Good day, ladies and gentlemen, and welcome to the PerkinElmer First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touch-tone cell phone. As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, Mr. Bryan Kipp, Vice President of Investor Relations. Sir, you may begin.
Thank you, Joel. Good afternoon, and welcome to PerkinElmer's first quarter 2019 earnings conference call. With me on the call are Rob Friel, Chairman and Chief Executive Officer, Prahlad Singh, President and Chief Operating Officer, Jamey Mock, Senior Vice President and Chief Financial Officer. If you have not received a copy of our earnings press release, you may get one from the investor section of our website at www.perkinelmer.com. Please note this call is being webcast live and will be archived on our website until May ninth. Before we begin, we need to remind everyone of the safe harbor statements that we have outlined in our earnings press release issued earlier this afternoon, and also those in our SEC filings. Any forward-looking statements made today represent our views only as of today.
We disclaim any obligation to update forward-looking statements in the future, even if our estimates change, so you should not rely on any of today's forward-looking statements as representing our views as of any other date after today. During this call, we will also be referring to certain non-GAAP financial measures. A reconciliation of non-GAAP financial measures we plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release. To the extent we use non-GAAP financial measures during this call that are not reconciled to GAAP in that attachment, we will provide reconciliations promptly. I'm now pleased to introduce the Chairman and Chief Executive Officer of PerkinElmer, Rob Friel.
Thanks, Bryan. Good afternoon, everyone. I'm pleased to report PerkinElmer had a very good start to 2019, delivering a strong performance in the first quarter. Revenue for the first quarter was $649 million, representing organic growth of 5%. Adjusted earnings per share was $0.69, representing growth of 10% over Q1 last year, and $0.03 better than our guidance. The EPS beat was attributable to slightly higher organic revenue growth in the quarter and better operating margin expansion, as adjusted operating margins increased 130 basis points in the quarter. In addition, we continued to execute on plans to invest in high-growth areas, shift the organization to a more unified structure, and further improve operating margins.
From an end market perspective, the first quarter played out similar to our expectations, except that we were able to ship about half of the revenue we thought we would miss as a result of the U.S. government shutdown. Looking at our growth by market, Americas was strong, up high single digits, led by diagnostics, pharma, and food. Asia was solid, up mid-single digits, with strength in diagnostics and pharma. Europe was down modestly due to softness in industrial, environmental, and food end markets. Looking ahead, we continue to expect improved growth momentum in APAC, solid growth trends in the Americas, and modest growth in the low single digits in Europe. While Jamey will discuss our end market in some more detail, the macro drivers to our growth remained largely unchanged. In diagnostics, the prevalence of infectious and autoimmune diseases continue to grow, particularly in emerging markets.
Increasing demand for earlier diagnosis and the rising adoption of new technologies also is fueling growth across all three of our segments of reproductive health, immunodiagnostics, and genomics. In life sciences, we continue to see robust demand in both product sales and services within the pharma and biotech markets as our customers continue to increase investments in tools and technologies to improve their research lab productivity. Within food analysis, market growth continues to be driven by the rising outbreaks of foodborne illnesses, advances in technology for food safety testing, and globalization of the food supply. Lastly, our environmental and applied markets generally track macroeconomic conditions, and as such, are experiencing stronger growth in the Americas with softness in Europe and Asia. Influenced by these market trends, we continue to shape our portfolio actions and investment priorities to expand into key growth areas I outlined in January.
During the first quarter, these areas experienced strong growth as we continued to execute on our plans to invest and build out these differentiated capabilities. I've asked Prahlad to briefly update you on our activities regarding these key growth initiatives, as well as how we are better aligning our organization to optimize these opportunities and better serve our customers. In addition to these organically funded initiatives, we continue to deploy capital to complement these growth areas with companies that add technology and leadership positions in synergistic market applications. A good example of this is our announcement today of our purchase of Cisbio Bioassays. Cisbio is based in France and produces kits and reagents for life science and diagnostic markets. Last year generated just over $50 million in revenue, with margins north of 25%.
We're very excited to welcome Cisbio team to PerkinElmer and believe it provides us a number of strategic opportunities. In the area of drug discovery, we will now have the broadest capabilities with regard to homogeneous detection technologies, helping scientists accelerate workflows and more efficiently screen potential drug candidates. Cisbio also enables our expansion into cellular imaging reagents to complement our strong positions in high content and in vivo imaging markets. In addition, approximately 25% of the revenue is focused on in vitro diagnostics, which is very complementary with Euroimmun. Finally, they bring strong technical capabilities and intellectual property in molecular and cellular biology and assay development. Once integrated, our combined resources should result in accelerated growth and innovation in our reagent portfolio for the life sciences and drug discovery markets. Jamey will discuss the financial aspects of the deal later in the call.
