Thermo Fisher Scientific 10-Q 2024-09-28

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 28, 2024 or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number 1-8002

THERMO FISHER SCIENTIFIC INC.

(Exact name of Registrant as specified in its charter)

Delaware			04-2209186
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

168 Third Avenue

Waltham, Massachusetts 02451

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (781) 622-1000

Securities registered pursuant to Section 12(b) of the Act:

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, $1.00 par value						TMO						New York Stock Exchange
0.125% Notes due 2025						TMO 25B						New York Stock Exchange
2.000% Notes due 2025						TMO 25						New York Stock Exchange
3.200% Notes due 2026						TMO 26B						New York Stock Exchange
1.400% Notes due 2026						TMO 26A						New York Stock Exchange
1.450% Notes due 2027						TMO 27						New York Stock Exchange
1.750% Notes due 2027						TMO 27B						New York Stock Exchange
0.500% Notes due 2028						TMO 28A						New York Stock Exchange
1.375% Notes due 2028						TMO 28						New York Stock Exchange
1.950% Notes due 2029						TMO 29						New York Stock Exchange
0.875% Notes due 2031						TMO 31						New York Stock Exchange
2.375% Notes due 2032						TMO 32						New York Stock Exchange
3.650% Notes due 2034						TMO 34						New York Stock Exchange
2.875% Notes due 2037						TMO 37						New York Stock Exchange
1.500% Notes due 2039						TMO 39						New York Stock Exchange
1.875% Notes due 2049						TMO 49						New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐

Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of September 28, 2024, the Registrant had 382,500,265 shares of Common Stock outstanding.

THERMO FISHER SCIENTIFIC INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 28, 2024

TABLE OF CONTENTS
						Page
PART I - FINANCIAL INFORMATION
Item 1.			Financial Statements (Unaudited)			3
			Condensed Consolidated Balance Sheets			3
			Condensed Consolidated Statements of Income			4
			Condensed Consolidated Statements of Comprehensive Income			5
			Condensed Consolidated Statements of Cash Flows			6
			Condensed Consolidated Statements of Redeemable Noncontrolling Interest and Equity			7
			Notes to Condensed Consolidated Financial Statements			9
			Note 1. Nature of Operations and Summary of Significant Accounting Policies			9
			Note 2. Acquisitions			10
			Note 3. Revenues and Contract-related Balances			12
			Note 4. Business Segment and Geographical Information			13
			Note 5. Income Taxes			14
			Note 6. Earnings per Share			15
			Note 7. Debt and Other Financing Arrangements			15
			Note 8. Commitments and Contingencies			17
			Note 9. Comprehensive Income/(Loss) and Shareholders' Equity			18
			Note 10. Fair Value Measurements and Fair Value of Financial Instruments			19
			Note 11. Supplemental Cash Flow Information			22
			Note 12. Restructuring and Other Costs			22
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			31
Item 4.			Controls and Procedures			32
PART II - OTHER INFORMATION
Item 1.			Legal Proceedings			32
Item 1A.			Risk Factors			32
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			32
Item 5.			Other Information			32
Item 6.			Exhibits			33

THERMO FISHER SCIENTIFIC INC.

PART I FINANCIAL INFORMATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

						September 28,						December 31,
(In millions except share and per share amounts)						2024						2023
Assets
Current assets:
Cash and cash equivalents						$	4,645					$	8,077
Short-term investments						2,000						3
Accounts receivable, less allowances of $204 and $193						8,255						8,221
Inventories						5,430						5,088
Contract assets, net						1,541						1,443
Other current assets						1,911						1,757
Total current assets						23,783						24,589
Property, plant and equipment, net						9,412						9,448
Acquisition-related intangible assets, net						16,262						16,670
Other assets						4,180						3,999
Goodwill						46,726						44,020
Total assets						$	100,364					$	98,726
Liabilities, redeemable noncontrolling interest and equity
Current liabilities:
Short-term obligations and current maturities of long-term obligations						$	4,116					$	3,609
Accounts payable						2,606						2,872
Accrued payroll and employee benefits						1,823						1,596
Contract liabilities						2,663						2,689
Other accrued expenses						3,393						3,246
Total current liabilities						14,601						14,012
Deferred income taxes						1,123						1,922
Other long-term liabilities						4,343						4,642
Long-term obligations						31,197						31,308
Redeemable noncontrolling interest						127						118
Equity:
Thermo Fisher Scientific Inc. shareholders’ equity:
Preferred stock, $100 par value, 50,000 shares authorized; none issued						—						—
Common stock, $1 par value, 1,200,000,000 shares authorized; 443,676,411 and 442,188,634 shares issued						444						442
Capital in excess of par value						17,831						17,286
Retained earnings						51,421						47,364
Treasury stock at cost, 61,176,146 and 55,541,290 shares						(18,227)						(15,133)
Accumulated other comprehensive income/(loss)						(2,477)						(3,224)
Total Thermo Fisher Scientific Inc. shareholders’ equity						48,992						46,735
Noncontrolling interests						(20)						(11)
Total equity						48,972						46,724
Total liabilities, redeemable noncontrolling interest and equity						$	100,364					$	98,726

The accompanying notes are an integral part of these condensed consolidated financial statements.

