Bio-Techne Corporation

Q3 total revenue was $311.4 million, down 2% reported and 2% organic. Adjusted EPS was $0.53, down $0.03 year over year, with foreign exchange adding $0.02; GAAP EPS was $0.32 versus $0.14 a year ago. Adjusted gross margin was 70.4% versus 71.6% last year, and adjusted operating margin was 34.2% versus 35.0%? Management stated it was down 70 basis points year over year and up 310 basis points sequentially. Reported segment sales were $226.2 million for Protein Sciences and $85.6 million for Diagnostics and Spatial Biology. For Q4, management expects organic growth to be approximately flat, with low single-digit underlying growth excluding cell therapy headwinds; the cell therapy drag should be about 150 basis points year over year in Q4 and fully roll off entering fiscal 2027. Management also said fiscal 2027 should benefit from biotech funding lag, academic normalization, and the removal of company-specific headwinds.

Kim Kelderman framed the quarter as disciplined execution in a mixed environment, with strong large-pharma demand, improving academia, and continued China momentum offset by softer emerging biotech. She emphasized that the portfolio is aligned around high-quality reagents, analytical platforms, spatial biology, cell therapy, and diagnostics, and highlighted AI as both an internal productivity tool and a future demand driver for high-quality biological data and validation workflows. Her tone was constructive but cautious: she repeatedly pointed to improving fundamentals while acknowledging that biotech recovery has not yet shown up in revenue.

Jim Hippel focused on the bridge between reported and underlying performance, noting that foreign exchange added 2 points while the Exosome Diagnostics divestiture, cell therapy customer timing, and an OEM supply order created headwinds that masked 2% underlying organic growth. He cited adjusted gross margin at 70.4%, SG&A at 28.7% of revenue, R&D at 7.5%, adjusted operating margin at 34.2%, operating cash flow of $86.7 million, net capex of $9.1 million, dividends of $12.5 million, cash of $209.8 million, and bank debt of $200 million, with leverage well below 1x EBITDA. He also said M&A remains a top capital allocation priority and that the company expects about 100 basis points of margin expansion in Q4 versus the prior year.

Analysts pressed on the surprisingly weak biotech performance despite stronger funding, and management said the miss was driven by the mix inside biotech: late-stage funding improved, but early-stage discovery spending was weaker, which hits core reagents and assays first. They said they initially expected stabilization, but after double-checking the data they are now keeping Q4 assumptions conservative because the usual 2- to 3-quarter funding-to-spend lag has not fully played out. On 2027 growth, management said they would be disappointed not to deliver at least mid-single-digit growth, and they pointed to proteomic analysis and spatial biology as early indicators of a biotech turn. They also denied that the core reagent softness was primarily a share-loss issue, saying the issue is more about where biotech dollars are being spent than competitive dynamics.