Revvity, Inc. (RVTY) Q2 2020 Earnings Call Transcript

Good afternoon, and welcome to the PerkinElmer Second Quarter 2020 Earnings Conference Call. With me on today’s call are Prahlad Singh, President and Chief Executive Officer; and Jamey Mock, Senior Vice President and Chief Financial Officer. If you have not received a copy of our earnings press release, you may get one from the Investors section of our website at www.perkinelmer.com. Please note this call is being webcast live and will be archived on our website until August 11, 2020.

Thank you, Bryan, and good afternoon, everyone. To start, I could not be more proud of how we at PerkinElmer have met the obstacles that have faced us the past few months. We have proven to be a resilient, responsive, and agile organization. Individually and collectively, we are all being presented with new challenges, big and small every single day. At PerkinElmer, our employees have met these challenges by rallying and responding to a call to action to help during the global pandemic. As I mentioned on our first quarter call, improving lives is in PerkinElmer's DNA. It is what inspires our team. The energy and purpose that pervaded throughout the organization during the second quarter was palpable. I felt it daily, and I recognize the same passion and the countless number of employees who went above and beyond. Whether through late-night, time-sensitive discussions with hospitals, healthcare systems, and governments to determine the best way to quickly ramp up COVID-19 testing, rapidly scaling our test kit assembly to fulfill urgent customer needs, or personally delivering products to testing sites, PerkinElmer colleagues demonstrated over and over again the very passion, perseverance, and purpose that underpins our culture. Our strong second quarter results were truly a team effort and further reinforce the diversity of our business from a portfolio and geographic standpoint.

Thanks, Prahlad, and good evening, everyone. To start, I hope you are all safe and doing well. I would like to echo Prahlad’s comments by thanking the global team at PerkinElmer. We have all been through a lot of change over the past 18 months, and our team's passion and dedication has been amazing. So a big thank you to everyone. Over the past three months, I spent a disproportionate amount of my time working with our segment leaders, especially within our applied and food businesses, to understand our go-to-market strategy, competitive advantages, and future opportunities. We evaluated the product pipeline strategy and profitability of these businesses and identified significant opportunities that have me even more excited about the future potential of PerkinElmer. We will be sure to democratize some of those learnings in future discussions with the external community, but I wanted to take the time to reinforce that we have also been making a lot of progress on our non-COVID portfolio, which will position us well for the future. On a related point, given our inability to get together in person due to the current environment, we will postpone our Analyst Day originally planned in September to a date to be determined in 2021. That said, we recognized there has been a significant amount of time since our last Analyst Day, and our portfolio has dramatically changed. Given this, our hope is to host virtual webinars to walk through our end markets and product portfolios over the coming quarters.

Thank you. Our first question comes from Vijay Kumar with Evercore. You may proceed with your question.

Thanks, guys, for taking my question, and wow, best quarter since 1999, and that came in the midst of a pandemic. Congrats on a terrific execution here. Maybe I have two questions. One, on the 3Q guide, Jamey. The non-COVID revenue base, I think the ranges are minus 7% to minus 14%. The base business was down 14% in 2Q. I think commentary from your peers would suggest that the base business is improving. So I'm just curious about the assumptions around that minus 7% to 14%, particularly at the high end. COVID revenue is $150 million to $200 million; it seems it's sustainable in the 3Q. I'm curious about that's in the 4Q on especially on COVID diagnostics.

Great. Thanks for Vijay for the question. First off, obviously, it's a very volatile environment. So the pandemic could swing both our COVID and non-COVID revenues, but we've put a lot of time into looking at this and analyzed the trends over the last three months, including the first three weeks of July. We looked at our backlog and feel pretty comfortable with both ranges. So I'll address the non-COVID piece. The minus 14% is similar to last quarter, the second quarter. And while we talked about some positive trends, particularly on the recurring side where we see services and consumables upticking through the quarter, instruments were a bit more lumpy. But backlog did grow in DAS. But we just think it's prudent that in this scenario – in this timeframe, there could be a scenario where something happens and there's a setback. So while we did see improving trends through the quarter and continue to do so, I think the low end of our range we think is no worse than the second quarter. And if the trends continue, we would get to the minus 7%. On the COVID side, the $150 million to $200 million, inside the $150 million basically that's just adjusted for serology. So serology was, as I mentioned in my prepared remarks, a little over $50 million, and we're planning for that to be under $10 million in the third quarter. The difference between $196 million and $150 million is solely serology. We feel confident as we look at our shipments today and our backlog that RNA extraction and PCR tests will continue. If you get to the high end, we're in the midst of a lot of commercial discussions, and those commitments could be coming, but the ramp of those and the timing of when they would happen is still in flux, but we do show you the opportunity to get to the high end of $200 million. That's how we derive the range around COVID revenue.

