Bio-Rad Laboratories Q2 2025 Earnings Report

Bio-Rad Laboratories EPS Results

• Actual EPS: $2.61
• Consensus EPS: $1.93
• Beat/Miss: Beat by +$0.68
• One Year Ago EPS: $3.11

Bio-Rad Laboratories Revenue Results

• Actual Revenue: $651.60 million
• Expected Revenue: $614.82 million
• Beat/Miss: Beat by +$36.78 million
• YoY Revenue Growth: +2.10%

Bio-Rad Laboratories Announcement Details

• Quarter: Q2 2025
• Date: 7/31/2025
• Time: After Market Closes
• Conference Call Date: Thursday, July 31, 2025
• Conference Call Time: 5:00PM ET

Bio-Rad Laboratories (NYSE:BIO) manufactures and distributes life science research and clinical diagnostic products in the United States, Europe, Asia, Canada, and Latin America. It operates through two segments, Life Science and Clinical Diagnostics. The company develops, manufactures, and markets instruments, systems, reagents, and consumables to separate, purify, characterize, and quantitate biological materials such as cells, proteins, and nucleic acids for proteomics, genomics, biopharmaceutical production, cellular biology, and food safety markets. It also designs, manufactures, markets, and supports test systems, informatics systems, test kits, and specialized quality controls for hospitals, diagnostic reference, transfusion, and physician office laboratories. The company offers its products through its direct sales force, as well as through distributors, agents, brokers, and resellers. Bio-Rad Laboratories, Inc. was founded in 1952 and is headquartered in Hercules, California.

Bio-Rad Laboratories Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Bio-Rad reported Q2 net sales of $652 M, up 2.1% reported (1% cc), and delivered operating margins above consensus on strong product mix and disciplined cost controls.
• Positive Sentiment: Sales in the Life Science segment, led by Process chromatography, grew 4.9% reported (3.8% cc) with strong double‐digit Process chromatography growth, prompting a full‐year outlook raise to low double digits.
• Positive Sentiment: The ddPCR portfolio was bolstered by the acquisition of Stila Technologies, the launch of the QX Continuum platform, and rebranding of the QX700 Series, with mid‐single‐digit revenue growth now expected.
• Negative Sentiment: Ongoing headwinds in the academic and biotech market continue to pressure instrument demand, although consumables remain stable and show signs of resilience.
• Positive Sentiment: Management raised 2025 guidance to flat-1% cc revenue growth and non-GAAP operating margin of 12%–13%, while repurchasing $139 M of shares in Q2 and retaining $337 M in buyback capacity.

Presentation

[Operator]

Thank you for standing by. My name is Gil, and I will be your operator for today's call. At this time, I would like to welcome each and every one of you to the Bio Rad Second Quarter twenty twenty five Results Conference Call and Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

[Operator]

It is now my pleasure to turn today's call over to Head of Investor Relations, Mr. Edward Chung. Please go ahead. Good afternoon, everyone, and thank you for joining us. Today, we will review the second quarter twenty twenty five financial results and provide an update on key business trends for

[Edward Chung, VP - IR at Bio-Rad Laboratories]

Bio Bio Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer John DiVincenzo, President and Chief Operating Officer and Ruplakaraju, Executive Vice President and Chief Financial Officer. Before we begin our review, I'd like to remind everyone that we will be making forward looking statements about management's goals, plans and expectations, our future financial performance and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially from these plans, goals and expectations.

[Edward Chung, VP - IR at Bio-Rad Laboratories]

You should not place undue reliance on these forward looking statements and I encourage you to review our filings with the SEC where we discuss in detail the risk factors in our business. The company does not intend to update any forward looking statements made during the call today. Finally, our remarks today will include references to non GAAP financials, including net income and diluted earnings per share, which are financial measures that are not defined under Generally Accepted Accounting Principles. In addition to excluding certain atypical and non recurring items, our non GAAP financial measures exclude changes in the equity value of our stake in Sartorius AG in order to provide investors with a better understanding of BI RAD's underlying operational performance. Investors should review the reconciliation of these non GAAP measures to the comparable GAAP results contained in our earnings release.

