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Thermo Fisher Reports Slight Q1 Revenue Growth, Lowers 2015 Revenue Guidance

NEW YORK (GenomeWeb) – Thermo Fisher Scientific today said that its first quarter revenues increased a fraction of 1 percent year over year. 

For the three months ended March 28, the company recorded revenues of $3.92 billion, up from $3.90 billion in the year-ago quarter, and short of the average analysts' estimate of $4.00 billion. Organic revenue growth was 2 percent year over year in the quarter, Thermo Fisher CFO Peter Wilver said on a conference call following the release of the company's financial results. 

By business segment, Life Sciences Solutions posted $1.02 billion in revenues compared to $835.5 million a year ago. The growth was due to the Life Technologies acquisition, which hit its one-year anniversary in February, Wilver said. 

Thermo Fisher President and CEO Marc Casper added that the company remains confident that it will meet the $60 million in revenue synergies resulting from the acquisition that it had previously targeted for 2015, while expectations for cost synergies are now expected to reach $125 million compared to a previous goal of $115 million. 

Analytical Instrument revenues were trimmed to $727.4 million from $769.9 million, while Specialty Diagnostics revenues were down to $785.2 million from $813.7 million, and Laboratory Products and Services decreased to $1.51 billion from $1.59 billion. 

By end market, the academic/government segment was down in the low-single digits year over year, driven primarily by Japan, which experienced a delay in the government's budget, and a difficult year-over-year comparison, Casper said, though he added that Thermo Fisher expects the academic/government space to improve throughout 2015 with growth in Japan returning to "more normalized levels" at low-single digits. 

Among its other end markets, industrial and applied markets were up in the low-single digits compared to Q1 2014, while diagnostics and healthcare improved also in the low-single digits, and pharma and biotech was up in the mid-single digits, Casper said. 

For the first quarter, Thermo Fisher had a profit of $385.1 million, or $.96 per share, compared to a profit of $543.1 million, or $1.36 per share, in Q1 2014. On an adjusted basis, the company had EPS of $1.63, beating the consensus Wall Street estimate of $1.61. 

Its R&D spending grew 11 percent to $165.8 million from $149.7 million, while its SG&A costs were cut by 7 percent to $916 million from $982.8 million. Thermo Fisher also said that it had restructuring costs of $32 million in the recently completed quarter, compared to a gain of $582.2 million in Q1 2014 tied to the sale of certain businesses including sera and media, gene modulation, and its magnetic beads business. 

The company said that it completed $500 million in share repurchases in January and reported the acquisition of two channel partners during Q1 2015. The deals, which cover Singapore, Malaysia, and South Korea, expands Thermo Fisher's commercial capabilities to better penetrate the analytical instruments markets in Asia, it said. 

Thermo Fisher exited the first quarter with $864.6 million in cash and cash equivalents, and $8.4 million in short-term investments. 

"We're pleased to have delivered solid adjusted EPS growth in the quarter, which demonstrates how well our team navigated the challenging foreign exchange environment," Casper said in a statement. "We also had a number of key accomplishments during the quarter that strengthen our industry leadership and position us to achieve our growth goals for the year." 

For full-year 2015, Thermo Fisher said that it anticipates more unfavorable currency rates and guided to revenues in the range of $16.67 billion to $16.83 billion. The firm previously had a guidance range of $16.80 billion to $17 billion. Currency exchange is anticipated to lower revenues for the year by about $985 million, or about $250 million more than the firm previously expected, Wilver said. 

Partially offsetting currency effects will be anticipated stronger operating performance, as well as contributions from the recent $300 million acquisition of Advanced Scientifics, a supplier of technologies for the vaccine and biotherapeutic drug production industry.

Thermo Fisher also revised its adjusted EPS guidance for full-year 2015 to a new range of $7.25 to $7.40. The low end of the range was raised by $.03 from previous guidance. 

In early morning trading on Wednesday, shares of Thermo Fisher on the New York Stock Exchange were down about 2 percent to $131.50