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Agilent Technologies Shuttering Resolution Bioscience Business

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NEW YORK – Agilent Technologies said Tuesday that it is shuttering its Resolution Bioscience liquid biopsy business by early 2024 due to a lack of demand for its next-generation sequencing-based companion diagnostics.

Acquired in March 2021 for $695 million, Resolution Bio was meant to bolster Agilent's long-term strategy to create an NGS liquid biopsy companion diagnostic testing business to support the firm's tissue-based assays. On a conference call to discuss Agilent's fiscal third quarter earnings results, however, CEO Mike McMullen said "the market for kitted NGS-based companion diagnostics has not developed as we expected. Furthermore, we don’t see a realistic path to profitability. As a result, we’ve made the difficult decision to shut down the business."

Agilent CFO Bob McMahon said on the call that the company expects to wind down the business in early fiscal 2024. In the meantime, Agilent took a $291 million pre-tax charge for the fiscal third quarter.

Overall, the Santa Clara, California-based firm said its revenues were down 3 percent for the quarter ended July 31, to $1.67 billion compared to $1.72 billion one year earlier. The firm beat the analysts' consensus estimate of $1.66 billion for the quarter.

McMullen attributed most of the decline in revenues for the quarter to a drop in sales in China as the country's economy weakened. Excluding China, Agilent's revenues grew 2 percent year over year, he said.

Agilent's Diagnostics and Genomics Group posted revenues of $349 million, up 3 percent from $340 million a year earlier. The firm attributed the rise to demand for its immunohistochemistry-based pathology diagnostics products, as patients return to regular health screenings, as well as growth in its nucleic acid solutions division. The firm also noted it began production during the quarter from the new track of its expanded oligo-nucleotide manufacturing facility in Frederick, Colorado, where the added capacity will let the company produce pharmaceutical ingredients for pharma partners' siRNA- and antisense-based therapeutic programs.

Agilent's Life Sciences and Applied Markets Group revenues declined 9 percent, to $927 million from $1.02 billion in the year-ago quarter. McMullen said on the call that customers for Agilent's Life Sciences and Applied Markets Group remain cautious about making capital purchases, a trend that Agilent expects will continue for the rest of the year.

Agilent CrossLab Group revenues rose 10 percent for the quarter, to $396 million compared to $359 million in Q3 2022.

The firm posted net income of $111 million, or $.38 per share, for the recently completed quarter compared to net income of $329 million, or $1.10 per share, in the year-ago quarter. It reported non-GAAP diluted EPS of $1.43 per share, beating Wall Street's consensus estimate of $1.36 per share.

Agilent raised its R&D spending about 2 percent year over year, to $118 million from $116 million, and lowered its SG&A spending about 1 percent, to $407 million from $412 million in Q3 2022. The firm ended the quarter with $1.34 billion in cash and cash equivalents.

For Q4, Agilent expects revenues between $1.66 billion and $1.71 billion and adjusted EPS between $1.33 and $1.36.

Citing a softer macroeconomic environment, Agilent lowered its full-year revenue guidance to a range of $6.80 billion to $6.85 billion, down from prior guidance of $6.93 billion to $7.03 billion. While overall revenues are expected to decline about 1 percent year over year, the firm said its core revenues are expected to grow 1 percent in 2023.

Full-year adjusted EPS is now estimated to be $5.40 to $5.43 per share, down from the previous estimate of $5.60 to $5.65.

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