Thermo Fisher Scientific Inc.

05/01/2026 | Press release | Distributed by Public on 05/01/2026 09:01

Quarterly Report for Quarter Ending March 28, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
This Management's Discussion and Analysis of Financial Condition and Results of Operations contains "forward-looking statements", within the meaning of the Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, and are often identified by words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "should," or similar expressions or words with similar meanings. Any statements contained herein that are not statements of historical fact should be considered forward-looking statements.
Forward-looking statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations include, among others, statements regarding:
•financial expectations, including projections of revenues, expenses, margins, earnings, cash flows, liquidity, capital allocation plans, and tax matters;
•operational matters, including business strategies, productivity initiatives, restructuring activities, cost-reduction programs, and new product or service developments;
•market and competitive conditions, including customer demand trends, industry dynamics, pricing, and competitive positioning;
•strategic actions, including planned acquisitions, divestitures, investments, and partnerships;
•legal, regulatory, macroeconomic, geopolitical, public health, supply chain, technology, and cybersecurity developments and their potential impacts on the company; and
•the timing and outcomes of any of the foregoing.
Each forward-looking statement contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations is inherently uncertain and involves significant risks, assumptions, and factors that could cause actual results to differ materially from those expressed or implied. Important risks and uncertainties that could cause such differences are detailed under the caption "Risk Factors" in the company's Annual Report on Form 10-K for the year ended December 31, 2025, which is on file with the Securities and Exchange Commission (SEC).
Forward-looking statements in this Management's Discussion and Analysis of Financial Condition and Results of Operations speak only as of the dates on which they are made. While the company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, in the event of new information, future developments, or otherwise, except as required by law.
The company refers to various amounts or measures not prepared in accordance with generally accepted accounting principles (non-GAAP measures). These non-GAAP measures are further described and reconciled to their most directly comparable amount or measure under the section "Non-GAAP Measures" later in this "Management's Discussion and Analysis of Financial Condition and Results of Operations."
Certain amounts and percentages reported within this Quarterly Report on Form 10-Q are presented and calculated based on underlying unrounded amounts. As a result, the sum of components may not equal corresponding totals due to rounding.
Overview
Thermo Fisher Scientific Inc. enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, increase laboratory productivity, and improve patient health through diagnostics and the development and manufacture of life-changing therapies. Markets served include pharmaceutical and biotech, academic and government, industrial and applied, as well as healthcare and diagnostics. The company's operations fall into four segments (Note 11): Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics, and Laboratory Products and Biopharma Services.
Consolidated Results
Three months ended
March 28, March 29,
(Dollars in millions except per share amounts) 2026 2025 Change
Revenues
$ 11,005 $ 10,364 6 %
GAAP operating income 1,863 1,716 9 %
GAAP operating income margin 16.9 % 16.6 % 0.3 pt
Adjusted operating income (non-GAAP measure)
2,399 2,269 6 %
Adjusted operating income margin (non-GAAP measure)
21.8 % 21.9 % (0.1) pt
GAAP diluted earnings per share attributable to Thermo Fisher Scientific Inc. 4.43 3.98 11 %
Adjusted earnings per share (non-GAAP measure)
5.44 5.15 6 %
THERMO FISHER SCIENTIFIC INC.
Organic Revenue Growth
Three months ended
March 28, 2026
Revenue growth 6 %
Impact of acquisitions 3 %
Impact of currency translation 2 %
Organic revenue growth (non-GAAP measure)
1 %
During the first three months of 2026, revenue growth was strong in the pharma and biotech market, with performance driven by strengthening underlying market conditions. Revenues in the academic and government market declined, driven by muted macro conditions in the U.S. and China. Revenue to customers in the industrial and applied market was flat. Revenue to customers in the diagnostics and healthcare market declined. During the first three months of 2026, sales grew slightly in North America and were flat in Europe and Asia-Pacific, with China declining slightly. The first quarter of 2026 was also impacted by one fewer selling day than the first quarter of 2025. Contributions to organic revenue during the first three months of 2026 were led by the Laboratory Products and Biopharma Services segment and, to a lesser extent, the Life Sciences Solutions segment, offset in part by declines in the Analytical Instruments and Specialty Diagnostics segments.
