All right, terrific. Welcome day two of the TD Cowen Global Healthcare Conference, 46th annual. I'm 55, so that's interesting. Really pleased to be with me on stage here, with senior management of Revvity. We've got Prahlad Singh, President and CEO. Prahlad, welcome, and thank you for being here.
Thank you, Dan.
Terrific. I mean, as we've started off most of these, given the timing of this conference, Q4 wasn't that long ago, and you offered 2026 guidance. Maybe just hit upon what you thought the key takeaways were and kind of the message for 2026 for Revvity.
Yeah, I think, you know, for us, 4Q played out pretty well in both, from an end market perspective and from a product execution perspective. You know, on the diagnostic side, reproductive health, newborn screening especially did pretty well. On the immunodiagnostic side, ex-China immunodiagnostics did very well. Even on the China side, despite all the pressure, it did better than we had anticipated. Then I think for us, what the encouraging thing was to see pharma biotech continuing to stabilize. You know, that reflected to some extent in our result. I think the thing for me that I took most positively was our performance and our execution all throughout the P&L. You know, above the line, below the line, I think we executed very well, and that positions us pretty well for 2026.
You know, in early summer, I think it was late summer, early fall last year, and I think it was at TD Cowen when we came out at 2026 and, you know, talked about what 2026 would look like. We've sort of stuck with that in terms of organic growth. We've put a lot of cost measures in place, which started taking in effect in the fourth quarter and will continue to do so in the first half of 2026, the impact of which we will see in the second half of 2026. That's sort of one of the drivers of the outsized margin expansion opportunity for 2026.
I think more importantly, one aspect which has been, you know, probably missing from folks' mind is that we will still see outsized margin expansion performance in 2027, at least in the first half from the activities and the actions that we would have taken this year.
Okay. This is a standard question we've been giving to most of your peers, and we'll give it to you. In terms of, you know, the 2%-3% guide, not the same as everyone, but kind of in the same zip code. You don't assume any change, which is maybe different than some others in the current underlying end market environment, right? No change. We're just always looking at, given how far below your LRP this year is starting out, what are some of the key levers in the revenue outlook maybe that could provide upside to that number?
Yeah. I think, you know, Dan, if I can break that down into two components. One is, you know, when you look at our LRP, you know, 70% of our portfolio is in our LRP. You know, Signals on the diagnostic side, reproductive health, you know, immunodiagnostics, ex-China. I think the pharma biotech market is the one where we've made an assumption that it will continue to be stable. I think that's sort of what is the 2%-3% factor that we've played out in organic growth along, you know, similar to what our peers have done. I think pharma biotech now needs to continue to improve and start seeing the growth trajectory that we expected to get to what would a normal market environment look like.
You know, all the signs are there, but we need to see the proof points for us to be able to then come out and say that, you know, now we expect normal market environment.
Maybe jumping off that then right into like some of your segments, which is a good segue. LSS, Life Science Solutions, you know, the growth outlook is something I think close to 1% maybe after a similar negative decline of 1% last year. You just mentioned, you know, the pharma market, you haven't assumed much of an improvement. The preclinical outlook or the preclinical market has just been a weak spot, I think not just for you, but for other players, Bio-Techne and others. Just kinda help frame the preclinical spending. You know, what will it take, do you think, for demand to inflect? I think you mentioned instruments got a little bit better, but just maybe what are you seeing and what can drive it higher?
Yeah, I mean, I think if you look on the reagent side of the Life Science Solutions business, Dan, I think, and if I'm wrong, four out of five quarters we've had positive growth. You know, that has been, I would say, a differentiated performance versus our peer group. I think the challenge for us was on the platform side of the business where we were having negative growth. That's where I think in the fourth quarter we started seeing a good, you know, good performance, and we continue to expect that to be better. I think that's going to be one of the drivers because the more, you know, platforms that get out, the more pull-through you see on the reagent side of the business, and that's where we are going to see an impact.
I think, you know, from, I would say, negative low single to positive low single is one driver of that, but that's what we've assumed in our baseline case in our guidance right now.
Mm-hmm. For reagents, I would assume when things are humming, I forget what your Investor Day deck had, probably 5% growth, I would think?
Yeah.
Maybe even high single digits.
