Welcome to day two of the TD Cowen Healthcare Conference. I'm Dan Brennan. I follow tools and diagnostics. I'm really pleased to be joined by senior management of Revvity. We have Prahlad Singh, so Prahlad, welcome. Thank you, Dan. Terrific, but we'd kind of zoom out to begin. Revvity recently completed the last leg of their multi-year transformation program. It Applied Genomics moving into life sciences. You created the Life Science Solutions business, so now that the kind of these corporate actions are complete, how is Revvity or how do you feel Revvity's position to take share and ideally grow above the market as we look forward? It's a good question, Dan. I mean, I don't think any company comes out and says that their transformation plan is complete. I mean, I think the transition of the transfer of the Applied Genomics business was more another evolutionary process in our transformation. So it's part of the journey. I think the company is set up really well at this point. If you look at the end markets where we play, those are high growth end markets that are really attractive. Our portfolio is differentiated. We have incremental margin opportunity where we are very early in the very early innings of it. So the company is really set up well for executing on. And this is where we are focused now is how do we innovate? How do we ensure that our R&D is bringing in the product portfolio that we were hoping for? So I would say that the transfer of the Applied Genomics was just one piece in that journey. And I think this will continue to do very well. OK. So starting with the macro, the Trump administration has been bringing forth, not lost on anyone here or on the phone or on the webcast, substantial amount of policy change. You have the policy towards China. You have the tariff implementation with a lot of news out today with Mexico and Canada and reciprocal tariffs happening. And on top of that, you have uncertainty over NIH funding. So clearly a lot of volatility. On top of this, you have RFK Jr., who is HHS Secretary. So can you just elaborate on how Revvity is contemplating the potential macro noise, if you will, in terms of your guidance? Yeah. I mean, there are a lot of balls in the air. And I think you listed down a whole host of them. So I'm not sure which one. You maybe start on tariffs. Specific on. It may be, start on tariffs, and then we could jump to the NIH. But as we've said on tariffs, for us, Mexico and Canada, there is nothing. We don't have any presence there in terms of manufacturing or site. So it doesn't really impact it. China, again, we've talked about this at length. From our perspective in China, we've always played in China for China. So whatever we manufacture in China is used in China. We don't use anything out of China for any of our other sources. And through COVID, even when we went through COVID, if you recall, we had sort of also gone to the secondary supply chain and seen do we have resiliency in our supply chain model so that there is no dependency. So there is none. So I think we've tried to position ourselves when this is not something that has come up overnight. We've sort of had an inkling of that for several months coming into this, so the team is very well prepared to deal with that. In terms of the decision to block or stop imports from Illumina sequencers going into China, again, we don't know what the future portends. How do you feel your product set in China either protects you from such actions or just how should investors view that risk? Most of what we do is locally manufactured. As you know, for a Newborn Screening and Reproductive Health business, everything that we use in China is manufactured in China. There is no dependency on outside of China. On the immunodiagnostic side, I would say 25%-30% of it is also in country, for country. We do use something from Germany that goes into China. So we've tried to balance out our portfolio in a way that it allows to mitigate the risks as much as it is possible. And we feel good about it. Terrific. And then just sticking on this macro, so on NIH, academic and government is low double digits% of your revenue. I think you've talked about NIH directly as a%, maybe indirect something higher than that. Maybe just speak to kind of what you've contemplated in guidance for this uncertainty and anything you can update on, maybe what activity or how trends are going. Sure. I mean, just sort of to calibrate, NIH direct is 1% of our revenue. Academic and government is 5% of total rev in Americas. In Americas, correct. But 80% of that is consumables. So 80% of that, what we do there is reagents and assays that we sent out. So to some extent, our assumption is, and what we are seeing is that unless and until you totally shut down the lab, that is going to be continued. Now, there will be short-term noise and uncertainty, as we are all seeing. But I think in the mid to longer term, as we go through the next weeks, things are going to come down and balance out. OK. So maybe kind of getting off the macro, your organic growth the last few years has been above kind of the larger capped industrial, the diversified tools group. 