Q2 2025 Revvity Inc Earnings Call

Welcome, and thank you for standing by today's conference. Call will be getting shortly if you would like to register a question at any time, please press star 1 on your telephone keypad, thank you.

Unknown Executive: Hello everybody and welcome to the Q2 2025 Revvity Earnings Conference Call. My name is Elliot and I'll be your coordinator for today. If you'd like to register a question during today's event, please press star 1 on your telephone keypad.

Hello everybody and welcome to the Q2 2025 ravity earnings conference call. My name is Elliot and I'll be your coordinator for today.

Stephen Willoughby: And I'd like to hand over to Steve Willoughby, Senior Vice President of Investor Relations. Please go ahead. Thank you, operator.

if you would like to register questions and today's events, please press star 1 on your telephone keypad,

I now, like to hand over to Steve, Willoughby, senior vice president of investor relations. Please go ahead.

Prahlad Singh: Good morning, everyone, and welcome to Revity's second quarter 2025 earnings conference.

Stephen Willoughby: On the call with me today are Prahlad Singh, our President and Chief Executive Officer, and Max Krakowiak, our Senior Vice President and Chief Financial I'd like to remind you of the safe harbor statements outlined in our press release issued earlier this morning and those in our SEC file. Statements or comments made on this call may be forward looking. which may include, but may not be limited to financial projections or other statements of the company's plans, objectives, expectations, or intentions. The company's actual results may differ significantly from those projected or suggested due to a variety of factors which are discussed in detail in our SEC filing.

Thank you, operator. Good morning, everyone and welcome to revity second quarter 2025 earnings conference call.

On the call with me today are prolonged, sing our president and chief executive officer and Max graovac, our senior vice, president and Chief Financial Officer.

I'd like to remind you of the Safe Harbor statements outlined in our press release issued earlier this morning and those in our SEC filings

Statements are comments made on this call, may be forward-looking statements which may include, but may not be limited to financial projections or other statements of the company's plans objectives expectations or intentions.

The company's actual results May differ significantly from those projected or suggested due to a variety of factors which are discussed in detail in our SSC finals.

any forward-looking statements made today represent our views as of today,

Stephen Willoughby: So you should not rely on any of today's statements as representing our views as of any date after today.

Stephen Willoughby: During the call, we will be referring to certain non-GAAP financial measures. A reconciliation of the measures we plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release.

We disclaimed any obligation to update these forward-looking statements in the future. Even if our estimates change, so you should not rely on any of today's statements, as representing our views as of any date after today.

Prahlad Singh: I'll now turn it over to our President and Chief Executive Officer, Prahlad Singh. Thanks, Steve. And good morning, everyone. The dynamic macro and market environment we experienced during the first quarter of the year continued through the second quarter and at this point does not yet appear to be settling down as we enter the second half of the year. Despite these persistent and in some cases new challenges, Revvity continues to perform at a high level. This strong performance exemplifies our unique businesses, which provided us with the proper balance to continue to generate results that were in line to above our expectations.

During the call, we will be referring to certain non-gaap Financial measures. A Reconciliation of the measures. We plan to use during this call to the most directly comparable, gaap measures is available as an attachment to our earnings press release.

I'll now turn it over to our president and chief executive officer pad Singh pad.

Thanks, Steve and good morning everyone.

The dynamic macro and Market environment we experienced during the first quarter of the year.

Continue through the second quarter. And at this point does not yet appear to be settling down as we enter the second half of the year.

Despite these persistent. And in some cases, new challenges gravity continues to perform at a high level.

Prahlad Singh: I'm very proud and extremely impressed with our employees' ability to stay focused on our key objectives. Quickly adapt to evolving obstacles. and capitalize on new opportunities as they arise. This strong performance and flexibility was on display in many ways during the second quarter. such as our ability to maneuver rapidly in the varying tariff environment, our strong levels of innovation, and our ability to swiftly manage and adjust our cost structure to ensure we continue to deliver for our shareholders. All these efforts culminated in our robust cash flow generation, which we have actively redeployed to return cash to our shareholders.

Businesses, which provided us with the proper balance to continue to generate results that were in line to above our expectations.

And very proud and extremely impressed with our employees ability to stay focused on our key objectives.

Quickly adapt to evolving obstacles.

And capitalize on new opportunities as they arise.

This strong performance and flexibility was on display in many ways. During the second quarter,

such as our ability to maneuver rapidly in the variant tariff environment.

A strong levels of innovation.

And our ability to swiftly manage and adjust our cost structure.

To ensure we continue to deliver for our shareholders.

Prahlad Singh: Despite the evolving market and regulatory environment, we were again able to achieve our objectives and deliver another solid quarter with 3% organic growth overall, which was right in line with our expectations. with a modestly stronger operating margin performance when excluding the impact from effect. We reported adjusted EPS in the quarter of $1.18, which was solidly above our expectations and guidance. Our performance in the quarter was led by our life sciences business, which grew 4% organically overall, led by approximately 30% growth in our signals software franchise. In addition to the strong performance in the quarter, our software business also set a new record for orders in a single quarter, which bodes well for its future performance.

All these efforts culminated in our robust cash flow generation, which we have actively redeployed to return cash to our shareholders.

Despite the evolving market and Regulatory environment. We were again able to achieve our objectives and deliver another solid quarter with 3%, organic growth overall, which was right in line with our expectations.

With the modestly stronger operating margin performance when excluding the impact from FX.

We reported adjusted EPS in the quarter of 18, which was solidly above our expectations and guidance.

Our performance in the quarter was led by a life sciences business which pre 4%, organically overall

Led by approximately 30% growth in our signals software franchise.

In addition to the strong performance in the quarter, our software business, also set a new record for orders in a single quarter.

Prahlad Singh: This strength in software helped drive mid-single-digit growth year over year with our pharma and biotech. and improvement from the low single-digit growth we experienced in the first quarter. This improved rate of growth from pharma and biotech was partially offset by continued weakness from academic and government customers. where our revenue again declined in the low single digits year over year globally. Similar to the performance we saw in the first. Sales into academic and government customers in the Americas region. also declined in the low single digits. Similar to the first quarter. Our diagnostic segment grew 2% organically, in line with our expectations.

Which both well for its future performance.

This strength in software helped Drive, mid single digit growth year-over-year with our farmer and biotech customers.

And improvement from the low single digit growth. We experienced in the first quarter.

This improved rate of growth from farmer and biotech was partially offset by continued weakness, from academic and government customers.

Where our Revenue again declined in the low single digits year-over-year globally.

Similar to the performance. We saw in the first quarter.

Sales into academic and government customers in the customers region.

Also declined in the low single digits, similar to the first quarter performance.

Prahlad Singh: as our immunodiagnostics franchise faced more difficult multi-year comparisons, limiting its growth to the low single digits this past quarter. Around midway through the quarter, we began to face a new challenge in this business in China relating to an expansion and acceleration of a hospital lab reimbursement chain known as the Diagnosis Related Groups or DRG. This expanded policy change is having an impact on the size of diagnostic panels ordered by physicians in the country. initially resulting in a reduction in overall volumes for some of our multiplex products. This is likely to drive an eventual increase in volume for more expensive single-plex tests.

Our diagnostic segment grew 2% organically in line with our expectations as our immuno Diagnostics franchise faced more difficult multi-year comparisons. Limiting its growth to the low single digits, this past quarter

Around Midway through the quarter, we began to face a new challenge in this business in China relating to an expansion and acceleration of a hospital, lab reimbursement change.

Known as the diagnosis related groups or drg.

This expanded policy change is having an impact on the size of diagnostic panels ordered by physicians in the country.

Initially resulting in a reduction in overall volumes for some of our Multiplex products.

Prahlad Singh: which we all show off. For the remainder of the year, we are now expecting a fairly meaningful pullback in our immunodiagnostics business in China, which is incorporated into our updated outlook for the total company for the year. While this policy change is a new headwind for us to contend, with over at least the remainder of the year, with the strong performance in many other areas of our business, along with tight management of our expenses, it is only having a very modest impact on our outlook for the year. We now expect our full year organic growth to be in the 2% to 4% range.

this is likely to drive an eventual increase in volume for more expensive, single Plex tests, which we also offer

For the remainder of the year, we are now. Expecting a fairly meaningful pullback in our immuno Diagnostics business in China.

Which is incorporated into our updated outlook for the total company for the year.

While this policy change is a new headwind for us to contend with our at least the remainder of the year with the strong performance, in many other areas of our business, along with tight management of our expenses.

It is only having a very modest impact on our outlook for the year.

Prahlad Singh: Down 1% from our prior outlook, while our adjusted EPS for the year is now expected to be in the range of $4.85 to $4.95, which is also down a modest 1% compared to our previous expectations. Overall, the second quarter ended up playing out largely as we had expected, both from a top and bottom line perspective, despite the new unforeseen headwinds in our diagnostics business in China. which is a testament to our resilience and the differentiation our unique businesses provide. In addition to the solid P&L results, we also continued to perform well with our cash flow conversion and generation.

We now expect our full year organic growth to be in the 2 to 4% range.

Down 1% from our prior Outlook. While I adjusted EPS for the year is now expected to be in the range of $4.85 to $4.95 which is also down a modest 1% compared to our previous expectation.

Overall, the second quarter ended up playing out largely as we had expected.

Both from a top and bottom line perspective, despite the new unforeseen. Headwinds in our Diagnostics business, in China,

Resilience and the differentiation are unique businesses, provide.

Prahlad Singh: In the quarter, we generated another $115 million of free cash flow, despite strategically moving and increasing inventories in some areas ahead of the potential tariff change. This resulted in free cash flow conversion to our adjusted net income to continue to be in line with our longer term aspirations and at 90% year-to-death. While we continue to actively evaluate redeploying this cash into potential M&A targets that we believe could make a strong strategic addition to the company, our disciplined multi-criteria process has not yet identified targets compelling enough from a financial profile and expected return perspective to move further forward with.

