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THERMO FISHER SCIENTIFIC INC. (TMO)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 revenue was $11.12B (+5% YoY; +2% QoQ) and adjusted EPS was $5.79 (+10% YoY), both above S&P Global consensus; GAAP EPS was $4.27, roughly flat YoY . Q2 2025 revenue was $10.85B and adjusted EPS $5.36; Q1 2025 revenue $10.36B and adjusted EPS $5.15 .
  • Management raised FY25 guidance: revenue to $44.1–$44.5B (from $43.6–$44.2B), adjusted EPS to $22.60–$22.86 (from $22.22–$22.84), and adjusted operating margin to 22.7–22.8% (from 22.5–22.7%) .
  • Beat drivers: $0.20 EPS from strong operational execution and $0.11 EPS from lower-than-expected tariffs/related FX impact; partially offset by ~$0.01 dilution from recent acquisitions .
  • Strategic catalysts: OpenAI collaboration to embed AI across clinical research and operations; acquisitions (Solventum Filtration & Separation; Sanofi Ridgefield sterile fill-finish) and $1.0B buyback support mid-term earnings growth and capital efficiency .

What Went Well and What Went Wrong

What Went Well

  • Adjusted operating margin expanded 100 bps YoY to 23.3%, with adjusted operating income +9% to $2.59B, reflecting strong productivity via the PPI Business System .
  • Segment momentum: Life Sciences Solutions revenue +8% and margin +200 bps to 37.4%; Specialty Diagnostics margin +130 bps to 27.4%; Lab Products & Biopharma Services margin +100 bps to 14.5% .
  • Management quote: “We’re raising our revenue guidance to $44.1–$44.5B and adjusted EPS to $22.60–$22.86,” underscoring confidence in execution and outlook .

What Went Wrong

  • Analytical Instruments margin down 230 bps YoY to 22.6%, pressured by tariffs/related FX and mix, despite sequential improvement vs Q2 .
  • Diagnostics & Healthcare remained down low-single digits due to China weakness; China declined mid-single digits overall, improving vs Q2 but still a headwind .
  • Free cash flow in Q3 decreased YoY to $1.84B (from $1.915B) on higher capex; nine-month FCF of $3.319B vs $4.498B prior year reflects timing and investment needs .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$10.60 $10.36 $10.85 $11.12
GAAP Diluted EPS ($)$4.25 $3.98 $4.28 $4.27
Adjusted EPS ($)$5.28 $5.15 $5.36 $5.79
GAAP Operating Margin (%)17.3% 16.6% 16.9% 17.4%
Adjusted Operating Margin (%)22.3% 21.9% 21.9% 23.3%
Organic Revenue Growth (%)—1% 2% 3%
Segment Revenue ($USD Billions)Q3 2024Q2 2025Q3 2025
Life Sciences Solutions$2.387 $2.499 $2.588
Analytical Instruments$1.808 $1.728 $1.893
Specialty Diagnostics$1.129 $1.134 $1.174
Lab Products & Biopharma Services$5.740 $5.995 $5.970
Eliminations$(0.467) $(0.501) $(0.503)
Consolidated$10.598 $10.855 $11.122
Segment Adjusted Operating Income ($USD Millions) and Margin (%)Q3 2024Q2 2025Q3 2025
Life Sciences Solutions$845 / 35.4% $919 / 36.8% $968 / 37.4%
Analytical Instruments$451 / 24.9% $325 / 18.8% $429 / 22.6%
Specialty Diagnostics$293 / 25.9% $306 / 27.0% $321 / 27.4%
Lab Products & Biopharma Services$773 / 13.5% $825 / 13.8% $868 / 14.5%
KPIsQ3 2024Q2 2025Q3 2025
Free Cash Flow ($USD Billions)$1.915 $1.105 $1.840
R&D Expense ($USD Millions)$346 $352 $346
Share Repurchases ($USD Billions)—$2.0 YTD by Q2 $1.0 in Q3
Cash & Short-term Investments ($USD Billions)—$6.39 (cash 4.576 + ST inv 1.814) $3.55 (cash 1.982 + ST inv 1.564)
Actuals vs S&P Global Consensus (Q3 2025)ConsensusActual
Revenue ($USD Billions)$10.91*$11.12
Adjusted/Primary EPS ($)$5.50*$5.79
# of Estimates (Revenue / EPS)17* / 20*—

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025$43.6–$44.2B $44.1–$44.5B Raised
Adjusted EPSFY 2025$22.22–$22.84 $22.60–$22.86 Raised
Adjusted Operating MarginFY 202522.5–22.7% 22.7–22.8% Raised
Organic Revenue Growth (midpoint)FY 20252% incl. ~1% pandemic runoff 2% incl. 1% pandemic runoff Maintained
Net Interest ExpenseFY 2025$360–$370M ~$440M Raised (headwind)
Adjusted Tax RateFY 202510.5% 10.5% Maintained
Net CapexFY 2025$1.4–$1.7B $1.4–$1.7B Maintained
Free Cash FlowFY 2025$7.0–$7.4B ~$7.0B Maintained to lower end
Capital Deployment (FY)FY 2025$2.0B buybacks done; ~$600M dividends $7.6B total: $4B M&A, $3B buybacks, ~$600M dividends Increased (post-deals)
FX ImpactFY 2025Rev tailwind ~$10M; EPS headwind $0.27 Rev tailwind ~$230M; EPS headwind $0.37 Larger FX tailwind/headwind
Share Count (diluted avg)FY 2025378–379M ~378M Slightly lower

