Q3 2026 Bio-Techne Corp Earnings Call

May 6, 2026

Speaker #1: Thank you for your continued patience. Your meeting will begin shortly. If you need assistance at any time, please press star zero and a member of our team will be happy to help you.

Speaker #1: Good morning and welcome to the Bio-Techne earnings conference call for the third quarter and fiscal year 2026. At this time, all participants have been placed in a listen-only mode.

Operator: Good morning. Welcome to the Bio-Techne earnings conference call for Q3 in fiscal year 2026. At this time, all participants have been placed in a listen-only mode, and the call will be open for questions following management's prepared remarks. During our Q&A session, please limit yourself to one question and one follow-up. I would now like to turn the call over to David Clair, Bio-Techne's Vice President, Investor Relations. Please go ahead.

Speaker #1: And the call will be open for questions following management's prepared remarks. During our Q&A session, please limit yourself to one question and one follow-up.

Speaker #1: I would now like to turn the call over to David Clair, BIO-TECHNE's Vice President, Investor Relations, please go ahead.

Speaker #2: Good morning and thank you for joining us. I'm the call with me this morning. Our Kim Kelderman, President and Chief Executive Officer, and Jim Hippel, Chief Financial Officer of BIO-TECHNE.

David Clair: Good morning, and thank you for joining us. On the call with me this morning are Kim Kelderman, President and Chief Executive Officer, and Jim Hippel, Chief Financial Officer of Bio-Techne. Before we begin, let me briefly cover our safe harbor statement. Some of the comments made during this conference call may be considered forward-looking statements, including beliefs and expectations about the company's future results. The company's 10-K for fiscal 2025 identifies certain factors that could cause the company's actual results to differ materially from those projected in the forward-looking statements made during this call. The company does not undertake to update any forward-looking statements because of any new information or future events or developments. The 10-K, as well as the company's other SEC filings, are available on the company's website within its investor relations section.

Speaker #2: Before we begin, let me briefly cover our safe harbor statement. Some of the comments made during this conference call may be considered forward-looking statements.

Speaker #2: Including beliefs and expectations about the company's future results. The company's 10-K for fiscal 2025 identifies certain factors that could cause the company's actual results to differ materially from those projected in the forward-looking statements made during this call.

Speaker #2: The company does not undertake to update any forward-looking statements because of any new information or future events or developments. The 10-K, as well as the company's other SEC filings, are available on the company's website within its investor relations section.

Speaker #2: During the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. Tables reconciling these measures to most comparable GAAP measures are available in the company's press release issued earlier this morning on the investor relations section of our BIO-TECHNE Corporation website.

David Clair: During the call, non-GAAP financial measures may be used to provide information pertinent to ongoing business performance. Tables reconciling these measures to most comparable GAAP measures are available in the company's press release issued earlier this morning on the investor relations section of our Bio-Techne Corporation website at www.bio-techne.com. Separately, in the coming weeks, we will be participating in the Bank of America and Jefferies Healthcare Conferences. We look forward to connecting with many of you at these upcoming events. I will now turn the call over to Kim.

Speaker #2: At www.bio-techne.com. Separately, in the coming weeks, we will be participating in the Bank of America and Jefferies Healthcare conferences. We look forward to connecting with many of you at these upcoming events.

Speaker #2: I will now turn the call over to Kim.

Speaker #3: Thank you, Dave, and good morning, everyone. Welcome to BIO-TECHNE's third quarter earnings call for fiscal 2026. The BIO-TECHNE team continues to execute with discipline in a dynamic and uneven-end market environment.

Kim Kelderman: Thank you, David Clair. Good morning, everyone. Welcome to Bio-Techne's Q3 earnings call for fiscal 2026. The Bio-Techne team continued to execute with discipline in a dynamic and uneven end market environment. Our quarterly performance was supported by sustained strength from our large pharmaceutical customers and stable to improving trends in our US academic end market. These positives were partially offset by continued softness in emerging biotech spending, resulting in a 2% organic revenue decline for the quarter. Importantly, we are seeing encouraging indicators that point to an ongoing improvement in the US academia and an eventual recovery in emerging biotech, which positions us well for a stronger fiscal 2027.

Speaker #3: Our quarterly performance was supported by sustained strength from our large pharmaceutical customers and stable to improving trends in our U.S. academic end market. These positives were partially offset by continued softness in emerging biotech spending resulting in a 2% organic revenue decline for the quarter.

Speaker #3: Importantly, we are seeing encouraging indicators that point to an ongoing improvement in the U.S. academia and an eventual recovery in emerging biotech, which positions us well for a stronger fiscal 2027.

Speaker #3: As discussed in our prior earnings call, order timing related to two cell therapy customers that received FDA fast-track designation along with the timing of a large OEM commercial supply order created a $400 basis point headwind in the quarter.

Kim Kelderman: As discussed in our prior earnings call, order timing related to 2 cell therapy customers that received FDA Fast Track designation, along with the timing of a large OEM commercial supply order, created a 400 basis point headwind in the quarter. Excluding these factors, underlying organic revenue growth was 2%. There were several notable highlights during our Q3, including the following. Our spatial biology portfolio delivered mid-teens growth and exited the quarter with another record backlog for our COMET platform. Our GMP protein portfolio grew nearly 50% year over year when excluding the 2 Fast Track cell therapy customers. Within our proteomic analysis franchise, favorable instrument placements and utilization trends drove mid-single-digit growth. Our China end market achieved positive organic growth for the fourth consecutive quarter, and our largest end market, large pharma, delivered its sixth consecutive quarter of double-digit growth.

Kim Kelderman: As discussed in our prior earnings call, order timing related to two cell therapy customers that received FDA Fast Track designation, along with the timing of a large OEM commercial supply order, created a 400 basis point headwind in the quarter. Excluding these factors, underlying organic revenue growth was 2%. There were several notable highlights during our Q3, including the following. Our spatial biology portfolio delivered mid-teens growth and exited the quarter with another record backlog for our COMET platform. Our GMP protein portfolio grew nearly 50% year-over-year when excluding the two Fast Track cell therapy customers. Within our proteomic analysis franchise, favorable instrument placements and utilization trends drove mid-single-digit growth. Our China end market achieved positive organic growth for the fourth consecutive quarter, and our largest end market, large pharma, delivered its sixth consecutive quarter of double-digit growth.

Speaker #3: Excluding these factors, underlying organic revenue growth was 2%. There were several notable highlights during our third quarter, including the following: our spatial biology portfolio delivered mid-teens growth and exited the quarter with another record backlog for our Comet platform.

Speaker #3: Our GMP protein portfolio grew nearly 50% year over year when excluding the two fast-track cell therapy customers. Within our proteomic analysis franchise, favorable instrument placements, and utilization trends drove mid-single-digit growth.

Speaker #3: Our China end market achieved positive organic growth for the fourth consecutive quarter. And our largest end market, large pharma, delivered its sixth consecutive quarter of double-digit growth.

Speaker #3: We also remained highly focused on profitability. Adjusted operating margin in the third quarter was 34.2%, representing a $310 basis point sequential improvement over fiscal Q2.

Kim Kelderman: We also remained highly focused on profitability. Adjusted operating margin in Q3 was 34.2%, representing a 310 basis points sequential improvement over fiscal Q2. Jim will provide additional detail on our financial performance later in the call. I turn to our end markets, beginning with biopharma, excluding cell therapy. Here we continue to see a divergence between the performance of large pharma and the performance of emerging biotech. Revenue from our large pharma customers grew low double digits, driven by sustained investment in discovery, translational research, and manufacturing. In emerging biotech, however, revenues declined high single digits, reflecting the typical lag in spending following the funding constraints experienced in the first half of calendar 2025.

Speaker #3: Jim will provide additional detail on our financial performance later in the call. Now I turn to our end markets beginning with biopharma excluding cell therapy.

Speaker #3: Here we continue to see a divergence between the performance of large pharma and the performance of emerging biotech. Revenue from our large pharma customers grew low double digits driven by sustained investment in discovery, translational research, and manufacturing.

Speaker #3: In emerging biotech, however, revenues declined high single digits reflecting the typical lag in spending following the funding constraints experienced in the first half of calendar 2025.

Speaker #3: BIO-TECH funding activity has since rebounded meaningfully with estimate increases of more than 90% and 50% in our fiscal Q2 and Q3 respectively. Given the typical two to three quarter lag between funding and customer spending, we view iew this as a constructive setup for fiscal 2027.

Kim Kelderman: Biotech funding activity has since rebounded meaningfully with estimate increases of more than 90% and 50% in our fiscal Q2 and Q3 respectively. Given the typical two to three-quarter lag between funding and customer spending, we view this as a constructive setup for fiscal 2027. In academia, the team delivered low single-digit growth as the US academic market returned to growth in Q3. The improvement in NIH outlays, new grant activity, and the 1% increase to the NIH budget have reduced funding uncertainty, and positioned this end market for continued stabilization. From a geographic perspective, the Americas declined low single digits, while Europe achieved mid-single-digit growth. Our 2 largest Fast Track cell therapy customers are reported within the North America results. Asia delivered low single-digit growth, with momentum in China continuing for the fourth consecutive quarter.

Speaker #3: In academia, the team delivered low single-digit growth as the U.S. academic market returned to growth in the third quarter. The improvement in NIH outlays, new grant activity, and the 1% increase to the NIH budget have reduced funding uncertainty and positioned this end market for continued stabilization.

Speaker #3: From a geographic perspective, the Americas declined low single digits while Europe achieved mid-single-digit growth. Our two largest fast-track cell therapy customers are reported within the North America results.

Speaker #3: Asia, delivered low single-digit growth with momentum in China continuing for the fourth consecutive quarter. China is seeing an increasing demand from biopharma and CRO customers focused on antibody-drug conjugates, cell therapy, and autoimmune disorders.

Kim Kelderman: China is seeing increasing demand from biopharma and CRO customers focused on antibody drug conjugates, cell therapy, and autoimmune disorders. These are areas where our reagents, instruments, and analytical platforms are particularly well-suited. In April, Bio-Techne announced a strategic brand alignment designed to streamline our portfolio from 10 brands down to 3. This alignment simplifies how our customers engage with Bio-Techne across the research to clinical continuum. Our 3 brands now include R&D Systems, which integrates our full portfolio of research use only and GMP reagents alongside our proteomic analysis instruments previously branded as ProteinSimple. Bio-Techne Spatial Biology, which includes our RNAscope in situ hybridization kits and reagents, as well as our COMET multi-omics spatial platform, and Bio-Techne Diagnostics, which encompasses our clinical controls and precision diagnostic solutions.

Speaker #3: These are areas where our reagents, instruments, and analytical platforms are particularly well-suited. In April, BIO-TECHNE announced a strategic brand alignment designed to streamline our portfolio from 10 brands down to 3.