In addition to the solid pnl results. We also continue to perform well with our cash flow conversion and generation.

In the quarter, we generated another 115 million of free cash flow.

Despite strategically moving and increasing inventories, and some areas ahead of the potential tariff changes.

This resulted in free cash flow conversion to our adjusted, net income.

To continue to be in line with our longer term aspirations.

And at 90% year to date.

Why we continue to actively evaluate redeploying this cash into potential m&a targets that we believe could make a strong strategic addition to the company.

Prahlad Singh: Given the strong and differentiated financial profile, Revvity now has a robust internal innovation pipeline. We will continue to remain active and aggressive in evaluating potential acquisition targets of all sizes. but will also remain disciplined as we believe Revvity has been built into something that is truly special on its own. With our longer term expectations for the company remaining unchanged, despite the challenges our industry has faced over the last few years. We continue to be opportunistic and use this period to become increasingly aggressive with our share repurchase act. After repurchasing $150 million worth of stock in the first quarter, we repurchased another nearly $300 million worth of stock in the second quarter alone.

Our disciplined multi-criteria process has not yet identified targets compelling enough from a financial profile and expected return perspective to move further forward with

Given the strong and differentiated Financial profile revity now has and a robust internal Innovation Pipelines.

We will continue to remain active and aggressive in evaluating potential, acquisition targets of all sizes.

But will also remain disciplined as we believe revity has been built into something that is truly special on its own.

With a longer term, expectations. For the company remaining unchanged, despite the challenges. Our industry has faced over the last few years.

We continue to be opportunistic and use this period to become increasingly aggressive with our shared purchase activities.

after repurchasing 150 million dollars worth of stock in the first quarter,

Prahlad Singh: This brings our repurchases of stock through the first half of the year to just shy of $450 million. This equates to a reduction of over 4 million shares or nearly 4% of our total shares outstanding. Since the end of the second quarter last year, we have repurchased over $750 million of our stock. which has reduced our total average diluted shares outstanding by 7 million or an approximate 6% decline in our share count overall. Our solid operational performance is driven by our strong levels of innovation, which allow us to consistently introduce important new offerings to our customers.

we repurchased another nearly million dollars worth of stock in the second quarter alone.

This brings our repurchases of stock through the first half of the year to just shy of 450 million.

This equates to a reduction of over 4 million shares on nearly 4% of our total shares outstanding.

Since the end of the second quarter last year, we have repurchased over 750 million dollars of our stock.

Which has reduced our total average diluted shares outstanding by 7 million. Or an approximate 6% decline in our share count overall.

Prahlad Singh: One example of this from the second quarter was the launch of our new IBS I-20 analytical random access platform introduced through our Euroimmune business. which is part of our immunodiagnostics portfolio. This CE Mark and FDL listed device represents a breakthrough in specialty testing automation, allowing laboratories to consolidate up to 20 different analytes across six diagnostic specialties on a single instrument. The IBS I-20 platform processes up to 140 tests per hour and enables labs to transition from manual or semi-automated methods to fully automated chemiluminescence immunoassay processing, while offering continuous loading capabilities and integrated reagent cooling, allowing for nonstop operation.

A solid operational. Performance is driven by a strong levels of innovation, which allow us to consistently introduced important new offering to our customers.

1 example of this, from the second quarter was the launch of our new IBS I20, analytical Random Access platform. Introduced through our Euro immune business.

Which is part of our immuno Diagnostics portfolio.

This car and FDA listed device represents a breakthrough in specialty testing automation.

Allowing Laboratories to consolidate up to 20 different analytes across 6 diagnostic Specialties on a single instrument.

The IBS I20 platform processes up to 140 tests per hour and enables labs to transition from manual or semi-automated methods to fully automated semi luminescence, amino acid, processing while offering continuous loading capabilities and integrated reagent Cooling.

Prahlad Singh: We believe this solution addresses critical laboratory needs for efficiency, versatility, and reliability in specialty testing areas, including endocrinology, allergy, Alzheimer's disease, autoimmune, and infectious diseases. as well as Therapeutic Drug Monitoring. The launch includes a strong initial lineup of assays, with many more expected to be added over the remainder of the year and into 2026. Since launching in May, initial customer feedback from installations in key labs across Europe is quite promising, and we continue to believe the I-20 will be a significant part of our chemiluminescence growth strategy in the coming years. Our ongoing innovation and strong execution are not only robust, but also rooted in sustainability and integrity.

Allowing for Non-Stop operation.

We believe this solution addresses critical laboratory needs for efficiency. Versatility and reliability. In specialty. Testing areas including Endocrinology allergy Alzheimer's disease, autoimmune and infectious diseases.

As well as therapeutic drug monitoring.

The launch includes a strong initial lineup of assays, with many more expected to be added over the remainder of the year and into 2026.

Since launching in May initial customer feedback from installations in key Labs across Europe is quite promising and we continue to believe the I20 will be a significant part of our chamayal luminous growth strategy in the coming years.

Prahlad Singh: Our continuous improvement in areas impacting our sustainability, governance, and social priorities was recognized recently by MSCI, who increased their overall ESG rating for Revity to AAA. which is the highest level. I see this progress and action every day at the company, but I'm proud that our achievements are being recognized externally as well. As we look ahead to the second half of the year, a number of our businesses are positioned to continue to perform at a very high level . such as our signals software franchise and our reproductive health. which is starting to benefit from the ramp up in July of sequencing volumes as part of the contract we were recently awarded from Genomics England for its generation study.

Our ongoing Innovation and strong execution are not only robust but also rooted in sustainability and integrity.

Please, the overall ESG rating for ravity to AAA.

Which is the highest level.

I see this progress in action every day at the company, but I'm proud that our achievements are being recognized externally as well.

As we look ahead to the second half of the year, a number of our businesses are positioned to continue to perform at a very high level.

Such as our signals software franchise and our reproductive Health business.

Prahlad Singh: It's also encouraging to see our life science reagents and instruments businesses demonstrating continued stability so far this year with a full year outlook for them remaining unchanged. We expect these promising signs to be partially offset by the new and unexpected challenges in our China immunodiagnostics business as previously mentioned. Overall, the current macroeconomic and regulatory environment continues to present challenges. but it's in precisely this kind of environment that we've consistently risen to the occasion and thrive. just as we have throughout the past five years of Revity's remarkable transformation. Our continued focus on executing at a high level on those items which are in our control while capitalizing on opportunities and managing through hurdles as they arise has allowed Revvity to consistently outperform most of our peers over the last two and a half years.

Which is starting to benefit from the ramp up in July of sequencing volumes. As part of the contract, we were recently awarded from genomics England for its generation study.

It's also encouraging to see our life science, reagents and instruments businesses demonstrating continued stability. So far this year with our full year. Outlook for them remaining unchanged.

We expect these promising signs.

To be partially offset by the new and unexpected challenges. In our China, immuno Diagnostics business. As previously mentioned,

overall, the current macroeconomic and Regulatory environment continues to present challenges

But it's in precisely this kind of environment that we've consistently risen to the occasion and thrived.

Just as we have throughout the past 5 years of revvies remarkable transformation.

Our continued focus on executing at a high level on those items which are in our control while capitalizing on opportunities and managing through hurdles as they arise.

Prahlad Singh: which is something I expect will continue in the years to come. This is all because of the dedication of our 11,000 colleagues around the world who are embracing the impossible to help improve lives everywhere.

Has allowed gravity to consistently outperform. Most of our peers over the last 2 and a half years.

Which is something I expect will continue in the years to come.

This is all because of the dedication of our 11,000 colleagues around the world.

Who are embracing the impossible to help improve lives everywhere.

Maxwell Krakowiak: With that, I will now turn the call over to Matt. Thanks, Prahlad, and good morning, everyone. As Prahlad mentioned, we continue to show good performance in the second quarter, despite facing new and existing challenges, which were unanticipated at the start of the year. From funding levels for academic research, to country and industry specific tariffs, and now new challenges from regulations which are limiting diagnostics volumes in China, our industry has faced many obstacles so far this year. Considering these developments, we have shown a strong ability to navigate them and respond quickly, allowing us to still deliver strong performance overall, as was evident in our second quarter results.

With that, I will now turn the call over to Matt.

Thanks for lot and good morning everyone.

As Perla mentioned, we continue to show good performance in the second quarter despite facing new and existing challenges, which were unanticipated at the start of the year.

From funding levels for academic research, to Country and Industry, specific tariffs. And now new challenges from regulations, which are limiting Diagnostics volumes in China. Our industry is faced many obstacles. So far this year,

Maxwell Krakowiak: I'll start on tariffs. As we first mentioned last quarter, we have quickly taken significant operational actions to largely mitigate their impact, which were executed upon as expected and on time during the second quarter. While some tariffs were rolled back during the quarter, particularly with China, this relief did not meaningfully change their overall impact on us given our mitigation efforts are operational in nature and still moving forward as previously planned. While the tariff situation continues to evolve, as evidenced by yesterday's announced preliminary pact between the U.S. and Europe, our updated outlook assumes the tariffs that are in place as of last Friday, the 25th.

Considering these developments, we have shown a strong ability to navigate them and respond quickly, allowing us to still deliver strong performance overall as was evident in our second quarter results.

I'll start on tariffs, as we first mentioned last quarter, we have quickly taken significant operational actions to largely mitigate their impact, which were executed upon as expected. And on time during the second quarter,

while some tears were rolled back during the quarter, particularly with China, this relief did not meaningfully change their overall impact on us, given our mitigation efforts, our operational in nature and still moving forward as previously planned.

While the Tariff situation continues to evolve as evidenced by yesterday's announced preliminary pact between the US and Europe.

