|Life Technologies CEO Greg Lucier|
Life Technologies ($LIFE) is set to become part of Thermo Fisher ($TMO) come 2014, but for now, the company is still trying to balance spiking costs and tepid revenue growth, watching profits slip 8.6% in the first quarter.
The sequencing giant reported $121.2 million in net income, down from $132.9 million in the same period last year thanks to a 7.1% jump in operating expenses. Revenue increased 2.5% to $963 million on the quarter, which Life attributes to strong sales for its Ion Torrent sequencing platform and solid performances from its bioproduction and forensics businesses.
Life's genetic analysis business, which includes Ion Torrent, grew 3% to $365 million, but Life is still struggling to grow research consumables, its largest unit. The segment dropped 3% on the quarter to $409 million, which Life blames on cautious research spending in the U.S. and Europe coupled with stimulus-inflated 2012 sales in Japan.
And the company isn't expecting things to pick up much in the near future, projecting up to $955 million in revenue next quarter, which would be a roughly 1% decline from Q1.
But Life sees opportunity for growth in molecular diagnostics, and the company has been stringing together deals over the past year to expand its presence in Asia and bolster its DNA analysis capabilities.
"During the quarter, we continued our rapid pace of innovation with new bioinformatics tools for Ion Torrent and software for our synthetic biology business," CEO Greg Lucier said in a statement. "We also continued to execute against our strategy to expand in growth and emerging markets as we entered into new collaborations in stem cells, Rapid DNA products, and acquired our reagent distributor in South Korea."
Thermo Fisher has agreed to buy Life for $13.6 billion, plus another $2.2 billion in debt, a price many analysts (and at least one litigious shareholder) pegged as too plush considering Life's less-than-glistening revenue outlook. Still, Thermo maintains the acquisition will pay off with a 30% revenue increase and cost savings of about $275 million.
- read Life's full results