Mike Ryskin on the Bank of America Life Science Tools and Diagnostics teams. I am excited to host Revvity for our next session. I am joined by Max Krakowiak, Senior VP and CFO. Max, thank you for being here. Yeah, thanks for having us, Mike. Kick things off, you know, our opening question, sort of, you know, you reported 1Q recently, gave an update on the guidance. Could you talk us through how the quarter played out? Sort of, what are the big changes? Obviously, there's a lot to unpack there, but give us a high-level overview, and then we'll attack each of the points separately. Yeah, sure. I would say, you know, overall, first, the first quarter was, I would say, solid performance. Obviously, a little bit different macro environment than what we had assumed at the time of our initial 2025 guidance. I think the sort of three main takeaways, I would say, from our first quarter earnings call is, one, you know, the beauty of our portfolio. I think it's been a big part of the transformation, and you can see the strength in our diagnostics business as well as our software business that continue to perform extremely well. I'd say the second piece is, you know, we had appropriately prudent guidance to start off 2025. I think we had baked in for some uncertainty, didn't know the level of or extent of change, but I think that was a very appropriate prudency. It is part of the reason why we are able to maintain our full-year guidance despite a weaker macro backdrop. The third thing I would say is really our ability to execute. I am sure we will talk about tariffs today, but our ability to sort of hold our full-year EPS and operationally mitigate the majority of the tariff headwinds sort of exiting the second quarter here, I think, is a testament, again, to our ability to execute. Okay. I mean, let's pick it up right there on the tariffs and the mitigation front. Can you, you know, expand a little bit on your mitigation strategy, how that's being implemented, the timing of that, phasing out over the course of the year? Yeah. Maybe to just reframe for everyone how we sort of talked about tariffs on the earnings call. For us, we framed it at about $135 million of gross tariff headwinds. We said the net impact, you know, was roughly $0.12 of EPS after the operational mitigation. You know, when you think about that, it is majority in the second quarter. We were really able to operationally mitigate the headwinds here in the second half with a lot of supply chain actions, but then also some additional belt tightening. Why are you able to, or how are you able to implement the mitigation steps so quickly? Because I think a lot of other peers have talked about taking most of 2025, in some cases, into 2026. By the end of 2Q, is this sort of from an end market perspective, from a geo perspective, just sort of walk us through that? Yeah, I'd say there's really probably two main drivers in our ability to do so. One is the beauty of our portfolio. You know, we are a global company, but I also say we are a nimble company as well, with sort of our streamlined portfolio that we now have, which has been a tailwind to our mitigation efforts. I'd say the second piece is something that we've been working on for really a long time in terms of our supply chain resiliency throughout the COVID period, but also some of our strategic actions we were taking just overall as a company perspective over the past 12 to 18 months. For example, you know, we've talked about the importance of GMP for us over the next couple of years in our life sciences reagents business. You know, as part of that, your customers want you to have dual manufacturing capabilities. We have the GMP facility in San Diego. We had already been in process of building a GMP facility outside of the U.S. as sort of the backup or redundancy site. We are just able to leverage that site and sort of, you know, reshore some of our reagent portfolios, which is helping us mitigate the tariff headwinds. In terms of the updates over the last couple of weeks since you announced results yesterday, obviously, the big change was China tariff from, you know, 145, 125 to 30% and 10% in the two directions. What impact does that have on your footprint, on your tariff hit? Yeah. So yes, recent news. It feels like there's new news every day here. But, you know, I would say, again, if you go back to how we framed up the tariff discussion or the impact for us, most of that impact was really in the second quarter from an operating margin headwind perspective. And so we're already kind of midway through the period here. We've already, you know, sort of been positioning inventory and selling through to our customers and making sure they get what they need. So if you think about that $0.12 impact, we've kind of framed it up as half as the impact from U.S. to China and then half as sort of, you know, rest of the world into the U.S. As you look at that impact in the second quarter, could there be some potentially modest, you know, upside for the or impact to the second quarter? There could be here, but we are also halfway through the quarter. I do not want, you know, somewhat temper the expectations in terms of the benefit of that China tariff reduction. Okay. And then from a policy going forward perspective in terms of the mitigation actions, you know, one of the questions we ask is sort of how permanent are those? How much are you willing to dial them back or adjust them? Like you