Bio-Techne at Leerink’s Global Healthcare Conference: Strategic Growth Amid Challenges

On Tuesday, 11 March 2025, Bio-Techne (NASDAQ: TECH) presented a comprehensive strategic overview at Leerink’s Global Healthcare Conference 2025. Despite facing short-term challenges such as changes in NIH funding and a tough macroeconomic climate in China, Bio-Techne remains optimistic about its long-term growth. The company highlighted its resilience through diversified business models and operational efficiencies.

Key Takeaways

• Bio-Techne anticipates a modest impact from NIH funding changes but expects recovery as funding resumes.
• The company is optimistic about growth in China, driven by increased government research funding.
• A recovery in the pharma sector is underway, boosting Bio-Techne’s outlook.
• Rapid growth in the GMP protein business and strategic M&A plans are key focus areas.
• Bio-Techne targets sustained margin improvement with a robust financial strategy.

Financial Results

• Bio-Techne reported a gross margin of 72% and aims for a long-term operating margin of 30-40%.
• The company expects higher revenues in the latter half of the year due to increased lab activity and reduced vacation time.
• Cost management measures have positioned Bio-Techne for margin expansion as growth returns.

Operational Updates

• Bio-Techne’s GMP protein business has grown from less than $5 million to over $60 million in annualized revenue in five years, with a 40% growth rate over the past year.
• The company serves over 500 GMP protein customers, with significant involvement in clinical trials.
• Bio-Techne’s spatial biology platform continues to see strong growth, despite challenges related to CapEx constraints.

Future Outlook

• Bio-Techne is optimistic about the recovery in the pharma and biotech sectors, with increased approval rates for reagent and instrument orders.
• The company foresees growth in China, aiming for mid-single-digit growth in 2025, supported by government funding for research.
• Strategic acquisitions remain a focus, with Bio-Techne enhancing its corporate development capabilities to identify opportunities.

Q&A Highlights

• CFO Jim Hippel noted the potential 50 basis points headwind from NIH funding cuts but emphasized that the worst-case scenario is not severe.
• The new NIH director’s decision to resume funding on March 24 is seen as a positive development.
• Bio-Techne expects to achieve profitability in China soon, with growth driven by targeted stimulus programs.

In conclusion, Bio-Techne’s presentation at the conference highlighted its strategic focus on growth and resilience amid challenges. For more details, refer to the full transcript below.

Full transcript - Leerink’s Global Healthcare Conference 2025:

Puneet Sada, Analyst, Leerink: Okay. Great. I’ll get started. I’m Puneet Sada. I cover life science tools and diagnostics here at Leerink.

And it’s my pleasure to be inviting team Bio Techne. Jim Hippel, CFO, joining us on the stage, and also David Claire from Invest head of Investor Relations. Welcome, guys. Great to have you here.

Jim Hippel, CFO, Bio Techne: Thanks, Puneet. Thank you, Puneet. Always good to be here.

Puneet Sada, Analyst, Leerink: Okay. Awesome. So maybe just to start with the topic that’s on everyone’s mind. Given, you know, February 7, NIH and Directs came out, you know, that we had an expectation you’re going to see some impact in Q1 calendar and then sort of continue through the year potentially. Things have seems like so far maybe somewhat status quo on the consumables end.

But again, we’ll see when the when the when the numbers come out. But NIH news is necessarily not necessarily turning positive. We’re, you know, obviously hoping that it turns positive one day because it’s obviously, you know, this is the number one medical research position that US has, number one position in that, that no one would like to lose ultimately. But, maybe just, you know, we we continue to see layoffs in intramural. There was some, 400,000,000 cut to a university, other things that continue to remain here.

EnzIT levels are high. I guess, at a high level, what are you hearing from the customers? What are you seeing on the ground? What are the what are the field reps telling you?

