Welcome, and thank you for standing by. I would like to inform all participants that this conference call, as well as any Q&A, may be recorded. Where a company is presenting, any recording may also be posted on their website. Views and opinions expressed by any external speakers on this call are those of the speakers and not of JPMorgan. Parts of this conference call may be reproduced in JPMorgan research. If you have any objections, you may disconnect at this time. Unless otherwise permitted by internal JPMorgan policy, members of JPMorgan Investment and Corporate Banking are not permitted on this call and should disconnect now. I would now like to turn the call over to your host. Perfect. Good afternoon, everyone. This is Rachel Vatnsdal from the Life Science Tools and Diagnostics team here at JPMorgan. I'm joined today by Marc Casper, CEO of Thermo Fisher Scientific, as a part of our JPMorgan CEO call series. As we typically do with this, this will be Q&A focused. It will be roughly 30 minutes. Thank you again for everyone on the line for joining us. Marc, thank you as well for joining us today. I wanted to kick off the discussion with just kind of a lay of the land and state of the union. Obviously, this has been a really dynamic time for the broader life science tools industry, not only from a fundamental standpoint, but also from a policy perspective, the last nine months with the new administration. Can we get your perspective on the overall market environment, how Thermo is uniquely positioned within that, and then why should investors feel confident and excited about the opportunity within Thermo? Rachel, thanks for doing this today. When I think about the environment, the state of the union, if you will, I think it starts with, you know, where are we with performance, right? Q2 was, you know, with strong performance, we were able to, you know, raise our outlook. You see the active management of the company in terms of not only focusing on driving share gain, but also on the cost management side of the equation so that we deliver strong performance, and we're excited about that. When I think about from the dynamic environment perspective, things are starting to play out in a way that are predictable, and you're seeing that step up slowly in the growth rates of the industry as well. Across the industry, largely, it was a reasonable quarter as well in terms of the market conditions. That is also encouraging because I think one of the things that's great about our industry, if you take a long perspective, is the predictability around it. From that perspective, we feel good about it. I think about, you know, what did we do the day after earnings call? I think it brings it a little bit to life about the environment. I actually traveled to Greenville, North Carolina, where we have our largest drug product facility, and was meeting with the executive team of one of our largest customers at the site, and where we produce a lot of medicines for them. We talked about the environment, right? How are they thinking about, you know, navigating the environment? Great enthusiasm about the opportunities ahead in their own pipeline as a large pharmaceutical company, but also some of the changes in policies and how they want to rely on Thermo Fisher to take advantage of production in the United States, where we can collaborate in an efficient way to help them navigate this environment successfully. When we talk about things like trusted partner, which I'm sure we'll talk about, to be able to literally start the cycle for Q3, and our customers are just rolling up their sleeves with us and looking for new opportunities to work even more closely together, I'm quite enthusiastic about what lies ahead. Perfect. I wanted to dig into some of the end market discussion. Maybe going off of some of the policy uncertainty, I think academic and government is an area that touches on that a lot. Academic and government is roughly 7% - 8% of Thermo Fisher 's revenues. Can you walk us through how is performance within that end market tracked so far relative to your expectations? How are you thinking about your assumptions for the back half of the year? Has your perspective on the outlook for NIH funding on 2026 changed at all, given some of the recent developments and also some of the new funding mechanisms that we're hearing about, things like multi-year grants as well? Yeah, so when I think about the academic and government end markets, in the U.S., it's about 7% - 8% of our total revenue. In the first half of the year, it was down mid-single digits in terms of the performance. What we've embedded in our guidance is that it gets a little bit weaker for the balance of the year, and that's been consistent for the last couple of quarters. The view is that customers' hesitancy, as they figure out exactly where their budgets are, how funding is getting released, that there'll be some level of caution through that. That seems to be a reasonable assumption. We've had the opportunity to have quite a bit of interactions with the administration in this area. There's a very clear understanding of the importance of innovation in this country to our economic health and job creation and America's standing in the world. There's actually a very high level of commitment to having policies that will foster strong investments and innovation in the country. In the midterm, I actually feel good about where direction will go. When I think about the budget process that's going on, it's very much as I saw it at the end of Q2, where you see that both in the House proposal, the Senate proposals, relatively flattish budgets is what's being proposed. That stability in budget should allow for an environment that actually, over time, is actually going to be better than what we're facing right now. As you get to a more of a flattish environment, that actually will become a tailwind for us going forward. Got it. That's helpful. Maybe what about pharma/biotech? This is your largest end market. It's roughly 60% of your revenues at Thermo. Can you remind us of the performance this past quarter and really what were the drivers within that pharma/biotech segment? We have a lot of ongoing questions regarding tariffs, MFN, some of the funding volatility within biotech as well. What are you hearing from customers? Again, remind us, how does Thermo serve these customers across the