Bio-Rad Laboratories, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. The filing also reports unaudited fourth-quarter results. Bio-Rad sells life science research and clinical diagnostics products; these segments represented 44% and 56% of 2023 sales, respectively. Approximately 42% of sales were in the U.S. and 58% internationally.
Financial performance and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Net sales | $2.671 billion | $2.802 billion |
| Gross profit / margin | $1.427 billion / 53.4% | $1.567 billion / 55.9% |
| Operating income | $337.8 million | $482.6 million |
| Net income (loss) | $(637.3) million | $(3.628) billion |
| Net cash from operations | $374.9 million | $194.4 million |
- Annual sales declined 4.7% reported and 4.1% currency-neutral. Excluding COVID-related sales, currency-neutral sales declined 0.4%.
- Fourth-quarter 2023 sales were $681.2 million and gross profit was $366.3 million; net income was $349.7 million. Fourth-quarter 2022 sales were $730.3 million and net income was $827.7 million.
- Life Science sales declined 12.5% to $1.178 billion; segment operating profit fell to $108.9 million from $266.8 million. Clinical Diagnostics sales rose 2.6% to $1.489 billion; segment operating profit increased to $229.6 million from $217.7 million.
- Gross-margin pressure reflected product mix, higher material costs and inventory reserves. SG&A was $841.7 million, up from $827.8 million; R&D was $247.4 million, down from $256.9 million.
- Cash, cash equivalents and short-term investments totaled approximately $1.607 billion at year-end. Long-term debt was approximately $1.2 billion, principally fixed-rate notes due 2027 and 2032. The company reported no borrowings under its existing revolving credit agreement; $0.2 million was used for standby letters of credit under that facility.
- Capital expenditures were $156.7 million. Bio-Rad repurchased $428.7 million of shares in 2023, with $278.7 million remaining under its $500 million 2023 authorization.
Changes, outlook and material items
- The net loss largely reflects a $1.252 billion loss from changes in fair value of equity securities and the loan receivable, principally the Sartorius investment. The comparable 2022 loss on that line was $5.194 billion. These valuation changes substantially affect reported earnings independently of Bio-Rad’s operating performance.
- Bio-Rad’s Sartorius holdings had a reported fair value of approximately $7.332 billion at year-end. Management disclosed that a 10% move in Sartorius share prices would have changed the reported result by about $730 million.
- Management expects economic constraints in China and ongoing challenges in biopharma and small biotechnology markets to continue negatively affecting the business in 2024. No quantitative revenue or earnings guidance is provided in the filing.
- Restructuring costs were $27.9 million in 2023. Several restructuring plans were approved during 2023; the October plan was expected to be substantially complete in early 2024.
- On February 13, 2024, Bio-Rad entered a new $200 million revolving credit facility, replacing the facility due to expire in April 2024.
- Key risks include international and currency exposure, China and biopharma demand, competition and pricing pressure, customer research funding, supply continuity, product development and regulation, cybersecurity, and volatility in Sartorius’s share price. Ordinary-course legal matters were disclosed; the company said it did not currently expect them to materially affect its financial position, results or liquidity, while noting outcomes remain uncertain.
Important facts for investors to verify
- Separate underlying operating trends from the large, volatile Sartorius-related fair-value effects when assessing earnings and valuation.
- Track whether Life Science demand stabilizes and whether Clinical Diagnostics growth and segment profitability continue.
- Monitor gross margin, inventory levels, restructuring charges and operating cash conversion.
- Review Sartorius share-price sensitivity, the loan’s collateral and repayment terms, and the resulting balance-sheet and earnings exposure.
- Assess debt maturities, covenant compliance, liquidity availability and the terms of the replacement credit facility.
- Consider that management provides no numerical 2024 guidance and specifically expects certain market headwinds to persist.