Thermo Fisher (TMO) Q1 2026 Earnings Transcript

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Date

Thursday, Apr. 23, 2026 at 8:30 a.m. ET

Call participants

• Chairman and Chief Executive Officer — Marc N. Casper
• Senior Vice President and Chief Financial Officer — Stephen Williamson
• Vice President, Investor Relations — Rafael Tejada

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Takeaways

• Revenue -- $11.01 billion, up 6% year over year, with growth comprised of 1% organic, 3% acquisitions, and 2% favorable foreign exchange (components do not sum to total due to rounding).
• Adjusted operating income -- $2.4 billion, representing a 6% increase year over year.
• Adjusted operating margin -- 21.8%, a decline of 10 basis points versus the prior-year quarter, including 80 basis points of negative impact from tariffs and related foreign exchange.
• Adjusted EPS -- $5.44, up 6%, including $0.01 contribution from Clario and $0.13 from operational performance above previous guidance.
• GAAP EPS -- $4.43, representing 11% year-over-year growth.
• Segment revenue performance -- Life Sciences Solutions up 13% reported (1% organic); Analytical Instruments flat reported (down 2% organic); Specialty Diagnostics down 1% reported (down 3% organic); Laboratory Products and Biopharma Services up 7% reported (4% organic).
• Clario acquisition -- Closed in late March, contributed $30 million in revenue and $0.01 adjusted EPS in the first quarter; $9 billion initial purchase price, with future performance-based payments.
• Shareholder returns -- $3 billion in share buybacks executed and 10% dividend increase; total first quarter capital return to shareholders was $3.2 billion, including dividends.
• Cash flow -- $1.2 billion operating cash flow; $830 million free cash flow after $370 million in net capital expenditure.
• Leverage ratios -- 3.8x gross debt to adjusted EBITDA, 3.5x net debt to EBITDA; ending cash and equivalents at $3.3 billion, with $43.2 billion in total debt.
• Adjusted ROIC -- 11% for the quarter.
• 2026 revenue guidance -- Increased to $47.3 billion–$48.1 billion, representing 6%–8% reported growth; organic growth projected at 3%–4%, with $900 million upside reflecting Clario.
• 2026 adjusted EPS guidance -- Increased to $24.64–$25.12, an 8%–10% rise versus 2025; midpoint includes $0.32 accretion from Clario and $0.37 incremental EPS increase over prior guidance.
• Second quarter guidance highlights -- Organic revenue growth of approximately 3% expected; adjusted EPS for the second quarter projected $0.25–$0.30 higher than the first quarter.
• AI and innovation focus -- Strategic collaborations with NVIDIA and OpenAI announced, with new workflow solutions and accelerated integration of advanced analytics into product offerings.
• Operational productivity -- "very strong productivity," cited across all segments, supporting margin stability despite mix and external headwinds.

Summary

Thermo Fisher Scientific (NYSE:TMO) delivered headline financial results in line with or above original guidance, driven by robust segment performance in Life Sciences Solutions, successful integration of Clario, and effective capital allocation. Management emphasized that first quarter organic revenue was dampened by one less selling day and revenue phasing in pharma services, quantifying each as roughly a one-point drag. The company increased full-year top- and bottom-line goals, with the Clario acquisition contributing meaningful accretion to revenue and adjusted earnings per share assumptions, and set expectations for continued operational execution amid macro complexity.

• Casper stated, "We are raising our full-year revenue and adjusted EPS guidance," with underlying assumptions unchanged for organic growth and margin expansion.
• Segment analysis revealed bioproduction and clinical research as principal growth drivers, while specialty diagnostics and analytical instruments faced volume and academic/government headwinds, particularly in the U.S. and China.
• Clario integration is advancing on plan, and management characterized early client feedback as "very excited about the technology" and its utility in digitizing clinical endpoint data.
• Research and development investment remained high at $340 million, or 6.9% of manufacturing revenue, reflecting a continued focus on innovation and automation roadmaps aligned with increased AI adoption.
• Guidance for 2026 incorporates higher projected inflation but is supported by anticipatory productivity strategies and ongoing cost mitigation efforts embedded in the company’s PPI Business System.

Industry glossary

• PPI Business System: Thermo Fisher Scientific's internal operational excellence framework focused on continuous improvement, productivity, and cost discipline.
• Clario: Acquired provider of digital endpoint data solutions, contributing to Thermo Fisher Scientific's clinical research and biopharma service capabilities.
• Bioproduction: Manufacture of biological products such as vaccines, therapeutic proteins, and cell therapies at scale.
• Authorizations: Contracted but not yet delivered sales, representing signed agreements or booked clinical trial or commercial work.
• Transplant diagnostics: Testing solutions enabling compatibility analysis and monitoring for organ transplantation procedures.

