Thermo Fisher Accelerates Revenue Growth as Demand Strengthens
Organic revenue growth reached 5%, up from 1% in the prior quarter.
Thermo Fisher Scientific (TMO), the maker of laboratory instruments and supplies, reported a 10% increase in second-quarter revenue to $11.99 billion, accelerating from 6% growth in the first quarter.
The quarter marked Thermo Fisher’s strongest top-line growth in a year as customer activity across its end markets continued to strengthen. Organic growth rose to 5% from 1% in the first quarter and 3% in each of the two preceding quarters; acquisitions contributed five percentage points to reported growth and currency translation added one point.
GAAP diluted earnings rose 9% to $4.68 a share from $4.28 a share, while adjusted earnings increased 13% to $6.03 a share from $5.36 a share. Adjusted earnings growth accelerated from 6% in the first quarter, and adjusted operating margin widened 0.9 percentage point to 22.8%.
Analytical Instruments produced the largest margin gain among the company’s segments. Revenue increased 6.9% to $1.85 billion, while segment income climbed 30% to $424 million and margin expanded 4.2 percentage points to 23.0%.
The company’s two largest businesses supplied more of the quarter’s growth. Life Sciences Solutions revenue rose 12.6% to $2.82 billion, while Laboratory Products and Biopharma Services revenue increased 11.6% to $6.69 billion and accounted for 55.8% of company revenue. Specialty Diagnostics grew more slowly, with revenue up 6.3% and its share of the company’s sales declining to 10.0% from 10.4%.
Free cash flow increased 51.9% to $1.68 billion as operating cash flow rose to $2.13 billion, more than offsetting higher capital expenditures. Thermo Fisher repurchased $1.0 billion of shares during the quarter, bringing first-half buybacks to $4.0 billion, twice the amount in the year-earlier period.
Capital deployment also shifted after Thermo Fisher completed the Clario acquisition in the first quarter and announced the divestiture of its microbiology business in the second. Acquisition spending totaled $8.87 billion in the first half, compared with none a year earlier, leaving the company to integrate a major purchase while reshaping its portfolio.