Maxwell Krakowiak: As it pertains to our updated outlook for the year, we are expecting continued stability from our pharma and biotech customers and the headwinds our academic and government customers are facing in the coming months.

Are updated Outlook assumes. The tariffs that are in place as of last Friday, the 25th of July

Maxwell Krakowiak: Thank you for listening. Our assumptions for growth within our life sciences segment remain unchanged within our updated outlook and guidance. However, as Prahlad mentioned, since the start of May, we have begun experiencing increasingly larger volume-related headwinds in our immunodiagnostics business in China, which we now expect will continue over at least the remainder of the year. While we were able to mitigate and offset most of the impact from these DRG changes during the second quarter itself, as we move into the second half of the year, we are lowering our expectations for this business in China to account for the trends we are seeing in July, which we anticipate will continue over the coming months.

As it pertains to our updated outlook. For the year. We are expecting continued stability from our Pharma and biotech customers. And the headwinds are academic and government customers are facing to continue.

Our assumptions for growth within our life sciences, segments remain unchanged within our updated outlooking guidance.

however, as Pride

while we were able to mitigate and offset most of the impact from these drg changes, during the second quarter itself,

Maxwell Krakowiak: As a result, our immunodiagnostic business in China, which represents approximately 6% of total company revenue, is expected to now be down high teens for the full year. Our updated outlook for this business in China is driving the entirety of the change in our overall outlook for the Incorporating the impact of these new pressures, we are now looking for organic growth this year for the total company to be in the range of 2 to 4%, which is slightly below our previous expectations. While this is impacting most diagnostic players in the market, including domestic competitors, we have already begun to take additional near and longer term cost actions to help offset the impact to our bottom line.

As we move into the second half of the year, we are lowering our expectations for this business in China to account for the trends, we are seeing in July, which we anticipate will continue over the coming months.

As a result, our immuno diagnostic business in China which represents approximately 6% of total company. Revenue is expected to now be down High Teens for the full year.

Our updated outlook for this business. In China, is driving the entirety of the change in our overall, outlook for the company.

This year, for the total company to be in the range of 2 to 4%.

Which is slightly below our previous expectations.

While this is impacting, most diagnostic players in the market including domestic competitors.

Maxwell Krakowiak: Those actions that are quicker to implement, including right sizing the business in China, along with other immediate discretionary expense reduction. are now factored into our updated outlook. In addition to these near-term actions, we are also taking additional structural actions that, given their scope, will take into next year to be fully implemented. While we are actively managing and offsetting a significant portion of the bottom line impact, we do expect a drop in volume and some margin rate headwinds from recent changes in FX. have a modest impact on our overall operating margins and adjusted EPS for the year.

We have already begun to take additional near and longer-term cost actions to help offset the impact to our bottom line.

Those actions that are quicker to implement including right sizing the business in China along with other immediate discretionary expense, reductions

Are now factored into our updated Outlook.

In addition to these near-term actions, we are also taking additional structural actions that given their scope will take into next year to be fully implemented.

Maxwell Krakowiak: I will provide additional details on our updated outlook in a moment, but the net impact of this is we now expect our 2025 adjusted earnings per share to be in a range of $4.85 to $4.95, down 1% from our prior outlook.

While we are actively managing, and offsetting a significant portion of the bottom line impact, we do expect the drop in volume and some margin rate headwinds from recent changes in FX to have a modest impact on our overall, operating margins and adjusted EPS for the year.

Maxwell Krakowiak: Now turning to the specifics of our second quarter performance. Overall, the company generated revenue of $720 million in the quarter, resulting in 3% organic. FX was a 1% tailwind to growth and we again had no incremental contribution from While FX became more favorable to our top line as the quarter progressed, given the severity of the changes in rates and their geographical dispersion, the change in the top line impact from FX is having a minimal corresponding impact to our adjusted netting . both in the second quarter and in our current outlook for the remainder of the year.

I will provide additional details on our updated Outlook in a moment, but the net impact of this is we now expect our 2025 adjusted earnings per share to be in a range of $4.85 to $4.95 down 1% from our prior Outlook,

Now, turning to the specifics of our second quarter performance.

Overall, The company generated revenue of 720 million in the quarter, resulting in 3%, organic growth.

FX was a 1% Tailwind to growth and we again had no incremental contribution from acquisitions.

While FX became more favorable to our Topline as the quarter progressed.

Given the severity of the changes in rates and their geographical dispersion the change in the Topline impact from FX is having a minimal corresponding impact to our adjusted net income.

Maxwell Krakowiak: As I mentioned, this is generating some pressure on our gross and operating margin rate for the year, given the associated increase in revenue dollars is without a corresponding increase in gross and operating profit dollars. As it relates to our P&L, we generated 26.6% adjusted operating margins in the quarter, which were down 210 basis points year-over-year and in line with our Our underlying operating margin performance was better than we had anticipated, as FX movements were a headwind to our margin rate and the impact from tariffs were in line with our expectations. Despite the changes that occurred midway through the quarter.

Both in the second quarter and in our current outlook for the remainder of the year.

As I mentioned, this is generating, some pressure on our gross and operating margin rate for the year. Given the associated increase in Revenue dollars is without a corresponding increase in Gross and operating profit dollars.

As it relates to our pnl. We generated 26.6% adjusted operating margins in the quarter, which were down to 210 basis points year-over-year and in line with our expectations

Maxwell Krakowiak: Looking below the line, our adjusted net interest and other expenses were $20 million in the quarter, which was modestly impacted by the increased share repurchase activity year-to-date, resulting in lower interest earnings on our cash balance. Our adjusted tax rate was 19.1% in the quarter, which was slightly lower than expected due to the favorable impact of recent tax planning initiatives. We also continue to remain active with our share repurchase program and average 117.5 million diluted shares in the quarter, which was down over two and a half million shares sequentially. This all resulted in our adjusted EPS in the second quarter being $1.18, which was $0.04 above our expectations.

Our underlying operating margin performance was better than we had anticipated. As FX movements were headwind to our margin rate and the impact from terrorists were in line with our expectations. Despite the changes that occurred Midway through the quarter.

Looking below the line, our adjusted net interest in other expenses were 20 million in the quarter which was modestly impacted by The increased share repurchase activity year to date, resulting in lower interest earnings on our cash balances, our adjusted tax rate was 19.1% in the quarter which was slightly lower than expected. Due to the favorable impact of recent tax planning initiatives.

We also continue to remain active with our share repurchase program and average 117.5 million diluted shares in the quarter, which was down over 2 and a half million shares sequentially.

This all resulted in our adjusted EPS in the second quarter, being a dollar and 18 cents, which was 4 cents above our expectations.

Maxwell Krakowiak: Moving beyond the P&L, we generated a free CASO of $115 million in the quarter, resulting in 83% conversion of our adjusted net income. On a year-to-date basis, our $234 million of free cash flow equates to a solid 90% conversion of our adjusted net income. As we move into the back half of the year, I expect our absolute cash flow and its conversion to continue to remain strong and solidly above our 85% long-term expectations. Regarding capital deployment, we have stayed active so far this year with our buyback program, as we repurchased $293 million worth of shares in the second quarter.

Moving beyond the p&l. We generated 3, cash flow of 115 million in the quarter resulting, in 83% conversion of our adjusted, net income.

On a year-to-date basis are 234 million of free cash flow equates to a solid. 90% conversion of our adjusted net income.

As we move into the back, half of the year, I expect our absolute cash flow and its conversion to continue to remain strong and solidly above our 85%, long-term expectations.

Maxwell Krakowiak: As it relates to our balance sheet, we finished the quarter with a net debt-to-adjusted EBITDA leverage ratio of 2.6 times, with 100% of our debt being fixed rate, with a weighted average interest rate of 2.6%, and a weighted average maturity out another seven years. As we evaluate capital deployment, we will continue to remain flexible in order to capitalize on the highest return opportunities. while maintaining our investment grade credit rating.

Regarding Capital deployment, we have stayed active so far this year with our buyback program as we repurchase 293 Million worth of shares in the second quarter.

As it relates to our balance sheet, we finish the quarter with a net debt to adjusted Evita leverage, ratio of 2.6 times with a 100% of our debt being fixed rate. With a weighted average interest rate of 2.6% and a weighted average maturity out another 7 years.

Unities, while maintaining our investment grade credit rating.

Maxwell Krakowiak: I will now provide some commentary on the second quarter business trends, which is also highlighted in the quarterly slide presentation on our investor relations website. The 3% growth in organic revenue in the quarter was comprised of 4% growth in our life sciences segment and 2% growth in diagnostic. Geographically, we grew in the mid-single digits in both the Americas and Europe, while Asia declined in the mid-single digits, with China also declining mid-single digits. From a segment perspective, our life sciences business generated revenue of $366 million in the quarter. This was up 5% on a reported basis and 4% on an organic basis.

I will now provide some commentary on the second quarter business Trends, which is also highlighted. In the quarterly side presentation on our investor relations website.

The 3% growth in organic Revenue in the quarter was comprised of 4% growth and our life sciences segment and 2% growth in Diagnostics.

Geographically. We grew in the mid single digits in both the Americas and Europe while Asia declined in the mid single digits with China also declining mid single digits

From a segment perspective, our life sciences business generated revenue of 366 million in the quarter.

Maxwell Krakowiak: From a customer perspective, sales to pharma and biotech customers grew in the mid single digits. Whereas sales in the academic and government customers declined in the low single digits in the quarter. Our life sciences solutions business declined in the low single digits in the quarter overall, with declines in instrumentation partially offset by continued growth and re-ageing. Our Signal software business was up a little over 30% year-over-year organically in the quarter, and as Prahlad mentioned, had its largest quarter of orders in its history. The business also continued to perform exceptionally well from an ARR, APV, and net retention rate perspective as well, with all metrics solidly above levels from last year.

