Executive Summary

Q1 2025 revenue was $10.36B (+0% YoY, +1% organic) and adjusted EPS was $5.15 (+1% YoY); GAAP EPS grew 15% to $3.98, supported by strong productivity and disciplined execution amid a more uncertain macro environment .
Results modestly beat Wall Street: adjusted EPS $5.15 vs consensus ~$5.10* and revenue $10.36B vs consensus ~$10.23B*; management also cited an internal “clean beat” driven by operations (+$0.09), partly offset by FX (-$0.05) .
Full-year 2025 guidance updated: revenue $43.3–$44.2B (midpoint unchanged), adjusted EPS $21.76–$22.84 (midpoint lowered by $1), organic growth 1–3%, adjusted operating margin 22.0–22.6% due to tariff and policy impacts, partly mitigated by pricing and supply chain actions .
Capital deployment remained robust: entered agreement to acquire Solventum’s Purification & Filtration business for ~$4.1B, repurchased $2.0B of shares, and increased the dividend by 10% (later declaring $0.43 per share) — potential medium-term catalysts from portfolio expansion and U.S. manufacturing investments ($2B over four years) .

What Went Well and What Went Wrong

What Went Well

Operational execution delivered an internal “clean beat” on adjusted EPS and organic revenue (~$100M or +1%); adjusted EPS +$0.04 vs prior internal assumption, driven by strong operations (+$0.09), partially offset by FX (-$0.05) .
High-impact innovation pipeline and commercial wins: launched the AI-enabled Vulcan Automated Lab for semiconductor analysis, Olink Reveal proteomics kits, and energy-saving centrifuges; “We delivered very strong performance in the first quarter…” — Marc Casper .
Segment breadth supported resilience: Specialty Diagnostics grew ~3–4% with stable 26.5% margin, while Analytical Instruments grew 2–3% led by electron microscopy; LPS had good growth in Pharma Services and channel despite pandemic run-off .

What Went Wrong

Macro/tariffs and policy changes drove guidance cuts: EPS midpoint -$1 vs January, with ~$400M revenue headwind from U.S.-China tariffs and ~$150M OI impact from U.S. policy changes (including NIH/clinical trials) .
Free cash flow fell to $373M vs $908M YoY on working capital timing; GAAP operating cash flow was $723M vs $1.251B YoY .
China declined mid-single digits; academic/government end market softened in the U.S.; $200M of vaccine-related clinical studies were cancelled/paused, reducing CRO revenue visibility near term .

Financial Results

Consolidated Performance vs Prior Periods and Estimates

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Billions)	$10.60	$11.395	$10.364
GAAP Diluted EPS ($)	$4.25	$4.78	$3.98
Adjusted EPS ($)	$5.28	$6.10	$5.15
GAAP Operating Margin (%)	17.3%	17.7%	16.6%
Adjusted Operating Margin (%)	22.3%	23.9%	21.9%
Adjusted Gross Margin (%)	41.8%	43.2%	41.7%
Organic Revenue Growth (%)	0%	4%	1%
Consensus Revenue ($USD Billions)	—	—	$10.234*
Consensus Adjusted EPS ($)	—	—	$5.10*

Notes: Consensus values marked with * are from S&P Global. Values retrieved from S&P Global.

Segment Revenue and Margins

Segment ($USD Millions)	Q3 2024 Revenue	Q4 2024 Revenue	Q1 2025 Revenue	Q3 2024 Segment Margin	Q4 2024 Segment Margin	Q1 2025 Segment Margin
Life Sciences Solutions	$2,387	$2,604	$2,341	35.4%	36.6%	35.6%
Analytical Instruments	$1,808	$2,186	$1,718	24.9%	30.5%	23.2%
Specialty Diagnostics	$1,129	$1,157	$1,148	25.9%	23.6%	26.5%
Lab Products & Biopharma Services	$5,740	$5,936	$5,640	13.5%	14.0%	13.0%
Eliminations	($467)	($487)	($482)	—	—	—
Total	$10,598	$11,395	$10,364	—	—	—

KPIs

KPI	Q3 2024	Q4 2024	Q1 2025
Operating Cash Flow ($USD Millions)	$2,167	$3,289	$723
Free Cash Flow ($USD Millions)	$1,915	$2,826	$373
Capital Expenditures ($USD Millions)	$271	$480	$362
Cash & Short-term Investments ($USD Millions)	$6,645	$5,570	$5,947
Total Debt ($USD Millions)	$35,313	$31,275	$34,189

Note: Total debt in Q1 2025 reflects long-term obligations plus short-term obligations/current maturities .

Guidance Changes

Metric	Period	Previous Guidance (Jan 30, 2025)	Current Guidance (Apr 23, 2025)	Change
Revenue ($USD Billions)	FY 2025	$43.5–$44.0	$43.3–$44.2	Maintained midpoint
Organic Growth (%)	FY 2025	3–4	1–3	Lowered
Adjusted Operating Margin (%)	FY 2025	~90 bps expansion (to ~23.5)	22.0–22.6 (tariff headwind -120 bps)	Lowered
Adjusted EPS ($)	FY 2025	$23.10–$23.50	$21.76–$22.84	Lowered
Net Interest Expense ($USD Millions)	FY 2025	~350	~330	Improved
Adjusted Tax Rate (%)	FY 2025	11.5	10.5	Lowered
Free Cash Flow ($USD Billions)	FY 2025	$7.0–$7.4	$7.0–$7.4	Maintained
Net Capex ($USD Billions)	FY 2025	$1.4–$1.7	$1.4–$1.7	Maintained
Share Buybacks ($USD Billions)	FY 2025	$2 (completed in Jan)	$2 (completed in Jan)	Maintained
Dividend	FY 2025	+10% increase noted	Declared $0.43/share (May)	Maintained/increased

