REVVITY, INC. Q3 FY2026 earnings call

• Strong Financial Execution: Pro forma organic growth reached 7%, exceeding mid-single-digit expectations. Adjusted operating margins expanded to 29.4%, and adjusted EPS came in at $1.37, beating estimates by 8 cents.
• Market Recovery & AI Demand: Underlying demand from pharma and biotech customers is recovering following previous policy-related headwinds. AI-related demand is expanding beyond high-content screening into broader portfolio areas, including reagents and detection instruments.
• Operational Efficiency: Consolidation of operations, such as at the Hopkinton campus, is driving efficiency. Diagnostics adjusted operating margins improved over 600 basis points year-over-year (excluding China headwinds).
• Product Innovation: Launched 'Signals Labgistics,' an AI-native workflow coordination tool. In diagnostics, launched a CE IVDR certified Type 1 Diabetes triplex kit in Europe, leveraging existing newborn screening infrastructure.
• Capacity Expansion: Increased capacity for high-content screening instruments to support elevated backlog and demand, anticipating further acceleration into next year.

Life Sciences: Generated $380 million in revenue, representing 11% reported growth and 9% organic growth. This segment contributed approximately 54% of total company revenue. Growth was driven by high single-digit reagent sales (bolstered by bulk screening orders) and strong mid-single digit instrument growth. Signal Software grew in the high teens organically.

Diagnostics: Generated $330 million in revenue, representing 4% reported growth and 5% organic growth. This segment contributed approximately 47% of total company revenue. Immunodiagnostics grew in the high single digits (driven by >20% growth in the US), while Reproductive Health grew in the low single digits.

• Full Year Organic Growth: Raised to approximately 5% (previously 4-5%), driven by stronger Q3 performance and continued market recovery.
• Full Year Revenue: Expected to be approximately $2.86 billion.
• Full Year Operating Margin: Raised to 28.8% (previously 28.7%), reflecting margin expansion from efficiency actions and favorable product mix.
• Full Year Adjusted EPS: Raised to a range of $5.40 - $5.45 (previously lower), representing ~12% YoY growth.
• Q4 Organic Growth: Expected to be approximately 5% (raised from 4%).
• Q4 Revenue: Midpoint expected to be approximately $755 million.
• Q4 Operating Margin: Expected to be slightly above 32%.
• Q4 Adjusted EPS: Midpoint expected to be $1.60.

• Divestiture Uncertainty: The China immunodiagnostics business is pending divestiture; its exclusion from pro forma results introduces complexity, and the business previously acted as a drag on margins (160 bps headwind in Q3).
• Geopolitical/Demographic Headwinds: APAC performance was negatively impacted by reproductive health pressures, specifically challenging birth rates in China.
• AI Adoption Timeline: While AI demand is growing, management notes it is still in the 'early days' and may not fully impact all portfolio segments until 2027.
• Seasonality and Timing: Reagent growth benefits from timing of large screening orders; removal of these one-time boosts in Q4 leads to a sequential decline in reagent growth rates.

Q: Dan Brennan asked about the quantification of the reagent bulk order contribution and whether Q4 reagent growth would sustain high single digits given the end-market outlook. / A: Max Krakowiak clarified that the bulk screening orders contributed approximately 100 basis points to reagent growth in Q3. He noted that excluding this timing item, underlying demand remains strong, but Q4 reagent growth is expected to moderate to mid-single digits due to the absence of these specific orders, despite positive trends across pharma/biotech and academic/government sectors.

Q: Vijay Kumar asked why Q4 organic growth guidance steps down to 5% despite strong Q3 momentum and bullish AI commentary, and which segments are most exposed to AI. / A: Prahlad Singh explained that the step-down is primarily due to reagent normalization (post-bulk orders) and a moderation in software growth from high teens to mid-teens. Regarding AI, he stated that exposure starts with high-content screening and high-throughput screening but will broaden across imaging, detection, and in vivo portfolios as drug candidates move toward IND filing, with significant impact expected in 2027.

Q: Doug Schenkel asked if the 40% incremental margin rate is sustainable as revenue normalizes, or if Q3 included non-recurring benefits, and sought details on instrument performance outside of high-content screening. / A: Max Krakowiak affirmed that the 40%+ incremental margin potential is a core characteristic of Revity’s portfolio, driven by operational efficiency and sales leverage, and expects it to continue. He clarified that instrument growth was broad-based, not just HCS, with backlog accelerating across nearly all instrument groups, including detection and high-throughput screening, indicating a fundamental market recovery rather than a niche phenomenon.

Q: Luke Sergott asked if the reagent strength was a 'backlog flush' from HCS and who the primary AI-driven customers are (legacy vs. new startups). / A: Max Krakowiak denied any 'backlog flush,' stating that HCS and reagent backlogs both grew and accelerated in Q3. He attributed the reagent strength to timing of multi-year screening program validations moving into Q3. He emphasized that the demand is broad-based across established pharma/biotech and academia, driven by a fundamental recovery in capex spend and long-term capacity building, rather than just new AI startups.

Q: Subbu Nambi asked if any parts of the portfolio are negatively impacted by AI adoption. / A: Prahlad Singh stated that there are no detractors or de-accelerators within the preclinical research portfolio due to AI. He reiterated that Revity’s value proposition is built on providing the tools researchers need to accelerate drug discovery, positioning the company to leverage AI-driven data generation needs rather than being disrupted by them.