Revvity at Goldman Sachs Conference: Diagnostics and Software Focus

On Tuesday, 10 June 2025, Revvity Inc (NYSE:RVTY) participated in the Goldman Sachs 46th Annual Global Healthcare Conference, outlining its strategic direction amidst a challenging market environment. CEO Prahlad Singh emphasized the company’s transformation and resilience, highlighting a shift towards diagnostics and software. While Revvity faces hurdles in the life sciences segment, it remains optimistic about its growth prospects and strategic initiatives.

Key Takeaways

• Revvity’s diagnostics and software now account for 60% of revenue, aligning with its long-range plan.
• The company maintains an organic growth guidance of 3% to 5% for the year.
• Share buybacks are prioritized, with $450 million executed over the last three quarters.
• Revvity is expanding its specialty diagnostics, particularly in neurological issues.
• The company is mitigating a $135 million tariff impact with global manufacturing capabilities.

Financial Results

• Revenue Composition: 60% from diagnostics and software.
• Organic Growth: Projected at 3% to 5% for the year.
• Gross Margin: Improved to 28% from a previous range of 18% to 20%.
• Share Buybacks: $150 million in Q4, $150 million in Q1, and $150 million+ in Q2.

Operational Updates

• Innovation: Launching nearly 2,000 new consumables annually.
• Software Business: Represents 8% to 9% of revenue, growing in the mid to high teens.
• Immunodiagnostics: U.S. exposure at 15% to 20%, with plans to expand.
• China Strategy: Focus on IP-protected assays and reproductive health menu expansion.
• Strategic Partnership: Collaboration with Genomics England.

Future Outlook

• Growth Opportunity: Immunodiagnostics in the U.S. seen as a significant growth driver.
• Software Expansion: Continued focus on bolstering the software business.
• Capital Deployment: Emphasis on cell and gene therapy and diagnostics enhancements.
• Specialty Diagnostics: Focus on neurological and rare disease testing.

Q&A Highlights

• Organic Growth: Variance observed in life sciences and diagnostics segments.
• Instrument Margins: Higher margins with consumables compared to instruments.
• CapEx Pressure: Capital expenditure remains pressured.
• Regional Manufacturing: Continued focus despite tariff challenges.
• Specialty Focus: Emphasis on providing differentiated specialty diagnostics.

For more detailed insights, readers are encouraged to review the full conference call transcript.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: morning, everyone. Matt Sykes, the life science tools and diagnostics analyst at Goldman Sachs. I have the pleasure of welcoming Prahlad Singh, CEO of Revity. Prahlad, thanks for being here.

I appreciate it. So let’s just set the stage a bit. It would be great to get some opening comments from you kind of reflecting in the half of the year, how your view has changed or not along with the various policy changes and how Reviti is able to adapt to the changing business environment. This is a challenging one, so I would love to get your view on.

Prahlad Singh, CEO, Revity: Well, it’s a dynamic environment for sure. Right? I mean, when we began the year, we expected there to be some uncertainty and dynamism in the marketplace with the new administration, but it has been more than that, right, for us and our sector as a whole, you know, whether it’s around tariffs, pharma, biotech, academia, government, m m and f. You know, it’s a host of things that have cropped up or or emerged. I think the thing really is this is where the diversity of our portfolio has shined.

I mean, this is year in a row where our growth rate is at the top end of a, you know, peer publicly traded peer group. And this is what the portfolio transformation was supposed to do. Now we are essentially 60% of the company’s diagnostics and software, which is pretty much in the LRP range that we had said. You know, the variance, is on the life sciences side of the business. But this is the whole journey that that we went through to come to this stage that, unfortunately, we have to demonstrate the resilience and the differentiation of our portfolio in a market that’s challenged right now.

But nevertheless, it’s short. And, you know, when we came out at the beginning of the year with our guidance, you know, we were prudent enough to be able to sort of ensure that we are able to anticipate the challenges that would be in a dynamic market environment. And it’s played out as such with the resilience of the portfolio showing And also the ability to be able to sort of absorb the challenge from the tariff without, you know, in any way changing our guidance is another demonstration of how in this market environment, it has been challenging enough the Revity portfolio shines through.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Yeah. I kinda wanna touch on that just because I think one of the maybe not misunderstood aspects, but as you’ve mentioned, like, you made this massive transformation. You, in my view, effectively allocated a lot of the COVID related cash flow that you generated over those years. But the timing was tough in terms of when when revenue was kind of reintroduced. Could you maybe help investors understand how the growth and profitability algorithm has significantly improved?

