NEW YORK – PerkinElmer reported Tuesday its fiscal third quarter revenues dropped 17 percent year over year on declines in its COVID-19 business and pandemic-related lockdowns in China that dragged down the firm's diagnostics revenue.
For the three months ended Oct. 2, the Waltham, Massachusetts-based firm posted $711.8 million in total revenues compared to $861.3 million in the year-ago quarter. The company, which is in the process of divesting its applied, food, and enterprise business, reported pro forma revenue for Q3 2022 of $1.03 billion. The Wall Street consensus estimate for the quarter was $1.01 billion.
Overall organic revenue grew about 8 percent.
PerkinElmer announced Aug. 1, along with its Q2 earnings, that it had reached a $2.45 billion deal to sell its applied, food, and enterprise business to New Mountain Capital and develop the remaining company into a high-margin life sciences and diagnostics firm with a yet-to-be announced name. The firms plan to close that deal in the first quarter of 2023, and New Mountain Capital intends to develop its purchase into an analytical and enterprise solutions business that will likely retain the PerkinElmer name and brand.
On Tuesday, PerkinElmer said its diagnostics segment brought in $399.2 million in revenues for the recently completed quarter, down 39 percent from $654.0 million in the year-ago quarter. Excluding COVID-19 revenues, the firm reported that its diagnostics segment's organic revenue grew 5 percent for the quarter.
"While COVID-related revenues have continued to decrease meaningfully throughout the year, we were able to generate $54 million in total revenue from these products and services in the third quarter, which was slightly above our expectations," CFO Max Krakowiak said on a conference call with investors. "We continue to expect demand for our COVID-related offerings to decline sequentially and are assuming we reach our expected terminal run rate of $25 million per quarter of COVID-related revenue, starting in the fourth quarter."
CEO Prahlad Singh said on Tuesday's call with investors that PerkinElmer's remaining life sciences and diagnostics business will generate 10 percent growth and 30 percent operating margins following the sale of the applied, food, and enterprise business.
"Our new life sciences and diagnostics company will be dedicated to helping close the chasm between research in the lab and entering clinical trials and then from those trials to hopeful cures," he said.
By supporting the development of groundbreaking therapeutics and effective means of diagnosing disease, Singh said, "we can build on the impact we're already having on global health and can meaningfully further improve the quality of life around the world in the years to come."
PerkinElmer's discovery and analytical solutions' continuing operations brought in $313 million during Q3 2022, a 50 percent rise from the $208 million the same period a year earlier. It also reported pro forma revenue in the segment increased 23 percent to $633 million from $513 million.
PerkinElmer posted a profit of $85.3 million, or $.67 per share, for the recently completed quarter compared to a profit of $127.7 million, or $1.11 per share, a year ago. Adjusted EPS was $1.21 while pro forma EPS was $1.51. The consensus Wall Street estimate was EPS of $1.46.
The company had $400.7 million in cash and cash equivalents as of Oct. 2.
Singh said PerkinElmer plans to redeploy the nearly $2 billion of after-tax proceeds of its divestiture, and that includes considering merger and acquisition opportunities that would fill gaps in its portfolio. He noted that PerkinElmer tends to focus on acquiring founder-entrepreneur-type companies, and neither PerkinElmer nor those firms tend to be in a rush for those sales.
For the fourth quarter, PerkinElmer is forecasting total revenues from continuing operations of $730 million. Pro forma revenues for the quarter are expected to range from $1.06 billion to $1.07 billion. Pro forma EPS is expected to be between $1.65 and $1.67.
The company also updated its full year guidance with a forecast of total revenue of $3.30 billion from continuing operations and pro forma total revenue in the range of $4.59 billion-$4.60 billion, with pro forma EPS of $7.89-$7.91. At the end of the last quarter, the firm forecast revenue for the year of $4.60 billion-$4.64 billion and adjusted EPS of $7.80-$7.90. The analysts' average estimate is $4.61 billion for the year, and adjusted EPS of $7.76.
In early morning trading on the New York Stock Exchange Tuesday, PerkinElmer's shares were down about 1 percent to $127.82.