Thermo Fisher reported third-quarter 2026 results on Wednesday, October 21, before the open. Revenue: $12.14 billion, up 9.1%, with organic growth of 6%. Operating margin rose to 18.6% from 17.4%, and adjusted earnings per share to $6.68 from $5.79.
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What was reported
| Q3 2026 | % of revenue | Q3 2025 | % of revenue | |
|---|---|---|---|---|
| Revenue (millions of dollars) | 12,137 | 11,122 | ||
| Cost of revenues | 6,945 | 57.2% | 6,470 | 58.2% |
| Selling, general and administrative | 1,863 | 15.3% | 1,795 | 16.1% |
| Amortisation of acquisition-related intangibles | 519 | 4.3% | 435 | 3.9% |
| Research and development | 348 | 2.9% | 346 | 3.1% |
| Restructuring and other costs | 199 | 1.6% | 135 | 1.2% |
| Total costs and operating expenses | 9,874 | 81.4% | 9,182 | 82.6% |
| Operating income | 2,263 | 18.6% | 1,941 | 17.4% |
| Diluted earnings per share (dollars) | 4.64 | 4.27 | ||
| Adjusted operating income | 2,968 | 24.5% | 2,587 | 23.3% |
| Adjusted earnings per share (dollars) | 6.68 | 5.79 | ||
| Free cash flow | 2,115 | 1,840 |
Source: Thermo Fisher's third-quarter 2026 press release, October 21, 2026, filed with the SEC on Form 8-K as Exhibit 99.1. "Adjusted" is a non-GAAP measure.
How the margin improved
The answer is that every major cost line fell as a percentage of revenue: cost of revenues from 58.2% to 57.2%, selling, general and administrative from 16.1% to 15.3%, and research and development from 3.1% to 2.9%. Together, total costs fell from 82.6% of revenue to 81.4%.
Against that, two lines rose: amortisation of acquisition-related intangibles rose to $519 million from $435 million, and restructuring costs to $199 million from $135 million. Both are excluded from the adjusted measure, and together they explain most of the gap between $4.64 per share on a GAAP basis and $6.68 adjusted: $1.40 per share for the amortisation and $0.54 for the restructuring.
Interest also rose: interest expense reached $417 million, from $347 million, while interest income rose to $252 million from $234 million.
The four segments
| Segment | Revenue | Change | Segment income | Margin | Year ago |
|---|---|---|---|---|---|
| Laboratory Products and Biopharma Services | 6,863 | +15.0% | 1,067 | 15.5% | 14.5% |
| Life Sciences Solutions | 2,719 | +5.1% | 1,022 | 37.6% | 37.4% |
| Analytical Instruments | 2,002 | +5.8% | 538 | 26.9% | 22.6% |
| Specialty Diagnostics | 1,098 | -6.5% | 341 | 31.0% | 27.4% |
| Total segments | 12,682 | 2,968 |
In millions of dollars. Total segment revenue, 12,682, is higher than consolidated revenue, 12,137, because of intersegment eliminations. The adjusted operating margin the company states - 24.5% versus 23.3% - is calculated on consolidated revenue, not on the sum of the segments.
Two observations:
The engine is Laboratory Products and Biopharma Services - 56.5% of revenue, growing 15.0%. It is also the only segment growing at a double-digit rate.
And Specialty Diagnostics is the only segment whose revenue fell, by 6.5%. But - and this is worth noting - its margin actually rose, to 31.0% from 27.4%. So the segment sold less and earned more on each dollar. The same picture, more sharply, appears in Analytical Instruments: revenue up 5.8% and margin up 4.3 points, from 22.6% to 26.9% - the sharpest improvement in the company.
Cash flow, and the business
Cash flow from operating activities rose to $2,551 million from $2,239 million, and capital expenditures to $437 million from $404 million. Free cash flow: $2,115 million, up 15.0% from $1,840 million.
The diluted share count fell to 371 million from 378 million - a 1.9% decline, which contributes to earnings per share.
During the quarter the company completed the divestiture of its microbiology business. On the investment side: a partnership with Mayo Clinic called Precure, which according to the company will combine data from more than one million patient samples with its proteomics ecosystem; the opening of its first AI-Automation Innovation Center, in South Korea; and an automated distribution centre in Kentucky.
And on guidance: the release states that the company would present its updated 2026 guidance on the earnings call, so the guidance figures do not appear in the release itself and are not reproduced here.
The stock
The report was published before the open on Wednesday, so the trading reaction is that same day, October 21. The stock closed at $694.02, up 0.97% from the prior close of $687.37. The intraday range was wide: $661.30 to $705.79.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
In a week when most of the large companies that reported closed lower, Thermo Fisher rose - and it is worth asking why. The answer, in my view, is not in the top line but in the quality of the improvement.
Note what happened across the segments: two segments improved their margins while their revenue barely moved, or fell. Specialty Diagnostics sold 6.5% less and its margin rose 3.6 points; Analytical Instruments grew 5.8% and its margin rose 4.3 points. That is not growth bought with discounts, and it is not an improvement that leans on volume.
And on the other side: the growth is concentrated in one segment. Laboratory Products and Biopharma Services is 56.5% of revenue and grows 15.0%, while the other four segments grow at single-digit rates or shrink. A company whose growth depends on one segment that is more than half of it is a company whose risk is concentrated there.
And what I would want to see and is not in the release: the guidance. The company chose to present it on the call rather than in the release, so the number that actually moves a stock in earnings season - what management says about the next quarter - is not in the document. That makes this report half a picture, and anyone who wants the other half needs the transcript.
What I will follow: whether Specialty Diagnostics' margin holds while revenue falls - because a margin improvement on shrinking volume can be efficiency, and it can equally be walking away from the less profitable business.
(To be clear: this is my personal opinion only. Nothing here is a recommendation to take any action, and there is no forecast here of the price of any security.)
Ilan Abramov, the author, or anyone on his behalf may hold some of the securities or funds mentioned in this article.
