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Danaher Q3 Revenues Up 18 Percent

NEW YORK (GenomeWeb) – Danaher reported on Thursday that its third quarter revenues rose 18 percent, year over year.

For the quarter ended Sept. 30, the company reported revenues of $4.13 billion, up from $3.51 billion in Q3 2015, and in line with the expectations of Wall Street analysts.

"Our team executed well despite the economic backdrop, and we were pleased with our performance in the third quarter as the strength and diversity of our portfolio continued to be a key differentiator," said President and CEO Thomas Joyce in a statement.

During a conference call following the release of the earnings, Joyce said that Danaher's recent spin off of Fortive was an important step toward optimizing its portfolio. The firm saw high growth in China and India in Q3, and modest growth in the US and Europe, which was offset slightly by declines in Japan.

Recorded revenues in the life sciences segment rose 60 percent, driven mostly by the acquisition of Pall. Reported and core revenues in the diagnostics business rose 3 percent, driven by sustained strength in China and India, and modest growth in the developed markets. Core growth for Danaher's Beckman Coulter unit was up in the low single digits. And the firm saw robust demand for consumables in diagnostics. Seasonally, Joyce said, Q3 tends to be lighter for diagnostics, but the company expects that business to pick up in Q4.

Danaher's life science business, overall, was up in the mid-single digits, and the firm continues to see good and persistent performance on the biopharma side, Joyce said.

Net earnings for the quarter fell to $391.6 million, or $.56 per share, from $1.40 billion, or $2.01 per share, a year earlier. On an adjusted basis, Danaher reported earnings of $.87 per share, beating analyst expectations for earnings of $.82 per share.

"Since July, we announced two strategic acquisitions, of Cepheid and Phenomenex," Joyce added in the statement. We believe that the addition of these businesses into our diagnostics and life sciences segments, respectively, will enhance our portfolio's strategic positions and broaden our product offering to customers." Both deals are expected to close in the fourth quarter.

On the call, Joyce said he and his executive team are positioning Danaher for strong growth through M&A. The company expects to achieve a double-digit return on investment within five years from its acquisition of Phenomenex, and the Cepheid acquisition will accelerate growth and further differentiate Danaher's offerings.

Further, the addition of Cepheid will likely bolster the Beckman Coulter business, Joyce added, saying that the Beckman business is performing well, and that the addition of Cepheid and a broad position in molecular diagnostics and point-of-care testing will help the core legacy business of Beckman to continue to grow.

The firm's R&D costs for the quarter rose 14 percent to $241.1 million from $212.2 million in Q3 2015. Its SG&A costs rose 13 percent to $1.35 billion from $1.20 billion a year earlier.

Danaher did not report how much cash it had at the end of the quarter.

For Q4, the company anticipates adjusted earnings per share of $1.01 to $1.05. Analysts, on average, are expecting Q4 earnings of $1.05. For the full year, Danaher expects adjusted earnings per share of $3.57 to $3.61, compared to analyst estimates of $3.56 per share for 2016.

Danaher's shares rose nearly 2 percent to $78.64 in morning trading on the New York Stock Exchange.