PerkinElmer, Inc. — Form 10-Q Summary
Entity note: The filing provided is for PerkinElmer, Inc. (NYSE: PKI), not a company identified in the request metadata as Revvity, Inc. The filing covers the quarter ended October 3, 2021 and the first nine months of fiscal 2021; it is unaudited.
Business context and reporting period
PerkinElmer operates Discovery & Analytical Solutions, serving life sciences and applied markets, and Diagnostics, serving clinically oriented customers. Results include the BioLegend acquisition from September 17, 2021 and other 2021 acquisitions. The nine-month comparison is affected by acquisitions and favorable foreign exchange; the prior fiscal year had 53 weeks versus 52 weeks in fiscal 2021.
Key financial results
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $1,166.7 million | $964.0 million | $3,702.8 million | $2,428.1 million |
| Gross margin | 54.2% | 54.7% | 56.8% | 52.8% |
| Operating income | $222.0 million | $248.0 million | $1,022.2 million | $468.3 million |
| Net income | $127.7 million | $176.7 million | $753.0 million | $347.5 million |
| Diluted EPS | $1.11 | $1.57 | $6.65 | $3.10 |
Q3 revenue grew 21% year over year, with both segments up 21%. Diagnostics revenue was $653.8 million and Discovery & Analytical Solutions revenue was $512.9 million. Q3 operating margin was approximately 19.0%, down from 25.7%; management attributed the decline mainly to acquired-intangible amortization, growth and product-development investment, and acquisition-related costs. Q3 net income also included higher interest and other expense, including $23.3 million of bridge financing and debt pre-issuance hedging costs and a $19.4 million loss from a change in fair value of financial securities.
For the first nine months, revenue increased 52% and net income more than doubled. Diagnostics revenue rose 83%, substantially reflecting acquisitions as well as growth in core and COVID-19 offerings; Discovery & Analytical Solutions revenue rose 22%. Nine-month gross margin improved on higher volume, product mix and service productivity, partly offset by acquired-asset amortization and inventory purchase-accounting charges.
Cash flow, debt and liquidity
- Operating cash flow was $1,075.2 million for the first nine months, versus $410.1 million a year earlier. Investing cash outflow was $4,052.8 million, including $3,967.7 million of acquisition payments; financing cash inflow was $3,080.7 million, principally from debt issuance and borrowings.
- At October 3, 2021, cash and cash equivalents were $487.4 million. The company reported $1,377.1 million of available borrowing capacity under its revolving credit facility.
- Reported debt carrying value was approximately $5.104 billion, comprising $5.099 billion long-term and $4.5 million current. Cash less reported debt implies net debt of approximately $4.616 billion.
- Current assets were $2.251 billion and current liabilities $1.145 billion. The current ratio was approximately 2.0. These balances include significant acquisition-related changes.
- The quarterly dividend remained $0.07 per share. The board declared the same amount for Q4, payable in February 2022.
Material changes, outlook and risks
- BioLegend acquisition: Completed September 17 for aggregate consideration of approximately $5.7 billion, funded with cash, debt and 14.1 million shares. The company also completed six other acquisitions during the first nine months for aggregate consideration of approximately $1.2 billion. Acquisition accounting allocations remained preliminary.
- Costs and earnings: The company reported $72.5 million of acquisition and divestiture-related costs in Q3 and expected further cost increases in Q4, including approximately $40.7 million of BioLegend-related amortization. Management said interest expense would continue to increase in 2022 due to higher debt.
- COVID-19 exposure: Diagnostics growth reflected COVID-19 products and testing-laboratory activity. Management expected significant related demand to continue into Q4 2021, but said sustainability depended on testing demand and the company’s ability to produce products and staff and manage laboratories. One Diagnostics customer represented approximately $94.8 million of Q3 revenue and $492.8 million of nine-month revenue.
- Risks and contingencies: The filing highlights pandemic and supply-chain disruption, market and government-funding volatility, foreign exchange and interest-rate exposure, acquisition integration and goodwill/intangible-asset impairment, debt covenants and refinancing access. Environmental liabilities accrued were $12.2 million; management did not expect known environmental matters or other ordinary-course legal matters to have a material adverse effect, while acknowledging uncertainty.
- Controls: Management concluded disclosure controls were effective at the reasonable assurance level and reported no material change in internal control over financial reporting during the quarter.
Investor facts to verify
- Confirm the intended issuer: this filing is PerkinElmer, Inc., ticker PKI, despite the Revvity, Inc. request metadata.
- Track BioLegend integration, final purchase-price allocations, acquisition synergies, and resulting amortization and debt-service costs.
- Assess how much Diagnostics revenue and earnings depend on COVID-19 offerings and the significant customer concentration disclosed.
- Separate underlying operating trends from acquisitions, purchase-accounting charges, financing costs, and other unusual items when evaluating growth and margins.
- Monitor cash generation, leverage, available revolver capacity, debt-covenant headroom, and the sustainability of the dividend and repurchase program.