THERMO FISHER SCIENTIFIC INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

						Three months ended												Nine months ended
						September 28,						September 30,						September 28,						September 30,
(In millions except per share amounts)						2024						2023						2024						2023
Revenues
Product revenues						$	6,148					$	6,157					$	18,266					$	18,832
Service revenues						4,450						4,417						13,218						13,139
Total revenues						10,598						10,574						31,484						31,971
Costs and operating expenses:
Cost of product revenues						3,170						3,214						9,189						9,829
Cost of service revenues						3,100						3,044						9,415						9,435
Selling, general and administrative expenses						2,098						2,049						6,392						6,313
Research and development expenses						346						319						1,016						1,010
Restructuring and other costs						45						84						151						379
Total costs and operating expenses						8,759						8,710						26,163						26,966
Operating income						1,838						1,864						5,321						5,005
Interest income						277						246						851						570
Interest expense						(356)						(359)						(1,073)						(985)
Other income/(expense)						(16)						14						(2)						(32)
Income before income taxes						1,742						1,765						5,096						4,558
Provision for income taxes						(99)						(53)						(507)						(151)
Equity in earnings/(losses) of unconsolidated entities						(14)						(17)						(75)						(58)
Net income						1,629						1,695						4,514						4,349
Less: net income/(losses) attributable to noncontrolling interests and redeemable noncontrolling interest						—						(20)						9						(16)
Net income attributable to Thermo Fisher Scientific Inc.						$	1,630					$	1,715					$	4,505					$	4,365
Earnings per share attributable to Thermo Fisher Scientific Inc.
Basic						$	4.26					$	4.44					$	11.79					$	11.31
Diluted						$	4.25					$	4.42					$	11.75					$	11.25

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Forward-looking statements, within the meaning of Section 21E of the Securities Exchange Act of 1934 (the Exchange Act), are made throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations. Any statements contained herein that are not statements of historical fact may be deemed to be forward-looking statements, including without limitation statements regarding: projections of revenues, expenses, earnings, margins, tax rates, tax provisions, cash flows, pension and benefit obligations and funding requirements, and our liquidity position; cost reductions, restructuring activities, new product and service developments, competitive strengths or market position, acquisitions or divestitures; growth, declines and other trends in markets we sell into; new or modified laws, regulations and accounting pronouncements; outstanding claims, legal proceedings, tax audits and assessments and other contingent liabilities; foreign currency exchange rates and fluctuations in those rates; general economic and capital markets conditions; the timing of any of the foregoing; assumptions underlying any of the foregoing; the COVID-19 pandemic; and any other statements that address events or developments that Thermo Fisher intends or believes will or may occur in the future. Without limiting the foregoing, the words “believes,” “anticipates,” “plans,” “expects,” “seeks,” “estimates,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements are accompanied by such words. While the company may elect to update forward-looking statements in the future, it specifically disclaims any obligation to do so, even if the company’s estimates change, and readers should not rely on those forward-looking statements as representing the company’s views as of any date subsequent to the date of the filing of this report.

A number of important factors could cause the results of the company to differ materially from those indicated by such forward-looking statements, including those detailed under the caption “Risk Factors” in the company’s Annual Report on Form 10-K for the year ended December 31, 2023 (which is on file with the SEC). Important factors that could cause actual results to differ materially from those indicated by forward-looking statements include risks and uncertainties relating to: the COVID-19 pandemic; the need to develop new products and adapt to significant technological change; implementation of strategies for improving growth; general economic conditions and related uncertainties; dependence on customers’ capital spending policies and government funding policies; the effect of economic and political conditions and exchange rate fluctuations on international operations; use and protection of intellectual property; the effect of changes in governmental regulations; any natural disaster, public health crisis or other catastrophic event; and the effect of laws and regulations governing government contracts, as well as the possibility that expected benefits related to recent or pending acquisitions may not materialize as expected.

The company refers to various amounts or measures not prepared in accordance with generally accepted accounting principles (non-GAAP measures). These non-GAAP measures are further described and reconciled to their most directly comparable amount or measure under the section “Non-GAAP Measures” later in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Certain amounts and percentages reported within this Quarterly Report on Form 10-Q are presented and calculated based on underlying unrounded amounts. As a result, the sum of components may not equal corresponding totals due to rounding.

Overview

Thermo Fisher Scientific Inc. enables customers to make the world healthier, cleaner and safer by helping them accelerate life sciences research, solve complex analytical challenges, increase laboratory productivity, and improve patient health through diagnostics and the development and manufacture of life-changing therapies. Markets served include pharmaceutical and biotech, academic and government, industrial and applied, as well as healthcare and diagnostics. The company’s operations fall into four segments (Note 4): Life Sciences Solutions, Analytical Instruments, Specialty Diagnostics and Laboratory Products and Biopharma Services.

