This article has been updated with additional comments from Thermo Fisher Scientific's earnings call.
NEW YORK (GenomeWeb) – Thermo Fisher Scientific today reported a 22 percent increase in second-quarter revenues that was partly driven by acquisitions and increased its revenue and earnings guidance for the year for the second time in a row.
"We achieved excellent growth in revenue and earnings. Our team executed well and capitalized on the continued strength of our end markets," said President and CEO Marc Casper during a conference call to discuss the firm's financial results this morning. "We're in a great position to achieve another very successful year."
Revenues for the quarter totaled $6.08 billion, up from $4.99 billion during the same period last year and beating Wall Street analysts' average estimate of $5.89 billion. Organic revenues grew 8 percent, while acquisitions boosted revenues by 12 percent and currency effects contributed 2 percent to revenue growth during the quarter. All four of Thermo Fisher's business segments contributed to the growth.Â
Life sciences solutions revenue grew to $1.57 billion, up 12 percent from $1.41 billion in Q2 of 2017. Organic revenues grew 9 percent and growth came from all businesses, including next-generation sequencing, bioproduction, biosciences, and genetic sciences.
Analytical instruments revenue increased 13 percent to $1.31 billion from $1.17 billion in the year-ago period. Organic revenue growth was 9 percent, and the company said it saw very good growth across all businesses, including chemical analysis, mass spectrometry, and electron microscopy.
Specialty diagnostics revenues grew 8 percent to $932 million from $862 million in Q2 of 2017. Organic revenues grew 5 percent, and the firm saw strong growth in transplant diagnostics and clinical diagnostics, as well as in the healthcare market channel.
Laboratory products and services, which include the Patheon acquisition last August, grew 42 percent to $2.55 billion from $1.79 billion a year ago. Organic revenues grew 9 percent and there was strong growth across all businesses, led by the clinical trials logistics business and the research and safety market channel, according to the company.
During the call, Casper commented on the firm's diagnostics business, saying that it showed "broad-based strength" across transplant diagnostics, clinical diagnostics, and the healthcare market channel. He also remarked on the good performance of the clinical NGS business, which is not part of the specialty diagnostics segment but serves the same market.
The Thermo Scientific Cascadion SM Clinical Analyzer, a mass spec-based instrument, received the CE-IVD mark in the second quarter, he said, and the company is commercializing it outside the US now. While it is not expected to be a "meaningful contributor" to revenues this year, the company expects sales to ramp up in 2019, he added. Thermo Fisher plans to showcase the Cascadion at the American Association of Clinical Chemistry meeting in Chicago next week, he said, "along with a number of other instruments that we are launching across the portfolio."
Casper also highlighted a number of product launches during the quarter. On the mass spectrometry side, he mentioned the launch of the Thermo Scientific Q Exactive UHMR system that he said helps streamline protein analysis and structural biology applications, and the Thermo Scientific Orbitrap ID-X Tribrid system that improves small molecule characterization for drug discovery and food safety.
In addition, he talked about a new next-generation sequencing Oncomine Childhood Cancer Research Assay, which the company developed in collaboration with Children's Hospital Los Angeles. Finally, he mentioned the launch of the Thermo Scientific BRAHMS Kryptor Gold instrument in Europe, an automated immunoassay analyzer that he said helps customers process blood samples faster to increase the productivity of diagnostic labs.
Casper also mentioned the recent opening of a Precision Medicine Science Center in Cambridge, Massachusetts, that will give customers access to a variety of the company's technologies and will complement the Precision Medicine Center the firm opened in China last year.
Thermo Fisher's business in China grew especially fast during the quarter, by more than 20 percent, and the company is prepared to "help our customers in China meet the objectives outlined in the country's five-year plan," Casper said, including in precision medicine. Earlier this year, the company organized a scientific meeting in Beijing, and "one of the outcomes is that we are now providing a range of analytical technologies to help build an infrastructure in China for multi-omics applications and support of precision medicine," he said. "Our long-term focus on expanding our presence in the region has clearly created a competitive advantage for us and we feel very good about our prospects."
Asked about how recently enacted tariffs are affecting its China business, Casper said that those tariffs "are targeting things primarily outside of our industry, so there is really very little exposure, it is not affecting the customer outlook."
Tariffs are expected to impact the company's overall costs in the second half of the year, he said, and the firm is "fully going to offset that operationally through our pricing actions and our sourcing and supply chain actions."
The company's net income for the quarter totaled $752 million, or $1.85 per share, compared to $612 million, or $1.56 per share, in Q2 of 2017. Adjusted EPS were $2.75 for the quarter, up 20 percent from $2.30 last year and beating analysts' expectations of $2.62 per share.
The firm's R&D expenses for the quarter were $242 million, up 9 percent from $222 million last year, and SG&A expenses grew to $1.23 billion from $1.04 billion in Q2 last year.
Thermo Fisher finished the quarter with $937 million in cash and cash equivalents.
As a result of its Q2 performance, the company raised its 2018 guidance slightly to a new revenue range of $23.68 billion to $23.86 billion compared to its previous guidance of $23.63 billion to $23.86 billion, reflecting 13 to 14 percent revenue growth over 2017. It also raised its adjusted EPS guidance to a new range of $10.80 to $11.01 per share compared to the old guidance of $10.80 to $10.96 per share, reflecting 15 to 16 percent year-over-year growth.
Thermo Fisher's shares were up 2 percent at $226.35 in Wednesday morning trading on the New York Stock Exchange.