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Revvity Q2 Revenues Down on COVID Testing Declines; Organic Dx Revenues Rise

NEW YORK – In its first quarter under the Revvity name, the former PerkinElmer life sciences and diagnostics business reported Tuesday a 21 percent year over year decline in second-quarter revenues due to the ongoing drop in COVID-19 testing, though the firm's organic revenues were up 6 percent when COVID-19 sales were excluded.

For the quarter ended July 2, the Waltham, Massachusetts-based firm reported revenues of $709.1 million compared to $895.6 million in the year-ago period, which was just above Wall Street's consensus estimate of $708.3 million.

Revvity in March completed the $2.45 billion divestiture of its applied, food, and enterprise services to New Mountain Capital and emerged as a pure-play diagnostics and life sciences firm.

Revvity CEO Prahlad Singh said on a conference call Tuesday morning that Revvity's life science business is facing a more challenging market than expected at the start of the year with lower spending on instruments, software contracts, and technology licenses and partnerships. But he said those difficulties were offset by double-digit organic growth in the firm's reagents and specialty pharma services business.

"After multiple years of significant growth, our life sciences business is now facing new pressures due to softer demand from our pharma biotech customers globally including in China," he said. "Our diagnostics business has been improving as the year is progressing, which we expect to continue into the second half of the year."

Revvity reported its diagnostics revenues fell 34 percent to $372.9 million compared to $569.2 million in the year-ago period. Its life sciences revenues rose 3 percent to $336.4 million compared to $326.6 million a year earlier.

Revvity CFO Max Krakowiak said that, excluding COVID-19 testing, organic revenues from Revvity's diagnostics business grew 8 percent in the quarter. Singh attributed those gains to strong sales of its immunodiagnostics products and its newborn screening business.

"This is a testament to our R&D and commercial strategies, which lead to broader screening menus overall and our ability to consistently bring new assays to market for rare diseases," he said.

Singh said that beyond the financial benefits of those interventions the company is proud of its role in newborn screening programs that can help ensure infants receive medical treatments. He noted that Ohio recently became the first US state to adopt universal screening for Duchenne muscular dystrophy. Revvity sells a screening kit used to identify the genetic disorder through elevated concentrations of creatine kinase-MM protein.

Krakowiak said Revvity's applied genomics business's organic revenues declined in the mid-single digits.

"Similar to last quarter, we saw a double-digit decline in instrumentation in this business as the market is continuing to digest the repurposing of equipment post-COVID," Krakowiak said.

Revvity officials also said this spring that the firm has been increasing support for assay development during research into therapies, particularly assays for use with cell and gene therapies, and it intends to advance its omics technologies in research and clinical medicine with services to aid biomarker identification and early disease detection.

Singh also noted during Tuesday's call the launch this June in Europe of Revvity subsidiary Euroimmun's automated Uniqo 160 immunofluorescence benchtop instrument, which he said reduces hands-on time for customers.

David Oliver, marketing director at Revvity subsidiary Euroimmun, said in an interview at last week's 2023 AACC Annual Scientific Meeting and Clinical Lab Expo that the firm plans to bring more of its automated instruments to the US in coming months and years. He added that the business is working to strengthen its positions in immunofluorescent antibody, ELISA, and molecular testing through instruments that can reduce hands-on time and improve efficiency.

Singh said Tuesday that Revvity's organic growth excluding COVID-19 products was in line with expectations, but the firm is tempering its expectations for the second half of the year in response to more cautious spending by its pharma biotech customers. The firm predicts organic growth of 4 percent to 6 percent for the year.

"We are building the company for the long term and will continue to fully invest in core projects that will drive the business in the future while being diligent and proactively managing our spend in some areas to align with the low volumes we are seeing," he said.

The firm raised its R&D spending by about 2 percent during the quarter to $57.3 million from $56.0 million. It raised SG&A spending slightly to $267.0 million from $263.2 million a year earlier.

Revvity reported net income of $35.6 million, or $.28 per share, compared to $179.2 million, or $1.42 per share, in the year-ago quarter. The firm's adjusted EPS was $1.21, beating analysts' consensus estimate of $1.18.

The firm also adjusted its guidance downward and forecast revenues of $2.80 billion to $2.85 billion for full-year 2023 compared to an earlier estimate of $2.90 billion to $2.94 billion. It anticipates adjusted EPS of $4.70 to $4.90 compared to the previous estimate of $4.85 to $5.05. Krakowiak said that adjustment accounts for increased uncertainty in the market.

In early morning trading on the NYSE, Revvity's shares were up less than 1 percent to $123.18.