Earnings call transcript: Revvity Q2 2025 beats earnings expectations

Revvity Inc. ($12.22B market cap) reported its second-quarter 2025 earnings, surpassing analyst expectations with an adjusted earnings per share (EPS) of $1.18, compared to the forecasted $1.14. The company’s revenue reached $720 million, exceeding the anticipated $710.39 million. According to InvestingPro data, the company maintains a strong financial health score of "GOOD" with robust profitability metrics. Despite this positive performance, the stock saw a premarket decline of 9.33%, trading at $94 per share, down from its previous close of $103.67.

Key Takeaways

• Revvity’s Q2 earnings and revenue exceeded forecasts, with EPS at $1.18.
• The stock fell 9.33% in premarket trading despite a strong earnings report.
• Full-year EPS guidance was revised downward to $4.85-$4.95.
• The company repurchased $450 million in stock, reducing shares by 4%.
• Challenges remain in the China diagnostics market due to policy changes.

Company Performance

Revvity demonstrated resilience in Q2 2025, achieving organic growth of 3% and maintaining strong performance in its life sciences and software segments. The company’s strategic focus on cost management and innovation, including the launch of the IDS I-20 analytical platform, contributed to its robust results. However, challenges in the China diagnostics market and cautious instrument market outlook tempered investor enthusiasm.

Financial Highlights

• Revenue: $720 million, up from the forecasted $710.39 million.
• Earnings per share: $1.18, beating the forecast of $1.14.
• Free cash flow: $115 million, with an 83% conversion rate of adjusted net income.
• Organic growth: 3% in Q2.

Earnings vs. Forecast

Revvity’s Q2 EPS of $1.18 surpassed the forecast of $1.14 by 3.51%, while revenue exceeded expectations by 1.35%. This marks a consistent trend of outperforming projections, although the magnitude of the beat was moderate compared to previous quarters.

Market Reaction

Despite the positive earnings surprise, Revvity’s stock declined by 9.33% in premarket trading, dropping to $94. This movement contrasts with the company’s 52-week range, where the stock traded between $87.7 and $129.5. The decline suggests investor concerns over the revised full-year EPS guidance and market challenges.

Outlook & Guidance

Revvity lowered its full-year adjusted EPS guidance to $4.85-$4.95, down from previous forecasts. The company anticipates organic growth of 2% to 4% for the year, with a focus on margin expansion and cost management. The reproductive health segment is expected to grow in high single digits by Q4.

Executive Commentary

CEO Prahlad Singh emphasized the company’s ability to perform well despite challenges, stating, "Despite these persistent and in some cases new challenges, Revvity continues to perform at a high level." CFO Max Grikowiak highlighted efforts to manage financial impacts, noting, "We are actively managing and offsetting a significant portion of the bottom line impact."

Risks and Challenges

• Policy changes in China’s diagnostics market could impact volumes.
• Continued headwinds in academic and government sectors.
• Uncertainty around NIH funding in 2026.
• Tariff impacts and global manufacturing adjustments.
• Potential long-term shifts in diagnostic testing methods.

Q&A

Analysts inquired about the impact of China’s DRG policy on diagnostic volumes, with executives noting a potential shift towards single-plex testing. Questions also focused on tariff mitigation strategies and the uncertain outlook for NIH funding, reflecting broader concerns about future revenue streams.

Full transcript - Revvity Inc (RVTY) Q2 2025:

Elliot, Conference Call Coordinator: Hello, everybody, and welcome to the Q2 twenty twenty five Reviti Earnings Conference Call. My name is Elliot, and I’ll be your coordinator for today. I’d now like to hand over to Steve Willoughby, Senior Vice President of Investor Relations.

Please go ahead.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti: Thank you, operator. Good morning, everyone, and welcome to Revity’s second quarter twenty twenty five earnings conference call. On the call with me today are Prahlad Singh, our President and Chief Executive Officer and Max Grikowiak, our Senior Vice President and Chief Financial Officer. I’d like to remind you of the Safe Harbor statements outlined in our press release issued earlier this morning and those in our SEC filings. Statements or comments made on this call may be forward looking statements, which may include, but may not be limited to financial projections or other statements of the company’s plans, objectives, expectations or intentions.

The company’s actual results may differ significantly from those projected or suggested due to a variety of factors which are discussed in detail in our SEC filings. Any forward looking statements made today represent our views as of today. We disclaim any obligation to update these forward looking statements in the future even if our estimates change. You should not rely on any of today’s statements as representing our views as of any date after today. During the call, we will be referring to certain non GAAP financial measures.

A reconciliation of the measures we plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release. I’ll now turn it over to our President and Chief Executive Officer, Prahlad Singh. Prahlad?

Prahlad Singh, President and Chief Executive Officer, Reviti: Thanks, Steve, and good morning, everyone. The dynamic macro and market environment we experienced during the first quarter of the year continued through the second quarter and at this point does not yet appear to be settling down as we enter the second half of the year. Despite these persistent and in some cases new challenges, Reviti continues to perform at a high level. The strong performance exemplifies our unique businesses, which provided us with the proper balance to continue to generate results that were in line to above our expectations. I’m very proud and extremely impressed with our employees’ ability to stay focused on our key objectives, quickly adapt to evolving obstacles, and capitalize on new opportunities as they arise.

