Ladies and gentlemen, thank you for joining us, and welcome to the Q3 2026 Revvity Earnings Conference Call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Steve Willoughby, Senior Vice President, Investor Relations. Steve, please go ahead.
Thank you, operator. Good morning, everyone, and welcome to Revvity's Third Quarter 2026 Earnings Conference Call. On the call with me today are Prahlad Singh, our President and Chief Executive Officer, and Max Krakowiak, our Senior Vice President and Chief Financial Officer. Before we begin, I'd like to remind you that today's call may include forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially from our expectations. Please refer to the safe harbor statements in our earnings release and to our SEC filings for a detailed discussion of these risk factors. We assume no obligation to update these forward-looking statements in the future. Additionally, we will refer to certain non-GAAP financial measures during this call. Reconciliations to the most directly comparable GAAP measures are available in our earnings release. I'll now turn it over to our President and Chief Executive Officer, Prahlad Singh. Prahlad?
Thank you, Steve, and good morning, everyone. I'm pleased to report that Revvity delivered exceptionally strong performance in the third quarter, with pro forma organic growth of 7%, exceeding our mid-single-digit expectation. With healthy gross margins, combined with sales leverage from the revenue upside we experienced, our strong incremental margins shine through, leading to pro forma adjusted operating margins in the quarter of 29.4%. This resulted in pro forma adjusted earnings per share of $1.37 for the quarter, which was $0.08 above the midpoint of our expectations. Our stronger-than-expected performance in the quarter was driven by our Life Sciences segment, which grew 9% organically, with reagents up high single digits, instruments up strong mid-single digits, and our Signals Software business growing in the upper teens. This fantastic performance was complemented by solid performance in our Diagnostics segment, which grew in the mid-single digits, in line with our expectations.
As we have been sharing with you for the last several quarters, underlying market demand trends from our pharma-biotech customers continued to improve in the third quarter, following the policy-related headwinds our industry faced throughout much of last year. On top of this market recovery, we also continued to see incremental AI-related demand build and begin to expand beyond just a high-content screening business, where it has initially been concentrated. While our high-content screening revenue growth continued to accelerate in the quarter, despite strong year-ago comps, our backlog for these instruments also continued to increase. We have taken additional actions to further expand our capacity in this area to support this elevated demand, while also building some additional capacity should it accelerate even more as we head into next year.
I think the most important dynamic we saw in the third quarter was that the end market improvements and AI-related incremental demand we have experienced over the past few quarters began to positively impact other parts of our portfolio beyond just our cellular analysis franchise. For example, as I have mentioned, our Life Sciences reagents grew in the high single digits in the quarter, which was its strongest performance in several years across both pharma/biotec and academia and government. Our reagent performance in the quarter also benefited from execution of our bulk orders backlog getting fulfilled, along with an improvement in our run rate business as well. We also saw other pieces of our instruments portfolio improve, such as our detection franchise, primarily consisting of our high-throughput screening instruments, which delivered solid growth in the quarter with improving momentum as we head into year-end.
Overall, the market continues to remain dynamic, but is moving in the right direction. AI-related demand is beginning to be seen across a wider cross-section of our offerings, but it is still in its very early days. I feel our customers are only beginning to scratch the surface in how AI is reshaping their workflows and how preclinical science is conducted. One thing I find particularly interesting is the amount of scientific data that can now actually be used. Our reagents and instruments have been generating large amounts of biological data for years. What has changed is the ability to now combine that information with other data sets and extract additional insights from it much faster than was previously possible. As customers look to build larger biological datasets to train and refine their AI models, they are going to need exponentially more data from the wet lab.
Our life sciences portfolio is well-positioned to help them generate, analyze, and validate that data. I am looking forward to our Investor Day taking place next Friday, November 13, where we will spend more time discussing how we see science and R&D changing because of AI, and why Revvity is well-positioned to support our customers through these changes. I hope many of you will be able to join us either in person or virtually. Another aspect of how the scientific world is changing because of AI that we plan to spend time on at our Investor Day is within our Signals Software business. As expected, this business delivered strong performance in the third quarter, and as we have highlighted throughout this year, 2026 will be the most significant year of new product launches in its history.
Just two weeks ago, we announced the launch of Signals LabGistics, a novel AI-native offering that helps connect and coordinate scientific workflows across different people, systems, and stages of development. Today, a lot of that work can still be fragmented, particularly as a drug moves from discovery into development and ultimately into manufacturing. LabGistics is designed to bring those different pieces together, which we believe can help our customers work more efficiently and ultimately move promising therapies forward faster. The launch of LabGistics caps an exciting year for Signals, where we have also introduced Xynthetica, BioDesign, Signals AI, and our Anthropic connector. Some of these offerings were not even on the drawing board 12 to 18 months ago, which says a lot about the team's ability to respond as technology and our customers' needs change.
