Release Date: October 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Danaher Corp (DHR, Financial) delivered strong third quarter results with revenue, adjusted net earnings per share, and cash flow all exceeding expectations.
- The bioprocessing segment showed continued positive momentum with high single-digit sequential order growth for the fifth consecutive quarter.
- Cepheid's core revenue increased double digits, driven by strong demand for respiratory and non-respiratory assays.
- The company launched several impactful new innovations, enhancing its long-term competitive advantage.
- Danaher Corp (DHR) completed the acquisition of Genedata, strengthening its Life Sciences segment with advanced software solutions for drug discovery.
Negative Points
- Core revenue in the Life Sciences segment decreased by 2%, with a decline in capital equipment sales, particularly in China.
- High growth markets, including China, experienced a mid-single-digit decline in core revenues.
- The adjusted operating profit margin decreased by 10 basis points due to accelerated investments in innovation.
- Smaller bioprocessing customers remain cautious with investments despite a modest improvement in the funding environment.
- The company expects a low single-digit core revenue decline in its bioprocessing business for the full year 2024.
Q & A Highlights
Q: Can you provide details on instrument growth excluding China and discuss any improvements or declines in specific areas like flow mass spec, lab automation, and microscopy?
A: Matthew McGrew, CFO, stated that instrument growth excluding China was low to mid-single digits. Rainer Blair, CEO, added that in developed markets, end markets were stable but no inflection was seen yet. In China, orders were down high single digits, with customers delaying purchases due to awaiting stimulus details.
Q: Regarding 2025, the street expects 6% growth in Life Sciences. Is this realistic given the current run rate?
A: Rainer Blair, CEO, mentioned that they are still assessing the fourth quarter and the impact of China's stimulus on Life Sciences. The gradual recovery in bioprocessing is expected to continue into 2025, but they need to see how Q4 plays out before providing guidance.
Q: How do you feel about the bioprocess market's gradual recovery and the lag between orders and revenue?
A: Matthew McGrew, CFO, explained that the order trajectory has improved over the last five quarters, and they expect a gradual recovery to continue into 2025. The high single-digit growth expected in Q4 is an important building block for 2025.
Q: Can you quantify the timing of Cepheid's respiratory kit purchases in Q3 and discuss market share gains in molecular testing?
A: Matthew McGrew, CFO, noted that a significant portion of the Q3 beat was due to customers securing supply ahead of the respiratory season. Market share gains were largely in the US, particularly in hospitals and near point-of-care settings.
Q: What are your thoughts on the 2025 outlook, given the current expectations for core growth and bioprocessing?
A: Rainer Blair, CEO, emphasized the importance of seeing Q4 results to understand 2025 better. Key variables include the trajectory of bioprocessing orders, respiratory season expectations, and the impact of China's stimulus on Life Sciences.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
