Thermo Fisher Scientific (TMO) Q2 2026 earnings call transcript

I would like to introduce our moderator for the call, Mr. Rafael Tahara, Vice President Investor Relations. Mr. Tahara, you may begin the call. Good morning, and thank you for joining us. On the call with me today is Mark Casper, our Chairman and Chief Executive Officer, and Jim Meyer, Senior Vice President and Chief Financial Officer. Please note this call is being webcast live and will be archived on the investor section of our website, thermofisher. com, under the heading, news, events, and presentations, until October 20, 2026.

A copy of the press release of our second quarter earnings is available in the investor section of our website, under the heading, financials. So, before we begin, let me briefly cover our say-parper 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 risks and uncertainties, including those discussed in the company's most recent reports on foreign 10K and foreign 10Q 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 like to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even in the events of new information, future developments or otherwise.

Also, during this call, we will be referring to certain financial measures, not prepared or reconciliation of these non-GAP financial measures through the most directly comparable GAP measures is available in the press release of our second quarter earnings and also in the investor section of our website, under the heading, financials.

So with that, I'll now turn the call over to Mark.

Thank you, Raph. Good morning, everyone, and thanks for joining us today for our second quarter call. As you saw in our press release, we delivered an outstanding quarter. Customer activity across our end markets continue to strengthen. Our proven growth strategy is enhancing our capabilities, further advancing our trusted partner status with customers, and continuing to drive share again.

And we're continuing to actively manage the company, leveraging our global scale and strength of our PPI business system to create value for our stakeholders and build an even brighter future for our company.

To start, let me recap the second quarter financial results. Our revenue group 10% to $11.99 billion adjusted operating income grew 15% to $2.73 billion, just an operating margin expanded by 90 basis points to 22.8%. And we grew adjusted EPS by 13% to $6.03 per share.

Turning to our performance by end market, it was good to see customer activity continue to strengthen across our end markets during the second quarter. Our team's excellent execution enabled us to capitalize on these opportunities and deliver outstanding performance in the quarter. Let me provide some additional details.

Starting with pharma and biotech, we delivered mid-single-digit growth during the quarter. Performance was led by our bio-production and clinical research businesses, as well as our research and safety market channel. In academic and government, we grew low single digits in the second quarter driven by our chromatography and mass spectrometry business. In industrial and applied, we delivered mid-single-digit growth during the quarter.

Performance was led by our electron microscopy and chemical analysis business, as well as the research and safety market channel. Finally, in diagnostics and healthcare, we grew in the mid-single digits in the quarter driven by our healthcare market channel and the immunodinostics business. Overall, it was great to see both sequential improvement and strong revenue growth across each of our end markets.

Let me now provide some highlights on the execution of 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 of our growth strategy, there was another excellent quarter of high impact innovation. Our innovation enables customers to accelerate scientific discovery and advance their important work. During the quarter, we launched a number of new technologies across our business that strengthened our industry leadership.

At this year's American Society of Mass spectrometry Conference, we launched Next Generation OrbiTrap platforms and AI-driven capabilities that enable new scientific discoveries in deeper insights. These will help scientists solve increasingly complex analytical challenges with greater speed and confidence. This was highlighted by the launch of our Thermoscientific OrbiTrap tri-brid Apex Mass spectrometer. It enables scientists to study complex biology across multi-omics, structural biology, biopharmaceutical characterization, and small molecule analysis to help accelerate research across a broad range of scientific applications.

We also introduced the Thermoscientific OrbiTrap XCD and Mass spectrometer, which enables scientists to reduce drug development risk and accelerate time to market for our pharma and biotech customers. Another highlight this quarter was the launch of our Thermoscientific Vanquish Amplify UHPLC system, which helps scientists analyze highly sensitive biological molecules with less sample loss and better with produceability, enabling greater confidence in method development through quality control. This is an important addition to our liquid chromatography offering.

These innovations are complemented by our expanding suite of AI-powered software, including new solutions that deliver smarter workflows and accelerate proteomics research. Another example of our high-impact innovation is in life science solutions, where we introduced the Applied Biosystems PowerFlex Thermal Cycle, a next-generation PCR platform that helps molecular biology laboratories improve workful flexibility, increase productivity, and enhance reproducibility. It was an outstanding quarter of innovation, and we're pleased with the adoption we're seeing from our customers.

