Bio-Rad Laboratories, Inc. (BIO) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed picture: modest revenue growth in diagnostics and improved free cash flow contrast with declining margins and net income. The Q&A reveals cautious management guidance and uncertainties in process chromatography. Despite strong growth in ddPCR and cash reserves, the lack of buyback and management's vague responses temper optimism. Overall, the sentiment is neutral, with no strong catalysts for significant stock movement.
Key Financial Performance
Net sales for Q4 2025 $693 million, a 3.9% increase year-over-year (YoY) from $668 million in Q4 2024. On a currency-neutral basis, this represents a 1.7% YoY increase, driven by the Clinical Diagnostics segment.
Life Science segment sales for Q4 2025 $268 million, a 2.6% decrease YoY from $275 million in Q4 2024. On a currency-neutral basis, this represents a 4% YoY decrease, driven by constrained academic research and biotech funding environment.
Clinical Diagnostics segment sales for Q4 2025 $425 million, an 8.4% increase YoY from $393 million in Q4 2024. On a currency-neutral basis, this represents a 5.6% YoY increase, driven by higher sales of quality control and blood typing products.
Gross margin for Q4 2025 (GAAP) 49.8%, compared to 51.2% in Q4 2024. The decline was due to higher supply chain costs, expedited freight, and service costs resulting from compressed timelines for instrument delivery and installation.
Gross margin for Q4 2025 (Non-GAAP) 52.5%, compared to 53.9% in Q4 2024. The decline was attributed to onetime inventory and other write-offs associated with product portfolio rationalization, restructuring, and amortization charges.
SG&A expense for Q4 2025 $221 million (31.9% of sales), compared to $204 million (30.6% of sales) in Q4 2024. The increase was primarily due to higher employee-related costs.
R&D expense for Q4 2025 $70 million (10.1% of sales), compared to $80 million (11.9% of sales) in Q4 2024. The decrease was due to lower in-process R&D charges.
Operating loss for Q4 2025 $119 million, compared to operating income of $58 million in Q4 2024. The loss included $173 million of impairment charges for purchased intangibles and other items due to portfolio rationalization.
Net income for Q4 2025 (GAAP) $720 million, driven by an $800 million contribution from the change in fair market value of Sartorius AG shares. Non-GAAP net income was $68 million, compared to $81 million in Q4 2024, reflecting lower gross margin.
Net sales for full year 2025 $2.583 billion, a 0.7% increase YoY from $2.567 billion in 2024. On a currency-neutral basis, sales were flat YoY.
Life Science segment sales for full year 2025 $1.021 billion, a 0.7% decrease YoY from $1.028 billion in 2024. On a currency-neutral basis, this represents a 1.3% YoY decrease, driven by decreased sales in the Americas.
Clinical Diagnostics segment sales for full year 2025 $1.562 billion, a 1.6% increase YoY from $1.538 billion in 2024. On a currency-neutral basis, this represents a 0.8% YoY increase, driven by higher quality control and blood typing product sales.
Gross margin for full year 2025 (Non-GAAP) 53.3%, compared to 55% in 2024. The decline was driven by reduced fixed manufacturing absorption and higher material costs.
SG&A expense for full year 2025 $809 million (31.5% of sales), compared to $799 million (31.1% of sales) in 2024. The increase was due to higher employee-related costs.
R&D expense for full year 2025 $257 million (9.9% of sales), compared to $282 million (11% of sales) in 2024. The decrease was due to lower in-process R&D charges.
Operating margin for full year 2025 (Non-GAAP) 12.1%, compared to 12.9% in 2024. The decline reflects the impact of gross margin headwinds.
Net income for full year 2025 (Non-GAAP) $271 million, compared to $291 million in 2024. The decline was due to lower gross margin and higher SG&A expenses.
Free cash flow for Q4 2025 $119 million, compared to $81 million in Q4 2024. The increase was driven by improved working capital efficiency.
Free cash flow for full year 2025 $375 million, compared to $290 million in 2024. The improvement was driven by focused efforts in improving working capital efficiency.
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Operating Highlights
QX700 Droplet Digital PCR family: Strong customer response and meaningful acceleration in instrument sales during Q4 2025. Expanding order funnel for ddPCR instruments, driven by qPCR conversions and competitive wins. Positioned to expand served market and gain share in the entry-level digital PCR segment.
