BIO-B

Management Statement and Operational Highlights

• In 2025, Bio-Rad delivered results within revised guidance for revenue and operating margin, but gross margin fell short. Progressed in cost reduction via restructuring and expense discipline.
• Clinical Diagnostics returned to growth in Q4 2025, driven by large customer orders and China diabetes testing reimbursement change. Life Science saw traction from Stilla acquisition and QX700 launch, with strong QX700 instrument sales in Q4. Process Chromatography had growth but faced order timing issues.
• Plan for 2026 includes advancing product launches like IVD QX600, additional ddPCR assays, and AI integration. Focus on R&D to drive innovation and portfolio optimization.

Guidance

• Currency-neutral revenue growth for 2026 is expected to be between 0.5% and 1.5%, with Q1 down low single digit then sequentially improving.
• Life Science segment currency-neutral revenue growth expected between 0 and 0.5%, core Life Science (excluding process chromatography) to grow ~4%, ddPCR mid-single-digit.
• Diagnostics segment currency-neutral revenue growth expected between 1% and 2%, quality controls mid-single-digit, remaining portfolio low single-digit.
• Full year non-GAAP gross margin projected between 54% and 54.5%, operating margin between 12% and 12.5%.
• Anticipate full year free cash flow of approximately $375 million to $395 million for 2026.

Segment Performance

• Clinical Diagnostics: Fourth quarter 2025 net sales were approximately $425 million, a 8.4% reported increase vs Q4 2024, driven by quality control and blood typing products. Currency-neutral sales up 5.6%. Full year 2025 net sales were $1.562 billion, a 1.6% reported increase vs 2024.
• Life Science: Fourth quarter 2025 net sales were $268 million, a 2.6% reported decrease vs Q4 2024, impacted by constrained academic research and biotech funding. ddPCR portfolio had mid-single-digit year-over-year growth in Q4. Full year 2025 net sales were approximately $1.021 billion, a 0.7% reported decrease vs 2024.
• Process Chromatography: Experienced quarter-over-quarter and year-over-year declines in 2025 due to customer order timing, but had over 20% growth for the full year, with expected mid-single-digit long-term growth.

Risks

• Global trade uncertainty and tariff headwinds impacted gross margin.
• Uncertainty in China policy development affecting the Clinical Diagnostics segment.
• Volatility in process chromatography due to customer order timing and regulatory changes related to therapeutics and vaccines.

Question and Answer

Q: About ddPCR business growth and Stilla contribution A: Jon DiVincenzo explains that ddPCR growth is driven by the QX700 platform, with the legacy portfolio and Stilla acquisition contributing, and guiding mid-single-digit growth due to consumables and market stabilization.

Q: Process chromatography changes and impact A: Jonathan DiVincenzo mentions changes in vaccine manufacturing strategies and customer efficiencies leading to a mid-teens decline in process chromatography, with long-term mid-single-digit growth potential.

Q: Op margins guidance A: Roop Lakkaraju states the operating margin range accounts for process chromatography impact and non-recurring Q4 costs, with potential margin enhancement from the ddPCR business.

Q: Clinical Diagnostics growth A: Jon DiVincenzo attributes muted growth to product mix and geography, with quality controls leading but other segments and China affecting performance.

Q: Process chromatography long-term growth A: Roop Lakkaraju expects low single-digit growth in 2027 and mid-single-digit growth beyond, dependent on clinical to commercial transitions.

Q: Buyback lack A: Roop Lakkaraju says there is no specific signal, with the company actively looking at assets opportunistically.