Let me now cover the remaining two pillars of our growth strategy, our industry leading commercial capabilities, and trusted partner status that enable our customer success. During the quarter, we continued to strengthen our position in both of these areas.

In April, we opened our flagship U. S. Bioprocesses Design Center in Massachusetts. This new facility expands our global network of collaborative innovation centers, where we work side-by-side with farm and biotech customers to accelerate drug development, optimize manufacturing processes, and help bring life-changing therapies to patients faster.

To advance population-scale research, we announced a strategic collaboration with Precision Health Research Singapore to support their population health study. By combining our integrated proteomics capabilities, including our OLEAN technology with our Corbitrap National Master of Chemistry platform, we're continuing to help advance precision medicine through one of the world's leading biobank initiatives.

These examples provide a unique opportunity for us to engage with our customers, helping them solve current challenges, accelerate innovation, and move science forward. Wrapping up on the growth strategy, we made great progress during the quarter, continuing to strengthen our leadership position.

Turning 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. Let me start with an update on our recently closed acquisitions.

First, we're very pleased with the progress we're making since completing the acquisition of Clario in late March. Clario's market-leading digital endpoint data solutions enhance our ability to deliver even deeper clinical insights to our pharma and biotech customers. This outstanding strategic fit further strengthens our position as the trusted partner to our pharma and biotech customers delivering important benefits that enable their success and help improve the productivity of the drug development process. The business delivered a strong second quarter, the integration is progressing smoothly, and the funnel of revenue synergies is building nicely.

We also continue to see great performance from our filtration and separation business. The integration continues to progress well. Customer feedback has been very positive, and we're excited about the long-term impact these capabilities will have for our customers and for our company. Both of these acquisitions demonstrate how our disciplined M&A strategy is creating value for our customers and shareholders.

And finally, you saw our announcement in late April that we entered into an agreement to divest our microbiology business. This transaction, which we expect to close in the third quarter, reflects our active management of the company. We deployed the anticipated net proceeds from this transaction, so we purchased $1 billion of our shares in the second quarter. As you know, our capital deployment strategy continues to prioritize strategic M&A complemented by return of capital to our shareholders.

We continue to have an active pipeline of M&A opportunities in our highly fragmented industry. Now, let me spend a few minutes on our PPI business system, which engages and inspires our colleagues to find a better way every day. PPI enabled another quarter of outstanding execution, which you can see in our strong profitability and free cash flow. Through PPI, we're continually improving quality, productivity, and customer allegiance while creating capacity to invest in innovation and strengthen leadership position.

We're actively deploying AI across the company to further accelerate PPI's impact. PPI enables outstanding execution today and positions us to create even greater value over the long term.

Before I turn to guidance, I'd like to highlight the latest updates to our CSR efforts and they're now available. I encourage you to visit our website to learn more about our performance and the progress from making towards our long-term goals. As you'll see on the website, we continue to execute our net zero roadmap, increasing the use of renewable electricity.

We also increase the number of zero waste certified sites, as well as expanded the reach of our STEM education programs. These programs benefit more than 185,000 students annually and help to inspire the next generation from innovators.

Now I'd like to review our updated 2026 guidance at a high level. We're raising our guidance for the full year on the top and bottom line, reflecting our strong operational performance in the second quarter and increased outlook for the second half of the year. And we're also incorporating the expected impact of the pending divestiture of our microbiology business.

We're raising our revenue guidance to a new range of 47.4 to $48.1 billion, representing 6 to 8 percent reported revenue growth over 2025. Our expectation for full year organic revenue growth has increased to about 4 percent. Our guidance range remains 3 to 4 percent, and we now expect to deliver at the upper end of that range. We're also increasing our adjusted earnings per share guidance to be in the range of $24.93 to $25.33, which now represents 9 to 11 percent growth over 2025, and a $0.25 increase from our previous guidance at the midpoint.

Jim will take you through the details in his remarks. So to summarize our key takeaways, we delivered outstanding performance in Q2 with a clean top and bottom line B with organic revenue growth of 5 percent and adjusted EPS growth of 13 percent. It's great to see customer activity continue to strengthen across our end markets. We're raising our full year revenue and adjusted EPS guidance.

Our proven growth strategy is resonating more than ever with our customers and driving meaningful share gain. Our recently closed acquisitions are performing very well. And at the halfway point in the year, we're well positioned to deliver a great 2026 and build an even brighter future for our company.

With that, I'll turn the call over to Jim.