Yeah, yeah.
That's a pretty attractive portfolio. Even though it's positive, you're probably well below that. I guess maybe asked a different way then, you're saying once instruments really start to go, then you think instrument consumables will follow? Is that the way to think about it?
What are the, you know, proof points?
Mm-hmm.
the green shoots or whatever
Sure.
adjective you want to use, right?
Sure.
You know, pharma biotech, I would say today the market environment is stable. I think there's a lot more discussion going around. You are seeing funding coming in. You are seeing M&A activity improve. All of these are signs that the market is continuing to move from stable to growth. I think the uncertainty and the chaos around MFN, around tariffs, and all of that has sort of subsided. You know, if you talk to me and our peers on the pharma biotech side, the mindset and the thought process is more around growth and investment right now.
Mm-hmm.
-rather than, you know, cutting and saving. I guess is a way to think of it. These are all positive signs that the growth will come to what normal looks like over the next few quarters. The question really is for us is to start actually seeing proof points of that coming to play. Right now, I think stable is good, and that's the way we sort of have played it out and guided accordingly.
I'm sure there's no normal, I'm sure there's no normal year anymore, but in a normal year, like, is there a cadence? Like, you know, we've heard in the past pharma budgets are locked now, and then they can start to spend. We're sitting here in the early March, like, is there any reason why we shouldn't start to see this in 1Q, 2Q building through the year? I guess is there no real playbook to how pharma spends in a given year?
I think you will start seeing as confidence comes back, and as you start seeing the cadence of this improving, I would expect that to improve over the next few quarters. Again, I'll qualify that we've got to start seeing that happen.
On instruments, you know, you've got areas across high-content screening, in vivo imaging, sample prep detection, right? Maybe just before we ask you a little bit about the drivers, just from a high level, how would you kinda characterize your position or, you know, outlook? I mean, you don't have to go through each one of those.
Yeah.
Just when you think of those four businesses, how should investors contemplate those businesses?
I think the way to think of it is that, we talked about this in the, you know, the third and fourth quarter earnings calls, right? The high-content screening business has started to come back and started to do well. I would say that the in vivo imaging, where we have a lot more reliance on academia and research, that's the one that still needs to come back to what normal would look like.
Mm-hmm.
That's the way I would categorize the two different poles of it.
The sample prep and detection, are those just smaller pieces?
Yeah, those are smaller pieces, and those are... I would say those are not as differentiated-
Got it. Got it.
... as high-content screening or in vivo is. Right.
Got it. Got it. Kinda the improving you saw in high-content screening, any more color around that, GLP-1s, other things? Just kinda what was the driver there in terms of a bit of an improvement in 4Q?
I think all of the above, obviously GLP-1 is one. I think the M&A funding, you know, in biotech, as you get funding, you get more instrumentations are being acquired. There are several elements to it.
Mm-hmm.
Those are, to use the word, some of the green shoots that you start seeing.
Are those continuing in 1Q?
Yeah. Yeah. I mean, again, we don't give intra-quarter guidance, but I would say that the market continues to stay stable and as it was in 4 Q.
Okay. just maybe back to the reagent portfolio for a minute-
Mm-hmm
... 'cause I was front-running my own questions. You know, we have a colleague here who follows Bio-Techne, and we, you know, try to do work on the reagent market, and there's a bunch of different players there. You each play different parts. Some of you serve academia more, some pharma more, some are tied like, you know, to more certain products like flow cytometry. How would you characterize your competitive positioning there, and kinda what supports that nine to 11 LRP?
Yeah. I mean, even in a, I would say a depressed market over the past eight quarters, if you were to look at it, then I think we've grown, as I said, you know, five to six, out of the seven quarters, and we've clearly taken share because the market hasn't grown.
Mm-hmm.
We've grown, so we've clearly taken share. I think there are two or three aspects to look at it, and this is despite, you know, the academia market where I think BioLegend plays a larger role.
Mm-hmm.
Despite that. BioLegend has done... I think differentiated itself well, taking some advantage of the disruption that has been in the marketplace. I think more importantly, the portfolio that we have has a lot of stickiness to it. Once you get onto a GLP program, you are not going to be there only for a quarter or two quarters. You know, that has a long cycle to it. The more of these programs that we have gotten onto, the more stickiness and the more predictability that you have for the reagents business.
