NEW YORK – Danaher on Thursday reported a 23 percent year-over-year increase in third quarter revenues, which included a rise of nearly 25 percent in life sciences revenues and of nearly 30 percent in diagnostics revenues.
For the three months ended Oct. 1, revenues reached $7.23 billion, up from $5.88 billion a year ago, beating the consensus Wall Street estimate of $7 billion. Core revenue growth was 21 percent.
Life sciences revenues grew to $3.63 billion from $2.92 billion in Q3 2020. Core revenue growth was 20 percent.
On a conference call to discuss the company's financial results, CEO Rainer Blair said both Cytiva and Pall saw growth of more than 30 percent during the quarter, with low double-digit core growth not related to COVID-19.
Blair added that the 2022 backlog for orders from Cytiva, which provides materials for the research and manufacturing of biopharmaceuticals, is already close to $2 billion. He added that Danaher has been investing in capacity expansions in its biotech business "for some time" and expects those capacities to continue to increase going into 2022.
In diagnostics, revenues grew to $2.45 billion from $1.89 billion a year ago. Core revenue growth was nearly 29 percent. During the quarter, Cepheid saw 60 percent growth, Blair said, adding that clinical diagnostic activity and patient volume have largely returned to pre-pandemic levels.
Due to expanded manufacturing capacity, Cepheid was able to ship 16 million respiratory test cartridges in the third quarter. Of these, 80 percent were for the firm's COVID-19-only test, and 20 percent for the 4-in-1 test for SARS-CoV-2, influenza A/B, and respiratory syncytial virus, Blair said.
In the non-respiratory business, Cepheid saw demand for sexual health, virology, and hospital-acquired infection testing, he added.
Revenues in environmental and applied solutions grew 7 percent to $1.15 billion from $1.07 billion in Q3 2020.
In Q3 2021, Danaher's R&D costs grew 29 percent year over year to $441 million from $342.6 million, while its SG&A spending rose 14 percent to $2.06 billion from $1.8 billion.
Blair said the firm has made substantial investments to expand capacity at Cepheid and throughout its bioprocessing business, including Cytiva and Pall. The company expects total capital expenditures across its businesses this year to equal $1.5 billion.
He noted that the firm is investing in its manufacturing network around the world and in research and development to "drive proprietary innovation" in both the short and long term.
The R&D increase is primarily related to more people and more testing equipment, Blair said, and the firm sees the increase as an investment in the future that will drive share gain.
The firm posted a net profit of $1.16 billion, or $1.54 per share, in Q3 compared to a net profit of $883.5 million, or $1.16 per share, in Q3 2020. Adjusted EPS was $2.39, coming in above analysts' average estimate of $2.15.
Danaher finished Q3 with $2.55 billion in cash and cash equivalents.
For the fourth quarter, Danaher expects core revenue growth will be in the low- to mid-teens percent range. For the full year, the company anticipates that core revenue growth including Cytiva will be more than 20 percent.