Consolidated Results

						Three months ended																		Nine months ended
						September 28,						September 30,												September 28,						September 30,
(Dollars in millions except per share amounts)						2024						2023						Change						2024						2023						Change
Revenues						$	10,598					$	10,574					0		%				$	31,484					$	31,971					(2)		%
GAAP operating income						1,838						1,864						(1)		%				5,321						5,005						6		%
GAAP operating income margin						17.3		%				17.6		%				(0.3)		pt				16.9		%				15.7		%				1.2		pt
Adjusted operating income (non-GAAP measure)						2,362						2,560						(8)		%				6,987						7,260						(4)		%
Adjusted operating income margin (non-GAAP measure)						22.3		%				24.2		%				(1.9)		pt				22.2		%				22.7		%				(0.5)		pt
GAAP diluted earnings per share attributable to Thermo Fisher Scientific Inc.						4.25						4.42						(4)		%				11.75						11.25						4		%
Adjusted earnings per share (non-GAAP measure)						5.28						5.69						(7)		%				15.76						15.87						(1)		%

THERMO FISHER SCIENTIFIC INC.

Organic Revenue Growth

						Three months ended						Nine months ended
						September 28, 2024						September 28, 2024
Revenue growth						0		%				(2)		%
Impact of acquisitions						1		%				0		%
Impact of currency translation						0		%				0		%
Organic revenue growth (non-GAAP measure)						0		%				(2)		%

Since 2020, the Life Sciences Solutions and Specialty Diagnostics segments as well as the laboratory products business have supported COVID-19 diagnostic testing. Additionally, our pharma services business has provided our pharma and biotech customers with the services they needed to develop and produce vaccines and therapies globally. Since the company’s acquisition of PPD in December 2021, the clinical research business has continued to play a leading role in supporting the clinical trials for COVID-19 vaccines and therapies. These positive impacts are expected to continue at much lower levels in 2024 as customer testing as well as therapy and vaccine demand declines. Sales of products related to COVID-19 testing were $0.03 billion and $0.05 billion in the third quarter of 2024 and 2023, respectively, and $0.08 billion and $0.27 billion in the first nine months of 2024 and 2023, respectively.

During the third quarter of 2024, revenues from pharma and biotech customers declined due to reduced demand for our products and services that support COVID-19 vaccines and therapies as well as a more muted macroeconomic environment, partially offset through strong commercial execution. Revenues in the academic and government market grew due to strong demand for electron microscopes and lab products. Revenue from the industrial and applied customers grew due to demand for electron microscopes. The diagnostics and healthcare market was flat. During the third quarter of 2024, sales growth was flat in Europe and Asia-Pacific, including China. Sales in North America declined. Sales in every region were impacted from decreased demand for COVID-19 related products, as well as a challenging macroeconomic environment. Contributions to organic revenue during the third quarter of 2024 from the Analytical Instruments and Specialty Diagnostics segments were offset by declines in the Life Sciences Solutions segment.

During the first nine months of 2024, all of our end markets were negatively impacted by a more muted macroeconomic environment and low economic activity in China. Revenues from pharma and biotech and diagnostics and healthcare customers declined due to demand for COVID-19 related products and services. Revenues in the academic and government market were flat. Revenues in the industrial and applied market increased slightly. During the first nine months of 2024, sales were flat in Europe and Asia-Pacific, including China. Sales in North America declined due to decreased demand for COVID-19 related products. Contributions to organic revenue during the first nine months of 2024 from the Analytical Instruments and Specialty Diagnostics segments were more than offset by declines in the Life Sciences Solutions and Laboratory Products and Biopharma Services segments.

The company continues to execute its proven growth strategy which consists of three pillars:

• High-impact innovation,

• Our trusted partner status with customers, and

• Our unparalleled commercial engine.

GAAP operating income margin and adjusted operating income margin decreased in the third quarter of 2024 due primarily to unfavorable business mix and strategic investments, partially offset by productivity improvements. GAAP operating income margin in the third quarter of 2024 also benefited from lower amortization expense.

GAAP operating income margin and adjusted operating income margin decreased in the first nine months of 2024 due primarily to unfavorable business mix, partially offset by productivity improvements. The decreases in GAAP operating income margin during the first nine months of 2024 were more than offset by lower levels of restructuring and other charges incurred for headcount reductions and facility consolidations in an effort to streamline operations (Note 12) and lower levels of amortization expense.

The company’s references to strategic investments generally refer to targeted spending for enhancing commercial capabilities, including expansion of geographic sales reach and e-commerce platforms, marketing initiatives, expanded service and operational infrastructure, research and development projects and other expenditures to enhance the customer experience, as well as incentive compensation and recognition for employees. The company’s references throughout this discussion to productivity improvements generally refer to improved cost efficiencies from its Practical Process Improvement (PPI) business system to address inflation, including reduced costs resulting from implementing continuous improvement methodologies, global sourcing initiatives, a lower cost structure following restructuring actions including headcount reductions and consolidation of facilities, and low cost region manufacturing.

THERMO FISHER SCIENTIFIC INC.

Notable Recent Acquisitions

On January 3, 2023, the company acquired, within the Specialty Diagnostics segment, The Binding Site Group, a U.K.-based provider of specialty diagnostic assays and instruments to improve the diagnosis and management of blood cancers and immune system disorders. The acquisition expands the segment’s portfolio with the addition of pioneering innovation in diagnostics and monitoring for multiple myeloma.

