Thermo Fisher Reports Record Earnings for the Third Quarter

Here are some highlights reported by the company relative to the record quarter:

• Adjusted earnings per share (EPS) grew 11 percent to a 3^rd quarter record of $1.19.

• Revenue increased 5 percent to a record $3.09 billion for the 3^rd quarter.

• Adjusted operating income rose 5 percent to $576 million.

• Year-to-date free cash flow increased 39 percent to $1.20 billion.

• Launched new immunoassays, analyzers and controls for specialty diagnostics, such as drugs-of-abuse testing, at AACC clinical laboratory expo.

• Opened new molecular biology Center of Excellence to serve global life sciences customers and strengthen presence in high-growth Eastern European markets.

• Completed acquisition of transplant diagnostics leader One Lambda, strengthening offering of in vitro specialty diagnostics for improving patient care.

• Deployed $400 million to repurchase 7.1 million shares of common stock.

Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.” Results for the company’s Laboratory Workstations business are reported as a discontinued operation for all periods presented and are not included in the company’s 2012 guidance.

“We delivered another quarter of excellent revenue and earnings growth thanks to solid execution by our teams and strong results from our growth initiatives,” said Marc N. Casper, President and Chief Executive Officer of Thermo Fisher Scientific. “Our innovative products, presence in emerging markets and commercial capabilities uniquely position us to help our customers meet their goals in the current economic environment.

“In the quarter, we expanded our Thermo Scientific specialty diagnostics offering for clinical laboratories with the launch of our new QMS™ Tacrolimus immunoassay in Europe and a new generation of our clinical analyzer, the Indiko^® Plus^®, in the U.S. In our biosciences business, we established a new molecular biology Center of Excellence in Lithuania to meet growing demand from life sciences and biotech customers globally.

“From a capital deployment perspective, we’re pleased to have completed our acquisition of One Lambda, which enhances our specialty diagnostics offering with tests that improve care for transplant patients. In addition, we continue to buy back our shares, and repurchased $400 million of our stock in the quarter.”

For the 3^rd quarter of 2012, adjusted EPS grew 11 percent to $1.19, versus $1.07 in the 3^rd quarter of 2011. Revenue for the quarter grew 5 percent to $3.09 billion in 2012, versus $2.93 billion in 2011. On a pro forma basis, as if Phadia were owned for the entire 3^rd quarter of 2011, organic revenue grew 4 percent, with currency translation lowering revenue by 3 percent and acquisitions, other than Phadia, increasing revenue by 1 percent. Adjusted operating income for the 3^rd quarter of 2012 increased 5 percent compared with the year-ago quarter, and adjusted operating margin was 18.7 percent in both periods.

GAAP diluted EPS for the 3^rd quarter of 2012 was $0.79, versus $0.69 in the same quarter last year. GAAP operating income for the 3^rd quarter of 2012 increased 11 percent to $352 million, compared with $316 million in 2011. GAAP operating margin was 11.4 percent, compared with 10.8 percent in the 3^rd quarter of 2011.

Annual Guidance for 2012

Thermo Fisher is raising its full year 2012 guidance based on strong year-to-date performance, completion of the One Lambda acquisition and slightly improved foreign exchange. As a result, the company now expects to generate revenue of $12.32 to $12.40 billion in 2012, resulting in 7 percent revenue growth year-over-year. The company is also raising its adjusted EPS guidance to a new range of $4.81 to $4.88, leading to 16 percent to 17 percent adjusted EPS growth over 2011.

Casper added, “Our excellent performance in the last nine months positions us to deliver a strong 2012, and gives us a solid foundation going into 2013.”

The 2012 guidance does not include the impact of any future acquisitions or divestitures and is based on recent foreign exchange rates. In addition, the adjusted EPS estimate excludes amortization expense for acquisition-related intangible assets and certain other items detailed later in this press release under the heading “Use of Non-GAAP Financial Measures.”

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company’s three business segments, as highlighted below.

Analytical Technologies Segment

In the 3^rd quarter of 2012, Analytical Technologies Segment revenue increased 1 percent to $1.01 billion compared with the 3^rd quarter of 2011. Segment adjusted operating income decreased 2 percent in the 3^rd quarter of 2012, and adjusted operating margin was 18.9 percent, versus 19.5 percent in the 2011 quarter.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue in the 3^rd quarter increased 15 percent to $707 million in 2012, compared with revenue of $616 million in the 3^rd quarter of 2011. Segment adjusted operating income increased 13 percent in the 3^rd quarter of 2012, and adjusted operating margin decreased to 24.1 percent, versus 24.4 percent in the 2011 quarter.

Laboratory Products and Services Segment

In the 3^rd quarter of 2012, Laboratory Products and Services Segment revenue increased 5 percent to $1.51 billion, compared with revenue of $1.44 billion in the third quarter of 2011. Segment adjusted operating income increased 7 percent in the 3^rd quarter of 2012, and adjusted operating margin was 14.2 percent, versus 13.9 percent in the 2011 quarter.