Douglas Adams, the late author of the popular Hitchhiker's Guide to the Galaxy trilogy (which included five books), wrote that the answer to the Ultimate Question of Life, the Universe, and Everything is 42. Yes, Douglas Adams marched to a different drummer than most people.
We can't find such a simple answer for a question about the meaning of Life Technologies (NAS: LIFE) . However, we can, at least, delve into the life sciences company's quarterly results announced on Nov. 1. So, Foolish philosophers across the galaxy, let's ponder the meaning of Life Technologies' third quarter.
When LIFE gets you down
The past three months did have a few negatives for Life Technologies. Revenue dropped by 1.9%, compared to last year's third quarter, coming in at $911 million. Gross margin and operating margin also fell by 50 and 150 basis points, respectively.
Two of the three Life Technologies' business groups contributed to the decline. Revenue for Research Consumables, which sells reagents and endpoint PCR instruments, among other consumable items, fell 3% year on year, to $384 million. Genetic Analysis revenues dropped 1%, to $353 million.
Applied Sciences was the only business group that didn't see sales decline during the quarter. However, the group's $174 million revenue total didn't increase compared to last year, either.
Currency headwinds played a big factor in the lower numbers. Excluding the currency impact, revenue would have grown slightly for all three business groups, and total company revenue would be 1.4% higher than third quarter of 2011.
The good things in LIFE
Despite the lower revenue, Life Technologies' results were actually a little better than expected. The average analyst estimates called for revenue to drop by 2.1%. The company beat estimates handily on the earnings front, reporting GAAP earnings per share of $0.55. That figure is higher than the $0.52 reported in third quarter of 2011. Analysts expected a 5.3% drop in earnings per share.
While sales in the Americas fell by 1%, other geographical regions experienced positive growth. Asia Pacific revenue jumped 10% year on year. Revenue from Japan grew 4%. Even beleaguered Europe saw revenue increase by 2%.
Life Technologies' chairman and CEO Gregory Lucier pointed to several encouraging developments during the third quarter. The company launched its Ion Proton genome sequencing system and the Pervenio service for testing lung cancer patients.
Another positive mentioned by Lucier during the earnings call was Life Technologies' recently announced partnership with Bristol-Myers Squibb (NYS: BMY) . The main goal for the expanded relationship between the two companies will be for Bristol to use Life Technologies' diagnostic systems to identify patients to target for drugs developed by the pharmaceutical company.
The future of LIFE as we know it
Life Technologies operates in a market that should experience solid growth over the coming years. As pharmaceutical companies develop more personalized drugs, the need for sequencing technology will increase.
Illumina (NAS: ILMN) and Pacific Biosciences of California (NAS: PACB) hope to best Life Technologies in the race for genome sequencing market share. However, both companies lag well behind their rival in revenue. Life Technologies had $3.38 billion in revenue over the last 12 months, whereas Illumina and Pacific Biosciences had $1.09 billion and $32.5 million, respectively.
Fellow Fool Alex Planes recently affirmed Life Technologies as best in its class. With the great potential for the company's new Ion Proton System, my view is that Alex is right in his assessment.
So, what is the meaning of Life Technologies' third quarter? I'd say the bottom line meaning is that things are better than many thought they would be, and should only get better. If that response isn't satisfying, let's just go with 42.
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The article What is the Meaning of Life Technologies? originally appeared on Fool.com.
Keith Speights has no positions in the stocks mentioned above. The Motley Fool owns shares of Illumina. Motley Fool newsletter services recommend Illumina and Pacific Biosciences of California. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.