Revvity Inc

NYSE:RVTY

Earnings Call Transcript 2021-Q1

[Operator]

Good day, and thank you for standing by, and welcome to the Q1 2021 PerkinElmer Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Bryan Kipp, Vice President of Investor Relations. Please go ahead.

[Bryan Kipp, executive]

Thank you, operator. Good afternoon, and welcome to the PerkinElmer First Quarter 2021 Earnings Conference Call. With me on the call today 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 May 18, 2021.

Before we begin, we need to remind everyone of the safe harbor statements that we have outlined in our earnings press release issued earlier this afternoon and also 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 disclosed in detail in our SEC filings. Any forward-looking statements made today represent our views as only of today. We disclaim any obligation to update 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 the 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 that are not reconciled to GAAP in that attachment, we will provide reconciliations promptly.

I am now pleased to introduce the President and Chief Executive Officer of PerkinElmer, Prahlad Singh. Prahlad?

[Prahlad Singh, executive]

Thank you, Bryan, and good afternoon, everyone. I would like to begin by welcoming Steve Willoughby as our new Vice President of Investor Relations. We are excited to have him join the team. He brings a wealth of industry knowledge, deep research and analyst experience. And as many of you know, Steve's industry surveys always seem to have a real-time finger on the pulse of market trends. We are looking forward to his insights and expertise as we continue to grow and transform PerkinElmer into a best-in-class life sciences and diagnostics organization.

Stepping back, I know it is a cliche, but we are living in a new world compared to 12 months ago. 2020 was one of the most dynamic years in my career, and I suspect yours too. It felt like we were living in rolling 4-week periods. Success was a byproduct of teamwork and agility. And quite frankly, little has changed in that regard during the first 4 months of 2021.

While our core markets are improving, COVID continues to keep us on our toes. Two things are for certain. Our team is tested, and the first quarter performance reinforces that PerkinElmer top to bottom is emerging from COVID as a stronger organization. We've shown we can and will respond quickly to whatever challenges are thrown our way, and our rallying cry of putting the customer first and our mission of innovating for a healthier world resonates and impassions our team.

We shined throughout 2020 and our resiliency, customer-first mindset and team-first culture will continue to differentiate us in 2021 and beyond. I've said it countless times over the past year, but I remain incredibly appreciative of and inspired by the entire PerkinElmer team for continuing to demonstrate the kind of dedication, agility, collaboration and genuine compassion for one another and the world around us that make PerkinElmer a world-class organization. Our recent commercial and financial success is really a byproduct of the team's commitment to driving our mission day in and out, and I could not be prouder.

Turning to the first quarter results. PerkinElmer delivered an outstanding financial performance. Adjusted and organic revenue grew by 101% and 92%, respectively. Adjusted earnings per share increased 455%, and we delivered 114% adjusted free cash flow conversion. Jamey will go into further detail around the broad-based momentum we experienced across the portfolio. But overall, it was a strong start to the year. And we are encouraged by the underlying recovery we are seeing across most of our core end markets.

The new PerkinElmer that is emerging from the COVID pandemic is a direct byproduct of the conscious execution against our 4 strategic priorities: people, customers, innovation and operational excellence. I know in many ways, the playbook sounds simple, but going back to the basics has truly reinvigorated our organization.

On the people front, we made progress in several areas over the course of the quarter. Magali Four was promoted to become our first Chief People and Culture Officer to accelerate the transformation of our culture and talent engagement efforts. Near term, Magali and her team will be laser-focused on reinforcing our foundation, instituting, carrying beyond work programs and bolstering PerkinElmer's profile as a destination of choice for top talent.

Specific to learning and development, we recently launched the PerkinElmer Leadership Academy and invested in external tools and resources to better engage employees of all levels in their own professional growth. Additionally, we are increasingly holding managers accountable for employee engagement. Tracking and managing goals and objectives and maintaining close contact even in remote environments with teams and direct reports is pivotal to individual development as well as ensuring that we are empowering our next generation of leaders.

On the diversity, equity and inclusion front, we recently established an inclusion board and identified over 100 inclusion champions around the world. The immediate focus of the team has been to execute on both global and local DEI efforts. One great example was spearheading the creation of a moving video montage to honor International Women's Day. Looking outward, we continue to reposition the portfolio and accelerate momentum through increased investments in innovation.

On the COVID front, the explorer workstation remains a differentiator for PerkinElmer. Customers love the seamless workflow and ability to rapidly toggle throughput based on real-time demand dynamics. The best-in-class nature of the platform is further reinforced by the fact that the competitive tender win rate has remained well north of 90% since the platform was launched last August.

