Good evening and thank you for attending today's PerkinElmer Fourth Quarter 2021 Earnings Call. My name is Bethany, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to our host, Steve Willoughby, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good afternoon everyone and welcome to PerkinElmer's fourth quarter 2021 earnings conference call. On the call with me today are Prahlad Singh, our President and Chief Executive Officer; and Jamey Mock, our Senior Vice President and Chief Financial Officer. If you have not yet received a copy of our earnings press release or slide presentation, you may find copies of them on our Investors section of our website at www.perkinelmer.com. Please note that this call is being webcast and will be archived on our website. Before we begin, I'd like to remind everyone of the safe harbor statements that we have outlined in our earnings press release issued earlier this afternoon and those in our SEC filings. Statements or comments made on this call may be forward-looking statements, which may include, but are not necessarily limited to financial projections or other statements of the company's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties. The company's actual results may differ significantly from those projected or suggested by any forward-looking statements due to a variety of factors, which are discussed in detail in our SEC filings. Any forward-looking statements made today represent our views as of today. We disclaim 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 forward-looking statements as representing our views as of any date after today. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of non-GAAP financial 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. To the extent we use non-GAAP financial measures during this call, which are not reconciled to GAAP in the attachment, we will provide reconciliations promptly. I'll now turn it over to our President and Chief Executive Officer, Prahlad Singh. Prahlad?

Thank you, Steve. At this time of the new year, I think it's always a great time to reflect on the past. When I look back on the last three years at PerkinElmer, I see a significant transformation that has taken place, likely the most in the company's 85-year history in such a short period of time. From the changes we made and programs we implemented in 2019 around refocusing our commercial and operating teams, to the output from those changes really shining through in 2020 as the company was able to quickly and aggressively react to the challenges and opportunities presented by the pandemic. I think that the PerkinElmer of 5 or 10 years ago would not have been able to respond in such an agile or innovative way as it does today by leveraging our collective know-how and efforts around the globe. When I turn to reflect on 2021, I think it is clearly the year of portfolio transformation, especially within the life sciences business. As part of this transformation, including the addition of nine businesses over the last year, we are now keenly focused on successfully welcoming more than 2,000 new colleagues to the company and capitalizing on both the commercial and scientific opportunities of the combined company. Our integration transformation office, which was established 18 months ago, has been hard at work ensuring synergies are realized both today and in the coming years. I was very excited, for example, to see all the teamwork that went into the planning and execution of a company-wide innovation summit we held in mid-November at BioLegend's San Diego campus. Scientists, executives and other business leaders from across the company all came together for several days to lay the current work for the scientific collaborations, which we look to realize across…

Thanks a lot and good evening, everyone. Before turning to the financial results, I want to remind everyone that our fourth quarter earnings call presentation has been posted on the Investors section of our website under Financial Information. As Prahlad mentioned, we had another successful quarter to the closeout of 2021, which again came in above our expectations on both the top and bottom line, despite facing some headwinds that were slightly greater than we had anticipated going into the quarter. I think this performance in the face of some cyclical adversity is a proof point of the transformation that has taken place at the company over the last two to three years, not only from a portfolio composition standpoint, but also from an operational agility and teamwork perspective. While supply chain and lockdown pressures are likely to be temporary in nature, new challenges will inevitably arise, but our team has demonstrated the ability to execute and flourish in any environment. I am grateful and proud of their efforts. Moving to the top line in the fourth quarter, it was great to see both our COVID and non-COVID revenues, again, exceed our expectations as both our discovering analytical solutions and our diagnostic segments came in better than we have expected on a non-COVID basis. I'm also pleased to see our recent addition performing very well and contribute over $150 million of incremental revenue in the quarter, with more than half coming from BioLegend. Overall, our adjusted revenue came in at $1.36 billion, which was up 1% year-over-year, despite our COVID revenues declining significantly and compared to the fourth quarter of 2020. Foreign exchange was a 1% headwind to revenue, slightly worse than what we had assumed at start of the quarter, while recent acquisitions added 11% to our total revenues,…

We will now begin the question-and-answer session. The first question is from the line of Dan Arias with Stifel. You may proceed.

