Italy’s DiaSorin sees 60% plunge in COVID-19 revenue next year

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FILE PHOTO: Healthcare worker collects a swab from Bronwen Cook for a PCR test against COVID-19 before traveling to London, at O.R. Tambo International Airport in Johannesburg

MILAN – Italian diagnostics firm DiaSorin forecast weaker 2022 sales and a near 60% plunge in COVID-19 revenue, with the rapid rollout of vaccines likely to bring the pandemic under control and crimp demand for tests, sending shares down more than 11%.

The health crisis had fuelled rapid growth at DiaSorin’s molecular division, which in 2020 accounted for 29% of sales.

But the company said on Thursday that 2022 revenue is expected to fall 2% from the previous year, with COVID-19 revenue decreasing to about 150 million euros ($169.9 million) from about 370 million euros in 2021.

Shares in DiaSorin fell as much as 13.6% on Friday to hit their lowest since late June as forecasts fell short of analysts’ expectations.

Presenting its business plan to 2025, the company said its estimates were conservative and that it could do better than forecast.

“We have given forecasts for 2022 with visibility limited to the first quarter, nobody knows what is going to happen with COVID, its variants and vaccines,” CEO Carlo Rosa told analysts during a presentation.

The company projected an adjusted core earnings margin – a measure of operating profit as a percentage of revenue – of about 35% for 2022 and 38% for 2025, compared with about 43% forecast for 2021.

“We see the 2022 adjusted EBITDA margin as significantly lower than our current forecast (40%)”, Intesa Sanpaolo analysts said in a note.

In a bid to boost its molecular business and offset a potential drop in demand for COVID-19 tests, DiaSorin agreed to buy U.S. rival Luminex Corp for $1.8 billion earlier this year.

On Thursday it forecast cost and revenue synergies from the integration of about $90 million in 2025.

“Based on the 2025 outlined financial targets, we have the impression that the Luminex integration could turn out to be slower than previously expected,” Intesa Sanpaolo analysts said.

Italy’s pandemic situation was on the mend, but with the new Omicron variant spreading rapidly worldwide, the country has extended a COVID-19 state of emergency and again tightened measures to limit contagion.

Without the COVID contribution, DiaSorin forecast revenue growth of about 24% for 2022 and year-over-year growth of 10% for 2022 to 2025.

The company also said it would launch three new molecular diagnostics platforms.

($1 = 0.8832 euros)

(Reporting by Mrinmay Dey in Bengaluru, Giancarlo Navach and Gianluca Semeraro in Milan; Editing by Devika Syamnath, Jan Harvey and Louise Heavens)