Speaker #3: This alignment simplifies how our customers engage with BIO-TECHNE across the research-to-clinical continuum. Our three brands now include R&D Systems, which integrates our full portfolio of research-use-only and GMP reagents alongside our proteomic analysis instruments previously branded as protein simple.

Speaker #3: BIO-TECHNE's spatial biology which includes our RNAscope in-situ hybridization kits and reagents as well as our Comet multiomic spatial platform. And BIO-TECHNE diagnostics which encompasses our clinical controls and precision diagnostic solutions.

Speaker #3: This structure better aligns our products and technologies with our customers' progress from discovery through translational research into clinical and diagnostic applications. It also enhances the visibility of our solutions across digital and AI-driven platforms, making it easier for customers to identify and deploy the right tools within their workflows.

Kim Kelderman: This structure better aligns our products and technologies with our customers' progress from discovery through translational research into clinical and diagnostic applications. It also enhances the visibility of our solutions across digital and AI-driven platforms, making it easier for customers to identify and deploy the right tools within their workflows. Speaking of artificial intelligence, we continue to see AI increasingly influence both how we operate internally and how our customers approach drug discovery. Internally, we are leveraging AI to design novel and patentable proteins with enhanced properties, including improved heat stability, bioactivity, and solubility relative to the naturally occurring proteins. As you are aware, AI tools are only as effective as the data that informs the model. Our models are trained on 5 decades of proprietary data, creating a meaningful competitive moat. In parallel, we are deploying AI throughout the organization to improve productivity and customer engagement.

Speaker #3: Speaking of artificial intelligence, we continue to see AI increasingly influence both how we operate internally and how our customers approach drug discovery. Internally, we are leveraging AI to design novel and patentable proteins with enhanced properties including improved heat stability, bioactivity, and solubility relative to the natural occurring proteins.

Speaker #3: As you are aware, AI tools are only as effective as the data that informs the model. Our models are trained on five decades of proprietary data creating a meaningful competitive mode.

Speaker #3: And in parallel, we are deploying AI throughout the organization to improve productivity and customer engagement. From a customer perspective, AI adoption is accelerating the earlier stages of drug discovery, particularly target discovery, which is expected to expand the number of viable programs and improve probabilities of success.

Kim Kelderman: From a customer perspective, AI adoption is accelerating the earliest stages of drug discovery, particularly target discovery, which is expected to expand the number of viable programs and improve probabilities of success. The effectiveness of these models depends heavily on the generation of high-quality biological data, which is an area where Bio-Techne is extremely well-positioned. As an example, a recently published collaboration between Providence and Microsoft on the GigaTIME AI framework used data sets generated on the Bio-Techne Spatial Biology platform COMET to convert traditional H&E pathology images into virtual three-dimensional tissue representations. We view the growing demand for content-rich biological data sets as a durable tailwind for both our spatial biology and our proteomic analysis platforms. AI also acts as a downstream demand driver for our reagent and assay portfolios.

Speaker #3: The effectiveness of these models depends heavily on the generation of high-quality biological data which is an area where BIO-TECHNE is extremely well-positioned. As an example, a recently published collaboration between Providence Health and Microsoft on the gigatime AI framework used datasets generated on the BIO-TECHNE spatial biology platform Comet to convert traditional H&E pathology images into virtual three-dimensional tissue representations.

Speaker #3: We view the growing demand for content-rich biological datasets as a durable tailwind for both our spatial biology and our proteomic analysis platforms. AI also acts as a downstream demand driver for our UI reagent and assay portfolios.

Speaker #3: Every AI-enabled insight ultimately requires biological validation which will fuel demand for highly specific antibodies, functional assays, and complex recombinant proteins in mechanism of action studies biomarker validation and preclinical workflows.

Kim Kelderman: Every AI-enabled insight ultimately requires biological validation, which will fuel demand for highly specific antibodies, functional assays, and complex recombinant proteins in mechanism of action studies, biomarker validation, and preclinical workflows. These applications align directly with the most differentiated and highest value sections of our portfolio. Now, let's turn to our segments, beginning with protein sciences, where organic revenue declined 4% in the quarter. After adjusting for order timing from the previously mentioned cell therapy and OEM commercial supply customers, underlying growth was 2%. Our differentiated portfolio of reagents, instruments, and analytical technologies remains foundational to the development and manufacturing of advanced therapeutics, including cell therapies.

Speaker #3: These applications align directly with the most differentiated and highest value sections of our portfolio. Now, let's turn to our segments, beginning with protein sciences where organic revenue declined 4% in the quarter.

Speaker #3: After adjusting for order timing from the previously mentioned cell therapy and OEM commercial supply customers, underlaying growth was 2%. Our differentiated portfolio of reagents instruments and analytical technologies remains foundational to the development and manufacturing of advanced therapeutics including cell therapies.

Speaker #3: As a reminder, two of our largest cell therapy customers received FDA fast-track designation which accelerated clinical timelines and reduced near-term GMP reagent demand as these customers had already secured the materials required to complete their clinical programs.

Kim Kelderman: As a reminder, two of our largest cell therapy customers received FDA Fast Track designation, which accelerated clinical timelines and reduced near-term GMP reagent demand, as these customers had already secured the materials required to complete their clinical programs. Excluding the impact of these two customers, GMP protein revenue grew nearly 50% year over year. This strong performance from emerging cell therapy customers underscores the increasing reliance on GMP-grade cytokines and growth factors as programs advance from early development through clinical trials and into manufacturing scale-up and commercialization. Staying with cell therapy, I'd like to provide a brief update on Wilson Wolf. We currently own 20% of Wilson Wolf and remain on track to acquire the remainder of this manufacturer of the market-leading product line of single-use bioreactors called the G-Rex by the end of calendar 2027, or potentially earlier upon achievement of specific milestones.

Kim Kelderman: As a reminder, two of our largest cell therapy customers received FDA Fast Track designation, which accelerated clinical timelines and reduced near-term GMP reagent demand, as these customers had already secured the materials required to complete their clinical programs. Excluding the impact of these two customers, GMP protein revenue grew nearly 50% year-over-year. This strong performance from emerging cell therapy customers underscores the increasing reliance on GMP-grade cytokines and growth factors as programs advance from early development through clinical trials and into manufacturing scale-up and commercialization. Staying with cell therapy, I'd like to provide a brief update on Wilson Wolf. We currently own 20% of Wilson Wolf and remain on track to acquire the remainder of this manufacturer of the market-leading product line of single-use bioreactors called the G-Rex by the end of calendar 2027, or potentially earlier upon achievement of specific milestones.

Speaker #3: Excluding the impact of these two customers, GMP protein revenue grew nearly 50% year over year. This strong performance from emerging cell therapy customers underscores the increasing reliance on GMP-grade cytokines and growth factors as programs advance from early development through clinical trials and into manufacturing scale-up and commercialization.

Speaker #3: Staying with cell therapy, I'd like to provide a brief update on Wilson Wolff. We currently own 20% of Wilson Wolff and remain on track to acquire the remainder of this manufacturer of the market-leading product line of single-use bioreactors called the GREX by the end of calendar 2027, or potentially earlier upon achievement of specific milestones.

Speaker #3: Despite the challenging BIO-TECH funding environment, Wilson Wolff delivered low double-digit growth on a trailing 12-month basis while maintaining EBITDA margins north of 70%. Turning to our proteomic analysis instruments, growth was led by an opportunistic increase in our ELA benchtop immunoassay platform.

Kim Kelderman: Despite the challenging biotech funding environment, Wilson Wolf delivered low double-digit growth on a trailing 12-month basis while maintaining EBITDA margins north of 70%. Turning to our proteomic analysis instruments, growth was led by an upper teens increase in our Ella benchtop immunoassay platform. Ella automates traditional immunoassays into a cartridge-based workflow delivering rapid, highly reproducible protein quantification with minimal hands-on time. These attributes are driving strong adoption in neurodegeneration research, which is reflected in a 3-year CAGR of 50% across our neurology assay portfolio. While this remains an emerging portion of the business, the recent launch of ultra-sensitive capabilities strengthens Ella's position as a leading platform for blood-based neurological biomarker analysis.

Speaker #3: ELA automates traditional immunoassays into a cartridge-based workflow delivering rapid, highly reproducible protein quantification with minimal hands-on time. These attributes are driving strong adoption in neurodegeneration research which is reflected in a three-year CAGR of 50% across our neurology, assay portfolio.

Speaker #3: While this remains an emerging portion of the business, the recent launch of ultra-sensitive capabilities strengthens ELA's position as a leading platform for blood-based neurological biomarker analysis.

Speaker #3: During the quarter, we also achieved CE IVD marking for ELA, enabling hospitals, clinical laboratories, or other European organizations to use ELA as a validated platform for clinical applications in-house test development, clinical trials, or other translational activities.

Kim Kelderman: During the quarter, we also achieved CE-IVD marking for Ella, enabling hospitals, clinical laboratories, or other European organizations to use Ella as a validated platform for clinical applications, in-house test development, clinical trials, or other translational activities. We also saw continued traction across our biologics characterization portfolio led by our Maurice platform. Maurice is increasingly embedded into biopharma manufacturing workflows as a quality control and a characterization tool. It is enabling faster and more consistent assessment of critical protein attributes, including size, charge, and purity. This drove double-digit growth in both Maurice instruments and consumables. Wrapping up protein sciences, our core reagent and assay portfolio, which includes more than 6,000 proteins and 400,000 antibody types, declined mid-single digits in the quarter. Excluding the impact of order timing related to the previously referenced OEM commercial supply customer, organic growth declined low single digits.

Speaker #3: We also saw continued traction across our biologics characterization portfolio led by our Maurice platform. Maurice is increasingly embedded into biopharma manufacturing workflows as a quality control and a characterization tool.

Speaker #3: more consistent assessment of critical protein attributes including size, charge, and purity. This drove double-digit growth in both Maurice instruments and consumables. Wrapping up protein sciences, our core reagent and assay portfolio which includes more than 6,000 proteins and 400,000 antibody types declined mid-single digits in the quarter.

Speaker #3: Excluding the impact of order timing, related to the previously referenced OEM commercial supply customer, organic growth declined low single digits. Strength from large pharma customers was offset by continued softness in US academic demand and the lingering effects of last year's challenging BIO-TECH funding environment.

Kim Kelderman: Strength from large pharma customers was offset by continued softness in US academic demand and the lingering effects of last year's challenging biotech funding environment. As funding conditions continue to normalize in academia, and recent improvements in biotech funding translate into customer spending, we believe that this core portfolio is well positioned to return to growth, supported by its differentiated performance in bioactivity, lot to lot consistency, and reproducibility. All of these are attributes that become increasingly critical as customer programs advance towards translational and regulated applications. Shifting to Diagnostics and Spatial Biology, the segment delivered 3% organic revenue growth in the quarter. Before discussing the performance in more detail, I'd like to congratulate Steve Crouse on his promotion to President of the segment. We look forward to Steve building on his prior success leading our analytical solutions business over the past 5 years.

