Bio-Techne (NASDAQ:TECH) released third-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.
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Summary
Bio-Techne reported a 2% organic revenue decline for the quarter, primarily due to softness in emerging biotech spending, offset by strength in large pharmaceutical customers.
The company achieved mid-teens growth in its spatial biology portfolio and a nearly 50% year-over-year increase in its GMP protein portfolio, excluding two fast-track cell therapy customers.
Management expects flat organic growth in the fourth quarter, with low single-digit underlying growth excluding cell therapy headwinds, and anticipates stronger performance in fiscal 2027 as funding conditions improve.
Bio-Techne’s adjusted operating margin improved to 34.2%, up 310 basis points sequentially, but down 70 basis points year-over-year due to unfavorable product mix.
Strategic initiatives include a brand alignment from 10 brands to three, enhancing customer engagement and streamlining product portfolios.
Full Transcript
OPERATOR
Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help you. Good morning and welcome to the Bio-Techne Earnings Conference call for the third quarter and fiscal year 2026. At this time, all participants have been placed in a listen only mode and the call will be open 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, Biotechny’s Vice President, Investor Relations. Please go ahead.
David Claire (Vice President, Investor Relations)
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 Hippel, 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-K for fiscal 2025 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-K, 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 Generally Accepted Accounting Principles (GAAP) financial measures may be used to provide information pertinent to ongoing business performance Tables Reconciling these measures to most comparable Generally Accepted Accounting Principles (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 and at www.bio-techne.com separately. In the coming weeks we will be participating in the bank of America and Jefferies 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)
Thank you Dave and good morning everyone. Welcome to Bio-Techne’s third quarter earnings call for fiscal 2026. The Bio-Techne team continued to execute with discipline in a dynamic and uneven end market environment. Our quarterly performance was supported by sustained strength from our large pharmaceutical customers and stable to improving trends in our US Academic end market. These positives were partially offset by continued softness in emerging biotech spending resulting in a 2% organic revenue decline for the quarter. Importantly, we are seeing encouraging indicators that point to an ongoing improvement in the US Academia and an eventual recovery in emerging biotech which positions us well for a stronger fiscal 2027. As discussed in our prior earnings call order, timing related to two cell therapy customers that received FDA fast track designation along with the timing of a large Original Equipment Manufacturer (OEM) commercial supply order created a 400 basis point headwind in excluding these factors. Underlying organic revenue growth was 2%. There were several notable highlights during our third quarter including the Our spatial biology portfolio delivered mid teens growth and exited the quarter with another record backlog for our Comet platform. Our Good Manufacturing Practice (GMP) protein portfolio grew nearly 50% year over year when excluding the two fast track cell therapy customers within our proteomic analysis franchise. Favorable instrument placements and utilization trends drove mid single digit growth. Our China end market achieved positive organic growth for the fourth consecutive quarter and our largest end market Large Pharma, delivered its sixth consecutive quarter of double digit growth. We also remained highly focused on profitability. Adjusted operating margin in the third quarter was 34.2% representing a 310 basis point sequential improvement over fiscal Q2. Jim will provide additional detail on our financial performance later. Nicole Now I turn to our end markets beginning with biopharma excluding cell therapy. Here we continue to see a divergence between the performance of large pharma and the performance of emerging biotech. Revenue from our large pharma customers grew low double digits driven by sustained investment in discovery, translational research and manufacturing. In emerging biotech, however, revenues declined high single digits reflecting the typical lag in spending following the funding constraints experienced in the first half of calendar 2025. Baytech funding activity has since rebounded meaningfully from with estimate increases of more than 90% and 50% in our fiscal Q2 and Q3 respectively. Given the typical 2 to 3 quarter lag between funding and customer spending, we view this as a constructive setup for fiscal 2027. In academia, the team delivered low single digit growth as the US Academic market returned to growth in the third quarter. The improvement in NIH outlays, new grant activity and the 1% increase to the NIH budget have reduced funding uncertainty and