That's a helpful, Jamey. And then one for Prahlad. Thinking about sustainability of trends, a couple of comments you made, Prahlad, in your prepared remarks. I think you mentioned something along the lines of opening new doors in terms of relationships just given the number of placements you guys have done on nucleic acid extraction, liquid handling. I'm just curious whether that has any implications for tender wins going forward. I think you also mentioned a COVID plus flu combo test. Perhaps, could you address the pricing or how we think about the opportunity for this combo test? Thanks.

Thanks, Vijay. I think the way I would address the first question around the extraction kits is that what has been really good is that the number of installed bases has obviously increased significantly this year, and that bodes well for other assays that are coming through the pipeline. Both COVID and also non-COVID related to infectious diseases and others. I think the longer term, as customers start using our RNA extraction kits and see the benefits that our magnetic-based solutions provide versus what others provide, especially in high-throughput labs, we are seeing a lot of attraction, and that will be quite beneficial for us competitively in the long run. Regarding your question around the pipeline and the flu test, the way I would look at it, Vijay, is I would sort of demarcate it in two parts. One is workflow solutions around direct testing, and that could be either a flu pack test or a viral deduction pooling or a direct antigen test. The second one is around immune insights, which looks at what immune response has emerged from the human system and how we measure that in relation to COVID. While it's too early to opine on the pricing, our focus is to maximize the ways we can in terms of detecting the disease directly and indirectly, and that's where our focus has been.

I understood. Congrats again, guys, I'll step back in the queue.

Thank you. Our next question comes from Steve Willoughby from Cleveland Research. You may proceed with your question.

Hi, thanks. A couple of questions for you, first on PCR test demand. Prahlad or Jamey, I know things are shifting quickly. When we look back 90 days ago, your 1Q call, it seems like you maybe downplayed the opportunity within PCR. Obviously, it came in much better than expected. Can you maybe just provide a little bit more color on sort of what changed as it relates to the demand for your PCR test? And then secondly, on PCR, Prahlad, how are you guys thinking about the sustainability in PCR test demand maybe even beyond the third quarter? And then I have one quick follow-up.

Sure, Steve. I think when we look back 90 days, the science on the wires was still very evolutionary. We, along with others, were still trying to figure out, do we want to focus on the direct testing or was serology more important? That's when serology came about, and there was a large spike in it; the discussion was that maybe this will tell us very quickly what the immune responses are, and people would get back to work. That sort of played a role. But the long and short of it is that we expect direct testing to be vital and expect sustained demand for it, not just in 3Q but at least to year-end. I don't think direct testing is going to go away anytime soon.

I would just add two things, Steve. At the time of our last call, remember, we had not made any shipments yet of PCR at that time. We were having some import issues at the time, so having the confidence to be able to ship that amount was still in question, I would say. The second thing is I think our workflow is terrific. So when you combine RNA extraction capabilities with our PCR technology and liquid handling, I think that's resonated very well in the marketplace.

So Jamey, with that, if you were only shipping the PCR test for, let's say, two months out of the quarter and you did, let's call it close to a $100 million in revenue, it seems like the guidance for 3Q as it relates to COVID tailwinds. Are we now assuming the PCR test makes up $150 million or so of that $150 million to $200 million?

Yes, that's right. I would try to mention in Vijay's question that serology, which was a little over $50 million obviously, has its time and place for serology going forward. We believe we'll see. Therefore, that demand, we have taken down to less than $10 million. The PCR and RNA extraction technology, as you said, was about $100 million, is now a bigger portion of the total $150 million to $200 million.

Got you. The other quick follow-up I had is just, what are your – what's your outlook or how are you thinking about demand overall in China? If there's any nuance between different end markets in China in the back half of the year? Thank you, guys.

