Thermo Fisher Scientific(TMO) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue grew 5% in Q3 to $11.12 billion, with adjusted operating income increasing 9% to $2.59 billion [5][21] - Adjusted operating margin expanded by 100 basis points to 23.3% [5][21] - Adjusted EPS increased by 10% to $5.79 per share [5][20] Business Line Data and Key Metrics Changes - Pharma and Biotech: Mid-single-digit growth driven by bioproduction and analytical instruments [6] - Academic and Government: Revenue declined in low single digits, showing modest improvement [6] - Industrial and Applied: Revenue grew in mid-single digits, led by electron microscopy [6] - Diagnostics and Healthcare: Revenue growth improved but remained down low single digits, primarily due to conditions in China [6][25] Market Data and Key Metrics Changes - North America grew low single digits, Europe and Asia-Pacific grew mid-single digits, while China declined mid-single digits [21] - Total company adjusted gross margin was 41.9%, reflecting strong productivity [21] Company Strategy and Development Direction - The growth strategy focuses on high-impact innovation, trusted partner status, and a strong commercial engine [7][10] - Recent innovations include FDA-approved diagnostic tests and new electron microscopes [8][9] - Strategic collaborations, such as with OpenAI and AstraZeneca, aim to enhance product offerings and drive innovation [10][13] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating government policies and reshoring activities in the U.S. [33][34] - The company raised its full-year revenue guidance to $44.1 billion to $44.5 billion and adjusted EPS guidance to $22.60 to $22.86 [17][27] - Management remains optimistic about midterm and long-term growth prospects, expecting organic growth of 3% to 6% [54] Other Important Information - The company completed significant acquisitions, including a filtration and separation business and a sterile fill-finish site, enhancing its capabilities [14][15] - Share repurchases totaled $1 billion in Q3, bringing the total for the year to $3 billion [15][23] Q&A Session Summary Question: Market conditions and customer conversations - Management noted excitement among pharma and biotech customers regarding scientific breakthroughs and confidence in their pipelines [33][34] Question: Academic and government funding outlook - Management indicated a more stable funding environment is expected, despite the ongoing government shutdown adding some uncertainty [37][38] Question: Analytical instruments performance - Growth was driven by strong demand in electron microscopy and chromatography, with expectations for continued momentum [44] Question: Diagnostics in China - Management acknowledged weak conditions in China but noted a modest improvement relative to the previous quarter [45][46] Question: Biopharma demand from small biotech - There was positive momentum in clinical research and early activities in pharma services, indicating a potential reinvestment cycle [66][67] Question: Onshoring impact on capacity and volumes - Management discussed incremental demand from new facilities and equipment, but noted that overall drug volumes would remain stable [73][74]