This was up 5% on a reported basis and 4% on an organic basis.

From a customer perspective, sales to Pharma and biotech customers. Grew in the mid single digits.

Whereas sales in the academic and government customers declined in the low single digits, in the quarter.

our life sciences Solutions, business decline in the low single digits, in the quarter, overall with declines in instrumentation, partially offset by continued growth in reagents

Our signal software business was up a little over 30% year-over-year organically in the quarter and as Perla mentioned had its largest quarter of orders in its history.

The business also continued to perform exceptionally well from an ARR APV and net retention rate perspective as well with all metrics solidly above levels from last year.

Maxwell Krakowiak: In our diagnostics segment, we generated $354 million of revenue in the quarter, which was up 3% on a reported basis and 2% on an organic basis. From a business perspective, our immunodiagnostics business grew low single digits organically during the quarter, which was in line with our expectations, despite China declining more than we expected and being down in the low teens. Excluding China, the other 80% of our immunodiagnostics business continues to perform very well, especially in Americas, which grew organically in the mid-teens, while immunodiagnostics in Europe grew in the solid mid-single digits. Our reproductive health business grew low, single digits, organically in the quarter.

And our diagnostic segment. We generated 354 million of Revenue in the quarter which was up, 3% on a reported basis and 2% on an organic basis.

From a business perspective, our immuno Diagnostics business grew, low single digits organically during the quarter, which was in line with our expectations, despite China declining more than we expected and being down in the low tees.

Excluding China, the other 80% of our immuno Diagnostics. Business continued to perform very well, especially in the Americas, which grew organically in the mid teens while Muno Diagnostics in Europe. Grew in the solid mid single digits.

Maxwell Krakowiak: Newborn screening continued to perform well and grew high single digits globally, which was driven by outstanding operational and commercial execution, giving continued headwinds from global birth rates, which have again intensified so far this year, particularly in China. As it pertains to China specifically, overall, we incurred a mid-single-digit organic decline in the second quarter, driven by our diagnostics business being down in the low double digits, as it began to face the impact of the DRG-related declines in volume. This was partially offset by strong mid-single-digit growth in our life sciences business in China as we saw improvements in year-over-year growth in both reagents and instruments in the region.

Our reproductive Health business, grew low single digits to organically in the quarter.

Newborn screening continue to perform well and grew High, single-digits globally, which was driven by outstanding, operational and Commercial execution. Giving continued headwinds from Global birth rates, which have again intensified so far this year particularly in China.

As it pertains to China. Specifically overall, we incurred a mid single-digit, organic decline in the second quarter driven by our Diagnostics business, being down in the low double digits, as it began to face the impact of the drg related declines in volume.

Maxwell Krakowiak: Now moving on to guidance. As mentioned, we are updating our Organic Growth Outlook for the back half of the year to account for the new volume-related pressures we are seeing from DRG changes in China and our diagnostics This change is leading to our total company organic growth outlook for the year to now be in the range of 2 to 4%. We continue to expect our life sciences segment to grow in the low single digits, unchanged from our prior outlook, but we now expect diagnostics to also grow in the low single digits, down from our previous mid single digits outlook.

This was partially offset by strong, mid single-digit growth in our life sciences business in China. As we saw improvements in year-over-year growth in both reagents and instruments in the region.

Now, moving on to the guidance.

As mentioned, we are updating our organic growth outlook for the back half of the year to account for the new volume related pressures. We are seeing from drg changes in China and our Diagnostics business.

This change is leading to our total company organic growth outlook for the year, to now be in the range of 2 to 4%.

Maxwell Krakowiak: With the continued weakening of the dollar so far this year, we now anticipate the impact from FX to be an approximately 1% tailwind to revenue for the full year, compared to our previous assumption of it being a 50 basis point headwind. As mentioned, given the makeup of the changes in FX, we do not expect it to have a material flow through in our P&L for the year. We expect these changes to our outlook for organic growth and FX to result in our total revenue this year to now be in the range of $2.84 to $2.88 billion overall.

We continue to expect our life sciences segment to grow in the low single digits unchanged from our prior Outlook. But we now expect Diagnostics to also grow in the low single digits down, from our previous mid single digits Outlook.

With the continued weakening of the dollars. So far this year. We now anticipate, the impact from FX to be an approximately 1% Tailwind to revenue for the full year, compared to our previous, Assumption of it, being a 50 basis, point headwind.

As mentioned given the makeup of the changes in FX, we do not expect it to have a material flow through in our p&l for the year.

We expect these changes to our outlook for organic growth and FX to result in our total revenue this year to now be in the range of 2.84 to 2.88 billion dollars. Overall

Maxwell Krakowiak: Moving down the P&L, we now expect our adjusted operating margins to be in a range of 27.1 to 27.3 percent, which is down from our prior outlook due to the changes in FX and the impact from lower volume of high margin diagnostics tests, which is being partially offset by the additional cost actions we are currently implementing. We expect the more significant structural cost actions we are beginning to take to be fully implemented in 2026. We anticipate the impact from these actions will allow us to offset the incremental margin pressures we are now facing this year and to be able to enter next year with a 28% operating margin baseline, which we would then expect to further expand upon commensurate with the level of organic growth we experience.

High margin Diagnostics tests which is being partially offset by the additional cost actions. We are currently implementing.

We expect the more significant structural cost actions. We are beginning to take to be fully implemented in 2026.

Maxwell Krakowiak: Consequently, because of these initiatives, we anticipate our overall operating margin expansion next year to be greater than what we would typically be expected in a given year, enabling us to recoup the impact from the new headwinds we are facing this year. Below the operating line, we now expect our net interest and other expense to be around $80 million this year, driven by some incremental pressure from lower interest income. We are continuing to make good progress with our tax planning initiatives and now expect our adjusted tax rate this year to be approximately 18% down from our prior 19% outlook and the 20% we had assumed at the beginning of the year.

We anticipate the impact from these actions will allow us to offset the incremental margin pressures. We are now facing this year and to be able to enter next year with the 28%, operating margin Baseline, which we would then expect to further expand upon commensurate with the level of organic growth. We experience

Consequently because of these initiatives we anticipate our overall operating margin expansion. Next year to be greater than what we would typically be expected in a given year. Enabling us to recoup the impact from the new headwinds, we are facing this year.

Below the operating line. We now expect our net interest in other expense to be around $80 million this year. Driven by some incremental pressure from lower interest income.

Maxwell Krakowiak: With our increased share buyback activity, we now also expect an average diluted share count of approximately 117 million for the year overall. This all results in our adjusted earnings per share for the year, expected to be a range of $4.85. $4.95 Regarding our outlook for the third quarter, we anticipate organic growth to be in the zero to two percent range, resulting in total expected revenue in the range of $690 million to $705 million. We anticipate our adjusted operating margins to be approximately 26% in the third quarter and we are assuming a tax rate of approximately 18% with roughly 116 million average diluted shares outstanding for the quarter.

We are continuing to make good progress with our tax planning initiatives. And now expect our adjusted tax rate, this year to be approximately 18% down from our prior 19% Outlook. And the 20% we had assumed at the beginning of the year.

With our increased share buyback activity. We now also expect an average diluted share count of approximately 117 million for the year overall.

this all results in our adjusted earnings per share for the year expected to be at a range of 4.85 to 4.95

regarding our outlook for the third quarter. We anticipate organic growth to be in the zero to 2% range, resulting in total expected Revenue in the range of 690 million to 705 million

Maxwell Krakowiak: We expect this to result in our adjusted EPS in the third quarter to be in the range of $1.12 to $1.14.

We anticipate our adjusted operating margins to be approximately 26% in the third quarter. And we are assuming a tax rate of approximately 18% with roughly 116 million, average diluted shares outstanding for the quarter.

Maxwell Krakowiak: Overall, we performed well in the second quarter, despite facing new and existing challenges, which we are actively working to counter and offset. Our levels of innovation and investment remain strong. which when combined with the additional cost actions we are taking positions us well to execute at a high level through all market environments while always still delivering for our customers.

We expect this to result in our adjusted EPS in the third quarter to be in the range of a dollar and 12 cents to a dollar and 14 cents.

Overall, we perform well in the second quarter despite facing new and existing challenges, which we are actively working to counter and offset.

Our levels of innovation and investment remain strong.

Which when combined with the additional cost actions, we are taking positions us well to execute at a high level through all Market environments, while always still delivering for our customers.

Unknown Executive: With that, operator, we would now like to open up the call for questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask a question, please ensure your device is unmuted locally.

With that operator, we would now like to open up the call for questions.

Thank you, if you would like to ask a question please press star. Followed by 1 on your telephone keypad. If you would like to withdraw your question, please press star followed by 2.

When preparing to ask your question, please, ensure your device is unmuted locally.

Vijay Kumar: First question comes from Vijay Kumar with Evercore ISI. Your line is open, please go ahead. Hi guys, thanks for taking my question.

First question comes from V, Kumar with evercore isi, your line is open. Please go ahead.

Vijay Kumar: Maybe first one on the guidance change here on organic. I know you mentioned this was China, China, this change in DRG. Was that anything else beyond DRG, anything on VVP? Because when we're doing the math, I think the exit rate is low singles. Should that be the ballpark here for fiscal 26? You know, given some of these headwinds should persist in in 26.

Hi guys, thanks for taking my question. Um maybe uh first 1 on, on the guidance. You ensure on organic um

I I I know uh, you mentioned this was China. Um, China, this change in DRT. Was that anything else Beyond DRC, any anything on vbp? Because when we're doing the math, I think the exit rate is low singles. It should should that be the ballpark here for fiscal 26. Um, you know, G given some of these headwinds should persist in in 26.

