Bio-Techne at Stifel 2025 Healthcare: Strategic Growth Amid Challenges

On Tuesday, 11 November 2025, Bio-Techne Corp (NASDAQ:TECH) participated in the Stifel 2025 Healthcare Conference, addressing its Q1 performance and future plans. The company reported a slight organic revenue decline but remains optimistic due to stabilizing markets and strategic investments. While facing challenges with reduced GMP protein orders, Bio-Techne is focusing on growth areas like spatial solutions and molecular diagnostics.

Key Takeaways

• Bio-Techne reported a 1% organic revenue decline, primarily due to reduced GMP protein orders from two major customers.
• The company anticipates growth in spatial solutions, cell therapy, and molecular diagnostics.
• Bio-Techne aims to double the revenue from its Luna4 spatial analysis platform.
• The company is committed to expanding its EBITDA margin to potentially 40%.
• Executives foresee a return to above-peer growth, with significant recovery expected by 2027.

Financial Results

Bio-Techne’s Q1 2025 financial performance was marked by:

• A 1% decline in organic revenue, impacted by decreased GMP protein orders.
• Excluding these customers, underlying growth was around 1%.
• The GMP business faced a 200 basis point headwind in Q1, with further challenges expected in Q2 and Q3.
• The academic market, contributing 22% of revenues, showed signs of stabilization.
• The pharma market experienced double-digit growth, outperforming broader market trends.

Operational Updates

Bio-Techne is advancing its operational capabilities by:

• Launching the ProPAX form factor to enhance GMP protein production efficiency.
• Investing in GMP production of small molecules in the U.K.
• Seeing momentum with the Luna4 spatial analysis platform, which is expected to double its pull-through revenue.
• Introducing the Leo instrument in ProteinSimple, offering higher throughput.

Future Outlook

Looking ahead, Bio-Techne executives are optimistic about:

• Achieving low single-digit growth in the latter half of the year.
• Aiming for 20% plus growth in the GMP business as markets recover.
• Expanding operating margins through strategic investments and divestitures.
• Stabilized end markets in academia and biotech, with biotech funding showing signs of recovery.

Q&A Highlights

During the Q&A session, executives addressed:

• The impact of GMP business headwinds due to fast-track FDA approvals.
• Improving NIH outlays and aligning grants with Bio-Techne’s research focus.
• Confidence in continued double-digit growth in the pharma sector.
• Expectations of 15%-20% growth in Simple Western, supported by new product introductions.

In conclusion, Bio-Techne’s strategic investments and focus on high-growth areas position it for a promising future. For further details, please refer to the full transcript below.

Full transcript - Stifel 2025 Healthcare Conference:

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay, we’ll go ahead and get started. Happy to kick off the 2025 Steeple Healthcare Conference. I am Dan Arias. I’m the Life Sciences and Diagnostics Analyst here at the firm. We’re happy to have Bio-Techne with us here this morning. We have Kim and Jim from the company, Dave sitting out front here. Guys, thanks very much for joining us today.

Kim, Executive, Bio-Techne: Thank you. Thanks for having us.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: My pleasure. Kim, maybe just an obvious place to start would just be talking about the quarter. You reported a week, week and a half ago. Maybe thinking about the top line first, 1% overall organic.

Kim, Executive, Bio-Techne: Decline.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Protein sciences was down, spatial was up, spatial and diagnostics was up. There is a lot of crosswinds going on in life sciences land today. Maybe we can just talk a little bit about that, and we can naturally move our way into GMP, which was a meaningful part of the conversation on the quarter.

Kim, Executive, Bio-Techne: That’s correct, Dan. Yeah, a quick fly-by on the market, sorry, on the company’s results for the first quarter. We had an organic revenue decline of 1%, and that was really based by two larger customers that had ordered GMP proteins in quite high volumes a year earlier, Q1 and Q2. You might remember that in those quarters, the GMP proteins were growing 60% and 90%, and we were saying, "Listen, don’t extrapolate that because there’s definitely some tailwind there." These companies had some additional tailwind in that they got fast-track approval from the FDA designation, and with that, could shorten their clinical studies, and with that, they had enough materials, and therefore didn’t order new materials this quarter. That gave us a 200 basis point headwind, and therefore the underlying growth was really low single digits in the 1% range.