pharma/biotech end market across the entire value chain? Yeah, we had a very strong performance in Q2. We had mid-single digit growth serving pharma/biotech. A nice organic versus the prior year, a nice step up in growth versus the prior quarter. You're seeing that market continue to improve. It was very broad-based for us in terms of the strength. We had very, very strong performance in bioproduction. We had very strong growth in pharma services. You saw clinical research turn to slightly positive growth with very strong authorizations performance. The channel did very well. When I look across our business, we really serve this customer base from facilitating what goes on in early research in the labs, all of the reagents and chemicals and equipment and consumables. We equip the labs and restock them. All the way through, we design and execute the clinical trials on the clinical development side. We help our customers develop the physical molecule in our drug pharma services business, all the way through commercial scale-up. From a physical standpoint, we also help them supply the medicines in all of the studies that they do. A very strong set of capabilities in serving that customer base. We're seeing that picking up nicely, and that bodes well for the future. The tone, there's a lot that the customer base is absorbing in terms of exactly how pricing mechanisms are going to work and what the tariff environment means for them from a production standpoint. When I sit down with executives and the customer base, it's actually remarkably positive, right? It's not that there won't be challenges and that there won't be issues, but they feel good about their ability to work with government to help shape policies and ultimately feel like they will come through this period successful. Probably part of that is because they're very confident in their pipelines, right? The science is good, the medical understanding is good, and they actually feel that they're going to bring new medicines to market. When I was thinking about my own experience during the course of August, I had the opportunity to spend meaningful time with the leadership at the FDA, really just discussing what their vision is and understanding that. They're looking to make the approval process of medicines more streamlined, effective, so that patients that are waiting for hope and a cure can get those medicines. They want it to be safe. They want to make sure it's effective. The interest in doing it in a better way, I think, is incredibly compelling for what that will create for our industry. Perfect. That's helpful. You mentioned pharma services. I wanted to dig into a few of your businesses here. With your CDMO business, can you update us on how that has performed year- to- date relative to your expectations, how you're thinking about the back half, and also the visibility into 2026? Another topic I wanted to touch on here was just the idea of this administration's focus on domestic manufacturing. You mentioned the Sanofi acquisition from earlier this year. How should we think about the opportunity within pharma services going forward here? Yeah, pharma services was a real highlight in Q2. We had high single-digit growth in the business. When I think about the outlook here, we have an incredibly strong position in sterile fill finish in the drug product side, which is incredibly important for biologics, for the GLP-1s, and any of the injectables. We're the leader in all of the clinical trials, logistics, packaging, distribution of medicines, where we have very high share as well. The demand has been incredibly robust, right? Customers trust us. They see our leading set of expertise. We've had very strong new wins in that business, expansions of relationships. When we talk about trusted partner, in a certain respect, it is not only to help them with the biggest challenges that a pharmaceutical company is trying to work through, but it creates new opportunities. The Sanofi example is a good one because we have a good longstanding relationship there. They have a high-quality drug product site in North America. It's underutilized, but a very talented team producing critical medicines. They sold it to us at a win-win for both companies, where we would give them assurance of supply of their medicines and be able to leverage that site by expanding its capacity to serve the market. Given the real focus on moving medicines from outside the U.S. to the U.S., it is a great way of cost-effectively serving the market by leveraging the existing footprint, just adding some lines, scaling up the facility. It's going to have really great returns for the company and solve some of the challenges that our clients are facing right now. Yeah, for sure. Along those same lines, in terms of services, assets, your CRO business, the clinical research, you saw really sustained momentum within the second quarter. It was slightly above positive growth for the quarter, and you noted strong authorization activity. Can you talk about, you maintained that outlook of the flattish organic revenue growth for the year, returning to positive growth in the back half. What trends are you really seeing within those pharma/biotech customers within the CRO? Can you give us some color on book to bill exiting the quarter? Sure. What is driving that strong authorization momentum here, and how should we think about that as we look into 2026? Yeah, so Rachel, when I think about our CRO capabilities, the year has been playing out as we expected, right? There's been obviously lots of investor questions across the industry about the CRO space. It is a business with a reasonable level of predictability. You have a view within the pipeline. The team's done a good job of executing against its plans. What has been really compelling is the impact of our Accelerator Drug Development solution, our drug development capabilities. There, it's leveraging our knowledge and insights from both being one of the largest clinical research organizations and also one of the largest clinical development organizations. How do you take time out of the clinical development process? That is allowing us to win a lot more business. When we talk about the strong authorizations growth, you saw authorizations start to pick up in some of the larger players in the industry. We did very favorably relative to that. The trends are very encouraging. It's a