Note: This story has been updated with additional comments from the company's earnings call.
NEW YORK – Danaher reported on Thursday a 39 percent year-over-year increase in total sales for the fourth quarter, beating the consensus Wall Street estimate.
For the three months ended Dec. 31, 2020, the Washington, DC-based conglomerate posted $6.8 billion in total sales compared to $4.87 billion in the year-ago period. The analysts' average estimate was $6.53 billion.
Core revenues grew at nearly 16 percent including Cytiva, the company said. The results were in line with Danaher's preliminary estimates.
By sector, Life Sciences grew 76 percent year over year to $3.36 billion from $1.92 billion, while Diagnostics rose 24 percent to $2.23 billion from $1.80 billion. Environmental and Applied Solutions increased 2 percent to $1.17 billion from $1.15 billion.
In Life Sciences, Sciex saw mid-single digit core revenue growth in the fourth quarter, driven by demand for new products, Danaher CEO Rainer Blair said in a conference call to discuss the firm's financial results.
Blair said Danaher's underlying base business increased approximately 4 percent in the fourth quarter. He added that Danaher is expanding its production capacity at subsidiaries Cepheid, Cytiva, and Pall Biotech to "support increasing demand for COVID-related testing and treatment."
Meanwhile, Cepheid, part of the Diagnostics segment, saw more than 100 percent core growth and passed $2 billion in annual revenue, one year after hitting the $1 billion mark, Blair said, and Radiometer and Leica Biosystems, also housed in Diagnostics, both had high single-digit revenue growth in the quarter.
During the quarter, Cepheid shipped approximately 9 million test cartridges, and Blair said the firm expects to ship 9 million during each quarter this year. Approximately 60 percent of the respiratory tests shipped were for SARS-CoV-2 only, while 40 percent were the 4-in-1 test for SARS-CoV-2, influenza A/B, and respiratory syncytial virus, he added. In Asia, there was a preference for the SARS-CoV-2-only test because the flu isn't as prevalent there, but in Europe there has been increasing adoption of the 4-in-1 test, although it's been staggered country by country, Blair said.
Cepheid also placed "a record number" of new GeneXpert systems, increasing its installed base 35 percent in 2020 to more than 30,000 instruments globally. Blair said the company has been thoughtful in placing those instruments, so they will "find great utilization" in the long term once COVID-19 testing demand has decreased.
Declines at Beckman Coulter's diagnostics business were moderated as elective procedures and wellness checks picked up during the fourth quarter, Blair said.
Beckman Coulter recently launched high-volume antigen test for SARS-CoV-2 that will be available on its installed base of 16,000 immunoassay analyzers, and Blair said the test could "help address the challenges associated with scaling up antigen testing." The company previously said that the test would be launched in January in countries accepting the CE mark and it plans on submitting the test to the US Food and Drug Administration for Emergency Use Authorization. Beckman Coulter said that it has the capacity to ship 25 million tests per month by March to its customers in the US.
Beckman Coulter's diagnostics business has "continued to see sequential improvements here quarter over quarter in practically every region," Blair said. Danaher CFO Matt McGrew said Danaher expects the subsidiary's diagnostics business to grow in the high single digits in 2021 as patient volumes for routine testing rebound.
Danaher's R&D costs in Q4 2020 grew 35 percent to $396 million from $293.8 million in Q4 2019, while its SG&A costs also increased 35 percent to $1.96 billion from $1.45 billion.
Net earnings from continuing operations were $1.24 billion, or $1.66 per share, in the recently completed quarter compared to $792.9 million, or $1.07 per share, a year ago. Non-GAAP EPS for Q4 2020 was $2.08, beating the consensus Wall Street estimate of $1.87.
For full-year 2020, Danaher's revenues increased nearly 25 percent year over year to $22.28 billion from $17.91 billion in 2019. It slightly beat analysts' average estimate of $22.05 billion.
Life Sciences revenues improved 52 percent to $10.58 billion from $6.95 billion. Diagnostic revenues grew 13 percent to $7.40 billion from $6.56 billion, and Environmental and Applied Solutions revenues fell 2 percent to $4.31 billion from $4.40 billion.
Danaher's R&D spending for 2020 was up 19 percent year over year to $1.35 billion from $1.13 billion, and its SG&A costs grew 23 percent to $6.90 billion from $5.59 billion.
The firm posted net earnings from continuing operations of $3.65 billion, or $4.89 per share, in 2020 compared to $2.43 billion, or $3.26 per share, in 2019. Non-GAAP EPS for 2020 was $6.31 and beat the consensus Wall Street estimate of $6.06.
The company ended the year with $6.04 billion in cash and cash equivalents.
In a statement, Blair said "2020 was also a transformative year for Danaher with the addition of Cytiva — the largest acquisition in our company's history and one that has strengthened our position as a global science and technology leader."
Cytiva generated more than $4 billion in revenue and 25 percent revenue growth in 2020, Blair said on the call. He also noted a "record bioprocessing demand," with Cytiva and Pall's combined order growth up more than 50 percent in the quarter. The 2021 revenue opportunity associated with COVID-19 vaccines and therapeutics in the bioprocessing business is expected to be $1.3 billion, Blair said.
Cytiva's strong performance has helped offer Danaher "more degrees of freedom" to make deals, but Blair said the firm will likely focus on smaller to midsized mergers and acquisitions for the time being.
For the first quarter of 2021, Danaher forecast core revenue growth including Cytiva will be in the mid to high teens range. Blair added the firm expects mid-single-digit growth in non-COVID-19 related businesses.
For full-year 2021, Danaher expects core revenue growth in the low double digits. Blair said the second half of the year would have tougher prior-year comparisons due to the significant growth in the second half of 2020. He also said the firm expects non-COVID-19-related businesses to see mid- to high single-digit growth.
In morning trading on the Nasdaq, Danaher's shares were up nearly 4 percent to $230.37.