On August 14, 2023, the company acquired, within the Laboratory Products and Biopharma Services segment, CorEvitas, LLC, a U.S.-based provider of regulatory-grade, real-world evidence for approved medical treatments and therapies. The acquisition expands the segment’s portfolio with the addition of highly complementary real-world evidence solutions to enhance decision-making as well as the time and cost of drug development.

On July 10, 2024, the company acquired, within the Life Sciences Solutions segment, Olink Holding AB (publ), a Swedish-based provider of next-generation proteomics solutions. The acquisition enhances the segment’s capabilities in the high-growth proteomics market with the addition of highly differentiated solutions. It also complements the existing life sciences and mass spectrometry offerings, accelerating protein biomarker discovery and providing strong synergy opportunities.

Segment Results

The company’s management evaluates segment operating performance using operating income before certain charges/credits as defined in Note 4 to the Consolidated Financial Statements of the company’s Annual Report on Form 10-K for 2023. Accordingly, the following segment data are reported on this basis.

						Three months ended												Nine months ended
						September 28,						September 30,						September 28,						September 30,
(Dollars in millions)						2024						2023						2024						2023
Revenues
Life Sciences Solutions						$	2,387					$	2,433					$	7,027					$	7,508
Analytical Instruments						1,808						1,754						5,277						5,226
Specialty Diagnostics						1,129						1,083						3,355						3,300
Laboratory Products and Biopharma Services						5,740						5,728						17,221						17,322
Eliminations						(467)						(424)						(1,397)						(1,385)
Consolidated revenues						$	10,598					$	10,574					$	31,484					$	31,971

Life Sciences Solutions

						Three months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	2,387					$	2,433					(2)		%				0		%				2		%				(4)		%
Segment income						845						872						(3)		%
Segment income margin						35.4		%				35.9		%				(0.5)		pt

The decrease in organic revenues in the third quarter of 2024 was primarily due to moderation in COVID-19 related revenue. The decrease in segment income margin resulted primarily from unfavorable volume mix, partially offset by strong productivity improvements.

						Nine months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	7,027					$	7,508					(6)		%				0		%				1		%				(6)		%
Segment income						2,551						2,525						1		%
Segment income margin						36.3		%				33.6		%				2.7		pt

The decrease in organic revenues in the first nine months of 2024 was primarily due to moderation in COVID-19 related revenue. The increase in segment income margin resulted primarily from exceptionally strong productivity improvements, partially offset by unfavorable volume mix.

THERMO FISHER SCIENTIFIC INC.

Analytical Instruments

						Three months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	1,808					$	1,754					3		%				0		%				0		%				3		%
Segment income						451						468						(4)		%
Segment income margin						24.9		%				26.7		%				(1.8)		pt

The increase in organic revenues in the third quarter of 2024 was primarily due to growth in the electron microscopy business. The decrease in segment income margin resulted primarily from unfavorable business mix and strategic investments, partially offset by strong productivity improvements.

						Nine months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	5,277					$	5,226					1		%				0		%				0		%				1		%
Segment income						1,289						1,321						(2)		%
Segment income margin						24.4		%				25.3		%				(0.9)		pt

The increase in organic revenues in the first nine months of 2024 was primarily due to very strong growth in the electron microscopy business, largely offset by declines in the other instrumentation businesses. The decrease in segment income margin resulted primarily from unfavorable business mix and strategic investments, partially offset by strong productivity improvements.

Specialty Diagnostics

						Three months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	1,129					$	1,083					4		%				0		%				0		%				4		%
Segment income						293						283						3		%
Segment income margin						25.9		%				26.1		%				(0.2)		pt

The increase in organic revenues in the third quarter of 2024 was primarily driven by growth in the healthcare market channel, as well as in the transplant diagnostics and immunodiagnostics businesses, partially offset by decreased demand for products addressing diagnosis of COVID-19. The decrease in segment income margin resulted primarily from strategic investments and unfavorable business mix, partially offset by good productivity improvements.

						Nine months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	3,355					$	3,300					2		%				0		%				0		%				2		%
Segment income						886						860						3		%
Segment income margin						26.4		%				26.1		%				0.3		pt

The increase in organic revenues in the first nine months of 2024 was driven by underlying growth in the immunodiagnostics and transplant diagnostics businesses, as well as in the healthcare market channel, partially offset by decreased demand for products addressing diagnosis of COVID-19. The increase in segment income margin was due to productivity improvements, partially offset by strategic investments.

THERMO FISHER SCIENTIFIC INC.

Laboratory Products and Biopharma Services

						Three months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	5,740					$	5,728					0		%				0		%				0		%				0		%
Segment income						773						937						(18)		%
Segment income margin						13.5		%				16.4		%				(2.9)		pt

Organic revenues were flat in the third quarter of 2024 due to decreased demand in COVID-19 vaccines and therapies, offset by growth in the research and safety market channel and underlying growth in the clinical research and pharma services businesses. The decrease in segment income margin was primarily due to unfavorable business mix, partially offset by strong productivity improvements.

