Deep Dive: Danaher
What do they do? Danaher is a global medical device, biopharma, and technology manufacturer. It is a serial acquirer that owns many different businesses.
History? The company started as a REIT in the 80s, but then the founders’ Steven and Mitchell Rales decided to pivot to a manufacturing company inspired by the Japanese philosophy called Kaizen, which means continuous improvement.
Industry? Since it is a conglomerate, Danaher operates in many different industries. However, its main focus is life sciences, which is estimated to be a $1 trillion market globally. It also competes with many different companies, depending on what business line you are referring to, including Thermo Fisher and Stryker.
Management? President/CEO is Rainer Blair, who just got the job in 2020. The founders are still on the board.
Valuation? (As of recording) EV/FCF of 33, dividend yield of 0.4%. Enterprise Value of $178.5 billion.
Earnings? $22.3 billion in sales, up 25% YoY. $6.2 billion in OCF.
Balance Sheet? $4.36 billion in cash, $22.7 billion in long-term debt.
Potential Competitive Advantages? We had trust, process, and scale.
Potential Future Growth Opportunities? Acquisition of GE Life Sciences group, COVID variants, and normalization for some of the businesses negatively affected by the pandemic. In reality, the one future growth opportunity is to acquire businesses at a reasonable price and bring in the Danaher business culture.
Highlights? Strong track record, stellar management, very hard to disrupt a lot of their companies.
Lowlights? Size was the only thing we came up with. It is really that good of a company.
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Disclosure: The authors and podcast guests are not financial advisors. Brett Schafer and Ryan Henderson are portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this podcast.