Yes. So China improves sequentially for us. So it was down over 30% in the first quarter and down about 14% in the second quarter. We had hoped actually that it would get flat at one point in the quarter here; DAS didn’t get flat and built a little backlog as well. So we feel good about that diagnostics, though, went from down 40% to roughly down 20% in the quarter. I think, whether that's the second outbreak in June in Beijing that happened, but we're still not at the utilization levels for people to feel comfortable going to the hospitals and clinics, et cetera. It's still not at that 100% level and hasn't returned to normal. So as we look forward here, we're hoping again, it will get to flat as soon as possible, perhaps in the third quarter, but what we're planning on in the third quarter is down high-single digits to low-double digits overall for China. Again, if it gets back to flat, that'll be upside to our current range. But right now, the way we see it as diagnostics is still a bit challenged; it's probably going to pick up a little bit, but that's what we're currently planning on.

Okay. Thanks very much.

Thank you. Our next question comes from Derik DeBruin with Bank of America. You may proceed with your question.

So Steve just took my China question. So now I got to think, I got to go to the second one here. So the free cash flow guidance going back to 80% to 90%, and also I just want to sort of talk about your comments in the opening about having accelerated some programs and things picked up. One of the questions we're all asking is sort of, what does things look like for these businesses that are getting these big COVID tailwinds? When things go back to normal, can you opine a little bit on how you see margins, the overall impact to margins post this crisis? What do you need to do to sort of get back to the free cash flow level as you were talking about?

Sure. So you want to talk both margins and free cash flow. So margins, obviously, it's an unprecedented quarter with strong volume growth and a great product mix, combined with all the productivity programs that we had already been working on largely in services and DAS and EUROIMMUN. On top of that, we had great OpEx leverage. Even though our OpEx was up, it was still good leverage. So I think in terms of the sustainability of that, I think it supports the overall thesis for PerkinElmer long-term that when these things happen, we do have the ability to get to mid-20s to high-20s operating margin business. This was an unprecedented quarter of margin expansion in the short term, but some of this will remain. I believe we are becoming more efficient, and the productivity programs are being put in place. Our volume and mix are changing over time. It's difficult to say what it would completely snap back to in the very short term. But I think the long-term proves what the business can be. As it pertains to free cash flow, we had one of our best quarters and certainly our best first half in a long time. A couple of things in there: our receivables have made a lot of process improvements, and we had a small benefit regarding COVID terms, but I think progress will continue to happen over time even in a normalized environment. You can see that we invested significantly in inventory. Most of that is about our COVID inventory and having the product ready, which Prahlad mentioned in his prepared remarks. We are tracking our turnaround time, enabling us to be ready for customers when they need the product immediately. The other half, we always have first half built. It's probably a little more than normal due to the demand levels, but our non-COVID backlog has increased. I believe that in the second half, our inventory levels should come substantially down, and we're still tracking at that 80% to 90%. There's a lot of good underlying progress on receivables and how we can manage our SIOP. It just so happens that our inventory is required to be high to meet our customer's demand.

Great. Just one follow-up. You mentioned some of the point-of-care allies antigen tests. Are you looking at those as sort of going in with an EUA authorization or following up with those and eventually going to a more FDA approval? I'm just curious because you haven't historically done things in the infectious disease market in the U.S. from an FDA standpoint; you are more focused in China. I'm just curious about your longer-term strategy if this is a shift.

Yes. I think COVID specific direct tests, we continue to actively investigate as a detection method. The key for us is that the quality of our test should meet that threshold. We would not release a test that lies in the low-80s or somewhere around that. If we have a test with the right relative sensitivity, we would expect it to be released specifically for COVID. I think longer-term, we will have a point-of-care test strategy in the U.S. that is to be determined.

Great. Thank you.

Thank you. Our next question comes from Tycho Peterson with JPMorgan. You may proceed with your question.

Hey, Jamey, just a clarification on the gross margin comment? Can you quantify how much of the step up was the COVID testing accretion versus the cost-cutting measures for 2Q? I didn't hear you quantify that in your response to Derik's question.

Yes. So overall mix, Tycho. We grew gross margins about 600 basis points, and I would say mix made up 85% to 90% of that. So even with the mix impact, we expanded gross margin by 50 to 80 basis points, and that was on our productivity programs. But the mix, certainly in total, not just COVID-related, but overall, probably made up 85% to 90% of that increase.

And then on the 3Q outlook for the non-COVID based business, can you just get a little more color on what you're pitching, even an academic recovery, for example? It would be helpful to understand overall end-market recovery?