Full Conference Call Transcript

Marc N. Casper, our chairman and chief executive officer, and Stephen Williamson, senior vice president and chief financial officer. Please note this call is being webcast live and will be archived on the Investors section of our website, thermofisher.com, under the heading News, Events, and Presentations, until 07/22/2026. A copy of the press release of our first quarter earnings is available in the Investors section of our website under the heading Financials. Before we begin, let me briefly cover our Safe Harbor statement. Various remarks that we may make about the company's future expectations, plans, and prospects constitute forward-looking statements within the meaning of applicable securities laws.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the company's most recent Annual Report on Form 10-K and subsequent quarterly reports on Form 10-Q under the heading Risk Factors. These forward-looking statements are based on our current expectations, and speak only as of the date they are made. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even in the event of new information, future developments, or otherwise. Also, during this call, we will be referring to certain financial measures not prepared in accordance with generally accepted accounting principles, or GAAP.

A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in the press release of our first quarter earnings and also in the Investors section of our website under the heading Financials. With that, I will now turn the call over to Marc.

Marc N. Casper: Thank you. Good morning, everyone, and thanks for joining us today for our first quarter call. As you saw in our press release, we delivered a strong start to the year. Our end markets are progressing in line with our expectations. We continue to strengthen and add to our capabilities by executing our proven growth strategy and completing the acquisition of Clario. Our progress in the quarter further advances our leadership position as the trusted partner to our customers. As you know, we are actively managing the company, leveraging our global scale and the strength of our PPI Business System to create value for our stakeholders and position our company for a very bright future.

To start, let me recap the first quarter financial results. Our revenue grew 6% to $11.01 billion. Adjusted operating income grew 6% to $2.4 billion. Q1 adjusted operating margin was 21.8%. We grew adjusted EPS by 6% to $5.44 per share. Turning to our end markets, performance played out as we expected. I will briefly cover each end market. Starting with Pharma and Biotech, we delivered mid-single-digit growth during the quarter. Performance was driven by strength in our bioproduction business, our clinical research business, and our Research and Safety Market channel. In Academic and Government, revenue declined low single digits, driven by muted macro conditions in the U.S. and China. In Industrial and Applied, growth was flat during the quarter.

Growth was led by our chromatography and mass spectrometry business, as well as the Research and Safety Market channel. Finally, in Diagnostics and Healthcare, revenue declined in the mid-single digits. We delivered another quarter of strong growth in our transplant diagnostics business. As I look ahead, we see our end markets progressing as expected in our original guidance. When I think about the broader macroeconomic environment, there is added complexity given the conflict in the Middle East, and we expect this to create some modest level of inflationary pressure. Our customers remain focused on advancing their priorities and we expect our end markets to prove resilient.

We are well positioned to navigate through this period, leveraging our experienced management team, global scale, and the strength of our PPI Business System. Let me now provide some highlights from our growth strategy this quarter. As a reminder, our growth strategy consists of three pillars: high-impact innovation, our trusted partner status with customers, and our unparalleled commercial engine. Starting with the first pillar, high-impact innovation, we had an excellent start to the year. Our innovation enables customers to advance science and improve lives around the world. During the quarter, we launched a number of new technologies across our businesses that strengthen our industry leadership and help customers break new ground in their important work.

In our Analytical Instruments business, we introduced the Thermo Scientific Glacios 3 Cryo-TEM, a next-generation cryo-transmission electron microscope that features AI-enabled workflows. What is really exciting about this launch is that it further democratizes access to cryo-EM. The robustness of the instrument allows installation in a broader range of lab spaces, bringing high-end structural biology capabilities to more customers. In mass spectrometry, we introduced the Thermo Scientific TSQ Certus triple-quad mass spectrometer. This advanced platform delivers faster, high-quality results, helping customers enhance productivity and reliability in pharmaceutical and applied markets. We also launched the Thermo Scientific Niton XL5E handheld XRF analyzer, a great addition to our handheld portfolio.

This new instrument enables industrial and applied customers to identify materials in the field, helping them drive productivity and speed decision-making. In Life Science Solutions, we launched the Gibco CTS Complio fill-and-finish system. This automated system helps address manual fill-and-finish challenges in cell therapy manufacturing, enhancing productivity and reliability while enabling scalable manufacturing. In Laboratory Products, we introduced the F1-ClipTip electronic pipette, which improves precision and efficiency in everyday lab work, helping customers generate more reliable results. Let me now cover the remaining pillars of our strategy. Our trusted partner status provides us with unique insights to guide our strategy and continually strengthen our capabilities for our customers.

At the same time, our industry-leading commercial engine enables us to deliver those at scale. During the quarter, we continued to strengthen our leading position in both of these areas. Earlier in the year, we announced a strategic collaboration with NVIDIA, combining our leadership in laboratory technologies with NVIDIA's advanced AI capabilities. The team is making great progress working together toward the commercialization of new workflow solutions that will enhance scientific instrumentation, help customers work faster, improve accuracy, and get more value out of each experiment. To further strengthen our U.S. drug product manufacturing capabilities for our Pharma and Biotech customers, we formed a strategic collaboration with SHL Medical, a leading provider of advanced drug delivery systems.