[Edward Chung, VP - IR at Bio-Rad Laboratories]

We have also posted a supplemental earnings presentation in the Investor Relations section of our website for your reference. With that, I'll now turn the call over to our Chief Operating Officer, John DiVincenzo. Thank you, Ed.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Good afternoon, everyone, and thank you for joining us today. We are pleased to share our second quarter twenty twenty five results, which reflect solid execution across the business. Both revenue and operating margin exceeded consensus expectations, underscoring the strength of our portfolio and the discipline of our teams in a challenging and rapidly evolving macroeconomic environment. Our Clinical Diagnostics business remained stable, while our Life Science segment benefited from the strength in our process chromatography portfolio. Product mix and a continued focus on cost control and discretionary spending helped drive an outperformance in operating margin for the quarter.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

While we continue to face headwinds in the academic market due to constrained government funding, we saw signs of stabilization, particularly in consumables. This resilience highlights the enduring demand for our differentiated assays and reagents, including Droplet Digital PCR consumables, which saw high single digit revenue growth versus 2024. The second quarter was a busy one for our ddPCR team as we completed the development of the QX Continuum platform and successfully closed the acquisition of Stila Technologies adding new platforms and a fantastic team of colleagues to Bio Rad. Synchronized with the closing of the Stila acquisition, we launched the rebranded QX700 Series ddPCR instruments. The combination of the QX Continuum and QX700 Series products are positioned to expand our Droplet Digital PCR portfolio for customers requiring a simplified workflow and flexibility at various budget levels.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Although it is early, customer feedback has been very positive. We look forward to showcasing these innovations at the upcoming DDPCR World Conference in Seoul, Korea this September along with a series of satellite events across APAC, EMEA and The Americas. Also during the quarter, several of our key gdPCR partners made progress in bringing this technology to the diagnostic market. Incyte Molecular Diagnostics, formerly OncoCyte, announced positive clinical data for its assay in kidney transplant monitoring. We are supporting its path toward FDA approval in 2026 and the development of a kidney IVD solution, an exciting advancement for the transplant community.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Geneoscopy advanced its Colasense colon cancer screening test, which is powered by our ddPCR technology. The assay was recently included in the National Comprehensive Cancer Network guidelines, a critical enabler for clinical adoption and reimbursement. We're encouraged with their progress and the potential of Colasense. Operationally, our teams continue to drive improvements through strong execution of lean initiatives, careful cost management and actions to actively mitigate tariff impacts. In Diagnostics, strength outside of China helped offset local reimbursement pressures resulting in 3.7% growth in our rest of world markets.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

In China, volume based procurement or VBP has not impacted our portfolio. Beyond the previously noted diabetes testing reimbursement reductions, we haven't faced any new reimbursement challenges. While we factored headwinds from the recent diagnosis Related Group or DRG policy changes affecting diagnostic panels into our first quarter guidance, the impact was not significant in the second quarter. Our local team continues to diligently monitor the evolving landscape of Chinese government policies. And finally, I'm excited to welcome Rajat Mehta as BIRAD's new Executive Vice President of Global Commercial Operations.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Rajat brings deep experience across Diagnostics and Life Sciences, most recently leading a large regional diagnostic division of LabCorp. He has lived and worked globally and brings expertise in commercial transformation, digital innovation and customer centric strategies. Project succeeds Mike Crowley, who is retiring after a remarkable twenty six year career with Bio Rad. I have enjoyed working with Mike during my first year and personally thank him for his support. We all wish Mike all the best in his retirement.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

So thank you again for your continued support. I'll hand the call over to Roop for a detailed review of our financial results.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Thank you, John, and good afternoon. I'd like to start with a review of the second quarter twenty twenty five results. Overall, we executed well during the quarter. Net sales for the 2025 were approximately $652,000,000 which represents a 2.1% increase on a reported basis versus $638,000,000 in 2024. On a currency neutral basis, this represents a one percent year over year increase and was primarily driven by sales of our process chromatography products.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Sales of the Life Sciences Group in the 2025 were $263,000,000 compared to $251,000,000 in 2024, which is an increase of 4.9% on a reported basis and 3.8% on a currency neutral basis, primarily driven by the increase in process chromatography and food safety product sales. Currency neutral sales increased in The Americas and EMEA, partially offset by decreased sales in Asia Pacific. Our Process Chromatography business experienced strong double digit growth on a year over year basis due to orders pulled into the second quarter by customers. The orders represented approximately 20% of the quarter's Process Chromatography sales. Zooming out of the second quarter results, we now expect low double digit growth for this product area in 2025 versus our prior high single digit growth outlook.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Excluding process chromatography sales, our Core Life Science Group revenue decreased 1.7% year over year and 2.7% on a currency neutral basis, reflecting ongoing softness in the biotech and academic research market, which affects instrument demand. Sales of the Clinical Diagnostics Group in the 2025 were approximately $389,000,000 compared to $388,000,000 in 2024, essentially flat on a reported basis and a decrease of 0.7% on a currency neutral basis. The decrease is because of the previously discussed lower reimbursement rate for diabetes testing in China, partially offset by increased demand for our quality control and immunology products. On a geographic basis, currency neutral sales decreased in Asia Pacific, partially offset by increased sales in EMEA and The Americas. Q2 reported gross margin was 53% as compared to 55.6% in the 2024.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

