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 DNA. It is what impassions 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 or 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 we 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 date to be determined in 2021. That's said we recognized there have 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 and 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% and 2Q I think commentary from your peers would suggest that the base business is improving. So I'm just curious on 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 looked at the trends over the last three months, including the first three weeks of July.

Looked at our backlog and feel pretty comfortable with both ranges. So I'll address the non-COVID piece. So the minus 14% is similar to last quarter, the second quarter. And while we talked some positive trends, particularly on the recurring side where we see services and consumables up-ticking 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.

And so the difference between $196 million and $150 million is solely serology. And we feel confident as we look at our shipments today and our backlog that RNA extraction and PCR tests will continue.

And then 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 influx, but we do show you the opportunity to get to the high end of $200 million. And so 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 amount of placements you guys have done on nucleic acid extraction, liquid handling.

I'm just curious whether that has any implications for tender wins are going forward. And I think you also mentioned a COVID plus flu combo test. Perhaps, could you address the pricing or how we think about opportunity for this combo test? Thanks..

Thanks, Vijay. I think the way I would address the first question around the extraction kits that I think what has been really good is that the number of installed base has obviously increased significantly this year and that bodes well for the other assays that are coming through the pipeline.

Both COVID and also non-COVID related to infectious diseases and others. So I think the longer term as customers get to using our RNA extraction kits and see the benefits that been under magnetic-based solutions provide versus what others provide.

Especially, in high throughput labs, we are seeing a lot of attraction and that will, I think, be quite beneficial for us and competitively in the long run. And regards to your question around the pipeline and the flu test, et cetera, 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 vital deduction pooling or a direct antigen test. And the second one is around immune insights. The ways that we can look at what immune response has come out from the human system and how do we measure that in regards to COVID.

So I think whilst too early to opine on the pricing, our focus is that to sort of put as many ways that we can in terms of detecting the disease directly, and also indirectly. And then 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 a 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, what we look out 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 backed 90 days, the science on the wires was still very evolutionary.

And I think, we, along with others, we're still trying to figure out, hey, do we want to focus on the direct testing or was serology more important? And that's when serology came about, there was a large spike in it? And the talk was that maybe this will tell us very quickly what the immune responses and people would get back to work.

And I think that sort of played a role, but the long and short of it Steve, that we expect direct testing the direct vital testing to be vital and expect sustained demand for it, not just in 3Q, but at least to the year-end that we look at it. So 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. So 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. And then 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, then, 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 mean, that’s so, I would try to mention in Vijay's question is that serology, which was a little over $50 million, obviously, time and place for serology is going to be in the future. We believe. We'll see.

So therefore that demand, we have taken down to less than $10 million and therefore the PCR and RNA extraction technology, which as you said, was, let's say $100 million is much more 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? And 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. And we had hoped actually that it would get the flat at one point in the quarter here. DAS didn’t get to flat and in fact, built a little backlog as well.

So we feel good about that diagnostics though went from down 40% roughly down in 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 of having people comfortable with going to the hospitals and clinics, et cetera.

It's still not at that a 100% level and hasn't returned to normal. So as we look forward here, we're hoping again, that'll get to flat as soon as possible and perhaps in the third quarter, but what we're planning on in the third quarter is down high-single digits to low-double digits as a whole for overall China.

So again, if it gets back to the flats, 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 uptake 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, you got to go to the second one here. So the free cash flow guidance going back to 80% to 90% and also I just eat them. I just want to sort of talk about your comments in the opening about having accelerated some programs and things picked up.

And I think 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 sort of see margins, the overall impact to margins, post this crisis.

And what you need to do to sort of get back to the – what do you do to get 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 we had, strong volume growth we had, great product mix we had, all the productivity programs that we had already been working on largely in services and DAS and EUROIMMUN, and as on top of that, we had great OpEx leverage.

And so even though our OpEx was up, it was still a 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 those things happen, we do have the ability to get to mid-20s to high-20s operating margin business.

But certainly this was an unprecedented quarter of margin expansion in the short term, but some of this will remain. I mean, I think we're becoming more efficient. I think the productivity programs are being put in place. I think our volume and mix is changing over time.

