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Thermo Fisher Posts 22 Percent Revenue Growth for Q1, Raises Guidance for FY 2014

NEW YORK (GenomeWeb) – Thermo Fisher Scientific today reported that its first quarter revenues increased 22 percent year over year as it benefitted from the recent acquisition of Life Technologies.

For the three months ended March 29, Thermo Fisher brought in total revenues of $3.90 billion, up from $3.19 billion in Q1 2013. It beat the average Wall Street estimate of $3.79 billion. The results include the contribution from Life Tech beginning Feb. 4 and exclude related divestitures as of March 22.

Organic revenue growth for the quarter was 2 percent, with acquisitions contributing 20 percent of the total growth year over year. CFO Pete Wilver said on a conference call following the release of the results that there was an "immaterial positive impact" from foreign exchange.

Sales in North America declined organically in the low-single digits, Europe grew in the mid-single digits, and Asia-Pacific grew in the high-single digits, with China growing in the low-double digits, said Wilver. Revenues for the rest of the world grew in the low-single digits.

The firm's academic and government customer market was a "little softer" earlier in the first quarter than during the past year, "most likely due to some of our US customers working fewer days," Thermo Fisher President and CEO Marc Casper said on the call. "Overall, we said last quarter that these customers would probably begin spending money under the new appropriations at around mid-year. Our view on that hasn't changed, and we believe this end market will improve in the second half as funds begin to flow."

Sales for its Life Sciences Solutions segment were $835.5 million, up sharply from $172.6 million in Q1 2013, driven by the addition of Life Tech's business. Its Analytical Instruments segment reported 4 percent revenue growth to $769.9 million from $740.1 million, while Specialty Diagnostics revenue increased 1 percent to $813.7 million from $805.6 million, and Laboratory Products and Services sales increased 2 percent to $1.59 billion from $1.56 billion year over year.

On a pro forma basis, assuming Life Tech would have been part of Thermo Fisher for all of the first quarter in both 2013 and 2014, organic revenue for the Life Sciences Solutions segment grew 1 percent. "In the quarter we saw good growth in our bioprocess production business and in next-gen sequencing, partially offset by a tough comparison in licensing revenues," said Wilver.

Thermo Fisher posted net income of $543.1 million, or $1.36 per share, compared to $336.2 million, or $.93 per share, for Q1 2013. On an adjusted basis, its EPS was $1.53, up from $1.37 and well above the consensus Wall Street estimate of $1.40.

Its R&D spending for the quarter jumped 52 percent to $149.7 million from $98.2 million, and its SG&A expenses climbed 42 percent to $982.8 million from $693.6 million.

The firm finished the quarter with $1.50 billion in cash and cash equivalents and $25.5 million in short-term investments.

Thermo Fisher also increased its revenue and EPS guidance for full-year 2014. It now expects revenues in the range of $16.84 billion to $17.00 billion, up from its previous guidance of $16.63 billion to $16.83 billion, and representing revenue growth of 29 percent to 30 percent year over year. It upped its adjusted EPS guidance to a range between $6.80 and $6.95 from an earlier range of $6.70 to $6.90.

Casper noted that Thermo Fisher has targeted synergies of $85 million in 2014 from the Life Tech transaction. "I have no doubt we'll accomplish that goal," he said.

In Wednesday morning trade on the New York Stock Exchange, shares of Thermo Fisher were down around 2 percent at $118.29.