On a non GAAP basis, second quarter gross margin was 53.7 versus 56.4% in the year ago period. The decrease in non GAAP gross margin was due to higher material costs and reduced fixed manufacturing absorption due to lower instrument demand. SG and A expense for the 2025 was two zero eight million dollars or 31.9% of sales compared to $195,000,000 or 30.5% in 2024. Second quarter non GAAP SG and A spend was $2.00 $1,000,000 versus $194,000,000 in the year ago period. The year over year increase in non GAAP SG and A expense was primarily due to higher variable compensation costs.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Research and development expense in the second quarter on a GAAP and non GAAP basis was $61,000,000 or 9.3% of sales compared to $59,000,000 or 9.2% of sales in Q2 twenty twenty four. The slightly higher year over year R and D was primarily due to project related spending. Q2 operating income was $77,000,000 or 11.8 percent of sales compared to $101,000,000 or 15.9% of sales in 2024. On a non GAAP basis, second quarter operating margin was 13.6% compared to 16.7% in 2024, reflecting the lower gross margin. The change in fair market value of equity security holdings primarily related to the ownership of Sartorius AG shares contributed $250,000,000 to our reported net income of $318,000,000 or $11.67 per diluted share.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Non GAAP net income, which excludes the impact of the change in equity value to Sartorius shares, was $71,000,000 or $2.61 diluted earnings per share for the 2025. Moving on to cash flow. For the 2025, net cash generated from operating activities was $117,000,000 compared to $98,000,000 for 2024. Net capital expenditures for the 2025 were $46,000,000 and depreciation and amortization for the second quarter was 41,000,000 Regarding free cash flow, we were pleased with the generation of $71,000,000 which compares to $55,000,000 in 2024. For the first six months of twenty twenty five, we generated free cash flow of 166,000,000 resulting in a year to date free cash flow to non GAAP net income conversion ratio of 117%.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

We continue to target full year free cash flow of approximately $310,000,000 to $330,000,000 for 2025. During June, we purchased an additional 170,860 shares of our stock for a total cost of $40,000,000 for an average purchase price of approximately $233 per share on top of the $99,000,000 share repurchase we called out for April. In aggregate, we bought back 593,508 shares during the second quarter for a total cost of $139,000,000 or an average price of approximately $234 per share. We will continue to be opportunistic with our buyback program and still have $337,000,000 available for share repurchases under the current Board authorized program. Moving on to the non GAAP guidance for 2025.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

We are raising our 2025 full year guide to reflect the Q2 results, the close of the Spill acquisition, the evolving state of academic and biotech research funding and the impact of changes in the macro economy including tariffs. Overall, we now expect total currency neutral revenue to be in the range of flat to 1% growth with the midpoint approximately 25 basis points higher than our previous guide. With respect to our Life Science business, we see consumable demand from academic customers more durable than our prior expectations in addition to an improved outlook for our process chromatography business that I called out earlier. With the recent close of the Still acquisition, we now expect revenue for our DDPCR portfolio to increase mid single digit in 2025 versus low single digit previously. We continue to see a slow biotech recovery and soft demand for instruments.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

In aggregate, we now expect our Life Science business to increase in the range of flat to 1% for the full year versus flat to down 3% previously. For our Diagnostics business, we are further tightening our range to approximately growth of 0.5% to 1.5% for 2025 versus 0.5 to 2.5% previously. This represents a 50 basis point reduction at the midpoint and primarily reflects continued market softness. Reflecting the easing of trade tensions with China and delays in implementing tariffs in other regions, we now expect a reduced headwind of approximately 30 to 40 basis points to operating margin. The remaining tariff headwinds are primarily related to supplier costs and EU manufactured products that are imported to The U.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

S. Factoring in the reduced tariff headwind, the updated full year non GAAP gross margin is projected to be between fifty three point five percent and fifty four point five percent versus 5354.5% previously. Full year non GAAP operating margin is now projected to be between 1213% versus 1012% previously reflecting our updated gross margin outlook along with proactive cost actions we've taken in managing the business. We continue to anticipate incurring in IPR and D expense in the third quarter as previously disclosed. Due to a further weakening of the U.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

S. Dollar, we now expect currency exchange to be approximately a 100 basis point tailwind to 2025 revenue with a 10 basis point positive impact on operating income. Notwithstanding our updated outlook for 2025, there are still many moving pieces which we continue to monitor closely. Finally, we had previously mentioned having an Investor Day this November. However, after careful consideration of the continued market volatility and the global geopolitical status, we've decided to move our Investor Day to the 2026.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

We will provide more detail on a specific date in early twenty twenty six. I'll now turn the call over to Norman for his remarks.