Good afternoon, guys. Thanks for the questions. Jamey, on maybe just to start with the guide for the year. What is the op margin outlook that’s assumed under the $6.80 to $7? And then along those lines, are you able to split out what’s due to mix versus other factors like investments and such? Obviously, the impact of the changing COVID testing profile on profitability is a focus. So I know testing is a moving target. But any help that you can give us there as we just sort of think about shifts would be helpful.

Sure. Yes. Hi, Dan. So the operating margin assumption is in the high 20s, let’s call it, 27%, 28% overall. And much of it is due to mix. Well, obviously, we’ve got COVID going away at relatively high margin rates, and then growth in the core and M&A coming in at still 40% plus incremental, so that overall gets you to the 27%-ish operating margin rate. And in terms of driving productivity, I think it’s everything that we’ve always been talking about. We’ve got a lot of programs going on, both with our procurement teams, with new product introductions and reconfiguring everything that’s going on with services acceleration. And then to your point, we did make a lot of investments over the last year. We took some of the COVID products, the profits to invest in the future and things like R&D, in selling and marketing, digital and information technology and people. And so those will more normalize as we head into 2022. And so we feel confident that 27% is achievable here.

Yes. Okay. Thank you. And then maybe on the Diagnostics side, specifically EUROIMMUN. That was a mid-teens grower in 2019 before COVID entered the picture. Can that business get back to those levels or something close this year on the non-COVID side, just given that you’re – I think you’re egging each geography with double-digit growth? It sounds like you’re launching some new products there and presumably conditions should continue to improve here. So just wondering how you kind of presume the trajectory that you had before COVID entered the picture.

Yes, Dan. I think our assumption going into – as you pointed out, EUROIMMUN has always been a double-digit grower, and our assumption is that it will continue to be B1 in 2022 and beyond. I think the only caveat I will say, and I mean a lot of that obviously is dependent on what happens with COVID. There are severe lockdowns, and obviously, EUROIMMUN takes a backseat. But assuming, as we have assumed, that things will start to normalize into the second half of the year, that will be a double-digit grower.

Okay. Thank you very much.

Operator, we’re ready for the next question. Bethany, are you there? It looks like we’ve lost the operator for one moment, there just – bear with us one second. Thank you.

Apologies. Our next question is from Vijay Kumar of Evercore. Vijay, please go ahead.

Hey, thanks for taking my question. Maybe, Jamey, one, I’ll start with the guidance here, and I had one for Prahlad. The guidance simplistically, you guys said 16% base growth, organic growth in fiscal 2021, and you’re guiding to 6% to 8%. That feels like it’s coming in a little bit better than what we were expecting given the comps here. I think you mentioned backlog here, orders coming in above. Maybe talk about your backlog, and how much visibility is that giving you to this high singles growth? Also maybe talk about pricing. I think you made some comments on pricing, price actions you took. And why is it prudent to assume no impacts of lockdown just given, I think you mentioned, three to four points of impacts in Q4?

Hey Vijay, there’s a lot in there. So, I don’t think it should be a surprise the 6% to 8%. I think we’ve been saying, look, the base business before our acquisitions could grow 5% to 7%. And we said that by 2023, we’d be high single digits. And along the way, in 2022, we’ll have a lot of these acquisitions come in throughout the year. And that’s the first part of the step up. In fact, on a pro forma basis, with our acquisitions, we are actually high single digits with this guide. So the 6% to 8% is just BioLegend coming in, in the fourth quarter, several others coming in the first through the third quarter. So hopefully, it’s not too much of a surprise. And I think just generally speaking, as we step back from it, I think the end market seems strong. I mentioned our backlog is strong. We’re not expecting a lot of the backlog to flush this year. Pricing has an upside lever to it as well. But the difference between the 5% to 7% and the 6% to 8% is really all in DAS or the same thing on a pro forma basis. If you go back, we said DAS could be mid-single digits in the past and the Diagnostics could be high single digits. DAS is now moving to mid-to-high single in this guide. And on a pro forma basis, it is a high single-digit guide. So overall, I hope it’s pretty consistent with what we’ve been guiding people over the next couple of years.