said, I mean, you already have them in place in the second quarter, but let's say hypothetical tariffs stay at current levels, you know, 30% and 10% between U.S. and China. Would you over time pull back on some of those efforts? Or is this sort of like a no regrets, we're going all in and this is the plan no matter what? Yeah, I think if you as you talk about the U.S. to China piece in particular, I think that one is a full no regret activity, and we're going to keep maintaining sort of the plans that we've laid out here. I would say if when you then look at the rest of the tariff impact I mentioned, sort of half that impact is from rest of the world into the U.S. And when you really look at that, that's mostly our diagnostics business where we have manufacturing in Europe and the U.K. that's being sold into the U.S. You know, if tariffs are to stay around longer and depending upon the levels which they're at, you know, I think we might have to relook at whether we want to make more, I would say, dramatic operational changes to mitigate them. I think that's really where you're seeing the belt tightening is to offset some of those headwinds here in the second half. Those are sort of temporary in nature. You know, I think the other point we get asked is, you know, what about pricing and the ability to pass it on through the customers? Again, given that it's mostly diagnostics related, it's a little bit longer of a cycle in terms of the contracts being renewed and when you can pass through those price increases. A lot of our contracts are with, you know, state government labs on the newborn screening side. It's just not necessarily the easiest or fastest place to push through pricing changes. I think the punchline being, we'll continue to execute the plan for U.S. to China, and then for the rest of the world into the U.S., we'll have to see how things sort of unfold here from a tariff perspective. Okay. Talking about some of those moving pieces in the guide update and the impact of tariffs, you know, you trimmed your adjusted operating margin guide a little bit to account for that, the offset was some non-op items. If we think about that OpEx or OpEm number going into 2026, you know, once the mitigation is fully in place, should that bounce back or is there going to continue to be margin pressure from this into next year? You kind of talked about that with the U.K., U.S. Yeah. I'm certainly not giving 2026 guidance here today. There's a lot of moving pieces. Again, new news happens every day. I would say as you think about it, maybe the better way to frame it is I would think 2026 is more of a, you know, a normal margin year in the context of our LRP. If the market does return to a more normalized state, for us, that's 75 basis points of operating margin expansion. If it's more of a mid-single-digit organic growth, you know, that's roughly 50 basis points. You can kind of scale down there, you know, low single digits, you know, more modest op margin expansion. I think that would probably be a different way to frame it based on, you know, what we know and where we sit here today is I wouldn't expect, you know, some sort of huge margin catch-up next year. Okay. Okay. That's helpful. Let's break into a couple of the specific end markets and customer groups. Not the biggest exposure for you, but the other policy areas, academic and government. Can you talk about, you know, specifically where you see exposure, what parts of the portfolio, how that played out in the first quarter, and then especially if you could give any order commentary or forward guidance because there's, you know, it is expected to continue. Yeah. I think maybe just hitting the last point first too, you know, from our sense, we do not guide necessarily by end markets between, you know, pharma biotech versus academic and governmental life sciences side. As we looked and updated our guidance for 2025, we have factored in sort of the lower or tempered expectations on the academic and government side, but we are able to offset that with our software and diagnostic strength. That allowed us to hold the full-year organic growth guidance, which we are very proud of. I would say when you look at specifically academic and government for us, you know, as a reminder, exposure level, it is 12% of revenue globally, slightly more than 5% of that, you know, being in the U.S. Even when you look at what we sell to the academic and government customers, the vast majority of it is our reagents. When you look at kind of what is happening, I would say there is consistent cautiousness on both the instrumentation and even on the reagent side as a sort of way to see what happens with, you know, indirect expense reimbursements and with the funding levels for NIH. There is just general cautiousness. In the first quarter, both instrumentation and reagents were down to our academic and government customers in the U.S. You mentioned the budget, you know, a lot of anticipation of the fiscal year budget once Congress sort of gets their hands on it. Is that the next major catalyst? Or just when you talk about cautiousness from your customers, what do you think we could look to see some relief of that? Yeah, I mean, every year they go through the budget thing, right? I mean, that's not a nuanced dynamic. You know, I would say the indirect expenses is definitely causing some significant cautiousness. I think more clarity around there would be helpful. Obviously, more