Maxwell Krakowiak: Hey, good morning, Vijay. You know, essentially a majority of what we are seeing is from DRG. You know, late April, this policy went into effect, which is called the de-bundle policy, that is specifically impacting the multiplex tests that we have. You know, in the mid to longer term, you know, the way to think of it is, you know, with autoimmune testing, you look for a needle in a haystack. And essentially, with the de-bundling policy, you know, it lowers the test volumes, which essentially means that they have to look for a needle in half the haystack, is one way to think of it.

Hey uh good morning Vijay. You know essentially a majority of what we are seeing is from drg. You know late April this policy went into effect which is called the D bundle policy that is specifically impacting the multiplex tests that we have.

You know, in the mid to longer term, you know, the way to think of it is, you know, with autoimmune testing, you look for a needle in a h stack.

Maxwell Krakowiak: But really, what it does is in the longer run, we think that this potentially offsets because there'll be more single-plex tests that will be needed, which also tend to be more expensive on a per-assay basis. So from a company perspective, we are working across with top leaders, KOs, doctors, and hospitals to see if this could potentially reverse some of the changes because the impact that it has on patient care. But majority of what you see is from DRG. Understood.

And essentially with the Deep bundling policy, you know, it lowers the test volumes which essentially means that they have to look for a needle in half the haze stack, is 1 way to think of it. But really, what it does is in the longer, uh, run. We think that this potentially offsets because there'll be more single Plex tests that will be needed, which also tend to be more expensive on a poor assay basis.

Thought leaders Kos, doctors and hospitals to see if this could potentially, you know, reverse some of the changes because the impact that it has on patient care but majority of what you see is from drg.

Maxwell Krakowiak: And then, Max, maybe one for you on the margin change. I think you made some comments about 26 margins being above your typical range, right? Can you just remind us, what is your typical range? What volumes did they assume? And, you know, when you think about margins for next year being slightly better on cost actions, is that assuming, what kind of volumes or revenue growth is that assuming?

Understood and then Max maybe 1 for you on, on the margin. Uh, change. I think you made some comments about, um,

Maxwell Krakowiak: Thank you. Yeah, hey Vijay. So look, I think you kind of mentioned it yourself, right? I think the intent of the comments was to establish that next year, our baseline will be a 28% operating margin. And then from there, depending upon the level of organic growth, we would have the corresponding margin expansion. As a reminder, our LRP, right, assumes a couple hundred basis points above market growth, which if you call it mid single digits, you know, would be a high single digit organic growth. And with that growth level, we would expect to expand margin 75 basis points in a normal year.

About 26 uh margins being above your typical range, right? Can you just remind us what is your typical range? Uh what volumes did they assume and and uh you know when you think about margins for next year being slightly better on cost actions is that assuming uh what kind of volumes of Revenue growth is that assuming thank you

Maxwell Krakowiak: If growth is, you know, mid single digits for us next year, that would probably be closer to a 50 basis points margin expansion. And so I think that's been the framework we've provided. And I think, you know, again, the intention on this call was just to establish that our baseline OM for next year will be starting at, you know, 28% with these structural cost actions.

Yeah ABJ. Um so look I think you kind of mentioned it yourself, right. I think the the intent of the comments was to establish that next year. Our Baseline will be a 28%, operating margin and then from there depending upon the level of organic growth, we would have the corresponding margin expansion as a reminder our lrp, right assumes, a couple hundred basis points above market growth, which if you call it, mid single digits, you know, it would be a high single digit organic growth and with that growth level, we would expect to expand margins. 75 basis points in a normal year. If growth is you know, mid single digits for us next year, that would probably be closer to a 50 basis points margin expansion. And so, I think that's been the framework. We've

Provided and I think, you know, again the intention on this call was just to establish that our Baseline om for next year will be starting at you know, 28% with these structural cost actions.

Vijay Kumar: Understood. Thank you, guys.

Understood. Thank you, guys.

Douglas Schenkel: We now turn to Douglas Schenkel with Wolf Research. Your line is open. Please go ahead. Good morning. I just want to ask questions on two topics. First, this is guidance assumptions for this year from a revenue pacing standpoint, and then a follow up on China. So, on guidance, it looks like you're assuming similar revenue pacing to last year. I just want to make sure that's right. And if so, what is embedded into guidance for things like a year-end budget flush and NIH funding? So, that's on guidance.

We now tend to talk Shankle with wolf research. Your line is open, please go ahead.

Good morning. Uh, I just want to ask uh questions on 2 topics. First is this guidance assumptions for this year from a revenue, patient standpoint and then a follow-up on China.

Douglas Schenkel: And then on China, the incremental reimbursement pricing headwinds is just getting going. When would you expect this to annualize? Do you have visibility on whether or not this is the last cut? And when would a move to single marker panels start to help your business? Thank you.

So um, on guidance it looks like you're assuming similar Revenue patient to last year. I just want to make sure that that's right. And if so what is embedded into guidance for um, things like a year-end budget flush, and um NIH funding so that that's on guidance. And then on China,

Um, the incremental reimbursement pricing, headwinds is just getting going. When would you expect this to annualize? Um, do you have visibility on whether or not? This is the last cut and when would a move to Signal, uh, sorry single marker, panels start to help your business. Thank you.

Maxwell Krakowiak: Hey, Doug, I'll take the first question there on the revenue pacing. You know, I think as you look at the, you know, sort of Q3 versus Q4 dynamic in the back half here, I would say it is sort of normal seasonality, just a high single digit ramp in both our life sciences solution and our diagnostics business. The other two, I would say sort of unique, you know, differences for us as a company is one, you do have the ramp up of gel in the fourth quarter. And then two, although the signals organic growth will be lower in the fourth quarter, it is always a larger quarter from a volume perspective for there.

Maxwell Krakowiak: So that is adding, you know, additional ramp between Q3 and Q4.

Maxwell Krakowiak: And Doug, to your second question, you know, as I said, we started seeing the impact of this in late April, early May. So we would like to, you know, likely to see an impact continue till the anniversary of this, you know, or as you said, potentially the regulation is either rolled back or altered. Just to put it in perspective, you know. Thank you. IDX in China is now less than 6% of our total revenue and will likely be less than 5% in 2020.

Yeah, hey Doug, I'll take the, uh, the first question there on the the revenue pacing. You know, I think as you look at the, you know, sort of Q3 versus Q4 dynamic in the back half here, I would say it is sort of normal seasonality, um, just a high single digit ramp in both our life sciences solution, and our Diagnostics business. The other 2, I would say sort of unique, um, you know, differences for us as a company is 1. You do have the ramp up of gel in the fourth quarter and then 2 although the signals organic growth will be lower in the fourth quarter. It is always a larger quarter from a volume perspective for there. So that is adding um you know, additional ramp between Q3 and Q4.

And back to your second question, you know, as I said, we started seeing the impact of this in.

April early May

So we would like to, you know, likely see to see an impact continue till the anniversary. This, you know, or as you said potentially the regulation is either rolled back or altered, you know, just to put it in perspective. Idx, in China is now less than 6% of our total revenue and will likely be less than 5% in 26.

Thank you.

Dan Brennan: Our next question comes from Dan Brennan with TD Cohen. Your line is open, please go ahead. Great, thank you. Maybe just on the lifetime side, since that did well in the quarter, you kind of beat your expectation. made some positive comments. I'm wondering, could you give any, any color underneath the hood about reagents and instruments? I know you said grew and were weak. And there wasn't a contemplation to raise the guidance there at all.

Our next question comes from Don Brennan with TD Cohen. Your line is open. Please go ahead.

Great. Thank you. Um, maybe it's on the lifetime side so that did well in the quarter. You kind of beat your expectation.

Prahlad Singh: Just kind of wondering if you could speak to, you know, kind of overall the trends that you were seeing, particularly on biopharma. Maybe I'll start with the trends that we are seeing, and then Max, you can jump in. I think, you know, Ben, if you just think of it, as we've said, pharma biotech continues to show stability, you know, mid single digit growth in the second quarter. And just to put it in perspective, our life sciences reagents business has now grown five consecutive quarters. So I think that bodes well, as we look forward, obviously, there continues to be impact on the capital's equipment spend, as we are seeing.

Made some positive comments, I'm wondering, could you give any any color underneath the heard about reagents and instruments? I know you said grew and we're weak. And there was an a contemplation to raise the guidance there at all, just kind of wondering if you could speak to, you know, kind of overall, the trends that you were seeing particularly on biofarma.

Maxwell Krakowiak: But overall, we continue to be optimistic with five consecutive quarters of reagents growth that we have seen in the business.

Our life sciences reagents business has now, grown 5 consecutive quarters. So I think that bodes. Well, as we look forward, obviously, there continues to be impact on the capital's equipment, spend, as we are seeing. But overall, we continue to be optimistic with 5 consecutive, quarters of reagents growth that we have seen in the business.

Maxwell Krakowiak: Okay, terrific. So maybe just on the reproductive health business. Sounds like the newborn screening business continues to do really well. Just kind of remind us. How are you thinking about that business in the back half of the year, Max? I know you alluded to the gel impact. Just kind of can you frame exactly what we're thinking about by the fourth quarter and kind of what's the visibility on that? Thank you. Yeah, I think when you look at the reproductive health business, you know, in the first half here, it grew low single digits. Again, we mentioned on the call, the newborn screening business continues to perform incredibly well, despite continued global birth rate pressures.

Okay, um, terrific. So maybe just on uh, the reproductive Health business.

Sounds like the newborn screening business continues to do really well, just kind of remind us.

How you're thinking about that business in the back half of the year and Max? I know you alluded to the gel impact just kind of. Can you frame exactly what we're thinking about by the fourth quarter and kind of what the visibility on that? Thank you?

