Bio-Rad at Wells Fargo Conference: Strategic Growth Amid Challenges

On Thursday, September 4, 2025, Bio-Rad Laboratories (NYSE:BIO) presented at the Wells Fargo 20th Annual Healthcare Conference 2025. The company highlighted its stronger-than-expected Q2 performance, driven by robust growth in process chromatography and consumables. Despite challenges in the U.S. academic and government sectors, Bio-Rad remains cautiously optimistic about strategic investments and operational efficiencies to sustain growth.

Key Takeaways

• Bio-Rad reported a stronger-than-expected Q2, with significant growth in process chromatography.
• The company successfully closed the Stillia acquisition and expanded its Droplet Digital PCR (ddPCR) portfolio.
• Challenges persist in the U.S. academic and government market, but performance in Japan and Korea shows improvement.
• Bio-Rad is focusing on strategic investments, operational efficiencies, and disciplined capital allocation for sustainable growth.
• The company plans a capital market day in the spring to outline future targets and strategies.

Financial Results

• Revenue: Exceeded expectations in Q2, driven by strong performance in process chromatography and consumables.
• Process Chromatography: Achieved over 50% growth in Q2, with full-year guidance raised to low double digits.
• Consumables: Demonstrated consistent pull-through and robust year-over-year growth.
• Operating Margin: Improved due to tariff stabilization and effective expense management.
• Free Cash Flow: Remained strong, with a continued focus on improvement.
• Tariff Impact: Reduced from an initial 130 basis points to 30-40 basis points.
• China Reimbursement: Anticipated impact of mid-teens to $20 million annually due to changes in reimbursement rates.

Operational Updates

• Stillia Acquisition: Completed at the end of Q2, expected to contribute approximately half of initial revenue projections for the second half.
• Continuum Launch: Introduced alongside the Stillia acquisition, expanding the ddPCR portfolio.
• Supply Chain: Efforts continue to enhance efficiency through lean manufacturing and distribution center consolidation.
• Manufacturing: Consolidated operations from France to Singapore to boost capacity for the Asian market.

Future Outlook

• ddPCR Growth: Targeting mid-single-digit growth in the near term and high single-digit to low double-digit growth long-term.
• Stillia Accretion: Aiming for accretion within 18-24 months, with potential acceleration.
• Diagnostics Business: Focus on growth outside China, with Quality Systems as a key contributor.
• Capital Allocation: Priorities include reinvesting in the business, strategic acquisitions, and share repurchases.
• Margin Expansion: Requires a minimum top-line growth of 3% or higher.
• A&G Market: U.S. academic and government market expected to remain stable in the second half of the year.

Q&A Highlights

• Academic & Government Market: U.S. market expected to remain similar to Q2; Europe faces pressure, particularly in France and Germany.
• ddPCR Market: Expanded portfolio opens new opportunities; growth expected to normalize at mid-single digits in the near term.
• Stillia Integration: Positive customer feedback with a growing pipeline.
• China Pricing: Reimbursement rate change impact estimated at mid-teens to $20 million annually.
• Sartorius Stake: Considered a monetizable asset, with strategic application pending.

Bio-Rad’s detailed conference insights underscore its commitment to innovation and strategic growth. For more information, refer to the full transcript below.

Full transcript - Wells Fargo 20th Annual Healthcare Conference 2025:

Brandon Coulliard, Analyst, Wells Fargo: All right. Good afternoon. Welcome to the Wells Fargo Health Care Conference. Thanks for being here. I’m Brandon Coulliard. I cover life science tools and diagnostics sector here at the firm. It’s a real treat to have Bio-Rad Laboratories with us back at the conference this year. Joining me for this conversation, to my left, CFO Roop Lakkaraju.

Thank you. CEO Norman Schwartz, thank you both for being here.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Thanks for having us.