2025 guidance reflects 3%-5%, also a really good number versus the peer group. Just speak to the level of growth that you've been able to achieve over the last few years and your outlook for this year, despite some of the kind of lag effect on post-COVID on the industry. How have you been able to put up these numbers? I mean, this is where the whole portfolio transformation journey is now starting to result and demonstrate the yields that we were hoping to get. I mean, if you look at the last two years, in a tough market environment, we have had a differentiated growth profile, whether you look at it from an organic growth perspective or from a margin perspective. And as I said, on these, we are still in the margin opportunity. We are still in our very early innings. I think the company is set up now in a way where the end markets that we play in, the product portfolio that we bring in are differentiated enough that we are going to continue to see performance which is differentiated on the top quartile of our peer group. That is where we have a high level of confidence that the portfolio that we have will result in yield in that. So the guide this year is, which we just kind of mentioned, 3%-5%. I think when you guided, you assumed no change in the underlying end market environment. Would you characterize that as fair? Would you characterize that as conservative? Given as we'll go through the discussion, it looks like there is some improvement in end market trends. I mean, if you just go back to the question that you asked a question before where you listed down the list of challenges that we are seeing. I wouldn't say that that's conservative, Guy. I think it's very prudent, and when we came out with the guidance, we said that we are being very prudent, knowing the macroeconomic factors and what we are going to observe near term, so we feel very good about the guidance, and these are some of the uncertainties that we had thought of that there will be some chaos and uncertainty with the new administration coming in, and we thought it would be prudent to guide where we would feel good, and if you look even at our guide, there is no ramp up throughout the year, which is something that we had last year and several others still have this year. That's where I think the prudence aspect comes into play. Great. So maybe jumping into some of the businesses. So life sciences, the reagent business, high growth potential. I think on a long-term basis, you've discussed 9%-11%. And this could be the first business to turn in the end market recovery given short-cycle nature. So what are you hearing thus far from customers in early 2025, maybe that you're tracking towards you could build conviction towards seeing this business improve? Yeah. I mean, you look at the last two quarters of 2024, 3Q and 4Q were sequentially continuing to do better and better year over year. And as I've said earlier, Dan, the first view that we will have when the market's starting to turn around is we have a very early view into it because of our reagent profile of the business. The run rate of our business gives us an early insight into what's happening. And I think the market is going to start turning around, taking aside the near-term or the short-term uncertainties that we have because of the noise. OK. Maybe flipping over to the instrument portfolio. I think the guide was down double digits last year in a tough environment. I think the guide this year, you can correct me if I'm wrong, is somewhere flattish, maybe low single in that zip code, certainly at the lower end of the kind of the segment growth. Can you just speak to, but you exited at a better level. Things got better throughout 2024. So maybe can you just review kind of how the business kind of exited the year in 2024? And And when we think about the different parts of your instrument portfolio across sample prep and cell analysis, in vivo and detection, how do we think about the progression of those businesses in the 2025? Yeah. I mean, I think not just 2025. The intent, again, when we were looking at transforming our portfolio is how do we now have an instruments business after what we had learned through the AES divestiture is, one, that is non-commoditized. Two, it is in specialized enough market where there will be a market need for it. And I think if you look at our in vivo single cell, our whole portfolio around life sciences, it is built in a way that there will be a need for it. And I think you saw the impact of that on the in vivo when we came up with the new NPI cycle in late 2023. And I think you will see that now with the other pieces of the portfolio. So I think, Dan, strategically, our intent is to put a portfolio together that is differentiated. Two, there is a need for it. And there is CapEx pressure. I don't think that's a secret in any way. But we've started seeing improvements in that as you looked at in the Q4. And this year, I think it will be flattish. OK. Maybe shifting over to diagnostics, and we can always circle back to the life science business if time permits. So immunodiagnostics business has benefited from strong performance in China over the last few years. Just remind us the mix of that business, China ex China, and kind of how have the trends been kind of between the major geographies? Yeah. I mean, China has done well. But I think the other businesses have other regions, as I've always said on our immunodiagnostics business, our other regions have done significantly better. And there continues to be significant opportunities for autoimmune testing, but more so for our overall immunodiagnostics business globally. China is a key component and a critical part of it. But it's not just only dependent on China. I always keep giving the example of the US. It is still only, it's been growing at a 25% CAGR. It's still only 15% of our revenue. It should be around 40% of our revenue. So there is still a lot of traction, even in the US market, where we need to achieve and accomplish that with the autoimmune business or overall immunodiagnostics business as such. So maybe sticking in China, then, I think you've expressed confidence that that business, your diagnostics business more broadly, won't be subject to the same price pressure that some of the central lab diagnostic vendors are seeing with tendering. Just elaborate on the positioning in China and why that's the case. Yeah. I mean, look, as I have said this publicly, local competition in China is not a new phenomenon. They have existed, and they will continue to exist. Our focus is really how do we have a differentiated portfolio. On the Newborn