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Thermo Fisher's Q1 Revenues Climb 3 Percent

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Paced by growth in its Analytical Technologies segment, Thermo Fisher Scientific today reported 3 percent revenue growth year over year in the first quarter.

For the three months ended April 2, the company posted revenues of $2.72 billion, up from $2.63 billion a year ago, and surpassing analyst forecasts for $2.65 billion. Acquisitions added 2 percentage points to revenues, while currency translation added 1 percentage point.

Pacing revenue growth was its Analytical Technologies segment, which saw revenues climb 9 percent to $1.18 billion from $1.08 billion a year ago. The segment grew organically 5 percent year over year, company CFO Peter Wilver said during a conference call after the release of the company's earnings results.

Revenues in Thermo Fisher's Laboratory Products and Services segment rose 1 percent to $1.69 billion from $1.67 billion a year ago. Organically, revenues dipped 1 percent year over year.

Thermo Fisher President and CEO Marc Casper said on the call that both the industrial and applied markets and diagnostics market performed well during the quarter, and clinical diagnostics saw double-digit growth, fueled by sales of the firm's biomarker test kits. Responding to an analyst question, he noted the strength of the biomarker test for sepsis that the company acquired when it purchased Brahms in 2009.

The business also benefitted from a stronger flu season, compared to the first quarter of 2010, Casper said.

Company officials did not qualify how the academic and government research market played out during the quarter, but Casper suggested unusual activity due to uncertainty over the US federal budget. With the recent resolution reached in Washington, "we're expecting more of a normalized set of market conditions in government and academic for the balance of the year," he said.

The biotech/pharma end market was softer than the company average, Casper said, primarily due to a difficult year-ago comparison when that that business jumped 20 percent in the first quarter of 2010.

Thermo Fisher ended 2010 by announcing its $2.1 billion bid for chromatography firm Dionex. Today, company officials said that the European Commission is reviewing the deal and it is expected to close in mid-May. When completed, the acquisition is expected to add between $.13 and $.15 to EPS over the first 12 months of ownership, Casper said.

Revenue synergies are expected to begin toward the end of the first 12 months of ownership and will ramp up in the years following, he added.

By geography, Thermo Fisher saw low-single digit growth in Europe, while North America was flat, Wilver said. Asia was "slightly" down but grew in the low-teens when the stimulus package in Japan a year ago is factored out. The rest of the world grew in the mid-double digits from a relatively small base, driven by sales in Brazil and the Middle East.

Japan represents about 3 percent of total revenues for Thermo Fisher, and Casper said that the earthquake and tsunami that struck parts of the country in March have not had a significant impact on the business.

For the first quarter, Thermo Fisher posted net income of $252.2 million, or $.64 per share, up 9 percent from $232.3 million, or $.56 per share, a year ago. On an adjusted basis, EPS was $.92, compared to $.82 a year ago, beating Wall Street estimates of $.88.

The company increased its R&D spending to $74.8 million, up 13 percent from $66.1 million a year ago. Its SG&A costs increased 4 percent to $606.7 million from $584 million a year ago.

As of April 2, Thermo Fisher had $2.79 billion in cash and cash equivalents.

For 2011, the company raised the midpoint of its revenue guidance by $180 million to a new range of $11.52 billion to $11.62 billion, which would represent a 9 percent to 10 percent growth rate from 2010 revenues.

The firm raised its adjusted EPS for the year by $.05 to a new range of $4.05 to $4.15, which would be growth of 17 percent to 20 percent over 2010 EPS.

In early Wednesday trade on the New York Stock Exchange, shares of Thermo Fisher were up 2 percent at $59.27.

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