Note: This story has been updated with comments from the company's conference call to discuss the financial results.
NEW YORK – Danaher reported a 3 percent year-over-year increase in third quarter revenues on Tuesday as growth for its Cepheid and Beckman Coulter Diagnostics businesses were offset by softness in China for its life sciences and diagnostics segments.
For the three months ended Sept. 30, revenues reached $5.80 billion, up from $5.62 billion a year ago and beating the consensus Wall Street estimate of $5.59 billion.
Life sciences revenues rose nearly 5 percent to $1.78 billion from $1.71 billion in Q3 2023, while core revenues fell 2 percent for the segment, the Washington DC-based conglomerate said. Ongoing research and laboratory activity has driven growth in consumables and services within the life sciences segment, but that growth has been offset by declines in capital equipment purchases, particularly in China, Danaher President and CEO Rainer Blair said on a conference call to discuss the firm’s financial results.
Earlier in the year, the Chinese government announced stimulus funding that Danaher said is expected to impact its business. However, Blair said on the call that the firm has not yet seen much ordering activity as customers have delayed purchasing decisions because they are still awaiting details about the implementation.
“While they’re waiting for those details, they tend to also delay, perhaps, the normal purchasing habits that they might have had,” he noted.
In diagnostics, revenues rose 5 percent to $2.36 billion from $2.25 billion a year ago. Core revenues also rose 5 percent. The clinical diagnostics business saw core revenue growth in the low-single-digit percent range, and Beckman Coulter Diagnostics also saw revenues up in the low-single-digit percent range. Blair noted that Beckman saw strong global demand that was partially offset by impacts from China’s volume-based procurement program.
Outside of China, recurring revenues were up in the high-single-digit percent range, driven by new product introductions and installed base expansions, he said.
Meantime, Cepheid’s core revenues rose in the double-digit percent range with “broad-based strength across respiratory and non-respiratory assays,” Blair said. Respiratory testing revenues were about $425 million, exceeding Danaher’s expectations of $200 million due to higher than anticipated volumes and a favorable mix of Cepheid’s 4-in-1 respiratory virus test for SARS-CoV-2, influenza A/B, and respiratory syncytial virus. The higher volumes were driven by customers purchasing tests in preparation for the upcoming Northern Hemisphere respiratory season, Blair said.
The firm is forecasting respiratory testing revenue of $1.7 billion for full-year 2024.
The core non-respiratory reagent portfolio saw growth in the mid-teens percent range, including more than 20 percent growth in group A Streptococcus, sexual health, and virology tests, Blair said. The firm also saw strong installed based growth for lower-throughput systems “as customers continue to add GeneXpert instruments in their clinics and alternate care sites.”
Revenues for the biotechnology business fell 1 percent to $1.65 billion from $1.66 billion in Q3 2023, while core revenues were flat year over year.
Within the biotechnology business, bioprocessing revenues rose in the low-single-digit percent range and discovery and medical revenues were down in the high-single-digit percent range. Bioprocessing orders increased in the high-single-digit percent range sequentially from Q2 2024 to Q3 2024, Blair said. Danaher saw order trends improve in developed markets as larger customers returned to “more normal ordering patterns,” but the firm’s China business was weaker, particularly for equipment purchases as customers have continued to conserve capital, Blair said.
Improving order trends in the business were driven by larger pharmaceutical, biopharmaceutical, and contract development and manufacturing organization customers, he added. Smaller customers, however, have remained cautious with investments and demand has not steadily improved in that segment.
China remains stable and the firm does not expect a change in the short term unless there is “material change in the execution and rollout of the stimulus program in China,” Blair said.
Core revenues in developed markets rose in the low-single-digit percent range, while high-growth markets saw revenues decline in the mid-single-digit percent range, including a high-single-digit decline in China, Blair said.
The firm posted net earnings of $818 million, or $1.12 per share, in Q3 2024 compared to a profit of $1.13 billion, or $1.51 per share, in Q3 2023. Adjusted EPS was $1.71 and beat the analysts' average estimate of $1.57.
The company had $2.63 billion in cash and cash equivalents at the end of Q3.
For the fourth quarter and full year, Danaher expects core revenues will decline in the low-single-digit percent range on a non-GAAP basis.
In afternoon trading on the New York Stock Exchange on Tuesday, Danaher shares dropped 3 percent to $263.95.