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Here's How Thermo Fisher Scientific Beat Wall Street Expectations in Q1

By Keith Speights – Apr 22, 2020 at 2:00PM

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The healthcare giant's COVID-19 efforts are helping it weather the storm.

Thermo Fisher Scientific (TMO -1.24%) hasn't been insulated from the impact of the coronavirus pandemic. Its shares were initially hit hard by the market sell-off caused by the COVID-19 outbreak. However, the healthcare giant has fared better than most stocks.

This outperformance could continue. Thermo Fisher Scientific announced better-than-expected first-quarter results before the market opened on Wednesday. Here are the highlights of the company's Q1 update.

Lab workers performing a test

Image source: Thermo Fisher Scientific.

By the numbers

Thermo Fisher reported first-quarter revenue of $6.23 billion. This reflected a 2% increase from the prior-year period revenue total of $6.12 billion. It also topped the consensus Wall Street Q1 revenue estimate of $6.17 billion.

The company announced Q1 net income of $788 million, or $1.97 per share, based on generally accepted accounting principles (GAAP). This represented a decrease from GAAP earnings of $815 million, or $2.02 per share, reported in the same quarter of 2019. 

Thermo Fisher's non-GAAP adjusted net income in the first quarter was $2.94 per share. This reflected a 5% year-over-year increase and beat the average analysts' estimate of adjusted earnings of $2.79 per share.

Behind the numbers

The company's life sciences solutions segment delivered the strongest performance in the first quarter. The segment's revenue jumped 10% year over year to $1.77 billion.

Thermo Fisher's biggest overall moneymaker, its laboratory products and services segment, also generated solid growth. The company reported that revenue for the segment totaled $2.73 billion in Q1, up 9% from the prior-year period.

However, the picture wasn't as rosy for Thermo Fisher's other two business segments. Analytical instruments segment revenue slipped to $1.1 billion in the first quarter from $1.32 billion in the same period last year. The company announced specialty diagnostics segment revenue of $0.96 billion, basically flat year over year.

Thermo Fisher's GAAP bottom line worsened from the prior-year period mainly due to higher income taxes. However, the company's non-GAAP earnings improved year over year thanks in large part to making adjustments related to restructuring costs.

Looking ahead

Like many companies, Thermo Fisher Scientific withdrew its previously announced full-year 2020 guidance due to uncertainties related to the COVID-19 pandemic. However, the coronavirus crisis also presents some opportunities for the company.

CEO Marc Casper noted that, "the COVID-19 pandemic has put a spotlight on the importance of the work we do at Thermo Fisher Scientific." He pointed to the company's rapid response in providing solutions for analyzing and diagnosing COVID-19.

While Thermo Fisher adapts to the changing market dynamics caused by the novel coronavirus outbreak, it's also moving forward with a major acquisition. Casper said the company is still on track to finalize its planned buyout of Qiagen in the first half of 2021.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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