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Danaher Corp (NYSE:DHR)
Q4 2020 Earnings Call
Jan 28, 2021, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, my name is Maria and I'll be your conference facilitator today. At this time, I would like to welcome everyone to Danaher Corporation's Fourth Quarter 2020 Earnings Results Conference Call. [Operator Instructions]

I will now turn the call over to Mr. Matt Gugino Vice President of Investor Relations. Mr. Gugino, you may begin your conference.

Matthew E. Gugino -- Vice President of Investor Relations

Thanks, Maria. Good morning everyone and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer and Matt McGrew, our Executive Vice President and Chief Financial Officer.

I'd like to point out that our earnings release, the slide presentation supplementing today's call and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investors section of our website www.Danaher.com under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events & Presentations and remain archived until our next quarterly call. A replay of this call will also be available until February 11, 2021.

During the presentation, we will describe certain of the more significant factors that impact year-over-year performance. The supplemental material describe additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to Company specific financial metrics refer to results from continuing operations and relate to the fourth quarter of 2020 and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are available only in certain markets.

During the call, we will make forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe, or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings and actual results might differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made and we do not assume any obligation to update any forward-looking statements except as required by law.

As a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we are presenting core revenue on a basis that includes Cytiva sales. References to core revenue growth includes Cytiva sales and the calculation of period-to-period sales growth, compare to the current period Cytiva sales to the historical period Cytiva sales prior to the acquisition. With that I'd like to turn the call over to Rainer.

Rainer M. Blair -- President and Chief Executive Officer

Well, thanks, Matt. And good morning, everyone. Before we go through our fourth quarter and 2020 financial results, I wanted to take a moment and reflect back on the past year. As we all know 2020 was a year that brought many unforeseen challenges, as a result of the COVID-19 pandemic. While our contributions in testing, treatment and vaccination has helped with the global effort to combat COVID-19, there is still much more progress to be made to overcome the pandemic. It's also not lost on us that part of our financial performance in 2020 was driven by the work we're doing to tackle a health crisis, which has had such a devastating impact on so many around the world. That being said, we're also very proud of our contributions to fight the pandemic and we'll continue to work tirelessly to support these global efforts in 2021 and beyond as necessary.

So as I look back on 2020 I most struck by our associates teamwork dedication and invaluable contributions during these difficult times. They are truly making a difference in the world. And since the onset of the pandemic, our team has met the challenges presented and turned them into impactful opportunities to help our customers, patients and the global community. Their efforts have been both humbling and inspiring. I'd also like to recognize and thank our customers, suppliers and business partners, many of whom we called upon for additional support to continue meeting demand throughout this pandemic. We're incredibly grateful and won't forget their collective efforts over the past year. One of our five core values at Danaher is, the best team wins and I believe we truly saw that in action in 2020.

So with that let's turn to our 2020 financial results. For the full year, we delivered nearly 10% core revenue growth, 170 basis points of core operating margin expansion, 43% earnings-per-share growth and over $5 billion of free cash flow. We also closed the largest acquisition in our history, welcoming Cytiva team to Danaher in March of last year. Cytiva is a global leader in bio-processing and has played a major role in supporting the development and production of COVID-19 vaccine and therapeutics. In 2020, the business generated more than 25% core revenue growth and over $4 billion of revenue. We couldn't be more pleased with Cytiva's early results, all driven by a highly talented, engaged and innovative team that has embraced the Danaher Business System.

So now let's take a closer look at the fourth quarter results. We generated $6.8 billion of sales, with 15.5% core revenue growth and believe we continued to capture market share across many of our businesses through accelerated investment in new product innovation and enhanced commercial execution and by deploying new engagement techniques -- new customer engagement techniques during the pandemic. COVID related revenue tailwinds contributed approximately 1,200 basis points to core revenue growth, while our underlying base business was up approximately 3.5%. Geographically, we saw broad-based and consistent revenue growth during the quarter, developed markets were up mid-teens with similar growth in both the U.S. and Western Europe. High growth markets were up low-double digits, driven by another excellent quarter in China.

Our gross profit margin was 58.5% and our operating profit margin of 23.7% was up 390 basis points, including 360 basis points of core margin expansion. Our outstanding margin performance was driven by a combination of higher core revenue growth and the impact of the Danaher Business System on productivity and operations across all of our platforms. Adjusted diluted net earnings per common share of $2.08 was up 63% versus last year. We generated $1.9 billion of free cash flow in the quarter and $5.4 billion for the full year, up 134% and 79% respectively.

Our free cash flow to net income conversion was 149% for the full year and marks the 29th consecutive year this figure has exceeded 100% for Danaher. The combination of our cash flow generation and strong balance sheet gives us more degrees of freedom earlier than anticipated after the Cytiva closing and positions us well to actively pursue strategic M&A opportunities. Given our strong margin and cash flow performance, we took the opportunity to accelerate investments in high impact growth initiatives across Danaher, including innovation and collaboration project.