The company continues to execute its proven growth strategy which consists of three pillars:
•High-impact innovation,
•Our trusted partner status with customers, and
•Our unparalleled commercial engine.
GAAP operating income margin and adjusted operating income margin decreased in the first quarter of 2026 due primarily to unfavorable business mix, strategic investments, and the impact of tariffs and related foreign currency effects, largely offset by very strong productivity improvements. The aforementioned decrease in GAAP operating income margin in the first quarter of 2026 was more than offset by lower levels of restructuring and other charges incurred for headcount reductions and facility consolidations in an effort to streamline operations (Note 6).
The company's references to strategic investments generally refer to targeted spending for enhancing commercial capabilities, including expansion of geographic sales reach and e-commerce platforms, marketing initiatives, expanded service and operational infrastructure, research and development projects and other expenditures to enhance the customer experience, as well as incentive compensation and recognition for employees. The company's references throughout this discussion to productivity improvements generally refer to the impact of its Practical Process Improvement (PPI) Business System to address inflation, drive cost efficiencies and improve profitability. The benefits of PPI include optimized price realization, reduced costs resulting from implementing continuous improvement methodologies, global sourcing initiatives, a lower cost structure following restructuring actions including headcount reductions and consolidation of facilities, and low cost region manufacturing.
Notable Recent Acquisitions
On March 24, 2026, the company acquired, within the Laboratory Products and Biopharma Services segment, Clario Holdings, Inc., a U.S.-based leading provider of endpoint data solutions for clinical trials. The acquisition expands the segment's portfolio with the addition of highly complementary clinical research offerings, enabling customers to gain critical insights from patient data to improve decision-making, accelerate innovation and drive greater productivity.
On September 1, 2025, the company acquired, within the Life Sciences Solutions segment, our filtration and separation business, a leading provider of purification and filtration technologies used in the production of biologics as well as in medical technologies and industrial applications, from Solventum Corporation. The business strengthens the segment's bioproduction offerings with advanced filtration technologies that improve quality and efficiency across upstream and downstream workflows. In addition, its industrial filtration and membrane solutions will expand our reach into industries including battery, semiconductor and medical device manufacturing.
Segment Results
The company's management evaluates segment operating performance using operating income before certain charges/credits as defined in Note 11 to the Consolidated Financial Statements of the company's Annual Report on Form 10-K for 2025. Accordingly, the following segment data are reported on this basis.
THERMO FISHER SCIENTIFIC INC.
Three months ended
(Dollars in millions) March 28, 2026 March 29, 2025
Revenues
Life Sciences Solutions
$ 2,636 $ 2,341
Analytical Instruments
1,716 1,718
Specialty Diagnostics
1,142 1,148
Laboratory Products and Biopharma Services
6,036 5,640
Eliminations
(524) (482)
Consolidated revenues
$ 11,005 $ 10,364
Life Sciences Solutions
Three months ended
Organic (non-GAAP measure)
(Dollars in millions) March 28,
2026 		March 29,
2025 		Total
Change 		Acquisitions/ Divestitures Currency
Translation
Revenues $ 2,636 $ 2,341 13 % 9 % 3 % 1 %
Segment income 954 834 14 %
Segment income margin 36.2 % 35.6 % 0.6 pt
The increase in organic revenues in the first quarter of 2026 was primarily driven by the bioproduction business. On a reported basis, the bioproduction business grew $222 million, which contributed 9 percentage points of reported growth in the segment, driven by higher demand from pharma and biotech customers, as well as the impact from the 2025 acquisition of the filtration and separation business. The increase in segment income margin resulted primarily from exceptionally strong productivity improvements, offset in part by unfavorable business mix, and the impact from the acquisition of the filtration and separation business.