Speaker #3: As funding conditions continue to normalize in academia, and recent improvements in BIO-TECH funding translate into customer spending, we believe that this core portfolio is well-positioned to return to growth, supported by its differentiated performance in bioactivity, lot-to-lot consistency, and reproducibility.

Speaker #3: All of these are attributes that become increasingly critical as customer programs advance towards translational and regulated applications. Shifting to diagnostics and spatial biology, the segment delivered 3% organic revenue growth in the quarter.

Speaker #3: Before discussing the performance in more detail, I'd like to congratulate Steve Kraus on his promotion to President of the segment. We look forward to Steve building on his prior success leading our analytical solutions business over the past five years.

Speaker #3: Let's begin with our recently rebranded BIO-TECHNE spatial biology portfolio our leadership in in-situ hybridization and mid-plex multi-omic applications across translational and clinical research. Strong order momentum over recent quarters translated into more than 65% growth for our Comet multi-omic spatial platform.

Kim Kelderman: Let's begin with our recently rebranded Bio-Techne Spatial Biology portfolio, where we continue to strengthen our leadership in in situ hybridization and mid-plex multi-omic applications across translational and clinical research. Strong order momentum over recent quarters translated into more than 65% growth for our COMET Multi-Omics spatial platform. During the quarter, we installed the first COMET system in China, an important milestone as demand continues to build in the region. We exited the quarter with another record backlog for the COMET, positioning the platform for continued growth. Performance within our RNAscope portfolio of in situ hybridization kits and reagents improved to high single-digit growth. Growth was driven by further customer adoption in EMEA and Asia, as well as increasing use in clinical diagnostic applications in the US.

Speaker #3: During the quarter, we installed the first Comet system in China, an important milestone as demand continues to build in the region. We exited the quarter with another record backlog for the Comet, positioning the platform for continued growth.

Speaker #3: Performance within our RNAscope portfolio of in-situ hybridization kits and reagents improved to high single-digit growth. Growth was driven by further customer adoption in EMEA and Asia as well as increasing use in clinical diagnostic applications in the US.

Speaker #3: Finally, our diagnostics portfolio, recently rebranded as BIO-TECHNE Diagnostics, declined low single digits as order timing from certain large customers temporarily impacted our results. Given the concentration of large customers, this business can be lumpy from quarter to quarter, and therefore I want to mention that on a trailing 12-month basis, growth for BIO-TECHNE Diagnostics remained in the low single digits.

Kim Kelderman: Finally, our diagnostics portfolio, recently rebranded as Bio-Techne Diagnostics, declined low single digits as order timing from certain large customers temporarily impacted our results. Given the concentration of large customers, this business can be lumpy from quarter to quarter. Therefore, I want to mention that on a trailing 12-month basis, growth for Bio-Techne Diagnostics remained in the low single digits. In summary, the Bio-Techne team continued to execute effectively in a mixed end market environment. Demand from large pharmaceutical customers remains strong. Our US academic business has stabilized, and we continue to build momentum in China and the broader APAC region. While emerging biotech spending has yet to fully reflect improving funding conditions, engagement and activity levels with this customer base continue to trend positively.

Speaker #3: In summary, the BIO-TECHNE team continued to execute effectively in a mixed and market environment. Demand from large pharmaceutical customers remains strong, our US academic business has stabilized, and we continue to build momentum in China and the broader APAC region.

Speaker #3: While emerging BIO-TECH spending has yet to fully reflect improving funding conditions, engagement and activity levels with this customer base continue to trend positively. We remain highly disciplined in how we operate the business delivering sector-leading profitability while continuing to invest in the growth factors that will shape BIO-TECHNE's future.

Kim Kelderman: We remain highly disciplined in how we operate the business, delivering sector-leading profitability while continuing to invest in the growth factors that will shape Bio-Techne's future. With improving funding visibility for our customers and strong positions across our core reagents, cell therapy, proteomic analysis, and spatial biology solutions, we believe that Bio-Techne is well-positioned for outperformance in the years ahead. With that, I will turn the call over to Jim. Jim?

Speaker #3: With improving funding visibility for our customers and strong positions across our core reagents, cell therapy, proteomic analysis, and spatial biology solutions, we believe that BIO-TECHNE is well-positioned for outperformance in the years ahead.

Speaker #3: With that, I will turn the call over to Jim. Jim, thanks, Kim. I'll begin with additional details in our Q3 financial performance. Followed by thoughts on our forward outlook.

Jim Hippel: Thanks, Kim. I'll begin with additional details on our Q3 financial performance, followed by thoughts on our forward outlook. Adjusted EPS for the quarter was $0.53, down $0.03 from the prior year, with foreign exchange having a favorable $0.02 impact. GAAP EPS came in at $0.32, up from $0.14 in the prior year period. Total revenue for Q3 was $311.4 million, decreasing 2% on both an organic and reported basis. Foreign currency exchange was a 2% tailwind, while the prior divestiture of Exosome Diagnostics created a 2% headwind. The timing impact from our two largest cell therapy customers who received FDA Fast Track designation was a 3% headwind, while a large OEM commercial supply order that we typically receive in Q3 but received in Q2 of this year was an additional 1% headwind to revenue.

Speaker #3: Adjusted EPS for the quarter was 53 cents, down 3 cents from the prior year. The foreign exchange having a favorable 2 cent impact. GAAP EPS came in at 32 cents, up from 14 cents in the prior year period.

Speaker #3: Total revenue for Q3 was $311.4 million, decreasing 2% on both an organic and reported basis. Foreign currency exchange was a 2% tailwind. While the prior divestiture of Exosome Diagnostics created a 2% headwind.

Speaker #3: The timing impact from our two largest cell therapy customers who received FDA fast-track designation was a 3% headwind. While a large OEM commercial supply order that we typically receive in Q3 but received in Q2 of this year was an additional 1% headwind to revenue.

Speaker #3: Adjusting for these previously disclosed items, organic growth was +2% for the quarter. From a geographic lens, North America declined low single digits as strength from large pharma and growth in academia was offset by order timing in cell therapy and a BIO-TECH end market that is yet to inflect from favorable funding trends.

Jim Hippel: Adjusting for these previously disclosed items, organic growth was +2% for the quarter. From a geographic lens, North America declined low single digits as strength from large pharma and growth in academia was offset by order timing in cell therapy and a biotech end market that has yet to inflect from favorable funding trends. In Europe, revenue increased mid-single digits, including low single-digit growth in biopharma and mid-single-digit growth from our academic customers in the region. We are encouraged by the fourth consecutive quarter of growth in China, where revenue increased low single digits. APAC, excluding China, also increased low single digits on a very strong comp as the Asian geography continues to show signs of sustained improvement. By end market, biopharma declined low single digits overall.

Speaker #3: In Europe, revenue increased mid-single digits. Including low single digit growth in biopharma and mid-single digit growth from our academic customers in the region. We are encouraged by the fourth consecutive quarter of growth in China, where revenue increased low single digits.

Speaker #3: APAC excluding China also increased low single digits on a very strong comp, as the Asian geography continues to show signs of sustained improvement. By end market, biopharma declined low single digits overall, however excluding our largest cell therapy customers, biopharma grew low single digits.

Jim Hippel: However, excluding our largest cell therapy customers, biopharma grew low single digits, driven by strong pharma demand but partially offset by emerging biotech softness. Academia increased low single digits, with the stabilization trends giving way to low single-digit growth in the US and Europe growing mid-single digits. Below the revenue line, adjusted gross margin was 70.4%, down from 71.6% last year, but up 190 basis points sequentially. The year-over-year decline was driven by unfavorable product mix. Adjusted SG&A was 28.7% of revenue, down 30 basis points compared to 29% last year. R&D expense was 7.5% compared to 7.8% in the prior year. The operating leverage reflects the benefits of structural streamlining and disciplined expense management, partially offset by targeted investments in strategic growth initiatives.

Speaker #3: Driven by strong pharma demand but partially offset by emerging biotech softness. Academia increased low single digits with the stabilization trends giving way to low single digit growth in the US and Europe growing mid-single digits.

Speaker #3: Below the revenue line, adjusted gross margin was 70.4%, down from 71.6% last year. But up 190 basis points sequentially. The year-over-year decline was driven by unfavorable product mix.

Speaker #3: Adjusted SGNA was 28.7% of revenue, down 30 basis points compared to 29% last year. R&D expense was 7.5% compared to 7.8% in the prior year.

Speaker #3: The operating leverage reflects the benefits of structural streamlining and disciplined expense management, partially offset by targeted investments in strategic growth initiatives. Adjusted operating margin was 34.2%, down 70 basis points year-over-year.

Jim Hippel: Adjusted operating margin was 34.2%, down 70 basis points year over year. The decline was driven by unfavorable mix and volume deleverage, partially offset by the Exosome Diagnostics divestiture. Below operating income, net interest expense was $1.3 million, up $0.4 million year over year due to the expiration of interest rate hedges. Bank debt at quarter end stood at $200 million, down $60 million sequentially. Other adjusted net operating income was $1.3 million, down $1.8 million from the prior year, primarily due to non-recurring foreign exchange gains in the prior year related to overseas cash pooling arrangements. Our adjusted effective tax rate was 22.3%, up 80 basis points year over year, driven by geography mix.

Jim Hippel: Adjusted operating margin was 34.2%, down 70 basis points year-over-year. The decline was driven by unfavorable mix and volume deleverage, partially offset by the Exosome Diagnostics divestiture. Below operating income, net interest expense was $1.3 million, up $0.4 million year-over-year due to the expiration of interest rate hedges. Bank debt at quarter end stood at $200 million, down $60 million sequentially. Other adjusted net operating income was $1.3 million, down $1.8 million from the prior year, primarily due to non-recurring foreign exchange gains in the prior year related to overseas cash pooling arrangements. Our adjusted effective tax rate was 22.3%, up 80 basis points year-over-year, driven by geography mix.

Speaker #3: The decline was driven by unfavorable mix and volume deleverage, partially offset by the Exosome Diagnostics divestiture. Below operating income, net interest expense was 1.3 million, up 0.4 million year-over-year due to the expiration of interest rate hedges.

Speaker #3: Bank debt at quarter end stood at $200 million, down 60 million sequentially. Other adjusted net operating income was 1.3 million, down 1.8 million from the prior year, primarily due to non-recurring foreign exchange gains in the prior year related to overseas cash pooling arrangements.

Speaker #3: Our adjusted effective tax rate was 22.3%, up 80 basis points year-over-year, driven by geography mix. Turning to cash flow and capital deployment, we generated $86.7 million in operating cash flow, with $9.1 million in net capital expenditures.

