Revvity Earnings Call: Solid Execution, Cautious 2026 Outlook

Revvity, Inc. ((RVTY)) has held its Q4 earnings call. Read on for the main highlights of the call.

Revvity Balances Earnings Strength With Cautious 2026 Outlook

Revvity’s latest earnings call painted a picture of a company executing well financially while bracing for a tough macro and sector backdrop. Management emphasized strong EPS and free cash flow beats, healthy diagnostics and software growth, and aggressive capital return, but they were equally candid about soft life sciences demand, persistent China pressure, margin headwinds, and a deliberately conservative growth framework for 2026. The overall tone was cautiously constructive: underlying operations look resilient, yet expectations remain grounded in a slow‑to‑recover environment.

Solid Top-Line Delivery Amid Challenging Markets

Revvity reported fourth-quarter revenue of $772 million, up 4% organically, and full-year revenue of $2.86 billion with 3% organic growth—essentially hitting the guidance the company had set despite a tough environment. Management highlighted that these results came against headwinds in China, muted life sciences demand, and policy-related pressures in several geographies. While not a high-growth story, the company underscored that it is still expanding in an environment where many peers are stalled or declining, reinforcing the narrative of operational resilience.

Earnings Upside and Still-Healthy Margins

Earnings and profitability were a key bright spot. Q4 adjusted EPS came in at $1.70, beating the midpoint of guidance by $0.11 and topping even the high end by $0.06. For the full year, adjusted EPS reached $5.06, above the initial guidance range and up 3% year over year. Q4 adjusted operating margin was a robust 29.7%, showing that Revvity can still generate strong profitability despite pressures. However, full-year operating margin slipped to 27.1%, down 120 basis points from the prior year, reminding investors that margin expansion will not be linear in the current environment.

Free Cash Flow Engine and Deleveraging Capacity

Revvity’s cash generation remained a major support for the equity story. The company posted free cash flow of $162 million in Q4 and $515 million for the full year, translating into 84% and 87% conversion of adjusted net income, respectively. With net debt to adjusted EBITDA at 2.7x and all debt fixed at a weighted average interest rate of 2.6%, Revvity is insulated from rising rates and retains balance sheet flexibility for buybacks, M&A, and continued investment. Management also reiterated expectations for free cash flow conversion of around mid‑80s percent in 2026, underscoring the durability of its cash profile.

Aggressive Capital Returns via Share Repurchases

The company leaned heavily on share repurchases to drive shareholder returns and support EPS. In 2025, Revvity repurchased over $800 million of stock—about 8.5 million shares—bringing total buybacks since 2023 to more than $1.5 billion. That equates to roughly 15 million shares retired, or about 12% of the share count at the time. These actions meaningfully reduced diluted shares outstanding, providing a tailwind to EPS growth even as underlying revenue growth remains modest. The message to investors: Revvity is willing to deploy substantial capital to enhance per-share value while the business environment slowly normalizes.

Diagnostics Segment Delivers Outperformance

Diagnostics remained a growth driver, helping offset weaker life sciences trends. The segment posted 7% organic growth in Q4 (10% reported), and 4% organic growth for the full year. Within diagnostics, reproductive health grew mid-single digits in the quarter, while newborn screening posted mid-single-digit growth in Q4 and high-single-digit growth for the full year. Management framed diagnostics as structurally attractive and more resilient, with particular strength in core screening franchises. This segment’s performance is central to the company’s ability to deliver overall growth while other end markets remain sluggish.

Software and Signals: A High-Growth Bright Spot

Revvity’s software and data platform business, particularly its Signals franchise, continued to be a standout. Signals software grew at a high-teens organic rate for the full year, while SaaS annual recurring revenue jumped nearly 40% year over year. SaaS now represents about 35% of the software business, and key metrics—including net retention above 110% and double-digit average price/contract value growth—demonstrate both strong customer engagement and pricing power. For investors, this mix shift toward higher-margin, recurring software revenue offers a structural growth and margin lever over time.

Strategic M&A and AI-Driven Product Innovation

Management highlighted a deliberate strategy to build out the software and AI stack. Revvity closed the acquisition of ACD Labs in mid-January, which is expected to add more than $20 million of revenue in 2026, contributing roughly 75 basis points to growth. The company also launched its Signals Synthetica AI platform and announced a collaboration aimed at accelerating adoption of AI-enabled solutions in pharma R&D. These moves position Revvity at the intersection of life sciences and data/AI, with management emphasizing that software, informatics, and automation will be important long-term differentiators—even if the near-term financial contribution is intentionally guided conservatively.

2026 Financial Framework: Growth, Margins, and EPS

Revvity reiterated its 2026 financial framework, calling for 2%–3% organic revenue growth and total revenue of $2.96–$2.99 billion, including roughly a 1% FX tailwind and about 75 basis points of growth from ACD Labs. The company is targeting an adjusted operating margin of 28%, up from 27.1% in 2025, and guiding adjusted EPS to a range of $5.35–$5.45, implying high single-digit growth. This framework assumes diluted shares around 112 million, adjusted net interest and other expense of about $95 million, and an 18% adjusted tax rate—up from 14.5%—which will partially offset operational gains. The message: modest top-line growth, disciplined cost control, and capital allocation will together support EPS progression.

Cautious Growth Outlook Reflects Slow End-Market Recovery

Despite solid execution in 2025, Revvity is keeping its 2026 organic growth guidance at a modest 2%–3%, reflecting a cautious view on the pace of recovery. The company noted that 2025 delivered only 3% organic growth, and it does not yet see convincing evidence of a sharp rebound across key customer segments. Management characterized the outlook as deliberately conservative, especially given uncertainties in life sciences funding, China policy, and pharma capital spending. For investors, this signals that while Revvity is confident in its strategic direction, it is not banking on a cyclical snapback to hit its numbers.

