PerkinElmer Continues to Make Global Transactions

In the space of 24 hours last month, PerkinElmer engaged in two deals that continued to demonstrate the growing globalization of the U.S. laboratory sector.

On April 25, the Massachusetts-based PerkinElmer sold its prenatal laboratory business to the Luxembourg-based conglomerate Eurofins Scientific. On April 26, it entered into an agreement to open up a joint research laboratory in Singapore.

A sales price for PerkinElmer Labs/NTD was not disclosed. That division had sales of $20 million last year, a little less than 1 percent of PerkinElmer’s annual sales of $2.3 billion.

“Recent changes to U.S. healthcare reform continue to drive the consolidation of diagnostics testing toward broader service providers," said Prahlad Singh, president of PerkinElmer’s diagnostics division, in a statement. “Eurofins, with its breadth of testing services and capabilities, is uniquely positioned to meet the expanding service needs of NTD’s customers.”

Eurofins has been particularly active in the U.S. market in recent months. Last year, it acquired Boston Heart Diagnostics for about $200 million. It also has purchased a majority stake in the Emory Genetics Laboratory. In addition to that transaction, PerkinElmer also entered into a development agreement with the Genome Institute of Singapore (GIS) to improve current technologies for analyzing cancer tumors and developing new treatment pathways. The two parties announced the opening of a joint research laboratory in Singapore to that end.

“Our collaboration with GIS brings together cutting-edge equipment and services along with insights from some of the world’s leading cancer researchers,” said Brian Kim, president of PerkinElmer’s life sciences and technology division. “Combined with GIS’s knowledge and experience, this partnership has the potential to unlock new doors in the future of applying precision medicine to cancer treatment.” The financial terms of that deal were not disclosed.

In February, PerkinElmer opened up a new testing facility in Chennai, India, indicating the company has ambitious goals for the Asian market. In January, it acquired Swedish genomic laboratory firm Vanadis Diagnostics.

For PerkinElmer’s first quarter ending April 3, it reported robust numbers. Net income was $47.5 million, up 17.6 percent from the $40.3 million reported for the first quarter of 2015. Revenue was also up 2.3 percent, from $526.9 million to $538.7 million. The company also bumped up its guidance for 2016 by 10 cents per share, from $2.75 to $2.85. That included 6 cents attributed to the strong first quarter and another 4 cents attributable to favorable foreign exchange rates.

Ross Muken, an analyst with Evercore ISI, attributed the growth and stronger forecast to “surprise” higher sales in its China market, where it performs a lot of food-related laboratory testing, a service in strong demand given that country’s doubts about its food supply chain. He noted in a recent report that it was a turnaround from the company’s more somber outlook issued during the fourth quarter.

“As such, we believe the quarter could serve as a clearing event for investors as a rosier macro outlook ... and the strong quarter will likely push aside any doubts in PerkinElmer’s ability to hit fiscal year targets,” he wrote.

Takeaway: PerkinElmer continues to make deals that demonstrate the globalization of U.S. laboratory companies.