						Nine months ended																														Organic (non-GAAP measure)
(Dollars in millions)						September 28, 2024						September 30, 2023						Total Change						Currency Translation						Acquisitions/ Divestitures
Revenues						$	17,221					$	17,322					(1)		%				0		%				0		%				(1)		%
Segment income						2,262						2,554						(11)		%
Segment income margin						13.1		%				14.7		%				(1.6)		pt

The decrease in organic revenues in the first nine months of 2024 was primarily due to decreased demand in COVID-19 vaccines and therapies, largely offset by underlying growth in the clinical research and pharma services businesses. The decrease in segment income margin was primarily due to unfavorable business mix, partially offset by productivity improvements.

Non-operating Items

						Three months ended												Nine months ended
						September 28,						September 30,						September 28,						September 30,
(Dollars and shares in millions)						2024						2023						2024						2023
Net interest expense						$	80					$	113					$	223					$	415
GAAP other income/(expense)						(16)						14						(2)						(32)
Adjusted other income/(expense) (non-GAAP measure)						(13)						5						(10)						4
GAAP tax rate						5.7		%				3.0		%				10.0		%				3.3		%
Adjusted tax rate (non-GAAP measure)						10.5		%				10.0		%				10.3		%				10.0		%
Weighted average diluted shares						384						388						383						388

Net interest expense (interest expense less interest income) in the third quarter and first nine months of 2024 decreased due primarily to higher cash, and cash equivalents and short-term investments balances, as well as higher interest rates on these balances when compared to the third quarter and first nine months of 2023. The company’s net interest expense was reduced by approximately $66 million and $197 million in the third quarter and first nine months of 2024, respectively, as a result of its interest rate swap and cross-currency interest rate swap arrangements. In the third quarter and first nine months of 2023, the company’s net interest expense was reduced by approximately $34 million and $62 million, respectively, as a result of these arrangements (Note 10).

GAAP other income/(expense) and adjusted other income/(expense) includes currency transaction gains/losses on non-operating monetary assets and liabilities, and net periodic pension benefit cost/income, excluding the service cost component. GAAP other income/(expense) in the third quarter and first nine months of 2024 also includes $(3) million and $7 million, respectively, of net gains/(losses) on investments. GAAP other income/(expense) in the third quarter and first nine months of 2023 also includes $10 million and $(33) million, respectively, of net gains/(losses) on investments.

The company’s GAAP tax rate increased in the first nine months of 2024 compared to 2023 primarily due to $176 million of expense, net, for a provision associated with a tax audit recorded in the first quarter of 2024. The company’s GAAP and adjusted tax rates in the first nine months of 2024 were also impacted by tax benefits of $183 million and $124 million in the second and third quarters of 2024, respectively, primarily in jurisdictions where the deferred tax assets are now expected to be realized due to forecasted income.

The company’s GAAP and adjusted tax rates in the first nine months of 2023 were impacted by the release of a valuation allowance of $183 million in the third quarter of 2023 in jurisdictions where the deferred tax assets are now expected to be realized, and a tax benefit of $91 million, net of related tax expenses, from a foreign exchange loss on an intercompany debt

THERMO FISHER SCIENTIFIC INC.

refinancing transaction in the second quarter of 2023. The company’s GAAP and adjusted tax rates in the nine-month periods ended September 28, 2024, and September 30, 2023, were also impacted by $102 million and $144 million, respectively, of tax benefits resulting from capital losses generated as part of intra-entity transactions (Note 5).

The effective tax rates in both 2024 and 2023 were also affected by relatively significant earnings in lower tax jurisdictions. Due primarily to the non-deductibility of intangible asset amortization for tax purposes, the company’s cash payments for income taxes are higher than its income tax expense for financial reporting purposes and are expected to total approximately $1.73 billion in 2024.

The company expects its GAAP effective tax rate in 2024 will be between 8% and 10%. The effective tax rate can vary significantly from period to period as a result of discrete income tax factors and events. The company expects its adjusted tax rate will be approximately 10.5% in 2024.

The company has operations and a taxable presence in approximately 70 countries outside the U.S. Some of these countries have lower tax rates than the U.S. The company’s ability to obtain a benefit from lower tax rates outside the U.S. is dependent on its relative levels of income in countries outside the U.S. and on the statutory tax rates in those countries. Based on the dispersion of the company’s non-U.S. income tax provision among many countries, the company believes that a change in the statutory tax rate in any individual country is not likely to materially affect the company’s income tax provision or net income, aside from any resulting one-time adjustment to the company’s deferred tax balances to reflect a new rate.

Equity in earnings/losses of unconsolidated entities was impacted by an $88 million impairment of an equity method investment in the second quarter of 2024.

Weighted average diluted shares decreased in 2024 compared to 2023 due to share repurchases, net of option dilution.

Liquidity and Capital Resources

The company’s proven growth strategy has enabled it to generate free cash flow as well as access the capital markets. The company deploys its capital primarily via mergers and acquisitions and secondarily via share buybacks and dividends.