Thank you, Mark. And good morning, everyone. I'll take you through an overview of our second quarter results for the total company and then provide color on our four business segments and conclude with details on our updated guidance for the year.

Before I get into the specifics of our financial performance, I'll provide a high level view of how the second quarter played out versus our expectations at the time of our last earnings call. As you saw in our press release, we delivered an outstanding quarter with 5 percent organic revenue growth and 13 percent growth in adjusted earnings per share.

These results are significantly ahead of the assumptions included in our previous guidance on both the top and bottom line. This reflects excellent execution by our team and stronger customer activity across our end markets.

Q2 revenue was approximately $300 million ahead of our previous guidance, including 2 percent stronger organic revenue growth, a higher contribution from acquisitions, and favorability from foreign exchange.

Adjusted EPS was 30 cents ahead of our previous guidance, driven by the expected pull through from our revenue beat, strong cost productivity, and excellent performance from our acquisitions, including Cleria. So a very strong quarter of execution by the team, delivering results well ahead of our guidance and positioning us incredibly well at the halfway point of the year.

Let me now provide you with some details on our performance. Starting with earnings per share, in the quarter, adjusted EPS grew by 13 percent to $6.03. Gap EPS in the quarter was $4.68, up 9 percent from Q2 last year.

On the top line, Q2 reported revenue grew 10 percent year over year. The components of our reported revenue change included 5 percent organic growth, a 5 percent contribution from acquisition, and a slight tailwind from foreign exchange.

Turning to our organic revenue performance by geography, in Q2 North America grew low single digits, Europe grew high single digits, and Asia Pacific grew high single digits with China growing low single digits. With respect to our operational performance, we delivered $2.73 billion of adjusted operating income in the quarter, an increase of 15 percent year over year, and adjusted operating margin was 22.8 percent, 90 basis points higher than Q2 last year.

In the quarter, we continued to deliver strong productivity and generated favorable volume leverage. This enabled us to offset the impact of unfavorable mix and fund strategic investments to further advance our industry leadership.

Total company adjusted gross margin in the quarter was 41.4 percent. Moving on to the details of the P&L, adjusted SG&A in the quarter was 15.6 percent of revenue. R&D expense was $360 million in Q2, reflecting our ongoing investments in high impact innovation. R&D as a percent of our manufacturing revenue was 6.9 percent in the quarter.

Looking at our results below the line, Q2 net interest expense was $190 million. The adjusted tax rate in Q2 was 11.6 percent, and average diluted shares with $371 million in Q2, 7 million lower year over year, driven by share repurchases, net of option dilution.

Turning to free cash flow and the balance sheet, year to date cash flow from operations was $3.3 billion, and free cash flow was $2.5 billion after investing $800 million of net capital expenditures.

In Q2, we also deployed $1.2 billion of capital to shareholders through $1 billion of share buybacks and approximately $175 million of dividends.

We ended the quarter with $4.1 billion of cash in equivalents and $42.5 billion of total debt. Our leverage ratio at the end of the quarter was 3.6 times gross debt to adjusted EBITDA and 3.3 times on a net debt basis.

Concluding my comments on our total company performance, adjusted ROIC was 10.9 percent. Now, I'll provide some color on the performance of our four business segments. In life sciences solutions, Q2 reported revenue increased 13 percent versus the prior year quarter, and organic revenue growth was 3 percent. Growth in this segment was led by our bio-production business, which had another quarter of excellent organic growth.

Q2 adjusted operating income for life sciences solutions increased 13 percent, and adjusted operating margin was 37.0 percent, up 20 basis points versus the prior year quarter. During Q2, we delivered very strong productivity, which was partially offset by the expected impact from the acquisition of our filtration and separation business and unfavorable mix.

In the analytical instrument segment, both reported revenue and organic revenue increased 7 percent versus the prior year quarter. We delivered good growth across all three businesses led by our electron microscopy business. In this segment, Q2 adjusted operating income increased 30 percent, and adjusted operating margin was 23.0 percent, up 420 basis points versus the year ago quarter. In the quarter, we delivered strong productivity, generated good volume leverage, and benefited from the impact of foreign exchange and favorable mix.

Turning to specialty diagnostics. In Q2, reported revenue grew 6 percent year over year, and organic revenue grew 5 percent. Growth in this segment was led by our healthcare market channel, as well as our immuno diagnostics and transplant diagnostics businesses.

