Life sciences and medical diagnostics company Danaher (DHR) reported higher-than-expected fourth-quarter earnings and earnings. Revenue increased nearly 10% on key metrics to $8.37 billion, well above estimates of $7.9 billion, according to Refinitiv. Adjusted earnings increased 6.7% to $2.87/share, beating the consensus estimate of $2.54/share. Excluding the impact of declining sales of Covid tests, but retaining revenue from vaccine and therapeutic support products, Danaher’s core business posted a 7.5% increase. This shows that the company is not too reliant on sales growth during the pandemic. Summary It was a solid quarter from one of the most successful companies in the world. There’s not much to nitpick about, so we attribute the 3% drop in stocks on Tuesday to a combination of management already announcing results ahead of time and stocks taking a big step toward print. Also to blame: the forecast for the first quarter may differ slightly from expectations. With better-than-expected quarterly results almost across the board, as well as increased operating margins and strong cash flow generation, we tend to view Tuesday’s sell-off as a buying opportunity, as noted in our 1 rating, especially given that the full-year guidance is also better. than expected. DHR 1Y Mountain Danaher (DHR) 1-Year Performance Management said in an earnings call that the first quarter is expected to be the low point for their core non-Covid bioprocessing growth as customers work to repurpose existing inventory. In other words, the oversupply of biotech stocks that has weighed on the life sciences industry in recent months appears to be coming to an end, at which point growth could pick up again. Management expects overall first-quarter core revenue growth to decline to mid-single digit percentages. After adjusting for “high to low double digits” expected impacts related to Covid testing, vaccine and therapeutic sales, the team forecast core business revenue growth to be in the mid single digit percentage range. The operating margin is expected to be around 30%, higher than the expected 27.7%. Management expects overall core revenue growth to be below average single digits throughout 2023. After adjusting for expected “double-digit” impacts related to Covid testing, sales of vaccines and therapeutics, the team forecast core business revenue growth to be in the high single-digit range. The operating margin is expected to be approximately 31%, higher than the expected 27.3%. While we don’t have an exact comparison due to changes in how management calculates growth going forward (more on that below), the Q1 guidance appears to be slightly out of line with what some analysts have been modeling and is likely the reason at least some selling pressure on Tuesday. However, the full-year forecast appears to be slightly better than analysts expected. During the teleconference, management said they now expect Covid-related vaccine and therapeutic revenues to be “approximately $150 million for all of 2023, up from approximately $810 million in 2022 and below our previous expectations of $500 million.” million dollars.” Reasons: lower vaccination and revaccination rates along with the availability of alternative therapeutics (other than monoclonal antibody treatments). Reporting structure Before delving into the results, we want to emphasize that management has slightly changed Danaher’s reporting structure. As a result of significant growth in the life sciences in recent years, the team decided to spin off part of the original segment into a new segment called Biotechnology. In order to provide a full comparison with Wall Street’s estimates, we have combined sales and operating income of the emerging biotechnology and life sciences segments in the table below under Product Segments. In addition, starting with the results for the first quarter of 2023, management is updating the definition of core business revenue growth to exclude the impact of Covid-related testing and the impact of Covid vaccine and therapeutic revenue streams. This is reflected in the manual section above. Previously, only income related to Covid testing was excluded. During the conference call, management pointed to roughly 10% core revenue growth in both North America and Europe. In China, a surge in infections as the Chinese government lifted its zero-Covid policy has hurt the productivity of the company’s clinical diagnostics business as patient numbers and testing volumes have declined. This momentum is expected to continue through the first quarter and then “gradually recover before the end of the year.” In addition, the team attributed the increase in Danaher’s earnings to “disciplined cost management, performance and pricing actions that help offset the impact of inflationary pressures on [the] Management also noted that while supply chain issues remain, they are seeing “a slight improvement in component availability.” growth in sales volumes related to water quality (these figures are not in the table). The EAS division is expected to become a separate company later this year. deal. Jim waits 45 minutes after sending a trade notice before buying or selling shares in his charitable foundation’s portfolio. If Jim was talking about stocks on CNBC TV, he waits 72 hours after a trade alert is issued before making a trade. THE ABOVE INFORMATION OF THE INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. 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In this photo illustration, the Danaher Corporation logo is displayed on a smartphone, with Danaher Corporation stock market information in the background.
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Life Sciences and Medical Diagnostics Company Danaher (DHR) reported higher-than-expected earnings and earnings for the fourth quarter.
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