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PerkinElmer Bullish on Cell Screening in 2007 as Q4 Revenues Rise 10 Percent

This story originally appeared in Biocommerce Week, a newsletter that has been discontinued.
 
Following the acquisition of two cell analysis businesses in the past month, PerkinElmer officials said last week that they are bullish on that market for 2007, though they expect both acquisitions to be neutral or slightly accretive to earnings this year. The firm also announced that its fourth-quarter 2006 revenues increased 10 percent year over year to $427 million.
 
PerkinElmer began 2007 with the acquisitions of Euroscreen Products and Evotec Technologies, adding complementary technologies to its CellLux and LumiLux instruments for cell-population experiments. The firm is hoping that these acquisitions will help spark growth in sales to its biopharma customers.
 
“In the biopharma business, we continue to sharpen the focus around cellular sciences, tools, and technologies,” Rob Friel, vice chairman and president of the Life and Analytical Sciences unit, said during the firm’s fourth-quarter conference call last week. “Over the last couple of months, we have introduced a number of new products, particularly reagents that target cell signaling pathways,” including the AlphaScreen SureFire reagent for high-throughput screening of cell-based kinase targets.
 
Earlier this month, PerkinElmer completed the acquisitions of Euroscreen Products and Evotec Technologies. The combined companies generated 2006 revenue of roughly $25 million, and PerkinElmer expects they will be neutral or slightly accretive to earnings in 2007.
 
In early December, PerkinElmer announced the deal to acquire Evotec Technologies for $30.5 million (see BioCommerce Week 12/6/2006). The acquisition provides PerkinElmer with high-content screening tools, particularly the Opera confocal imager, which has significant penetration in the high-content market.
 
The Euroscreen acquisition, which was announced a few weeks later, gave PerkinElmer a greater presence in the GPCR-screening market (see BioCommerce Week 1/3/2007).
 
The acquisitions and PerkinElmer’s increasing focus on the cell-screening field do not come as a surprise. Company officials said a year ago that customers were increasingly embracing cell-analysis applications, and the firm would seek to match that demand.
 
"We're seeing a migration of applications," said Friel during a conference call last January (see BioCommerce Week 2/1/2006). "In drug discovery, it's really moving from biochemical and radioactive assay to cellular and non-radioactive,” he said.
 
Friel said during the call last week that the firm is “fairly bullish” on the cell-screening market for 2007. “I think clearly that is where the market is going,” he said.
 
Q4 Revenues Rise 10 Percent
 
PerkinElmer’s total revenue for the three months ended Dec. 31, 2006, increased to $427 million from $388 million year over year. A foreign exchange benefit contributed 3 percent to that growth, while acquisitions contributed 2 percent.
 
Revenue for the company’s Life and Analytical Sciences business was up 12 percent to $321 million year over year, while Optoelectronics revenue was up 5 percent to $106 million, and “other” revenue was down 11 percent to $8.5 million year over year. The LAS business had a 3 percent currency benefit and a 3 percent contribution from acquisitions.
 

“In the biopharma business, we continue to sharpen the focus around cellular sciences, tools, and technologies.”

Health Sciences receipts represented 85 percent of revenue for the LAS business in the quarter and wer driven by genetic screening, medical imaging, environmental and service businesses, and from acquisitions and new product launches, the firm said.
 
“In the second half of 2006, LAS experienced higher dollar revenue growth than in any six-month period over the last four years,” said Friel during the conference call.
 
PerkinElmer’s fourth-quarter profit tumbled to $41.8 million, or $.33 per share, from $187.5 million, or $1.45 per share, in the year-ago period. However, last year’s results include a $190.9 million gain on the sales of its Aerospace and Fluid Testing divisions and its lithography product line.
 
The firm’s R&D spending in the quarter increased to $27 million from $21 million year over year, “mostly due to the timing of some project investments,” said Greg Summe, chairman and CEO, during the call. “We expect to carry this momentum into 2007, bringing an increased number of new products to market while continuing to deliver strong financial results,” he said.
 
For fiscal year 2006, PerkinElmer reported revenue of $1.55 billion, a 5.4 percent gain on revenue of $1.47 billion in fiscal year 2005. Its net income for the year fell 55.4 percent to $119.6 million, or $.95 per share, from $268.1 million, or $2.04 per share, last year. The 2005 results included the $190.9 gain mentioned earlier.
 
PerkinElmer said it expects full-year 2007 revenue to climb “in the high single to low double digits.” The firm also forecasted first-quarter 2007 earnings per share of $.23 to $.25.
 
PerkinElmer had around $191 million in cash and cash equivalents as of Dec. 31, 2006.

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