Bio-Techne (TECH) Q2 2026 Earnings Call Transcript

DATE

Wednesday, February 4, 2026 at 9:00 a.m. ET

CALL PARTICIPANTS

• President and Chief Executive Officer — Kim Kelderman
• Chief Financial Officer — James T. Hippel

TAKEAWAYS

• Total Revenue — $295.9 million, flat year over year on both an organic and reported basis, with a 2% foreign exchange benefit offset by a 2% headwind from businesses held for sale.
• Adjusted Operating Margin — 31.1%, expanding by approximately 100 basis points year over year.
• Adjusted EPS — $0.46, up 10% year over year, including a $0.04 favorable foreign exchange impact.
• GAAP EPS — $0.24, increasing from $0.22 in the prior year period.
• Adjusted Gross Margin — 68.5%, down from 70.5% last year, attributed to unfavorable product and customer mix.
• Operating Cash Flow — $82.4 million generated, with $5.9 million in net capital expenditures.
• Dividends Paid — $12.5 million returned to shareholders during the quarter.
• Average Diluted Shares Outstanding — 157 million, down 2% year over year.
• Bank Debt — $260 million at quarter-end, reduced by $40 million sequentially.
• Cash Balance — $172.9 million at quarter-end.
• Protein Sciences Segment Revenue — $215.1 million in reported sales, up 2% year over year; organic revenue declined 1%, with a 3% positive impact from foreign exchange.
• Protein Sciences Organic Growth Excluding Cell Therapy Timing Impact — 4%, indicating underlying segment strength aside from large customer dynamics.
• Protein Sciences Segment Operating Margin — 39.3%, down 190 basis points year over year due to unfavorable mix.
• Diagnostics and Spatial Biology Segment Revenue — $81.2 million, down 4% year over year, reflecting an 8% negative impact from the Exosome Diagnostics divestiture and 1% benefit from foreign exchange; organic growth of 3% for the segment.
• Diagnostics and Spatial Biology Operating Margin — 10.4%, up from 3.9% last year.
• Diagnostics Product Growth — Upper single-digit growth, driven by balanced performance in clinical controls and molecular diagnostic kits.
• Spatial Biology Instrument (Comet) Bookings — Nearly 40% growth, representing the second consecutive quarter of strong booking acceleration.
• Cell Therapy Revenue — Declined over 30%, with GMP reagents specifically down 50% due to FDA Fast Track designation for two largest customers; excluding those customers, GMP reagents grew nearly 30%.
• Large Pharma Customer Revenue — Increased low double digits for the fourth consecutive quarter.
• Emerging Biotech Revenue — Declined mid-single digits, but sequential improvement observed.
• US Academia Revenue — Low single-digit decline, partially offset by stable growth in Europe, resulting in a low single-digit overall decline for academic end markets.
• China Revenue — Grew mid-single digits, marking the third consecutive quarter of growth, driven by advanced therapy R&D demand.
• APAC Revenue Excluding China — Increased nearly 20%, indicating strong momentum in the region.
• Four Growth Verticals Revenue Share — Cell therapy, proteomic analytical instrumentation, spatial biology, and precision diagnostic tools now constitute 47% of total revenue, up from 32% in fiscal 2020.
• Underlying Organic Growth (Excluding Major Customers/Timing) — 1% in fiscal Q1, 3% in Q2, with implied step-up to mid-single digits in Q3 guidance.
• Full-Year Margin Guidance — Management expects 100 basis points of operating margin expansion for the fiscal year.
• Wilson Wolf Performance — Organic revenue growth of 20% in the quarter, with trailing twelve-month growth in the upper teens; company holds 20% stake, moving to full acquisition by end of 2027 or earlier with milestone achievement.
• Organoid Business — Current run rate of $50 million, targeting the $1.4 billion global organoid market.