Perhaps sort of a before and after comparison just to help drive home what a different company this is today. I mean because you point out, you look at what the growth you’ve actually been achieving, you look at what the margins have done and what the margin potential is, and the algorithm seems to be far improved to what you were before. It’s just the level of appreciation in the market either due to macro headwinds is not quite there yet.

Prahlad Singh, CEO, Revity: Yeah. I mean, for those of you who recall and, you know, and and Reviti in our in our when we were PerkinElmer, essentially, the company was a totally different portfolio and a product profile. You know, 70% of our product portfolio and revenue that is in Reviti today did not exist nearly seven years ago. So that is how different that portfolio is today. You know?

No. 80 plus percent of our revenue is on a record In in portfolio, it used to be 55% of our revenue was on a recurring basis. So much more of a CapEx heavy portfolio. You know, if you look at our growth rates, you know, our LRP, we have said, is gonna be 200 bps above market in the six to 8% range. That used to be in the three to 5% range in the previous time when the market was healthy.

And then I think the most important aspect is when you look at our You know, we are in the 28% profile right now, which used to be closer to 18 to 20%. So, you know, just factually, if you look at some of these data points that really starkly points out the differentiation of the portfolio that is within Reviti now versus what it used to be. You know? And then as I said previously, 60% of our revenue is from diagnostics and software, and that is already within our LRP range that we have said that, you know, this is going to be.

So if it wasn’t for the pharma biotech and academia challenge on the life sciences side of the business, we would already be in our LRP range. Could you maybe kind of

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: talk about the organic growth guide this year, 3% to 5%? Sort of what are the upside and downside risks? I think a lot of us are familiar with the downside risk. But if you can kind of go through that, in your mind, what are sort of the error bars around that three to five? What could cause it to be over?

What could cause it to be under?

Prahlad Singh, CEO, Revity: Yeah. Again, I’ll I’ll point to some of the comments that I made earlier. Look. You know, when we came out at the beginning of the year, we were very prudent in how we define what our organic growth for the year is going to be. And this was, again, based on what we assess to be the uncertainties and the dynamism in the marketplace.

And I think, you know, we were confident in in it being there. And, you know, some folks said that we were being too conservative. But in hindsight now, that looks like, you know, it was a very appropriate move as such. Again, if you look at the port you know, as I said, 60% is diagnostics and software, and that pretty much plays out as is, you know, whether it’s on newborn immunodiagnostics and software. The variance is really around the life sciences and diagnostic side, and that’s where we put a little bit more prudence in our guidance.

So I think we are very comfortable with the error bars that we have or the deviation that we have in the three to 5% that we have forecasted for the year.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Just drilling down on life sciences segment, your exposure is to a lot of early stage preclinical work. Obviously that’s either sentiment or in reality impacted some through academic and government, but also not necessarily today but the potential overhang of MFN, pharma sector tariffs, maybe just talk about how your product portfolio can differentiate itself in this environment. Because the growth has been impacted, but probably not to the extent that people thought it would be. And I think that’s sort of the key question for the half of the year, as you point out, the sort of delta in the guide is the life sciences segment. So maybe talk about how you feel like you can weather through some of these issues.

Prahlad Singh, CEO, Revity: Yeah. I mean, you have to break it down, right, into pieces within the business segment. You know, when you start on the preclinical discovery side of the portfolio, now at some point of time, innovation cannot stop. Because if you don’t fuel the engine, there’s going to be no byproduct coming out at the other end. And then from that perspective, if you look at what has happened over the past couple of years, would say more of the funding has been slanted towards the clinical side, you know, more from a short term exposure.

But if that happens, the pipeline is going to dry up from an innovation perspective, and that needs to continue to be fueled. And what we have in terms of our differentiated product portfolio on the consumable side primarily, you know, that has got a lot of stickiness Mhmm. As the product development process goes. So that’s where we feel very comfortable. You know, obviously, the impact on the CapEx side of the funding is being felt by all.

And I think that’s going to be challenged till some of these overhangs, you know, clear out.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Yeah. Drilling down on instruments, they’ve struggled as the sector has kind of grappled with CapEx constrained environment. It’s not unique to Revity. How should we think about the incremental margin opportunity as that spend starts coming back? Because there probably is some level of operating leverage in that business when the CapEx spend environment comes back.

