Executive Summary / Key Takeaways

• Differentiated Portfolio & Operational Agility: Revvity (NYSE:RVTY) has successfully transformed into a specialized health sciences solutions provider, leveraging a unique portfolio in life sciences and diagnostics, coupled with operational agility to outperform peers amidst dynamic market conditions.
• AI as a Core Differentiator: The company is rapidly embedding AI capabilities both internally, driving significant efficiencies in sales and R&D, and externally through new product launches like SignalsOne and Living Image Synergy AI, positioning it at the forefront of scientific innovation.
• Strategic Growth Drivers: Strong performance in the Signals Software business (20% organic growth in Q3 2025) and resilient Reproductive Health (mid-single-digit growth in Q3 2025) are offsetting headwinds in instrumentation and China immunodiagnostics, supported by key partnerships with Genomics England and Sanofi .
• Prudent Outlook & Margin Expansion: Despite ongoing market uncertainties and specific challenges like China's DRG policy, Revvity projects 2-4% organic growth for FY2025 and a preliminary 2-3% for FY2026, with a commitment to adjusted operating margin expansion, targeting a 28% baseline for 2026 through strategic cost actions.
• Disciplined Capital Deployment: With a robust balance sheet and strong free cash flow generation, Revvity is aggressively executing share repurchases, viewing them as the most attractive return on capital in the current environment, while maintaining an active, disciplined M&A pipeline.

The Transformed Landscape: Revvity's Strategic Foundation

Revvity, Inc., founded in 1937, has undergone a significant transformation, evolving into a focused health sciences solutions provider. Headquartered in Waltham, Massachusetts, the company delivers complete workflows from discovery to development, and diagnosis to cure. This strategic evolution was notably marked by the fiscal year 2023 divestiture of its Applied, Food, and Enterprise Services businesses, a move that streamlined its portfolio and enabled deeper investment in specialized diagnostics and software. The company's overarching strategy centers on leveraging its differentiated technologies and operational agility to address complex challenges in translational multi-omics, biomarker identification, imaging, and diagnostics.

The industry landscape in which Revvity operates is characterized by rapid technological change, frequent new product introductions, and evolving customer needs. Competitors such as Thermo Fisher Scientific , Danaher Corporation , Agilent Technologies (A), and Bio-Rad Laboratories (BIO) vie for market share across various segments. Revvity distinguishes itself through its targeted innovation and customer-focused solutions, particularly in specialized diagnostics and informatics. While larger rivals like Thermo Fisher (TMO) and Danaher (DHR) benefit from broader portfolios and greater scale, Revvity's strength lies in its integrated offerings for specific applications, often providing qualitatively superior performance in niche workflows. The company's Signals Software business, for instance, boasts a stronger growth rate and a more ingrained enterprise footprint than many competitors, benefiting from deep customer relationships within its broader life sciences franchise.

Revvity's core technological differentiation is increasingly centered on its advanced informatics and AI-driven solutions. The company is rapidly embedding AI across its operations and product offerings. Internally, "Revvity AI" has been deployed for all 11,000 employees, utilizing large language models to enhance efficiencies. This has resulted in a 3-4x improvement in sales lead generation conversion rates, a 5-10% reduction in software development timelines, and improved financial collections. These internal advancements underscore a commitment to operational excellence and cost efficiency, directly supporting the company's margin expansion goals.

Externally, Revvity's AI-focused product launches are transforming scientific workflows. SignalsOne, a reimagined core Signals data platform, now integrates expanded AI capabilities for managing scientific data. Transcribe AI is enhancing reproductive health solutions, while Phenologic AI is gaining rapid adoption among preclinical Contract Research Organizations (CROs) in high-content screening, enabling greater efficiency and new insights. The Living Image Synergy AI software platform for in vivo imaging instruments significantly reduces manual image review time from several hours to mere minutes, freeing scientists to focus on higher-level analysis. These technological advancements not only enhance Revvity's competitive moat by offering unique, high-value solutions but also contribute to improved financial performance through increased adoption, potentially higher average selling prices (ASPs), and stronger customer retention. The collaboration with ProFluent Bio to offer novel AI-engineered enzymes with Revvity's Pin-point base editing system further exemplifies this, aiming for increased precision and efficiency in single nucleotide edits without bystander editing, a critical advantage in therapeutic development.