We're also expanding production capacity at Cepheid, Cytiva and Pall Biotech to support increasing demand for COVID related testing and treatments while positioning the businesses for continued long-term growth. So now let's take a more detailed look at our results across the portfolio. Life Sciences reported revenue increased as a result of the Cytiva acquisition with core revenue up 18.5% led by core growth rates of 30% or more at Cytiva, Pall Biotech, Beckman Life Sciences and IDT. We continue to see strong demand from our biopharma customers during the quarter and our non-COVID related biopharma business was up double-digit. And we also saw an acceleration in activity focused on COVID-19 vaccines and therapeutics.

We also saw our customers building out their genomics and automation capabilities to support the development and production of COVID related tests and treatments. In our more instrument oriented life science businesses, order trends and installations improved as academic and research labs continued to reopen. SCIEX benefited from this uptick in activity and delivered mid-single digit core revenue growth in the quarter, fueled by demand for new products such as the 7500 Triple Quad and the Echo MS.

Moving over to Diagnostics, reported revenue was up 23.5% with core revenue up 21.5%, led by more than 100% core growth at Cepheid, driven by elevated COVID-19 testing demand and GeneXpert Systems' placements. Cepheid achieved a significant milestone in December for passing $2 billion in annual revenue, just one year after hitting the $1 billion mark. Its a tremendous accomplishment by a fantastic team.

Radiometer and Leica Biosystems, our acute care and pathology businesses, both delivered high single-digit core revenue growth. Declines at Beckman Coulter Diagnostics moderated as elective procedures and wellness checks steadily resumed through the quarter.

Moving to our Environmental & Applied Solutions segment reported revenue was up 2% and core revenue was up 1%. Our Water Quality platform delivered low single-digit core revenue growth and product identification was down slightly. Across our Water Quality businesses, we saw solid demand for our consumables and chemistries, as we continued to support customers day-to-day mission critical water operations. Equipment declines moderated as more customer facilities got back up and running and by end-market municipal activity and project continued to resume and industrial declines moderated.

ChemTreat delivered its 52nd consecutive year of core revenue growth in 2020. An impressive accomplishment in any year, but even and more so, given the unprecedented challenges presented by the pandemic. Across our water quality platform with the teams focused execution, combined with our innovative offering and the positioning of our portfolio, enabled the water quality platform to achieve positive core revenue growth for the full year.

At our product identification platform, positive results in our marking and coding businesses were offset by moderating declines and packaging and color management. Consumables and services held up well globally as we continue to help customers keep their essential businesses operating through the pandemic. So with that as context for what we saw by segment during the quarter, let me give you some color on the trends we're seeing across our end markets and geographies.

Customer activity around the world remains broadly consistent with what we saw back in October and through the fourth quarter and we expect this relative stability to persist near-term. Despite rising COVID infection rates and new targeted lockdown in certain regions, customers are adapting to working in this new pandemic environment and we have not yet seen a material impact on demand.

Within Life Sciences COVID-19 vaccine and therapeutic activity continues to drive record bioprocessing demand. Cytiva and Pall Biotech comprised most of our bioprocessing exposure and their combined order growth in the quarter was up more than 50%. As a market leader across the bio processing workflow, our teams are playing a significant role in the development and production of COVID-19 vaccines and treatments, while working to ramp up manufacturing capabilities on a massive and very compressed timeline.

We are involved in the majority of more than 400 vaccine and therapeutic projects under way globally, including all of the vaccines in the U.S. that had recently received FDA emergency use authorization or are in late stage clinical trials.

We are very proud of our team's tireless efforts, which will directly impact the lives of so many people around the world. From where we stand today, we estimate that 2021 revenue -- the 2021 revenue opportunity associated with COVID related vaccine and therapeutics at Cytiva and Pall Biotech will be approximately $1.3 billion, roughly twice the amount we recognized in 2020. Non-COVID related bio processing activity remains strong and in-line with what we saw over the last several quarters.

Turning to our other life science end markets and as I mentioned earlier, academic and research labs are continuing to reopen albeit at reduced capacity as social distancing measures limit the number of people in the lab at any one time. In clinical diagnostics heightened demand continues for molecular testing in both hospital labs and point of care settings. Since launching the first rapid molecular test for COVID-19 in March, Cepheid is meaningfully increased production capacity and shipped approximately 9 million test cartridges in the fourth quarter.

As anticipated, approximately 60% of the respiratory tests shipped in the fourth quarter were COVID-only test and 40% were four-in-one combination test for COVID-19, Flu A, Flu B and RSV.

The team also placed a record number of new systems in 2020, increasing Cepheid's installed base by more than 35% year-over-year to over 30,000 instruments globally and reinforcing its market leading position in molecular diagnostics. Cepheid's differentiated offering and leading presence at the point of care, positioned the business to help meet customers testing needs in 2021 and beyond. As a result of this strong positioning and the elevated COVID-19 infection and hospitalization rates that we are still seeing today, we expect to ship at least 9 million tests per quarter for the duration of 2021.

