Repligen Corporation (RGEN) Q4 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary reveals strong financial performance with growth in key areas like Chromatography and Analytics, along with margin improvements. The Q&A section highlights positive future prospects, such as high funnel opportunities and strategic M&A considerations, despite some uncertainties. The guidance increase and strategic investments signal optimism. However, management's lack of clarity on certain topics tempers the sentiment slightly. Overall, the positive financial metrics and optimistic guidance outweigh these concerns, suggesting a positive stock price movement in the short term.

Key Financial Performance

Fourth Quarter Revenue $198 million, 14% organic growth year-over-year. Reasons: Strong performance in Proteins and Process Analytics (both grew over 30%) and Chromatography (grew more than 25%).

Full Year Revenue $738 million, 16% growth on both a reported and organic non-COVID basis. Reasons: Momentum across portfolio, customer base, and geographies.

Proteins Growth Greater than 30% growth in Q4 and 31% for the year. Reasons: Broad-based growth across ligands, growth factors, and custom resins.

Process Analytics Growth 37% growth for the year (21% excluding M&A). Reasons: Strong execution and traction with SoloVPE PLUS.

Filtration Growth High single digits for the quarter and 8% for the year (11% non-COVID). Reasons: Driven by Fluid Management and ATF consumables.

Chromatography Growth Greater than 25% growth for Q4 and the year. Reasons: OPUS large-scale columns and new pharma customer wins.

Adjusted Gross Margin 52.6% for the year, 220 basis points increase year-over-year. Reasons: Volume leverage and price offsetting inflation and mix headwinds.

Adjusted Operating Margin 13.8% for the year, 90 basis points increase year-over-year. Reasons: Volume leverage and price overcoming inflation and M&A dilution.

Adjusted EBITDA Margin 19% for the year, 50 basis points increase year-over-year. Reasons: Volume leverage and price overcoming inflation and M&A dilution.

Adjusted Net Income $28 million for Q4, $3 million increase year-over-year. Reasons: Higher adjusted operating income offset by lower interest income.

Adjusted Fully Diluted EPS $1.71 for the year, 9% increase year-over-year. Reasons: Higher adjusted operating income and tax planning actions.

Cash and Marketable Securities $768 million at the end of Q4, $90 million sequential increase. Reasons: $26 million cash flow from operations and $8 million CapEx.

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Operating Highlights

SoloVPE PLUS: Launched as the next generation of SoloVPE with increased accuracy and faster readout time. Traction observed in 2025 with an expected multiyear upgrade cycle.

ProConnex MixOne: A new single-use mixer launched in 2025 with demos initiated and first placements expected in 2026.

AVIPure resins: Three new catalog resins launched in December 2025 for the new modality market, with traction observed in custom resins developed for specific key accounts.

Asia Pacific strategy: Notable progress made in 2025 with continued investments planned for 2026 due to growth opportunities in the region.

Key account penetration: Commercial team focused on approximately 20 large pharma and CDMO customers, with 2.5x increase in product lines sold to these customers since 2019.

Margin expansion: Adjusted operating margin expanded by 90 basis points to 13.8% in 2025, with a 240 basis point expansion excluding M&A and foreign currency impacts.

AI and infrastructure investments: Investments made in legal, finance, and IT leadership, along with AI and infrastructure to ensure scalability for future growth.

M&A activity: Acquired 908 Devices' bioprocessing portfolio and integrated it into the PATsmart portfolio. Announced a strategic partnership with Novasign for machine learning integration into filtration systems.

Digitization efforts: Investments in AI across legal and supply chain functions, and IT modernization to support growth.

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Risk or Challenges

FDA policy and biopharma strategic response to MFN: There is near-term uncertainty around FDA policy and biopharma's strategic response to MFN, which could impact the company's ability to convert certain funnel opportunities in 2026.

Gene therapy platform headwind: A 2-point headwind from a gene therapy platform is expected to impact revenue growth in 2026, particularly affecting the Filtration franchise.

Muted demand for downstream systems: Demand for downstream systems remains muted, which has impacted the timing of Fluid Management revenue and overall growth in the Filtration franchise.

Tariff surcharges and related costs: Tariff surcharges and related costs are expected to have a slightly higher impact on revenue and margin in 2026 compared to 2025.

Emerging biotech customer activity: While revenue from emerging biotech customers grew for the third consecutive quarter, activity remains below historical levels, creating uncertainty about sustained growth in this segment.

China market recovery: Although China showed growth in the fourth quarter, it is recovering from a low base, and its future growth remains uncertain.

Inflation and compensation costs: Annual merit and compensation inflation contributed to increased operating expenses, which could pressure margins if not offset by revenue growth.

