Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Thermo Fisher Scientific Inc (TMO, Financial) delivered strong financial performance in Q1 2025, with revenue of $10.36 billion and adjusted EPS growth of 1% to $5.15 per share.
- The company demonstrated excellent execution across all dimensions, translating revenue performance into earnings that exceeded expectations.
- Thermo Fisher Scientific Inc (TMO) launched several innovative products, including the Thermo Scientific Vulcan Automated Lab and the next-generation Thermo Scientific Transcend, enhancing their market leadership.
- The company continued to strengthen its commercial engine and deepen its trusted partner status with customers, which is expected to accelerate innovation and productivity.
- Thermo Fisher Scientific Inc (TMO) successfully executed its capital deployment strategy, including a $4.1 billion acquisition agreement for Solventum's Purification & Filtration business and $2 billion in share repurchases.
Negative Points
- Revenue in the Academic and Government segment declined due to macroeconomic conditions in the US and China.
- The company faced a 3% headwind from the combined impact of two fewer selling days and the runoff of pandemic-related revenue.
- Thermo Fisher Scientific Inc (TMO) updated its 2025 guidance to reflect macroeconomic uncertainties, including tariffs and US policy changes, which are expected to impact revenue and adjusted EPS.
- The company anticipates a $400 million revenue headwind due to US-China tariffs, affecting sales of US-made products in China.
- The updated guidance reflects a $500 million reduction in revenue expectations due to policy changes impacting US Academic and Government customers and clinical trials related to vaccines.
Q & A Highlights
Q: Given the uncertainty in the broader market and policy changes, how is Thermo Fisher Scientific approaching its guidance methodology?
A: Marc Casper, CEO, explained that despite the dynamic macro environment, the company had a strong start to the year. They are fully mobilized on mitigation actions and will capitalize on opportunities as they arise. The guidance reflects current conditions, and they are prepared to adjust as necessary. The upside scenario includes changes in US-China policies, while the downside involves potential tariff increases or macroeconomic impacts.
Q: How does Thermo Fisher view the long-term growth prospects of the life sciences tools market, considering potential changes in US government funding and other macro factors?
A: Marc Casper, CEO, expressed optimism about the long-term health of the industry, driven by aging populations and scientific breakthroughs. While short-term challenges exist, the fundamental drivers of growth remain strong. The company will continue to assess the situation and adjust its outlook as needed.
Q: Are there any changes in order behavior or patterns in the large biopharma end market due to tariffs?
A: Marc Casper, CEO, noted that given the short timeframe since the tariff announcements, there hasn't been significant order pull-forward. The company hasn't observed any meaningful changes in customer behavior and expects normal patterns to continue.
Q: How flexible is Thermo Fisher's manufacturing in mitigating tariff impacts, and what are the priorities for flexing manufacturing capabilities?
A: Stephen Williamson, CFO, explained that the company has a flexible manufacturing system, with scale facilities in every major geography. This allows them to move production efficiently and mitigate tariff impacts. The PPI Business System aids in executing these changes effectively.
Q: What impact do policy changes have on Thermo Fisher's guidance, particularly in the Academic and Government and Clinical Research markets?
A: Marc Casper, CEO, stated that $200 million of the guidance reduction is due to canceled or delayed vaccine studies in Clinical Research, with the remaining impact from Academic and Government markets. The company expects US Academic to be relatively soft for the rest of the year, with potential improvements based on future appropriations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
