Hello, and welcome to the Q2 2024 Revvity Earnings Conference Call. My name is Elliott, and I'll be coordinating your call today. [Operator Instructions] I would now like to hand over to Steve Willoughby, Senior Vice President, Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Revvity's second quarter 2024 earnings conference call. On the call with me today are Prahlad Singh, our President and Chief Executive Officer; and Max Krakowiak, our Senior Vice President and Chief Financial Officer. I would like to remind you of the safe harbor statements outlined in our press release issued earlier this morning and also those in our SEC filings. Statements or comments made on this call may be forward-looking statements, which may include, but may not be limited to financial projections and other statements of the company's plans, objectives, expectations or intentions. The company's actual results may differ significantly from those projected or suggested 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 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 the 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. I'll now turn it over to our President and Chief Executive Officer, Prahlad Singh. Prahlad?

Thank you, Steve, and good morning, everyone. The power and potential of Revvity were on displayed during the second quarter, which allowed us to exceed our financial expectations for the quarter despite continued market uncertainty persisting amongst some in the pharma biotech market. While the headcount reductions, site consolidations and other cost cutting measures we have seen from these customers since mid-last year continued, we were more than able to offset the impact of these actions through meaningful strength in our other businesses. Revvity's uniqueness enabled us to overcome these challenges and continue to post leading financial performance. I expect this differentiation to continue even as pharma spending eventually normalizes. Max will provide more specifics, but I wanted to briefly touch on a few key points as it pertains to our recent financial performance. Our negative 1% organic revenue decline was at the upper end of our expectations for the quarter. Our customers are continuing to work through temporary cyclical pressures with their preclinical spending, and I'm confident in the eventual return to a more normalized environment, like, we've seen over the last two decades. We had fantastic performance in a number of other areas of the business in the quarter, which should continue over the remainder of the year, specifically within our signal software and diagnostics franchises, both of which are somewhat unique to Revvity compared to our general peer group. We also continued to tightly manage spending, which resulted in 29% adjusted operating margins in the quarter, up significantly from the first quarter. These good top line results combined with our strong margin performance led to adjusted EPS of $1.22, which was meaningfully above our expectations. In addition to the strong P&L performance, we continued to show great progress on managing our operations, leading to another quarter of…

Thanks, Prahlad, and good morning, everyone. As Prahlad briefly touched on, in the second quarter, we continue to do a very good job of executing on those items that are more fully within our control, such as our expenses, which led to strong margin performance and our working capital management, which led to exceptional free cash flow conversion and cash generation. While pharma and biotech spending continued to remain challenging in the second quarter, the uniqueness of Revvity allowed us to overcome these headwinds and be in a position to raise our margin and adjusted EPS expectations for the year. This strong performance year-to-date, combined with our successful cash generation, positions us to more aggressively deploy capital at a very opportunistic time. We plan to begin more significant share repurchase activity going forward in addition to remaining focused on proactively deleveraging. These actions are expected to drive meaningful value creation for our shareholders in the years to come, while providing even more flexibility to us for future capital deployment activities in the future. Now turning to the specifics of our second quarter performance. Overall, the company generated total adjusted revenues of $692 million in the quarter, resulting in a 1% decline in organic revenue, which was at the high end of our expectations. FX was a 1% headwind, which was slightly worse than expected, and we again had no incremental contribution from acquisitions. As it relates to our P&L, we are pleased to report we generated 28.7% adjusted operating margins in the quarter, which was up significantly versus the first quarter and was roughly 120 basis points above our expectations. I'm extremely proud of our team's execution from a cost perspective by controlling what we can control, realizing additional synergies and experiencing the full benefit of the restructuring actions we…

Thank you. [Operator Instructions] Our first question comes from Patrick Donnelly with Citi. Your line is open. Please go ahead.

