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Danaher Reports 17 Percent Spike in Q2 Revenues; Restructures Reporting Segments

NEW YORK (GenomeWeb) – Danaher said on Monday that its second quarter revenues grew 17 percent year over year.

The company's results for the second quarter included operations from Fortive, which it spun off on July 2. In connection with the sale of Fortive, Danaher has revised its reporting segments: Life Sciences & Diagnostics, formerly one segment, will be divided into a Life Sciences segment and a Diagnostics segment, while the Environmental and Industrial Technologies segments will be combined into a new segment, called Environmental & Applied Solutions. The Dental segment remains unchanged.

Danaher posted $5.79 billion in revenues for the quarter, up 17 percent from $4.96 billion in the same quarter last year and beating the consensus Wall Street estimate of $5.76 billion.

Core revenues increased by 2 percent year over year, acquisitions added 15 percent to revenue growth, and currency effects dampened results by a half a percent, the company said.

Revenues in the Life Sciences & Diagnostics segment grew 42 percent to $2.6 billion, compared to $1.84 billion in the second quarter of 2015. Core revenues in the segment grew 3 percent year over year, which Danaher President and CEO Thomas Joyce said in a conference call was led by strength in high-growth markets and Western Europe.

Within Life Sciences & Diagnostics, core revenues at Sciex grew in the mid single digits, Joyce said, driven by continued strength in pharmaceutical, food, and environmental end markets. He added that the company had another very strong quarter in China, where new regulations by the China Food and Drug Administration increased demand for drug testing and food safety.

Beckman Life Sciences continued to outperform, with high single-digit core growth that was driven by strong demand in flow cytometry, in particular in North America and China, Jocye said. The flow cytometry growth was largely driven by demand for the new CytoFlex, he said.

Core revenues in diagnostics grew in the low single digits. At Beckman Coulter, core revenues were up in the low single digits, driven primarily by strength in high-growth markets, Joyce said. He pointed out that the company's recently launched molecular diagnostics platform Veris "continues to gain early traction in Europe."

Among Danaher's other segments, Test & Measurement sales decreased 4 percent to $650 million from $676 million; Environmental sales grew 8 percent to $958 million, from $892 million; Dental sales increased 4 percent to $715 million, from $688 million; and Industrial Technologies sales decreased less than 1 percent to $859 million, from $865 million.

Danaher posted a 5 percent decrease in net earnings for the quarter, to $656.7 million, or $.94 per diluted share, from $695.7 million, or $.97 per diluted share, a year ago. On a non-GAAP basis, adjusted diluted net EPS from continuing operations was $1.25, up 17 percent from $1.07 a year ago, and beating the consensus Wall Street estimate of $1.22.

The company increased its R&D spending 10 percent year over year to $336.6 million from $304.6 million, and grew its SG&A expenses 26 percent to $1.78 billion from $1.41 billion.

As of July 1, Danaher held approximately $4.1 billion in cash and cash equivalents.

"Our team continued to execute well in challenging economic conditions," Joyce said in a statement.

Going forward, Danaher will report its results for four business segments: Life Sciences, which includes Beckman Coulter Life Sciences, Sciex, Molecular Devices, Leica Microsystems, and Pall; Diagnostics, which includes Beckman Coulter, Leica Biosystems, and Radiometer; Dental, which includes KaVo, Kerr, Nobel Biocare, Ormco, and Dexis; and Environmental and Applied Solutions, which includes the water quality businesses Hach, Trojan Technologies, and ChemTreat, as well as the Product Identification businesses Videojet, Esko, and X Rite Pantone.

In the third quarter, the company anticipates diluted net EPS from continuing operations of $.47 to $.51 and adjusted diluted EPS from continuing operations of $.80 to $.84.

Full-year 2016 diluted net EPS from continuing operations are estimated to be $2.79 to $2.86 and adjusted diluted EPS from continuing operations to be $3.53 to $3.60. All guidance statements treat Fortive as a discontinued operation for the full year 2016.

In morning trading on Thursday on the New York Stock Exchange, shares of Danaher were down 0.33 percent to $80.97.

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