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Thermo Fisher Scientific Q4, Full-Year 2023 Revenues Down 5 Percent

NEW YORK – Thermo Fisher Scientific on Wednesday morning reported a 5 percent year-over-year decline in Q4 2023 revenues.

For the quarter ended Dec. 31, the company booked $10.89 billion in revenues, down from $11.45 billion in Q4 2022 but beating analysts' average estimate of $10.73 billion.

Q4 organic revenues decreased by 7 percent, and the firm saw a 4 percent dip in organic revenues for its core business during the quarter. Additionally, Q4 revenues reflect a 1 percent contribution from acquisitions as well as 1 percent from foreign exchange effects. COVID-19 testing revenue contributed $50.0 million to the total.

"In the fourth quarter, underlying market conditions largely played out in line," Thermo Fisher Chairman, President, and CEO Marc Casper told investors in a conference call recapping the financial results. "Our continued strong execution resulted in revenue performance that was slightly ahead of our expectations."

By end markets, Casper said revenues from pharma and biotech customers declined by high single digit percentage points in the quarter. Revenues from academic and government customers, meanwhile, grew in the mid-single digits, and revenues from diagnostics and healthcare customers declined in the high teens.

Additionally, Casper said the company has made "strong progress in transitioning COVID-related capacity to other therapies."

By market segment, Thermo Fisher’s revenues in the life sciences solutions segment fell 19 percent in Q4 to $2.47 billion from $3.05 billion a year ago, while organic revenues were 20 percent lower than in the prior-year period. The decline was primarily driven by the the year-over-year loss of pandemic-related revenues in the segment as well as by lower levels of activity in the company’s bioproduction business, Thermo Fisher CFO and Senior VP Stephen Williamson said.

Analytical instruments revenues grew 9 percent in Q4 to $2.04 billion from $1.88 billion, and organic growth in this segment was 8 percent, led by the electron microscopy business, he noted.

Specialty diagnostics revenues declined slightly to $1.11 billion from $1.12 billion, and organic revenue was 7 percent lower than the prior-year quarter. Thermo Fisher saw "strong underlying growth" in this segment from transplant diagnostics, microbiology, and immunodiagnostics businesses, which was offset by lower pandemic-related revenues, Williamson said.

Laboratory products and biopharma services revenues were down 4 percent to $5.72 billion from $5.95 billion a year ago, and organic revenues decreased 5 percent compared to the prior-year quarter. The decline was driven by lower vaccines and therapies revenue and the phasing of revenue in the pharmacy services business.

Looking at different geographical regions, Williamson said the company’s revenues declined in the low single digits in Europe and grew in the low single digits in Asia Pacific, with revenues in China declining in the mid-single digits.

Net income in Q4 totaled $1.63 billion, or $4.20 per share, compared to net income of $1.58 billion, or $4.01 per share, for the year-ago quarter. Adjusted EPS for the quarter was $5.67, just beating the analyst consensus estimate of $5.64.

Q4 R&D costs were $327.0 million, down 16 percent from $391 million in the previous year, and SG&A costs declined 9 percent to $1.67 billion from $1.84 billion a year ago.

For full-year 2023, Thermo Fisher reported $42.86 billion in revenues, a 5 percent decrease from $44.92 billion in 2022. This was ahead of the company's previously lowered guidance of $42.70 billion and slightly above the analyst consensus estimate of $42.77 billion.

Organic revenues for the year also declined 5 percent, and acquisitions increased revenue by 1 percent. The firm's base business saw 1 percent organic revenue growth in 2023, and COVID-19 testing revenues totaled $330 million.

Life sciences solutions revenues declined 26 percent year over year to $9.98 billion from $13.53 billion, organic revenues also declined 26 percent. Analytical instruments revenues rose 10 percent to $7.26 billion from $6.62 billion, and organic revenues were also 10 percent higher than 2022. Specialty diagnostics revenues decreased 7 percent to $4.41 billion from $4.76 billion, and organic revenues were down by 13 percent. Laboratory products and biopharma services revenues grew 2 percent, same as organic revenues, to $23.04 billion from $22.51 billion.

For the full year, revenues in North America declined in the high single digits, revenues in Europe in the low single digits, and revenues in Asia Pacific in the low single digits, with China revenues declining in the high single digits.

Full-year R&D costs decreased 9 percent in 2023, to $1.34 billion from $1.47 billion the year before. SG&A expenses were down 8 percent to $6.57 billion from $7.13 billion.

Net income for 2023 totaled $5.96 billion, or $15.45 per share, down from $6.96 billion, or $17.63 per share, in 2022. Adjusted EPS was $21.55, surpassing the company’s guidance of $21.50 and narrowly beating analysts' average estimate of $21.57.

Thermo Fisher finished 2023 with $8.08 billion in cash and cash equivalents.

The company said it expects 2024 revenue to be in the range of $42.10 billion to $43.30 billion. Adjusted EPS is expected to be $20.95 to $22.00. This guidance assumes core organic revenue growth in the range of -1 percent to 1 percent, according to the company.

Thermo Fisher also estimates pandemic-related revenue in 2024 to consist of just under $100 million in testing revenues and $300 million to $400 million in vaccines and therapies-related revenues, representing 3 percent of total revenues.

At current rates, the company expects foreign exchange effects to be neutral year over year to both revenue and adjusted EPS during 2024, according to Williamson.

In mid-day trading on the New York Stock Exchange, Thermo Fisher's shares were down 4 percent at $544.78.