Then maybe one more on that front, reading my own question here. I know your reagent kind of business is expected to be more like short cycle, right? You kinda see it kinda quick, so maybe it's not instruments first. Just back to maybe one more question. You did grow, you grew 1% in 2025. Like, why do you think it's so far below? Is it just pharma and is it more academia? Is it more pharma? It just seems like it's such a gap, and it's not you alone in this front-
Yeah
There is a reasonable size gap.
I think if you look at this, the market and the whole market itself, as you pointed out, the end market has been depressed. I think this is the longest, you know, negative cycle that we have seen for a long period of time.
Mm-hmm.
I mean, in my history, this is the longest period that we've seen. There have been several sequential events which have been causative factors for it, right? You know, whether it is the MFN status, whether it was initially coming out of COVID, you know, CapEx, interest rates, inflation. I think, you know, as we entered the fall of 2025, as the uncertainty started subsiding and the chaos started coming back to what normal would look like, you know, post some of the White House meetings with some of our pharma biotech leaders, that has been probably the biggest inflection point to start seeing more stability in the market, more of a longer-term thinking around the investments that would happen in pharma biotech. I would say that was probably an indicator of markets getting back towards stability.
It's not going to be a flip of a switch where it will, you know, turn over in overnight, but I think we are starting to see signs of that.
Maybe moving over to software, which, you know, I know you've probably gotten a bunch of questions on just given the volatility in that market from AI. You know, maybe starting with Revvity Signals offering and what extent, how would you frame the competitive risk from AI?
That question has not been asked today. To put it in the simplest form that I can, Revvity Signals is a net beneficiary from the AI phenomenon. To put it very simply, the way to think of it is today, Revvity Signals is, for matter of record, the platform that is used by preclinical scientists. That is where the experimentation happens, that is where data is housed, and that is where analysis is done, right? On top of Revvity Signals suite, we have launched Synthetica, which becomes sort of the gateway or the marketplace for using AI models, whether it is homegrown or from the pharma biotech partner or third party or from the public domain.
Revvity Signals suite provides a secure and a regulated environment in which you can then use AI models to do drug design in silico, which can then transition on to lead candidates where you start then moving on to the wet lab side. There is no better place to leverage the opportunity of AI than for our Signals platform. We could not be more differentiated than what the perception is versus what the truth is. The best way to do is to do channel checks with our pharma biotech partners and see where and what they are using today and what they anticipate to use it for.
Is there any pricing element at Revvity Signals such that like the way the product is priced, like there's a premium price attributed not just to what it does, but from the analysis that could be placed on top of it? If there's AI software that could come on top of it, maybe it would kinda lessen maybe the value of how you price it. I'm just trying to think out loud about...
Yeah. I mean, I think obviously on the AI side, it's going to be a different pricing model with, you know, tokens that you would be using. Essentially, to be able to do that, you would have to have a license to Revvity Signals.
Mm-hmm.
I think step one to think of it is no different than SAP or Oracle, where you have an ERP system that you have a license, you buy a number of licenses for. That's what 49 of the 50 pharma biotech companies have today. You know that, again, as I say, that provides the ecosystem in which research is done and where you would leverage the opportunity that AI brings to do that research in a federated model in a secure environment.
Obviously, you've got a deep software team at Revvity. How much work have you guys done just to pressure test that there's, you know, like your, your thesis and your view here, I mean, there's no holes in it?
We do user groups, as I have said, you know, at your conferences and many others. We group do user groups with our scientists three times a year. You know, this year is our biggest launch in the history of the Signals business, where we've got three product launches coming out. Each one of them in its own would be probably one of the biggest launches for Signals. With BioDesign, with which we sort of move into the biomolecule side, with Synthetica, which provides the platform for what we are doing, and with Logistics, which comes out towards the end of the year. You know, we have the elements that are needed to continue to see the validation and verification for the Signals business.
You know, the user groups that we have from our customers, they provide the needs that they have in them for their, for their use. It's not that we are doing any of this in isolation to what the marketplace's need is.
Mm-hmm. When will Synthetica have the full launch?
