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THERMO FISHER SCIENTIFIC INC. (TMO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $10.85B (+3% y/y, +5% q/q) and adjusted EPS was $5.36; both exceeded internal guidance amid tariff mitigation and cost actions .
  • Versus Wall Street: revenue beat consensus by ~$0.17B and EPS by ~$0.13; EBITDA modestly above estimates; management raised FY25 top- and bottom-line guidance; these are notable positive catalysts for the stock [Values retrieved from S&P Global]*.
  • Guidance raised: FY25 revenue to $43.6–$44.2B (midpoint +$0.12B), adjusted EPS to $22.22–$22.84 (midpoint +$0.23), and adjusted operating margin to 22.5–22.7% .
  • Execution themes: pharma/biotech strength (bioproduction, pharma services), disciplined cost management via the PPI Business System, AI-enabled process improvements, and tariff navigation; analytical instruments softness tied to academic/government demand and China headwinds .

What Went Well and What Went Wrong

What Went Well

  • Market-share gains and operational outperformance: “We delivered excellent operational performance… beating our guidance and raising our outlook for 2025” .
  • Strong end-market execution: mid-single-digit growth in pharma/biotech led by bioproduction and pharma services; clinical research turned slightly positive; transplant diagnostics strong .
  • High-impact innovation: launches of Orbitrap Astral Zoom & Excedion Pro mass spectrometers and Krios 5 Cryo-TEM; customer feedback called AstralZoom a “paradigm shift for proteomic technology” .

What Went Wrong

  • Analytical Instruments pressure: segment revenue down and margin compression (18.8%, -580 bps y/y) driven largely by tariffs and muted demand, especially in academic/government and China .
  • Gross margin headwinds: adjusted gross margin was 41.3% (-80 bps y/y) due to tariffs; partially offset by productivity improvements .
  • China and academic/government softness: APAC declined low single digits with China high-single-digit decline; academic/government mid-single-digit decline, reflecting funding uncertainty .

Financial Results

Headline P&L vs prior periods

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$10.54 $10.36 $10.85
GAAP Diluted EPS ($)$4.04 $3.98 $4.28
Adjusted EPS ($)$5.37 $5.15 $5.36
GAAP Operating Margin (%)17.3% 16.6% 16.9%
Adjusted Operating Margin (%)22.3% 21.9% 21.9%
Gross Margin (%)—41.7% 41.3%

Segment breakdown (Revenue and segment margin)

SegmentQ2 2024 Rev ($MM)Q2 2024 Margin (%)Q1 2025 Rev ($MM)Q1 2025 Margin (%)Q2 2025 Rev ($MM)Q2 2025 Margin (%)
Life Sciences Solutions$2,355 36.7% $2,341 35.6% $2,499 36.8%
Analytical Instruments$1,782 24.6% $1,718 23.2% $1,728 18.8%
Specialty Diagnostics$1,117 26.7% $1,148 26.5% $1,134 27.0%
Lab Products & Biopharma Services$5,758 12.9% $5,640 13.0% $5,995 13.8%

KPIs

KPIQ1 2025Q2 2025
Organic Revenue Growth (%)1% 2%
Adjusted Operating Income ($USD Billions)$2.269 $2.375
Free Cash Flow ($USD Billions)$0.373 $1.105
R&D Expense ($USD Millions)$342 $352
Adjusted SG&A (% of Revenue)16.5% 16.2%
Gross Margin (%)41.7% 41.3%

Results vs Wall Street consensus (Q2 2025)

MetricConsensusActualDelta
Revenue ($USD Billions)$10.68*$10.85 +$0.17*
Adjusted EPS ($)$5.23*$5.36 +$0.13*
EBITDA ($USD Billions)$2.59*$2.613*+$0.02*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$43.3–$44.2 $43.6–$44.2 Raised midpoint +$0.12B
Adjusted EPS ($)FY 2025$21.76–$22.84 $22.22–$22.84 Raised midpoint +$0.23
Adjusted Operating Margin (%)FY 202522.0–22.6 22.5–22.7 Raised range
Organic Revenue Growth (%)FY 20251–3 1–3 Maintained
Net Interest Expense ($MM)FY 2025~330 360–370 Higher
Adjusted Tax Rate (%)FY 202510.5 10.5 Maintained
Net Capex ($B)FY 20251.4–1.7 1.4–1.7 Maintained
Free Cash Flow ($B)FY 20257.0–7.4 7.0–7.4 Maintained
Dividends ($MM)FY 2025—~600 Stated
Q3 PhasingQ3 2025—Organic growth ~1 pt > Q2; EPS +$0.10–$0.15 vs Q2 New detail