As I mentioned earlier, another key focus area for us this year is expanding our operating margins, and I was particularly pleased with our performance in the first quarter. The majority of this progress was attributable to three areas that we have targeted this year. The first is Euroimmun, where a more favorable product mix and improved cost management added roughly 60 basis points to margin. The second is improved factory productivity, which drove about 50 basis points of margin expansion, with the remaining factor was continued success in leveraging operating expenses by maintaining our SG&A expenses flat while revenue grew 5% organically. The progress we made this quarter reinforces our confidence in the full year plan to increase operating margins 120 to 150 basis points.
To summarize the start of the year, we delivered strong financial performance, continued to make good progress on those areas that accelerate our growth, completed the Cisbio acquisition, which adds terrific capabilities and is attractive financially, and we experienced good traction on our initiatives to significantly expand our operating margins. Now I'd like to turn the call over to Prahlad to give you some more color on our growth initiatives.
Thanks, Rob. As I mentioned during last quarter's earnings call, we are rallying around an end market approach to create the most advanced solutions for our customers in the key markets we serve. This approach will enable us to drive leadership across our priority end markets, whether through the differentiated solutions we are creating to meet customer needs, or strategic partnerships and acquisitions that will deliver incremental value to our customers, who are focused on solving the next big thing in science and healthcare. In that regard, I've had the opportunity of spending a great amount of time this past quarter meeting with customers, employees, and shareholders across all of PerkinElmer, and it has further reinforced the need and opportunity for us to move forward on this strategy.
Rob mentioned our key growth accelerators, I would like to give you a sense of the progress we are making in a few of these areas, which we believe will fuel long-term top-line growth while expanding profitability. We continue to execute against our previously stated key priorities of providing an exceptional customer experience, being recognized as an innovation leader, and making people and culture a competitive advantage. To accelerate our efforts, we are focused internally on reshaping the organization to leverage our capabilities across PerkinElmer. We recently announced a combined R&D organization that brings together our technical capabilities across businesses and geographies and aligns our two R&D groups from diagnostics and discovery and analytical solutions under one team.
Further, as we continue to see capabilities and applications that our customers demand converge across our end markets, we are revamping our go-to-market approach to maximize the benefit from the intersections of our technologies and expertise across end markets. This will be a seamless transition that positions us to immediately create even more relevancy and opportunities with customers around the globe. From an operations standpoint, we have launched several initiatives that will improve the customer experience, from quickening order fulfillment to optimizing the supply chain. Importantly, we are fully capitalizing on the trend towards digitalization and will be implementing a company-wide digital transformation strategy aimed at recrafting our digital architecture, assets, and capabilities to better benefit our customers and organization. Similarly, in immunodiagnostics, we continue to leverage the capabilities of Euroimmun and PerkinElmer to launch innovative products and penetrate new markets for allergy, autoimmune, and infectious disease testing.
We received FDA clearance for two celiac markers to complete Euroimmun's offerings in the U.S. and help expand our test menu within existing lab accounts. We continue to expand our autoimmune screening footprint with some key wins and expect that by early Q3, we will boost Euroimmun's market share in the U.S. market to 50%. The market for autoimmunity screening testing is anticipated to increase as more patients gain access to testing. Building upon our leadership in the burgeoning area of genomics, in collaboration with Helix and Genome Medical, we launched GenePrism: Actionable Insights. This is a generic test that will return results for 59 genes, which the American College of Medical Genetics and Genomics have associated with potentially life-threatening but actionable health conditions.
PerkinElmer Genomics is the only truly global genomics lab covering all aspects of genomics, biochemical, cytogenetics, and molecular testing with options from prenatal with our Vanadis NIPT test to postnatal with whole genome sequencing. We are also uniquely able to conduct testing for both sick and healthy populations. For healthy individuals, GenePrism offers elective genomic sequencing of actionable genes. This test is not a direct-to-consumer test, but rather physician-driven, which includes pre- and post-test genetic counseling. PerkinElmer Genomics will provide data analysis, interpretation, clinical reports to individuals who purchase the product. Within reproductive health, our Vanadis NIPT system continues on track, and we are ramping up our global service and support teams. The funnel is strong and is improving with each quarter. We also continue to expand our newborn screening business around the world, the latest milestone being in Singapore.
