Revvity, Inc. (RVTY) FY2025 Earnings Quality Report

Grade: F — Major red flags

Framework: Schilit *Financial Shenanigans* + Beneish M-Score + forensic accounting principles

Data: SEC EDGAR 10-K (Fiscal year ended December 28, 2025) + Yahoo Finance

Auditor: Deloitte & Touche LLP — Unqualified opinion (1 critical audit matter: Goodwill – Life Sciences Solutions Reporting Unit)

One-line verdict: Revvity (the renamed PerkinElmer after the Applied Sciences divestiture) earns an F grade because two checks fail: cash of $0.9B covers only 27% of $3.4B debt (C4), and goodwill plus intangibles equal 124% of equity (D1). Three watch items reinforce the picture: DSO up 11 days (A1), AR growing 17.8% vs. revenue at 3.7% (A2), and Debt/EBITDA at 4.4x (D2). The M-Score of -2.45 passes but is not clean. The business itself is in modest growth: revenue grew 4% to $2.86B, operating income was essentially flat, and the company explicitly disclosed a fair-value headroom of "more than 10% but less than 20%" on the $4.5B Life Sciences Solutions goodwill — meaning a ~15% decline in that reporting unit's fair value could trigger impairment.

Two Segments After the 2023 Split

Revvity is the post-divestiture continuing business of what was formerly PerkinElmer. In March 2023 the company sold its Analytical, Food and Enterprise Services businesses and rebranded as Revvity. The remaining business operates in two segments: Life Sciences and Diagnostics.

From the MD&A: "Revenue for fiscal year 2025 was $2,856.1 million, as compared to $2,755.0 million for fiscal year 2024, an increase of $101.1 million, or 4%, which includes an approximate 1% increase in revenue attributable to favorable changes in foreign exchange rates."

Segment breakdown from the MD&A:

Product/service split from the income statement:

Diagnostics segment growth came from Immunodiagnostics (+$41.3M) and Reproductive Health (+$27.2M). Life Sciences growth was driven by Software (+$35.6M) partially offset by a $3.1M decrease in Life Sciences Solutions.

Gross margin has compressed from 60.1% in FY2022 to 54.8% in FY2025 — a 530bp decline in three years. From the MD&A: "Our consolidated gross margin decreased 104 basis points in fiscal year 2025, as compared to fiscal year 2024, primarily due to increased tariffs, unfavorable changes in foreign exchange rates, and product mix shift, partially offset by the completion of product rebranding efforts in fiscal year 2024."

The tariff impact is explicit in the MD&A: "Tariffs enacted and implemented during fiscal year 2025 increased our cost of revenue by approximately $25 million. Through proactive mitigation efforts, the net impact on gross margin was approximately $20 million. The majority of this impact affected products manufactured in Europe and sold in the U.S. market."

Restructuring continues. From the MD&A: "In fiscal year 2025, severance actions associated with facility consolidations and cost reduction measures affected approximately 5% of our workforce." Restructuring charges jumped from $17.5M (FY2024) to $55.9M (FY2025).

Cash Flow: Holding Steady

The FY2023 CFFO of $91M was depressed by divestiture-related working capital adjustments. The "normalized" run rate of $583M in FY2025 is solid and represents 2.4x net income — healthy cash conversion.

From the MD&A on FY2025: "Net cash provided by continuing operations was $589.0 million for fiscal year 2025, as compared to $665.0 million for fiscal year 2024, a decrease of $76.0 million. The cash provided by operating activities for fiscal year 2025 was principally a result of income from continuing operations of $239.9 million, adjustments for non-cash charges aggregating to $445.9 million, including depreciation and amortization of $405.3 million, and a net cash decrease from changes in working capital of $96.8 million, primarily due to timing of collections in China during fiscal year 2025."

The working capital drag of $96.8M is tied to "timing of collections in China" — which the A2 fail reflects at the check level. Revvity's Diagnostics segment operating margin also declined 194bp specifically "due to increased tariffs, unfavorable changes in foreign exchange rates, and product mix shift due to China diagnostic testing policy changes."