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
AI/PPI Business SystemIntroduced Accelerator Drug Development; strong execution via PPI .PPI leveraged to adjust supply chains, aggressively manage costs; integrating AI to enhance service and reduce cost .Intensifying use of AI/PPI to drive productivity.
Supply chain & tariffsQ1: embedded tariff impacts in guidance; mitigation actions underway .Tariff impact lower than assumed; Q2 beat partly from tariffs easing; additional $300M cost actions in 2025 .Easing near-term impact; continued mitigation.
Product innovationQ1: Vulcan Automated Lab, Transcend UHPLC, Olink kits .Orbitrap Astral Zoom & Excedion Pro, CryoS5 TEM; strong customer reception .Sustained cadence; positive customer uptake.
Pharma/biotech demandQ1: low-single-digit growth; bioproduction strong .Mid-single-digit growth; bioproduction excellent; pharma services strong .Improving momentum.
Clinical research (PPD)Q1: vaccine study cancellations (-$200M); otherwise normal; authorizations strong .Slightly positive growth; authorizations “very strong” .Turning positive; building backlog.
Academic/government fundingQ1: low-single-digit decline; muted purchases .Mid-single-digit decline; continued funding uncertainty .Persistent headwind near term.
ChinaQ1: mid-single-digit decline; tariff headwinds baked into guide .High-single-digit decline; tariff effects improved vs guide .Still weak; some easing vs assumptions.
Reshoring/CDMOFY24: Accelerator introduced . Q1: $2B US investment plan .Acquisition of Sanofi’s Ridgefield sterile fill-finish site; expand US capacity .Structural US capacity build; tailwind developing.
Leadership—CFO retirement and named successor (effective Mar 2026) ; acknowledged on call -.Planned transition; continuity of finance leadership.

Management Commentary

  • “We’re increasing our guidance for the full year on the top and bottom line… revenue $43.6–$44.2B and adjusted EPS $22.22–$22.84” — Marc N. Casper, CEO .
  • “Q2 adjusted EPS was 13% ahead of what was included in the prior guide… 8% from lower tariff impact… 5% from strong cost management enabled by the PPI Business System” — Stephen Williamson, CFO .
  • “Customer feedback has been incredibly positive… AstralZoom a paradigm shift for proteomic technology” — CEO on product launches .
  • “We have meaningfully stepped up the action as the year has progressed, adding an additional $300 million of cost reduction since the initial guide” — CEO .

Q&A Highlights

  • Analytical Instruments outlook: bookings positive; demand most impacted by academic/government and China; tariff assumptions kept conservative for H2; potential upside if China demand improves .
  • Mid-term (2026–2027) framing: expect 3–6% organic growth with 50–70 bps annual adjusted margin expansion; longer-term 7%+ organic growth with 2–3 pts share gain .
  • Reshoring dynamics: elevated interest in US manufacturing; Sanofi Ridgefield adds third US sterile fill-finish site; faster to acquire capacity than build greenfield .
  • Clinical research: vaccine cancellations isolated; biotech authorizations strong; business returning to growth with advantages from integrated Accelerator solutions .
  • Pricing: appropriate actions to offset inflation/tariff-related costs; price moving from ~1% to closer to 2% for 2025 .

Estimates Context

  • Q2 2025 beat: revenue $10.85B vs $10.68B consensus; adjusted EPS $5.36 vs $5.23; EBITDA $2.61B vs $2.59B — modest across-the-board beats [Values retrieved from S&P Global]*.
  • H2 setup: Q3 organic growth expected ~1 point higher than Q2 and EPS $0.10–$0.15 above Q2, with potential upside if tariffs remain as currently eased .
  • FY25 raised guidance implies improved margin trajectory and stronger cost actions; consensus estimates likely to drift higher on EPS and margin assumptions .

Other Relevant Q2 2025 Press Releases

  • CFO transition: Stephen Williamson to retire March 31, 2026; Jim Meyer to become CFO effective March 1, 2026 .
  • Strategic partnership: acquisition of Sanofi’s Ridgefield, NJ sterile fill-finish site to expand US capacity for pharma/biotech customers .
  • Dividend: declared quarterly dividend of $0.43 per share, payable Oct 15, 2025 .

Key Takeaways for Investors

  • Positive inflection: revenue/EPS beats vs consensus, with raised FY25 guide and stronger cost actions; near-term catalysts include Q3 phasing and tariff upside optionality [Values retrieved from S&P Global]*.
  • Mix headwinds contained: analytical instruments softness offset by bioproduction and pharma services strength; margin preservation via PPI-driven productivity .
  • Durable growth engines: high-impact instrument launches and integrated CRO/CDMO (Accelerator) support medium-term share gains and margin expansion .
  • Reshoring tailwind: Sanofi Ridgefield acquisition adds US capacity; expect incremental demand as customers localize supply chains over the next 12–24 months .
  • Watch points: academic/government funding clarity, China demand stabilization, and tariff trajectory; management has maintained conservative assumptions for H2 and signaled potential upside .
  • Capital allocation steady: $2B buybacks already completed; dividends (~$600M) and FCF guide ($7.0–$7.4B) support ongoing returns while funding innovation and M&A (Solventum close by year-end) .

Notes:

  • All non-GAAP references (adjusted EPS, margins, organic growth, free cash flow) are defined and reconciled in company materials .
  • Segments and consolidated financials sourced from the Q2 2025 8-K and press release; Q1 2025 and Q4 2024 used for trend analysis -.
  • Consensus estimates from S&P Global; marked with asterisks.*