Hey. Good morning, guys. Thanks for taking the questions. Prahlad, maybe on the reagent side, certainly, I understand the technology licensing comps weighing things down there. But as Max talked about, that low to mid-single maybe a little bit below expectations, sounds like the pharma piece is just lingering there. Can you just talk about, I guess, what you're seeing kind of break down the business a little bit, whether it's BioLegend or different segments and just talk about the trends you're seeing and then expectations, it does not sound, like, you guys are baking in much of an improvement in the guide. But it would be helpful to just talk through what you're seeing and just expectations what you guys are looking for to signal a recovery there?

Hey, Patrick. Good morning. Sure. So on the reagent side, as you heard from both Max and I in the prepared remarks, we saw some sporadic, I would say, volatility and additional site consolidations and close down that happened around the middle of the quarter. But the headcount reductions and site consolidations we saw, I think it's now mostly behind us. I mean despite -- outside of this, I would say, sporadicness, we've seen generally nine months of stability and that's what gives us increased confidence that the worst is behind us. In terms of the current guidance, we assume very similar level of absolute dollars in the third quarter versus the second quarter with some, I would say, normal seasonal improvements from that going on in 4Q. But I think the essence to your question is, we feel like the worst of the cuts that are going on in the pharma biotech is now likely behind us and that's what sort of gives us a sense of increased visibility into the second half.

Okay. That's helpful. And then maybe one for Max, just on the margins, nice performance, good to see that come through in 2Q. You obviously moved the guidance up a little bit there. Can you just talk about the moving pieces? How much of it is the restructuring versus any mix? And then it sounds like, again, this 20, 20.5 good launching point for next year. Can you just remind us how you think about the algorithm as we work our way into next year and then any moving pieces we should be thinking about? Much appreciated, guys. Thanks.

Yeah. Hey, Patrick. So from a margin standpoint, I think we're encouraged by the performance for the team for the first half of the year. Again, that's leading us to take up the margin expectations for the full year. I think when you think about the factors that are driving this, I would say it's really continued progress on our integrations and synergies from some of the recent acquisitions in addition to the restructuring actions that we took at the end of last year. So, I think it's kind of a combination of those two factors is really the predominant driving force on the margin side. As we look longer term, as a reminder, our LRP kind of calls for 75 basis points of OMX per year, assuming a normal market growth rate environment. I think as we mentioned in the call, we'll see about 25 here either at our Analyst Day or again in January. But I think for us, if we are in a normal market environment, we feel very confident on the 75 bps OMX per year.

We now turn to Jack Meehan with Nephron Research. Your line is open. Please go ahead.

Thank you. Good morning. I wanted to ask about China diagnostics. Starting with immunodiagnostics flat in the quarter, what are your expectations for the second half of the year? And can you just remind us what the go-to-market changes you were made were earlier in the year and how those are playing out? Thanks.

Yeah. Sure. Hey, Jack. So from a China diagnostics standpoint, I would say for the second quarter, really the headwind we faced was on the instrumentation side, as we mentioned in the prepared remarks, China IDX was right in line with expectations being approximately flat. As we look towards the second half of the year, specifically again for China IDX, we anticipate positive mid-single digit growth in the second half of the year. And I think then to your last question on the go-to-market change, this was for one of our older legacy product lines that we had in China. It was related mostly to an infectious disease portfolio. At the beginning of the year, we did go to an indirect commercial model. And so again, that's been a little bit of a headwind from a revenue perspective, but it's been a tailwind from a profitability standpoint and it's more or less played out as anticipated.

Got it. Okay. And then on the newborn screening side, it sounds like that was still down in the quarter, but you're confident in that making a turn, like, what are you seeing on the ground? What gives you that confidence that business is going to turn? Thanks.

Yeah, Jack. I think just as we've talked about earlier, the prenatal screening tends to be an early indicator around the birth rates that are going to play out over the second half of the year. So it's nothing more than just seeing the prenatal screening numbers going up that sort of gives us a sense that there will be improvement in birth rates as we look into the second half of the year.

We now turn to Puneet Souda with Leerink Partners. Your line is open. Please go ahead.