Now, overall, we were more optimistic in our call than usual, and that was more based upon, and I’ll fly through the three to four end markets and our verticals. The end markets, academic, really tough end market, but we saw some positive outlays, and we clearly see some of the grants more aligning with our research markets. We had some positive feeling about academics, especially as the quarter progressed. Definitely in the last month, we saw some momentum building. We had biotech, obviously very constrained funding market. However, there were some positive outlays and a little bit of positive momentum, maybe paced by increased M&A and licensing activity.

We had our pharma markets, large pharma, where we had already a couple of quarters of double-digit growth. Just before our earnings call a quarter ago for Q4, we were, of course, a little worried that the MFM discussions and the letters from the president going to the CEOs in pharma talking about tariffs, we were worried that they would slow down, but they did not. All those end markets were kind of stabilizing, right? On top of that, we pushed a second, achieved a second positive growth quarter in China. Those are the four kind of end markets that looked more stable than they usually looked. From the four growth verticals point of view, spatial’s building momentum, cell therapy, yes, taking those two customers out, we had a real successful quarter in adding customers.

The ProteinSimple franchise doing really well, and again, with double-digit growth for the 10th time out of 12 quarters in the consumables, building some momentum in the order book. Then molecular diagnostics also lapping a 34% quarter a year ago, still mid-single digits. We felt in every of our verticals also some momentum. Therefore, yes, the negative 1% was in our feeling not representing the official momentum in the quarter because we saw these trends, and we were therefore for the first time in quite a while more optimistic than usual.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay. How has visibility changed over time with the GMP business? You have a greater number of customers, obviously, than you used to, but there is a concentration at the top. To your point, these were two of your largest, if not your largest customers. How has visibility changed, and how do you think your forecasting abilities change over time? Do you see this becoming less of a lumpy business for you?

Kim, Executive, Bio-Techne: Over time, with more customers and also, of course, more customers progressing through the phases, and then even more so, more important is customers progressing into commercial stages. The law of numbers will, of course, make the ramp more stable over time. I think the most important part there is going commercial, and we have zero commercial customers currently, five in phase three. In the early phases, customers typically buy enough material to finish a whole clinical study. By definition, that becomes very lumpy. They will not order like every month or every quarter. Once you go commercial, they will have supply agreements. They typically go for rolling forecasts, and then things become much more manageable. It might still not be super smooth, but at least you know what’s coming from an order perspective. Over time, we saw it in DRD for many years.

It was a very lumpy business, and it continued to grow, the diagnostic reagents and controls. It is now also been much more stable for all of us over the years.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Jim, the way that it will work for the next couple of quarters is 200 basis points headwind that we just experienced. That steps up to 400 next quarter and then down to 200 again in the third quarter. Is that based on discrete forecasts on that part? How confident are you in that trajectory there?

Jim, Chief Financial Officer, Bio-Techne: Yeah, I mean, hopefully it’s, I’d say, a base case in terms of not getting much worse than that because we essentially took most of the revenues out from those two customers in that view. They really have these two specific customers haven’t given us any specifics really beyond December in terms of what they’ll need and when they’ll need it. Based on the fast-track designation, we’re assuming they’re not going to need anything for a while. If they do order in the second half, that will be some upside to what we talked about.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: What do you think is the right growth rate for this business? It’s been an above-average grower. I mean, I would certainly put it in the bucket of some of your most important products in the franchise. How do you see long-term growth for GMP?

Kim, Executive, Bio-Techne: I think that in recovering markets, I would not say at full speed, but also not when it is totally subdued and in distress. In recovering markets, we feel that 20% plus is a good rate. We have real nice coverage from the GMP proteins, launched the ProPAX, which is a form factor where human mistakes as well as contamination is highly reduced. Small molecules, we have made investment there for GMP production in the U.K. We have a real broadening portfolio with some good innovations. We feel that that should be 20% plus. If you then think about further recovery in the markets, and especially if you would add Wilson Wolf to the equation later, that should be north of 20%.

