Business context and reporting period
The supplied filing is PerkinElmer, Inc.’s Form 10-K for the fiscal year ended January 2, 2022; it is not filed under the name “Revvity, Inc.” Fiscal 2021 comprised 52 weeks, compared with 53 weeks in fiscal 2020, which affects year-over-year comparability. The company operated through Discovery & Analytical Solutions and Diagnostics, serving life sciences, applied markets and diagnostic customers worldwide.
Financial results
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $5.067 billion | $3.783 billion | +34% |
| Operating income | $1.332 billion | $978.6 million | +36% |
| Net income | $943.2 million | $727.9 million | +30% |
| Diluted EPS | $8.08 | $6.49 | +24% |
| Gross margin | 56.3% | 55.8% | +49 basis points |
| Cash from continuing operations | $1.411 billion | $892.2 million | +$518.6 million |
Revenue growth included approximately 8% from acquisitions and divestitures and 1% from favorable foreign exchange. Diagnostics revenue rose 42% to $2.932 billion, principally reflecting a $749 million increase in immunodiagnostics revenue from COVID-19 offerings. Discovery & Analytical Solutions revenue increased 24% to $2.135 billion. Consolidated operating margin increased 42 basis points; higher volume and favorable mix were partly offset by acquisition-related amortization and growth investments.
Cash used in investing activities was $4.113 billion, including $3.991 billion of net acquisition spending and $99.9 million of capital expenditures. Cash provided by financing activities was $2.942 billion, largely reflecting debt issuance and borrowings used in part to fund acquisitions. Cash and cash equivalents ended at $618.3 million. Total debt had a $4.984 billion carrying value ($5.027 billion principal before discounts and issuance costs), versus $1.991 billion carrying value a year earlier. The company reported $1.49 billion of available capacity under its revolving credit facility.
Material changes and unusual items
- Acquired BioLegend for approximately $5.7 billion, funded with about $3.3 billion cash and $2.6 billion in stock, and acquired seven other businesses for $1.2 billion aggregate consideration. The acquisitions materially increased goodwill, intangible assets and debt; year-end goodwill was $7.417 billion and net intangible assets were $4.063 billion.
- Interest and other expense included $23.4 million of BioLegend bridge-financing and debt pre-issuance hedge costs. Acquisition and divestiture-related costs totaled $97.5 million for the year.
- The effective tax rate rose to 26.3% from 19.7%, including approximately $37.1 million of tax provision associated with planned repatriation of foreign earnings. The company identified about $1.2 billion of foreign earnings no longer considered indefinitely reinvested.
- One Diagnostics customer accounted for approximately $638.6 million of FY2021 revenue, up from $97.8 million in FY2020.
Outlook, risks and contingencies
- Management expected COVID-19 product and laboratory-services demand to decline in 2022; related revenue and inventory valuation depended on testing demand and the company’s ability to produce products and staff and manage laboratories.
- Management expected FY2022 capital expenditures to be similar to FY2021. It stated that operating cash flow should fund operating expenses, capital expenditures, smaller acquisitions, interest and dividends, while larger acquisitions and debt maturities may require external financing.
- Key risks include COVID-related demand and supply-chain disruption, single- or limited-source components, acquisition integration and valuation, competition and product development, regulatory compliance, foreign exchange exposure, and substantial debt and covenant obligations.
- Recorded environmental remediation accruals were $11.9 million. Management did not expect known legal and environmental matters to materially adversely affect the financial statements, but noted outcomes remain uncertain. Potential acquisition contingent consideration was up to $108.4 million; $58.0 million was recorded.
- The annual dividend was $0.28 per share. The board could reduce or discontinue dividends. Management reported effective disclosure controls and internal control over financial reporting; the auditor issued unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- Confirm the issuer and reporting period: the supplied document is PerkinElmer’s FY2021 10-K, not a filing under the stated Revvity name.
- Assess how much Diagnostics growth was COVID-related and whether the expected 2022 decline affected subsequent revenue, margins and inventory.
- Review BioLegend and other acquisition integration, purchase-price allocation, amortization burden and realized performance against expectations.
- Evaluate debt maturities, refinancing needs, covenant headroom and cash availability, given the sharp increase in debt following acquisitions.
- Examine customer concentration, contingent consideration exposure, and any subsequent developments in environmental, legal or tax contingencies.