Jim Hippel, CFO, Bio Techne: Yeah. So thank you, It’s been a fun month. February has. And, honestly, you know, we had a we had a sales meeting with our sales leadership yesterday to get a a beat on what’s going on in the field. And frankly, it was already old news because most of their information was Monday through Thursday, and, of course, there was an announcement Friday from the new incoming NIH, which was some positive news.

So maybe I’ll sum it up in terms of how we’re thinking about it based off of what we’re hearing from our customers, what we’re seeing in our run rates and what we’re hearing from administration, what we’re hearing from analysts, try to pull it all together. And we think about it early in three time frames. The most important, of course, is the long term. Long term, the very, very short term, meaning this quarter, and then the intermediate term, which is kind of somewhere in between, which is to me means when the dust settles and we actually the uncertainty is gone, whatever the answer is, we know what the answer is. Right?

So the long term, regardless of what the outcome of the answer is of all these different iterations of edicts and and so forth that have come down the pipe, we’re not overly concerned about it. And they start with first framing the actual, call it, exposure, if you wanna put it that way, that we have to this issue. When we we actually looked at all of the publicly you know, it’s public it’s public domain, which universities and institutions get NIH funding. We mirrored that to our database of customers and looked at our TTM revenue, and said, okay. Worst case scenario, if there’s a reduction in NIH funding, and there have been numbers that have been thrown out as much as 8% of the 15% indirect cap sticks.

So we use that as a worst case scenario because not all the revenue from these customers comes from NIH, but we don’t know how much does. Eight percent slice off of all that revenue was about 50 bps of headwind. So in the absolute worst case scenario, which is there’d be an 8% reduction in night spending, and all that spending gets spent on us by those customers, that’s the worst case scenario. So it’s not a huge exposure. And we make an argument there’s actually an upside.

If you actually read the writing of the of the message that came out of the NIH regarding the 15% cap, it actually said that the intent was not to reduce net dollars that universities get, but to have the indirect money instead go into direct, which if you read that by the letter of what it says, would actually suggest maybe an increase in direct spending. I’m not so I’m not saying that’s the case either. My point is it’s somewhere in the middle, which is probably status quo. So our exposure is not great, and the impact is not a big is not gonna be a big deal. And what’s more important to us, and we’ve always said this for our company, is when IH funding goes up and down, the boats drift up and down with it with the water level.

But what’s most important for us is where the current of the water is. And really for the last three or four years, we’ve been more out out of the current than in the current because much of those double digit increases have gone to NIH funding increases have been directed towards COVID, COVID related disease research and vaccine development, and that’s not where we play. And if this administration actually puts its money where its mouth is in terms of prioritizing funding towards those grants that are more towards chronic disease, like they’ve said, cancer, diabetes, neurological disease. Guess what? That is our wheelhouse.

That is where we play. So regardless of what this outcome is, we think we will benefit ultimately long term. Okay. So long term, no strategic changes being made because of this. The very, very near term this quarter here and now, you know, clearly, when there’s uncertainty, I don’t care whether it’s investors, whether it’s customers, or what industry it is, whenever there’s uncertainty, people clam up.

They pause. And and I don’t like to use the word freeze. That sounds rather draconic, but they do pause in their activity. And so clearly, after the February, we started to see that as well. Now having said that, it wasn’t a cliff drop.

It was just a we had very strong momentum in our academic daily run rates at the end of Q our Q2 and into January. We saw it noticeably momentum start to soften a bit in February, not unexpectedly. And if you think about it, at the end of the day, what researchers are working on in the academic labs today was from funding that was approved much, much earlier. So those don’t just stop automatically. Does the CapEx environment for future slow down a bit?

Yes. Our exposure in CapEx and academic is fairly minimal. Our CapEx as a company is fairly minimal. And to the extent we have it, it’s more geared towards towards biopharma. So it the here and now is it’s it’s it’s it’s not the momentum we saw in q two, but it’s, you know, it’s not earth shattering either.