Additionally, we were proud to receive an EUA from the FDA during the quarter to test for asymptomatic individuals as we anticipate that COVID surveillance testing will remain important for the foreseeable future and largely target asymptomatic carriers as economies across the globe reopen.

PerkinElmer continues to be uniquely positioned to help in the march towards normalization as we are one of the few suppliers to have an EUA for asymptomatic testing, maintain the most sensitive PCR and rapid tests on the market and have end-to-end capabilities to promote pool testing, which saves time and resources for diagnostic laboratories.

Outside of COVID, our life sciences team reintroduced a groundbreaking cell painting kit as part of the new portfolio of PhenoVue, cellular imaging reagents. Cell painting is a powerful high-content screening approach, which combines cell and computational biology to unravel cellular responses. With this new and novel workflow, researchers will be able to better understand diseases and develop more pinpointed therapies to treat them.

Additionally, these reagents were recently approved for use by the JUMP-Cell Painting Consortium, which includes many of the top global pharmaceutical companies as well as the Broad Institute. Meanwhile, our recently acquired Horizon Discovery business had an exciting announcement of their own during the quarter. The team launched a new family of CRISPR modulation reagents for CRISPR interference or CRISPRi. CRISPRi is CRISPR without the cut, which allows researchers to repress rather than completely knock out a gene, allowing for more nuanced research. Researchers will have the flexibility to repress genes in almost all cell lines over any length of time and at any scale from single-gene readouts to high-throughput studies.

From a customer standpoint, we continue to execute on expanding existing partnerships as well as forging new relationships. During the first quarter, we were selected as the largest supplier in a sizable tender with the Yunnan Province CDC to support environmental and food safety testing. In total, 70 PerkinElmer instruments will be distributed to 9 municipalities and 45 county-level technical centers to improve testing and early warning capabilities around hazardous ingredients. The win was a seminal event for our new LC 300 UHPLC franchise as it is the largest order to date for the platform, which approximately is 20 systems.

Vanadis is another great example of where we force new and exciting relationships. We added several new customers in both Europe and North America. And we established the first Vanadis lab in India. We will provide more substantive updates on Vanadis in due time, but with a strong funnel and growing pipeline, the platform is emerging from COVID in a great position to experience accelerating momentum over the next several quarters.

As I said earlier in my prepared remarks, the new PerkinElmer that is emerging from COVID is on a much stronger footing than 2 years ago. The addition of Horizon Discovery, Omni and most recently, Oxford Immunotec further bolsters our position. While inorganic contributors during the first quarter, these 3 assets combined grew over 25% year-over-year. But more importantly, all 3 carve out new niches in high-growth areas where we see significant opportunity in the future.

Specifically, the Horizon Discovery integration is proceeding very well. The team executed phenomenally during the quarter. Both commercial teams are actively engaged and driving some early commercial wins. And Horizon has already begun to leverage internal PerkinElmer automation capabilities to scale their automated screening and cell line engineering efforts.

Meanwhile, Omni International's homogenization products are highly complementary with PerkinElmer's applied genomics portfolio. Omni's Bead Mills technology has been a critical component in PerkinElmer's differentiated COVID-19 saliva test workflow. And it also has the potential to enhance our end-to-end workflows in the food and cannabis markets.

Lastly, while we are only a couple of months into the Oxford Immunotec integration efforts, visibility on both revenue and cost synergy opportunities continues to improve. The team has quickly executed on several small, early wins out of the gate. And the progress on the automation rollout is already having an impact on new account wins.

In closing, I could not be more excited about the future for PerkinElmer. The organization is eager and energized to build on our recent momentum. We have fundamentally transformed ourselves, and we are undoubtedly better positioned to capture the opportunities of tomorrow. We are stronger in core markets where we have a right to win, successfully leveraging our scale to deliver novel solutions to the market and proactively investing to further augment our portfolio and expand into faster-growing markets.

We are not going to take our foot off the gas. The second quarter is shaping up to be another outstanding quarter with 29% organic growth, and we are well positioned to grow faster on both our core and COVID businesses in 2021 than we guided a quarter ago. And to that point, I'm excited to announce that we plan to delve further into what has been going on behind the scenes at PerkinElmer during our upcoming Analyst Day on June 24. I encourage everyone to go to the Investors section of our website after the call to preregister.

Before I turn the call over to Jamey, I want to take a moment and comment on the devastating COVID-19 situation in India, which is taking the lives of thousands every day. Having been born in India and working for a company that employs over 2,000 locally in that country, the severity of the present situation truly hits home.