And just to add to that, Vijay, this is probably another proof point that we are on our way to the high single digits growth that we said for 2023. As you recall, three weeks ago, we said at the JPMorgan conference that we will be 7% to 9% in 2023. I think our story that of being in the midst of the transformation is over. Our transformation is completed, and we are starting to see the benefits of what all the hard work that has gone on over the past two, three years. So, I think moving forward, as we move into 2023 as a high single-digit company, this is the next step in that direction.

That’s helpful commentary, Prahlad. Maybe one related to that question on your 2023 comments rate. I think, at JP, you guys said $7 of earnings or north of $7 with the margins of like 26%, I think if I’m looking at your base implied margins here for fiscal 2022, I think you guys were already at 23% op margin here for the base business with BioLegend being incremental. Maybe talk about your margins, visibility into margin trajectory, that 26% you laid out for fiscal 2023? And then BioLegend still expected to be $380 million of the contribution in fiscal 2022? I thought Q4 perhaps came in a little light.

I don’t think Q4...

Yes, Q4 came in right as we expected, Vijay. BioLegend overall still hit $320 million of revenue for the year and was up 33% versus the prior year.

And we’ve said $380 million for the year. That’s consistent and strong. Well, I think to your bigger question really, Vijay, that you asked. I think the way to think of it is that for us, and both Jamey and I have pointed out, 26% is just a midpoint into our journey as we continue to transform the company. This has really changed. We are now better equipped to overcome cyclical or other challenges. Essentially, if Diagnostics and Life Sciences is 80% of our business. I think that’s the piece that – and I continue to communicate to you guys that this is a company that is now going to be a high single-digit growth company, which is going to deliver margin in the late 20s. And we are at a point where essentially, you know what we have forecasted for the next 24 months. If you look at what we have pointed out for 2022 and we just pointed out where 2023 will be for us at JPMorgan. So, I think, I couldn’t be prouder of the story that we have. We are sitting here to communicate on behalf of our 16,000 employees today.

Fantastic. Congratulations gentlemen.

Thank you, Vijay.

Thank you, Vijay.

Thank you. Our next question comes from Dan Leonard of Wells Fargo. Dan, please begin with your question.

Thanks for the time here. Just a couple. First off, on pricing power. Can you elaborate a bit more on how you feel about pricing power across the enterprise? And perhaps quantify the greater pricing you expect to capture in 2022?

Hey, Dan. So a big portion of our business, as you know, is on reagent rental. So to the extent that they are coming up for renewal, we can affect those. But much of our business is under two-year, three-year, five-year contracts. Otherwise, though, historically, pricing has been, we’ve called it less than 100 basis points, maybe 50 basis points. And while we don’t want to guide specifically or I would say exactly what our pricing power will be, it’s going to be, as I mentioned in my prepared remarks, substantially more this year. And we’ve been having conversations with our customers, our commercial team, as I’ve mentioned in the past, there doesn’t seem to be a lot of pushback. So, we feel confident in having a lot more pricing power this year to the extent that we can affect it in certain contracts.

And then a follow-up, Jamey, there was a lot of discussion of backlog in the prepared remarks. It was unclear to me how much of the strength in backlog is due to the supply chain issues and ability to fill all the orders by year-end versus core organic backlog growth. Is there any way you could elaborate on that further?

Yes. I would say it’s a small – the supply chain issues, Dan, were a relatively small component of our backlog growth. So to put that into perspective, our backlog is up 50% year-over-year, and it’s the strongest it’s ever been. So yes, supply chain played a small role in that, supply chain pressures and push out that is. But overall, the demand on all the end markets is extremely strong, both instruments and consumables are up substantially, so not a huge impact on backlog.

