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Revvity Q3 Revenues Drop 6 Percent on Weaker Pharma, Biotech Demand

NEW YORK – Revvity said before the market open Monday that its total revenues shrank 6 percent year over year on weaker demand from pharma and biotech customers for instruments and consumables, falling short of the consensus Wall Street estimate.

For the three months ended Oct. 1, the Waltham, Massachusetts-based firm reported total revenues of $670.7 million, down from $711.8 million in the year-ago period and below the Wall Street consensus estimate of $695.3 million.

On an organic basis, revenues in Q3 2023 dropped 7 percent year over year. Excluding COVID-19 testing, revenues grew about 1 percent year over year.

On a conference call, Revvity CEO Prahlad Singh said the firm plans to expand its cost-cutting measures as the firm braces for softer spending to continue into the coming quarters.

"While the future of our end markets remains bright and we expect global investment levels into science to rebound, we are certainly seeing more end market pressure than we had previously anticipated in some of our markets," Singh said. "As we've highlighted in the past, while we are likely more insulated from the macro and industry pressures than many of our peers, we are not immune to the current softer spending environment from pharma and biotech customers."

Singh said the company also made promising strides during the quarter with the launch of its IVIS Spectrum 2 and Quantum GX3 in vivo imaging platforms as well as the launch of Revvity's Pin-Point base editing reagents.

Revvity also announced this month a collaboration with Element Biosciences to combine Element's next-generation sequencing system and Revvity's sample preparation instruments and consumables to improve NGS workflows, and Singh expects the collaboration will initially focus on expanding Revvity's presence in newborn screening. He also noted that Revvity and Danaher subsidiary Sciex announced this month a distribution agreement that combines Sciex's mass spectrometry instruments and Revvity's reagents.

Revvity CFO Max Krakowiak said during the call that the company saw a "noticeable step-down in demand from our pharma and biotech customers as we progressed through the quarter," especially in September. The firm has identified $20 million in costs it can cut through the remainder of the year and is further analyzing its cost structure going into 2024.

Krakowiak said Revvity expects pharma and biotech spending will remain down for at least a few more quarters. However, he and Singh indicated that that weakness was partly offset by an overall strong performance by the company's immunodiagnostics business.

The firm is still in its first year post-divestment of its applied, food, and enterprise businesses, which it sold for $2.45 billion to New Mountain Capital. The divested businesses retained the PerkinElmer name while the remaining diagnostics and life sciences businesses rebranded under the Revvity name.

For Q3, Revvity's diagnostics business brought in $363 million, down 9 percent compared to $399 million in the year-ago quarter. Its life sciences business brought in $308 million, down 2 percent compared to $313 million one year earlier.

The firm reported net income of $9.5 million for the quarter, or $.08 per share, compared to $85.3 million, or $.67 per share, in 2022. The firm reported adjusted EPS from continuing operations of $1.18 per share, just short of analysts' consensus estimate of $1.19 per share.

Revvity finished Q3 2023 with $1.14 billion in cash and cash equivalents, and $293.0 million in marketable securities.

The company adjusted its full-year guidance downward and forecast revenues of $2.72 billion to $2.74 billion for 2023 compared to an earlier estimate of $2.80 billion to $2.85 billion. It anticipates adjusted EPS of $4.53 to $4.57 compared to the previous estimate of $4.70 to $4.90.