Revvity Plunges 9.8% as China Reimbursement Shifts Trigger Sell-Off—Is This a Buying Opportunity or a Warning Sign?

Summary
• Revvity (RVTY) reports Q2 earnings beat but slashes full-year profit guidance due to China’s DRG policy impact
• Diagnostics sales in China decline double-digits, prompting CEO to warn of 'meaningful pullback'
• Shares trade at $93.48, down from a $93.925 open, with intraday range of $92.62–$95.19

Revvity’s sharp selloff reflects a collision of strong quarterly results and existential threats to its Chinese diagnostics business. The stock’s 9.8% drop underscores investor anxiety over policy-driven revenue risks, despite beating both earnings and revenue estimates. With China now accounting for a critical portion of its diagnostics growth, the company’s ability to adapt to shifting reimbursement rules will define its near-term trajectory.

China’s Reimbursement Policy Shifts Spark Profit Guidance Cut and Share Sell-Off
Revvity’s 9.8% intraday drop stems from its decision to lower full-year adjusted EPS guidance to $4.85–$4.95, down from $4.90–$5.00, citing China’s Diagnosis Related Groups (DRG) reimbursement policy changes. These rules have incentivized hospitals to shift from high-margin multiplex tests to cheaper single-plex alternatives, directly cutting Revvity’s diagnostics revenue growth to low single digits. CEO Prahlad Singh warned of a 'meaningful pullback' in China’s immunodiagnostics business, with Q2 sales declining double-digits. The move mirrors broader industry pain, as seen in Abbott’s $700M revenue hit, but Revvity’s lack of diversified growth drivers has amplified its stock’s vulnerability.

Health Care Equipment Sector Splits as Thermo Fisher Gains, Revvity Stumbles
While Revvity’s shares crumbled, the broader Health Care Equipment and Supplies sector showed resilience. Thermo Fisher Scientific (TMO), a sector leader, traded up 1.36% as its diversified life sciences and diagnostics business offset China-specific headwinds. Revvity’s struggles highlight its unique exposure to China’s policy-driven pricing pressures, unlike peers with broader geographic or product diversification. The sector’s mixed performance underscores the importance of operational flexibility in navigating regulatory shifts.

Options Playbook: Capitalizing on Volatility with High-Gamma Contracts
• MACD: 0.88 (Bullish momentum, but weakening) • RSI: 58.07 (Neutral, but oversold potential) • 200D MA: $107.80 (Price 14.3% below key resistance) • Bollinger Bands: $91.80–$105.12 (Price near lower band, suggesting oversold risk)

The technical setup suggests a volatile short-term outlook. Key support at $94.86 and resistance at $111.83 define a tight range, but the 52W low of $87.70 looms as a critical psychological threshold. High-liquidity put options like RVTY20250815P90 and RVTY20250919P90 offer asymmetric payoffs if the sell-off accelerates. These contracts balance leverage and liquidity, making them ideal for hedging or speculative plays.

• RVTY20250815P90 (Put) – Strike: $90, Expiry: 8/15, IV: 38.18%, Leverage: 66.46%, Delta: -0.2699, Theta: -0.0129, Gamma: 0.0402, Turnover: 14,083
- High IV (38.18%) suggests strong bearish sentiment
- Gamma of 0.0402 ensures sensitivity to price drops
- Turnover of 14,083 confirms liquidity
- Payoff at 5% downside ($88.81): $1.19/share (13.2% return)
- Ideal for short-term bearish bets with defined risk.
• RVTY20250919P90 (Put) – Strike: $90, Expiry: 9/19, IV: 36.27%, Leverage: 31.25%, Delta: -0.3249, Theta: -0.0180, Gamma: 0.0273, Turnover: 7,288
- Delta of -0.3249 offers moderate directional exposure
- IV of 36.27% aligns with sector volatility
- Gamma of 0.0273 provides decay protection
- Payoff at 5% downside ($88.81): $1.19/share (13.2% return)
- Suitable for longer-term bearish positioning with time decay cushion.
If $90 breaks, RVTY20250815P90 offers immediate downside capture.

Backtest Revvity Stock Performance
The backtest of RVTY's performance after a -10% intraday plunge shows favorable results, with win rates increasing significantly across various time frames. The 3-Day win rate is 52.29%, the 10-Day win rate is 53.48%, and the 30-Day win rate is 55.52%. This indicates that RVTY tends to recover from such significant dips, with maximum returns of 1.05% observed within 42 days.

Revvity’s Crossroads: Rebound Potential or Continued Downtrend?
Revvity’s selloff reflects a pivotal test of its operational resilience amid China’s regulatory headwinds. While Q2 results showed execution strength, the company’s dependence on a single market’s policy shifts creates a binary risk. Investors should monitor management’s response to the DRG crisis and watch for a potential rebound if Revvity’s life sciences segment gains traction. In the sector, Thermo Fisher’s 1.36% gain highlights the importance of diversified exposure. For now, the RVTY20250815P90 and RVTY20250919P90 options offer compelling short-term plays if the $90 level breaks.