Dive Brief:

• Demand for COVID-19 tests during the second quarter looks set to boost diagnostics makers' growth figures in upcoming earnings reports, according to preliminary results from a number of companies, including Thermo Fisher, GenMark Diagnostics, Luminex and Quidel.

• In statements published in recent days, diagnostic companies have shared early looks at their quarterly results. Thermo Fisher led the way with a better-than-expected 10% jump in revenues.

• The preliminary results, which include 86% to 118% revenue increases at smaller companies, suggest the near-insatiable demand for COVID-19 tests is offsetting disruption to other parts of the diagnostic sector.

Dive Insight:

Medtech companies with heavy exposure to infectious disease testing emerged from the last round of quarterly updates looking well placed to grow sales during the COVID-19 pandemic. Luminex, for example, advised investors to expect its 2020 sales to exceed the top end of the range it provided going into the year, while GenMark Diagnostics added $10 million to its forecast. 

Now, those companies and others in the sector have begun to share results that suggest they can live up to the raised expectations. As examples, Thermo Fisher, Luminex, GenMark and Quidel each reported double-digit growth in the recently ended second quarter.

Thermo Fisher, the most diversified of the companies, is exposed to markets negatively affected by the disruption to healthcare providers and other businesses. Even so, Thermo Fisher reported growth of 10% as a result of $1.4 billion of revenue from PCR-based tests and other products and services involved in the response to COVID-19. That pre-announcement followed earlier projections that revenue growth would be flat or negative during the quarter.

"While details are limited, we view the much stronger than expected COVID-related revenues as a positive read across to other companies under coverage with significant exposure, primarily [Danaher], [Hologic], [Qiagen], and [PerkinElmer]," UBS analysts wrote following Thermo Fisher's preliminary results.

Smaller companies with portfolios more focused on the COVID-19 opportunity reported still bigger increases in sales. Quidel expects its second quarter revenues to come in just above $200 million, an increase of around 86% over the comparable period of 2019. The growth was underpinned by the production of 3 million SARS-CoV-2 assays and 4 million SARS Antigen cassettes in the quarter. Quidel shipped 1,500 Sofia instruments in June alone, increasing its installed base by around 3%.

Investors responded to Quidel’s preliminary results by driving its valuation up more than 5% to nearly $10 billion. GenMark’s valuation received an even bigger boost, rising 21% in a day in response to preliminary results headlined by a 118% increase in total revenue. The sales growth reflects a 48% increase in ePlex analyzer shipments and a 74% jump in average annuity per analyzer.

Luminex posted record quarterly revenue of around $110 million after sales of its molecular diagnostic products increased by more than 100%. The increase more than offset a 45% contraction at Luminex’s flow cytometry business. Sales at the unit would have been almost 30% higher if COVID-19 had not stopped Luminex from installing $2 million worth of ordered products.

None of the companies changed full-year 2020 guidance in the preliminary updates. At the midpoint of the year, GenMark is two-thirds of the way to the bottom end of its guidance range. Luminex is also on track to exceed its current guidance. Both companies said they may change their guidance early next month. Thermo Fisher’s more diversified businesses may make it harder to gauge how COVID-19 will affect the company's full-year results.

Thermo Fisher is set to report earnings July 22 and Luminex on Aug. 3. Quidel is tentatively slated to issue financial results in "late July" while GenMark expects to do the same in "early August."