At PerkinElmer, we feel that it is our role as a global citizen to do everything we can to help both our employees and the country. We have joined other U.S. companies and engaged government officials, both in the U.S. and India to provide vital goods and services. Locally, our team in India is working around the clock to assist our employees in every possible way, including organizing vaccination drives, providing testing support, and seeking to facilitate meeting their urgent medical needs.

While many people are eagerly looking to transition to a post-COVID world, countless others around the globe are still struggling daily with the pandemic and its deadly impact. My heart and prayers go out to everyone who are still acutely dealing with the pandemic daily. And I promise that at PerkinElmer, we will continue to tirelessly support afflicted regions and countries in their efforts to combat COVID-19 and flatten the curve.

Jamey?

[James Mock, executive]

Thanks, Prahlad, and good evening, everyone. To start, I echo Prahlad in welcoming Steve Willoughby as our new Vice President of Investor Relations. Steve has been a terrific research analyst over the past decade plus, but more importantly, he is a great person. And I've thoroughly enjoyed getting to know him over the last few years. I have no doubt that he will be an invaluable addition to the PerkinElmer family.

Before turning to the financial results, I want to remind everyone that our first quarter earnings call presentation has been posted on the Investors section of our website under Financial Information. I will begin my prepared remarks by highlighting the first quarter. Then I'll provide some additional color on our served end markets and financial metrics, and I will end with our second quarter and updated full year 2021 guidance.

At a high level, the team executed extremely well during the first quarter. As Prahlad mentioned, we are seeing signs of normalization in our core markets. Non-COVID product order growth exceeded reported revenue growth for the second quarter in a row, and service level activity continued to improve on a sequential basis. And as we look ahead, we are even more confident that we will be a faster-growing company in a post-COVID world.

During the first quarter, adjusted revenue grew 101% compared to last year to $1.3 billion and included a 3% foreign exchange and a 5% acquisition tailwind. Organic revenue grew 92%, 2 percentage points better than what we previously communicated. Overall, COVID-related products and services contributed $550 million in the quarter, propelled primarily by our PCR tests and RNA extraction solutions as well as our turnkey Lab-In-A-Lab testing solutions in the State of California and the United Kingdom.

In total, excluding the impact of our labs, our COVID solutions contributed approximately $250 million during the quarter. By business, Diagnostics, representing 65% of total sales, increased 227% organically. Strength in our immunodiagnostics and applied genomics businesses led the way. And our reproductive health franchise returned to growth for the first time since the fourth quarter of 2019. Discovery and Analytical Solutions, representing 35% of total sales, increased 6% organically led by broad-based growth across life sciences, food and applied.

You will recall that during the first quarter of 2020, we benefited from an extra week. We estimate that the revenue impact of the extra week was approximately $11 million, with the vast majority of it benefiting the DAS business. Normalizing for the extra week, DAS grew 9% on a core basis year-over-year.

On a geographic basis, Americas and Europe grew triple digits; Asia Pacific grew strong double digits; China grew over 50% year-over-year. Operationally, we are extremely pleased with our performance. Adjusted operating margins expanded approximately 2,600 basis points to 41%, led by volume leverage, business mix and productivity programs. Adjusted earnings per share of $3.72 in the first quarter increased 455% relative to the first quarter of 2020.

Looking further into the key drivers within our segments, let's start with our Diagnostics business. As mentioned in my earlier remarks, organic revenue increased 227%, with all 3 major geographic regions growing triple digits. Our immunodiagnostics franchise led the way, posting 420% growth with the non-COVID portfolio increasing over 20% led by EUROIMMUN and Tulip. Demand for our portfolio of RT-PCR COVID assays remained strong and serology demand remained consistent with the past 2 quarters.

Meanwhile, our applied genomics business grew 330% on broad-based momentum across all geographies with strength in our nucleic acid extraction, liquid handling and sample prep product lines. Automated liquid handling and nucleic acid extraction grew over 10x and 9x, respectively, versus the first quarter of 2020. And despite ongoing concerns around the impending centralization of testing, we experienced a mid-teens sequential growth in our automated liquid handling solutions, led by our molecular franchise. Customers continue to invest in expanded testing capabilities during the first quarter and the JANUS brand continues to take market share.

Reproductive health increased high single digits organically, driven by a rebound in clinical immunoassay and next-generation sequencing testing demand. Birth rates trends have yet to inflect. However, the easier comparisons limited the headwind on the overall reproductive health franchise. Excluding the clinical lab and sequencing businesses, the reproductive health business was flat year-over-year.

Turning to Discovery & Analytical Solutions. Organic revenue increased 6% in the first quarter versus the same period last year. By end market, we experienced low single-digit organic revenue growth in Life Science. Pharma/biotech was up low single digits. Excluding the extra week headwind, pharma/biotech would have been up high single digits.

