PerkinElmer completes $2.45B spinoff to create new diagnostics, life sciences company

There’s a new multibillion-dollar medtech company in town.

Right on schedule, PerkinElmer has completed the split it announced last August, selling off its applied science, food and enterprise services businesses to private equity firm New Mountain Capital and combining the remaining life sciences and diagnostics businesses into a new, standalone company.

While the businesses sold to New Mountain will retain the PerkinElmer name, the newly formed medtech supplier will go by a different moniker—though its name, logo and ticker symbol have yet to be announced. The new branding still has to be approved by shareholders, after which it’ll be unveiled sometime in the second quarter of this year, PerkinElmer said in a Monday release about the completion of the deal.

Until then, the diagnostics- and life sciences-focused company will continue to share the PerkinElmer name with the New Mountain-owned assets.

Under the terms of the deal laid out last year, New Mountain offered up $2.3 billion in upfront cash to take over the trio of PerkinElmer businesses, which produce hardware used in food safety, environmental testing, forensics, semiconductor manufacturing and more. The deal also set aside another $150 million in cash that could be paid out to PerkinElmer in the future, depending on how much New Mountain earns from future sales of the newly acquired businesses.

Altogether, those divested segments made up about a third of PerkinElmer’s workforce and generated just under $1.3 billion in revenues in 2022—representing around 5% year-over-year growth—according to a recent full-year earnings report.

Meanwhile, the remaining life sciences and diagnostics businesses together brought in more than $3.3 billion last year. That marks a drop of about 13% compared to 2021’s $3.8 billion total—thanks in large part to plummeting demand for COVID-19 diagnostics—though PerkinElmer said in its divestment plans last August that it was expecting the newly formed company’s organic revenues to grow more than 10% each year after the spinoff.

In its diagnostics segment, the company makes both tests and testing systems, while its life sciences work churns out imaging tools, reagents, analyzers and other tools used by researchers for new drug development. The yet-to-be-named entity is led by Prahlad Singh, Ph.D., who has been at PerkinElmer for nearly a decade and was named CEO and president of the company at the beginning of 2020.

PerkinElmer’s split is just the latest in a growing list of medtech industry spinoffs.

For one, at the start of this year, General Electric separated out its healthcare business, setting GE HealthCare loose to grow the conglomerate’s longstanding portfolio of imaging machines and other devices on its own. Days later, Baxter announced a spinout plan of its own: By mid-2024, the tech maker will have cleaved off its renal care and acute therapies divisions to form a standalone kidney care company.

Meanwhile, Medtronic is also in the process of sending its own renal care solutions business out of the nest, with plans to combine those technologies with DaVita’s experience in providing dialysis services to create yet another standalone kidney care company. And that’s not Medtronic’s only spinoff in the works: It’s also planning to divest its patient monitoring and respirator businesses into a new venture within the next year or so, the medtech giant announced last fall.