Appreciate the color. Thank you.

Thanks Dan.

Thank You. Our next question comes from Derik De Bruin of Bank of America. Derik, please begin with your question.

Hi, good afternoon. I wanted to follow up on Dan's question. So across the Life Sciences industry, everyone is talking about just gaining share and not everyone apparently can gain share. I mean, is it just that the fact that the markets are much stronger than they have before and we're sort of the next level of demand versus everybody claiming they're taking share from maybe else? I mean, I'm just trying to understand the dynamics because the growth for most companies is doing a lot better, and we're sort of that – you would think that a lot of catch-up spending is done. So it's more of a commentary on the broader end market outlook that you're seeing. And then it goes to the next point on this one is like how sustainable is this? I mean, are we in a new – is the market is now 4% to 6% growth where they were historically particularly in the DAS segment? Thanks.

Yes, it's a great question, Derik. But I think the starting point, obviously, is that the end markets are strong. But I think two other factors to consider. One is it depends on which space you are playing in. We've sort of ring-fenced the areas both in Life Sciences and Diagnostics where we are playing. We are not sort of a provider for everything for every customer, right? And I think whether you look at it in preclinical discovery, either on the small molecule side or the biologics side, we have sort of built our forte in that market. Just like on the Diagnostics side, we've done with reproductive health or immunodiagnostics. So I think both of those play a role. And then the fact that we've consistently been able to put solutions in front of our customers, I mean, if you go back and recall what we presented three weeks ago, the examples around how we are building a total solution work for a solution around infectious diseases with Oxford assays or around Applied Genomics. I think the answer to your question really is, yes, the end markets are strong, but I think also the fact that we are now able to bring a portfolio which our customers want is also playing a role. Anything else, Jamey?

I think that's it.

Thanks. And the pricing gains that you're seeing, I mean, do you expect those to be sticky in 2023? I'm just wondering, is there some deflation at some point where you have to give price back.

Hard to say, Derik, at this point. I mean, I think, overall, the value proposition of our products is quite strong out there. So you would hope that much of this sticks and remains moving forward.

So we hadn't heard you guys talk about Vanadis in a while, but would love sort of like an installed base update, how you're competing against some of the NGS players? Just sort of a little bit deeper in that one. And sort of what can that contribute to the reproductive health business, and then I'll get off.

Sure, Derik. I mean, I think as I've mentioned, we are sort of trying to stay away from providing numbers and how many units we are installing. But as I have pointed out earlier, we have a very strong pipeline. We've started shipping equipment and instruments, and we are doing a lot of validations across several sites. I think our expectation, I would say, that from a commercial perspective, that we'll double our volume in 2022. But I think more importantly, it was the fact that you pointed out around some of the other players. And I think there has been enough information out there around the press that sort of validates our product segmentation that we were trying to do with Vanadis when we launched it, i.e., provide OBGYNs and our customers with a solution that is easy to put into action and implement. And more importantly, it focus on what matters, which is 13, 18 and 21. And I think you have seen hopefully enough news and articles around that, that helps validate that assumption that we made going into with Vanadis. And I think it's going to be a big driver for us to be productive health into mid-single digits.

For sure.

And what's the price point of Vanadis test versus an IPT, and I really have done –with the sequencing based on IPT.

Absolutely great question. If you are going to do $5,000 to $10,000 per test, it's $100 per test versus what you get from NGS, which is several hundred dollars.

Thanks.

Yes.

Thank you, Mr. Bruin. Our next question comes from Catherine Schulte of Baird. Please go ahead Catherine, your line is open.

Hey guys congrats on the quarter and thanks for the question. I guess, first, one of your COVID testing peers provided a framework for thinking about COVID testing upside potential drop through to EPS, just given there's such a wide range of outcomes here. Is there a way to frame that for you guys? Like each 10 million of COVID upside would yield an additional $0.03 of EPS or something like that.