Integration of recent acquisitions: The integration of recent acquisitions, such as 908 Devices' bioprocessing portfolio, requires significant resources and could pose challenges to operational efficiency.

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Guidance & Outlook

Revenue Guidance for 2026: Repligen projects revenue for 2026 to be in the range of $810 million to $840 million, representing 9% to 13% organic revenue growth. This includes a 2-point headwind from a gene therapy platform.

Operating Margin Expansion: The company anticipates 150 basis points of operating margin expansion in 2026, driven by volume leverage, pricing, and productivity.

Franchise Growth Projections: Filtration is expected to grow in the low double digits, Chromatography and Proteins are also projected to grow in the low double digits, and Analytics is expected to grow greater than 20% in 2026.

Regional Growth Expectations: China is expected to return to growth in 2026, supported by strong orders in the fourth quarter of 2025.

Capital Expenditures: CapEx spend is expected to be approximately 3% to 4% of 2026 revenue.

Gross Margin Expansion: Gross margins are expected to expand to 53.6% to 54.1% for the full year 2026, up approximately 125 basis points year-over-year at the midpoint.

Adjusted Earnings Per Share (EPS): Adjusted fully diluted EPS is projected to be between $1.93 and $2.01, up $0.22 to $0.30 versus 2025, representing a 15% increase at the midpoint.

Seasonality in Revenue: Approximately 48% of revenue is expected in the first half of 2026, with organic growth slightly above the midpoint in the second half and slightly below the midpoint in the first half.

Strategic Priorities for 2026: The company aims to outpace bioprocessing industry growth, drive operating leverage, continue innovating and launching new products, integrate recent acquisitions, pursue additional M&A, and focus on IT modernization and strategic transformation initiatives.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What are the factors influencing the higher and lower ends of the guidance range?

A:The higher end of the guidance is influenced by larger funnel opportunities with high probability above 50%, which are at the highest level ever. The lower end is influenced by uncertainties such as tariff updates, which are less than 1% of total sales, and onshoring opportunities that are pushed out until 2027.

Q:How does the company prioritize operating margin expansion relative to M&A?

A:Operating margin expansion remains a top priority along with above-market growth. However, the company will consider M&A opportunities that have strategic merits, even if they result in short-term dilution. They aim for deals with immediate accretion to financials but acknowledge the potential for long-term strategic benefits.

Q:Why is the company assuming a normal first-half versus second-half revenue split despite market uncertainties?

A:The company assumes a normal revenue split due to prudence given continued market uncertainties. They acknowledge that market normalization could be a source of upside to the guidance range. Factors like macroeconomic conditions, FDA approvals, and CapEx spending decisions by big pharma companies are being monitored.

Q:What is the expected Q1 organic growth and how does it align with the annual guidance?

A:Q1 organic growth is expected to be sequentially down by only a couple of points versus Q4 2025, indicating a strong start to the year. This aligns with the annual guidance of 9% to 13% organic growth.

Q:What are the growth expectations for the Analytics portfolio in 2026?

A:The Analytics portfolio is expected to grow above 20% in 2026, driven by the SoloVPE PLUS upgrade cycle, the integration of 908 Devices' products, and the FlowVPX technology. The upgrade cycle for SoloVPE PLUS is expected to last 2-3 years.

Q:What is the company's strategy for new product launches in 2026?

A:The company plans to launch several new products, including additional catalog resins for Proteins, a combination of ATF with Raman technology, and a Mid-IR technology for Protein aggregation measurement. These innovations aim to expand their portfolio and address customer needs.

Q:What are the expectations for the China market in 2026?

A:The company aims to grow the China market faster than the rest of the business, with a focus on increasing commercial resources, partnerships, and customer engagement. China currently represents 2-3% of total revenue, down from high single digits during COVID.

Q:What is the company's approach to expanding its service business?

A:The company aims to grow its service business to represent 10% of total sales, up from 6% in 2025. They are focusing on increasing attachment rates for larger-scale equipment and incentivizing the commercial team to secure more service contracts.

Q:What is the outlook for capital equipment sales in 2026?

A:The company expects low double-digit growth in capital equipment sales, driven primarily by the Analytics business. Downstream systems are expected to have flat sales, with potential upside if macroeconomic conditions improve.

Q:Review of Unclear Management Responses

A:Management avoided giving direct answers or lacked clarity on several topics, including the specific timing and impact of macroeconomic factors like FDA approvals and CapEx spending decisions. Additionally, there was vagueness around the launch strategy and timing for the combined ATF and Raman technology, as well as the exact growth expectations for the China market.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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