Great. Thanks. Good to be here, Prahlad and Max. So first question is just a bit more on the -- Max commented about the pharma layoffs. We are all aware of it. So Prahlad, that some of those folks -- preclinical folks are not getting back to labs anytime soon. So wondering sort of what gives you confidence in the recovery within the biopharma segment? And then maybe if you could talk about early stage discovery versus academic. We saw some improvement from your peers in the -- more in the development and later stages, but just wondering what you're seeing with the early discovery folks?

Yeah, Puneet. I think the reason for the visibility that we talk about is that, yes, the headcount reductions have happened and the site consolidations are happening, but it's not that we are getting any indication that the programs are shutting down. It's the time that it takes to transition the program to say from the West Coast to an East Coast side that sort of gives us a sense of visibility as to when it comes back up and running. And then, that gives us a sense of, what I said earlier, visibility into when the programs are and that's what causes the volatility that I talked about earlier. In terms of early discovery versus clinical, if I'm not wrong, that was what your question was, Puneet?

Yes.

I mean, at the end of the day, as I've said earlier, innovation is only going to happen as they continue to invest in early discovery programs, whether there are only two ways that you do it, either you invest in discovery or you buy compounds. And right now, what we are saying is that there is no indication that pharma biotech is saying that we are going to shut down the pipeline for innovation.

And then just the last point on sort of the pre-revenue biotech funding question. Again, as a reminder, it's less than 5% overall of our total company revenue that's exposed to this customer group. However, I would say that the second quarter was a sequential improvement from the first quarter. So it does appear to be getting better, but it is still challenged overall and did decline in the period.

Got it. Very helpful. And then just on the buybacks, Max, those $330 million, is that entirely this year? Just wanted to get the view on the cadence for that. Thank you.

Yeah. So in terms of the $330 million, Puneet, that is just the authorization we have left on our share repurchase program. It's TBD, exactly how the timing of that plays out. I think the comments on our call were that we're going to be more opportunistically aggressive on the share repurchasing. And I think that's what all our comments are at this point in time.

Yeah. I mean, just to add to that, it's just the existing authorization that we have. But Puneet, more broadly, just looking at our current valuation and where we think we are headed in the future, the return on buying back our stock makes a lot more sense to deploy capital around that, particularly, if you look at the continued elevation for M&A candidates, and we honestly don't expect this valuation disconnect opportunity to last forever. So, we plan to be aggressive while it does.

Got it. That's helpful, guys. Thank you.

Our next question comes from Vijay Kumar with Evercore ISI. Your line is open. Please go ahead.

Fantastic. Good morning, Prahlad, and thanks for taking my question. One on the second half organic revenue phasing. I just want to confirm if the implied Q4 is high singles. In related to that, I think I heard you say life science instrumentation was down 30% in China because of the stimulus-related delays. Can you give some flavor on what kind of instruments is a small versus large ticket items and when -- and what is the guide assuming for back half on those China instruments?

Yeah. So maybe I'll start with the second one first, Vijay, just on the China life sciences instrumentation. So as a reminder on our portfolio, most of the items are what we would consider bigger ticket items. The ASP is sort of 500,000 plus from a life sciences instrumentation standpoint. I think as we look at the second half of the year right now, our guidance assumes it's still down mid-single digits for the second half of the year from an instrumentation standpoint. And so, we'll see how that plays out, but that's what the assumption in the guidance is. I think as you look at the overall second half organic revenue ramp, in the second quarter, our guidance is for positive low-single digits, which then implies for the fourth quarter that you're going to be looking at high single to low double-digit organic growth range in the fourth quarter. Now that step up has a couple of different components. Half of that step up is related to instrumentation, which is really just normal seasonality between the third and the fourth quarter. We are not factoring in any change in market environment. Then there's another 2% of that is related to our software business, which is just the renewal timing in our pipeline, and we have good visibility into that. The remaining couple of percentage points is really related actually to China diagnostics and the two pieces there. One, it's an easier comp for immunodiagnostics in the fourth quarter. And then, as we already talked about, we are anticipating a step up in our neo business in the fourth quarter in China.

