This story originally ran on April 22.
By Tony Fong
Danaher's recent acquisitions of AB Sciex and Molecular Devices helped grow sales for its life science and diagnostic business 52 percent in the first quarter year over year, the company said this week.
The three months ended April 2 represented the conglomerate's first quarter as the owner of the mass spec business once jointly controlled and operated by Life Technologies and MDS.
While the company did not break out revenue figures for the instruments, CEO Larry Culp said he was "pleased" with the integration process and hinted the company might launch a new product during next month's American Society for Mass Spectrometry conference.
Along with the mass-spec business, now housed in AB Sciex, Danaher acquired MDS' Analytical Technologies business and formed a new company, Molecular Devices, to house that business.
During a conference call accompanying the Q1 earnings, Culp said of the two acquisitions, "We've been very pleased with the customer and associate feedback that we've received to date. Our initial operating reviews have been very positive."
In its first-quarter earnings report filled with the US Securities and Exchange Commission today, Danaher said, "The acquisition of AB Sciex significantly expands the company's position in the life sciences and diagnostics business and in particular establishes a position in the mass spectrometry market."
Culp said during the conference call that the addition of AB Sciex and Molecular Devices has made Danaher's Medical Technologies segment a $4 billion business. In 2009, that segment posted sales of $3.1 billion.
The two deals gave Danaher $126 million in accounts receivables and a total net cash consideration of $1.1 billion for the first quarter.
As a result of the new purchases, Danaher has also broken out its Medical Technologies earnings into Life Sciences and Diagnostics, and Dental. In total, Medical Technologies recorded sales of $948.3 million in Q1 2010, up 32 percent from $717 million a year ago.
Sales in Life Sciences and Diagnostics comprised 55 percent, or about $522 million, of total sales in Medical Technologies. Life Sciences and Diagnostics sales rose 52 percent during the quarter with acquisitions contributing 38 percent to the growth, primarily as a result of AB Sciex and Molecular Devices, Danaher said.
During the conference call, Culp took particular note of AB Sciex's acquisition of Eksigent's liquid chromatography business (PM 02/19/10) and said that its "successful entry into this high-priority adjacency just 14 days after joining Danaher certainly sets a new benchmark for our M&A and strategic efforts."
The firm has about $2 billion of funds available, and while Culp did not specifically say that AB Sciex will be adding new acquisitions in the coming months, he left open that possibility. Indeed, Danaher has a reputation as an aggressive M&A player (PM 09/17/09), and during the past year has closed on 18 deals.
Responding to an analyst's question, Culp said the M&A environment "in our view has been good." He added that although Danaher's primary strategy remains to add bolt-ons to existing businesses in the Danaher group, "every once in a while, you could expect us to do something bigger, but again I think that will be the exception as opposed to the number one priority."
He said that he is "excited" about AB Sciex's new product pipeline and said "we'll have some news next month at the ASMS show."
At Pittcon in February, AB Sciex officials spoke about a new "groundbreaking" mass-spec platform the company was developing that allows both qualitative and quantitative analysis at high resolution and high sensitivity with accurate mass. Officials declined at the time to say when the system would be launched (PM 03/05/10).
This week, the firm announced a collaboration with the Samuel Lunenfeld Research Institute aimed at improving understanding of cancer, diabetes, and heart disease. The work will be carried out using the new platform under development (See related story).
Danaher said companywide sales for the first quarter rose 18 percent to $3.1 billion from $2.6 billion in Q1 2009. Profits rose 26 percent to a little more than $3 million, or $0.89 per diluted share, from $2.4 million, or $0.72 per diluted share, a year ago.
Danaher said it had cash and cash equivalents of more than $8 million as of April 2. R&D spending climbed 16 percent to $1.9 million from $1.6 million a year ago.