Jim Hippel: Turning to cash flow and capital deployment, we generated $86.7 million in operating cash flow with $9.1 million in net capital expenditures. Also during Q3, we returned $12.5 million to shareholders via dividends and ended the quarter with 157.4 million average diluted shares outstanding, down 1% year over year. Our balance sheet remains strong, with $209.8 million in cash and a total leverage ratio well below 1x EBITDA. M&A remains a top priority for capital allocation. Now let's review our segment performance, beginning with Protein Sciences. Q3 reported sales were $226.2 million, a decrease of 1% year over year.

Jim Hippel: Turning to cash flow and capital deployment, we generated $86.7 million in operating cash flow with $9.1 million in net capital expenditures. Also during Q3, we returned $12.5 million to shareholders via dividends and ended the quarter with 157.4 million average diluted shares outstanding, down 1% year-over-year. Our balance sheet remains strong, with $209.8 million in cash and a total leverage ratio well below 1x EBITDA. M&A remains a top priority for capital allocation. Now let's review our segment performance, beginning with Protein Sciences. Q3 reported sales were $226.2 million, a decrease of 1% year-over-year.

Speaker #3: Also during Q3, we returned $12.5 million to shareholders via dividends and ended the quarter with 157.4 million average diluted shares outstanding, down 1% year-over-year.

Speaker #3: Our balance sheet remained strong with $209.8 million in cash and a total leverage ratio well below 1 times EBITDA. M&A remains a top priority for capital allocation.

Speaker #3: Now let's review our segment performance beginning with protein sciences. Q3 reported sales were $226.2 million, a decrease of 1% year-over-year. Organic revenue declined 4%, with a 3% benefit from foreign exchange.

Jim Hippel: Organic revenue declined 4% with a 3% benefit from foreign exchange. Excluding cell therapy and OEM commercial supply timing impacts from our largest customers, organic growth was +2%. Growth was led by our proteomic analysis instrument franchise, which benefited from continued strength in large pharma, paired with double-digit growth from our academic end market. As Kim mentioned, our core portfolio of research reagents and assays declined mid-single digits, reflecting the challenging biotech environment and the lingering impact of the U.S. government shutdown on grant activity and fund outlays in the quarter. Excluding the timing impact of a large commercial supply customer, the decline in the core portfolio was limited to low single digits. ProteinSimple's operating margin was 44.2%, down 140 basis points year over year, primarily due to unfavorable product mix and volume deleverage, partially offset by ongoing profitability initiatives.

Jim Hippel: Organic revenue declined 4% with a 3% benefit from foreign exchange. Excluding cell therapy and OEM commercial supply timing impacts from our largest customers, organic growth was +2%. Growth was led by our proteomic analysis instrument franchise, which benefited from continued strength in large pharma, paired with double-digit growth from our academic end market. As Kim mentioned, our core portfolio of research reagents and assays declined mid-single digits, reflecting the challenging biotech environment and the lingering impact of the U.S. government shutdown on grant activity and fund outlays in the quarter. Excluding the timing impact of a large commercial supply customer, the decline in the core portfolio was limited to low single digits. ProteinSimple's operating margin was 44.2%, down 140 basis points year-over-year, primarily due to unfavorable product mix and volume deleverage, partially offset by ongoing profitability initiatives.

Speaker #3: Excluding cell therapy and OEM commercial supply timing impacts from our largest customers, organic growth was +2%. Growth was led by our proteomic analysis instrument franchise, which benefited from continued strength in large pharma paired with double-digit growth from our academic end market.

Speaker #3: As Kim mentioned, our core portfolio of research reagents and assays declined mid-single digits, reflecting a challenging biotech environment and the lingering impact of the US government shutdown on grant activity and fund outlays in the quarter.

Speaker #3: Excluding the timing impact of a large commercial supply customer, the decline in the core portfolio was limited to low single digits. Protein sciences operating margin was 44.2%, down 140 basis points year-over-year.

Speaker #3: Primarily due to unfavorable product mix and volume deleverage, partially offset by ongoing profitability initiatives. In our diagnostics and spatial biology segment, Q3 sales were 85.6 million, down 4% year-over-year.

Jim Hippel: In our Diagnostics and Spatial Biology segment, Q3 sales were $85.6 million, down 4% year over year. The divestiture of Exosome Diagnostics negatively impacted reported growth by 8%, while foreign exchange had a favorable impact of 1%, resulting in 3% organic growth for the segment. Bio-Techne Diagnostics declined low single digits as order timing from certain large customers impacted growth. Spatial Biology grew mid-teens, including over 65% growth in our COMET platform, while our RNAscope portfolio increased high single digits. Segment operating margin improved to 12.1%, up from 9.4% last year, driven by the Exosome Diagnostics divestiture and productivity initiatives, partially offset by unfavorable mix among our OEM customers. We expect continued margin expansion commensurate with the scaling of our COMET Spatial Biology platform.

Jim Hippel: In our Diagnostics and Spatial Biology segment, Q3 sales were $85.6 million, down 4% year-over-year. The divestiture of Exosome Diagnostics negatively impacted reported growth by 8%, while foreign exchange had a favorable impact of 1%, resulting in 3% organic growth for the segment. Bio-Techne Diagnostics declined low single digits as order timing from certain large customers impacted growth. Spatial Biology grew mid-teens, including over 65% growth in our COMET platform, while our RNAscope portfolio increased high single digits. Segment operating margin improved to 12.1%, up from 9.4% last year, driven by the Exosome Diagnostics divestiture and productivity initiatives, partially offset by unfavorable mix among our OEM customers. We expect continued margin expansion commensurate with the scaling of our COMET Spatial Biology platform.

Speaker #3: The divestiture of Exosome Diagnostics negatively impacted reported growth by 8%, while foreign exchange had a favorable impact of 1%, resulting in 3% organic growth for the segment.

Speaker #3: BIO-TECHNE Diagnostics declined low single digits as order timing from certain large customers impacted growth. Spatial biology grew mid-teens, including over 65% growth in our Comet platform, while our RNA scope portfolio increased high single digits.

Speaker #3: Segment operating margin improved to 12.1%, up from 9.4% last year, driven by the Exosome Diagnostics divestiture and productivity initiatives, partially offset by unfavorable mix among our OEM customers.

Speaker #3: We expect continued margin expansion commencement with the scaling of our Comet spatial biology platform. As we look ahead to closing out the remainder of our fiscal year 2026, we remain focused on what we can control.

Jim Hippel: As we look ahead to closing out the remainder of our fiscal year 2026, we remain focused on what we can control. This includes our operational and commercial execution, productivity and capital discipline, and delivering sector-leading profitability while investing across our growth platforms. The state of our pharma end market remains strong. The stabilization and signs of gradual improvement in the US academic market are encouraging. Funding levels for biotech have been very strong the past 2 quarters, and our commercial teams are reporting increased engagement and a higher opportunity funnel from these customers. Given the timing lag between funding and spending by biotech customers, which typically is 2 to 3 quarters, we believe this end market is the biggest swing factor for growth to accelerate from here.

Speaker #3: This includes our operational and commercial execution, productivity and capital discipline, and delivering sector-leading profitability while investing across our growth platforms. The state of our pharma end market remains strong.

Speaker #3: The stabilization and signs of gradual improvement in the US academic market are encouraging. Funding levels for biotech have been very strong the past two quarters, and our commercial teams are reporting increased engagement and a higher opportunity funnel from these customers.

Speaker #3: However, given the timing lag between funding and spending by biotech customers, which typically is 2 to 3 quarters, we believe this end market is the biggest swing factor for growth to accelerate from here.

Speaker #3: While we can start to see improvement in the biotech end market as early as our June quarter, our base case is that we won't see a meaningful uptick in growth until the first half of our fiscal year 2027.

Jim Hippel: While we could start to see improvement in the biotech end market as early as our Q4, our base case is that we won't see a meaningful uptick in growth until the H1 of our fiscal year 2027. As Kim Kelderman mentioned earlier, we also remain encouraged by the progress of our largest cell therapy customers following FDA Fast Track designations. While these designations temporarily reduce near-term GMP reagent demand as these customers advance through their Phase III trials, they meaningfully accelerate potential commercial timelines. This customer-specific headwind moderates in the Q4, impacting growth by approximately 150 basis points year over year and will be fully out of our comparisons as we enter fiscal 2027. Taking these market and customer-specific dynamics into account, we expect organic growth in the Q4 to be approximately flat.

Jim Hippel: While we could start to see improvement in the biotech end market as early as our Q4, our base case is that we won't see a meaningful uptick in growth until the H1 of our fiscal year 2027. As Kim Kelderman mentioned earlier, we also remain encouraged by the progress of our largest cell therapy customers following FDA Fast Track designations. While these designations temporarily reduce near-term GMP reagent demand as these customers advance through their Phase III trials, they meaningfully accelerate potential commercial timelines. This customer-specific headwind moderates in the Q4, impacting growth by approximately 150 basis points year-over-year and will be fully out of our comparisons as we enter fiscal 2027. Taking these market and customer-specific dynamics into account, we expect organic growth in the Q4 to be approximately flat.

Speaker #3: As Kim mentioned earlier, we also remain encouraged by the progress of our largest cell therapy customers following FDA fast-track designations. While these designations temporarily reduced near-term GMP reagent demand as these customers advanced through their phase three trials, they meaningfully accelerate potential commercial timelines.

Speaker #3: This customer-specific headwind moderates in the fourth quarter, impacting growth by approximately 150 basis points year-over-year and will be fully out of our comparisons as we enter fiscal 2027.

Speaker #3: Taking these market and customer-specific dynamics into account, we expect organic growth in the fourth quarter to be approximately flat. Excluding the impact of the cell therapy headwinds, we anticipate low single digit underlying growth across the remainder of the portfolio.

Jim Hippel: Excluding the impact of the cell therapy headwinds, we anticipate low single-digit underlying growth across the remainder of the portfolio. This outlook assumes end market conditions are broadly consistent with what we experienced in Q3, and any incremental stabilization or improvement in emerging biotech spending could prove additive. Importantly, this near-term outlook positions us well for an acceleration in fiscal 2027 as biotech funding should more fully translate into customer spending, academic conditions continue to normalize, company-specific timing headwinds roll off, and we lap easier year-over-year comparisons. From a margin perspective, we remain focused on balancing growth investments with operational efficiency and intend to close the last quarter of the year with approximately 100 basis points of margin expansion over the prior year. That concludes my prepared remarks. I'll turn the call back to the operator to open the line for questions.

Speaker #3: This outlook assumes end market conditions are broadly consistent with what we experienced in Q3, and any incremental stabilization or improvement in emerging biotech spending could prove additive.

