Repligen Corporation (RGEN) Earnings

Management highlights

### General Business Performance - Delivered strong Q2 results with 13% organic growth and 460 basis points of adjusted operating margin expansion, driven by disciplined operational execution, balanced growth investment, and manufacturing efficiency gains. - Positive order momentum from late Q1 continued into Q2, including improved ATF order trends; emerging biotech revenue grew high teens against tough prior-year comparisons, confirming sustainable recovery tied to improving industry funding conditions. - New modalities grew 9% (excluding the specific gene therapy headwind), marking the best performance since Q1 2025 with sequential growth across all cell and gene therapy segments. - APAC growth of 40% confirms progress on the region's reinvigoration strategy, with strength across both biopharma and CDMO customers, led by over 60% H1 growth in China. - The company remains on track to hit its long-term target of 30% adjusted EBITDA margin by 2030. ### Updated Strategic Priorities - **Integrated Solution Strategy**: Launched a dedicated team to proactively cross-sell the full end-to-end product portfolio, initially focused on ADCs and new modalities, to capitalize on biomanufacturing onshoring opportunities. The team will engage more directly with engineering firms to improve response speed and professionalism for large integrated RFPs. The upcoming BioLife acquisition will expand cell therapy solution offerings under this strategy. - **Product Lifecycle Management**: Institutionalized continuous portfolio innovation to address customer needs with frictionless upgrades. The strategy has already delivered tangible benefits via the Solo VPA plus upgrade cycle, and the same playbook will be rolled out across other portfolio segments. - **BioLife Acquisition**: The definitive agreement to acquire BioLife accelerates Repligen's cell therapy strategy, adding a differentiated, trusted portfolio led by Biopreservation Media that already supports 18 commercial cell therapies. Cell therapy represents nearly 25% of biopharma clinical pipelines, with strong long-term growth confirmed by industry data showing 170% growth in U.S. treatment centers and 740% growth in U.S. cell/gene therapy claims from 2018 to 2025. The transaction is financially accretive: expected to deliver at least $20 million in synergies and $0.05 adjusted EPS accretion in year one, growing to at least $30 million in synergies and $0.25 accretion in year two.

Guidance

- Full year 2026 guidance (excluding BioLife acquisition impact, expected to close in Q4 2026) has been raised across key metrics. Organic revenue growth midpoint is increased by 1 full percentage point, and adjusted EPS midpoint is increased by $0.05. - New full-year 2026 revenue guidance is $813 to $834 million, representing 10% to 13% reported growth and 10.5% to 13.5% organic growth. The 12% organic growth midpoint matches H1 2026 organic growth, so no further acceleration is required to hit the midpoint. - By franchise, full-year 2026 growth guidance is: mid-single digits for filtration, 20%+ for chromatography, mid-teens for proteins, and 25%+ for analytics. - Adjusted operating income guidance is raised to $128 to $134 million, with adjusted operating margin guidance of 15.7% to 16%, implying 190 to 220 basis points of full-year operating margin expansion. Gross margin expansion guidance is maintained at 110 to 160 basis points for the full year. - Adjusted fully diluted EPS guidance is $2.03 to $2.09, representing 20% year-over-year growth at the midpoint. The adjusted effective tax rate is now expected to trend toward the lower end of the prior 22% to 23% range, set at ~22% for guidance. - Q3 2026 revenue is expected to increase slightly sequentially from Q2. Q3 is expected to be the lowest adjusted gross margin quarter of the year due to product mix impacts, with margins expected to step up in Q4 on volume leverage. - OPEX is expected to step up sequentially in Q3 to levels consistent with Q1, driven by the non-recurrence of a transient favorable employment compensation cost benefit from Q2, plus modest new investments in sales and R&D (to support 2027 growth) focused on APAC expansion, the new integrated solutions team, and IT for the company's fit-for-growth transformation. Full-year OPEX is still expected to grow only high single digits year-over-year, below top-line growth to preserve operating leverage. - 2026 CapEx is expected to remain 3% to 4% of total annual revenue.

Segment performance

Repligen reported total Q2 2026 revenue of $204 million, with 12% year-over-year reported growth and 13% organic growth. Revenue contribution by region: North America 51% (grew high teens), EMEA 32% (declined mid single digits), Asia Pacific and Rest of World 17% (grew 40%). By product franchise: 1. Filtration: Revenue grew slightly year-over-year. Consumable demand (fluid management, sachet cassettes) was offset by the Polymem divestiture and a pre-disclosed gene therapy headwind. ATF and systems demand was muted, though orders have picked up. Expected 2026 full-year growth of ~mid-single digits. This segment contributed the slowest growth among the four product franchises. 2. Chromatography: Revenue grew low double digits year-over-year, even against a very strong prior-year comparable quarter. Growth is driven by Opus columns, with 18% unit growth for large-scale columns in H1 2026 from CDMO and biopharma customers. Expected 2026 full-year growth of 20%+, contributing a double-digit share of total revenue growth. 3. Proteins: Revenue grew 50% year-over-year, with strength across the entire portfolio (EAM partnership with PureLight, Avitide custom ligand/resin development, and growth factors). Expected 2026 full-year growth of mid-teens, up from prior guidance of low double digits, and contributed the largest share of Q2 2026 revenue growth. 4. Analytics: Revenue grew over 30% year-over-year, with strength across consumables, services, and capital equipment. Growth was supported by the Solo VPA plus product upgrade cycle, with additional strength in downstream and upstream analytics offerings. Expected 2026 full-year growth of at least 25%, and is the second fastest growing segment this quarter.