Discovery and informatics grew mid-teens and high single digits, respectively. Enterprise declined high single digits, adversely impacted by the extra week, and our effort to improve the margin mix of this franchise. The academic and government end market was a bit noisy this quarter. U.S. and European customers have yet to fully normalize and APAC moderated sequentially. Overall, academic and government declined low single digits.

Food increased high single digits led by demand in Europe and Asia Pacific. Food safety led the way with approximately 30% growth despite a tough double-digit comparison year-over-year. Our Meizheng business in China rebounded extremely well, growing over 70% compared to the first quarter of 2020. Applied market demand continues to improve as well, growing low double digits during the first quarter. Asia Pacific led the way with over 20% growth.

Breaking down applied further. The environmental safety end market rebounded nicely with approximately 30% growth driven by European and Asia Pacific demand while industrial continued on its recovery trajectory, increasing high single digits.

Shifting to below-the-line items. Adjusted net interest and other expense for the first quarter was approximately $12 million, and our adjusted tax rate was 21%.

Turning to the balance sheet. We finished the quarter with approximately $2.6 billion of debt and nearly $1 billion of cash. Adjusted free cash flow was $479 million in the quarter, which resulted in an adjusted free cash flow conversion rate of 114%. Finally, we exited the quarter with a net debt to adjusted EBITDA ratio of approximately 0.9x, down over 1/4 of a turn compared to the fourth quarter of 2020.

Turning to guidance. We now anticipate full year 2021 revenue of $4.37 billion. Embedded in this guidance, we assume COVID revenues increase 5% year-over-year compared to our prior guide of at least flat. And we expect the continuation of the non-COVID momentum we saw in the first quarter, translate into full year non-COVID organic growth of 11%. These assumptions do not account for any incremental lockdowns and/or any COVID-related disruptions.

Additionally, we are anticipating a 4% benefit from acquisitions and a 2% benefit from foreign exchange for the full year. And on the bottom line, we anticipate adjusted earnings per share of $9.40, which assumes approximately $60 million in adjusted interest and other expense. A tax rate of 20% and our average diluted share count to be in the range of 112 million to 113 million shares.

For the second quarter, we are forecasting adjusted revenue of approximately $1.11 billion, representing 29% organic revenue growth, including 5% from acquisitions and 4% benefit from foreign exchange. Embedded in this guidance is $325 million of COVID-related revenue and organic growth of high teens for our non-COVID product lines. In terms of adjusted earnings per share guidance for the second quarter, we are forecasting $2.35, which assumes approximately $16 million of interest and other expenses, a 21% tax rate and a diluted share count of 112 million to 113 million shares. All of this is detailed in the second to last page of our first quarter earnings presentation.

In closing, we delivered a very strong start to 2021. I have no doubt we are better positioned as an organization to drive more consistent and faster top line growth and improve shareholder returns compared to where we were a year ago. We remain extremely excited for what is ahead for PerkinElmer. I cannot be prouder of our team and the effort that they have put in over the past year plus to get us to this point.

Operator, at this time, we would like to open the call to questions.

[Operator]

[Operator Instructions] And our first question comes from Dan Leonard from Wells Fargo.

[Daniel Leonard, analyst]

So looking at the Q1 outperformance, are you able to assess how much is an elevated -- a greater elevated level of demand that's durable versus maybe pent-up demand?

[Prahlad Singh, executive]

I think, Dan, we are seeing a strong comeback from all the markets and across the board. I don't think it's as much pent-up demand as the markets just coming back and it's coming back strong. And we've seen this across all regions. So I wouldn't categorize this as pent-up demand.

[Daniel Leonard, analyst]

Okay. And my follow-up, Prahlad. As COVID testing demand starts to fade, does that impact your M&A funnel at all? Are prices of any interesting assets getting more reasonable?

[Prahlad Singh, executive]

I would say that, again, Dan, just to remind, right, if you look back at our track record, most of the deals that we have done have been opportunities where we've spent a lot of time. They tend to be more strategic and more partnerships resulting into acquisitions. So we are not really in the auction space, so it hasn't impacted that much either on the upside. But I think I would say, generically, if you look at it, the market is still very hot and companies still that have a COVID tailwind are demanding a premium.

[Operator]

And our next question comes from Vijay Kumar from Evercore.

[Vijay Kumar, analyst]

Congrats on a good print here. Jamey or Prahlad, maybe on the guidance here. You guys did 10% on the base off of a minus 3 comp. I guess the back half implied is about high single, right, to get to your annual of 11%. Now that we have Q1 out of the way, 2Q of high teens, I think the implied back half is high singles.

