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THERMO FISHER SCIENTIFIC INC. (TMO)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue grew 5% year over year to $11.40B, adjusted EPS rose 8% to $6.10, and adjusted operating margin expanded 50 bps to 23.9% .
  • Analytical Instruments led performance, with Q4 organic growth of 8% and margin expansion, while all end markets posted positive revenue growth in Q4 .
  • Management initiated 2025 guidance: revenue $43.5–$44.0B (3–4% organic), adjusted EPS $23.10–$23.50, and ~90 bps adjusted operating margin expansion; Q1 phasing assumes flat organic and adjusted EPS growth due to fewer selling days and service timing .
  • CFO flagged Q4 results “significantly ahead” of the midpoint of prior guide (organic growth beat by just under 2 points; adjusted EPS beat by $0.14), with strong full-year free cash flow of $7.3B .

What Went Well and What Went Wrong

What Went Well

  • Analytical Instruments delivered 8% organic growth in Q4, led by electromicroscopy and chromatography/mass spectrometry; adjusted operating margin up 170 bps year over year to 30.5% .
  • Broad-based end-market strength in Q4: pharma/biotech mid-single-digit growth (fourth consecutive sequential improvement), academic/government high single-digit growth, industrial/applied high single-digit growth, and diagnostics/health care low single-digit growth (core growth positive) .
  • Strong productivity and cost management drove adjusted operating margin expansion and adjusted gross margin improvement to 43.2% in Q4; Q4 free cash flow of $2.826B supported capital returns .
    “ We finished 2024 with excellent financial performance, delivering strong growth on the top and bottom line in the fourth quarter.” — Marc Casper, CEO .

What Went Wrong

  • Laboratory Products & Biopharma Services’ Q4 margin was flat year over year at 14%, and FY adjusted margin declined 130 bps to 13.3%, reflecting unfavorable mix and strategic investments .
  • Diagnostics & Health Care declined low single digits for the full year due to COVID testing runoff despite solid core growth; total company FY organic/core organic growth was flat .
  • 2025 headwinds include ~1% revenue drag from remaining pandemic runoff (largely in clinical research) and ~$650M (~1.5 pts) FX headwind; Q1 is guided flat organically and on adjusted EPS due to fewer selling days and services phasing .

Financial Results

Consolidated Metrics (USD)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($B)$10.541 $10.598 $11.395
GAAP Diluted EPS$4.04 $4.25 $4.78
Adjusted EPS (non-GAAP)$5.37 $5.28 $6.10
GAAP Operating Margin (%)17.3% 17.3% 17.7%
Adjusted Operating Margin (%)22.3% 22.3% 23.9%
Organic Revenue Growth (%) YoY-1% 0% 4%
Core Organic Revenue Growth (%) YoY0% 0% 5%

Notes: Adjusted results exclude items detailed in the non-GAAP reconciliations (e.g., amortization of acquisition-related intangibles, restructuring) .

Segment Breakdown – Q4 2024

SegmentRevenue ($MM)Segment Margin (%)
Life Sciences Solutions$2,604 36.6%
Analytical Instruments$2,186 30.5%
Specialty Diagnostics$1,157 23.6%
Lab Products & Biopharma Services$5,936 14.0%
Eliminations$(487) —

KPIs

KPIQ2 2024Q3 2024Q4 2024
Free Cash Flow ($MM, non-GAAP)$1,674 $1,915 $2,826
GAAP Net Cash from Ops ($MM)$1,960 $2,167 $3,289
Share Repurchases ($B)$3.0 (YTD through Q2) $3.0 (YTD through Q3) $1.0 in Q4; $4.0 FY total

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($B)FY 2025Initiated$43.5–$44.0Initiated
Organic Growth (%)FY 2025Initiated3%–4% (incl. ~1% pandemic runoff headwind)Initiated
Adjusted EPSFY 2025Initiated$23.10–$23.50Initiated
Adjusted Op Margin Expansion (bps)FY 2025Initiated~90 bpsInitiated
FX ImpactFY 2025—~$650MM revenue headwind (~1.5 pts)Headwind
Net Interest Expense ($MM)FY 2025—~350Set
Adjusted Tax RateFY 2025—~11.5%Set
Net Capex ($B)FY 2025—$1.4–$1.7Set
Free Cash Flow ($B)FY 2025—$7.0–$7.4Set
Share Repurchases ($B)FY 2025—$2 (completed in January)Set
Avg Diluted Shares (MM)FY 2025—378–379Set
Dividends ($MM)FY 2025—~600Set
Q1 2025 PhasingQ1 2025—Flat organic growth; flat adjusted EPS vs prior-year Q1Set