We will be leveraging our recently acquired Ridgefield, New Jersey sterile fill-finish site to offer fully integrated sterile fill-finish and device assembly solutions for our customers. Another great example of our trusted partner status is the continued adoption of our unique accelerated drug development offering, which combines our leading capabilities in pharma services and clinical research. This competitive differentiator is translating into strong performance and share gain in our clinical research business, which delivered strong revenue and authorizations growth once again in the quarter. We also continue to invest in our commercial engine to ensure we are meeting the current and future needs of our customers. For example, we opened a new cryo-EM drug discovery center in San Francisco.

It provides Pharma and Biotech customers with hands-on access to further accelerate adoption of our advanced cryo-EM technologies to advance drug development. Wrapping up on our growth strategy, we made great progress during the quarter, and we are continuing to advance our leadership position. Let me now turn to capital deployment. We continue to successfully execute our disciplined approach to capital deployment, which is a combination of strategic M&A and returning capital to our shareholders. In late March, we completed the acquisition of Clario and had a terrific kickoff with our new colleagues. Clario is a market leader in digital endpoint data solutions. This technology business is an outstanding strategic fit and highly complementary to our clinical research capabilities.

It enhances our ability to serve Pharma and Biotech customers by enabling deeper clinical insights and helping improve the productivity of the drug development process. This acquisition is a great example of the value that our proven M&A strategy creates for the company. Clario further strengthens Thermo Fisher Scientific Inc.'s position as the trusted partner to Pharma and Biotech customers, delivering important benefits to enable their success, and the acquisition has a very attractive return profile for our shareholders. We are also very pleased with the progress we are making with our filtration and separation business we acquired from Soventia. I had the chance to visit the team in Germany recently. The business is performing very well.

The integration is going smoothly. Customer enthusiasm for these capabilities is very high. Finally, in terms of return of capital during the quarter, we repurchased $3 billion of shares and increased our dividend by 10%. Let me now give you a brief update on our PPI Business System because of its relevance to our success. PPI is deeply embedded in our culture and empowers colleagues across the company to operate with agility. The mindset of finding a better way every day is a core part of our culture and gives me great confidence in our ability to manage through the current environment. We have a proven track record of actively managing the company and consistently delivering strong operational performance.

As a reminder, a few areas of focus for the PPI Business System in 2026 are driving an accelerated level of cost productivity, deploying AI at scale to run the company better, and the continued mitigation of tariffs. Our teams are proactively working to mitigate any potential impacts from higher inflation given the current macro environment. Now I would like to review our 2026 guidance at a high level. We are raising our guidance for the full year on the top and bottom line, incorporating the positive impact of Clario and the strong first quarter earnings performance.

We are raising revenue guidance from a range of $46.3 billion to $47.2 billion to a new range of $47.3 billion to $48.1 billion, which represents 6% to 8% reported revenue growth over 2025 and continues to assume 3% to 4% organic revenue growth for the year. We expect adjusted earnings per share to be in the range of $24.64 to $25.12, which represents 8% to 10% growth over 2025, an increase from our original guidance of $24.22 to $24.80. Stephen will take you through the details in his remarks. To summarize our key takeaways, we delivered a strong start to the year. We are raising our full-year revenue and adjusted EPS guidance.

Our end markets and our business are progressing in line with our expectations, and we are on track to deliver a strong year. We have advanced our long-term competitive position in the quarter with high-impact innovation and important strategic collaborations. We are incredibly excited about the addition of Clario to our capabilities, and we will continue to leverage the strength of our PPI Business System to create value for our stakeholders while building an even brighter future for our company. With that, I will turn the call over to Stephen.

Stephen Williamson: Thank you, Marc, and good morning, everyone. I will start by thanking Marc and the team for their support during my transition into the role. I have appreciated meeting many of you on the call over the past few months and look forward to continued engagement with the investor community. In my remarks today, I will take you through an overview of our first quarter results for the total company, provide color on our four business segments, and finally share details on our updated guidance for the year.

Before I get into the specifics of our financial performance, I will provide a high-level view on how the first quarter played out versus our expectations at the time of our last earnings call. As you saw in our press release, we had a strong start to the year. We advanced our proven growth strategy, closed the acquisition of Clario, and delivered strong earnings growth. Let me begin with Clario. Clario was not included in our previous guidance. We were excited to complete the acquisition in late March and the business added $30 million of revenue and $0.01 of adjusted EPS to our first quarter results. The business is on track, and the integration is progressing well.

Turning back to the total company, both revenue and organic revenue growth were in line with our previous guidance for the quarter. On the bottom line, we delivered adjusted EPS in the quarter that was $0.14 ahead of our previous guidance. This included the $0.01 from Clario and $0.13 from strong operational performance, demonstrating our continued active management of the company and the power of the PPI Business System. So a strong quarter with excellent execution by the team, which enabled us to deliver Q1 financial performance ahead of what we had assumed in our prior guidance. Starting with earnings per share, in the quarter adjusted EPS grew by 6% to $5.44.

