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Danaher Q1 Revenues Rise 12 Percent

NEW YORK – Danaher reported on Thursday a 12 percent year-over-year increase in total revenues.

For the three months ending March 31, total revenues were $7.69 billion compared to $6.86 billion in the year-ago period. It beat the analysts' average estimate of $7.54 billion.

Core revenue growth was also 12 percent year over year, and base business core revenue growth was 8 percent, the company said in a statement. Danaher said that its base business core sales growth excludes revenues related to COVID-19 testing but includes revenues from vaccines or therapeutics related to COVID-19. The firm expects the ongoing demand for products supporting COVID-19 testing "will be subject to more fluctuations" than the demand for products supporting COVID-19 vaccines and therapeutics.

COVID-19 testing contributed 4 percent to Danaher's revenues, CEO Rainer Blair said on a conference call to discuss the earnings results.

Revenues in Danaher's Life Sciences segment, the largest of its three segments, grew 9 percent to $3.88 billion in Q1 2022 from $3.55 billion in Q1 2021, according to the company's Form 10-Q filed with the US Securities and Exchange Commission. 

Revenues from Aldevron, which Danaher acquired in September for $9.6 billion, were up more than 40 percent in Q1, Blair said.

The company's bioprocessing businesses, including Cytiva and Pall Biotech, saw its core revenues grow in the high-single digits and the firm continued to build backlog, Blair said. Sciex, Integrated DNA Technologies, and Leica Microsystems, each grew more than 10 percent.

Meanwhile, the Diagnostics business increased 21 percent year over year to $2.64 billion from $2.18 billion. Cepheid saw revenue growth of more than 50 percent, with non-COVID-19 clinical diagnostics businesses collectively growing in the mid-single digits, Blair said. Regional lockdowns in China are impacting patient volumes, and he added that the company expects the Diagnostics business to be most affected by the shutdowns in Q2. The slowdown is related to limited customer accessibility in hospitals and labs, as well as manufacturing plant shutdowns, Blair said.

Respiratory testing revenues were $900 million for the quarter, exceeding the company's expectations, but moderated globally as the Omicron surge subsided in most places, Blair said. However, the demand for Cepheid's instruments at the point of care "remains very strong," and the company believes it is taking market share. As the COVID-19 pandemic moves toward an endemic state, Cepheid is seeing increased demand for its broader, non-respiratory testing menu, which grew in the double digits in Q1, led by hospital-acquired infections, virology, and infectious disease testing, Blair said.

Customers have shown increased interest in expanding their menu utilization and freeing testing capacity from respiratory testing, he added. There is also an increased preference for Cepheid's 4-in-1 combination COVID-19, influenza A/B, and respiratory syncytial virus, with the combo test making up 65 percent of respiratory testing cartridges shipped in the quarter. The COVID-19-only test was 35 percent of the 17 million cartridges shipped, Blair said. Danaher had previously expected respiratory testing volumes of 19 million for Q1.

The shift was "larger than anticipated," beating expectations that the combo and COVID-19-only test mix would be 50-50, he said. Danaher CFO Matt McGrew added that the firm expects slightly lower test volumes from Cepheid in the next quarter.

Revenues for Danaher's third segment, Environmental & Applied Solutions, grew 3 percent to $1.16 billion from $1.13 billion.

In Q1, Danaher's R&D spending was up 16 percent to $441 million from $380 million. Its SG&A costs grew 11 percent to $2.09 billion from $1.88 billion.

The company posted net earnings of $1.73 billion, or $2.31 per share, in the recently completed quarter compared to net earnings of $1.70 billion, or $2.29 per share, in Q1 2021.

On a non-GAAP basis, EPS for Q1 2022 was $2.76 and beat the consensus Wall Street estimate of $2.66.

The firm finished the quarter with $3.72 billion in cash and cash equivalents.

Danaher expects non-GAAP base business core revenue growth for the second quarter of 2022 to be in the mid-single digit percent range, with full-year 2022 base business core revenue growth in the high-single digit percent range on a non-GAAP basis.

The firm expects a negative impact in Q2 from the COVID-19-related shutdowns in China, it said. Lockdowns had a "very modest impact" on the company's Q1 results, Blair said, but the firm believes activity levels will normalize by the end of June.

In morning trading on the New York Stock Exchange on Thursday, Danaher's shares were up 2 percent at $285.27.