This strong performance and flexibility was on display in many ways during the second quarter, such as our ability to maneuver rapidly in the varying tariff environment, our strong levels of innovation, and our ability to swiftly manage and adjust our cost structure to ensure we continue to deliver for our shareholders. All these efforts culminated in our robust cash flow generation, which we have actively redeployed to return cash to our shareholders. Despite the evolving market and regulatory environment, we were again able to achieve our objectives and deliver another solid quarter with 3% organic growth overall, which was right in line with our expectations. With a modestly stronger operating margin performance when excluding the impact from FX, we reported adjusted EPS in the quarter of $1.18 which was solidly above our expectations and guidance. Our performance in the quarter was led by our life sciences business, which grew 4% organically overall, led by approximately 30% growth in our signals software franchise.

In addition to the strong performance in the quarter, our software business also set a new record for orders in a single quarter, which bodes well for its future performance. This strength in software helped drive mid single digit growth year over year with our pharma and biotech customers, an improvement from the low single digit growth we experienced in the first quarter. This improved rate of growth from pharma and biotech was partially offset by continued weakness from academic and government customers where our revenue again declined in the low single digits year over year globally, similar to the performance we saw in the first quarter. Sales into academic and government customers in The Americas region also declined in the low single digits similar to the first quarter performance. Our Diagnostics segment grew 2% organically in line with our expectations as our immunodiagnostics franchise faced more difficult multiyear comparisons limiting its growth to the low single digits this past quarter.

Around midway through the quarter, we began to face a new challenge in this business in China relating to an expansion and acceleration of a hospital lab reimbursement change known as the diagnosis related groups or DRG. This expanded policy change is having an impact on the size of diagnostic panels ordered by physicians in the country, initially resulting in a reduction in overall volumes for some of our multiplex products. This is likely to drive an eventual increase in volume for more expensive single plex tests, which we also offer. For the remainder of the year, we are now expecting a fairly meaningful pullback in our immunodiagnostics business in China, which is incorporated into our updated outlook for the total company for the year. While this policy change is a new headwind for us to contend with over at least the remainder of the year, with the strong performance in many other areas of our business, along with tight management of our expenses, it is only having a very modest impact on our outlook for the year.

We now expect our full year organic growth to be in the 2% to 4% range, down 1% from our prior outlook, while adjusted EPS for the year is now expected to be in the range of $4.85 to $4.95 which is also down a modest 1% compared to our previous expectation. Overall, the second quarter ended up playing out largely as we had expected, both from a top and bottom line perspective despite the new unforeseen headwinds in our diagnostics business in China, which is a testament to our resilience and the differentiation our unique businesses provide. In addition to the solid P and L results, we also continued to perform well with our cash flow conversion and generation. In the quarter, we generated another $115,000,000 of free cash flow despite strategically moving and increasing inventories in some areas ahead of the potential tariff changes. This resulted in free cash flow conversion to our adjusted net income to continue to be in line with our longer term aspirations and at 90% year to date.

While we continue to actively evaluate redeploying this cash into potential M and A targets that we believe could make a strong strategic addition to the company, our disciplined multi criteria process has not yet identified targets compelling enough from a financial profile and expected return perspective to move further forward with. Given the strong and differentiated financial profile Reviti now has and our robust internal innovation pipelines, we will continue to remain active and aggressive in evaluating potential acquisition targets of all sizes, but we’ll also remain disciplined as we believe Reviti has been built into something that is truly special on its own. With our longer term expectations for the company remaining unchanged despite the challenges our industry has faced over the last few years, we continue to be opportunistic and use this period to become increasingly aggressive with our share repurchase activities. After repurchasing $150,000,000 worth of stock in the first quarter, we repurchased another nearly $300,000,000 worth of stock in the second quarter alone. This brings our repurchases of stock through the first half of the year to just shy of $450,000,000 This equates to a reduction of over 4,000,000 shares or nearly 4% of our total shares outstanding.

Since the end of the second quarter last year, we have repurchased over $750,000,000 of our stock, which has reduced our total average diluted shares outstanding by 7,000,000 or an approximate 6% decline in our share count overall. Our solid operational performance is driven by our strong levels of innovation, which allow us to consistently introduce important new offering to our customers. One example of this from the second quarter was the launch of our new IDS I 20 analytical random access platform introduced through our EUROIMMUN business, which is part of our immunodiagnostics portfolio. This CE Mark and FDA listed device represents a breakthrough in specialty testing automation, allowing laboratories to consolidate up to 20 different analytes across six diagnostic specialties on a single instrument. The IDS I 20 platform processes up to a 140 tests per hour and enables labs to transition from manual or semi automated methods to fully automated chemiluminescence immunoassay processing while offering continuous loading capabilities and integrated reagent cooling allowing for nonstop operation.

We believe this solution addresses critical laboratory needs for efficiency, versatility, and reliability in specialty testing areas including endocrinology, allergy, Alzheimer’s disease, autoimmune, and infectious diseases, as well as therapeutic drug monitoring. The launch includes a strong initial lineup of assays with many more expected to be added over the remainder of the year and into 2026. Since launching in May, initial customer feedback from installations in key labs across Europe is quite promising and we continue to believe the I 20 will be a significant part of our Kelly Luminescence growth strategy in the coming years. Our ongoing innovation and strong execution are not only robust but also rooted in sustainability and integrity. Our continuous improvement in areas impacting our sustainability, governance, and social priorities was recognized recently by MSCI who increased their overall ESG rating for Reviti to triple a, which is their highest level.

I see this progress and action every day at the company, but I’m proud that our achievements are being recognized externally as well. As we look ahead to the second half of the year, a number of our businesses are positioned to continue to perform at a very high level such as our signals software franchise and our reproductive health business, which is starting to benefit from the ramp up in July of sequencing volumes as part of the contract we were recently awarded from Genomics England for its generation study. It’s also encouraging to see our life science reagents and instruments businesses demonstrating continued stability so far this year with our full year outlook for them remaining unchanged. We expect these promising signs to be partially offset by the new and unexpected challenges in our China immunodiagnostics business as previously mentioned. Overall, the current macroeconomic and regulatory environment continues to present challenges, but it’s in precisely this kind of environment that we’ve consistently risen to the occasion and thrived.