By the end of this year, all newborn babies in Singapore will be screened for treatable genetic disorders with PerkinElmer Genomics solutions. Lastly, I would like to provide some updates on our focus on the food and cannabis end markets. We were recently awarded Emerald Test badges for our proficiency in cannabis testing. As state and federal regulations in this space evolve, Emerald Test results provide a benchmark for laboratories in the cannabis industry to ensure safe, high-quality products. Our analytical instruments, such as the QSight series and testing methods were proven to meet the highest standards in accurately detecting pesticides, heavy metals, residual solvents, and terpenes in cannabis, as well as determining product potency. By qualifying as a vendor and not just a testing lab, PerkinElmer is even better positioned above the competition to demonstrate that our technology, application knowledge, and SOPs are the best choice for customers.
I look forward to sharing ongoing progress with you during the year and will now hand the call over to Jeremy.
Thanks, Prahlad, and good evening, everyone. I want to start with the financial highlights for the first quarter of 2019. Next, I'll provide some additional color on our served end markets and detail on other financial metrics. I'll finish by providing a brief update on how we are thinking about the rest of 2019. Turning to the first quarter results, we continue to be pleased with the strength in our business as organic revenue grew approximately 5%. Reported revenue in the first quarter of $649 million included a 4% foreign exchange headwind. Net acquisitions had a negligible impact. As discussed in our previous guidance for the quarter, the temporary U.S. government shutdown created a delay in the approval process for an export control product, which led to a 1% headwind in the quarter. Both segments and geographies grew in line with our initial assumptions heading into the year.
Diagnostics, representing 40% of total sales, grew 9% organically, driven by broad-based growth across our reproductive health, applied genomics and immunodiagnostics business lines. Discovery and analytical solutions, representing 60% of total sales, grew 2% organically, highlighted by strength in pharma, biotech, and market. I will provide some additional color on both businesses in a moment. As expected, organic revenue growth was mixed on a geographic basis. High single-digit organic revenue growth in the Americas. Mid-single-digit organic revenue growth in APAC was modestly offset by a low single-digit organic revenue decline in Europe. Excluding the impact from the lost revenue due to the U.S. government shutdown, both APAC and China were up high single digits. We are encouraged by our operational performance in the first quarter. Adjusted gross margins were up 120 basis points to 49.8%.
Adjusted operating margins expanded 130 basis points in the first quarter to 16.2%, driven by strong productivity in our diagnostics business and good operating expense leverage. As Rob mentioned, adjusted earnings per share of $0.69 was an increase of 10% versus the first quarter of 2018 and was $0.03 better than our guidance in January. The beat was comprised of $0.01 from greater organic revenue growth and $0.02 from more favorable incremental margins. Looking further into the key drivers within our segments for the first quarter of 2019, let's start with our diagnostics business. As mentioned in my earlier remarks, organic revenue grew 9%, driven by broad-based momentum across our portfolio. Reproductive health grew high single digits organically, driven by our genomics testing business. We remain on track to double revenue in our genomics testing business year-over-year in 2019.
Immunodiagnostics grew low double digits organically, led by double-digit organic growth in Euroimmun and Tulip. As Prahlad mentioned, we're encouraged by our progress in the U.S. and excited about our future NPIs over the next couple of years. Applied genomics products grew high single digits as customers increasingly rely on our automated sample-to-answer portfolio. Finally, we are encouraged by the initial feedback from our Vanadis early adopters and remain on track to have 30 total installations by the end of the year. Turning to discovery and analytical solutions, the first quarter was impacted by several unique timing items. We feel confident the business will grow mid-single digits in 2019. We experienced high single-digit organic revenue growth in pharma biotech. Demand for our leading discovery product portfolio remained robust, led by our high-content screening and in vivo imaging solutions.
This marks our fourth consecutive quarter of double-digit organic revenue growth in our imaging and detection product lines. We are optimistic that Cisbio, which I will talk about in a few minutes, will help further improve our leading discovery portfolio. Additionally, we experienced high single-digit organic revenue growth in our OneSource business and flat organic revenue growth in our informatics business off a difficult first quarter 2018 comparison. The two end markets impacted most by timing were applied and academic and government. Applied markets, which grew low single digits, would have been mid-single digits, excluding the impact from the U.S. government shutdown. Academic and government, which had a double-digit decline off a small revenue base, would have been flat excluding the U.S. government shutdown and service timing delays.
