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Sharp Increase in Life Sciences, Diagnostics Drive Danaher Q2 Revenues up 25 Percent

NEW YORK (GenomeWeb News) – Danaher today reported sales in its Life Sciences & Diagnostics segment more than doubled in the second quarter from a year ago, while total revenues grew 25 percent.

For the three months ended June 29, the Life Sciences & Diagnostics business posted revenues of $1.58 billion, up 125 percent from $704.8 million a year ago as acquisitions added 123 percentage points to the growth while the segment's core business grew 5 percent year over year.

The company completed its purchase of Beckman Coulter in late June 2011, and while Danaher did not break out sales figures for Beckman, it said in its Form 10-Q filed with the US Securities and Exchange Commission today that the purchase has "expanded the segment’s life sciences research product portfolio through the addition of new and complementary product and service offerings."

On a conference call following the release of the company's earnings today, Danaher President and CEO Larry Culp said of the Beckman business, "A year in here, I think we're very pleased with where we are ... certainly the primary objective has been quality. I think we've made a lot of progress.

"With respect to growth, clearly we're encouraged here with the low single digit growth in diagnostics," that the firm has seen during the past three quarters. "I think that really speaks that this business is really getting back up on its feet," he continued.

"I think at this point as we look at next year, I think low singles [digit growth] is probably what makes sense with respect to expectations with mid singles being certainly within reach for 2014," he said.

Danaher also said that the mass spectrometry business, housed in AB Sciex, saw modest year-over-year growth in the second quarter as a decline in sales in the pharmaceutical and academic research markets offset growth in the applied and clinical research markets.

Sales growth was strong in China and other emerging markets, but US and Japan saw weakness, Culp said. For the remainder of the year, recently introduced products in mass spectrometry are expected to favorably impact year-over-year sales growth, the company said.

Overall, "I think Life Sciences and Diagnostics as a whole will probably be one of our leading segments from a growth perspective, but Diagnostics will clearly be the better performing of the two as we look at the second half," Culp said.

Companywide, sales were up to $4.55 billion, up from $3.64 billon a year ago, narrowly missing consensus Wall Street estimates of $4.58 billion. Core revenues increased 3.5 percent year over year.

R&D costs rose 2 percent year over year to $238.6 million from $233.7, while SG&A spending increased 17 percent to $1.28 billion from $1.09 billion.

Profits during the quarter slipped to $600.1 million, or $.84 per share, compared to $648.8 million, or $.94 per share, a year ago, but still beat Wall Street estimates of $.81 per share.

Danaher had cash and cash equivalents of $1.12 billion as of June 29.

Danaher said that for the third quarter, EPS is expected to be in the range of $.74 and $.79.

It lowered full-year 2012 EPS to a range of $3.19 and $3.26 from a previous range of $3.25 and $3.35 to account for the negative currency impact from the recent strengthening of the US dollar and the firm's accelerated restructuring activities, which are expected to result in full year cost of about $100 million.

At the mid-way point of its new guidance, EPS growth would be about 14 percent from full-year EPS of $2.83, Danaher said.

Danaher shares were down 4 percent on the New York Stock Exchange at $50.09 in Thursday morning trading.

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