Not enough for us to feel overly concerned about, you know, some of the soft guidance we gave for the quarter in terms of mid single digit growth. We are seeing strength in other areas. We continue to see strength in pharma or as to say, a recovery happening in pharma that could potentially offset any short term headwinds we have because of this February, call it, pause we had in activity, or a pause in momentum. The real concern for us was the intermediate, meaning, as long as there’s not new NIH programs being funded, the longer that goes on, there’s gonna be an air pocket in the future. And we were concerned that this dragged on in the courts or otherwise for three, six, nine well, like six, nine, twelve months, it could become a problem for us perhaps in fiscal year twenty six in terms of a bit of an air pocket.

And Friday was great news because the new incoming NIH director basically said they’re going to turn the spigot back on on March 24. And not only that, but take a look at the 15% cap and see what makes sense there, which is code for negotiating, come up with something more reasonable. Because what we are hearing from customers is that, you know, the ones who have a 15% gap to date don’t even understand or can’t comprehend why some universities get 70%. So is there froth in the system? For sure.

Anyone who’s tour I’ve toured a lot of universities on customer visits, and you see Zen Gardens and, you know, cafeterias that are nice, and I’m gonna take my wife out to eat. Right? So I mean, be a little bit exaggerated here, but money is it goes into a general fund, and God only knows where it’s met. Overall, 15% probably is a bit too tight, but where we’re at where we’ve been in the past is is probably a bit egregious. So if it ends up being somewhere in the middle, I think everyone’s gonna be just fine.

But it’s encouraging more in the interim that they are turning the spigot back on, so there’s not a major gap in programs rolling off and new programs coming in. So we’re less concerned about that that air pocket now.

Puneet Sada, Analyst, Leerink: Got it. I know that’s helped very helpful perspective. And, I mean, it’s, I know it’s hard to say given just a lot of the moving parts still, but, you know, I know you usually don’t give guidance, but you said, you know, sort of mid single digit to high single digit in the second half. Is that, just given the comments that you made about sort of what happens in the medium term, is that was that already at the time you provided that, was that already baking a level of prudence or does it need to have more prudence now?

Jim Hippel, CFO, Bio Techne: Well, I mean, there were you know, we’ve had that that self guidance we’ve maintained throughout the year up to our last earnings call, and that was, of course, before all the stuff came down with academic and the 15% cap. So it’s all it’s a new wrinkle in it.

Puneet Sada, Analyst, Leerink: Yeah.

Jim Hippel, CFO, Bio Techne: It’s so dynamic, you know, Puneet, that I’m not about to call call call. Is it a risk item? For sure. But, you know, every two days, it seems to change. So so at this point, not enough of a change for me to say there’s no way we can still achieve what we had set out to achieve in our Q4 at the start of the year.

No way would I say that at this point. But, you know, March will be an interesting month to see how it plays out, March into April.

Puneet Sada, Analyst, Leerink: Okay. Just shifting to another macro topic. One is China tariffs, but on the flip side is China stimulus. Could you talk a little bit about, you know, again, I believe your exposure is not that large, but, and it’s a lot of it is consumables still. So maybe just talk to us about and maybe I need to be corrected on that.

If you can provide sort of instrumentation versus consumable mix for China, how will you fare there? And how should we think about the tariffs risk, but on the flip side, maybe the stimulus coming back?

Jim Hippel, CFO, Bio Techne: Sure. So as a reminder, our business in China is roughly 8% of our revenue these days. It was as high as 10 at one point, but it’s in 8% to 9% range now. And historically, it’s been a mix of about 50% instruments and 50% consumable. So it is our most highest concentration from a region perspective of of instrumentation.

That mix has probably shifted a bit. It’s in the last year or so. I don’t have an exact figure off the top of my head, but it’s still instrument biased for sure. We were just in, in China in December, and there’s no doubt the macro economy is probably going through the toughest period I’ve seen there in twenty five years. And you can you can tell by just talking to the people on the street that they’re feeling it as well.

