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UPDATE: Danaher Q3 Revenues Improve 4 Percent

The story has been updated to include comments from Danaher's third quarter conference call this morning.

NEW YORK (GenomeWeb) – Danaher today reported 4 percent year-over-year growth in its third quarter revenues as the firm just missed the average analyst estimate on the top line but beat it on the bottom line.

For the three months ended Sept. 26, the Washington-based conglomerate posted $4.87 billion in revenues, up from $4.67 billion during the third quarter of 2013. The consensus Wall Street estimate was $4.90 billion.

Core revenues rose 3 percent year over year on a non-GAAP basis, Danaher said, while acquisitions added 2 percentage points to growth, and currency translation had a negative impact of .5 percentage points.

By segment, Life Sciences & Diagnostics revenues rose just under 4 percent year over year to $1.74 billion from $1.68 billion, while Test and Measurement was up to $821 million from $808.6 million, the company said in its Form 10-Q filed with the US Securities and Exchange Commission. Environmental rose to $914.1 million from $828.7 million, Dental increased to $528.4 million from $510.2 million, and Industrial Technologies was up to $865.6 million from $846.5 million.

Within the Life Sciences & Diagnostics segment, sales from existing diagnostics businesses increased in the mid-single digits on clinical business growth, paced by "strong demand" in China, which was partially offset by slight year-over-year declines in Europe. Global consumables sales related to acute care instruments improved in Q3 2014 and drove growth in the acute care diagnostics business, while the demand for core histology instruments saw soft year-over-year demand, Danaher said.

On Danaher's conference call following the release of the financial results, new President and CEO Thomas Joyce said that core revenues in the Beckman Coulter business grew in the mid-single digits with double-digit growth in immunoassays, urinalysis, and automation. Growth in China was up more than 20 percent.

During the quarter, the US Food and Drug Administration gave 510(k) clearance to Beckman Coulter's Power Express automated sample processing system.

Meanwhile, the segment's existing life sciences businesses were up in the low-single digits as weakness in China offset growth in the US. Joyce added on the call that the Chinese life science space is "probably one of the most challenging environments out there today." That is not expected to change in the next few weeks or even in the next few months, he cautioned. "That could be something that continues to be under pressure, [and be a] slower growth market maybe even into 2015," he said.

He also said that the AB Sciex business, which houses Danaher's mass spectrometry business, saw core revenues grow in the mid-single digits with strong sales in the applied markets in North America and Europe and in the academic research markets in North America.

Cellular analysis and sample preparation products sales, however, declined during the recently completed quarter, as a result of continued delays in government and academic funding in China and Japan.

Danaher recorded a profit of $680.6 million, or $.95 per share, for the third quarter, compared to a profit of $597 million, or $.84 per share, a year ago, and beat the consensus analyst expectation of $.89 per share.

Its R&D spending increased 6 percent year over year to $328.3 million form $309.1 million, while its SG&A costs rose 5 percent to $1.37 billion from $1.30 billion.

The firm exited the quarter with $4.03 billion in cash and cash equivalents.

For the fourth quarter, Danaher projected GAAP EPS to be in the range of $1 to $1.04. The range includes about $125 million, or $.13 per share, of anticipated productivity charges, partially offset by about $.07 per share in anticipated gains on the sale of marketable securities.

"As we plan for 2015, we remain mindful of the challenging macroeconomic outlook including the recently stronger dollar," Joyce said in a statement. "However, we believe our focus on high-impact growth investments and margin expansion, combined with our robust balance sheet and M&A capacity, position us to finish 2014 well and drive long-term results."