Looking at below-the-line items, adjusted net interest and other expense for the first quarter was approximately $14 million, and our adjusted tax rate was approximately 16%, driven by discrete items. Turning to the balance sheet, we finished the quarter with approximately $1.9 billion of debt and $134 million of cash. We exited the quarter with a net debt to adjusted EBITDA ratio of approximately 2.8 times. Free cash flow in the quarter was negative $25 million and adjusted free cash flow in the quarter was negative $7 million. The difference between the reported and adjusted number is due to cash payments associated with the Tulip and Vanadis acquisitions. Working capital usage increased mostly due to seasonal inventory builds. We have ongoing actions to execute our full-year cash flow plan. We continue to forecast adjusted free cash flow conversion of 95% in 2019.
As Rob mentioned, we are excited about our acquisition of Cisbio, the net purchase price of approximately $215 million. We expect a double-digit return on invested capital by year four. Cisbio had about $51 million of revenue in 2018. For the remainder of 2019, we expect Cisbio to contribute $35 million in revenue and approximately $0.02 of adjusted earnings per share to PerkinElmer. Given our strong first quarter results and the addition of Cisbio, we are raising our revenue and adjusted earnings outlook for 2019. We expect revenue for the year to be approximately $2.93 billion, including $42 million from foreign exchange headwinds, $35 million of contributions from Cisbio, and 6% organic revenue growth. For the full year, we expect adjusted EPS of $4.02 to $4.07, driven primarily by the addition of Cisbio.
Implicit in this guidance is adjusted operating margin expansion of 120-150 basis points, $60 million of interest and other expense, and a tax rate of 16%. We expect our share count to be slightly under 112 million shares. For the second quarter of 2019, we are forecasting reported revenue of $730 million, representing 5%-6% organic revenue growth, including a foreign exchange headwind of approximately $18 million versus the comparable prior period and $8 million from Cisbio. In terms of adjusted earnings per share guidance, we are forecasting $1. This concludes my prepared remarks. Operator, at this time, we would like to open the call for questions.
Thank you. Ladies and gentlemen, if you have a question at this time, please press the star, then the number 1 key on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Again, that's star then one to ask a question. In the interest of time, we ask that you please limit yourself to one question and one follow-up. Our first question comes from Steve Willoughby with Cleveland Research. Your line is now open.
Hi, good evening. A question for you just on guidance first, Jamey. You beat here by $0.03 in the first quarter. This acquisition you're saying is $0.02 accretive. It looks like your interest expense for the year might be coming down a few million as well. What is the offset that you're only raising your full-year guidance by $0.02? I have one follow-up.
Sure. Thanks for the question, Steve. Yeah, the $0.03 beat in the first quarter, we think $0.02 will come back in the second quarter. That's due to the extra organic revenue growth for the export-controlled product, as well as a little bit of margin expansion with a little bit of timing. The offset to the extra $0.01 is actually a little bit extra interest expense in the year because our free cash flow performance in the first quarter was a little less than expected. I think you might be referring to the number that I quoted was total interest expense and other, and that was $60 million is our guidance for the year.
Okay, great. I was just wondering if someone could comment and provide a little bit more color just on how the Vanadis rollout is going, how discussions as it relates to reimbursement is going, how people are seeing throughput, et cetera, and maybe an update on when we will see some clinical publications on that.
Yeah, Steve, this is Prahlad. The Vanadis installations are going per plan that we have shared earlier. We've had 13 installations by the end of Q1. I personally have visited the first seven customers over the last month, and the feedback has been very positive, and generally, customers continue to remain excited. We have a pretty strong pipeline. That's from an installation and a current status perspective. We have submitted a publication. Hopefully, it's going through the peer review process, and that provides data around all the clinical around the CE mark that was submitted. In the U.S., as you know, we've got the Women & Infants, the VALUE study that's ongoing. We've just very initially begun discussions and started exploring as to what our strategy should be around payers. It's still in its early stages in regards to reimbursement.
Thank you. Our next question comes from Patrick Donnelly with Goldman Sachs. Your line is now open.
Great. Thanks, guys. Rob, maybe one for you just on China. We've seen some mixed data points there. You had one peer who saw a decline, called out a few specific areas of weakness. Another peer put up a really strong quarter, sounded bullish across the board. On the more macro side, we saw some core industrial companies report even today, kind of blaming the macro in China and saw a big slowdown there. I know you guys had high single kind of removing one-time stuff. Can you just provide your perspective on that market, help us think about the state of the market there during the quarter and then also just the go forward?
