Bio-Techne Corporation Q4 FY2025 earnings call

• Delivered 3% organic revenue growth in Q4, with 5% organic revenue growth for the full fiscal year 2025.
• Strength in biopharma end markets, particularly large pharma customers, drove demand for automated proteomic analytical instrumentation and cell therapy solutions.
• Divested Exosome Diagnostics business to MDxHealth, retaining access to proprietary exosome-based technology for breast cancer recurrence kit. This divestiture will redirect investments to core growth pillars.
• Biopharma end market had high single-digit growth in Q4 and full fiscal year, with large pharma driving growth but smaller biotech firms more cautious due to funding constraints.
• Academic end markets declined low single digits in Q4 but increased low single digits for the full fiscal year, with less than 1/3 of U.S. academic revenue tied to NIH grants.
• Protein Sciences segment saw 4% growth in Q4, driven by proteomic analytical tools and cell therapy workflow solutions. GMP reagent portfolio grew 20% in Q4 and over 30% for the full fiscal year. Wilson Wolf, in which Bio-Techne owns 20%, grew over 20% in fiscal 2025 with EBITDA margins north of 70%.
• Proteomic analytical instrument business had high single-digit growth, with mid-teens growth in instrument revenue and strong demand for next-generation instrument Leo. Simple Western technology saw traction in regulated environments like FDA approval support.
• Biologics business led by Maurice platform continued to gain share due to ease of use, reproducibility, and data compliance.

Protein Sciences segment: Q4 reported sales were $226.5 million, with reported revenue increasing 6% year-over-year and organic revenue growth of 4%. Operating margin was 43.6%, up 60 basis points. Diagnostics and Spatial Biology segment: Q4 sales were $89.7 million, both reported and organic growth decreased 1%. Total Exosome Diagnostics revenue was $25.9 million in fiscal 2025, which had an unfavorable impact of 200 basis points on corporate adjusted operating margin. Approximately 80% of revenue is from consumables, with academic revenue representing ~21% of total business, and U.S. institutions contributing ~12%.

• Expect low single-digit organic growth until uncertainties around NIH funding, pharmaceutical tariffs, and MFN pricing are resolved.
• Anticipate adjusted operating margin expansion of approximately 100 basis points in fiscal year 2026 compared to fiscal 2025, starting flat in Q1 and ramping to ~200 basis points higher by Q4.
• Reallocation of resources from the ExoDx franchise to core growth pillars, including advancing proteomic analysis and spatial biology platforms, expanding cell therapy applications, and reinvigorating core reagents portfolio.

• Uncertainties around NIH funding and the fiscal 2026 NIH budget, leading to cautious purchasing behavior from U.S. academic customers.
• Potential pharmaceutical tariffs and MFN drug pricing model introducing uncertainty in the pharma landscape.
• Biotech funding decline of over 40% year-to-date compared to 2024 levels, causing subdued performance from smaller biotech firms.
• Geopolitical headwinds delaying instrument placements for Lunaphore COMET systems in the Middle East.

Q: Puneet Souda asked about guidance for full year fiscal '26 and segment growth cadence.

A: Jim Hippel said they expect low single-digit growth until uncertainties around academic funding, pharmaceutical tariffs, and MFN pricing are resolved. They don't give specific segment guidance but expect some fluctuations within segments but no big material change in growth rates.

Q: Dan Leonard asked about operating margin expansion with low single-digit growth.

A: Jim Hippel said it's being driven by the divestiture of Exosome Diagnostics, which was a ~200 basis point headwind in fiscal 2025, and reallocation of resources to core growth pillars will help expand margins by 100 basis points in fiscal 2026.

Q: Daniel Arias asked about NIH exposure and funding sources for academic customers not tied to NIH.

A: Jim Hippel explained that ~50% of academic funding comes from federal sources, ~50% of that from NIH, so less than 1/3 of U.S. academic revenue is directly tied to NIH grants, and the remaining comes from other federal and private sources.

Q: Kyle Boucher asked about trends between large pharma and biotech and pharma fit in low single-digit growth.

A: Jim Hippel said large pharma has been robust with double-digit growth, but there's risk from MFN concerns, balanced by academic being overly conservative. Low single-digit growth is consistent with the current quarter's performance with uncertainties not resolved.

Q: Brandon Couillard asked about margin outlook and China growth breakdown.

A: Jim Hippel said margin expansion of ~200 basis points by Q4 is due to Exosome Diagnostics divestiture and productivity initiatives. China's low double-digit growth in Q4 was driven by stimulus and anticipation of tariffs, with the market stabilizing to modest growth.