I'm excited about how the business is positioned for what comes next and look forward to further showcasing our Signals franchise next week. During the quarter, we also demonstrated our continued innovation in our Diagnostics segment by recently launching in Europe our new CE-IVDR-certified GSP T1D 3plex kit for the early detection of type 1 diabetes. This is an important innovation for us because it capitalizes on the capabilities and infrastructure we've built over many years in newborn screening and extends our expertise into early childhood screening, which is a new market for us. Using a simple dried blood spot sample on our existing GSP platform, the new test can screen children at risk for type 1 diabetes months or even years before symptoms appear, creating the opportunity for earlier intervention.
Given the increasing incidence of type 1 diabetes and the growing interest in population-level screening, we think this is a great example of how we can leverage our existing instrument installed base, scientific expertise, workflows, and customer relationships to expand into important new areas of diagnostics which have significant unmet needs. I'm optimistic about the potential of this new 3plex assay as adoption expands, initially across European countries. At the same time, we are advancing the development in our pipeline of an even broader T1D assay in collaboration with Sanofi. Over the last few months, I've spent time at a number of our sites around the world, including our operations in Lübeck and Hamburg, Germany, as well as our newly modernized campus in Hopkinton, Massachusetts. These visits give me a valuable opportunity to see firsthand the progress our teams are making.
Every one of these sites is running better than it was two years ago, and the teams are motivated and engaged to do even more. Hopkinton is a good example. We've consolidated key life sciences and diagnostics activities onto one campus there, including R&D and manufacturing. That's part of the increased efficiency we've talked about over the past several quarters. It simplifies our footprint and increases our team's opportunities to collaborate. I look forward to having you visit this updated campus outside of Boston in the future. We are seeing similar progress with the efficiency of our diagnostics work in Europe, as we've mentioned over the last year. These actions are now starting to show up in our numbers, as adjusted operating margins for our Diagnostics segment in 3Q were 29.9%, which included 160 basis points of headwind from our immunodiagnostics business in China that we are working to divest.
Excluding this business in China, our diagnostics margins were up over 600 basis points year-over-year, and over 30% overall in the quarter. These efforts, which I was able to view firsthand over the last few months, are helping to allow Revvity's full potential to shine through. Our 40%+ incremental margins were on full display in the quarter, which I expect will continue going forward. We are in a good position to deliver a strong finish to 2026, with solid momentum heading into next year. While Max will provide more details in a moment, given the improving performance we've seen over the first nine months of the year, and our expectation for current underlying market trends to continue during the fourth quarter, we now expect our full year pro forma organic growth to be approximately 5%.
Considering we started the year with a 2%-3% organic growth outlook, it is clear that our performance this year has been progressively moving in the right direction. Given our earnings outperformance in the third quarter, we now expect our pro forma adjusted EPS for the full year to be in the range of $5.40-$5.45, which equates to approximately 12% growth year-over-year. In closing, we have driven strong levels of operational, commercial, and financial execution over the last several years since becoming Revvity, while overcoming what have been fairly challenging end market environments that we have been able to consistently outperform by several hundred basis points. I believe our third quarter performance fully demonstrated for the first time since the start of our recent transformation what our true potential is as a company.
Our specialty offerings across life sciences and diagnostics are seeing stronger and differentiated levels of demand due to their robust innovation and our ability to deliver the solutions that our customers need. Our significant operational efforts are having a meaningful impact, which should continue to benefit us as we move forward. With AI-related demand tailwinds beginning to come into view, Revvity is well-positioned to capitalize on these emerging opportunities and help power scientific innovation alongside our customers. Finally, I look forward to seeing many of you next week at our Investor Day in New York. With that, I will turn the call over to Max.
Thanks, Prahlad, and good morning, everyone. The improved momentum we have been seeing across the business as we have gone through this year further accelerated in the third quarter, as evidenced by our exceptional performance in the quarter and improved outlook for both the fourth quarter and the full year. Most encouragingly, the strength we saw was broad-based. Our Life Sciences segment delivered a meaningful sequential improvement with strong growth across reagents, instruments, and Signals Software, while our Diagnostics segment continued to perform well and demonstrate solid, durable growth. As Prahlad discussed, we are encouraged by the continued recovery in demand from our pharma-biotech customers, and incremental AI-related demand is beginning to extend beyond just high-content screening and impact a broader portion of our portfolio. We also continued to execute very well operationally.