Yes. Catherine thanks for the kind remarks. I would say COVID has pretty fairly high incrementals. So without giving specifics, we have been saying its north of the Diagnostics gross margins, not a lot of extra selling cost to it. So I think that should give you some math in terms of what an extra $100 million could be. It could be $50 million to $60 million of operating profit and then tax effective. It does come with a higher tax rate. Most of the jurisdictional incomes are a little bit higher than where we play and where our mix is. So hopefully, that gives you a little bit of color there.

Yes, helpful. And then can you quantify of the three or four points of supply chain and lockdown headwinds, how much of that was really lockdown related? And it seems like there should still be some lockdown impact in the first quarter. So what are your assumptions there in the 1Q guide?

That's right. Yes, it will remain in the first quarter here. To your point, we've taken that into account in our guidance. But I would say the lockdown impact as opposed to supply disruption impact is maybe 1/3 to 40% of that overall number. So call it one point to 1.5 points.

Great. Thank you.

Thank you.

Thank you, Ms. Schulte. The next question comes from the line of Josh Waldman with Cleveland Research. You may proceed.

Josh, are you there?

Josh, you are on mute.

Yes. Sorry, guys. I was on mute. Just two for you. First, I wondered if you could comment on recent trends within the food business. I know last couple of quarters, that business has been growing mid-single digits, maybe a bit below the gas average. Are you seeing backlog build in that business as well? I know you called out Life Sciences seeing backlog build in Life Sciences, but wondered if you're seeing backlog build in the food business.

Yes. So it has been growing nicely. It's coming off a relatively easy comp in 2020, Josh. So – but as we've mentioned in the past, we've done a lot with our food business, and it's really comprised into three areas: our food safety business, which is doing extremely well, particularly in China with our Meizheng business; food quality, we’ve had some historical issues, but I think we’ve started to write the shift there; and then cannabis, which, as you know, was significant in the year 2019, which is why the 2020 numbers looked pretty rough. So overall, I’d say there’s signs of life in cannabis. I would say food safety is doing extremely well. Food quality is doing well. And overall, for the year, grew mid-teens, I think. And I think as we head into 2022, we’re very confident. So we’re going back to our historical guide of, say, 6% growth in food. But I think there’s plenty of reasons why there could be upside there. And in terms of backlog, yes, we had the backlog grow in our food business as well. It too was impacted a little bit by supply chain. So it was both supply chain pressure plus demand increased our backlog in the food business.

Got it. And then can you provide some additional context on what you’re seeing in China from an end market perspective? I guess, what level of growth are you expecting from that region kind of within your 2022 guide?

Yes. So China has been extremely strong for us. I think for the year, it did 20% or 24% growth, something like that. And that was obviously off an easier comp in the year 2020. But as we head into 2022, we’re thinking high single digits. So we are still factoring in some concerns around COVID, and particularly, in our EUROIMMUN business. As you might remember, Diagnostics makes up a large portion – a larger portion of the mix in China. So reproductive health and the birth rate pressures that we’ve seen in China dragged that down kind of in the high single digits versus historically, we’ve been seeing double digits. So in this guide, we’re thinking high single digits overall, Josh. Life Sciences has been extremely strong. Applied Genomics has been extremely strong. But as a percentage of the overall business, it’s a little bit smaller.

Got it. Appreciate the context.

Thank you, Mr. Waldman. The next question comes from the line of Jack Meehan with Nephron Research. You may proceed.

Thank you and good afternoon. I wanted to continue on the China discussion, but just more focused on a reflection on the fourth quarter. It’s still early in earnings season, but haven’t heard other companies really talk about disruption in the region, and we’ll have to wait and see what others have to say. But I was just curious if you could elaborate a little bit more on some of the headwinds you saw in the quarter and what might have been unique to PerkinElmer that others haven’t called out yet.