Risks & headwinds

- Temporary headwinds are concentrated in the filtration segment, including the Polymem divesture impact, a pre-disclosed gene therapy program headwind, and two customer-specific headwinds (one customer reducing ATF inventory through 2026, another delaying new site deployment that delays 2026 orders). These headwinds are expected to persist through Q3 and begin normalizing in Q4, with most impacts being temporary and set to reverse for 2027 growth. - Foreign currency and tariff impacts create modest uncertainty, though the full-year guide incorporates current expectations for these factors. - Forward-looking statements are inherently subject to uncertainties that could cause actual results to differ from management guidance, with additional risk factors detailed in the company's SEC filings. - Capital equipment order conversion is delayed by customer site preparedness, with most recent strong orders expected to convert to revenue primarily in 2027 rather than 2026.

Analyst Q&A

• Q: What drove the stronger-than-expected protein growth in Q2, and what is the margin cadence for the second half of 2026? /

  A: Q2 50% protein growth came from broad strength across the entire portfolio, not just one large order. It includes strong performance from the EAM partnership with PureLight, the Avitide custom ligand/resin portfolio, and growth factors. This broad traction led the company to raise full-year protein guidance to mid-teens from low double digits. For margins, the full-year operating margin guide was raised by 25 bps after a 25 bps raise in Q1, bringing total expected full-year expansion to just over 200 basis points. OPEX will step up by a couple million in Q3 and another similar step in Q4, driven by new investments in sales (APAC, integrated solutions) and R&D, but full-year OPEX will still grow only high single digits, below top-line growth to preserve leverage. Gross margin will see a mix-driven pullback in the second half after stronger first half mix expansion, but full-year gross margin expansion guidance is unchanged at ~135 basis points year-over-year.

• Q: How does second half 2026 capital equipment growth compare to H1, and what is the 2027 outlook for the segment? /

  A: Capital equipment revenue grew high single digits year-over-year in H1 2026, with muted Q2 revenue that was fully expected. The key positive is a significant sequential pickup in orders in Q2, with a book-to-bill ratio above 1. The company recently won its second large RFP for integrated equipment solutions, with a third decision expected in the next few weeks. Most of this new order backlog will convert to revenue in early 2027, rather than the second half of 2026, setting up strong 2027 growth for capital equipment.

• Q: How is Repligen positioned to win large integrated onshoring RFPs, and what competitive changes are you seeing? /

  A: Repligen only recently gained a full seat at the table for these large opportunities, after building out a complete large-scale hardware portfolio over the past several years (adding downstream TFF and mixing capabilities to its existing ATF offering). The company can now offer ~80% of the hardware required for large biomanufacturing expansions, paired with its proprietary intelligent P8E process monitoring technologies that are not widely available from competitors. The new dedicated integrated solutions team is built to respond to these large opportunities professionally, positioning the company to capture market share as customers seek new end-to-end solutions.

• Q: 40% APAC growth is very strong; what products are driving traction, and how do onshoring opportunities set up for 2027? /

  A: APAC growth is broad across the entire region, with China leading at over 60% H1 growth, and the rest of Asia also performing well. Growth is broad across Filtration, Chromatography, and Analytics, with proteins currently a smaller contributor in the region. The OEM partnership for local Chinese manufacturing is on track to launch early 2027, which will support further growth. China now hosts ~30% of global clinical trials and 40% of the global cell therapy pipeline, creating strong long-term tailwinds. For onshoring in developed markets, the company sees growing large RFP opportunities, with a third expected win imminent, and the integrated solutions team will help capture these opportunities, most of which will contribute 2027 revenue.

• Q: What is the durability of current protein outperformance versus market growth? /

  A: The protein market splits into two segments: ligand/resins, which have market growth of 8-10% trending toward the lower end of that range, and growth factors/cytokines, which are growing low to mid-teens driven by adoption of high cell density upstream processes. Repligen is a relatively new entrant gaining broad traction: initially focused on custom ligands for new modalities, the company is now winning broad share across established products as customers recognize the superior performance of its current offerings. Most current growth is tied to ongoing validation of Repligen products for commercial and clinical programs, so significant sustainable future growth is expected as these programs ramp.