Across hospital and reference labs patient volumes remained steady as elective procedures and wellness checks continue at a similar pace, as we saw through Q4. We're closely monitoring patient activity in areas that have recently implemented new lockdowns, but we've not seen any material impact at this point.

During the quarter, Beckman Coulter Diagnostics expanded its COVID-related test menu, with the addition of a high-volume antigen test. This automated test is designed to run on Beckman's immunoassay analyzers and can help address the challenges associated with scaling up antigen testing to make higher volume, mass testing possible. Beckman's automated antigen test is another important addition to our COVID diagnostics offering and a testament to the Beckman team's strong cadence of innovation having launched six new COVID-related tests and as many months.

Finally, in the applied markets consumables remains solid as customers sustain essential businesses -- business operations like testing and treating water and safely packaging food and medicine. And we're encouraged to see sequential improvements on the equipment side as customers initiate new project and capital investments.

Looking ahead now to the first quarter and full year 2021. We expect to deliver mid-to-high teens core revenue growth in the first quarter. We anticipate that COVID-related revenue tailwinds will contribute approximately 1,300 basis points to core revenue growth with mid-single digit core revenue growth in our non-COVID related businesses.

For the full year 2021, we expect to deliver low double-digit core revenue growth with growth moderating sequentially in the second half of the year, as a result of tougher prior year comparison. We anticipate that COVID-related revenue tailwinds will contribute approximately 500 basis points to core revenue growth for the full year with mid-to-high single digit core revenue growth in our non-COVID related businesses.

So to wrap up, 2020 was an exceptional year for Danaher, our team took the challenges presented by the pandemic and turned them into opportunities to support customers across all of our businesses and also directly contribute to the fight against COVID-19. We're all humbled by our associates efforts and believe that Danaher's future is bright, thanks to their dedication. 2020 was also a transformative year for Danaher, with the addition of Cytiva. This was one of several strategic portfolio moves we have made over the last few years to build a better, stronger company and established Danaher as the global science and technology leader.

Looking ahead, we believe the combination of our talented team, excellent portfolio of businesses and strong balance sheet, all powered by the Danaher Business System, position Danaher to outperform in 2021 and beyond. So with that, I'll turn the call back over to Matt.

Matthew E. Gugino -- Vice President of Investor Relations

Thanks. Rainer. That concludes our formal comments. Maria, we're now ready to take questions.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Tycho Peterson of JP Morgan.

Tycho Peterson -- J.P. Morgan -- Analyst

Hey, good morning. Nice quarter. Rainer, I'm curious if you could talk about the sustainability of the Pall, Cytiva order book as you lap tougher comps, I know you talked about the $1.3 billion in revenues tied to COVID vaccines, but question is more on kind of, the order book and then timelines for the manufacturing capacity expansion you alluded to.

Rainer M. Blair -- President and Chief Executive Officer

Sure. Good morning, Tycho. So in terms of the sustainability of the order book, the way we're thinking about this, and we've mentioned this at J.P. Morgan as well, is about -- we're looking at a backlog here of about $1 billion coming into the first quarter, and we expect the total year to have COVID-related sales of about $1.3 billion. And that's really based on the approved vaccines that we see out there in the marketplace, as well as the volumes that we see related to clinical trials as it relates to other vaccines. So we think that we have good sustainability and strong backlog here to be able to make sure that we cover that $1.3 billion. Additionally, and coming back to your capacity point, we have been expanding capacity continuously, even prior to the close of the transaction we had agreed with GE to continue capacity expansion. We had then, after the close, continued to invest whether that with Cytiva, Pall Biotech or elsewhere in order to make sure that we are able to meet our customers' demand, and that will continue to occur here through the year 2021 and beyond.

Tycho Peterson -- J.P. Morgan -- Analyst

Okay. And then for McGrew, one on just the margin dynamics here. As we think about Cepheid tests a quarter and then Cytiva, Pall continued to kind of trend at these levels, what were the margin implications between these two tailwinds in your view for the year?

Matt McGrew -- Exective Vice President and Chief Financial Officer

Yeah, I mean, Tycho I think -- maybe the way to think about it is that it helps to kind of sustain a similar margin profile to what we've seen before. So maybe if you think about from a fall through perspective on the core growth here for 2021, and frankly for Q1 as well, we are sort of assuming we are going to see about a 40% or so fall through improved, like I said for both Q1 and 2021. Now, that's down slightly from what we have been seeing in the last couple of quarters. But I think we want to stay aggressive in what we've been doing on the growth investment side, one. And two, we are starting to see a little bit of inflationary pressure, particularly around freight and a little bit in the supply chain as well. And then, China also is -- we've got some targeted lockdowns, as you know now. But in the fourth quarter, we really saw China sort of, having inter-country, if you will travel, be pretty significant. They're moving -- they're moving around quite a bit and getting back at it. So I think we're sort of thinking instead of maybe the levels of fall through we've seen. It might be more like 40%, but again, I think we will be able to hopefully sustain something like that, given what you talked about, which is pretty good margin profile,both of businesses that that will continue to be pretty strong here next year.