GAAP EPS in the quarter was $4.43, up 11% from Q1 last year. On the top line, Q1 reported revenue grew 6% year over year. The components of our reported revenue change included 1% organic growth, a 3% contribution from acquisitions, and a 2% tailwind from foreign exchange. As a reminder, in Q1 we had one less selling day than the prior year. This impacted organic revenue growth by approximately one percentage point. Turning to organic revenue performance by geography, in Q1 North America grew low single digits, Europe was flat, and Asia-Pacific was flat, with China declining low single digits.

With respect to our operational performance, we delivered $2.4 billion of adjusted operating income in the quarter, an increase of 6% year over year, and adjusted operating margin was 21.8%, 10 basis points lower than Q1 last year. This includes approximately 80 basis points of headwind from tariffs and related FX versus the prior year. In the quarter, we delivered very strong productivity, which enabled us to fund strategic investments to further advance our industry leadership and largely offset the impact of unfavorable mix and the headwind from tariffs and related FX. Total company adjusted gross margin in the quarter was 40.8%. The drivers of adjusted gross margin are similar to those of adjusted operating margin.

Moving on to the details of the P&L, adjusted SG&A in the quarter was 16% of revenue. Total R&D expense was $340 million in Q1, reflecting our ongoing investments in high-impact innovation. R&D as a percentage of our manufacturing revenue for the quarter was 6.9%. Looking at our results below the line, Q1 net interest expense was $120 million. The adjusted tax rate in Q1 was 10.5%, and average diluted shares were 373 million in Q1, 6 million lower year over year driven by share repurchases net of option dilution.

Turning to free cash flow and the balance sheet, Q1 cash flow from operations was $1.2 billion and free cash flow was $830 million after investing $370 million of net capital expenditures. During the quarter, we completed the acquisition of Clario for approximately $9 billion plus potential future performance-based payments. The business is now part of our Laboratory Products and Biopharma Services segment. In Q1, we also deployed $3.2 billion of capital to shareholders through $3 billion of share buybacks and approximately $160 million of dividends. We ended the quarter with $3.3 billion of cash and equivalents and $43.2 billion of total debt.

Our leverage ratio at the end of the quarter was 3.8 times gross debt to adjusted EBITDA, and 3.5 times on a net debt basis. Concluding my comments on our total company performance, adjusted ROIC was 11%. Now I will provide some color on the performance of our four business segments. In Life Sciences Solutions, Q1 reported revenue increased 13% versus the prior-year quarter, and organic revenue growth was 1%. Growth in this segment was led by our bioproduction business, which had another quarter of excellent organic growth. Q1 adjusted operating income for Life Sciences Solutions increased 14% and adjusted operating margin was 36.2%, up 60 basis points versus the prior-year quarter.

During Q1, we delivered very strong productivity, which was partially offset by unfavorable mix and the expected impact from the acquisition of our filtration and separation business. In the Analytical Instruments segment, Q1 reported revenue was flat and organic revenue decreased 2% year over year. Performance reflects muted demand for instruments from academic and government customers in the U.S. and China. In this segment, Q1 adjusted operating income decreased 11% and adjusted operating margin was 20.7%, down 250 basis points versus the year-ago quarter. The majority of the margin change was driven by the expected impacts of tariffs and related FX.

Beyond that, we delivered good productivity, which was more than offset by lower volume and unfavorable mix in the quarter. Turning to Specialty Diagnostics, in Q1 reported revenue declined 1% year over year and organic revenue declined 3%. Performance in this segment reflects the impact of one less selling day in the quarter and a strong year-over-year comparable. In Q1, growth in this segment was led by our transplant diagnostics business. Q1 adjusted operating income for Specialty Diagnostics increased 3% and adjusted operating margin was 27.4%, 90 basis points higher than Q1 2025. During the quarter, strong productivity and favorable mix were partially offset by lower volume.

Finally, in the Laboratory Products and Biopharma Services segment, reported revenue increased 7% and organic growth was 4%. In Q1, growth in this segment was led by our clinical research business and our Research and Safety Market channel. Q1 adjusted operating income in this segment increased 6% and adjusted operating margin was 12.9%, 10 basis points lower than the prior-year quarter. In the quarter, we delivered very strong productivity, which was more than offset by unfavorable mix, strategic investments, and expected headwinds from foreign exchange. Turning to guidance, as Marc outlined, we are raising our 2026 full-year guide to reflect a strong start to the year and the acquisition of Clario.

We now expect revenue to be in the range of $47.3 billion to $48.1 billion and adjusted EPS to be in the range of $24.64 to $25.12, representing 8% to 10% adjusted EPS growth. Our updated guidance for the year continues to assume 3% to 4% organic revenue growth. The midpoint of our organic growth guidance continues to be slightly above 3%, and we continue to assume a $300 million tailwind to revenue from foreign exchange for the year. At the midpoint, the guidance includes $900 million higher revenue, 20 basis points of additional margin expansion, and $0.37 higher adjusted EPS compared to our previous guidance.

