Thermo Fisher soars on diagnostics as blockbuster Life deal awaits

Thermo Fisher ($TMO) rode a boom in diagnostics sales and double-digit growth in China to another record quarter, piling on profits as it prepares to integrate sequencing giant Life Technologies ($LIFE) into its growing operation.

In the third quarter, Thermo's net revenue increased 3% to $3.2 billion, driven by a 7% leap in the company's fast-growing diagnostics segment and a 4% jump in its banner lab products business. That third-quarter-record revenue made for $317.6 million in net profits, a 9% rise over the same period last year.

Now, with Thermo planning to wrap up its $13.6 billion buyout of Life Technologies early next year, the company has raised the low end of its 2013 revenue guidance by $40 million, expecting between $12.9 billion and $13 billion for up to 4% annual growth.

But the path forward won't be painless. Thermo shed 655 jobs in the first half of the year, racking up millions in restructuring costs as it pares down to prepare for the merger, and that trend is likely to continue as the company looks to save about $275 million annually by year three.

Thermo CEO Marc Casper expects the deal to spur 30% annual revenue growth for his company, saying the buyout "will take our leadership position to a new level, creating an unrivaled leader in our industry." 

Some, however, believe Life's final price tag was too steep. In addition to the $13.6 billion, Thermo is on the line for another $2.2 billion or so in outstanding debt, a costly bill for a company that has averaged sales growth of only about 5% over three years. Life trails Illumina ($ILMN) in the gene sequencing market, and while its Ion Torrent platform has had success, many market watchers wonder whether Life is fated for second place.

- read Thermo's full results