(In millions)						September 28, 2024						December 31, 2023
Cash and cash equivalents						$	4,645					$	8,077
Short-term investments						2,000						3
Total debt						35,313						34,917

Approximately half of the company’s cash balances and cash flows from operations are from outside the U.S. The company uses its non-U.S. cash for needs outside of the U.S. including acquisitions, capacity expansion, and repayment of third-party foreign debt by foreign subsidiaries. In addition, the company also transfers cash to the U.S. using non-taxable intercompany transactions, including loans and returns of capital, as well as dividends where the related U.S. dividend received deduction or foreign tax credit equals any tax cost arising from the dividends. As a result of using such means of transferring cash to the U.S., the company does not expect any material adverse liquidity effects from its significant non-U.S. cash balances for the foreseeable future.

The company believes that its existing cash and cash equivalents and its future cash flow from operations together with available borrowing capacity under its revolving credit agreement will be sufficient to meet the cash requirements of its existing businesses for the foreseeable future, including at least the next 24 months.

As of September 28, 2024, the company’s short-term obligations and current maturities of long-term obligations totaled $4.12 billion. The company has a revolving credit facility with a bank group that provides up to $5.00 billion of unsecured multi-currency revolving credit (Note 7). If the company borrows under this facility, it intends to leave undrawn an amount equivalent to outstanding commercial paper to provide a source of funds in the event that commercial paper markets are not available. As of September 28, 2024, no borrowings were outstanding under the company’s revolving credit facility, although available capacity was reduced by immaterial outstanding letters of credit.

						Nine months ended
(In millions)						September 28, 2024						September 30, 2023
Net cash provided by operating activities						$	5,377					$	4,683
Net cash used in investing activities						(5,861)						(4,766)
Net cash used in financing activities						(3,126)						(2,194)
Free cash flow (non-GAAP measure)						4,498						3,685

THERMO FISHER SCIENTIFIC INC.

Operating Activities

During the first nine months of 2024, cash provided by income was offset in part by investments in working capital. An increase in inventories used cash of $0.22 billion. A decrease in accounts payable used cash of $0.24 billion. Changes in other assets and liabilities used cash of $0.24 billion primarily due to the timing of payments for compensation and income taxes. Cash payments for income taxes were $1.43 billion during the first nine months of 2024.

During the first nine months of 2023, cash provided by income was offset in part by investments in working capital. Changes in other assets and other liabilities used cash of $1.36 billion primarily due to the timing of payments for compensation and income taxes. A decrease in accounts payable used cash of $0.74 billion. Cash payments for income taxes were $1.17 billion during the first nine months of 2023.

Investing Activities

During the first nine months of 2024, acquisitions used cash of $3.13 billion. The company’s investing activities also included purchases of short-term investments of $2.07 billion, as well as $0.92 billion of purchases of property, plant and equipment for capacity and capability investments.

During the first nine months of 2023, acquisitions used cash of $3.66 billion. The company’s investing activities also included purchases of $1.07 billion of property, plant and equipment for capacity and capability investments.

The company expects that for all of 2024, expenditures for property, plant and equipment, net of disposals, will be between $1.3 billion and $1.5 billion.

Financing Activities

During the first nine months of 2024, issuance of debt provided $1.20 billion of cash. Repayment of senior notes used $1.11 billion. The company’s financing activities also included the repurchase of $3.00 billion of the company’s common stock (5.5 million shares) and the payment of $0.43 billion in cash dividends. On November 14, 2023, the Board of Directors announced that it replaced the existing authorization to repurchase the company’s common stock, of which $1.00 billion was remaining, with a new authorization to repurchase up to $4.00 billion of the company’s common stock. All of the shares of common stock repurchased by the company during the first quarter of 2024 were under this program. At November 1, 2024, authorization remained for $1.00 billion of future repurchases of the company’s common stock.

During the first nine months of 2023, repayment of senior notes and net commercial paper activity used cash of $2.00 billion and $0.32 billion, respectively. Issuance of debt provided $3.47 billion of cash. The company’s financing activities also included the repurchase of $3.00 billion of the company’s common stock (5.2 million shares) and the payment of $0.39 billion in cash dividends.

The company’s commitments for purchases of property, plant and equipment, contractual obligations and other commercial commitments, did not change materially subsequent to December 31, 2023, except in connection with the completion of the Olink acquisition, which occurred on July 10, 2024 (Note 2).

Non-GAAP Measures

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures such as organic revenue growth, which is reported revenue growth, excluding the impacts of revenues from acquired/divested businesses and the effects of currency translation. We report organic revenue growth because Thermo Fisher management believes that in order to understand the company’s short-term and long-term financial trends, investors may wish to consider the impact of acquisitions/divestitures and foreign currency translation on revenues. Thermo Fisher management uses organic revenue growth to forecast and evaluate the operational performance of the company as well as to compare revenues of current periods to prior periods.

We report adjusted operating income, adjusted operating margin, adjusted other income/(expense), adjusted tax rate, and adjusted EPS. We believe that the use of these non-GAAP financial measures, in addition to GAAP financial 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 core operating performance, especially when comparing such results to previous periods, forecasts, 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. To calculate these measures we exclude, as applicable:

• Certain acquisition-related costs, including charges for the sale of inventories revalued at the date of acquisition, significant transaction/acquisition-related costs, including changes in estimates of contingent acquisition-related consideration, and other costs associated with obtaining short-term financing commitments for pending/recent acquisitions. We exclude these costs because we do not believe they are indicative of our normal operating costs.