This incorporates the acquisition of Clario, which increased our 2026 revenue guidance by $900 million and added $0.32 of adjusted EPS net of financing costs. At the midpoint, the increase in adjusted EPS reflects the contribution from Clario and the strong operational performance in Q1, partially offset by an assumption for higher inflation in future quarters that we are actively working to mitigate. In terms of adjusted operating margins, our guide has increased to 70 basis points of expansion for the year, including the addition of Clario and the strong performance we delivered in Q1.

We are continuing to actively manage the company and drive excellent operational performance, enabling us to increase our guidance for the year while navigating a complex macro environment. Let me provide some of the modeling elements for the full year. We expect approximately $660 million of net interest expense, which now includes financing for the Clario acquisition. We continue to assume that the adjusted income tax rate will be 11.5%. We expect between $1.9 billion and $2.1 billion of net capital expenditures and free cash flow in the range of $6.9 billion to $7.4 billion for the year, both reflecting the addition of Clario.

In terms of capital deployment, we are assuming $3 billion of share buybacks, which were already completed in January, and that we will return approximately $700 million of capital to shareholders this year through dividends. We estimate the full-year average diluted share count will be between 370 million and 375 million shares. Now let me provide some color on phasing for Q2. Aligned with the quarterly progression in our original guidance, we are assuming organic revenue growth of about 3% for the second quarter. We expect Q2 adjusted EPS to be between $0.25 and $0.30 higher than Q1. To conclude, we had a strong quarter. We executed very well to deliver on our commitments.

We are thrilled to have welcomed Clario to the company and we are raising our adjusted EPS guidance for the year. With that, I will turn the call back over to Rafael.

Rafael Tejada: Operator, we are ready for the Q&A portion of the call. We will now open the call for questions.

Operator: When preparing to ask your question, please ensure your device is unmuted locally. In order to allow everyone in the queue an opportunity to address the Thermo Fisher Scientific Inc. management team, please limit your time on the call to one question and only one follow-up. If you have any additional questions, please return to the queue. Our first question comes from Michael Leonidovich Ryskin from Bank of America. Your line is now open. Please go ahead.

Michael Leonidovich Ryskin: Great. Thanks for taking the question. Marc, let me start with a high-level one. A lot of questions from investors both this morning and over the last couple of weeks have been the acceleration as you go through the year. Investors are increasingly worried about the ramp given some of the end-market concerns and lingering macro pressures. You touched on a couple of those when you were talking about the first quarter. What would you say to assuage some of those fears about the ramp needed to hit the full-year guide? You talked about what you did in the first quarter, and Stephen just called out 3% for the second quarter.

I think a lot of people are seeing something like 3% in the third quarter and then 5% in the fourth. You have days impact in there, but beyond that, just talk about the confidence of the improvement in performance as you go through the year.

Marc N. Casper: Yes, Mike, thanks for the question. When I step back and look at the quarter, I had the opportunity to see many customers during the quarter. Of course, the macro is challenging with the war in the Middle East and so forth, but it is actually not even in the customers’ thinking in a good way. They are focused on their pipelines and the scientific advances. It is an incredibly exciting time given what is going on in our industry. The markets played out as we expected in the first quarter. We understand the ramp, but the ramp is not really assuming a change in the underlying market conditions.

This has to do with comparable days and things of that sort. It is nice to have a good quarter behind us, and then we step up in a logical way from there. Stephen, maybe you want to talk a little bit about the phasing.

Stephen Williamson: When you think about the phasing from Q1 to Q2, you have the impact of the headwind from days in Q1 that does not exist in Q2, and you also have a significant comparable change in Analytical Instruments. So that is really the step up, those two drivers, Q1 to Q2. Then if you think about the first half to the second half, you obviously have the impact of the days headwind in Q1 and the tailwind in Q4, and you have a meaningfully different revenue phasing profile in pharma services that impacts both this year and last year.

Our pharma services business delivers much stronger growth in the second half of the year, aligned with how we modeled the year to start it.

Michael Leonidovich Ryskin: Okay. And then a follow-up, if I could. It sounds like you had another strong quarter in Pharma and Biotech. You called out bioproduction and clinical research continuing to do well. Is there anything in particular that offset that? I think you touched on weaker U.S. A&G and in China, maybe a little softness in Diagnostics. Any moving pieces in terms of what came out worse than expected to offset some of the strength in Pharma and Biotech?

Marc N. Casper: No. As I think about the end markets and the growth that we delivered, even by the various foreign markets, they pretty much were what we expected to happen during the quarter. We knew that Pharma and Biotech would be the strongest growth of that end market. That was our expectation, and the strength was broad-based in terms of the momentum there. I do not think there was anything materially different. In the tiny categories, you had a weaker rest-of-season, but it is really irrelevant in terms of scale. That probably shows up in the positive that shows up elsewhere in some minor numbers. Pretty much a very predictable quarter, and the team did a nice job executing against it.

Thanks, Mike.

Operator: Thank you. Our next question comes from Tycho W. Peterson from Jefferies.

Tycho W. Peterson: Marc, just picking up on that biopharma thread. Curious if you could talk on PPD. I think one of your peers had light bookings last night. You are coming off a very strong fourth quarter. What did you see in the quarter on PPD? And then is the biotech funding, which has been okay here, starting to translate into spending? And then just early feedback on Clario too from customers and how we should think about the combination there.