Yes, sure. In total, in the 7% to 14% range at a high level, we have diagnostics, which was down 20% in the second quarter ex-COVID in a minus 10% to 20% range. On the DAS side, which was down 10%, we're actually in the minus 5% to 10% range. Let me hit some of the end markets underneath there. So reproductive health continues to tick up a little; when we mentioned it was down mid-single digits, we're planning on down low single digits. China utilization, particularly on prenatal, is not yet at 100% normalization. As for immunodiagnostics and applied genomics, it was down high double digits and should remain down double digits, based on when people feel comfortable coming back to see physicians and hospitals. But we expect a little bit of uptick there. Life sciences on the DAS side which was down low single digits, we expect to go to low single digits. The enterprise was flattish; discovery was down. I don’t anticipate informatics to be as strong, but I think discovery will pick up. We expect applied markets and food to remain down, likely down double digits. So the simplest way for our ranges is down 5% to 10% for DAS and down 10% to 20% for the rest, excluding COVID.

Okay. That's helpful. And then just one for Prahlad on the antigen test. You mentioned, I assume, that uses some of the lateral flow technology, but can you just talk about the thought process there? We've seen a lot of lower quality antigen tests come into the market. So I'm curious why you're entering and how you think about the role of antigen testing versus PCR longer-term? Thanks.

Yes, Tycho, thanks. I'm not saying that we are going to; I'm saying that we are evaluating it, and you're absolutely right. There are – while we actively investigate, the focus for us is that we would only launch it if the quality met our threshold. Tulip is one aspect from there; we would develop it just like the rest of our product portfolio where we have been able to leverage our capabilities across different sites and companies. We've got competencies and capabilities in China and Europe as well. So in the event we come out, it would only be if we meet the sensitivity and specificity levels at the high end.

Okay. Thank you.

Thank you. Our next question comes from Dan Arias with Stifel. You may proceed with your question.

Afternoon, guys. Thanks. Maybe just on the reproductive health side. Obviously, it’s a tough selling environment for your Vanadis franchise right now. But can you just sort of level-set us on expectations? And what’s going on in Europe? Thinking ahead there, what does the value study with women and infants look like? Is that data that can still show up at the end of the year? Or is it best to think of that as a 2021 thing?

Yes. So thanks, Dan. The Vanadis program itself continues to progress very well. The funnel continues to be stronger, but COVID has resulted in installation delays. The funnel for us is stronger, and installations are being held up right now. The tests continue to run smoothly, and demand is high; the challenge for both publishing the study and getting the installations is impacted by the market shift due to COVID and travel restrictions. I think as it starts to loosen and open up, installations will pick up. I do not think we expect installations to reach 55 in 2020 as projected, but we are hopeful that as regions open up in Q3 and Q4, we will fill the pipeline that we have seen.

Okay. Thanks. And just maybe going back to COVID on serology. For a lot of the data that you’re generating suggests that your ELISA assay can be used to provide information on neutralizing antibodies. Thinking about commercialization, to what extent are you able to bundle the serology tests with some of the other things that you’re working on with PCR tests, since it’s obviously in pretty high demand? It sounds like some of your larger diagnostics competitors, at least on the European side, have adopted that strategy. So just curious whether that’s something you’re able to use to drive volume.

Yes. To your first question, Dan, I think in the case of serology, our understanding of science is evolving every day. If I were to look in a crystal ball, I would say we expect the epidemiology studies around serology to continue, providing a better understanding of immune response. As vaccines come into play, this will drive broader immune insights testing, where serology will play a larger role. In terms of bundling, we have done both serology and PCR testing, as seen with Sonora Quest. I would say we see traction around our total solutions, whether it’s around collection devices or extraction kits, PCR, or serology. The challenge has been that serology has taken a back seat, and most of the focus continues to be on direct virus detection.

Got it. Okay. Thanks very much.

Thank you. Our next question comes from Catherine Schulte with Baird. You may proceed with your question.

Great. Thanks so much for the questions. First, can you just walk us through where you are from a manufacturing capacity standpoint on the serology, neurology PCR, and extraction kits today? What are your plans in terms of expanding capacity further as we move through the rest of the year?

Yes. So in all cases, we are highly scalable, and our manufacturing exceeds what we had previously disseminated in terms of our capacity. The breadth of our capabilities and broad geographic footprint in all three regions, whether it’s in Asia, Europe, or North America comes to bear. We’ve also established strong supply redundancies; we are not dependent on any sole suppliers or any particular country or region. Currently, we do not feel supply to be a constraint. In fact, as we discussed earlier, we put turnaround times on our website, and you can live track our capability to provide turnaround time to our customers.