That's extremely helpful, Max. And maybe one on margins here, pretty impressive free cash outperformance and OM execution. The -- I think your cost actions was $100 million last year. Did we pull forward the savings? Like, what is the total cost actions benefit we're expecting for fiscal '24 and what is remaining for fiscal ‘25?

Yeah. I think, so just as a reminder too, Vijay, when we had come into this year and we are calling for flat operating margin performance year-over-year, the dynamics that played were one, the cost actions we took at the end of last year, but then two, the return of the variable comp, which we said should normalize in 2024 versus the compression that it faced in 2023. So those were the assumptions coming into this year. I think what you're seeing is just continued execution on a lot of the operational initiatives we have. I talked about some of the synergies and integration work that continues to be ongoing. And I think, again, as we look again in the outer years from a margin standpoint, this is what really gives us the confidence in our ability to execute and sort of reach our ultimate margin entitlement from an overall company perspective.

Got it. Thanks, guys.

Our next question comes from Matt Sykes with Goldman Sachs. Your line is open. Please go ahead.

Good morning. Thanks for taking my questions. Maybe just focus on applied genomics for a minute. You mentioned the weakness was due to subdued pharma demand. Just curious the dynamics of the applied genomics business as it relates to pharma demand. Should we see a similar level of recovery and cadence for that recovery versus what you're saying in life sciences or is there something about the applied genomics business that you think might take longer for the recovery to take hold in that specific business?

Yeah . Hey, Matt. From an applied genomics perspective, I don't know, if there's anything specifically unique to that business that I would call out. I think as you've been following the company over the past six, seven quarters, it's been a meaningful headwind for us as an overall company. The business has been facing two headwinds. One is on the pharma biotech side and then the second was the build out of the installed base on the clinical side during the COVID period ramp. I think what we're seeing here is in the second half of the guidance is we are assuming a similar market dynamics that we saw in the first half of the year. We continue to work through those two headwinds and really the function of the performance in the second half is the same market environment and normal seasonality in the fourth quarter.

Yeah, Matt. If you recall, I think this product line grew close to 50% two years in a row. So that this is hopefully what we are seeing is now the bottoming out of it.

Got it. Thank you. And then, Max, just for modeling, just would love to get what you achieved in terms of pricing in the quarter and what your expectations for pricing are embedded in the guide for the balance of the year?

Yeah. So from a pricing perspective in the second quarter, similar to the first quarter. In the first quarter, I think we mentioned it was around approximately 100 basis points of price. I think we have a similar assumption for the second half of the year. I would just say overall, obviously, given the market environment, pricing is, I would say, more challenged than what it is in a normal year, but we continue to still get price on the life sciences side. Yeah.

Great. Thank you very much.

We now turn to Dan Brennan with TD Cowen. Your line is open. Please go ahead.

Great. Thank you for the questions, guys. Congrats on the quarter. If we can just go back to reagents, I know it came up earlier in the call given the size of that business for you. Could you just provide a little more color on BioLegend versus legacy and kind of how we think about reagents Q3, Q4 and kind of any visibility you can provide on that front?

Yeah. I think we've been pretty consistent in not breaking out individual business units or sub-brands. Obviously, BioLegend, again, is more than 50% of our overall reagents portfolio. I would say, it's probably the best performing piece of our overall reagents portfolio. I think that's probably all the color we provide. And I think to further echo the comments that Prahlad previously made about the second half assumptions, we're assuming essentially the same market environment that we faced here in the first half and there's no real meaningful change in volume assumptions between the first half and second half.

Yeah, Matt. There is nothing here that is competitive driven. I mean what we are seeing is sporadic market softness because of site closures and consolidations.

Got it. Okay. Maybe moving over to M&A. There's been more activity year-to-date kind of in the sector, some unconventional like out of Chapter 11, but Agilent recently announced pretty sizable deal. Just wondering, I know that's an important part of your go forward. Kind of can you speak to kind of what your pipeline looks like there? Maybe is it feasible something could be executed in the next six months to 12 months. And just give us some context around how sizable you're willing to go for the right deal.