Tycho Peterson -- J.P. Morgan -- Analyst

Okay. And if I could ask one more before I hop off to some M&A, Rainer. It seems like you're telegraphing a desire to do something more meaningful any incremental color you could provide on willingness to do a larger transaction and any framework you can talk about?

Rainer M. Blair -- President and Chief Executive Officer

It's great to be able to talk about M&A here in January of 2021 having just closed the Cytiva deal. And no question between the better performance that we've seen out of Cepheid -- I'm sorry Cytiva, as well as the equity raise that we've done and the free cash flow that we've seen. We definitely see more degrees of freedom here earlier than we've had. But we still have work to do here with Cytiva, standing them up as an operating company, and we'll always be in the game, but likely more focused on smaller to mid-size deals here for now.

Tycho Peterson -- J.P. Morgan -- Analyst

Okay, thank you.

Operator

Our next question comes from the line of Derik De Bruin of Bank of America.

Derik De Bruin -- Bank of America -- Analyst

Hi, good morning.

Rainer M. Blair -- President and Chief Executive Officer

Good morning, Derik. How are you?

Derik De Bruin -- Bank of America -- Analyst

Good. So just -- I guess just following up on Tycho's question on the margins, and just sort of thinking about the bottom-line. I mean, you didn't give an EPS guidance for 2021 but I mean, is there any reason to think that, something in that $1.90 to $2.00 range on a quarterly basis isn't sustainable for the rest of the year?

Matt McGrew -- Exective Vice President and Chief Financial Officer

Well, I mean I think I'd probably, Derik -- I think I'd go back to take your 40% VCM and the fall through, and whatever revenue assumptions, you sort of put in. I think the map would kind of take care itself on.

Derik De Bruin -- Bank of America -- Analyst

Okay. And just sort of looking at some of the -- just, I guess looking at some of the -- one big question that's coming up in the -- from investors is thinking about instrument placements in the diagnostics area. I mean, obviously there has been -- not only has Cepheid replaced a ton of instruments, but a lot of your competitors, all the other companies selling molecular diagnostic tools have placed enormous numbers of instruments. Are you worried that there is going to be a glut of machines out there that don't get used, or are you being very selective in sort of like where you're placing it? The question is like, what's going to be the following demand once we're sort of past COVID for your installed base?

Rainer M. Blair -- President and Chief Executive Officer

So, our instrument placements as we think about Cepheid, we have placed now, and have an installed base of over 30,000 instruments right, growing that over 35% here and -- in the year 2020. And we've been very thoughtful about the placement of those instruments. First of all, and helping here during the pandemic and making sure we have those at the point of care where diagnostic decisions are being made and the answer has to be fast, and it has to be right, and the Cepheid GeneXpert is just a perfect solution for that. At the same time, we've been thinking about those placements for the long-term. You may be aware that Cepheid has the largest molecular diagnostic menu in U.S. with over 20 tests and outside of the U.S. with over 30 tests. And so, we've placed those instruments primarily there, where we see that even in a post-COVID world, they would find great utilization based on the full testing menu.

Derik De Bruin -- Bank of America -- Analyst

Great. And then just one cleanup question or just one follow-up question. How should we think about the EAS segment in 2021?

Rainer M. Blair -- President and Chief Executive Officer

So the EAS segment has been improving sequentially here throughout 2020. And we're really pleased with the fact that water quality in particular, has had positive growth, but also PID was essentially flat here in 2020 as well. And so we see that recovery, and we will continue to see that recovery here as we go through 2021 and expect them to be in the mid-single digit range, not only as the consumables remain solid as they have been, but as those instrument placements which have been in moderate decline had -- moderating decline start picking up, as we've seen these customer projects in our funnel.

Derik De Bruin -- Bank of America -- Analyst

Thanks.

Rainer M. Blair -- President and Chief Executive Officer

Thanks, Derik.

Operator

Our next question comes from the line of Vijay Kumar of Evercore ISI.

Rainer M. Blair -- President and Chief Executive Officer

Hi, Vijay.

Vijay Kumar -- Evercore ISI -- Analyst

Hi guys. Good morning. Congrats on a solid print here. Rainer, maybe I'll start with some of the base business here, right. The assumptions here for the guide in a base business at mid-singles, and obviously the comps were pretty easy in '20 given the disruptions. And I looked at the Q1 guide here, Mid-to-high teens, you guys said just to at mid-teens inclusive of five days impact. I mean, correct me if I'm wrong. It feels like the base business is accelerating here in the Life Science particularly it seems to be growing double-digits in the back half of '20. I'm curious what's driving that acceleration in base Life Sciences in the back half of '20 and why is the guide assuming mid-singles for '21.