But our space there has been feeling it for a lot longer. And and and there were some extra some hopeful signs that, you know, the bottoming process is is in, and, I think a gradual recovery is is in the works. There’s a stimulus, quote unquote stimulus, which I’ll get to in a moment. But for us, what’s what’s more meaningful and more important is them getting kind of back to more of a business as usual with regards to their equivalent of NIH funding. So their National Academy of Sciences, I think is what they call it, Dave.

And because because we are much more consumable based there, we’re much more heavily, we’re not CDMO or or, it’s heavy industry wise there. We’re much more heavy towards academia, institutions, and biotech that is ultimately, you know, semi funded through the government. So government funding is very important for our business in China. And, when we were there in December, what we were hearing was that, you know, for the first time in what seems like two years, their equivalent of NIH was becoming much more vocal about encouraging grants to be submitted in the upcoming year. We haven’t seen much activity from that yet because it’s usually, it starts to kick in after the Chinese New Year month long celebration, which just finished.

So we’ll see that. But, given that, and that’s more important because it’s more sustaining for us. Our team there feels like it it will allow us to turn into the black, perhaps as early as this quarter in January I mean, in in China and, you know, get to mid single digit growth in 2025. Now specifically, as it pertains to the stimulus, it’s it’s not stimulus in the sense of what we’ve gotten used to with Chinese stimulus, what’s kind of almost a broad based cut cut cut cut a check for whatever you want, for your purchases. It’s very, very targeted towards replacement of equipment for a technological reason.

And, for us specifically, there’s really only one instrument platform that pertains to because our most popular instrument in China is our Maurice Biologics instrument, but almost everyone has one. They’ve all replaced their ICE instruments over the past two years. It’s more of the simple Western platform where many customers still have the old discontinued West platform, and so we’re looking to upgrade them to adjust. And we know exactly which customers they are. We know what the opportunities are because we literally have to almost hold their hand and go through the technical specs in the application process to get to get through.

So we’ve seen that. We actually started to see that saw a couple of those trickle in last quarter. We expect a few more to trickle in this quarter. The brunt of those will probably happen in our Q4, which will help Q4 for us. But, but it’s not a needle mover by any sense, and and we’re not necessarily expecting it to.

It’s just another firming of the base, so to speak, is how we think about it.

Puneet Sada, Analyst, Leerink: Yes. No, that’s helpful. Thank you for that. And then, what’s interesting in you started to see some pharma and biotech recovery in first fiscal first quarter of yours. Fiscal second quarter, you saw a strong growth in GMP proteins.

Maybe just, what’s the latest update from the pharma side and maybe the, you know, early biotech side? What are you seeing from those customers?

Jim Hippel, CFO, Bio Techne: Yeah. So as a reminder, you know, we when we have you the first ones to kind of stick our neck out for in in the twenty five calendar year and talk about talk about soft guidance, We had a kind of a staggered approach where we thought the biotech subsector would smaller biotech, small subsector would start to recover first just because of the strong funding we saw earlier in the year. We expected that to start to happen in our Q2. And then China to come on board and start become accretive to growth as opposed to a drag to growth in our Q3. And then large pharma not really start the recovery process until our Q4 just because we were expecting we were assuming that pharma budgets would become more normalized, meaning not the amount that they spend, it would be any different in terms of growth, but in terms of how they distribute it among their programs.

They’ll be get back to more traditional spread among, full range of discovery, translation all the way into the clinic as opposed to last year. It was definitely much more geared towards, you know, later stage clinical stuff. But we wouldn’t see that, we thought, until the April time frame when budgets get approved and get pushed down to the lab level who are actually our ultimate customers. We started to see biotech’s momentum pick up, even a little bit earlier than expected in September and then in October. That then what so what pleasantly surprised us was that November, we started to see pharma pickup, which was much earlier than we expected, and, and even more so than biotech, frankly.

