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PerkinElmer (PKI) Q3 Earnings Top, Revenues Decline Y/Y

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PerkinElmer, Inc. reported third-quarter 2022 pro-forma adjusted earnings per share (EPS) of $1.51, which beat the Zacks Consensus Estimate of $1.48 per share by 2%. The bottom line, however, declined 34.6% from the year-ago quarter.

PerkinElmer signed an agreement to divest its Applied, Food and Enterprise Services (“AES”) businesses with an investment firm, New Mountain Capital, in August for up to $2.45 billion in total consideration. The deal is expected to close in the first quarter of 2023. The AES business is part of PKI’s Discovery & Analytical Solutions segment, which is currently held for sale and the company is reporting it as a discontinued operation. The company reported its third-quarter results with adjusted pro-forma figures for its total business, including AES. It also reported adjusted and GAAP figures separately for its continuing operations, which exclude the AES business.

Adjusted EPS from continuing operations was down 41.5% from the year-ago period to $1.21. Adjusted EPS from AES business was 30 cents, up 25% year over year.

GAAP EPS from continuing operations in the quarter was 55 cents compared with the year-ago quarter's figure of 94 cents.

Revenue Details

Based in Waltham, MA, this leading MedTech company reported pro-forma adjusted revenues of $1.03 billion, down 12% year over year and 13% organically. However, the metric was up 9% organically after excluding sales from COVID products. The top line was in line with the Zacks Consensus Estimate.

Revenues from continuing operations were down 17% year over year and 23% organically. However, revenues from continuing were up 8% organically after excluding sales of from COVID products.

Segment Details

Discover & Analytics Solutions

In this segment, pro-forma revenues were $633 million, reflecting a rise of 23.4% from the year-ago quarter. Organically, the segment witnessed an increase of 12%. Revenues from continuing operations were $313 million, up 50.5% year over year. Organically, the metric was up 14%.

Coming to profits at the DAS segment, the company reported third-quarter 2022 adjusted pro-forma operating income of $165 million, up 73.7% from the year-ago quarter. Adjusted operating income from continuing operations was $117 million, up 101.7% year over year.

Diagnostics segment

Revenues at this segment amounted to $399 million, down 39% on a year-over-year basis. Organically, segment revenues decreased 33% in the third quarter.

Adjusted operating income in the segment totaled $123 million, down 57.1% from the year-ago quarter.

Margin Analysis

Adjusted gross profit from continuing operations in the quarter amounted to $455.5 million, down 18.8% year over year. Adjusted gross margin, as a percentage of revenues, was 64%, down 110 basis points (bps) year over year.

PerkinElmer, Inc. Price, Consensus and EPS Surprise

PerkinElmer, Inc. Price, Consensus and EPS Surprise

PerkinElmer, Inc. price-consensus-eps-surprise-chart | PerkinElmer, Inc. Quote

Selling, general and administrative expenses were $240 million, down 13% on a year-over-year basis. Research and development expenses amounted to $53.5 million, up 8.3% from the year-ago quarter.

Adjusted operating income was $223.8 million, which declined 30.5% from the year-ago quarter. Adjusted operating margin, as a percentage of revenues, was 31.4%, down 600 bps. Pro forma adjusted operating income for the quarter was $272 million, down 24.2% year over year.

Financial Update

The company exited the third quarter with cash and cash equivalents of $400.7 million, compared with $360.8 million in the second quarter of 2022.

Net cash provided by operating activities, including discontinued operations, in the third quarter totaled $160 million compared with $313.8 million in the year-ago quarter.

2022 Guidance

PerkinElmer provided pro-forma and continuing operations revenues and pro-forma earnings guidance for fourth-quarter 2022 and full-year 2022.

For fourth-quarter 2022, the company projects pro-forma adjusted EPS in the range of $1.65 to $1.67. The Zacks Consensus Estimate is pegged at $1.67 per share. For the same period, revenues from continuing operations and pro-forma revenues are anticipated to be $0.73 billion and $1.06-$1.07 billion, respectively. The Zacks Consensus Estimate for the same stands at $1.1 billion.

For 2022, the company expects pro-forma adjusted EPS in the range of $7.89 to $7.91. The Zacks Consensus Estimate is pegged at $7.80 per share.

Revenues from continuing operations and pro-forma revenues are anticipated to be $3.3 billion and $4.59-$4.60 billion, respectively. The consensus mark stands at $4.62 billion.

Conclusion

PerkinElmer exited the third quarter on a mixed note, wherein earnings beat estimates and revenues came in line with the consensus mark. The company witnessed a solid performance at Discover & Analytics Solutions segment in the quarter under review.

Per management, the company is well-poised to execute both its short and long-term goals on the back of perseverance and team effort.

However, the contraction in operating margin is a woe. Weakness in the Diagnostics segment is disappointing. Apart from this, PerkinElmer continues to make acquisitions, which increase integration risks.

Zacks Rank and Stocks to Consider

Currently, PerkinElmer carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. (ELV - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .

Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Elevance Health has an earnings yield of 5.5% against the industry’s (2.3%). ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.

Medpace Holdings, having a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $384 million outpaced the consensus mark by 8.1%.

Medpace Holdings has an estimated growth rate of 22.7% for 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 22.04%.

Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.

Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.


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