Yes. I would say two things. Josh, remember in our Diagnostics business – or sorry, Jack, there’s two things. In our Diagnostics business, EUROIMMUN obviously plays a big role. And when we saw Omicron lockdowns affect the month of December, we started to have a pretty dramatic impact, some in autoimmune, but largely in other infectious disease and allergy, which is a big portion of the EUROIMMUN business over there, number one. And then number two, supply chain still affected our business over there. So the global applied backlog, global food backlog, global Life Sciences backlog, every region was impacted as a result of that. So we saw it both on the Diagnostic side, as well as some of the instruments on the DAS side.

I think, Jack, more importantly, if you just look at the macro factors for China for us, that continues to be a growth market for us. That’s not going to slow down. If you look at the – one of the bigger challenges for us for some time, as you know, has been the birth rates. I think it’s going to, hopefully the government is putting enough incentives, and our hope is that as the party meets again in August this summer, they are going to put more incentives into play for people to have kids. So either from immunodiagnostics, and as Jamey pointed out, Diagnostics is a big piece of our play there. That market is not going to slow down. And we haven’t seen any impact as such that it would.

Great. And as an unrelated follow-up for you, Prahlad, a lot of commentary in the script about, obviously, you guys were active with M&A in 2021. Curious just level of appetite for more deals in 2022. And on a similar vein, given the discussion around women’s health, reproductive health, Vanadis, what’s your level of appetite for doing deals kind of in the specialty lab space to maybe help bolster that strategy?

Yes. I mean, I think there are three questions in there, Jack. In terms of our ability to do M&A, in terms of the timing on that, and in terms of the space, right? So I think we both said pretty clearly that I think our focus right now will be on debt repayment and ensuring that we get back to the leverage that we are comfortable in, as we've pointed out. So once we do that and once we get to a position where we do M&A, you will see more of it in the spaces that we have played recently. In the Life Sciences segment, if there are any holes in our portfolio, we'll continue to fill that and bolster that. And on the Diagnostic side around infectious diseases. As you know, we've now got a significantly large installed base of new customers, and we need to fuel that engine. So similar to what you saw with Oxford around tuberculosis or with ideas around endocrinology, we will continue to bolster our portfolio on assays on the Diagnostic side.

Thank you.

Thank you, Mr. Meehan. The next question is from the line of Patrick Donnelly with Citi. You may proceed.

Hey, thanks for taking the question guys. Jamey, maybe one for you on the backlog piece, I know you talked about it being at a record and then going forward, planning to run the business with a bit higher level of backlog than in the past. Can you just talk about – maybe help frame that whether it's a magnitude of where we are today or kind of how much larger you're looking to go in the future. And then again, just wondering how much that will improve the visibility and transparency going forward?

Yes. I mean, I don't want to give too Patrick, but I would say it's material particular to the businesses where we sell instruments. And that's now 20% to 25% of our overall revenue, just to put that into perspective. So if we're $5 billion, $1 billion, $1.5 billion is what we're talking about here. And instruments provide good visibility and I think consistency in our ability to meet what we say we're going to do here. So I'd say it's a relatively high portion of that overall segment. On the consumables side, that's much more flow and even though the backlog did increase, like I mentioned, that just already has some level of consistency to it. So I don't know. That's a little bit more color, but I think that level of backlog affords us the visibility to consistently execute what we say we're going to do.

That's helpful. And then maybe just one on BioLegend, it sounds like your revenues are tracking pretty much where you guys expected. Can you just talk about the synergy opportunity now that we're, what, five months, I guess, since you closed it, both on the cost side and revenue side. I know, obviously, it wasn't a cost synergy deal. And you guys wanted to invest in the R&D side there, but maybe just talk through that. And then the margin profile, I think it's a little over 40% op margins. Where those could go as well would be helpful?

