Thermo Fisher Scientific Q3 Earnings Call Highlights

Key Points

• Thermo Fisher reported a strong third quarter: Revenue rose 9% to $12.14 billion, organic growth was 6%, and adjusted EPS increased 15% to $6.68. Adjusted operating margin expanded 120 basis points to 24.5%, with strength across pharma and biotech, industrial and applied markets.
• Laboratory Products and Biopharma Services led segment performance, posting 15% reported revenue growth and 10% organic growth, while Analytical Instruments grew 6% and delivered significant margin expansion. Specialty Diagnostics declined 6% on a reported basis but benefited from transplant diagnostics.
• The company raised its 2026 outlook, now targeting $47.7 billion–$48.2 billion in revenue, adjusted EPS of $25.13–$25.43 and free cash flow of $7 billion–$7.5 billion. Management also highlighted AI investments in microscopy and clinical research as potential long-term growth drivers.

Thermo Fisher Scientific NYSE: TMO reported third-quarter revenue growth of 9% to $12.14 billion, supported by 6% organic growth, acquisitions and foreign-exchange effects. Adjusted earnings per share rose 15% to $6.68, while adjusted operating income increased 15% to $2.97 billion.

Chairman and CEO Marc Casper said improved end-market conditions seen in the second quarter continued through the third quarter, with customer activity strengthening in pharma and biotech, industrial and applied markets. The company raised its full-year 2026 revenue, earnings and free-cash-flow outlook.

Third-Quarter Results and End Markets

Thermo Fisher's adjusted operating margin expanded 120 basis points from a year earlier to 24.5%. GAAP earnings per share were $4.64, up 9% year over year.

CFO Jim Meyer said third-quarter revenue exceeded the company's prior outlook by more than $200 million, including roughly two percentage points of stronger-than-expected organic revenue growth and favorable foreign exchange. Adjusted EPS was $0.26 above previous guidance.

The quarter also included approximately $60 million of adjusted operating income, or $0.15 per share, from tariff refunds that were recovered during the period. Meyer said Thermo Fisher reinvested part of the refund proceeds in AI deployment, additional Pharma Services capacity and employee-related investments.

• Pharma and biotech: High-single-digit growth, led by Pharma Services, the research and safety market channel, and clinical research.
• Academic and government: Flat revenue, with favorable demand for chromatography and mass spectrometry offerings.
• Industrial and applied: High-single-digit growth, led by electron microscopy and the research and safety market channel.
• Diagnostics and healthcare: Low-single-digit growth, supported by transplant diagnostics.

Geographically, North America and Europe each grew at a mid-single-digit rate, while Asia-Pacific grew at a low-double-digit pace. China also posted low-double-digit growth, driven primarily by pharma and biotech as well as industrial and applied markets, Meyer said.

Segment Performance

In Life Sciences Solutions, reported revenue rose 5% and organic revenue grew 1%. Bioproduction led growth in the segment, while adjusted operating income increased 6% and adjusted operating margin reached 37.6%.

The Analytical Instruments segment generated 6% reported and organic revenue growth. Electron microscopy recorded strong growth, particularly in semiconductor applications, while chromatography and mass spectrometry also grew. Segment adjusted operating income increased 26%, and adjusted operating margin expanded 430 basis points to 26.9%.

Specialty Diagnostics reported a 6% revenue decline, while organic revenue was flat. Growth in transplant diagnostics helped offset other pressures. Adjusted operating income increased 6%, and adjusted operating margin rose 360 basis points to 31%.

Laboratory Products and Biopharma Services posted reported revenue growth of 15% and organic growth of 10%, led by Pharma Services, the research and safety market channel and clinical research. Adjusted operating income increased 23%, while adjusted operating margin rose 100 basis points to 15.5%.

Innovation, AI and Drug Development

Casper highlighted several product introductions, including the Orbitrap Isora mass spectrometer for isotope ratio analysis, the EMPAD G2 electron detector for advanced-materials characterization, the FDA-cleared EliA CTD 13 Screen for autoimmune diagnostics, and the Ion 560 Chip for the Ion GeneStudio S5 sequencing platform.

The company is also embedding AI-enabled software into its Krios 5 and Glacios 3 cryo-electron microscopes. Casper said the software can reduce manual setup time by approximately 90% while supporting higher-quality data generation for structure-based drug discovery.

In clinical research, Thermo Fisher introduced an AI-based clinical research assistant designed to connect proprietary clinical and operational data across multiple systems. Casper said the initiative is intended to allow teams to devote more attention to site engagement, risk assessment and study quality.

Casper said AI could improve drug developers' returns on investment by helping support better medicines and more efficient development processes. He added that the company's long-term 7% organic growth framework is “not the cap” on future growth, although he did not quantify a potential contribution from AI.

The company also cited progress in its Accelerator Drug Development strategy, which combines clinical research and Pharma Services capabilities. Casper said customers are seeking ways to shorten development timelines, improve trial success rates and reduce costs.

Capital Deployment and Updated Outlook

Thermo Fisher said its Clario acquisition is performing well and is building momentum for revenue synergies within its clinical-development offering. The filtration and separation business acquired a year earlier is also performing well, according to management. During the quarter, the company completed the divestiture of its microbiology business.

Year-to-date operating cash flow totaled $5.9 billion, and free cash flow was $4.6 billion after $1.2 billion of net capital expenditures. Thermo Fisher repaid approximately $1.1 billion of senior notes during the third quarter, paid $175 million in dividends and received $1 billion from the microbiology divestiture.

The company ended the quarter with $6.1 billion in cash and short-term investments and $41.4 billion in total debt.

For full-year 2026, Thermo Fisher raised its revenue outlook to $47.7 billion to $48.2 billion, representing reported growth of 7% to 8% over 2025. The company now expects 4% organic revenue growth for the year.

Adjusted EPS guidance was raised to $25.13 to $25.43, representing growth of 10% to 11%. Thermo Fisher also increased its projected free cash flow range to $7 billion to $7.5 billion and continues to expect approximately 80 basis points of adjusted operating-margin expansion for the year.

About Thermo Fisher Scientific (NYSE:TMO)

Thermo Fisher Scientific Inc is a global supplier of laboratory products, analytical instruments, reagents, consumables, software and services used in scientific research, healthcare, pharmaceuticals, biotechnology and industrial applications. The company serves customers ranging from academic institutions and government agencies to hospitals, clinical laboratories and pharmaceutical manufacturers.

Its offerings include instruments and systems for genetic analysis, mass spectrometry, chromatography, electron microscopy and materials science, as well as molecular biology reagents, cell culture products, laboratory plastics and research chemicals.

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