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DATE

Thursday, July 23, 2026 at 8:30 a.m. ET

CALL PARTICIPANTS

• Vice President, Investor Relations - Rafael Tejada
• Chairman and Chief Executive Officer - Marc Casper
• Senior Vice President and Chief Financial Officer - Jim Meyer

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TAKEAWAYS

• Revenue -- $11.99 billion, representing 10% reported growth over the prior year.
• Organic Revenue -- 5% growth, exceeding the company's previous guidance by 2 percentage points due to stronger customer activity.
• Adjusted Operating Income -- $2.73 billion, an increase of 15% year over year.
• Adjusted Operating Margin -- 22.8%, expanding by 90 basis points reflecting strong productivity and volume leverage.
• Adjusted EPS -- $6.03, representing 13% growth and exceeding previous guidance by $0.30 per share.
• Pharma and Biotech Revenue -- Mid-single-digit growth, led by performance in the Bioproduction and Clinical Research businesses.
• Academic and Government Revenue -- Low-single-digit growth, driven by demand for Chromatography and Mass Spectrometry solutions.
• Industrial and Applied Revenue -- Mid-single-digit growth, led by the Electron Microscopy and Chemical Analysis businesses.
• Diagnostics and Health Care Revenue -- Mid-single-digit growth, reflecting contributions from the Health Care market channel and Immunodiagnostics.
• North America Organic Growth -- Low-single-digit growth, as market conditions began to stabilize.
• Europe and Asia Pacific Organic Growth -- High-single-digit growth for both regions, driven by broad-based demand.
• China Organic Growth -- Low-single-digit growth, returning to growth led by pharma, biotech, and industrial markets.
• Life Sciences Solutions Segment -- $2.64 billion in revenue with 3% organic growth, led by the bioproduction business.
• Analytical Instruments Segment -- $1.72 billion in revenue with 7% organic growth, driven by innovation in electron microscopy.
• Specialty Diagnostics Segment -- $1.14 billion in revenue with 5% organic growth, led by the health care market channel.
• Laboratory Products and Biopharma Services Segment -- $6.04 billion in revenue with 5% organic growth, driven by clinical research performance.
• Free Cash Flow -- $2.5 billion year to date, following $800 million in net capital expenditures.
• Share Repurchases -- $1 billion in the second quarter, funded by the anticipated net proceeds from the pending microbiology divestiture.
• Full Year Revenue Guidance -- $47.4 billion to $48.1 billion, representing 6% to 8% reported growth over 2025.
• Full Year Adjusted EPS Guidance -- $24.93 to $25.33, an increase of $0.25 at the midpoint from previous estimates.
• Full Year Organic Growth Outlook -- Increased to approximately 4%, positioning the company at the upper end of its original 3% to 4% range.
• Microbiology Divestiture Impact -- Expected to reduce 2026 revenue by $200 million and adjusted EPS by $0.05 following a third quarter close.
• Acquisition Contribution -- Estimated to provide $1.6 billion in revenue and $0.32 in adjusted EPS for the full year.
• Foreign Exchange Impact -- Projected revenue tailwind of $200 million, a reduction from the previously expected $300 million.
• Capital Expenditure Guidance -- $1.9 billion to $2.1 billion for the full year to support capacity expansion and innovation.

SUMMARY

Management at **Thermo Fisher Scientific Inc.** (TMO +8.71%) reported strengthening customer activity across all end markets, particularly in pharma and biotech, which accounts for approximately 60% of total revenue. The company raised its full year 2026 organic growth and adjusted earnings guidance based on second quarter performance and an improved outlook for the second half of the year. Strategic capital deployment remains a priority, evidenced by the $1 billion in share repurchases completed during the quarter and the successful integration of the Clario and filtration acquisitions. The company is actively managing its portfolio through the pending divestiture of its microbiology business, with proceeds already deployed to shareholders. Management stated that high-impact innovation and the PPI Business System continue to drive share gains and operational efficiency.

• CEO Casper noted that biotech customer spending is converting to revenue, stating that "it's good to see that's translating into the revenue as well."
• The company launched the Thermo Scientific Orbitrap Tribrid Apex mass spectrometer, which allows scientists to study complex biology across multiomics and structural biology.
• Management is increasing production capacity for its filtration and separation business to meet strong customer demand.
• Clinical research authorizations showed continued strength, with the company noting a typical six-month lag between authorizations and revenue recognition.
• CFO Meyer provided specific phasing guidance, stating he expects Q3 adjusted EPS to be "$0.35 to $0.40 higher than in Q2."
• The U.S. bioprocess design center opened in Massachusetts to facilitate collaborative drug development with pharma and biotech customers.
• CEO Casper observed that even in muted funding environments, academic customers secure capital for "relevant innovation" to maintain competitive research publications.

INDUSTRY GLOSSARY

• Orbitrap: A high-resolution mass spectrometry technology used for identifying and quantifying molecules in complex biological samples.
• PPI Business System: Practical Process Improvement, the company's internal operational framework for driving efficiency and quality.
• UHPLC: Ultra-High-Performance Liquid Chromatography, a technique used to separate, identify, and quantify components in a mixture.
• Bioproduction: The manufacturing of medicines, such as vaccines and biologics, using living biological systems.
• Mass Spectrometry: An analytical technique used to measure the mass-to-charge ratio of ions to identify the chemical composition of a sample.
• Clario: A provider of digital endpoint data solutions for clinical trials, acquired by the company in March 2026.
• Patheon: The company's brand for its pharmaceutical development and manufacturing services.