Yes. So like you said, Patrick, this is not a cost synergy play whatsoever with BioLegend. We plan to continue to invest in the business. And we did say, yes, operating profits is in the high-40s. I think they can continue to tick up as they get more volume leverage for sure over time. So nothing has affected our overall 50 to 75 basis points beyond 2023, and BioLegend fits into that. I'd say as we look at 2022, commercial synergies is what we're looking at. We've mentioned five years out; we could have $100 million of annualized. And so I don't think it will be a perfect linear $20 million in the first year, it might be half that from a synergy perspective, but I think the teams are already working together. There's been a lot of training sessions, a lot of different discussions around how to execute, how to quote, et cetera. And then on the innovation side, I think that's what's more exciting. I mean, Peter Brighton Smith talked about Oxford and being able to use some of their antibodies, and we're starting to look at that. But we and Prahlad mentioned we had our summit recently. I think if you look at the innovation side, wrapping not only Biogen, but Nexcelom, Oxford, SIRION, Horizon, we have some serious plays be able to make a difference in cell and gene therapy, our continued discovery business, more on the biologics, as well as Diagnostics. So I think the technology and innovation play is probably more exciting in the longer term.

Yes. And Patrick, just to add to that, I think the benefit that BioLegend brings short-term or near-term, as Jamey pointed out, the revenue synergy is an obvious 1 as we expand it into geographies where they don't play a role. But I think mid- to longer term, the opportunity that BioLegend gives us is that it gives us several shots at the goal. It's not just 1 shot. It's on the Diagnostics side, whether it's with EUROIMMUN or Oxford, and it's on the Life Sciences side, whether it's with Cisbio or Nexcelom. So the benefit that BioLegend gives us is that it gives us opportunity to realize the product synergies and technology synergies with several of our businesses rather than any one or two.

Thanks helpful. Thank you guys.

Thank you Mr. Donnelly. The next question comes from the line of Matt Sykes with Goldman Sachs. You may proceed.

Thank you. Good afternoon and thanks for taking my questions. Appreciate squeezing me in. Just two quick high-level ones for me. Just one on DAS. We spent a lot of time over the past year, a couple of years improving the business from an operational efficiency standpoint, but also obviously putting in acquisitions. I'm just wondering, it sounds like you feel like you've set that business up very well for future growth. When it comes to profitability, are there still areas like OneSource comes to mind where you feel like you can still get some levers on increasing margins from an operational efficiency standpoint? And could you just comment on the progress you think you've made to that point? And how much more there is maybe to go for in that?

Yes. Hey Matt, so I still think there's a large amount of opportunity in the DAS business for margin expansion. You mentioned OneSource, so I'd say that's number one. And we've talked a lot about everything we're doing around services and software that we invested in. I would say Life Sciences as a whole also has a lot of leverage. So as we grow the volume there, I think you have additional upside on the leverage line for life sciences, in particular. And then analytical or applied markets, I mean, I've mentioned a lot about how we're trying to redesign the products? How we're trying to sell more consumables? So I think all three of our end markets, food as well, all have opportunity. And I would say, generally speaking, we're probably in the third or fourth inning, maybe to use a baseball analogy here. So I still think there's plenty of runway in the DAS business.

Or I think just taking the – I mean, the natural progression of it has happened, Matt. Because as we've evolved the portfolio, if you just put Life Sciences in the DAS side, if you just put Life Sciences and informatics together, that's close to 70% of the business now, right?

For sure. Yes.

And I think that itself is a big needle move around the operating margin for the business.

Got it. Thanks.

Yes, on a pro forma basis, Matt. This is 68% of the revenue of DAS that's going here. So I think that helps for sure. And that's really what's moved from mid-single digits overall to on a pro forma basis, DAS had a high single-digit overall organic growth perspective.

Got it. That's very helpful color. And then just lastly, just on reproductive health. You talked about mid perhaps some stabilization in the birth rates, particularly in Asia. But if that were to prove to be stubborn and not stabilize or grow can improve utilization and menu expansion fully offset that impact if it's sort of declining at sort of similar rates we've seen and not get worse?

