Thermo Fisher Scientific Inc. (NYSE: TMO), the world leader in serving science, today reported its financial results for the fourth quarter and full year ended December 31, 2020.

Fourth Quarter and Full Year 2020 Highlights

• Fourth quarter revenue grew 54% to $10.55 billion.
• Fourth quarter GAAP diluted earnings per share (EPS) increased 151% to $6.24.
• Fourth quarter adjusted EPS increased 100% to $7.09.
• Full year revenue grew 26% to $32.22 billion.
• Full year GAAP diluted EPS increased 74% to $15.96.
• Full year adjusted EPS increased 58% to $19.55.
• Led the industry in supporting our customers and enabling the societal response to the pandemic, delivering exceptional results while significantly strengthening the long-term growth trajectory of the company.
• Achieved very strong growth in the fourth quarter, generating $3.2 billion of COVID-19 response revenue and accelerating growth momentum in the base business.
• Delivered an extraordinary year of high-impact innovation, establishing leadership in COVID-19 testing — highlighted by the Applied Biosystems TaqPath COVID-19 Combo Kit and Amplitude Solution for high-throughput PCR-based testing — while continuing to strengthen our leading offerings in electron microscopy, mass spectrometry, biosciences and bioproduction. During the quarter, we launched the Thermo Scientific Tundra cryo-transmission electron microscope to further democratize this ground-breaking technology.
• Continued to build on our industry-leading scale in high-growth and emerging markets during the year, adding single-use bioproduction manufacturing in Suzhou, China, and opening new commercial centers to support our materials science customers in China and South Korea. In the quarter, we announced the formation of a joint venture to establish a biological drug development and manufacturing facility in Hangzhou, China.

• Significantly increased capital expenditures during the year, investing $1.5 billion to support near- and long-term growth opportunities across our businesses. In the quarter, we announced plans to manufacture plasmid DNA for cell and gene therapies in Carlsbad, California, and to expand our bioproduction cell culture media site in Grand Island, New York.
• Advanced our environmental, social and governance priorities, highlighted by commitments to our Foundation for Science, which supports STEM education in underserved communities, and the Just Project, to help enable the safe return of students and faculty at historically black colleges and universities.
• Continued to successfully execute our capital deployment strategy, returning $1.8 billion of capital to shareholders in 2020 through stock buybacks and dividends. We also entered into a strategic partnership with CSL to expand our biologics capacity and acquired Phitonex to enhance our flow cytometry offering for cell analysis. Shortly after year end, we acquired Novasep's European viral vector business and agreed to acquire Mesa Biotech to enhance our PCR-based diagnostics offering with rapid point-of-care testing.

Adjusted EPS, adjusted operating income, adjusted operating margin and free cash flow are non-GAAP measures that exclude certain items detailed later in this press release under the heading "Use of Non-GAAP Financial Measures."

"Our team executed extremely well and operated with speed at scale to help our customers and governments around the world respond to the pandemic and continue to advance their important work," said Marc N. Casper, chairman, president and chief executive officer of Thermo Fisher Scientific. "I am proud that we delivered the strongest year of performance in our company's history. From a financial perspective, we generated exceptional growth in revenue, earnings and free cash flow for the quarter and the year."

Casper added, "Our performance in 2020 showcased our proven strategy in action, our commitment to our customers' success and our ability to lead in a changing environment. We are continuing to significantly invest in talent, capabilities and infrastructure to build on the value we've created and ensure an even brighter future."

Fourth Quarter 2020

Revenue for the quarter grew 54% to $10.55 billion in 2020, versus $6.83 billion in 2019. Organic revenue growth was 51% and currency translation increased revenue by 3%.

GAAP Earnings Results

GAAP diluted EPS in the fourth quarter of 2020 increased 151% to $6.24, versus $2.49 in the same quarter last year. GAAP operating income for the fourth quarter of 2020 grew to $3.07 billion, compared with $1.23 billion in the year-ago quarter. GAAP operating margin increased to 29.1%, compared with 18.0% in the fourth quarter of 2019.

Non-GAAP Earnings Results

Adjusted EPS in the fourth quarter of 2020 increased 100% to $7.09, versus $3.55 in the fourth quarter of 2019. Adjusted operating income for the fourth quarter of 2020 grew 107% compared with the year-ago quarter. Adjusted operating margin increased to 33.3%, compared with 24.9% in the fourth quarter of 2019.

Full Year 2020

Revenue for the full year grew 26% to $32.22 billion in 2020, versus $25.54 billion in 2019. Organic revenue growth was 25% and currency translation increased revenue by 1%.

GAAP Earnings Results

GAAP diluted EPS for the full year increased 74% to $15.96, versus $9.17 in 2019. GAAP operating income for 2020 grew to $7.79 billion, compared with $4.59 billion a year ago. GAAP operating margin increased to 24.2% in 2020, compared with 18.0% in 2019.

Non-GAAP Earnings Results

Adjusted EPS for the full year rose 58% to $19.55, versus $12.35 in 2019. Adjusted operating income for 2020 grew 60% compared with 2019, and adjusted operating margin increased to 29.7%, compared with 23.4% a year ago.

Annual Guidance for 2021

The company will provide 2021 financial guidance during its earnings conference call this morning at 8:30 a.m. Eastern time.

Segment Results

Management uses adjusted operating results to monitor and evaluate performance of the company's four business segments, as highlighted below. Since these results are used for this purpose, they are also considered to be prepared in accordance with GAAP.