Full Conference Call Transcript

Operator: Good morning, ladies and gentlemen, and welcome to the Thermo Fisher Scientific 2026 Second Quarter Conference Call. [Operator Instructions] I would like to introduce our moderator for the call, Mr. Rafael Tejada, Vice President, Investor Relations. Mr. Tejada, you may begin the call.

Rafael Tejada: Good morning, and thank you for joining us. On the call with me today is Marc Casper, our Chairman and Chief Executive Officer; and Jim Meyer, Senior Vice President and Chief Financial Officer. Please note this call is being webcast live and will be archived on the Investors section of our website thermofisher.com under the heading News Events and Presentations until October 20, 2026. A copy of the press release of our second quarter earnings is available in the Investors section of our website under the heading Financials. So before we begin, let me briefly cover our safe harbor statement.

Various remarks that we may make about the company's future expectations, plans and prospects constitute forward-looking statements within the meaning of applicable securities laws. Actual results may differ materially from those indicated by these forward-looking statements as a result of various risks and uncertainties including those discussed in the company's most recent reports on Form 10-K and Form 10-Q under the heading Risk Factors. These forward-looking statements are based on our current expectations and speak only as of the date they are made. While we may like to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even in the event of new information, future developments or otherwise.

Also, during this call, we will be referring to certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in the press release of our second quarter earnings, and also in the Investors section of our website under the heading Financials. So with that, I'll now turn the call over to Marc.

Marc Casper: Thank you, Raf. Good morning, everyone, and thanks for joining us today for our second quarter call. As you saw in our press release, we delivered an outstanding quarter. Customer activity across our end markets continue to strengthen. Our proven growth strategy is enhancing our capabilities, further advancing our trusted partner status with customers and continuing to drive share gain. And we're continuing to actively manage the company, leveraging our global scale and strength of our PPI business system to create value for our stakeholders and build an even brighter future for our company. To start, let me recap the second quarter financial results. Our revenue grew 10% to $11.99 billion. Adjusted operating income grew 15% to $2.73 billion.

Adjusted operating margin expanded by 90 basis points to 22.8%, and we grew adjusted EPS by 13% to $6.03 per share. Turning to our performance by end market. It was good to see customer activity continue to strengthen across our end markets during the second quarter. Our team's excellent execution enabled us to capitalize on these opportunities and deliver outstanding performance in the quarter. Let me provide some additional details. Starting with Pharma and Biotech. We delivered mid-single-digit growth during the quarter. Performance was led by our Bioproduction and Clinical Research businesses as well as our Research and Safety Market channel.

In Academic and Government, we grew low single digits in the second quarter, driven by our Chromatography and Mass Spectrometry business. In Industrial and Applied, we delivered mid-single-digit growth during the quarter. Performance was led by our Electron Microscopy and Chemical Analysis business as well as the Research and Safety Market channel. Finally, in Diagnostics and Health Care, we grew in the mid-single digits in the quarter driven by our Health Care market channel and the Immunodiagnostics business. Overall, it was great to see both sequential improvement and strong revenue growth across each of our end markets. Let me now provide some highlights on the execution of our growth strategy this quarter.

As a reminder, our growth strategy consists of three pillars: high-impact innovation, our trusted partner status with customers and our unparalleled commercial engine. Starting with the first pillar of our growth strategy. It was another excellent quarter of high-impact innovation. Our innovation enables customers to accelerate scientific discovery and advance their important work. During the quarter, we launched a number of new technologies across our business that strengthened our industry leadership. At this year's American Society of Mass Spectrometry conference, we launched next-generation Orbitrap platforms and AI-driven capabilities that enable new scientific discoveries and deeper insights. These will help scientists solve increasingly complex analytical challenges with greater speed and confidence.

This was highlighted by the launch of our Thermo Scientific Orbitrap Tribrid Apex mass spectrometer. It enables scientists to study complex biology across multiomics, structural biology, biopharmaceutical characterization and small molecule analysis to help accelerate research across a broad range of scientific applications. We also introduced the Thermo Scientific Orbitrap Excedion mass spectrometer which enables scientists to reduce drug development risk and accelerate time to market for our pharma and biotech customers. Another highlight this quarter was the launch of our Thermo Scientific [ Vanquish Amplify UHPLC system ], which helps scientists analyze highly sensitive biological molecules with less sample loss and better reproducibility, enabling greater confidence in mess development through quality control.

This is an important addition to our liquid [ hematography ] offering. These innovations are complemented by our expanding suite of AI-powered software, including new solutions that deliver smarter workflows and accelerate proteomics research. Another example of our high-impact innovation is in Life Science Solutions, where we introduced the Applied Biosystems PowerFlex thermal cycler, a next-generation PCR platform that helps molecular biology laboratories improve workflow flexibility, increase productivity and enhance reproducibility. It was an outstanding quarter of innovation, and we're pleased with the adoption we're seeing from our customers. Let me now cover the remaining two pillars of our growth strategy, our industry-leading commercial capabilities and trusted partner status that enable our customer success.

