Bio-Rad Laboratories, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Clinical Diagnostics business remained stable, while Life Science segment benefited from strength in process chromatography portfolio.
• Product mix, cost control, and discretionary spending drove outperformance in operating margin. Academic market showed signs of stabilization in consumables, with Droplet Digital PCR consumables seeing high single-digit revenue growth vs 2024.
• ddPCR team completed development of QX Continuum platform, acquired Stilla Technologies, and launched rebranded QX700 Series ddPCR instruments. Key ddPCR partners made progress: Incyte's assay for kidney transplant monitoring and Genoscopy's ColoSense in NCCN guidelines.
• Operationally, teams drove improvements via lean initiatives, cost management, and tariff impact mitigation. In Diagnostics, strength outside China offset local reimbursement pressures. Welcomed Rajat Mehta as new Executive Vice President of Global Commercial Operations; Mike Crowley retiring after 26 years.

Segment Performance

• Life Science Group: In the second quarter of 2025, sales were $263 million, a 4.9% increase on a reported basis compared to $251 million in Q2 2024. On a currency-neutral basis, it was a 3.8% increase. Process chromatography had strong double-digit year-over-year growth, with orders pulling into the second quarter accounting for approximately 20% of process chromatography sales. Excluding process chromatography sales, core Life Science Group revenue decreased 1.7% year-over-year and 2.7% on a currency-neutral basis.
• Clinical Diagnostics Group: Sales in Q2 2025 were approximately $389 million, essentially flat on a reported basis compared to $388 million in Q2 2024. It was a 0.7% decrease on a currency-neutral basis, driven by lower reimbursement for diabetes testing in China, partially offset by increased demand for quality control and immunology products.

Guidance

• Raised 2025 full-year guide: Total currency-neutral revenue expected to be flat to 1% growth, midpoint 25 bps higher than prior guide. Life Science business now expected to be flat to 1% growth for full year (previously flat to down 3%) due to improved process chromatography and ddPCR portfolio growth (mid-single digit in 2025 vs low single digit previously). Diagnostics growth range tightened to 0.5%-1.5% (previously 0.5%-2.5%).
• Tariff headwind reduced to ~30-40 bps; updated non-GAAP gross margin projected 53.5%-54.5%, operating margin 12%-13%. Currency exchange expected to be ~100 basis point tailwind to 2025 revenue. Investor Day moved to spring 2026.

Risks

• Continued macroeconomic uncertainties impacting business operations.
• Volatility in U.S. government policies and tariffs affecting cost structures.
• Softness in academic and biotech research funding leading to weak instrument demand.
• Geopolitical and market volatility posing challenges to business performance.

Question and Answer

Q: On process chrome strength, how much is easy comp vs order patterns?

A: Jonathan P. DiVincenzo says it's a return to a normal state where it's more of an appropriate relationship between customer demand and ordering from them, not just easy comp but a normalized environment.

Q: On diagnostics in China, impact of DRG, VBP, reimbursement?

A: Roop K. Lakkaraju and Jonathan P. DiVincenzo say VBP has not impacted Bio-Rad's portfolio, DRG was factored earlier in the year, and no new significant reimbursement changes have been seen.

Q: Tariff management, countermeasures?

A: Jonathan P. DiVincenzo says they've adjusted supplier and manufacturing strategies, working with suppliers and replicating manufacturing capabilities where necessary to adapt to tariff challenges.

Q: Revenue margin phasing, ddPCR instruments performance?

A: Roop K. Lakkaraju says Q3 is expected to be similar to Q2 in top line, Q4 has seasonal increase; ddPCR instruments were weak year-over-year but slightly better sequentially.

Q: Process chrome growth magnitude, ddPCR commercial stimulation?

A: Roop K. Lakkaraju says process chrome growth is not in the 50% range as misconstrued, and Jonathan P. DiVincenzo says commercial focus is on expanding the digital PCR user base by targeting simplified workflows and flexibility across budget levels.

Q: Academic demand trends ex-U.S.?

A: Jonathan P. DiVincenzo and Roop K. Lakkaraju say there are global academic funding pressures, with China being soft and Korea/Japan showing positive movement, and academic customers continuing to drive research despite uncertainties.

Q: Continuum uptake from lower throughput customers?

A: Jonathan P. DiVincenzo says it's too early to tell, but the flexibility of the Continuum platform (1 sample to 96 samples) is an advantage, and customer feedback is awaited in the coming months.