The paragraph introduces the Q1 2024 Revvity Earnings Conference Call and the participants on the call. The host, Steve Willoughby, reminds listeners of the Safe Harbor statements and mentions that the company's actual results may differ from projections due to various factors. He also mentions that non-GAAP financial measures will be used and a reconciliation to GAAP measures is available. Prahlad Singh, the President and CEO of Revvity, then thanks everyone and notes that this is the fourth quarter reporting results as Revvity after the company's transformation.

The speaker is looking forward to celebrating their company's one-year anniversary and is proud of the progress they have made. They have been active in pursuing key initiatives and while there have been promising conversations with customers, actual spending has not yet picked up. The company's diagnostic businesses have remained strong, with the immunodiagnostics franchise growing in the low-double-digits and the Newborn Screening business performing well. However, there were significant declines in the Applied Genomics business. Overall, the company's performance was better than expected with a 3% decline in organic revenue.

The company has been working to eliminate standard costs and offset variable expenses in order to optimize their organization. They have formed a new enterprise operations team to lead initiatives such as footprint consolidation and vendor consolidation. The company has also realigned management in their Life Sciences segment, with Gene Lay becoming the Head of the segment. This change solidifies the reverse integration process that has been ongoing since the acquisition of BioLegend two years ago. The company has also successfully integrated several other acquisitions, including IDS, Oxford Immunotec, and Nexcelom.

The company has made organizational changes to improve collaboration and drive key initiatives, such as bringing new innovations to market and managing expenses. The first quarter saw strong financial performance, with adjusted operating margins above expectations and a focus on improving margins in the Diagnostics and Life Sciences segments. The company is confident in their ability to continue driving margin improvement and cash generation in the future.

The company had a strong first quarter, generating over $130 million in free cash flow and launching new software offerings in their Revvity Signals business. They also launched a next-generation sequencing solution for Newborn Screening and announced a collaboration with a non-profit research institute. They expect these positive trends to continue throughout the year.

Revvity has had a strong quarter of innovation in their Life Sciences Reagents business, launching new GMP recombinant proteins and products with next-generation UV dyes. They have also been awarded grants from the Michael J. Fox Foundation to help commercialize breakthroughs in Parkinson's disease research. With the divestiture behind them, the company is hitting its stride and making advancements in their operating structure and go-to-market strategy. They plan to provide more insight on their potential and progress at an upcoming Investor Day in November.

The company will be hosting an event in the coming months, and Max Krakowiak discusses their strong performance in the first quarter despite challenges in the pharma biotech industry. They exceeded their organic revenue expectations and focused on controlling operational efficiency and cash flow generation. COVID-related revenues were de-minimis and they saw a 3% decline in organic revenue. FX was a slight headwind and there were no contributions from acquisitions.

In the first quarter, we focused on controlling operational costs and eliminating divestiture-related costs, resulting in strong margins. We also had a favorable pricing impact and generated free cash flow of $132 million. We expect this momentum to continue and have potential divestiture-related outflows returning to us. We were active in capital deployment, repurchasing shares and evaluating potential opportunities. We finished the quarter with a net debt to adjusted EBITDA leverage ratio of 2.7 times. Our first quarter business trends are included in the quarterly slide presentation on our Investor Relations website.

In the quarter, the company saw a 3% decline in organic revenue, with a decline in the Life Sciences segment and growth in Diagnostics. Sales declined in all regions, with China declining the most. The Life Sciences segment saw a decline in sales to pharma biotech and academic/government customers, with decreases in instrument and reagent sales. The Signal Software business saw growth, driven by strong SaaS offerings. In Diagnostics, there was flat reported revenue and 1% organic growth, with strong growth in the Immunodiagnostics business.

