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Thermo Fisher Revenues Jump 7 Percent in Q2

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today reported a 7 percent increase in revenues year over year and a nearly 15 percent increase in profits for its second quarter.

For the three months ended July 3, the company posted receipts of $2.65 billion, up from $2.48 billion in Q2 2009. The firm fell just short of analysts' consensus estimate of $2.66 billion.

The company's Analytical Technologies segment had revenue growth of 10 percent to $1.10 billion from $1.00 billion in Q2 2009, while revenues for Laboratory Products and Services bounced 5 percent to $1.68 billion, compared to $1.60 billion a year ago.

In Analytical Technologies, the firm saw "especially strong growth" in its mass spectrometry business, clinical diagnostics, and biosciences business, Thermo Fisher CFO Peter Wilver said during a conference call following the earnings release. He did not elaborate.

He added that "a number" of Thermo Fisher's instrument businesses serving the industrial markets also continued to strengthen "and contributed to growth," but growth in the firm's microbiology business was stunted by difficult year-over-year comparisons due to high 2009 H1N1 flu sales last year and overall weakness in the healthcare markets.

Thermo Fisher posted net income of $237.3 million, up from $206.9 million a year ago. Diluted earnings per share came in at $0.57, a second-quarter record for Thermo Fisher, and up 16 percent from $0.49 a year ago. On an adjusted basis, Thermo Fisher's EPS for Q2 2010 was $.84, matching analysts' consensus estimate.

For the second quarter, spending on R&D climbed to $70.3 million, up from $58.1 million, while SG&A spending rose to $583.3 million from $544 million in the year-ago period.

During the quarter, Thermo Fisher completed its acquisition of proteomics tools firm Proxeon. It also announced its purchase of reagents firm Fermentas, which it completed earlier this month.

During the conference call, Thermo Fisher CEO Marc Casper noted the Fermentas deal, as well as the earlier acquisition of Finnzymes, as important moves by Thermo Fisher to move into the PCR space.

"PCR is a major product category and it's one that as a company historically, we didn't participate much in, and I think it's important that we participate in the market," Casper said.

The M&A strategy for the year has been to target businesses that serve attractive markets "that in combination with our business will help us accelerate growth," he added. Responding to a question about other genetic analysis markets that the company may be interested in entering, Casper said that Thermo Fisher's strategy is to focus on the diagnostics space.

Next-generation sequencing, however, is not in the company's future. "It's not a space we've spent a lot of time or effort to think about in terms of trying to get into," he said.

Thermo Fisher reported cash, cash equivalents, and short-term investments of $1.32 billion as of July 3.

Despite anticipated negative effects from currency exchange, the company maintained its previous guidance of between $10.60 billion and $10.75 billion in revenues for full-year 2010, which would represent a 5 percent to 6 percent improvement year-over-year. It provided an EPS guidance of $3.40 to $3.50, which would be an 11 percent to 15 percent improvement over full-year 2009 figures.

The estimated revenue range was trimmed from an earlier forecast of between $10.65 billion and $10.8 billion.

In early Tuesday trade on the New York Stock Exchange, Thermo Fisher's shares dropped 8 percent to $46.84.

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