During the quarter, we continued to strengthen our position in both of these areas. In April, we opened our flagship U.S. bioprocess design center in Massachusetts. This new facility expands our global network of collaborative innovation centers, where we work side by side with pharma and biotech customers to accelerate drug development, optimize manufacturing processes and help bring life-changing therapies to patients faster. To advance population scale research, we announced a strategic collaboration with Precision Health Research Singapore to support their population health study. By combining our integrated proteomics capabilities, including our Olink technology with our Orbitrap Astral mass spectrometry platform, we're continuing to help advance precision medicine through one of the world's leading biobank initiatives.

These examples provide a unique opportunity for us to engage with our customers, helping them solve current challenges, accelerate innovation and move science forward. Wrapping up on the growth strategy, we made great products during the quarter, continuing to strengthen our leadership position. Turning to capital deployment. We continue to successfully execute our disciplined approach to capital deployment, which is a combination of strategic M&A and returning capital to our shareholders. Let me start with an update on our recently closed acquisitions. First, we're very pleased with the progress we're making since completing the acquisition of [ Clario ] in late March.

[ Clario's ] market-leading digital endpoint data solutions enhance our ability to deliver even deeper clinical insights to our pharma and biotech customers. This outstanding strategic fit further strengthens our position as the trusted partner to our foreign biotech customers delivering important benefits that enable their success and help improve the productivity of the drug development process. The business delivered a strong second quarter. The integration is progressing smoothly, and the funnel of revenue synergies is building nicely. We also continue to see great performance from our Filtration and Separation business. The integration continues to progress well.

Customer feedback has been very positive, and we're excited about the long-term impact these capabilities will have for our customers and for our company. Both of these acquisitions demonstrate how our disciplined M&A strategy is creating value for our customers and shareholders. And finally, you saw our announcement in late April that we entered into an agreement to divest our microbiology business. This transaction, which we expect to close in the third quarter reflects our active management of the company. We deployed the anticipated net proceeds from this transaction to repurchase $1 billion of our shares in the second quarter.

As you know, our capital deployment strategy continues to prioritize strategic M&A complemented by a return of capital to our shareholders. We continue to have an active pipeline of M&A opportunities in our highly fragmented industry. Now let me spend a few minutes on our PPI Business System, which engages and inspires our colleagues to find a better way every day. PPI enabled another quarter of outstanding execution, which you can see in our strong profitability and free cash flow. Through PPI, we're continually improving quality, productivity and customer allegiance while creating capacity to invest in innovation and strengthen leadership position. We are actively deploying AI across the company to further accelerate PPI's impact.

PPI enables outstanding execution today and positions us to create even greater value over the long term. Before I turn to guidance, I'd like to highlight the latest updates to our CSR efforts and they're now available. I encourage you to visit our website to learn more about our performance and the progress we're making towards our long-term goals. As you'll see on the website, we continue to execute our Net Zero road map increasing the use of renewable electricity. We also increased the number of Zero Waste certified sites as well as expanded the reach of our STEM education programs. These programs benefit more than 185,000 students annually and help to inspire the next generation of innovators.

Now I'd like to review our updated 2026 guidance at a high level. We are raising our guidance for the full year on the top and bottom line, reflecting our strong operational performance in the second quarter and increased outlook for the second half of the year and we're also incorporating the expected impact of the pending divestiture of our microbiology business. We're raising our revenue guidance to a new range of $47.4 million to $48.1 billion, representing 6% to 8% reported revenue growth over 2025. Our expectation for full year organic revenue growth has increased to about 4%, our guidance range remains 3% to 4%, and we now expect to deliver at the upper end of that range.

We're also increasing our adjusted earnings per share guidance to be in the range of $24.93 to $25.33, which now represents 9% to 11% growth over 2025 and a $0.25 increase from our previous guidance at the midpoint. Jim will take you through the details in his remarks. So to summarize our key takeaways. We delivered outstanding performance in Q2 and with a clean top and bottom line beat with organic revenue growth of 5% and adjusted EPS growth of 13%. It's great to see customer activity continue to strengthen across our end markets. We're raising our full year revenue and adjusted EPS guidance.

Our proven growth strategy is resonating more than ever with our customers and driving meaningful share gain. Our recently closed acquisitions are performing very well and at the halfway point in the year, we are well positioned to deliver a great 2026 and build an even brighter future for our company. With that, I'll turn the call over to Jim.

James Meyer: Thank you, Marc, and good morning, everyone. I'll take you through an overview of our second quarter results for the total company and then provide color on our four business segments and conclude with details on our updated guidance for the year. Before I get into the specifics of our financial performance, I'll provide a high-level view of how the second quarter played out versus our expectations at the time of our last earnings call. As you saw in our press release, we delivered an outstanding quarter with 5% organic revenue growth and 13% growth in adjusted earnings per share. These results are significantly ahead of the assumptions included in our previous guidance on both the top and bottom line.