And that momentum has continued into January into our third quarter. So, so we’re pleased by that. What we were hearing from customers that substantiated this was that we had orders, some larger reagent orders and some instrument orders where our clients our customers really wanted them, but they kept on getting turn they were in their budget, but they kept on getting turned down for approval by their evil CFOs. And all of a sudden in November, they would they made one more pass at it, and it went through. So it wasn’t like there was this edict that came from the butt from the top that said spend it or you’re gonna lose it or whatever.

It was more it was more just all of a sudden things were getting through the system and getting approved, which putting myself in my customer’s shoes if I was one of those evils I am an evil CFO, but if I was one of the my customer’s evil CFOs, I sure wouldn’t be, you know, giving a perception to my to the employees that things are all clear if they weren’t. So I think it was a positive sign, and we saw that carry through in January, which is encouraging.

Puneet Sada, Analyst, Leerink: Got it. Okay. Then on if I could switch, Greg, to GMP proteins, business has done well for you there. There was a bit of a pull forward that you talked about. You know, how should we think about the growth in context of that pull forward into the, you know, sort of second half twenty five?

Maybe if you can, you know, sort of level set us in terms of, you know, how this business again, this has been a strong growth. It’s it’s it’s offset some of the the other challenges in other parts of the market that you had. But maybe just talk about the sustainability of it.

Jim Hippel, CFO, Bio Techne: Yeah. So our GMP protein business is obviously one of our growth pillars for a reason. It’s gone from less than $5,000,000 of revenue to north of $60,000,000 on on an annualized basis in about five short years, considering our UO protein business is a little over two to three times that size, but took forty, fifty years to build, right? So pretty remarkable growth. And, you know, what we’re seeing now is our we have over 500 customers.

About 85 of them or so are actually in clinical trials, and about a half dozen of those are now as far as long as phase three. And what we’re starting to see as these customers get into clinical trials and progress through them is pretty much what we hypothesized all along, which is that the amount of volumes were going to increase exponentially from these customers as they progressed, yep, all the way through the clinical trials and then really explode once they get to commercial. And that hypothesis is is is proving out to be true because these half dozen or so customers are when they buy, they buy a lot of material. And and now it’s causing lumpiness. But it’s a good lumpiness.

It’s a good problem to have. And as we get more and more customers in the clinical trials and progressing through clinical trials, you know, the lumpiness will smooth out, not because of the individual customer level they smooth out, but in aggregate, they’ll start to smooth out. But that causes some heartburn for folks like us in the finance mind and folks like us in the room who are trying to forecast this stuff. But, that’s why we started talking more and more about our trailing twelve month growth rates as it pertains to our GMP protein business because it’s it’s it’s how you think about how you should think about the growth trajectory, and that’s now it stands at 40%. Our long term view over the next ten years is for a 30% CAGR, so we’re above that long term view.

But that’s the way I would be thinking about it. Yes, we’re sitting at whatever it is, 80% or so year to date growth. But as you mentioned, and Poland is not where I like to use because Poland would suggest we pulled it in. We did not. Our customers called us up and asked us.

They said they needed it earlier. So we’re like, great. So that will cause some choppiness from a from a quarterly growth rate perspective for sure. But as you think about building out your one year plus models, be thinking 30%, forty % plus. That’s how I would be thinking about

Puneet Sada, Analyst, Leerink: it. And what’s interesting is that when we look at the cell and gene therapy backdrop in the market, I mean, the sentiment is not so great, but you guys are obviously levered to some of these trials that are doing well. They’re needing more proteins. Just along those lines, I mean, Wilson Wolf, can you sort of update us where Wilson Wolf is today, size of that position? When do you expect to pull the be able to pull the trigger?

And just remind us what that criteria is.

