Earnings call transcript: Bio-Techne Q4 2025 beats EPS forecasts

Bio-Techne Corp (TECH) reported its fourth-quarter earnings for fiscal year 2025, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $0.53, compared to the forecasted $0.50. Revenue reached $317 million, slightly above the anticipated $315.54 million. According to InvestingPro analysis, the company is currently trading below its Fair Value, with the stock falling by 9.09% to $54.64 in pre-market trading, reflecting broader market concerns and sector-specific challenges. The stock has declined nearly 30% over the past year, now trading close to its 52-week low of $46.01.

Key Takeaways

• Bio-Techne’s EPS beat expectations by 6%.
• Revenue growth was modest, with a 3% organic increase.
• The stock price dropped over 9% in pre-market trading.
• Operating margins declined, but a future expansion is expected.
• The company divested its Exosome Diagnostics business.

Company Performance

Bio-Techne demonstrated solid performance in the fourth quarter, achieving a 3% organic revenue growth. The company launched several innovative products, including the next-generation Simple Western instrument, LEO, and AI-enabled designer proteins. Despite the positive earnings results, the company faces challenges such as a decline in biotech funding and uncertainties in NIH funding, impacting academic research.

Financial Highlights

• Revenue: $317 million, up 4% year-over-year.
• Earnings per share: $0.53, up from $0.49 in the previous year.
• Adjusted gross margin: 70.1%, down from 71.1%.
• Adjusted operating margin: 32%, a decrease of 150 basis points.
• Cash from operations: $98.2 million.

Earnings vs. Forecast

Bio-Techne’s EPS of $0.53 exceeded the forecast of $0.50, a 6% surprise. Revenue also surpassed expectations, albeit marginally, with a 0.46% surprise. This performance aligns with the company’s historical trend of meeting or slightly exceeding market expectations.

Market Reaction

The company’s stock saw a significant decline of 9.09% in pre-market trading, despite the earnings beat. This reaction may be attributed to broader market uncertainties, including potential pharmaceutical tariffs and NIH funding uncertainties. The stock’s current price of $54.64 is closer to its 52-week low of $46.01, indicating investor caution.

Outlook & Guidance

Bio-Techne anticipates low single-digit organic growth with a 100 basis point margin expansion in fiscal year 2026. The company expects further margin improvement to 200 basis points by the fourth quarter. Strategic initiatives, such as product launches and partnerships, are expected to support this growth.

Executive Commentary

"Our performance was once again achieved with a strong emphasis on profitability," stated Kim Kelderman, CEO. CFO Jim Hipple expressed optimism about the future, saying, "The underlying secular drivers... remain firmly intact and continue to support the long-term growth outlook for our business."

Risks and Challenges

• Biotech funding has decreased by 40% year-to-date, which could impact future growth.
• NIH funding uncertainty may affect academic research investments.
• Potential pharmaceutical tariffs could create market volatility.
• Operating margins have declined, although future expansion is expected.
• The China market, while stabilizing, remains a concern.

Q&A

During the earnings call, analysts inquired about the company’s confidence in outperforming market growth, China growth dynamics, and the resilience of the cell and gene therapy market. Executives clarified their exposure to academic funding and addressed concerns regarding NIH funding uncertainties.

Full transcript - Bio-Techne Corp (TECH) Q4 2025:

Conference Operator: Good morning and welcome to Bio Tech ne’s Earnings Conference Call for the Fourth Quarter and Fiscal Year twenty twenty five. At this time, all participants have been placed in a listen only mode and the call will be opened for questions following management’s prepared remarks. During our Q and A session, please limit yourself to one question and one follow-up. I would now like to turn the call over to David Claire, Bio Techne’s Vice President, Investor Relations.

David Claire, Vice President, Investor Relations, Bio Techne: Good morning, and thank you for joining us. On the call with me this morning are Kim Kelderman, President and Chief Executive Officer and Jim Hipple, Chief Financial Officer of Bio Techne. Before we begin, let me briefly cover our safe harbor statement. Some of the comments made during this conference call may be considered forward looking statements, including beliefs and expectations about the company’s future results. The company’s 10 ks for fiscal year twenty twenty four identifies certain factors that could cause the company’s actual results to differ materially from those projected in the forward looking statements made during this call.

The company does not undertake to update any forward looking statements because of any new information or future events or developments. The 10 ks as well as the company’s other SEC filings are available on the company’s website within its Investor Relations section. During the call, non GAAP financial measures may be used to provide information pertinent to ongoing business performance. Tables reconciling these measures to most comparable GAAP measures are available in the company’s press release issued earlier this morning on the Investor Relations section of our Bio Techne Corporation website at www.biotechne.com. Separately in the coming weeks, we will be participating in the UBS, Wells Fargo, Baird, Morgan Stanley, and Deutsche Bank healthcare conferences.

We look forward to connecting with many of you at these upcoming events. I will now turn the call over to Kim.

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Thank you, Dave, and good morning, everyone. Welcome to Bio Techne’s fiscal fourth quarter twenty twenty five earnings call. I’m pleased to report that we delivered a solid quarter that was in line with our expectations. The team’s continued execution drove 3% organic revenue growth in a dynamic operating environment. Our performance was once again fueled by strength in the biopharma end markets, particularly among large pharma customers, which fueled robust demand for our automated proteomic analytical instrumentation

Jim Hipple, Chief Financial Officer, Bio Techne: solutions.