Management also guided Q2 organic growth similar to Q1 and adjusted EPS $0.05–$0.10 above Q1 . Guidance excludes impact from the pending Solventum transaction .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
AI/Technology Initiatives	Emphasis on Orbitrap Astral, Stellar MS, Iliad STEM; GenAI embedded in PPI system	Launched AI-enabled Vulcan Automated Lab; continued advanced MS/LC innovation; Olink Reveal kits	Strengthening innovation cadence
Supply Chain/PPI	PPI driving productivity, quality; streamlined instrument manufacturing; inventory optimization	PPI leveraged to mitigate tariffs, manage cost base, accelerate share gains	Intensified execution focus
Tariffs/Macro	January guide assumed modest policy changes; watch FX and export controls	Explicit tariff/policy impact embedded; EPS midpoint -$1; mitigation actions underway	Increased uncertainty, proactive mitigation
Product Performance	Electron microscopy and chromatography strong; LSS bioproduction orders improving	Electron microscopy strong; Specialty Diagnostics growth; LPS offsetting pandemic runoff with services/channel	Mixed; core strength persists
Regional Trends	China muted; stimulus expected 2025; Q4 China mid-single-digit growth	Q1 China declined mid-single digits; guidance assumes muted conditions; stimulus a potential tailwind	Near-term soft; medium-term opportunity
Regulatory/Policy	IRA reprioritization; NIH/academic stability uncertain	U.S. academic/government purchases more muted; vaccine trial cancellations ($200M)	Headwinds
R&D/Clinical	Accelerator Drug Development introduced (integrated CRO+CDMO)	Strong biotech authorizations; Accelerator driving wins; vaccine trials paused	Positive momentum ex-vaccine

Management Commentary

“We delivered very strong performance in the first quarter in a more uncertain macroeconomic environment, and I’m incredibly proud of our team's execution.” — Marc Casper, CEO .
“Organic revenue growth was approximately $100 million or 1% ahead, and adjusted EPS was $0.04 ahead… a clean beat for the quarter.” — Stephen Williamson, CFO .
“Our updated guidance range… reflects the expected impact of recent changes in the macroeconomic environment… tariffs between U.S. and China… net headwind to adjusted operating income of $375M versus prior guide.” — Stephen Williamson, CFO .
“We will invest an additional $2 billion in the United States over the next four years… ensuring life-saving medicines and therapies will continue to be developed and produced in America.” — Marc Casper, CEO .

Q&A Highlights

Guidance methodology and scenario analysis: management widened ranges to reflect policy/tariff uncertainty; upside from reduced U.S.-China tariff impact and improved biotech funding; downside if tariffs/macro worsen .
Manufacturing flexibility/mitigation: scale manufacturing and twin factories across geographies enable swift supply chain reconfiguration; competitive advantage under tariff regimes .
Pricing: appropriate, measured pricing actions to offset inflation/tariff costs; net pricing moving from ~1% to close to ~2% for 2025 .
Clinical research: $200M in vaccine studies cancelled/paused; otherwise normal activity with strong biotech authorizations; Accelerator program differentiates with faster, cost-effective development .
Phasing: Q2 organic growth similar to Q1; adjusted EPS $0.05–$0.10 higher than Q1 .

Estimates Context

Q1 2025 consensus: adjusted EPS ~$5.10* (22 estimates) vs actual $5.15; revenue ~$10.234B* (20 estimates) vs actual $10.364B — modest beats in both metrics. Values retrieved from S&P Global.
Given EPS/margin guidance reset, Street estimates for FY 2025 EPS likely need to adjust downward toward $21.76–$22.84, with margin compression relative to the prior ~23.5% trajectory due to tariff-related FX and cost headwinds .

Key Takeaways for Investors

Near-term earnings reset driven by tariffs/policy, not operational weakness; mitigation actions and pricing should limit EPS impact in 2025 and largely normalize by 2026 .
Segments show resilience: Diagnostics steady margins; Instruments bolstered by EM and LC/MS launches; LPS benefits from Pharma Services and channel strength even as vaccine/therapy runoff fades .
Watch Q2: management sees adjusted EPS up $0.05–$0.10 QoQ; similar organic growth to Q1; monitor FX and tariff execution cadence .
Strategic catalysts: Solventum filtration acquisition broadens bioprocessing; U.S. $2B investment expands manufacturing/R&D footprint; both enhance medium-term growth and margin potential .
China is a swing factor: Q1 decline mid-single digits; 2025 stimulus could aid instrument demand; company’s scale in-country positions it to capture recovery .
Capital deployment remains shareholder-friendly: $2B buybacks completed; dividend increased and subsequently declared at $0.43/share; FCF guide maintained at $7.0–$7.4B .
Narrative for the stock: execution quality intact; temporary margin compression from externalities; innovation and integrated CRO/CDMO strategy (Accelerator) support medium-term reacceleration and share gains .

Footnote: Consensus values marked with * are from S&P Global. Values retrieved from S&P Global.

THERMO FISHER SCIENTIFIC INC. (TMO)·Q1 2025 Earnings Summary