NEW YORK – Agilent Technologies is restructuring two of its three business segments in an effort to develop closer relationships with customers, cut costs, and accelerate innovation in key growth areas, company officials said on Monday.
Agilent CEO Padraig McDonnell said during a conference call to discuss the firm's fiscal fourth quarter financial results that the company also expects revenue growth across all of those business segments during 2025, and the firm plans to use its realignment to help accelerate that growth. Robert McMahon, Agilent's CFO, added that the restructuring will help the company to achieve price and cost efficiencies that will result in savings and margin expansion during the second half of 2025.
According to McMahon, the restructuring is expected to contribute to an anticipated operating margin expansion in the range of 50 to 70 basis points during fiscal year 2025. McDonnell added that the restructuring is an aggressive program to help Agilent become nimbler and more customer-focused, continuing a project started three years ago to consolidate the firm's customer-facing commercial activities and develop its digital capabilities, end-to-end customer support, and customer- and market-focused sales channels.
McDonnell had been appointed to lead that commercial organization when it was formed, and he said that the resulting transformation had helped the firm to set a record high in fiscal year 2024 of more than $1 billion in digital orders.
"With the new structure, we are aligning business units to our markets, facilitating close collaboration among the businesses like never before, and enabling better execution on cross-division, customer-first priorities," he said.
He also reiterated statements earlier this year that the company is focused on growth vectors such as its biopharma, perfluoroalkyl and polyfluoroalkyl substances testing, and advanced materials businesses.
Agilent is uniting its diagnostics and life sciences businesses under its new Life Science and Diagnostics Markets Group (LDG) that provides about 38 percent of the company's annual revenues, or about $2.5 billion. The firm said that the LDG segment is focused on the pharma, biopharma, clinical, and diagnostics end markets.
Agilent's LDG includes the company's pathology, companion diagnostics, and genomics businesses, liquid chromatography and mass spectrometry instruments, cell and biomolecular analysis tools, and contract development and manufacturing organization capabilities from the company's nucleic acid services division (NASD) and its recently purchased Biovectra business.
The firm also established a new Applied Markets Group that is focused on food, environmental, forensics, chemicals, and advanced materials markets and that provides about 20 percent of the company's annual revenues, or about $1.3 billion. That business includes gas chromatography and mass spectrometry, spectroscopy, and vacuum technologies.
The Agilent CrossLab Group remains focused on supporting customers across all of its end markets through software, informatics, automation, and consumables services. It contributes about 42 percent of the company's annual revenues, or $2.7 billion.
"The group is uniquely positioned to leverage its comprehensive portfolio and capabilities to further enhance the installed base of instruments with targeted workflows and applications that drive critical outcomes and productivity in labs," McDonnell said.
The changes follow other restructuring actions by Agilent in 2023 and 2024. The company announced last year plans to shut down its Resolution Bioscience liquid biopsy business before reaching a deal to sell the business to Exact Sciences for $50 million.
Later in the year, Agilent also announced plans to cut 400 employee positions and close excess facilities by the end of FY 2024, a move intended to reduce the company's global workforce by 2 percent and its annual sales-related and operating expenses by $80 million. The company also filed notice in June that it planned to lay off 184 employees at six locations in California, separate from the cuts announced in late 2023.
Agilent also said after the close of the market on Monday that its fourth quarter revenues rose about 1 percent while its diagnostics and genomics revenues fell 1 percent.
For the three months ended Oct. 31, the Santa Clara, California-based company reported revenues of $1.70 billion compared to $1.69 billion in the year-ago quarter. It beat the consensus Wall Street estimate of $1.67 billion.
On a core basis companywide revenues were down less than 1 percent, the firm noted.
"Our new market-based, customer-first strategy combined with our transformation — which includes the new organizational structure announced today — will position us to capture even more growth opportunities as the market improves," McDonnell said in a statement.
Meanwhile, Agilent reported its results for Q4 and the full fiscal year 2024 under the previous company structure.
The firm's Diagnostics and Genomics Group reported that revenues dipped to $442 million in Q4 2024 from $445 million one year earlier. McMahon said during Monday's call that solid growth in the pathology business had been offset by softness in the nucleic acid services division and cell analysis instruments businesses. McDonnell noted that low-single digit growth in the genomics business also beat expectations.
Simon May, president of the new LDG segment, added on the call that Agilent had pivoted its genomics strategy to focus on growth drivers through differentiated products, particularly the company's Magnis automated next-generation sequencing library preparation system.
Meanwhile, Agilent's Life Sciences and Applied Markets Group revenues also declined about 1 percent to $833 million from $839 million a year ago. McMahon said that conservative capital spending on instruments had constrained the group's performance. The instrument market seems to be recovering, however, and instrument orders had picked up year over year and sequentially, he said.
The declines in two of the business segments were offset, however, by a 5 percent year-over-year rise in the Agilent CrossLab Group revenues to $426 million from $404 million. Revenues grew in every region except for China, where they were flat year over year, McMahon said.
McMahon said that Agilent's fourth quarter revenues grew in the high single digits in Asia outside of China and low single digits in Europe, while revenues declined in the Americas and China. He noted, though, that China had a better-than-expected revenue decline of 3 percent, and the company had booked its first stimulus-supported orders in China during October. He said that the firm expects more stimulus-backed orders in fiscal year 2025.
While the incoming Trump administration has pledged to enact tariffs on goods entering the US from China, McDonnell and McMahon said that only a small percentage of Agilent's US revenues come from products that are manufactured in China and vice versa.
McMahon said, however, that the company has worked to diversify its supply chain, and he expects that any proposed tariffs would be manageable. McDonnell said that US tariffs against China could cost $4 million to $5 million in a quarter and the company likely could mitigate the effects within a few months.
Agilent reported net income for Q4 2024 of $351 million, or $1.22 per share, compared to $475 million, or $1.62 per share, in Q4 2023. It reported non-GAAP EPS of $1.46, which beat analysts' estimate of $1.41.
For the full fiscal year, Agilent reported that its overall revenues declined 5 percent to $6.51 billion from $6.83 billion in fiscal year 2023. Its revenues were also down 5 percent on a core basis.
The Diagnostics and Genomics Group's full-year revenues fell 6 percent to $1.65 billion from $1.76 billion in fiscal year 2023. Life Sciences and Applied Markets Group revenues also declined 8 percent for the year to $3.22 billion from $3.51 billion. Agilent CrossLab Group revenues, though, rose 4 percent to $1.64 billion from $1.57 billion.
The firm reported net income of $1.29 billion for fiscal year 2024, or $4.43 per share, compared to a net income of $1.24 billion, or $4.19 per share, in fiscal year 2023. The company reported non-GAAP EPS of $5.29 per share, which beat Wall Street's consensus estimate of $5.24 per share.
The firm ended the quarter with $1.33 billion in cash and cash equivalents.
Agilent expects revenues in the range of $1.65 billion to $1.68 billion in the first quarter of fiscal year 2025. Non-GAAP EPS is expected to be in the range of $1.25 to $1.28 per share.
For the full fiscal year 2025, the company expects that its revenues will rise 4 percent to 6 percent to $6.79 billion to $6.87 billion. Non-GAAP EPS for the year is expected to be in the range of $5.54 to $5.61.
In early morning trading Tuesday, shares of Agilent on the New York Stock Exchange were down 3 percent at $130.88.