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Thermo Fisher Scientific Q2 Revenues Grow 4 Percent

NEW YORK – Thermo Fisher Scientific today reported a 4 percent increase in second-quarter revenues, driven by growth across its business segments.

The Waltham, Massachusetts-based company had revenues of $6.32 billion in Q2, up 4 percent from $6.08 billion in the year-ago quarter and just beating the average Wall Street estimate of $6.3 billion. Organic revenues grew 5 percent, acquisitions increased revenue by 1 percent, and currency effects decreased revenue by 2 percent.

"We achieved very strong revenues and earnings performance," said Thermo Fisher President and CEO Marc Casper during a conference call to discuss the firm's financial results. "We're well positioned to continue our momentum and achieve another outstanding year."

Casper highlighted several new product launches during the quarter, including the release of two new Thermo Scientific Orbitrap mass spectrometry systems, the Exploris 480 and the Eclipse Tribrid, and the launch of two qPCR systems, the Applied Biosystems QuantStudio 6 and 7 Pro Real-Time PCR instruments.

The company also expanded it bioproduction capabilities during the quarter, committing $50 million to add capacity for single-use technologies at facilities in the US and Europe and establishing a Bioprocessing Collaboration Center at its pharma services site in St. Louis, Missouri.

Casper also pointed out Thermo Fisher's strong growth in emerging markets in the quarter, noting that the firm had an "excellent quarter" in China, where it saw growth of mid-teen percentage points. In addition, Thermo Fisher opened a customer experience center in Seoul, South Korea to showcase its life sciences technologies. Since the opening in May, hundreds of current and prospective customers have visited the center, Casper said.

The company also completed its $1.7 billion acquisition of Brammer Bio during the quarter and the divestiture of its Anatomical Pathology business for $1.14 billion. In addition, it announced plans to acquire a manufacturing site in Cork, Ireland, for the production of complex active pharmaceutical ingredients from GlaxoSmithKline, a deal the firm hopes will close by the end of the year.

Casper noted that an outage at one of the company's data centers late in the second quarter led to the delay of some orders and shipments, which will now be moved to the third quarter. Thermo Fisher estimates that this event decreased organic revenue growth for the second quarter by approximately 1 percent, primarily in the analytical instruments business segment, but it does not expect the outage to have a material impact on the full year.

All of Thermo Fisher's business segments saw revenue growth during the quarter. Life sciences solutions revenue was up 9 percent to $1.71 billion from $1.57 billion in Q2 of 2018. Organic revenue grew 10 percent, driven by the bioproduction and biosciences businesses.

Analytical instrument revenue grew 1 percent in the quarter to $1.32 billion from $1.31 billion during the year-ago quarter. Organic growth was up 3 percent, driven by the chemical analysis and chromo-mass spec businesses.

Specialty diagnostics revenue increased 1 percent to $943 million from $932 million in Q2 of 2018, and 3 percent organically. Growth in this segment was led by the clinical diagnostics and immunodiagnostics businesses, as well as the healthcare market channel, but was partially offset by the performance of the now-divested anatomical pathology business.

Finally, laboratory products and services revenue grew 3 percent to $2.63 billion from $2.55 billion in Q2 of 2018. Organic growth was 4 percent, driven by the pharma services business and the research channel business.

Thermo Fisher's net income for the quarter totaled $1.11 billion, or $2.77 per share, up from $752 million, or $1.85 per share, for the year-ago quarter. Adjusted EPS were $3.04, up 11 percent from $2.75 a year ago and narrowly beating analysts' average estimate of $3.00.

The firm's R&D spending for the quarter was $246 million, up 2 percent from $242 million in the same quarter last year, while SG&A spending totaled $1.26 billion, up 2 percent from $1.23 billion a year ago.

The company finished the quarter with $2.29 billion in cash and cash equivalents.

As a result of its strong operational performance so far this year, Thermo Fisher raised its revenue and earnings guidance for 2019. The company now expects revenues between $25.3 billion and $25.5 billion for the year, a 4 to 5 percent growth over 2018, compared to its previous guidance of $25.17 billion to $25.47 billion. Earnings per share are now expected to range from $12.16 to $12.26, a 9 to 10 percent year-over-year growth, compared to the previous guidance of $12.08 to $12.22.

Thermo Fisher shares were down around 3 percent at $283.94 in morning trading on the New York Stock Exchange.