This reflects excellent execution by our team and stronger customer activity across our end markets. Q2 revenue was approximately $300 million ahead of our previous guidance, including 2% stronger organic revenue growth, a higher contribution from acquisitions and favorability from foreign exchange. Adjusted EPS was $0.30 ahead of our previous guidance, driven by the expected pull-through from our revenue beat, strong cost productivity and excellent performance from our acquisitions, including [ Clario ]. So a very strong quarter of execution by the team, delivering results well ahead of our guidance and positioning us incredibly well at the halfway point of the year. Let me now provide you with some details on our performance. Starting with earnings per share.

In the quarter, adjusted EPS grew by 13% to $6.03. GAAP EPS in the quarter was $4.68 and up 9% from Q2 last year. On the top line, Q2 reported revenue grew 10% year-over-year. The components of our reported revenue change included 5% organic growth, a 5% contribution from acquisition and a slight tailwind from foreign exchange. Turning to our organic revenue performance by geography. In Q2, North America grew low single digits, Europe grew high single digits and Asia Pacific grew high single digits, with China growing low single digits.

With respect to our operational performance, we delivered $2.73 billion of adjusted operating income in the quarter, an increase of 15% year-over-year and adjusted operating margin was 22.8%, 90 basis points higher than Q2 last year. In the quarter, we continued to deliver strong productivity and generated favorable volume leverage, this enabled us to offset the impact of unfavorable mix and fund strategic investments to further advance our industry leadership. Total company adjusted gross margin in the quarter was 41.4%. Moving on to the details of the P&L. Adjusted SG&A in the quarter was 15.6% of revenue.

R&D expense was $360 million in Q2, reflecting our ongoing investments in high-impact innovation, R&D as a percent of our manufacturing revenue was 6.9% in the quarter. Looking at our results below the line, Q2 net interest expense was $190 million. The adjusted tax rate in Q2 was 11.6%, and average diluted shares were $371 million in Q2, $7 million lower year-over-year, driven by share repurchases, net of option dilution. Turning to free cash flow and the balance sheet. Year-to-date cash flow from operations was $3.3 billion and free cash flow was $2.5 billion after investing $800 million of net capital expenditures.

In Q2, we also deployed $1.2 billion of capital to shareholders through $1 billion of share buybacks and approximately $175 million of dividends. We ended the quarter with $4.1 billion of cash and equivalents and $42.5 billion of total debt. Our leverage ratio at the end of the quarter was 3.6x gross debt to adjusted EBITDA and 3.3x on a net debt basis. Concluding my comments on our total company performance, adjusted ROIC was 10.9%. Now I'll provide some color on the performance of our four business segments. In Life Sciences Solutions, Q2 reported revenue increased 13% versus the prior year quarter and organic revenue growth was 3%.

Growth in this segment was led by our bioproduction business, which had another quarter of excellent organic growth. Q2 adjusted operating income for Life Sciences Solutions increased 13% and adjusted operating margin was 37.0%, up 20 basis points versus the prior year quarter. During Q2, we delivered very strong productivity, which was partially offset by the expected impact from the acquisition of our filtration and separation business and unfavorable mix. In the Analytical Instruments segment, both reported revenue, organic revenue increased 7% versus the prior year quarter. We delivered good growth across all three businesses, led by our Electron Microscopy business.

In this segment, Q2 adjusted operating income increased 30%, and adjusted operating margin was 23.0%, up 420 basis points versus the year ago quarter. In the quarter, we delivered strong productivity generated good volume leverage and benefited from the impact of foreign exchange and favorable mix. Turning to Specialty Diagnostics. In Q2, reported revenue grew 6% year-over-year and organic revenue grew 5%. Growth in this segment was led by our health care market channel as well as our Immunodiagnostics and Transplant Diagnostics businesses. Q2 adjusted operating income for Specialty Diagnostics increased 9% and adjusted operating margin was 27.7%, 70 basis points higher than Q2 2025. During the quarter, favorable volume leverage and good productivity were partially offset by unfavorable mix.

Finally, in the Laboratory Products and Biopharma Services segment, reported revenue increased 12% and organic revenue growth was 5%. In Q2, growth in this segment was led by our Research and Safety Market channel and our Clinical Research business. Q2 adjusted operating income in the segment increased 13% and adjusted operating margin was 14.0%, 20 basis points higher than the prior year quarter. In the quarter, good productivity and strong performance from the recently acquired [ Clario ] business were partially offset by unfavorable mix and strategic investments. Turning to guidance.

As Marc outlined, we're raising our 2026 full year guidance to reflect the strength of our performance in Q2 and an improved outlook for the second half of the year, while also incorporating the expected impact of the announced divestiture of our microbiology business. We now expect revenue to be in the range of $47.4 million to $48.1 billion and adjusted EPS to be in the range of $24.93 to $25.33, now representing 9% to 11% adjusted EPS growth. Let me walk through key assumptions underlying our updated full year guidance. For organic revenue growth, our expectation has increased to about 4% for the year.