Yeah. I think the way I would look at it, Matt -- Dan is that we still feel that the valuations continue to be elevated for the M&A candidates. We continue to have a fertile pipeline and we continue to build on the relationships, but I don't think you're going to see us do any sizable side or -- size M&A in the near future. I think we talked about the share buyback where we will have a focus on to continue to deploy capital in the near term.

Got it. Okay. Thanks a lot.

Yeah.

Our next question comes from Catherine Schulte with Baird. Your line is open. Please go ahead.

Hey, guys. Thanks for the questions. First, just a modeling question. How should we think about growth by segment for the third quarter and the full year?

Yes. Hey, Catherine. Hope you're doing well. So on the growth by segment for the third quarter for life sciences, we're anticipating to be roughly flat overall in the third quarter and on the diagnostics side, positive low to mid-single digits growth for the third quarter. If you were to compare that overall for the full year, that would bring life sciences then to flat to slightly down from an organic growth perspective. On the diagnostics side, it would again sort of be in the low to mid-single digit range.

All right. Perfect. And then I guess if you do exit the year at high single to low double-digits in the fourth quarter, how do you think about how that sets you up heading into '25? I know it's still early now and there are some comp dynamics that are going on there. So how will those comps change as we head into next year as we try to level set? Thanks.

Yeah, Catherine. I think the way I would look at this is, we really feel that the worst is behind us, as I said earlier, and we continue to see more encouraging signs just from our recent conversations with customers, particularly in the U.S., but I wouldn't say that we've gone to full normalization yet. I mean, I think in terms of what we would expect to see in 2025, I think we'll have to wait till our Analyst Day, which is in late November to give you a bigger -- deeper insight into what we think.

Great. Thank you.

Our next question comes from Luke Sergott with Barclays. Your line is open. Please go ahead.

Great. Thanks, guys. I kind of want to follow-up on the applied genomics, that seems to be -- you continue to go through the headwinds there, but it seems to continue to get a little better and better. And so, as the confidence comes on, like, can you break out from a -- we had the Revvity OMX piece to start the year that was a slight headwind and that you're getting that coming back. And then you have the extract RNA, DNA extraction kits, things like that. So talk about the different pieces within that sub-segment that are kind of coming back and what it's going to take to continue that acceleration?

Yeah. Hey, Luke. So just as one clarification before diving into -- the Revvity OMX piece that you referred to is actually part of our reproductive health business, not applied genomics, so just one clarification there.

[Multiple Speakers] get that. Sorry about that. Yeah.

Yeah. It's all right.

No worries.

And I think as you look then at applied genomics, right, I think again there's really two sort of main pieces of this business, right? You do have the RNA, DNA extraction and then on the other side, you kind of have the liquid handling portion of the business. I think as you look at those two, we've definitely seen the headwinds on the extraction piece a bit quicker right now. I think that's again, that was the piece where it really got built up through the COVID installed base years. That part of the business has been performing better and has been returning to growth. I think where we're still continuing to see the challenges is really more so on the liquid handling side of things. And that is where I think now as we get into the second half of the year, from a comps dynamic perspective, we are expected to start to see that start to return to growth again.

Great. Thanks. And then as you think about on the life sci and with the licensing comp on the reagents that you guys face, can you talk about what that licensing or technology license was for actually? Because I thought that you guys mostly did your own internal antibodies and you license them out and I guess you license them out to others. But kind of just walk us through the various details there and get a better understanding of what goes on.

Yeah. From a comp perspective that Max pointed out earlier, Luke, that was the one that we had announced the pin-point base editing technology, which we had licensed to AstraZeneca in the second quarter of last year. So specifically, that was the one. The other licensing technologies that we license are around AAV vectors, viral vectors and lentiviruses that we license out from our SIRION Biotech acquisition. So, there are three or four components where we focus around licensing opportunities, just to sort of give you a sense of what they account for.

Yeah. That's helpful. Thanks.

We now turn to Michael Ryskin with Bank of America. Your line is open. Please go ahead.