I would say that probably towards the end of the year or early 2027. You know, we announced it in December, January timeframe. I think we are going to do probably June, July is when it'll come out in collaboration with Lilly, where we would have the first launch, and then the full launch would probably be towards the end of the year or 2027, early 2027.
Maybe just one more back to ARS before we go back to Synthetica and BioDesign. What about like Signals Synergy and Signals Clinical? Are those as immune to any kind of AI? I mean, are they exactly incorporated what you're saying on the core Signals or are those adjacent that could have some risk?
Again, they are modules on the Signals suite portfolio. They're in isolation themselves. They are not big needle movers.
Mm-hmm.
It's not going to be impacted one way or the other, but they are more of an offering that is part of the whole Signals suite.
Okay. How would you frame Synthetica? Like I mean, we'll find out more as the year goes on into 2027, but I mean, is there any way to frame, you know, what this could mean for the business?
I mean, maybe I can say this for the Signals business as a whole. You know, in the next five years, if the Signals business has not doubled, you know, we've not done our job.
Mm-hmm.
A big key component of that is the Synthetica platform.
Mm-hmm.
Because that essentially becomes the marketplace on which, you know, the, the AI opportunity sort of takes life.
Okay. got it. How about BioDesign? Like, what do we think about that product?
I mean, look, that has been a gap in our portfolio and with our customers, one of the user group requirements has been that you've got to do on the bio side, on the biomolecule side, what you have done on the small molecule side. It has been in a gap in our portfolio, you know, and some of our esteemed competitors had a lead on that, and I think that is filling a gap in what we needed to do that.
You felt it could be one of the like, that on its own would be a meaningful launch.
Well, it.
Is a meaningful launch like a point of growth, or what do you think?
It is definitely a, I would say a major NPI launch on its own because it sort of meets a critical need for our customers which we did not have in our portfolio.
Is there a revenue like size of that market?
You know, generally, if you look at most of the NPIs that launch, you know, the way I would frame or quantify the opportunities with this NPI, these NPIs, is I would say these are the key elements that will double the business in the next five years.
Got it. Okay.
You know, rather than break them out-
Yeah
...whether what BioDesign would do or what Labgistics would do.
I got it. Okay. Maybe switching gears off software then, just maybe immunodiagnostics, you know, really did well ex-China or it's been doing well ex-China. Just kinda where are we? I know. You give color on the U.S. business. U.S. business has been like it's been growing a lot. It's been kind of, you know... I know it's still not a huge part of your business, but it's done well. Just maybe give some color on that part of the business and what kind of growth we can expect there.
Yeah. I think U.S. will be an outsized portion of the growth for the immunodiagnostics business ex-China.
Mm-hmm.
You know, when we acquired Euroimmun, it was U.S. was 5% of total revenue. It's now about 20% of total revenue.
Mm-hmm.
You know, rightfully the share of it is 40% should be what it should be.
Mm-hmm.
I think, you know, it needs to double from where it is today is the way to think of it.
Who do you take share from there, or is it just older, less, you know, kinda less accurate tests or?
I think it's an element of all of the above. You know, one, there is a need. You know, autoimmune disease itself, you know, testing for it is growing in high single digits, so that itself is a big driver of it. You know, the portfolio that the more comprehensive panels that we bring in sort of takes market from whether it's other LDTs or homegrown tests or more inaccurate tests.
Mm-hmm. Okay. Maybe just on China, I mean, I'm sure you got a lot of-
I'm sorry. Just to complete two more elements of it.
Yeah.
as autoimmune moves forward, you know, the expansion into more, I would say, esoteric testing for autoimmune disease, whether it's on, you know, neuroimmune diseases or nephrology...
Mm-hmm
...those are areas that are still uncharted and unexplored territories where we are finding that a lot of the diseases that come out of it are more autoimmune related-
Mm-hmm. Mm-hmm. Yeah.
...which have not been tested before.
Right.
These becomes really key markers for growth there.
Okay. Yeah, I was just kinda hitting on the China growth, which where you know, you've kinda took down your guide for conservatism. You said you're not seeing anything. Just kinda discuss that a little bit more, like the reduction in the guide and kinda what drove that.
