Dan Brennan

Dan Brennan asked for further elaboration on the onshoring announcements, specifically how to quantify the incremental demand from CapEx, capacity, and drug volumes, distinguishing between greenfield and brownfield projects. He sought to understand the potential sizing and magnitude of this impact for Thermo Fisher, including equipment uptake in 2026.

Answer

Marc Casper (Chairman, President and CEO) clarified that onshoring generates incremental one-time demand for new equipment, initial stocking, and labs over the next few years, even if overall drug volumes remain constant. He highlighted Thermo Fisher's stronger current presence, particularly in bioproduction, Solventum filtration, and DynaSpin bioreactor technology, which positions them for a higher share in new facilities compared to existing ones. Mr. Casper noted that while he couldn't provide an aggregate number, it should be a tailwind for bioproduction, which is already performing exceptionally well with strong bookings. Stephen Williamson (SVP and CFO) addressed the EPS impact of tariffs, stating that Q3 saw an $0.11 favorable pickup from tariffs and related FX compared to prior guidance. For Q4, he expects tariff assumptions to hold, with no significant pickup, given the increased tariffs between the U.S. and Europe since the last guidance.

Dan Brennan asked about the bioprocessing equipment side, specifically how Cytiva's built-up capacity and the trend of reshoring/onshoring might impact demand over the next few years, including potential benefits for capital demand and recurring revenue in late 2026/2027. He also inquired about the 2026 guide for the life science segment, particularly the assumption of flat growth, and whether this is a conservative estimate for instruments versus genomics.

Answer

Rainer Blair (President and CEO) explained that equipment demand is driven by manufacturing growth and regionalization of capacity (reshoring). He expects continued investment, starting with brownfield projects for quicker capacity, followed by larger greenfield investments over several years, potentially leading to an extended capital cycle. Policy changes and tariff/MFN discussions have been an overhang but are dissipating, providing more confidence. For life sciences, Matt McGrew (EVP and CFO) confirmed the flat growth assumption for 2026. Rainer Blair added that clinical/applied markets are solid, pharma R&D is modestly recovering, but academic/government demand (low single-digit exposure) is soft. He expects some headwinds from large customers in life science consumables to lap, leading to modest growth next year, but for planning, flat growth is prudent until order trends confirm upside.

Dan Brennan asked for a broader perspective on the bioprocessing equipment side, specifically how Cytiva's built-up capacity and the trend of reshoring might impact demand over the next few years, distinguishing between incremental demand and regional shifts, and potential benefits for Danaher in late 2026 into 2027. He also sought further details on the 2026 life science guide, which assumes flat growth, asking for a breakdown between instruments and genomics, and what would be needed to achieve even zero growth, questioning if this outlook is conservative.

Answer

Rainer Blair, President and CEO, explained that equipment demand is driven by manufacturing growth and regionalization of supply chains (reshoring). While policy discussions have delayed investments, confidence is growing as overhangs dissipate. He expects initial brownfield investments to quickly add capacity, followed by larger greenfield projects, potentially leading to an extended capital cycle, though this has not yet translated into orders. Regarding life sciences, Mr. Blair noted that clinical and applied markets remain solid, and pharma research spending shows modest recovery. The academic and government segments, which are a smaller exposure, are currently anchoring growth. He also mentioned that life science consumables are lapping headwinds from large customers. Matt McGrew, Executive Vice President and CFO, confirmed the flat growth assumption for life sciences in 2026, consistent with recent performance, but acknowledged potential upside if order trends improve.

Dan Brennan (via an unknown analyst on the line) asked for more detail on the accelerated tissue growth, including doctor adoption rates for the combined portfolio, pricing opportunities for GPS, and the reasons for slower growth in liquid-based tests.

Answer

CEO Michael McGarrity explained that tissue growth is driven by both a 'push' from pathology partners and successful penetration within large urology practices, leading to 'sticky', compliant adoption without expanding the sales force. On pricing, he noted the focus is on both advancing ASPs and reducing COGS through scale and efficiency. Regarding liquid tests, McGarrity described the slower growth as a tactical decision to focus sales incentives on the higher-margin, higher-growth tissue-based portfolio, which is performing as planned.

An analyst on behalf of Dan Brennan asked for more detail on other potential cost-saving levers the company could pull if the challenging environment were to persist.

Answer

CFO Adam Taich reiterated the over $50 million in 2025 OpEx savings already actioned, split between headcount and discretionary spending. He noted that there is more that can be done, particularly in discretionary areas, and emphasized the company's commitment to remaining nimble to protect its balance sheet. CEO Serge Saxonov added that the company will be agile while navigating the environment.

Asked for details on the recent ACOG bulletin, the process and potential timelines for guideline inclusion, progress with Medicaid opportunities, and confirmation of the Medicaid pilot program target.

Answer

The ACOG bulletin supports risk stratification, which aligns with Sera's strategy. Guideline updates could happen in a normal 2-4 year cycle, be accelerated, or be delayed. The company is excited about Medicaid engagement in states where preterm birth is a priority, as the test can help meet quality metrics and reduce costs. The target of 2-4 Medicaid pilots in the next year was confirmed.

Dan Brennan asked about commercial payer feedback on the new markers, the size of the RA market opportunity, the strategy for volume growth in 2025, and the outlook for operating expense leverage.

Answer

John Aballi stated that payer feedback is positive, with denials mostly related to out-of-network status, which they can appeal effectively. He sized the addressable market at ~2.5 million annual tests and expects volume growth to improve to high single-digits with an expansion of the sales force. Jeff Black added that significant OpEx leverage and scaling are expected in the second half of 2025.

Speaking for Dan Brennan, an analyst from TD Cowen asked for the drivers behind the company's confidence that Hereditary Cancer testing volumes can accelerate to low-double-digit growth, given that recent trends have been closer to mid-single-digits.

Answer

An executive explained that the overall Hereditary Cancer number has been partially dragged down by the BRACAnalysis CDx business, while the core MyRisk test is seeing stronger growth. President and CEO Paul Diaz added that the company has strategically focused on profitable revenue over pure volume, and expects share shifts from recent competitor disruptions to accelerate in 2025, boosting MyRisk adoption.

Representing Dan Brennan, Thomas Stevens asked about the growth outlook for NGS given a modest deceleration, and also inquired about the surprising strength of the base clinical business and the apparent lack of cannibalization.

Answer

CEO Chris Smith and CCO Warren Stone expressed confidence in the NGS runway, citing under-penetration in community oncology and the upcoming PanTracer liquid biopsy launch. Regarding the base business, Warren Stone explained that while some cannibalization occurs, it is more than offset by strong commercial execution, particularly a significantly improved customer retention rate which stabilizes the business.

Asked for an update on the G4X services and instrument funnel, the commercial launch timeline for 2025, the expected timing for first publications, and the key differentiators of the G4X platform against potential competition.

Answer

The company has a deep funnel for both services and early access instruments. The commercial launch is targeted for Q2 2025, following an early access program in late 2024. Publications are expected later in the year. The platform's differentiation comes from a combination of proprietary chemistry optimized for tissue, a fast and flexible instrument design, and a strong IP portfolio.