Our guidance range remains 3% to 4%, and we now expect to deliver at the upper end of that range. The increase in our full year organic revenue growth outlook includes all of the Q2 overperformance plus a modest improvement to the second half. Updating for FX, we now expect a $200 million revenue tailwind from foreign exchange, which is $100 million lower than our previous guidance. Our updated guidance also incorporates the expected impact of the pending divestiture of our microbiology business, which we expect to close in the third quarter. As a reminder, the business had revenue of $645 million in 2025 with roughly 1/4 of that revenue selling through our channel businesses.

We'll retain our channel relationship and continue selling these products after the divestiture. With an expected Q3 close, the divestiture reduces 2026 revenue by approximately $200 million, net of the retained channel business and reduces 2026 adjusted EPS by $0.05. We continue to expect the transaction to be dilutive to adjusted EPS by approximately $0.15 in the first full year following the close.

In aggregate for adjusted EPS, we are increasing the midpoint of our full year guidance by $0.25 comprised of the following: $0.30 from the strong performance in Q2, $0.05 from an increase to our revenue outlook for the second half of the year, partially offset by the impact of the divestiture of our microbiology business of $0.05 and a second half headwind from recent changes in FX rates of $0.05. Embedded in the guide is stronger performance from our acquisitions on both the top and bottom line compared to our previous guidance. Acquisitions are now expected to contribute $1.6 billion of revenue and $0.32 of adjusted EPS for the year.

In terms of adjusted operating income margins, our guide has increased to 80 basis points of expansion. We are continuing to actively manage the company and drive excellent operational performance, enabling us to increase our top and bottom line guidance for the year. To help you with your modeling, here are a few additional assumptions within the updated guide. We continue to expect approximately $660 million of net interest expense in 2026. We continue to assume that the adjusted income tax rate will be 11.5%.

In terms of free cash flow, we continue to expect that to be in the range of $6.9 billion to $7.4 billion for the year, including between $1.9 billion and $2.1 billion of net capital expenditures. In terms of capital deployment, we're assuming $4 billion of share buybacks with $3 billion completed in January and an additional $1 billion completed in the second quarter. The second quarter share repurchase represents the use of expected net proceeds from the pending microbiology divestiture. We elected to use the proceeds for share repurchases and to complete the repurchase ahead of the transaction closed based on an assessment of our valuation at that time.

And we're assuming that we'll return approximately $700 million of capital to shareholders this year through dividends. We estimate that full year average diluted share count will be between 370 million and 373 million shares. Now let me provide some color on phasing for the remainder of the year. We grew 3% organically in the first half in total and expect that to step up to 4% for the second half with both quarters being similar in terms of organic revenue growth. And we expect Q3 adjusted EPS to be $0.35 to $0.40 higher than in Q2.

So to conclude, we executed very well to deliver an outstanding second quarter and we are raising our full year outlook on the top and bottom line. With that, I'll turn the call back to Raf.

Rafael Tejada: Thank you, Jim. Operator, we're ready for the Q&A portion of the call. .

Michael Ryskin: Great. And congrats on a very strong front. Marc, maybe I'll start with a high-level one to you. You called out a couple of times in the prepared remarks, customer activity continues to strengthen, end markets continue to strengthen, you called out share gains a few times. It seems like it was a pretty broad-based beat in the quarter, across segments, across end markets.

But maybe if you could just throw in on one or two things that are maybe driving that, whether it's farm on biotech or a little bit more stability in academic markets, we just love to get a better sense on where you saw some of the big improvement from where we stood 3 months ago, especially as you look into the second half of the year?

Marc Casper: Yes, Mike, thanks for the question. It's good to have a good quarter behind us and a strong first half. So when I think about our end markets, as the way you described, the customer activity actually picked up across our end markets. And if you recall what we said during the course of this year is we expected that activity would pick up from the 2025 levels as this year progressed. And we saw that getting to that level in Q2 with a much better set of activity. Very encouraging to see the continued progression in pharma and biotech customer base definitely good momentum continues in pharma, but also biotech, clearly, we saw spending pick up.

We've talked a lot about how activity has been picking up, but now it's good to see that's translating into the revenue as well. And across the various segments, you saw that trend across broadly. But our biggest end market, about 60% of our revenue is really progressing in a nice direction.

Michael Ryskin: Okay. And Jim, maybe just drilling in a little bit on the guide, Encouraging to see the full year organic raise and you kind of bumped up the second half a little bit, but I kind of comment towards the end there where you said you expect kind of similar organic growth between 3Q and 4Q. I think we were expecting 4Q to be a little bit higher previously because of the days tailwind. Is this just some conservatism as you kind of looking out for the rest of the year, keeping something in the back pocket? Or is there anything else that's notable in terms of phasing we should be keeping in mind?

James Meyer: Yes, Mike, thanks for the question. So we look at it, we grew 3% in the first half, and we're stepping it up to 4% in the second half, and that includes a modest improvement to the outlook for the second half. And right now, we've outlined the way we see the quarterly phasing playing out, which is really not meaningfully changed versus our original assumption.

Tycho Peterson: Nice quarter. Maybe just starting on the services side, I'm curious, any incremental color you can provide on [ PPD ]. We've obviously seen pretty strong book-to-bill from some of the peers. And it sounds like maybe some of the biotech funding starting to really convert there. So any metrics on [ PPD ], anything on [ Clario ] that you can give us a little more specifically? And then similarly with Patheon, just curious what you saw in the quarter.