One, is my math correct? And if it is correct then I think your back half comps are pretty easy down mid-singles. So well, was there any timing element from first half to second half? Or is this perhaps some conservatism baked into second half?

[James Mock, executive]

Yes. Thanks, Vijay. So your math is correct, to answer your first question, it is assuming high single digits in the second half. I don't think there's anything to read into here. We've -- as Prahlad mentioned, we've got -- and I mentioned in my prepared remarks, that orders are strong, they continue to be strong. The high single digits versus a little bit of an easier comparison in the second half, not much to read into there. It's just -- it's a little further out. So we're probably a little bit more conservative in the second half, but overall, still feel very confident in the 11% plus here.

[Vijay Kumar, analyst]

Got you. That's helpful. Prahlad, one for you. On the COVID testing side, there's been a lot of nervousness around how the environment around testing could change quite rapidly. Maybe talk about the visibility that you have in the 2Q code assumption? And does your annual guide bake in any upside from antigen revenues or perhaps any OUS tenders, if you will?

[Prahlad Singh, executive]

Yes. So, Vijay, thank you for the question. One, none of the antigen upside has been baked into our revenue. We feel really good about our COVID numbers. And as Jamey has pointed out earlier, our basis is based on the fact that we have in a number of EUAs around asymptomatic pooling was the one that I talked about in the group. And as opportunities open up, around schools and testing with pooling, that is an avenue that's there. The antigen testing is an avenue. That's open there. So actually, from where we sit today, we feel really good about the number, and that's why we've stood by it.

[Operator]

And our next question comes from Doug Schenkel from Cowen.

[Chris Lin, analyst]

This is Chris on for Doug today. Jamey, sorry to belabor the point, but I think the Q2 organic revenue growth guidance implies a 2-year stacked growth rate of 2%, which is 200 bps lower than what you just delivered in Q1. Now I would imagine underlying demand is improving in Q2. So could you just comment on this dynamic?

[James Mock, executive]

No, I think that's fair, Chris. I think as we just come into the quarter here, like I said, I think we feel confident in the high teens guide here. It is a little lower on a stack comparison. Again, nothing to read into that. I would say that we are confident in the guidance we're giving and continue to see a good outlook here.

[Chris Lin, analyst]

Okay. Great. And then for my follow-up question, again for you, Jamey, could you just unpack the free cash flow performance a bit more? That -- free cash flow conversion rate was very strong, I'm curious how much of that was due to maybe onetime dynamics versus benefits you're getting from just all the work you put in improving free cash flow.

[James Mock, executive]

Yes. I think it's probably both, Chris. We've been -- as you mentioned, we've been really over the last 2 or 3 years, put a lot of incentives, a lot of processes into place to fundamentally change our free cash flow. That said, the first quarter is normally one of the weakest. So there's a lot going on in this particular quarter. I would say we pay out a lot of prior year accruals in this quarter, but the benefit that we're getting is you can see in the receivables line, we've got about $170 million free cash flow benefit there, even when sales were, from a sequential standpoint, relatively flat.

So we did collect on a lot of the past dues that were in the fourth quarter, and our DSO has improved substantially. But in terms of going forward, I mean, we remain very confident in the processes we put in place and the fact that we'll be above 85% moving forward, perhaps this year is going to be a little bit better. But there's a little bit from a couple of customers that we collected on, but overall, I think we've got fundamental improvements in place here.

[Operator]

And our next question comes from Derik Bruin from Bank of America.

[Michael Ryskin, analyst]

This is Mike on for Derik. A quick question for you, Prahlad. You mentioned India in your prepared remarks and obviously, it's sad situation that's gone on there in recent weeks and months. But I was wondering if you could go into a little bit more detail on that. You obviously have a relatively large exposure there because of EUROIMMUN and Tulip and just the legacy business. Are you seeing anything in terms of the impact on operations? Are you seeing sort of -- is it factoring into your outlook for the rest of the year? Just sort of what's the latest on that?

[Prahlad Singh, executive]

Yes. I can say that is factored into the outlook for the second quarter. We don't know how the situation. And hopefully, it improves in the second half, Michael. And I think so far, given that most of what we do is in the arena of infectious diseases and COVID and all of that, so we haven't seen much impact because health care has been exempted from the lockdown. So it hasn't impacted so far.

[James Mock, executive]

Yes. The only other thing, Mike, I mean, in terms of the exposure, in total, India is a little bit more than $100 million. So it's not a substantial exposure for any particular quarter. EUROIMMUN, you mentioned does not really sell a lot into India, Tulip does, obviously. But it's not an enormous exposure here.

