Thermo Fisher Scientific (TMO -3.10%) has turned what seemed like a horrible year into a very good one. Its shares were down 25% year to date at one point in late March. However, the company rebounded strongly and is now up 27% so far in 2020.
That momentum was put to the test when Thermo Fisher announced its second-quarter results before the market opened on Wednesday. And the healthcare company passed that test with flying colors. Here are the highlights from its Q2 update.
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By the numbers
Thermo Fisher Scientific announced Q2 revenue of $6.92 billion, a 10% increase from the $6.32 billion reported in the same quarter of the previous year. This result also easily topped the average analyst's revenue estimate of $6.13 billion.
The company generated net income in the second quarter of $1.16 billion, or $2.90 per share, based on generally accepted accounting principles (GAAP). This marked a solid improvement from GAAP earnings of $1.12 billion, or $2.77 per share, recorded in the prior-year period.
Thermo Fisher also reported adjusted net income in Q2 of $3.89 per share, up nearly 28%, compared to adjusted earnings of $3.04 per share in the second quarter of 2019. The adjusted-earnings result trounced the consensus Wall Street estimate of $2.84 per share.
Behind the numbers
There was one primary factor behind Thermo Fisher's Q2 success -- COVID-19. The company said that it generated around $1.3 billion in revenue related to the COVID-19 pandemic.
Thermo Fisher's life sciences solutions segment was its biggest winner in the quarter. Revenue for the segment soared 52% year over year to $2.6 billion. Adjusted operating margin for the segment also increased significantly, up from 35.6% in the prior-year period to 47.4% in the second quarter of 2020.
Two other business segments delivered more modest growth. The specialty diagnostics segment revenue rose to $0.99 billion in Q2 from $0.94 billion in the prior-year period. The laboratory products and services segment revenue increased to $2.79 billion from $2.63 billion in the same quarter of 2019.
The company's analytical instruments segment ranked as its worst-performing unit. Revenue for the segment fell more than 20% year over year to $1.05 billion.
Looking ahead
Thermo Fisher Scientific didn't provide any guidance for full-year 2020 or for the third quarter with its Q2 results. However, it's likely that COVID-19 will continue to be the primary growth driver for the healthcare stock throughout the rest of the year.
The company won a multiyear contract with the U.S. Biomedical Advanced Research and Development Authority (BARDA) to provide pharma services in support of accelerated vaccine development and production. It's marketing a polymerase chain reaction (PCR) test for diagnosing COVID-19 after receiving Food and Drug Administration emergency-use authorization.
CEO Marc Casper said that Thermo Fisher is now "a global leader in COVID-19 testing." He added that the company continues to develop "new products and capabilities across our businesses that will position us well for years to come."