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RISKS

• James T. Hippel said, “adjusted gross margin was 68.5%, down from 70.5% last year. The decline was driven by unfavorable product and customer mix, which we expect to gradually improve as the calendar year progresses.”
• Revenue in the Americas declined by high single digits; after excluding cell therapy order timing, growth in the region was low single digits.
• Cell therapy revenue declined over 30%, with a 50% drop in GMP reagents specifically, driven by order timing from two large customers receiving FDA Fast Track designation, creating a temporary headwind.
• Emerging biotech revenue declined mid-single digits amid continued funding pressures, despite sequential improvement.

SUMMARY

Bio-Techne (TECH +6.82%) delivered overall revenue that was flat year over year, as segment outperformance from large pharma and select geographies was offset by headwinds in cell therapy, emerging biotech, and academic markets. Operating margins expanded due to both cost management and structural improvements, alongside benefits from divestitures, even as gross margin declined from adverse mix. Significant execution in proteomic analytical tools, diagnostics innovation, and spatial biology drove product category momentum. Management highlighted underlying business growth improvement and provided guidance that factors temporary headwinds from major customer transitions, anticipating a more favorable operating and end-market backdrop as the year progresses.

• Kelderman said, “four strategically important growth verticals—cell therapy, proteomic analytical instrumentation, spatial biology, and precision diagnostic tools—now represent 47% of our total revenue, up from 32% in fiscal 2020, and with that, delivering an upper teens CAGR over the past five years.”
• Management described Wilson Wolf’s G-Rex bioreactor, for which Bio-Techne currently holds a 20% stake, as “highly synergistic with our cell therapy offering” and cited 20% organic revenue growth for Wilson Wolf in the quarter, positioning it as immediately accretive upon full acquisition.
• Spatial biology’s Comet platform saw nearly 40% growth in bookings and, according to Kelderman, the pull-through now is about 45k per instrument per year. But we are working hard on getting the multiomic capabilities rolled out and customers trained on it. And that will drive pull-through for my reagents. And we’re actively working on broadening our antibody portfolio for spatial analysis as well. And as you know, we have a broad portfolio of probes in the RNA detection side. Will now have a very broad capability and offering from the protein detection side and we’re one of the few that offer true parallel multiomics, and therefore, we are aiming that over time, the pull-through per box under the agent side would be more in the 90k per box per year area.
• The company’s organoid business is producing at a $50 million run rate, underpinned by new product launches such as Culturex Synthetic Hydrogel, which targets the accelerating shift from animal to organoid models after recent FDA validation.
• Kelderman highlighted that in Q2, “excluding the two customers that are progressing through priority review with the FDA, GMP reagents grew nearly 30%,” indicating optimism for normalized growth following disruptive customer-specific headwinds.

INDUSTRY GLOSSARY

• GMP Reagents: Good Manufacturing Practice-compliant biological materials produced under rigorous conditions for use in clinical and commercial therapeutic manufacturing.
• Organoids: Lab-grown three-dimensional cellular models derived from stem cells, replicating key aspects of human organ structure and function for research and drug development.
• Proteomic Analytical Tools: Instruments and platforms (e.g., automated western blots, multiplex immunoassays) enabling the characterization and quantification of proteins within biological samples.
• Spatial Biology: Technologies and assays enabling detection, visualization, and quantitative analysis of nucleic acids and proteins at single-cell resolution within their spatial tissue context.
• Comet Platform: Bio-Techne’s fully automated multi-omic spatial biology instrument designed for parallel protein and RNA analysis in research and diagnostic applications.
• Wilson Wolf G-Rex: A line of market-leading single-use bioreactors optimized for scaling cell therapy manufacturing by supporting efficient cell expansion with minimal contamination risk.

 Conference Call Transcript

Kim Kelderman, President and Chief Executive Officer, and James T. 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-Ks for fiscal year 2025 identify 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 the most comparable GAAP measures are available in the company’s press release issued earlier this morning on the Investor Relations section of the Bio-Techne Corporation website at www.biotechne.com. Separately, in the coming weeks, we will be participating in the Cowen and Leerink Healthcare Conferences. We look forward to connecting with many of you at these upcoming events. I will now turn the call over to Kim. Thank you, Dave. And good morning, everyone.