In the quarter, the company experienced high growth in China and outside of China, driven by unique market opportunities and menu expansion. The reproductive health business grew slightly, while the Newborn Screening business performed well. However, the Applied Genomics business experienced a decline due to decreased demand from clinical and pharma customers. The company expects this business to improve throughout the year but still anticipates a decline for the full year. In China, overall revenue declined as expected, with a decline in diagnostics offset by growth in immunodiagnostics and a significant decline in reproductive health. The Life Sciences business in China also declined, but slightly better than anticipated.

The company has not yet seen any impact from potential additional stimulus on their orders, so they are remaining cautious with their assumptions for the year. They expect organic growth in the 1% to 3% range and do not anticipate returning to positive organic growth until the second half of the year. They have adjusted their expectations for currency rates and now expect a neutral impact on revenues. Operating margins are expected to remain flat at 28% for the year, with a slight improvement in the fourth quarter. There are a few factors that will offset each other below the operating line.

The company has adjusted its financial outlook for the year, with expected net interest and other expenses to be lower but offset by a higher tax rate. The second quarter is expected to be similar to the first quarter, resulting in unchanged adjusted EPS guidance. The company has performed well despite challenging market conditions and is positioned for future success. The first question from a Bank of America analyst focuses on the various surprises in the quarter, with reagents and pharma/biotech performing worse but China and Diagnostics performing better.

Prahlad Singh, CEO of a company, is asked about his confidence in predicting growth in a volatile market. He explains that while there have been some challenges, the overall market has stabilized and they expect their core reagents to be up in the mid-single-digits for the full year. He also mentions that their diagnostics business has performed well, with Newborn Screening growing in double-digits outside of China and their software business exceeding expectations. Singh emphasizes the importance of their diversified portfolio in a volatile market.

During a recent conference call, Max Krakowiak, a representative from Bio-Techne, discussed the company's weaker performance in the reagents business compared to their peers. He attributed this to slower growth in the pharma and biotech sector, but noted that the academic and government sectors showed growth. Prahlad, another representative, added that the company has seen progress in March and April and is confident in their full year outlook. During the call, Prahlad was also asked about the company's capital allocation strategy.

The speaker is asked if, in hindsight, they would have done anything differently in regards to recent acquisitions and if they feel the business is well-positioned despite current market conditions. They express confidence in their strategy and mention that the majority of their revenue comes from recurring sources. The discussion then shifts to instrument demand, with the speaker noting a mid-teens decline in Life Sciences but also mentioning stabilization in Q1. They are asked about their outlook for capital equipment demand and the impact on revenue throughout the year.

Prahlad Singh, CEO of the company, discusses the demand for instrumentation and capital equipment for the rest of the year, stating that they are still expecting a mid to high single-digit decline. However, the first quarter showed an improvement from their initial expectations. They are not assuming a market recovery and expect a steady state environment. In regards to reagents, they expect a mid-single-digit growth for the year, with March and April showing positive trends. The reagent business was down mid-single digits due to licensing comparisons, but excluding that, it was up mid-single digits.

The company experienced some volatility in its budget finalization with pharma biotech customers in December, but this bled into January and impacted initial sales. However, sales have returned to expected levels in March and April. The company expects low-single-digit growth in the second quarter and mid-single-digit growth for the full year. The biopharma conversations have firmed up in the last two months, with more solidity and prolonged discussions, but have not yet converted into orders. The company is encouraged by this trend, but it is not yet at a point of inflection. The next question is from Andrew Cooper from Raymond James.

Andrew Cooper asks about the potential growth of the software business in the next few years. Prahlad Singh responds by stating that they are optimistic about the growth and that the launches of new products are a direct result of customer feedback. He mentions the expansion of Signals Clinicals and Synergy, which have seen good initial traction. He also mentions that there will continue to be new launches in the future due to the modular approach taken by the company.

The speaker discusses the long-term growth assumptions for their Software business, which is expected to have high-single-digit to low-double-digit growth per year. They also mention that there may be some quarterly noise in cash flow, but overall, they expect it to be greater than $475 million for the year. The speaker also talks about the drivers behind the better-than-expected operating margins, which were supported by cost efforts and organic upside. They mention that some of the cost benefits may have been one-time in nature and that they would need to see certain factors to increase their margin outlook.