Jim Hippel, CFO, Bio Techne: Yes. So I mean, even in this more difficult time for biotech in particular this past year and a half, Wilson Wolf is also doing well. I think year to date, on our fiscal year to date, they’re roughly 20% growth right now. So they’re doing well like we are. What’s really exciting about Wilson Wolf is they have over 800 customers.

They’re in about 45% of all the cell immuno cell therapy trials today. And they’ve got almost a half a dozen, I think, five of the nine therapies that have been approved for immunocell therapy, they’re in five of them, so over half. And those five customers have provided forecasts for their launch in the upcoming year. And just those five customers alone will give Wilson Wolf multiple double digit growth rates even if the whole even if their other seven ninety five customers don’t grow, which is probably not the case. So again, we’re seeing exactly what we expected in terms of that that massive inflection once once you go commercial with Wilson Wolf, and that’s what’s going to be in our sites with our GMP proteins eventually.

As it pertains to, you know, purchasing the remaining 80% of of Wilson Wolf, As a reminder, they have a a bogey, to hit either $326,000,000 of TTM revenue or a hundred and 36,000,000 of TTM of EBITDA. $2.26. Sorry. $2.26 and $1.36. Thank you, Dave.

That’s why you’re up here. Keep me honest. And, and they’ll if they hit any of those, they’ll hit the EBITDA one first. So that gives you a sense of how profitable they are. John Wilson still thinks he can hit that perhaps as early as early twenty twenty seven.

You know, that’s great. Forever optimist, we’re still going on the path that we’ll probably end up purchasing it at the end of twenty twenty seven at a contracted 4.4 times TTM revenue. But it’ll be in that ballpark one way or the other in terms of the revenues we we expect. So, as, you know, pretty much on on plan.

Puneet Sada, Analyst, Leerink: Got it. Just wondered since we’re talking about potential acquisition, just, I mean, given the state of the market right now, biotech that’s an important pillar to biotech is are those acquisitions. Maybe they are starting when they start, they’re a little bit dilutive, but then they catch up, but they have a, you’ve been disciplined about that, and you have a great profile whenever you acquire those assets. But maybe just give us a sense of what you’re seeing in the marketplace, today and, given the the challenges of the market?

Jim Hippel, CFO, Bio Techne: M and A market, you’re assuming? Yeah. Yeah. Yeah. I think you’re seeing it in the in the public markets, and we see it in the private markets because that’s kind of where we play historically is in the private space, you know, typically, sub $500,000,000 deals.

Right? And, you know, the assets that are very cheap are cheap for a reason, generally speaking. And I guess true in the public sector, but also definitely true in the private sector. The assets that are strong assets that have a lot of potential, really exciting science, really don’t have any problem getting funding. And so those owners, why would they sell in an environment like this, that’s in a suppressed overall market for our space when they know they can, you know, they they can get more, in a more normalized market.

So they’re in no hurry, and they’re willing to wait. And from our viewpoint, you know, why pay You’ll probably pay the same a year from now or two years from now that you’ll pay now, but with much clearer skies than what we have right now. So it’s not to say we’re sitting on laurels doing nothing. We’ve done a lot to actually beef up our corp dev organization. We’ve got some really strong professional people we brought in from the outside to not only hone our m and a strategy, but hone hone that if our overall company strategy overall and, and really focusing much more targeted on on on what we want out of M and A, so that when the time is right, we’re we’re in a much better position to strike and and be seen as a fable acquired by those potential companies.

So a lot of activity goes on behind the scenes before you ever pull the

Puneet Sada, Analyst, Leerink: trigger. Got it. We touched on the sort of the state of the market. So maybe I can just briefly talk about the spatial platform that is well positioned on the,

Jim Hippel, CFO, Bio Techne: you

Puneet Sada, Analyst, Leerink: know, closer to translational. Just wondering if you are seeing any impact there too, or is that more defensive, because Comet has grown, you know, over the last few quarters.