Marc Casper: Tycho, thanks for the question. So clinical research really had an excellent quarter. Strong organic growth and revenue, strong organic growth in authorizations. Business is doing very well in the market. And the market conditions are improving. So you have really both good results in the quarter and encouraging progression going forward, which is largely as we expect it would be playing out. So it's good to see that translating. [ Clario ] had a very good quarter. Obviously, it doesn't show up in our organic results. But our first full quarter of ownership of the business was very strong. We had good performance on its authorization, its revenue growth, earnings, so really a nice contribution.

It was good to see both that and with our combination with our filtration and separation business, we were able to raise our contribution from acquisitions for the full year on both the revenue and earnings line. So that's very positive. When I think about a couple of other highlights within our broader services business, accelerated drug development incredibly well received.

And that really shows up in our biotech customers where you have -- where a customer can get their arms around the whole program from how they outsource their development of the actual medicine through the scale-up of that medicine as well as designing the clinical trials and the interplay between those activities allows you to save time and cost. And that's been very compelling and has really helped us drive very strong authorizations. When I think about the performance of our pharma services or what you call the Patheon business, we had modest growth in the quarter, in line with our expectations.

The second half, as we've talked about all year, will be stronger for that business just based on when we're actually shipping the activity and that business obviously has benefited earlier in the year from a number of wins around reshoring that has been embedded in the outlook for the business. So I feel very good about the position for Pharma Services in terms of how we execute commercially and what the outlook looks like for the coming quarters and years ahead.

Tycho Peterson: And then just a follow-up on the revised outlook for the back half of the year. I guess where else are you feeling better across the portfolio? What's kind of leading to the incremental uptake?

Marc Casper: Yes. So when I think about the quarter, right, we took all of the beat in Q2, embedded that in our outlook. And then we increased our organic revenue growth modestly but did increase it. It's really driven by that -- the forward look is really driven by pharma biotech. It was nice to see in the quarter that academic and government return to growth. And we saw the U.S. slightly positive, and those things are very good. But we still think the market is going through a stabilization period. So we didn't change the outlook for academic and government. We really focused it on pharma and biotech.

And then obviously, we'll see if we see the very positive trends in academic and government sustain, and that would obviously be an upside over time.

Jack Meehan: Thank you. Good morning, guys. I wanted to get a little bit more color on your thoughts on pharma biotech spending patterns. I got a lot of questions this week about inventory levels, trade tariff, reshoring dynamics, as you look at your customer class and product portfolio, how are those things progressing? Anything that stands out?

Marc Casper: Yes, Jack, thanks for the question. Clean quarter, right? When I think about business progressed nicely, and as we look to the second half for pharma biotech, we actually think it will be a little better, even though we saw a nice step-up in quarter. For us, we had broad-based momentum. And the bioproduction had a really excellent quarter. It was nice to see the continued momentum in that business. Very strong growth. Obviously, we talked about clinical research with Tycho's question. And in addition, research and safety market channel had a very strong performance.

So there really was not a lot of -- as you parse through all of the details, it was just a clean good quarter and actually quite encouraging to see biotech picking up as well. Again, we're not surprised by it. And I think Jim articulated in our Investor Day, the progression for the stepping up of growth in our business, the big drivers are recovery in Biotech and recovery in Academic and Government, you saw the real signs of the Biotech recovery in the results. You saw a good quarter in Academic and Government. We're not calling yet that, that's the new level yet, but it's progressing in a nice direction.

Jack Meehan: Can you dig a little bit more into the channel for me on the research and safety side? It seems like it stepped up. How much of that do you think is just market versus share? And on the health care market side, it seems like that rebounded versus what you put up in the first quarter. Just anything you would call there was it timing or something else?

Marc Casper: Yes. So if I think about to health care first. The first half of the year was representative for the health care market channel. The first quarter had very specific headwinds. The second quarter was incredibly strong. I actually I think the average of the two is the right way to think about health care market channel. They are doing a good job the business is well positioned. So I feel good about the performance there. So that one is really just take the average of the 2 quarters when we report our results in the [ Q ].

When I think about research and safety market channel, you see really two dynamics, really, very strong competitive position, serving pharma and biotech. And as demand picks up there, that's good, wins also -- with account wins also drives some of that performance. So I think it's the wins are really the share gain part, the market improvement shows up broadly. So that business is doing quite well in a better quarter in academic and government helps that business but not really the big driver, if you will, of the step.

Matthew Larew: The biggest delta versus our model was on Analytical Instruments and acknowledging that the comparable was easy that certainly stood out. You've had a number of product launches across the category in the last 12 months. You also have referenced interest on sort of the autonomous lab, lab and the loop side. But then perhaps as biotech activity or just farm activities picked up, maybe that's an area that dollars have been allocated to. Just curious if you think through the various moving pieces, how do all those kind of play into the performance in the quarter?