Okay, great. And then, as we think about – you’re getting pretty incredible incremental margins on this COVID testing business. What's your thought process in terms of letting that drop through versus using that to maybe accelerate some strategic investments?

Yes, Catherine, we are biased to invest. Some of the spending levels in the first half or second quarter are not at the levels by choice. They are down because of restrictions on travel and inability to engage third parties. As we look into the second half of the year, we are going to step up our investment in areas like R&D and digital investments as well. There are some pockets of the organization where we want to invest with additional people. We plan to continue to spend and probably invest a little more than we have been. Of course, we’ll always monitor the outlook. But one of our guiding principles has been to emerge from this as a stronger company, and we're fortunate enough to be able to reinvest back in the business and we plan on doing so.

Especially around R&D, as noted, some investments we aimed to make in the first half of 2020 were not possible due to travel restrictions or scientist availability. Our pipeline and the NPI pipeline we’re discussing indicate we will continue to invest incrementally.

Okay. And maybe just the last one for me, going back to Jamey’s comment on emerging as a stronger company after this. If we step back and think about how part of the strategic rationale around the EUROIMMUN acquisition was really the opportunity to grow its U.S. presence. It seems like once we emerge from COVID, and those tailwinds subside, you should be in a much stronger position from a U.S. adoption perspective than you would have been if COVID had never happened. Is there any way you can help us think about just how much of an accelerator COVID has been in terms of the U.S. adoption of that portfolio longer-term?

There are three ways to look at it, Catherine. One, the relationships we are establishing with customers have strengthened significantly, whether it’s with institutions like Mayo or large reference labs. The second aspect is the familiarization with the science aspects of EUROIMMUN, and the workflow that the team in Lübeck has been improving. This has allowed us to leverage relationships to provide a preview of our current pipeline of commercially available products and those in development. As we discussed earlier, our random access platform, Axentis, is expected to launch from EUROIMMUN hopefully by the end of the year or early 2021 due to COVID restrictions. The barrier for adopting this platform is much lower given what we have done around COVID. That's one way to quantify the benefit that COVID provides longer-term.

Great. Thank you.

Thank you. Our next question comes from Steve Beuchaw with Wolfe Research. You may proceed with your question.

Hi, good afternoon, and thanks for the time here. I’ll ask one for Prahlad, one for Jamey, and then just go back in the queue. The one for Prahlad is, if we reflect a little bit on the experience we’ve had with serology, some learnings from the clinical trial data we’ve seen out of some vaccine studies, it seems like T cells have gained more and more attention at least in the clinical community. But it’s not clear to me how much demand there is for broader, outside of vaccine clinical trials T cell reactivity assessments. Could you speak to that and the extent to which outside of clinical trials, those types of assays might be in demand? Then for Jamey, there has been some focus on margins on the call, but can we just jump out, like, and sorry to ask it this far, in three and four years? What does the margin trajectory of this company look like relative to what you thought seven or eight months ago? I would imagine there’s been some discovery of structural cost savings. You flagged on the call or in Q&A earlier that there’s a path to mid-20s, or maybe even higher margins, which makes sense at some point. But can you speak to whether you think that’s within the next four or five years or is that a longer-term view? I really appreciate all the help here. Thank you.

Yes. Let me start with the easier one, and then Jamey can take the rest. I think outside of these direct clinical trials, the T cell response remains unclear. We will need to consider total responses, whether it's humoral or innate responsiveness. The focus ultimately remains on immune insights, which we are examining further.

Yes, as for the margins, Steve, it's difficult to provide an exact target for three to four years. We stated we would come out with our Analyst Day. That was when we hoped to launch our outlook relating to margin over the next three years. We’ve learned a lot as you mentioned. What I would convey without giving an exact number is that we’re even more confident in our margin expansion opportunity. I highlighted in my prepared remarks how much time we've spent in analytical and food businesses; across all segments, there is substantial margin expansion value creation opportunity. It’s a three to five-year strategy with some short-term actions that we believe will be significant. I mentioned mid-20s and maybe that’s within three to four years; we don’t wish to commit to anything at this point, but we are more confident in that approach.

Okay. Really appreciate all the color there. Thanks so much. Have a great night.

Thank you. Our next question comes from Doug Schenkel with Cowen. You may proceed with your question.

