Thermo Fisher posts 16% yearly sales growth, 7% specialty diagnostics bump

Dive Brief:

Thermo Fisher Scientific's Specialty Diagnostics business saw 4% fourth-quarter growth and 7% full-year growth, per its 2018 earnings release Wednesday. CEO Marc Casper highlighted transplant, clinical and immuno-diagnostics as key contributors to the smallest of the company's four major segments, which posted $3.72 billion in total yearly revenue.
Earlier this week, the Waltham, Massachusetts-based company announced a definitive agreement to divest its anatomical pathology arm for $1.14 billion. Company executives reported the business has generated approximately $350 million in annual revenue for the Specialty Diagnostics segment and the net dilution to 2019 adjusted EPS will likely be about $0.10.
Thermo Fisher had overall quarterly sales of $6.51 billion, representing 8% year-over-year growth and beating a consensus analyst estimate of $6.23 billion. Total 2018 revenue for the company reached $24.36 billion, up 16% from last year.

Dive Insight:

Analytical Instruments was a particularly strong segment for Thermo Fisher this quarter, growing 11% to $1.57 billion, or 13% to $5.47 billion on the year. Across the company's portfolio, India and especially China, the company's single largest international market, stood out with double-digit growth. As it stands, Asia-Pacific accounts for just over one-fifth of Thermo Fisher's business.

In light of strong growth in 2018, some analysts questioned why the company isn't kicking off 2019 with even more bullish goals for the coming year. Casper and other executives, though optimistic, cited potential for slower GDP growth in 2019 depending on how Brexit, the U.S. trade war with China and other tariffs play out.

The company set revenue guidance for 2019 between $24.88 billion and $25.28 billion, which would represent year-over-year revenue growth of 2% to 4%, and projected 8% to 10% yearly growth in earnings per share, or a range of $12.00 to $12.20. Executives said a $50 million planned expansion to St. Louis, announced in April, would not impact revenue until 2020.

On Monday the medtech announced a definitive agreement with PHC Holdings, headquartered in Tokyo, to sell its anatomical pathology arm for $1.14 billion in cash. The business includes microscope slides, instruments and consumables and generated approximately $350 million in annual revenue as part of Thermo Fisher's specialty diagnostics segment. Thermo Fisher expects the deal to close in the second quarter of 2019.

Company officials said on Wednesday they are not considering any additional divestments in the year ahead.

Also impacting 2018 earnings were the company's acquisition of Roper's electron microscopy business Gatan, announced in June, and of BD's bioprocessing business, announced in September. The former faced a roadblock in the U.K. in December when the Competition and Markets Authority placed the deal under investigation. Separately, executives said on Wednesday's earning call they expect the Gatan deal to close in the latter half of 2019.

Thermo Fisher shares were slightly up following the call Wednesday morning.