Marc Casper: Thanks for the question. So in terms of analytical instruments, really a very nice quarter, high single-digit growth. All three businesses delivered strong growth in the quarter. So it was really nice to see that. When I think about the drivers, innovation is the most important driver. We launched a suite of products. We had a great American Society of Mass Spectrometry conference in June with two mass spectrometers, a number of AI-enabled software offerings that really help customers have greater insights into their research. We saw a strong adoption of our high-end instrumentation broadly and especially actually globally in the academic customer set.

So -- you've heard me say in the past that irrespective of funding environments, if you have really relevant innovation, customers get money. And we saw that show very nicely. We also had a very important launch in our UHPLC product offering, which bodes well for the future. And those are really the biggest drivers. And then within electron microscopy, another really good quarter semiconductor, we play a key enabling role there and as well as advanced materials, and we saw very strong growth in our business, and very strong booking growth as well. So very nice performance for analytical instruments in Q2.

Matthew Larew: Okay. Great. And then China was up low single digits and it has obviously been down for some time. But Marc, you've been in China in March, and I know you left more positive, just would be curious if you could dig a little bit to what you've seen there and how much you think maybe you've kind of been a turning or inflection point for that geography.

Marc Casper: Yes. So when I think about China, as a reminder, it's about 7.5% of our revenue. It grew in the low single digits, great to return to growth in the business, really driven by a blend of pharma and biotech and industrial and applied markets. So those were both very strong. Academic and Government within China remains quite muted, not different than what we've seen, but not improving either. And -- so what we're doing is capitalizing on where the money is. And it's nice to see the team deliver growth, and that obviously helped contribute to our overall growth in the overall performance of the company.

I'll be spending more time again in China in the second half of the year. I'm looking forward to that and spending a lot of time with customers, some government relations topics as well. And continue to stay close to what's going on there. But team is doing a good job, and I feel good about that progressing a little bit better, but still not it's not accretive to our organic growth as a company yet, but we're taking the steps to put ourselves in a good position.

Daniel Arias: Marc, you called out Chemical Analysis is doing well. That's been one of the areas that people have just had some concern broadly across the space. Can you maybe just touch on that, what's doing well? And then how do you feel about the macro sensitive parts of the business at this point? Obviously, still choppy out there globally.

Marc Casper: Yes. So Dan, thanks for the question. I have got a Chemical Analysis question a long time so it makes it happy. It's to have a good quarter in the business. It's not a huge business, but we have some really key technologies. The two drivers of the growth were I would say the higher commodity prices, you saw that in the demand for industrial customers that are commodity sensitive. So that was good. And we also saw an increase in demand for safety and security applications as well given the amount of conflict going on in the world, not surprised that's picked up. For us, it's largely radiation and explosive detection, and we saw good demand there.

So market conditions are getting better, and the team is doing a good job.

Daniel Arias: Okay. And then maybe back on Pharma Services, Patheon specifically. Is it right to say that the stronger back half also includes some sequential strengthening each quarter just based on the booking timing? I mean it sounded like 4Q could end up being the strongest quarter of the year just given the way that revenues are expected to fall. I just want to make sure that, that's the right assumption.

James Meyer: Yes, Dan, I wouldn't reach that assumption. We've been saying all along the second half steps up versus the first half. First half was low single-digit growth, and then it steps up meaningfully in the second half. It's all aligned to production schedules and with customer campaigns. -- but it doesn't necessarily imply that this fourth quarter grows over the third quarter.

Daniel Brennan: Congrats on the quarter. Maybe just on the bioproduction business. You've had a few really good organic growth quarters there from the [ Qs ], which we could see you're growing above market and peers. So just any color about where that above-market growth is coming from. And obviously, your largest peer saw some customer delays. I'm wondering did you see any delays at all this quarter or anything expected in the back half?

Marc Casper: Dan, thanks for the question. The business had a really strong quarter. It's performing well. It's a very well-positioned business, right? And we have differentiated set of capabilities that span the upstream and downstream workflow. And as a reminder, we're a leader in cell [indiscernible] for media and single-use technologies. We have a growing position in purification and obviously through the acquisition of Solventum filtration and separation business, we have a nice position in filtration as well. So when I think about the quarter, we had good strength in our business, and the team did a good job broadly across. While it doesn't show up in our organic growth in the quarter, filtration and separation business is doing very well.

And demand has been strong, and we're actually increasing capacity, which will bode well for the future of that business. So broad-based very good, and we're looking forward to our competitive position and doing a great job for our customers and serving that market.

Daniel Brennan: Great. Maybe I'll just stick on pharma. Just kind of large pharma. Could you just zoom out a little bit, Marc? I mean, there's been so much noise the past few years with [ IRA, MFN ], lease shoring now AI. Can you just kind of speak maybe just broadly across your business, kind of what you saw in the quarter maybe versus first craft? Are things changing there? Is the tone getting better? Like did you update a guy leave room for upside potentially depending upon what the trends are there?

Marc Casper: A good multipart question, Dan. So what I would say is when I think about large pharma, I interact with these executives regularly and I was thinking I said breakfast yesterday with one of our key customers. And just there's a lot of excitement about our pipelines, right? And the discussion is about what's the strategy to help them accelerate their innovation? How do they do it productively, why are we investing, where we're investing, how do they can deploy our capabilities to help them? Our trusted partner status, I mean, it sounds cool, but the reality is that's how we work with these customers every single day to help them be successful. And there's quite a positive tone.

