NEW YORK – While Revvity has reported growing revenues from its immunodiagnostics and newborn screening businesses, a subdued life sciences market for instruments has dragged on the company though the company anticipates a return soon to stable growth rates.
Revvity CEO Prahlad Singh said on a conference call Monday that subdued pharma spending has proven to be a strong headwind, resulting in lower instrument revenues than expected during the third quarter. In China, Revvity customers have been delaying instrument purchases while they wait to see if they can secure stimulus funding to aid those purchases, he said.
"We remain optimistic that market trends are continuing to stabilize and that the worst of the headwinds are likely behind us," he said.
Singh thinks, though, that China's government is committed to boosting economic activity and supporting the life sciences and diagnostics sectors and that the stimulus money will be a driver for growth of the company's China business during 2025.
Revvity said on Monday that its third quarter revenues rose 2 percent year over year with higher diagnostics revenues that were partly offset by a slowdown in the life sciences business.
The Waltham, Massachusetts-based firm reported revenues of $684.0 million for the quarter ended Sept. 29 compared to $670.7 million in the year-ago quarter and beat Wall Street's consensus estimate of $679.7 million. On an organic basis, the firm's Q3 revenues also rose 2 percent year over year.
Revvity CFO Max Krakowiak said on the call that Revvity recorded low-single-digit growth in the Americas and Europe while Asia's revenues were flat, with low-single-digit declines in China.
The firm's life sciences revenues fell 2 percent to $300.9 million from $307.9 million. Organically, the segment was down 3 percent compared to a year ago.
Krakowiak said the life sciences business recorded low-single-digit declines in sales during Q3 to pharma and biotech customers as well as to academic and government customers. Life sciences instruments revenues declined in the low teens year over year, which was worse than anticipated, he said.
Krakowiak said that Revvity continues to expect high performance from its Signals software business with low-double-digit growth for the year despite declines during Q3 due to the timing of contract renewals. Those declines were partly offset by mid-single-digit growth in its reagents business.
Singh noted that Revvity launched during Q3 its research-use Phenologic.AI image analysis module that allows the rapid identification of cellular structures to provide improved data for screening samples.
"With this solution now launched, we will also be more able to rapidly deploy additional AI algorithms for our instrument platforms in the future," he said.
More recently, the firm also launched in October its Transcribe AI cloud-based service to process images of handwritten text and aid data entry related to newborn screening. Singh said during Monday's call that Transcribe AI helps clinical labs to automate a time-consuming task of transcribing handwritten patient information from samples, and he said that the company's analysis shows that it can increase the speed of those workflows by 40 percent, including the time for data verification.
Revvity's diagnostics revenues, meanwhile, grew 6 percent year over year to $383.3 million from $363.1 million a year ago, or 5 percent organically. The firm said that its immunodiagnostics business grew in the mid-single digits globally while its reproductive health segment grew in the high-single digits globally including in China. The applied genomics business, meanwhile, fell in the low single-digits on softness in China's instruments market.
The immunodiagnostics business' growth during Q3 was in line with expectations, Krakowiak said, while the reproductive health business also grew in the high-single digits organically during the quarter with strong performance from the newborn screening segment despite a global trend of lowering birthrates.
Krakowiak said that the firm's prenatal and newborn screening businesses received a boost in China during 2024 during the Year of the Dragon, which is considered a promising zodiac sign, although Singh said that the change was more muted than in previous Dragon years.
Revvity's applied genomics business appeared to be stabilizing following two years of double-digit declines, and the firm expects its year-over-year performance to improve in Q4.
Singh also noted that Revvity's Euroimmun subsidiary recently secured CE marking for its EuroRealTime APOE molecular assay, which is used to help assess an Alzheimer's disease patient's risk of side effects to anti-amyloid (beta) therapy.
"We expect the market opportunity for this APOE gene-focused assay to increase significantly as anti-amyloid therapies become more widely available in Europe in the future," he said.
Singh said that Revvity has been working since the height of the COVID-19 pandemic response to form strategic partnerships with government agencies, and he noted that the US Administration for Strategic Response and Preparedness' Biomedical Advanced Research and Development Authority announced last week that it had awarded Revvity a $9.2 million contract for the development of a home-use molecular test for COVID-19 and flu A/B.
"While it will likely be several more years before this platform is ready for commercialization, receiving a contract of this size from such an important US federal government agency is a testament to both our strong relationships and the level of novel science that is taking place within the company," Singh said.
Singh said that Revvity has continued from previous years an aggressive share repurchase program "and returned over 100 percent of our cash flow in the quarter to shareholders via buybacks and dividends." He noted that the company's board has authorized a two-year, $1 billion stock repurchase program to replace the remainder of an existing program announced in May 2023, and he said that the size of that program reflects the company's confidence in its performance and balance sheet stability.
Singh had said in April during a conference call about Q1 earnings that Revvity was cutting costs through a series of restructuring measures involving company operations, logistics, and vendors and the firm was realigning the management of some of its businesses.
On Monday, the firm reported that it had cut its R&D spending about 7 percent year over year to $49.1 million from $53.0 million. It also cut its SG&A expenses 5 percent to $237.5 million compared to $250.2 million a year ago.
Revvity reported net income of $94.4 million, or $.77 per share, compared to $9.5 million, or $.08 per share, a year ago. The company reported adjusted EPS of $1.28 for the recently completed quarter compared to analysts' consensus estimate of $1.13 per share.
Revvity ended the quarter with $1.23 billion in cash and cash equivalents.
The company also lowered its full-year revenue guidance but simultaneously raised its estimated earnings per share. It expects revenues in the range of $2.75 billion to $2.77 billion compared to the previous guidance of between $2.77 billion to $2.79 billion. The firm said that the change reflects changes in currency exchange rates and assumes no organic growth to 1 percent organic growth.
Full-year EPS is expected to be in the range of $4.83 to $4.87 for the year compared to previous guidance of $4.70 to $4.80.
Singh said that Revvity, formerly PerkinElmer, launched into weakened markets when it emerged in 2023 as a life sciences and diagnostics business following the divestiture of its applied, food, and enterprise services businesses to New Mountain Capital.
"Imagine what the strength of the portfolio will be when the markets turn around," he said.
In Monday afternoon trading on the New York Stock Exchange, Revvity shares were up 3 percent at $124.14.