NEW YORK (GenomeWeb) – PerkinElmer reported after the close of the market on Thursday that its second quarter revenues rose 2 percent year over year, thanks largely to a 6 percent increase in reported revenues from its diagnostics business.
Separately on Thursday, PerkinElmer announced that PerkinElmer Genetics has launched clinical genomics services, including clinical whole-genome sequencing.
For the three months ended July 2, the diagnostics firm reported total revenues of $547.0 million, up from $536.2 million a year earlier, but missing Wall Street analyst expectations for revenues of $554.0 million.
Revenues for the firm's discovery and analytical solutions (DAS) business were relatively flat at $383.1 million, compared to $381.5 million in Q2 2016. Organic revenues increased 1 percent. Revenues for the diagnostics business rose 6 percent to $163.8 million from $154.7 million. Organic revenues for the unit increased 1 percent.
"We continued to make excellent progress in the second quarter, driving operating efficiencies and executing on our strategic initiatives," PerkinElmer Chairman and CEO Robert Friel said in a statement. "During the quarter, we announced our agreement to acquire EuroImmun and completed the successful divesture of our non-core medical imaging business, actions we believe improve our growth trajectory while expanding our capabilities. Based on our overall performance for the first half, we remain on track to deliver our full year 2017 financial commitments."
On a conference call with analysts following the release of the earnings, Friel said the "disappointing" top line result was partially due to weakness in the academic market outside the US, and partially due to a malware attack on a third-party logistics provider in Europe in the last two days of the quarter. Friel estimated the malware attack caused a $5 million impact on revenues, which was split fairly evenly between the DAS and diagnostics business units. However, he also said, "I think we'll get all of it back" on instrument sales in subsequent quarters.
As for the firm's acquisition of EuroImmun, Friel said the deal is part of PerkinElmer's plan to drive strategic growth initiatives. He believes EuroImmun will fill key gaps in PerkinElmer's business and that PerkinElmer can accelerate EuroImmun's growth in the US.
PerkinElmer's Q2 net income grew to $204.1 million, or $1.84 per share, from $63.9 million, or $.58 per share, in the year-ago period. On an adjusted basis, the firm reported EPS of $.67, in line with Wall Street expectations.
The company's Q2 R&D expenses rose 5 percent to $33.6 million from $31.9 million in Q2 2016, and its SG&A costs dipped 2 percent to $147.9 million from $151.0 million.
PerkinElmer ended the quarter with $616.3 million in cash and cash equivalents.
For the full year 2017, the company now forecasts earnings per share of $2.23 to $2.31 and adjusted earnings per share of $2.84 to $2.92. Analysts are expecting EPS of $2.86 for the year. On the call with analysts, CFO Frank Wilson said the company is expecting $2.3 billion to $2.4 billion in revenues for the year. He also noted that PerkinElmer is expecting Q3 revenues of $550.0 million to $555.0 million and Q3 adjusted EPS of $.71 to $.73. Analysts are expecting 2017 revenues of $2.21 billion, Q3 revenues of $543.1 million, and Q3 EPS of $.71.
Regarding its new clinical genomics services offering, PerkinElmer said that through its integrated laboratories in the US, India, and China it offers a global genomic lab testing platform for screening and diagnostic testing, specializing in newborn screening and high-throughput next-generation sequencing for rare inherited diseases. PerkinElmer Genetics will now also offer whole-exome sequencing and whole-genome sequencing services. These services will be combined with biochemical profiling targeted for rapid WES and WGS for genetic disease diagnosis.
"We are pleased to extend our portfolio to include clinical WGS which expands the continuum of care from preconception to newborns. This offering will provide clinicians insights into the complex nature of rare and inherited diseases," Madhuri Hegde, vice president and chief scientific officer for laboratory services of PerkinElmer's diagnostics business group, said in a statement. "Because sequencing is not a stand-alone option, our ability to use dried blood spot samples and assimilate molecular and biochemical data from our global laboratories will improve interpretation of genomic variants."
On the call with analysts, Friel said PerkinElmer's expertise in dried blood spot biosampling can help improve patient access to WGS and WES globally, and can decrease costs. The company expects to generate about $15 million to $20 million from this business through the end of 2017 and 2018, and is likely to generate $50 million or more in the long term.