This article has been updated with information from Thermo Fisher's quarterly earnings call.
NEW YORK – Thermo Fisher Scientific on Monday reported a 54 percent increase in fourth quarter revenues and a 26 percent rise in full-year 2020 revenues, driven by products and services related to the COVID-19 pandemic response.
The Waltham, Massachusetts-based firm booked $10.55 billion in Q4 revenues, up from $6.83 billion in Q4 2019 and beating analysts' average estimate of $9.58 billion. Organic revenues grew 51 percent, and currency translation effects increased revenues by 3 percent.
Marc Casper, Thermo Fisher's CEO, chairman, and president, said during a conference call to discuss the firm's financial results that this was the strongest quarter in the company's history.
"2020 truly demonstrated the power of who and what we are as a company," Casper said. "During a unique time of need we stepped up for our customers, enabling their important contributions to society and helping them navigate the impact of the pandemic. As a result, we were able to gain significant market share and solidify Thermo Fisher as their partner of choice. At the same time, we stayed focused on driving strong returns from existing investments and made additional investments to accelerate our future growth."
Life sciences solutions revenues grew 138 percent in Q4 to $4.37 billion from $1.84 billion during the year-ago quarter, and 134 percent organically. Growth in this segment was especially strong in the genetic sciences and in the biosciences and bioproduction businesses.
Analytical instruments revenues grew 8 percent to $1.64 billion from $1.52 billion in Q4, and 5 percent organically. While end markets for chemical analysis products "remain muted," this was "more than offset" by strong growth in both chromatography and mass spectrometry, as well as the materials and structural analysis businesses, Thermo Fisher Senior VP and CFO Stephen Williamson said during the call.
Specialty diagnostics revenues more than doubled to $1.97 billion from $940 million in Q4, and were up 107 percent organically. COVID-19 response revenue contributed significantly to this growth, particularly in the microbiology, healthcare market channel, and clinical diagnostics businesses. Routine diagnostics revenues were up in Q4 compared to Q3 but "still remain below pre-pandemic levels," Williamson said, especially in the immunodiagnostics and transplant diagnostics businesses.
Laboratory products and services revenues grew 28 percent to $3.62 billion from $2.83 billion, and 25 percent organically, profiting from strong growth across all businesses.
Thermo Fisher posted a net income of $2.50 billion in Q4, or $6.24 per share, up sharply from $1.00 billion, or $2.49 per share, for the year-ago quarter. Adjusted EPS for the quarter was $7.09, beating the consensus analyst estimate of $6.56.
R&D expenses increased 44 percent in Q4 to $376 million from $262 million last year, and SG&A costs went up 48 percent to $1.79 billion from $1.21 billion a year ago.
For full-year 2020, Thermo Fisher recorded $32.22 billion in revenues, up from 25.54 billion in 2019 and beating the consensus analyst estimate of $31.12 billion. Organic revenues grew 25 percent, and currency translation effects increased revenues by 1 percent.
Casper said the company generated about $6.6 billion in revenue related to the COVID-19 response in 2021, and $3.2 billion in Q4 alone, while quickly returning its base business to growth in the later part of the year. Much of COVID-19 revenues came from testing products, such as testing kits, instruments, sample prep and other reagents, molecular controls, and viral transport media. But the company also generated $500 million in revenue related to COVID-19 vaccines and therapies, which he said is expected to grow to $1 billion in 2021.
The company also "dramatically increased" its installed base of PCR and sample preparation instruments, he said, and signed an agreement last month to acquire Mesa Biotech for up to $550 million to add rapid point-of-care PCR testing capabilities to its portfolio.
Casper pointed out that revenues from the diagnostics and healthcare end market tripled in Q4, and doubled in 2020, due to increased demand for sample preparation, PCR, and viral transport media products for COVID-19 testing.
Life sciences solutions revenues grew 77 percent in 2020, both on a reported basis and organically, to $12.17 billion from $6.86 billion in 2019. Analytical instruments revenues fell 7 percent to $5.12 billion from $5.52 billion, and 8 percent organically; specialty diagnostics revenues increased 44 percent to $5.34 billion from $3.72 billion, and 48 percent organically; and laboratory products and services revenues grew 16 percent to $12.24 billion from $10.60 billion, and 13 percent organically.
R&D expenses grew 18 percent for the year, to $1.18 billion from $1.00 billion, and SG&A costs climbed 17 percent to $5.76 billion from $4.93 billion.
The company's net income for 2020 totaled $6.38 billion, or $15.96 per share, up significantly from $3.70 billion, or $9.17 per share, in 2019. Adjusted EPS was $19.55, and beating analysts' estimates of $18.97.
Thermo Fisher finished 2020 with $10.33 billion in cash and cash equivalents.
For 2021, the company expects $35.1 billion in revenues, representing 9 percent reported and 7 percent organic growth over 2020. It also guided for adjusted EPS of $21.62 in 2021, an increase of 11 percent over last year.
Williamson explained that this guidance depends on customer demand for COVID-19-related products, especially testing products, and relies on a number of assumptions. The firm assumes that its base business will grow 7 percent organically, he said, and that revenues related to the COVID-19 response will total $7.1 billion in 2021. This includes testing-related revenue at a similar level to 2020 and approximately $1 billion in vaccine and therapy-related revenue.
"We're assuming that vaccine and therapy revenue is fairly linear in 2021, but testing-related revenue is assumed to be very front-end loaded," Williamson explained, with Q1 levels expected to be similar to Q4 2020 levels. The company's guidance assumes that demand for testing may begin to level off in Q2 and decrease further as the year progresses. "Should the pandemic be longer lasting, and the need for testing maintained, then there's sizeable upside to the $7.1 billion, particularly in the second half of the year," he said. "We're really well positioned to support our customers should demand levels be higher from this initial guidance assumption."
In morning trading on the New York Stock Exchange, Thermo Fisher's shares were up almost 2 percent, at $518.12.