Great. Thanks for taking the question, guys. Max, a couple of times in your prepared remarks and in your Q&A, you talked about seasonality in the fourth quarter and how that explains a lot of the ramp from 3Q to 4Q, both for total company and for some of the instruments business. I'm just curious what's driving that and what exactly do you mean by that. I mean, obviously, we know your typical seasonality, but is that attributed to budget flush? Is that attributed to customers coming back because if pharma and biotech is still a little bit pressured and it sounds like it's going to be pressure through the rest of the year and if China is a little pressured, maybe that seasonality won't come back to the normal effect that you see in prior years? Just trying to delve deeper into what's driving that confidence. Thanks.

Yeah. Hey, Mike. So I would say, it's probably a little bit of a combination of the things that you mentioned in your opening question there. I think one is the conversations we are having with our customers and what the pipeline looks like. I think, two, just from a normal buying behavior standpoint, instruments are the largest volume-wise in the fourth quarter. And so, I think it's a combination of those two things that's really leading to our expectations for the fourth quarter.

Okay. Thanks. And then on China specifically, you talked a little bit about ImmunoDx and reproductive health, but excluding those, it sounded like China got a little bit worse as the quarter went on. I think you specifically said that. I mean, it sounds like your expectations for China are now lower than they were before. I realize a lot of this hinges on stimulus timing and magnitude and that's still a lot unknown. But just curious your thoughts on China, bigger picture, not just the next couple of months, the ability of that end-market to come back in 2025, the various outcomes possible with the stimulus. Just take a step back and sort of holistically talk us through what you're seeing in China. Thanks.

I think my -- the way to look at it as we take a step back and strategically for us, China continues to be a very important market at, 16% 17% of your -- our revenue, as you know. Immunodiagnostics continues to be very strong in that market. 10% of our business there is diagnostics. Our reproductive health, as we've talked about earlier, we expect this year to see a bump up in birth rates, given the year of the dragon. And I think overall, if you take a step back, especially with the stimulus funding coming in, either by the end of the year or early next year, it is continuing -- it is going to continue to drive growth and that -- I don't believe that, that is going to slow down. Keep in mind, our product portfolio is differentiated enough that we had high single-digit growth last year. So, we are coming off that comp in that marketplace. So, we feel very good about China and we -- it is one of our strategic markets. So nothing strategically has changed for us based on what you saw in the second quarter.

Thanks.

Our next question comes from Paul Knight with KeyBanc. Your line is open. Please go ahead.

Hi. Thanks for the question. The BioLegend business, we're seeing on our side growth in clinical trials, Phase 1 since 2018. So maybe that's a sign things better. Does BioLegend win off of Phase 1, or are they more later-stage winner? I already...

They tend to be earlier stage -- they tend to be a bit earlier stage in the pipeline, Paul. They tend to be more in the preclinical and discovery side. As we are moving into the GMP capabilities, that's where -- there was the whole strategy around us moving into the pilot plant and then Phase 1 side. So that is where we are heading towards, but primarily the -- the primary domain the BioLegend plays is in discovery and early -- preclinical.

Do you think we're seeing the effect of better funding in the therapy -- in the biopharma market?

Yeah. I mean, we've started seeing signs of the pre-revenue biotech capital funding influx coming in. And as Max pointed out during one of the questions, increased conversations with our customers around opening programs and starting programs with that funding, but I think it will take a quarter or two before that materializes.

Okay. Thank you.

Yeah.

We now turn to Rachel Vatnsdal with JP Morgan. Your line is open. Please go ahead.

Great. Good morning, you guys. Thanks for taking the questions. So I wanted to ask another one here on instruments. You talked about how the instruments in China have been pressured from some of this air pocket related to China stimulus. So could you remind us within your instrument portfolio, how much of it is exposed to China versus rest of world? And then just to dig in on those rest of world trends, can you talk about how customers outside of China are thinking about their capital budgets? Has that improved at all, or is that continued to be pressured here as well?

