NEW YORK – Bio-Techne's fiscal second quarter revenues exceeded its prior expectations as a result of the improving biopharmaceutical end market and continued traction in its diagnostics and spatial biology businesses, executives reported on Wednesday.
For the three months ended Dec. 31, 2024, the Minneapolis-based life science research and diagnostic tools company reported revenues of $297.0 million, up 9 percent compared to $272.6 million a year ago and above the Wall Street estimate of $285.4 million. Organic Q2 revenues also increased by 9 percent year over year.
Revenues from the company's Protein Sciences segment, which supplies specialized proteins such as cytokines, growth factors, immunoassays, antibodies, and reagents to biopharmaceutical and academic researchers, rose 7 percent to $211.6 million from $197.7 million a year ago, or 8 percent on an organic basis. Improving biopharma end-market conditions and continued momentum of Bio-Techne's cell and gene therapy workflow solutions contributed to the growth in the quarter, the firm said in a statement.
Sales of instrument-specific consumables increased in the high-teens percent range during the quarter, and Bio-Techne CEO Kim Kelderman said on a conference call to discuss the firm's financial results that eight of the last nine fiscal quarters have ended with at least double-digit consumable growth.
New instrument placements grew in the low-single-digit percent range globally and in the mid-single-digit percent range excluding China. This marks the first quarter in the past two years that Bio-Techne saw positive instrument growth, Kelderman said.
Sales to biopharma customers increased in the mid-teens percent range with "a notable improvement" from large pharmaceutical customers, according to Kelderman. The academic end market saw revenue growth in the mid-single-digit percent range excluding China, Bio-Techne CFO Jim Hippel added on the call.
He noted that the company saw improvements in "all types of order activity from our larger pharma customers," from large instrument purchases to bulk order reagent requests and increased daily run-rate purchases. Much of the R&D pipeline repositioning from those customers "is behind us," and a "more broad-based increase in R&D funding from discovery through the clinic" is more likely in 2025, which will encourage continued growth in the segment, he said.
Run rates from large pharma customers are not yet back to normal, Hippel said, but there was "a noticeable improvement from the prior quarter."
The segment was boosted by higher-than-anticipated sales in Bio-Techne's GMP proteins business, as orders from large customers that were expected in fiscal Q3 were placed in fiscal Q2 instead, Hippel said. Kelderman added that the company is confident this is "also a very positive sign for the overall markets."
GMP reagents revenue increased more than 90 percent year over year in Q2, he noted.
The company's core portfolio of research-use-only proteomic reagents grew in the low-single-digit percent range.
This quarter marked the best performance of the Protein Sciences segment since larger market headwinds following the COVID-19 pandemic began in fiscal Q1 2023, Kelderman said.
"We believe that the strength of our growth pillars in cell and gene therapy and proteomic analysis, combined with the momentum that we saw in our core products, are indicative of an early-stage recovery in key biopharma end markets," he said.
The firm's Diagnostics and Spatial Biology segment, which sells carrier screening and oncology kits, bulk and custom reagents for the in vitro diagnostic market, spatial biology products, and exosome-based diagnostic tests, grew 12 percent on a reported and organic basis to $84.1 million from $75.4 million a year ago.
Spatial biology revenue increased in the mid-teens percent range, Kelderman said. He added that Bio-Techne is "very happy" with the uptake of its Comet spatial biology instrument and that he expects consumable pull-through on the instrument to be high.
He noted that the firm's spatial biology business has been successful in the clinical setting and that it is "well positioned to continue to outperform there."
The firm has renamed its molecular diagnostics business to precision diagnostic tools, which Kelderman said is a "better reflection of the focus of this team, which is to provide clinical laboratories with precise diagnostic tools that leverage our exosome-based diagnostic technology combined with Asuragen's proprietary chemistry."
Meantime, ExoDx Prostate test volumes grew more than 30 percent year over year in the quarter.
Geographically, the company saw organic revenue growth in the low double-digit percent range in America driven by strong demand from cell therapy customers. Europe, the Middle East, and Africa also saw low double-digit growth, particularly in the automated protein analysis portfolio, which grew more than 20 percent, Kelderman said.
China sales, however, declined in the low double-digit percent range. China's financial performance was in line with expectations, and Kelderman said Bio-Techne expects revenues in China to modestly grow in fiscal Q3. The targeted stimulus program and a modest improvement in government funding are expected to slowly materialize, he added.
Kelderman noted that there has been more government funding activity compared to the last couple of years but added that there's "no doubt that there is a tough economic environment in China."
Bio-Techne's Q2 net income rose to $34.9 million, or $.22 per share, from $27.5 million, or $.17 per share, a year ago. Adjusted Q2 EPS was $.42, above analysts' average estimate of $.38.
Bio-Techne finished the quarter with $177.5 million in cash and cash equivalents.
Hippel noted that M&A "remains a top priority for capital allocation." Kelderman added that the firm is interested in analytical platforms for discovery of novel biological insights and tools to support the development and manufacturing of advanced therapeutics.
Hippel also said that the company's growth outlook for the second half of fiscal year 2025 remains intact. The firm expects fiscal Q3 revenues to be in the upper range of mid-single-digit organic growth, although Hippel emphasized that there are multiple headwinds anticipated. The year-over-year comparison will be more difficult in fiscal Q3 2025 and the early GMP protein orders are not expected to recur in Q3.
However, he noted that the earlier than expected momentum from large pharma customers and the anticipated return to growth in China in Q3 allows Bio-Techne to hold to its previous guidance, and the improvement in large pharma business "strengthens our confidence that we can exit our Q4 with organic growth in the high single digits as we have predicted all year."
In a separate announcement on Wednesday, the firm announced that its board of directors has decided to pay a dividend of $.08 per share for the quarter ended Dec. 31, 2024, payable on Feb. 28 to all common shareholders of record on Feb. 17.
In afternoon trading on the Nasdaq, Bio-Techne shares were up 5 percent at $76.39.