Danaher Corp. (NYSE: DHR), a well-known player in the medical device market, recently unveiled its third-quarter financial results on October 24. With a global presence, Danaher specializes in the design, manufacture and distribution of professional, medical, industrial and commercial products and services.
The latest earnings report painted a somber picture for Danaher, as the company grappled with a decline in both sales and profits compared to the previous year. This underwhelming performance came as the pharma and biotech sectors experienced a broader loss of momentum in critical markets.
“Pharma and biotech took a modest step down, and that was particularly the case in the U.S. In China, we see large pharma customers also tightening their belts as it relates to capital expenditures,” said Rainer Blair, President and Chief Executive Officer of Danaher, in response to an analyst question during the October 24 earnings call. “Our developed markets were down largely due to the softness in pharma and biotech.”
Revenues from Danaher’s biotechnology segment totaled $1.7 billion, down 19% from $2 billion in Q3:23. The diagnostic segment was also hit with lower sales, with revenue dropping 16% to $2.25 billion from $2.68 billion in Q3:22.
Despite surpassing analysts’ predicted revenue of $6.63 billion with a revenue of $6.67 billion, Q3:23 still marked an 11.5% decline from Q3:22. Excluding the approximate 9% impact of Covid-related tests and products, Danaher’s core business sales were down 3% compared to the same period the previous year. The company’s adjusted earnings-per-share also witnessed a 21% annual drop, settling at $2.02.
Despite its earnings shortcomings in the latest quarter, Danaher still made significant strides in the M&A market. In August 2023, Danaher purchased Abcam for approximately $5.7 billion. This transaction marked a standout event in the laboratories subsector, standing as the largest laboratories deal for the year (so far) and the eighth largest across all healthcare verticals, according to data sourced from the LevinPro HC database. Abcam is expected to operate as a standalone operating company and brand within Danaher’s Life Sciences segment, furthering Danaher’s strategy to help map complex diseases and accelerate the drug discovery process.
For the fourth quarter of 2023, Danaher expects adjusted base business core revenues from continuing operations to decline to mid-single digits on a year-over-year basis. Its full-year core revenue outlook for the base business also indicates a slight decrease compared to the low-single-digit growth the company expected three months ago. Shares of Danaher fell roughly 5% (from $204.05 to $193.06) in the 24 hours after the earnings results were released the morning of Tuesday, October 24 after disappointing investors with its 2023 outlook, despite its better-than-expected Q3:23 financials.
