Seven is turning out to be a less-than-lucky number for Danaher: For the second quarter in a row, the Washington, D.C.-based conglomerate has reported a year-over-year drop in revenues of around 7%.
The second quarter’s decrease came to light in an earnings report published Tuesday, in which Danaher calculated sales of just under $7.2 billion, nearly 7.7% lower than the $7.8 billion it had raked in at the same point last year.
That echoes—and exacerbates—the first quarter’s results. In that April report, the company tallied up another $7.2 billion in sales, representing a year-over-year drop of about 6.8%.
Danaher attributed much of the continued downslide to reduced coronavirus-related revenues; several of its biggest subsidiaries, including Cepheid and Beckman Coulter, spent the pandemic churning out diagnostic tests to catch COVID-19, its antibodies and related health conditions, while its Cytiva and Pall arms had a hand in the development of vaccines for the virus.
The conglomerate’s diagnostics segment registered a year-over-year revenue drop of 13% for the second quarter but, according to this week’s earnings report, its base business would’ve actually grown by high single digits if COVID-related revenues weren’t included in the calculations. Similarly, while the biotechnology segment also fell by 17%, that decrease would’ve been confined to the high single digits without COVID sales factored in.
Altogether, without the effects of that falling demand for COVID-related products, Danaher reported, its total quarterly revenues would’ve risen by 2%.
“Our team’s consistent execution, paired with better-than-expected performance in our life science and diagnostics businesses, including stronger respiratory testing revenue, helped offset softer demand in bioprocessing,” CEO Rainer Blair said in the report.
Though Blair added that Danaher was “pleased” with the quarter’s results, the company maintained a conservative outlook for the rest of the year. For all of 2023, it’s expecting to see its overall revenues fall by low single digits, while its sans-COVID base business will grow by the same metric—a slight shift from previous forecasts that estimated the year’s COVID-free revenue growth to land in the mid-single digits.
Despite that somewhat tempered outlook, shareholders appeared satisfied with Danaher’s results. After taking a sharp dip right as the market opened on Tuesday, the company’s shares quickly recovered throughout the morning, ultimately surpassing the $260 mark for the first time since February.
The dwindling demand for COVID-related products has taken an especially hard blow to Danaher’s diagnostics segment, where those sales had a double-digit impact, per Tuesday’s earnings report.
And Cepheid, in particular, has been undergoing major changes in the wake of waning COVID test demand. Within the last year, the subsidiary has made plans to lay off more than 1,600 workers as it shuts down and consolidates many of the testmaking plants that sprang up amid the peaks of the pandemic.