Rainer M. Blair -- President and Chief Executive Officer

Vijay, that's right. I mean we have seen a sequential acceleration of our more instrument-related life science businesses as labs have continued to open. They've been able to work out there social distancing protocols, they are not up to full capacity yet but they certainly have been improving and that's given us more lab access to continue installations and of course brings a service business back online. So that's been continuously improving and we would expect that trend to continue here in 2021. Now as we think about the guide here mid-to-high teens, look, we have our base business there at mid-single digits, which is 100-150 basis points acceleration as well as the COVID tailwind accelerating here to 1,300 basis points. So we think we're well placed there and just as a reminder, we've got a couple of working days less also in the first quarter of 2021. And then lastly, as it relates to the COVID tailwinds, keep in mind that Cepheid already last year in the first quarter had a very strong quarter as physicians were trying to rule out flu, if you will, with more flu testing in the absence of an actual COVID test.

Vijay Kumar -- Evercore ISI -- Analyst

That's extremely helpful, Rainer. One for Matt. Matt, I know you said the 40% incrementals, we can do the math, but I just want to clarify for the, I'm getting to north of 28% operating margins for fiscal '21. Does that seem ball park in the right zip code for you guys?

Matt McGrew -- Exective Vice President and Chief Financial Officer

Yeah, I mean, again, it's, there's not much, if you think about the fall through, at kind of 40%. There are some moving pieces here below the line, but they largely offset each other. So I mean I think it is pretty straightforward that whatever your revenue assumptions are going to be that that should be a pretty good way to think about where we land on that I think will dictate where you come out on the bottom for sure.

Vijay Kumar -- Evercore ISI -- Analyst

Got you. And then Rainer one last quick one for you, please on the high volume antigen test. Is that-- I know you sort of mentioned in your press release about screening opportunity, is that an upside in the model here for the guide or how should we think about up high volume antigen tests?

Rainer M. Blair -- President and Chief Executive Officer

So the high volume antigen test, you're right, we just launched that here in December. And in fact that will be available on our installed base of about 16,000 instruments. So it is a broadly applicable test for us here in our installed base at Beckman. Having said that, we've been very moderate in our planning assumptions here as it relates to, including higher volumes of antigen test until it becomes much clear on how those will be applied here, not just under the Biden administration in the U.S. but throughout the world, as people start setting standards as to what the test results for antigens mean from a diagnostics perspective, but also in terms of how you might think of large volume serial testing for schools opening up and other institutions.

Vijay Kumar -- Evercore ISI -- Analyst

Got you. Congrats again guys on the impressive our print here. Thanks.

Rainer M. Blair -- President and Chief Executive Officer

Thanks, Vijay.

Operator

Our next question comes from the line of Scott Davis of Melius Research.

Rainer M. Blair -- President and Chief Executive Officer

Hi, Scott.

Scott Davis -- Melius Research -- Analyst

Good morning. Just one nit picky questions and on E&AS, is there a meaningful difference between the incremental leverage on the recovery in water versus product ID?

Rainer M. Blair -- President and Chief Executive Officer

Not really, not really. Scott those businesses are pretty similar similar from a fall through perspective.

Scott Davis -- Melius Research -- Analyst

Like 35% to 40% ballpark?

Rainer M. Blair -- President and Chief Executive Officer

I think that's a great place to be.

Scott Davis -- Melius Research -- Analyst

Okay. And then when you guys were thinking in terms of like the four-in-one versus the four-in-one take rates, the 40% number, is that kind of uniform around different geographies or is there a particular higher take rates in different geographies around the world?

Rainer M. Blair -- President and Chief Executive Officer

Scott so it actually does differ by geography. Let me see if i can do something about the echo here. Do you here me OK now?

Scott Davis -- Melius Research -- Analyst

I can you hear you fine.

Rainer M. Blair -- President and Chief Executive Officer

Okay. So that' differed by geographies particularly anywhere in the U.S., you are looking at 60% COVID-only and 40% of the four-in-one. In Asia, there is a real pressure on the whole COVID-only test as the flu is not as prevalent there and as seasonal. As you go to Europe. here with increasing adoption of the four-in-one, but that's a little staggered as the improvement by country roll in.

Scott Davis -- Melius Research -- Analyst

Okay, all right, I'll pass it on, stick to two questions. Thank you guys and good luck.

Rainer M. Blair -- President and Chief Executive Officer

Thank you, Scott.

Operator

Our next question comes from the line of Doug Schenkel with Cowen.

Doug Schenkel -- Cowen & Co -- Analyst

Hi, good morning guys.

Rainer M. Blair -- President and Chief Executive Officer

Hey Doug

Doug Schenkel -- Cowen & Co -- Analyst

And thank you for taking my, my questions. Maybe just a quick follow-up on an earlier guidance question, it looks like you're assuming a two year stack base business growth of around 5%. That doesn't seem to imply a full recovery as we think about the steady state through your portfolio. So just to be clear -- and I think we know the answer to this, but I just want to confirm it, seems like the philosophy for this year that's some assumption for continued recovery in line with recent trend that based on backlog, but not a full reopening over the course of the year.