The Balance Sheet: Still Leveraged

Cash of $919.9M covers only 27% of the $3.4B debt load. Net debt grew $316M YoY even though no major acquisitions were announced — reflecting cash deployment to share buybacks. The goodwill balance of $6.57B reported in the critical audit matter is before the intangibles add-on; total intangible assets (definite and indefinite-lived) bring the total to ~$9B, which is 124% of stockholders' equity.

The 18-Point Screening

Revenue Quality

A1 and A2 (both watch): The combination is meaningful. DSO rose 11 days and AR grew 17.8% vs. 3.7% revenue. The MD&A confirms this is China-concentrated: "a net cash decrease from changes in working capital of $96.8 million, primarily due to timing of collections in China." Revvity explicitly tied its Diagnostics margin compression to "China diagnostic testing policy changes."

This is one of the more notable AR patterns in the coverage because the company itself disclosed the root cause — this is not hidden, it is a China collection timing issue tied to specific policy changes. Whether the receivables ultimately convert to cash depends on those Chinese diagnostic customers.

Expense Quality

B4: Gross margin declined 104bp for the year. B4 passes on the absolute year-over-year change but the three-year trend (60.1% → 54.8%) reflects sustained tariff and mix pressure.

Cash Flow Quality

C4 (critical fail): $920M cash vs. $3.4B debt = 27% coverage. This is the residue of the 2021 BioLegend acquisition, which was the largest deal in company history ($5.3B) and was largely debt-financed. Revenue from the continuing-operations business has not grown enough to meaningfully delever.

Balance Sheet

D1 (fail): Goodwill + intangibles of ~$9B exceed stockholders' equity of $7.25B. The BioLegend acquisition (2021), Euroimmun (2017), and Oxford Immunotec (2022) all added significant goodwill. The critical audit matter singles out the Life Sciences Solutions reporting unit specifically because its fair value headroom is narrow.

D2 (watch): Debt/EBITDA of 4.4x exceeds the 4.0x watch threshold. For an industrial diagnostics business with cyclical China exposure, this is elevated leverage.

M&A Risk

Intangibles declined 2% YoY — amortization is running ahead of additions since Revvity has paused major M&A following the BioLegend deal and the PerkinElmer Applied Sciences divestiture.

Beneish M-Score

M-Score of -2.45 passes but is close to threshold. The DSRI component (AR growing faster than revenue) contributes, consistent with the A2 watch.

Critical Audit Matter: Life Sciences Solutions Goodwill

Deloitte identified a single critical audit matter: goodwill impairment testing for the Life Sciences Solutions reporting unit. From the audit report:

"As of December 28, 2025, the Company's balance of goodwill was $6.6 billion, of which $4.5 billion was allocated to the Life Sciences Solutions reporting unit. In connection with the annual impairment assessment as of November 3, 2025, the Company concluded that the fair value of each reporting unit exceeded the carrying value of each reporting unit and no impairment was recognized. The fair value of the Life Sciences Solutions reporting unit exceeded the carrying value by more than 10% but less than 20%."

This is a rare explicit disclosure: the fair-value-to-carrying-value headroom is 10-20%. Translated: a ~15% decline in the reporting unit's fair value could tip the segment into an impairment scenario. Deloitte explained: "The fair value of the Life Sciences Solutions reporting unit exceeded the carrying value by more than 10% but less than 20%. The Company determined the fair value of the Life Sciences Solutions reporting unit using an income approach which was corroborated with a market approach. The income approach required management to make significant estimates and assumptions related to the discount rate and forecasts of future revenue."

Deloitte's procedures included "evaluating the discount rate, including testing the underlying source information and mathematical accuracy of the calculations, and developing a range of independent estimates and comparing those to the discount rate selected by management" along with involving Deloitte's fair value specialists. Deloitte has served as Revvity's (formerly PerkinElmer's) auditor since 2002.

