NEW YORK – Speaking during a conference call following the release of Bruker's Q4 2024 financial results, President, Chairman, and CEO Frank Laukien said the company does not anticipate major revenue losses from the National Institutes of Health's plan to cap payments supporting indirect research costs.
Laukien said that Bruker "fundamentally [does] not expect the reduction in NIH and other life science, medical, and research investment in the US." He added that even if the announced cuts did come to pass, they would negatively impact Bruker's 2025 revenues by, at most, around $15 million, which he said the company expects would be offset by factors including an ongoing recovery in its biopharma markets as well as Chinese stimulus funds.
Last week, the NIH issued guidance in which it set "a standard indirect rate of 15 percent across all NIH grants for indirect costs in lieu of a separately negotiated rate for indirect costs in every grant." Grant indirect costs are used by institutions to fund infrastructure, personnel, and other expenses required to support their research. Roughly 27 percent of the average NIH grant goes toward indirect costs, though at some institutions that rate is as high as 60 percent.
Scientists and stakeholders fear the cap could significantly hamper research activity. This, in turn, could impact the life science tools industry.
Laukien downplayed the cap's potential impact, noting that NIH is "less than 5 percent of our exposure." He said that modeling done within Bruker projected that an 8 percent to 10 percent drop in NIH funding would lead to a roughly $15 million decline in the company's revenues.
Laukien added that the company has not heard from any customers about order cancellations following release of the NIH guidance.
He said that he expects NIH funding to operate under "a new paradigm" going forward, adding that "there is no going back," but also that he does not believe the money taken from indirect funding will simply be cut. It will, rather, be put "back into infrastructure or other scientific or clinical research projects," he suggested.
It remains to be seen whether the NIH guidance ultimately goes into effect. A group of state attorneys general have sued the agency to block the move as has a group of universities. On Monday, a federal judge issued a temporary restraining order halting implementation of the guidance.
Laukien also touched on the potential impact of tariffs threatened by the Trump administration, noting that the company has major manufacturing sites in the US, Europe, and Malaysia and that it can shift manufacturing locations in response to tariffs if needed.
"So far we don't seem to be affected, but you never know what happens," he said. "Things are happening quickly. So if we needed to respond, we can respond within a few quarters."
For the three months ended Dec. 31, 2024, the company reported revenues of $979.6 million, up 15 percent year over year from $854.5 million in Q4 2023 and beating the consensus Wall Street estimate of $965.6 million.
Organic revenues grew 4 percent during the quarter as acquisitions added nearly 12 percent while foreign currency translation had a negative effect of 1 percent.
The company's CALID segment, which houses its life science mass spec business, reported revenues of $320.6 million during the quarter, up 25 percent from $257.2 million in Q4 2023. Laukien said its TimsTOF business showed signs of renewed momentum after having ceded ground to another recently released instrument — presumably Thermo Fisher Scientific's Orbitrap Astral.
"Our win rate has come back and remains competitive," he said.
Bruker's Nano group posted revenues of $318.3 million, up 19 percent from $268.5 million in the year-ago period. Revenues from its BioSpin group were $272.4 million, up 6 percent from $257.9 million in Q4 2023. Revenues from its BEST group were $72.1 million, down 4 percent from $75.2 million in Q4 2023.
Bruker's Q4 net income was $13.7 million, or $.09 per share, compared to $205.5 million, or $1.41 per share, in Q4 2023. On an adjusted basis, Q4 EPS was $.76, above the average Wall Street estimate of $.74. The decline in net income was driven by increased costs related to the company's recent acquisitions as well as a one-time $.99-per-share bargain purchase gain in Q4 2023 stemming from its acquisition of PhenomeX, said Bruker CFO Gerald Herman.
Bruker's Q4 R&D costs rose 25 percent to $104.4 million from $83.4 million the year before, while its SG&A expenses were $247.3 million, up 17 percent from $211.3 million a year ago.
For full-year 2024, Bruker reported revenues of $3.37 billion, up 14 percent from $2.96 billion in 2023 and above the Wall Street consensus estimate of $3.35 billion.
Organic revenue was up 4 percent year over year, with acquisitions adding around 10 percent and currency translation having a negative effect of less than 1 percent.
The CALID segment reported full-year 2024 revenues of $1.09 billion, up 13 percent from $960.4 million in 2023. The Nano group posted revenues of $1.10 billion, up 17 percent from $941.9 million in 2023. Revenues from the BioSpin group were $905.7 million, up 13 percent from $798.5 million the year before. Revenues from the BEST group were $283.0 million, up 1 percent from $280.7 million in 2023.
Bruker reported a profit of $113.1 million, or $.76 per share, for the year versus $427.2 million, or $2.90 per share, in 2023. On an adjusted basis, full-year EPS was $2.41, beating the average Wall Street estimate of $2.39.
Full-year 2024 R&D costs were up 28 percent to $376.5 million from $294.8 million in 2023, and SG&A expenses were up 23 percent to $893.8 million from $729.4 million the year before.
The company ended the year with cash, cash equivalents, and restricted cash of $186.7 million.
Bruker said it expects 2025 revenue between $3.47 billion and $3.54 billion, or 3 percent to 5 percent year-over-year growth. That includes between 3 percent and 4 percent organic revenue growth with a negative contribution from foreign currency translation of around 2 percent and a positive contribution from acquisitions of between 2 percent and 3 percent. The firm said it expects adjusted full-year 2024 EPS of $2.67 to $2.72.
In Thursday morning trading on the Nasdaq, Bruker shares were down less than 1 percent to $51.42.