long cycle business. That really means that you see that in 2026 and 2027 in revenue. Those authorizations position us well. We've seen great strength there. Biotech really benefits from the Accelerator Drug Development capabilities because they are, in a way, smaller. It's easier for them to fully capitalize on what are we developing for them and then the actual clinical research process. We're seeing really great momentum there. We have great strength in pharma, and that continues to progress well. Perfect. Just book to bill color, if you had any color on that one. Yeah, it's well over 1x. We don't give out the exact number, but it was a very strong performance. Perfect. Great to hear. Last business I wanted to touch on was your Analytical Instruments. Can you walk through how did organic revenue growth in the second quarter track relative to your expectations? What stood out across some of those individual businesses? One question that I think we're getting on is electron microscopy, where growth seemed to be below trend, given that had been such a strong performing business in prior quarters. Looking ahead, how do you kind of see growth playing out within the Analytical Instrument business? You also highlighted some of the product releases at ASMS. What excites you about some of those introductions? How are customers kind of viewing innovation at this part of the CapEx cycle? Yeah, so there's a lot to that question. First of all, I think at the highest level, our Analytical Instruments business played out in Q2 as we expected. It's the business that has the most headwinds from the market conditions because it has a large presence in China, and it has a large academic presence, right? When you think about funding, we were expecting more muted conditions. We declined in the mid-single digits, in line with what we would have expected for Q2. When I look at the quarter, we had a very strong set of product launches. Because we typically play at the higher end of the instruments business, the million-dollar price point on really breakthrough innovations, the interesting thing is that it's not that correlated with funding. When you have a really relevant innovation, customers actually get the money, right? If I think about the two mass spectrometers that we launched at ASMS, the next generation of the Orbitrap Astral Zoom, demand has been incredibly strong. The same thing, we're seeing real interest in the Excedion as well. We also launched our next generation cryo electron microscope, and the order book is very strong there. When you really bring out relevant innovation, customers get the money. I feel good about that. Electron microscopy largely played out as we expected, and largely because of the comparisons. In the prior year, we had double-digit growth, and I think that part explained the particular dynamic in Q2. That makes sense. You touched on China. It's not a tools fireside chat if we don't dig into China. Yes, absolutely. You mentioned organic growth within the region declined high singles in the second quarter. How did that play out relative to your expectations? Can you walk us through some of the specific factors that are impacting those results? I know you've traveled to China recently. What are you hearing from customers and the team in the region? How should we think about demand in China going forward? Yeah, so I think, Rachel, starting with the context, about 8% of our revenue. It's an important market. We have about, on a percentage basis, about half the average exposure to the industry. Normally, that would be a liability. Right now, it seems to be positive, right, in terms of the environment. We declined high single digits in the quarter. That was actually a bit favorable to what we expected because at the end of Q1, that was really the area where tariffs were so high that it was almost like a trade stoppage. That quickly rolled out. Versus our expectations, China was actually a little bit better. Holding aside the tariff environment, the market growth is pressured, right? When I think about that right now in the instrument business, it really has been customers are still in that recovering economic situation and really have been cautious on spending. I got to spend a week in China at the end of July into early August. I had lots of meetings with both customers, our team, and then with the very senior members of government. What I came away with is a couple of things. One is our +40 years of history in the country really serves us well, right? We have incredibly strong relations. We're a trusted supplier to the customer base. In an environment where there's a lot of noise and tension, that history helps us in terms of navigating it. I feel good about our ability to continue to be successful in China. We'll see good opportunities there. I also come away with customers are still in that recovery mode. They don't yet have that full confidence. Our expectation is that while China market conditions are going to improve in the not distant future, it's more about flattening out, if you will, than it is robust growth in the short term. That makes sense. Shifting to capital deployment, you even announced that you closed the Solventum deal earlier this week. Can you walk us through what you guys are seeing from an M&A pipeline currently? How should we think about size and just mix of deals as well? As you look across Thermo 's current businesses, do you see any meaningful gaps that you'd like to address inorganically? Yeah, so when I think about capital deployment, I always, you know, the strategy has been consistently executed for a very long period of time. It's around, you know, for M&A, it's following a disciplined criteria of, you know, does a transaction strengthen the company strategically? Does it help our customers? Would it be valued by our customers? Does it generate, you know, strong returns for our shareholders in terms of, you know, strong returns on invested capital, strong internal rates of return so that we are creating value? Our track record here is excellent. We are incredibly disciplined. We look at many transactions. We pick a few. You're here in a perfect week because we closed two transactions this week, both the Solventum, as you noted, and the Sanofi transaction, both closed at the beginning of the week. When I think about those transactions, you know, the tangible ones, these are ones