The company's outlook for the year remains unchanged, with operating expenses expected to remain flat and gross margin expected to increase based on volume. There has been no significant change in trends in the Life Science segment in China, and the company expects stable pricing in the Chinese diagnostics market.

The speaker asked a couple of questions about the company's guidance, specifically regarding the stimulus and the impact of declining birth rates in China. The company stated that they are not factoring in the stimulus in their assumptions and that they expect the birth rate trend in China to improve in the second half of the year. They also reiterated their full year organic revenue guidance and stated that Q2 was in line with expectations, but acknowledged that biotech and pharma demand has not rebounded as much as hoped.

The speaker discusses the performance of the company in terms of good and bad factors. They mention that they had expected a stronger recovery in the first quarter but their guidance had assumed a stable outlook, which is what played out. They also mention that their margin assumptions and quarterly phasing remain unchanged.

The company expects second quarter organic growth to be down low-singles, but reagents are expected to improve. The decline in growth is due to timing of VBP impact.

The company anticipates a low-single-digit decline in organic growth for the second quarter, with a sequential improvement in reagents. The decrease in growth is attributed to the timing of VBP impact, which was not seen in the first quarter.

Prahlad Singh and Max Krakowiak discuss the company's assumptions for mid-single-digit price declines on an annual basis. They also mention that the Life Sciences reagents will improve in the second quarter, but the instrument side of the business is still under pressure. They expect the newborn business and immunodiagnostics to continue growing, but are being more conservative in their assumptions for the second quarter. Max also clarifies that there is no specific timing for the pricing headwinds in China and that it will be a consistent issue throughout the year.

Prahlad Singh, speaking on a conference call, was asked about the performance of the pharma and biotech industries. He noted that there has not been much improvement in orders, but that there may be some differences between production-oriented businesses and lab-oriented areas. He also mentioned that there is still pressure on higher ticket items, but not as much on lower ticket items. When asked about the impact of the Spotfire litigation, Singh stated that initial customer inquiries have died down and that the company still has an agreement in place with renewals. Another analyst asked about the pipeline reprioritization in large pharma, to which Singh responded that there has been a trend of removing molecules from pipelines and it is not unique to Roche. He did not give a timeline for when this trend may end.

The speaker discusses the pipeline realignment in the pharmaceutical industry and its potential impact on their business. They believe that the realignment will continue but will not have a major impact on their business in the mid to long term. They also mention their focus on helping their customers optimize and make their processes more efficient. When asked about their expectations for the pharma/biotech market in the second quarter, they decline to give a specific outlook but mention a general change in the market. The speaker also discusses the solid performance of immunodiagnostics in the first quarter and mentions that the comps will get more difficult as the year progresses. They do not provide specific details about the second quarter or the second half, but mention the potential impact of new products and pricing.

The speaker discusses the strong performance of the IDX business in the first quarter and expects it to continue to perform well for the rest of the year. They predict high-single-digit growth and attribute it to both geographic expansion and innovation. They also mention the US as a strong growth driver for the immunodiagnostics business. In terms of costs, they have implemented short-term and long-term initiatives to remove stranded costs and improve operating margins, with the short-term actions expected to be completed by 2024.

The speaker discusses the long-term growth strategy for the company, focusing on areas such as in-sourcing, freight lane optimization, vendor consolidation, and rooftop consolidation. They also mention the strong growth of the immunodiagnostics business in the US and the potential for continued growth in this market through menu expansion and FDA approvals. They believe that the US market still has a lot of growth potential for the company.

The company has launched a new automated tuberculosis testing system that has received positive feedback at a current show. It uses all of their other offerings and reduces hands-on time and technician touch points significantly. The system has a shorter total hands-on time compared to competitors. The company does not disclose specific tenders, but they are optimistic about the new system.

This summary was generated with AI and may contain some inaccuracies.