Brandon Coulliard, Analyst, Wells Fargo: Maybe this would be a good place to start off. You put up a pretty good 2Q. Probably one of the biggest revenue beats I’ve kind of seen in Bio-Rad in a little while. Just talk about some of the things that maybe played out more favorably for you, some of the highlights in the portfolio, and then we can dig in from there.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: OK. Maybe I’ll start with Q2. Obviously, we were happy with it overall. I think a couple of things contributed to that, the result. I think on the top line standpoint, I wouldn’t say things got better, but I think things stabilized a bit from an end market standpoint. That was quite helpful. Specifically, process chromatography was strong for us. That was very specific to a customer’s desire to pull in from later in the year to Q2. That’s solely for their production needs and not tariff-related, these sort of things. That was a nice, strong contributor. We had consistent consumable pull-through. We saw a strong year-over-year growth rate on consumables. Activity continues, even with all of the churn that’s happening from an A&G standpoint, these sort of things. That was nice to see. Aside from the top line, I think operating margin, we saw good news there overall.

I think the tariff situation stabilizing. At the end of or during our Q1 call, we specifically had kind of in the midst of all the tariff dynamicism going on. That stabilized a bit. That allowed us to improve the operating margin. We also continued to see the flow-through of consumables and the mixed revenue, and then just tight expense management. Closed the Stillia acquisition by the end of Q2, which we really were focused on doing. Along with that closure, the announcement and launch of Continuum, which I think has been long awaited. Most recently, we did a webinar of our Droplet Digital PCR portfolio. Hopefully, you all got a chance to watch that, listen to that. That really gives you a sense of the breadth of our portfolio there.

Cash flow was also very strong in the quarter, which is a continued focus for us in terms of free cash flow. Overall, I think a good quarter and continued progress from our standpoint.

Brandon Coulliard, Analyst, Wells Fargo: A number of things I want to dig in further into there. Just start with process chromatography. I think it was maybe over 50% in the second quarter. You raised the guide for the full year. I think low double digits now. It’s starting to trend, I think, more consistently with other players in that ecosystem. How’s visibility today, maybe relative to where it was perhaps 6 or 12 months ago? Is there, I guess, anything besides the one customer you’d like to sort of call out?

Norman Schwartz, CEO, Bio-Rad Laboratories: Yeah, I think given that fundamentally, that business is kind of lumpy quarter to quarter, I think we do have much better visibility today than we had several years ago, where I think we’ve managed to partner better with the companies that are using the product. It’s to their benefit and our benefit. I think that’s worked very well. To your point, I think the business has kind of stabilized out. Of course, again, it’s a lumpy business. If you draw a line through the ups and downs that we’ve had, it’s still a pretty healthy, growing business, high single, low double digits. I think we continue to see that going forward.

Brandon Coulliard, Analyst, Wells Fargo: Maybe just we look at biopharma excluding process chromatography. It’s so unique, right? What do you see from an R&D demand point of view? Is that any different between instruments and consumables? You kind of stated the world biopharma.

Norman Schwartz, CEO, Bio-Rad Laboratories: It’s interesting. We just sat in on a lunch presentation from Merck. They’ve got this big program to reduce costs. One of the places they’re investing is R&D. That was a very strong point that they made. That sounded pretty good to me.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: I think to build on Norman’s comments there, I think from a biopharma X large pharma, I think is still challenged, especially on the instrument side of the house. Consumables, people are, again, I think are getting activity done because they want to move research forward. Instrument softness continues across both biotech and smaller biopharma, if you will. Large pharma, which is evidenced by our process chromatography area of the business, has stabilized for us, as we just spoke to.

Brandon Coulliard, Analyst, Wells Fargo: To what extent, if at all, are pharma tariffs, MFN, kind of affecting your conversations with pharma clients or spending appetite, if at all?

Norman Schwartz, CEO, Bio-Rad Laboratories: We really aren’t seeing much in that regard. In fact, it was interesting to listen to the Merck people just now. They don’t feel it’s going to have a big effect on them either. We aren’t seeing anything that says that that’s going to be a headwind for us.

Brandon Coulliard, Analyst, Wells Fargo: Your life science business actually over-indexes to academic and government. I think earlier in the year, maybe after the first quarter, you kind of built in, I think, an assumption, correct me if I’m wrong, that the U.S. A&G market would maybe be down 20% this year. What’s embedded? Obviously, the second quarter was a lot more stable than maybe you thought three months earlier. What’s embedded in your outlook for the back half for A&G globally within life sciences?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah, I think from a U.S. perspective on A&G, we continue to see it similar to the second quarter, where activity continues, especially on the consumable side. Instruments are challenged. I think everyone’s pointing to the NIH budget finalization, where that lands. There is a point of view that it’s no longer a -40%. The question is, is it 0% to -10%? One thing that people are just looking for is kind of a decision on that, so that at least they have got comfort around, OK, I at least know what 2026 budget could be, and then how I can plan for instrument and obviously continued activities from a consumables standpoint. That’s the U.S. I think when we look at globally A&G, Europe is getting pressured, especially areas like France and Germany, where people are moving money from health care to defense and these sort of things.