Prahlad Singh, CEO, Revity: Yes. I think there are two questions in there. One is the impact on the CapEx side, and one is on the operating margin side. You know, I think the CapEx is going to be pressured, and we’ve seen that. But I think as that improves if you look at our life sciences business, there are three port three pieces to the portfolio.

Right? One is the instruments, one is software, and one is consumables. Consumables is you know, and and our margins are in the thirties with that. Consumables is at the higher end of it. Obviously, software is somewhere in the middle of it, and instruments are at the low end of it.

But overall, you know, it is still a very high margin business. The portfolio that we have on the instrument side is differentiated in that there are not a lot of commodity instruments that we sell. So there will be some modest impact on margins, but I you know, it’s not gonna be something that’ll be a significant needle mover. Got it. How does kind

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: of your leadership position within reagents consumables help drive the consistency of growth over the long term? And how do you continue to push utilization higher amongst the installed bases of the consumables that you serve?

Prahlad Singh, CEO, Revity: I mean, the reagents portfolio that we have is essentially, you know, open system. It’s not related to our own instrument. So, you know, it is being used widely. I think the the thing to keep in mind is what we develop and what we sell are related to long term programs. You know, GLP one is one that, you know, I’ve talked about earlier.

It’s once it starts, there is a lot of stickiness to it. You know, from our perspective, what we focus on is how do we continue to generate more and more NPS. We probably launch nearly 2,000 new consumables every year. So that innovation engine needs to continue to rev at a steady pace to be able to provide researchers with the tools that they are looking for in terms of their discovery and development process. And that’s what our focus is on.

And there is a lot of stickiness to the portfolio that we have, which is evident from if you look at the performance even in this depressed environment over the last three to four quarters.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. You’ve quickly gained a pretty strong presence in the software side of tools spend. Many other tools companies in the past have tried to advance their software and bioinformatics business with mixed success. What differentiates Signal’s offering? And how do you see this business driving customer stickiness going forward?

Just because I think we’ve all understood the ability for tools companies to be software companies. But for whatever reason, it hasn’t come out. But you seem to have reached a level of critical mass in your software business. How is your approach different perhaps than what has been tried in the past, and how do you think that will capture customers within that ecosystem that you have?

Prahlad Singh, CEO, Revity: Yeah. I mean, our software business always did well. It’s just that when we were PerkinElmer, we didn’t have an opportunity to talk about it given everything else that was on the list of things to talk about. No. I think our software business is unique in the sense that it’s not tied to any instruments or anything from that perspective that there is a CapEx, and you need it as a it is more of an ERP for researchers.

And that that is something that is critical and instrumental in them being able to do their work. You know, 48 out of the top 50 pharma companies have our software. And we treat it really, really like a pure software business. Mhmm. But the biggest also driver for it is our life sciences business turns to be a pure customer for our software business to be able to enable them to understand what is the pipeline, what is the product portfolio, what is the user needs that will play out, whether it is within our research, life sciences research service labs, or in on the clinical side on our diagnostic service labs.

So there is a sandbox even within the company that the software business is able to leverage as a customer profile that would need. So, I mean, we couldn’t be prouder of the way they have been performing and executing, But there is a method to the madness that has resulted in it being 8% to 9% of the company’s revenue at this point.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Switching over to diagnostics. You have immunodiagnostics and reproductive health, both of which have recovered pretty nicely post COVID.

Prahlad Singh, CEO, Revity: Can you

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: talk about the penetration and growth opportunities specifically with Immunodiagnostics in The U. S, which has been a focus for you?

Prahlad Singh, CEO, Revity: Yeah. I mean, you know, immunodiagnostics is, what, 15% to 20% of our total company exposure is within The US, which should be, I would say, around 35% to 40% historically if you look at the if you look at the size of the market. So this is our biggest opportunity and the low hanging fruit that we have to continue to grab. And this is what we’ve continued to talk about. I mean, even that, even when we acquired EUROIMMUN, that was, like, three to 5% of exposure.