[Norman Schwartz, Chairman & CEO at Bio-Rad Laboratories]

Thanks, Ru. I think as we all know, the second quarter remained tumultuous. But it does seem we're all getting used to it for what it's worth. I think, you know, in any case, it's good to see our customers adapting to the current situation and figuring out how to navigate. And, you know, it's nice to see some positive signals relating to to NIH funding for 2026.

[Norman Schwartz, Chairman & CEO at Bio-Rad Laboratories]

We discussed tariffs. Obviously, it's still evolving. The U. S. Government policies are a work in process.

[Norman Schwartz, Chairman & CEO at Bio-Rad Laboratories]

But I think to the credit and determination of Bio Rad employees around the world, as a company, we remain resilient and continue to advance our business on many fronts. Probably probably good to take a moment here to welcome the, Stella employees to Bio Rad. I've had the, the chance to interact with some of them in the last few weeks, and and I think they are a great addition to Bio As John mentioned, Mike Crowley, who's been leading our global commercial operations, is retiring after a long and distinguished career at Bio Rad. Mike has been an important part of Bio Rad's success over the years. Just a call out, thank you, Mike, for all your contributions.

[Norman Schwartz, Chairman & CEO at Bio-Rad Laboratories]

So I think that concludes our prepared remarks. Gail, I think we'll now open it up to take questions.

[Operator]

Okay. So your first question comes from the line of Patrick Donnelly with Citi. Your line is open.

[Patrick Donnelly, Managing Director at Citi]

Hey, guys. Thank you for taking the questions. Hey, Patrick. Maybe first hey, Roop, how are you? Maybe first just on the Process Chrome side, nice to see those results this quarter.

[Patrick Donnelly, Managing Director at Citi]

I think you hinted at maybe a little bit of pull forward. Can you just talk about, I guess, what you saw in the quarter? What sense you have for how much of that was pulled forward? What's sustainable? Just want to talk through given what's going on with tariffs and everything, it felt like maybe there's a little bit of an impact there.

[Patrick Donnelly, Managing Director at Citi]

So it'd be helpful if you could just talk through that and the expectations for the remainder of the year on that piece.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Yes, of course. So first of all, I'll start out with maybe for the full year, we actually raised kind of a previous guide on Processed Chrome from high single digits to low double digits. So I think that maybe answers your question on sustainability. We think it is sustainable. Yes, we've had both in Q1 and Q2 a little bit of movement between quarters because these are customer conversations where they want to pull it forward for their own purposes.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Can't necessarily say it's because of tariff related. We that's not necessarily the driver, but just in terms of their production time frames and these sort of things. So we were more than happy to help support it. And as I said earlier, I think we see that as continuing to sustain through the rest of the year, and expect it to be still good for us.

[Patrick Donnelly, Managing Director at Citi]

Okay. Understood. And then in the guidance, I just wanted to clean up. I know Stila is now in the guidance. Can you just peel back what contribution that is?

[Patrick Donnelly, Managing Director at Citi]

Did the organic number move? I just want to make sure I understand where the raise came from, what's organic, what's still, if you could just help us out there, it would be appreciated.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Yeah. So so we got a few different reasons. So still is now in the guide, as we had indicated we would once we closed that transaction, which we did as of June 30. So that's in there. So when we take the guide up, included in there is the ddPCR growth rate moving up to that mid single digits that we talked about.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

That movement is solely still a specific because Continuum we already had in our original guide coming into the year because we expected it to be released in 2025, although we didn't specifically give dates as you know. So that piece is in there and that contributes to that, DDPCR growth rate increase, which obviously then takes our range up, overall to that zero to 1% versus the previous, wider range that we had, including the down to the minus 3%. And so maybe just to just to summarize. Right? So there's process chrome, which we just talked about in terms of increased, growth opportunity, the d d p c r, including still up.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

And then the third piece is consumables, which have continued to be more durable, which we commented on, during the script.