The combination of stronger revenue growth, favorable business mix, and the operational efficiency actions we have taken over the last 18 months drove meaningful margin expansion and demonstrated our strong incremental margin potential. Our third quarter results reinforce our confidence in Revvity's ability to continue to deliver differentiated and above-market growth across all end market conditions, with the potential for even greater separation as AI-related demand impacts certain areas of our industry more than others. Now, turning to the specifics of our third quarter performance. As a reminder, given the pending divestiture of our China immunodiagnostics business, the following commentary and our updated guidance is provided on a pro forma basis, which excludes the impact of that business, which we expect to divest next year. Overall, we generated total revenue of $710 million in the quarter, resulting in strong 7% organic growth, which was well above our guidance.
FX was an approximate 1% headwind to growth, while our recent acquisition of ACD/Labs contributed another approximately 1% to growth. As it relates to our P&L, we delivered strong operational performance in the quarter, with better gross margin performance as a result of our operational efficiency actions beginning to take hold and an improved product mix. Our pro forma adjusted operating margins were 29.4%, approximately 40 basis points ahead of our expectations. Looking below the line, our adjusted net interest and other expenses were $21 million in the quarter, and our adjusted tax rate was 18%. We averaged 111.8 million diluted shares in the quarter as we continue to benefit from our repurchase activity over the last few years. Our pro forma adjusted operating earnings per share in the quarter was $1.37, which was well above our guidance and represented 21% growth year-over-year.
The earnings upside was driven primarily by our stronger top-line performance and the margin favorability from our efficiency actions and sales leverage. Moving beyond the P&L, we generated robust free cash flow of $152 million in the quarter, resulting in 99% conversion of our adjusted net income. On a year-to-date basis, we've now generated over $450 million in free cash flow, with a conversion rate of 105% of our adjusted net income. Our cash performance continues to be something we are very proud of, and I expect should continue as we move forward. Our balance sheet also continues to improve as we finish the quarter with a net debt to adjusted EBITDA leverage ratio of 2.3 times. As a reminder, we retired our EUR 500 million note earlier in the quarter, resulting in a meaningful drop in our gross leverage overall.
We are still targeting a gross leverage ratio of below 3 times as we exit the year, with our net leverage approaching 2 times. Following this recent repayment, our outstanding debt stack remains very well positioned as 100% of our long-term debt remains fixed rate, with a weighted average interest rate of 2.8% and a weighted average maturity out another seven years. I will now provide some commentary on our third quarter business trends, which are also highlighted in the quarterly slide presentation on our investor relations website. Again, these results are on a pro forma basis to exclude our China immunodiagnostics business and are comparable to the guidance we provided 90 days ago. The 7% growth in our total company organic revenue in the quarter was comprised of 9% organic growth in our Life Sciences segment and 5% organic growth in our Diagnostics segment.
Geographically, Europe continued its double-digit growth for the fourth quarter in a row. The Americas also grew double digits in the quarter, while APAC experienced a low single-digit decline due to continued Reproductive Health pressures offsetting double-digit life sciences growth in China. From a segment perspective, life sciences generated $380 million of revenue in the quarter. This was up 11% on a reported basis and 9% on an organic basis. From a business perspective, both our Life Sciences Solutions and Signals Software business performed exceptionally well in the quarter and saw significant improvements in growth sequentially. Our Signals Software business grew in the high teens organically, which was in line with our expectations, driven by strong contract renewals in the quarter and continued 20%+ ARR growth. Annualized portfolio value, or APV, also continued to show good growth and once again grew in the low double digits.
Life sciences solutions grew in the high single digits in the quarter, with both reagents and instrumentation delivering growth ahead of our expectations. While our instrumentation performance improved with strong mid-single-digit growth, our high single-digit growth in reagents was the clear standout. We saw strong trends across geographies for reagents and also benefited from the delivery of the bulk orders we mentioned last quarter. Even absent the bulk orders, our reagent performance improved meaningfully as compared to the trends we were seeing in the first half of the year. By customer type, sales to pharma/biotech grew in the low double digits, while academic and government sales increased in the mid-single digits year-over-year, supported by improved instrumentation and reagent growth. In our Diagnostics segment, we generated $330 million of revenue in the quarter. This was up 4% on a reported basis and 5% on an organic basis.