Jim, Chief Financial Officer, Bio-Techne: Yeah, I’d add that as well because if you’re at the time horizons in the next three to four years, I think I agree with Kim completely. 20% plus is kind of what we expect as we add new customers and customers progress through clinical trials. You get beyond that, and hopefully many of these customers start to become commercialized, it could actually be significantly higher than 20%.

Kim, Executive, Bio-Techne: Yeah, with the two that are now working on their clinicals and going into their filing, that by themselves could drive significantly higher than 20%.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Yeah, okay. Okay, we may come back to that. There’s lots of stuff I want to cover here. Maybe just moving to academic. We’ve talked a lot about the sluggish demand that exists in the U.S. You actually sounded a little bit encouraging on the call. Can you maybe just elaborate on where things were getting a little better? Does that translate to equipment purchases maybe over the next couple of quarters being a little bit better for you guys? And then couch it in terms of your overall NIH exposure, which you guys have kind of said is on the lower end.

Kim, Executive, Bio-Techne: Yeah. Yeah, I’ll start high level. 22% of our revenues for the company come from academic. 10% is related to Europe academic, and that has been nicely stable in the mid-single digits. 12% comes from the US academic, and there, as of February last year, everything was going swimmingly, but I think the turbulence that was created has definitely put a lot of pressure on our results. The good thing, though, is that the last couple of months you saw that the NIH outlays were actually improving and maybe even positive year over year. One important factor that we clearly see and follow is that the number of grants that are getting enacted on are definitely much more aligned with our research areas in oncology and neurology, etc., versus in infectious diseases and in vaccination.

In a way, the shift towards those areas is an additional benefit for us. Why we were enthusiastic is because the core, which is usually very sensitive to overall activity level, and the core products are all the proteins and antibodies that you would use in basic research, that core was for the first time flat, coming from declines, and indicates overall activity level. That was true in this specific academic market as well. We feel that that market is finding its activity levels again. One thing is for sure, we will be lapping February pretty soon, so comparables will get easier as well.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Yeah. When we were talking earlier in the year, the way in which you were thinking about the situation in the U.S. was very much that it was the uncertainty around the budget rather than the actual numbers that was causing the biggest problem in the mind of the academic scientists. Do you still feel like that uncertainty removal will drive better spending, or is the reality of what the dollars and cents might be looking more important in your mind over the next, call it, two to three quarters?

Jim, Chief Financial Officer, Bio-Techne: I mean, I think the answer is yes. I think what we’ve seen the past three quarters in our academic end market, particularly our reagents, which kind of show the day-to-day mentality of our customers, points to exactly that, where in the sense that as the proposals that were coming out of the houses for a flattish budget year over year became more public and pronounced, we saw the run rates continually improve towards that flat growth that we saw this most recent quarter.

Said another way, the customers are starting to behave now more like what the expectation is, which is for more of a flat budget, versus two quarters or three quarters ago when the hammer first came down around threats of 40%, 20%, that range of cuts, not so much with us, but we believe the end markets, we were hearing customers talk about voluntarily slashing their budgets by 15-20% in preparation of what was to come. We’re not hearing that. We have not heard that this most recent quarter, and our results would suggest they’re behaving more like how they’re expecting more of a flattish budget going forward.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay. Maybe just on the core reagents business, it was flat in the quarter. As you guys have pointed out, it’s pretty resilient given what we’re talking about here. What do you think about the prospects for acceleration in reagent demand going forward if, in fact, some of this uncertainty, academic or pharma, is starting to subside?

Kim, Executive, Bio-Techne: Yeah, I think if the markets normalize and you would see more research activity in pharma, biotech getting normalized funding levels, and academic returning to their normalized activity level, we certainly think that the entitlement of this portfolio is in line with market or slightly better. That would be in our mind mid-single digits or high, mid or low, high single digits, but that in that range.

Jim, Chief Financial Officer, Bio-Techne: By the way, I think right now one of our key end markets, that being pharma, is behaving what we call normal because for us, we expect double-digit growth in pharma, even though their budgets are probably growing mid-single digit on average year over year their R&D budgets are. In our core reagents, we are seeing at least mid-single digit growth in pharma. It correlates.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: You feel comfortable that pharma can continue to be double-digit from here?

