On July 26, 2023 Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, reported its financial results for the second quarter ended July 1, 2023 (Press release, Thermo Fisher Scientific, JUL 26, 2023, View Source [SID1234633436]).

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Second Quarter 2023 Highlights

•Second quarter revenue was $10.69 billion, 3% lower versus the same quarter last year. Core organic revenue growth was 2%.
•Second quarter GAAP diluted earnings per share (EPS) was $3.51.
•Second quarter adjusted EPS was $5.15.

•The macroeconomic environment was more challenging in the second quarter and our PPI Business System helped the company to effectively navigate the environment.

•Strong execution of our proven growth strategy, launching a range of high-impact, innovative new products, including the groundbreaking Thermo Scientific Orbitrap Astral mass spectrometer, a significant advancement in mass spectrometry offering high resolution and speed to enable the discovery of new proteins and advance precision medicine; the Thermo Scientific Metrios 6, a fully automated scanning transmission electron microscope incorporating advanced machine learning to accelerate semiconductor development; the Gibco OncoPro Tumoroid Culture Medium Kit, to accelerate development of novel cancer therapies; and the first FDA-cleared assays for risk assessment and clinical management of preeclampsia, a serious pregnancy complication.

•Further strengthened our industry-leading commercial engine and trusted partner status with the opening of a state-of-the-art customer center of excellence in Milan, allowing us to consolidate capabilities from across the company to better serve our customers and enhance productivity.

•Shortly after the quarter ended, announced a definitive agreement to acquire CorEvitas for approximately $0.9 billion. Highly complementary to our leading clinical research business, CorEvitas provides regulatory-grade, real-world evidence solutions to pharmaceutical and biotechnology companies with objective data and clinical insights to improve patient care and clinical outcomes.

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•Building on our environmental, social and governance priorities, we published our 2022 Corporate Social Responsibility Report, highlighting our actions in these areas and reflecting our commitment to society and our stakeholders.

"The macroeconomic environment became more challenging in the second quarter. Economic activity in China slowed, and across the economy more broadly, businesses became more cautious in their spend," said Marc Casper, chairman, president and chief executive officer of Thermo Fisher Scientific. "The team is leveraging our PPI Business System to effectively manage through this dynamic environment."

Casper added, "Our experienced management team has a long track record of successfully navigating and capitalizing on dynamic macro environments. We are incredibly well positioned to create value for all of our stakeholders and ensure a bright future for our company."

Second Quarter 2023

Revenue for the quarter declined 3% to $10.69 billion in 2023, versus $10.97 billion in 2022. Organic revenue was 3% lower, Core organic revenue growth was 2%, and COVID-19 testing revenue was $0.08 billion.

GAAP Earnings Results

GAAP diluted EPS in the second quarter of 2023 was $3.51, versus $4.22 in the same quarter last year. GAAP operating income for the second quarter of 2023 was $1.58 billion, compared with $2.00 billion in the year-ago quarter. GAAP operating margin was 14.8%, compared with 18.2% in the second quarter of 2022.

Non-GAAP Earnings Results

Adjusted EPS in the second quarter of 2023 was $5.15, versus $5.51 in the second quarter of 2022. Adjusted operating income for the second quarter of 2023 was $2.37 billion, compared with $2.61 billion in the year-ago quarter. Adjusted operating margin was 22.2%, compared with 23.7% in the second quarter of 2022.

Annual Guidance for 2023

Given the macroeconomic environment, Thermo Fisher is revising revenue and adjusted EPS guidance for the full year. The company now expects 2023 revenue to be a range of $43.4 to $44.0 billion, with Core organic revenue growth of 2 to 4%, and adjusted EPS of $22.28 to $22.72.

Use of Non-GAAP Financial Measures

Adjusted EPS, adjusted net income, adjusted operating income, adjusted operating margin, free cash flow, organic revenue growth and Core organic revenue growth are non-GAAP measures that exclude certain items detailed after the tables that accompany this press release, under the heading "Supplemental Information Regarding Non-GAAP Financial Measures." The reconciliations of GAAP to non-GAAP financial measures are provided in the tables that accompany this press release.