positioned this end market for continued stabilization. From a geographic perspective, the Americas declined low single digits while Europe achieved mid single digit growth. Our two largest fast track cell therapy customers are reported within the North America. Results Asia delivered low single digit growth with momentum in China continuing for the fourth consecutive quarter. China is seeing increasing demand from biopharma and CRO customers focused on antibody drug conjugates, cell therapy and autoimmune disorders. These are areas where our reagents, instruments and analytical platforms are particularly well suited. In April, biotechny announced a Strategic Brand Alignment designed to streamline our portfolio from 10 brands down to three. This alignment simplifies how our customers engage with biotechny across the research to clinical continuum. Our three brands now include RD Systems, which integrates a full portfolio of research use only, and Good Manufacturing Practice (GMP) reagents alongside a proteomic analysis instrument previously branded as Protein Simple Biotechni Spatial Biology, which includes our RNA Scope, in situ hybridization kits and reagents as well as our Comet Multiomics spatial platform and Bio-Techne Diagnostics which encompasses our clinical controls and precision diagnostic solutions. This structure better aligns our products and technologies with our customers progress from discovery through translational research into clinical and diagnostic applications. It also enhances the visibility of our solutions across digital and AI driven platforms, making it easier for customers to identify and deploy the right tools within their workflows. Speaking of artificial intelligence, we continue to see AI increasingly influence both how we operate internally and how our customers approach drug discovery internally. We are leveraging AI to design novel and patentable proteins with enhanced properties including improved heat stability, bioactivity and solubility relative to the natural occurring proteins. As you are aware, AI tools are only as effective as the data that informs the model. Our models are trained on five decades of proprietary data, creating a meaningful competitive mode and in parallel we are deploying AI throughout the organization to improve productivity and customer engagement. From a customer perspective, AI adoption is accelerating the earliest stages of drug discovery, particularly target discovery, which is expected to expand the number of viable programs and improve probabilities of success. The effectiveness of these models depends heavily on the generation of high quality biological data, which is an area where Bio-Techne is extremely well positioned. As an example, a recently published collaboration between Providence Health and Microsoft on the Gigatime AI framework used data sets generated on the Biotechni spatial biology platform Comet to convert traditional H and E pathology images into virtual three dimensional tissue representations. We view the growing demand for content rich biological datasets as a durable tailwind for both our spatial biology and and our proteomic analysis platforms. AI also acts as a downstream demand driver for RUO reagent and assay portfolios. Every AI enabled insight ultimately requires biological validation which will fuel demand for highly specific antibodies, functional assays and complex recombinant proteins in mechanism of action studies, biomarker validation and preclinical workflows. These applications align directly with the most differentiated and highest value sections of our portfolio. Now let’s turn to our segments beginning with Protein Sciences where organic revenue declined 4% in the quarter after adjusting for order timing from the previously mentioned cell therapy and Original Equipment Manufacturer (OEM) commercial supply customers, underlaying growth was 2%. Our differentiated portfolio of reagents, instruments and analytical technologies remains foundational to the development and manufacturing of advanced therapeutics including cell therapies. As a reminder, two of our largest cell therapy customers received FDA Fast Track designation with which accelerated clinical timelines and reduced near term Good Manufacturing Practice (GMP) reagent demand as these customers had already secured the materials required to complete their clinical programs. Excluding the impact of these two customers, Good Manufacturing Practice (GMP) protein revenue grew nearly 50% year over year. This strong performance from emerging cell therapy customers underscores the increasing reliance on Good Manufacturing Practice (GMP) grade cytokines and growth factors as programs advance from early development through clinical trials and into manufacturing scale up and commercialization. Staying with cell therapy, I’d like to provide a brief update on Wilson Wolf. We currently own 20% of Wilson Wolf and remain on track to acquire the remainder of this manufacturer of the market leading product line of single use bioreactors called the GREX by the end of calendar 2027 or or potentially earlier upon achievement of specific milestones. Despite the challenging biotech funding environment, Wilson Wolf delivered low double digit growth