that, you know, our customers are excited by. I already talked about the Sanofi one. On Solventum, you know, we have a very strong position in bioproduction. This adds filtration to the capabilities. Our customers are excited to build out the presence further with us. We will take a very strong position and make it an even faster growing business over time. We're excited about that. When I look to the future, we have an active pipeline. We have a strong balance sheet. We serve a very fragmented market. You'll continue to see us actively, you know, evaluate the opportunities out there. When the right ones generate the right returns, you'll see us continue to be very active in terms of capital deployment. I feel good about what our pipeline looks like and our ability to continue to build out our portfolio and capabilities. That will be incredibly valued by our customers. Our customers are excited when we add new capabilities because it helps them have even more opportunity to achieve their goals and leverage a trusted partner. Are there any gaps in the portfolio that you currently see? I don't really think so much as gaps as I think about how do we strengthen our offering, right? We have an incredibly strong set of positions. In the vast majority of what we do, we're the number one or number two player in the market. I think about, you know, there are opportunities in our specialty diagnostic businesses. There are opportunities in our Life Science solutions business to continue to build out our product offerings there. That's helpful. Shifting to some financial questions. You guys gave us a lot of information on the second quarter earnings call in terms of financial framing. You laid out expectations of 3% - 6% organic growth in 2026 and 2027, and +7% organic growth in 2028 and beyond. Can you walk us through why 3% - 6% is the right range for the next two years? What gives you confidence in achieving that +7% long term? Also, on margins, I think this is an area that comes up a lot. What are the key drivers of the margin expansion in the next two years? How should we think about margin progression in the context of that +7% long term growth? Rachel, when we thought about going into the Q2 call, what we wanted to do was give our best view of what does the shorter term environment look like and how are we managing the company. Today, when you look at where are we operating at, we're operating around the 3% range on an organic perspective. While we don't have a crystal ball as at exactly eight quarters ahead, over the next couple of years, assuming that the conditions are similar, just the absence of the negatives, meaning that academic and government stabilizes even at 0%, that the authorizations that we're winning in clinical research just flow into revenue, and that China slowly stabilizes from meaningful declines of mid-single digit decline to getting a bit better, you move very progressively through the 3% - 6% range, right? We understand that the world doesn't have to be particularly different to operate within that range. With that assumption, we want to deliver really strong earnings growth. We're putting our time about driving the productivity and the cost management to actively manage the company so that this is a great place to invest, right? Which is why we talked about the mid- to high- single- digit earnings growth before capital deployment, because in this environment that we are in right now, that's where we're going to focus on. Obviously, if there's more growth opportunities, we're going to seize them, right? It's not that, nah, but when we think about it, we see the opportunity to drive compelling investment returns in this environment. Our belief is that the fundamentals of our industry, the demand for health care, the unmet health care needs is compelling. What's going on in the understanding of science within our pharmaceutical and biotech customers drives the market growth and the opportunity. Do we believe that +7% is the right, you know, mid-term growth of the business? We do, right? Our view is that what's embedded in that is that the market growth returns to around 4% and that we continue to drive share gain of the +2 to + 3, you know, percentage points on top of that. We feel that from our experience in the industry and understanding our customer dynamics, that that's a very reasonable set of assumptions for the not that distant future. We'll be able to deliver very strong earnings growth off of both of those top line scenarios. When I think about margins, in the shorter term, we think that the 50 basis points- 70 basis points of margin expansion seems like the right set of objectives. In the longer term, you're probably in that 40 basis points-50 basis point when you're in that +7% because you're at a slightly higher reinvestment rate cycle if the markets are supporting the higher growth rates. Yeah, that's helpful. Maybe just in the final few minutes here, just in closing, what do you think is the most underappreciated aspect of the Thermo Fisher story today? Yeah, so when I think about the reflections on the company, actually, it's one of the few times where I say that we haven't yet articulated to our investors just how compelling of an investment Thermo Fisher is. When I think about the strength of our market position, the long-term fundamentals that are attractive in our industry, and the proven track record of just consistently gaining share, executing a growth strategy, and a capital deployment strategy that works, this is an incredibly exciting time. We're going to manage the company very actively in the short term to deliver great results while strengthening for an even brighter future down the road as well. This is really an exciting time. Our customers are enthusiastic about working with us and the opportunities we have to help them navigate this environment successfully in a way that they will thrive. We'll be behind the scenes helping them do that and seizing new opportunities. It's an incredibly exciting time at the company, and it's one that we're leaning in in an incredible way to make sure that we do a great job for our customers and create meaningful shareholder value for our investors. That sounds great. With that, we are unfortunately out of time. Marc, thank you so much for joining us today. Everyone on the line, thank you for joining as well. Hope you have a great rest of your day.