Screening side and overall on the Reproductive Health side, we've worked over the last decade to build out an in-country, for-country portfolio. So there is no dependency on other markets or importing anything into the market. On the autoimmune side, it's not one or two tests that a customer needs. You go into a lab for them if they need the full panel. And the ability and the vast menu that the autoimmune business brings to the market is really what the customer's ask and need is. They are not going to replace it just because there is somebody who's got two or three tests that are cheaper. There is IP around some of these assays, and that is part of the whole panel, and our focus is really how do we stay a step ahead? How do we keep adding to the panel? How do we keep adding assays so that from a customer perspective, we are bringing a differentiated portfolio into the marketplace, and besides this, and as you know, we've talked about it, we've also assumed a single-digit price decline into the marketplace, so I think, one, the markets we play in, or even the sub-end markets of autoimmune testing or Newborn Screening, they're pretty specialized and niche. They're not as routine, so they come down the totem pole in terms of garnering the attention that it requires. Two, the portfolio that we bring into the marketplace, it's differentiated enough, so that sort of has been our strategy. It will continue to be our strategy for the next decade. So basically, then, just as a follow-up to that, one of the large peers in the sector had to take down numbers or kind of guide below in 2025, just given more extensive price pressure in the big hospitals in China. I guess what you're saying is, A, the cumulative dollar amount of your businesses there in the areas you play in are a smaller portion. So maybe they're not drawing the specter of kind of the Chinese government to look for price pressure. And B, you're differentiated enough that basically you're not more of a commodity, maybe, that some of these other tests are. Is that the idea? I think it's specialized. I would say it's a specialized portfolio. And it's one that has a broad menu opportunity. It's not one or two. There are several tests that go as part of that menu and assay that come into the marketplace. And then I would say, look, is it going to continue to have pricing pressure? Absolutely. And we've said that. And we have accepted that. And we've assumed that into our business. So you just mentioned a moment ago that your immuno business mix in the U.S. is 15% of global, but it's been growing rapidly. The deal was done, I forget if it was five or six or seven years ago. So it's been a while. But so that business in the U.S. has grown. Is the right way for investors to think about that continued really strong growth, like you said, 30%, and it just cumulatively climbs up? Or is there anything that could really accelerate that climb from 15% of the mix to 40%? I think the big hurdle is getting the assays through the regulatory process, right? I mean, it is growing, as I said, at a 25% CAGR. And that's nothing to sneeze about, Dan. And I think it will continue to grow. And our goal is to continue to accelerate that growth and penetration into the marketplace. It'll be 25% or higher. And what's the right way, just on that assay side, from a competitive standpoint, maybe to speak highly in the US, where are you positioned? And then B, in terms of FDA and kind of assets, is there anything baked in this year for menu expansion such that some of the issues at FDA maybe could slow that down? No. So the answer to the second question is no. The answer, because you can't hang your hat on based on something that is not in your control. I think on the first part, look, you have to keep in mind that, as I've said, autoimmune testing is still in its nascency, even in the U.S. marketplace. Forget anywhere else. And as we bring more and more proprietary or IP-controlled tests into the market, that gives a differentiated advantage to the autoimmune portfolio, especially as we look at autoimmune disease. I mean, we've talked about general screening. Now, once you start going organ-specific, whether it's looking at neuroautoimmune antibodies, looking at nephroautoimmune antibodies, these are still just scratching the surface. And as we bring some of these assays into the marketplace, that continues to give it the opportunity to see the growth it has so far. So maybe on the Reproductive Health business, it's been held back by low birth rates in China. Still grew mid-single digits despite being down, I think, high single digits in China. So is high single digits ex China possible again in 2025? And just kind of walk through what the outlook is there. Yeah. Well, China in the first half of last year was very bad. So even though it did, China was not that great a story overall, right? So in the second half, we did start seeing some uplift because of the Year of the Dragon. And that's how it plays out. I think overall, look, I think the Reproductive Health business and Newborn Screening is doing very well in a market environment where it continues to be pressured by birth rates. Our focus is to continue to bring menu expansion to play. How do you look at the newer rare diseases that pharma has put a lot of focus on, whether it's spinal muscular atrophy, Duchenne muscular dystrophy, MPS II? There are several of these assays which are either approved recently or are in the approval process. And there's geographic expansion. As I keep saying, there's still 100 million newborns who are not being screened worldwide. So it will have that growth opportunity. But the birth rate pressures are not going away. And I feel really proud about how that business has done despite a pressurized birth rate environment. And in terms of the ex China growth, so pretty solid last year. Just remind us how you've thought