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Thermo Fisher Scientific Q1 Revenues Up 2 Percent

NEW YORK  – Thermo Fisher Scientific on Wednesday morning reported a 2 percent year-over-year increase in its first quarter 2020 revenues.

Earlier this month, the Waltham, Massachusetts-based company had predicted a 1 to 2 percent increase in Q1 revenues but withdrew its financial guidance for 2020. 

Q1 revenues totaled $6.23 billion, up from $6.13 billion in Q1 2019 and beating the consensus analyst estimate of $6.17 billion. Organic revenue also grew 2 percent, while acquisitions drove revenues up 1 percent and currency effects decreased revenue by 1 percent.

"I'm incredibly humbled by the way our colleagues around the world have stepped up to deliver a very good quarter under tough circumstances," said President, Chairman, and CEO Marc Casper in a conference call to discuss the firm's financial results. "We performed well in Q1, even though the impact of the pandemic became more significant as the quarter played out."

During the quarter, Thermo Fisher announced its intent to acquire Qiagen for $11.5 billion, a deal it continues to expect to close in the first half of 2021. To finance the acquisition, the company recently raised $3.5 billion through US and European bond offerings.

In response to the coronavirus pandemic, the Thermo Fisher developed the Applied Biosystems TaqPath COVID-19 Combo Kit, which received Emergency Use Authorization from the US Food and Drug Administration, the CE mark, and other authorizations worldwide. It also released the Thermo Scientific AcroMetrix Coronavirus 2019 RNA Control to help validate molecular coronavirus tests.

The firm's life sciences solutions business segment saw 10 percent revenue growth in Q1 to $1.77 billion from $1.61 billion a year ago. Organically, revenues grew 12 percent. Growth was driven by the genetic science and bioproduction businesses, in part by the sale of COVID-19 testing kits.

 

Analytical instruments revenues decreased 17 percent to $1.10 billion from $1.32 billion last year, and 16 percent organically. Part of the decline was driven by COVID-19, in particular by the importance of China for this segment, and by strong year-ago comparison in the the analytical instrument businesses.

 

Specialty diagnostics revenues stayed virtually flat in Q1, at $958 million compared to $957 million last year, reflecting the divestiture of the Anatomical Pathology business in June 2019. The company saw strong organic growth in this segment, led by the healthcare market channel and the transplant and clinical diagnostics businesses.

 

Laboratory products and services revenues grew 9 percent to $2.73 billion in Q1 from $2.51 billion last year, and 6 percent organically. Growth in this segment was led by the pharma services business and the research and safety market channel.

The company reported a net income of $788 million, or $1.97 per share, down from $815 million, or $2.02 per share, for the year-ago quarter. Adjusted EPS for the quarter was $2.94, versus $2.81 in Q1 of 2019, beating the consensus analyst estimate of $2.79.

R&D expenses in Q1 fell 1 percent year over year to $245 million from $248 million last year, and SG&A expenses rose 2 percent to $1.25 billion from $1.23 billion a year ago.

Thermo Fisher finished the quarter with $2.98 billion in cash and cash equivalents.

While the company withdrew its financial guidance for 2020, Senior VP and CFO Stephen Williamson provided some estimates for the second quarter. Organic revenues are expected to stay flat or decline by up to 15 percent, he said, which will be driven by gains from COVID-19 testing on the one hand and by a combination of COVID-19-related declines, market growth, and gains in market share on the other hand.

 

COVID-19 testing might account for $400 to $750 million in Q2 revenues, he said, a 6 to 12 percent growth over the prior year quarter. The other factors, in combination, are expected to lead to a revenue decline in the range of 10 to 25 percent. "This range is largely driven by the level of customer demand, which in turn is driven by whether they are shut down altogether or operating at a reduced level," he said.

In morning trading on the New York Stock Exchange, Thermo Fisher's shares were up 3 percent, at $329.18.