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Thermo Fisher Scientific Q2 Revenues up 34 Percent

This article has been updated with comments from Thermo Fisher's analyst conference call.

NEW YORK – Thermo Fisher Scientific reported before the opening of the market on Wednesday that its second quarter revenues rose 34 percent year over year, thanks to growth across all of its business segments.

For the three months ended July 3, the Waltham, Massachusetts-based company reported total revenues of $9.27 billion, up from $6.92 billion a year ago and beating the average Wall Street analyst estimate of $8.77 billion. Organic revenues grew 28 percent, while acquisitions increased revenue by 2 percent and currency translation increased revenue by 5 percent, Thermo Fisher said.

Revenues from the life sciences solutions business unit rose 37 percent to $3.56 billion in Q2 2021 from $2.60 billion in Q2 2020, and revenues from the specialty diagnostics segment grew 25 percent to $1.24 billion from $988.0 million. Meanwhile, revenues from the analytical instruments segment rose 41 percent to $1.48 billion from $1.05 billion in the year-ago quarter, and revenues from the laboratory products and services segment rose 29 percent to $3.58 billion from $2.79 billion.

"Our team delivered an incredibly strong second quarter, building on our excellent start to the year. The strength of our base business reflects our proven growth strategy, and we continue to enable the societal response to the pandemic, which allowed us to deliver exceptional performance in revenue, earnings, and free cash flow for the quarter," Thermo Fisher Chairman, President, and CEO Marc Casper said in a statement. "We extended our leading innovation track record, and our ongoing investments in talent, capabilities and infrastructure are positioning our company for an even brighter future."

On a conference call with analysts following the release of the earnings, Casper discussed revenues from the company's end markets. Starting with pharma and biotech, he said the company had growth of more than 30 percent year over year, driven by strong underlying market conditions and the company's role in supporting its customers across a wide range of therapeutic areas, including COVID-19 vaccines and therapies.

"We saw excellent growth across all businesses serving these customers, including bio-production, pharma services, biosciences, chromatography, and mass spectrometry, and in our research and safety market channel," he said. "We are clearly benefiting from our trusted partner status that we've earned over many years with these customers."

Thermo Fisher's academic and government end markets grew 35 percent year over year in Q2, he added, with strong growth across the firm's biosciences, electron microscopy, and research and safety businesses.

And its industrial and applied end markets grew approximately 30 percent during the quarter, with particularly strong growth in the electron microscopy, chromatography, and mass spectrometry businesses.

Finally, Casper said, Thermo Fisher's diagnostics and healthcare end markets grew in the high teens during the quarter, and the company saw customer demand in its base business approach pre-pandemic levels.

"Our immunodiagnostics and transplant diagnostics businesses delivered outstanding growth, he said. "Also, in diagnostics and healthcare, demand for COVID-19 testing-related products grew to approximately $1.4 billion." He also noted that the company's COVID-19 response-related revenues are up to $4.7 billion for the first half of the year.

Thermo Fisher's Q2 net income rose to $1.83 billion, or $4.61 per share, from $1.16 billion, or $2.90 per share, a year ago. On an adjusted basis, the company reported EPS of $5.60 per share for the quarter, beating the average Wall Street estimate of $5.49 per share.

The company's R&D costs rose 30 percent to $343.0 million from $264.0 million a year ago, while its SG&A expenses rose 14 percent to $1.61 billion from $1.42 billion.

Thermo Fisher ended the quarter with cash and cash equivalents of $7.02 billion.

For full-year 2021, the company raised its revenue guidance by $300 million to $35.90 billion. This would result in 11 percent revenue growth over 2020. The firm also raising its adjusted EPS guidance by $.10 to $22.07 for the year, which would represent 13 percent year-over-year growth.

Analysts are expecting revenues of $35.66 billion and earnings per share of $22.12 for year.

On the call, Thermo Fisher CFO Stephen Williamson said the increase in revenue guidance is being driven by an increase in the organic growth outlook for the base business from 8 percent to 12 percent for the full year, an updated assumption of $6.7 billion of COVID-19 response revenue for 2021, and a slightly more favorable foreign exchange tailwind than previously assumed.

"Starting with the base business, we're increasing the outlook by $850 million, reflecting our great Q2 performance and a stronger outlook for growth in the second half of the year," he said. "Our role in supporting COVID-19 vaccines and therapies continues to increase and … given the strength of both the base business growth and our vaccine and therapy response, we've taken the opportunity in this revised guidance to significantly de-risk the outlook for testing."

Casper also noted that the company is planning several innovative initiatives for the year. For example, he said, the company is collaborating with the Mayo Clinic to develop more precise and personalized diagnostics for blood-based cancers, allergy, autoimmunity, and therapeutic drug monitoring.

"This work will leverage our insight and technology in clinical next-generation sequencing, immunology, and clinical mass spectrometry," he added. "In addition, we announced that we'll build and operate a state-of-the-art cell therapy development, manufacturing, and collaboration center at the University of California, San Francisco to advance innovation in cell and gene therapy."

The firm's shares dropped a fraction of a percent to $526.96 in afternoon trading on the New York Stock Exchange.

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