IVD version of QX600 and high-value ddPCR assays: Planned launches in 2026, including oncology-focused assays and AI integration into future platforms.
Diagnostics segment: Returned to growth in Q4 2025, driven by large customer orders in quality control portfolio and diabetes testing reimbursement changes in China.
Life Science segment: Anticipating modest recovery in 2026, with mid-single-digit growth expected for ddPCR business. Process chromatography projected to decline mid-teens in 2026 due to regulatory changes and improved production efficiencies.
Operational improvements: Initiated actions to strengthen operational rigor, improve forecasting and planning, and drive consistency across manufacturing, procurement, and logistics.
Cost management: Focused on lowering cost base through restructuring and tighter expense discipline, despite global trade uncertainties and tariff headwinds.
Portfolio optimization: Discontinued and reprioritized certain R&D programs as part of ongoing portfolio rationalization.
Stilla acquisition: Expected to be accretive by mid-2026, earlier than initially anticipated. Reinforces focus on measured scale and top-line growth.
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Risk or Challenges
Gross Margin Pressure: Gross margin did not meet expectations due to higher-than-anticipated supply chain costs, expedited freight, and service costs resulting from compressed timelines for instrument delivery and installation.
Supply Chain Costs: Higher-than-anticipated supply chain costs in Q4 2025 pressured gross margins, attributed to execution-related issues rather than structural problems.
Academic and Government Spending: Cautious spending in academia and government sectors continues to weigh on instrument demand, with academic institutions prioritizing staffing and ongoing research over capital equipment purchases.
Biopharma Funding Volatility: Biopharma funding conditions improved but remain skewed towards later-stage biotech companies, creating uncertainty for broader market recovery.
Process Chromatography Revenue Volatility: Revenue concentration in the process chromatography business from a select number of commercial therapeutics and vaccines leads to quarter-to-quarter lumpiness.
Regulatory and Policy Risks in China: Cautious monitoring of policy developments in China, particularly related to reimbursement and VBP (volume-based procurement) headwinds, which could impact the diagnostics portfolio.
U.S. Government Shutdown Impact: The extended U.S. government shutdown caused delays in sales, leading to compressed timelines and higher operational costs.
Procurement Initiative Delays: Slower-than-expected progress on procurement initiatives impacted cost-saving efforts.
Currency-Neutral Revenue Growth Challenges: Currency-neutral revenue growth for the Life Science segment is projected to be flat to 0.5%, reflecting challenges in process chromatography and constrained academic research funding.
R&D Program Reprioritization: Impairment charges due to the discontinuation and reprioritization of certain R&D programs as part of ongoing portfolio rationalization.
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Guidance & Outlook
Revenue Growth: For 2026, Bio-Rad is guiding currency-neutral revenue growth to be between 0.5% and 1.5%. The Life Science segment is expected to grow between 0% and 0.5%, with core Life Science business excluding process chromatography projected to grow nearly 4%. The Diagnostics segment is estimated to grow between 1% and 2%.
Process Chromatography: Process chromatography is projected to decline approximately mid-teens in 2026 due to changes in government regulations and improved production efficiencies by customers. Long-term growth for this area is expected to be mid-single-digit.
ddPCR Business: The ddPCR business is expected to grow mid-single-digit in 2026, driven by the QX700 platform and new product launches.
Gross Margin: Full year non-GAAP gross margin is projected to be between 54% and 54.5% in 2026, with sequential improvement expected each quarter.
Operating Margin: Full year non-GAAP operating margin is projected to be between 12% and 12.5% in 2026.
Free Cash Flow: Free cash flow for 2026 is anticipated to be approximately $375 million to $395 million.
Product Launches and Innovation: In 2026, Bio-Rad plans to advance several product launches, including an IVD version of the QX600, additional high-value ddPCR assays across oncology, and the incorporation of artificial intelligence into future platforms.
Market Trends: Early signs of stabilization are observed in core markets, with steady improvements in biopharma funding and stronger demand for quality control reagents in Diagnostics.
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Shareholder Return Plan
Share Buyback Program: During 2025, Bio-Rad retired 1.2 million shares through its buyback program at a total cost of approximately $296 million. Since Q1 2024, the company has spent $494 million to repurchase 1.9 million shares at an average price per share of approximately $261, representing a 6.6% reduction in share count. The company has approximately $285 million available for additional buybacks under the current Board-authorized program.