So it’s continued to grow, but there is still a lot of room for it to grow in the marketplace. So we see that as a strong growth profile. And that will sort of balance out, to some extent, the global exposure, specifically vis a vis China, that the immunodiagnostics business has as it continues to grow its presence within The United States.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Are there any natural gating factors to increasing penetration in The US, whether it’s competitive landscape, whether it’s the offering you have, like commercial intensity? Like, what is it that you feel maybe it’s just blocking and tackling and hard work to get there, but, like, what do you feel is sort of the unlock for that further penetration gains in The US?

Prahlad Singh, CEO, Revity: Yeah. I mean, there is it’s just blocking and tackling in time. I mean, you know, it’s gone, as I said, from 3% to 5% to 15% to 20%. So it has continued to grow at a torrid pace. We just need to continue to fuel the regulatory filings, ensure that we have enough feet on the street, and penetration with the big large reference labs, which have been great partners and customers for us.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Shifting over to China, your while your testing categories have not been in the VBP programs, technically, local competition is present, something you face every day there. How do you differentiate your capabilities versus local competitors? And what has sort of been the pricing impact over the past few years? And how do you maintain margins longer term in that market?

I mean, your growth has been really good, but you’re facing similar levels of competition everybody else is over there.

Prahlad Singh, CEO, Revity: Yeah. Look. I mean, you know, the competition in China is not new, as I have said, and it’s going to continue to be intense. And even the, you know, the external factors, whether it’s VBP or DRG, you know, we are gonna see the impact of that. That’s not there.

Plus, you know, we’ve also had high comps. So we are going to see the impact of this, especially this year in the short term. But, really, the differentiation for us, as I have continued to say, is our portfolio. You know, we bring in assays that have got IP that we are able to provide. You know?

And I’ll use two examples that I always use is around nephro and around neuro, you know, autoimmune diseases. You know, it’s not just the basic ANA screening or basic screening for lupus, thyroid, etcetera. But it’s for more complex diseases where do you need tests that, you know, you have to have where do you have an intellectual property around that? That is what will con continue to ensure the growth and profitability of that business, not just in China but across. So

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: For reproductive health in China, and you’ve called this out pretty consistent, birth rate has been a consistent challenge. There’s not a terrible amount you can do about that outside of the Year of the Dragon last year. But, however, you still see growth in this area to increase your exposure to rare disease testing in the future as sort of a future driver of growth? I mean, there’s sort of a natural move from reproductive to to rare disease. So maybe talk about that potential evolution.

Prahlad Singh, CEO, Revity: Yeah. I mean, breaking it down within China and outside of China. Right?

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Yeah. It’s more of a global question, honestly. I

Prahlad Singh, CEO, Revity: mean, within China, you’re right. I mean, last year, we saw a modest modest increase from the year of the dragon. And, you know, look. We still have a long way to go in terms of the number of disorders that, you know, some provinces can test for. I mean, the big ones around Shanghai and and then Beijing and Shenzhen, they get more than, you know, a few disorders, but there’s still you know, it’s a very large country, but there’s still opportunity for growth from menu expansion.

So from our from our perspective, in China, that’s our place. How do we continue to be in China for China in terms of developing, discovering, and getting approval from an MPA for disorders within China. You know? And sort of that takes away the dependency on any other country for fueling the product portfolio within the country. Outside of China and related to the rare disease component, I I think we’ve over the past couple of years, if you look at it, we’ve done a very good transition on that, you know, especially with our omics business playing the catalyst in that play.

You know, that’s around DMD, SMA, you know, novel diseases, rare diseases, which are now having therapeutics in play. You know, providing companion diagnostics, working with therapeutic partners to be able to, a, identify patients that would be good for their clinical trials, but more importantly, as population genomics starts to play a role. You know, as we announced a few weeks ago, our partnership with Genomics England. You know, that’s a critical play, you know, being able to test for a 100 newborns, be able to provide the competencies and capabilities along with the tools and the service component is really critical for us to partner over the long term in the identification of rare diseases vis a vis and also help therapeutic companies and pharma to develop novel therapeutics for that. So that is sort of our play is how do we take what we are doing in terms of basic screening for newborn errors of metabolism or genetic disorders in newborns towards helping pharma develop therapeutics for some of these disorders.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Yeah. And I would expect that that some of the language we’ve heard from CBER and and the FDA about their willingness to accelerate rare disease drug approvals would be a nice tailwind for that business as well over time. Would you would you agree with that?

