PerkinElmer Q4 Diagnostics Business Grows 53 Percent

PerkinElmer announced after the close of the market on Thursday that its fourth quarter revenues rose 18 percent year over year.
 
For the three months ended Dec. 30, 2018, the company posted revenues of $756.3 million compared to $641.6 million a year ago. It beat the consensus Wall Street estimate of $746.6 million.
 
Core organic revenue growth was 7 percent, the company said.
 
In its Diagnostics segment, revenues were up 53 percent to $296.5 million from $193.4 million, while revenues in the Discovery & Analytical Solutions segment rose 3 percent to $459.9 million from $448.2 million. Organic revenues were up 14 percent year over year in Diagnostics, and up 5 percent in Discovery & Analytical Solutions, PerkinElmer said.
 
Reported growth in the Diagnostics business was largely a result of the addition of Euroimmun, which PerkinElmer acquired at the end of 2017. The business grew in the mid-single digits organically in 2018 and "exceeded our plan for operating income," noted PerkinElmer Chairman and CEO Robert Friel in a conference call. PerkinElmer CFO Jamey Mock added that Euroimmun posted $97 million in revenues during Q4, which was short of the firm's $102 million target due to timing of an order. Meanwhile, Tulip Diagnostics, acquired by the company more than two years ago, grew revenues by 20 percent year over year.
 
With the additions of Euroimmun and Tulip, as well as RHS and others, Friel said that the Diagnostics business has evolved from a business focused on newborn screening and "centered around the mother and child to a broader specialty diagnostics provider. As a result, we now have leading positions in reproductive health, emerging infectious diseases, autoimmune diseases, and applied genomics, and have gained new technological skill sets across immuno and clinical chemistry, detection and automation, PCR, mass spec, NGS workflow, and single-cell genomics."
 
Mock said that the Diagnostics revenue growth, overall, was driven by reproductive health and immunodiagnostics. In reproductive health, the genomics testing business was up by 50 percent year over year in Q4 2018. Genomics testing related to PerkinElmer's sequencing business finished its first year, 2018, with approximately $10 million in revenues, "and we continue to see a solid pipeline of opportunity," Mock said.
 
In November the company announced it received CE-IVD marking for its Vanadis NIPT system. While commercialization of the platform is still in its early days, Friel said the launch is going "very well," and for 2019, PerkinElmer is targeting 30 installations of the platform. He declined to provide a revenue outlook for the instrument.
 
To get increased traction for the system, he added, published studies detailing performance and utility of Vanadis will be necessary, which are expected to start mid-year.
 
On the Discovery & Analytical Solutions side of the company, growth was driven by mid-single digit organic revenue improvement in the life sciences and applied markets, Mock said. Life sciences saw strength in the imaging and detection product lines and informatics. Applied markets growth resulted from the environmental, food, and industrial end markets, he added.
 
Its R&D spending in Q4 2018 grew 38 percent to $52 million from $37.7 million a year ago, while its SG&A costs rose 19 percent to $210.5 from $176.4 million.
 
The company recorded a profit of $71.3 million, or $.64 per share, in the recently completed quarter compared to a net loss of $41.1 million, or $.37 per share, a year ago. Adjusted EPS was $1.18 and beat analysts' average estimate of $1.16.
 
For full-year 2018, PerkinElmer's revenues reached $2.78 billion, up 23 percent from $2.26 billion in 2017. It edged out the consensus Wall Street estimate of $2.77 billion.  Core organic revenue growth was 7 percent, Friel said.
 
Diagnostics revenues grew 59 percent to $1.08 billion in 2018 from $678.5 million in 2017. Discovery & Analytical Solutions revenues increased 7 percent to $1.69 billion from $1.58 billion.
 
Its R&D spending for 2018 was $194 million, up 39 percent from $139.5 million, and its SG&A costs grew 30 percent to $811.9 million from $626 million.
 
PerkinElmer had a profit of $237.9 million, or $2.13 per share, in 2018 compared to a profit of $292.6 million, or $2.64 per share, in 2017. Adjusted EPS was $3.61, just above the consensus Wall Street estimate of $3.60.
 
PerkinElmer finished 2018 with $163.1 million in cash and cash equivalents.
 
For Q1 2019, the company is forecasting reported revenues of $643 million. That compares with the consensus Wall Street estimate of $670.2 million. Adjusted EPS is expected to be $.66, Mock said on the conference call. Analysts' average estimate is $.71.
 
The firm initiated full-year 2019 guidance with organic revenue growth of 6 percent. Reported revenues are anticipated to be about $2.89 billion, Mock said. On average, Wall Street anticipates $2.92 billion in revenues. PerkinElmer's EPS is expected to be in the range of $2.93 to $2.98 for 2019, and adjusted EPS is expected to be in the range of $4.00 to $4.05. Analysts' average estimate is $4.03.
 
In late morning trading on the Nasdaq on Friday, PerkinElmer's shares were up more than 2 percent at $92.74.