Many technology stocks such as Teladoc (TDOC) and Netflix (NFLX) have found the coronavirus pandemic to be less than beneficial. Repligen (RGEN) is another exception, which is under the radar.
Repligen rode the pandemic to record revenues as customers purchased supplies and accelerated research timelines. Pandemic-related sales accounted for 28% of full-year 2021 revenue.
Cautious investors may be waiting for the party to stop and the nasty hangover to begin. However, that hasn't happened yet. Pandemic-related revenue did decrease in Q2 2022, but the rest of the business made up for it.
By the Numbers
Repligen reported a record quarterly profit of $207.6 million in Q2 2022, compared to the same month last year. It would have been 5% higher if not for the strength of the US dollar, although currency swings were far from a worst-case scenario.
The bioprocess technology leader generated 80% of revenue from the core business, which included filters and purification services. Pandemic-related revenue decreased to just 18% of total revenue, but it still represents a significant portion of business.
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Repligen isn't only delivering impressive revenue growth, but also at impressive margins, too. Gross margin increased to 58.5% in Q2, while operating margin was at an eye-popping 30.4%, which means 30% of revenue trickled down the income statement after paying all non-financial expenses. Truly amazing.
Can't Stop, Won't Stop on the Road to Long-Term Riches
Repligen generated $414 million in first-half revenue, benefited from high order volume, and plans to construct a new manufacturing facility in the coming months. That gave management the confidence it needed to raise full-year revenue forecasts for 2022, although it's become a recurring event for investors in recent years.
Repligen has given more guidance for every statistic it examines, including:
Although management's updated full-year 2022 forecast calls for "slower projected covid-related revenue," it does not appear to be reducing the company's overall business. That's a sign that Repligen's acquisitions from 2020 and 2021 are more than offset by shrinking pandemic-related revenue.
As pandemic initiatives roll off the books, I expect revenue to settle down for a brief period in the future. However, for the time being, I'm a happy shareholder benefiting from another quarter of outstanding execution.