Kim, Executive, Bio-Techne: Pharma won’t be, but we will be in pharma.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Yeah, you will be in pharma.

Jim, Chief Financial Officer, Bio-Techne: The reason is that everything I have been reading and hearing is that pharma budgets continue to be up mid-single digits and are expected to be again next year. As long as they are up mid-single digits and they are not doing any massive reshifts of their portfolio, which they went for that major shift in calendar year 2024, it should continue to be a normal market. For us, normal, our expectation is to grow to essentially 2x that in pharma.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay. Maybe a little bit on spatial. Spatial is a business where there is academic sensitivity, and I think that’s impacted you. Luna4 is a clinical translational tool as much as it is a research tool. It doesn’t really compete with the 10x Genomics of the world, etc. Can you maybe just talk a little bit about the puts and takes there in terms of drivers versus headwinds? Do you think that that business can continue to stay up and grow, maybe accelerate if, to our point, some of these things are starting to peel off?

Kim, Executive, Bio-Techne: No, your view is correct. Spatial in general has a little bit of a disproportional read on the biotech as well as on academic, especially if it is being used as a research, let’s say, translational tool. Therefore, it has seen some pressure. However, quarter over quarter, we have seen this business also improving, and we talked in the call about it being back to flat for the reagents. That meant for the ACD RNAscope, that meant back in the low single digits. Instruments still had some headwinds with a decline of low teens. However, in total, they were flat, building momentum. In Luna4, we saw a double-digit order growth, which is a very good indicator for us. Overall, the instrument is definitely, from a performance point of view, a winner.

We see a great win-loss rate for the accounts where we compete, and we feel that we’ve got quite some momentum and taken market share in down and up markets. We will be able to do so. Of course, from a pull-through point of view, this instrument is very interesting for our company because we have our 85,000 RNAscope probes. We have over 100 antibodies now validated for the instrument. Most recently, we launched the protein-protein interactions, which gives you a true multi-omic view as to what’s going on. Those will take two antibodies to run. We feel this is going to be a very, very good pull-through growth driver for the company.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Jim, are you able to separate out ACD growth from Luna4 growth within the spatial bucket?

Jim, Chief Financial Officer, Bio-Techne: Absolutely.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Could you do that for us?

Jim, Chief Financial Officer, Bio-Techne: Nope.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay.

Kim, Executive, Bio-Techne: I just did.

Jim, Chief Financial Officer, Bio-Techne: Yeah, we actually.

Kim, Executive, Bio-Techne: I just did. I said like ACD was low single digits and Luna4 was low teens negative.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay.

Kim, Executive, Bio-Techne: Yeah. In aggregate, they were flat.

Jim, Chief Financial Officer, Bio-Techne: Importantly, and you may have made some of this to my mistake, but the bookings for the instruments were up double digit. It is the one instrument we have where we do look at the bookings because it is a larger instrument. It can often spread to two quarters to build and ship versus our protein simple typically book and ship in the same quarter. It was very encouraging to see double-digit growth in bookings.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Do you think that pull-through, when we were talking, was in the 40-50 range, $40,000-$50,000 per instrument per year? Do you see that as stable going forward, or is there the potential for acceleration just given that it does sound like it has a momentum?

Jim, Chief Financial Officer, Bio-Techne: I think there’s definitely potential for acceleration because we haven’t even gotten started really with the antibody pull-through yet and our RNAscope. That’s kind of a low bar I think we’ve put out there. Between the RNAscope pull-through, the antibody pull-through, and then just the chip pull-through on the instrument itself, 40K is a starting point.

Kim, Executive, Bio-Techne: Yeah, we think over time that in our model, Stan, this is going to double.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: It’s going to be a double as far as overall revenues for the Luna4 business.

Kim, Executive, Bio-Techne: It’s going to double the.

Jim, Chief Financial Officer, Bio-Techne: 4080.

Kim, Executive, Bio-Techne: The pull-through per box per year is going to go from, let’s say, 45 to 90.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Care to put a time frame on that for modeling purposes, or is there?