Just as we have throughout the past five years of Reviti’s remarkable transformation. Our continued focus on executing at a high level on those items which are in our control while capitalizing on opportunities and managing through hurdles as they arise has allowed Reviti to consistently outperform most of our peers over the last two and a half years, which is something I expect will continue in the years to come. This is all because of the dedication of our 11,000 colleagues around the world who are embracing the impossible to help improve lives everywhere. With that, I will now turn the call over to Matt.

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Thanks, Prahlad, and good morning, everyone. As Prahlad mentioned, we continue to show good performance in the second quarter despite facing new and existing challenges, which were unanticipated at the start of the year. From funding levels for academic research to country and industry specific tariffs and now new challenges from regulations, are limiting diagnostics volumes in China, our industry has faced many obstacles so far this year. Considering these developments, we have shown a strong ability to navigate them and respond quickly, allowing us to still deliver strong performance overall as was evident in our second quarter results. I’ll start on tariffs.

As we first mentioned last quarter, we have quickly taken significant operational actions to largely mitigate their impact, which were executed upon as expected and on time during the second quarter. While some tariffs were rolled back during the quarter, particularly with China, this relief did not meaningfully change their overall impact on us given our mitigation efforts are operational in nature and still moving forward as previously planned. While the tariff situation continues to evolve, as evidenced by yesterday’s announced preliminary pact between The U. S. And Europe, our updated outlook assumes the tariffs that are in place as of last Friday, July 25.

As it pertains to our updated outlook for the year, we are expecting continued stability from our pharma and biotech customers and the headwinds our academic and government customers are facing to continue. Our assumptions for growth within our Life Sciences segment remain unchanged within our updated outlook and guidance. However, as Prahlad mentioned, since the May, we have begun experiencing increasingly larger volume related headwinds in our immunodiagnostics business in China, which we now expect will continue over at least the remainder of the year. While we were able to mitigate and offset most of the impact from the DRG changes during the second quarter itself, as we move into the second half of the year, we are lowering our expectations for this business in China to account for the trends we are seeing in July, which we anticipate will continue over the coming months. As a result, our immunodiagnostics business in China, which represents approximately 6% of total company revenue, is expected to now be down high teens for the full year.

Our updated outlook for this business in China is driving the entirety of the change in our overall outlook for the company. Incorporating the impact of these new pressures, we are now looking for organic growth this year for the total company to be in the range of 2% to 4%, which is slightly below our previous expectations. While this is impacting most diagnostic players in the market, domestic competitors, we have already begun to take additional near and longer term cost actions to help offset the impact to our bottom line. Those actions that are quicker to implement, including rightsizing the business in China, along with other immediate discretionary expense reductions, are now factored into our updated outlook. In addition to these near term actions, we are also taking additional structural actions that, given their scope, will take into next year to be fully implemented.

While we are actively managing and offsetting a significant portion of the bottom line impact, we do expect the drop in volume and some margin rate headwinds from recent changes in FX to have a modest impact on our overall operating margins and adjusted EPS for the year. I will provide additional details on our updated outlook in a moment, but the net impact of this is we now expect our 2025 adjusted earnings per share to be in a range of $4.85 to $4.95 down 1% from our prior outlook. Now turning to the specifics of our second quarter performance. Overall, the company generated revenue of $720,000,000 in the quarter resulting in 3% organic growth. FX was a 1% tailwind to growth and we again had no incremental contribution from acquisitions.

While FX became more favorable to our top line as the quarter progressed, given the severity of the changes in rates and their geographical dispersion, the change in the top line impact from FX is having a minimal corresponding impact to our adjusted net income, both in the second quarter and in our current outlook for the remainder of the year. As I mentioned, this is generating some pressure on our gross and operating margin rate for the year given the associated increase in revenue dollars is without a corresponding increase in gross and operating profit dollars. As it relates to our P and L, we generated 26.6% adjusted operating margins in the quarter, which were down two ten basis points year over year and in line with our expectations. Our underlying operating margin performance was better than we had anticipated as FX movements were a headwind to our margin rate and the impact from tariffs were in line with our expectations despite the changes that occurred midway through the quarter. Looking below the line, our adjusted net interest and other expenses were $20,000,000 in the quarter, which was modestly impacted by the increased share repurchase activity year to date, resulting in lower interest earnings on our cash balances.

Our adjusted tax rate was 19.1% in the quarter, which was slightly lower than expected due to the favorable impact of recent tax planning initiatives. We also continue to remain active with our share repurchase program and averaged 117,500,000.0 diluted shares in the quarter, which was down over 2,500,000.0 shares sequentially. This all resulted in our adjusted EPS in the second quarter being $1.18 which was $0.04 above our expectations. Moving beyond the P and L, we generated free cash flow of $115,000,000 in the quarter, resulting in 83% conversion of our adjusted net income. On a year to date basis, our $234,000,000 of free cash flow equates to a solid 90% conversion of our adjusted net income.

As we move into the back half of the year, I expect our absolute cash flow and its conversion to continue to remain strong and solidly above our 85% long term expectation. Regarding capital deployment, we have stayed active so far this year with our buyback program as we repurchased $293,000,000 worth of shares in the second quarter. As it relates to our balance sheet, we finished the quarter with a net debt to adjusted EBITDA leverage ratio of 2.6 times with 100% of our debt being fixed rate with a weighted average interest rate of 2.6% and a weighted average maturity out another seven years. As we evaluate capital deployment, we will continue to remain flexible in order to capitalize on the highest return opportunities while maintaining our investment grade credit rating. I will now provide some commentary on the second quarter business trends, which is also highlighted in the quarterly slide presentation on our Investor Relations website.