[Michael Ryskin, analyst]

Okay. That's helpful. And then as far as the updated COVID outlook for the year, you touched on the California and the U.K. labs, obviously, and sort of the various components of the mix there. I'm just curious, as we go through the rest of the year, how should we think about that flowing through margins?

Because obviously, as the mix shifts as some of those -- some of the COVID contributions ramp down, that's going to impact margins in the second half of the year. And I guess the follow-up on that is as it flows to '22, if you could give any sort of early insight into margins in the model, and how we should be thinking about it?

[James Mock, executive]

Yes. I mean, obviously, as COVID ramps down, it will impact our margins, our margin profile here in the second half of the year. We've always transparent about that, and we remain steadfastly committed to the 23% plus that we laid out in 2023. So I think the best way to look at it is, if you look at the end of this year, go back to a more normal comparison. There'll still be a little bit of COVID in there. There's going to be some amount of durable revenue here. But go back to fourth quarter of 2019 and add some growth rate to that from an op profit perspective, and we will steadily march towards 23% plus, and we've got all the productivity programs in place to do it.

[Operator]

And our next question comes from Tycho Peterson from JPMorgan.

[Tycho Peterson, analyst]

I want to jump into some on DAS. Academic down low single digit. That is in a little bit of a contrast to what we've heard about from some of your peers that have talked about end markets being at or above pre-pandemic levels. So can you maybe just talk a little bit on why you're seeing more pressure on the academic side?

And then similarly, on pharma, I know you talked about that being up high single digit, excluding the extra week impact. That is also kind of lagging the number of the peers up double digit on pharma. So could you touch on those dynamics?

[James Mock, executive]

Yes. I mean I don't think there's much to read into an academia and government. As you know, Tycho, our exposure to it is small. So whether it's customer classification or what have you, I'm not sure we have it perfectly classified between pharma, biotech and academia and government.

So overall, I would say Life Sciences performed better than what we expected. So you can factor in the extra week, I mentioned that Discovery was up low double digits, Informatics was up high single digits. The extra week really affected our enterprise business. So we were quite pleased with the performance, and we're pretty bullish on the outlook in Life Sciences here.

[Tycho Peterson, analyst]

Okay. And then on the COVID dynamic, can you just clarify what is actually India, updated guidance for the U.K. and CA labs? And then just to be clear, you're not including any upside from the asymptomatic test. Is that correct?

[James Mock, executive]

So did you say U.K. and California labs? What was the first part of your question.

[Tycho Peterson, analyst]

Yes. Yes.

[James Mock, executive]

Yes. So U.K. it's not -- so now it's just the Wales lab. IP5 is still in there. That has been extended through the first quarter of 2022. It's a nominal impact per quarter. So we've got that in there. California, we've got obviously extending going all the way through October. And we're probably taking down the run rate on that a little bit starting in the third quarter. But in general, we still have a fair amount of revenue related to the COVID labs. Overall, though, Tycho, in general, we raised COVID guidance by $50 million, which was the beat that we had in the first quarter.

[Prahlad Singh, executive]

And to the second part of your question, there is no asymptomatic pooling that we have assumed in the guidance.

[Tycho Peterson, analyst]

And one last one before I hop off. Is 30% growth in food against tough comps? Can you maybe just touch on that, what's driving that?

[James Mock, executive]

Yes. I mentioned food safety has been strong, particularly Meizheng, Tycho. So I think there's 3 factors in play over there. One is we're seeing a lot of uptick in downstream or retail from large multinationals over there that are operating in China. The second is there's some regulations around antibiotics residue and pesticide residue that we've won some tenders on. And the third is the business is starting to export outside of China. So in general, Meizheng, I think, was up 70% is what I said in the prepared remarks, and that continues to lead the way in food safety.

[Operator]

And our next question comes from Matt Sykes from Goldman Sachs.

[Matthew Sykes, analyst]

My first question is just a little bit more general. Just as you mentioned your -- the 3 assets that you're scaling up generated about 25% growth. And I'm just wondering, given the free cash flow you're generating, your balance sheet where it is, is scaling up additional assets over the course of the year a limiting factor for you guys as you guys think about capital deployment? Or are you able to divide and conquer and staff up to now that you're comfortable you can take on more?

[Prahlad Singh, executive]

So, Matt, good question. The intent from us is that it is not a limiting factor, right? We have capital ready to deploy, and we continue to actively look for opportunities. But more importantly, what we've done, and as I mentioned, both at the earlier conference in January and subsequently, we have established what we are calling the integration transformation office and put a very good function in place. That has allowed for seamless integration of the acquisitions that we have brought in. And we hope to bring in, in the rest of the year. So I think you'll continue to see us be active in the M&A space.

