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Danaher Q2 Revenues Tick Up 4 Percent

NEW YORK (GenomeWeb) – Danaher today reported that revenues in its second quarter grew almost 4 percent year over year with growth in its Life Sciences and Diagnostics segment a little less than 3 percent. 

For the three months ended July 3, the Washington-based conglomerate posted total revenues of $5.13 billion, up from $4.96 billion in the year-ago quarter, and above the consensus Wall Street estimate of $5.06 billion. 

Organically, revenues were up nearly 4 percent for the quarter. Acquisitions added another 7 percent of growth, while currency translation reduced revenues by about 7 percent, Danaher said. 

Life Sciences and Diagnostics, the firm's largest segment, recorded $1.84 billion in revenues for Q2 2015 compared to $1.79 billion in Q2 2014, the company said in its Form 10-Q filed with the US Securities and Exchange Commission. On a core basis, revenues in the segment were up about 5 percent, Danaher President and CEO Thomas Joyce said on a conference call after the release of the firm's financial results. 

Diagnostic revenues grew in the mid-single digits, paced by Beckman Coulter, which improved in most major product lines, Joyce said, adding China and the Middle East were particularly strong as business in both geographies rose in the double digits. 

Meanwhile, life science revenues grew in the low-single digits, as Sciex was up in the mid-single digits, driven by the pharmaceutical and clinical end markets, he said. 

In May, Danaher announced plans to buy Pall for $13.8 billion in an all-cash deal and to split its business into two publicly traded firms. The Life Sciences & Diagnostics and Dental segments, water quality and product identification platforms, and Pall will be rolled into one business and keep the Danaher name. The second industrial growth company will comprise Danaher's Test & Measurement instrument platforms and its specialty industrial businesses.

Joyce said on the call that US antitrust regulators have approved the Pall deal, and Danaher expects a ruling from EU regulators next month. 

"We're also making great progress on the planning front, have identified key leadership appointments, and look forward to closing the transaction later this year," Joyce said. Upon the separation of the firm, "we will have created two strategically focused independent companies, each with the ability to pursue meaningful M&A. We believe these companies will be better and stronger separately than they are together and generate long-term value for our shareholders." 

In Danaher's other segments, Test & Measurement recorded $842.4 million in revenues, down from $856.5 million, while Environmental revenues grew to $892.3 million from $876 million, Dental revenues shot up to $687.6 million from $528.1 million, but Industrial Technologies revenues slid to $864.5 million from $913 million. 

By geography the US was up in the mid-single digits, as was Europe and the high-growth markets, which include China and the Middle East. Sales in Brazil and Russia, however, were weak, Joyce said, and smaller developed markets, such as Japan, "experienced more modest growth." 

Danaher posted a profit of $695.6 million, or $.97 per share, for the second quarter, compared to a profit of $676.4 million, or $.95 per share, in the year-ago quarter. On a GAAP basis, EPS was $1.08, beating analysts' average estimate of $1.04. 

Its R&D spending rose about 3 percent year over year to $344.9 million from $336.4 million, while its SG&A costs increased 6 percent to $1.48 billion from $1.39 billion. 

The firm finished the quarter with $3.34 billion in cash and cash equivalents. 

For the third quarter, Danaher is guiding to adjusted EPS from continuing operations of between $1 and $1.04. The company also changed its adjusted EPS guidance for full-year 2015 to a new range of $4.25 to $4.33 from a previous range of $4.23 to $4.33. 

Danaher recently divested its communications business, resulting in a reduction in its adjusted EPS for the first half of 2015. The reduction was essentially offset by the firm's Q2 performance, which exceeded Danaher's guidance issued in April, the firm said. The divestiture also resulted in a 26 million-share reduction in the company's outstanding stock. The new full-year 2015 EPS guidance includes the changes, Danaher said. 

"We expect the macroenvironment to remain a challenge as we move into the second half of 2015, but we're confident that our focus on driving growth and optimizing our portfolio will offer our shareholders substantial value for years to come," Joyce said on the call. 

In morning trading on the New York Stock Exchange, Danaher shares were up a fraction of 1 percent to $88.51.