This article has been updated with information from Thermo Fisher's earnings conference call.
NEW YORK – Thermo Fisher Scientific on Wednesday morning reported a 10 percent year-over-year boost in second quarter revenues, driven by increased global demand for COVID-19-related products and services.
The results are in line with the Waltham, Massachusetts-based company's earlier prediction of 10 percent revenue growth for Q2.
"We delivered an extraordinary quarter," said President, Chairman, and CEO Marc Casper in a statement. "We quickly mobilized our resources to support the global COVID-19 response and made a significant contribution to our customers and society while effectively managing the company through the current economic environment."
In a conference call to discuss the financial results Casper elaborated that the company was "prepared for the most difficult quarter we have seen in the 18 years I've been with Thermo Fisher, and we successfully navigated the environment to deliver truly extraordinary performance."
Revenues in Q2 totaled $6.92 billion, up from $6.32 billion in Q2 2019 and handily beating the consensus analyst estimate of $6.13 billion. Organic revenue grew 11 percent and currency effects decreased revenue by 1 percent.
About $1.3 billion, or 19 percent, of revenues were related to COVID-19 products and services.
During the quarter, Thermo Fisher received an expansion for its emergency use authorization from the US Food and Drug Administration to run its PCR coronavirus test on additional instruments and with additional consumables, making the workflow more flexible. It also built a new facility in Lexena, Kansas, to manufacture viral transport media for sample collection under a US government contract.
Moreover, the firm formed a collaboration with WuXi Diagnostics and the Mayo Clinic to develop a total antibodies serology test, and it signed a multi-year pharma services contract with the US Biomedical Advanced Research and Development Authority (BARDA) to support accelerated vaccine development and production.
Also during the quarter, Thermo Fisher launched two new-generation Exploris mass spectrometers that extend its Orbitrap platform.
Thermo Fisher's life sciences solutions business segment saw 52 percent revenue growth in Q2, to $2.60 billion from $1.71 billion a year ago. Organic revenue growth was 55 percent. Revenues in this segment were driven by "exceptionally strong growth" in the company's genetic sciences business and continued strong growth in the bioproduction and biosciences businesses, Senior VP and CFO Stephen Williamson said during the call. Three-quarters of COVID-19-related revenues came from the life sciences solutions segment, he added, including test kits, instruments, and sample preparation reagents.
Analytical instruments reported and organic revenues decreased 20 percent to $1.05 billion from $1.32 billion last year. "COVID-19 disruptions to our customers continued to have a significant impact to the businesses in this segment," Williamson said.
Specialty diagnostics revenues increased 5 percent to $988 million compared to $943 million a year ago. Organic revenue growth was 12 percent. Some of the businesses in this segment, in particular immunodiagnostics and transplant diagnostics, were significantly impacted by COVID-19, Williamson said, as patients delayed visits to their doctors and related testing. "That said, this business also saw significant COVID-19-related tailwinds in the quarter," he added, with strong growth in the healthcare market channel, clinical diagnostics, and microbiology.
Laboratory products and services revenues grew 6 percent to $2.79 billion in Q2 from $2.63 billion last year, and 5 percent organically. Growth was led by the pharma services business. This segment included revenues from personal protective equipment, plastics for COVID-19 testing, and support of COVID-19 vaccine and therapy development.
The company reported Q2 net income of $1.16 billion, or $2.90 per share, compared to $1.12 billion, or $2.77 per share, for the year-ago quarter. Adjusted EPS for the quarter was $3.89, up from $3.04 in Q2 of 2019 and easily beating the consensus analyst estimate of $2.84.
R&D expenses increased 7 percent year over year in Q2 to $264 million from $246 million last year, and SG&A expenses rose 13 percent to $1.42 billion from $1.26 billion a year ago.
Thermo Fisher finished the quarter with $5.82 billion in cash and cash equivalents.
While the company is still not able to provide detailed guidance for 2021, Williamson said, it currently estimates that organic revenue growth in Q3 will be approximately 15 percent. The two key variables will be additional revenues related to COVID-19 and lost revenues from disruptions to customers' activities, he said. As of now, Thermo Fisher believes it will likely have $1.1 billion in COVID-19-related revenues in Q3, translating to 18 percent growth, while the rest of the business is expected to stay flat or decline by up to 5 percent.
In mid-morning trading on the New York Stock Exchange, Thermo Fisher's shares were up 1 percent, at $407.20.