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Our fourth quarter kept off a fiscal year in which we delivered 5% organic revenue growth. We reinforced our leadership across key markets through a series of innovative product launches, and we positioned the company for sustained future growth. As a reminder, approximately 80% of Bio Techne’s revenue is derived from consumables, including those used for our proprietary instrumentation, and this provides a strong foundation for durable growth. This resilient revenue mix, combined with the critical value our customers place in our portfolio of tools for research, manufacturing and precision diagnostics was reflected in our differentiated financial performance despite uncertainties many of our customers face throughout 2025. This performance was once again achieved with a strong emphasis on profitability.

The operational efficiencies we continue to implement contributed to an adjusted operating margin of 32% for the quarter. Our team remains focused on striking the right balance between investing for future growth and driving productivity across the organization. This disciplined approach enables us to maintain our industry leading profitability while positioning Bio Techne for long term success. Before we delve into the quarterly performance, I want to highlight a strategic portfolio action that reflects our long term financial and operational priorities. Last night, we announced the divestiture of our exosome diagnostics business, including the ExoDx prostate test and our CLIA certified clinical laboratory to MDxHealth, a recognized leader in urology and specifically prostate cancer diagnostics.

Following a thorough strategic assessment, we concluded that a single high performing CLIA test does not provide us the operational leverage needed to support our broader growth ambitions. We expect the transaction to close in the 2026. Importantly, Bio Techne will retain access to the proprietary exosome based technology used in our recently launched ESR1 mutation kit for breast cancer reoccurrence. We remain committed to leveraging this platform to expand our portfolio of exosome based gene mutation kits, further strengthening our position in precision diagnostics. Over the past five decades, Bio Techne has built a market leading portfolio of high quality, high margin reagents, instruments and tools serving both markets.

The divestiture of Exosome Diagnostics represents a strategic repositioning of our portfolio, and this enables us to redirect investments towards strengthening our core foundation and our growth verticals. This transaction also delivers an immediate uplift to our already sector leading operating margin profile. Jim will provide additional detail on the financial implications of this deal later in the call. Let’s now turn to our end markets, beginning with biopharma. Throughout fiscal twenty twenty five, we saw steady momentum in this segment, particularly among large pharmaceutical customers.

However, recent commentary from The U. S. Administration regarding potential pharmaceutical tariffs and the proposed implementation of the most favored nation drug pricing model has introduced a degree of uncertainty across the pharma landscape. Despite those evolving dynamics, including shifting timelines, changing tariff structures and dynamic messaging regarding policy intent, demand for Bio Techne’s broad portfolio remains strong. Large pharmaceutical companies continue to rely on our high quality reagents and productivity enhancing tools to advance their pipeline initiatives, underscoring the essential role our solutions play in their research, development and manufacturing workflows.

The growth driven by a large pharmaceutical customer base continued to be a key driver in the quarter. However, this momentum was partially offset by more subdued performance from smaller biotech firms. These companies remain cautious with their spending amid a constrained funding environment. This trend is consistent with broader industry data, which indicates that biotech funding has declined more than 40% year to date compared to the 2024 levels. Despite these headwinds, our overall biopharma end market delivered high single digit growth for both the fourth quarter and the full fiscal year.

Turning to academia, a segment that continues to attract heightened attention across the life science tools industry. Revenue from our academic customers represents approximately 21% of our total business, with The U. S. Institutions contributing roughly 12%. Given the ongoing uncertainty surrounding the upcoming NIH budget, we conducted a comprehensive assessment to better understand our exposure to NIH funded research.

Based on this evaluation, our new estimate is that less than one third of our U. S. Academic revenue is directly tied to NIH grants. In other words, our total company exposure to NIH funded research is likely in the low single digits range, and that is notably below our prior estimate of 5% to 6%. In light of recent reports of NIH grant cancellations, we also examined publicly available databases to identify which research areas are most affected.

Encouragingly, our analysis revealed that funding for programs that are aligned with Bio Techne’s core portfolio remains largely intact. Areas such as proteomics, immunohistochemistry and spatial biology, cell culture, cell therapy and immunology have experienced relatively limited disruption. This reinforces the durability of our academic exposure, which is concentrated in fields of ongoing scientific and clinical importance. As a result, our academic end markets declined low single digits in the fourth quarter and increased low single digits for the full fiscal year. From a geographic standpoint, performance was broadly consistent with expectations.

The Americas delivered low single digits growth, Europe expanded mid single digits and APAC, excluding China, grew low single digits as well. Noteworthy is that China delivered a positive surprise, increasing low double digits in the quarter as the region returned to growth ahead of anticipated tariff impact. This momentum was broad based, spanning our portfolio of research and GMP reagents, analytical instrumentation and spatial biology solutions. Beyond the tariff related activity, market signals suggest that China has stabilized and is well positioned for a gradual return to modest growth in the coming quarters. Now let’s discuss the growth drivers in our Protein Sciences segment, where strong execution drove demand across our portfolio of proteomic analytical tools and cell therapy workflow solutions.

And this enabled 4% growth for the segment in the quarter. Fiscal twenty twenty five was marked by several key product launches that further strengthened our position in the market. These launches included the introduction of LEO, our next generation simple western instrument the introduction of POPEX, enabling the continued expansion of our GMP reagents portfolio and the introduction of AI enabled designer proteins. For full fiscal year 2025, our Protein Sciences segment increased revenues by 5%. Demand for our cell therapy workflow solutions remained strong with over five fifty customers relying on BioTechnique’s high quality, consistent and highly bioactive GMP reagents to advance their preclinical and clinical programs.

