10-QPeriod: Q2 FY2020

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q2 Ended Jun 27, 2020

Filed July 31, 2020For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported solid financial results for the second quarter of 2020, demonstrating resilience amidst the COVID-19 pandemic. Total revenues increased by 10% year-over-year to $6.9 billion, driven by strong performance in the Life Sciences Solutions and Laboratory Products and Services segments, partly offset by a decline in Analytical Instruments. The company's ability to rapidly pivot to support COVID-19 testing and treatment needs significantly boosted demand for certain products, particularly in the Life Sciences Solutions segment, which saw a remarkable 52% revenue increase. Despite some business headwinds due to global economic slowdowns, Thermo Fisher maintained healthy profitability, with diluted earnings per share of $2.90, a modest increase from the prior year. The company also made significant strategic moves, including an amended agreement to acquire QIAGEN N.V. for approximately $12.7 billion, which is expected to close in the first half of 2021. This acquisition, coupled with strong operational cash flow generation, demonstrates Thermo Fisher's commitment to strategic growth and expanding its capabilities in diagnostics and life sciences. The company maintained a strong liquidity position, ending the quarter with $5.8 billion in cash and cash equivalents, providing ample resources to fund the acquisition and ongoing operations.

Financial Highlights

54 data points
Beta

Revenue

$6.92B

Net Income

$1.16B

16.7% Net Margin

EPS (Diluted)

$2.90

Total Assets

$61.59B

Cash & Equivalents

$5.84B

Free Cash Flow

$1.62B

Financial Statements
Beta
Revenue$6.92B
R&D Expenses$264.00M
SG&A Expenses$1.71B
Operating Expenses$5.53B
Operating Income$1.39B
Interest Expense$137.00M
Net Income$1.16B
EPS (Basic)$2.92
EPS (Diluted)$2.90
Shares Outstanding (Basic)395.00M
Shares Outstanding (Diluted)398.00M

Key Highlights

  • 1Total revenues increased by 10% to $6.9 billion in Q2 2020 compared to Q2 2019, driven by strong demand across various segments.
  • 2The Life Sciences Solutions segment experienced robust growth, with revenues up 52% year-over-year, largely due to increased demand for COVID-19 diagnostic and bioproduction products.
  • 3Diluted earnings per share (EPS) were $2.90, up from $2.77 in the prior year, indicating improved profitability.
  • 4Thermo Fisher entered into an amended agreement to acquire QIAGEN N.V. for approximately $12.7 billion, a significant strategic move to expand its molecular diagnostics and life sciences capabilities.
  • 5The company generated strong operating cash flow of $2.24 billion in the first six months of 2020, up from $1.94 billion in the same period last year, highlighting its operational efficiency.
  • 6Cash and cash equivalents increased significantly to $5.8 billion as of June 27, 2020, providing substantial liquidity.
  • 7The Analytical Instruments segment saw a revenue decline of 21% due to reduced demand from industrial and academic customers impacted by the COVID-19 pandemic.

Frequently Asked Questions

The COVID-19 pandemic had a mixed impact. While it led to reduced demand in some areas, such as the Analytical Instruments segment, it also significantly boosted demand for products supporting COVID-19 diagnosis and treatment, particularly in the Life Sciences Solutions segment. This dual effect contributed to overall revenue growth and demonstrated the company's ability to adapt to changing market needs.

The proposed acquisition of QIAGEN N.V. for approximately $12.7 billion is a major strategic move. QIAGEN is a leader in life science and molecular diagnostic solutions. This acquisition is expected to significantly expand Thermo Fisher's capabilities in these crucial areas, enhancing its portfolio and market position, particularly in diagnostics and sample preparation.

Thermo Fisher's liquidity position remained very strong. Cash and cash equivalents more than doubled from $2.4 billion at the end of 2019 to $5.8 billion as of June 27, 2020. This substantial increase, partly due to debt issuance to fund the pending QIAGEN acquisition and strong operating cash flow, provides ample financial flexibility for strategic investments and operational needs.

The Life Sciences Solutions segment is experiencing significant growth driven by COVID-19 related demand. Laboratory Products and Services showed steady growth, largely due to services for pharma. However, the Analytical Instruments segment faced headwinds due to reduced industrial and academic spending. Specialty Diagnostics saw modest growth, with some positive impact from COVID-19 related products.