The 3% growth in organic revenue in the quarter was comprised of 4% growth in our Life Sciences segment and 2% growth in Diagnostics. Geographically, we grew in the mid single digits in both The Americas and Europe, while Asia declined in the mid single digits with China also declining mid single digits. From a segment perspective, our Life Sciences business generated revenue of $366,000,000 in the quarter. This was up 5% on a reported basis and 4% on an organic basis. From a customer perspective, sales to pharma and biotech customers grew in the mid single digits whereas sales into academic and government customers declined in the low single digits in the quarter.

Our life sciences solutions business declined in the low single digits in the quarter overall, with declines in instrumentation partially offset by continued growth in reagents. Our signal software business was up a little over 30% year over year organically in the quarter and as Prahlad mentioned, had its largest quarter of orders in its history. The business also continued to perform exceptionally well from an ARR, APV and net retention rate perspective as well with all metrics solidly above levels from last year. In our Diagnostics segment, we generated $354,000,000 of revenue in the quarter, which was up 3% on a reported basis and 2% on an organic basis. From a business perspective, our immunodiagnostics business grew low single digits organically during the quarter, which was in line with our expectations despite China declining more than we expected and being down in the low teens.

Excluding China, the other 80% of our immunodiagnostics business continued to perform very well, especially in Americas, which grew organically in the mid teens, while immunodiagnostics in Europe grew in the solid mid single digits. Our reproductive health business grew low single digits organically in the quarter. Newborn screening continued to perform well and grew high single digits globally, which was driven by outstanding operational and commercial execution, given continued headwinds from global birth rates, which have again intensified so far this year, particularly in China. As it pertains to China specifically, overall, we incurred a mid single digit organic decline in the second quarter, driven by our Diagnostics business being down in the low double digits as it began to face the impact of the DRG related declines in volume. This was partially offset by strong mid single digit growth in our Life Sciences business in China as we saw improvements in year over year growth in both reagents and instruments in the region.

Now moving on to guidance. As mentioned, we are updating our organic growth outlook for the back half of the year to account for the new volume related pressures we are seeing from DRG changes in China and our diagnostics business. This change is leading to our total company organic growth outlook for the year to now be in the range of 2% to 4%. We continue to expect our Life Sciences segment to grow in the low single digits unchanged from our prior outlook, but we now expect Diagnostics to also grow in the low single digits down from our previous mid single digits outlook. With the continued weakening of the dollar so far this year, we now anticipate the impact from FX to be an approximately 1% tailwind to revenue for the full year compared to our previous assumption of it being a 50 basis point headwind.

As mentioned, given the makeup of the changes in FX, we do not expect it to have a material flow through in our P and L for the year. We expect these changes to our outlook for organic growth and FX to result in our total revenue this year to now be in the range of $2,840,000,000 to $2,880,000,000 overall. Moving down the P and L, we now expect our adjusted operating margins to be in a range of 27.1% to 27.3% which is down from our prior outlook due to the changes in FX and the impact from lower volume of high margin diagnostics tests, which is being partially offset by the additional cost actions we are currently implementing. We expect the more significant structural cost actions we are beginning to take to be fully implemented in 2026. We anticipate the impact from these actions will allow us to offset the incremental margin pressures we are now facing this year and to be able to enter next year with a 28% operating margin baseline, which we would then expect to further expand upon commensurate with the level of organic growth we experienced.

Consequently, because of these initiatives, we anticipate our overall operating margin expansion next year to be greater than what we would typically be expected in a given year, enabling us to recoup the impact from the new headwinds we are facing this year. Below the operating line, we now expect our net interest and other expense to be around $80,000,000 this year driven by some incremental pressure from lower interest income. We are continuing to make good progress with our tax planning initiatives and now expect our adjusted tax rate this year to be approximately 18%, down from our prior 19% outlook and the 20% we had assumed at the beginning of the year. With our increased share buyback activity, we now also expect an average diluted share count of approximately 117,000,000 for the year overall. This all results in our adjusted earnings per share for the year expected to be in a range of $4.85 to $4.95 Regarding our outlook for the third quarter, we anticipate organic growth to be in the 0% to 2% range resulting in total expected revenue in the range of $690,000,000 to $7.00 $5,000,000 We anticipate our adjusted operating margins to be approximately 26% in the third quarter, and we are assuming a tax rate of approximately 18% with roughly 116,000,000 average diluted shares outstanding for the quarter.

We expect this to result in our adjusted EPS in the third quarter to be in the range of $1.12 to $1.14 Overall, we performed well in the second quarter despite facing new and existing challenges which we are actively working to counter and offset. Our levels of innovation and investment remain strong, which when combined with the additional cost actions we are taking positions us well to execute at a high level through all market environments while always still delivering for our customers. With that, operator, we would now like to open up the call for questions.

Elliot, Conference Call Coordinator: Thank you. First question comes from Vijay Kumar with Evercore ISI. Your line is open. Please go ahead.

Vijay Kumar, Analyst, Evercore ISI: Hi, guys. Thanks for taking my question. Maybe first one on the guidance change here on organic. I know you mentioned this was China, this change in DRG. Was that anything else beyond DRG?

Anything on VBP? Because when we’re doing the math, I think the exit rate is low singles. It should should that be the ballpark here, for fiscal twenty six, you know, given some of these headwinds should persist in in ’26?