Kim, Executive, Bio-Techne: Yeah. I’ve not thought about how we say that externally with an appropriate buffer in there. Of course, I know my internal models, but let me think about that.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay. Maybe Simple Western. I do want to make sure that I hit a couple of the important product categories, at least in my mind anyway. Simple Western has been this really great business for you. It’s been 15%-20% growth over time, but it’s been 20% plus in certain periods, probably more than it’s been below 15%. Is that still a range that you think is appropriate there? Can you touch on Leo, the new instrument? And how does what you’re doing in cell and gene therapy play into the Simple Western growth rate? Because my understanding is that there is some demand coming from those customers for that product.

Kim, Executive, Bio-Techne: Yeah. Now, it’s very broadly applicable, of course. Western blot is a process that gets used everywhere. Our simple way of automating it and then having quantitative results instead of visual results is a huge differentiator. We have very good success with our original offering, and now we recently added, three quarters ago, we added a Leo instrument, which is basically more specific, but also four times higher throughput, meaning you can run 100 samples instead of 25. You can run different samples in the same run doing different experiments. Very flexible, high throughput if it comes to the consumables as well. Definitely a benefit, higher ASP box, and has met all our expectations from a launch point of view if you look at the quantities of boxes we’ve placed. Those launch targets were set in more normalized markets.

In a way, this is outperforming our targets in a subdued market. We are very optimistic about it. Yes, of course, people are going to find different applications for it because Western blot was just such a messy process. Now you can, first of all, automate it, and secondly, you can bring it back in the lab for other applications. You asked about the cell and gene therapy applications, the AAV potency, the gene potency application is one that is really driving some of the adoption at the moment.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay. Jim, maybe just thinking a little bit about the course of growth over the year. Down one in 1Q, it sounds like something similar in 2Q, and then low single-digit growth in the back half, especially as the comps ease into our point here, presumably some easier or better end market conditions. 1% growth feels like a good starting point for the year, but it also feels like there’s ambitions for something higher. Leaving aside the obvious, which is that a bunch of academic customers decide to spend more or pharma ends up being better, where do you see the upside in the model when you really look primarily, I guess, at the back half of the year, which is where things seem like to have the most variability, but tell me if I’m wrong there.

Jim, Chief Financial Officer, Bio-Techne: Yeah, I’ll tell you how we think about our forecast from a build-up perspective, and then it might become more obvious where the upside is. As we think about going from Q1 to Q2, we’ve called for essentially the same amount of overall organic growth, which is, call it minus 1% roughly. The reality is you take out these two customers we spoke of, the underlying, the business in its entirety is actually gradually stepping up its growth rate. If you backed out these two customers, as Kim talked about in Q1, we were plus 1%, not minus 1%. If we do the same for our forecast for Q2, the headwind’s even greater. It’s about a 400 basis point headwind as opposed to a 200 basis point. We grew 90% in cell therapy a year ago in Q2.

You back those two out, that means the minus one actually is more like plus three for the entirety of the company. We’re seeing a gradual ramp-up in our overall growth rate. Really what’s behind that is, I’d say from a portfolio perspective, now that we’re seeing more stabilized markets in academic, we believe biotech will start to stabilize now that funding appears to have come back four months in a row with growth year over year. We’ve always said, and we’ve seen this before, we saw it a year ago when we were starting to come out of the COVID halo or COVID hangover, that our growth pillars, our growth verticals kind of lead us back into growth. They’re the kind of early indicators for us. Sure enough, we saw momentum pick up.

We’ve seen momentum pick up in ProteinSimple for a few quarters now, but particularly in the back half of Q1 and starting so far in October, some very solid momentum across our entire ProteinSimple franchise, not just one or two of the platforms. Of course, spatial. We talked about the turn we saw in spatial in Q1, and we’ve seen that momentum continue into October, which is encouraging. That is where we’d expect to see kind of for us the lead indicators of market stabilizing and us outperforming the market. That is exactly what we’re seeing right now. Those two things we think will lead us to better growth in Q2, combined with, to a lesser extent, but nonetheless, China and Asia overall. We are expecting yet a third quarter in a row of growth in China and Asia overall in Q2.