Rainer M. Blair -- President and Chief Executive Officer

Doug, that's exactly how we're thinking about it. We are still in the middle of the pandemic, as we all know involved. We're hopeful that things get better as the vaccines rollout and the adoption there improves, we are not expecting 2021 to be a year that is, if you will, a post-COVID herd immunity year. This is going to continue to be a transition year and probably not quite back to the pre-COVID rate.

Doug Schenkel -- Cowen & Co -- Analyst

Okay, super helpful. Pivoting quickly back over to Cepheid, I believe Rainer that you said, the guidance assumes Cepheid should continue to sell around 9 billion assays per quarter in 2021, it doesn't seem like that's reflecting any potential capacity increases. I just want to make sure that's the case and if so why? And then kind of building off of that is the expectation that the mix of kind of COVID only in four-in-one test will remain kind of in that 60-40 ratio.

Rainer M. Blair -- President and Chief Executive Officer

Okay. So let's start with the first one and as you may know, we in Q2 of last year shipped 6 million, 7 million in Q3 we were planning to ship 8 million cartridges here in Q4 and we were able to exceed that by shipping 9 million. So as we think about our capacity improvements, which we continue to work on we do not yet have those in place and in view of the pretty dynamic situation, also as it relates to the actual pandemic, we think it's a good planning number to take the 9 million cartridges here per quarter for the full year and of course as we continue to work on and we are working on and investing in capacity increases, we'll provide further updates. Now in terms of the mix, I think that is a good planning assumption. The way you're thinking about that with 60% COVID-only tests and about 40% of the four-in-one test. That's how we're thinking about it as well.

Doug Schenkel -- Cowen & Co -- Analyst

Okay. Just one last one -- I just want to dig in on your comments regarding capacity expansion within bio-processing. Presumably, at some point, you're going to be well positioned to transition-out the building C -- the building COVID-19 capacity over to other large molecules. You were building that out even in advance of the pandemic, as you've mentioned in your prepared remarks, so you're -- do you think that bio-processing revenue can be sustained at 2021 levels even when we look forward to the day where vaccine and therapeutic tailwinds related to COVID-19 update, It is -- do you think there is an air pocket or a sustainable demand that trends enough to support revenue at least at 2021 levels?

Rainer M. Blair -- President and Chief Executive Officer

Well, when we look at that pipeline of drugs that are that -- and vaccines, so therapeutics and vaccines that are not COVID-related as well and it's chockfull, it continues to grow and that business has been very, very solid. So, there's a couple of things here, Doug. One we expect that pipeline to be very relevant to the capacity that's being traded today. In fact many of our investments are nearly pulling forward things that we had planned for several years down the road. That's kind of one point, but the second point is that it also looks as though vaccine manufacturing will be with us for some time, not only as it relates to COVID; but as you think about the bolus of investment that is now gone into biotech companies that are looking at new vaccine technologies to get at diseases where we've yet to develop vaccines. We do see increasing number of projects there as well. So as it relates to this incremental capacity, we feel really good about where we're positioned, got the right portfolio and we think our utilization is going to be very strong.

Doug Schenkel -- Cowen & Co -- Analyst

Okay, thanks very much. Oh sorry Matt.

Matt McGrew -- Exective Vice President and Chief Financial Officer

Yeah, May be just to give you -- Yeah, just to give you a little bit of color around kind of the capacity side and maybe tying that back to how we're thinking about the sustainability of what we're seeing today. I mean -- I think as Rainer said, as everything he just kind of laid out, when you think about -- what we've seen in the core base biopharma business, we've seen last three or four quarters here, where we've got a low double-digit core -- kind of core growth and that's even probably a little bit above where it was a couple of years ago given everything Rainer just said. Now when you put on top of that what we've seen here on the vaccines and therapeutics still lot of unknowns obviously going forward -- but you're looking at, as we talked in Q2 and Q3. I mean the order growth that at Cytiva was well north of 50 and it was north of 50 again in Q4. So, I mean I really think we've got good sustainability as we head into '21, given the backlog, given what we saw in order growth in Cytiva in Q4 and given the base business, sort of going low-double digits.

Doug Schenkel -- Cowen & Co -- Analyst

That's great. Okay, thanks again, guys.

Operator

Our next question comes from the line of Steve Beuchaw of Wolfe Research.

Rainer M. Blair -- President and Chief Executive Officer

Hi Steve.

Steve Beuchaw -- Wolfe Research -- Analyst

Hi, good morning and thanks for the time here everybody. I actually wanted to rewind almost all the way back to the beginning of your prepared remarks, Rainer and a point that you made about accelerating investments in innovation and collaboration. It's one of the sort of high-quality problems that has emerged for companies that are part of the -- the solution around COVID. I wonder if you could talk us through, how you've gone about identifying areas to make those investments. And if you could flag for us any particular areas of emphasis. I'd really appreciate it and I do have one follow-up.

Rainer M. Blair -- President and Chief Executive Officer

Thanks, Steve. So the way we've been thinking about these growth investments is very broad across our portfolio. We've always looked at this as an opportunity to strengthen our capabilities and exit the pandemic stronger than we entered -- whether that's in businesses that have and -- that are benefiting from COVID tailwinds or businesses that are not in that particular application.

