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Life Technologies' Genetic Analysis Sales Drive Q1 Revenues up 5 Percent

NEW YORK (GenomeWeb News) – Life Technologies reported after the close of the market Tuesday that its first-quarter revenues increased 5 percent, or 2 percent excluding the impact of currency, beating Wall Street estimates on the top and bottom line.

The firm reported total revenues of $939 million for the three months ended March 31, compared to $896.8 million for the first quarter of 2011. It beat analysts' consensus estimate for revenues of $921.8 million.

Sales for its Genetic Analysis business, which includes sequencing products, rose 7 percent year over year to $356 million. Sales for the Research Consumables business grew 4 percent to $420 million, and sales for the Applied Sciences business were up 4 percent to $162 million.

By region, sales for the Americas were flat year over year, while Europe grew 2 percent , Asia Pacific was up 8 percent, and Japan sales increased 7 percent.

"Our end markets remain in line with our expectations, with strength in emerging markets and Asia, and stability in the US and Europe," Life Technologies Chairman and CEO Greg Lucier said on a conference call following the release of the results.

"We're not seeing a change in buying behavior by the labs at this current level," he said. "We think it has stepped down from 2011. We're at a stable rate now, and we don't see disruption to that pattern for the course of 2012."

Lucier added that Life Tech "saw particular strength across all of our businesses in Japan, as the government fiscal year ended and researchers spent their remaining budget funds," he added. "We expect to see the normal sequential decline in Q2 as the Japanese government finalizes its budget for 2012 in May and researchers evaluate their spending."

Life Tech had high-teens revenue growth in China and "strong growth" in Eastern Europe and Russia, according to Lucier.

In its sequencing business, he said the firm saw "significant" year-over-year growth for the Ion Torrent PGM platform. "We are winning the majority of bids where we compete, and just as importantly, we are expanding the existing PGM market by reaching customers who are new to next-generation sequencing," said Lucier.

CFO David Hoffmeister noted on the call that the company will no longer break out Ion Torrent revenues separately, as it had done in previous quarter since the initial launch of the PGM. The Ion Torrent systems are reported under the Genetic Analysis business group. "We're reducing the amount of information disclosed for competitive reasons," he said.

Lucier said Life Tech continues to have the largest installed base of next-generation sequencers on the market and it continues to add more than "100 new customers to our Ion community each and every week."

Earlier this year, Life Tech announced the impending launch of its new Ion Proton Sequencer. The firm is developing two semiconductor chips to run on the system: the Ion proton I chip is being designed to sequence a human exome in a day, and the Ion Proton II chip is expected to sequence a whole human genome in a day for $1,000.

Lucier said the firm is on track for a mid-year delivery of the Proton I chip, with delivery of the Proton II chip scheduled for six months later.

Life Tech said it is taking orders on the new products, and announced separately today that multiple Ion Proton Systems have been installed at the Baylor College of Medicine Human Genome Sequencing Center as part of an early-access program. Lucier said that those units are already generating raw data needed for full exomes in just a few hours.

During the quarter, Life Tech made two tuck-in acquisitions in the animal health and food safety markets. It purchased Matrix Microscience, a UK-based provider of large sample volume automated prep systems and consumables for food-borne pathogen detection, as well as French firm Laboratoire Service International, which makes real-time PCR animal testing for the veterinary market.

Lucier also noted on the call the firm's growing push into the diagnostics market. During the quarter, it hired Ronnie Andrews as president of medical sciences. He joined from GE Molecular Diagnostics, where he served as a segment leader following GE's 2010 acquisition of Clarient, where Andrews was CEO.

Lucier said that the company already has more than 7,500 instrument placements in clinical settings that span its capillary electrophoresis, qPCR, SOLiD, and Ion Torrent Personal Genome Machine technologies. "Combining these with newly introduced technologies in fluorescent microscopy and flow cytometry allows a unique opportunity to be more than a single-discipline product supplier to the clinical market," said Lucier.

Life Tech posted non-GAAP net income of $181.4 million, or $.99 per share, for the first quarter compared to $157.8 million, or $.85 per share, for Q1 2011. Wall Street had expected EPS of $.93. On a GAAP basis, its profit was $132.7 million, or $.72 per share, compared to $93.7 million, or $.50 per share, for Q1 2011.

The firm's R&D spending for the quarter was $88.6 million, down 3 percent from $91.5 million, while its SG&A expenses increased 1 percent to $253.4 million from $250.6 million.

It finished the quarter with $263.6 million in cash and short-term investments.

Life Tech is maintaining its full-year 2012 organic revenue growth forecast of between 2 percent and 4 percent, revenues of around $3.7 billion, and non-GAAP EPS of between $3.90 and $4.05.

In early Wednesday trade on the Nasdaq, shares of Life Technologies were down 2 percent at $45.27.