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PerkinElmer's (PKI) Q4 Earnings Top, Revenues Decline Y/Y

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PerkinElmer, Inc. reported fourth-quarter 2022 pro-forma adjusted earnings per share (EPS) of $1.70, which beat the Zacks Consensus Estimate of $1.66 by 2.4%. The bottom line, however, declined 33.6% from the year-ago quarter.

PerkinElmer signed an agreement to divest its Applied, Food and Enterprise Services (“AES”) businesses to an investment firm, New Mountain Capital, in August 2022 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. PKI reported its fourth-quarter results with combined 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 $1.41, down 41.7% from the year-ago period. Adjusted EPS from AES business was 28 cents, up 100% year over year.

GAAP EPS from continuing operations in the quarter was 85 cents compared with the year-ago quarter's figure of $1.45.

Revenue Details

Based in Waltham, MA, this leading MedTech company reported combined revenues of $1.09 billion, down 20.2% year over year and 15% organically. However, the metric was up 8% organically after excluding sales from COVID products. The top line beat the Zacks Consensus Estimate by 1.7%.

Revenues from continuing operations were down 27.9% year over year and 23% organically. However, revenues from continuing operations were up 8% organically after excluding sales of COVID products.

Segment Details

Discover & Analytics Solutions

In this segment, combined revenues were $695 million, indicating an increase of 6.1% from the year-ago quarter. Organically, the segment witnessed an increase of 11%. Revenues from continuing operations were $347.4 million, up 9.1% year over year. Organically, the metric was up 13%.

Coming to profits at the DAS segment, the company reported fourth-quarter 2022 adjusted combined operating income of $203.6 million, up 41.5% from the year-ago quarter. Adjusted operating income from continuing operations was $145.6 million, up 24% 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

Diagnostics

Revenues at this segment amounted to $394 million, down 44.5% on a year-over-year basis. Organically, segment revenues decreased 39% in the fourth quarter.

Adjusted operating income in the segment totaled $113 million, down 66.2% from the year-ago quarter.

Full-Year Results

PerkinElmer reported full-year combined revenues of $4.61 billion, down 9% year over year. The combined adjusted EPS for 2022 was $7.95, down 30%.

Margin Analysis

Selling, general and administrative expenses were $244.3 million, down 13.8% on a year-over-year basis. Research and development expenses amounted to $54.5 million, down 10% from the year-ago quarter.

Adjusted operating income was $240 million, which declined 44.4% from the year-ago quarter. Adjusted operating margin, as a percentage of revenues, was 32.3%, down 970 bps. Combined adjusted operating income for the quarter was $298 million, down 35.1% year over year.

Financial Update

The company exited the fourth quarter with cash and cash equivalents of $454.4 million, compared with $400.7 million in the year-ago period.

Net cash provided by operating activities, including discontinued operations, in the fourth quarter totaled $25.5 million against net cash used by operating activities of $0.5 million in the year-ago quarter.

2023 Guidance

PerkinElmer provided continuing operations revenues and earnings guidance for full-year 2023.

For 2023, the company expects adjusted EPS to be $5.05. Revenues from continuing operations are anticipated to be $2.94 billion.

Conclusion

PerkinElmer exited the fourth quarter on a strong note, wherein earnings and revenues beat estimates. The company witnessed a solid performance at Discover & Analytics Solutions segment in the quarter under review.

Per management, the company is well poised to accomplish 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 increases integration risks.

Zacks Rank and Stocks to Consider

Currently, PerkinElmer carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .

Cardinal Health, carrying a Zacks Rank #2 (Buy), reported second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.

McKesson, having a Zacks Rank #2, reported third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.

McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.

Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.

Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.


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