10-QPeriod: Q3 FY2021

THERMO FISHER SCIENTIFIC INC. Quarterly Report for Q3 Ended Jul 3, 2021

Filed August 6, 2021For Securities:TMO

Summary

Thermo Fisher Scientific Inc. (TMO) reported strong financial results for the quarter and six months ended July 3, 2021, demonstrating significant year-over-year growth across key metrics. Total revenues surged by 34% in the second quarter and 46% in the first six months, driven by robust demand across all business segments, particularly Life Sciences Solutions and Laboratory Products and Services. This growth was bolstered by strong performance in COVID-19 related products and services, alongside a recovery in non-COVID-19 demand. The company's operating income and margins also saw substantial improvements, reflecting increased sales, favorable foreign exchange rates, and ongoing productivity initiatives, despite strategic growth investments. The company is actively pursuing strategic growth through acquisitions, notably the pending acquisition of PPD, Inc. for $17.4 billion. This acquisition, if completed by year-end 2021, is expected to significantly expand its clinical research and specialized laboratory services offerings. Despite the significant debt load associated with this transaction, Thermo Fisher's strong operating cash flow and available credit facilities provide a solid foundation for its financial health and strategic ambitions. Investors should monitor the regulatory approval process for the PPD acquisition and the company's ability to integrate this large transaction effectively.

Financial Highlights

54 data points
Beta

Revenue

$9.27B

Net Income

$1.83B

19.7% Net Margin

EPS (Diluted)

$4.61

Total Assets

$67.70B

Cash & Equivalents

$7.04B

Free Cash Flow

$1.69B

Financial Statements
Beta
Revenue$9.27B
R&D Expenses$343.00M
SG&A Expenses$1.90B
Operating Expenses$7.11B
Operating Income$2.16B
Interest Expense$122.00M
Net Income$1.83B
EPS (Basic)$4.65
EPS (Diluted)$4.61
Shares Outstanding (Basic)393.00M
Shares Outstanding (Diluted)396.00M

Key Highlights

  • 1Total revenues for the second quarter of 2021 reached $9.27 billion, a 34% increase year-over-year, driven by broad-based demand across all segments.
  • 2Net income for the second quarter was $1.83 billion, a significant increase from $1.16 billion in the prior year's quarter, reflecting strong operational performance.
  • 3Operating income margin improved to 23.3% in Q2 2021 from 20.1% in Q2 2020, indicating enhanced profitability.
  • 4The company generated $4.21 billion in cash from operating activities in the first six months of 2021, a substantial increase from $2.24 billion in the same period last year.
  • 5Thermo Fisher announced a definitive agreement to acquire PPD, Inc. for $17.4 billion, a move expected to expand its clinical research and specialized laboratory services.
  • 6The Life Sciences Solutions segment showed exceptional growth, with revenues up 37% in Q2 and 77% in the first six months of 2021, driven by demand for biosciences and bioproduction products.
  • 7Despite a substantial debt load ($18.78 billion as of July 3, 2021), the company's liquidity remains strong with $7.02 billion in cash and cash equivalents and available credit facilities.

Frequently Asked Questions

For the three months ended July 3, 2021, Thermo Fisher Scientific reported total revenues of $9.27 billion, a 34% increase compared to $6.92 billion in the same period last year. Net income rose to $1.83 billion from $1.16 billion. For the six months ended July 3, 2021, revenues were $19.18 billion, up 46% from $13.15 billion in the prior year, and net income was $4.17 billion, more than double the $1.94 billion reported for the same period in 2020. Operating income and margins also showed significant year-over-year improvements for both periods.

The significant revenue growth was driven by increased demand across all business segments, particularly Life Sciences Solutions and Laboratory Products and Services. Sales of products and services addressing COVID-19 testing, diagnosis, and treatment continued to be a strong contributor, alongside a recovery and strong fundamentals in non-COVID-19 related areas. Factors contributing to growth include strong fundamentals in life sciences, robust global economic activity, and the company's role in the pandemic response.

Thermo Fisher Scientific entered into a definitive agreement to acquire PPD, Inc. for approximately $17.4 billion in cash, plus the assumption of $3.5 billion in net debt. PPD provides clinical research and specialized laboratory services. The transaction is subject to customary closing conditions, including regulatory approvals. Both Thermo Fisher and PPD received a 'Second Request' from the U.S. Federal Trade Commission (FTC) for additional information, which extends the HSR Act waiting period. The company continues to expect the merger to be completed by the end of 2021, subject to these conditions.

As of July 3, 2021, Thermo Fisher had approximately $18.78 billion in outstanding indebtedness. The company plans to finance the PPD acquisition with existing cash and new debt issuances. Despite the increased leverage, Thermo Fisher's liquidity remains strong, with $7.02 billion in cash and cash equivalents and an available $3.00 billion revolving credit facility. The company generated $4.21 billion in operating cash flow in the first six months of 2021 and expects its current resources and future cash flow to be sufficient to meet its obligations and fund the PPD acquisition.