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Life Sciences, Diagnostics Drive Danaher Q4 Revenues Up 11 Percent

NEW YORK (GenomeWeb) – Danaher today reported an 11 percent year-over-year increase in its fourth quarter revenues, with its Life Sciences and Diagnostics segments growing above the companywide rate.

Danaher also announced a transition plan for Daniel Comas, who will step down as CFO on Jan. 1, 2019, to be replaced by Matthew McGrew.

For the three months ended Dec. 31, 2017, total revenues came in at $5.09 billion, up from $4.58 billion in the year-ago period, and beating the consensus Wall Street estimate of $4.98 billion.

Organic revenue growth from continuing operations companywide was almost 6 percent year over year on a non-GAAP basis. Earlier this month the company preliminarily said that core revenues were expected to be up about 5 percent.

Driving the growth were the Washington D.C.-based conglomerate's two largest segments, Life Sciences and Diagnostics. Life Sciences revenues rose 12 percent year over year to $1.63 billion in Q4 2017 from $1.45 billion in Q4 2016. Diagnostics revenues grew 13 percent year over year to $1.62 billion in the recently completed quarter from $1.43 billion a year ago.

In Life Sciences, core revenues grew more than 7 percent year over year, Danaher President and CEO Thomas Joyce said on a conference call. Beckman Coulter's life science core revenues were up in the high-single digits, driven by its flow cytometry and particle counting business, he said, adding that he believes Beckman Coulter continues to take market share, on improved commercial execution and new product introductions.

During the past three years, that business has launched approximately 20 new products, including several that address higher-growth areas, such as biologics and genomic workflows, "setting the business up well for continued strong performance," Joyce said.

Leica Microsystems core revenues grew in the low-single digits, while Sciex was up in the mid-single digits, driven by the food, environmental, and pharmaceutical end markets. Phenomenex was up in the high-single digits, Joyce said.

Meanwhile, Pall core revenues grew almost 10 percent year over year.

In Diagnostics, core revenues were up 6 percent year over year. Beckman Coulter's diagnostics business improved in the low-single digits, led by immunoassay sales, as well as urinalysis, and clinical chemistry, Joyce said.

Radiometer core revenues improved in the mid-single digits, and Leica Biosystems core revenues rose in the high-single digits, Joyce said.

He also noted "an outstanding quarter" by Cepheid as core revenues in Q4 2017 grew more than 25 percent year over year, with improvement coming across all major product lines and geographies. For full-year 2017, Cepheid core revenues were up about 20 percent, Joyce added.

The better-than-expected performance at Cepheid resulted from improved commercial execution, he said, as new customer additions have improved 15 percent since Danaher bought the business in late 2016 for $4 billion.

He added that an increased test menu has also contributed to growth with new flu and streptococcus tests introduced in 2017, while continued strength in the high-burden developing countries, as well as developed markets, also factored into Cepheid's growth.

Among its other segments, Dental grew 3 percent year over year in Q4 2017 to $758.8 million from $739.3 million a year ago, while Environmental & Applied Solutions was up 13 percent to $1.08 billion from $959.1 million.

R&D spending in Q4 2017 rose 12 percent to $298.9 million from $268.0 million in Q4 2016, and SG&A costs increased 6 percent year over year to $1.59 billion from $1.50 billion.

Danaher posted a profit of $856.6 million, or $1.21 per share, for the recently completed quarter, compared to a profit of $747.0 million, or $1.07 per share, in Q4 2016. Adjusted EPS for Q4 2017 was $1.19, above the consensus Wall Street estimate of $1.16.

For full-year 2017, the firm posted $18.33 billion in revenues, up about 9 percent from $16.88 billion in 2016. It beat the consensus Wall Street estimate of $18.22 billion.

Core revenue growth was 3.5 percent.

Life Sciences grew 6 percent to $5.71 billion from $5.37 billion, while Diagnostics rose 16 percent to $5.84 billion from $5.04 billion.

Dental revenues improved to $2.81 billion, up a fraction of 1 percent from $2.79 billion, and Environmental & Applied Solutions ticked up nearly 8 percent to $3.97 billion from $3.69 billion.

R&D costs grew 16 percent to $1.13 billion from $975.1 million. SG&A costs climbed 8 percent to $6.04 billion from $5.61 billion.

Net earnings were down in 2017 to $2.49 billion, or $3.53 per share, compared to $2.55 billion, or $3.65 per share, in 2016. Adjusted EPS was $4.03, beating the analysts' average estimate of $3.98.

Danaher finished 2017 with $630.3 million in cash and cash equivalents.

The company guided to adjusted EPS for the first quarter in the range of $.90 to $.93. For full-year 2018, adjusted EPS was maintained at a range of $4.25 to $4.35.

Danaher also announced that McGrew will replace Comas as CFO. Comas will continue as an executive vice president at the firm, as well as a member of the Office of the Chief Executive as he gradually transitions to retirement starting on Jan. 1, 2019.

Comas has been with Danaher for more than 25 years and has been its CFO since 2005. McGrew is currently Group CFO of Danaher's Diagnostics and Dental platforms and has been a Danaher Group CFO since 2012. He began at Danaher in 2004 as director of M&A Finance and became vice president of investor relations in 2009, a position he continued in until 2014.