I mean, China today is, I mean, our diagnostics is about 5% or slightly lower than that, you know, as part of the total business. I would say that, you know, as we look forward, our assumption is it's not gonna go above five. If anything, it's gonna go below. You know, look, our assumption on China diagnostics, immunodiagnostics, is we've assumed in our guidance that it's going to go down, you know, in the mid-20s or so, right? I mean, it did better than anticipated in the fourth quarter. From a guidance perspective, we've tried to be conservative enough that we are able to manage it in case of unforeseen policy changes that might happen.
'Cause I know in December there was some noise and, I mean, is there anything that you see possibly on the horizon that led to that?
No, I mean, you know, there was some noise as you pointed out in December, but I think that if, if that were to play out, that would be more towards the healthcare providers.
Mm-hmm
...than through manufacturers. From our perspective, we've tried to sort of calibrate our guidance so that, you know, we learned our lesson from last year, I guess.
Maybe just a question I didn't write down here, but maybe just zooming out for a sec before we hit reproductive health and then go to the P&L. Just in terms of the targets that you guys set, just kinda remind us, like what's the way like management compensation is set? Like what are the targets? Is it three-year targets, one-year targets? How do we think about growth rates? Is it on organic growth? Is it on margins? Just can you provide some color?
I think, you know, and it's out there in the proxy. For us, it's around organic growth, it's around operating margin expansion, and around cash flow conversion.
Mm-hmm.
Those are the three elements that we are compensated on.
Yep, yep. It's usually like one-year targets or three-year targets or?
Well, three-year targets.
Three-year targets.
The long-term incentive plan is three years.
Got it. What's the three-year target? Do you know?
Gotta go look it up in the proxy.
Okay. All right. Good. Okay. Maybe just on reproductive health, you know, Gel, you know, we, you know, I think you've guided for this, right? I mean, $13 million of Gel contribution first across the first three quarters. Is there like tremendous visibility in that? Is that in the bank or is there any uncertainty around that contribution?
No, there is no uncertainty around the Gel, the Gel component of it. I think, you know, overall you've got to look at the reproductive health business and more importantly on the newborn screening business.
Mm-hmm.
You know, that business has had outsized growth.
Mm-hmm.
It continues to do very well despite birth rates being depressed in most of the developed markets. You know, that is a direct correlation of a geographic expansion that we've seen and the new disorders that we are launching. We've got two new disorders that just got approved by, you know, the HHS. As we are bringing those into the market through the regulatory bodies, you know, that business is very well positioned to grow at the same rate that it has grown. That's one of the drivers, Dan, that, you know, that in terms of what we have in our LRP versus how we've done. It has had disproportionate growth.
Yeah. No, it's grown well above your LRP for sure. I mean, right now. Okay. Maybe just ask, or talk about the Sanofi partnership a little bit on early detection of type one, and is that like a nice incremental driver? Just, you know, could that actually show up in the numbers?
I think the way to think of it is it's a green field, right? It's a new territory. You know, today the way, you know, a child... You detect a child has juvenile diabetes or type one diabetes is if there is an event.
Mm-hmm.
You know, and that's pretty devastating to parents. I think Sanofi with TZIELD has the first approved drug that delays the onset of juvenile diabetes.
Mm-hmm.
You can only give the drug if you know that a child has type one, type one diabetes. That's where screening plays a very important role. The partnership with Sanofi is exactly that we develop companion diagnostic along with them that allows to identify kids through a screening program as to who has type one diabetes. You know, in some progressive countries, Italy being an example, that have implemented that as a mass screening for all kids.
Mm-hmm.
I think, you know, you will see that over the next few years that is going to be adopted by other countries and, you know, and hopefully the United States where I think it's, whatever another word for criminal is.
Mm-hmm
...is to not test kids for, you know, a simple screening that allows you to know whether your child has type one diabetes or not.
Okay. Maybe before I hit the P&L, maybe just zooming out, you bought back 15 million shares of stock over the last two and a half years. Talk a little bit about, you know, you're obviously a very positive on your stock price, but talk about cap allocation, talk about maybe M&A, talk about like when that's a meaningful amount and kind of what you do from here.