As mentioned, we introduced our ProPak GMP cytokine product line in fiscal year twenty twenty five. ProPaks deliver precise cytokine concentrations to cell therapy manufacturers and support closed system CAR T and TCR T manufacturing workflows. These innovative cytokine delivery systems carry a value proposition that enables Bio Techne to take share in later stage and potentially commercial stage programs. Our GMP reagent portfolio grew 20% in Q4 and exceeded 30% growth for the full fiscal Sticking with our cell therapy growth pillar, I also like to take this opportunity to give an update on the manufacturer of the leading G Rex bioreactors, Wilson Wolf. Biotechnica only owns 20% of Wilson Wolf and is on track to acquire the remaining 80% by the end of calendar twenty twenty seven or earlier contingent upon milestone achievements.

Despite the ongoing softness in biotech funding, Wilson Wolf grew over 20% for fiscal twenty twenty five, while maintaining EBITDA margins north of 70% for the year. Next, I’d like to highlight the continued strength of our proteomic analytical instrument business. The productivity gains these platforms deliver, combined with disciplined execution from our commercial teams, drove high single digit growth for both the quarter and the full fiscal year. Importantly, we saw mid teens growth in instrument revenue, marking the third consecutive quarter of year over year growth in instrument placements. Turning to our Simple Western portfolio.

Demand for our next generation high throughput instrument called LEO was strong in the quarter. The growing installed base, a robust order funnel and a higher consumable pull through compared to the legacy Simple Western systems all point to a promising future for this platform. We’re also seeing meaningful traction in expanding the use cases for the Simple Western technology. A recent example is a role Simple Western plays in supporting the FDA approval of Aviona Therapeutics cell based gene therapy. Our platform was used for GMP lot release testing of both the viral vector and the cell therapy underscoring its growing relevance as a QC tool in therapeutic development and manufacturing.

This is a clear signal that our instrumentation is not only driving productivity in research workflows, but it is increasingly being adopted in regulated environments, an important validation of our strategy. I’d also like to highlight the continued strength we’re seeing in our biologics business led by the Maurice platform. Maurice continues to gain share driven by its ease of use, reproducibility and strong data compliance, which are attributes that align closely with the needs of our pharma and bioprocessing customers. As a reminder, Maurice is specked into pharmaceutical manufacturing lines as a QAQC instrument and demand for bioprocessing instrumentation remains robust. This tailwind combined with our commercial execution has translated into consistent growth in both instrument placements and consumables pull through.

Wrapping up our Protein Sciences segment, I’d like to turn to our core reagent and assay portfolio. Our research use only consumables, including our industry leading catalog of 6,000 proteins and 400,000 antibody types, grew low single digits in the quarter. Importantly, despite ongoing concerns around NIH outlays and uncertainties surrounding the fiscal twenty twenty six NIH budget, reagent sales to our U. S. Academic customers remained flat compared to the prior year period.

Another highlight is that we reinforced our leadership in RUO assays through a strategic distribution partnership with SPEAR Bio. Under this agreement, Bio Techne will distribute SPEAR Bio’s ultra sensitive immunoassays targeting key Alzheimer’s disease biomarkers, including pTau217, NfL and others. This collaboration builds on our earlier participation in SPEAR Bio’s $45,000,000 Series A funding round in 2024. Let’s now turn to the growth pillars within our Diagnostics and Spatial Biology segment. Organic revenue declined 1% in the fourth quarter, primarily due to order timing across all three businesses.

For the full year, however, the segment delivered 6% organic revenue growth, reflecting the strength of our portfolio. Spatial biology remains the area with the highest exposure to academic customers and as such has been more acutely impacted by the uncertainties surrounding NIH funding and a softer biotech funding environment. Additionally, order timing for several LUNAR-four COMET systems weighed on our performance with geopolitical headwinds delaying instrument placements in The Middle East. As a result, Spatial Biology declined mid single digits in Q4, but grew mid single digits for the full fiscal year, including nearly 50% growth for LUNIPOR. In summary, I’m incredibly proud of the consistent execution by the Bio Techne team throughout fiscal year twenty twenty five, especially in the face of persistent macroeconomic challenges and policy driven uncertainties.

This past year showcased our innovation at scale with several high impact product launches across both segments that position us well for future growth. Our portfolio remains tightly aligned with some of the most attractive and fastest growing markets in life sciences and precision diagnostics. With a focused strategy and a world class team, we are well equipped to capitalize on these opportunities and drive long term value creation. Now with that, I’ll pass the call over to Jim. Jim?

Jim Hipple, Chief Financial Officer, Bio Techne: Thank you, Kim. I’ll start with some additional details on our Q4 financial performance and then give some thoughts on the forward outlook. Starting with the overall fourth quarter financial performance, adjusted EPS was $0.53 compared to $0.49 in the prior year, with foreign exchange having a favorable $03 impact. GAAP EPS for the quarter was a loss of $0.11 compared to a positive $0.25 in the prior year period. Q4 revenue was $317,000,000 an increase of 3% year over year on an organic basis and 4% reported.

By geography, North America increased low single digits year over year, driven primarily by our pharma customers. Europe increased mid single digits, led by strength from our biopharma customers and steady growth in academia. China increased low double digits as demand improved in front of tariff uncertainties, while the rest of Asia increased low single digits. By end market in Q4, biopharma increased high single digits, while academia decreased low single digits in the quarter. Below revenue on the P and L, total company adjusted gross margin was 70.1% in the quarter compared to 71.1% last year, down year over year primarily due to unfavorable product mix.