Prahlad Singh, CEO, Revity: I think I think we are still at the very cusp. You know, this is a tale of two different cities or stories, whichever way you wanna say it. You know, there is still a 100,000,000 babies, newborns in the world that are not tested. So you have that scenario where the geographic expansion for basic disorders is still nonexistent or in its very early infancy. At the same time, there is an emergence, or I would say, a surge of new novel therapeutics for rare diseases.

You know, each of these cost $7.50 to a million dollars per therapeutic regimen. But to be able to identify patients early on who would benefit from these therapeutics is a big market opportunity. So for us, since our presence on this side is pretty strong, it’s a natural bridge and extension to be able to provide the product portfolio and the capabilities to not just therapeutics but also to countries as they start developing their population genomics program.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. One last question on China. We’ve seen a we’ll see how long it lasts, but de escalation of tariffs tariff rates in China. During your q one call, you talked about a $135,000,000 headwind if nothing was mitigated. How would you characterize the headwind today given the lower tariff rates?

And does this allow you to speed up your mitigation efforts specifically with your BioLedging business?

Prahlad Singh, CEO, Revity: Yeah. I mean, I think if you as you will recall, what we said is that was the opportunity or the challenge in terms of the tariff and the mitigation actions that we were placing in place in the second quarter to ensure that we don’t have that uncertainty into play. So most of what we had planned is already in execution, and that trains sort of left the station because, you know, as in any negotiations, these things go up and down and up and down, and we’ve experienced that, right, since around this call. So from our perspective, there is very little upside if these were to go back because we’ve already put in place, you know, manufacturing capabilities in different parts of the world to ensure that all countries have the supply that is needed without having this hangover of the tariff scenario.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: So so are you similar to other tools companies that we’ve spoken to where despite what the tariffs may do, the regionalization of manufacturing will likely continue? Because it’s probably the right way to be positioned in the future.

Prahlad Singh, CEO, Revity: I think we had to reexercise our COVID muscle to ensure that there is supply chain redundancy in all markets. And, you know, that’s what we went back. Biology was a new muscle because at that time, Biology was not part of Revity. But, you know, it’s amazing the amount of execution focus that they put in a matter of weeks to ensure that there was no disruption in product availability for the China marketplace.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Shifting over to academic and government and market, you’ve outlined your exposure is roughly 5%, I think, total exposure, but NIH is around 1%. Given this is not hugely material, we have seen a pretty meaningful decline in demand in this segment regardless. How do you maintain your exposure to this important early stage research while also kinda calibrating to a potentially lower level of demand going forward?

Prahlad Singh, CEO, Revity: Yeah. You know, look. This is always gonna impact, you know, maybe short term or near term results, especially with the academia, government on the on the on the in vivo side of the business where there is a bit more exposure. But really from a researcher’s perspective, the more innovation that we can bring in place, Matt, the better off they are. Because if we are able to provide more productivity, more efficiency, more automation, you know, from the instrument portfolio, it becomes a compelling proposition for them to move forward with some of these you know?

So if there is a limited budget, they will spend they will buy a limited amount of things. But our focus is really to provide a product that make becomes compelling enough to take that. So this is where our focus is. Like, on the in vivo side, right, we provide imaging for for research purposes. How do we provide automated regions of interest around organs so they don’t have to go and demarcate it?

Right? And if this is something from a machine learning perspective, we are able to instill it in the software. It just significantly reduces the time as they do imaging. That’s an example of how our focus is really on the innovation side to be able to deal with some of the headwinds, temporary headwinds, hopefully, around the CapEx availability.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And then just to kind of frame it embedded in your guide, what is your expectations for growth in the academic and government segment over the course of this year?

Prahlad Singh, CEO, Revity: Yeah. I would say we have not had I don’t recall what the number is, but it’s not really any high expectations around what academia and government would do. Okay.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: So you’re assuming some level of cut at NIH, whatever that might be?

Prahlad Singh, CEO, Revity: I mean, you know, NIH is a small component. As you said, it’s 1% of exposure, but overall, academia is around 5%.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. Shifting to some of the recent policy changes at the FDA, which has largely been sort of headcount reduction so far, but also some announcements that I mentioned before, trying to accelerate the drug approval process, especially in the earlier stages. You have in vivo imaging, organoid, organ on a chip capabilities. While some of these might still be pretty early in their stages of development or establishing use cases, How can Reviti benefit from this attempt to accelerate earlier stages of drug development? Like, I would think this is gonna be a nice tailwind for you because a lot of what you do is actually trying to solve that same problem.

