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Thermo Fisher Posts 4 Percent Increase in Q2 Revenues

The story has been updated to include comments from company officials from its earnings conference call.

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today said that its second quarter revenues improved 4 percent year over year, as the company exceeded the average analyst estimates on the top and bottom lines.

Companywide revenues for the three months ended June 29 reached $3.24 billion, up from $3.11 billion a year ago, beating the consensus Wall Street estimate of $3.22 billion.

By segment, Analytical Technologies' revenues rose 4 percent to $1.01 billion from $972 million a year ago. The company's mass spec and chromatography businesses saw strong growth in the quarter, and on a conference call following the earnings results release, CFO Peter Wilver said those businesses benefitted from "strong performance" in China.

Specialty Diagnostics saw an 8 percent improvement to $794 million from $732 million. Clinical diagnostics delivered "very good growth" in the quarter, while its European business in the segment started to stabilize in the second quarter, he said.

The firm's largest segment, Laboratory Products and Services, saw revenues increase to $1.58 billion, up 3 percent from $1.54 billion in the year-ago period.

By end market, academic/government grew "slightly" in the second quarter, but the company still expects that space to remain challenging for the rest of 2013, Thermo Fisher President and CEO Marc Casper said on the conference call. The second quarter was the first full quarter of sequestration in the US, and Casper said the US academic/government end market was slightly weaker in the quarter, which was offset by "a little bit of strength" outside the US.

The industrial and applied markets continue to be weak, with a low-single digit decline, he added, while the healthcare and diagnostics market grew in the low-single digits with "strong demand" for Thermo Fisher's biomarker test and clinical diagnostic offerings.

Lastly, pharmaceutical/biotech was "very strong" with high-single digit growth, Casper said.

As the firm awaits the pending $13.6 billion acquisition of Life Technologies to close, he said that integration leaders were appointed a few months and ago and planning is in full swing. Progress has been made on the regulatory front, Thermo Fisher has secured much of the funding required for the transaction, and the deal remains on track to close in early 2014, Casper said.

Thermo Fisher posted a net income of $277.4 million, or $.76 per share, for the quarter compared to $233.8 million, or $.63 per share, a year ago. On an adjusted basis, EPS was $1.32 beating the average Wall Street estimate of $1.30.

R&D spending grew 3 percent to $96.7 million from $94.2 million in the second quarter of 2012, while SG&A costs increased 4 percent to $734.4 million from $705.2 million a year ago.

Thermo Fisher ended the quarter with $1.41 billion in cash and cash equivalents.

The firm lowered its full-year 2013 revenue guidance to a new range of $12.83 billion to $12.95 billion, compared to an earlier guidance of $12.84 billion to $13.00 billion, to reflect increased headwinds from currency exchange rates. Thermo Fisher also raised the low end of its adjusted EPS guidance for the full year by $.02, to a new range of $5.29 to $5.39.

The guidance does not include the Life Tech acquisition or the impact of related financing activities.

To counter the currency exchange headwinds, Thermo Fisher initiated an additional $10 million in restructuring actions in the second quarter, CFO Wilver said on the call. The total amount of restructuring benefits expected in 2013, as a result, has been raised to $85 million from $75 million from previous restructuring actions. Through the first half of the year, the company has realized about $45 million of the benefits.

Shares of Thermo Fisher were up 2 percent at $91.40 in morning trading on the New York Stock Exchange.