Marc N. Casper: Tycho, thanks for the question. Clinical research had an excellent quarter. Whether you are starting by saying sequentially how the business is progressing—nice step up in organic growth—or looking year over year, we saw really nice organic growth in both revenue and authorizations. Customers really value our capabilities. The early read is we are continuing our share gain momentum, and conditions are actually improving. It is not a surprise. You are seeing the biotech environment improving from a funding perspective. That is a good thing from our perspective, and sentiment continues to get stronger. There are lots of good opportunities we have been able to close, and we also have a nice funnel of activities.

When I think about our accelerated drug development capabilities, where we simplify the process, reduce complexity, and take time out, that is highly valued by our customers. It is unique to us because we are able to leverage the insights of our development and manufacturing organization as well. That is going very well. We are embedding AI into our capabilities through the collaboration we announced with OpenAI, and customers value that. It positions us very well. The business is quite healthy, and our trusted partner status is progressing.

On Clario, we just closed it on March 24, and the early feedback from customers—even from announcement to close—is that they are very excited about the technology that Clario has and how we think about bringing the major endpoints together in an easier way for them to execute their clinical trials. I am very excited about the acquisition and looking forward to the value unlock it is going to bring for the company and for our customers.

Tycho W. Peterson: Great. And then maybe just a quick follow-up on Analytical Instruments. Everybody has been dealing with the academic and government headwinds. As we think about that business for the remainder of the year, how are you feeling about a recovery on the instrument side?

Marc N. Casper: When I think about the instruments business, as you said, the market conditions are below normalized levels, driven by the academic and government environment in the U.S. and China. Our innovation is super strong, so I feel very good about what is ahead. You heard how much time I spent in my script on product innovation out of the instrument business—whether it is the next cryo-EM, our new mass spectrometer, or new handhelds. That is just a small sampling of what we launched, and ASMS is going to be awesome for us in June. The comparisons are a little odd this year.

We know them, so there is nothing new, but the comparison for Analytical Instruments, as Stephen said, is much easier in Q2 because it was affected by the implementation of tariffs. You will see the growth normalize in the first half in a certain respect in the business.

Operator: Thank you. Our next question comes from Jack Meehan from Nephron Research. Please go ahead.

Jack Meehan: Marc, I wanted to get your thoughts around AI as it is a huge topic for the market. As you look across the business segments, can you talk about how adoption might be influencing your customers’ spending behavior? I am not sure if you are planning an Analyst Day or not, but any color you can share on new offerings you might be able to highlight that leverage your data and Clario?

Marc N. Casper: Jack, thanks for the question. I was going to have in my closing remarks that we are going to have our Analyst Day the morning of 05/20/2026. We are quite excited to see our analysts in New York that day. In terms of artificial intelligence, it is super exciting. When I think about the role that AI is playing with our customers, it is accelerating scientific discovery, deepening understanding, and ultimately accelerating bringing new medicines to patients faster to address significant unmet medical needs. We believe that AI is going to improve the returns on investment for the drug development industry.

That means there will be more products coming through the pipeline and, ultimately, an enhancement of funding interest in the biotech community. We think it is a meaningful positive. For our company, the good end market matters, and that will help us, but we also see AI as a significant positive for Thermo Fisher Scientific Inc., as we are exceptionally positioned to shape it and benefit from it—both in our clinical research business, where we have talked about OpenAI, and across our technology businesses, our instrument businesses, and parts of Life Science Solutions.

It is going to make our portfolio of capabilities stronger and really amplifies what differentiates us: our scale, our portfolio breadth, our trusted partner status, and great execution. We believe that AI is going to accelerate and enhance our durable competitive advantage. It is an exciting time, and we are looking forward to continuing to drive the adoption that makes a huge difference for our customers.

Jack Meehan: I am looking forward to 05/20/2026. Stephen, one follow-up. You called out higher inflation a few times in the script. Could you elaborate on what areas you might be seeing that in and what the strategy is around offsets and productivity?

Stephen Williamson: Thanks, Jack. Given the daily variability in oil prices, we felt it appropriate to put a placeholder in the guide for future quarters for the risk of inflation that we are not fully able to mitigate within the year. The team is activated to offset it and mitigate it, and we expect to be able to do that, but given the wide range of outcomes, we thought it was prudent to put something in there. The area you see it first is in the shorter-term supply chain, logistics, and transportation. We started to see some of that, and the team is actively executing against it. Right now, it is just a placeholder given the variability.

Operator: Our next question comes from Daniel Anthony Arias from Stifel. Your line is now open. Please go ahead.

Daniel Anthony Arias: Hey, good morning. Thanks for the questions. Marc, last quarter, the way that you and Stephen framed the year was to say that you are looking to retire risk as you go along. When you were answering Mike’s question, you talked to some of the moving parts on the macro that have cropped up as new. Do you think there is anything that is an offset there that, ninety days later, you are feeling a little bit better about and would consider being retired at this point?

