Revvity (RVTY) 2024 Wells Fargo Healthcare Conference summary

Key business performance and portfolio evolution

• Outperformed peers in organic growth over the past two years, driven by a differentiated, higher recurring revenue portfolio.

• New leadership and rebranding have improved execution and margin potential, with a focus on educating investors at the upcoming Analyst Day.

• China business remains resilient, with flat growth expected in 2024 and a unique product mix less exposed to VBP risks.

• Pharma/biotech exposure is mainly with medium and large pharma, with smaller biotech headwinds easing slightly.

• Instrumentation and applied genomics businesses are expected to return to normalized growth rates, with high content screening and imaging as key drivers.

Life sciences and diagnostics segment insights

• Reagents business (~$750M) is expected to grow high single to low double digits in a normalized environment, with BioLegend as the largest contributor.

• Licensing portfolio (Pin-point editing, viral vectors) is volatile but offers long-term royalty potential as more deals progress to commercialization.

• Software business (~$200M) is standalone, sticky with large pharma, and growing double digits, driven by SaaS adoption and new product launches.

• Immunodiagnostics is growing high single digits, with U.S. market penetration and menu expansion as key growth levers.

• Newborn screening outpaces global birth rates due to menu and geographic expansion, with China expected to improve in the Year of the Dragon.

Financial outlook and capital deployment

• Free cash flow guidance raised to over $500M for the year, supported by a higher mix of reagents and operational improvements.

• $700M short-term note to be paid off in September; $3B long-term debt remains, but further paydown is not a top priority.

• Near-term capital deployment favors share buybacks due to discounted valuation and high M&A sticker prices.

• Fourth quarter organic growth expected to ramp to high single/low double digits, driven by software renewals, China diagnostics, and normalized instrumentation seasonality.

• SG&A expected to grow at half the rate of sales, supporting 75bps operating margin expansion in a normalized environment.