NEW YORK – Revvity reported on Monday that its second quarter revenues fell 2 percent year over year on declines in its life sciences business, partly offset by slightly higher diagnostics revenues with contributions from immunodiagnostics, reproductive health, and newborn screening.
For the quarter ended June 30, the Waltham, Massachusetts-based firm reported revenues of $691.7 million, down from $709.1 million in the year-ago quarter but slightly higher than analysts' consensus estimate of $690.4 million. On an organic basis, Q2 revenues fell 1 percent year over year.
Company officials had predicted this spring that the firm would post organic revenue declines in the low single digits for the second quarter and return to positive organic growth in the second half of the year. President and CEO Prahlad Singh said during a conference call on Monday, however, that the firm had beaten expectations in Q2 and was on its way toward achieving its full-year goals.
"The power and potential of Revvity were on display during the second quarter, which allowed us to exceed our financial expectations for the quarter despite continued market uncertainty persisting among some in the pharma biotech market," Singh said.
He said that it's unclear when the softness in pharma spending will return to normal but the company is optimistic that the worst weakness in that market is in the past.
The company's Q2 diagnostics revenues were up 1 percent to $378.0 million from $372.9 million a year ago, or up 3 percent organically. The firm reported high-single digit growth in immunodiagnostics revenues and low-single digit growth from reproductive health and newborn screening revenues. In China, however, immunodiagnostics revenues were flat while newborn screening revenues were up by high-single digits. Applied genomics revenues were down slightly on muted pharma spending.
The firm noted that it anticipates expanded margins from the diagnostics business due to reorganization that is meant to improve commercial and operational synergies. Singh said during a conference call in April recapping Q1 earnings that the company had begun taking measures to cut costs and streamline operations and that the restructuring included the formation of an enterprise operations team to find internal opportunities to further reduce expenses.
The firm's life sciences revenues dropped 7 percent to $313.8 million from $336.4 million and fell 6 percent organically. The company cited mid-single digit declines in its business with pharma, biotech, academic, and government customers as well as low-teens declines in its instruments business and high-single digit declines from its reagents menu. Those declines were partly offset by high-teens growth in software as that business gains momentum.
Revvity CFO Max Krakowiak said on the earnings call that, by region, Revvity's overall revenues declined in the low-single digits in the Americas and Europe and grew in the low-single digits in Asia. In China, the firm's revenues declined in the low-double digits, with a high-single digit decline in diagnostics and low-double digit decline in life sciences. Late in Q1, the firm saw demand for instruments slow further as customers held off on purchases in anticipation of potential stimulus.
"We expect our life science and applied genomic instrumentation in China to remain challenged until stimulus arrives," he said.
Singh said that China remains an important market for Revvity, with strong performance by the company's immunodiagnostics business and an expected increase in reproductive health revenues with an anticipated rise in birth rates in the coming year. The addition of stimulus funding this year or early next year could help to drive growth, he said.
Singh noted that in April Revvity launched European sales of the highly automated Auto-Pure 2400 liquid handler from Allsheng for use with the company's T-SPOT.TB test for latent tuberculosis. He said the instrument will help Revvity to be more competitive globally in the latent TB testing market. The firm expects to secure US Food and Drug Administration marketing clearance for the instrument in the current quarter and is working to secure clearance in China.
He also noted that the World Health Assembly recently passed a resolution that recommends establishing newborn screening programs in every country, which he said could open the door to new funding from the World Bank and federal governments.
Singh said that the company has also been incorporating the use of artificial intelligence to streamline operations and improve product offerings, including the use of AI-based tools to aid the design of complex biological structures for the life sciences reagents business, validate imaging results from its high-content screening offerings, and overcome language barriers in its investigations into why invoices have gone unpaid.
Revvity also slashed its Q2 R&D expenses by 16 percent year-over-year to $48.1 million from $57.3 million. It also cut SG&A expenses by about 6 percent to $251.7 million from $267.0 million.
The company reported net income of $55.4 million, or $.45 per share, compared to $35.6 million, or $.28 per share, a year earlier. The firm reported adjusted EPS of $1.22, beating the Wall Street's estimate of $1.12 per share.
The firm ended the quarter with $1.25 billion in cash and cash equivalents and $706.1 million in marketable securities.
Krakowiak said during Monday's conference call that the firm plans to aggressively use its capital for share repurchasing and de-leveraging. He said that the firm repurchased $20 million of shares during Q1 and increased its funding toward key capital expenditure projects.
Revvity narrowed its full-year revenue guidance to between $2.77 billion and $2.79 billion compared to previous guidance of $2.76 billion to $2.82 billion, and the firm expects 2 percent organic growth for the full year. EPS is expected to be in the range of $4.70 to $4.80 for the year compared to previous guidance of $4.55 to $4.75.
Revvity's shares were up about 4 percent at $120.00 in morning trading on the New York Stock Exchange.