budget certainty helps as well. I think right now, until we get a little bit more information, you'll kind of continue to see that level of cautiousness, which is what we've factored into our updated guidance. When you say, you know, the majority of your U.S. A&G's reagents, is that BioLegend? Yeah, the vast majority of that is even within BioLegend. Yep. Okay. All right. And then talking about, you know, switching to pharma and biotech grew positively in the first quarter. How have those conversations continued? Yeah, I think when we came into the year from a pharma biotech perspective, I think we were cautiously optimistic that we were going to continue to see that improved underlying, you know, end market trends. I think now with the more uncertainty on the macro backdrop and the pharma tariffs and the, you know, the preferred pricing, you know, it's going to be a little bit more of a wait and see, which is what we're sort of seeing from our pharma biotech customers. I think when you look at what we sell to pharma biotech, though, you do have a little bit of differences based on the portfolio group. So when you look at it from a software perspective, our software business continues to perform extremely well in an area we remain incredibly excited about long term. I think when you look at reagents, even despite the cautiousness, we continue to see modest sequential quarter-over-quarter growth, but also year-over-year growth. I think you'll continue to see, I would say, stable growth from a reagents perspective. When you look at it, really where the pressure point is right now is, I would say, on the instrumentation side. It continued to be down year-over-year in the first quarter. We expect it to continue to face pressures over the remainder of the year and aren't really factoring in sort of any improvement from an instrumentation standpoint. Is that, you know, have you, can you parse out any difference between large pharma, mid-biotech, small biotech, sort of like where the various pockets of weakness in instrumentation are coming from? If you look at our portfolio, majority of what we sell into is mid and large-sized pharma. From that perspective, that is where most of the, I would say, the weakness or cautiousness that we're seeing is mostly within that customer group. Okay. The other question we got was, as it relates to pharma as a customer group, and maybe a little bit to A&G as well, is timing changes pull forward? You know, I hate to use the word stockpiling, but just sort of, were any of your customers trying to get ahead of tariffs, get ahead of budget cuts? Did you notice any unusual ordering patterns or dynamics there? No. I would say for our portfolio, the sort of stocking of inventory or the pull really does not have an impact. It did not have an impact in COVID. I would say it is not really having an impact now. You know, again, most of our reagents are shipped and delivered within 24-48 hours across the globe. From that perspective and with the expiration date risk, it is just not something where they can, you know, stockpile months and months of inventory. Okay. On the weakness you're seeing in instrumentation or maybe some of the cautiousness you're seeing there, what do you think is driving that, especially if it is, you know, large, mid-sized pharma? They're not necessarily budget constraint. Is it uncertainty on pharma tariffs? Is it drug pricing, most favorite nation, just sort of like where is the, what's the source of the cautiousness? I think it's a combination of all the factors that you've mentioned. If you remember what we sell from an instrumentation perspective, most of it is relatively large ticket, customized instrumentation on preclinical research. From that perspective, in terms of new areas of research they're looking into or new projects they might be looking to start, you know, that's something I think if I was, you know, in their shoes as well, there would just be a certain level of cautiousness given the uncertainty on some of the policy. I think until you start to see that settle out and they can more clearly forecast and plan from their perspective, I would assume they're going to be continuously cautious on large ticket purchases. Okay. Maybe pivoting a little bit to geographies, maybe we can touch on China a little bit. Obviously, a sizable part of the business. How did the first quarter play out relative to expectations? Maybe you can parse out again different subsegments or business lines. Yeah. So I think when you look at China for us, just overall context too, it's 16% of total company revenue, you know, roughly 9% in diagnostics, 7% on the life sciences side. I think when you look at the first quarter performance, I would say it was roughly in line with expectations. We had a slight decline year over year on the life sciences side, and then we had high single-digit growth on the diagnostics side. I think as you look over the course of the rest of the year, I think our expectation is that you'll continue to see sort of choppiness in the China life sciences end market. I think you'll continue to see, you know, modest growth in our diagnostics business, probably ending the year roughly around mid-single-digit growth year over year. Okay. When you talk about that choppiness, obviously there's been a lot of reasons for choppiness in China over the last couple of years. If you think in terms of tariffs and forgetting sort of like the