So it's difficult to say, what it would completely snap back to in the very short term. But I think the long-term, this is proving what the business can be. As it pertains to free cash flow, we had one of our best quarters, again and certainly, our best first half in a long time. And that is, there's a couple of things in there.

Our receivables we've been – as you know when we've been talking about, we're making a lot of process improvements on. But we also did have a small benefit with regards to COVID terms. But I think, receivable as progress will continue to happen here over time, even in a normalized environment.

You can see that we invested a significant amount in inventory. And I think most half of that it's about our COVID inventory.

And we think that having the product ready, which Prahlad mentioned in his prepared remarks that we are tracking our turnaround time, is enabling us to be ready for customers and when customers that need the product immediately. And then the other half, we always have first half built.

It's probably a little bit more than normal due to the demand levels, but our non-COVID backlog has increased. So I do think that the second half will our inventory levels should come substantially down. And so, yes, we're still, I think what we were saying, Derik, is that 80% to 90% we're tracking.

There's a lot of good underlying progress here on receivables, on our ability to manage our SIOP. It just so happens right now that our inventory is required to be high and to meet our customer's demand, but we're focused on it. And I think we feel confident that we can get to that 85% to 90% range in a couple of years.

And if it happens before that, that's great..

Great. And just one follow-up, you mentioned some of the point of care allies antigen test. Are you looking at those as sort of going in with an EUA authorization or and then following up with those, eventually going to a more FDA approved for it.

I'm just curious because you haven't historically done things in the infectious disease market in the U.S., from an FDA standpoint and more focused in China. I'm just sort of curious on your longer term strategy, if this is sort of like some shift..

Yes. I think COVID specific direct, we continue to actively investigate that as a detection method. I think the key for us, it's very important that the quality of our test should meet at that threshold. And I mean, we would not release a test, that are in the low-80s or somewhere around that.

So if we have a test which has got the right relative sensitivity that we would expect it to be, then we would release it specific to COVID. I think longer, we will we have a point of care test strategy in the U.S. that is TBD..

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. So we grew gross margins about 600 basis points, and I would say mix made up 85% to 90% of that. So even, it has the mix impact, we expanded gross margin by 50 to 80 basis points, and that was on our productivity programs.

But mixed, certainly in a total, not just COVID related, but in total, 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 very big, even an academic recovery, for example, and taking in a sequential improvement. It's just a little bit more color by end market? It might be helpful..

Yes, sure. So I think 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. And I'll talk about some of the markets and then DAS, which was down 10%, obviously in a minus 5% to 10% range. So let me just hit some of the end markets underneath there.

So reproductive health, I think continues to tick up a little bit, so when I think we mentioned that it was down mid-single digits, we're kind of planning on downloads single digits. China utilization particularly on prenatal is not yet at a 100% normalization. So that's reproductive health.

Immunodiagnostics and applied genomics down kind of high double digits, I think it'll remain down double digits and that's just a function of when the people feel comfortable coming back to see physicians and hospitals and whatnot. But we expect a little bit of uptick there.

Slipping into the DAS side, life sciences, which was down low single digits, we think probably go rose low single digits. In the second quarter, we were buoyed by strong informatics business. Enterprise was flattish and discovery was down. I don't anticipate informatics to be as strong, but I think discovery will pick up.

And we're seeing that in some of the consumables business and our backlog and our tenders, as well as the enterprise business has more labs returned. So we expect looking at a lifetime to kind of move from downloads single digits to upload single digits. Again, this is on the high end of our range that is.

Applied markets and food, again, was down I think, 20% and on the low end of our range, obviously that remains at that level. And, but we are expecting it to start picking back up. We had a bit of backlog growth, but that, we would expect to pick up, but it would still be down double digits, even in the high end of our range, which is down 7%.

But I think the simplest way is down 5% to 10% for DAS and 10% to 20% for DS 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 just curious, why you're entering and how you think about the role of antigen testing versus PCR longer term. Thanks..

Yes, Tycho, thanks. But 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 investigated the focus for us is that we would only launch it if the quality met our threshold.

