Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Luckily, Repligen’s sales grew at an impressive 18.6% compounded annual growth rate over the last five years. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Repligen’s recent history marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 11% over the last two years.

We can dig further into the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Repligen’s organic revenue averaged 11.4% year-on-year declines. Because this number aligns with its normal revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Repligen’s $167.5 million of revenue was flat year on year and in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 9% over the next 12 months, an improvement versus the last two years. This projection is healthy and implies its newer products and services will catalyze better top-line performance.

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Adjusted Operating Margin

Adjusted operating margin is a key measure of profitability. Think of it as net income (the bottom line) excluding the impact of non-recurring expenses, taxes, and interest on debt - metrics less connected to business fundamentals.

Repligen has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 23%.

Looking at the trend in its profitability, Repligen’s adjusted operating margin decreased by 13.8 percentage points over the last five years. This performance was caused by more recent speed bumps as the company’s margin fell by 16 percentage points on a two-year basis. We’re disappointed in these results because it shows its expenses were rising and it couldn’t pass those costs onto its customers.

In Q4, Repligen generated an adjusted operating profit margin of 14.9%, down 2.9 percentage points year on year. This contraction shows it was recently less efficient because its expenses increased relative to its revenue.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Repligen’s EPS grew at a solid 8.3% compounded annual growth rate over the last five years. However, this performance was lower than its 18.6% annualized revenue growth, telling us the company became less profitable on a per-share basis as it expanded.

Diving into Repligen’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Repligen’s adjusted operating margin declined by 13.8 percentage points over the last five years. Its share count also grew by 5.8%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q4, Repligen reported EPS at $0.44, down from $0.52 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 7.9%. Over the next 12 months, Wall Street expects Repligen’s full-year EPS of $1.57 to grow 9.2%.

Key Takeaways from Repligen’s Q4 Results

It was encouraging to see Repligen beat analysts’ organic revenue, EPS, and EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance exceeded Wall Street's estimates. Zooming out, we think this quarter featured some areas of strength. The stock traded up 1.6% to $153.22 immediately following the results.

Is Repligen an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free .