Hey guys. Good afternoon. Thanks for taking my questions. Just a couple of quick ones. The first is just as a guidance cleanup question. It appears your third quarter guidance implies that you expect operating margin to decline about 300 to 400 basis points sequentially, despite similar sequential revenue numbers. Could you provide a bit more detail on what drives this? I’m guessing it’s a combination of change in mix and a reflection of some of the opportunistic investment and long-term growth initiatives that you talked about.

You nailed it. It's about half of that. I would expect the gross margin line to come down about 200 basis points sequentially versus the prior quarter, and that is mostly mixed; both non-COVID and COVID. So the non-COVID book coming back up a little, and the COVID book coming down a bit could lead to a blended mix at the midpoint. You're right; the other half comes in through incremental investments within everything I mentioned in response to Catherine’s question regarding R&D, digital, and hiring.

Okay. Super helpful. The second one is, and I think this is a Prahlad question. If you would provide a bit more detail on your PCR revenue assumptions moving forward. One of your peers who also produces non-automated PCR kits aims to produce 10 million tests per week. Automated diagnostic system vendors are expected to ramp manufacturing meaningfully by the next flu season. Just with those two examples in mind, I’m wondering if you could share a little bit more on how you expect your revenue to evolve over time. Are you expecting to maintain share? Do you expect to gain share? Or is this really just as simple as you're going to sell as many as you can produce for the foreseeable future?

Yes, let me put it this way, Doug. As of now, our capacity is greater than the demand. We feel very good about where we are because we realize that customers are returning to us from our competitors, recognizing we provide full workflow solutions with collection media, extraction kits, extraction units, PCR, and fully validated workflows. This is the benefit we see from our customers. As we progress and see sustained demand, we are pleased with the solutions we bring to direct antigen testing.

Great. Thank you.

Thank you. Our next question comes from Dan Brennan with UBS. You may proceed with your question.

Great. Thanks for that. Thanks for taking the questions and congrats on the quarter. Just wondering if you could share a little insight on the liquid handling, kind of the robotic market. We haven’t dived in too much there, but obviously, you’re a leader there, and it’s harder to diligence because there’s not as much information. So just give us a little color on maybe, size of that market, any color on kind of instrument placements in the quarter, and how we think about the opportunity going forward for COVID.

It has been particularly strong, and especially our JANUS product line has seen a lot of demand in the second quarter. The ongoing demand continues to be strong. I don’t have specifics breaking it down by product line around automation.

The only thing we said, Dan, was that it was up 6x year-over-year here in liquid handling.

More color on that, Jamey, like 6x, I mean how much of the $190 million or so was liquid handling in the quarter? I know you gave some color on PCR action. But how much was liquid handling of that, and how do we think about that implicit in kind of…

Okay. I think Dan, we’re trying not to provide exact numbers here to drive that off of. So, we’d like to keep everybody focused that the overall franchise is doing well, and that the diagnostics opportunity across all of our product lines is performing well, so selling together.

Got it. Okay. And then maybe just a couple of other related ones, just kind of sticking with COVID if you don’t mind. Could you share any insight at all on pricing since it’s hard for us to back into kind of market share? As Doug mentioned, there’s a lot of capacity out there, but the revenue contribution really matters. Obviously, the branded players are in the 20s; maybe the less automated players are in the teens. Any help you can provide us on PCR pricing and also any color about OUS versus U.S. mix in terms of your PCR and extraction businesses. Thank you.

I’m happy to tell you that we feel that our RT-PCR and extraction pricing remains consistent. I think that’s the level of detail we want to share. There has been some modest decline in serology, but it’s not for us. I think the overall serology market has seen a decline. We want to avoid getting into specific pricing.

And in terms of U.S. versus outside the U.S. is it just following your geographic split? Or do you have more success in a particular market?

I think we are seeing success in both markets: in the U.S., Europe, and other locations in Asia. We are seeing broad penetration across countries and continents.

Great. Okay. All right. Thank you very much.

Thanks, Dan.

Thank you. I would now like to turn the call back over to Prahlad Singh for any closing remarks.

Thank you for your questions. Again, I’m proud of our entire organization and how everyone has rallied together. Our breadth of capabilities puts us in a unique position to help combat this pandemic. We are focused on leading with science, and that is clearly resonating. I have no doubt we emerge from this crisis as an even stronger company. Thank you for supporting PerkinElmer. I look forward to providing further updates on our third quarter earnings call. Thank you.

Thank you, ladies and gentlemen. This concludes today’s conference call. Thank you for participating. You may now disconnect.