Bio-Techne’s Earnings Call: Growth Amid Challenges

Bio-Techne ((TECH)) has held its Q3 earnings call. Read on for the main highlights of the call.

Bio-Techne’s recent earnings call painted a picture of robust growth tempered by external challenges. The company reported strong organic revenue growth and a solid financial position, with significant achievements in the pharma and diagnostics segments. However, uncertainties such as NIH funding, tariff impacts, and difficulties in the China market present notable headwinds. While Bio-Techne’s strategies to mitigate these challenges are promising, the timing and full impact remain uncertain.

Strong Organic Revenue Growth

Bio-Techne reported a commendable 6% organic revenue growth despite a challenging macroeconomic environment. The company’s focus on profitability resulted in an impressive adjusted operating margin of 34.9%, highlighting its ability to navigate economic headwinds effectively.

Pharma Segment Performance

The pharma segment demonstrated low double-digit growth, driven by improved R&D pipelines and strong demand in the Protein Sciences segment, which itself saw a 7% organic revenue growth. This reflects the company’s strategic focus on high-demand areas.

Protein Analytical Instrument Growth

Bio-Techne’s protein analytical instrumentation business, particularly the biologics platform Maurice, experienced double-digit growth. This was fueled by strong demand from pharma and CRO partners, underscoring the platform’s critical role in the industry.

Diagnostics Growth

The diagnostics segment showed promising growth, with diagnostic reagents achieving high-single-digit growth and the Asuragen portfolio seeing low double-digit growth. Notably, the ExoDx prostate cancer test increased by over 30% for the fiscal year-to-date.

Tariff Mitigation Strategies

Despite facing tariff challenges, Bio-Techne is well-positioned to mitigate impacts through global production and supply chain optimization. The company expects to fully mitigate these costs by the start of fiscal 2026, showcasing its proactive approach to external pressures.

Strong Financial Position

Bio-Techne reported a robust financial position, generating $41.1 million in cash from operations, returning $12.6 million in dividends, and executing $100 million in stock buybacks. The company maintains a strong balance sheet with a total leverage ratio well below one time EBITDA.

NIH Funding Uncertainty

Uncertainty surrounding potential NIH funding cuts poses challenges for US academic customers, impacting purchasing decisions, particularly for capital equipment. This uncertainty is a significant concern for Bio-Techne’s academic market exposure.

Academic Market Challenges

The Spatial Biology segment, heavily reliant on US academic markets, has been affected by NIH funding uncertainties, impacting growth rates. This highlights the segment’s vulnerability to funding fluctuations.

Tariff Challenges

Recent global tariff increases could potentially impact Bio-Techne’s adjusted operating income by $20 million annually, with significant exposure from Chinese tariffs on proteomic analytical instruments. The company is actively working to mitigate these impacts.

China Market Decline

Bio-Techne’s revenue from China decreased mid-single digits due to ongoing economic challenges, contrasting with improved conditions in the rest of Asia. This decline underscores the broader economic issues facing the Chinese market.

Stalled Biotech Momentum

Momentum in the biotech sector has stalled due to global economic uncertainties, impacting growth expectations. This stall highlights the broader challenges facing the biotech industry in the current economic climate.

Forward-Looking Guidance

Bio-Techne’s forward-looking guidance remains optimistic despite current challenges. The company reported strong financial performance in the third quarter of Fiscal Year 2025, with a 6% organic revenue growth and a 34.9% adjusted operating margin. Bio-Techne is strategically navigating NIH funding uncertainties and tariff impacts, expecting full mitigation of tariff costs by the start of Fiscal Year 2026. The company remains well-positioned for future growth, supported by its comprehensive product portfolio and strategic investments.

In conclusion, Bio-Techne’s earnings call highlighted a company that is growing robustly despite facing significant external challenges. The overall sentiment was positive, with strong financial results and strategic initiatives aimed at overcoming current headwinds. Investors and market watchers will be keen to see how Bio-Techne’s strategies unfold in the coming quarters.