Q2 adjusted operating income for specialty diagnostics increased 9 percent, and adjusted operating margin was 27.7 percent, 70 basis points higher than Q2 2025.

During the quarter, favorable volume leverage and good productivity were partially offset by unfavorable mix. Finally, in the laboratory products and biopharma services segment, reported revenue increased 12 percent, and organic revenue growth was 5 percent. In Q2, growth in this segment was led by our research and safety market channel and our clinical research business.

Q2 adjusted operating income in this segment increased 13 percent, and adjusted operating margin was 14.0 percent, 20 basis points higher than the prior year quarter. In the quarter, good productivity and strong performance from the recently acquired Claryo business were partially offset by unfavorable mix and strategic investments.

Turning to guidance, as Mark outlined, we're raising our 2026 full year guidance to reflect the strength of our performance in Q2 and an improved outlook for the second half of the year, while also incorporating the expected impact of the announced divestiture of our microbiology business. We now expect revenue to be in the range of 47.4 to 48.1 billion dollars and adjusted EPS to 48.1 billion dollars in the range of 24.93 cents to 25.33 cents, now representing 9 to 11 percent adjusted EPS growth.

Let me walk through key assumptions underlying our updated full year guidance. For organic revenue growth, our expectation has increased to about 4 percent for the year. Our guidance range remains 3 to 4 percent, and we now expect to deliver at the upper end of that range. The increase in our full year organic revenue growth outlook includes all of the Q2 over performance plus a modest improvement to the second half.

Updating for FX, we now expect a $200 million revenue tailwind from board exchange, which is $100 million lower than our previous guidance.

Our updated guidance also incorporates the expected impact of the pending divestiture of our microbiology business, which we expect to close in the third quarter. As a reminder, the business had revenue of $645 million in 2025 with roughly a quarter of that revenue selling through our channel businesses. We'll retain our channel relationship and continue selling these products after the divestiture. With an expected Q3 close, the divestiture reduces 2026 revenue by approximately $200 million net of the retained channel business and reduces 2026 adjusted EPS by 5 cents.

We continue to expect the transaction to be deluded to adjusted EPS by approximately 15 cents in the first full year following the close.

In aggregate for adjusted EPS, we are increasing the midpoint of our full year guidance by 25 cents comprised of the following.

30 cents from the strong performance in Q2.5 cents from an increase to our revenue outlook for the second half of the year, partially offset by the impact of the divestiture of our microbiology business of 5 cents, and a second half headwind from recent changes in FX rates of 5 cents.

Embedded in the guide is stronger performance from our acquisitions on both the top and bottom line compared to our previous guidance. Acquisitions are now expected to contribute $1.6 billion of revenue and $0.32 of adjusted EPS for the year. In terms of adjusted operating income margins, our guide has increased to 80 basis points of expansion. We are continuing to actively manage the company and drive excellent operational performance, enabling us to increase our top and bottom line guidance for the year.

To help you with your modeling, here are a few additional assumptions within the updated guide. We continue to expect approximately $660 million of net interest expense in 2026. We continue to assume that the adjusted income tax rate will be 11.5%. In terms of free cash flow, we continue to expect that to be in the range of $6.9 to $7.4 billion for the year, including between $1.9 and $2.1 billion of net capital expenditures.

In terms of capital deployment, we're assuming $4 billion of share buybacks with $3 billion completed in January, and an additional $1 billion completed in the second quarter. The second quarter share repurchase represents the use of expected net proceeds from the pending microbiology divestiture. We elected to use the proceeds for share repurchases and to complete the repurchase ahead of the transaction closed based on an assessment of our evaluation at that time.

And we're assuming that we'll return approximately $700 million of capital to shareholders this year through dividends. We estimate that full year average diluted share camp will be between $370 and $373 million shares.

Now let me provide some color on phasing for the remainder of the year. We grew 3% organically in the first half in total, and expect that to step up to 4% for the second half, with both quarters being similar in terms of organic revenue growth. And we expect Q3 adjusted EPS to be $0.35 to $0.40 higher than in Q2.

So to conclude, we executed very well to deliver an outstanding second quarter, and we are raising our full year outlook on the top and bottom line. With that, I'll turn the call back to wrap.

Thank you, Jim. Operator, we're ready for the Q&A portion of the call.