Speaker #3: Importantly, this near-term outlook positions us well for an acceleration in fiscal 2027. As biotech funding should more fully translate into customer spending, academic conditions continue to normalize, company-specific timing headwinds roll off, and we lap easier year-over-year comparisons.

Speaker #3: From a margin perspective, we remain focused on balancing growth investments with operational efficiency and intend to close the last quarter of the year with approximately 100 basis points of margin expansion over the prior year.

Speaker #3: That concludes my prepared remarks. I'll turn the call back to the operator to open the line for questions.

Speaker #1: Thank you. If you'd like to ask a question, press *1 on your keypad. To leave the Q&A at any time, press *2.

Operator: Thank you. If you'd like to ask a question, press star one on your keypad. To leave the queue at any time, press star two. We ask that you please limit yourself to one question and a follow-up. Once again, that is star and one to ask a question. We'll take our first question from Matt Larew with William Blair. Please go ahead. Your line is now open.

Speaker #1: We ask that you please limit yourself to one question and a follow-up. Once again, that is star and one to ask a question. We'll take our first question from Matt Leroux.

Speaker #1: With William Blair, please go ahead. Your line is now open.

Speaker #3: Hi, good morning, and thanks for taking my question. One of the follow-ups on emerging biotech—that was down mid-single digits in the fiscal second quarter, and you mentioned down high single digits this quarter—acknowledging the improvement in funding may materialize later in the year. Just given that step down, we'd be curious what you saw from sort of an intra-quarter trend perspective, and if you've seen any improvement sort of from January through to March, and then now into April.

Matt Larew: Hi, good morning. Thanks for taking my question. One of the follow-up on emerging biotech that was down mid-single digits in the fiscal Q2, you mentioned down high single digits this quarter. Acknowledging that the improvement in funding, you know, may materialize later in the year, just given that step down, would be curious what you saw from sort of an intra-quarter trend perspective and if you've seen any improvement, you know, sort of from January through to March and then now into April.

Speaker #4: Matt, thank you for the question and good morning. Yeah, the biotech end market was indeed our surprise. So I appreciate you honing in on it.

Kim Kelderman: Matt, thank you for the question and good morning. Yeah, the biotech end market was indeed our surprise. I appreciate you honing in on it. We had, of course, very clear visibility to how the funding had been, and as you remember, funding was relatively abysmal in H1 2025, calendar 2025. It recuperated a little bit to low single digits in Q3 and it actually had a real step up, 90% growth in Q4. We rolled into the new calendar year with yet another good quarter in funding. Underneath that, we saw our 2 last quarters at negative mid-single digits 2 times in a row, indicating some sort of stabilization. You take on top of that, you know, we saw that the funding was up. We know interest rates were stabilizing.

Speaker #4: We had, of course, very clear visibility to how the funding had been, and as you remember, funding was relatively bismal in the first half of 2025, calendar 2025.

Speaker #4: It recuperated a little bit to low single digits in the third quarter, and then actually had a real step up, 90% growth in Q4.

Speaker #4: And then we rolled into new calendar year with yet another good quarter, in funding. Underneath that, we saw our two last quarters at negative mid-single digits, two times in a row, indicating some sort of stabilization you take on top of that, that we saw that the funding was up.

Speaker #4: We know interest rates were stabilizing, M&A deals were up in biotech, and licensing deals just as well. We also had a little bit of visibility to the Comet bookings being positive there.

Kim Kelderman: M&A deals were up in biotech and licensing deals just as well. We also had a little bit of visibility to the COMET bookings being positive there. We assumed a slight improvement in the biotech end market to maybe negative low single digits. You're right, it did step down to negative high single digits instead, and that really is the hole for our quarter. It fits very nicely to exactly the gap in our biotech end market. There, of course, we double-clicked and you can see that funding was substantially up in late-stage biotech. Early-stage biotech, where a larger portion of our core reagents have a direct read on, that early stage of funding was actually down if you tease that apart. That is where our surprise came in.

Speaker #4: So we assumed a slight improvement in the biotech end market to maybe negative low single digits. But you're right, it did step down to negative high single digits instead.

Speaker #4: And that really is the hole for our quarter. And it fits very nicely to exactly the gap in our biotech end market. And there, of course, we double-clicked and you can see that funding was substantially up in late-stage biotech, but early-stage biotech were larger portion of our core reagents have a direct read on.

Speaker #4: That early stage funding was actually down. If you tease that apart. And that is where our surprise came in. The trend during the quarter, we hear from our sales force that there are more interaction and dialogue about possible orders and investments.

Kim Kelderman: The trend during the quarter, you know, we hear from our sales force that there are, you know, more interaction and dialogue about possible orders and investments. For now, we are assuming that, you know, with 2 negative mid-single digit quarters going to high negative singles, well, you know, we can't assume that there is a clear stabilization or improvement. For now, we're keeping our forecast at flattish because we don't have clear indicators that there's an improvement.

Speaker #4: But for now, we are assuming that with two negative mid-single digit quarters going to high negative singles, we can't assume that there is a clear stabilization or improvement.

Speaker #4: So for now, we're keeping it our forecast at flattish. Because we don't have clear indicators that there is an improvement.

Speaker #3: Okay, okay, fair enough. And then you talked about the outlook here for the calendar second quarter as I think through the way some of your larger peers have characterized both that quarter and then the rest of the year unfolding.

Matt Larew: Okay, fair enough. You talked about the outlook here for the calendar Q2 as I think through the way some of your larger peers have characterized both that quarter and the rest of the year unfolding. You know, given the OEM timing and cell therapy headwinds being removed from your comps, some improvement in SG&A. Would just be curious if you're thinking that sort of the mid-single digit range by the end of the year, again, kind of consistent with improvement others are citing, if that's reasonable or if there's another, you know, range we should be thinking about. That's all for me. Thank you.

Speaker #3: Given the OEM timing, cell therapy headwinds being removed from your comps, and some improvement in A and G, I would just be curious if you're thinking that sort of the mid-single digit range by the end of the year—again, kind of consistent with improvement on the other side—and if that's reasonable, or if there's another range we should be thinking about.

Speaker #3: And that's all from me. Thank you.

Speaker #5: And this is Jim. Thanks for the question. I'm trying to understand your question correctly. You're asking about the end of calendar 26?

Jim Hippel: Matt, this is Jim. Thanks for the question. I'm just trying to understand your question correctly. You're asking about the end of calendar 2026?

Speaker #4: Yeah, that's right. Yeah, just given how sort of peers have framed the calendar second quarter relative to the balance of the year. Yep.

Matt Larew: Yeah, that's right. Yeah, just, you know, given how sort of peers have framed-

Jim Hippel: Yeah.

Matt Larew: the calendar Q2

Jim Hippel: Yeah.

Matt Larew: the calendar Q2

Jim Hippel: Sure.

Matt Larew: relative to the balance of the year. Yep.

Speaker #5: Yeah, sure. Yeah, I mean, again, we won't be giving any kind of even soft guidance around 27 until next quarter. But as I've mentioned in my prepared comments, we're very encouraged about the upcoming fiscal year.

Jim Hippel: Yeah, sure. Yeah, I mean, you know, again, we won't be giving any kind of even soft guidance around 2027 till next quarter. As I've mentioned in my prepared comments, you know, we're very encouraged about the upcoming fiscal year. Many of these headwinds that are company specific will now finally be behind us. We're seeing, you know, we have seen a definite stabilization in the North American academic market and of course pharma remains strong. It really comes down for us to biotech. Admittedly, I think, you know, we were probably a little bit. We saw 2 quarters of quote-unquote "stabilization" in biotech and thought perhaps the worst was behind us.

Speaker #5: So many of these headwinds that our company-specific will now finally be behind us. And we're seeing we have seen a definite stabilization in North America and academic market.

Speaker #5: And of course, pharma remains strong. So it really comes down to for us to biotech. And in Italy, I think we were probably a little bit we saw two quarters of "stabilization" in biotech and thought perhaps the worst was behind us.

Speaker #5: But in retrospect, we may have been a little bit got the car a little too far ahead of the horse on that one in the sense that the reality is the call at the two to three-quarter lag really hasn't happened yet given that it's only been two quarters too recent quarters where we've had strong funding.

Jim Hippel: In retrospect, we may have been a little bit, you know, got the cart a little too far ahead of the horse on that one in the sense that the reality is, let's call it the 2 to 3-quarter lag, really hasn't happened yet, given that it's only been 2 quarters, 2 recent quarters where we've had strong funding. It does, you know, if history is any guide, it does bode very well for the H2 of calendar 2026 with respect to the biotech market. Of course, that's our first fiscal Q1 of 2027. Well, it's also encouraging to hear from our peers who've already announced that they're also expecting an uptick in momentum in the back half of the year.

Speaker #5: But it does, if history is any guide, bode very well for the second half of calendar '26. That's with respect to the biotech market.

Speaker #5: And of course, that's our first fiscal quarter of 27. And it's also encouraging to hear from our peers who've already announced that they're also expecting an uptick in momentum in the back half of the year.

Speaker #5: And we tend to agree to that thesis.

Jim Hippel: We, you know, we tend to agree with that thesis.

Speaker #3: Okay, thank you.

Matt Larew: Okay. Thank you.

Speaker #1: Thank you. We'll take our next question from Puneet Sudha with Leering Partners. Please go ahead. Your line is open.

Operator: Thank you. We will take our next question from Puneet Souda with Leerink Partners. Please go ahead. Your line is open.

Speaker #6: Yeah, hi, guys. So Jim, first for you, one quarter away from fiscal 27. Just given we've been in these markets for some time, the challenges you're well aware of those.

Puneet Souda: Yeah. Hi, guys. Jim, first for you're one quarter away from fiscal 2027. Just given, you know, we've been in these markets for some time, the challenges, you're well aware of those. You know, can we still do mid-single digit growth? Can Bio-Techne do mid-single digit growth still in fiscal 2027? I think it's an important question just given, you know, how we have ended so far. You know, on the biotech side, I understand, just trying to understand, you know, given the end market challenges, was there something that surprised you later in the quarter, or is this more about the way you're building the overall forecasting?

Speaker #6: Can we still do mid-single digit growth? Can biotech do mid-single digit growth still in fiscal 27? I think it's an important question just given how we have ended so far.

Speaker #6: And on the biotech side, I understand, but just trying to understand, given the end market challenges, was there something that surprised you later in the quarter?

Speaker #6: Or is this more about the way you're building the overall forecasting? Because I don't think investors were expecting a surprise at this point given that GMP fast-track designations already surprised two quarters ago.

Puneet Souda: Because I don't think investors were expecting, you know, a surprise at this point given that GMP Fast Track designation's already surprised 2 quarters ago.