From a business perspective, immunodiagnostics grew in line with our expectations, with high single-digit organic growth overall, driven by more than 20% growth in the U.S. Reproductive Health grew in the low single digits organically in the quarter, which was also in line with our expectations, as newborn screening outside of China grew in the mid-single digits year-over-year. On a year-to-date basis, our Reproductive Health business is still up low double digits, which is well above our longer-term expectations for this franchise. Moving to our updated guidance for the year. Again, our updated guidance is on a pro forma basis, excluding the China immunodiagnostics business we are planning to divest, as this is the most appropriate way to view the company and its performance going forward.
Our strong third quarter results demonstrated a continuation of the improved demand we have been seeing since the start of the year and benefited modestly from some timing items that we do not expect to repeat here in the fourth quarter. Overall, our performance continues to be differentiated, which I expect to continue even as end market conditions improve. As a result, we are raising our expectations for pro forma organic growth for the fourth quarter and for the full year as compared to our previous outlook. We now expect our pro forma organic growth in both the fourth quarter and for the full year to be approximately 5%. This is up from our prior outlook of 4% for the fourth quarter and 4%-5% for the year.
FX is still expected to contribute approximately 50 basis points for the full year, while the acquisition of ACD/Labs is still expected to add another approximately 75 basis points to our revenue growth this year. We expect this to now result in our 2026 pro forma revenue being approximately $2.86 billion. With our strong operating margin performance in the third quarter, we are again raising our pro forma adjusted operating margin outlook for the full year. This is now the third quarter in a row we have raised our margin outlook this year. We now expect our full year operating margins to be 28.8%, which is up 10 basis points from our prior outlook, and is 80 basis points higher than our outlook at the start of the year.
Our operational efficiency actions are clearly having an impact, and the improved growth in areas such as our life sciences reagents and Signals Software business are favorably impacting our mix. The exciting piece is that the majority of our margin performance is driven by structural actions we have taken over the last 18 months, and consequently will continue to provide benefits to us as we enter next year. We now expect our net interest expense to be approximately $88 million, down slightly from our previous outlook, and our full year adjusted tax rate assumption of 18% remains unchanged. Our outlook for our shares outstanding also remains unchanged at 112 million. This all results in our pro forma adjusted EPS now expected to be in the range of $5.40- $5.45.
This increase reflects our 3Q outperformance and increased growth outlook for the fourth quarter, offset by some incremental investments we made in the business to reflect our performance so far this year and support our growth in the future. For the fourth quarter, as mentioned, we expect our pro forma organic growth to be approximately 5%. With FX rates as of the end of September and the contribution of our recent acquisition, this puts the midpoint of our expected revenue for the fourth quarter to be approximately $755 million. We expect our pro forma adjusted operating margins to be slightly above 32% in the fourth quarter, and we expect our net interest expense will be approximately $22 million.
We are looking for an adjusted tax rate this quarter that is approaching 20%, and we do not assume any buybacks in our guidance, so our share count should be around 112 million. Overall, this puts the midpoint of our pro forma adjusted EPS guidance at $1.60 for the fourth quarter. In closing, our strong third quarter results marked a continuation of the improving conditions we have seen since mid-February of this year. Our pharma/biotech customers are continuing to move back to more normalized spending behavior, while incremental AI-related demand appears to still be early days, but picking up momentum. Our diagnostics business continues to perform well, and our strong execution and operational efficiency actions are beginning to more meaningfully show up in our reported results.
This is all leading to our ability to demonstrate the true potential of what Revvity has become, and I look forward to sharing much more with you next week at our Investor Day in New York. With that, operator, we would now like to open up the call for questions.
We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Dan Brennan with TD Cowen. Your line is open. Please go ahead.
Thanks, guys. Thanks for the questions here. Nice print. Maybe just starting on reagents. I know you called out the bulk order. Could you quantify that? That would really help, I think, just how much did that contribute in the quarter? So ex that, what did reagents and the total organic do? What are you assuming for reagents in the fourth quarter? Sounds like you are pretty optimistic about what you are seeing. Is it more pharma? Is it more early biotech? Any more color what is driving the reagent strength?
Yeah, sure. Hey, Dan. Look, I think as you look at the third quarter results, I think we were encouraged by the performance we saw across our reagents business. I think we saw a combination of, again, just stronger momentum on both customer groups from pharma/biotech and academic and government within the third quarter. I think in your question in terms of the bulk order or some of the larger screening programs, it was a little bit of a contribution to the stronger performance. Maybe if you look at the reagents performance with maybe 100 basis points contribution to the reagents business within the quarter.
I think as you then think about that as we head into the fourth quarter, I think us removing sort of that contribution from the screening orders is why you are seeing the reagents drop from what were high single digits in the third quarter, to sort of a mid-single digit outlook for the fourth quarter. Again, I think we are very encouraged by what we saw from a, I would say, underlying market demand perspective and our team's ability to execute across the reagents business.