Yeah. Hey, Rachel. So as a reminder, our overall instrumentation in China is 3% of total company revenues. So it is in the grand scheme things still relatively small to the overall portfolio. Yeah. As I mentioned, I think it was a challenging second quarter. We'll see what happens here in the second half with stimulus. I think as we look outside to the rest of the world, we do continue to see sequential improvements in our instrumentation from the first quarter of this year. And I think as we look towards the second half, again, the conversations we're having with the customers are providing increased visibility on those pipelines and is alluding -- sort of leading us to our expectations for the second half of the year.

Great. And then on my follow-up, just in terms of activity levels throughout the quarter, can you walk us through what did you see within the life sciences side and specifically really within reagents throughout the quarter? Was June any better than April? And then how is that going to continue to trend into the month of July as well?

Yeah. I don't think we want to get into intra-quarter guidance, Rachel. I would say that over the last 45 to 60 days, we have seen continued to see the stability that we have seen. And as I mentioned, the sporadicness that we had was related to two or three site closures that happened in the West Coast and then those programs have now shifted to other sites. So it's more a matter of that and headcount reduction than any continued trend. On the other -- previous question that you had on the instrument side, I think one thing to add. As you -- if you recall, we totally revamped our in vivo imaging portfolio that was launched towards the end of the last year. And that's where we started to see increased conversations from customers. Particularly in the U.S., we continue to be more optimistic around this being the first market where we will start seeing signs of turnaround on the life sciences instruments side.

Our next question comes from Tycho Peterson with Jefferies. Your line is open. Please go ahead.

Hey, thanks. Good to talk to you, guys. So maybe, Prahlad, I want to go back to the buyback. And no, I appreciate you have $330 million left in your current program and you did $20 million in the second quarter. I guess, why not do something bigger? We've seen some of your peers kind of do multi-billion-dollar buybacks. And then on M&A, I guess you're saying multiples are high, but can you maybe just talk about digesting prior deals? I think in the past, you talked about reverse integration of BioLegend. So maybe just talk about kind of integration of some of the deals you've done.

Sure, Tycho. Good to hear your voice. On the buyback, I will say that you are right, the existing authorization, that's why I said is for $330 million. We will -- we do plan to go back to the Board for authorization at the next Board meeting. But I think from a valuation perspective, if you recall, Tycho, most of the acquisitions that we tend to do and our private founder entrepreneur-owned companies and that's where I say that the impact of the market really has not had an effect on valuation. I mean, those founder entrepreneurs do not get impacted by publicly-listed company valuations and that's where we still see elevated valuations. So I think from that perspective, we will continue we see that in the short-term, it makes a whole lot more sense to deploy capital around buying back stock than for looking at M&A candidates. And when we find the right one, we will be. But as you pointed out, we've done several acquisitions and we are starting to see the synergistic benefits as we continue to integrate them into the company.

Okay. And then maybe a follow-up, you've had a number of questions on pharma. I'm just wondering thinking ahead about IRA and kind of what happens in the next six months here, can you maybe just talk a little bit about how you're thinking about that impact in particular?

Yeah. I think, Tycho, it's a great question, but I think that has already been planned out as pharma biotech has looked at their P&L and strategic plans for '25 and beyond. I mean, that was the exercise I believe that they went through the fourth quarter of last year and the first quarter of this year. So that has already been in the planning stages for, I would say, about two, three quarters ago.

Okay. And then before I hop off, just one quick clarification. I think on value-based pricing, you previously expected about a 500 basis point headwind. Is that still accurate in China?

Yeah. It wasn't necessarily tied into VBP program specifically. It was just related to, I think, some of the pricing challenges we have in China overall. And that was related to our immunodiagnostics portfolio that we made that comment about, as it has not been brought into scope of VBP. So, it was more just a general comment of what we're seeing on the industry.

Okay. Thank you.

That's all the time we have for questions. I'll now hand back to Steve Willoughby for closing remarks.

Thank you, Elliot. We look forward to catching up with everyone over the next few weeks. Talk soon.

Ladies and gentlemen, today's call has now concluded. We'd like to thank you for your participation. You may now disconnect your lines.