Yes, there are two levers to it, right? Obviously, one that you're talking about, Matt is the geographic expansion that we would be able to offer in place. But also the recent new NPI launches that we have had from a menu expansion perspective, whether it's around DMD, around SLA, around X-ALD, as they start gaining traction and as more and more states for example, in the U.S. and in Europe start adopting those that will help. But I think the biggest driver for reproductive health in 2022 and beyond is still going to be Vanadis. And I think as Vanadis gains traction, as it gains adoption, that is the needle mover that to bring reproductive health back into the mid-single digits.

Totally agree. Two things, one clarification, Matt. So we didn't say APAC birth rates have normalized. In fact, China continues to be a significant drag, it was in the U.S., we saw some inflection points, perhaps, I wouldn't call it an inflection point yet, but maybe there's signs here, as well as certain parts of Europe. So that's clarification number one. We're still banking on the fact that China has been going down, to Prahlad's earlier point. At some point, it should hit bottom. And then the second thing is just to reemphasize, what Prahlad said. I mean, even if you look at our two year stack in reproductive health to your point, we've been able to offset significant declines in birth rates. On a two year stack basis, we are low single digits. So we're already doing what you said. And then if you add to it Vanadis, like Prahlad said, that gets you back into the 5% to 10% range. And if birth rates normalize, that's only upside to this as well.

Great. Thank you very much for the clarification. Appreciate it.

Thanks, Matt.

Thank you, Mr. Sykes. Our last question is from the line of Max Masucci with Cowen. Please go ahead.

Hey, thanks for taking question. So you're entering 2022 as increased exposure to a wide range of next-gen proteomics and bioprocessing applications. So in those two areas, can you call out any specific products that you expect to become real – more meaningful revenue contributors throughout the year? Whether it's antibodies for upstream and downstream, proteomic applications or even cell culture media and other GMP-grade products for bioprocessing?

Yes, Max. As you know, we don't play in cell culture media or in the bioprocessing side. But as you pointed out on the antibody side for proteogenomics, that's one of the fastest-growing markets or segments of BioLegend. And I think that's the opportunity that we have. So from a near-term perspective, that's what we would see. Anything else, Jamey?

I would just say, I mean – I agree, we don't play a lot in bioprocessing and self-culture. I mean, a small degree in Horizon to some point. And I think we see a little bit of prospects there.

Yes.

Okay. Got it. And then one final one here. You're leveraging BioLegend's reagent capabilities in a partnership with a next-generation flow cytometry company that has increased multiplexing capabilities. So understanding that the partnership is just getting started, it would be great to hear what your expectations are for that partnership in 2022? And then maybe just more broadly, whether you see additional opportunities to optimize and merge your reagent offerings with other life science instrument companies and similar partnerships.

Yes. I mean Max I think BioLegend has had very good partnerships with Cytek as you are saying, the next genomics and several companies. And I think that's going to continue. There's no reason that's going to stop. But I think the one that you are pointing out that's in its initial stages and it's just beginning. So it's tough to sort of give any quantification or any more certainty around that. But obviously, it's a natural fit with the flow of cytometry Instrument Company, and that's the opportunity that they are trying to leverage.

Got it. Thank you

Yes.

Thank you. Mr. Masucci. There are no additional questions waiting at this time. I would like to pass the conference back over to Prahlad Singh for any closing remarks.

Thank you, Operator. In summary, this is a very exciting time for PerkinElmer. In many corners of the company, we are moving the needle, both in science and health care and we are pursuing important external collaborations that we've talked about today. With the global health care networks, governments, organizations and most reputable partners, key opinion leaders and influencers across our markets, but more importantly we feel like we have built a greater sense of purpose, energy and team work. I'm confident that 2022 will be an exciting year as we have all the pieces in place to drive towards our vision of being a champion for growth. Thank you for your time this evening, and have a great evening.

That concludes the PerkinElmer's Fourth Quarter 2021 Earnings Call. I hope you all enjoy the rest of your day. You may now disconnect your lines.