cost impact and the tariff impact, do you think that a de-escalation of the trade war could improve underlying market conditions in China, maybe improve some of the growth factors there? Or what's your view on underlying demand? I do not think it can hurt to have more stability from a trade perspective. I think there are a lot of other variables that are going on right now just broadly with the China economy. I think, again, until you see a little bit more clarity and certainty there and how that is going to progress, I think the market will continue to be choppy. I think the one benefit we do have with our life sciences portfolio is, again, the majority of it is the reagents in terms of our revenue exposure there. From that perspective, we do continue to see levels of lab activity. I think instrumentation, again, sort of with the stimulus flow through, remains a little bit more volatile. Okay. All right. You know, you talked about the strength in diagnostics in the first quarter. Any specific areas of strength there? I want to tie that into a VBP question, just sort of what you've seen there and give us an update on why you think your portfolio may be less exposed there. Yeah. I mean, I think it's important for our diagnostics business in China to remember that we do different things than I think the other competitors who say they have diagnostics in China. We don't play in the generalist diagnostics markets of respiratory and infectious disease. You know, we play in more specialized end markets of immunodiagnostics in terms of autoimmune, allergy, you know, TB testing. And then we've, you know, got the reproductive health business. The majority of what we do in China diagnostics is really our autoimmune portfolio. That remains something that is, you know, highly specialized, requires a high degree of science. As weaving that sort of into the VBP question, you know, it's one, not the biggest piece of the hospital budget, so not necessarily focused from that perspective. There is not a ton of local competition with the sort of breadth and depth of our menu, which is really preventing it from sort of being a priority from a VBP perspective. I think as we look at our long-term growth algorithm for diagnostics in China, you know, we expect immunodiagnostics to kind of grow mid-single digits. That includes facing, you know, a mid-single digit pricing headwind every year. It might not be VBP, but we are also not immune from the pricing headwinds that do exist in the China diagnostics market. Okay. On a VBP-specific basis, you haven't seen any hits so far in the fourth quarter or first quarter? Nope. Okay. All right. Maybe we'll dive into life sciences a little bit. You know, you talked about the different pushes and pulls you're getting between consumables and instrumentation. Just where do you think you're best positioned for the rest of the year in consumables? You know, how sustainable is that performance? Yeah, I think we remain, again, encouraged by the performance of our reagents business. Again, I think coming into this year, I think we were maybe a little bit more optimistic that the recovery was really going to continue to ramp and get closer to more normalized, I would say, behavior of our reagents business and underlying lab activity. I think that has been tampered down a little bit. We still expect our reagents business to grow year over year for the full year 2025 with relatively consistent volume levels from what we saw in the first quarter. I think that continues to be a bright spot for us. If you go back over the past couple of quarters, our reagents business has outperformed the peers' reagents group, particularly around what we sell in RUO and preclinical reagents. I think we remain incredibly excited about that business. You know, I think when you look at on the instrumentation side, again, I think until you get more certainty both on academic and government funding levels, but also the impact of policy on pharma budgets, until you get more certainty around those two areas, I think you're going to continue to see pressure on instrumentation. Okay. You know, we touched on BioLegend previously, but just following up on that, sort of how has that performed relative to your deal model? It's been a couple of years. Can you give us an update on sort of integration plans, synergy, cost outs, and just next steps with BioLegend? I think we remain incredibly excited about the BioLegend acquisition. You know, obviously, it's a little bit different market environment than when we underwrote the deal or acquired them a couple of years ago. Yes, it is a little bit off of the deal model, but that doesn't change, I think, our long-term excitement level about the BioLegend portfolio. Again, if you look back over the past couple of years and the performance of our reagents business, outperforming peers, as I mentioned, BioLegend is the biggest piece of our reagents portfolio and a key part of that. I think we remain incredibly excited. We're seeing good commercial synergies with sort of our legacy reagent, Revvity reagent portfolio. We're continuing to see internal innovation and collaboration between BioLegend and our diagnostics business. It is just, I think, a little bit of unfortunate timing with the market, but it is still an acquisition we remain, you know, very excited about. You talked about some of those synergies, and I remember we talked about this when you first acquired the