Danaher Corp. delivered 5% growth in third-quarter core revenues, touting continued momentum in diagnostics and life sciences, though industrial businesses such as environmental testing and packaging posted lower rates of growth.
The environmental and applied solutions segment saw slight revenue growth of 0.5% in the third quarter. However, executives on the Oct. 24 earnings call said they are encouraged by positive product order trends, and therefore expect the segment to improve in the fourth quarter.
Washington, D.C.-based Danaher, a maker of laboratory equipment and other life sciences tools and instruments, was trading down slightly by 1.1% to $136.94 as of 9:43 a.m. ET.
Danaher lowered and narrowed its full-year EPS guidance to a range of $4.74 to $4.77 from the previous $4.75 to $4.80 range, to account for the completed IPO of the company's dental unit. Fourth-quarter EPS is expected to range from $1.32 to $1.35, and Danaher CEO Thomas Joyce said fourth-quarter core revenue growth is expected to be approximately 4.5%, again excluding the dental segment.
Danaher CEO Thomas Joyce
Performance by segment
Joyce said the 6.5% revenue growth in Danaher's diagnostics group was driven by new product introductions, particularly Danaher unit Beckman Coulter's hematology line. Improvements in automation systems for laboratories struggling to keep up with speedy processing and skilled labor also contributed to diagnostics growth.
He added that Danaher's diagnostics business continued to see good growth and "very high retention" in China, which grew by high single digits overall for the quarter.
The life sciences unit saw revenue growth of 6%, driven by high-growth markets like Asia and Eastern Europe. According to Joyce, the segment's biopharma exposure is now worth $1.5 billion, mostly coming from Danaher's Pall Biotech division. This division saw double-digit core growth in the quarter for the sixth consecutive quarter.
Joyce acknowledged that single-use technologies in gene and cell therapy are smaller portions of Danaher's overall portfolio but said they will be "significant growth drivers in the future," especially amid increased interest in biological, or large-molecule, drug production.
On the call, an analyst asked whether certain positive ordering trends in Europe could be attributed to customers stocking up ahead of Brexit. Joyce said Europe overall was growing at a low-single-digit rate, due to the region's macro softness in the instrumentation, equipment and packaging markets, particularly on the industrial side, rather than specifically Brexit-related procurement behavior.
Danaher updated analysts on the progress of its $21.4 billion acquisition of GE Healthcare Inc.'s biopharma business. Danaher will divest certain biomolecule and chromatography-related businesses for $750 million to Sartorius AG, ahead of the expected closing of the GE deal in the first quarter of 2020.
According to Joyce, the divested units generated revenue of $140 million, less than 5% of the planned acquired revenue of GE Biopharma.
Joyce said the sales were initiated with the "clear understanding" of global regulatory reviews of a deal that size, but he declined to comment on the possibility of further regulatory actions such as additional divestitures.