Prahlad Singh, President and Chief Executive Officer, Reviti: Hey. Good morning, Vijay. You know, essentially, a majority of what we are seeing is from DRG. In late April, this policy went into effect, which is called the bundle policy that is specifically impacting the multiplex tests that we have. You know, in the mid to longer term, you know, the way to think of it is, you know, it’s with autoimmune testing, you look for a needle in a haystack.

And essentially, with the debundling policy, you know, it lowers the test volumes, which essentially means that they have to look for a needle in half the haystack is one way to think of it. But really what it does is in the longer run run, we think that this potentially offsets because there’ll be more single plex tests that will be needed, which also tend to be more expensive on a per asset basis. So from a, you know, a company perspective, we are working across with top leaders, KOLs, doctors, and hospitals to see if this could potentially, you know, reverse some of the changes because the impact that it has on patient care. But majority of what you see is from DRG.

Vijay Kumar, Analyst, Evercore ISI: Understood. And then, Max, maybe one for you on on the margin change. I think you made some comments about about 26% margins being above your typical range, Can you just remind us what is your typical range? What volumes did they assume? And when you think about margins for next year being slightly better on cost actions, is that assuming, what kind of volumes or revenue growth is that assuming?

Thank you.

Max, CFO, Reviti: Yeah. Hey, Vijay. So look, I

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: think you kind of mentioned it yourself, right? I think the intent of the comments was to establish that next year, our baseline will be a 28% operating margin. And then from there, depending upon the level of organic growth, we would have the corresponding margin expansion. As a reminder, our LRP, right, assumes a couple of 100 basis points above market growth, which if you call it mid single digits, would be a high single digit organic growth. And with that growth level, we would expect to expand margins 75 basis points in a normal year.

If growth is mid single digits for us next year, that would probably be closer to 50 basis points margin expansion. And so I think that’s been the framework we’ve provided. And I think, again, the intention on this call was just to establish that our baseline OM for next year will be starting at 28% with the structural cost actions.

Vijay Kumar, Analyst, Evercore ISI: Understood. Thank you, guys.

Elliot, Conference Call Coordinator: We now turn to Doug Schenkel with Wolfe Research. Your line is open. Please go ahead.

Doug Schenkel, Analyst, Wolfe Research: Good morning. I just want to ask questions on two topics. First is just guidance assumptions for this year from a revenue pacing standpoint and then a follow-up on China. So on guidance, it looks like you’re assuming similar revenue pacing to last year. I just want to make sure that’s right.

And if so, what is embedded into guidance for, things like a year end budget flush and, NIH funding? So that’s on guidance. And then on China, the incremental reimbursement pricing headwinds is just getting going. When would you expect this to annualize? Do you have visibility on whether or not this is the last cut?

And when would a move to signal, sorry, single marker panels start to help your business? Thank you.

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Hey, Doug. I’ll take the first question there on the revenue pacing. I think as you look at the sort of Q3 versus Q4 dynamic in the back half here, would say it is sort of normal seasonality. Just a high single digit ramp in both our Life Sciences solution and our Diagnostics business. The other two, I would say, sort of unique differences for us as a company is, one, you do have the ramp up of Gel in the fourth quarter.

And then two, although the signals organic growth will be lower in the fourth quarter, it is always a larger quarter from a volume perspective for there. So that is adding additional ramp between Q3 and Q4.

Prahlad Singh, President and Chief Executive Officer, Reviti: And, Doug, to your second question, you know, as I said, we started seeing the impact of this in late April, early May. So we would like to, you know, likely see to see an impact continue till we anniversary this, you know, or as you said, potentially, the regulation is either rolled back or altered. You know, just to put it in perspective, IDX in China is now less than 6% of our total revenue and will likely be less than 5% in ’26.

: Thank you.

Elliot, Conference Call Coordinator: Our next question comes from Dan Brennan with TD Cowen. Your line is open. Please go ahead.

: Great. Thank you. Maybe just on the Life Science side, since that did well in the quarter, you kind of beat your expectation, made some positive comments. I’m wondering, could you give any color underneath the hood about reagents and instruments? I know you said grew and were weak.

And then within a contemplation to raise the guidance there at all, just kinda wondering if you could speak to, you know, kinda overall the trends that you were seeing particularly on biopharma.

Prahlad Singh, President and Chief Executive Officer, Reviti: Maybe I’ll start with the trends that we are seeing and then Max, you can jump in. I think, you know, Ben, if you just think of it as we’ve said, pharma biotech continues to show stability, you know, its mid single digit growth in the second quarter. And just to put it in perspective, our life sciences reagents business has now grown five consecutive quarters. So I think that bodes well as we look forward. Obviously, there continues to be impact on the capital equipment spend as we are seeing.

But overall, we continue to be optimistic with five consecutive quarters of reagents growth that we have seen in the business.

: Okay. Terrific. So maybe just on, the reproductive health business, sounds like the newborn screening business continues to do really well. Just kinda remind us how you’re thinking about that business in the back half of the year, Max. I know you alluded to the gel impact.

Just kind of can you frame exactly what we’re thinking about by the fourth quarter and kind of what’s the visibility on that? Thank you.

Max, CFO, Reviti: Yes. I think when you look

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: at the reproductive health business, in the first half here, it grew low single digits. Again, we mentioned on the call, the newborn screening business continues to perform incredibly well despite continued global birth rate pressures. I would say, as you look at the back half, the third quarter will probably be similar levels of what you saw in the first half as Gel is still ramping up. And then in the fourth quarter, we do expect reproductive health to grow in the high single digits, which is really a combination of one, the ramp up of Gel and then two, there’s a little bit of a comp dynamic in the fourth quarter. But that essentially sums up our expectations for the second half.

