Bio-Rad optimistic about 2020 despite $20m impact of Q4 cyber-attack

Bio-Rad Laboratories expects to recover 25% of the revenue shortfall resulting from the cyber-attack it suffered in Q4.

The US research and clinical diagnostic reagents firm made the prediction during a conference call this week.

CFO Ilan Daskal told analysts “Fourth quarter revenue fell short by about $20 million from the midpoint of our guidance, mainly due to the cyber-attack that we reported in early December.

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He added, “We expect to recover in Q1 of 2020 about $5 million of the Q4 revenue shortfall.”

During the Q&A session he added, “We plan to capture $5 million out of the $20 million. And the remaining $15 million, we currently don’t anticipate or plan or kind of forecast to recover the $15 million from Q4.”

Bio-Rad shared details of the hack in December, explaining it took certain systems offline as soon as it detected the ransomware attack.

According to Daskal “Sales in Asia were most impacted by the cyber-attack, mainly impacting the Life Science group sales.”

Life science sales

Total revenues in the final three months of 2019 were $624.4 million, up 1.2% from the comparable period in 2018.

Life Science group sales were $242 million compared to $239.6m, up just 1% on the equivalent period in 2018. The firm said sales gains were driven by growth of its process media business.

Bio-Rad’s gross margin for Q4 was 52.9% down from 53.9% in 2018. Again, Daskal cited the cyber-attack as the key dynamic.

“The fourth quarter gross margin was negatively impacted, mainly by lower revenue fall-through, the temporary production outage and lower manufacturing utilization, due to the cyber-attack, as well as a restructuring reserve.”

Analysts at Jefferies said the cyber-attack muddied the waters in 4Q but predicted “investors will look thru the noise.”

Outlook

Bio-Rad’s revenues for the full year were $2,311.7 million up from the $2,289.4 million recorded in 2018.

Net income for the year was $1,758.7 million, up from the $365.6 million Bio Rad saw a year earlier.

The firm said the increase was “due to the change in fair market value of our equity securities in 2019 primarily related to our holdings of Sartorius AG.”

CEO Norman Schwartz predicted revenue and income growth in 2020, citing product launches as well as technologies introduced last year as key.

“The markets for our products continue to grow around the world and our outlook for 2020 is positive.

“I think for me that outlook is driven by the robust markets, but also by the planned introduction of new products and platforms across the business and the full year effect of products introduced in 2019,” he added.