Margin Pressure and Q1 2026 Trough

Margins are expected to be choppy in the near term. Full-year 2025 adjusted operating margin declined 120 basis points to 27.1%, and Q4 margin slipped 60 basis points year over year. For Q1 2026, management guided to an adjusted operating margin around 23%, citing several temporary headwinds: an extra operating week that adds labor and other operating costs, tariff and FX impacts, and the fact that cost-savings programs will not be fully realized until the end of Q2. Investors should expect margin improvement as the year progresses, with a step-up in Q2 and a stronger back half as efficiency initiatives flow through.

Persistent China Diagnostics Drag

China remains a clear sore spot, particularly in immunodiagnostics. The company reported double-digit declines in China immunodiagnostics for the full year, driven largely by DRG-related volume pressures and structural changes in reimbursement dynamics. Management does not expect a quick fix, guiding that China IDX weakness will likely persist into mid-2026 and embedding a more conservative assumption for this market into its framework. This stance reduces downside risk from China but also caps upside if conditions improve faster than expected.

Life Sciences Still Slow, Especially Academia and APAC

Life sciences end markets continued to lag diagnostics. Organic growth in the life sciences business was flat in Q4 and only 2% for the full year. Academic and government customers declined in the low single digits, and Asia-Pacific posted a low-single-digit decline for the year, reflecting constrained budgets and funding uncertainties. Management signaled that visibility remains limited in these segments, and the 2026 outlook builds in a slow, uneven recovery rather than a broad-based acceleration. For investors, life sciences remains the cyclical part of the portfolio, and its recovery is a key swing factor for upside.

Instrument Demand: Recovery, But Still Fragile

Instrument sales—a particularly sensitive component of life sciences demand—showed some stabilization but remain subdued. Life sciences instruments were roughly flat year over year in Q4, representing a strong sequential improvement versus prior quarters that saw significant declines. However, management is not ready to call a sustained upcycle and is assuming flattish instrument performance for 2026. This conservative view reflects ongoing caution among pharma, biotech, and academic buyers when it comes to big-ticket capital equipment, even as consumables and services hold up better.

Rising Below-the-Line Costs Weigh on EPS

Even as Revvity focuses on operational efficiency, below-the-line items are moving in the wrong direction for EPS. Adjusted net interest and other expense totaled $84 million in 2025 and is expected to rise to around $95 million in 2026, driven by bond retirement dynamics and lower average cash balances following heavy buybacks and M&A. In addition, the adjusted tax rate is expected to climb to about 18% from 14.5%, providing another headwind to net income growth. Management’s EPS guidance incorporates these pressures, underscoring that future EPS gains will need to come from a mix of operational improvements, disciplined capital allocation, and gradual top-line growth.

Macro, Policy, Tariffs, and FX Add Volatility

The company flagged a range of external factors weighing on performance and visibility. Changes in NIH funding, ongoing pharma policy uncertainty, the prolonged U.S. government shutdown, tariffs, and currency fluctuations all impacted results. While foreign exchange is expected to provide a roughly 1% tailwind to revenue in 2026 (and a larger benefit in Q1), management noted that FX can simultaneously pressure margins, especially when costs and revenues are mismatched by currency. Tariffs and policy shifts also complicate planning in key markets, prompting the company to retain a conservative stance in its outlook.

Conservative Expectations for New Software and AI

Despite enthusiasm around new software and AI offerings—including the Signals Synthetica platform and additional tools like Biodesign and Labgistics—management purposely did not embed significant near-term benefit from these products into its 2026 guidance. Adoption curves in pharma and biopharma informatics can be long, and the company is signaling that the financial impact will likely be more back-end loaded beyond 2026. For investors, this approach creates potential upside if customer uptake proves faster than modeled, while anchoring guidance on more established revenue streams.

Forward-Looking Guidance: Moderate Growth, Improving Margins, Strong Cash

Revvity’s 2026 outlook calls for 2%–3% organic growth, with Q1 growth roughly matching the full-year pace, plus an approximate 1% FX tailwind for the year and about 75 basis points of contribution from the ACD acquisition—together implying total revenue of $2.96–$2.99 billion. The company expects adjusted operating margin to reach 28% for the year, with Q1 as the low point at about 23% due to an extra week of operations, tariffs, and incomplete cost savings, and a step-up beginning in Q2 as efficiency programs are completed by midyear. Full-year adjusted EPS is guided to $5.35–$5.45, representing high-single-digit growth, with Q1 contributing about 19% of the annual EPS—pressured by the extra week, which adds around 100 basis points to organic growth but is roughly a $0.06 EPS headwind. The guidance also assumes roughly 112 million diluted shares, increased net interest and other expense, a higher tax rate, and continued strong free cash flow conversion of about 85% or better.

In closing, Revvity’s earnings call underscored a company that is executing well on what it can control—costs, cash generation, software expansion, and capital allocation—while remaining realistic about a sluggish and uncertain operating backdrop. Diagnostics and software are providing growth and resilience, share buybacks are meaningfully amplifying per-share results, and strategic investments in AI and informatics could lay the groundwork for a stronger long-term growth profile. However, persistent China weakness, slow life sciences demand, and near-term margin and below-the-line headwinds mean investors should expect steady, not spectacular, progress in 2026. The overall tone: cautious but constructive, with upside potential if end markets and new digital offerings inflect faster than management’s conservative assumptions.