We do feel like this is the start of a new recovery process, not just lumpiness like we saw for the better part of two and a half years prior to calendar 2025. That is what gets us from the plus one to the plus three adjusting for these two customers. As we think about the back half, we are not really predicting at this point any changes in the market trajectories of any of our key end markets. It is more about wrapping easier comps. As you talked about, the academic comp has been a tough comp ever since February, but we will wrap that in February. Even the biotech comps may become easier as well.

It’s more of a comp story in the second half, not to mention these two customers, as you kicked off early in the conversation, they do have headwinds in the second half, but less so than the first half. The upside here is that the markets go from being stable to actually recovering, namely academic and biotech. If there’s any true recovery there in terms of growth from the end market, then we have upside, I think, in our second half.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay. The take-home message is that your assumption, the two to three that we might model for the back half or that you do not seem to be disagreeing with, does not require any improvement in the end market conditions. What is in place today can get you there. It is about what kind of improvement we see from here.

Jim, Chief Financial Officer, Bio-Techne: Correct.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: You are a victim of your own calendar when it comes to comparing Bio-Techne to other tools players. The beginning of calendar 2026 would have you being two to three. If something were to be higher in the back half of calendar 2026, it could feel like the three to four that we are kind of looking at for other life sciences companies. The question is, because there is a question embedded there, is 2027 the year when you think you resume above peer growth? That kind of has been your calling card for a long time. I think that is why people invest in Bio-Techne in a lot of situations.

Jim, Chief Financial Officer, Bio-Techne: The above peer growth is what we believe becomes much more, the spread becomes larger when the markets are stable and improving. The answer is yes. If you actually think about even the first half of calendar 2026, at low single-digit growth, you said two to three, I think you can easily tack on a couple more points on top of that because of the headwinds of these two customers that will still linger. I think we already are talking about potentially being in a mid-single-digit growth in the early part of 2026 absent these two customers. I do believe that is still ahead of what most of the peers are saying. If the markets continue to recover, and we believe they will, history shows when these markets turn, they turn relatively quickly.

We saw that exactly a year ago as we were predicting to come out of the COVID hangover as well as the IRA situation that was impacting large pharma. We had to stick, as you remember, Danny, to stick our neck out early and say, "Hey, we think we’re in the midst of a recovery here." It played out exactly how we, not exactly, but in aggregate, it played out how we thought it would in our first and our second quarter. It really was not until February when the hammer came down on with the administration on academic and then followed by biotech, everything else, that a whole new set of headwinds came up. It did turn really quickly.

We went from flattish growth to end our calendar, our fiscal 2024 in June, and then we went to mid-single digit growth, high single digit growth, and we were predicting internally, we did not mention it, we were predicting that we were on the path to double digit growth in our Q3 before February hit. This gives you a sense. We have seen this before, admittedly more shallow and less enduring downturns that the market has seen. We have seen very quick snapbacks, but I think it could happen again. I am not calling for making a call for it, but I am saying it would not surprise me because we have seen that movie before.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: You still see there being a path back to double-digit organic growth for the company?

Jim, Chief Financial Officer, Bio-Techne: Oh, absolutely. Absolutely. I mean, anything short of that, we’re not saying we got to change our strategy.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Op margins. All of the op margin expansion is you will expand op margins this year. Let’s start with the positive.

Jim, Chief Financial Officer, Bio-Techne: I told you we would.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: You did. When we were talking about it, I certainly was not expecting it to all come from a divestiture. There is not a lot of organic growth. It is tough to get leverage on 1%-2% growth. You are lapping some comp expenses from last year, if I remember correctly. Why is there not more of an organic op margin expansion opportunity this year?

Kim, Executive, Bio-Techne: You talk about the mechanics. I’ll quickly talk about the philosophy. Overall, Dan, yes. Could we have further optimized our op margin? The answer is probably yes. In fact, though, we went into the year thinking that, listen, these are tough conditions, and you can always take your benefits and your savings to the bank and have them flow through the P&L. You also have to make sure that you do continue to position yourself as a double-digit grower and as a grower that outpaces the others in the market. For that, you have to invest. Of course, we had a certain level of R&D investment already, but we also, with this hard work that gives us this strong bottom line, wanted to make sure that some of that benefit goes into specific investments.

