Clinical and Agbio Markets Boost Affymetrix Q2 Sales

Affymetrix second quarter sales grew 4.1%, 7.9% excluding currency, to $89.0 million. Organic growth was driven by agbio and clinical sales, which climbed 24% and roughly 20%, respectively. Overall, consumables and instrument sales grew 4.8% and 16.8%, to account for 86% and 4% of revenues, respectively. Service and other revenue fell 5.1% to make up 10%, as higher royalty and license revenue was offset by slower revenue from scientific services. Adjusted gross margin advanced 470 basis points to 65.6% of sales due to productivity improvements, higher reagent utilization rates and product mix. Despite increased headcount in China, adjusted operating profit more than doubled to $12.0 million.

Affymetrix highlighted clinical sales in the quarter, which accounted for roughly 20% of revenues. This growth was driven by demand in the partnering and licensing business, for which sales are projected to reach $16 million in 2015. In addition, Cytogenetics product sales grew 12%, as the company converted two major European reference labs to CytoScan. Conversely, Genotyping revenue contracted 3% to account for 19% of sales due to timing of projects in Europe. However, Axiom sales in the Americas and Asia Pacific each climbed double digits. Agbio sales accounted for roughly 30% of Axiom revenue.

Life Science Reagents sales were led by demand for molecular biology products. Despite the benefit from delayed orders and higher sales of in vitro transcription products, Expression sales were negatively impacted by lower demand for gene and exon arrays. Core flow cytometry and immunoassay sales within the eBioscience segment grew 5.6%, 9% excluding currency, due to the expansion of PrimeFlow assays to pharmaceutical markets. Pharmaceutical sales within the eBioscience business grew nearly 20%, led by demand in North America and increased traction in China. Affymetrix maintained its 2015 currency neutral mid-single digit revenue growth outlook. However, the company raised its full-year adjusted gross margin guidance from 61% to 63%.

US Demand Drives BD Bioscience Growth

Fiscal third quarter revenue for Becton, Dickinson’s BD Biosciences unit contracted 2.7% to $269 million to account for 9% of company sales. Excluding currency, segment sales advanced 5.1%, led by demand for research instruments and new products. Growth also benefited from a weak year-over-year comparison as well as favorable timing of Advanced Bioprocessing product orders in the US. As a result, US sales climbed 9.6% to make up 38% of Biosciences revenue. International revenue, which was driven by demand in Western Europe, grew 2.8% excluding currency to account for 62% of segment sales. Fiscal full-year BD Biosciences sales are expected to grow in the upper range of the company’s organic revenue growth forecast of 4.5%–5.0%.

Pharma and Applied Growth Lift Danaher’s Q2 Sales

Second quarter sales for Danaher’s Life Sciences & Diagnostics segment grew 4.5% organically to account for 36% of company revenues. Organic sales from the life sciences business grew in the low single digits. Despite strong growth in the US, Leica Microsystems sales declined in the low single digits organically due to weakness in Latin America and China. However, total organic order growth for this business improved. SCIEX sales grew in the mid-single digits organically, driven by MS demand from pharmaceutical and clinical customers, especially in the US. Segment core operating profit margin expanded 55 basis points to 16.4%.

Revenue for Danaher’s Environmental segment grew 3.0% organically to make up 17% of revenues. Organic sales for the segment’s water quality platforms grew in the mid-single digits, including double-digit growth in China and higher sales across all businesses. Demand for analytical instrument products, including related consumables and services, was strong in all major geographies. Sales of chemical treatment solution products benefited from new products in the US and expansion in Latin America. Ultraviolet water disinfection product sales were led by strength in the US and Western Europe. Hach sales grew across most major product lines and benefited from double-digit sales growth in China, as well as mid single-digit sales growth in the US and Europe each. Segment core operating profit margin advanced 145 basis points to 22.5%.