We have a geopolitical situation. China continues to be challenged from an end market and macro standpoint, and that’s resulting in some softness there. Japan and Korea have improved when you look at Asia broadly, which is nice to see, but obviously smaller markets overall.

Norman Schwartz, CEO, Bio-Rad Laboratories: Just one more point to add to what Roop says on, I think as the NIH budget gets resolved, I think it’s going to take time for researchers to kind of rebuild a trust in basically the government and in the future. I don’t look to it to be a kind of a spring-loaded situation. I think it’ll take time to kind of gradually rebuild that trust, and therefore the instrument fails to come back.

Brandon Coulliard, Analyst, Wells Fargo: Just to clarify one comment you made, Roop. Are you assuming that the U.S. A&G market is kind of flat sequentially in terms of dollars in the second half relative to 2Q? Or were you referencing more of a year-over-year growth rate or decline?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: I think sequentially, it’s going to be similar to the second quarter, right? Not necessarily anything. There’s no budget flush. To maybe read into Norman’s comments a little bit, we’re not expecting a budget flush or anything like that in terms of what we see right now. It’s more just continued activity with cautiousness around instruments.

Brandon Coulliard, Analyst, Wells Fargo: OK. OK. I’d like to pivot over to ddPCR. You did hold that webinar a week or two ago to kind of showcase the new combined portfolio. You finally got Continuum out the door. Could you just talk about how much the portfolio expansion kind of opens new opportunities and where those are? I guess what you view as a normalized growth rate for ddPCR going forward.

Norman Schwartz, CEO, Bio-Rad Laboratories: I think it opens up a lot of opportunity for us. Certainly, one of the areas that we’ve talked about in the past is the entry level. Now we’ve got a good, solid entry-level platform or platforms if you can. You also think about the Continuum, which is kind of a little higher on the scale, but still in that kind of entry level. We’ve got a couple of offerings now in that entry level, in addition to the kind of the mid and high-range platforms. I think if you look at the combination of all the platforms we have there, we’ve got really, really something for everyone today. Not only that, but we can use those platforms to build on the, I don’t know how many hundreds of thousands of assays we have.

I think the last number was like 490,000 or something, being able to port those assays onto the new 700 series and enable researchers to do a lot more.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: To build on Norman’s comments, that assay portfolio plus the amount of research publications that we articulated are kind of market-leading elements, right? Why that’s important gets to your question around the growth rate. Obviously, over the last few years, we’ve seen negative growth rate or kind of flattish growth rate. I think our opportunity, and this is evidenced by our ddPCR growth rate for the rest of this year, going from low singles to mid singles, is evidence of that. It’s driven by that expanded portfolio in the second half. I think near term, we kind of look at that market-leading position to help enable, let’s call it mid single digits. Long term, our focus is driving that to high single-digit kind of growth rate and seeing if we can’t start to touch that double-digit growth rate. It’s a little early to talk about it from that standpoint.

We think with the market migration and obviously the macro improving over time, I think will help enable spend around instruments again.

Brandon Coulliard, Analyst, Wells Fargo: Do you think the market will primarily continue to be concentrated in research? What needs to happen for adoption to really take off in diagnostics? Is there a new application? What would accelerate its uptake in the clinical setting?

Norman Schwartz, CEO, Bio-Rad Laboratories: I think we’re starting to see some adoption. It always takes time for these technologies to develop and to gestate in this kind of research environment. We’re working on some opportunities in diagnostics. We’re also seeing some through the external partnerships we have with Genoscopy and Insight. I think it’s starting to develop. It’ll take more time.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: It’s early, I think, for the DX side of digital PCR, right? I mean, for that matter, ddPCR or digital PCR adoption is still relatively early. There’s more growth from that standpoint, growth in terms of applications, especially in oncology and where rare event detection is really needed. You still have got opportunity there. As you get more traction on the life sciences standpoint, I think you’ll see more of that adoption and translation over to the DX side, which is especially early, if you will. That’s a future growth opportunity for us as we think about it on a longer-term basis.

