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Thermo Fisher Revenues Increase 3 Percent in Q3

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today said that revenues for the third quarter rose 3 percent year over year as it narrowly beat the consensus Wall Street estimates on the top and bottom lines.

The company took in $3.19 billion in total revenues for the three months ended Sept. 28, up from $3.09 billion a year ago, and edging out the average analyst estimate of $3.18 billion. Organically, revenues grew 2 percent year over year.

"We executed well in a challenging market environment, driving productivity and leveraging our PPI Business System to deliver solid adjusted operating margin expansion," Thermo Fisher President and CEO Marc Casper said in a statement.

By segment, Laboratory Products and Services took in $1.58 billion in revenues, up from $1.53 billion a year ago, while Analytical Technologies revenues increased to $996.6 million from $986.5 million, and Specialty Diagnostics increased to $759.2 million from $706.7 million.

By end market, academia/government was down in the low-single digits due to sequestration in the US as well as the uncertainty leading up to the budget standoff, Casper said on a conference call following the release of the earnings results.

Partially offsetting the soft US academic/government market was improved markets outside the US, and in particular Japan, where the company shipped a "significant order" for analytical instruments to the country's National Police Agency for use in forensic toxicology and drug screening, Casper said.

The industrial and applied markets were up in the low-single digits, as well, against an easy year-ago comparison.

The healthcare and diagnostics end market, meanwhile, was up in the low-single digits as healthcare utilization remained soft in the US. Also, lower reimbursement rates affected Thermo Fisher's anatomical pathology business. One bright spot was the transplant diagnostics business, formed when Thermo Fisher bought One Lambda in September 2012, Casper said. In the year since the acquisition, the business has delivered high-single digit growth, he noted.

Lastly, pharma/biotech grew in the high-single digits.

The company did not materially update its pending $13.6 billion purchase of Life Technologies. Life Tech shareholders approved the deal in late August, and the integration planning teams are "right on schedule, and day one planning is nearly complete," Casper said on the call.

The regulatory approval process for the acquisition continues, and Thermo Fisher continues to expect the deal to close early next year, he said.

Thermo Fisher's profits increased to $317.6 million, or $.86 per share, in the third quarter, up from $290.4 million, or $.82 per share, a year ago. On an adjusted basis EPS was $1.30, above the $1.28 expected by Wall Street.

The firm's R&D spending ticked up 4 percent to $95.9 million from $92.0 million in the year-ago period, and SG&A spending increased a fraction of 1 percent to $713.2 million from $707.8 million.

Thermo Fisher also reported restructuring and other costs of $11.4 million versus $15.2 million for Q3 2012. Those costs pertain to severance, abandoned facility, and other expenses related to headcount reductions and real estate consolidation. Through the first half of the year, the company reduced its headcount by about 655.

Thermo Fisher ended the quarter with $1.85 billion in cash and cash equivalents.

For full-year 2013, Thermo Fisher narrowed its revenue guidance to a new range of $12.87 billion to $12.95 billion. In the second quarter, the company guided to a range of $12.83 billion to $12.95 billion.

Its adjusted EPS guidance was also narrowed to a new range of $5.31 to $5.39, compared to an earlier range of $5.29 to $5.39.

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

In morning trading today shares of Thermo Fisher on the New York Stock Exchange were up a fraction of 1 percent at $96.31.

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