In terms of visibility on Gel, I’d say the launch is going incredibly well so far. Again, we’re almost now almost a full month into it, and we’ve got pretty good levels of visibility into the expected volume ramps here for the rest of the year.

Doug Schenkel, Analyst, Wolfe Research: Great. Thank you.

Elliot, Conference Call Coordinator: We now turn to Puneet Souda with Leerink Partners. Your line is open. Please go ahead.

Puneet Souda, Analyst, Leerink Partners: Hi, Prahlad and Max. Thanks for taking my question. So just briefly on the software side. Can you talk a little bit about how much of that was installs and new contracts versus continuing licensing and service? And what’s the expectation of growth for software in the second half?

And remarkably strong here, but wondering how sustainable that is and why was why is that not a tailwind to gross margins?

Prahlad Singh, President and Chief Executive Officer, Reviti: Yeah. Hey, Puneet. You know, look, as I mentioned in as we mentioned in our prepared remark, our signals software business continues to do extremely well. You know, we had record quarters for the orders. You know, this is, I think, the longest highest we had in the history with the you know, also from a growth perspective, 32% organic growth.

You know? But I think it’s not really as much as what we look at organic growth, but more around net retention, our ARR, and APV. You know, we’ve had a 21% uplift with a 115% net retention in the business. Our APV has grown by 13%. That is driven by a strong SaaS booking.

You know, we had nearly more than one third of our business is now SaaS. So overall, you know, when we look at the business, the benefits of the investments that we have made in the business and as the new product launches come up, that gives us the confidence that this business is continuing to go con you know, grow very well.

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Got it. And then then question. Do you

Puneet Souda, Analyst, Leerink Partners: mind repeating that? Yeah.

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Can you repeat that second question for us?

Puneet Souda, Analyst, Leerink Partners: Margin side, you know, you know, why why why shouldn’t we expect, you know, improved margins from the software side just given generally those are better margins on the gross margin side?

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Yeah. I think we’re factoring in obviously the mix of our businesses as we look at our operating margin for the year. Really what you’re having an impact of on the operating margin side is the magnitude of the volume drop on what were extremely high margin diagnostic assays for our China Immunodiagnostics business.

Puneet Souda, Analyst, Leerink Partners: Okay. And then, Prahlad, a high level, an important question for you. I didn’t hear as much on the portfolio resiliency as you have talked about in prior calls since the transformation. I mean, diagnostics was supposed to be the support or the ballast in these challenging time and tools, but it’s turning out to be no different than what peers are seeing in terms of the DRG impact in China. Can you talk a

Doug Schenkel, Analyst, Wolfe Research: little bit

Puneet Souda, Analyst, Leerink Partners: about where the portfolio is? And how do you see the position of your position in China, IDX overall and your presence in China? And how that fits into the you know, portfolio mix that, know, you want to have in terms of the resiliency? Thank you.

Prahlad Singh, President and Chief Executive Officer, Reviti: Yeah. Puneet, I think, you know, we are very confident and very optimistic with our total portfolio. I mean, we talked about the strength that we have seen in life in in our life sciences business with five consecutive growth or your five consecutive quarters of growth on reagent from pharma biotech in a tough market environment. We have a signal software business that has grown 30% plus organic growth in the quarter. Our our reproductive health business continues to do very well in a tough birth rate market environment.

And even our IDX business outside of China grew very well. I think the fact is that, you know, DRG came up and we saw this unexpected debundling policy that was implemented in the middle of the quarter. So our focus really is that how do we address this with KOLs and with the, you know, and with hospitals to, a, figure out how to reverse these changes because it is going to have an impact on patient care. You know, there are many things that have gone and taken place in China around VBP, Sunshine Act, but really the one that has impacted us is DRG. And our focus really is to ensure that we address that because in the longer term, we are confident this is going to impact patient care.

Care.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti: Okay. Thank you.

Elliot, Conference Call Coordinator: Our next question comes from Dan Leonard with UBS. Your line is open. Please go ahead.

Dan Leonard, Analyst, UBS: Thank you. I want to make sure I understood the comment on the difficult multiyear comps in immunodiagnostics. Could you elaborate there?

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Sure. I I mean, I think when we look at our our guidance here for the second half, Dan, if you look at the the multiyear stacks between q three and q four for our IDX business outside of China, they’re basically the same at at low double digits. And so that’s what we mean by when we say there’s a little bit of a comp dynamic, but on a multiyear basis, they’re at the same level between Q3 and Q4.

Dan Leonard, Analyst, UBS: Okay. And a clarification on foreign currency, Max. The foreign currency movements haven’t been that dramatic since late April when you last reported. So what’s the, I’d just like to better understand the driver of foreign currency on the EBIT margin percentage, if possible.

Max, CFO, Reviti: Yeah. Well, I’d say a couple of

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: things on that. One is that, you know, it was as of March 31 is the FX rates we we moved and I I don’t know maybe your definition of materiality, but I think it’s been a quite significant weakening of the US dollar from the March. So I think it’s been pretty material. I’d say second, when you look at the operating margin drop, I mean, biggest pieces I’ve mentioned though is really the volume drop of incredibly high margin assays in our diagnostics business for IDX China.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti: Got it. Thank you.

Elliot, Conference Call Coordinator: We now turn to Michael Ryskin with Revete. Your line is open. Please go ahead.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti0: Mike Ryskin with Bank of America, but close enough. On the I want to go back on the DRG changes, that you talked about. You made a comment a couple of times that you think that could actually lead to a change in how diagnostics is done with moving away from some of these more multiplex panels going individual testing. I’m just wondering sort of what makes you think that’s the direction it’s going to. I mean, couldn’t you interpret this as just another step to reduce cost and reduce spending?