Yeah, Mike, thanks for the question. You know, it's good to have a good quarter behind us and a strong first half. So when I think about our end markets, you know, as the way you described it, customer activity actually picked up across our end markets. And if you recall what we said during the course of this year is we expected that activity would pick up from, you know, the 2025 levels as this year progressed. And we saw that getting to that level in Q2 with a much better set of activity, very encouraging to see the continued progression in pharma and biotech customer base.

Definitely good momentum continues in pharma, but also biotech clearly, we saw spending pick up, you know, we've talked a lot about how activity had been picking up. But now it's good to see that's translating into the into the revenue as well. And across the various segments, you know, you saw that trend across broadly, but, you know, our biggest end market, about 60% of our revenue really progressing in a nice direction.

Okay.

So we look at it. We grew, we grew 3% in the first half and we're stepping it up to 4% in the second half, and that includes a modest improvement to the outlook for the second half.

And right now the we've outlined the way we see the quarterly phasing playing out, which is really not meaning if we change versus our original assumption.

Thanks, Mike.

Tycho, thanks for the question. Good morning. So clinical research really had an excellent quarter. Strong organic growth and revenues, strong organic growth and authorizations. Business is doing very well in the market.

And the market conditions are improving. So you have really, really both good results in the quarter and encouraging progression going forward, which largely as we expected would be playing out. So it's good to see that translating. Clario had a very good quarter. Obviously doesn't show up in our organic results, but our first full quarter of ownership of the business was very strong.

You know, it had good performance on, you know, it's authorizations. It's revenue growth, earnings. So really a nice contribution. It was good to see both that and with our combination, with our filtration and separation business, we were able to raise our contribution from acquisitions for the full year on both the revenue and earnings line. So that's very positive. When I think about, you know, our broader services business, accelerated drug development, incredibly well received. And that really shows up in our biotech customers where, you know, you have a where customer can get their arms around the whole program from, you know, how they outsourced their development of the actual medicine through the scale up of that medicine as well as designing the clinical trials and the interplay between those activities allows you to save time and cost.

And that's been very compelling and has really helped us drive very strong authorizations. When I think about the performance of our form of services or what you call the Paytheon business, you know, we had modest growth in the quarter in line with our expectations. The second half, as we've talked about all year, will be stronger for that business is based on when we're actually shipping the activity and that business obviously has benefited earlier in the year from a number of wins around reshoring that has been, you know, embedded in the outlook for the business. So I feel very good about the position for farmer services, you know, in terms of how we execute commercially and what the outlook looks like for the coming quarters and years ahead.

Thank you.

Yeah, so when I think about the quarter, right, you know, we took all of the beat in due to embedded that in our outlook and then we increased our organic revenue growth, you know, modestly, but did increase it. It's really driven by that, the forward look is really driven by farmer by attack. You know, it was nice to see in the quarter that academic and government return to growth. And, you know, we saw the U. S. slightly positive and those things are very, very good. But we still think the market is going through a stabilization period so we didn't change the outlook for academic and government. We really focused it on farmer and biotech and then obviously we'll see if, you know, we see the very positive trends in academic and government sustain and that would obviously be an upside over time.

As you look at your customer class and product portfolio, however those things progressing, anything that stands out? Yeah, Jack, thanks for the question. Clean quarter, right? You know, when I think about business progress nicely, you know, and as we look to the second half for a farmer and biotech, we actually think it'll be a little better even though we saw a nice step up in the quarter.

For us, we had broad-based momentum and the bio-production had a really excellent quarter. It was nice to see the continued momentum in that business. Very strong growth.

Obviously we talked about clinical research with Tycho's question and in addition, research and safety market channel had a very strong performance. So it really was not a lot of, you know, as you pass through all of the details, it was just a clean, good quarter, and actually quite encouraging to see biotech picking up as well. Again, we're not surprised by it, and I think how Jim articulated, you know, in our investor day, the progression for the stepping up of growth in our business, you know, the big drivers are, you know, recovery in biotech and recovery in academic and government.

You saw, you know, the real signs of the biotech recovery in the results. You saw a good quarter in academic and government were not calling yet, that's the new level yet, but it's progressing in a nice direction.

I actually think the average of the two is the right way to think about healthcare market channels. I was actually doing a good job on the business as well position. So I feel good about the performance there. So that one's really to take the average of the two quarters, you know, when we report our results in the queue.

