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Thermo Fisher Q4 Revenues Climb 6 Percent; Mum on Life Tech Speculation

NEW YORK (GenomeWeb News) – Thermo Fisher Scientific today said that revenues in the fourth quarter improved 6 percent year over year as its Specialty Diagnostics segment saw 12 percent growth.

Revenues for the quarter ended Dec. 31, 2012 totaled $3.26 billion, up from $3.09 billion a year ago, topping the consensus Wall Street estimate of $3.14 billion. Organically, revenues were up 4 percent year over year, the company said.

By segment, Specialty Diagnostics saw the biggest year-over-year jump as it recorded $791.8 million in revenues, compared to $706.2 million in the fourth quarter of 2011. In September Thermo Fisher completed its acquisition of transplant diagnostics firm One Lambda for $925 million.

Analytical Technologies saw a 3 percent increase in sales to $1.11 billion from $1.08 billion, and Thermo Fisher's largest segment, Laboratory Products and Services, increased its sales 4 percent to $1.50 billion from $1.44 billion.

On a conference call following the release of Thermo Fisher's earnings today, President and CEO Marc Casper commented on the academic/government end market, saying that market conditions "played out pretty much as we expected, resulting in a slight decline in Q4 versus the prior year. As we've seen all year long, growth here was muted due to the uncertain funding environment.

"Until our customers have a clearer view of how this may unfold, their spending on capital equipment will continue to be constrained, while purchases of laboratory consumables will be less affected," he said.

Thermo Fisher's profit in the quarter rose to $376.4 million, or $1.04 per share, compared to $288.9 million, or $.77 per share, a year ago. Non-GAAP EPS of $1.36 beat analyst estimates of $1.28.

The company upped its R&D spending in the quarter to $98.5 million, up a fraction of 1 percent from $95.5 million a year ago, and increased SG&A spending to $720.1 million from $693.6 million, a 4 percent increase.

The firm said that it spent $350 million in the fourth quarter to buy back 5.7 million shares of its stock.

Earlier in the week, a report surfaced that Thermo Fisher is contemplating buying Life Technologies. Casper declined to comment specifically about the speculation, but said that the company is gaining market share and building a stronger competitive position, which may be fueling the speculation.

"Everybody knows what our M&A criteria are on every transaction and we follow [those criteria], which is to create value for our customers, strengthen the company strategically, and then obviously focus on creating shareholder value as measured by [return on invested capital] as the primary metric," he said.

Revenues for full-year 2012 increased 8 percent to $12.51 billion from $11.56 billion in 2011, beating analyst estimates of $12.40 billion. Revenues were up 4 percent organically.

Specialty Diagnostics was up 20 percent to $2.96 billion from $2.47 billion. Analytical Technologies revenues increased 7 percent to $4.12 billion from $3.85 billion, and Laboratory Products and Services rose 4 percent to $6.00 billion from $5.76 billion.

Casper was especially bullish about Thermo Fisher's mass spectrometry business.

"Q Exactive has incredible momentum, so that will continue to propel us," he said on the conference call, "but in addition to that we have a very exciting set of products in the pipeline for launches during the course of this year, so I think when you look at the full year outlook for mass spec it will be more than just a Q Exactive story, but the Q Exactive will give us substantial growth during the course of the year."

The firm's net income for the year decreased to $1.18 billion, or $3.21 per share, from $1.33 billion, or $3.46 per share, in 2011. Thermo Fisher said that the decrease was due primarily to gains on the sale of discontinued operations in 2011.

Non-GAAP EPS for 2012 of $4.94 edged out Wall Street estimates of $4.86.

Thermo Fisher's R&D expenses for the year were up 11 percent to $376.4 million from $340.2 million, and its SG&A spending rose 8 percent to $2.83 billion from $2.63 billion.

The company bought back 20.8 million shares of its stock at $1.15 billion in 2012. CFO Pete Wilver said that the firm assumes it will return approximately $800 million of capital to shareholders in 2013, with $600 million of that in share buybacks and $200 million in dividends.

Thermo Fisher ended 2012 with $851 million in cash and cash equivalents.

The company initiated guidance for 2013 with adjusted EPS anticipated to be in the range of $5.32 to $5.46. Revenues are expected to total between $12.80 billion and $13.00 billion.

In morning trade on the New York Stock Exchange, shares of Thermo Fisher were up a fraction of 1 percent at $70.49.