Brandon Coulliard, Analyst, Wells Fargo: You closed the Stillia deal at the end of 2Q. I think you guided to something like maybe $15 million in revenue contribution in the second half, correct me if I’m wrong. Is somewhere in the mid-20s, $30 million range a good full-year run rate to think about? Remind us what you’ve kind of disclosed as far as getting that acquisition to break even, eventually accretion, and maybe what the gross margin profile looks like.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: You got a lot in that question.

Brandon Coulliard, Analyst, Wells Fargo: You got a lot out.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: 10 questions.

Brandon Coulliard, Analyst, Wells Fargo: Let me try and walk through those immediately. If I miss anything, remind me. I think the first part is the revenue number you’re quoting is probably high. Take half of that. It’s kind of how we plan for it in the second half. Part of that is just getting the teams trained up, the Stillia teams trained on the Bio-Rad instruments, but also our teams trained on the Stillia platform, as well as Continuum, and getting that out to market. That takes a little time. We are working our way through there. I will say that customer feedback to date has been incredibly strong. Obviously, the Stillia products were already on market. Through our diligence, we spoke to every one of our customers. There was tremendous feedback on their instruments and the workflow and architecture and everything else. We are seeing that play out. Pipeline is building.

I think the end markets starting to buy instruments will be more helpful. We are seeing that traction. To the number in the back half of the year, it looks more like that. I think as we think about and tying back to my comment earlier around longer-term growth rate in ddPCR and that kind of mid single digit type of number in the near term, that’s kind of how we want to think about it into 2026 and beyond. We think that that’s kind of the runway there. What didn’t I hit on your questions?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Just the acquisition.

Brandon Coulliard, Analyst, Wells Fargo: Yeah, accretion, break even, what that normally means.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: In the second half or the Q2 call, we actually increased our operating margin outlook for the year, expanded that by 200 basis points. Incorporated within there is some dilution from the Stillia acquisition. What we’ve talked about initially is that we want to drive accretion 18 to 24 months out. I think that’s very reasonable in terms of what we see here. We’ll kind of provide that update based on market uptake in the second half of this year at the year-end call. That will give you a sense of what’s baked into the 2026 growth rate overall, as well as that time to accretion. I feel very good about kind of that within 18 months, getting to that accretion point. Our focus, quite honestly, as we build out the 2026 plan is, can we accelerate that even further?

Brandon Coulliard, Analyst, Wells Fargo: Shifting gears over to diagnostics, could you just talk about what you’re seeing from a pricing or reimbursement perspective in China? What part of the portfolios is it concentrated in? You look out in 2026, is it still a headwind next year? Do we lap it as we move into the first quarter?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Do you want to go?

Norman Schwartz, CEO, Bio-Rad Laboratories: Yeah. Obviously, there’s been a lot of talk around VBP, which really hasn’t affected us. They’ve obviously gone off after kind of the larger players, the larger assays that are being done. We tend to be more on the specialty side, so we’re kind of under the radar in most cases. We did get they have kind of pivoted from the use of this VBP back to basically just changing reimbursement. That’s what we had happen in the fourth quarter of last year. We’ll obviously get through that at the end of this year, but it’s a lower reimbursement rate for our A1C test there.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah. We’re not seeing it across other areas, and we don’t anticipate seeing any further reimbursement rate changes here in 2025. I think we’re continuously monitoring how the China market evolves. Some of our peers talked about DRG more specifically in the recent quarter. That’s something we’d already factored in earlier in the year when we did our Q1 call because we’d seen some evidence of DRG. What that really is doing is reducing the amount of panel tests from a diagnostic standpoint just to curb the cost for the end consumers in China. That has been carrying through. We’re mindful of how the China market is continuing to evolve.