When I think about research and safety market channel, you see really two dynamics, really very strong competitive positions serving pharma and biotech. And, you know, as demand picks up there, that's good. Winds also with account winds also drives some of that performance. So I think it's the winds are really the, you know, the fair game part, the market improvement shows up broadly. So that business is doing doing quite well and a better quarter and academic.

And government helps that business, but not really the big driver, if you will.

Thanks to the question. So in terms of analytical instruments, really a very nice quarter. You know, high single digit growth. All three businesses deliver strong growth in the quarter. So it's really nice to see that. When I think about the drivers, innovation is the most important driver. You know, we launched a suite of products. You know, we had a great American Society of mass spectrometry conference in June with two mass spectrometers, the number of AI enabled software offerings that really help customers have greater insights into their research. We saw a strong adoption of our high end instrumentation broadly and especially actually globally in the academic customer set. So you've heard me say in the past that irrespective of funding environments, if you have really relevant innovation, customers get money and we saw that show up very nicely.

We also had a very important launch in our UHPLC product offering, which bodes well for the future. And, you know, those were really the biggest drivers. And then with an electron microscopy, another really good quarter, you know, semiconductor. You know, we play a key enabling role there and as well as advanced materials and we saw very strong growth in our business and very strong bookings growth as well. So, you know, very nice performance for analytical instruments, which you do.

Yeah, so when I think about China as a reminder, it's about seven and a half percent of our revenue. We grew in the low single digits, great to return to growth in the business. Really driven by a blend of pharma and biotech and industrial and applied markets. So those were both very strong academic and government within China remains, you know, quite muted. You know, not different than what we've seen, but not improving either.

And so, you know, what we're doing is capitalizing on where the money is and it's nice to see the team deliver growth and that obviously help contribute to our overall growth in the overall performance of the company. I'll be spending more time again in China in the second half of the year. I'm looking forward to that and spending a lot of time with customers and government relations topics as well and continue to stay close to what's going on there. But he was doing a good job and I feel good about that progressing a little bit better, but still, still not a, you know, it's not a creed as to our organic growth as a company yet, but we're taking the steps to put ourselves in a good position.

I haven't got a chemical analysis question a long time, so I think it makes it happy to have a good quarter in the business. It's not a huge business, but we have some really key technologies. The two drivers of the growth were, I would say the higher commodity prices, you saw that in the demand for industrial customers that are commodity sensitive.

So that was good. And we also saw an increase in demand for safety and security applications as well, given the amount of conflict going on in the world. Not surprised that that's picked up or us is largely radiation and explosive detection and we saw good demand there. So, Mark, conditions are getting better and, you know, the team's doing a good job.

Yeah, Dan, I wouldn't reach that assumption. We've been saying all along the second half steps up versus the first half. First half was the low single digit growth and then it steps up meaningfully in the second half. It's all aligned to production schedules and with customer campaigns, but it doesn't necessarily imply that this quarter grows over the third quarter.

Dan, thanks for the question. You know, the business had a really strong quarter is performing well. It's a very well positioned business, right? And, you know, we have differentiated set of capabilities that span the upstream and downstream workflow. You know, and as a reminder, we're a leader in so-called for media and single use technologies. We have a growing position in purification and, and obviously through the acquisition of sovents and filtration and separation business. We have a, you know, a nice position in filtration as well. So when I think about the quarter, we had good strength in our business and team did a good job broadly across. While it doesn't show up in our organic growth in the quarter, filtration and separation business is doing very well and demand has been strong and we're actually increasing capacity, which will vote well for the future of that business.

So, broad base, very good. And, you know, we're looking forward to, you know, our competitive position and doing a great job for our customers and serving that market.

Could you just zoom out a little bit, Mark? I mean, there's been so much noise. The past few years with IRA, M. F. N. Lee Shoring, now, AI.

Can you just kind of speak, maybe just broadly across your business, kind of what you saw in the quarter, maybe verse first craft like our things changing there is a tone getting better, like, you know, did you want, you know, did your new updated guy leave room for upside potentially, you know, depending on what the trends are there. Thank you.

And you got a good multipart question, Dan. So what I would say is when I think about large pharma, you know, I interact with these executives, you know, regularly.

And I was thinking, I was having a breakfast yesterday with one of our key customers and just, here's a lot of excitement about their pipelines, right? And, and the discussion is about, you know, what's the strategy to help them accelerate their innovation? How do they do it productively? Why are we investing where we're investing? How do they can deploy our capabilities to help them?