Adjusted SG and A in Q4 was 30.2% of revenue compared to 29.8 in the prior year, while R and D expense in Q4 was 7.8% of revenue compared to 7.9% in the prior year. The overall stability in SG and A and R and D was driven primarily by the ongoing benefits of structural streamlining and diligent expense control offset by the funding of strategic growth initiatives. Adjusted operating margin for Q4 was 32%, down 150 basis points compared to the prior year, primarily due to the impact of unfavorable product mix. We continue to execute cost containment measures and prioritize our growth initiatives to drive efficiencies throughout the organization with the goal of maximizing operating leverage while we are in this uncertain market environment. Looking at numbers below operating income, net interest expense in Q4 was 1,400,000.0 flat with the prior year.

Our bank debt in the balance sheet as of the end of Q4 stood at $346,000,000 Other adjusted net operating income was $5,200,000 in the quarter, an increase of $4,700,000 compared to the prior year. The increase was driven by the foreign exchange impact related to our overseas cash point arrangements, as well as our share of Wilson Wolf net income. Moving further down the P and L, our adjusted effective tax rate in Q4 was 21.5%, down 60 basis points compared to the prior year due to geographic mix. Turning to cash flow and return of capital, dollars 98,200,000.0 of cash was generated from operations in the quarter and our net investment in capital expenditures was $4,900,000 Also during Q4, we returned capital to shareholders by way of 12,400,000 in dividends and $100,100,000 through stock buybacks. We finished the quarter with $155,800,000 average diluted shares outstanding, a decrease of 3% compared to the prior year.

Our balance sheet finished Q4 in a strong position with $162,200,000 in cash and our total leverage remains well below one times EBITDA. Going forward, M and A remains a top priority for capital allocation. Next, I’ll discuss the performance of our reporting segments starting with the Protein Sciences segment. Q4 reported sales were $226,500,000 with reported revenue increasing 6% compared to the prior year. Organic revenue growth was 4% for the quarter with foreign currency exchange having a favorable impact of 2%.

This segment’s organic growth was driven by strong performances in our cell therapy and protein analytical tools businesses, especially from large pharma customers. Operating margin for the Protein Sciences segment was 43.6%, an increase of 60 basis points compared to the prior year, primarily due to the impact of favorable volume leverage, cost management, and ongoing structural alignment initiatives. Turning to the Diagnostics and Spatial Biology segment, Q4 sales were $89,700,000 with both reported and organic growth decreasing 1% compared to the same period last year. Growth in Assurgence, our EksoDx prostate cancer test and our Diagnostic Reagents business was offset by the impact of macro uncertainties on our spatial biology portfolio and the timing of projects from our companion diagnostics customers. For modeling purposes, total Exosome Diagnostics revenue was $25,900,000 in fiscal twenty twenty five, with an unfavorable impact of 200 basis points on our corporate adjusted operating margin.

As Kim mentioned in his remarks, we reached a definitive agreement to divest the Exosome Diagnostics business to MDX Health and the business will be classified as a business held for sale until the anticipated close of the transaction during the first quarter of our fiscal twenty twenty six. Moving on to the Diagnostics and Spatial Biology segment operating margin, which was 6% compared to the prior year’s 12.5%. The decrease in margin was primarily due to unfavorable product mix. We expect this unfavorable product mix within this segment to start to reverse in ’26, and we anticipate immediate improvement in the Diagnostics and Spatial Biology operating margin following the Exosome Diagnostics’ divestiture. In summary, Q4 was in line with our expectations and our teams continue to execute extremely well, especially considering the turbulent market conditions induced by biotech funding challenges as well as NIH funding and tariff uncertainties potentially impacting our customers.

Prior to the emergence of NIH funding and tariff uncertainties, our business was on its way back towards double digit organic growth, which we continue to view as the long term growth rate of our business under normal market conditions. Looking ahead, predicting when these uncertainties will be resolved and when we might see more stabilized end markets remains challenging. We are hopeful that the ongoing House and Senate appropriations process will bring greater clarity to the government’s fiscal twenty twenty six NIH budget. Encouragingly, select members of Congress continue to express support for NIH funding, though the final outcome is unlikely to be known before this fall. In the meantime, additional risks are emerging, including the potential for budget, precision, and a shift toward multi year grant funding by the Executive Branch.

These factors are contributing to cautious purchasing behavior among our US academic customers, and we expect this dynamic to persist until there is more certainty around funding. Turning back to our pharma end market, uncertainty remains around the potential tariff exposure our pharmaceutical customers may face under the current US administration. While the recently announced US EU trade agreement, which includes a blanket 15% tariff on pharmaceuticals, is a constructive step, the US administration is still proposing up to a 250% tariff on pharmaceutical companies in the future. Compounding this uncertainty is the administration’s recent push for most favored nation pricing, which could impact the profitability of the largest pharmaceutical companies and in turn their reinvestment into R responding cautiously to the broader uncertainty impacting innovation and commercialization. Concerns around reduced innovation from the academic sector, coupled with potentially lower returns on invested capital from clinical pipelines are weighing on sentiment.

These pressures stem from the possibility of diminished profitability post commercialization due to policy shifts such as MFM pricing. As Kim noted, biotech funding has been notably soft year to date with industry report estimating decline of over 40 compared to 2024 levels. We do not anticipate a meaningful rebound in funding for smaller biotech companies until there is greater clarity around NIH appropriations, tariff policies, and drug pricing reforms. Taking all of these factors into account, we believe Bio Techne has navigated a highly dynamic and uncertain market environment with discipline and resilience, delivering low single digit organic growth in the most recent quarter. Moving forward, we anticipate that our organic growth will remain in a low single digit range until the current headwinds across our end markets begin to subside.