Prahlad Singh, CEO, Revity: Software. I mean, whole idea is, you know, how do we surround it And by software, I mean more around machine learning and AI capabilities that we are able to bring to the portfolio. You know, whether as you said, it’s around organoids or, you know, or Organo chip or or three d capabilities.

Our focus really is that if I’m you know, if you are a researcher and if you are looking for, you know, a certain tool set, how do we make it seamless and automated enough for you so that your efficiency improves, especially in a budget tight environment? That’s essentially where our focus is.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: It. Shifting to financials, asking to maybe put Max’s hat on for a minute. But you’ve outlined kind of given the challenging macro backdrop, operating margins are expected to contract between twenty and forty basis points. You talked about that on the Q1 call that if tariffs were to be scaled back, you would continue with your flexible manufacturing plans, which we just talked about, and may not update the margin guide. However, do you see any upside to these margin targets if top line growth trends are a little bit better in the And do you think the long term what do you think the long term operating margin target is for this business overall?

Prahlad Singh, CEO, Revity: As we said during the first quarter earnings call, you know, the ’28 from twenty eight point three, the minor drop that we said is related to the tariffs. But I think the the thing to keep in mind, it is still in the top quartile of a publicly traded peer group. You know, to be able to take the operating margin to that level in the matter of time that we have done with the portfolio that we have assembled is really, really, I think, a great accomplishment. But I think what’s more important for us is that we are still at the very early stages of what the true portfolio profile can result in terms of what the operating margin for the business should be. As we have said, you know, assuming normal market environment and us being in our LRP range, we should be a company that has operating margin in the mid-30s.

There is nothing that should be stopping us from doing that.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Do you think the upside to that margin case is more to do with life sciences segment than diagnostics at this point, or do you think there’s equal opportunities in both businesses to get that margin expansion?

Prahlad Singh, CEO, Revity: I think there is equal opportunities in both sides of the business. You know? I mean, on every side. I mean, look at our software business. The more it grows and the pace that it has been growing, you know, from it was 13% growth last year.

This year, it will be probably be in the mid to high teens. That continues to, you know, provide margin. Life sciences, as you mentioned, obviously, will be a big driver. And even within diagnostics, we’ve still got a lot of work to do with the acquisitions that we have made and bring them up closer to what we think is the corporate operating margin profile.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. I do want to shift to M and A, and you spent a few years immediately post COVID with an increased level of M and A versus your history. As you reflect back on these transactions sort of on a postmortem basis, how would you assess the success of these deals? And how would you assess the overall kind of redeployment of the COVID cash flow that you generate in terms of transforming the company to higher growth and higher margins? And would you have done anything differently with the benefit of hindsight?

Prahlad Singh, CEO, Revity: Yeah. I mean, you know, we made 13 acquisitions

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Yeah. I know.

Prahlad Singh, CEO, Revity: In a matter of twenty two months. And then then I think I think as I keep using the term, that there was a method to that madness. Right? We we knew that the 700,000,000 on average of COVID revenue that we were getting on an annual basis is gonna go away, and we needed to replace that with high growth, high margin portfolio. And on the life sciences side, that’s what we set out to do.

You know? And and we made some acquisitions on the diagnostic side. You know, did we get a, whatever, thousand strike rate? Probably not. You know, maybe one or two of the acquisitions that we did have been a bit challenging.

You know? And one I keep pointing out is tuberculosis franchise. I think we probably could have anticipated the amount of automation that it required for The US marketplace more earlier and the amount of work that it would require, especially with the FD you know, with the regulatory body and going through the approval process. So that’s probably been at a slower pace than what we would have anticipated. But, generally, I mean, you know, some of the big ones that we’ve done around BioLegend, Horizon, EUROIMMUN, of course, they have been, I would say, spectacular acquisitions.

And they’ll continue to bolster the growth of the business overall.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: Got it. And looking forward, how would you prioritize capital allocation strategy when you look at the options of M and A, organic, buybacks, dividends? How are you kind of rank ordering those in this environment? And do you expect that to change?

Prahlad Singh, CEO, Revity: Yeah. I mean, you know, going to your previous question, I think if we look at the past seven years, we deployed around 7 to $8,000,000,000 of capital in acquisition. We divested a of the company and the brand name along with that. So there was a lot of m and a activity at that period of time. We are very happy with the portfolio that we have at this point of time.