Brandon Coulliard, Analyst, Wells Fargo: How much of a drag is that on the DX business this year? What are you seeing kind of outside of China, any growth drivers or themes to call out?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah. From a reimbursement rate change effect, it’s kind of in that mid-teens to $20 million on an annual basis overall. Obviously, in the fourth quarter is when it cut in last year. We’ll lap that come the fourth quarter of this year, and so that full effect. A bit of a headwind. I’ll just remind folks, we also had a reasonable headwind on the donor screening business that we had through a partner that also no longer exists in 2025. A bit of headwind for the diagnostics business coming into 2025. With that said, if I look at the Q2 results in diagnostics, ex-China, 3.7% growth, which we were very happy with. Quality Systems was a strong contributor to that kind of growth rate, and we hope to see that continue as we get through 2025 and roll into 2026.

Right now, on a broader global standpoint, we’re mindful of just how the macro evolves, I think, from potential growth opportunities.

Brandon Coulliard, Analyst, Wells Fargo: Gotcha. OK. On the tariff topic, remind us what’s embedded for the year in terms of gross and net impact from tariffs. Would you be able to fully mitigate that in 2026? Subsequent to the call, we did have the Swiss 50% rate go into effect. Care to update us on what that means as far as near-term cost impact?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah, I think the Swiss piece is still, like so many of these, it’s not solidified, right? I think it’s to be determined in terms of potential impact. I mean, we produce some product in Switzerland. We produce product elsewhere in Europe. We’ll need to see what products and how we might mitigate that in region, for region type of situation. From a tariff standpoint and what we had contemplated, coming out of the Q1 call when the tariff discussion was at its height, we had assumed a 130 basis point kind of headwind to the margins. At the Q2 call, we indicated that that’s been mitigated partly through where tariffs actually fell versus what was initially contemplated and announced. We reduced tariff headwind down by 100 basis points to about 30 to 40 basis points. That’s what’s factored in for the rest of the year.

Obviously, since the Q2 call, there’s been such as Switzerland, such as India. There are some things that have continued to evolve. Needless to say, there’s variability still out there for which we’re assessing kind of the impact in both near term as well as into 2026.

Norman Schwartz, CEO, Bio-Rad Laboratories: Yeah, not to mention the kind of the updates last week where those fall out.

Brandon Coulliard, Analyst, Wells Fargo: Right, right, the court case. OK.

Norman Schwartz, CEO, Bio-Rad Laboratories: The court cases.

Brandon Coulliard, Analyst, Wells Fargo: Of course. OK. It’s been about a year and a half since Sadat kind of came on board to run the supply chain organization. He’s a former Danaher guy. Seems to have the pedigree to make change there. Just an update on any progress or milestones and what you see as the opportunity with supply chain for you.

Norman Schwartz, CEO, Bio-Rad Laboratories: Yeah, I think he’s got a whole plate full of projects. He’s kind of working diligently, piece by piece through these. Yeah, I think we’re very happy with the pace of progress that he’s making. Obviously, with the markets being a little depressed right now, it doesn’t all show up. Yeah, I think we’re pretty happy with what’s being done.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah, if I could build on Norman’s comments there, the lean manufacturing concepts that he’s brought to our factories really resonated. We saw some immediate impact in terms of productivity and labor leverage and these sort of things, which was nice to see. That’s what flowed through in the 2024 period and continues to flow through in 2025. To Norman’s point, it’d be nice to get a little bit more volume running through those to get the absorption improvement even further. Beyond that, we’ve done some things around the logistics area where it’s gotten more efficient, more effective. Part of that was distribution center consolidation and rationalization. We completed the move from France into Singapore in terms of the manufacturing footprint consolidation.

That’s all while giving us incremental capacity in Singapore and greater opportunity to leverage the potential growth in the Asia market into the future years with that Singapore capacity. I think what’s yet, there’s more that we’re focused on doing. Part of that is kind of long-term view. Obviously, the tariffs and other things play a part in this in terms of footprint rationalization and where our capacity is and how we should think about that strategically. Beyond that, there’s procurement leverage that there is still, I would say, more opportunity there in terms of how we think about supply chain and consolidation and leverage. There’s more to do, I think, inside our factories in terms of lean efficiency and productivity and execution from a quality standpoint. All of these things are opportunities that we’re looking at driving.

Norman Schwartz, CEO, Bio-Rad Laboratories: Just utilization in general, too.

Brandon Coulliard, Analyst, Wells Fargo: Absolutely.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah.