Jim Hippel, CFO, Bio Techne: Yeah. It’s all relative, but, you know, naturally, it’s gonna be somewhat impacted, in a sense that spatial overall, and not just the comment, but our ACD business is more heavily weighted towards academic than the rest of our portfolio is. And of course, in the case of Lunaford, it’s a it’s a higher priced instrument. So from a CapEx perspective, it’s going to be more sensitivity. Mhmm.

So despite all that, it’s still got tremendous double digit growth, and it’s got an amazing pipeline of of opportunity. I don’t think we’ve had one dissatisfied customer that we know that’s been brought to our attention. We have one customer who’s not just bought one or two or three, but has bought eight of them. You don’t buy eight of these instruments unless unless, you know, you you really you really see the value in it. So, you know, the the future there is still just amazingly exciting.

And the fact that it can do that well in this environment, I think, is a testament to the underlying technology of the product.

Puneet Sada, Analyst, Leerink: And then just this is a question we’ve been getting around, and I should have asked it with the m and a question. I mean, just given the state of the academic market, does it change your view at all on things that you could potentially pursue on the m and a side? Or this is more of a, you know, again, a temporary situation?

Jim Hippel, CFO, Bio Techne: Well, again, our long term view is that it’s not going to be impactful to any of our strategy, and that would basically include our M and A strategy as well.

Puneet Sada, Analyst, Leerink: Okay. All right. Then, just briefly on given the time, let me touch on margins. Obviously, your great margin profile, 72% gross margin, you’re targeting 30 to forty five thirty sorry, 30 to 40 long term target on the operating margin line. But maybe just talk to us you know, what drives your confidence in the step up in the second half?

Again, recognizing that there have been challenges and that could gated, but if those were to resolve, what else? What are the margin levers that you can pull? And if things were to be tough, what are the margin levers that you can pull?

Jim Hippel, CFO, Bio Techne: Well, I think we’ve already pulled a lot of those margin levers in the sense that we know the last year, year and a half, and especially in the last year since Kim has been on board, we’ve really done, you know, as you would, like, kind of, you know, housecleaning. Right? So it’s what you do when you’re running a hundred miles an hour for three or four years, and then, you know, you realize you’ve left a lot of trash, nasty trash, but you’ve left a lot of debris behind that you gotta clean up. Right? So whether it’s right sizing the organization for the where the areas that are growing versus the areas that are not growing as much, whether it’s realigning some of our portfolio, which we’ve done, and so we don’t have so many distractions.

We definitely have held the line on costs, and we’re positioned very, very well for margin expansion when the growth returns. So I would say now what gives us confidence in the lift of incremental margin from second first half to second half, honestly, it’s it all comes back to volume pull through because if you look historically at our profile of our revenue, our second half revenue is always higher than our first half, and it’s really just a dynamic of when people take vacations. You gotta remember, much of our revenue is is generated by the individual at the lab. So if they’re in the lab, they’re buying our stuff. If they’re not, they’re not.

So heavy vacations in the fall quarter, heavy vacations with holidays in the winter quarter, not so much in the spring and early summer. So that’s why our revenues are always higher in the second half. And with that you know, if our cost base maintaining relatively the same, you get that incremental margin lift, and you see that pull through come from the bottom line. It’s just really as simple as that, which is why if there’s any risk to the margin guidance we gave in the second half, it really comes down to the revenue. If the revenue is not as strong, the margin may not be as strong, but it still will be incrementally higher than the first half.

And then you haven’t asked it, but I expect you will. You know? Then what gives us confidence about in the future getting to 35 to back to 40, it’s that same confidence that how we can get such a big step up in margin from first half to second half demonstrates the amazing pull through we have on our revenues. So when we get back a double digit growth, you can get back to that 35% plus rather quickly.

Puneet Sada, Analyst, Leerink: Alright. We’re at almost at the time. This is always helpful. Jim, thanks for taking the time. Dave, thanks for being here.

Jim Hippel, CFO, Bio Techne: You bet, Penny.

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