business. Can you give us a couple of examples where you're able to leverage BioLegend's capabilities in diagnostics and other parts of the portfolio? Yeah. I think for, like, instance, anytime we're coming out with a new diagnostic assay and it, you know, needs an antibody for that assay, BioLegend is the first call on the ability to make that in-house. We've also seen, you know, opportunities where we've had the ability to move some of our reproductive health suppliers from sort of an outsourcing of our, you know, antibody development to moving that in-house with BioLegend, which has been a big success for us. I'd say even commercially, you know, the ability to leverage the pharma biotech channel of our legacy Revvity reagents, and then conversely, leveraging the academic and government channel from BioLegend for our legacy reagents have provided some nice wins for us. I think that's all those two pieces are adding up to our ability to, I think, outperform the peer group from a reagent perspective over the past couple of years. Is there more upside from any of those areas? Just sort of like how many of that, how many of those opportunities have you already tackled and incorporated? Or are there, you know, other areas where you can continue to find synergies between the two businesses? No, I think it's a part of our long-term growth algorithm, right? I think when you look at what we expect reagents to do over the long term, those channel synergies are a key component of that execution. Okay. I want to touch on software. You called it out a couple of times as a pretty major area of strength. Just what's driving that performance? What makes your software business so differentiated? And you know, why has it been so good for so long? Yeah, I think one is a big difference is really our portfolio. You know, we do have two main direct competitors of Benchling and Dotmatics. But I would say when you look at really our product and how we partner with the large pharma customers, I would say is really differentiated and leads to and helps us sort of drive that customer stickiness. I would say the second piece is we are really excited about the long-term growth capabilities we have in that business as you look at sort of the different pillars of our strategy. And those pillars being one, moving a little bit further downstream in the software world. We've already launched two new products there, Signal Synergy and Signal Clinical, which are continuing to have strong commercial success. You know, the second piece of the strategy is our product portfolio was mostly focused on small molecule in the past. We're working very closely with our pharma partners to develop the same capabilities from a large molecule perspective in terms of their notebook and workflow capabilities. The third one is expanding into new customer groups, whether that's moving further downstream into some of the smaller pharma biotech companies or entering into sort of new markets such as material science, where it is a very similar workflow and software need perspective. We've seen really good traction on both those fronts over the past couple of quarters. Okay. I want to ask a little bit about the cost structure and margins. You already talked about 2026 and sort of the puts and takes and how to think about that. When I think about, you know, various levers for the rest of the year, ability to achieve, you know, upside versus downside versus from your targets, where do you see sort of the opportunity across the portfolio, across the cost base? Yeah, I would say right now our margin expectations for the year are balanced. You know, I would say we've, again, in order to mitigate the tariff headwinds, we are doing some belt tightening here in the second half. Those are temporary in nature. We don't have any sort of plans right now to take out additional structural costs here in the second half based on our commercial pipelines. Obviously, we'll, you know, keep monitoring that to see if there's any, you know, adjustments or course corrections are needed. I think over the past couple of years, we've shown our ability to execute from a margin standpoint and our ability to appropriately manage our cost profile. I think you'll see the same thing play out here for 2025. Okay. Like you said earlier, those belt tightening moves, that's not something you're going to necessarily roll back based on the macro. That's, you know, things you're already committed to. Correct. Okay. From a pacing perspective, as we go through the year, anything we should keep in mind relative to normal seasonality, just given some of the macro besides the margin component? No, I think as you look at pacing, I would say from a commercial perspective, it's in line with what we had initially communicated at the start of the year. We had said it would be a relatively consistent organic growth cadence throughout the year, which is still sort of what's factored in. We don't have some meaningful ramp here in the second half. We're assuming the underlying market conditions kind of persist as they were, you know, at the time of the earnings call. Now I wouldn't really call it anything too specific from a cadence perspective. Okay. I want to touch on capital allocation a little bit. You know, we talked about BioLegend a little bit. Can you characterize your plans or the opportunity for further M&A and sort of how do you balance that versus other capital deployment or internal