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Acquisitions Help Drive up Thermo Fisher Q4 Revenues 15 Percent

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today said revenues for the fourth quarter grew 15 percent year over year, beating Wall Street estimates on the top and bottom lines.

For the period ended Dec. 31, 2011, revenues came in at $3.13 billion, up from $2.72 billion in the year-ago quarter, and beating consensus analyst expectations of $3.08 billion.

By segment, Analytical Technologies brought in $1.08 billion in revenues, up 23 percent from $880.2 million a year ago, helped along by contributions from the Dionex business that was acquired by Thermo Fisher in May. Organic growth was 8 percent, CFO Peter Wilver said on a conference call following the earnings release.

Sales were particularly strong for instruments serving the industrial and applied markets and for bioprocessing products. Mass spectrometers and chromatography products delivered "strong" year-over-year growth, Wilver said.

Specialty Diagnostics grew 32 percent to $705 million from $535.6 million a year ago. Figures for Q4 2011 include revenues from Phadia, which Thermo Fisher acquired during the summer. Organically, the segment grew 6 percent.

Laboratory Products and Services revenues increased 5 percent to $1.48 billion from $1.41 billion a year ago.

On a pro forma basis — if Dionex and Phadia had been part of Thermo Fisher in the fourth quarters of both 2011 and 2010 — revenues grew 6 percent year over year in the quarter, including a 1 percent increase from other acquisitions and a negligible impact from currency translation, the company said.

Marc Casper, President and CEO of the company, said on the conference call that while the academic/government end market remained relatively weak overall, it improved sequentially from the third quarter, helped along by the passage of a 2012 federal budget that slightly increased the National Institutes of Health budget, and the release of pent-up demand among researchers for products, "especially for laboratory consumables."

Moving ahead, though, that end market is expected to see negative growth in 2012, he said.

Pharmaceutical and biotech end markets saw strong demand in the quarter, Casper said, and in healthcare diagnostics, demand has remained consistent in particular for clinical diagnostics and for Phadia, now named immunodiagnostics.

The firm's R&D spending in the quarter shot up 23 percent to $95.7 million from $77.6 million a year ago, and SG&A costs increased to $699.6 million, up 17 percent from $595.6 million.

Quarterly profits came in at $288.9 million, or $.77 per share, compared to $297.5 million, or $.75 per share, a year ago. On an adjusted basis, EPS was $1.18, above Wall Street estimates of $1.15.

In the third and fourth quarters of 2011, Thermo Fisher implemented cost-cutting measures, which included "tightening our discretionary spends," initiating additional site consolidations, and reducing its workforce. Restructuring efforts throughout 2011 are expected to result in savings of about $100 million. Casper said that the firm realized some of those savings during the 2011, "and we expect to reap the balance of it in 2012 and a small amount in 2013."

The company also had previously said that it expects $60 million in total operating synergies from the Dionex purchase by the third year after the close of the deal. That includes $40 million in cost synergies and $20 million in revenue synergies.

Casper said today that Thermo Fisher is ahead of its goal of $15 million in cost synergies during the first year and is tracking "even better" in terms of its revenue synergies. The company now expects that it will achieve its $20 million revenue synergy as quickly as one year ahead of schedule.

For full-year 2011, Thermo Fisher recorded $11.73 billion in revenues, an 11 percent increase from $10.57 billion in 2010, and besting analyst estimates of $11.66 billion.

Revenues from Analytical Technologies were $3.85 billion, up 19 percent from $3.24 billion a year ago, with organic growth up 6 percent, while Specialty Diagnostics revenues were up 15 percent to $2.47 billion from $2.15 billion, with organic growth at 4 percent.

Laboratory Products and Services grew revenues 5 percent to $5.94 billion from $5.65 billion.

Its R&D spending was up 20 percent to $340.6 million, compared to $284.8 million in 2010, and its SG&A costs were up 14 percent to $2.65 billion from $2.32 billion.

Thermo Fisher posted net income for 2011 of $1.33 billion, or $3.46 per share, compared to $1.04 billion, or $2.53 per share, in 2010. Adjusted EPS of $4.16 beat Wall Street expectations of $4.13.

Thermo Fisher ended 2011 with $1.02 billion in cash, cash equivalents, and short-term investments.

The company initiated adjusted EPS guidance for full-year 2012 of between $4.67 and $4.82, which would represent growth of 12 percent to 16 percent over 2011 figures. Revenues for the year are anticipated to fall between $12.15 billion and $12.35 billion, which would be 4 percent to 5 percent growth over 2011 levels.