And Tulip is one aspect from there, we would develop it just like on the rest of our product portfolio, where have every been able to leverage our capabilities from across different sites and companies. We've got competencies and capabilities are on this in China and Europe too. So we would be leveraging.

So in the event we would come out, it would only be if we get 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 then what’s going on in Europe? And then just thinking ahead there, where does all of this have the value study with women and infants shaking out? Is that data that can still show up at the end of the year? Or is it best to sort of think of that as a 2021 thing?.

Yes. So thanks, Dan. The Vanadis as a program itself it continues to progress very well. The funnel continues to be stronger, obviously COVID has resulted in installation delays. The funnel for us is stronger and the installations generally are being held up right now. In terms of the tests, they continue to run smoothly. And the demand is high.

The challenge for us, both in terms of publishing the study and getting the installations are in place, is that the market shift in terms of COVID – I would say, freeze or travel restrictions, et cetera. But I think as it starts to loosen and open up the installations will pick up.

I will say that I don’t think we expect the installations to be anywhere up to 55 in 2020 as we had projected. But we are very hopeful that as regions open up in Q3 and Q4 that we will be able to 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.

And then just thinking about commercialization, to what extent are you able to maybe bundle the serology tests? And then maybe some of the other things that you’re working on with the PCR test, 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 there..

Yes. To your first question, Dan, I think, in the case of serology, our understanding of the science, as I said earlier, is evolving every day. I think if I were to look in a crystal ball, I would say that we expect the epidemiology studies around serology to continue and for it to provide a better understanding of the immune response.

And as vaccines come into play, it will drive broader immune insights testing. And that’s where serology will play a larger role. In terms of us being able to put it together, I mean, there are examples as you saw with Sonora Quest, where we’ve done both serology and PCR testing. So I would say that it is larger customer basis.

We are seeing traction around our total solutions, whether it’s around collection devices or extraction kits, PCR or serology. I think the challenge as of now is that serology is to some extent 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? And what are your plans in terms of expanding capacity further as we move through the rest of the year?.

Yes. So in all the cases we are highly scalable and our manufacturing multiples of what we have previously disseminated in terms of our capacity. I think this is where the benefit of – the breadth of our capabilities and having a broad geographic footprint in all three parts of the world, whether it’s in Asia, Europe or North America comes to bear.

We’ve also put very strong supply redundancies in place. So we are not sort of dependent on any sole suppliers, et cetera, or any particular country or a region. At this point, we do not feel supply to be a constraint.

In fact, as you probably – as we’ve talked about earlier, we put turnaround times on our website and you can live track – it’s live streaming in terms of 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, I think we are biased to invest. And so actually some of the spending levels in the first half second quarter are not at the levels by choice. It’s a level because, you can’t travel or you can’t get a third-party service, et cetera.

So I think as we look into the second half of the year, we are going to step up our investment in areas like R&D, digital investments as well, so information technology. There’s some pockets of the organization where we want to invest with some additional people.

So I think we will continue to spend and probably invest a little bit more than we have been. Of course, we’ll always monitor the outlook. But I think one of our guiding principles has been to emerge from this as a stronger company. And I think we’re fortunate enough to be able to reinvest back in the business and we plan on doing so..

And especially around R&D, Catherine, I think, some of the investments that we did want to make in the first half of the year we couldn’t just because of whether it was travel restrictions or availability of scientists to come to the bench.

So I think that definitely – and given the pipeline and the NPI pipeline that we are talking about, that’s where we will continue to invest incrementally..

Okay. And maybe just 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.

And 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. So 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?.

So there are three ways to look at it, right? One, Catherine, the way I would look at it in terms of the relationships. So the emerging relationships that we are establishing with those customers that has become significantly stronger, whether it’s at institutions, such as Mayo or with large reference labs.

I think the second aspect is the familiarization with the science aspects of EUROIMMUN, and with the work flow that the team has been doing in Lübeck that has significantly improved.

And it has also allowed us to leverage the relationships to provide a peek into our current pipeline of products that are commercially available and also what’s coming into the future.