[Matthew Sykes, analyst]

Great. And just -- my follow-up, just on going back to DAS. You mentioned in the presentation that you had strong backlog in all 3 of the end markets. Could you provide any additional color in the end market, particularly strong backlog or any particular product lines where you guys see a strong backlog developing?

[James Mock, executive]

I'm not sure I'd point to anything, Matt. I think all 3 end markets look strong, both from the instruments and consumables perspective. I'm not sure one -- any one of them uptick more significantly than the other.

[Prahlad Singh, executive]

I think we've seen across the board, it being strong.

[Operator]

And our next question comes from Josh Waldman from Cleveland Research.

[Joshua Waldman, analyst]

I guess going back to a question, Tycho and Dan asked, I wonder if you could provide more context on what all within the non-COVID business is performing better than expected to start the year. And I guess, am I right that the majority of the guidance raised in the non-COVID business was attributed to the first quarter beat?

[James Mock, executive]

No. I'll take the second part, I mean, in general, raising overall 11% from a prior guide of 5% to 7% has all quarters kind of rising tides here. So not just the first quarter beat. The first quarter, we guided low single digits, came in at 10%. So that obviously contributes to some of it, but not all of it. So we are anticipating improved performance 2Q through 4Q.

In terms of the end markets, I mean, like Prahlad mentioned, it is across the board. There is not an end market that didn't perform better than our expectations. So maybe I'll just give a little bit more color on that. When we originally guided, we thought DAS was going to be flattish to nominal growth. And we thought DX would kind of be in the mid-single digits, which kind of got us to our low singles.

On DAS hitting 6% versus flattish Life Sciences, as I mentioned, just to Tycho's question, was significantly better than we kind of anticipated there in both food, but particularly food safety, which I talked about as well as applied NPIs. Our Triple Quad has done extremely well. Our new IR has done extremely well. So all of those contributed to the beat in DAS.

If you move to Diagnostics, I would say, largely immunodiagnostics and applied genomics drove the beat here. So I mentioned in the prepared remarks that EUROIMMUN did great, particularly in China. So I'd say in China, we're now above 2019 levels. Tulip did extremely well in the quarter as well. Applied genomics continued. I'd say the brand increase with JANUS as attributed to COVID has now started to filter off into non-COVID revenue as well. And then reproductive health was still a little bit better, largely in genomics testing, I would say. So again, across all end markets, we saw a significant improvement versus our original expectation, and it should last throughout the year.

[Joshua Waldman, analyst]

And then can you provide an update on the cannabis business? I think that was -- I think you said near 0 in 2020. Does that bounce back to '19 levels? Or does it remain well below that?

[James Mock, executive]

Yes. So there's no revenue in the first quarter, Josh. But I would say that the commercial activity, we are cautiously optimistic that it is upticking again. So we've been involved in more discussions, more potential orders here. So hopefully, starting in 2Q or certainly by the second half of the year, we will land some of the orders and revenue. But in the first quarter, it was nothing. And right now, it's immaterial in our overall guidance.

[Operator]

And our next question comes from Catherine Schulte from Baird.

[Unknown Analyst]

This is [ Tom ] on for Catherine. Congrats on the strong print. Wondering if you could just get into your mix of COVID testing by geography. Just any geographic trends to call out, particularly in Europe given some country-specific COVID pressures?

[James Mock, executive]

Yes. [ Tom ], in general, I would say, if you remember from last year, Europe and Americas led the way, APAC was relatively nominal in terms of overall COVID, and that continues to be true. I would say the falloff in the U.K. moving forward versus the fourth quarter and the first quarter would obviously have an impact on EMEA and the increase in the California lab. So therefore, if you kind of move forward here, those would be the 2 large shifts.

If you look at a recurring revenue basis outside of the 2 significant labs, I don't think there's any large shift. I think, in general, all of our customers are down ticking a little bit but continue to place a pretty consistent level of orders with us. But overall, that shift of less [indiscernible] and more California will impact the overall geographic revenue related to COVID.

[Unknown Analyst]

Got it. And then just a follow-up on China. I think you said over 50% in the quarter. I think that is, I think last year, 1Q you were down somewhere in the ballpark of 30%. So just wanted to get a sense of to how you're thinking about the recovery in China, any trends to call out and thoughts for the remainder of the year.

[Prahlad Singh, executive]

Yes. I think as Jim pointed out, China has come back strong, and we expect it to be strong throughout the year. Specifically, just to point out, EUROIMMUN China, where, if you recall, for autoimmune and allergy, it was depressed last year. That has come back strong. Applied Genomics, too, is there. And on the DAS side, Life Sciences across the board, we've seen very good utilization and tailwind, and we expect it to keep going for the year.

