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PerkinElmer Q1 Revenues Up 25 Percent

NEW YORK (GenomeWeb) – PerkinElmer reported after the close of the market on Monday that its first quarter revenues rose 25 percent year over year, thanks largely to a 62 percent increase in revenues from its diagnostics business.

For the three months ended April 1, the company reported revenues of $644.0 million, up from $514.1 million in Q1 2017, and beating analysts' average estimate of $619.6 million. The firm's revenues grew 6 percent organically, composed of 5 percent growth from its base business and 1 percent growth from incremental organic growth in the Euroimmun business PerkinElmer acquired in June 2017.

Revenues from the firm's diagnostics business unit rose to $247.5 million in Q1 2018 from $152.4 million in Q1 2017. Organic revenues rose 7 percent. Revenues for its discovery and analytical solutions (DAS) unit rose 10 percent year over year to $396.5 million from $361.8 million in Q1 2017. Organic revenues for the DAS unit increased 5 percent.

"We are off to a very good start in 2018, as we delivered strong revenue and adjusted earnings per share growth in the first quarter," PerkinElmer Chairman and CEO Robert Friel said in a statement. "In recognition of both the progress made in the first quarter and the continuing opportunities available to us, we are confident in raising both our revenue and adjusted earnings per share guidance for the year."

On a conference call with analysts following the release of the earnings, Friel said diagnostics now represents about 40 percent of PerkinElmer's total revenues, while life sciences represents about 35 percent of the total. The remaining 25 percent is in the applied markets and includes industrial, food, and environmental customers.

Sales to pharma and biotech customer grew in the high single digits organically, and academic and government sales increased mid-single digits organically, Friel noted. Sales to environmental and food customers grew in the mid-single digits organically, but were offset by some softness in the industrial markets.

In diagnostics, Friel said, PerkinElmer is focusing on its Vanadis non-invasive prenatal testing solution and its whole-genome sequencing service. He noted that the company will soon be receiving CE marking for Vanadis, and will commence shipping the test in the second half of the year. Friel also said that the company processed about 5,000 samples in Q1 for its WGS service, which remains on track to reach $8 million to $10 million in revenues for 2018.

In the DAS business, Friel said the company plans to focus on accelerating growth in China and the emerging markets.

"We are now producing three product lines in China and expect soon to close on a small acquisition in China and to expand our elemental analysis products," Friel said. "For the DAS business, China grew high-teens in the first quarter with broad base growth across life sciences and applied market."

The firm's net income for Q1 2018 fell to $26.0 million, or $.23 per share, from $38.6 million, or $.35 per share, a year earlier. On an adjusted basis, the firm reported EPS of $.63 for the quarter. Analysts had expected earnings per share of $.61 for the recently completed quarter. Friel attributed the EPS beat to higher organic revenue growth and a slightly lower tax rate than planned.

PerkinElmer's Q1 R&D costs rose 38 percent to $46.0 million from $33.3 million in the year-ago period, and its SG&A expenses rose 36 percent to $199.7 million from $147.0 million in Q1 2017.

The company ended the quarter with $180.8 million in cash and cash equivalents.

For full-year 2018, PerkinElmer lowered its guidance for EPS from continuing operations to $2.25 from a previous guidance of $2.28. However, the firm raised its guidance for adjusted EPS for the year to $3.60 from a previous forecast of $3.50. Analysts expect EPS of $3.53 for the year.

During the call, PerkinElmer CFO Andy Wilson said the company is also expecting full-year 2018 reported revenues to be approximately $2.8 billion, representing 5 percent organic growth in the base business and Euroimmun revenues of approximately $380 million. This reflects slightly stronger organic growth and the impact of the current foreign exchange environment.

For Q2, Wilson said, the company is forecasting reported revenues of $695 million and adjusted EPS of $.86. Analysts are expecting revenues of $679.0 million and EPS of $.85 for Q2, and revenues of $2.74 billion for the full year.

Friel noted that this will be Wilson's last analyst conference call as PerkinElmer's CFO. As the company has previously announced, Wilson is retiring, and will be replaced by James Mock, effective May 1.

The firm's shares dipped nearly 2 percent to $72.18 in early Tuesday morning trading on the New York Stock Exchange.