Speaker #5: Yeah. Yeah, hi, Puneet. Thanks for the question. This is Jim. So yeah, with regards to fiscal year 27, I mean, based off the lens we have right now, yeah, we'd be disappointed if we didn't do at least mid-single digit growth because all the indicators are pointing towards a gradual normalization of the market.

Jim Hippel: Yeah. Yeah. Hi, Puneet. Thanks for the question. This is Jim. Yeah, with regards to fiscal year 2027, I mean, based off the lens we have right now, yeah, we ought to be disappointed if we didn't do at least mid-single digit growth because all the indicators are pointing towards a gradual normalization of the market. You know, I'll remind everyone that, you know, Put these company specific items aside, which amounts to 3 customers, we would've been low single digit growth even in this environment we're in today with a tough biotech end market. Yeah, I think we'd be disappointed.

Speaker #5: And I would remind everyone that put these company-specific items aside, which amounts to three customers, we would have been low single digit growth even in this environment we're in today with a tough biotech end market.

Speaker #5: So yeah, I think we'd be disappointed. And I think in terms of what we're looking for in terms of indicators, we talked about the fact that in academic, we really saw an uptick in growth in our proteomic analysis instrument portfolio.

Jim Hippel: I think in terms of, you know, what we're looking for in terms of indicators. You know, we talked about the fact that in academic, we really saw an uptick in growth in our proteomic analysis instrument portfolio, as well as in our spatial portfolio. You've heard us say this before, Puneet, that those two, in particular, those two growth vectors for us are where we are kind of indicators for us when we start to see the markets come back. That's where the money often flows first. It's exactly where we saw some very nice growth in US academic this quarter, which gives us added confidence that our customer base is getting more confidence in their funding there. That's also what we're looking for with regards to our biotech customers in terms of an indicator for that inflection point.

Speaker #5: As well as in our spatial portfolio. And you've heard us say this before, Puneet, that those two in particular, those two growth vectors for us are where we are kind of indicators for us when we start to see the markets come back.

Speaker #5: That's where the money often flows first. And it's exactly where we saw some very nice growth in US academic this quarter, which gives us added confidence that our customer base is getting more confidence in their funding there.

Speaker #5: And so that's also what we're looking for with regards to our biotech customers. In terms of an indicator for that inflection point. And again, it truly to call it at this point, which is why we're being, I think, rather prudent about our Q4 forecast in terms of kind of holding it steady in terms of overall base improvement.

Jim Hippel: Again, it's too early to call it at this point, which is why we're being, I think, rather prudent about our Q4 forecast in terms of kind of holding it steady in terms of overall base improvement. It was encouraging to hear from our businesses and our commercial leads that the interest in, particularly in our proteomic analysis as well as our spatial biology offerings, has picked up recently among our biotech customers, and the funnels there are starting to grow again. We'll see if that translates into more orders in Q4 for higher revenue in early fiscal year 2027. Those are the things we'll be looking for out of our biotech end market.

Speaker #5: But it was encouraging to hear from our businesses and our commercial leads that the interest in particularly in our proteomic analysis as well as our spatial biology offerings has picked up recently among our biotech customers.

Speaker #5: And the funnels there are starting to grow again. So we'll see if that translates into more orders in Q4 for higher revenue and early fiscal year '27.

Speaker #5: Those are the things we'll be looking for out of our biotech end market.

Speaker #6: Got it. And then that's helpful. And then look, on the RUO reagent side, I think you commented that that business is soft, partly biotech being the emerging biotech being the reason.

Puneet Souda: Got it. That's helpful. Look, on the RUO or reagent side, I think you commented that that business is soft, partly biotech being the reason, or Emerging BioPharma being the reason. We've seen, you know, two readouts from two competitors so far. One of them, under as an opco under a larger entity, and their business is recovering there. Another one that is strong in flow cytometry is also showing signs of growth. You know, what gives you confidence that this is not any share loss in R&D Systems and Novus Biologicals?

Speaker #6: But we have seen two readouts from two competitors so far. One of them as an opco under a larger entity in their business is recovering there.

Speaker #6: Another one that is a strong inflow cytometry is also showing signs of growth. So how should we what gives you confidence that this is not any share loss in R&D systems in Novice Biologicals?

Speaker #4: Yeah, Puneet, thanks. Yeah, very good question. In fact, a couple of dynamics here. The one order that we had talked about that got booked in Q2 versus Q3, the 100 basis points swap we've talked about previous and this earnings call, is actually in that number.

Kim Kelderman: Puneet Souda, thanks. Yeah, very good question. You know, in fact, a couple of dynamics here. The one order we had talked about that got booked in Q2 versus Q3, the 100 basis point swap we've talked about previous and, in this earnings call, is actually in that number. It sits in that core reagents area. If you look at, you know, our comparables with, you know, double-digit growth last year, it's almost 20% last year. Compared to some of the other companies that you're talking about having negative numbers to compare against. We've done our math and our homework and also, of course, our market work. We're relatively confident that we're actually still pretty well off.

Speaker #4: It sits in that core reagents area. And if you look at our comparables with double-digit growth last year, it’s almost 20% last year. And compared to some of the other companies that you’re talking about having negative numbers to compare against, we’ve done our math and our homework and also, of course, our market work.

Speaker #4: And we're relatively confident that we're actually still pretty well off. And that is the situation for that core business.

Kim Kelderman: That is the situation for that core business.

Speaker #5: Yeah, I'll add there, Puneet, just a little bit so that when people think about our core reagents, they typically think about our proteins and antibodies portfolio.

Jim Hippel: Yeah. I'll add there, Puneet, just a little bit so that, you know, when people think about our core reagents, they typically think about our proteins and antibodies portfolio, rightfully so. We also include that there's some other small molecules, there's assays, core ELISA assays, et cetera. As it pertains specifically to that protein and antibodies portfolio, after you take out this very large 1 customer OEM order that happened to impact that portion of our portfolio, both our proteins and antibodies combined grew low single digits this quarter.

Speaker #5: Rightfully so. But we also include that. There's some other small molecules. There's assays, core ELISA assays, etc. But as it pertains specifically to that protein and antibodies portfolio, after you take out this very large one-customer OEM order that happened to impact that portion of our portfolio, both our proteins and antibodies combined grew low single digits this quarter.

Speaker #6: Got it. Okay, that's helpful. Thanks. That's fair. Thank you.

Puneet Souda: Got it. Okay, that's helpful. Thanks. That's fair. Thank you.

Speaker #7: Thank you. We'll take our next question from Patrick Donnelly with Citi. Please go ahead. Your line is open.

Operator: Thank you. We'll take our next question from Patrick Donnelly with Citi. Please go ahead. Your line is open.

Speaker #8: Hey, guys. Thank you for taking the questions. Kim, maybe one on the China piece. Continues to show a little bit of growth there. Can you just talk about what you're seeing and then the expectations, visibility going forward?

Patrick Donnelly: Hey, guys. Thank you for taking the questions. Kim, maybe one on the China piece. You know, continues to show a little bit of growth there. Can you just talk about what you're seeing and then the expectations, visibility going forward? Are you feeling, you know, you're in a pretty good spot there as we head into 2027? We would like some more detail just on the overall backdrop and expectations there.

Speaker #8: Are you feeling you're in a pretty good spot there as we head into 27? We'd like some more detail just on the overall backdrop and expectations there.

Speaker #4: Patrick, thank you for the question. Yeah, we are quite excited that we have for the fourth time positive growth in China. And obviously, Jim and I were earlier this quarter in China.

Kim Kelderman: Patrick, thank you for the question. Yeah, we are quite excited that we have, for the fourth time, positive growth in China. You know, obviously, Jim and I were earlier this quarter in China meeting with government officials, exploring how we can further support science and medicine in the country. We connected with customers in academic, as well as in the new companies that working on new therapeutics, including CROs and CDMOs. You know, there's a lot of activity. You can clearly see a momentum in the market, especially around the advanced therapeutics. You know, so for us, we're not surprised that we are in growth mode again. We called that one right a year ago.

Speaker #4: Meeting with government officials, exploring how we can further support science and medicine in the country. We connected with customers. In academic, as well as in a new companies that are working on new therapeutics.

Speaker #4: Including CROs and CDMOs. And there's a lot of activity. You can clearly see a momentum in the market, especially around the advanced therapeutics. And so for us, we're not surprised that we are in growth mode again.

Speaker #4: We called that one right a year ago, and there's no reason to believe that that is going to weaken. I would expect continued momentum and strengthening of that particular end market, specifically after our visit—we are direct in the market.

Kim Kelderman: There's no reason to believe that that is going to weaken. I would expect a continued momentum and strengthening of that particular end market, specifically after our visit. We are direct in the market, and our team is really well connected with customers on both sides, on the biotech as well as pharma, as well as the academic side. Yeah, it's positive all around.

Speaker #4: And our team is really well connected with customers, on both sides—on the biotech as well as pharma, as well as the academic side.

Speaker #4: And yeah, it's a positive all around.

Speaker #8: Okay. That's helpful. And then maybe just one more on the biotech piece. Again, surprising step down there. I guess in terms of your customer conversations, what are you hearing?

Patrick Donnelly: Okay, that's helpful. Then maybe just one more on the biotech piece. You know, again, surprising step down there. I guess in terms of your customer conversations, you know, what are you hearing? I mean, the funding has looked quite good for over six months here. Typically, that does cause an inflection higher for you guys. Just curious, I guess, on the visibility, the customer conversations, how you're feeling about that market as you head into 2027. A nice tailwind certainly going into the next quarter in 2027. Obviously, it's lagged a little bit. Just trying to figure out, you know, what that could look like as we work our way forward here over the next six, nine months.

Speaker #8: I mean, the funding has looked quite good for over six months here. Typically, that does cause an inflection higher for you guys. Just curious, I guess, on the visibility, the customer conversations, how you're feeling about that market as you head into 27.

Speaker #8: It feels like it should have been a nice tailwind, certainly going into the next quarter and 27. Obviously, it's lagged a little bit. Just trying to figure out what that could look like as we work our way forward here over the next six, nine months.

Speaker #4: Yeah, Patrick, I think Jim already touched on it, right? So we were quite surprised to step down. After a further analysis and if you look at the funding levels for early-stage biotech and later-stage biotech, we understand it.

Kim Kelderman: Yeah, Patrick, I think Jim already touched on it, right? We were quite surprised at the step down. After further analysis, if you look at the funding levels for early-stage biotech and later-stage biotech, we understand it. You're right, the funding levels were very encouraging. As I mentioned, interest rates, M&A deals, all those were pointing in the right direction. I already mentioned that the conversations are getting better. Interest levels from the biotech markets are improving. Last quarter, we have 2 times negative mid-single digits.

Speaker #4: But you're right. The funding levels were very encouraging. And as I mentioned, interest rates, M&A deals, all those were pointing in the right direction.