That said, we maintain a high degree of confidence that our end markets will return to their long term historical growth trajectories once these uncertainties are resolved. The underlying secular drivers, an aging global population, increasing demand for improved quality of life and the accelerating pace of scientific breakthroughs in life sciences remain firmly intact and continue to support the long term growth outlook for our business. In terms of adjusted operating margin, we remain committed to balancing strategic investments that fuel future growth with productivity initiatives that enhance profitability in today’s dynamic environment. A portion of these strategic investments will be funded through the reallocation of resources previously dedicated to the EksoDx franchise, now redirected toward our core growth pillars. These include advancing the next generation of our automated proteomic analysis and spatial biology platforms, expanding applications in cell therapy, and reinvigorating our core reagents portfolio with targeted investments in organoid research and AI driven protein development.

Even with this redirected investment, we expect adjusted operating margin expansion of approximately 100 basis points in fiscal year twenty six compared to fiscal twenty twenty five, starting flat year over year in our first quarter and ramping to roughly 200 basis points higher by Q4. That concludes my prepared comments. And with that, I’ll turn the call back over to the operator to open the line for questions.

Conference Operator: Thank you. We’ll take our first question from Puneet Souda with Larnik Partners. Your line is now open.

Puneet Souda, Analyst, Larnik Partners: Yes. Hi, guys. Thanks for taking my questions. So first one on the guide. I just wanted to clarify, in the outlook comments you made.

Are you expecting low single digit for the full year fiscal twenty twenty six? And if you could talk a little bit about the cadence of that over the next four quarters, how should we think about the Protein Sciences segment growth within that context versus the DSS growth?

Jim Hipple, Chief Financial Officer, Bio Techne: Puneet. This is Jim. So first of all, to clarify, the guidance was not necessarily for full year fiscal twenty six growth of low single digits. It was that we expect low single digit growth until there is more certainty around various administration policies out there on academic funding and pharmaceutical tariffs and SM pricing. And if that takes the full fiscal year to become more certain, then yes, that would translate to a full fiscal year ’26.

But to be clear, I’m not necessarily anticipating that I’ll take the full year for that uncertainty to become more known. With regards to by segment, as you know, we don’t give guidance specifically by segment. I’d say there’s some puts and takes within both the segments, but I wouldn’t expect a big material change in the growth rates in either one under this environment.

Puneet Souda, Analyst, Larnik Partners: Okay. That’s helpful. And then, on the pharma, large pharma segment, it appears instrumentation did well. That’s in contrast to, some, some of the things that we’re seeing from the peers. Maybe can you talk a little bit about what’s what instruments are driving growth there?

LUNARFOR was obviously weak in academic setting, but just wanting to understand what was what’s picking up in instrumentation? And how should we think about the overall antibodies and cytokines business to perform this year? Because, you know, obviously that’s consumables and should be more resilient, you know, despite the somewhat challenging market backdrop. Thank you.

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Thanks for the question. The instruments indeed to our delight did really well in large pharma, and we have seen that trend over the last couple of quarters because we know that our instrumentation are getting more and more utilized, not only in the early discovery phases, but also in the QA and QC applications for production, and there we’re getting specked in, and we definitely strong growth in the biologics product lines. And then on top of that, we’ve launched the simple Western high throughput system called LEO, which is kind of tailored to large pharma users because it has much higher throughput, and that’s what I attribute the successes to for serving the large pharma customers. On the LUNARFOR side, yeah, we had strong traction and in my prepared remarks, I already mentioned that we were pretty unlucky with three placements of the instruments where we couldn’t execute on putting them in commission in The Middle East due to political turbulence, and therefore we’ll have to push out those instruments to next quarter. But in the meantime, if I look at the win loss rate and the order book for that product line, we’re looking pretty strong.

Conference Operator: Thank you. We’ll take our next question from Dan Leonard with UBS. Your line is now open.

Dan Leonard, Analyst, UBS: Thank you very much. So I appreciate we’re in an uncertain environment, but when you’re thinking about the outlook, Kim, would you still commit to that market plus 500 basis points of growth that you’ve talked about previously?

Kim Kelderman, President and Chief Executive Officer, Bio Techne: In an extreme environment, Dan, and thanks for your question, it’s obviously harder or less predictable to outperform exactly those 500 basis points or more. We obviously have a track record where we’ve done so for a couple of years, but yeah, if markets dry up or are really turbulent, it could be different. However, over the quarters where I definitely hope and see that there will be more clarity around the two or three topics Jim mentioned earlier. I have no doubt that we will have the same differentiation to our peer group, but also a very much intact long range model where we will be growing 500 basis points or more compared to market, and that will then naturally also bring us back to double digits.

Dan Leonard, Analyst, UBS: Understood. And then my follow-up on your operating margin expansion. I’m curious how you can accomplish 100 basis points of operating margin expansion on low single digit growth. Is that due specifically to the divestiture of Exosome or is that something that you could commit to at that growth level?

Jim Hipple, Chief Financial Officer, Bio Techne: It is being driven by the divestiture of Exosome. As we mentioned, Exosome was a headwind of about 200 basis points to our margin in fiscal year twenty five. But we are making strategic moves to reinvest some of the money we had put in Exosome prior into other growth pillars. So we think we can do that and continue to fortify our positions for growth going forward in our core growth pillars, while still providing some margin expansion back to investors, hence the 100 basis points.

