Form 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 29, 2025

Thermo Fisher Scientific Navigates Shifting Market Conditions in Q1 2025

Thermo Fisher Scientific, a leading provider of scientific instrumentation, reagents, and services, has reported its financial results for the first quarter of 2025. Despite facing some headwinds, the company demonstrated resilience and continued to execute on its growth strategy.

Revenue and Profit Trends

In the first quarter of 2025, Thermo Fisher’s revenues grew slightly to $10.36 billion, up from $10.35 billion in the same period of 2024. This modest increase was driven by growth in the pharma and biotech, industrial and applied, and diagnostics and healthcare markets, which helped offset declines in the academic and government market.

On an organic basis, which excludes the impacts of acquisitions, divestitures, and currency translation, revenue grew 1% year-over-year. The Life Sciences Solutions and Analytical Instruments segments were the primary contributors to organic growth, with increases of 2% and 3%, respectively. In contrast, the Laboratory Products and Biopharma Services segment saw a 1% decline in organic revenues.

While revenues remained relatively flat, Thermo Fisher’s profitability was impacted. GAAP operating income margin decreased to 16.6% in Q1 2025, down from 16.1% in the prior-year period. Adjusted operating income margin also declined slightly to 21.9%, compared to 22.0% in Q1 2024. This was primarily due to unfavorable business mix, strategic investments, and the effects of foreign exchange, which were only partially offset by strong productivity improvements.

The company’s adjusted earnings per share (EPS) increased to $5.15 in the first quarter of 2025, up from $5.11 in the same period of 2024. This was driven by a lower adjusted tax rate, which decreased from 10.5% to 10.0% year-over-year.

Segment Performance

Thermo Fisher’s business is organized into four reportable segments, each with its own unique dynamics:

Life Sciences Solutions: This segment, which includes the bioproduction, genetic sciences, and biosciences businesses, saw a 2% increase in organic revenues. Growth was driven by the bioproduction business, which benefited from higher demand from pharma and biotech customers. However, segment income margin declined due to unfavorable business mix and the impact of the Olink acquisition.

Analytical Instruments: Organic revenues in this segment grew 3%, primarily due to strong demand for electron microscopy products. The segment’s income margin decreased slightly, as strategic investments and foreign exchange impacts offset productivity improvements.

Specialty Diagnostics: Organic revenues in this segment increased 4%, led by growth in the healthcare market channel and the immunodiagnostics and transplant diagnostics businesses. Segment income margin remained flat year-over-year.

Laboratory Products and Biopharma Services: This segment experienced a 1% decline in organic revenues, as moderation in COVID-19-related revenue was only partially offset by growth in the pharma services business and the research and safety market channel. Segment income margin was flat, with productivity improvements offsetting unfavorable mix and strategic investments.

Strengths and Weaknesses

Thermo Fisher’s key strengths include its diversified portfolio of products and services, strong market positions, and commitment to innovation. The company’s high-impact innovation, trusted partner status with customers, and unparalleled commercial engine have been critical to its success.

However, the company faces some challenges, such as the moderation in COVID-19-related revenue and the decline in the academic and government market. Additionally, the company’s profitability was impacted by unfavorable business mix, strategic investments, and foreign exchange effects, which offset productivity improvements.

Outlook and Future Prospects

Looking ahead, Thermo Fisher remains cautiously optimistic about its prospects. The company expects its GAAP effective tax rate in 2025 to be between 6% and 8%, with an adjusted tax rate of approximately 10.5%. This, combined with the company’s focus on productivity improvements and strategic investments, should help support its profitability.

The company’s strong cash flow generation and access to capital markets provide it with the financial flexibility to pursue growth opportunities, both organically and through acquisitions. Thermo Fisher’s recent acquisition of Olink, a provider of next-generation proteomics solutions, is an example of how the company is enhancing its capabilities in high-growth markets.

Overall, Thermo Fisher appears well-positioned to navigate the evolving market conditions and continue its track record of growth. The company’s diversified business model, commitment to innovation, and focus on operational excellence should help it weather any near-term challenges and capitalize on long-term opportunities in the scientific instrumentation and services industry.