THERMO FISHER SCIENTIFIC INC.

• Costs/income associated with restructuring activities and large-scale abandonments of product lines, such as reducing overhead and consolidating facilities. We exclude these costs because we believe that the costs related to restructuring activities and large-scale abandonment of product lines are not indicative of our normal operating costs.

• Equity in earnings/losses of unconsolidated entities; impairments of long-lived assets; and certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, including gains/losses on investments, the sale of businesses, product lines, and real estate, significant litigation-related matters, curtailments/settlements of pension plans, and the early retirement of debt. We exclude these items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

• The expense 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 up to 20 years. 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.

• The noncontrolling interest and tax impacts of the above items and the impact of significant tax audits or events (such as changes in deferred taxes from enacted tax rate/law changes), the latter of which we exclude because they are outside of our normal operations and difficult to forecast accurately for future periods.

We 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. The company also uses this measure as an indication of the strength of the company. Free cash flow is not a measure of cash available for discretionary expenditures since we have certain non-discretionary obligations such as debt service that are not deducted from the measure.

The non-GAAP financial measures of the company’s results of operations and cash flows included in this Form 10-Q are not meant to be considered superior to or a substitute for the company’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 within the “Consolidated Results” and “Segment Results” sections and below.

						Three months ended												Nine months ended
						September 28,						September 30,						September 28,						September 30,
(Dollars in millions except per share amounts)						2024						2023						2024						2023
Reconciliation of adjusted operating income
GAAP operating income						$	1,838					$	1,864					$	5,321					$	5,005
Cost of revenues adjustments (a)						9						14						25						73
Selling, general and administrative expenses adjustments (b)						21						14						(24)						28
Restructuring and other costs (c)						45						84						151						379
Amortization of acquisition-related intangible assets						450						584						1,514						1,775
Adjusted operating income (non-GAAP measure)						$	2,362					$	2,560					$	6,987					$	7,260
Reconciliation of adjusted operating income margin
GAAP operating income margin						17.3		%				17.6		%				16.9		%				15.7		%
Cost of revenues adjustments (a)						0.1		%				0.1		%				0.1		%				0.2		%
Selling, general and administrative expenses adjustments (b)						0.2		%				0.1		%				(0.1)		%				0.1		%
Restructuring and other costs (c)						0.4		%				0.8		%				0.5		%				1.2		%
Amortization of acquisition-related intangible assets						4.2		%				5.6		%				4.8		%				5.5		%
Adjusted operating income margin (non-GAAP measure)						22.3		%				24.2		%				22.2		%				22.7		%
Reconciliation of adjusted other income/(expense)
GAAP other income/(expense)						$	(16)					$	14					$	(2)					$	(32)
Adjustments (d)						3						(9)						(8)						36
Adjusted other income/(expense) (non-GAAP measure)						$	(13)					$	5					$	(10)					$	4
Reconciliation of adjusted tax rate
GAAP tax rate						5.7		%				3.0		%				10.0		%				3.3		%
Adjustments (e)						4.8		%				7.0		%				0.3		%				6.7		%
Adjusted tax rate (non-GAAP measure)						10.5		%				10.0		%				10.3		%				10.0		%

THERMO FISHER SCIENTIFIC INC.

						Three months ended												Nine months ended
						September 28,						September 30,						September 28,						September 30,
(Dollars in millions except per share amounts)						2024						2023						2024						2023
Reconciliation of adjusted earnings per share
GAAP diluted earnings per share (EPS) attributable to Thermo Fisher Scientific Inc.						$	4.25					$	4.42					$	11.75					$	11.25
Cost of revenues adjustments (a)						0.02						0.04						0.07						0.19
Selling, general and administrative expenses adjustments (b)						0.05						0.03						(0.06)						0.07
Restructuring and other costs (c)						0.12						0.22						0.39						0.98
Amortization of acquisition-related intangible assets						1.17						1.50						3.95						4.57
Other income/expense adjustments (d)						0.01						(0.02)						(0.02)						0.09
Provision for income taxes adjustments (e)						(0.36)						(0.49)						(0.50)						(1.38)
Equity in earnings/losses of unconsolidated entities						0.04						0.04						0.20						0.15
Noncontrolling interests adjustments (f)						(0.02)						(0.05)						(0.02)						(0.05)
Adjusted EPS (non-GAAP measure)						$	5.28					$	5.69					$	15.76					$	15.87
Reconciliation of free cash flow
GAAP net cash provided by operating activities						$	2,167					$	2,414					$	5,377					$	4,683
Purchases of property, plant and equipment						(271)						(332)						(920)						(1,074)
Proceeds from sale of property, plant and equipment						20						66						40						76
Free cash flow (non-GAAP measure)						$	1,915					$	2,148					$	4,498					$	3,685

(a) Adjusted results exclude accelerated depreciation on fixed assets to be abandoned due to facility consolidations, charges for the sale of inventory revalued at the date of acquisition, and charges for inventory write-downs associated with large-scale abandonment of product lines.