You know, it is very well balanced. It’s a high growth, high margin business that is set up to deliver the margin profile and the growth profile that we have laid out in a long range plan. We feel very confident in that. I think from that perspective, we don’t really have a burning desire to do an acquisition or an M and A activity at this point of time. I think what we will and, you know, and to some extent, given the current market environment, you know, the share buyback has been a very attractive opportunity for us to deploy capital.

That’s why I think we said we we did a 150 bill million in q four, a 150,000,000 in q one, and I think 150,000,000 also plus in q two. So, you know, for us, we think the best investment right now is to do share buybacks. And right now, that’s the opportunity. Doesn’t mean that we are not gonna be active in in on the M and A side. We continue to have a very active pipeline.

We continue to look at opportunistic opportunities that are synergistic with the portfolio that we have put in place. But I would say that, you know, the share buyback provides us an attractive opportunity currently.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: So would you characterize your willingness to invest given that you’ve transformed the company and done all these M and A transactions? And now would you characterize you kind of have the beachheads in place and therefore a lot of the gap filling in the portfolio could be organic versus M and A?

Prahlad Singh, CEO, Revity: I think you have to look at the portfolios differently. Right? I mean, if I were to look in the three businesses, you know, on the software side, if there is something that we can continue to add to bolster a faster growing business, we might do something there. On the life sciences side, around cell and gene therapy, if there are any holes that we have to fill, we will look for opportunities. Similarly, on the diagnostic side, if there is a assay that bolsters our menu, we might add something there.

So, again, what our focus is looking at where there is a strategic fit, what can add to the growth profile of the business, and meet our financial hurdles at the same time, we might do it. But as I said, right now, the share buyback is such a glaring opportunity for us that I would be we would our focus is on capitalizing that.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: I want to touch on one comment you made about diagnostics just because and you had said it earlier about maybe expansion into other areas, and I think CNS is one that’s starting to gain a lot of traction, particularly among some of the larger tools companies, whether it’s Alzheimer’s and you’re starting to do APOE type testing, how do you think about expanding indications within your diagnostics franchise where, one, you can get some synergies based on what you’re already doing but also go into larger attractive areas within diagnostics? And maybe Alzheimer’s is one that you can address.

Prahlad Singh, CEO, Revity: Yeah. I mean, our focus always has been, Matt, is providing specialty diagnostics. So we are not really in the space to fight on price or tender or or or compete around big boxes. Our focus is really how do we bring specialty diagnostics, whether it is in neuro or or any other disease profile that is differentiated enough for the customers to have to that they must have that. And this is where I keep using the opportunity around neuro autoimmune testing.

You know, there’s not a lot known, and and this is where you know, whether it’s around brain encephalitis or other tests that we bring to the marketplace, it is differentiated enough that customers need to have that in their profile. So that is sort of where we look for on the diagnostic side of the business is put together a portfolio that that is a must have opportunity rather than it would be good to have.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: And then last question. Just given the 3% to 5% expected growth this year, the 28% margins with some clear upside to that in a better market environment, and then I look at your multiple, Like, what do you think is the most underappreciated thing or unappreciated things about about Reviti and and that’s not necessarily reflected in the stock price today?

Prahlad Singh, CEO, Revity: I I think the more one is the macro environment. I mean, you know, as you pointed out at the question, you know, given the challenges that are hovering and and then, you know, I think if you look at over the past six months or year to date or even over the twelve months, we are still one of you know, in our peer group in a depressed market environment, we are still one of the better performing stocks in terms of the profile or multiples. But it is a tough market environment. And from an investor’s perspective, I think some of this cloud overhang needs to go away. But this is where, man, what I wanna sort of leave with is we are very confident in our long term prospect for the business.

60 of our business is already in our LRP. You know? In this market, to be able to say that, I’m not sure how many people can say that. Right? The life science variance is obviously there to play.

Software business is a crown jewel, but it is such because of how it is associated with our life sciences business. You know? So there are a lot of tools and capabilities. We’ve put together a good a good portfolio and a good profile, and we are executing to the best. And we are being aggressive in our share buyback.

Matt Sykes, Life Science Tools and Diagnostics Analyst, Goldman Sachs: It’s a great place to end it. We’re out of time, Prahlad. Thank you very much. Appreciate it.

Prahlad Singh, CEO, Revity: Thank you.

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