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Bio-Techne Sees Signs of Recovery as Biopharma, China Headwinds Wane in Fiscal Q3


Note: This story has been updated with comments from the conference call discussing the firm's financial results.

NEW YORK – After multiple quarters of headwinds from lower biopharmaceutical funding and macroeconomic concerns in China, Bio-Techne is starting to see positive developments across its businesses, executives said on a conference call discussing the firm's fiscal third quarter financial results released on Wednesday. 

Bio-Techne President and CEO Kim Kelderman said that "several green shoots … continued to sprout" during its fiscal third quarter and noted that "the headwinds we've faced … continue to stabilize and eventually improve." The firm's performance in the biopharmaceutical end market, which faced struggles in recent months as funding dried up, improved in the fiscal third quarter, rising in the low-single-digit percent range compared to the prior-year. Kelderman added that the growth could signify a positive upward trend but cautioned that it was still early days and noted that December saw an eight-year low in biopharma funding levels. 

He said that biotechnology funding improvements will likely impact Bio-Techne in its consumables business first and that instruments and larger investments will "have a little bit longer of a lead time before the funding flows through." 

"Overall, it looks very good right now, but … those are only trends for three months, and we had some disastrous months at the end of the calendar year," Kelderman said. "We want to be careful with that prognosis." 

Bio-Techne's revenues in the academic end market, meantime, saw growth in the low-single-digit percent range as US and European academic budgets have remained stable, Kelderman said. The firm's spatial biology and proteomic instrument products performed particularly well in these markets, he added. 

The market in China has been the talk of the diagnostics and life sciences industry in recent months, with Bio-Techne noting headwinds from the decrease in funding in China in previous quarters. In fiscal Q3, Kelderman said revenues in China declined in the mid-single-digit percent range compared to the prior year but noted that revenues stabilized in January and February as expected — a "confirmatory sign that the bottom may have been reached in China." 

Bio-Techne CFO Jim Hippel noted that both the core reagents and spatial biology businesses in China saw year-over-year growth during the quarter. In his view, the "worst of the China slowdown is behind us at this point and over the long term, [and] we remain confident China will still be the fastest-growing major region in the world for life science tools." 

Kelderman remained optimistic, as well, saying that the headwinds Bio-Techne faced in China were largely based on lack of funding but that the firm is seeing some momentum in funding efforts in the country now, particularly for instrumentation. 

For both biopharma and China, he added that there are "early indications that these markets will improve in the back half of the calendar year." 

More broadly, the firm reported that its fiscal third quarter revenues rose 3 percent year over year on a reported basis. 

The firm said that for the three months ended March 31, its revenues grew to $303.4 million from $294.1 million, beating the analysts' average estimate of $292.2 million. Revenues were up 2 percent on an organic basis, Bio-Techne said. 

The firm reported its Diagnostics and Genomics segment's revenues rose 16 percent to $87.5 million from $75.7 million a year ago, while its Protein Sciences segment's revenues dipped 2 percent to $214.6 million from $218.9 million. Organically, revenues for the Diagnostics and Genomics segment grew 10 percent year over year, and revenues for the Protein Sciences segment declined 1 percent. 

The Protein Sciences segment saw sequential improvement compared to fiscal Q2, Kelderman said. That segment has the most exposure to the biopharma and China end markets and thus "stands to benefit the most from the green shoots taking root," he added. The segment saw double-digit growth in the ProteinSimple line of consumables, and the segment was further enhanced by the growing installed base and expanding applications of its instruments. 

Kelderman emphasized the growth of the firm's Simple Western portfolio of western blot instruments, which saw low-double-digit growth in the quarter, including double-digit growth in both instrument placements and consumables. Simple Western was a "highlight" of the firm's ProteinSimple brand this quarter, Hippel said, but the entire ProteinSimple instrument portfolio has been "very resilient" despite struggles with instrument placements in the last few quarters. "As the markets normalize, we'll see accelerating growth in that portfolio once again." 

In its Diagnostics and Genomics segment, Kelderman noted that the Comet platform from its Lunaphore subsidiary has seen strong growth, with demand for the instrument outpacing Bio-Techne's manufacturing capacity. The firm is rapidly scaling up its capacity and is on track to meet current and future demand, he said. 

Production manufacturing of the Comet platform should meet the order number through the fiscal first quarter of 2025, Kelderman said. The firm will "continue to reel in the backlog in the first half of our fiscal year," but having to beef up capacity is "a good problem to have," he added. 

Within its molecular diagnostics business, Kelderman said that Asuragen's carrier screening and oncology kit products have seen strong traction, with growth approaching 30 percent in fiscal Q3. The company is developing exosome-based single gene mutation assays for monitoring various cancer markers that will be distributed through Asuragen's laboratory channels. The first monitoring test is expected to launch in the upcoming quarter. 

The ExoDx prostate test, meantime, saw volume growth of more than 25 percent in Q3. 

Bio-Techne posted Q3 net income of $49.1 million, or $.31 per share, compared to $70.2 million, or $.43 per share, in the prior year. The firm's adjusted EPS was $.48 and beat the analysts' average estimate of $.45. 

At the end of Q3, Bio-Techne had cash and cash equivalents of $139.9 million and short-term available-for-sale investments of $5.4 million. 

According to Hippel, the firm expects its fiscal Q4 to "look similar" to Q3, namely with regards to the biotechnology end market and China, although it also expects incremental revenue growth compared to Q3. However, he noted the fourth quarter will have tougher year-over-year comparisons than Q3. 

Bio-Techne on Wednesday also announced a quarterly dividend of $.08 per share, payable on May 24 to common shareholders of record on May 13. 

In afternoon trading Wednesday on the Nasdaq, Bio-Techne's shares were up 18 percent to $74.61.