For those customers that have larger exclusivity cliffs that come up, they're really working their pipeline, and we're helping them with that. So it's really quite an encouraging time. They have their arms around the macro, right, in terms of things like the [ IRA and MFNs ] and tariffs and these different factors. And we've said for a while that our customers felt like they were going to navigate that successfully. And I think they feel very good about what the outlook is. And so it's an exciting time in serving that customer base.

Patrick Donnelly: Marc, maybe one for you. You touched a little bit on the academic government market, but I wanted to drill in a bit. How would you characterize where we are in that cycle? It sounds like things have improved at least a little bit. What are you seeing and how those customer conversations are evolving? Is it certain areas of instrumentation more than others? I would love to dive into that [indiscernible] piece a bit more?

Marc Casper: Sure. So let me start at a high level, and then I'll click down a little bit, right? So Patrick, when I think about it, we had low single-digit growth in the quarter. So it was nice to have a positive quarter, really driven most significantly by chromatography and mass spectrometry. And the launches of products over the last year, we saw a strong adoption globally for those products. So very important set of research tools. And as you know, if you're an academic restructure, if you don't have the best tools, then effectively, it's very hard to have the cutting-edge publications and breakthrough research because another scientist elsewhere has a better tool.

So you've seen money deployed in that area. From a geographic perspective, we actually had a very strong quarter in Europe. U.S. return to growth. China, as I mentioned on the timing commentary, was more muted environment, not relative to the past, but kind of at the same level. And when I think about the second half, we're not calling a new trend based on Q2. We were encouraged by it. but we'd like to see the activity continue to be more broad-based before we say that, that one is behind us. There's good support in the government. I spend enough time with Congress to know that in the U.S. around supporting academic research is very good support for that.

So I feel good about the market stabilizing. And I think our customers are getting their arms around. It's less about the headlines, and it is actually about funding flow and the funding flow is improving. So I feel good about the slow stabilization of that end market.

Patrick Donnelly: Okay. That's helpful. And then maybe just a follow-up on [ PPD ]. It sounds like things are trending pretty well there. Can you just talk about, I guess, the visibility given the recent bookings, how you're thinking about the second half improvement there? And are you starting to see that early stage biotech pick up? Obviously, something has been healthier for a good stretch here. It would seem to be lagging in terms of when it shows up for the group overall. Are you starting to see any signals that, that piece could pick up and just the [ PPD ] visibility overall?

Marc Casper: So harder for me to comment on the group overall. We've seen biotech activity pick up for a few quarters now actually in our authorization. So that's actually been strong for us. And there's -- for simplicity, a 6-month lag or so from authorizations to revenue, and it varies a little bit. But -- so that's picked up authorizations have been strong for a while now in the business. And actually, the business is performing as we expected, and that's a good thing. We expected this to have a really good year in clinical research and that's actually playing out that way. So that's very encouraging.

And there'll be a lot of excitement around the [ Clario ] capabilities of our endpoint data business and that's gone well in the first full quarter of ownership. And there's a lot of customer interest in that because whether you're using our CRO or anybody else as CRO, it's really a great set of capabilities that can enable great clinical research. So a good time for that business.

Rafael Tejada: Operator, we'll take one more question.

Luke Sergott: I just want to kind of touch back on the bioprocessing piece. So I mean, like the -- especially given what we've seen from the larger peers right now on the downstream side and issues with resins and pushouts. I know that you guys are have a bunch of launches coming up. You're underappreciated there on the downstream side. Can you just talk about what the competitive dynamic looks like? Any early wins or increased interest on some of the newer portfolio you have on that side?

Marc Casper: Yes. There are a number of fine players in the bioproduction space. The bioproduction space is a great space, right? It's a key enabling technology, especially moving more towards single-use for the pharmaceutical and biotech industry. And we play a key role. We've launched a number of innovative technologies, whether it's our [ DynaDrive ] single-use bioreactors, which is getting more and more standardized across the CDMO landscape. That's a super important indicator because it basically says that it drives efficient production of medicines, right?

It's also being adopted in the innovative pharmaceutical companies, but CDMOs that they make all their money, including our own on how well you run your operations, [ DynaDrive ] is quickly becoming the favorite technology, and that bodes well for the follow-on consumables for that comes from that as well. So that's gone well. And our resin business is doing well, right? It's a smaller business. It's won a lot of new molecules over time. And we're doing well there. That's another area where technology has driven differentiation. And from a filtration perspective, kind of a different strategy.

Legacy [ 3M ] business was always well respected as a very good technology business, but our commercial reach to this customer base and the relationships that we have has been allowing for a lot of trials of the technology. Effectively, customers want to see it. They're aware of it, but now they're interested because they -- our customers know us as a really reliable supplier, and we'll help them enable their success. So let me wrap up the call. First, I'd like to thank everyone for participating today, and we're pleased to deliver an outstanding quarter.

We're on track to deliver a strong year as we continue to create value for our stakeholders and build an even brighter future for our company. We look forward to updating you as the year progresses. And as always, thank you for your support of Thermo Fisher Scientific. Have a good day, everyone.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.