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Danaher Q3 Revenues Dip Slightly, Lowers 2012 EPS Guidance

NEW YORK (GenomeWeb News) – Danaher today said that revenues in the third quarter were down a fraction of 1 percent year over year as the company missed the consensus Wall Street estimate on the top and bottom line.

For the three months ended Sept. 28, revenues totaled $4.42 billion, compared to $4.45 billion a year ago, and short of the average analyst estimate of $4.51 billion.

Danaher said that core revenues grew 1 percent year over year while acquisitions added 1.5 percent to growth. The impact of currency translations shrank revenues by 3 percent, however.

The Life Sciences and Diagnostics segment, which houses the AB Sciex and Beckman Coulter businesses, saw revenues contract by 3 percent year over year to $1.52 billion from $1.57 billion, the Washington-based conglomerate said in its quarterly earnings statement filed with the US Securities and Exchange Commission.

In a conference call following the release of the results, Danaher President and CEO Larry Culp said that the revenue slowdown in the segment resulted from currency effects and an unidentified small divestiture. Core revenues in Life Sciences and Diagnostics were up 2 percent, he added.

The diagnostics business saw mid-single digit core growth, with the Beckman Coulter diagnostics segment up in the low single digits, Culp said. Beckman Coulter launched its AU5800 Clinical Chemistry System in the US in July, and Culp said the launch is "going well with encouraging initial customer feedback … We expect the 5800 to be a key driver of growth in 2013 and beyond."

Life sciences, meanwhile, was down in the low-single digits year over year, though AB Sciex grew in the low-single digits during the quarter and was particularly strong in China. Life science sales, Culp said, were impacted by weaker than anticipated spending in the academic market.

Last month Danaher announced its plans to buy Iris International for $338 million, and earlier this week it extended its tender offer after Iris disclosed revised financial information.

However, on the conference call, Culp said that in the future, Danaher "is very keen" to focus the next $1 billion to $3 billion in acquisitions away from the Life Sciences and Diagnostics segment, as well the Dental segment, in order to maintain a balanced mix among Danaher's five business segments.

During the quarter company-wide R&D costs rose a fraction of 1 percent to $289.5 million from $287.5 million a year ago. SG&A costs of $1.25 billion were down about 2 percent from $1.27 billion a year ago.

Danaher posted a profit of $548.7 million, or $.77 per share, up from $523.4 million, or $.74 per share, a year ago, but short of Wall Street estimates of $.79 per share.

The firm initiated guidance today for fourth-quarter EPS from continuing operations with a range of between $.80 and $.85. Danaher also lowered its full-year 2012 EPS guidance to between $3.14 and $3.19 from an earlier projected range of $3.19 to $3.26.
The macro-environment is expected to continue to be a challenge, Culp said, and the firm increased its previously announced 2012 restructuring spending to $120 million from $100 million.

Danaher exited the third quarter with $1.54 billion in cash and cash equivalents.

In morning trading, shares of Danaher were down nearly 5 percent on the New York Stock Exchange at $53.57.