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Thermo Fisher Scientific Q2 Revenues Up 10 Percent; Firm Increases 2017 Guidance Again

NEW YORK (GenomeWeb) – Thermo Fisher Scientific today reported a 10 percent increase in second quarter revenues, resulting from growth in all of its business segments, in particular analytical instruments.

"We had another excellent quarter," said President and CEO Marc Casper in a conference call this morning to discuss the company's earnings. "Our performance in Q2 contributed to a strong first half and we’re right on track to deliver another great year."

For the three months ended July 1, the company reported $4.99 billion in revenue, up 10 percent from $4.54 billion in the second quarter of 2016, and beating analysts' average estimate of $4.92 billion. Organic revenue grew 4 percent, acquisitions increased revenue by 8 percent, and currency effects decreased revenue by 1 percent.

Revenues from the life sciences solutions segment grew 3 percent to $1.4 billion, from $1.37 billion in the second quarter of 2016. Organic revenue was also 3 percent, and the bioscience business saw particularly strong growth, according to Senior Vice President at CFO Stephen Williamson.

Analytical instruments revenues, which include electron microscopy maker FEI, which was acquired in September 2016, increased 47 percent to $1.17 billion, from $794 million during Q2 of 2016. Organic revenue grew 6 percent for the segment, which saw strong growth in the chromatography and mass spectrometry businesses, as well as positive growth from the chemical analysis business and a "positive impact" from the electron microscopy business, Williamson said.

Specialty diagnostics revenues grew 1 percent to $862 million from $851 million in the second quarter of 2016. Organic growth was 2 percent, and the transplant diagnostic business delivered particularly strong growth in the quarter.

Laboratory products and services revenues grew 4 percent to $1.79 billion from $1.72 billion in the year-ago period. Organic growth was 5 percent, and the channel business grew especially well, according to the company.

Thermo Fisher's net income for Q2 increased to $611.6 million, or $1.56 per share, from $516.6 million, or $1.30 per share, during the same period last year. Adjusted EPS was $2.30, narrowly beating analysts' average estimate of $2.27.

The company's R&D spending for the quarter rose 21 percent to $221.6 million from $182.4 million a year ago. Its SG&A spending increased 4 percent to $1.04 billion from $992.4 million last year.

During the quarter, the firm launched several new products, including a new Q Exactive Orbitrap mass spectrometer for protein research and the SeqStudio Genetic Analyzer for sequencing applications.

It also obtained FDA clearance for its BRAHMS PCT assay and FDA premarket approval for its Oncomine Dx Target Test, the first next-generation sequencing-based companion diagnostic for non-small cell lung cancer, which the company developed in partnership with Novartis and Pfizer.

Thermo Fisher also opened a center of excellence for electron microscopy in Saudi Arabia during the quarter.

In addition, it announced the acquisition of contract development and manufacturing firm Patheon for $7.2 billion.

Overall, the company continued to see strong results in Asia-Pacific and emerging markets, including double-digit growth in China and India.

In terms of end markets, pharmaceutical and biotech was the strongest, with growth in mid-single digits for the quarter. Industrial and applied end markets grew at about company average, Casper said, and applied markets, in particular, especially environmental and food safety, remained strong. The other two end markets — academic and government, and diagnostics and healthcare — grew in the low-single digits.

Thermo Fisher finished the second quarter with $611 million in cash and cash equivalents.

Due to its strong performance in the second quarter and a less adverse currency exchange climate, the company again increased its revenue and EPS guidance for 2017. It now expects revenues between $19.71 billion and $19.89 billion for the year, representing 8 percent to 9 percent growth over 2016 compared to its previous revenue guidance of $19.51 billion to $19.71 billion. Adjusted EPS is now expected to be between $9.15 and $9.28, up 11 to 12 percent over 2016, compared to the previous guidance of $9.12 to $9.28.

In morning trading on the New York Stock Exchange, shares of Thermo Fisher were down about 5 percent at around $174.50.