Analytical Instruments
Three months ended
Organic (non-GAAP measure)
(Dollars in millions) March 28,
2026 		March 29,
2025 		Total
Change 		Acquisitions/ Divestitures Currency
Translation
Revenues $ 1,716 $ 1,718 0 % 0 % 2 % (2) %
Segment income 355 399 (11) %
Segment income margin 20.7 % 23.2 % (2.5) pt
The decrease in organic revenues in the first quarter of 2026 was driven by muted demand for instruments from academic and government customers in the U.S. and China. On a reported basis, the electron microscopy business declined $27 million, largely offset by $26 million of growth in the chromatography and mass spectrometry business. The decrease in segment income margin was driven by the impacts of tariffs and related foreign exchange, unfavorable business mix, and lower volume, partially offset by productivity improvements.
Specialty Diagnostics
Three months ended
Organic (non-GAAP measure)
(Dollars in millions) March 28,
2026 		March 29,
2025 		Total
Change 		Acquisitions/ Divestitures Currency
Translation
Revenues $ 1,142 $ 1,148 (1) % 0 % 3 % (3) %
Segment income 313 304 3 %
Segment income margin 27.4 % 26.5 % 0.9 pt
The decrease in organic revenues in the first quarter of 2026 was driven by the impact of one fewer selling day in the current year quarter, and strong performance in the prior year quarter. On a reported basis, the healthcare market channel declined $43 million, partially offset by growth across the diagnostics businesses. The increase in segment income margin was driven by strong productivity and favorable impacts of foreign exchange, offset in part by unfavorable volume leverage.
THERMO FISHER SCIENTIFIC INC.
Laboratory Products and Biopharma Services
Three months ended
Organic (non-GAAP measure)
(Dollars in millions) March 28,
2026 		March 29,
2025 		Total
Change 		Acquisitions/ Divestitures Currency
Translation
Revenues $ 6,036 $ 5,640 7 % 1 % 2 % 4 %
Segment income 778 731 6 %
Segment income margin 12.9 % 13.0 % (0.1) pt
The increase in organic revenues in the first quarter of 2026 was primarily due to strong growth in the clinical research business and the research and safety market channel. On a reported basis, the clinical research business, pharma services business, and the research and safety market channel grew $189 million, $134 million, and $100 million, respectively, which contributed 3 percentage points, 2 percentage points, and 2 percentage points, respectively, of reported growth in the segment. The decrease in segment income margin was driven by unfavorable business mix, strategic investments and unfavorable impacts of foreign exchange, largely offset by very strong productivity improvements.
Non-operating Items
Three months ended
March 28, March 29,
(Dollars and shares in millions) 2026 2025
Net interest expense
$ 121 $ 100
GAAP other income/(expense) (9) 3
Adjusted other income/(expense) (non-GAAP measure)
(8) 2
GAAP tax rate 4.0 % 5.8 %
Adjusted tax rate (non-GAAP measure)
10.5 % 10.0 %
Weighted average diluted shares 373 379
Net interest expense (interest expense less interest income) in the first three months of 2026 increased due primarily to the increase in debt for general corporate purposes and the company's capital deployment initiatives, which included financing stock buybacks, paying dividends, and acquiring Clario (Note 12), partially offset by higher average cash, cash equivalents and short-term investments balances when compared to the first three months of 2025. In the first three months of 2026 and 2025, the company's net interest expense was reduced by approximately $96 million and $67 million, respectively, as a result of its interest rate swap and cross-currency interest rate swap arrangements (Note 10).
GAAP other income/(expense) and adjusted other income/(expense) includes currency transaction gains/losses on non-operating monetary assets and liabilities, and net periodic pension benefit cost/income, excluding the service cost component. GAAP other income/(expense) in the first three months of 2026 and 2025 also includes $(1) million and $1 million, respectively, of net gains/(losses) on investments.
The company's GAAP and adjusted tax rates in the first quarter of 2026 and 2025 were impacted by $175 million and $125 million, respectively, of deferred tax benefits from the recognition of a tax attribute related to domestication transactions (Note 7).
