NEW YORK (GenomeWeb News) – Beckman Coulter reported after the close of the market Wednesday that its third-quarter revenues increased 9 percent, with a decline in its Life Sciences segment offset by growth in the Clinical Diagnostics segment.
The Orange County, Calif.-based firm brought in total revenues of $893.8 million for the three-month period ended Sept. 30, compared to $822.8 million for the third quarter of 2009. Beckman beat analysts' consensus estimate of $884.7 million.
Its recurring revenue, which includes supplies, service, and lease payments, grew 7 percent to $723 million from $676.1 million, while cash instrument sales increased 16 percent to $170.8 million from $146.7 million.
Sales for its Clinical Diagnostics segment jumped 11 percent to $787.6 million from $711 million, while sales for the Life Sciences segment dropped 5 percent to $106.1 million from $111.8 million.
Paul Glyer, SVP of strategy and business development for Beckman, said during a conference call following the release of the results that weak demand, particularly in Europe, was the primary reason for the life sciences sales decline. He added that hospital customers have remained cautious in purchasing instruments and have preferred leases.
CFO Charles Slacik also noted during the call that flow cytometry and molecular diagnostics are considered part of the firm's diagnostics business, whereas other firms usually consider such businesses as part of life sciences. Including those two businesses, Beckman "posted growth as good as anybody in the [life sciences] space," he said.
Within the diagnostics unit, chemistry and clinical automation products had 14 percent sales growth to $323.2 million; cellular analysis was up 7 percent to $244.2 million, and immunoassay and molecular diagnostics products were up 11 percent to $220.2 million.
Though Beckman benefitted from a $112.2 million sales contribution from the Olympus diagnostics business, which it acquired in 2009 for $800 million, as well as strong growth in recurring revenue from international markets, interim President and CEO Bob Hurley said in a statement that the firm's Q3 revenues in developed markets were "negatively impacted by softness in demand."
Hurley was appointed interim chief last month after former Chairman, President, and CEO Scott Garrett resigned. He took over amid an ongoing problem with quality control issues surrounding the firm's AccuTnl troponin test kits that run on its UniCel DxI immunoassay system. Company officials noted on the call today that they expect to name a new CEO sometime in the next three to six months.
In a statement today, Hurley said, "We believe that U.S. recurring revenue growth will remain under pressure until our quality challenges are behind us, especially in Chemistry and Immunoassay."
He said that Beckman has "identified root causes and developed remediation plans. Implementation is underway with some projects continuing through 2011."
Beckman posted net income of $67 million, or $.95 per share, for the third quarter, compared to a profit of $1.5 million, or $.02 per share, for Q3 2009. Last year's Q3 results included a $79.2 million charge for restructuring and acquisition-related costs. On an adjusted basis, Beckman's EPS for Q3 2010 was $1, compared to $.89 for Q3 2009. Analysts had expected EPS of $.88.
The firm's R&D spending for the quarter was $66.2 million, down 8 percent from $71.7 million, and its SG&A expenses were nearly flat at $211.7 million versus $211.3 million. Its charge for amortization of intangible assets was $13.8 million, up from $11.3 million for Q3 2009.
Beckman finished the quarter with $284.6 million in cash and cash equivalents.
The company reaffirmed its FY 2010 outlook from July with expected revenues of between $3.65 billion and $3.7 billion. It expects adjusted earnings per diluted share in the range of $3.90 to $4.00.
A key project for Beckman Coulter has been development of its DxN molecular diagnostics platform, and company officials said earlier in the year that they expect to launch the system in 2012. Though the firm said today that it has shifted some R&D dollars from future products to resolve its current quality issues, the firm is trying not to let that effect development of the molecular diagnostics program, and "we're not revising our outlook with respect to molecular," said Glyer.
"Molecular is our most valuable project," Glyer said. But, "customer satisfaction is our overriding priority and when there's tension for resources, the winner's going to be customer satisfaction," he said.