Revvity Inc (RVTY) Q2 2025 Earnings Call Highlights: Strong Software Growth and Strategic Share ...
Adjusted EPS: $1.18, above expectations.
Life Sciences Segment Growth: 4% organic growth.
Diagnostics Segment Growth: 2% organic growth.
Signals Software Growth: Over 30% organic growth.
Free Cash Flow: $115 million in Q2, 83% conversion of adjusted net income.
Operating Margin: 26.6% adjusted operating margin, down 210 basis points year over year.
Share Repurchase: $293 million worth of shares repurchased in Q2.
Full-Year Organic Growth Outlook: 2% to 4% range.
Full-Year Adjusted EPS Outlook: $4.85 to $4.95.
Net-Debt-to-Adjusted-EBITDA Ratio: 2.6 times.
Adjusted Tax Rate: 19.1% in Q2.
Warning! GuruFocus has detected 5 Warning Signs with RVTY.
Release Date: July 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Revvity Inc (NYSE:RVTY) achieved 3% organic growth in Q2 2025, in line with expectations, driven by strong performance in the Life Sciences segment.
The Signals Software franchise experienced approximately 30% growth, setting a new record for orders in a single quarter.
Revvity Inc (NYSE:RVTY) reported adjusted EPS of $1.18, which was above expectations and guidance.
The company generated $115 million in free cash flow during the quarter, maintaining a solid 90% conversion rate year-to-date.
Revvity Inc (NYSE:RVTY) repurchased nearly $300 million worth of stock in Q2, bringing total repurchases to nearly $450 million for the first half of the year.
Negative Points
The Diagnostics segment faced challenges in China due to changes in hospital lab reimbursement policies, impacting the Immunodiagnostics business.
Revvity Inc (NYSE:RVTY) lowered its full-year organic growth outlook to 2% to 4%, down 1% from prior expectations.
The company anticipates a meaningful pullback in its Immunodiagnostics business in China for the remainder of the year.
Operating margins were pressured by lower volumes of high-margin diagnostic tests and recent changes in FX rates.
The academic and government customer segment continued to show weakness, with revenue declining in the low single digits year over year.
Q & A Highlights
Q: Can you explain the guidance change related to organic growth, particularly in China, and whether other factors like VBP are involved? A: (Prahlad Singh, CEO) The majority of the impact is from the DRG policy in China, which affects multiplex tests. This policy reduces test volumes, but in the long term, it may lead to more single-plex tests, which are more expensive. We are working with stakeholders to potentially reverse these changes due to their impact on patient care.
Q: Regarding margin changes, what are your expectations for 2026 margins, and what growth assumptions are they based on? A: (Maxwell Krakowiak, CFO) We expect a baseline operating margin of 28% for 2026, with margin expansion depending on organic growth levels. Typically, with high single-digit growth, we expect a 75 basis point margin expansion, and with mid-single-digit growth, about 50 basis points.
Q: What are the revenue pacing assumptions for this year, and how do you see the impact of NIH funding and year-end budget flush? A: (Maxwell Krakowiak, CFO) We expect normal seasonality with a high single-digit ramp in both Life Sciences and Diagnostics. The fourth quarter will see a ramp-up in gel and larger volume in Signals Software. We assume academic and government funding will remain weak for the rest of the year.
Q: Can you provide insights into the Life Sciences segment's performance, particularly reagents and instruments, and any guidance changes? A: (Prahlad Singh, CEO) Pharma-biotech showed stability with mid-single-digit growth, and our Life Sciences reagents business has grown for five consecutive quarters. While capital equipment spending is impacted, we remain optimistic about the reagents business.
Q: How is the Software segment performing, and what are the expectations for growth in the second half? A: (Prahlad Singh, CEO) The Signals Software business had a record quarter with 32% organic growth. We focus on net retention, ARR, and APV, with strong SaaS bookings. We expect continued growth due to investments and new product launches.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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