That's great. Thanks, Max. Then maybe just switching over to instruments, sounds like that was around 6% in the quarter. There's obviously been a lot of focus here, particularly on high-content screening, given the commentary you guys have had on customer ordering and demand trends there. So would love to know if you could tell us, what did high-content screening actually do in the quarter? How are you thinking about that business in the fourth quarter? Then I know you talked about backlog. Could you give any color on what the backlog looks like and how much capacity you guys have to meet the demand? Thank you.
Yeah. Hey, Dan. Obviously, as you heard us in the prepared remarks, high-content screening and overall our instrument business did really well. We had strong mid-single-digit growth in the third quarter, and we expect to have high single-digit growth in the fourth quarter. So, obviously, the trend continues to do well. We continue to have a strong backlog and execute. Obviously, high-content screening did well, but what I would say is, the fundamental recovery that we are seeing in the pharma/biotech market is obviously helping the full instruments portfolio. So obviously, AI is a catalyst, but overall, there is a strong fundamental recovery in the base case market, which is obviously helping the instruments business.
Your next question comes from the line of Vijay Kumar with Evercore ISI. Your line is open. Please go ahead.
Hi, Prahlad and Max. Good morning, and thank you for taking my question. I guess maybe my first one, Max, perhaps to you on this Q4 implied. I think Q4 implied is maybe around 4.5% organic. Why does Q4 step down, just given you had a phenomenal Q3? You sound bullish on end markets and AI demand. So curious, do you have any days headwinds? What's the assumptions underpinning the Q4 guide?
Yeah. Hey, Vijay. Look, I think as you mentioned, I think, again, we're very encouraged by what we're seeing from an end market perspective. I think as we look at the fourth quarter, really the drop quarter-over-quarter is mostly driven by two factors within life sciences. One, I did talk about the reagents dynamic, and then two, we are seeing a little bit slower of a software growth between the third and the fourth quarter. In the third quarter, our software business was up high teens, and we expect that to moderate a little bit in the fourth quarter to closer to a mid-teens number. I'd say those are really the two big, I would say, pieces that's really causing for a little bit of the drop between the third and the fourth quarter.
Again, I think we're very encouraged overall by what we're seeing across both customer groups of pharma/biotech and academic and government.
Understood. Prahlad, maybe one for you, a big picture question on, you noted AI a few times in the call. High level, what are the key segments or products that are exposed to AI? I know high-content screening comes up, but I think I also heard you saying it's expanding beyond high-content screening. So what are the other product categories that are exposed to AI, and what percentage of revenues are exposed to AI? What's the right framework to think about AI demand? Thank you.
Yeah. Vijay, obviously, if you look at on the life sciences side of our portfolio, starting from reagents, as we go from high-content screening to high-throughput screening, both on the instruments and the reagent side, you will expect to start seeing a pickup. I would say we are in the early days, and as both Max and I have pointed out, we are just starting to see the beginning of the impact that AI could have on the portfolio. But the way I would sort of look at it, as you walk through, on the reagent side, from high-content screening to high-throughput screening, and eventually, as these drug candidates move down the pipe to an IND filing, you will start seeing the impact of it on imaging and detection through in vivo.
We expect as we move forward into 2027, it having a broader impact across the portfolio that we've set up for preclinical.
Your next question comes from the line of Doug Schenkel with UBS. Your line is open. Please go ahead.
Hey. Good morning, guys. Thank you for taking my questions. One follow-up on instruments, and then I want to talk about margins. On instruments, you grew Life Sciences Solutions instruments mid-single digits in the quarter. Based on your commentary, it seems like you beat what you embedded in guidance by maybe $1 million-$2 million. What drove instrument growth above your expectations? Underlying demand, order conversion, or shipping timing? Really more to the point, given you're talking about high-content screening continuing to grow double digits, how did the rest of the instrument portfolio perform? Based on the math, it seems like there are areas that are lagging. Where is there an opportunity for things to pick up? That's really instruments. On the margin side, as revenue growth normalizes, is about 40% incremental adjusted operating margin a reasonable framework for the next several quarters?
Does the strength we're seeing in the second half of the year include some benefit that won't recur, especially as you move into an environment where maybe you could invest more in long-term growth? Thank you.
