01—Abstract
Summary
Summary of the 10-K filed February 21, 2020. Cited figures are marked; the original filing is the authoritative source.
Danaher Corporation's 2019 10-K filing highlights a year of strategic expansion and operational focus.
The company reported a 5.0% increase in consolidated sales to $17.9 billiona, driven by a 6.0% core sales growth, indicating strong underlying performance across its Life Sciences, Diagnostics, and Environmental & Applied Solutions segments. A significant event was the pending $21 billion acquisition of GE Biopharma, which was expected to close in Q1 2020 and positioned Danaher for substantial growth in the life sciences sector. The company also completed the disposition of its Dental business (Envista) through an IPO and split-off, generating proceeds that were used to manage its capital structure.
Danaher continued to emphasize its Danaher Business System (DBS) for operational improvements and demonstrated a commitment to innovation through research and development investments. The financial outlook appears robust, with increasing sales and operating profit, despite investments related to the large GE Biopharma acquisition and other strategic initiatives. The company managed its debt effectively, even as it incurred additional debt to finance the GE Biopharma acquisition.
Danaher's diversified business model across multiple industries and geographies provided resilience against market fluctuations. Investors should note the ongoing integration of acquired businesses and the strategic importance of the GE Biopharma acquisition for future growth and market positioning.
02—Key points
Key Highlights
- Consolidated sales increased by 5.0% to $17.91 billion in 2019, with core sales growing by 6.0%.
- The company announced and proceeded with the significant acquisition of GE Biopharma for approximately $21.0 billion, expected to close in Q1 2020, bolstering the Life Sciences segment.
- Danaher completed the disposition of its Dental business (Envista Holdings Corporation) through an IPO and subsequent split-off, generating proceeds used for debt management and corporate purposes.
- Operating profit increased to $3.27 billion, with operating profit margins improving to 18.3% from 17.9% in the prior year.
- The company maintained a strong cash flow from operations, providing flexibility for investments, acquisitions, and returns to shareholders.
- Total debt increased significantly to $21.73 billion, primarily due to financing for the GE Biopharma acquisition, while the company maintained its credit facilities.
- The company's strategic focus remains on enhancing its portfolio through capital allocation, strengthening competitive advantage via DBS, and attracting talent.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Danaher Corp kept $0.17.
- Revenue$17.91B100.0%
- Cost of revenue−$7.93B44.3%
- Gross profit$9.98B55.7%
- Operating costs−$6.71B37.5%
- Operating income$3.27B18.3%
- Interest, other & tax−$261.0M1.5%
- Net income$3.01B16.8%
Where FY2019 revenue went
$17.91B- Cost of revenue: $7.93B, 44% of revenue
- SG&A: $5.59B, 31% of revenue
- Net income: $3.01B, 17% of revenue
- R&D: $1.13B, 6.3% of revenue
- Interest, other & tax: $261.0M, 1.5% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 21, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $17.91B$17.05B | +5.1% |
| Cost of Revenue | $7.93B$7.54B | +5.1% |
| Gross Profit | $9.98B$9.51B | +5.0% |
| R&D Expenses | $1.13B$1.06B | +6.3% |
| SG&A Expenses | $5.59B$5.39B | +3.7% |
| Operating Income | $3.27B$3.06B | +7.0% |
| Interest Expense | $108.00M$137.00M | −21.2% |
| Net Income | $3.01B$2.65B | +13.5% |
| EPS (Basic) | $4.11$3.78 | +8.7% |
| EPS (Diluted) | $4.05$3.74 | +8.3% |
| Shares Outstanding (Basic) | 715.00M700.60M | +2.1% |
| Shares Outstanding (Diluted) | 725.50M710.20M | +2.2% |
05—Questions
Frequently Asked Questions
What was Danaher's overall financial performance in 2019?
Danaher reported strong financial performance in 2019, with consolidated sales increasing by 5.0% to $17.91 billion. Core sales, which exclude the impact of acquisitions and currency fluctuations, grew by 6.0%, indicating healthy underlying business performance across its segments. Operating profit also saw an increase to $3.27 billion, with operating profit margins improving to 18.3%.
What were the key strategic initiatives or major transactions during the year?
The most significant strategic move was the announcement and progress towards acquiring GE Biopharma for approximately $21.0 billion, a deal expected to significantly expand Danaher's Life Sciences segment. Additionally, Danaher completed the separation of its Dental business, Envista Holdings Corporation, through an IPO and a subsequent split-off, which provided capital and allowed the company to focus on its core segments.
How did the company manage its debt and capital structure in relation to the GE Biopharma acquisition?
To finance the substantial GE Biopharma acquisition, Danaher significantly increased its total debt to $21.73 billion by year-end 2019. This was accomplished through public offerings of common stock and preferred stock, as well as issuing long-term debt. The company also maintained its access to credit facilities and commercial paper programs to support its liquidity and financing needs.
What is the outlook for Danaher's business segments?
Danaher operates across three key segments: Life Sciences, Diagnostics, and Environmental & Applied Solutions. The Life Sciences segment is expected to see substantial growth driven by the GE Biopharma acquisition. The Diagnostics segment showed consistent demand, particularly in high-growth markets like China, while the Environmental & Applied Solutions segment reported growth in water quality and product identification businesses. The company's diversified portfolio is designed to mitigate risks associated with any single market or geography.
06—Continue