This story has been updated with information from Danaher's analyst conference call.
NEW YORK – Danaher reported before the opening of the market on Thursday that its second quarter revenues rose 37 percent year over year, thanks largely to steep gains from its life sciences and diagnostics businesses.
For the three months ended July 2, revenues rose to $7.22 billion from $5.30 billion in the second quarter of 2020, beating the average Wall Street analyst estimate for revenues of $6.72 billion.
Revenues for the life sciences business rose 41 percent to $3.73 billion from $2.64 billion, revenues for the diagnostics business also rose 41 percent to $2.34 billion from $1.66 billion, and the company saw a 16 percent increase in the environmental and applied solutions business to $1.15 billion in revenue from $995.0 million in the year-ago quarter.
"Broad-based strength across the portfolio helped us deliver over 30 percent core revenue growth and outstanding earnings per share growth and cash flow generation," Danaher President and CEO Rainer Blair said in a statement. "We continued to make significant growth investments during the quarter, strengthening our organic growth trajectory and enhancing our portfolio with the announcement of our pending acquisition of Aldevron."
Danaher announced in June that it has entered into a definitive agreement to acquire Aldevron, a manufacturer of plasmid DNA, mRNA, and proteins, for approximately $9.6 billion. On a conference call with analysts following the release of the earnings, Blair said that the company anticipates Aldevron will generate revenues of $500 million in 2022, with more than 20 percent annual revenue growth.
Blair noted that revenues from the Danaher's high growth markets grew nearly 35 percent in Q2 and revenues from its developed markets were up more than 25 percent. Revenues in each of its three largest markets — North America, Western Europe, and China — were up 30 percent or more.
The growth in the life sciences unit was broad based, with most of Danaher's major businesses in that unit delivering core growth of 30 percent or better, he said. The company is also continuing to see strong demand for its bioprocessing products, with combined core revenue growth of more than 40 percent for the Cytiva and Pall businesses.
Blair also said that Danaher's non-COVID-related bioprocessing business rose in the low double digit percentage points, and the company saw robust customer activity and order rates. Revenues from COVID-related vaccines and therapeutics were "consistent with the first quarter and exceeded $1 billion over the first six months of the year," he added.
In the diagnostics business, revenue growth was led by more than 50 percent core growth in Danaher's Cepheid business unit, Blair said. Beckman Diagnostics and Leica Biosystems each grew more than 30 percent as patient volume and clinical diagnostic activity approached pre-pandemic levels around the world.
"At Cepheid, growth outside of respiratory testing was led by our sexual health and hospital-acquired infection assays, particularly among newly acquired Cepheid customers," he added. "In respiratory testing, we believe we continued to gain market share as expanded manufacturing capacity enabled the team to produce and ship approximately 14 million cartridges in the quarter."
COVID-only tests accounted for approximately 80 percent of these cartridge shipments, Blair noted, while Danaher's four-in-one combination test for COVID-19, Flu A, Flu B, and RSV made up the other 20 percent.
In the environmental and applied solutions segment, the company saw demand in its water quality business for analytical chemistries and consumables, driven by improving activity across municipal, chemical, food, and beverage end markets, Blair said. Equipment order rates accelerated as customers got back to investing in larger projects, he added.
The company's net income in Q2 rose to $1.79 billion, or $2.40 per share, from $927.0 million, or $1.24 per share. On an adjusted basis, Danaher reported earnings of $2.46 per share, beating the average analyst estimate of $2.05 per share.
The firm's Q2 R&D costs rose 32 percent to $426.0 million from $323.0 million in the prior-year quarter, while its SG&A expenses rose 17 percent to $1.97 billion from $1.69 billion.
Danaher ended the quarter with $7.32 billion in cash and cash equivalents.
For the third quarter, the company said it expects core revenue growth in the mid- to high-teens percent range.
Blair said the company expects to deliver approximately 20 percent core revenue growth for full-year 2021. Danaher also expects to recognize $2 billion in COVID-related vaccine and therapeutic revenues in 2021 and anticipates entering 2022 with approximately $1.5 billion in COVID-related backlog revenue. He also noted the company expects to ship approximately 50 million respiratory tests in 2021.
"These assumptions do not include the potential contribution from booster shots or an expansion of availability to populations under 12 years old, due to the level of uncertainty around each of these scenarios," he added.
Danaher's shares rose more than 3 percent to $289.44 in afternoon trading on the New York Stock Exchange.