The effective tax rates in both 2026 and 2025 were also affected by relatively significant earnings in lower tax jurisdictions. Due primarily to the non-deductibility of intangible asset amortization for tax purposes, the company's cash payments for income taxes are higher than its income tax expense for financial reporting purposes and are expected to total approximately $1.5 billion in 2026.
The company expects its GAAP effective tax rate in 2026 will be between 9% and 11% based on currently forecasted rates of profitability in the countries in which the company conducts business and generates foreign tax credits. The effective tax rate can vary significantly from period to period as a result of discrete income tax factors and events. The company expects its adjusted tax rate will be approximately 11.5% in 2026.
The company has operations and a taxable presence in approximately 70 countries outside the U.S. Some of these countries have lower tax rates than the U.S. The company's ability to obtain a benefit from lower tax rates outside the U.S. is dependent on its relative levels of income in countries outside the U.S. and on the statutory tax rates in those countries. Based on the dispersion of the company's non-U.S. income tax provision among many countries, the company believes that a change in the statutory tax rate in any individual country is not likely to materially affect the company's income tax provision or net income.
Weighted average diluted shares decreased in 2026 compared to 2025, primarily due to share repurchases, net of option dilution.
THERMO FISHER SCIENTIFIC INC.
Liquidity and Capital Resources
The company's proven growth strategy has enabled it to generate free cash flow as well as access the capital markets. The company deploys its capital primarily via mergers and acquisitions and secondarily via share buybacks and dividends.
(In millions) March 28, 2026 December 31, 2025
Cash and cash equivalents $ 3,254 $ 9,852
Short-term investments 2 253
Total debt 43,161 39,384
Approximately half of the company's cash balances and cash flows from operations are generated outside the U.S. The company uses its non-U.S. cash for needs outside of the U.S., including acquisitions, capacity expansion, and repayment of third-party foreign debt by foreign subsidiaries. In addition, the company also transfers cash to the U.S. using non-taxable intercompany transactions, including loans and returns of capital, as well as dividends where the related U.S. dividend received deduction or foreign tax credit equals any tax cost arising from the dividends. As a result of using such means of transferring cash to the U.S., the company does not expect any material adverse liquidity effects from its significant non-U.S. cash balances for the foreseeable future.
The company believes that its existing cash and cash equivalents and its future cash flow from operations together with available borrowing capacity under its revolving credit agreement will be sufficient to meet the cash requirements of its existing businesses for the foreseeable future, including at least the next 24 months.
As of March 28, 2026, the company's short-term obligations and current maturities of long-term obligations totaled $3.09 billion. During the first quarter of 2026, the company amended its revolving credit facility with a bank group that provides up to $5.00 billion of unsecured multi-currency revolving credit to extend the expiration date by one year to January 7, 2028 (Note 3). If the company borrows under this facility, it intends to leave undrawn an amount equivalent to outstanding commercial paper to provide a source of funds in the event that commercial paper markets are not available. As of March 28, 2026, no borrowings were outstanding under the company's revolving credit facility.
Three months ended
(In millions) March 28, 2026 March 29, 2025
Net cash provided by operating activities
$ 1,192 $ 723
Net cash used in investing activities
(8,961) (527)
Net cash provided by (used in) financing activities
1,093 (102)
Free cash flow (non-GAAP measure)
825 373
Operating Activities
During the first three months of 2026, cash provided by income was offset in part by investments in working capital. Changes in other assets and liabilities used cash of $0.45 billion primarily due to the timing of payments for compensation and income taxes. Cash payments for income taxes were $0.35 billion during the first three months of 2026.
During the first three months of 2025, cash provided by income was offset in part by investments in working capital. Changes in other assets and liabilities used cash of $1.19 billion primarily due to the timing of payments for compensation and income taxes. Cash payments for income taxes were $0.65 billion during the first three months of 2025.
Investing Activities
During the first three months of 2026, acquisitions used cash of $8.87 billion. The company's investing activities also included purchases of $0.38 billion for the purchase of property, plant and equipment for capacity and capability investments.