Yeah. For us, it was a good quarter in China. I would say the majority of our end markets continue to see good growth. If you look particularly on the diagnostic side, Euroimmun did well. Our immunodiagnostic business continues to do pretty well. I would say on the diagnostic side, we saw good strength. On the pharma side, we continue to see good strength. I would say to the extent that was somewhat offset by weakness more on the applied markets. We think some of that may be timing related, but as you said, when you exclude the sort of one-time impact of the export control product, we were sort of high single digits. We felt pretty good about the China momentum going into the second quarter.
Okay. Maybe just on DAS, calling for a pretty healthy uptick to mid-single digits in 2Q, facing a significantly more difficult comp. I know you touched on it a bit. Can you just talk through the moving pieces there, how much visibility you have, and what drives that business really higher on, kind of, a two-year stack number?
First of all, we did see strong growth or continued strong growth in the pharma biotech. It was sort of high single digits for us in the first quarter. We think that continues. Some of that was offset from some academic markets that were, quite frankly, timing related. There was a number of items there that sort of caused that to be actually negative in the quarter. We don't think that's a market phenomenon. We think that's unique to a couple of things we had. If academic goes back to sort of positive, we think that'll drive life sciences to sort of mid to high single digits.
As I mentioned before, there are some things in the applied markets outside the U.S. that I think, when we look at the bookings, we're fairly confident that we'll return that business to mid-single digits despite the difficult comp with last year.
All right. That's very helpful. Thanks.
Thank you. Our next question comes from Doug Schenkel with Cowen. Your line is now open.
Hey, good afternoon. This is Chris on for Doug today. Thanks for taking my question. Just based on your Q2 core revenue guidance, it looks like the core revenue growth for the year is back-end loaded. By our math, you're essentially guiding to 6.5%-7% core growth in the second half relative to a 5% growth rate in the first half. With that in mind, can you just walk us through the key drivers behind the 150-200 basis points of revenue growth acceleration in the second half?
Why don't I take the revenue, then maybe Jamey can talk a little bit about the margin. I think actually going into the year, we talked about the fact that the back end would be a little better from both a revenue perspective as well as a margin perspective. A lot of that is because a lot of the growth accelerators that Prahlad mentioned, whether it's our genetic testing business, whether it's Vanadis, whether it's some of the NPIs that are coming out later in the year, will ramp up the revenue growth. That also impacts our margins to some extent, but I'll let Jamey speak to the margin stuff.
That's what I was going to say. 130 basis points of margin expansion in the first quarter. The first half of the year, Chris, is probably 46% to 47% of our revenue. We get a lot more volume leverage in the second half of the year. If we're in the 120 range already in the first half, we feel very confident in the 120 to 150 for the total year.
Okay. For my follow-up question, could you just provide a bit more detail on your performance, specifically what end markets were soft there? Do you expect that to linger for the balance of the year? Maybe just more broadly, are there any major changes to your end market or geographic growth assumptions for the year? Thank you.
Yeah, I would say the pressure we saw in Europe was largely in the applied markets and also academic. That really put some pressure on our DAS growth rates. The majority of our diagnostic business continued to do well in Europe. For Europe overall, we were just slightly negative. Your question whether we do think that's going to come back somewhat in the remainder of the year, I think we talked in the beginning of the year of targeting Europe at sort of low single digits. We still think that's the appropriate number for Europe.
Thank you. Our next question comes from Brandon Couillard with Jefferies. Your line is now open.
Thanks. Good afternoon. Rob, on the Cisbio deal, could you help us kind of understand what the growth profile of that asset is and any opportunities you might see to accelerate growth or profitability under the PerkinElmer umbrella?
Yeah. I would say we're quite excited about this acquisition because we think it's extremely complementary to what we do on drug discovery. I mentioned a little bit in my prepared remarks, but we think with Cisbio, combined with our strength in some of the areas, particularly around sort of luminescence. We do a lot of work around luminescence. They have a very strong fluorescent portfolio of assays. Of course, when you combine that with our automation and detection, we can now go with a fully automated workflow, whether it's reagents, plates. Automation detection information for all the drug discoveries, and I sort of alluded to before, we're the only company now that can provide all three assay tests on an homogeneous. Whether you want to look at luminescence, whether you want to look at fluorescence, or whether you want to look at radiometric.