Brandon Coulliard, Analyst, Wells Fargo: Roop, don’t take this the wrong way. For a book and shift business, why is working capital consuming almost half of revenue? Why is it the exact same profile as Bruker?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: I can’t speak to Bruker, so I won’t even start there.

Brandon Coulliard, Analyst, Wells Fargo: It has been that way forever.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah. I think there’s a few different things to consider here. The first, I’ll say very explicitly to your question, we’ve got opportunity in terms of working capital efficiency. We know that we have initiatives in place to drive more effective working capital efficiency, which right now, arguably, our free cash flow to op revenue or op income is kind of a one-to-one. There’s more opportunity from that free cash flow standpoint. Therefore, there’s greater leverage. The first part of it is kind of where our inventory sits, right? I mean, we’re sitting at turns of 1.0 turns. I mean, that’s quite honestly, it’s abysmal, right? Even considering the Quality Systems business that we have. We recognize that. How do we get there? Part of it is coming out of COVID and the need and the supply chain constraint and really needing to make sure we had continuity of supply.

Not an excuse. That’s just the reality. The second part of it is when you think about the growth rates that we expected, going back to our 2022 investor day and kind of what we thought the business model could be, was a much higher growth rate. When you factor that growth rate in with a constrained market, you end up buying maybe additional inventory that you hope to burn through that hasn’t burned through completely. Obviously, what we’re focused on doing, using lean methodology and more effective forecasting, is to reset our, these are some basic sort of things, but MOQ levels, our safety stock levels, so we can get or accelerate that inventory flow through and improve turns. Additionally, I talked about procurement leverage. Part of that procurement leverage is consolidation of suppliers and getting buying power leverage, right? That gives you terms opportunities.

When you look at DPO, there’s opportunities there as well, right? Working capital at the end of the day is an important focus for us. We’ve got opportunity to improve, which will result in better free cash flow over a multi-year basis.

Norman Schwartz, CEO, Bio-Rad Laboratories: Just one other point. I think it’s hard to compare basically a big-ticket instrument business to a business with a lot of flow and consumables and small instruments. In a big-ticket instrument business, you get an order, and then you’ve got six months to deliver it. In our case, we get an order. We have to deliver it the next day or the day after. It creates a little different profile for inventory. I mean, Roop is right. We got a lot of improvements we can still make. I’m not sure that’s the best.

Brandon Coulliard, Analyst, Wells Fargo: Agreed. They’re totally different businesses, but the working capital consumption ratios are remarkably similar.

Norman Schwartz, CEO, Bio-Rad Laboratories: I prefer the flow business to the big-ticket instrument business.

Brandon Coulliard, Analyst, Wells Fargo: Yeah. As we look at the back half of the year, Roop, how comfortable are you with the fourth quarter revenue ramp in terms of dollars, perhaps being above where that sequential growth has been, say, the past couple of years?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah. I mean, we’ve looked at that. Our fourth quarter, there’s two businesses. To the question on against prior years, how does it compare? It’s not too dissimilar. With all that said, in terms of our fourth quarter very specifically, though, there are some specific drivers to that fourth quarter kind of ramp that we expect to see. Part of that relates to our Quality Systems and the lot releases and the timing of those lot releases. They’re not uniform through the year. It’s more Q4 ended. We’re trying to see what we can do in terms of bringing that into Q3 or not, et cetera. That’s a focus point for us in terms of execution on the Quality Systems and delivery of those lot releases in that fourth quarter to ensure we get that revenue.

The other part is within the fourth quarter is the revenue from the expanded Droplet Digital PCR portfolio. That’s a contributor in there as well. Both of those, obviously, we’re seeing strong pipeline development on the ddPCR, as I mentioned earlier. We got to sell those through. Part of that is just closing deals. We feel good about what’s there, and it’s based on a bottoms-up analysis. We need to get those lot releases out. We got to close the deals that we’re building a pipeline around.

