Business context and reporting period
The supplied filing is PerkinElmer, Inc.’s unaudited Form 10-Q for the quarter and six months ended July 4, 2021—not a filing under the name Revvity, Inc. The requested company name and source filing therefore do not match. PerkinElmer reported Discovery & Analytical Solutions and Diagnostics segments; fiscal 2021 has 52 weeks.
Financial performance
Amounts below are in millions of dollars except per-share data. Comparisons are with the corresponding periods ended July 5, 2020.
| Metric | Three months | Six months |
|---|---|---|
| Revenue | $1,228.5; +51% | $2,536.2; +73% |
| Gross margin | 55.8%, up 0.7 percentage points | 58.0%, up 6.4 percentage points |
| Operating income | $332.5; +89% | $800.3; versus $220.3 |
| Net income | $245.9; versus $137.2 | $625.2; versus $170.8 |
| Diluted EPS | $2.19; versus $1.23 | $5.56; versus $1.53 |
| Operating cash flow | Not separately stated in the supplied cash-flow statement | $761.4; versus $198.6 |
Quarterly operating margin was approximately 27.1% (versus 21.6%); six-month operating margin was approximately 31.6% (versus 15.0%). Six-month operating cash flow reflected continuing-operations income of $625.3 million, noncash adjustments, and a net working-capital cash use of $12.5 million.
- Segments: Q2 Diagnostics revenue was $715.6 million (+70%) and operating income $286.3 million (+79%). Discovery & Analytical Solutions revenue was $512.8 million (+31%) and operating income $64.2 million (+63%). Management attributed growth to Diagnostics core and COVID-19 offerings, and to life-sciences and applied-markets demand, favorable product mix, and foreign exchange.
- Liquidity: At July 4, cash and cash equivalents were $572.8 million, current assets $2,260.0 million, and current liabilities $1,122.8 million. The company reported $864.0 million of additional borrowing capacity under its revolving facility. Cash-flow-statement cash, cash equivalents, and restricted cash totaled $726.7 million, including $152.1 million of restricted cash in other assets.
- Debt: Balance-sheet debt carrying value was $2,353.2 million, including $4.7 million current and $2,348.5 million long-term. The company issued $800 million of 2031 and 2051 notes, redeemed $339.6 million of 2021 notes, and reported $125 million outstanding on its revolving facility.
Material changes, outlook and risks
- Revenue growth included acquisition and foreign-exchange contributions: management estimated these at approximately 6% and 5%, respectively, in Q2, and 5% and 4% for the six-month period. Pandemic-related cost controls and disruptions in the prior-year comparison also affected expense trends.
- Six-month results included a $27.9 million gain from changes in fair value of financial securities, contributing to net interest and other income of $6.3 million. The Q2 tax provision included a $14.6 million expense from remeasuring UK deferred tax liabilities following the UK corporation-tax-rate increase. Reported results also included higher acquired-intangible amortization and acquisition-related costs.
- During the first half, the company acquired Oxford Immunotec, Nexcelom, and another business for aggregate consideration of $860.5 million; net acquisition cash outflow was $702.7 million. After quarter-end, it completed the approximately $155 million acquisition of Immunodiagnostic Systems and agreed to acquire BioLegend for approximately $5.25 billion in cash and stock, subject to adjustments, regulatory approval, and other closing conditions. The BioLegend deal was expected to close by fiscal year-end and was expected to require additional financing.
- The company also had an agreement to acquire Sirion for approximately $94.8 million in cash plus possible contingent consideration of up to $85.3 million; closing was expected in Q3. These transactions add integration, financing, valuation, and execution risks.
- Management gave no specific quantitative full-year revenue or earnings guidance in the supplied filing text. It said COVID-19-related Diagnostics demand was expected to continue into Q4, while its sustainability depended on testing demand and the company’s ability to produce products and staff and manage laboratories. It warned that pandemic effects could continue to weigh on parts of Discovery & Analytical Solutions and could affect overall results.
- One Diagnostics customer contributed approximately $192.5 million of Q2 revenue and $398.0 million for the first half. Other risks discussed include supply-chain disruption, foreign-exchange and interest-rate exposure, acquisition integration, debt and covenant constraints, and potential impairment of goodwill and intangible assets. Environmental remediation accruals were $12.1 million; management said legal and other contingencies were not expected to have a material adverse effect, while noting outcomes remain uncertain.
Important facts for investors to verify
- Confirm the filing identity and period: this source names PerkinElmer, Inc. and ends July 4, 2021, despite the request naming Revvity, Inc.
- Assess the scale, financing terms, closing conditions, and integration risks of the announced BioLegend acquisition and other acquisitions.
- Evaluate how much Diagnostics growth depended on COVID-19 testing and the concentrated customer, and how durable those revenues may be.
- Reconcile reported earnings with unusual items, including the securities fair-value gain, UK tax remeasurement, acquired-intangible amortization, and acquisition costs.
- Review debt maturities, variable-rate exposure, borrowing capacity, and the company’s ability to fund acquisitions while maintaining liquidity and shareholder distributions.