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PerkinElmer Revenues Drop 28 Percent in Q4 on COVID-19 Test Decline

This story has been updated from a previous version to include comments made by PerkinElmer executives in an earnings call.

NEW YORK – PerkinElmer said Tuesday that its revenues declined 28 percent year over year in the fourth quarter of 2022, largely on plummeting PCR testing for COVID-19, but the firm predicts growth in its life sciences and diagnostics businesses as it divests other businesses in the coming months.

For the three months ended Jan. 1, the Waltham, Massachusetts-based firm reported revenues of $741.2 million, compared with $1.03 billion in the year-ago period, and below the consensus Wall Street estimate of $1.04 billion. Max Krakowiak, PerkinElmer CFO, said during a conference call that the firm's COVID-19 testing revenue dropped in the quarter to $31 million from $336 million one year earlier, but excluding COVID-19 testing revenue, organic revenues were up 8 percent year over year.

PerkinElmer inked a $2.45 billion deal last year with New Mountain Capital for the applied, food, and enterprise businesses, which are expected to retain the PerkinElmer name. The remaining life sciences and diagnostics businesses will take on a new name, which PerkinElmer CEO Prahlad Singh said will be revealed in the months following the divestiture.

Krakowiak said the firm will set aside much of the proceeds from the sale to pay down debt, about $500 million of which is due in September.

"This will still leave us with ample capability to pursue additional capital deployment activities as they arise, such as continuing our track record of finding strategically important and accretive acquisitions," he said. "With these proceeds and the cash we expect to generate, we will have more than $2 billion in additional unencumbered cash we'll be able to deploy over the next three years without taking on any new debt."

Krakowiak said during the call that the firm predicts that, excluding COVID-19 testing, revenues from its remaining life sciences and diagnostics businesses will grow 9 percent during fiscal 2023, with low double-digit growth in the life sciences business and high single-digit growth in diagnostics.

Singh said PerkinElmer recently started commercial installations in Europe of its Accentis high-throughput, random access chemiluminescent testing platform and the firm plans to bring this next-generation platform to the US in the coming year. The Accentis instrument will complement the instruments the company acquired with its 2021 purchase of Immunodiagnostic Systems.

"With the low- and medium-throughput platforms that were added with the acquisition of IDS in 2021, the initial launch of the Accentis now provides a complete portfolio of chemiluminescent analyzer platforms, spanning all throughputs to support our full spectrum of customers," Singh said.

Among the company's other projects, he noted that the firm's viral vector experts are collaborating with researchers in Germany on development of novel gene delivery vectors that could help treat a growing population with neurodegenerative diseases.

"We are not only increasingly aligned with rapidly evolving and attractive fields like cell and gene therapy, but we've positioned ourselves to be uniquely focused to help accelerate these advancing fields forward," Singh said.

PerkinElmer's immunodiagnostics business in China is still recovering from pandemic-related lockdowns during 2022, and Singh said the company predicts that business will return to normal in the second half of 2023.

For Q4, PerkinElmer's diagnostics business brought in $394 million in revenues, a 45 percent decline from $710 million in the year-ago quarter. Its discovery and analytical solutions' revenues from continuing operations brought in $347 million during the quarter, up 9 percent from $318 million a year ago.

The Massachusetts firm reported net income of $137.7 million for the quarter, or $1.09 per share, compared to $190.2 million, or $1.50 per share, in the year-ago quarter. The firm's adjusted EPS was $1.70, beating Wall Street's consensus estimate of $1.62 per share.

For the full fiscal 2022, PerkinElmer's revenues declined 14 percent year-over-year to $3.31 billion from $3.83 billion in fiscal 2021. Its diagnostics business brought in revenues of $2.02 billion for the year, down 31 percent from $2.93 billion, whereas the firm's discovery and analytical solutions' revenues from continuing operations brought in $1.29 billion for the fiscal year, up 44 percent from $898 million a year earlier.

The firm's net income of $579.2 million, or $4.58 per share, for the full year was down from $943.2 million, or $8.08 per share, in 2021. The firm reported an adjusted EPS of $7.95 for the year, edging the consensus Wall Street estimate of $7.89 per share.

For 2023, PerkinElmer forecasts revenue from its continuing operations of $2.94 billion and adjusted earnings per share of $5.05. That guidance excludes any revenues from COVID-19 testing.

In early morning trading on the New York Stock Exchange, PerkinElmer's shares were up about 3 percent to $142.82.