[Patrick Donnelly, Managing Director at Citi]

Yes. That's helpful. And then maybe last one just on the margins. Obviously, lot of moving pieces there with some of the tariff moves. Can you just talk about again the delta, the bridge from the old guide to the new, what are the moving pieces, what's tariffs, what's not would be helpful? Thanks, Rupert.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Yes, of course. So the biggest piece tariffs have come down significantly. So that's big piece. Right? If you remember in the in the prior calls, we didn't get it.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

We could see up to 130 points of headwind on on tariffs at the bottom line. We now think that that's 30 to 40 bps of headwind on the op margin related to tariffs. So significant change there. So if you think about the op margin change from 10% to 12% previously to now the 12% to 13%, you can see about 100 bps of that is related to tariffs. The rest of it is related to one, expecting to see because of Stella and other things, some better absorption, from the manufacturing standpoint.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

And then, of course, the mix continuing to be, stable for us and and, positive, if you will, because the consumable pull through. So those are the different pieces there.

[Patrick Donnelly, Managing Director at Citi]

Thanks guys.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Thanks Patrick.

[Operator]

Your next question comes from the line of Dan Leonard with UBS. Your line is open.

[Dan Leonard, MD & Research Analyst at UBS Group]

Thank you very much. My first question is on the diagnostics market in China. I could use a bit of help understanding how all the headlines relate or don't relate to Bio Rad over there and why?

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Yeah. Maybe I can start, John. Please jump in. Norman jump in. So there's I guess there's three pieces if you think about right now.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

I mean, China still overall is soft. So I'll start with that. So maybe that's the four pieces. So that's number one. China's continuing to be soft.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

With that said, I think in terms of some of the elements that, you know, John mentioned, I think, in his part of the script, you know, v b p, we've not seen any impact of VBP and and we continue to not see impact from VBP. So that's not something we've seen. You mentioned DRG. That's something we actually saw earlier in the year. And Dan, if you remember, we actually indicated that we took our numbers down after the q during the q one call, for the rest of the year because of some softness in diagnostics.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Part of that was some of this China DRG piece that was in there. So we'd already contemplated that. And, you know, we haven't seen any significant change or change from what we've commented on back then. The final piece is around the reimbursement rate changes. I mean, it's something our teams continue to monitor, as John said.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

But we haven't seen any news that we've got further reimbursement rate changes that could negatively impact us.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Yeah. Exactly, Ruben. I think hey, Dan. This is John DiRucentzo. Essentially, it reflects our mix versus maybe some other suppliers.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

We are a specialty diagnostic supplier. A large part of our portfolio are wholly controls, are not necessarily affected by reimbursement. And then the other areas that we called out, yes, were affected by the diabetes reimbursement, but other areas, especially areas are not really targeted at this time by those policies. So I just think it's where they've looked at the bigger spend, the larger maybe areas there and it has not affected us and we don't think that it's part of their view moving forward.

[Dan Leonard, MD & Research Analyst at UBS Group]

And John on the panel testing pressures over there. I know you supply panel tests through the BioPlex 2,200. But from a mix perspective, is that just not a big part of your mix in China?

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Right. Exactly. I think that's the explanation. Yeah.

[Dan Leonard, MD & Research Analyst at UBS Group]

And then for my follow-up question on the tariff environment, appreciate that there is lesser operating margin headwind due to the rollbacks. I'm wondering if I'm wondering more how are you managing your business given all uncertainty? Are there actual countermeasures you've put in place for a more severe tariff environment that you've had to roll back? Or are there things that are in flight, which remain in flight? If you could just talk through that process a little bit for me that would help. Thank you.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Yes. So we have taken a number of actions. Obviously, we've taken a fine, fine look at all of our different suppliers across various geographies. We have already started to move some of the way we move materials around the world where we make product. We have plans in place to even be more flexible in the future and adapt what's the best source of those products.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

So we've worked with suppliers. We've worked with our own teams. We built replicated in some areas some manufacturing capabilities if it becomes necessary. We didn't want to overdo it because of all the volatility still out there. But as things settle down now, we think we're in pretty good shape where we know where the challenges are.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

We have some flexibility from our suppliers and we have flexibility in our own plants to move manufacturing around. So we feel like as much as we could be, have some adaptability there and some resilience.

[Dan Leonard, MD & Research Analyst at UBS Group]

Thank you very much.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Thanks, Dan.