So while people might, you know, while you might try to replace them with single plex panels, it doesn’t seem like it’s going to be a durable change if, again, the end goal was to cut costs. So I don’t know if you’ve seen any evidence for that or any early anecdotes. Just talk about the long term shift there.

Prahlad Singh, President and Chief Executive Officer, Reviti: Sure. Hey, Mike. Welcome to the team. Good morning. You know, I I I would just say that you you are you are right.

You know, the debundling policy of the minimum sufficiency principle as they say, you know, the primary driver for this is cost. And and that’s what we are assuming, that this is going to have an impact and we have assumed in our guidance that this impact will continue until we anniversary this. The fact of the matter is that as you think from a patient care perspective, you do need to find out what is the cause for the autoimmune disease that a patient might have. So from that perspective, they will eventually have to get a single plex test to confirm. And and again, I I use the needle in a haystack example to sort of, illustrate as to how this plays a role.

But you you are right. From our perspective, we have assumed that this impact is going to continue and we will anniversary this.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti0: Okay. Alright. Fair enough. And then on the life sciences side of things, you know, the declines in instruments, not super surprising given, what we know about the end market. Just curious if you could give us anything on order trends, book to bill.

I know you don’t have to give specifics, but just any forward demand trends that you saw during the quarter to give you any sense for how when the instruments might return to growth, if they’ll return to growth by the end of the year or if we should really look for that in 2026? Thanks.

Max, CFO, Reviti: Yes. Hey, Mike. Look, I

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: think as you look at our platform assumptions for the remainder of the year, we’re really not anticipating a different market environment than what we’ve experienced so far in the first half of the year, which will be continued to be a cautious environment, but one that is relatively stably cautious. And so that’s kind of our assumption here for the second half. I think we’ll have to continue to see how things play out here over the back half of the year and what that also means for 2026. But at least our assumption for the remainder of this year is that it’s going to remain relatively cautious here.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti0: Got it. Thank you.

Elliot, Conference Call Coordinator: We now turn to Patrick Donnelly with Citi. Your line is open. Please go ahead.

Doug Schenkel, Analyst, Wolfe Research: Thank you for taking the questions. Maybe just a follow-up on the reagent side. You just talk about not only what you saw in the quarter, but expectations going forward? I know you serve some different end markets there. So just curious what you’re seeing in each vertical and again expectations for the remainder of the year on the reagent side and what you’re seeing there?

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Yes. So from a reagent perspective, I think, as Prahlad mentioned, it’s been five straight quarters now of sequential growth, which is obviously a positive sign. I think as you look at what our expectation is for the back half of the year, Patrick, it’s very similar to what we saw from the first half. Again, similar to what I just mentioned on platforms, we’re not really assuming a change in the underlying market environment and things continue to be stable and modestly improving, although we’re definitely not back at what we consider normal levels. I think when you look at the different splits between pharma, biotech and academic and government on the reagent side, pharma, biotech is doing slightly better from a reagent standpoint.

Obviously, the academic and government headwinds, we’re not immune to. But although we are selling reagents, we are, I would say, a little bit more insulated there from an academic and government standpoint. But things are, you know, I would say, relatively stable even there as we’ve kind of progressed through the second quarter.

Doug Schenkel, Analyst, Wolfe Research: Okay. That’s helpful. And then moving on the cap deployment side, you guys talked a little bit about a little more aggressive on the share repo. Can you just talk about the appetite on the deal side? It’s been topical.

We’ve seen a few larger deals gonna come through in in a group. Can you just talk about your appetite, what you’ve seen, and and,

Steve Willoughby, Senior Vice President of Investor Relations, Reviti0: you know, what the

Doug Schenkel, Analyst, Wolfe Research: funnel looks like at the moment? Thank you, guys.

Prahlad Singh, President and Chief Executive Officer, Reviti: Yeah, Patrick. I mean, we continue to actively evaluate, you know, redeploying our cash into potential m and a targets as I’ve talked about earlier. But, really, we are focuses on, you know, making strong strategic additions to the company. And this is sort of where our discipline multi criteria process, plays a role. You know, we’ve not really identified targets yet that are compelling enough from both a financial profile and expected return perspective to move forward with.

I mean, given the strong and differentiated financial profile that we have now put in place for Reviti and our strong internal innovation pipeline, you know, we’ll continue to remain active and aggressive in looking at opportunities and targets of all shapes and sizes, but we’ll also remain disciplined, you know, as we believe that what we’ve built at Revity is now something that is truly special on its own. So we continue to look. We have an active pipeline, but really we haven’t found anything that has been compelling enough for us to make the jump.

Doug Schenkel, Analyst, Wolfe Research: Understood. Thank you, guys.

Elliot, Conference Call Coordinator: Our next question comes from Rachel Wattensdall with JPMorgan. Your line is open. Please go ahead.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti1: Hi, good morning you guys. Thanks so much for taking the questions. Wanted to kind of pivot here and talk a little bit about your tariff assumptions. So you mentioned that your guide was really assuming the tariff as of Friday, but you also acknowledge the tariff deal that was announced over the weekend with the EU. Given EU tariffs are now going be 15% instead of 10%.

So can you help unpack for us a little bit what is currently assumed in terms of dollar amounts for what’s going to be pressuring the EU? And then talk about some of the incremental offsets that we can see there given just that’s an important geography for you guys.

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Yeah. Hey, Rachel. Thanks for the question. Look, think as you as you look at the tariff situation here, obviously, it’s it’s, you know, rapidly evolving as we saw the news, come across the desk yesterday. I’d say, look, there’s still some details that have to get finalized here in terms of the exact scope of what is agreed upon in this framework.