As we’ve talked about earlier, right? We’re getting our random access platform Axentis that would be out from your EUROIMMUN hopefully by the end of the year or early 2021 given some COVID restraints. The adoption of that – the barrier for adoption of that is going to be much lower given what we have done around COVID with our customers.

So, that’s one way sort of to quantify to some extent as to what the benefit of COVID provides longer-term to the company as a whole..

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 queue.

The one for Prahlad is, if we reflect a little bit on the experience that we’ve had with serology, some of the learnings for the clinical trial data that we’ve seen out of some of the 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 necessarily how much demand there is for broader, so 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. And 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, three and four years, what is 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.

And 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 a lot of sense on some amount of time. 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. I think Steve, the aspect around T cell – the T cell response, I think it’s a little too early to tell in my opinion. I think one would have to look at the total response, whether it’s humoral or innate response and how to look at it.

But the more germane way to think of it is that immune insights are going to be important and that’s where sort of we are trying to focus on as to what aspects and what avenues do we need to look at. So I think it’s something TBD or yet to come..

Yes, as for the margins, Steve, it’s difficult to give an exact target here in three to four years. And we said, we’d come out with our Analyst Day. And that’s when we were hoping to launch what our outlook is for margin in the next three years. Obviously, as you mentioned, we have had a lot of learnings.

So what I would say, without giving an exact number, I’d say we’re even more confident in our margin expansion opportunity. I mentioned in my prepared remarks, how much time we’ve spent in the analytical and food business and all segments for that matter. But I think the margin expansion value creation opportunity there is substantial.

I think it is a three to five-year play, some short-term actions, but certainly over the course of our MPI cadence, what we’re doing with procurement, what we’re doing with skew rationalization. I think it will be rather substantial. So, I did mention mid-20s and maybe that’s in three to four years.

But I don’t think we want to sign up for anything at this point. And again, we’re still learning here, but I would say we are even 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 was about half that. And I think 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 little bit at the midpoint to your point.

As well as some sub business mix with a little less informatics in the third quarter versus the second quarter, so half of this probably comes down through the gross margin line.

And then you’re right, the other half comes in through incremental investments and everything I mentioned to Catherine’s question in terms of R&D, digital, people continuing to invest and emerge stronger here..

Okay. Super helpful. The second one is, and I think this is a Prahlad question. I’m just to be willing to provide a bit more detail on your PCR revenue assumptions moving forward.

Specifically what I’m thinking about here is, one of your peers who also produces non-automated PCR kits, produces – well, they’re driving to produce 10 million tests per week. The automated diagnostic system vendors are expected to wrap manufacturing meaningfully by the next flu season.

So just with those two examples in mind, I’m just wondering if you could just 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, I think – let me put it this way, Doug. As of now, our capacity is greater than the demand.

And we feel very good about where we are, because what we are realizing that customers aren’t coming back to us from some of our competitors, because they realize that we provide a full workflow solutions with collection media, extraction kits, extraction units, PCR and fully validated workflows.

And I think that’s the benefit that we are seeing from our customers. And I think that’s where we feel that as we progress and we see sustained demand we are very well pleased with the solution that we bring to direct antigen testing..

Great. Thank you..

Yes..

Thank you. Our next question comes from Dan Brennan with UBS. You may proceed 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 dove 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 kind of 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. And the ongoing demand continues to be strong. I don’t know if you have break it down specifically to product lines 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 million in the quarter. I know you gave some color on PCR action. But how much was liquid handling of that and kind of how do we think about that implicit in kind of….

Okay. I think Dan, we’re trying not to get into exact numbers here to walk through and be able to be off of and whatnot. So I think 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 doing 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 share a market? And 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 give us on PCR pricing and then any color also about OUS, 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. And I think that’s the level of detail we want to share. There has been some decline in serology, modest, but it’s not for us. I think the whole serology market has seen a decline. But I think we want to stay away from getting into specific pricing..

And in terms of U.S., OUS is it just follow along your geographic split? Or you kind of having more success in one market or the other?.

I think we are seeing success in both markets, both in the U.S., Europe and OUS also in Asia. So we are seeing a broad penetration across countries in all 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. And 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..