This article has been updated with additional information from Thermo Fisher Scientific's Q3 earnings call.
NEW YORK (GenomeWeb) – Thermo Fisher Scientific reported a 9 percent increase in third quarter revenues today before the opening of the stock market, driven by growth in all four of its business segments, in particular life sciences solutions and analytical instruments.
"We had another great quarter, and we're right where we should be at this point of the year," said President and CEO Marc Casper during a conference call to discuss the firm's earnings.
For the third quarter, Thermo Fisher reported revenues of $4.49 billion, up from $4.12 billion a year ago and above the average analyst estimate of $4.39 billion. CFO Stephen Williamson said during the call that 4 percent of the growth was organic and 5 percent came from acquisitions, while there was a "slight headwind" from currency effects.
Revenue from the life sciences solutions segment grew 14 percent to $1.23 billion, from $1.08 billion in the year-ago quarter. Williamson said the firm continued to see strong growth in several of its businesses, led by next-generation sequencing, bioproduction, and biosciences.
Sales in the analytical instruments segment, which now includes electron microscopy company FEI, increased 15 percent to $900 million year, from $780 million a year ago. According to Williamson, contributors to this growth were the chromatography and mass spec business, as well as the environmental instruments business. This was offset by continued weakness in the business serving the industrial end markets. FEI, he said, contributed $100 million in revenues for the quarter. Casper noted that the FEI acquisition closed in September, earlier than anticipated.
Specialty diagnostics revenues grew 3 percent to $800 million, from $780 million last year, and benefitted from growth in the transplant diagnostics and immunodiagnostics business, Williamson said.
Laboratory products and services revenues grew 7 percent to $1.75 billion, from $1.64 billion in the third quarter of 2015, with particularly strong growth coming from the biopharma services and research and safety market channel businesses, Williamson said.
Casper said that results from the company's key end markets were in line with expectations, and similar in the third quarter compared to the second. The academic and government market and the healthcare and diagnostics markets were essentially the same, he said. Pharma and biotech, on the other hand, was a bit stronger, while the industrial and applied science market was a little weaker.
In pharma and biotech, the company grew in the low double-digit percentage points. Growth in the bioproduction and biopharma services businesses was particularly strong in the quarter, Casper said, and the company also highlighted the performance of its chromatography and mass spec businesses.
Academic and government end markets grew slightly in the quarter, while industrial and applied end markets declined slightly.
In healthcare and diagnostics, the company's growth was similar to the last quarter. For example, Casper said, there was strong performance for the firm's transplant diagnostic business and its clinical next-generation sequencing business. The company is seeing good adoption of its sequencers, including the S5 and S5 XL systems it launched about a year ago, he said, and the firm brought several new assays for these instruments to market.
From a geographic perspective, Thermo Fisher saw similar growth than in the second quarter. According to Williamson, North America and Europe grew by low single-digit percentage points, Asia Pacific grew by low teen percentage points, and the rest of the world declined by low single-digit percentage points. China in particular grew by high teen percentage points.
Casper said the company had another strong quarter of growth in Asia Pacific and emerging markets, especially in China and India. The firm recently formalized a strategic partnership in Guangzhou, China, that involves local companies and scientific institutions to advance healthcare, environmental protection, and food safety.
Thermo Fisher reported net income of $473.5 million, or $1.19 per diluted share, for the quarter, compared to $476.1 million, or $1.18 per diluted share, a year ago. On an adjusted basis, the company reported EPS of $2.03, beating the average analyst estimate of $1.97.
The firm's R&D expenses increased 4 percent to $183.3 million for the quarter from $171.6 million a year ago. SG&A expenses rose 14 percent to $1.04 billion from $911 million in the third quarter of 2015.
Thermo Fisher ended the quarter with $1.97 billion in cash and cash equivalents. However, Williamson pointed out that the company used $1.2 billion of this on the first business day of the fourth quarter to pay down debt obligations in connection with the FEI acquisition.
To reflect the addition of FEI, its operational performance for the year so far, and a favorable foreign exchange environment, the company raised its revenue guidance for FY 2016 to a range of $18.25 billion to $18.39 billion, compared to its previous guidance of $17.84 billion to $18 billion. It also raised its adjusted EPS guidance for the year to a range of $8.19 to $8.30 versus the previously announced $8.07 to $8.20.
Thermo Fisher's shares rose nearly 2 percent to $150.35 in Thursday morning trading on the New York Stock Exchange.