(b) Adjusted results exclude certain third-party expenses, principally transaction/integration costs related to recent acquisitions, charges/credits for changes in estimates of contingent acquisition consideration, and charges associated with product liability litigation. Adjusted results in the third quarter of 2024 also exclude $5 million of accelerated depreciation on fixed assets to be abandoned due to facility consolidations.

(c) Adjusted results exclude restructuring and other costs consisting principally of severance, impairments of long-lived assets, net charges for pre-acquisition litigation and other matters, abandoned facilities, net gains on the sale of real estate, and other expenses of headcount reductions and real estate consolidations. Adjusted results in 2023 also exclude $26 million of contract termination costs associated with facility closures.

(d) Adjusted results exclude net gains/losses on investments.

(e) Adjusted results in exclude incremental tax impacts for the reconciling items between GAAP and adjusted net income, incremental tax impacts as a result of tax rate/law changes, and the tax impacts from audit settlements.

(f) Adjusted results exclude the incremental impacts for the reconciling items between GAAP and adjusted net income attributable to noncontrolling interests.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis and Note 1 to the Consolidated Financial Statements of the company’s Annual Report on Form 10-K for 2023 describe the significant accounting estimates and policies used in preparation of the consolidated financial statements. There have been no significant changes in the company’s critical accounting policies during the first nine months of 2024.

Recent Accounting Pronouncements

A description of recently issued accounting standards is included under the heading “Recent Accounting Pronouncements” in Note 1.

The company’s exposure to market risk from changes in interest rates and currency exchange rates has not changed materially from its exposure discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.

THERMO FISHER SCIENTIFIC INC.

Management’s Evaluation of Disclosure Controls and Procedures

The company’s management, with the participation of the company’s chief executive officer and chief financial officer, has evaluated the effectiveness of the company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, the company’s chief executive officer and chief financial officer concluded that, as of the end of such period, the company’s disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in the company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the fiscal quarter ended September 28, 2024, that have materially affected or are reasonably likely to materially affect the company’s internal control over financial reporting.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

There are various lawsuits and claims against the company involving product liability, intellectual property, employment and commercial issues. See Note 8 to our Condensed Consolidated Financial Statements under the heading “Commitments and Contingencies.”

The risks that we believe are material to our investors are discussed in the company’s Annual Report on Form 10-K for the year ended December 31, 2023 under the caption “Risk Factors,” which is on file with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

There was no share repurchase activity for the company's third quarter of 2024. On November 14, 2023, the Board of Directors announced that it replaced the existing authorization to repurchase the company’s common stock, of which $1.00 billion was remaining, with a new authorization to repurchase up to $4.00 billion of the company’s common stock. At September 28, 2024, $1.00 billion was available for future repurchases of the company’s common stock under this authorization.

Director and Officer Trading Arrangements

On August 7, 2024, Marc Casper, our chairman, president and chief executive officer, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act. Mr. Casper’s plan is for the sale of up to 49,000 shares of company common stock, and the exercise of vested stock options and the associated sale of up to 71,250 shares of company common stock, through December 12, 2025. The foregoing exercises or sales will be made in accordance with the prices and formulas set forth in the plan and such plan terminates on the earlier of the date all the shares under the plan are sold and December 16, 2025.

On August 22, 2024, Stephen Williamson, our senior vice president and chief financial officer, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act. Mr. Williamson’s plan is for the exercise of vested stock options and the associated sale of up to 19,650 shares of company common stock through February 26, 2026. The foregoing exercises or sales will be made in accordance with the prices and formulas set forth in the plan and such plan terminates on the earlier of the date all the shares under the plan are sold and February 27, 2026.

On September 9, 2024, Frederick Lowery, an executive vice president, adopted a trading plan intended to satisfy the conditions under Rule 10b5-1(c) of the Exchange Act. Mr. Lowery’s plan is for the exercise of vested stock options and the associated sale of up to 18,300 shares of company common stock through February 27, 2025, and for the gift of up to 1,304 shares of company common stock through December 13, 2024. The foregoing transactions will be made in accordance with the prices and formulas set forth in the plan and such plan terminates on the earlier of the date all the shares under the plan are sold or gifted, as applicable, and February 28, 2025.

THERMO FISHER SCIENTIFIC INC.

Exhibit Number						Description of Exhibit
31.1						Certification of Chief Executive Officer required by Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer required by Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer required by Exchange Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2						Certification of Chief Financial Officer required by Exchange Act Rules 13a-14(b) and 15d-14(b), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document.
101.CAL						XBRL Taxonomy Calculation Linkbase Document.
101.DEF						XBRL Taxonomy Definition Linkbase Document.
101.LAB						XBRL Taxonomy Label Linkbase Document.
101.PRE						XBRL Taxonomy Presentation Linkbase Document.
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
						The Registrant agrees, pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K, to furnish to the Commission, upon request, a copy of each instrument with respect to long-term debt of the Registrant or its consolidated subsidiaries.

---

** Certification is not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certification is not deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:			November 1, 2024			THERMO FISHER SCIENTIFIC INC.
						/s/ Stephen Williamson
						Stephen Williamson
						Senior Vice President and Chief Financial Officer
						/s/ Joseph R. Holmes
						Joseph R. Holmes
						Vice President and Chief Accounting Officer