We think by combining our efforts with Cisbio's capabilities, we can accelerate. Historically, they've grown fairly well. We think this business, with PerkinElmer, definitely gets into the high single digits, maybe even a little bit better than that. The other aspect I alluded to is, as I think you know well, we have a very strong imaging portfolio, whether it's high content or whether it's in vivo. Generally, up to this point, we've been principally around in instruments and software, and other firms sell the cellular imaging reagents that go with our imaging instruments. With Cisbio's technology and capabilities, we'll be able to expand in the cellular imaging reagents and consumables, therefore, we'll be able to go to our customers with a package with the instruments, software, and the assays.
I think that further drives incremental growth between the two companies.
Thanks. Just a quick follow-up for Jamey. Could you help us with the impact of currency on the gross and operating margin lines and any impact on the EPS in the quarter?
Yeah. Gross operating margin, foreign exchange was probably about 20 basis points, and on operating margin, it was about 30 basis points with regards to foreign exchange.
Very good. Thank you.
Thank you. Our next question comes from Paul Knight with Janney. Your line is now open.
Paul, we can't hear you.
Hey, can you hear me now, Rob?
Yes, Paul. How are you?
Congratulations on your new IR person.
I understand he was trained well.
Anyway. Hey, Rob, can you talk about China? You were one of the early innovators there with Symbio. Could you also talk about your M&A pipeline specifically in that market? My next question would be your U.S. penetration now in diagnostics with your broader product line. Thanks.
Yeah. Why don't I take the China discussion, and I'll pass it over to Prahlad on the U.S. I assume you're talking mostly with Euroimmun on the U.S. penetration.
Yeah, correct.
As you point out, we were fairly early in the China market. Symbio brought us some terrific distribution capabilities, then we've added with Haoyuan, the blood screening, and a number of other areas. Of course, Euroimmun brings a very strong capability in China. I think, first of all, looking at the diagnostic side, we feel very good about our capabilities. We continue to look for opportunities from an inorganic perspective to add to that, and we invest a lot of time and effort in that regard. I guess I would say stay tuned on that one. Where we've been a little bit more active recently is on the DAS side.
As you saw over the last sort of year or two, we've been adding some assets on the analytical instrument side, and we're looking very active in the applied markets, like for areas like food and other areas that are higher growth areas. Like I said, I would say we're very active there, and hopefully we'll have something to talk about maybe later this year. Let me turn it over to Prahlad. Maybe you could talk a little bit about the Euroimmun penetration in the U.S.
Yeah. Thanks, Rob. Paul, I think you're ready. Euroimmun continues to do well in the U.S. As I mentioned, they got two approvals on celiac markers this quarter. They continue to grow well. They had a major lab victory, which will not only give them instrument penetration but also continued assay penetration over the years. They grew low double digits in the first quarter, we see a very good traction for the rest of the year.
Thank you very much.
Thank you. Our next question comes from Bill Quirk with Piper Jaffray. Your line is now open.
Hi. Thanks. This is Dan on for Bill. First on Tulip, it sounds like growth was strong in the quarter. I think you said double digits. Could you just provide an update there? Then any insight on new offerings as well? Thanks.
Yeah. Tulip, again, as you said, it continues to do well. They have double-digit growth, and their pipeline is growing both, not just in India, but we're also looking at how do we take their product portfolio out into some of the other emerging markets. Great traction there. They had a very good 2018 and a very good start to the year.
Okay, great. Thanks. Then, I'm a millennial, so stereotypically, I have to ask about cannabis. Do you guys have any update on what kind of market opportunity you're seeing there?
Yeah. We talked in the beginning of the year of the opportunity to probably double that business in 2019. Just a reminder, we did about $10 million last year, so we're good to go about $20. I would say we saw strong growth in the first quarter, and we think we're well on track to at least do $20 million in 2019.
Awesome. Thanks.
Thank you. Our next question comes from Jack Meehan with Barclays. Your line is now open.
Hey, thank you. This is actually Mitch Petersen on for Jack this afternoon. Pretty good growth out of OneSource in the quarter. I was just hoping you could unpack that for us a little bit. I know you're expecting to lap some enterprise wins there. As we think about the balance of the year, do you think the high single-digit growth rate from 1Q19 is sustainable for the remainder of 2019? Thanks.
Hey, Mitch, it's Jamey. Thanks for the question. OneSource is going as planned. We still feel confident in the high single digits for the year. As we mentioned before, we're looking at some tenders that we think could land in the second half, maybe late, maybe have an impact to that, but still feel good about it, and I think no change in the overall guidance.