Financial Performance and Operational Momentum

Revvity's financial performance in 2025 reflects its strategic focus and operational resilience amidst a challenging macro environment. In the third quarter of fiscal year 2025, the company reported total revenue of $698.90 million, a 2% increase over the prior year, which included a 1% tailwind from favorable foreign exchange rates. For the nine months ended September 28, 2025, total revenue reached $2.08 billion, up from $2.03 billion in the comparable prior-year period.

Profitability, however, faced some headwinds. Consolidated gross margins decreased by 266 basis points in Q3 2025, primarily due to increased tariffs, unfavorable foreign exchange rates, and product mix shifts. This led to a gross margin of 53.60% for the quarter, down from 56.30% in Q3 2024. Similarly, consolidated operating margins decreased by 263 basis points in Q3 2025. Selling, general, and administrative (SG&A) expenses increased by 2% to $241.90 million in Q3 2025, influenced by restructuring costs ($9.90 million) and transformation costs ($5.10 million), though as a percentage of revenue, SG&A decreased to 34.60%.

Research and development (R&D) expenses rose 3% to $50.80 million, driven by FX and new product development investments.

Despite these pressures, the company's adjusted earnings per share (EPS) in Q3 2025 was $1.18, exceeding the midpoint of its guidance by $0.05. This outperformance highlights effective cost management and a favorable mix within the portfolio. For the nine months ended September 28, 2025, income from continuing operations was $144.11 million, compared to $194.69 million in the prior year.

Segment Performance and Drivers

Revvity's business is structured into two key segments: Life Sciences and Diagnostics. Effective fiscal year 2025, the Life Sciences segment now comprises Life Sciences Solutions (reagents, consumables, instruments, services, technology, and licensing) and the Signals Software business. The Diagnostics segment includes Immunodiagnostics and Reproductive Health.

Life Sciences Segment

The Life Sciences segment generated $342.8 million in revenue in Q3 2025, showing approximately flat organic growth. For the nine months ended September 28, 2025, revenue was $1.05 billion, with 2% organic growth. The Signals Software business continues to be a standout performer, growing 20% organically in Q3 2025. This unit demonstrates robust metrics, with Annual Recurring Revenue (ARR) over 40%, Annual Portfolio Value (APV) of 12%, and a net retention rate exceeding 110%. This strong software performance is a critical driver, offsetting a low single-digit decline in the Life Sciences Solutions business in Q3 2025, where instrumentation remains pressured, and reagents were modestly softer during the summer months. The company's reagents business, however, has shown consistent sequential growth over five consecutive quarters, indicating underlying stability in lab activity.

Diagnostics Segment

The Diagnostics segment delivered $356.1 million in revenue in Q3 2025, achieving 2% organic growth. For the nine months ended September 28, 2025, revenue was $1.03 billion, with 3% organic growth. Reproductive Health, particularly newborn screening, performed exceptionally well, growing in the mid-single digits year-over-year in Q3 2025, with newborn screening itself growing in the high single digits. This strength is partly driven by the ramp-up of the Genomics England Generation Study, where Revvity provides DNA sequencing and extraction services for screening newborns for rare genetic conditions. The recently IVDR-approved neo LSD seven plex kit in Europe, awaiting FDA clearance, is expected to further bolster this business.

Conversely, the Immunodiagnostics business experienced a low single-digit organic decline in Q3 2025. This was primarily due to a significant mid-20s decline in China immunodiagnostics, impacted by the expansion of Diagnosis-Related Groups (DRG) policy, which is altering diagnostic panel volumes. Outside of China, however, the immunodiagnostics business demonstrated strong performance, growing in the high single digits globally, with mid-teens growth in the Americas. The launch of the IDS i20 analytical random access platform through EUROIMMUN, a CE mark and FDA-listed device for specialty testing automation, is expected to be a significant growth driver in the coming years.