Hey, Doug. Thanks for the questions. I am actually going to work backwards to the questions there and start with the margin one. I think as you take a step back and look at our portfolio, I think even when we set up our LRP a few years ago, we had mentioned that we expect our portfolio to deliver low 40%s+ incremental margins. I think you are continuing to see that come through over the course of this year. Yes, we do believe that this is sustainable. We believe that it is one of the more exciting pieces of the Revvity portfolio that we really haven't gotten a tremendous chance to show folks, just given the market headwinds over the past couple years.
But as you can see now with some, I would say, stronger improvements in the underlying markets, we are able to showcase the true, I would say, margin potential in Revvity, and it's one of the things that we're most excited about. I think if I then move to your first question on instrumentation, I would say from an instruments portfolio perspective, I am not sure if $1 million or $2 million was really the right beat number in the third quarter. I think it was probably a little bit more than that. But it was broad-based. It wasn't just driven from the HCS portfolio. It was strong growth in the quarter.
I think if you had heard Prahlad's response to the previous question in terms of how we see this continuing to broaden out across our portfolio is, we saw in the third quarter, our backlog grew across almost every instrument group that we have in the portfolio and continues to accelerate. I think as you look at some of the additional, I would say, pieces of the instrument portfolio that we'll see demand pick up, we talked about starting to see it in the detection and high-throughput business. We've talked about how subsequently it will also start to impact our imaging and in vivo portfolios. I think this is something that isn't just an HCS phenomenon, and this is something that over the course of the next couple quarters here, you're going to see a continuing broadening out of the demand across our instrument portfolio.
Your next question comes from the line of Puneet Souda with Leerink. Your line is open. Please go ahead.
Yeah. Hi, guys. Thanks for the questions here. First one, a more specific one on HCS, and then a broader follow-up after. Prahlad, maybe, or Max, on the HCS Opera Phenix, obviously very strong. Wondering what metrics can you provide here in terms of sort of like the order book, backlog conversion? Obviously, this is a high-ticket item. I think investors also want to know the pull-throughs of these platforms, how sticky that is, and ultimately, if there is a way to contextualize the AI demand that you're seeing, not just across HCS, but just broadly across the portfolio that you have, which is obviously a transformed portfolio that is now delivering.
Hey, Puneet. Thanks for the question. As I'll point out, and we said, I think, in mine or Max's remarks, we are starting to see backlog build up across all our instrument groups. I would say that HCS is obviously an important aspect of it, and it gets attention. Specifically, I think what we can tell you guys is HCS backlog continued to increase in 3Q, and the revenue growth continued to accelerate, despite us having strong comps. That is an added element that we have to keep in mind. We've added capacity and are building more just in case as demand continues to accelerate into next year. But I don't think we are going to start quantifying sub-segments of the instruments business. But we continue to be very excited about the trend that we are seeing. Not just AI.
I'll reiterate, we are seeing a fundamental recovery across the pharma/biotech sector.
Got it. On that point of fundamental recovery, I mean, you said outlook has steadily improved throughout the year. We've seen numbers go up. Prahlad, there have been false starts in the past and across the sector. Just wondering what gives you confidence that this is more sustainable this time and sustainable as the momentum, that the momentum can actually continue into 2027?
I mean, I think CapEx spend is a key indicator, the order trend, the backlog. I think what we've seen in the past, as you pointed out, they tended to happen in spurts, but now, two, three quarters in a row, we are continuing to start to see a trend where customers, researchers, and pharma/biotech are really looking at mid to longer term as to how can they build capacity and capability to be able to build out what they need to do, both for their current pipeline and as they look at AI as a driver for research.
Your next question comes from the line of Subbu Nambi with Guggenheim. Your line is open. Please go ahead.
Hey, guys. Good morning. Thank you for taking my questions. Acknowledging that we are still focused on 2026, can you give us some color on how you're thinking about diagnostics for next year? There are some questions surrounding comps of Reproductive Health, if you can grow at LRP, considering a potential gel headwind, and what should immunodiagnostics ex-China look like given the growth you have seen?
Hey, Subbu. The way I would say is that if you're looking at 2027, our end markets, both on diagnostics and pharma, continue to do well. I think you guys have looked at how the Reproductive Health business has done in the first half of the year, both on instruments and reagents, and in the second half, the reagents continue to do well. I think you might want to come to the Investor Day, and we may provide some considerations to think about 2027 there.
Fair enough. My second question is, it's great to see all this increase in demand because of AI, but are there areas that are seen as being negatively impacted by AI at any of the portfolio, whether it's instrumentation, reagents, software?
Not on the preclinical research side, Subbu. I don't think we've seen anything where it has been a detractor or a decelerator on the portfolio. I mean, the whole idea of when we set up Revvity and we built the preclinical side of the portfolio was to ensure that we provide the capabilities, tools, and elements that our researchers need in order to be able to accelerate drug discovery. We are in a position to now leverage the full capability of the portfolio. I would say that there is nothing that we've seen that is being a detractor.
