 4.9%, 5.3% organically, to £361.6 million ($547.9 million = £0.66 = $1). However, excluding the superconducting wire business and completed Siemens MRI service contract, total organic sales contracted 3.1%, primarily due to weakness in the industrial markets. Orders grew 12.1% organically.

Sales for Oxford’s Nanotechnology Tools (NT) segment declined due to slower demand from semiconductor research laboratories within the Plasma Technology business. Sales to semiconductor markets accounted for roughly 9% of NT revenues. The segment’s largest end-markets consisted of research and academia customers, accounting for 83% of sales, of which nearly three-quarters of were in the physical science research fields and a quarter were for bioscience applications. Microscopy demand was steady, with growth in each of the NanoAnalysis, Andor Technology and Asylum Research businesses. NT adjusted operating profit grew 2.9%, 11.6% organically, to £21.3 ($32.3 million) due to increased sales volume, improved margins in the Plasma Technology business and divestment of the Omicron business (see IBO 5/31/15).

Organic sales for Oxford’s Industrial Products (IP) segment were negatively impacted by lower sales in the Superconducting Wire business, as well as weak demand from metals and construction markets within the Industrial Analysis and X-ray Technology businesses. As a result, IP adjusted operating profit fell 29.7%, 40.6% organically, to £4.5 million ($6.8 million).

Service revenue slipped due to the completed Siemens MRI contract. However, this was offset by the acquisition of Medical Imaging Resources and strong revenue growth in Japan. Service adjusted operating profit climbed 19.7% to £18.8 million ($28.5 million), but declined 3.2% excluding the acquisition and currency.

Overall, organic sales in North America contracted 16.9% to account for 36% of sales, primarily due to the completed MRI contract. Organic sales in Europe and Rest of World fell 0.3% and 19.1% to account for 28% and 2%, respectively. Asian sales improved 2.2% organically to make up 35%. Adjusted gross margin advanced 10 basis points to 44.8% of sales. Adjusted operating margin expanded 100 basis points to 12.3% due to cost saving measures and the transition of the Omicron business.

Pac. Bio. Builds Backlog

Pacific Biosciences recorded first quarter revenues slightly ahead of expectations, as sales grew 8.4% to $19.1 million. Strong service revenue and increased shipments of the new Sequel system drove revenue growth. Total instrument sales grew 11% to make up 41% of revenues, as the company placed 18 Sequel instruments in the quarter compared to 10 in the fourth quarter of 2015. The company recorded orders for 30 Sequel instruments across a broad range of customers and geographic regions. Including steady utilization rates for the RS II, consumables sales grew 8% to account for 24% of revenues. Milestone payments were unchanged, accounting for 19% of sales.

Gross margin expanded 16 percentage points to 49.7% due to the higher-margin Sequel system. However, margins are expected to decline in the fourth quarter following the end of the contractual revenue agreement with Roche. Given the strong backlog and order expectations along with a ramp-up in production, the company expects continued sequential revenue growth throughout the year. The full-year 2016 revenue target of at least $93 million was unchanged. Excluding contractual revenue, this represents product and service sales growth of more than 70%.