Beckman Coulter Announces Third Quarter 2007 Results
Total revenue from clinical diagnostics products increased 9.4% over prioryear quarter, or 7.5% in constant currency. Within clinical diagnostics,Immunoassay was up 28%, Chemistry increased 6%, and Cellular was flat.Clinical Automation systems revenue grew more than 40% over prior year quarterindicating continued strong demand for the company's industry-leadinglaboratory systems that automate hospital laboratories, improving productivityand patient safety while reducing skilled labor requirements.
Markets for the company's life science products continued to be soft inmost geographies. Compared to third quarter 2006, sales of life scienceproducts declined 8.6%, or 10.5% in constant currency.
The company's consumables sales grew 8.7%, or 6.8% in constant currency.The fourth quarter 2006 acquisition of Lumigen, Inc. contributed 1.7% to thisgrowth. Access Immunoassay consumables grew nearly 23%. Recurring revenue,comprised of supplies, test kits, service revenue and operating-type leasepayments, was 79.9% of total revenue, compared to 76.6% in third quarter 2006.
Scott Garrett, president and chief executive officer, said, "BeckmanCoulter's broad product offering continues to be attractive to our clinicaldiagnostics customers as they deal with labor shortages, requirements forfaster turn-around times, and the continuing growth of their outpatient andoutreach testing. Demand for our immunoassay systems continues on a strongpace and placements of our UniCel(R) DxC 600i chemistry / immunoassay workcells nearly doubled in the quarter.
"Although we continued to experience strong demand for ourindustry-leading clinical systems, total revenue in the third quarter waslower than anticipated due primarily to two items. First, worldwide lifescience markets were generally soft. Academic research funding is down inmany major markets. Second, sales of Cellular products were constrained by ashort-term supply disruption caused by the consolidation of our printedcircuit board operations. Consequently, the quarter ended with about $10million in cellular instrument backorders. We expect to work down thesebackorders sufficiently in the fourth quarter to achieve our goals for thefull year," he said.
Gross profit margin (adjusted) declined 70 basis points to 46.6%,compared to third quarter 2006. Higher distribution costs and a decline inmargin on life science products were primarily responsible. Diagnosticsproduct margins were flat with prior year quarter reflecting overall stablepricing trends.
R&D investment, excluding the license acquired in 2006 for $27.5 million,ramped up $6.5 million, or 12.2% over prior year quarter. The increase in R&Dinvestment was largely directed at the development of the company's previouslyannounced sample-to-result system for molecular diagnostics, the UniCel(R)DxN, slated for commercialization in 2010.
Reported operating income was $67.5 million. In the third quarter, thecompany recorded a $3 million charge in connection with the previouslyannounced closure and relocation of several facilities. On an adjusted basis,operating income was $70.5 million, down 5% compared to third quarter 2006.The decline in operating i
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