Great. That's helpful. Maybe just to confirm, it sounds like you pulled in half of what you expected from the U.S. government shutdown. Do you expect to recruit the other half of that in the second quarter?
That's right. We got about half in the first quarter. Going back to Steve's point, and some of the questions around DAS, mid-single digits in the second quarter, we expect the second portion of that to come in the second quarter, which also helps give confidence to mid-single digits for DAS in the second quarter.
Got it. Thanks a lot.
Thank you. Our next question comes from Ross Muken with Evercore. Your line is now open.
Hey, guys. It's Luke on for Ross today. Just real quick, couple of housekeeping ones. Did you break out your expectations for guidance by segment? I think I missed that one.
Expectations for Q2 or for the year?
Yeah, for 2Q.
No, we didn't give expectations for 2Q. I think generally speaking, probably high single digits for diagnostics, mid-single digits for DAS is the way to think about 2Q.
Okay, that's great. I guess, just sticking with the diagnostics growth and how strong it's been over the last couple of quarters, how much of that is due to strong market conditions and just high growth markets, speaking of immunodiagnostics, et cetera, and how much of that is really your expanding portfolio and kind of everything starting to come together for you guys?
I think it's a combination of both. If you look at it from the reproductive health perspective, I think despite strained birthrates, we have expanded the business, and that's happening because we are adding new test menus with lysosomal disorders and NeoBase 2 approvals that have come through. Similarly, on the applied genomics side and neuroimmune, we see good traction for those product portfolio in emerging markets. I think it's a combination of both.
Okay. That's helpful. Thank you.
Thank you. Our next question comes from Derik De Bruin with Merrill Lynch. Your line is now open.
Hi, this is Avima on for Derik today. Thank you for the questions. First question is for the applied market. I know, appreciate the color provided so far. Some of your competitors called out some choppiness in the food market, particularly in China. Just wondering if you've seen any of that. If so, when can we expect that to go away? Thanks.
I would say we probably saw some of that in China, quite frankly, one of the dynamics that are going on in the China market right now, which you've probably heard from our competitors as well, is there is some shifting in testing going from government labs to more private-based labs. A lot of these private-based labs do more than food. They will test for environmental, they'll test for food, they may do other types of things. Quite frankly, for first quarter in particular, there may be noise in sort of was it environmental lab or was it a food lab? We're still trying to get better color behind that. Clearly, we've seen a little bit of a reduction in food testing as this shift has occurred from public labs to private labs.
We do think it's somewhat temporary, as we think about food for 2019, we expect it'll continue to do strong growth in China.
Okay, that's very helpful. Just to follow up, apologize if I missed it earlier, just wanted to get more color on the pacing for the rest of the year. Anything that we should think about for the rest of the quarters regarding organic growth and margin trends throughout the year, just given the more difficult comps? Thank you.
No. As we think about the first quarter, it came in pretty much as we expected, we would say that we think the year is going to play out pretty much as we expected, which would be a little stronger growth in the back half. We talked a little bit about that earlier. We think our back half organic growth is probably in the 6.5, 7% range. As we think about operating margin expansion, we also think that's a little heavier in the back half. If you think about maybe 100 basis points or so in the first half, and then stronger growth in the back half so that we average that 120-150 for the year. Again, that's very consistent with what we talked about in January.
Great. Thanks.
Thank you. Our next question comes from Dan Brennan with UBS. Your line is now open.
Thanks. This is Tim on for Dan. Would you be able to get a little more granular about your applied growth? I know it was low single digits in the quarter, could you maybe give us a breakout of the industrial versus environmental versus food?
Industrial and environmental, we really don't sort of break down. Again, part of that is, it's becoming increasingly more difficult with our customer base is to really definitively define what's being done on from an environmental testing perspective and what's being testing for other things. We sort of put those together. If you look at industrial and food, we think that was sort of low to mid-single digits. As I mentioned before, food was down, largely outside the U.S. U.S. was very strong, sort of mid-teens. If you looked at it from a geographic perspective, applied was sort of mid-singles and Americas up sort of low to mid-single, depending on how you consider the government-controlled product. Europe was down a little bit, sort of low single digits.