about the guide this year in terms of ex China Reproductive Health? I think we've assumed low single, low single. OK. Terrific. I'm looking at Steve just to make sure I don't give a number. Maybe jumping back over for a minute, because, well, one more question on diagnostics. Then I have one more question back to the life science business. I know the long-term growth rate target you've set, 9%-11%, includes a couple of points contribution from new products and a couple of points from geographic expansion. Just in terms of new products, can you just speak to, like you mentioned at the beginning, innovation? I know Max has talked about innovation. Where are we on the innovation aspect of that two-point contribution? Yeah. I mean, Dan, our portfolio is so different today, right? There is not one NPI that I can point. There's not like a new GC or a new LC that's coming out. When we were PerkinElmer, that was part of our business, which we could say that this is what is the innovation coming out. BioLegend are our reagents business, release thousands of NPIs on an annual basis, right? So it's a machine that keeps churning and churning. So there's an NPI innovation there on the in vivo side. On the instrument side, we recently had a full portfolio turnover with new NPIs coming out. On the Reproductive Health side, I gave you an example of three disorders which are there. And there are a couple more which are either going to the FDA for approval or are in the process of submission. On the software side, we've talked about lab l ogistics. We've talked about the Clinical Signals portfolio that is coming out. So given where we are with the portfolio is now 80% consumable software and services, NPI is not an occasional phenomenon of a launch, but a regular phenomenon on a monthly or a quarterly basis. OK. So maybe back on the life science side. So pharma grew for the first time in 4Q in a couple of years. I think you were up against an easy comp. Just walk through what you've been seeing across biotech and large pharma customers. And what's the tone and the outlook for 2025? Yeah. I think if you look at pharma biotech, right, and as I said, for us, a preliminary indicator is the performance of our reagent business. I think obviously there are some companies that have a strong pipeline and a strong portfolio who have to invest in that, the GLP-1s being a classic example. The others, they have a challenge around IP and patent cliffs coming through. They have to invest because they have to have a sustainable pipeline for their survival and success. From our perspective, we are early enough in the discovery process that in either one of these scenarios, we play a role. And that's why you saw the differentiated performance around the reagents part of our business. And I think that will continue. So, has the tone, do you feel after a couple of years, could you see with that Q4 positive growth, do you feel like there's a noted shift? Is it just an evolution? I know you just answered the question, but I'm wondering, because we have heard that from other tools vendors, pharma is getting better. But it's such a big contributor broadly for your business and the group. But just being sure to understand, is this slowly getting better? Or is there some real notable change? I'll play with the words that you use. You said, is it a noted shift? Or is it an evolution? Right. I would say it's an evolutionary shift, if it makes sense. So I think there are more conversations. But for us, the conversations, if they are happening, are happening around the CapEx side of the business, not on the reagent side of the business. The reagent flow has started, as you saw, in the incremental performance in Q3 and Q4. OK. On to the income statement. You grew your margin 30 basis points last year despite modest organic growth. Our model has 30 basis points up against this year. I think you led off the discussion talking about you're early in the evolution of some of these margin kind of initiatives. Could you just speak to kind of where are you on that front? Kind of what's baked in this year? And maybe as we look beyond, I know you hosted the Investor Day, but just how much headroom is there to drive operating leverage? Yeah. I mean, look, as we said publicly, if it's 6%-8%, we have 75 basis points of margin. If you're 4%-6%, it's 50%. And if it's less than 4%, then it is 20%-40%. And this is what we have baked into this year. So I think we are being very prudent again on the margin expansion opportunities. You look at our margin opportunity. You look at our cash flow conversion. I think we are doing really well. On the margin side, I think as the life sciences market continues to come back, you are going to obviously see the leverage and the incremental opportunity that we have. Because if we are being able to do this when life sciences is 0%-2%, imagine what happens if the market comes back to a normal environment. So it's not that there is any Herculean effort that the company has to do. It's just a normal margin flow through that you will see when the market comes back to a normal environment. On the strategic front, I think you talked about a few strategic partnership type opportunities at the recent Investor Day. Could you just speak to any of those stand out more particularly? Which are you most excited about? I think I wouldn't say there is one that I would call out and say that there is something that we were excited about. Our pharma partnerships, the ones that we have announced, the ones that we have not announced, they continue to do well. But those are journeys, right? They are just like part of the evolutionary drug therapeutic approval process that goes through it. They continue to do well. On the government side, the work that we have been doing with some of the partnerships that we've announced, like with Genomics England as an example, and we talked