Conference Operator: Thank you. We’ll take our next question from Dan Arias with Stifel. Your line is now open.

Dan Arias, Analyst, Stifel: Morning, guys. Thanks for the questions. Appreciate you doing the legwork to understand the NIH exposure there. Low single digit exposure is actually pretty low. Can expand on where the funding is coming from for the two thirds of the academic customers that aren’t tied to the NIH?

Is it pharma? Is it private sources? Where are these guys getting their money from?

Jim Hipple, Chief Financial Officer, Bio Techne: Yeah. Based on the research we’ve done, Dan, and you probably can see the same as a lot of surveys out there that have been published with regards to where academic institutions need us to get their money from. And pretty consistent that roughly 50%, 55% of their funding comes from federal sources. And all those federal sources, roughly 50% comes from NIH. So that equates to roughly less than a third of the academic research funding coming from specifically NIH.

So that’s the math behind that number. And for us, of course, US academic is only 12% of our business.

Dan Arias, Analyst, Stifel: Yep. Okay. And then maybe on Wilson and Walt, since you guys touched on that, obviously, the top line performance that would trigger the change of control is something that you can only do so much about, but the EBITDA threshold could be managed to, especially since I think that’s the one that’s actually closer to hitting the target. Do you have a sense for whether that business is going to be run with a sooner rather than later takeout in mind or is it really just kind of, you know, it’ll do what it does and that change will take place whenever that happens to happen?

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yeah, Dan, I think, of course, we keep a close eye on it because we are quite interested in having the assets under our management because it’s a fantastic product portfolio and very synergistic with not only our reagents, but also with our top and bottom line. So EBITDA, to your question, it’s going to be close. I think if there is a little bit of tailwind in the business, it’s definitely possible that the EBITDA threshold will be triggered and that we will be rightful owners of the assets earlier than 12/31/1927, which is the date where we will get it no matter what, right? It’s going to be close. So we keep an eye on it and we of course are rooting for Wilson Wolf to achieve it.

Conference Operator: Thank you. We’ll take our next question from Matt Lavelle with William Blair. Please go ahead. Your line is open.

Matt Lavelle, Analyst, William Blair: Hi, good morning. You referenced a set of unknowns that sort of driving the low single digit outlook. And I think it’s likely that those are not resolved simultaneously and probably there’s some cadence to how that occurs. It sounds like you did a lot of customer outreach and surveys over the course of the last few months. What did you learn about budget unlock and what will really kind of catalyze spend from those different sets of uncertainties that they’re putting out look?

Jim Hipple, Chief Financial Officer, Bio Techne: Well, I think from the academic perspective, Matt, it comes down to its customary behavior. We’re hearing that despite the NIH funding being less than a third of what actually funds these academic institutions, natural behavior is to kind of overreact and hold back on everything, being concerned of where money might come from in the future. And so we’re hearing about at least temporary budgets being cut 10%, 15% across the board in terms of, not cut, but just in terms of holding back on spending in anticipation of what may or may not happen. So I think our actual belief after talking to many customers and hearing a bunch of surveys around this is that what we’re experiencing now in academic is from a behavior perspective might be worse than any actual negative outcome of the funding. I actually view a resolution call it certainty, where the NIH budgets fall out, whether that’s flat, whether that’s minus 10%, or even minus 15%, I actually view that as upside once that unknown becomes known.

Because we believe customers are actually behaving more conservative than even the worst case scenario.

Matt Lavelle, Analyst, William Blair: Okay, thanks. So obviously the exosome divestment followed the earlier with the Atlanta biologics one a couple of years ago. You referenced M and A remains a key focus in light of some of the portfolio reshaping that’s going on. You’ve referenced sort of renewed focus on a market profile. How are you thinking about M and A by segment by stage of company or relative profitability and potential?

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yeah, thank you, Matt. M and A is still the highest priority and will be for the capital deployments. And yes, we would be very interested in getting product lines and companies that are aligned with our strategy, high margin, high volume products that we can shift through our channels globally, and therefore investing in our core reagents adding to that is very likely a desirable scenario. Cell therapy, there are still many capabilities that we could add to our very successful cell therapy franchise. And then we have a very strong portfolio in instrumentation and related consumables in the ProteinSimple franchise, and there we also see capabilities that we could add.

And yeah, therefore we’re keeping a very precise list of targets that we are nurturing and definitely would be very eager to act on it.

Conference Operator: Thank you. We’ll take our next question from Kyle Butcher with TD Cowen. Please go ahead. Your line is open.

David Claire, Vice President, Investor Relations, Bio Techne: Hey, good morning. Thanks for taking the questions. I wanted to just dig in a little bit trends you’re seeing between large pharma and biotech and maybe how they sort of trended throughout the quarter. And then maybe on the large pharma side, some peers have been a little bit more positive on large pharma that it’s sort of stable, if not steadily improving a little bit. So guess just in the context of your low single digit growth expectation, how does pharma sort of fit within that framework?

Jim Hipple, Chief Financial Officer, Bio Techne: Yeah. So even this most recent quarter, we had low single digit growth and yet our pharma, large pharma grew double digit. So large pharma has been very robust for us as well. Our guidance going forward basically assumes more of the same. Is there risk that could soften a bit with the MFN concerns and so forth?

Yes. We feel like that’s balanced with somewhat from academic being a bit overly conservative right now with regards to what the eventual outcome there could be. So, the low single digit basically is more of the same that we saw this current quarter. We just lived through a quarter of some of the largest uncertainties we faced in the life science tools industry in quite a long time. And those uncertainties haven’t gone away.