Marc N. Casper: Every year, we have expectations of how things are going to play out based on our experience and our deep knowledge of working with our customers. When it goes exactly as we thought—which is what Q1 was—that retires risk in terms of the world being as we thought it would be. Our operating discipline was even stronger than what we embedded in our guidance, which is allowing us to raise our earnings outlook. Customer sentiment is actually quite strong. If I think about our Pharma and Biotech customers, they are excited about their pipelines and about the improving environment in their own end markets, including the fact that they have reached agreements with the U.S. government.

Things are good in that industry and getting better, and that bodes well. From that perspective, we have retired risk. On our normal conventions, if I think about the earnings side of the equation, normally we would have flowed through the $0.13 operational beat to the P&L. The only reason we did not do 100% of that is there is volatility, as Stephen said, in inflation. Nobody has a crystal ball. What I do know is our team is fully focused on offsetting it with all the levers. If it is relatively modest, we will offset it all, and that will all flow through the bottom line—what we held back.

If the world gets really challenging from an inflation perspective, then we have given ourselves a little bit of a cushion to deal with it. I feel good as we sit here in late April about the year. We raised our outlook and are excited to deliver a great year.

Daniel Anthony Arias: Helpful. And then, Stephen, for the quarter, you had the selling days issue as mentioned, but I think there might have also been some phasing in pharma services that was material. Is that a quantifiable amount? I think you characterized the combination of those two as a couple of points. So as a normalized number for 1Q, it is more like 3%, and you are pointing to 3% for 2Q. Is the general assumption that it is status quo across the board when it comes to end market conditions, or is it more puts and takes—an improvement in one place and maybe a step back in other places?

I am curious about how you see 1Q to 2Q in the context of where a more normalized 1Q number might be.

Stephen Williamson: Thanks. Your characterization is correct. The 1% growth in Q1 was impacted by about a point from the impact of selling days and about a point by the impact of the timing of revenue phasing in the pharma services business. In Q2, there are puts and takes, but in the aggregate, your summarization is correct.

Rafael Tejada: Thanks, Dan.

Operator: Our next question comes from Matt Larew from William Blair. Hi, good morning.

Matt Larew: I wanted to follow up on Jack’s question on AI, but also the instrument innovation highlights you shared. It seems like there is going to be an enhanced emphasis on scale, automation, connectivity, and auditability or proof of work, both for large-scale generation of biological data and in autonomous labs. As you think about the way your instruments exist today and what kinds of enhancements or changes you might make in the future, how might customers shift the way they are using your instruments, and how are you thinking about developing them?

Marc N. Casper: Excellent question. One of the really interesting aspects—and I like the way you characterized it—of the adoption of AI in the research aspects of lab work is that you are seeing experimentation scale up and will scale up in areas that would never have happened in the past, which is large-scale generation of biological information to effectively create biology models. As opposed to what people normally do—looking at their particular area of interest—you are now seeing very wide-scale, large-volume labs that are building biology models. When you think about what those customers need, they want the instruments to be more automated or more automation-ready, and they want it to be easy to have the data populate their own models.

Those are a couple of the trends. It is a trend we have been aware of for a number of years—long before generative AI—when customers would have called it the “lab of the future” or “lab in the loop.” That is not new, but you are seeing very scaled facilities coming online, and our technologies are being adopted. As part of our R&D roadmaps, we are focused on creating better connectivity, and we feel good about what we are doing there.

Matt Larew: Great. And then on reshoring, I think that was probably a 2027 and beyond item. At an industry conference this week we heard that people are seeing RFPs. What is your level of confidence that this will remain a tailwind, and what has the activity level been like for Thermo?

Marc N. Casper: When I think about reshoring activity, it is a nice tailwind in the 2027–2028 timeframe. Starting with our CDMO business, a number of customers have decided that leveraging our capabilities is the best way to meet their production requirements in the U.S. You have seen some announcements and topics we have talked about there. In fact, President Trump visited our drug product site in Cincinnati, Ohio, as part of a discussion about healthcare and reshoring and what we are doing. That is a site that would benefit from growth in jobs and so forth. There is real momentum in contracts signed. In bioproduction, we expect that the revenue is largely a 2027 and 2028 activity.

We have won some business already in brownfield facilities that are scaling up. That increases confidence that you will see even more revenue in 2027–2028. Our bioproduction business had a phenomenal quarter—very strong growth, and from what we have seen of others, in excess of that. The team is doing a great job delivering on our customers’ needs, and we feel very good about the prospects of our business. We view reshoring as an incremental tailwind that will develop over the next couple of years.

Operator: Our next question comes from Daniel Gregory Brennan from TD Cowen. Please go ahead.

Daniel Gregory Brennan: Thanks for the questions, and congrats on the quarter. On Pharma, nice quarter again. I am wondering about the preclinical side. It is hard for us to track, but I know it is a big part of the business, and maybe that has been an area that was not investing as much. Could you speak a little to what you are seeing in that part of the business? Has it been a bit of a drag, and is that something that could get better this year?