about that at the Investor Day, that continues to go well. So this is not something that we are doing that is going to impact next week or next quarter. But the idea really is how do you build long-term multi-year partnerships that provide sustained opportunities for growth for the company? I think both on the pharma biotech side and on the government side, you will see that. You bought back nearly $800 million of stock over the last few years. I think you did $400 million in the last six months of last year. Speak to your capital allocation priorities, like the state of the balance sheet. Why is the aggressive buybacks now the right move given where the stock is at? Yeah. I think we feel that still there is a lot of opportunity. And we feel we are underappreciated. And on the M&A side and versus the share buyback, we'll continue to have a very balanced approach. If there's an opportunity that will come, I mean, you know we have an acquisitive appetite. And we've demonstrated that over the past seven years. If you look at it, we've acquired more than 13 companies. That's not going to go away. But it has to be the right fit at the right price. So we continue to have a fertile pipeline of opportunities that we are looking at. Until then, as we have opportunities, we'll also continue to be strategic and opportunistic even on the share buyback side. I think you just filed a mixed shelf last week. Just wondering, is that normal course of business? Just maybe speak to that. To which part? Oh, I think you filed a mixed shelf last week. I don't know. It was undisclosed amount. Yeah. OK. Fine. Maybe just on capital allocation, you just mentioned it. You've done 13 deals over an X period of time looking back. Just what is the appetite for M&A today? Just speak to the key priorities and how big of a deal would you consider? Yeah. I mean, if I answered all of those questions to you, I'm not sure that would make sense. Look, as I said, it has to be a right fit to the portfolio, number one. And you know the profile of companies that we look at are tend to be founder entrepreneur companies. And those have been really good successes. You look at Euroimmun, look at BioLegend, look at what we've done with those two acquisitions. So we continue to be very aware and continue to build a pipeline which hopefully will materialize. And I think over the next few quarters and years, you will see us to be an acquisitive company that will fill the portfolio. But I think the question really is, Dan, what we focus on is how do we add a product portfolio that adds to the differentiation that we bring in? You won't see us in routine markets where we have to compete with the big wigs. Our focus is bring something which is innovative enough, differentiated enough, fits our profile, and fits our culture as a company too. Is there—I'm sure you get this question, but I forget the answer—is there a size limit, leverage limit that you would go up to where you'd feel comfortable if the right deal came along that met all those criteria? We'll be in the credit rating. We are not going to move our credit rating, and we'll see what we can do that we are able to afford and fit. And do you feel the deal environment today is better or worse? Obviously, prices might be more attractive. But there's more macro volatility. Just wondering how you would characterize today's deal environment versus 12 months ago. I think given the profile of companies that we look at, founder entrepreneurs don't get impacted by what happens over the quarter. They really are focused on looking to their company going and being part of a company that fits their innovation culture, fits what they want to do. And those are the companies that we look at. And they really don't get impacted by vagaries of short-term movements in the marketplace. So in terms of getting back to a normal end market in tools that would allow you to get back into your LRP, obviously 2025 is a stepping stone towards it. Others I've talked about will be exiting, not in their LRP, but kind of getting closer with 2026 potentially being the year. We'll see. How would you characterize that question in terms of where are we in the evolution with end markets to getting back to a normal LRP? Again, it depends on the portfolio that you bring to bear. I mean, you look at our software business, that's not getting impacted. You look at our diagnostics business, whether it's around Newborn Screening or autoimmune testing, that's not really that much impact. The pharma biotech market is where I would affirm what you are saying is I think 2025 is the year that will be the step up, and path to normalization is what we say, and that's sort of the term that we feel comfortable with, and hopefully, 2026 is the year where you see a normal market environment there. So basically, what may be the final two questions. You talked a lot about all the initiatives you have ongoing, the business reorientation, the growth ahead, margins. If you had to pick one or two things that excite you most as we look out or investors look out for the next couple of years on revenue, what would they be? Incremental margin opportunity. I mean, I think that's honestly one of our underappreciated parts of our story. Given the portfolio that we have built, there is a significant traction for market for margin growth. The cash flow conversion that you have seen, I mean, we've set up a portfolio that gives us that opportunity to have a rich cash flow conversion opportunity. And the differentiated profile of the business, which will result in an organic growth that will always be in the top quartile of the marketplace. So I think those are the three things that we were set out to do. And I think we are well on a path to success on that. Terrific. Well, I think we're about out of time. So Prahlad, thanks for being with us. Thanks, everyone in the audience. Thank you, Dan.