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Thermo Fisher Scientific Reports 6 Percent Rise in Q2 Revenues; Inks Chinese MDx Development Deal

NEW YORK (GenomeWeb) – Thermo Fisher Scientific reported before the opening of the market on Thursday that its second quarter revenues increased 6 percent, thanks in part to large increases in laboratory products and services revenues and life sciences solutions revenues.

Separately today, Thermo Fisher said that it has signed a deal with Health BioMed to support that company's efforts to develop molecular diagnostic kits for infectious disease and pharmacogenomics screening for the Chinese market.

For the quarter ended July 2, Thermo Fisher reported revenues of $4.54 billion, up from $4.27 billion a year ago, and in line with the consensus Wall Street estimate for revenues of $4.50 billion.

Revenues from the life sciences solutions segment grew 13 percent to $1.28 billion from $1.13 billion in Q2 2015. Revenues from the analytical instruments business increased 2 percent to $793.9 million from $777.0 million. Specialty diagnostics segment revenues rose 4 percent to $851.3 million from $817.1 million. Laboratory products and services revenues grew 6 percent to $1.80 billion from $1.69 billion.

"We continued to build on our leadership position by executing our proven growth strategy. During the quarter, we launched new products that raise the bar on performance and productivity, delivered strong growth in emerging markets and enhanced our unique customer value proposition," said President and CEO Marc Casper in a statement accompanying the release of the earnings. "We're continuing to effectively deploy capital to strengthen our competitive position and drive growth. We're excited about our pending acquisition of FEI, which will add leading capabilities in electron microscopy that complement our analytical instruments portfolio. We plan to leverage our industry leadership to expand the use of these technologies in life sciences and applied markets, creating significant value for our customers and our shareholders."

In a conference call with analysts, Casper said the strong quarterly results were due to a combination of good end markets and good execution. The company saw growth in the pharma and biotech units in the high single digits, and Casper noted that growth in bioproduction was particularly strong. Diagnostics grew at the company average, he added, especially the next-generation sequencing platforms business, and there was low single digit growth overall in industrial markets.

Casper also said the company had a strong quarter in emerging markets, particularly in China, South Korea, India, and Southeast Asia. Growth in China was in the mid-teens, and there was specific growth in the environmental, food safety, and life sciences segments. Casper noted the alliance the company recently formed with West China Hospital of Sichuan University to jointly develop a platform to research precision medicine. He also said the company's recent acquisition of Affymetrix offers an opportunity to expand in the Asia Pacific region.

Its new agreement with HBM will also push the company's agenda of expanding precision medicine in Asia. According to the terms of the deal, HBM will submit all kits it develops on the Applied Biosystems 3500Dx Capillary Electrophoresis platform to the China Food and Drug Administration after they are successfully validated. HBM said it will use its CE-based Advanced Fragment Analysis (AFA) technology and reagents to develop multiple assays under its SureX brand of multiplex kits. Additional terms of the deal were not disclosed.

On the call with anlysts, Casper also said growth in Thermo Fisher's life sciences segment was driven by strong performance across the business, the NGS business grew very strongly in the teens, and the genetic analysis business saw stable organic growth. Adoption of the Ion S5 and Ion S5 XL sequencers is also going well, Casper added, and the company is receiving positive feedback from customers.

Thermo Fisher reported a profit of $516.6 million, or $1.30 per share, up from $511.6 million, or $1.27 per share, a year ago. On an adjusted basis, the company reported EPS of $2.03, beating analyst estimates for EPS of $2.01.

The firm's Q2 R&D costs rose 4 percent to $182.4 million from $174.6 million a year earlier. SG&A expenses rose 7 percent to $992.4 million from $928.3 million in Q2 2015.

Thermo Fisher ended the year with $663.1 million in cash and cash equivalents.

In a quick update on the firm's $4.2 billion acquisition of FEI, Casper said he now expects the deal to close by the end of 2016, instead of early 2017 as previously announced.

The company lowered its revenue guidance for FY2016 to a range of $17.84 billion to $18.00 billion versus its previous guidance of $17.86 billion to $18.04 billion announced on April 28. It cited strong foreign exchange headwinds for the revision, but also raised its adjusted EPS guidance for the year to a range of $8.07 to $8.20 versus the previously announced $8.05 to $8.19, citing strong operational performance. Analysts on average expect revenues of $17.94 billion and EPS of $8.13 for the year.

Thermo Fisher's shares dipped 1 percent to $157.20 in morning trading on the New York Stock Exchange.

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