on a trailing twelve month basis while maintaining EBITDA margins north of 70%. Turning to our proteomic analysis instruments, growth was led by an opportunity increase in our ELLA benchtop immunoassay platform. ELLA automates traditional immunoassays into a cartridge based workflow delivering rapid, highly reproducible protein quantification with minimal hands on time. These attributes are driving strong adoption in neurodegeneration research which is reflected in a three year CAGR of 50% across our neurology assay portfolio. While this remains an emerging portion of the business, the recent launch of Ultra Sensitive Capabilities strengthens ella’s position as a leading platform for blood based neurological biomarker analysis. During the quarter we also achieved CE IVD marking for ella, enabling hospitals, clinical laboratories or or other European organizations to use ELLA as a validated platform for clinical applications in house test development, clinical trials or other translational activities. We also saw continued traction across our biologics characterization portfolio led by our Maurice platform MREZ is increasingly embedded into biopharma manufacturing workflows as a quality control and a characterization tool. It is enabling faster and more consistent assessment of critical protein attributes including size, charge and purity. This drove double digit growth in both MRE’s instruments and consumables. Wrapping up Protein Sciences Our core reagent and assay portfolio, which includes more than 6,000 proteins and 400,000 antibody types, declined mid single digits in the quarter, excluding the impact of order timing related to the previously referenced Original Equipment Manufacturer (OEM) commercial supply. Customer organic growth declined low single digits Strength from large pharma customers was offset by continued softness in US academic demand and the lingering effects of last year’s challenging biotech funding environment. As funding conditions continue to normalize in academia and recent improvements in biotech funding translate into customer spending, we believe that this core portfolio is well positioned to return to growth, supported by its differentiated performance in bioactivity, lot to lot consistency and reproducibility. All of these are attributes that become increasingly critical as customer programs advance towards translational and regulated applications. Shifting to diagnostics and spatial biology, the segment delivered 3% organic revenue growth in the quarter. Before discussing the performance in more detail, I’d like to congratulate Steve Kraus on his promotion to President of the segment. We look forward to Steve building on his prior success leading our analytical solutions business over the past five years. Let’s begin with our recently rebranded Biotechnique spatial Biology portfolio where we continue to strengthen our leadership in in situ hybridization and midplex multiomic applications across translational and clinical research. Strong order momentum over recent quarters translated into more than 65% growth for our Comet multiomics spatial platform. During the quarter we installed the first Comet system in China, an important milestone as demand continues to build in the region. We exited the quarter with another record backlog for the comet, positioning the platform for continued growth performance within our RNA scope portfolio of in situ hybridization kits and reagents improved to high single digit growth. Growth was driven by further customer adoption in EMEA and Asia as well as encasing use in clinical diagnostic applications in the us. Finally, our diagnostics portfolio, recently rebranded as Bio-Techne Diagnostics, declined low single digits as order timing from certain large customers temporarily impacted our results. Given the concentration of large customers, this business can be lumpy from quarter to quarter and therefore I want to mention that on a trailing twelve month basis, growth for biotechny diagnostics remained in the low single digits. In summary, the biotechny team continued to execute effectively in a mixed end market environment. Demand from large pharmaceutical customers remains strong. Our US Economic business has stabilized and we continue to build momentum in China and the broader APEC region. While emerging biotech spending has yet to fully reflect improving funding conditions, engagement and activity levels with this customer base continue to trend positively. We remain highly disciplined in how we operate the business delivering sector leading profitability while continuing to invest in the growth factors that will shape biotechny’s future. With improving funding visibility for our customers and strong positions across our core reagents, cell therapy, proteomic analysis and spatial biology solutions, we believe that biotechny is well positioned for outperformance in the years ahead. With that, I will turn the call over to Jim Jim Thanks Kim.
Jim Hippel (Chief Financial Officer)
I’ll begin with additional details on our Q3 financial performance followed by thoughts on our forward outlook. Adjusted EPS for the quarter was $0.53, down $0.03 from the prior year with …
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