Maxwell Krakowiak: I would say, as you look at the back half, the third quarter will probably be similar levels of what you saw in the first half, as gel is still ramping up. And then in the fourth quarter, we do expect reproductive health to grow in the high single digits, which is really a combination of one, ramp up of gel, and two, there's a little bit of a comp dynamic in the fourth quarter. But that essentially sums up our expectations for the second half. In terms of visibility on gel, I'd say the launch is going incredibly well so far.

Yeah, um, I think when you look at the reproductive Health business, you know, in the first half here at grew low single digits, again, we mentioned the call, the newborn screening business continues to perform incredibly. Well, despite continued Global birth rate pressures. I would say as you look at the back, half the third quarter will probably be similar levels of which you saw on the first half is gel, is still ramping up and then in the fourth quarter we do expect reproductive Health to grow in the high single digits um which is really a combination of 1, the ramp up of gel and then 2 there's a little bit of a a comp Dynamic uh in the fourth quarter. Uh but that essentially sums up our expectations for the second half.

Maxwell Krakowiak: Again, we're almost now almost a full month into it. And we've got, you know, pretty good levels of visibility into the expected volume ramps here for the rest of the year.

In terms of visibility on gel, I say the launch is going incredibly well. So far again, we're almost now almost a full month into it. Uh, and we've got, you know, pretty good levels of visibility into the expected volume ramps here for the rest of the year.

Puneet Souda: Great, thank you.

Great. Thank you.

Puneet Souda: We now turn to Puneet Souda with Lee Rink Partners. Your line is open, please go ahead. Yeah, hi, Prahlad and Max, thanks for taking my question. So just briefly on the software side, can you talk a little bit about how much of that was installed in new contracts versus continuing licensing and service? And what's the expectation of growth for software in the second half? And, you know, remarkably strong here, but wondering how sustainable that is? And why is that not a tailwind to gross margins? Yeah.

We now send super need suda with Lee rink Partners. Your line is open. Please go ahead.

Uh, yeah. Hi Pro. Um, and Max thanks for taking my questions. So, um, uh, just briefly on on the software side. Can you talk a little bit about, um, how much of that was installed as a new contracts versus continuing, um, licensing and Service? Uh, and what's the expectation of growth for software and the second half and and, you know, remarkably strong here but wondering how sustainable that is and why it was, why is that not a Tailwind to gross margins?

Puneet Souda: Hey, Puneet, you know, look, as I mentioned, as we mentioned in our prepared remark, our signals software business continues to do extremely well. You know, we had record quarters for the orders. You know, this is, I think, the longest, highest we had in the history with, you know, also from a growth perspective, 32% organic growth, you know, but I think it's not really as much as what we look at organic growth, but more around net retention, our ARR and APV. You know, we've had a 21% uplift with 115% net retention in the business. Our APV is grown by 13%.

Yeah. Hey, uh, Pony. You know, look as I mentioned in, as we mentioned, in our prepared remarks, our signals software business continues to do extremely well. You know, we had, uh, recorded quarters for the orders, you know, this is, I think the longest highest we had in the history with the, you know, also from a growth perspective, 32% organic growth, you know? But I think it's not really as much as what we look at organic growth, but more around Net retention, our ARR and APV, you know, we've had a 21% Off plan.

Puneet Souda: That is driven by a strong SaaS booking. You know, we had nearly more than one third of our businesses now SaaS. So overall, you know, when we look at the business, the benefits of the investments that we have made in the business, and as the new product launches come up, that gives us the confidence that this business is continuing to go, you know, grow very well. Got it.

Lift with 115%, net retention in the business. Our APV is grown by 13% that is driven by a strong SAS booking. You know, we had nearly more than 1 third of our businesses now SAS. So overall, you know, when we look at the business, the benefits of the Investments that we have made in the business, and as the new product launches, come up, that gives us the confidence that this business is continuing to go. Uh, you know, grow very well.

Maxwell Krakowiak: Yeah, can you repeat the second question for us? Yeah, margin side, you know, you know, why shouldn't we expect, you know, improved margins from the software side, just given the, you know, generally, those are better margin on the Grisham Archetype. Yeah, I think we're factoring in obviously, the mix of our businesses, as we look at our operating margin, you know, for the year, really what you're having a, you know, an impact of on the operating margin side is the magnitude of the volume drop on what were extremely high margin diagnostic assays for a China immune diagnosis.

Got it. Um and then do you mind repeating that? Yeah. Can you repeat that? Second question for us.

Yeah, margin side. Um, you know, you know why, why, why shouldn't we expect? You know, improved margins from the software side just given the, um, you know, generally those are a better margins.

On the gross margin side.

Yeah, I think it would look, we're factoring in obviously the the the mix of our businesses. As we look at our operating margin, you know, for the year, really, what you're having is, you know, an impact of on the operating margin side is the magnitude of the volume drop on what we're extremely, high margin and diagnostic assets for our China unit, Diagnostics business,

Puneet Souda: Okay.

Puneet Souda: And then, Prahlad, you know, a high-level, an important question for you. You know, I didn't hear as much on the portfolio resiliency as you've talked about in prior calls and the transformation. I mean, diagnostics was supposed to be the support or the ballast in these challenging time and tools, but, you know, it's turning out to be no different than what peers are seeing in the DRG impact in China.

Prahlad Singh: Can you talk a little bit about, you know, where the portfolio is and how do you see the position of your position in China, IDX overall, and your presence in China, and how that fits into the, you know, portfolio mix that, you know, you want to have in terms of the resiliency? Thank you. You know, Puneet, I think, you know, we are very confident and very optimistic with our total portfolio. I mean, we talked about the strength that we have seen in life in our life sciences business, with five consecutive growth, or your five consecutive quarters of growth on reagent from pharma biotech in a tough market environment.

And and your presence in China and how that fits into the, you know, portfolio, mix that um you know you want to have in terms of the resiliency, thank you.

Prahlad Singh: We have a signal software business that has grown 30% plus organic growth in the quarter. Our reproductive health business continues to do very well in a tough birth rate market environment. And even our IDX business outside of China grew very well. I think the fact is that you know, DRG came up and we saw this unexpected debundling policy that was implemented in the middle of the quarter. So our focus really is that how do we address this with KOLs and with, you know, and with hospitals to A, figure out how to reverse these changes, because it is going to have an impact on patient care.

Yeah, Bonita. I think, you know, we are very confident and very optimistic with our total portfolio. I mean, we talked about the strengths that we have seen in life in, in our life sciences business with 5 consecutive growth per year. 5 consecutive quarters of growth on reagent from Pharma biotech, in a tough Market environment. We have a signal software business that has grown 30% Plus organic growth. In the quarter, our reproductive Health business continues to do very well in a tough birth rate Market environment and even our idx business outside of China grew very well.

Puneet Souda: You know, there are many things that have gone and taken place in China around VBP, Sunshine Act, but really the one that has impacted us is DRG. And our focus really is to ensure that we address that because in the longer term, we are confident this is going to impact patient care. Okay, thank you.

I think the fact is that, you know, the drg came up and we saw this unexpected debate policy, that was implemented in the middle of the quarter. So our Focus really is that how do we address this with Kos and with the, you know, a and with hospitals to a figure out how to reverse these changes because it is going to have an impact on patient care. You know, there are many things that have gone and taken place in China, around vbp, Sunshine act. But really the 1 that has impacted us is drg. And our Focus really is to ensure that we address that because

In the longer term. We are confident. This is going to impact patient care.

Okay, thank you.

Dan Leonard: Our next question comes from Dan Leonard with UBS. Your line is open, please go ahead. Thank you. I want to make sure I understood the comment on the difficult multi-year comps and immunodiagnostics. Could you elaborate there? Sure, I think when we look at our guidance here for the second half, Dan, if you look at the multi-year stacks between Q3 and Q4 for IDX business outside of China, they're basically the same at low double digits. And so that's what we mean by when we say there's a little bit of a comp dynamic, but on the multi-year basis, they're at the same level between Q3 and Q4.

Our next question comes from Dan Lenard, with UBS your line is open. Please go ahead.

Thank you. I want to make sure I understood the comment on the difficult. Multi-year, comps and amuno Diagnostics. Could you elaborate there?

Sure. I mean, I think when we look at our, our guidance here, for the second half in, if you look at the, the multi-year stacks between Q3 and Q4 for idx, business outside of China, they're basically the same at at low double digits. And so, that's, that's what we mean by. When we say, there's a little bit of a comp Dynamic, but on the multi-year basis there, at the same level between Q3 and Q4.

Dan Leonard: Okay, and a clarification on foreign currency, Max, the foreign currency movements haven't been that dramatic since late April when you last reported. So what's the, I'd just like to better understand that the driver of foreign currency on the EBIT margin percentage, if possible. Yeah. Well, I'd say a couple of things on that. One is that, you know, it was as of March 31st is the FX rates we moved. And I don't know, maybe your definition of materiality, but I think it's been a quite significant weakening of the US dollar from the end of March. So I think it's been pretty material.

Okay. And uh, clarification on foreign currency Max, the foreign currency movements. Haven't been that dramatic since late April, when you, you last reported. So, so, what's the? Um, I just like to better understand that the driver of foreign currency on the ebit margin percentage if possible.

Maxwell Krakowiak: I'd say second, when you look at the operating margin drop, I mean, the biggest pieces I've mentioned, though, is really the volume drop of incredibly high margin assays in our diagnostics business for IDX. Got it. Thank you.

Yeah. Um, well I'd say a couple things on that then 1 is that, you know, it was as of March, 31st, as the FX rates, we we moved and I, I don't know maybe your definition of materiality but I think it's been a a quite significant weakening of the US dollar from the end of March. So I think it's been pretty material. I'd say second when you look at the operating margin drop, I mean the biggest pieces. I've mentioned though is really the volume drop of incredibly high, margin assays, and our Diagnostics business for idx, China.