And so what we do is we work together with our teams to identify where the most attractive projects are, not just on a return perspective here in the near-term, but also strategically positioning us for competitive advantage and then we will invest aggressively in those and that's been the case here for several quarters now. So we'll continue to do that.

Steve Beuchaw -- Wolfe Research -- Analyst

Okay. Much appreciate it and then look a lot of good questions have been asked about margins, earnings and the businesses. I'll try to round it out a little bit and just ask about core Beck Dx. I wonder if you could give us a perspective on where you are with the DxA rollout in the replacement cycle and to what extent COVID has impacted that. I could see -- I could see it having some puts and takes. So any perspective on how that's going. And what you're thinking about for core Beckman -- for core Beck Dx, I should say for '21 would really appreciate it. Thanks again.

Rainer M. Blair -- President and Chief Executive Officer

Yeah, we...

Matt McGrew -- Exective Vice President and Chief Financial Officer

Maybe I'll, I'm sorry. Go Ahead Rainer

Rainer M. Blair -- President and Chief Executive Officer

Yeah, I was just going to say, I mean we've just launched the DxA and we couldn't be more pleased with the initial interest in that. But if we back up to the Beckman Diagnostics business for a second and see how that's been performing -- and we've continued to see sequential improvements here quarter-over-quarter and practically every region and couldn't be more pleased with the way -- in fact, that business has positioned. You were speaking earlier about these kinds of growth investments that we're making. Well, we've just launched the hematology analyzers along with the DxA for the DxA 9000[Phonetic] and 5000, as well as just launched six new COVID-related tests. So that's just an example of your first question, also as it relates directly to Beckman Dx. So we've been tracking exactly what we wanted to hear with the DxA and and that's -- that's been really going well for us. Matt did you want to add anything there?

Matt McGrew -- Exective Vice President and Chief Financial Officer

No. Yeah, I just wanted to sort of address the question of what we thought they'd do from a growth perspective here in '21 and I think -- we're sort of thinking that as the rebound continues, a little bit with the patient volumes. We expect them to be up sort of high-single digits here for the year.

Steve Beuchaw -- Wolfe Research -- Analyst

Great, thanks so much.

Rainer M. Blair -- President and Chief Executive Officer

Thanks, Steve.

Operator

Our next question comes from the line of Jack Meehan at Nephron Research.

Rainer M. Blair -- President and Chief Executive Officer

Hi, Jack.

Jack Meehan -- Nephron Research -- Analyst

Hi, good morning. Thank you. I was wondering if you could give a little bit more color on expectations around capital equipment, so you obviously ended the year on a strong note, but just given some of the recent flare-ups. Do you think that sustains as you go into the first half of the year?

Rainer M. Blair -- President and Chief Executive Officer

So Jack you are right, we have seen the capital equipment purchases picking up here as labs open up -- that's increased and then we close, very strong here. We saw that in many of those instrument type businesses in the end of Q4, with some high-single digit performance there. So, and in fact we continue to see that we've pulled our businesses and customers and they learning to work around the pandemic with the necessary social distancing measures and we continue to see that accelerating here going into 2021 and we see that also reflected in our guide here for both Q1 as well as at a low double digits for 2021.

Jack Meehan -- Nephron Research -- Analyst

Great. And then I know you've given a lot of color already on bioprocessing but one follow-up, just on the expectations built into the guidance. So you have it roughly doubling the $1.3 billion from COVID tailwinds in 2021, but that kind of looks like you're annualizing the benefit you saw in the second half. So is there anything, maybe just talk about how you see the demand playing out throughout the year and is there anything tailing off -- maybe on the therapeutic side? What are you assuming there?

Rainer M. Blair -- President and Chief Executive Officer

So as we think about the bioprocess order book, recall that we had orders growth at Cytiva and Pall Biotech of over 50% here in Q4 and that was a further acceleration from what we had seen and we expect that acceleration here to continue. So our backlog position is really strong. We entered the year with $1 billion and we are confident that that $1.3 billion of revenue are really are really solid, but that also had some assumptions behind it, which is, here we are supplying the approved vaccines, as well as those that are in clinical trials and you know we're well positioned not just on the vaccines in project work speed -- but the over 400 projects that you have both vaccines and therapeutics. So as you think about 2021, while we do expect a moderation in the second half of the year, that's entirely related to more difficult comps as opposed to a trailing off of the actual absolute demand. So we continue we believe that, that will continue.

Jack Meehan -- Nephron Research -- Analyst

Great. Thank you.

Matt McGrew -- Exective Vice President and Chief Financial Officer

So to give you some sense Jack on what -- on how that order book is going to flow through. I mean we saw at Cytiva and Pall Biotech in the second half of the year -- we grew -- call it north of 35%. We've got that backlog position now and some of the -- some of what you said, for some of that came in during the year and booked and shipped in the year to give us 35% but we're going to get off to a pretty good start here at Cytiva Q1 core growth in Cytiva is going to be probably north of 50%.