Marc N. Casper: Thanks for the question, Dan. When I think about the businesses serving the lab-based portions of Pharma and Biotech—and it is a little hard for us to discern in our own data whether it is going to a QA/QC lab or a research lab because customers do not manage that segregation much—I think a rough proxy is that we are seeing good momentum in the channel business there. In the higher-tech portfolio of life science reagents, it is a little bit softer but still progressing in the right direction. Of the businesses, that is one where we are seeing signs of a pickup, and I feel okay about how that is progressing going forward.

Daniel Gregory Brennan: Thank you, Marc. And then just on U.S. Academic and Government, can you elaborate on how that has been progressing? There are hopes that things are bottoming out and starting to get a little better. Are you seeing any signs of that, and what are you assuming for the rest of the year in U.S. Academic and Government?

Marc N. Casper: In the U.S., the quarter played out as expected—muted conditions for sure. The passage of the budget in late January is good. We saw funding flow start during the quarter, which is also a positive. Our assumption is that for the year we would see greater stability in the U.S. end market, improving modestly over time, but not back to normal. In aggregate, similar to what we saw last year.

Rafael Tejada: Thank you.

Operator: Our next question comes from Casey Woodring from JPMorgan. Your line is now open.

Casey Woodring: Thank you for taking my questions. Maybe you can walk through the Specialty performance in the quarter and the mid-single-digit decline there. You called out strength in transplant and minimal impact from respiratory, but where did the softness occur in the quarter? We have seen a couple of reports of a weaker microbiology market in China—did that contribute? Any color on pacing in Specialty Diagnostics for the rest of the year? I think you have an easier comp in 2Q and tougher comps in the back half, so how should we think about the growth cadence there?

Marc N. Casper: Stepping back, Specialty Diagnostics is a highly differentiated, profitable business focused on high-value clinical insights. Our technology capabilities are very strong, spanning immunodiagnostics, transplant diagnostics, biomarkers, and protein diagnostics for multiple myeloma. These are incredibly important to healthcare systems around the world. In Q1 specifically, this business is almost entirely consumables, so it has a more significant impact from selling days. It also had a tougher comparison versus the prior year because of respiratory, which does not repeat in the second quarter. So the phasing is that this business improves as the year progresses. It is performing in line with what we would expect.

Casey Woodring: Got it. That is helpful. And then a quick follow-up on China. How did performance in the region play out relative to your expectations across your different businesses? I think you called out a bit weaker academic in the region, so maybe walk through the portfolio, particularly the Pharma end market in China, and do you expect China to return to growth at any point this year?

Marc N. Casper: As a reminder, China is about 7.5% of our revenue. We had a low single-digit decline in the quarter. Conditions are muted in aggregate. As you mentioned, Academic and Government were weak. Pharma and Biotech performed well in the country. We are well positioned to capture opportunities as conditions improve. I was in China in March and participated in the China Development Forum—an incredibly productive visit. I engaged with customers, our team, and government stakeholders. I left China incrementally more positive, particularly as I saw that Chinese Pharma and Biotech innovators see the value in doing more work with a company like us.

When they are competing with another Chinese company, our technology and capabilities are a differential advantage for them, and they are trying to license some of these technologies to the West. I think we are very well positioned to benefit from that trend. We are not assuming any meaningful growth coming out of China this year. Over time, if China returns to stronger growth, that would be an upside that we have not embedded into our longer-term viewpoint.

Rafael Tejada: Operator, we will take one more question.

Operator: Thank you. Our final question comes from Analyst from Deutsche Bank. Your line is now open.

Analyst: Thank you, and good morning. Marc, the Research and Safety Market channel was a strong contributor to growth in 1Q. Can you help us understand how indicative that is of a recovery in the end market versus ongoing market share gains? Likewise, the clinical business is also recovering nicely—PPD is taking share. Can you help us understand the appetite for customers to reinvest in early stage and further upstream in R&D and what you are seeing there?

Marc N. Casper: On the Research and Safety Market channel, the business is doing well. It is a blend of both improving end-market conditions and market share gains. I feel good about how that business has performed for quite some time, and it continues to progress nicely. In clinical research, we are seeing strong customer interest and reinvestment. We had a strong quarter of authorizations growth, and we have a very strong pipeline as well. Authorizations are what you have signed up; the pipeline is what you are working on that is not yet in the decision process. Both have moved nicely.

The business is progressing as we thought it would this year, stepping up in performance, and it is good to see that the wins we have been talking about for a few quarters translated into good growth in what we delivered as well. Let me wrap with a couple of comments. First, thank you to everyone for participating in our call. We are pleased to deliver a strong quarter, and we are on track to deliver a strong year as we continue to create value for our stakeholders and build an even brighter future for our company.

We look forward to updating you at our Investor Day, which we have scheduled for the morning of 05/20/2026, as well as the year progresses. As always, thank you for your support of Thermo Fisher Scientific Inc. Have a good day, everyone.

Operator: Thank you. This now concludes today's call. Thank you all for joining. You may now disconnect your line.

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