Welcome to Bio-Techne’s second quarter earnings call of fiscal 2026.

Kim Kelderman: Our second quarter performance was largely in line with our expectations. Continued strength from our large pharma customers was offset by a soft yet improving biotech end market and a soft but stable US academic end market. As anticipated, order timing impact from two of our largest cell therapy customers receiving FDA Fast Track designations also created a temporary headwind. Taken together, these factors resulted in flat organic revenue growth for the quarter. Overall, these end market dynamics combined with solid execution across the organization drove sequential year-over-year organic revenue growth improvement in most of our product categories. I would like to mention the following highlights.

Our core reagents and assays, proteomic analysis instruments, and diagnostic kits all grew modestly more in Q2 than during Q1. Cell therapy, excluding our two largest FDA Fast Track customers, delivered strong sequential improvement in year-over-year growth. In our spatial biology franchise, we saw a meaningful acceleration in bookings for our automated Comet platform. In addition, we delivered our third consecutive quarter of growth in China, alongside notable strength across the rest of Asia. The team delivered these top-line results with a continued focus on our sector-leading profitability profile. Adjusted operating margins expanded, like in our first quarter, by approximately 100 basis points year-over-year to 31.1%.

This performance reflects our disciplined approach to productivity and cost management while continuing to invest in the strategic growth verticals that will continue to shape Bio-Techne’s future. These four strategically important growth verticals—cell therapy, proteomic analytical instrumentation, spatial biology, and precision diagnostic tools—now represent 47% of our total revenue, up from 32% in fiscal 2020, and with that, delivering an upper teens CAGR over the past five years. Notably, our core portfolio of reagents, assays, and diagnostic controls delivered a competitive mid-single-digit CAGR over the same period. Calendar 2026 is a milestone year as we celebrate Bio-Techne’s fiftieth anniversary. Several events are planned to mark the occasion, including ringing the Nasdaq closing bell on February 25.

Over the past five decades, we have built one of the most durable and differentiated portfolios in life science tools addressing high-growth, high-value applications aligned with global healthcare megatrends. We recently highlighted several of these high-value applications during our presentation at the JPMorgan Healthcare Conference. As a case in point, we often emphasize the essential role our GMP reagents and proteomic analysis instruments play in enabling cell therapy workflows. But these capabilities extend well beyond cell therapy as our tools support development and manufacturing across a broad range of advanced therapies. Our ProteinSimple franchise, for example, is an essential component in the development, manufacturing, and quality processes of monoclonal antibodies, antibody-drug conjugates, and other advanced biological treatments.

Turning now to the performance of our end markets in the most recent quarter, beginning with the biopharma customers. Excluding cell therapy, the divergence between large pharma and emerging biotech persisted in Q2, although the gap narrowed. Revenue from our large pharma customers remained strong, increasing low double digits for the fourth consecutive quarter. In contrast, emerging biotech declined mid-single digits, reflecting continued pressures stemming from negative funding conditions during 2025. While growth from these smaller biotech customers remained challenging, we did see sequential improvement. As many of you know, biotech funding rebounded meaningfully in 2025, positioning this end market for improvement going forward. In academia, stabilization in the US continued with constructive developments on the federal funding front.

Both the House and Senate appropriation bills include roughly a 1% NIH budget increase, maintaining indirect funding rates, and capping multiyear grants at fiscal 2025 levels. While these bills must still be reconciled, the proposals are far more supportive of academic research than originally feared. For Bio-Techne, a modest decline in our US academic business was partially offset by stable growth in Europe, resulting in a low single-digit decline for this end market overall. Shifting to performance by geography, the Americas declined high single digits. However, after adjusting for cell therapy order timing headwinds, revenue in the region grew low single digits.

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