Your next question comes from the line of Dan Leonard with RBC. Your line is open. Please go ahead.
Thank you very much. I just wanted to revisit that reagents growth number again. High single digits in total, mid-single digits ex the bulk. You talked a bunch about end market improvement, but it doesn't seem like the end markets for reagents businesses are growing that fast if you look at comps that have already reported. Can you speak to some of the execution elements behind your reagents performance?
Yeah, sure. I think, look, I think from a reagents growth perspective, I think we would maybe argue that it does continue to improve sequentially from the trends we've seen over the past several quarters. I mean, if you look discretely within both academic and government and pharma/biotech, even if you remove some of the benefit from the screening orders, these were the strongest performance we've seen in both customer groups in over a year and a half. I think we are continuing to see improved levels of lab activity, again, across both customer groups. I think also when you step back and look at it in terms of just our sort of overall reagent playbook and why we believe we're able to execute so well commercially, it's a multitude of factors.
Whether it's around, one, our ability to deliver our products within 24 hours around the globe, or two, our level of customer support and engagement and being true partners with them on the research side, and three, really being able to, I would say, deliver the best value-based product in the market. I think it's a multitude of factors. It's not just one factor. But we do believe, I would say, on two fronts. One, we're executing well, and two, the markets are improving.
I appreciate that. My follow-up question, maybe this is better served for next week, but wondering if you could offer any insight into the uptake of your new software products. Any KPIs you could share?
Yeah. Hey, Dan. I think we have a big section on both the software side and the AI and life sciences component, so I'm sure you will really love to come to the Investor Day and hear the story there. I don't want to burst their bubble and talk about it here.
Your next question comes from the line of Dan Arias with Stifel. Your line is open. Please go ahead.
Hey, good morning, guys. Thanks. Max, what was pharma/biotech up this quarter if you exclude software? Last quarter, you made the point that ex-software, you were up low singles. Software is clearly accretive now this quarter, so just curious what the apples to apples would be if we're comparing growth rates for biopharma reagents and equipment.
Yeah, so if you were to exclude the benefit from the Signals business, which obviously had a very strong quarter here in the third quarter, pharma/biotech, excluding Signals, was still up high single digits. That is going to be an acceleration from what we had previously seen. Again, we talked about some of the reasons why we're seeing the improved demand from pharma/biotech, not just related to AI, but I would say more natural improvement in the market conditions, and you're seeing that come through the results.
Okay. Okay, thanks. Thanks on that. Then just maybe on Genomics England, I don't think I heard you say this, but to just finish the year, what are you thinking about as a contribution, and then the idea of an expansion of the relationship with a new contract into next year? Thank you.
Yeah, for Genomics England, we are now embedding about, I would say, $25 million-ish in terms of a full-year contribution from that project. Then, as we've previously discussed, we're still in active negotiations with them in terms of extending the existing partnership, but also looking to expand it into other areas that we can continue to work with them on. Again, I think both of us are incredibly excited about how the project has gone and look forward to working together on additional projects as well.
Your next question comes from the line of Luke Sergott with Barclays. Your line is open. Please go ahead.
Great. Thanks for the question. I know all the stuff on the AI and the high-content screening, but can you just give a sense of the reagent strength in that bulk order? Was that associated with your high-content screening, the Opera backlog build that you guys have been doing? It seems like there was a little bit of a backlog flush here to get your instruments above what you guys were looking for, and I'm just wondering how much of that bulk order on the reagent followed through. More broadly on the demand, where is this coming from an AI, from these customers? Is this just traditional or legacy biotechs and pharma that are now transitioning into AI drug discovery, or is this from just new biotech or pharma or new AI drug discovery startups?
Yeah. Hey, Luke. Appreciate the question. There was a lot of questions embedded in that one. I think, look, maybe to just, I think, summarize what you were trying to get after. From an instrumentation perspective, let's start there, I would say there was no backlog flush within the period. Our backlog continued to grow and accelerate as we exited the third quarter, and again, that was broad-based improvement. I think even when you look at the reagent side of things, there was no, I would say, real backlog flush either. These screening programs are ones that usually you have a very strong engagement with a pharma/biotech customer. It's usually a multi-year project. The timing of these can be a little bit sporadic, as it does take validation on their side as well when you come out with the larger screening panels.