They haven’t gotten any worse, but they haven’t gotten any better. And so we kind of expect more of the same in all three of our major end markets until these uncertainties are resolved.

David Claire, Vice President, Investor Relations, Bio Techne: Got it. And then maybe a quick clarification on China. Pretty impressive growth there in the fiscal fourth quarter. Could you quantify how much maybe pull forward you saw in the fiscal fourth quarter? I think you mentioned that activity sort of picked up ahead of potential tariff impacts.

Is that right?

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yeah, that was definitely something that we saw. In China, there were a couple of dynamics. One is that we had some benefit from funding that was being released. That was a tailwind. And then China itself was, of course, aware that there was a deadline booming if it comes to the tariffs, and there might have been some behavior in pulling in purchases before these deadlines expire and before the tariffs would be enacted, and that’s what drove our double digit results, and we wanted to make sure that that’s not something we feel that the region would deliver every quarter from now, but that we would see, if you take those out, a very stable China that is inching forward and accelerating again to modest growth.

So that’s how we would look at it.

Conference Operator: Thank you. We’ll take our next question from Brandon Couillard with Wells Fargo. Please go ahead. Your line is open.

Jim Hipple, Chief Financial Officer, Bio Techne: Hey, thanks. Good morning. I just clarify on the margin outlook. I think you talked about 200 basis points in the second half of the year. Does that assume an accelerating top line outlook?

And if you could just touch on kind of what’s embedded for net pricing and any tariff headwinds for the year, would be helpful. Thanks. Yes, just sort of clarify specifically, we expect to be about 200 basis points of improvement by the time we get to Q4. So not necessarily the entire second half, but by the time we get to Q4. And the ramp of going from flat to 200 basis points is a combination of the timing of Exosome Diagnostics completely rolling off of our ledger, ongoing productivity initiatives that we’re implementing right now that will gain traction in terms of hitting the bottom line as the year progresses.

And then the natural lift of revenues that we have from a seasonality perspective in the back half of the year versus the front half of the year. So it’s really a combination of all three of those things that allow for that margin expansion accelerate throughout the year. Great. And just one follow-up on China in the quarter, low double digit growth. How would that kind of break down between consumables and instruments?

And was there any stimulus benefit in the period? Thanks.

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yeah, there was a handful of instruments that we shipped related to stimulus. And the breakout between consumables and instruments we usually don’t give, but it’s relatively similar.

Jim Hipple, Chief Financial Officer, Bio Techne: Yeah, what add to that is that, I think the growth we saw in China was driven a little bit by the stimulus as Kim mentioned, but also by the instruments that we believe customers were ordering anticipation of tariffs which never really materialized. And we talked about the fact that we think overall the Chinese market is stabilizing to a market growth that’s roughly flat going forward and maybe slightly positive. And that would be more consistent with how our reagents performed.

Conference Operator: Thank you. We’ll take our next question from Daniel Markowitz with Evercore ISI. Please go ahead. Your line is open.

Daniel Markowitz, Analyst, Evercore ISI: Hey guys, thank you for taking my question. I had two. The first one, as you think through the drivers of margin expansion in fiscal twenty twenty six, it seems like the guide is assuming low single digit organic. It’s hard to expand margins at that kind of top line growth. Of course, you have a couple of tailwinds coming from the tariff offsets and the ExoDx divestiture.

Is the plan to toggle the amount of ExoDx reinvestments depending on top line? Or would any upside to the organic top line lead to upside to margin expansion as well?

Jim Hipple, Chief Financial Officer, Bio Techne: So I’d say that, excuse me, our base case that we’re operating right now is low single digit growth until the markets improve. And I can’t predict when exactly that will be. But we are managing the business under that low single digit growth environment, taking productivity actions as you’d expect us to do in that kind of situation. Those productivity actions combined with exo diagnostics no longer being our results gives us margin headroom for reinvestment back into our businesses when the markets do return. So that’s how we’re managing the business today.

Now, if you’re asking when these uncertainties get resolved and you should see some tailwinds from that, we will decide when that happens, what next investments are on deck to make and the trade offs between reinvesting that upside into future growth platforms and or giving them some more margin back to the investors. So we will continue to have that balancing act as the markets return back to normal. But right now we’re managing the business under a low single digit growth environment. And through productivity actions and ExoDx allow us to still reinvest for growth while expanding margins.

Daniel Markowitz, Analyst, Evercore ISI: That’s helpful. Thanks, Jim. And then the second one, just on cell and gene therapy. I know you called out Wilson Wolf plus 20% and called out strength in cell therapy in the press release and on the call. Was this similar across the rest of the cell and gene portfolio?

Jim Hipple, Chief Financial Officer, Bio Techne: I’m sorry, could you repeat the question one more time? We’re not quite sure we understood the context.

Daniel Markowitz, Analyst, Evercore ISI: Sorry. Yeah, you called out Wilson Wolf about 20% growth. Was that similar growth profile across the rest of the cell and gene portfolio?

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yes, it was. It was almost identical. Yes.

Conference Operator: Thank you. We’ll take our next question from Mac Itosh with Stephens Inc. Please go ahead. Your line is open.

Mac Itosh, Analyst, Stephens Inc.: Hey, good morning. Maybe just following up on the previous question around cell and gene therapy. Can you maybe flush out some of the puts and takes around this end market just given the current challenges?

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yeah, I didn’t hear the question. Do you mind repeating it?