So I think we'll have a good strong start. Let's see how that order book sort of develops through the year as more vaccines in therapeutic, sort of, make their way through the systems to the approvals -- but that's sort of how we've framed it as we stand now with kind of the $1.3 billion opportunity Part 6

Operator

And ladies and gentlemen, we have time for one more question. Our final question comes from the line of Patrick Donnelly of Citi.

Rainer M. Blair -- President and Chief Executive Officer

Hi, Patrick.

Patrick Donnelly -- Citigroup -- Analyst

Great. appreciate. Hey, Rainer, how are you. Thanks for squeezing me in here. Maybe just a quick one, more high level on a geographic basis. China, I think was low double-digits in the quarter on a core growth basis. Can you just talk about the pace of the recovery there, which markets are growing strongly. And then also just the expectations baked in for '21 on that front?

Rainer M. Blair -- President and Chief Executive Officer

Sure. So, as you say, we did see a very nice recovery in China here, both in Q4, as well as what we're planning here going forward. So, low double-digits in China in 2020 and that's really across the businesses. So we saw that, both in our Life Science and Diagnostics businesses as well as in EAS as China has really ramped here, not just in the healthcare sort of, related businesses, but also in the applied markets. And as you look forward to 2021 starting with Q1, we expect our businesses to be over 50% in China in terms of the growth in Q1. So really getting out of the gates there very strongly. Of course, they had a lower comparison there in Q1 of 2020. And as we think about the full year, we really see China in the mid-teens. so very solid performance, very strong recovery after a full year, which really came in at the low-single digit. So 2020, China low-single digit, 2021, mid-teens speaks to a strong recovery there.

Patrick Donnelly -- Citigroup -- Analyst

Okay, that's helpful. And then maybe just one more on Cepheid. I know it has been touched on a few times. But I guess as you think about kind of the sustainability of that $9 million a quarter. How are you thinking about the overall, I guess, COVID testing market in the back-half. Are you assuming that shrinks and Cepheid get a bigger piece? And then on the back of that, do you see point-of-care becoming more and more important as we go here, and maybe this ends up being a positive inflection point for this as a piece of the market on the go mode. Thank you.

Rainer M. Blair -- President and Chief Executive Officer

Sure. So looking to point-of-care here, and COVID testing in general to the second half, it's very hard to forecast right now how COVID testing will play out in the second half. Just because, as we think about vaccines rolling out, we're already now talking about a variant who knows how many more of those will occur. And of course, often the dialog tends to be about what's happening in the U.S. but, in fact, other places around the world are not vaccinating yet at that rate or even don't have vaccines yet. So, we think that, that planning assumption of 9 million per quarter is a very solid planning assumption. And then, as it relates to Cepheid in particular at the point-of-care, you may have heard this concentric circle metaphor, but point-of-care is really at the center of that in terms of the durability of that testing for the long-term, because that's where the doctors need fast turnaround time. That's where they need an accurate result because they're going to make a therapeutic decision. They're going to make a decision as to what happens next. And the outer portions of those concentric circles are the ones that have increasingly less durability as the general public becomes vaccinated and over time, although it's going to be interesting to see whether that's achieved in the second half of the year, whether herd immunity is even relevant. Keep in mind, herd immunity is not something that happens in a country. The whole world is a petri dish here and if we continue to travel, interact with each other, there is a high likelihood that high testing volumes will continue for some time.

Patrick Donnelly -- Citigroup -- Analyst

Great, thank you.

Rainer M. Blair -- President and Chief Executive Officer

Thank you.

Operator

And that was our final question. I'd like to turn the floor back over to management for any additional or closing remarks.

Rainer M. Blair -- President and Chief Executive Officer

Thanks for...

Matthew E. Gugino -- Vice President of Investor Relations

So thank you everyone for joining us...

Rainer M. Blair -- President and Chief Executive Officer

Go ahead. Go ahead, Matt.

Matthew E. Gugino -- Vice President of Investor Relations

Thanks, Rainer. Thanks, Matt. Thanks everyone for joining us here today. And we'll round our day for questions.

Rainer M. Blair -- President and Chief Executive Officer

Thanks, everybody. Thanks, Maria.

Operator

[Operator Closing Remarks]

Duration: 50 minutes

Call participants:

Matthew E. Gugino -- Vice President of Investor Relations

Rainer M. Blair -- President and Chief Executive Officer

Matt McGrew -- Exective Vice President and Chief Financial Officer

Tycho Peterson -- J.P. Morgan -- Analyst

Derik De Bruin -- Bank of America -- Analyst

Vijay Kumar -- Evercore ISI -- Analyst

Scott Davis -- Melius Research -- Analyst

Doug Schenkel -- Cowen & Co -- Analyst

Steve Beuchaw -- Wolfe Research -- Analyst

Jack Meehan -- Nephron Research -- Analyst

Patrick Donnelly -- Citigroup -- Analyst

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