This is one of the closer-to-the-edge goodwill impairment disclosures in the S&P 500 biotech/diagnostics group — the 10-20% headroom is explicitly narrow. A Life Sciences Solutions revenue forecast cut, or a rise in discount rate, could meaningfully close that gap.

Key Risks from Item 1A

1. Patent/IP competition. From Item 1A: "Our competitors range from foreign and domestic organizations, which produce a comprehensive array of goods and services and that may have greater financial and other resources than we do, to more narrowly focused firms producing a limited number of goods or services for specialized market segments... We expect the proportion of large competitors to increase through the continued consolidation of competitors."

2. FDA regulatory risk. From Item 1A: "Some of our products are subject to regulation by the FDA and similar foreign agencies... if we fail to comply with those regulations or standards, we may face, among other things, warning letters; adverse publicity; investigations or notices of non-compliance, fines, injunctions, and civil penalties; import or export restrictions; partial suspensions or total shutdown of production facilities."

3. Environmental remediation. From Item 1A: "We have accrued $10.8 million and $14.2 million as of December 28, 2025 and December 29, 2024, respectively, which represents our management's estimate of the cost of the remediation of known environmental matters... We expect that the majority of such accrued amounts could be paid out over a period of up to ten years."

4. China Diagnostic policy changes. Not explicitly flagged in Item 1A summary but disclosed in the MD&A: "Segment operating margin decreased 194 basis points to 24.2% in fiscal year 2025... primarily due to increased tariffs, unfavorable changes in foreign exchange rates, and product mix shift due to China diagnostic testing policy changes."

5. Tariff exposure. From the MD&A: "Tariffs enacted and implemented during fiscal year 2025 increased our cost of revenue by approximately $25 million. Through proactive mitigation efforts, the net impact on gross margin was approximately $20 million. The majority of this impact affected products manufactured in Europe and sold in the U.S. market."

6. Restructuring scale. The company continues active restructuring. From the MD&A: "In fiscal year 2025, severance actions associated with facility consolidations and cost reduction measures affected approximately 5% of our workforce."

Altman Z-Score and F-Score

Z-Score of 3.86 is in the safe zone but is meaningfully lower than typical medical diagnostics peers — the leverage and goodwill weight on the ratios. The F-Score of 0.57 is low, consistent with the M-Score reading.

Summary

Grade: F. Two fails including one critical, plus three watch items.

Revvity's F grade reflects the enduring consequences of the BioLegend debt-financed acquisition and the post-PerkinElmer-split balance sheet. Cash covers only 27% of debt (C4 fail), goodwill plus intangibles equal 124% of equity (D1 fail), Debt/EBITDA sits at 4.4x (D2 watch), and the Deloitte critical audit matter discloses a goodwill headroom of only 10-20% on the Life Sciences Solutions reporting unit.

The China receivables pattern (A1 DSO +11 days, A2 AR growth 17.8% vs. revenue 3.7%) is both a watch signal and a disclosed business issue — Revvity itself named "China diagnostic testing policy changes" as a driver of margin compression and working capital drag. The collections cycle matters for the FY2026 CFFO run rate.

The operational story is a mixed bag: 4% revenue growth, modest operating margin expansion, but gross margin compression from 60.1% in FY2022 to 54.8% in FY2025 under tariff pressure. This is a company whose reported numbers are not being manipulated (M-Score clean, auditor unqualified), but whose balance sheet and goodwill position leave minimal margin for error if either China or the Life Sciences Solutions forecast weakens further.

**Disclaimer**: This report is based on Revvity's FY2025 10-K (SEC EDGAR) and public financial data. This is NOT investment advice.

Data: SEC EDGAR 10-K (Fiscal year ended December 28, 2025) + Yahoo Finance

Auditor: Deloitte & Touche LLP (Unqualified opinion, 1 critical audit matter: Goodwill - Life Sciences Solutions Reporting Unit)