Got it. Thank you.

Michael Ryskin: We now turn to Michael Ryskin with Revvity. Your line is open. Please go ahead.

Michael Ryskin: Yeah, Mike Ryskin with Bank of America, but close enough, thanks guys, I want to go back on the DRG changes that you talked about, you made a comment a couple times that you think that this could actually lead to a change in how diagnostics is done, you know, with moving away from some of these more multiplex panels going to individual testing, I'm just wondering sort of what makes you think that's the direction it's going to, I mean, couldn't you interpret this as just another step to reduce costs and reduce spending. So while people might, you know, while you might try to replace them with single plex panels, it doesn't seem like it's going to be a durable change if again, the end goal was to cut costs.

We now send you Michael Riskin with rev rev team. Your line is open, please go ahead.

Michael Ryskin: So I don't know if you've seen any evidence for that or any early anecdotes.

Maxwell Krakowiak: Just talk about the long term shift there. Sure.

Uh, yeah, Mike Mike resin on the Bank of America, but close enough. Um, thanks guys. Um, on the, I want to go back on the drg changes. Um, that you talked about, you made a comment a couple times that you think that this could actually lift lead to a change in how Diagnostics is done, uh, you know, with moving away from some of these more. Um, Multiplex panels, going individual testing. I'm just wondering sort of what makes you think that's the direction it's going to. Um I mean can you interpret this as just another step to reduce cost and reduce spending? So while people might you know while you might try to replace them with single Plex plans, if it doesn't seem like it's going to be a durable change. If again the end goal is to um cut costs. So I don't know if you've seen any evidence for that or any error or early anecdotes

I'm just talking about the, the long-term shift their

Maxwell Krakowiak: Hey, Mike, welcome to the team. Good morning. You know, I would just say that you are you're right, you know, the debundling policy of the minimum sufficiency principle, as they say, in the primary driver for this is cost. And that's what we are assuming, that this is going to have an impact and we have assumed in our guidance that this impact will continue until the anniversary of this. The fact of the matter is that as you think from a patient care perspective, you do need to find out what is the cause for the autoimmune disease that a patient might have.

Sure. Hey Mike, welcome to the team. Uh, good morning. Uh

You're right. You know, the Deep bundling policy is a minimum sufficiency Principle as they say, you know, the primary driver for this is cost

and and that's what we are assuming that this is going to have an impact and we have assumed in our guidance that this impact will continue until we anniversary this

Maxwell Krakowiak: So from that perspective, they will eventually have to get a single plex test to confirm. And again, I use the needle in a haystack example to sort of illustrate as to how this plays a role. But you are right. From our perspective, we have assumed that this impact is going to continue, and we will learn from it.

So from that perspective, they will eventually have to get a single Plex test to confirm.

And and again I I use the needle in a haystack example to sort of uh illustrate as to how this plays a role.

But you, you are right from our perspective. We have assumed that this impact is going to continue and we will anniversary this

All right, fair enough. And then on the life sciences side of things, um, you know, the declines and instruments, uh, not super surprising given, uh, what we know about the End Market, just curious. If you could give us anything on an order Trends booked to Bill, I know you don't like to give specifics but just any forward, demand trends, that you saw during the quarter, to give you any sense for how, um, when instruments might return to growth. If they'll return to growth by the end of the year, or if we should really look for that in 2026,

Maxwell Krakowiak: Yeah, hey, Mike. Look, I think as you look at our platform assumptions for the remainder of the year, we're really not anticipating a different market environment than what we've experienced so far in the first half of the year, which will be continued to be a cautious environment, but one that is relatively stably cautious. And so that's kind of our assumption here for the second half. You know, I think we'll have to continue to see how you know, things play out here over the back half of the year and what that also means for 2026. But at least our assumption for the remainder of this year is that it's going to remain relatively cautious here.

Yeah. Hey Mike. Um look, I think as you look at our platform assumptions for the remainder of the Year, we're really not anticipating a different Market environment than what we've experienced so far in the first half of the year, which will be continued to be a cautious environment. But 1, that is relatively, uh, stably cautious. Um, and so that's kind of our assumption here for the second half, you know, I think we'll have to continue to see how, you know, things play out here, over the back half of the year and what that also means for 2026. But at least our assumption for the remainder of this year is that it's going to remain, you know, relatively, uh, cautious here

Patrick Donnelly: Got it. Thank you.

Got it. Thank you.

Patrick Donnelly: We now turn to Patrick Donnelly with City. Your line is open. Please go ahead. Thank you for taking the questions. Maybe just to follow up on the reagent side, can you just talk about not only what you saw in the quarter, but expectations going forward? I know you serve, you know, some different end markets there. So just curious what you're seeing in each vertical and again, expectations for the remainder of the year on the reagent side.

We're now sending to Patrick Donnelly with City. Your line is open. Please go ahead.

Thank you for taking the questions. Um, maybe just a follow-up on the reagent side. Can you just talk about? Not only what you saw on the quarter but but expectations going forward. I know you serve, you know, some different end markets there so just curious what you're seeing in each vertical and again, expectations for the remainder of the year on, on the reagent side, and what you're seeing there?

Yeah. So from a reagents perspective, I think it's, you know, provide mentioned, it's been, you know, 5 straight quarters. Now of sequential growth, which is obviously a positive sign. I think as you look at what our expectation is for the back, half of the year pass, it's, it's very similar to what we saw from the first half again, similar to what I just mentioned on platforms, we're not really assuming a, a change in the underlying Market environment and things continue to be stable and and modestly improving. Um, although we're definitely not back at what we consider normal levels. You know, I think when you look at the different splits between Pharma biosc and academic and government, on the reagent side, you know, Pharma biotech is doing slightly better from a reagent standpoint, obviously, the academic and government headwinds, um, you know, we're not immune to. But although we are selling reagents, we are, I would say a little bit more insulated there, from an academic and government standpoint. Um, but things are, you know, I would say relatively stable, even there as we've kind of progressed through the second quarter,

Patrick Donnelly: Okay, that's helpful. And then moving on the CAP deployment side, you guys talked a little bit about a little more aggressive on the share repo. You know, can you just talk about the appetite on the deal side? It's been topical. You know, we've seen a few larger deals going to come through in a group. Can you talk about your appetite, what you've seen and, you know, what the funnel looks like at the moment?

Okay, that's helpful. And then maybe on a cap deployment side. You guys talked a little bit about, you know, a little more aggressive on the share repo. Um,

Maxwell Krakowiak: Thank Yeah, Patrick. I mean, we continue to actively evaluate, you know, redeploying our cash into potential M&A targets, as I've talked about earlier. But really, our focus is on, you know, making strong strategic additions to the company. And this is sort of where our disciplined multi-criteria process plays a role. You know, we've not really identified targets yet that are compelling enough from both a financial profile and expected return perspective to move forward with. I mean, given the strong and differentiated financial profile that we have now put in place for Revity and our strong internal innovation pipeline, you know, we'll continue to remain active and aggressive in looking at opportunities and targets of all shapes and sizes.

You know, can you just talk about the appetite on the deal side? It's been topical. You know we've seen a few larger deals going to come through in a group. Can you just talk about your appetite? What you've seen and and uh you know what? The funnel looks like at the moment. Thank you guys.

yeah, I think I mean,

We continue to actively evaluate, you know, redeploying our cash into potential m&a targets as I've talked about earlier, but really, we are focus is on, you know, making strong, strategic additions to the company. And this is sort of where our discipline multi-criteria process, uh, plays a role. You know, we've not really identified targets yet. There are compelling enough from both a financial profile and expected return perspective to move forward with

I mean given the strong and differentiated Financial profile that we have now put in place for revity,

And our strong internal Innovation pipeline.

Maxwell Krakowiak: But we'll also remain disciplined, you know, as we believe that what we've built at Revity is now something that is truly special on its own.

Maxwell Krakowiak: So we continue to look, we have an active pipeline, but really, we haven't found anything that has been compelling enough for us to make the jump. understood.

You know, we'll continue to remain active and aggressive and looking at opportunities, uh and targets of all shapes and sizes. But we'll also remain disciplined. You know, as we believe that what we've built at revity is now something that is truly special on its own. So we continue to look, we have an active pipeline but really we haven't found anything.

That has been compelling enough for us to make the jump.

Patrick Donnelly: Thank you guys.

I understood. Thank you guys.

Rachel Vattenstall: Our next question comes from Rachel Vattenstall with J.P. Morgan. Your line is open, please go ahead. Hi, good morning, you guys. Thanks so much for taking the questions.

Our next question comes from Rachel vat install with JP Morgan, your line is open, please go ahead.

hi, good morning, you

Rachel Vattenstall: I wanted to kind of pivot here and talk a little bit about your tariff assumption. So you mentioned that your guide was really assuming the tariffs as of Friday, but you also acknowledge the tariff deal that was announced over the weekend to EU, given EU tariffs are now going to be 15% instead of 10%. So can you help unpack for us a little bit what is currently assumed in terms of dollar amounts for what's going to be pressuring the EU, and then talk about some of the incremental offsets that we can see there, given just that's an important geography for you guys.

So much for taking the questions.

Um, Wanted.

EU. Um, given EU tariffs are now going to be 15% instead of 10%. So can you help unpack for us a little bit? What is currently assumed in terms of dollar amounts for what's going to be pressuring, the EU and then talk about some of the incremental offsets that we can see their given. Just, that's an important geography for you guys.

