By Mark Terry, BioSpace.com Breaking News Staff
On the same day that Pfizer (PFE) announced it would not break into two companies, Waltham, Massachusetts-based PerkinElmer (PKI) announced that it was reorganizing into two separate business segments.
PerkinElmer’s Diagnostic business will become a standalone business segment. It is focused on reproductive health, emerging market diagnostic solutions and applied genomics. This unit will be led by Prahlad Singh, who was named senior vice president and president, Diagnostics, effective October 3.
The company’s Environmental Health and Life Science Solutions units will combine to form Discovery & Analytical Solutions. It will be tasked with meeting the needs and developing products in the food, environmental, industrial and life sciences market. Jim Corbett will run this business, and effective October 3 will be executive vice president and president, Discovery & Analytical Solutions.
“We are excited about taking the next step in our strategic evolution to drive increasing profitable growth and advance our mission of innovating for a healthier world,” said Robert Friel, chairman and chief executive officer of PerkinElmer, in a statement. “These organizational changes will accelerate our application and technology development efforts for the benefit of PerkinElmer’s customers as we expand our capabilities to provide more integrated solutions that address critical needs around the globe.”
On August 4, the company announced its second-quarter financials. It reported that its GAAP earnings per share from continuing operations was $0.56, up from $0.43 per share in the second quarter of 2015. Revenue in the second quarter was $572.7 million, up from $563.9 million in the same period the previous year. Operating income from continuing operations for the second quarter was $71.2 million, compared to $68.1 million the previous year’s second quarter. Adjusted earnings per share was $0.67, compared to $0.60 in the 2015 second quarter.
Its Human Health segment reported revenue of $353.5 million, up from $341.5 million for the second quarter the previous year. Environmental Health reported $219.2 million in revenue, up from $222.4 million for the second quarter of the previous year.
“I am pleased to report that PerkinElmer had a strong second quarter and year-to-year financial performance, as improved execution drove substantial margin expansion and cash flow generation while also funding a number of strategic growth investments,” Friel said in a statement at the time. “We believe these investments, coupled with the strength of our productivity and efficiency initiatives, position us well to deliver solid financial results for the balance of 2016.”
In today’s announcement, the company indicated it was splitting off the Diagnostics business to better position itself to grow in attractive end markets, while improving share with its core product offerings.
PerkinElmer stock is currently trading for $55.52. Shares traded on February 8 for $44.45 and rose to $56.92 on July 29.
Although it’s possible their evaluations will change in light of today’s news, on July 20, Zacks Investment Research downgraded shares from “buy” to “hold.” On July 22, BTIG Research issued a “neutral.” On August 5, Mizuho downgraded it from “buy” to “neutral” and set a $56 price target.