What’s Driving the Growth in Thermo Fisher Scientific’s Segments?

Thermo Fisher Scientific (TMO) operates in four business segments.

The Life Sciences Solutions segment provides reagents, instruments, and consumables for use in biological and medical research and in the development of new drugs and vaccines. Its revenue rose from $1.4 billion in the second quarter of 2017 to $1.57 billion in the second quarter of 2018 primarily due to higher demand for bioscience products, bioprocess production products, and genetic sciences products.

The Analytical Instruments segment provides instruments, software, and services for use in laboratory applications. The segment’s revenue rose from $1.17 billion in the second quarter of 2017 to $1.31 billion in the second quarter of 2018 due to increased demand for chromatography and mass spectrometry and electron microscopy.

The Specialty Diagnostics segment provides diagnostic test kits, culture media, and related products. The segment’s revenue increased from $86.0 million in the second quarter of 2017 to $932.0 million in the second quarter of 2018. This increase came from the strong performance of the healthcare market channel and clinical diagnostic products.

The Laboratory Products and Services segment provides self-manufactured and sourced products for laboratories. The segment’s revenue rose from $1.79 billion in the second quarter of 2017 to $2.55 billion in the second quarter of 2018 primarily due to acquisition growth and the strong performance of its research and safety market channel.

So far in 2018, Thermo Fisher Scientific has acquired IntegenX for a total consideration of $65.0 million and agreed to acquire Gatan for $925.0 million. IntegenX provides a rapid DNA platform for use in forensics and applications for law enforcement. Gatan, a subsidiary of Roper Technologies, is a manufacturer of instrumentation and software used in electron microscopes. This acquisition is expected to close by the end of 2018.

In September, Thermo Fisher agreed to acquire Becton, Dickinson and Company’s (BDX) advanced bioprocessing business.

We’ll discuss Thermo Fisher Scientific’s valuation metrics and upside potential in the next article.