During the first three months of 2025 the company's investing activities included purchases of $0.36 billion for the purchase of property, plant and equipment for capacity and capability investments.
The company expects that for all of 2026, expenditures for property, plant and equipment, net of disposals, will be between $1.9 billion and $2.1 billion.
Financing Activities
During the first three months of 2026, issuance of debt and net commercial paper activity provided $5.63 billion of cash. Repayment of debt used cash of $1.41 billion. The company's financing activities also included the repurchase of $3.00 billion of the company's common stock (4.9 million shares), and the payment of $0.16 billion in cash dividends. On November 6, 2025, the Board of Directors authorized the repurchase of up to $5.00 billion of the company's common stock. All of the shares of common stock repurchased by the company during the first three months of 2026 were under this program. At May 1, 2026, $2.00 billion was available for future repurchases of the company's common stock under this authorization.
THERMO FISHER SCIENTIFIC INC.
During the first three months of 2025, issuance of debt provided $2.84 billion of cash. Repayment of senior notes used cash of $0.84 billion. The company's financing activities also included the repurchase of $2.00 billion of the company's common stock (3.6 million shares) and the payment of $0.15 billion in cash dividends.
The company's commitments for purchases of property, plant and equipment, contractual obligations and other commercial commitments, did not change materially subsequent to December 31, 2025, except in connection with the completion of the Clario acquisition, which occurred on March 24, 2026 (Note 12).
Non-GAAP Measures
In addition to the financial measures prepared in accordance with GAAP, we use certain non-GAAP financial measures such as organic revenue growth, which is reported revenue growth, excluding the impacts of revenues from acquired/divested businesses and the effects of currency translation. We report organic revenue growth because Thermo Fisher management believes that in order to understand the company's short-term and long-term financial trends, investors may wish to consider the impact of acquisitions/divestitures and foreign currency translation on revenues. Thermo Fisher management uses organic revenue growth to forecast and evaluate the operational performance of the company as well as to compare revenues of current periods to prior periods.
We report adjusted operating income, adjusted operating income margin, adjusted other income/(expense), adjusted tax rate, and adjusted EPS. We believe that the use of these non-GAAP financial measures, in addition to GAAP financial measures, helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company's core operating performance, especially when comparing such results to previous periods, forecasts, and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making and for compensation purposes. To calculate these measures we exclude, as applicable:
•Certain transaction-related costs, including charges for the sale of inventories revalued at the date of acquisition, significant transaction-related third-party costs, changes in estimates of contingent acquisition-related consideration, and other costs associated with obtaining short-term financing commitments for pending/recent acquisitions. We exclude these costs because we do not believe they are indicative of our normal operating costs.
•Costs/income associated with restructuring activities and large-scale abandonments of product lines, such as reducing overhead and consolidating facilities. We exclude these costs because we believe that the costs related to restructuring activities and large-scale abandonment of product lines are not indicative of our normal operating costs.
•Equity in earnings/losses of unconsolidated entities; impairments of long-lived assets; and certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, including gains/losses on investments, the sale of businesses, product lines, and real estate, significant litigation-related matters, curtailments/settlements of pension plans, and the early retirement of debt. We exclude these items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.
•The expense associated with the amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of up to 20 years. Exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.
•The noncontrolling interest and tax impacts of the above items and the impact of significant tax audits or events (such as changes in deferred taxes from enacted tax rate/law changes), the latter of which we exclude because they are outside of our normal operations and difficult to forecast accurately for future periods.
We report free cash flow, which is operating cash flow less net capital expenditures, to provide a view of the continuing operations' ability to generate cash for use in acquisitions and other investing and financing activities. The company also uses this measure as an indication of the strength of the company. Free cash flow is not a measure of cash available for discretionary expenditures since we have certain non-discretionary obligations such as debt service that are not deducted from the measure.
The non-GAAP financial measures of the company's results of operations and cash flows included in this Form 10-Q are not meant to be considered superior to or a substitute for the company's results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth within the "Consolidated Results" and "Segment Results" sections and below.
