Revvity’s first several months as a standalone company haven’t all been smooth sailing.
After spinning out of PerkinElmer last spring, the company put out its first full-year earnings report on Thursday, showing significant revenue drops in 2023 compared to the previous, pre-spinout year.
Revvity—which comprises the diagnostics and life sciences businesses previously housed under the PerkinElmer umbrella—took in just over $2.75 billion for the year, down from more than $3.31 billion in 2022.
That constitutes a decline of around 17%, though the company noted in its earnings report that the decrease would be completely erased if COVID-related revenues were left out of the equation. Indeed, sans that segment’s 19% year-over-year drop, Revvity’s revenues actually increased 2% year over year.
“Overall, when looking back on 2023, I’d say it certainly ended up playing out quite differently than we had anticipated when sitting here a year ago,” CEO Prahlad Singh, Ph.D., said on a call with investors Thursday morning.
“However, I’m so proud of the transformation that we have undergone over the past few years, which we ultimately completed last year,” he continued. “While we are continuing to face external challenges, I’m extremely grateful for what Revvity has become and the significant efforts of so many who have made it come to fruition.”
Revvity’s full-year report seemed to hit a nerve with investors: After its release Thursday morning, the company’s share price promptly took a dip, dropping about 3% to $105 within the first hour of trading.
The overall revenue declines stemmed from the diagnostics half of Revvity’s business, as the life sciences division’s 2023 revenue remained flat compared to 2022.
The diagnostics business experienced a 28% drop in revenue—which once again turned positive when COVID-related earnings were excluded, resulting in a 5% year-over-year increase. As Max Krakowiak, Revvity’s chief financial officer, explained on Thursday’s call, that increase came largely from the immunodiagnostics segment’s sans-COVID mid-teens growth for the year, offset by single-digit drops in both the reproductive health and applied genomics segments.
Meanwhile, in life sciences, while Revvity’s reagent licensing and specialty pharma segment grew in the mid-single digits for the year, that growth was all but canceled out by drops in both the instruments and software segments, according to Krakowiak. The latter, in particular, was hit by the fact that fewer multi-year contracts had been set to renew in 2023, a trend the CFO predicted will “normalize” in 2024.
Krakowiak also cited reduced spending from pharma and biotech customers in his breakdowns of both divisions’ 2023 performance, noting that life science sales to those customers declined in the mid-single digits for the year, and singling out that slowdown as a major contributor to the drop in the diagnostics business’ applied genomics segment.
For the year ahead, Revvity is expecting to continue to face many of the same headwinds that slowed it down last year. Krakowiak said on the call that the company is initially predicting annual growth between 1% and 3% for 2024, minus COVID-related revenues.
As for how that will play out throughout the year, he explained: “We expect revenue in the first quarter to be down mid-single digits, with sequential improvement in the second quarter, resulting in the first half still being down year over year overall. We expect to return to positive growth starting in the third quarter this year.”
In the meantime, Revvity aims to rev up its balance sheet by cutting costs. Though he didn’t specify the exact nature of the “structural cost actions” the company is taking, Krakowiak described them as “right-sizing the company, given all of the transformation,” including by integrating acquisitions and eliminating the remaining costs from its spinout.
“The significant actions we took in 2023, combined with the additional measures we’ve implemented as we begin 2024, have put us on a good trajectory to further streamline and adjust our operations for the business we have now become,” Singh, the CEO, said on the call.