Mac Itosh, Analyst, Stephens Inc.: Yeah, apologies. Was just saying good morning. But I just wanted to follow-up on the prior question. I was just hoping to see if you all could flush out some of the puts and takes around the cell and gene therapy end market just given the current challenges.

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yeah, so we’re actually, we know that the biotech markets are depressed from a funding level, but the later stage companies still invest in programs and that’s really what’s driving the results. I think it could be better with a broader, healthier market in biotech and pharma, but overall I’m impressed with the resilience of our cell and gene therapy franchise, which we will hope accelerate at some point, but with 20% growth, it’s in constrained market, it’s showing its value and it’s showing that many companies are still investing behind the cell therapy solutions.

Mac Itosh, Analyst, Stephens Inc.: Appreciate that. And then you also highlighted the cell and gene therapy opportunity for the LLN Simple Western instruments. Is there any way to frame up how much of your instrument revenue comes from the cell and gene therapy end market or what this can mean for growth going forward?

Kim Kelderman, President and Chief Executive Officer, Bio Techne: It’s hard for us. We typically don’t divulge that information because customers could order an instrument and use it in several applications. We do notice from the interest in the different application notes that we release that there has been clearly a tilt towards the applications in cell therapy.

Jim Hipple, Chief Financial Officer, Bio Techne: Yeah, I’d also say that the strength in our protein sample franchise was driven this last recent quarter, but for several quarters now by both our simple Western and our MOREs platforms. And we know that and from both large pharma and smaller biotech customers both. And so we know that the applications that those are being used for can tend to be more downstream in nature, whether that’s in biologics or whether that’s in cell therapies. I think to Kim’s point, the cell therapy clinical tends to be more later stage and that’s where the money is still going.

Conference Operator: Thank you. We’ll take our next question from Patrick Donnelly with Citi. Please go ahead. Your line is open.

Dan Arias, Analyst, Stifel: Hey, guys. Thanks for taking the questions. Maybe on China, helpful to talk through, it seems like maybe a little bit of some pull forward. Can you talk about, I guess, what you saw underlying in the quarter and then the expectations going forward? Where are we in that region?

How are you thinking about in terms of that low single digit growth going forward? How China plays into that would be helpful.

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Yeah, thank you, Patrick. Right, there’s a couple of dynamics going on in China, and I think the most important one for us is, of course, the funding has been long storyline over the last couple of years, but we always knew that we were with the most recent funding that it was going be a slight positive impact for us, not the main driver. Then we have the China for China market, which is a positive driver for us, which we feel is stabilizing. And then last but not least, we now have quite some activity, a high activity level in China out licensing technologies and therapies globally. And that is really what is driving some of the heightened activity level.

That’s also what we feel is going to be the true driver for the upcoming growth where we feel that there will be a continued recovery in the China region to get back to modest growth.

Dan Arias, Analyst, Stifel: Okay, that’s helpful. And then maybe one for Jim, just in terms of the guide, obviously, get the kind of the short term, low single digits. I guess, in terms of visibility, are you guys just is it just the biotech and academic piece, just a little bit of caution there and want to wait and see before calling any sort of inflection? What are you guys looking for in terms of gaining a little more visibility and ramping back to maybe a little bit more of the normal growth rates we’re used

Jim Hipple, Chief Financial Officer, Bio Techne: to seeing from you guys? No, in fact, that’s exactly right. I mean, rather than sit here and try to call an inflection point and call a point in time of when these decisions are gonna be made around NIH funding and how the executive branch is gonna manage to that. And when funding will actually return back to biotech. I mean, I’m not a soothsayer anymore than anyone else is.

So those are the key indicators we’re looking for. We do believe that once all this noise around NIH funding settles down, we think our customers and academic will also settle down and regroup. And we do think right now we’re experiencing the worst of it. So I see that as upside when that happens. And hopefully that happens early this fall, but we all know they can drag out longer than that.

So we’ll have to wait and see. And then biotech funding, same thing. We’re monitoring that. The good news is the past couple months, it appears as though the funding is starting to come back a bit, but it’s still down a lot year over year from a year to date perspective. So two months doesn’t make a trend, but we are encouraged by that.

But we do believe the biotech funding sentiment follows kind of a combination of both the academic sentiment and the large pharma sentiment. So and it can accelerate otherwise. So I think getting resolution on the pharma tariffs, the pharma MSM pricing and how that’s going to play out, once those are more known, I think those will all be inflection points for stabilization of our markets and confidence to reinvest in R and D.

Conference Operator: Thank you. We have reached our allotted time for the question and answer session. I would now like to turn the call back over to Kim Kellerman for any additional or closing remarks.

Kim Kelderman, President and Chief Executive Officer, Bio Techne: Thank you for joining today’s earnings call. As mentioned, I’m extremely proud of the BioTek team for their continued execution during this prolonged period of uncertainty across our end markets. Our differentiated financial performance reflects the strong value our customers place on our uniquely positioned portfolio of research reagents, proteomic analysis tools, cell therapy workflow solutions, and diagnostic and spatial biology products. In fiscal twenty twenty five, we strengthened our portfolio through several innovative product launches and reshape the business with the divestiture of non strategic assets. These strategic moves enhance our competitive positioning and allow us to focus investment on our core products and our key growth pillars and with that unlocking sustainable value creation for all our stakeholders.

Thank you again, and

Jim Hipple, Chief Financial Officer, Bio Techne: I wish you all a great day.

Conference Operator: Thank you. This does conclude today’s program. Thank you for your participation. You may disconnect at any time and have a wonderful day.

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