Okay, great. Could you talk a little bit about Cisbio just in terms of your overall M&A strategy going forward? Do you see other deals of this size kind of in the pipeline? Was this a particularly competitive deal? Is this an area where you think you might continue to focus? Just give us a little bit more color there about how-
I would say, generally our M&A strategy is sort of consistent with the overall company strategy, which is we're trying to drive from an end market perspective into the more attractive end market for us, which we think are life sciences, food, and diagnostics. Those are areas that we think are very attractive, because of the growth profile and also because we think we have some differentiated capabilities in those markets. We're also looking to continue to expand our capabilities globally. We've, over the last couple of years, been focused largely on emerging market growth. Then I would say the third aspect of it is we want to continue to drive our growth into areas that facilitate a workflow. Obviously we sell instruments. We want to continue to build out our reagent assay and consumable as well as our informatics.
That's the fundamental larger strategy that we're focusing on. Cisbio hit most, if not all those, obviously, a very strong capability in assays, increased our exposure to the pharma and biotech market. While they weren't significant in emerging markets, we think their capability, combined with our distribution capability, will be able to expand emerging market presence in the drug discovery space.
Thank you.
Thank you. Our next question comes from Tycho Peterson with JPMorgan. Again, line is now open.
Hey, thanks, Rob. I guess on Euroimmun, I know you said double-digit growth. Can you just talk to how that compares to the full-year guidance of 13%-15%? Can you just maybe unpack China, Germany with the moderation versus U.S. and other emerging markets?
Yes. Euroimmun pretty much came on track as what we expected. I would say Euroimmun, when I think about the first quarter, revenue was pretty much on. We sort of mentioned this a little bit in the prepared remarks, we were pleasantly surprised on the operating margin side. They had a nice pickup in operating margin. Some of that is probably timing because they sold a little less instruments in the quarter and they'll sell a little bit more. We think a lot of it is just better cost focus and cost management. We're excited about that because we think that is one of the big levers to margin expansion as we start thinking about 2019, 2020, and 2021. I think that's good. With regard to China and Germany, are you talking specifically for Euroimmun or for PerkinElmer?
Euroimmun.
Okay. Euroimmun had another strong quarter in China, it was up sort of mid-teens, something like that, maybe even a little bit better than that. I don't know Germany offhand. I can tell you sort of Europe was sort of mid-single.
Okay. On Vanadis, just curious about utilization at some of your early customers. As we think about how many biochemical screening labs have enough volume to achieve the €100 cost per test, can you maybe just talk to how you plan to penetrate some of the lower volume labs?
Yeah. Tycho, this is Talat. The labs that we are focusing on right now are obviously labs that have larger than, let's say, on average 5,000 tests. That's where we are seeing a lot of interest coming in from. I think in some of the places or some of the countries where you would have lower volumes, we would probably look at either centralizing it to one lab there that could attract. There are also facilities where we have our own labs, whether it's in Kuala Lumpur or India or in the U.S., where we would look at putting Vanadis.
Okay.
Tycho, just to clarify quickly, it was high single digit Euroimmun in Europe.
Okay. Just last one. It came out in the K, I think you guys had about a 1.3% organic growth from the ASC 606 switch last year. As we think about that in the context of the underlying organic growth, are you still comfortable with kind of the high single-digit targets that you put out there and the path to get there?
Yeah, we are, Tycho. Just to maybe explain that change last year. I mean, the new revenue guidance enabled us to do some things operationally and commercially that we chose to do that we are able to recognize revenue under 606, and we wouldn't have been able to under 605. Had 606 not come around, we just wouldn't have made those changes and still had relatively the same amount of revenue growth year-over-year.
Thank you. Our next question comes from Dan Leonard with Deutsche Bank. Your line is now open.
Hey, guys. This is Mike Sarcone for Dan Leonard. Just a few questions on Euroimmun. You had mentioned you're targeting 50% market share in the U.S. by the end of the year. Can you just tell us where you're starting from in terms of market share heading into 2019? Then maybe your confidence level around getting to 50%?
Just to give you a sense, I think around the autoimmune screening business, we would say that we are somewhere around 30%. With some of the new forays that we have made in the lab, we think that by the end of the year, we'll get to about 50% in autoimmune screening.
Got it. One more on Euroimmun. I think on the last conference call, you said you had, in the U.S., about 50 tests approved. Where do you stand today?
A little over 60.
Yeah, I think we are slightly over 60 now.
Okay, thank you.
Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Robert Friel for any closing remarks.
Well, great. Well, first of all, thank you for your questions and your interest in PerkinElmer. We think we're off to a great start this year, to continue to drive our mission and continue to create value for our customers, shareholders, and employees. I look forward to updating you on our progress in the coming quarters. Thanks again for joining the call, and hope everyone has a great evening.
Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program. You may all disconnect. Everyone, have a wonderful day.