[Operator]

Your next question comes from the line of Brandon Couillard with Wells Fargo. Line is open.

[Brandon Couillard, Managing Director at Wells Fargo]

Good afternoon. Ruth, as we look at the second half, how should we think about revenue margin phasing between third and fourth quarter? And did the second half organic guide actually come down if we exclude the Stila contribution?

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

No, it did not organically. I mean, we've got some headwind in the diagnostic side, but life sciences continue to be inclusive of still helping support kind of that overall increase, if you will. In terms of the profiling, I think Q3 is going to look similar to Q2 from a top line perspective. And then, of course, we've got the fourth quarter with seasonal increase that we expect to see overall. So we may see a little bit of strength in Q3 over Q2, but not much.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

But then we've got Q4 stepping up kind of reasonably, although probably not as much as what we saw before. I think some of that's moved around a little bit into whether it's q three into q two, etcetera, from an overall profiling standpoint. From a margin standpoint, what you're going to end up seeing is q three margins, being somewhere in the similar range of q two. And then in q four, because we do have part of it's the mix with higher quality systems and and some of the d d p c r follow flow through, q four margins and then the improved absorption, to be better than q three and q two from an overall standpoint to land within kind of that midpoint of the range of what we provided the 53.5 to 54.5%.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

And we spent quite a bit of time with our commercial teams and customers to look at that ramp that we have in the fourth quarter. Fourth quarter is significant increase over the previous few quarters there. But it's a little bit of timing and it's kind of year over year we see a number of areas of our business have larger orders and we have both high confidence in the orders coming through as well as all of our supply teams to be able to deliver that product during the quarter. So pretty good confidence level in the fourth quarter number as well.

[Brandon Couillard, Managing Director at Wells Fargo]

Okay. Thanks. That's helpful. And then on dDPCR, did you comment on how instruments performed in the quarter? And then secondly, it's nice to see Continuum finally coming to market.

[Brandon Couillard, Managing Director at Wells Fargo]

I think you mentioned that it was already baked into the guidance. Do you think there's any pent up demand in the market for that system? And how are you kind of positioning it relative to Stila platforms? Thanks.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Yes. So recognize I the team did a great job not only kind of getting to the finish line and closing the acquisition, but keeping that focus on Continuum and having very, very robust quality data to be able to launch that into the marketplace. There's a lot of excitement about it. I mean, the Continuum platform was designed to replace QPCR, it's a '96 well plate standard format. And there's a lot of excitement about that bringing more precision sensitivity to those applications.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

So a lot of excitement there. So we're kind of on track to what we had, kind of forecasted going into the year. On the QX700 series, the team's already rebranded them, positioned them. We're moving we have hundreds of thousands of assays that have been developed over the last decade or so. We're moving those on to Continuum and to the QX700.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

So there's a week after we closed the deal we had our sales team in Pleasanton, California being trained on them and we continue that training globally both in sales and service. So we're doing everything possible to drive share and expand overall the market for digital PCR. So a lot of excitement for both those products coming to the market on our assay content.

[Brandon Couillard, Managing Director at Wells Fargo]

Any color on just how instruments, DDPs or instruments performed in 2Q? Thanks.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Yeah. They were I mean, on a sequential basis, they were slightly better. But on a year over year basis, it was relatively weak overall.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Still very soft, particularly in the academic market where people are not sure of their budgets overall. So we see softness across the board instruments not just digital PCR but all the other instruments as well.

[Brandon Couillard, Managing Director at Wells Fargo]

Great. Thanks.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

And just a little bit of color to that. We had not factored in any kind of end of year budget flush, but potentially there's some upside for us as we speak to customers on a kind of daily basis here. And potentially there'll be a little more confidence in their budget and there could be a little bit upside but we have not factored into our forecast.

[Operator]

Your next question comes from the line of Jack Meehan with Natron Research. First

[Jack Meehan, Partner & Equity Research Analyst - Life Science Tools & Diagnostics at Nephron Research LLC]

question, I wanted to ask about the process chrome strength in the quarter. How much of this is just small numbers and easy comps versus can you talk about what you're seeing in terms of order patterns with your customers and any recovery there?

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Yes. So I think we're getting back to a normal state where it's not a matter of customers being overstocked anymore. That'd be some of that in some places. But I think it's more is more of an appropriate relationship between how they need product, when they need product, when they're ordering from us. So you're right, it's an easier comp.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Last year was a soft year as we allowed our customers to adjust to kind of their inventory levels they wanted. And now we think it's more of a direct correlation between their demand and what they're ordering from us. And it's more similar to the volume that we saw in years past before kind of the volatility of supply chain challenges and overall their own managing their inventory.