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
High-impact product innovationMultiple launches incl. Stellar MS; biobased film; TSX ULT freezers Iliad STEM; MagMAX; NCI myeloMATCH partnership iCAP MX ICP-MS; Dynabeads CTS enhancements; continued innovation pipeline Sustained innovation cadence increasing adoption
PPI Business System / productivityExecution and share gain emphasis Differentiated performance via PPI Productivity driving margin expansion; GenAI embedded in PPI Strengthening operational leverage
End-market conditionsSequential improvement, flat core growth Sequential improvement to flat Positive growth across all end markets in Q4 Improving through the year
China dynamicsOngoing muted environment noted broadlyImprovement muted; industry reliance on China instruments (implied)Q4 China mid-single-digit growth; stimulus aiding orders for instruments Stabilizing with stimulus tailwind
Clinical research (PPD)Network expansion; long-cycle nature Expansion of bioanalytical lab; authorizations improving Pandemic runoff headwind ~1% in 2025; strong H2’24 authorizations; Accelerator Drug Development launch Setting up for stronger growth in 2026
Regulatory/policyIRA impacts on portfolios (context)—“Modest policy changes” embedded; NIH funding uncertainty monitored; business-friendly outlook Managed conservatively in guide

Management Commentary

  • Strategy and positioning: “Our proven growth strategy continued to drive significant share gain… we are well positioned to deliver excellent financial performance [in 2025].”
  • Operational execution: “Team executed well… delivered Q4 financials significantly ahead of the midpoint of our prior guide.”
  • Innovation: Highlights across MS, EM, biosciences, bioproduction; Q4 launches include iCAP MX ICP-MS and Dynabeads CTS additions .
  • Capital deployment: Returned $4.6B to shareholders in 2024, including $1B buyback in Q4; completed Olink acquisition .
  • Guidance framing: 2025 organic growth 3–4% with ~90 bps margin expansion; FX and pandemic runoff headwinds incorporated; strong EPS growth focus .

Q&A Highlights

  • Policy changes and NIH uncertainty: Management embedded assumptions for modest policy shifts and emphasized active navigation; academic/government assumed around company average with slightly below, noting strong Q4 finish globally .
  • Margin expansion: ~90 bps operating margin expansion in 2025 driven by strong volume pull-through from prior cost actions and ongoing PPI productivity, not mix-driven .
  • Analytical Instruments and China stimulus: Q4 8% organic growth; China stimulus contributed to orders that will ship in 2025; innovation is driving share gain .
  • Clinical research phasing: Q1 headwind from pandemic runoff; strong H2’24 authorizations and positive pipeline point to better trajectory into late 2025/2026 .
  • Accelerator Drug Development: Unique combined CDMO/CRO capability accelerating drug development for customers; early momentum across biotech and large pharma .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 could not be retrieved due to SPGI daily request limits; therefore, explicit “vs. consensus” comparisons are unavailable. Values would normally be retrieved from S&P Global.
  • Management indicated Q4 performance exceeded internal guidance: organic growth beat by just under 2 points and adjusted EPS beat by $0.14 versus the midpoint of prior guidance .

Key Takeaways for Investors

  • Q4 marked a clean inflection with broad-based end-market growth, margin expansion, and stronger FCF, reinforcing operational leverage heading into 2025 .
  • Analytical Instruments’ momentum and China stimulus orders support near-term revenue trajectory; watch shipment conversion in 2025 .
  • 2025 guide embeds FX (~$650MM) and pandemic runoff (~1 pt) headwinds; despite this, management targets 6–8% adjusted EPS growth and ~90 bps margin expansion—execution is the near-term driver .
  • Lab Products & Biopharma Services margins remain the key watch point; mix and strategic investments offset productivity in Q4—monitor progression through 2025 .
  • Accelerator Drug Development (CDMO+CRO) is a structural differentiator; strong authorizations suggest medium-term growth acceleration (notably into 2026) .
  • Capital deployment remains robust: Olink integration progressing; 2025 $2B buybacks completed in January and ~$600MM dividends planned support per-share compounding .
  • Trading setup: Q1 phasing (flat organic/EPS) may be a near-term overhang; focus on sequential improvement and margin execution, Analytical Instruments strength, and visibility on clinical research pipeline conversion as catalysts .