It was just a little bit of a timing and execution dynamic of why that shifted into the third quarter, but it wasn't a flush, as I would call it, or as you mentioned. I think the one thing on the reagent side to keep in mind is, we did have some of these screening programs planned for the fourth quarter that moved into the third quarter, but we are still holding the same mid-single digits reagent outlook in the fourth quarter that we had previously, which is a testament to the improved underlying market demand environments that we have been talking about that we are seeing from both pharma/biotech and academic and government customers.
Okay, great. Thanks. I guess lastly here from the Signals side, I know you just launched a lot of the new software suites. Can you talk about the funnel and how that has been building? You guys talked about that ticking down a little bit in the mid-teens, and I know it is a little bit of a longer sales cycle there. So just give us a sense of the building demand for all the new Signals products.
Yeah, look, I think one of your colleagues here tried to ask a similar question before. Look, I do not think we are going to ruin too much or give too much of a spoiler in terms of what we are going to go through at Investor Day. But I would say overall, as you look at the Signals business, it continues to perform well. APV growth is double digits again in the third quarter. It should be on track to deliver again double digits for the full year from an APV perspective, which again, that annualized portfolio value is really the best way to look at the performance of that business. From an NPI perspective, we continue to get really good, I would say, traction and feedback from the customers.
As we had previously mentioned, we did not anticipate a huge contribution from them in 2026, just given that they were new product launches, and that takes time to convert into the results and our organic growth. But from an actual traction perspective and feedback from customers, everything has been very positive on the NPIs.
Your next question comes from the line of Jack Meehan with Nephron Research. Your line is open. Please go ahead.
Thanks. Good morning, guys. I wanted to focus on the diagnostics business. Is it possible to just elaborate on the newborn screening performance in the quarter? It was mid-singles ex-China. What was it altogether and in China? I was just curious if there were any comp dynamics going on there.
Sorry, what was that, Jack? Repeat that second piece of the question.
I was just curious, it was mid-singles ex-China. What was it altogether? Just talk about what is going on in the China business.
Yeah, look, Reproductive Health at a global level was low single digits in the quarter. I think when we had come into the quarter, we had talked about a couple reasons for why you were going to see a step-down from the first half to what we were expecting for the second half, which was a low single-digit outlook. Those two factors is, one, you have less of a contribution from Genomics England year-over-year, and then the second dynamic is we were not expecting as much contribution from instruments, which also had a tougher comp in the second half of this year. I would say that's how I would think about it at the global level. When you look at things from a China Reproductive Health perspective, obviously birth rates continue to be very challenging within China.
However, Reproductive Health in China for us is now approximately 1% of our total company revenue, so it's a smaller piece of the overall portfolio. It can still move, I would guess, the Reproductive Health, but at least at a total company level, it's a very small balance for us.
Great. Then appreciate all the 4Q commentary on the life science business. Was wondering if you could just share that on the diagnostic side too, just what the expectations are for Reproductive Health and immunodiagnostics.
Sure. For the fourth quarter on the diagnostic side, we're expecting very similar performance to what we saw in the third quarter. So the outlook is about mid-single digits overall for diagnostics, and that has immunodiagnostics up high single digits, like it was in the third quarter, and Reproductive Health at low single digits, like it was in the third quarter.
Your next question comes from the line of Casey Woodring with JP Morgan. Your line is open. Please go ahead.
Good morning. This is Paul on for Casey. Congrats on the quarter. It looks like your 4Q guide, aside from pulling out the 100 basis points that you talked about for the screening reagents bulk orders, is essentially the same on the top and bottom lines. Could you just confirm, are there any changes to the 4Q implied guide aside from the screening bulk orders that were moved to 3Q?
I would say maybe the one other nuance is we do have also an uptick in the instruments outlook for the fourth quarter, as we are now calling high single digits versus the previous outlook. Other than that, no. In terms of nominal revenue dollars and the margins that we have in the fourth quarter, it is the same as we had in the previous guidance assumption.
Okay. Appreciate that. Then just as we are thinking about exit rates, could you just touch on, in terms of 4Q, any assumptions for budget flush? How are you thinking about that? Any other timing factors or seasonality flags that you would call out, just as we are thinking about kind of exiting the year into 2027 as a jumping off point?
Yeah. Look, I don't think there's anything specific I would call out from a fourth quarter perspective. If you look at the seasonality ramp, which we generally have about 6% or 7% between the third and the fourth quarter, I think if you look at it for what we've implied, it's a very similar level of seasonality ramp. I wouldn't say there's anything specific I would call it that would be a nuance for us in the fourth quarter.
We have reached the end of the question and answer session, and this concludes today's call. Thank you for attending. You may now disconnect.