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q1)Current Period (Q3)Trend
AI/technology initiativesLaunched next-gen Orbitraps (AstralZoom, Excedion Pro), Cryo-TEM; emphasized PPI and early AI integration , see launches]Strategic collaboration with OpenAI to embed AI in clinical research, product dev, service, operations; rolled out ChatGPT Enterprise Expanding AI deployment, deeper operational embedding
Supply chain/tariffs/macroTariffs headwind to margins (~140 bps) and EPS; active PPI cost actions; guidance included tariff cushion Q3 EPS beat included $0.11 benefit from lower-than-assumed tariffs/FX; FX now $230M revenue tailwind but $0.37 EPS headwind Tariff volatility persists; net FX tailwind to revenue, EPS headwind
Product performance (Analytical Instruments)Organic decline in Q2 from tariffs; bookings positive; innovation pipeline strong Electron microscopy and chromatography/mass spec led mid-single-digit growth; margin still pressured YoY but sequentially improved Sequential improvement; innovation-led demand
Regional trendsQ2: NA/EU low-single-digit growth; APAC low-single-digit decline; China high-single-digit decline Q3: NA low-single-digit; EU/APAC mid-single-digit; China mid-single-digit decline Broad stabilization; China still a drag
Clinical research (PPD)Q2: Slightly positive growth; strong authorizations; Accelerator solution traction; Tufts validation Q3: Returned to low-single-digit growth; authorizations “incredibly strong” Improving trajectory
Reshoring/U.S. manufacturingQ2: Agreement to acquire Sanofi Ridgefield sterile fill-finish site Q3: Ridgefield deal closed; expansion plans; customers planning greenfield/brownfield builds Execution underway; tailwind over 2026–2028

Management Commentary

  • Marc Casper (CEO): “We’re raising our revenue guidance to a new range of $44.1 billion to $44.5 billion and raising our adjusted EPS guidance to a range of $22.60 to $22.86 per share.”
  • Casper on AI: “With OpenAI, we’re further embedding AI across our operations, products and services… deploy OpenAI advanced capabilities to… significantly improve the cycle time of clinical trials.”
  • Casper on execution: “Our team did an outstanding job and delivered excellent operational performance… launching outstanding new products, completing complementary acquisitions, and collaborating with OpenAI.”
  • CFO Stephen Williamson: “We delivered $0.30 of adjusted EPS ahead of our prior guide… $0.11 from lower impact of tariffs/related FX, $0.20 from very strong operational performance.”

Q&A Highlights

  • Reshoring and U.S. capacity: Customers are planning new sites (tailwind over 2027–2028) and more near-term U.S. volume via pharma services; Sanofi Ridgefield adds a trained workforce and expansion capacity .
  • Academic/government funding and shutdown: Q3 U.S. conditions similar to Q2; management assumes reasonable outcomes in Q4 despite shutdown-related hesitancy .
  • Analytical Instruments drivers: Growth led by EM and chromatography/mass spec; margin pressure mostly tariffs/FX; strong innovation driving resilient demand .
  • China outlook: Q3 mid-single-digit decline, improved vs Q2; full-year expected down mid-to-high single digits; diagnostic pricing/reimbursement pressure persists .
  • Clinical research: Authorizations “well ahead” of revenue growth; Accelerator solution winning significant business and shaving time/cost in trials .

Estimates Context

  • Q3 2025 actuals beat S&P Global consensus: revenue $11.12B vs $10.91B*, and adjusted/Primary EPS $5.79 vs $5.50*; # of estimates: revenue 17*, EPS 20*. Values marked with * retrieved from S&P Global.
  • FY25 S&P Global estimates: revenue $44.26B*, EPS $22.73* vs company guidance $44.1–$44.5B and $22.60–$22.86, suggesting modest upward bias to revenue forecasts and EPS near the top half if operational momentum sustains .

Key Takeaways for Investors

  • Strong beat with quality: Broad-based segment margin expansion and PPI-driven productivity underpin a 100 bps adjusted margin expansion; guidance raised on both top and bottom lines .
  • Tariffs/FX remain a swing factor: Q3 saw favorable tariff/FX vs prior assumptions; FY25 now embeds higher net interest and larger FX EPS headwind—watch for policy developments .
  • AI is a tangible driver: The OpenAI collaboration should accelerate clinical trial cycle times and improve productivity; near-term impact is executional but strategically significant .
  • Reshoring tailwinds: Ridgefield adds U.S. fill-finish capacity; greenfield/brownfield demand likely creates incremental equipment/initial inventory orders into 2026–2028 .
  • Segment setup: Life Sciences Solutions and Specialty Diagnostics show sustained margin strength; Analytical Instruments improving sequentially with innovation-led demand .
  • Cash returns and deployment: $3B buybacks YTD and $4B deployed on M&A support EPS compounding; FCF guided ~$7B provides funding flexibility .
  • Near-term trading: Narrative anchored on execution and raised guide; watch Q4 academic/government demand, China trajectory, and tariff headlines as potential volatility drivers .