investment needs? Yeah, I think when you look at the capital deployment for us, and we spoke about this a little bit, the investor, I think we have taken a much more balanced approach to capital deployment than we historically have as Revvity or as, you know, when we were PerkinElmer. I think for us, the balance is really, you know, really around share buybacks. For us, if you go back now over the past couple of years, we've done close to $1 billion worth of share repurchases. I think you'll see us continuously remain opportunistic in our share repurchasing. I think for us, as we think about M&A, yes, it's still a part of our long-term strategy. I think for us to be successful, we no longer have to do M&A. I think, you know, as before this portfolio transformation was really something we had to do. I think now we can be much more selective in terms of what we go after. It is going to need to be something that makes a ton of sense both strategically and financially as we really do like the new financial profile we have created as a company. Okay. You know, talking about on the topic of M&A, there's been obviously a lot of pullback in valuations in the space. Does that, you know, how does that factor into your decision-making criteria? You know, are there more opportunities? Are sellers becoming a little bit more desperate? Yeah, I mean, I think it's a mixed bag, maybe a better way to answer. I think too, when you look at where we've historically done, you know, M&A, it's been more in the private sector. For us, the private companies, you know, yes, their valuations might be condensed right now or compressed, but long term, if their business is performing well, which it would have to be to sort of fit our, you know, financial framework that we would target, they're not in a rush to sell. If valuations are low today, either you're going to pay them the valuation they want or they have no problem sitting on the sidelines and waiting for you to meet their valuation expectations. I think in the private sector, we haven't really seen a change in expectations. I think on the public side, maybe you start to see some things shake loose at some of these lower valuations. Again, you know, if a company for some of the valuations and what we're looking for to meet our strategic need, I don't think we're seeing a ton of drop from price expectations. Okay. All right. That's fair. We've got a couple of questions left, a couple of minutes left. I'm going to sort of go to our standard closing comment of, you know, what do you feel is most underappreciated or misunderstood about Revvity? Yeah, I would say maybe three things. One is that when you look at our portfolio, it is a different portfolio, different from what we've had in the past as PerkinElmer, but also very different from the peer group, you know, that we compete against. I'm not sure that's completely fully recognized yet. We're still having conversations, I feel like, educating, you know, folks on what our software business is, which we really think is a crown jewel for us. We're still going through education on how our newborn screening business and reproductive health continues to perform so well despite declining birth rates and why we're excited about that business long term. I still think there's, you know, pieces of the portfolio that aren't maybe perfectly well understood externally. I think the second piece is, you know, we continue, I think, to get pressured and maybe concerns over our ability to execute. I think when you look at the past couple of years, we've shown an ability to execute in challenging times and an ability to put up numbers that are in line, if not better than the peer group. When you look at things across margins, organic growth, cash flow performance, which has been a huge tailwind for us, I still don't think we get the execution credit. You know, I think maybe the last piece is, you know, educating folks on our margin expansion opportunity, which is really, I think, the area I'm most excited about in the company and one we really haven't been able to show yet externally because of the end market pressures. I think once the market sort of returns to that more normalized state and we're able to really show the power of our margin profile, I think that's going to be a real differentiator for us versus the peer group and an ability to have industry-leading margins at the end of it. Okay. I think maybe on those last two points, the ability to execute and the margin expansion opportunity, sort of what do you think needs to happen to be able to demonstrate that? Is it just about the underlying macro and the policy noise dying down? Is there anything you can do to sort of bring that to the forefront more, or is it kind of out of your hands here? I think some's in the control, some's out of the control. I think, again, if you look back over the past couple of years, I think we have demonstrated. I just don't think we get the credit for it. I think we've shown the ability to manage our margin profile. I mean, last year, we expanded 30 basis points of margin, growing 2%. I would say that's normal than what you should be expanding margins in a 2% growth scenario. I think that's really probably, you know, something I would—I just don't think we're getting the, I would say, the credit for the execution we've shown. Okay. All right. Thanks. On that point, Max, we are out of time. Thanks so much for joining us. Thanks, everyone.