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Key Q&A
Q:What contributed to the strong quarterly growth in the ddPCR business, and why is mid-single-digit growth expected to continue?
A:The strong growth was driven by the QX700 platform, which saw significant sales success. The shift in revenue composition from assays (historically 80%) to a mix of 2/3 assays and 1/3 instruments also contributed. Mid-single-digit growth is expected due to the large installed base and ongoing consumables demand, with potential for higher growth as the market stabilizes.
Q:What changes in guidelines around vaccine production impacted the process chromatography forecast?
A:Changes in vaccine demand by geography led to adjustments in customers' manufacturing strategies, which impacted the process chromatography business. This was communicated at the end of last year as part of the 2026 planning.
Q:Why does the EBIT margin range of 12% to 12.5% seem conservative for 2026?
A:The process chromatography impact accounts for a 50 basis point headwind. However, improved operational efficiencies, mix improvements, and growth in high-margin products like the QX700 platform could enhance margins. The company is being realistic in its guidance.
Q:What drives the long-term mid-single-digit growth forecast for process chromatography?
A:The forecast is based on changing conditions, including government regulations and customer efficiencies. Growth in clinical phase customers and their potential transition to commercial phases also contribute. The company is being conservative but acknowledges potential for higher growth depending on customer progress.
Q:Is the portfolio over-indexed to vaccines compared to the bioprocess industry?
A:Yes, the commercial product portfolio is over-indexed to vaccines, which contributes to midterm pressure. However, the clinical trial projects have a more balanced portfolio.
Q:What is the organic growth forecast compared to acquisition contributions before Stilla is annualized?
A:Excluding Stilla, the organic growth for LSG is slightly negative (just under -1%), driven by process chromatography impacts. Stilla contributed mid-single-digit millions in revenue in Q4.
Q:Why is the Clinical Diagnostics growth guide muted at 1% to 2% compared to pre-COVID levels?
A:The muted growth is due to a mix of portfolio performance and geographic factors, including reliance on weaker markets like China. Quality controls, the largest part of the Diagnostics business, are performing well.
Q:When could process chromatography return to mid-single-digit growth?
A:The company anticipates low single-digit growth by 2027, with potential to reach mid-single digits a year or two later, depending on customer progress through clinical phases.
Q:Why was there no stock buyback this quarter despite $1.5 billion in cash on the balance sheet?
A:The lack of a buyback is not signaling anything specific. The company is looking at assets for potential M&A and approaches buybacks opportunistically.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details about the customer impacted by vaccine production changes and did not elaborate on the exact timeline or conditions for process chromatography to return to mid-single-digit growth. Additionally, the response to the lack of a stock buyback was vague, with no clear indication of future plans.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Asia Pacific
Bio Rad
Clinical Diagnostics
Diagnostics segment
Rad market
Rad term
SGA expense
Science segment
Stilla acquisition
action
basis increase
blood product
cash flow
charge
core Life
currency digit
day
decline
efficiency
end market
flow cash
freight service
headwind
increase basis
instrument
non
portfolio rationalization
procurement
product portfolio
progress
reimbursement
sale Americas
sale EMEA
sale increase
segment currency
success QX
vaccine
BIO Transcript
Bio-Rad Laboratories, Inc. (BIO) Q4 2025 Earnings Call Transcript
Unknown2-12
The earnings call presents a mixed picture: modest revenue growth in diagnostics and improved free cash flow contrast with declining margins and net income. The Q&A reveals cautious management guidance and uncertainties in process chromatography. Despite strong growth in ddPCR and cash reserves, the lack of buyback and management's vague responses temper optimism. Overall, the sentiment is neutral, with no strong catalysts for significant stock movement.
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The earnings call presents a mixed picture: while there is optimism in product development and partnerships, financial metrics show declining cash flow and net loss. The guidance is cautious, with some positive outlooks, but uncertainties in key markets like China and the Americas persist. The Q&A reveals optimism in certain areas, but management's vague responses on growth and market challenges add uncertainty, balancing positive developments. Overall, the sentiment remains neutral as positive and negative factors offset each other.
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