Liquidity, Capital Deployment, and Risks

Revvity maintains a strong financial position, with $931.39 million in cash and cash equivalents as of September 28, 2025. The company also has a $1.50 billion senior unsecured revolving credit facility available through January 7, 2030. Its net debt to adjusted EBITDA leverage ratio stood at a manageable 2.7 times, with all debt being fixed rate at a weighted average interest rate of 2.6% and a six-year weighted average maturity.

Capital deployment remains a key focus. Revvity generated $120 million in free cash flow in Q3 2025, representing an 88% conversion of adjusted net income. The company has been aggressive with share repurchases, buying back 2.32 million shares for $204.90 million in Q3 2025. Since its divestiture two and a half years ago, Revvity has repurchased 12.5 million shares, reducing its total shares outstanding by 10% at the end of 2023. A new $1 billion share repurchase program was authorized in October 2025, replacing the previous one, underscoring management's view that buybacks offer the most attractive return on capital in the current environment. While an active M&A pipeline is maintained, the company emphasizes a disciplined approach, prioritizing strong strategic additions that meet rigorous financial and return criteria.

Several risks warrant investor attention. Global economic and political conditions, including trade barriers and tariffs, continue to pose challenges to Revvity's supply chain and customer demand. While the company has implemented extensive mitigation strategies for tariffs, the dynamic nature of these policies presents ongoing uncertainty. The DRG policy in China is a specific headwind for the immunodiagnostics business, expected to persist until Q2 2026. Additionally, uncertainties surrounding U.S. academic funding have led to cautious spending from academic customers, impacting instrumentation and consumables demand. The company also faces inherent risks related to rapid technological change, intense competition, and the potential for intangible asset impairment.

Outlook and Future Trajectory

Revvity's outlook for the remainder of 2025 and preliminary view for 2026 reflect a balanced approach, acknowledging both persistent market challenges and internal strengths. For the full year 2025, the company reiterates its organic revenue growth expectation of 2% to 4%, with total revenue projected between $2.83 billion and $2.88 billion. Adjusted operating margins are expected to be in the range of 27.1% to 27.3%, with adjusted EPS between $4.90 and $5.00. The fourth quarter of 2025 is anticipated to see 2-3% organic growth and 30% operating margins.

Looking ahead to fiscal year 2026, Revvity prudently assumes organic growth will remain in the 2% to 3% range, similar to recent years, with opportunities for improvement as customer confidence and spending normalize. The company is confident in achieving a 28% adjusted operating margin baseline for 2026, driven by ongoing restructuring activities. This baseline, coupled with the projected organic growth, implies high single-digit EPS growth for 2026, even before considering additional capital deployment. Net interest and other expenses are expected to be relatively flat, and the adjusted tax rate is projected to be around 18%.

Strategic partnerships are poised to contribute meaningfully to future growth. The collaboration with Sanofi (SNY) to develop a new four-plex assay for early screening of type 1 diabetes, along with expanding the existing autoantibody assay, holds significant potential for the Diagnostics franchise upon regulatory approvals. The Genomics England partnership is already yielding impactful results, as evidenced by early detection of a rare genetic condition in a newborn. The recent definitive agreement to acquire ACD/Labs, expected to close in late Q4 2025, will further expand Revvity Signals' software capabilities, integrating analytical characterization and molecular design tools to create a unified SaaS environment.

Conclusion

Revvity has successfully navigated a period of significant transformation and market volatility, emerging as a more focused and agile health sciences solutions provider. The company's core investment thesis rests on its differentiated portfolio, particularly the high-growth Signals Software business and resilient Diagnostics segment, underpinned by a strategic embrace of AI and a robust innovation pipeline. While macroeconomic uncertainties, tariff impacts, and specific regional challenges like China's DRG policy present headwinds, Revvity's proactive operational adjustments, disciplined capital deployment through share repurchases, and strategic partnerships position it for continued outperformance. The commitment to expanding adjusted operating margins, targeting a 28% baseline for 2026, underscores the company's strong operating leverage. As market conditions gradually normalize and its technological leadership continues to yield new solutions, Revvity is well-positioned to deliver sustained financial performance and drive meaningful advancements in global health.