Yeah. Hey Rachel, uh, thanks for your question. Look, I think as you as you look at the Tariff situation, it's it's, you know, rapidly evolving as we saw the news. Uh, come across the desk yesterday, you know, I say look. And there's still some details that have to get finalized here in terms of the exact scope of what, uh, is agreed upon in this framework. But if we take the assumption that it's, you know, a 15% tariff here between the Europe and us, you know, that's probably a gross impact for us in the second half of 3 to 5 cents. However, I would say we're already actively putting in place offsetting mitigation actions uh to sort of a bade these uh, potential headwinds and then longer term, you know, as we're looking at our overall, uh, cost structure, you know, this is going to be a major factor as we sort of look at as we, you know, evaluate our Global manufacturing footprint and what sort of permanent changes we may need to make their

Rachel Vattenstall: Great, that's helpful.

Rachel Vattenstall: And then just on NIH, you talked about some of the pressure that you were seeing in academic and government. And that's kind of playing out in line with your expectations here. But can you just walk us through what's the House view from Revity's end on how you see the budgets playing out? Do you think we'll have a continuing resolution here? You know, what are your expectations for NIH in regards to funding next year?

Great that's helpful. And then just on NIH, you talked about some of the pressure that you were seeing in academic and government and that's kind of playing out in line with your expectations here. But could you just walk us through? What's the house view from remedies and on how you see the budgets playing out? Do you think we'll have a continuing resolution here? Um, you know what are your expectations for NIH in regards to funding next year?

Maxwell Krakowiak: Yeah, I think anyone's response would be as good as mine in trying to speculate what 2026 NIH budget would look like, Rachel. You know, from our expectation right now for the rest of the year, we are assuming that it will continue to, the academic and government performance will continue to stay weak and stay stabilized at the lower level for the rest of this year. And we just have to see how things pan out in the second half to be able to comment on 2026.

yeah, I I think uh,

Anyone's response would be as good as mine in trying to speculate what 2026. Uh NIH budget would look like racial, you know, from our expectation right now for the rest of the year, we are assuming that it will continue to the academic and government performance will continue to stay weak, uh, and uh, stay stabilized at the lower level of for the rest of this year. You know, we just have to see how things span out in the second half to be able to comment on 2026.

Unknown Executive: Next question, operator.

Luke Sergott: We now turn to Luke Sergott with Barclays. Your line is open, please go ahead. Great, thanks. I just wanted to touch a little bit on the life side margin side. You had a little bit on the GM, you talked about like the weakness there, but you have really strong software, reagents were up, you know, like we said, instruments, we talked a little bit about that just kind of the puts and takes with what's going on. I assume that there's probably a little bit of volume there. But like I said, you had strong reagents and software and kind of how this is going to trend throughout the year.

Next question, operator.

We now send to Luke so I got with Barclays. Your line is open, please go ahead.

Great, thanks. I just wanted to touch a little bit on the, um, the life side margin side. Um, you had a little bit of the, on the, on the GM you talked about like, the, the weakness there. But, um, you have really strong software, uh, reagents were up. You know, like we said, instruments. We talked a little bit about that, just kind of the puts and takes with what's going on. Um, I assume that there's probably a little bit of volume there, but like, like I said, you had strong reagents and software and kind of how this is going to Trend throughout the year.

Maxwell Krakowiak: Yeah, I think as you look at our life sciences operating margin, I'd say a couple of dynamics are at play. One, you've got the tariff headwinds, obviously, that we've talked about, there's more of an impact in DX, but LS isn't completely immune. I'd say the second thing is we did talk a little bit of the FX pressure that's impacting both of our businesses. And then the third one, I would say there was a little bit of specific product mix within the reagents business here in the second quarter that led to a little bit of some margin pressure for that business.

Maxwell Krakowiak: But I think as we look over the long term, and there's nothing really that's sort of structurally changed how we view, you know, the operating margin performance or entitlement of our life sciences business.

Maxwell Krakowiak: Okay, and then on the additional cost actions you guys are taking out, is this essentially you guys looking at and saying, all right, well, this is a tougher environment, we can kind of pull forward some of those cost actions we were looking to implement on the out years? Or is this going to be incremental to the I think it's a combination of things. One, I think there is a little bit of what you talked about of maybe pulling in some additional structural actions that were already planned in future years. I think two, as I've mentioned, we are reevaluating our global manufacturing book print, you know, which is given that we have some regulated sites can take a little bit of time, but one now with some of these tariff rates, that probably makes a little bit more financial sense to pull the trigger on.

Yeah, I think as you look at our life sciences operating margins, and I, I say a couple of uh, Dynamics are at play. Um 1, you've got the, the Tariff headwinds, obviously, that we've talked about there's more of an impact in DX but LS isn't completely immune. I say the second thing is we did talk a little bit of uh the FX pressure, that's impacting both of our businesses. And then the third 1, I would say is there was a little bit of specific um product mixed within uh the reagents business here in the second quarter that led to a little bit of a, some margin pressure for that business, but I think as we look over the long term and there's nothing really that's sort of structurally changed how we view. You know, the operating margin, uh, performance or entitlement of our life sciences business,

Okay, and then on the additional cost actions, you guys are taking out. Is this essentially you guys looking at it and saying, all right well this is a, you know, a tougher environment we can kind of pull forward, some of those cost actions. We were looking to implement on that out ears. Or is this going to be incremental to those?

Maxwell Krakowiak: And then I'd say third, we are looking at some specific sales and marketing channels, given the specific drops in IDX China and making some very, I would say, targeted actions in that location. Gaya. Thank you.

I think it's a combination. I think, 1, I think there is a little bit of what you talked about of maybe pulling in, uh, some additional structural actions that were already planned in future years. I think. 2, is I've mentioned, we are reevaluating our Global manufacturing footprint, you know, which is given that we have some regulated sites. You can take a little bit of time, but 1 now, with some of these tariff rates, that probably makes a little bit more financial sense to, to pull the trigger on. Um, and then I say third, we are looking at some specific sales and marketing channels, um, given the, you know, specific drops and and idx China and making some very uh I would say targeted actions in that in that location.

Got you. Thank you.

Dan Arias: Our final question today comes from Dan Arias with Stiefel. Your line is open, please go ahead. Morning, guys. Thank you. Prahlad, you mentioned BBP in your China comments. Can you just sort of explicitly update us on the confidence that you have in that business not getting caught up there? I mean, the message I think has been pretty consistently that that shouldn't be an issue, just given the nature of the business and some of the competitive dynamics. But obviously, there are surprises afoot here. So just checking to make sure that that's still the view that you have.

Oh, final question. Today comes from Dan eras, with state, for your line is open. Please go ahead.

Business, not getting caught up there. I mean, the, the message I think has been pretty consistently that that shouldn't be an issue, just given the nature of the business, um, and some of the competitive Dynamics, but

Obviously, there are surprises of foot here, so just checking to make sure that that's still the view that you have.

Prahlad Singh: Yes, Dan. What we have seen, again, as I said, has been more around the DRG policy rather than on VBP. I mean, we haven't seen any impact from it going forward, but at the end of the day, one way or the other, the whole focus of the government really is how do you de-bundle, whether you use the Sunshine Act or VBP or DRG to bring costs down? The question really comes from our perspective. The guidance that we have assumed is that impact will continue until we anniversary this, but mid to longer term, our focus is around patient care because from an autoimmune perspective, as I said, at the end of the day, you have to find what the specific autoimmune disease is.

Uh, yes. Dan. Uh, what we have seen again, as I said, has been more around, uh, the drg policy rather than on vbp. I mean, VB, we haven't seen any impact from it going forward, but at the end of the day, 1 way or the other, you know, the whole focus of the government really is, how do you Deb bundle whether you use the sunshine act, or vbp, or drg to bring cost down?

Prahlad Singh: And without multiplex and going to singleplex, this is going to, in the mid to longer term, add to the cost or rather, at the most, be neutral to the cost structure that they are trying to put in place right now and not really significantly bring it down.

The question really comes from our perspective, the guidance that we have assumed is that impact will continue till we anniversary this, but longer mid to longer term. Our focus is around patient care because from an autoimmune perspective, as I said at the end of the day, you have to find what the specific autoimmune disease is and without Multiplex and going to single Plex. This is going to in the mid to longer term. Add to the cost or rather at the most be neutral to the cost structure that they are trying to put in place right now. And not really significantly bring it down.

Dan Arias: Okay, all right, that's helpful.

Dan Arias: And then maybe on Genomics England and the expanded program there, can you just help us with what the ramp up period should like for volumes and maybe what kind of contributions you've assumed for the back half? I think we had circled like 10 million or so, so just check. Max, that's an okay number. Yeah. Hey, Dan. I think that's an okay number. And again, as I mentioned, we've got pretty good visibility in what the ramp is. We've already a month into the program. It's going extremely well. And I think the splits that you mentioned are appropriate in terms of 10 million overall for the back half.

Okay, all right, that's helpful. Um and then maybe uh on on genomics England and the expanded program there. Can you just help us with what the ramp up period should like for volumes and maybe what kind of contributions you assume for the back half? I think we had circled like 10 million or so. So just checking to make sure that Max that's an okay number thanks.

Maxwell Krakowiak: You know, most of that will be in the fourth quarter though. Okay.

Yeah. Hey Dan um I think that's an okay number. And again as I mentioned we've got pretty good visibility and what the ramp is. We've already a month into the the program it's going extremely well and I think the splits that you mentioned uh are appropriate in terms of 10 million overall for the back half you know most of that will be in the fourth quarter though.

Okay, thank you.

Stephen Willoughby: This concludes our Q&A.

Stephen Willoughby: I'll now hand back to Steve Willoughby for any final remarks. Thank you, Elliot. We look forward to speaking with everyone over the remainder of today and over the coming weeks. Have a good day.

This concludes our Q&A on our hand back to Steve Willoughby for any final remarks.

Unknown Executive: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your line.

Thank you, Elliot. We look forward to speaking with everyone over the remainder of today and over the coming weeks, have a good day.

Ladies and gentlemen, today's call is now concluded. We like to thank you for your participation. You may now disconnect your lines.