We want to make sure that we have a next generation Luna4 platform in the making. We want to make sure that there’s new detectors and new applications coming for the ASD, for the analytical business in the proteins. We have seen how powerful those new introductions, new product introductions are, and how differentiated the setup is. Spatially, we want to continue driving it. In the meantime, we also want to make sure that in a subdued market where customers have less funding available, the programs that do start are typically of high quality. Those are the ones that they’re really committed after and that maybe people still would invest behind, but they have constrained funding. What you want to do is make sure that you’re part of a program.

For that, you often see these press releases around grants where you could get a grant where you get a certain number of protein reagents, a certain number of G-Rexes. We want to make sure we seed the market because at the end of the day, you know how sticky revenue will be once you seed it and once you’re part of a certain treatment, and we want to be on the forefront of it. We use some of these monies that we could have trickled through for investment in new product development capabilities as well as seeding the funnel.

Jim, Chief Financial Officer, Bio-Techne: Yeah. I’ll take one more step further. The way I look at it is, yes, technically we chose to exit the exit zone lab business through divestiture, but I see it simply as we prioritize what we invest in all day long, every month, every quarter, we’re prioritizing what we’re going to invest in. There are certain things we choose not to invest in that kind of gradually go away that no one even notices. My point being is that it wasn’t necessarily to me, it was less of a divestiture and more of a prioritization choice on where we want to invest for growth going forward, profitable growth going forward.

It may be a bit of a nuance, but it was not about, "Hey, we are just going to sell this business and everything else is going to be normal." It was a purposeful choice so that we can invest more in the areas that I think will give us more profitable growth faster in the future. Anyways, that is a philosophical thing. In terms of mechanics, yes, we talk about 1% growth, but remember, we still were minus one with these two customers, and they are very profitable accounts. It is still a pretty big significant headwind in terms of that mix. Secondly, there is still 70% of our costs are people costs, and there is still wage inflation. We are at 3%-3.5% minimum. You still have that headwind. We are doing a lot of productivity initiatives just to counter that. You mentioned comp tailwinds.

I just want to clarify that. We do not necessarily have any comp tailwinds. We had comp headwinds last year because we essentially had comp targets for the company that were in line with where we grew. We grew, as a reminder, mid-single digit in fiscal year 2025. And so the comp was mostly paid out on target, maybe slightly above in certain areas, including our sales force. The year before that, we have massively missed our internal comp targets and therefore got paid out significantly less. Last year was more about getting a true up and that we are hopefully, knock on wood, going to hit our internal targets this year and pay out about the same. It is not a headwind or a tailwind at this point.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Last question in the speed round here. Just to that point and to Kim’s point on there, there are things that need to be invested in in any one year, especially for a company trying to develop the types of products that you are. When you look at the next 12 to 18 months, do you see the investment levels that will be investment and compensation and expense levels that will be required for the business as on the way down, on the way up, or something on par with where we’ve been?

Kim, Executive, Bio-Techne: I think we are at a healthy investment level, so we’re not starving the company at all. I think that one of the things I forgot to mention earlier, we have accelerated and taken dollars to assign to a relatively new opportunity, at least for the US, in organoids. It’s right up our alley if it comes to being able to grow cells and to manipulate cells into a certain state. It’s an opportunity that was already, let’s say, five years in the making in Europe, but we’re definitely now accelerating in the US as well with these organoids being accepted for generating data by the FDA. Definitely another opportunity to invest in. I think the moment markets will normalize and our growth would go back into double digits, as we mentioned, you could be more aggressive on the investment levels.

Unfortunately, we’re in a company that has plenty of ideas or projects that we could kick off. We would do so in normalized conditions and always make sure that we end up somewhere around 35% on EBITDA margin and manage the company around. If we keep the belt somewhat tightened, then we would run to 40% unless we do M&A, unless we do some heightened R&D investments. That’s how we always manage the company to be a best-in-market EBITDA company as well as the top-line growth.

Dan Arias, Life Sciences and Diagnostics Analyst, Steeple Healthcare: Okay. You know it’s a good session when your last question involves organoids. I’m going to leave it there and say thank you both for attending. Appreciate it.

Jim, Chief Financial Officer, Bio-Techne: Thank you, Dan.

Kim, Executive, Bio-Techne: Thank you.

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