[Jack Meehan, Partner & Equity Research Analyst - Life Science Tools & Diagnostics at Nephron Research LLC]

Okay. And then sticking with life sciences, you call that food safety as a growth driver. It's been a while since we talked about that product family. Anything to note there?

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

You know, our food safety business is an interesting one because we're essentially taking our products that are used in life science research and and how they're developing specific content for the food applications. And that area continues to grow high single digit. We have a very strong team focused on that. It's not a huge business for us, but it is an interesting kind of additional market, applied market that, do not have some of the challenges that we see today in life sciences or in biotech. So it's an area that we're looking to see what more could we do there, the next few years.

[Jack Meehan, Partner & Equity Research Analyst - Life Science Tools & Diagnostics at Nephron Research LLC]

Okay. And last one, wanted to circle back on The U. S. Federally funded research customers. Just as you look at them as a customer class, can you talk about how the demand played out throughout the quarter on consumables and instruments?

[Jack Meehan, Partner & Equity Research Analyst - Life Science Tools & Diagnostics at Nephron Research LLC]

Was it stable? Did it strengthen or weaken at all? How are you feeling about that?

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Yeah, Jack. It was stable throughout the quarter and improved from where it was in q one where I think there was a bit more paralysis, if you will. And and that's part of what we're anticipating for the rest of the year to see that continuity from q two through the rest of the year.

[Jack Meehan, Partner & Equity Research Analyst - Life Science Tools & Diagnostics at Nephron Research LLC]

Okay. Thank you guys.

[Norman Schwartz, Chairman & CEO at Bio-Rad Laboratories]

Thanks Jack.

[Operator]

Your next question comes from the line of Tycho Peterson with Jefferies. Your line is open.

[Matt Taylor, Managing Director at Jefferies & Company Inc]

Thanks. This is Matt on for Tycho. Ruth, to go back to Process Chrome, just and appreciate the disclosures in the deck you guys gave this quarter, but it seems to suggest that on a dollar basis, Process Chrome was up like 15,000,016 million dollars year over year. Are you saying 20% of that is tied to pull forward, so maybe a few million was pulled forward? And then any more color you can provide on just the strong double digit growth, just given the revenue base of that business and those disclosures, I mean, would suggest that the strong double digits was something like 50% plus in the quarter.

[Matt Taylor, Managing Director at Jefferies & Company Inc]

So any more clarity you can just add in terms of the magnitude of the Process Chrome growth and comp you've had in 2Q? Thank you.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

We like you. Know. Matt, you got a lot of, I appreciate all the numbers there. Listen, I think you're a little high on some of those numbers. So when we think about Process Chrome and and where it landed for the quarter, you know, obviously, we got an easy comp from from a '24 standpoint. And and as we talked about, we've got, I think, as John said, a more, normalized environment. That's been good.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

On a sequential basis, we saw strength on Processed Chrome, as a result and obviously a very strong compare on a year over year basis. It's not quite 50% on a year over year. It's kind of maybe closer to half of that or slightly above half of that sort of number, how you ought to think about it.

[Matt Taylor, Managing Director at Jefferies & Company Inc]

Okay. Thanks. That's and then just to go back to the the new digital PCR launches, sounds like you have the whole team out there right after it closed. Can you just talk about what you're doing on the commercial side stimulate demand? Are you running any promotions for existing dDPCR customers?

[Matt Taylor, Managing Director at Jefferies & Company Inc]

I understand it's a different part of the market. Or are you running any kind of targeted programs for high end qPCR customers? Just talk about how you're kind of positioning the 700 series in the continuum, going forward. Thanks.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Yeah. And we will share more details, at a webinar coming up here. But, it's exactly the point is that this is not to replace our installed base. It's really to expand the number of users for digital PCR. It is a very simple workflow at the right kind of price points to take share from qPCR.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

And also as you said on the high end, with the QX700HT and our existing QX600 products, we continue to have the high sensitivity products in the market. And we see a number of applications where rather than next gen sequencing they can apply PCR for faster and less expensive solutions for them. So it's expansion of the marketplace primarily. Of course, there's some areas where it'll hit kind of the center of the existing ddPCR market. But in general, it's to expand the number of users of Droplet Digital PCR.