You know, our trusted partner status, I mean, it sounds cool, but the reality is that's how we work with these customers every single day to help them be successful. And, you know, there's quite a positive tone. You know, for those customers that have larger, you know, exclusivity clips that come up, they're really working their pipeline and we're helping them with that. So it's really quite an encouraging time.

They have their arms around the macro, right, in terms of things like the IRA and MFNs and tariffs and these different factors. And we've said for a while that, you know, our customers felt like they were going to navigate that successfully. And I think they feel very good about what, you know, what the outlook is. And so it's an exciting time and serving that customer base.

You know, how would you characterize where we are in that cycle? It sounds like things have improved at least a little bit. You know, what are you seeing and how those customer conversations are evolving? Is it certain areas of instrumentation more than others would love to dive into that academic piece a bit more.

Sure. So let me start at a high level and then I'll click down a little bit, right? So Patrick, when I think about it, we had low single digit growth in the quarter. So it was nice to have a positive quarter really driven, most significantly by chromatography and aspect commentary and the launches of products over the last year, we saw strong adoption globally for those products.

It's a very important set of research tools. And as you know, if you're an academic researcher, if you don't have the best tools, then effectively it's very hard to have the cutting edge publications and break through research because another scientist elsewhere has a better tool. So you've seen money deployed in that area. From a geographic perspective, we actually have a very strong quarter in Europe. U. S. return to growth. China, as I mentioned on the China commentary, was more muted environment, not relative to the past, but kind of at the same level.

And when I think about the second half, you know, we're not calling a new trend, you know, based on Q2, we're encouraged by it, but we'd like to see the activity continue to be more broad base before we say that that that one's behind us. There's good support in the government. I've spent enough time with Congress to know that in the U. S. around supporting academic research, there's very good support for that. So I feel good about the market stabilizing. And I think our customers are getting their arms around, it's less about the headlines and it is actually about funding flow and the funding flow is improving. So I feel good about the, you know, slow stabilization of that.

Thanks, Mark. So harder for me to comment on the group overall. You know, we've seen biotech activity pickup or a few quarters now actually in our authorization. So that's actually been strong for us. And, you know, there's a, you know, for simplicity, a six month lag or so from authorizations to revenue. And it varies a little bit, but so that's picked up.

Authorizations have been strong for a while now in the business. And actually, the business and performing as we expected, and that's a good thing. We expected this to have a really good year in clinical research. And that's actually playing out that way. So that's very, you know, very encouraging. And there'll be a lot of excitement around the Clario capabilities and point data business. And that's gone well in the first full quarter of ownership. And there's a lot of customer interest in that because whether you're using our CRO or anybody else's CRO, it's really a great set of capabilities that can enable, you know, great clinical research. So good time for that business.

Operator, we'll take one more question.

You're underappreciated there on the downstream side. Can you just talk about what the competitive dynamic looks like? You know, any early wins or increased interest on some of the newer portfolio you have on that side?

Yeah, you know, there are a number of fine players in the bio production space. The bio production space is a great space, right? It's, you know, a key enabling technology, especially moving more towards single use for the pharmaceutical and biotech industry. And we play a key role. We've launched a number of, you know, innovative technologies, whether it's our Dynadrive, you know, single use bio reactors, which is getting more and more standardized across the CDMO landscape. That's a super important indicator because it basically says that it drives efficient production of medicine. It's also being adopted in the innovative pharmaceutical companies, but CDMOs that, you know, they make all their money, including our own, on how well you run your operations.

Dynadrive is quickly becoming the favorite technology and that both well for the follow along consumable stream that comes from that as well. So, so that's gone well and our resin business is doing well, right? It's a smaller business. It's worn a lot of new molecules over time and, you know, and, you know, we're doing well there. That's another area where technology has driven differentiation.

And from a filtration perspective, kind of a different strategy that the legacy 3M business was always well respected as a very good technology business. But our commercial reach to this customer base and the relationships that we have has been allowing for a lot of trials of the technology. In fact, the customers want to see it. They are aware of it. But now they're interested because they, you know, our customers know us as a really reliable supplier and, you know, we'll help them enable their success.

Yep. Thank you. So, let me wrap up the call first. I'd like to thank everyone for participating today. You know, we're pleased to deliver an outstanding quarter. You know, we're 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 as the year progresses and as always, thank you for your support. If I'm officially scientific. Have a good day, everyone.