Speaker #4: I already mentioned that the conversations are getting better. Interest levels from the biotech market are improving. And last quarter, we have two times negative mid-single digits.

Speaker #4: We thought stabilization and improvement was there. But with the step down, we're going back to, okay, stabilization is our next point, typically, because we need to see the ship turn the corner.

Kim Kelderman: We thought stabilization improvement was there, with the step down, we're going back to, okay, stabilization is our next point, typically, because we need to see the ship turn the corner and therefore we're somewhat careful, and I think that's the right thing to do. You're right. All the indicators, including the dialogue with customers are positive.

Speaker #4: And therefore, we're somewhat careful, and I think that's the right thing to do. But you're right, all the indicators, including the dialogue with customers, are positive.

Speaker #5: And if I could, I'll just add a little bit. I mean, I kind of going back to my cart before the horse comment. It's what I kind of trying to thread a needle here with regards to exactly what quarter you see the inflection point.

Jim Hippel: If I could, I'll just add a little bit. I mean, I kind of going back to my cart before the horse comment. I, you know, it's like kind of trying to thread a needle here with regards to exactly what quarter you see the inflection point. We've said that we've looked at our history over the last several decades and looked at different ebbs and flows of biotech funding, and the range is anywhere between 1 quarter and as many as 4 quarters. You know, the average or the mean is somewhere between 2 and 3. You know, the reality is, you know, it's only been 2 quarters of solid funding. We're kind of right at that median point now.

Speaker #5: And we've said that we've looked at our history over the last several decades and looked at different ebbs and flows of biotech funding. And the range is anywhere between one quarter and as many as four quarters.

Speaker #5: But the average or the mean is somewhere between two and three. And the reality is it's only been two quarters of solid funding. So we're kind of right at that median point now.

Jim Hippel: You know, we'll see whether we see that, any of that pickup in Q4 or not. Right now, our base case is that it does not, but it doesn't necessarily get any worse from here either. It does, again, bode well for H2 of this calendar year, which is H1 of our fiscal year, 'cause at that point in time, you start to get to the, call it the tail end of the bell curve of when we usually start to see that flow through.

Speaker #5: And we're we'll see whether we see any of that pick up in Q4 or not. Right now, our base case is that it does not.

Speaker #5: But it doesn't necessarily get any worse from here either. But it does, again, bode well for the back half of this calendar year, which is the first half of our fiscal year.

Speaker #5: Because at that point in time, you start to get to the call it the tail end of the bell curve. But when we usually start to see that flow through.

Speaker #8: Thank you, guys.

Patrick Donnelly: Thank you, guys.

Speaker #5: Yep.

Jim Hippel: Yep.

Speaker #7: Thank you. We'll take our next question from Justin Bowers with Deutsche Bank. Please go ahead. Your line is open.

Operator: Thank you. We'll take our next question from Justin Bowers with Deutsche Bank. Please go ahead. Your line is open.

Speaker #4: Hi. Good morning, everyone. Just going to stick with the current line of questions. But Jim, can you update us on your view for fourth quarter for the different end markets?

Justin Bowers: Hi. Good morning, everyone. Just gonna stick with the current line of questions. Jim, can you update us on your view for Q4 for the different end markets? What's the view for academic, US academic, biotech, et cetera? Then also, when you double-clicked on the funding analysis, what sort of competitive dynamics, if any, did you uncover? Part three of that would just be what parts of the portfolio would you start to see the recovery the soonest from the EBP customers? Thanks.

Speaker #4: So what's the view for academic, US academic, biotech, etc.? And then also when you double-clicked on the funding analysis, what sort of competitive dynamics, if any, did you uncover?

Speaker #4: And then part three of that would just be what parts of the portfolio would you start to see the recovery the soonest? From the EBP customers.

Speaker #4: Thanks.

Speaker #5: Well, I'll take the first one. Thanks for the question. I'll take the first one and the third one. I'll let Kim jump in on the second point.

Jim Hippel: Well, I'll take the first one. Thanks for the question. I'll take the first one and the third one. I'll let Kim jump in on the second point. You know, real quite simple, without going through end market by end market, the very simple answer is our base case is we're assuming basically the same level of performance across all of our end markets in Q4 that we saw in Q2. You know, pharma already is very strong. Academic is going the right direction, albeit slowly. Therefore, we don't see a meaningful move, but nonetheless, continued progress. Then, you know, with biotech, we're assuming the same kind of performance we saw in Q3 for Q4.

Speaker #5: Real quite simple, without going through end market by end market, the very simple answer is our base case is we're assuming basically the same level of performance across all of our end markets in Q4 that we saw in Q2.

Speaker #5: Pharma already is very strong. Academic is going the right direction. Albeit slowly. So therefore, we don't see a meaningful move. But nonetheless, continued progress.

Speaker #5: And then with biotech, we're assuming the same kind of performance we saw in Q3 for Q4. As we talked about in my opening comments, that would be—that will be—if there's any potential upside, that's where we think we might see it, is in biotech.

Jim Hippel: As we talked about in my opening comments, you know, that will be if there's any potential upside, that's where we think we might see it is in biotech. Right now, that's not our base case. That's really how we're viewing the end markets. With regards to I said I was gonna take the third bullet. I'm trying to remember what it was now. It was around. Remind me.

Speaker #5: But right now, that's not our base case. So that's really how we're viewing the end markets. With regards to and I said I was going to take the third bullet.

Speaker #5: I'm trying to remember what it was now. It was around, remind me?

Speaker #4: Just around what parts of the portfolio would you start to see? See the recovery for biotech. Yep.

Justin Bowers: Just around-

Jim Hippel: Third question.

Justin Bowers: What parts of the portfolio would you start to see?

Jim Hippel: Yes.

Justin Bowers: see the recovery.

Jim Hippel: Yes. Thank you.

Justin Bowers: for biotech? Yep.

Jim Hippel: Thank you. As I, again, as I mentioned, answering an earlier question, we look with the performance, you know, particularly our proteomic analysis business, our spatial business, those two growth factors. Cell therapy kind of beats to its own drum, but that's already doing very well. Those two, those two growth factors for us, we believe is usually an early indicator for us with regards to a turn in the markets when we see those start to inflect. Just as we saw those two parts of our business do very well with double-digit growth in our US academic market this most recent quarter, that's where we're looking for the inflection point in biotech as well.

Speaker #5: Yeah. Yeah. Thank you. So again, as I mentioned, answering the earlier question, we look at our we looked at the performance at particularly our proteomic analysis business, our spatial business.

Speaker #5: Those two growth factors—cell therapy kind of beats to its own drum—but that's already doing very well. But those two growth factors, for us, we believe it's usually an early indicator for us with regards to a turn in the markets.

Speaker #5: When we see those start to inflect. And just as we saw those two parts of our business do very well with double-digit growth in our US academic markets this most recent quarter, that's what we're looking for the inflection point in biotech as well.

Speaker #5: And like I said, I don't get it. I don't want to get ahead of us. But it was encouraging to hear that the interest level and funnels among our biotech customers for those two portions of our portfolio have picked up here in the last several months.

Jim Hippel: Like I said, I don't want to get ahead of us, but it was encouraging to hear that the interest level and funnels among our biotech customers for those two portions of our portfolio have picked up here in the last several months.

Speaker #4: Yeah. And just to your second question—oh, go ahead.

Kim Kelderman: Yeah. just on to your second question about.

Jim Hippel: Patrick.

Kim Kelderman: Oh, go ahead.

Speaker #3: No, go ahead, Kim.

Justin Bowers: No. Oh, go ahead, Kim.

Jim Hippel: No. Oh, go ahead, Kim.

Speaker #4: Yeah. Your second question was around the trends in biotech, right? So yes, over the last year, funding mix has shifted. And the year before, you could clearly see 75% of all the funding going into late-stage work, clinical development, phase one to three.

Kim Kelderman: Yeah. Your second question was around the, you know, the trends in biotech, right? Yes, over the last year, funding mix has shifted, and the year before, you could clearly see 75% of all the funding going into late stage work clinical development Phase 1 to 3, and that has become 82% of the funding. The same happened in reverse for the early stage discovery, which used to be 25% of budgets and now being 18% of all the funding. That took a step down, the early discovery part. That's really what we bumped into with our core portfolio, specifically the assays that Jim mentioned. I don't think that is by definition a change in competitive trends. It's just a change in where the money gets spent.

Speaker #4: And that has become 82% of the funding. And the same happened in reverse for the early-stage discovery, which used to be 25% of budgets, and now being 18% of all the funding.

Speaker #4: So that took a step down. The early discovery part. And that's really what we bumped into. With our core portfolio, specifically the assays that Jim mentioned.

Speaker #4: And I don't think that is by definition a change in competitive trends. It's just a change in where the money gets spent.

Speaker #3: Understood. I'll jump back in, Q, and someone else will turn.

Justin Bowers: Understood. I'll jump back in queue and someone else's turn.

Speaker #4: Thank you.

Kim Kelderman: Thank you.

Speaker #7: Thank you. We'll take our next question from Kyle Boucher with TD Cowan. Please go ahead. Your line is open.

Operator: Thank you. We'll take our next question from Kyle Boucher with TD Cowen. Please go ahead. Your line is open.

Speaker #6: Hey, good morning. Thank you for taking my questions. I know you touched on this a little bit, but I wanted to ask another just a clarification question on the guide.

Kyle Boucher: Hey, good morning. Thank you for taking my questions. I know you touched on this a little bit, I wanted to ask another, just a clarification question on the guide. You said flat organic in fiscal Q4, sort of implying low single digit underlying growth, excluding the GMP headwinds. It sounds like there's fewer sort of discrete items in the fiscal Q4. You know, the GMP reagent headwind is pretty small at 150 basis points. The OEM reagent timing headwinds out of the way, you face the easiest comparison year over year on organic. I guess beyond biotech performance, I mean, is there anything else that's sort of getting worse?

Kyle Boucher: Hey, good morning. Thank you for taking my questions. I know you touched on this a little bit, I wanted to ask another, just a clarification question on the guide. You said flat organic in fiscal Q4, sort of implying low single digit underlying growth, excluding the GMP headwinds. It sounds like there's fewer sort of discrete items in the fiscal Q4. You know, the GMP reagent headwind is pretty small at 150 basis points. The OEM reagent timing headwinds out of the way, you face the easiest comparison year-over-year on organic. I guess beyond biotech performance, I mean, is there anything else that's sort of getting worse?

Speaker #6: And you said flat organic in fiscal Q4, sort of implying low single-digit underlying growth, excluding the GMP. Headwinds, but it sounds like there's fewer sort of discrete items in the fiscal fourth quarter.

Speaker #6: The GMP reagent headwind is pretty small at 150 basis points. The OEM reagent timing headwind's out of the way. And you face the easiest comparison year over year on organic.