US HPV Sales Slow QIAGEN Q2 Growth

QIAGEN second quarter sales fell 3.4% to $319.5 million but grew 3% organically. Currency reduced revenue growth by 8%, while the acquisition of Enzymatics’ NGS technology and consumables portfolio (see IBO 1/15/15) contributed 2%. Organic growth was hampered by US HPV sales, which slumped 43% to account for 3% of revenues. Excluding US HPV sales, organic sales grew 6%. All figures below are on a currency-neutral basis. Instrument sales grew 18% to account for 13% of revenues. Consumables and related revenues increased 4% to make up 87%, led by double-digit sales growth for bioinformatics products. Overall, sales in the Americas, which made up 49% of revenues, grew 4%, or 11% excluding HPV sales. Sales in Europe/Middle East/Africa region grew 3% to account for 30%, as demand in Germany, Turkey and the UK was partially offset by weakness in Russia. Sales in Asia-Pacific/Japan climbed 14% to account for 20%, including strength in China and Korea, as well as higher sales in Japan. Sales from the top seven emerging markets expanded 11% to represent 15% of revenues.

All figures below are on a currency-neutral basis. Excluding US HPV sales, Molecular Diagnostics sales climbed 10%, led by double-digit sales growth for the QuantiFERON TB test, and strong demand for the QIAsymphony and QIAcube automation systems as well as instrument services. Personalized Healthcare sales also contributed to growth. Within the life sciences businesses, Applied Testing sales grew 11%, led by demand for the new Investigator STR assay kits used for DNA forensic testing. Pharma and Academia sales grew roughly 3% each excluding the acquisition. Pharma growth was hampered by lower sales in the Asia-Pacific/Japan region. Total adjusted gross margin contracted 95 basis points to 70.7% due to product mix. As a result, adjusted operating income fell 2.8% to $78.9 million. The company reaffirmed its 2015 currency-neutral sales growth outlook of 4%, or roughly 2% excluding acquisitions. Third quarter sales are projected to decline 4%–5% but grow 3% excluding currency and roughly 1% organically.

Service Revenue Leads VWR Q2 Growth

VWR’s second quarter revenues declined 1.9% to $1.08 billion. Excluding currency headwinds of 8.6% and acquisition benefits of 2.0%, organic sales advanced 4.7%. Growth was driven by strength from biopharmaceutical markets, which accounted for 42% of revenues. Increased service-related revenues, which grew in the double digits for the company as a whole, contributed sharply to this growth. Organic sales further benefited from sustained demand from health care and university customers. Industrial, education and health care sales made up 24%, 14% and 7% of revenues, respectively. Government and other markets accounted for the remaining 12% of sales. Overall, private label sales grew roughly 9% organically. Gross profit margin slipped 60 basis points to 27.6% of sales due to currency. Despite a negative currency impact, adjusted operating profit improved 6.8% to $78.3 million. The company reaffirmed its 2015 sales outlook of $4.24–$4.31 billion, representing a reported decline of 1%–3% but organic growth of 3%–4%. Longer-term organic revenue growth expectations mirror this outlook of 3%–4%.

VWR’s Americas segment revenue was driven by low-double-digit biopharmaceutical sales growth, including strong demand for procurement services and private label products from large pharmaceutical companies. Education sales grew in the mid-single digits due to continued demand from universities. Health care and government sales also grew in the mid-single digits each, while industrial sales declined in the mid-single digits. By product, chemicals sales advanced in the double digits, equipment and instrument sales grew in the high single digits, and sales of consumables grew in the low single digits. Americas adjusted operating profit jumped 24.6% to $42.1 million.

VWR’s EMEA-APAC sales also recorded double-digit organic sales growth from pharmaceutical markets, led by strong service and equipment sales. All figures below are organic. Health care sales expanded in the mid-single digits, and industrial sales grew in the low single digits. Conversely, education sales declined in the low single digits, and government revenues contracted in the mid-single digits due to budget constraints. By product, chemicals and consumables sales each grew in the mid-single digits. Equipment and instrument sales grew in the low single digits. EMEA-APAC adjusted operating profit declined 8.2% to $36.2 million because of currency.