26/04/2024, 15:02 Danaher Sees Some Subsiding Headwinds as Q1 Revenues Dip 3 Percent | GenomeWeb

Danaher Sees Some Subsiding Headwinds

as Q1 Revenues Dip 3 Percent
Apr 23, 2024 | Kelsy Ketchum

Premium

Note: This story has been updated with comments from a conference call discussing the firm's
financial results.

NEW YORK – Some headwinds that have shaped Danaher's business in the past year, such as the
destocking in the bioprocessing business and the soft biotechnology funding environment, are
beginning to wane, but concerns around China remain, company executives explained on Tuesday
morning.

On a conference call to discuss the firm's first quarter financial results, Danaher CEO Rainer Blair
said that the bioprocessing business saw better than expected results in Q1 even though revenues
in that segment were down in the high-teens percent range. Bioprocessing orders increased in the
mid-single-digit percent range sequentially from Q4 2023 to Q1 2024, which Blair noted was
encouraging because typically there is a seasonal order decline between Q4 and Q1.

Many customers in the bioprocessing segment, particularly in North America and Europe, are
returning to regular order patterns, and Danaher expects these customers' inventory levels to have
"largely normalized" by the end of Q2. The firm has seen significant headwinds in recent quarters as
its bioprocessing customers have been destocking inventory and working through backlogs, but
Blair said that Danaher has not changed its assumption that there will be gradual improvement in
bioprocessing throughout the year.

In addition, improvements in the overall biotechnology funding environment are a "positive indicator
for the long-term health of the bioprocessing market," Blair said. The funding environment has been
weak in the sector for the past few quarters, but Blair noted that despite near-term headwinds, the
"robust underlying market trends reinforce our confidence in the health and long-term growth profile
of the biologics market."

Blair also noted that even though the biotechnology funding environment shows signs of improving,
that improvement has not yet translated to a growth in orders at Danaher. While it has been "helpful
to see the biotech funding stabilize and even showing the slightest of growth," it's "just too early"
for Danaher to see the impacts and will take several quarters "to make any discernible difference
across the business," Blair said.

The firm also saw a decline in revenues in the high-teen percent range in China, where "the
economic landscape remains challenging," Blair said, adding that the country's biotechnology
environment remains a significant headwind for Danaher. Demand and underlying activity levels
have remained weak in China as customers continue to conserve capital, Blair said, resulting in a
year-over-year revenue decline of nearly 40 percent in Q1 Danaher's Biotechnology segment in
China.

China headwinds are affecting more than just Danaher's biotechnology business. In its Life
Sciences segment, China revenue declines have been driven by both difficult comparisons between
Q1 2023 and Q1 2024 and lower demand due to weaker underlying activity levels, Blair said. Lower

https://www.genomeweb.com/business-news/danaher-sees-some-subsiding-headwinds-q1-revenues-dip-3-percent 1/3
26/04/2024, 15:02 Danaher Sees Some Subsiding Headwinds as Q1 Revenues Dip 3 Percent | GenomeWeb

end-market demand for Life Sciences tools is the result of the weaker macroenvironment in China,
but Blair said that the firm expects to see improvements in China in the second half of 2024 due to
lower comparators from the second half of 2023.

Blair added that he expects the improvements in biotechnology funding to be skewed more toward
developed markets than toward China, and it "remains to be seen when that returns."

Overall, the company reported a 3 percent year-over-year decrease in its total first quarter
revenues.

For the three months ending March 31, total revenues were $5.80 billion compared to $5.95 billion
in the year-ago period and beat the analysts' average estimate of $5.28 billion.

Core revenues decreased 4 percent year over year, the Washington, D.C.-based conglomerate
said.

Revenues in Danaher's Life Sciences segment grew 2 percent to $1.75 billion in Q1 2024 from $1.71
billion in Q1 2023, according to the company's Form 10-Q filed with the US Securities and
Exchange Commission. Core revenues in the business declined by 3 percent, as revenue for the
instruments business declined in the mid-single-digit percent range.

Blair noted that the genomics consumables business saw revenue growth in the low-single-digit
percent range. Double-digit revenue growth in plasmids and proteins was partially offset by declines
in next-generation sequencing and gene writing and editing solutions, he added.

Meanwhile, revenues from the Diagnostics business rose nearly 7 percent to $2.53 billion from
$2.38 billion a year ago. Core sales in the firm's molecular diagnostics business grew as Danaher
saw increased sales of both respiratory and non-respiratory disease tests, it said in its Form 10-Q.
Blair noted that Beckman Coulter Diagnostics saw "solid growth" in both instruments and
consumables, as well as better win and retention rates across the portfolio.

Cepheid core revenues increased in the double-digit percent range, and Blair said he believes the
company continued to gain market share during Q1. Respiratory testing revenue totaled about $675
million in the quarter, exceeding expectations of $575 million, driven by both higher volumes and a
favorable mix of Cepheid's 4-in-1 respiratory testing panel, Blair added.

Danaher continues to expect about $1.6 billion in respiratory testing revenue for 2024.

Blair noted that Cepheid's installed base has grown to more than 55,000 instruments — a more than
threefold increase since 2019. The team has taken a "thoughtful approach to placing systems at
customers with clinical use cases beyond the pandemic" and has "continued to drive increased
menu adoption and utilization," he said. The growth rates for assays in the group A strep and sexual
health categories were each up more than 40 percent in the first quarter.

In addition, many sites are returning to testing protocols that were suspended during the COVID-19
pandemic, leading to mid-teen revenue growth in hospital-acquired infection tests, Blair said.

Danaher CFO Matt McGrew noted that Q4 and Q1 are usually the highest volume quarters for
Cepheid due to the respiratory season in the Northern Hemisphere and said that Danaher expects
respiratory testing revenue to drop to about $200 million in Q2 2024.

The firm's Biotechnology segment revenues fell 18 percent to $1.52 billion in Q1 2024 from $1.86
billion in the year-ago quarter. The decline was the result of decreased core sales in the
bioprocessing business and the impact of currency exchange rates, Danaher said in its SEC
document. Core revenue in the segment declined 17 percent, with bioprocessing down in the high-
teens percent range and discovery and medical down approximately 20 percent.

https://www.genomeweb.com/business-news/danaher-sees-some-subsiding-headwinds-q1-revenues-dip-3-percent 2/3
26/04/2024, 15:02 Danaher Sees Some Subsiding Headwinds as Q1 Revenues Dip 3 Percent | GenomeWeb

The company posted net earnings of $1.09 billion, or $1.45 per share, in the recently completed
quarter compared to net earnings of $1.45 billion, or $1.94 per share, in Q1 2023.

On a non-GAAP basis, EPS for Q1 2024 was $1.92 and beat the consensus Wall Street estimate of
$1.60.

The firm finished the first quarter with $7.03 billion in cash and cash equivalents.

Danaher expects non-GAAP base business core revenue for the second quarter of 2024 to decline
in the mid-single-digit percent range. For the full year, total core revenue is expected to decline in
the low-single-digit percent range on a non-GAAP basis.

In afternoon trading on the New York Stock Exchange on Tuesday, Danaher's shares were up 7
percent at $253.21.

Filed Under Business News Molecular Diagnostics financial results Danaher

North America

Privacy Policy. Terms & Conditions. Copyright © 2024 GenomeWeb, a business unit of Crain
Communications. All Rights Reserved.

https://www.genomeweb.com/business-news/danaher-sees-some-subsiding-headwinds-q1-revenues-dip-3-percent 3/3