Speaker #6: I guess beyond biotech performance, I mean, is there anything else that's sort of getting worse?

Speaker #4: I can give a flyby and then Jim can double-click. No, I'll look at our end markets first. The pharma has been double-digits. And funding have been stable there.

Kim Kelderman: I can give a flyby and then Jim can double-click. No, I'll look at our end markets first. The pharma has been double digits and funding have been stable there, maybe slightly improving. We think our entitlement continues to be double digits. Biotech, we discussed in detail here. Academic, we see a slight improvement, and we are excited that we're, you know, back in positive territory for the first time. It's still a frail market. It's certainly not going to be a V-shaped recovery, I think. Stabilizing and improving is a fair assumption there. China, we've already discussed with, you know, four times in positive territory and continued momentum. From that point of view, I'm relatively comfortable.

Speaker #4: Maybe slightly improving. So we think our entitlement continues to be double digits. Biotech, we discussed in detail here. Academic, we see a slight improvement, and we are excited that we're back in positive territory for the first time.

Speaker #4: It's still a frail market. It's certainly not a going to be a V-shaped recovery, I think. But stabilizing and improving is a fair assumption there.

Speaker #4: And China, we've already discussed with four times in positive territory and continued momentum. So from that point of view, I'm relatively comfortable. And the one that we have been talking about and we feel could be a detractor is still in the biotech area.

Kim Kelderman: The one that we have been talking about and we feel could be a detractor is still in the biotech area. From a portfolio point of view, you know, our core has been doing good except for these areas that we discussed. If you look at our verticals, I couldn't be, you know, more positive. Cell therapy, we know about the two customers, but you take those out, the underlying growth was 50%. We're looking at 17%, 12 trailing months, and that looks stable. We would like that to be 20% minimum, so it's heading there. Spatial, as you know, was back to mid double digits with the reagents improving and the COMET instrument at 65% growth.

Speaker #4: From a portfolio point of view, our core has been doing good, except for these areas that we discussed. And if you look at our verticals, I couldn't be more positive.

Speaker #4: Cell therapy—we know about the two customers, but if you take those out, the underlying growth was 50%. We're looking at 17%, twelve trailing months.

Speaker #4: And that looks stable. We would like that to be 20% minimum. So it's heading there. Spatial, as you know, was back to mid double digits.

Speaker #4: With the reagents improving and the comet instrument at 65% growth, proteomic analysis right now, it's at mid single digits. And we do know that it belongs in double digits, deep in double digits.

Kim Kelderman: Proteomic analysis, right now it's at mid-single digits, we do know that it belongs in double digits, deep in double digits. There we feel that the Bio-Techne uptake would be the trigger to get it back into the zone where it belongs, in mid-double digits. The Diagnostics area, it was negative for the quarter, especially the Diagnostics molecular diagnostics products, that was clearly a timing issue. There I do have some positive backdrop as well that it can come back to normal growth rates. That's the flyby on the product lines. Overall comfortable with, of course, be careful for your next quarter, with a strong trajectory to normalization.

Speaker #4: So, there, we feel that the biotech uptick would be the trigger to get it back into the zone where it belongs, in mid-double digits.

Speaker #4: And then the diagnostics area, it was negative for the quarter. The especially the diagnostics molecular diagnostics products. And that was clearly a timing issue.

Speaker #4: So there, I do have some positive backdrop as well that it can come back to normal growth rates. So that's the flyby on the product lines.

Speaker #4: So overall, comfortable with, of course, be careful for your next quarter, but with a strong trajectory to normalization.

Speaker #3: Got it. Thank you. And maybe just on the GMP reagent business and even spatial on the LUNA4 side—pretty impressive growth rates, almost 50% on the GMP reagent side and over 60% for LUNA4.

Kyle Boucher: Got it. Thank you. Maybe just on the GMP reagent business and even, you know, space on the Lunaphore side, you know, pretty impressive growth rates, almost 50% on the GMP reagent side, over 60% for Lunaphore. I mean, how sustainable do you think these levels of growth are going forward? I mean, do they face, you know, easy comps year over year?

Speaker #3: And how sustainable do you think these levels of growth are going forward? I mean, do they face easy comps year over year?

Kim Kelderman: Yeah. Taking the two customers out, we clearly look at the funnel underneath. We have 700 plus customers. The number of customers has increased mid-single digits, so that's not carrying it. Customers going deeper into their projects and spending more is clearly the driver. We have 85 programs, the same like last quarter, in clinical. However, 18 are in phase 2, and it used to be 15, and still the same 6 customers in phase 3. There is a progress that the customers are making that drives the growth. If you look at the cell therapy trials, globally are also increasing significantly. There's been a mix shift from gene therapy to cell therapy, and that's where we're benefiting as well.

Speaker #4: Yeah. So taking the two customers out, we clearly look at the funnel underneath. We have 700-plus customers. The number of customers has increased mid-single digits.

Speaker #4: So that's not carrying it. But customers going deeper into their projects and spending more is clearly the driver. We have 85 programs, the same as last quarter, in clinical.

Speaker #4: However, 18 are in phase two. And that used to be 15. And still the same six customers in phase three. So there is a progress that the customers are making that drives the growth.

Speaker #4: If you look at the cell therapy trials, globally, are also increasing significantly. There's been a makeshift from gene therapy to cell therapy. And that's where we're benefiting as well.

Kim Kelderman: We do believe that the 20% growth as a minimum for a 12-month trailing would be the right bar to set. Of course, we can always look at our Wilson Wolf numbers. We talked about mid-single digit growth this last quarter, and that was over comparable of 25% growth last year. The number of grants that we're writing there is impressive. We are happy that there's more or less 50% attachment rates with Bio-Techne's cytokines and proteins. Overall, we're comfortable with the market underlying activity levels, progress of the pipeline, and the number of customers that we are putting into the funnel.

Speaker #4: So we do believe that the 20% growth as a minimum for a 12-month trailing would be the right bar to set. And of course, we can always look at our Wilson-Wulff numbers.

Speaker #4: We talked about mid single-digit growth this last quarter. That was over a comparable of 25% growth. Last year, but the number of grants that we're writing there is impressive.

Speaker #4: We are happy that there's a more or less 50% attachment rates with biotechnies, cytokines, and proteins. So overall, we're comfortable with the market. Underlying activity levels, progress of the pipeline, and the number of customers.

Speaker #4: That we are putting into the funnel.

Speaker #3: Got it. Thank you.

Kyle Boucher: Got it. Thank you.

Speaker #1: Thank you. We'll take our next question from Matt Etoch with Stevens Inc. Please go ahead, your line is open.

Operator: Thank you. We'll take our next question from Mason Carrico with Stephens Inc. Please go ahead. Your line is open.

Speaker #5: Hey, good morning. And thank you for taking my questions. Maybe just one for me and following up on the last question asked on GMP proteins and cell therapies.

Mason Carrico: Hey, good morning, and thank you for taking my questions. Maybe just one for me and following up on the last question asked on GMP proteins and cell therapies. Could you just maybe break down how much of those, how much of the growth that you're seeing is coming from maybe new program wins versus expansion of existing customers? I would really appreciate that. Thank you.

Speaker #5: Could you just maybe break down how much of the growth that you're seeing is coming from maybe new program wins versus expansion of existing customers?

Speaker #5: I would really appreciate that. Thank you.

Speaker #4: Yeah. I just touched base on it. Thanks for the question. Our overall number of customers increased 3%. Over the last couple of quarters, we saw a rotation, some customers rotated out, and they started two, three years ago with a setup that turned out to maybe not be a winning strategy.

Kim Kelderman: Yeah, I just touched base on it. Thanks for the question. Our overall number of customers increased 3%. Over the last couple of quarters, we saw a rotation. Some customers rotated out, and they started 2, 3 years ago with a setup that turned out to maybe not be a winning strategy within the cell therapy. Others have come in, and it's all about are you able to scale? Are you able to make it cost-effective? We are certainly helping our customers doing so with the Wilson Wolf G-Rex and our cytokines, proteins, as well as the form factor of the ProPak that we've launched a quarter or 2 ago. Overall, we feel that 3% increase in customers, including the churn is encouraging.

Speaker #4: Within the cell therapy, but others have come in. And it's all about, are you able to scale? Are you able to make it cost-effective?

Speaker #4: And we are certainly helping our customers doing so with the Wilson-Wulff GREX and our cytokines. Proteins, as well as the form factor of the PROPAC that we've launched, a quarter or two ago.

Speaker #4: So overall, we feel that 3% increase in customers including the churn is encouraging. The number of clinical studies is increasing. And there's progress in the pipeline from by the customers from clinicals one into two.

Kim Kelderman: The number of clinical studies is increasing, and there's progress in the pipeline from, for, by the customers from clinicals 1 to 2 and 3. We see positive trends in all three of those dimensions.

Speaker #4: And three. So we see positive trends in all three of those dimensions.

Speaker #1: Thank you. At this time, we've reached our allotted time for questions. I will now turn the program back over to our presenters for final remarks.

Operator: Thank you. At this time, we've reached our allotted time for questions. I will now turn the program back over to our presenters for final remarks.

Speaker #6: Thank you, everyone, for joining today's call. I want to recognize the Bio-TECHNE team for their continued focus and execution through what has been an extended period of market and customer-specific challenges.

Kim Kelderman: Thank you everyone for joining today's call. I want to recognize the Bio-Techne team for their continued focus and execution through what has been an extended period of market and customer-specific challenges. We are encouraged by the improving biotech funding visibility, stabilization in US academia, sustained engagement from our large pharmaceutical customers, and continued momentum across China and the broader APAC region. As we move through Bio-Techne's 50th year, we do so with a portfolio that has never been better aligned with the direction of science and medicine. Our combination of high-quality reagents, analytical platforms, and enabling technologies supports critical workflows from early discovery through translational research and manufacturing. Continued investments across cell therapy, proteomic analysis, spatial biology, and precision diagnostics position us well to support our customers and capture attractive long-term growth opportunities.

Speaker #6: We are encouraged by the improving biotech funding visibility, stabilization in US academia, sustained engagement from our large pharmaceutical customers, and continued momentum across China, and the broader APAC region.

Speaker #6: As we move through Bio-TECHNE's 50th year, we do so with a portfolio that has never been better aligned with the direction of science and medicine.

Speaker #6: Our combination of high-quality reagents, analytical platforms, and enabling technologies supports critical workflows from early discovery through translational research and manufacturing. Continued investments across cell therapy proteomic analysis, spatial biology, and precision diagnostics position us well to support our customers and capture attractive long-term growth opportunities.

Speaker #6: Thank you again for your interest in Bio-TECHNE, and we look forward to updating you on our progress next quarter.

Kim Kelderman: Thank you again for your interest in Bio-Techne, and we look forward to updating you on our progress next quarter.

Operator: Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.