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Danaher Q3 Revenues Increase 46 Percent

NEW YORK (GenomeWeb News) – Danaher today reported a 46 percent increase in sales year over year for the third quarter, beating analysts' estimates on the top and bottom line.

For the three months ended Sept.30, the Washington-based conglomerate posted $4.52 billion in sales, compared to$3.09 billion in the year-ago period, exceeding Wall Street expectations of $4.46 billion. Core business added 7.5 percentage points to growth, while acquisitions added 35 percentage points and currency translation added 3.5 percentage points.

The Life Sciences & Diagnostics segment, which houses AB Sciex and the recently purchased Beckman Coulter business, grew to $1.57 billion during the quarter, compared to $559.8 million a year ago, mostly as a result of the Beckman acquisition. Core growth in the segment added six percentage points to the growth, while acquisitions added more than 168 percentage points.

On a conference call following the release of its earnings, Danaher CEO Larry Culp said that the Beckman business was flat on a topline basis for both equipment and consumables.

Three months into the close of the $6.8 billion deal, Culp said that he is pleased "by the absence of surprises on both sides of the ledger." Integration has gone "very well and we're really having a significant impact on the way we run the business," he said, adding that Beckman is "rapidly adopting" the Danaher Business System with 25 full-time people working within Beckman to implement DBS.

Workforce reductions have started and there is "a little more discipline on the [SG&A] spend," Culp said.

In August, Beckman received a warning letter from the US Food and Drug Administration concerning violations at the company's Brea, Calif., facility connected to quality control issues for its AccuTnl troponin test kits. The issue is a longstanding one and Culp said today that "we really didn't find that there was new news in the wake of that FDA audit."

The work that Beckman had already been doing to address those issues, he said, "gives us the conviction that we will not only fix the issues of the past but ultimately make quality a competitive advantage for Beckman."

Culp also gave a new timetable for FDA submission for the troponin assay of the first quarter of 2012. In April Beckman said in a regulatory filing that it expected to file to FDA for clearance of the test on its Dxl and Access instruments during the third quarter.

In its quarterly earnings document filed with the US Securities and Exchange Commission today, Danaher added that its mass spectrometry business, housed in AB Sciex, grew at a low double-digit clip year over year for the third quarter, driven by "strong demand" in both the academic and proteomic research markets and the applied markets.

Company-wide R&D expenses grew to $289.6 million, a 47 percent increase from $196.4 million a year ago, while SG&A costs rose 46 percent to $1.27 billion from $872.9 million.

Danaher posted a profit of $523.4 million, or $.74 per share, down 19 percent from a profit of $646.4 million, or $.95 per share, from a year ago due to charges related to the Beckman deal. On a non-GAAP basis, EPS of $.73 beat analyst estimates of $.70.
The company ended the quarter with $484.4 million in cash and cash equivalents.

Danaher said that in the fourth quarter it anticipates a previously announced $50 million restructuring effort would be increased to about $100 million, excluding ongoing cost reduction efforts related to Beckman.

Danaher CFO Dan Comas said on the conference call that in the third quarter about $50 million was spent on restructuring Beckman, and in the fourth quarter Danaher would spend about $25 million on that effort.

Culp also said that Danaher is raising its full-year 2011 adjusted diluted EPS from continuing operations to between $2.79 and $2.84 from an earlier range of $2.75 to $2.82.

For the fourth quarter, he gave guidance for adjusted diluted EPS from continuing operations of between $.75 and $.80.

In early morning trading today on the New York Stock Exchange, shares of Danaher were up about 3 percent to $45.23.

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