But if we take the assumption that it’s a 15 tariff here between the Europe and that’s probably a gross impact for us in the second half of $0.03 to $05 However, I would say we’re already actively putting in place offsetting mitigation actions to sort of abate these potential headwinds. And then longer term, you know, as we’re looking at our overall, cost structure, you know, this is going to be a major factor as we sort of look at as we, you know, evaluate our global manufacturing footprint and what sort of permanent changes we may need to make there.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti1: Great. That’s helpful. And then just on NIH, you talked about some of the pressure that you were seeing in academic and government, and that’s kind of playing out in line with your expectations here. But could you just walk us through what’s the House view for Remedy’s end on how you see the budgets playing out? Do you think we’ll have a continuing resolution here?

You know, what are your expectations for NIH in regards to funding next year?

Prahlad Singh, President and Chief Executive Officer, Reviti: Yeah. I think anyone’s response would be as good as mine in trying to speculate what 2026 NIH budget would look like, Rachel. You know, from our expectation right now for the rest of the year, we are assuming that it will continue to the academic and government performance will continue to stay weak and stay stabilized at the lower level of for the rest of this year. And then we just have to see how things pan out in the second half to be able to comment on 2026.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti: Next question, operator.

Elliot, Conference Call Coordinator: We now turn to Luke Sergott with Barclays. Your line is open. Please go ahead.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti2: Great. Thanks. I just wanted to touch a little bit on the LifeSci margin side. Had a little bit on GM. You talked about like the weakness there, but you have really strong software.

Reagents were up. Like we said, instruments, we talked a little bit about that. Just kind of the puts and takes of what’s going on. I assume that there’s probably a little bit of volume there, but like I said, you had strong reagents and software and kind of how this is going to trend throughout the year?

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Yes. I think as you look at our Life Sciences operating margin, I’d say a couple of dynamics are at play. One, you’ve got the tariff headwinds, obviously, that we’ve talked about. There’s more of an impact in DX, but LS isn’t completely immune. I’d say the second thing is we did talk a little bit of the FX pressure that’s impacting both of our businesses.

And then the third one, I would say, there was a little bit of specific product mix within the reagents business here in the second quarter that led to a little bit of some margin pressure for that business. But I think as you look over the long term, I mean, there’s nothing really that’s sort of structurally changed how we view the operating margin performance or entitlement of our Life Sciences business.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti2: Okay. And then on the additional cost actions you guys are taking out, is this essentially you guys looking at it and saying, alright. Well, this is a, you know, tougher environment. We can kind of pull forward some of those cost actions we were looking to implement on the out years? Or is this going to be incremental to those?

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: I think it’s a combination of things. One, I think there is a little bit of what you’ve talked about of maybe pulling in some additional structural actions that were already planned in future years. I think two, as I’ve mentioned, we are reevaluating our global manufacturing footprint, which is given that we have some regulated sites can take a little bit of time. But one now with some of these tariff rates, probably makes a little bit more financial sense to pull the trigger on. And then I’d say third, we are looking at some specific sales and marketing channels, given the specific drops in IDX China and making some very, I would say, targeted actions in that location.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti: Got you. Thank you.

Elliot, Conference Call Coordinator: Our final question today comes from Dan Arias with Stifel. Your line is open. Please go ahead.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti3: Morning, guys. Thank you. Pillag, you mentioned VBP in your China comments. Can you just sort of explicitly update us on the confidence that you have in that business not getting caught up there? I mean, the the message, I think, has been pretty consistently that that shouldn’t be an issue just given the nature of the business, and some of the competitive dynamics.

But, obviously, there are surprises afoot here, so just checking to make sure that that’s still the view that you have.

Prahlad Singh, President and Chief Executive Officer, Reviti: Yes, Dan. What we have seen, again, as I said, has been more around, the DRG policy rather than on VBP. I mean, we we we haven’t seen any impact from it going forward. But at the end of the day, one way or the other, you know, the whole focus of the government really is how do you debundle whether you use the Sunshine Act or VBP or DRG to bring cost down. The question really comes from our perspective, the guidance that we have assumed is that impact will continue till we anniversary this, But longer mid to longer term, our focus is around patient care because from an autoimmune perspective, as I said, at the end of the day, you have to find what the specific autoimmune disease is.

And without multiplex and going to sim single plex, this is going to, in the mid to longer term, add to the cost or rather at the most, be neutral to the cost structure that they are trying to put in place right now and not really significantly bring it down. Okay.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti3: Alright. That’s helpful. And then maybe, on on Genomics England and the expanded program there, can you just help us with what the ramp up period should like for volumes and maybe what kind of contributions you’ve assumed for the back half? I think we had circled, like, 10,000,000 or so, so just checking to make sure that, max, that’s an okay number. Thanks.

Max Grikowiak, Senior Vice President and Chief Financial Officer, Reviti: Yeah. Hey, Dan. I think that’s an okay number. And, again, as I’ve mentioned, we’ve got pretty good visibility on what the ramp is. We’ve already a month into the the program.

It’s going extremely well. And I think the splits that you mentioned, are appropriate in terms of 10,000,000 overall for the back half. You know, most of that will be in the fourth quarter though. Okay. Thank you.

Elliot, Conference Call Coordinator: This concludes our Q and A. I’ll now hand back to Steve Willoughby for any final remarks.

Steve Willoughby, Senior Vice President of Investor Relations, Reviti: Thank you, Elliot. We look forward to speaking with everyone over the remainder of today and over the coming weeks. Have a good day.

Elliot, Conference Call Coordinator: Ladies and gentlemen, today’s call has now concluded. We’d like to thank you for your participation. You may now disconnect your lines.

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