[Operator]

And our next question comes from Dan Brennan from UBS.

[Daniel Brennan, analyst]

Great. Maybe the first one on COVID. Just obviously, there's a tremendous amount of uncertainty on how this will ultimately play out this year and next. But just any sense of how we think about the durability of your business as the pandemic slows. I apologize if this was raised earlier on the call, but I'm just trying to get a sense of beyond 2021, what kind of lasting benefit do you think PerkinElmer will play within COVID testing? And then I have a follow-up.

[Prahlad Singh, executive]

Yes. I mean we've talked about durability of COVID going forward just based on the installed base of what we had placed around chemagic and JANUS last year. And we continue to see that trend in the first quarter. It hasn't slowed down. So we expect that to continue to further strengthen the assumptions that we have around COVID durability. Around the assumption for COVID for the year, we've got a very good line of sight for the second quarter. And we have been pretty prudent in our planning for the rest of the year. So we feel very good about the number, and that's why the raise that you see.

Plus we have -- as Jamey talked about earlier, we have upside opportunities, whether it's from asymptomatic, from serology, from antigen testing. That continues to bolster our assumption and forecast around COVID.

[Daniel Brennan, analyst]

Got it. And then maybe just within Diagnostics, obviously, very strong growth ex COVID as well. Just could you speak to the overall environment just more broadly How much of that's related to Perkin specific initiatives and kind of success? And how much is the overall kind of environment improving as a backdrop in Diagnostics?

[Prahlad Singh, executive]

Yes. I mean I think it's a much broader question, right? The markets are opening up. And if you look at reproductive health, markets opened up, testing is going to start again. Applied genomics continues to be strong and around infectious diseases, and you see that. Autoimmune and allergies have come back with -- in a very strong manner. So across the board, again, whether it's applied genomics, reproductive -- applied genomics and immunodiagnostics, we've seen good strength. Reproductive health, I would say, is slower coming back because of the pressure that it's seeing from birth rates, but it has started showing signs.

Anything else?

[James Mock, executive]

The only thing I would add is largely China has been much stronger than we thought would come back here, Dan.

[Operator]

And we have a follow-up question from Patrick Donnelly from Citi.

[Patrick Donnelly, analyst]

You talked about a little better visibility into revenue and cost synergies with Oxford. Can you just expand that a bit? Just want to understand, obviously, you talked about the acquisitions together growing 25%. But can you just talk about the drivers specific to Oxford and the performance there?

[Prahlad Singh, executive]

I think, Pat, the number one thing is it's obviously a strong rebound from what we had seen in 2020. And we expect the testing levels to continue to exceed in '19. They've seen double-digit growth in Q1. The T cell piece that the team has launched there that has seen good traction early on around vaccination deployment to measure immunity. And the automation is opening up some doors with early wins. So those are the 3 factors I would point out in terms of seeing good traction for Oxford. And the deal integration is going very well. The teams have jagged very well. There are lots of doors that they are opening for each other in regions around the world.

[Patrick Donnelly, analyst]

Okay. Got you. And then maybe just on the end market side, the industrial, I think you talked about high single; environmental, low double. Can you just talk about the drivers there and then the sustainability as we go forward? It certainly seems, Jamey, I know you talked about how broad-based the strength was and it felt like every end market was better than you expected. But can you just kind of zone in on those 2 and just your thoughts on the go forward?

[James Mock, executive]

Yes. So Patrick, on the industrial side, I'll start there. I mean a lot of this was due to the bounce back in China. It's a lot stronger than we anticipated. I would say if you look across the subsegments of industrial, semiconductor across the globe continues to be the strongest. I would say Americas is a decent from a descent growth rate perspective. EMEA had a little bit of a difficult comp in the first quarter of 2020, it's been strong.

But on the outlook, I think, in general, it's a steady uptick, but China really bounced back more than anybody else. I would say in environmental, we see it largely in APAC and EMEA, China, again, for APAC, but EMEA has continued to be extremely robust, and Americas is still nominally positive here.

[Operator]

And I am showing no further questions. I would now like to turn the call back over to Prahlad Singh for closing remarks.

[Prahlad Singh, executive]

Thank you, Justin, and thank you all for your questions. While 2021 has already been a unique year in and of itself, I'm confident we have the right team and the right strategy to embrace the future and all of its possibilities.

Thank you for your interest in PerkinElmer, and have a good evening.

[Operator]

This concludes today's conference call. Thank you for participating, and you may now disconnect.