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Thermo Fisher Q3 Revenues up 31 Percent

NEW YORK (GenomeWeb) – Thermo Fisher Scientific today reported that its third quarter revenues jumped 31 percent year over year as the firm surpassed the consensus analyst estimate on the bottom line but missed it on the top line.

For the three months ended Sept. 27, Thermo Fisher said total revenues increased to $4.17 billion from $3.19 billion in the year-ago period, but were below the consensus Wall Street expectation of $4.21 billion.

By segment, Life Sciences Solutions was up dramatically to $1.07 billion from $167.2 million a year ago, largely due to the contributions from Life Technologies, which Thermo Fisher acquired earlier this year. Excluding the Life Tech business, revenues in the segment were up 3 percent year over year on an organic basis, Thermo Fisher CFO Peter Wilver said on a conference call following the release of the company's financial results.

The integration of Life Tech continues to be "excellent" and by the end of 2014 synergies resulting from the acquisition are expected to be slightly above the $100 million that Thermo Fisher projected in the second quarter, Thermo Fisher President and CEO Marc Casper said on the call.

In Analytical Instruments, revenues grew 3 percent to $786.5 million from $765.4 million In that segment, new products in the mass spectrometry business are doing "very well," as is the chromatography business, Casper said. Overall, mass spec and chromatography continues to see growth, even though sales in China were weaker.

Thermo Fisher continued to see overall weakness in China with low-single digit growth in Q3 year over year companywide, resulting from delays in government funding. "Long-term [China] is good, but short-term [it] has been quite uncertain," Casper said.

Among the company's other segments, Specialty Diagnostics was up 7 percent to $811.8 million from $759.3 million, while Laboratory Products and Services grew 2 percent $1.63 billion from $1.59 billion.

By end markets, Thermo Fisher saw mid-single-digit growth in three of its four markets, with academic/government growing in the low-single digits, as an uptick in North America was partially offset by weakness in China, Casper said on the call.

The industrial and applied markets saw improved performance during the third quarter from the first half of 2014, he said, while diagnostics and healthcare also performed well, as clinical diagnostics saw strong sales of biomarker tests and immunodiagnostic tests.

In the pharma/biotech market, Casper highlighted the recent deal between Thermo Fisher and GlaxoSmithKline and Pfizer to develop next-generation sequencing-based companion diagnostic tests for cancer drugs.

Thermo Fisher's profit for Q3 2014 increased to $471.6 million, or $1.17 per share, from a profit of $317.6 million, or $.86 per share, in Q3 2013. On a non-GAAP basis, EPS was $1.71, beating the consensus Wall Street estimate of $1.69.

The company's R&D spending increased 83 percent to $175.2 million from $95.9 million, while its SG&A costs were up 37 percent to $976.6 million from $713.2 million.

Thermo Fisher finished the third quarter with $534.3 million in cash and cash equivalents.

The company revised its full-year guidance to reflect an anticipated negative effect from currency exchange of about $.07 per share on an adjusted basis. Total revenues for the year are now expected to be in the range of $16.74 billion to $16.82 billion, compared to a previous range of $16.86 billion to $16.98 billion. Adjusted EPS was tightened to a new range of $6.87 to $6.95 from an earlier range of $6.85 to $6.97.

Shares of Thermo Fisher were down around 4 percent at $113.95 in Wednesday morning trade on the New York Stock Exchange.

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