Yeah. Look, I think if we had the opportunity, we'll continue to be opportunistic in share buyback. I think there is no better opportunity for us than to put our money towards buying our shares. We do have a EUR 500 million bond, which is due in July, our focus is on paying that back. You know, as you pointed out, we've bought back 12% of our shares and, you know, I think our focus right now, if we are to do deals, they will be more like the ACD/Labs deal that we did on the Signals side of the business and more bolt-on acquisitions. I think, you know, we are very acquisitive, as you know.
You know, since I've joined the company, I have deployed nearly $10 billion in M&A towards mergers and acquisition and divestiture of PerkinElmer, so we are not shy of being acquisitive. You know, I think it has to make strategic sense and financial sense both for us to be able to want to do a deal.
Right now it's more bolt-ons is what you're seeing today, you're saying?
I mean, right now our focus is on, A, paying back the-.
Mm-hmm. Got it.
...debt and continuing to be opportunistic on. There are no gaps in our portfolio. I think we've gone through the journey of portfolio transformation. We are very happy with what we have. If there's something that makes sense strategically, we will look at it.
What's the market missing then? You're buying back your stock hand over fist, and you're saying it's the best value you see for your, you know, for cash. Stock trades at, you know, it's not a super low multiple, but it's one of the lower multiples, you know, kind of in that peer group. What's the market missing?
Yeah, I think we've we are still a prove it story. You know, Revvity is a, I would say 15 quarter company. You know, PerkinElmer was an 80-year company, but Revvity is not. It 65% of our revenue was nonexistent five years ago, seven years ago. You know, I think we've got to be able to put the proof points. Let me give you an example of what we've done in 2025. You know, we came out at the beginning of 2025, we said we would be 3% to 5% organic growth, $4.90 to $5 in EPS.
Mm-hmm.
Right? You know, we had tariffs hit, we had China immunodiagnostics, we had NIH funding issues. You know, you can go down the litany of items that hit all of us. You know, we still grew 3% in that market environment. We beat our EPS guidance by $0.06.
Mm
...we had some benefit from below the line items, but I think we showed exemplary performance in terms of how we executed on things that were in our control, you know, from all across the P&L, top to bottom, we are really proud of it. I think that is the differentiated performance you will see. We just need to see the market come back to somewhat of a normal environment for us to be able to prove the value and the strength of the portfolio that we have assembled together. That's the opportunity that we are looking for and waiting for.
Maybe just, we have one minute left. I want to jump into a margin question. I know I kind of front-ran the ending, but, just back to Gel for one moment. Right. As you articulated, excuse me, reproductive health was growing that mid-single-digit rate that was above your LRP, and that's kind of, you know, we modeled 2%-3% in 2026. The mid-single-digit growth rate, you said it was outpacing birth rates. Is there a chance it can sustain mid-single this year above the kind of 2%-4% that I think 2%-3% where the street is?
I don't know what we've said, I would say that. You see he's shaking his head in the right direction, the answer is yes.
That you could grow above that rate?
Yeah.
Okay, that sounds good. Maybe final question. You know, we talked about just a moment ago, like you need to see the recovery. I don't know, like what's something in 2026, you know, if we look back that'll, you know, one or two things you think that'll, not surprise, but it'll be key for how Revvity does?
I think what the things that have been, you know, in our control and execution. You know, I'll give you the opportunity around the margin story, right? You know, there has been some skepticism that their margin expansion from Q1 to Q4 is large. You know, typically the revenue difference between Q1 and Q4 is $100 million, so that itself accounts for 600 basis points of margin expansion, right? We've have a $10 million cost aspect in Q1, which is because of the extra week, which won't be there in Q4.
Mm-hmm.
That adds another element to it. The cost initiatives that we have put forth in Q1, Q4, and Q3 and that are also ongoing in the first and the second quarter of this year will have a $20 million impact in the second half of the year and in Q4, but more importantly, also in the first half of 2027. We've got a clear line of sight to the margin expansion opportunities in Q4 to hit 28% in year. I don't think that story is fully understood.
Right.
I think what is still not understood is that you will also see the benefit of that in the first half of second year. We are going to have two years of outsized margin expansion of performance by the company. I think we just need to go through and demonstrate that to the street.
Terrific. Well, that's a great way to end it. Thank you for being here. Hopefully you guys have a great rest of the day.