THERMO FISHER SCIENTIFIC INC.
Three months ended
March 28, March 29,
(Dollars in millions except per share amounts) 2026 2025
Reconciliation of adjusted operating income
GAAP operating income
$ 1,863 $ 1,716
Cost of revenues adjustments (a)
14 11
Selling, general and administrative expenses adjustments (b)
43 14
Restructuring and other costs (c)
49 98
Amortization of acquisition-related intangible assets 430 429
Adjusted operating income (non-GAAP measure)
$ 2,399 $ 2,269
Reconciliation of adjusted operating income margin
GAAP operating income margin 16.9 % 16.6 %
Cost of revenues adjustments (a) 0.1 % 0.1 %
Selling, general and administrative expenses adjustments (b) 0.4 % 0.1 %
Restructuring and other costs (c) 0.4 % 1.0 %
Amortization of acquisition-related intangible assets 3.9 % 4.1 %
Adjusted operating income margin (non-GAAP measure)
21.8 % 21.9 %
Reconciliation of adjusted other income/(expense)
GAAP other income/(expense) $ (9) $ 3
Adjustments (d) 1 (1)
Adjusted other income/(expense) (non-GAAP measure)
$ (8) $ 2
Reconciliation of adjusted tax rate
GAAP tax rate 4.0 % 5.8 %
Adjustments (e) 6.5 % 4.2 %
Adjusted tax rate (non-GAAP measure)
10.5 % 10.0 %
Reconciliation of adjusted earnings per share
GAAP diluted earnings per share (EPS) attributable to Thermo Fisher Scientific Inc. $ 4.43 $ 3.98
Cost of revenues adjustments (a) 0.04 0.03
Selling, general and administrative expenses adjustments (b) 0.12 0.04
Restructuring and other costs (c) 0.13 0.26
Amortization of acquisition-related intangible assets 1.15 1.13
Other income/expense adjustments (d) 0.00 0.00
Income taxes adjustments (e) (0.45) (0.32)
Equity in earnings/losses of unconsolidated entities 0.02 0.04
Adjusted EPS (non-GAAP measure)
$ 5.44 $ 5.15
Reconciliation of free cash flow
GAAP net cash provided by operating activities $ 1,192 $ 723
Purchases of property, plant and equipment (376) (362)
Proceeds from sale of property, plant and equipment 9 12
Free cash flow (non-GAAP measure)
$ 825 $ 373
(a)Adjusted results exclude accelerated depreciation on manufacturing assets to be abandoned due to facility consolidations and charges/(credits) for the sale of inventory revalued at the date of acquisition. Adjusted results in 2026 also exclude $3 million of transaction-related costs.
(b)Adjusted results exclude certain third-party expenses, principally transaction/integration costs, and charges/credits for changes in estimates of contingent acquisition consideration. Adjusted results in 2026 also exclude $2 million of accelerated depreciation on fixed assets to be abandoned due to facility consolidations.
(c)Adjusted results exclude restructuring and other costs consisting principally of severance, impairments of long-lived assets, net charges/credits for pre-acquisition litigation and other matters, net gains/losses on the sale of real estate, and abandoned facility and other expenses of headcount reductions and real estate consolidations.
(d)Adjusted results exclude net gains/losses on investments.
(e)Adjusted results exclude incremental tax impacts for the reconciling items between GAAP and adjusted net income, incremental tax impacts as a result of tax rate/law changes, and the tax impacts from audit settlements.
THERMO FISHER SCIENTIFIC INC.
Critical Accounting Policies and Estimates
Management's Discussion and Analysis and Note 1 to the Consolidated Financial Statements of the company's Annual Report on Form 10-K for 2025 describe the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no significant changes in the company's critical accounting policies during the first three months of 2026.
Recent Accounting Pronouncements
A description of recently issued accounting standards is included under the heading "Recent Accounting Pronouncements" in Note 1.
Thermo Fisher Scientific Inc. published this content on May 01, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 01, 2026 at 15:01 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]