Revvity, Inc. Q2 FY2025 earnings call

• Despite persistent macro challenges, Revvity performed well with 3% organic growth.
• Strong cash flow generation, with $115 million of free cash flow in the quarter.
• Actively repurchased shares, with $450 million repurchased in the first half of the year, reducing shares outstanding by nearly 4%.
• Launched the new IDS i20 analytical random access platform, a breakthrough in specialty testing automation.
• Recognized by MSCI with an increased ESG rating to AAA.

In the second quarter, Revvity had 3% organic growth overall. The Life Sciences segment grew 4% organically, generating revenue of $366 million. The Diagnostics segment grew 2% organically, with revenue of $354 million. Geographically, the Americas and Europe grew mid-single digits, while Asia, including China, declined mid-single digits.

• Revised organic growth outlook for the year to 2%-4%, down from prior expectations.
• Adjusted EPS expected to be in the range of $4.85 to $4.95.
• Third quarter organic growth expected to be in the 0%-2% range, with total revenue expected to be $690 million to $705 million.
• Adjusted operating margins expected to be approximately 26% in the third quarter, with adjusted EPS in the range of $1.12 to $1.14.

• Challenges from the DRG policy in China impacting the Diagnostics segment, with immunodiagnostics in China expected to be down high teens for the year.
• Evolving tariff environment, though mitigation efforts are in place.
• FX impacts and headwinds from academic and government customer weakness.

Q: About guidance change on organic, specifically on DRG in China.

A: Prahlad R. Singh mentioned majority impact is from DRG, a debundled policy affecting multiplex tests, with potential for more single plex tests in longer term.

Q: On margin change and 2026 margins.

A: Max Krakowiak said next year's baseline operating margin will be 28%, with margin expansion depending on organic growth.

Q: On revenue pacing and China's incremental reimbursement.

A: Maxwell Krakowiak talked about normal seasonality and DRG impact in China, expecting impact to continue until anniversary.

Q: On Software side growth and margins.

A: Prahlad R. Singh noted Signals Software had record orders and strong growth metrics, while Maxwell Krakowiak explained margin impact from Diagnostics volume drop.

Q: On tariff assumptions and NIH funding.

A: Maxwell Krakowiak discussed tariff impact and Prahlad R. Singh spoke about NIH funding expectations remaining weak for the rest of the year.

Q: On cap deployment and M&A appetite.

A: Prahlad R. Singh said Revvity is actively evaluating M&A but hasn't found compelling targets yet.

Q: On Life Sciences margin and additional cost actions.

A: Maxwell Krakowiak explained margin dynamics and cost actions including reevaluating manufacturing footprint and targeted actions in China.

Q: On VBP in China and Genomics England ramp-up.

A: Prahlad R. Singh discussed VBP and Max Krakowiak talked about Genomics England ramp-up with visibility on volumes.