Life Sciences Solutions Segment

In the fourth quarter of 2020, Life Sciences Solutions Segment revenue grew 138% to $4.37 billion, compared with revenue of $1.84 billion in the fourth quarter of 2019. Segment adjusted operating margin increased to 53.1%, versus 37.5% in the 2019 quarter.

For the full year 2020, Life Sciences Solutions Segment revenue grew 77% to $12.17 billion, compared with revenue of $6.86 billion in 2019. Segment adjusted operating margin increased to 50.2% in 2020, compared with 35.7% a year ago.

Analytical Instruments Segment

Analytical Instruments Segment revenue grew 8% to $1.64 billion in the fourth quarter of 2020, compared with revenue of $1.52 billion in the fourth quarter of 2019. Segment adjusted operating margin was 20.2%, versus 26.0% in the 2019 quarter.

For the full year 2020, Analytical Instruments Segment revenue was $5.12 billion, compared with revenue of $5.52 billion in 2019. Segment adjusted operating margin was 15.8%, versus 23.1% in 2019.

Specialty Diagnostics Segment

Specialty Diagnostics Segment revenue grew 109% to $1.97 billion in the fourth quarter of 2020, compared with revenue of $0.94 billion in the fourth quarter of 2019. Segment adjusted operating margin was 26.4%, versus 23.7% in the 2019 quarter.

For the full year 2020, Specialty Diagnostics Segment revenue grew 44% to $5.34 billion, compared with revenue of $3.72 billion in 2019. Segment adjusted operating margin was 25.6%, versus 2019 results of 25.0%.

Laboratory Products and Services Segment

In the fourth quarter of 2020, Laboratory Products and Services Segment revenue grew 28% to $3.62 billion, compared with revenue of $2.83 billion in the fourth quarter of 2019. Segment adjusted operating margin was 9.4%, versus 13.8% in the 2019 quarter.

For the full year 2020, Laboratory Products and Services Segment revenue grew 16% to $12.24 billion, compared with revenue of $10.60 billion in 2019. Segment adjusted operating margin was 10.4%, versus 2019 results of 12.5%.

Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including adjusted EPS, adjusted operating income and adjusted operating margin, which exclude certain acquisition-related costs, such as charges for the sale of inventories revalued at the date of acquisition and significant transaction costs; restructuring and other costs/income; and amortization of acquisition-related intangible assets. Adjusted EPS also excludes certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, the impact of significant tax audits or events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods. We also use a non-GAAP measure, free cash flow, which is operating cash flow, excluding net capital expenditures to provide a view of the continuing operations' ability to generate cash for use in acquisitions and other investing and financing activities. We believe that the use of non-GAAP measures helps investors to gain a better understanding of our core operating results and future prospects, consistent with how management measures and forecasts the company's performance, especially when comparing such results to previous periods or forecasts.

For example:

We exclude costs and tax effects associated with restructuring activities, such as reducing overhead and consolidating facilities. We believe that the costs related to these restructuring activities are not indicative of our normal operating costs.

We exclude certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition and significant transaction costs. We exclude these costs because we do not believe they are indicative of our normal operating costs.

We exclude the expense and tax effects associated with the amortization of acquisition-related intangible assets because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have lives of 3 to 20 years. Based on acquisitions closed through the end of the fourth quarter of 2020, adjusted EPS for the full year 2021 will exclude approximately $3.12 of expense for the amortization of acquisition-related intangible assets. Exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both our newly acquired and long-held businesses and with both acquisitive and non-acquisitive peer companies.

We also exclude certain gains/losses and related tax effects, the impact of significant tax audits or events (such as changes in deferred taxes from enacted tax rate changes or the estimated initial impacts of U.S. tax reform legislation), which are either isolated or cannot be expected to occur again with any predictability and that we believe are not indicative of our normal operating gains and losses. For example, we exclude gains/losses from items such as the sale of a business or real estate, gains or losses on significant litigation-related matters, gains on curtailments of pension plans, the early retirement of debt and discontinued operations.

We also report free cash flow, which is operating cash flow, excluding net capital expenditures to provide a view of the continuing operations' ability to generate cash for use in acquisitions and other investing and financing activities.

Thermo Fisher's management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring the company's core operating performance and comparing such performance to that of prior periods and to the performance of our competitors. Such measures are also used by management in their financial and operating decision-making and for compensation purposes.

The non-GAAP financial measures of Thermo Fisher's results of operations and cash flows included in this press release are not meant to be considered superior to or a substitute for Thermo Fisher's results of operations prepared in accordance with GAAP. Reconciliations of such non-GAAP financial measures to the most directly comparable GAAP financial measures are set forth in the accompanying tables. Thermo Fisher does not provide GAAP financial measures on a forward-looking basis because we are unable to predict with reasonable certainty, and without unreasonable effort, items such as the timing and amount of future restructuring actions and acquisition-related charges as well as gains or losses from sales of real estate and businesses, the early retirement of debt and the outcome of legal proceedings. The timing and amount of these items are uncertain and could be material to Thermo Fisher's results computed in accordance with GAAP.

About Thermo Fisher Scientific

Thermo Fisher Scientific Inc. is the world leader in serving science, with annual revenue exceeding $30 billion. Our Mission is to enable our customers to make the world healthier, cleaner and safer. Whether our customers are accelerating life sciences research, solving complex analytical challenges, improving patient diagnostics and therapies or increasing productivity in their laboratories, we are here to support them. Our global team of more than 80,000 colleagues delivers an unrivaled combination of innovative technologies, purchasing convenience and pharmaceutical services through our industry-leading brands, including Thermo Scientific, Applied Biosystems, Invitrogen, Fisher Scientific, Unity Lab Services and Patheon. For more information, please visit www.thermofisher.com.