Brandon Coulliard, Analyst, Wells Fargo: Let’s take a flyer on this one. I think the guide does suggest that the fourth quarter organic growth is actually kind of in that 4% to 5% range. Correct me if I’m wrong. Is that exit rate a reasonable base case to think about Bio-Rad in 2026, what you could do next year?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: I think it’s a little early to talk about 2026. I’ll kind of reframe it to say that 4% to 5% potential growth rate in the fourth quarter on a year-over-year basis is because of some of those specific drivers. The other thing I’ll just remind folks is that in the fourth quarter of 2024, we had the reimbursement rate cut, which is kind of a one-time piece of that because the cut-in. There’s a little bit of a difficult compare there, or an easy compare, I should say, because of that. Therefore, I want to moderate what 2026 might, right? Macro consideration, being mindful. As we’ve talked about before, Brandon, our focus is to get to consistent market growth rates. I think it’s debatable as to what people view as market growth rates today, right? Is it 3% to 5%? Is it 4% to 6%? Whatever it is.

We need to get there on a consistent basis, both through diagnostics growth and life sciences growth.

Brandon Coulliard, Analyst, Wells Fargo: What’s the minimum top line growth you need to expand margins?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: At least 3% or lower than 3%.

Brandon Coulliard, Analyst, Wells Fargo: SG&A dollars have been flat on a dollar basis for, I don’t know, six years, like running, you know, call it $200 million a quarter. Is there any reason at all that that needs to grow? Like if revenue starts to pick up again, that line needs to grow at all?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: SG&A. I mean, I think there’s not.

Brandon Coulliard, Analyst, Wells Fargo: You’re basically spending for what is like a $3 billion top line, and you’re at 2%, right? Basically, you know, it’s the infrastructure for a much larger company.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: We do have infrastructure for a larger company. With that said, does it need to grow? I mean, you got things like merit and other things that happen. Our focus has to be on driving leverage of that SG&A more effectively, right? Part of that is through that consistent top line growth that we need to drive. Part of it is further rationalization of our SG&A through productivity efforts, which we have underway, as well as then identifying opportunities for further rationalization of expense management that needs to occur.

Brandon Coulliard, Analyst, Wells Fargo: I have to ask about Sartorius. I mean, basically, at this point, you’re just going to wait until 2028 and then decide to do something, Norman? Or is the board at all even entertaining, let’s say, alternatives for that stake? You seem to have signaled it would be on the table at least over the past year.

Norman Schwartz, CEO, Bio-Rad Laboratories: Right. I don’t think 2028 is a magic date. In 2028, you’ll have kind of a change in shareholders. That’s principally the difference. I think that we do look at it today as a monetizable asset. I think it’s a question of where to apply it and then to apply it smartly when we have the opportunity.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: I mean, to your point, we don’t need to do anything with it, right? It’s a very nice appreciated asset sitting on the balance sheet that gives us optionality. Arguably, it’s undervalued today, right? I think it gives us strength from an optionality.

Brandon Coulliard, Analyst, Wells Fargo: OK. It’s been nice to see the pickup in share repurchase activity the last few years. You did just close an acquisition. How do you think about capital allocation going forward? I mean, if you strip out Sartorius, the stock is still very cheap, right, on what is a very depressed earnings base. How do you think about your priorities next two, three years?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Yeah, from a capital allocation standpoint, the first thing we want to do is we want to invest back in the business. We think that there’s growth opportunities in our business, some of which we’ve talked about here. We want to invest back into the business. We’ve talked about being strategic. From an acquisition standpoint, I think Stillia is a great representative of it. We pivoted from early-stage acquisitions to finding assets that have products on market that can be accretive more near term. I think Stillia does that. We’re seeking more of those sort of assets in the marketplace that can add value to our customers, as well as accelerate our margin expansion opportunities and top line growth rate. That’ll be a focus with that. The final piece is we’ve done share repurchases opportunistically.

We’ll continue to look at share repurchases opportunistically, considering our overall float and kind of technical aspects of share repurchases.

Brandon Coulliard, Analyst, Wells Fargo: Last one real quick. What are the odds we see the capital market day event next year and maybe updated LRP targets?

Roop Lakkaraju, CFO, Bio-Rad Laboratories: We pushed out our expected investor day just because of end market kind of aspects, but we’ll do one in the spring. That’s the goal, and the intent is that we will provide a three-year model, 2026 through 2028, if we do it in the spring.

Brandon Coulliard, Analyst, Wells Fargo: Excellent. Look forward to that. We’re out of time, so we’ll leave it there. Thanks, everybody, for being here. Thank you for coming as well. Y’all have a great day.

Roop Lakkaraju, CFO, Bio-Rad Laboratories: Thanks for having us, Brandon.

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