[Matt Taylor, Managing Director at Jefferies & Company Inc]

Thanks. And maybe if I could sneak one more in. OUS academic government would just be curious kind of what demand trends look like both in Asia and Europe in 2Q and kind of how you're thinking about the funding and demand backdrop ex US for ANG for the rest of the year? Thank you.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Yes. So maybe Rupo give more details on it. But when we say academic, we're not we're specifically talking about global academic where some countries in Europe have shifted budgets to defense or other areas. It's a zero sum game in some areas. So they're slowing down some investments in academic.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

So it's not just a U. S. Phenomenon, it's a global phenomenon. Can't say I know exactly in China if it's really seen that way or not. But certainly U.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

S. And Europe are similar in pressures on academic funding.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

I think you're spot on John. And just from an APAC standpoint, China is continuing to be soft. We're seeing some movement positive movement in Korea and Japan, which is great to see because they they've been kind of jammed up for a bit of time now.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

But China is kind of in that softness category, if you will.

[Matt Taylor, Managing Director at Jefferies & Company Inc]

Super. Thank you.

[Operator]

Thank you everyone. Okay. Sorry.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

I'm sorry. From an academic standpoint just to reiterate what we said to you, customers are focused on keeping their people and keeping the research going. So I actually commend them for their ingenuity in making that happen. But it shows in our results for our assays and reagents that are continuing to be used. We can see the research is continuing Even under uncertainty, they're moving science forward.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

And I think it's commendable that with all the disruptions and unknowns that they continue to do that. We see that in our numbers.

[Operator]

Okay. So your next question comes from the line of Connor McNara with RBC. Your line is open.

[Analyst]

Hi, this is David Carter for Connor. I just wanted to call to ask about, can you confirm if the organic number 423, which goes from like a negative three that goes to about positive 5% in the fourth quarter?

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

That sounds about right because you're you're looking at it from a total company standpoint. Is that right?

[Analyst]

Yeah. That's correct.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Yes. Yes. So, that's right in terms of how that progresses through the year.

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

And again part of that is in the fourth quarter last year is when we first saw the reimbursement changes in China. So that's annualized at that point in time. So that's kind of not necessarily because also there's a better market dynamic it's more of the comp to it.

[Analyst]

And just to follow-up on the continuum, how has the response been for the lower throughput customers? Because I know that was one aspect of the portfolio there was a gap for that for the PVPCR. How is the uptake from that portion of customers?

[Jonathan DiVincenzo, President & COO at Bio-Rad Laboratories]

Yes. I think it's too early to give you actual results, but actually the flexibility on the continuum where you can have one sample or 96 samples It's cost effective and it also meets those customers more episodic when they're actually using the platform. So that's one of the advantages that we're touting to the product. But probably a little too early to tell that there's direct customer user feedback yet. Give us a month or so.

[Analyst]

Okay. Still early rounds. No problem. Thank you.

[Roop Lakkaraju, Executive VP & CFO at Bio-Rad Laboratories]

Thank you, Ricardo.

[Operator]

Thank you, everyone. And that concludes our Q and A session for today. I will now turn the call back over to Mr. Edward Chang for the closing remarks. Please go ahead.

[Edward Chung, VP - IR at Bio-Rad Laboratories]

Thank you for joining today's call. As previously discussed, we are planning to host a webinar on Droplet Digital PCR and our updated portfolio on August 26 at 1PM Eastern Time, 10AM Pacific. We will post registration information on the Investor Relations section of biorad.com shortly. As for upcoming investor conferences this fall, we'll be participating at the Wells Fargo Healthcare Conference in Boston and the Morgan Stanley Global Healthcare Conference in New York. Our CEO, Norman Schwartz will also be participating on an industry panel at the Nephron Healthcare Summit in Napa.

[Edward Chung, VP - IR at Bio-Rad Laboratories]

As always, we appreciate your interest and we look forward to connecting soon.

[Operator]

Ladies and gentlemen, that concludes today's call. Thank you all for joining and you may now disconnect. Have a nice day ahead everyone.

Participants

Executives

• Edward Chung, VP - IR
• Jonathan DiVincenzo, President & COO
• Roop Lakkaraju, Executive VP & CFO
• Norman Schwartz, Chairman & CEO

Analysts

• Patrick Donnelly, Managing Director at Citi
• Dan Leonard, MD & Research Analyst at UBS Group
• Brandon Couillard, Managing Director at Wells Fargo
• Jack Meehan, Partner & Equity Research Analyst - Life Science Tools & Diagnostics at Nephron Research LLC
• Matt Taylor, Managing Director at Jefferies & Company Inc
• Analyst