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. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release. We have also posted a supplemental earnings presentation in the Investor Relations section of our website for your reference. Revenue was consistent with our outlook, and operating margin exceeded consensus, a testament to the discipline and agility of our teams in what continues to be a challenging and evolving macro environment.

Our Clinical Diagnostics segment remains stable across our product areas, aside from the reimbursement rate headwind in China, which we expect to analyze in the fourth quarter. In our Life Science segment, process chromatography delivered a strong performance, helping offset the continued softness we're seeing in academic research and biotech funding. This sentiment was reflected through continued weak instrument demand and some softness in consumables. However, through disciplined cost management and tight control of our discretionary spending, we achieved margin outperformance for the quarter.

While it's still early, we are encouraged by the customer receptivity to the new products, particularly in the entry-level segment. In summary, we're pleased with the progress we're making, balancing near-term execution with continued investment in innovation and long-term growth. Net sales for the third quarter of 2025 were approximately $653 million, which represents a 0.5% increase on a reported basis versus $650 million in Q3 of 2024. Within the Life Science segment, our process chromatography business experienced strong double-digit growth on a year-over-year basis due to the timing of customer orders within the quarter.

What went well
  • Revenue was consistent with the company's outlook and operating margin exceeded consensus, with net sales of approximately $653 million, a 0.5% reported increase versus Q3 2024.
  • Process chromatography again delivered strong double-digit year-over-year growth, prompting the company to raise its full-year outlook for the product area to high teens growth from prior low double-digit.
  • Non-GAAP operating margin improved to 11.8% from 11.3% a year ago, reflecting proactive cost actions and net reductions in in-process R&D expense.
  • Free cash flow was $89 million for the quarter and $256 million year-to-date, yielding a year-to-date conversion ratio of 126% of non-GAAP net income.
  • The ddPCR strategy advanced with completed global sales training, a building sales funnel, strong entry-level segment receptivity, and new partnerships with Gencurix and Biodesix.
What went wrong
  • On a currency-neutral basis net sales decreased 1.7% year-over-year, driven by both Life Science and Clinical Diagnostics segments.
  • Non-GAAP gross margin declined to 53.5% from 55.6% a year ago, due to higher material costs and reduced fixed manufacturing absorption.
  • Core Life Science revenue excluding process chromatography fell 6% year-over-year (7.8% currency neutral) on academic and biotech softness plus a tough comparison from large one-time orders a year ago.
  • Clinical Diagnostics currency-neutral sales decreased 1.8%, hurt by lower diabetes testing reimbursement in China.
  • Instrument demand remained weak and consumables showed some softness as research customers stayed cautious with budgets.

Guidance Changes

MetricPeriodCurrent guidance
Total currency-neutral revenue growthFY2025Flat to 1% (maintained)
Non-GAAP gross marginFY202553.5%-54.5% (maintained)
Non-GAAP operating marginFY202512%-13% (maintained)
Free cash flowFY2025$310M-$330M (maintained)
Process chromatography growthFY2025High teens (raised)
Process chromatography growth (framing)FY2026High single digit (normalization) (new framing)

Performance Breakdown

MetricYoYNote
Net sales +0.5% reported (-1.7% currency neutral) to ~$653M Driven down currency-neutral by both Life Science and Clinical Diagnostics segments
Life Science segment sales Flat reported (-1.5% currency neutral) at $262M Constrained academic research and biotech funding environment
Core Life Science ex-process chromatography -6% (-7.8% currency neutral) Academic/biotech softness and tough comp from large one-time orders in year-ago period
Clinical Diagnostics segment sales +0.6% reported (-1.8% currency neutral) to ~$391M Lower diabetes testing reimbursement in China
Non-GAAP gross margin 53.5% vs 55.6% Higher material costs and reduced fixed manufacturing absorption
Non-GAAP operating margin 11.8% vs 11.3% Proactive cost actions and net reductions in IP R&D expense
Non-GAAP net income $61M ($2.26 EPS) vs $56M ($2.02 EPS) Excludes Sartorius equity value change
Free cash flow $89M vs $123M Lower operating cash generation versus prior year

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Process chromatographyLow double digit FY outlookHigh teens FY outlook; Q4 expected lower sequentially and year-over-year on order timing; FY2026 framed at high single digitStrong near-term, normalizing
Academic/government research fundingStabilizing in Q2Still cautious; no budget flush expected amid NIH budget uncertainty and U.S. government shutdownSoft/cautious
China diagnosticsSoft, DRG impact noted, no VBPStill soft; expect return to growth in Q4 as diabetes reimbursement annualizes; no new VBP expected into 2026Soft, improving into q4
ddPCR portfolioQX700 launched, Stilla closedSales training complete, funnel building, strong entry-level receptivity, new Gencurix/Biodesix partnerships; still expecting flat for the yearImproving
Biotech fundingSlow recoveryGradual improvement anticipated into 2026Gradual improvement

Q&A Summary

What are the expectations for the Q4 ramp given the government shutdown and process chromatography pull-forward?
Slight uptick on both Life Sciences and Diagnostics. Process chromatography is a Q4 headwind, offset by expected ddPCR strength on the Life Science side; on Diagnostics it is about the quality controls lot releases. October demand was on plan, giving confidence in the trajectory.
How are you thinking about the market into 2026?
U.S. academic remains cautious and TBD pending the NIH budget; instruments most affected while consumables chug along. China remains an open question with no VBP impact. Biotech improves gradually. Process chromatography normalizes back to high single digit growth. Full guidance comes at the February call.
Does the high single-digit process chromatography framing for 2026 reflect full market normalization given historical volatility?
Volatility remains, as seen this year with customers pulling forward between quarters tied to therapeutic demand. But without an easy comparator from 2025 into 2026, normalization back to high single digits is where they are pointing and what they want to execute to.
Can you quantify the China diabetes pricing headwind?
Last Q4 had two components: the price cut-in (mid-single digits) which China cut in mid-quarter, and a channel cut-in (low to mid-single digits). That frames what was there last year and is annualizing.
Can margins expand in 2026 if growth stays low single digit, and what are the moving parts?
There are opportunities for margin expansion in 2026 beyond 2025. Ideally growth would be 3%-5%, with 3% allowing more effective absorption. Drivers include lean/productivity initiatives in factories, logistics improvements, untapped supply chain buying-power leverage, and OpEx productivity in R&D and other functions.
Was ddPCR integration disruptive, and how were instruments versus consumables in Q3?
Integration was not disruptive; there was excitement about the expanded portfolio and growing pipeline, with somewhat extended sales cycles. Still expecting to be on plan for the full year for the portfolio. Consumables were a little slow in Q3 but expected to come back in Q4, with an instrumentation rebound in Q4 and 2026.

More on Bio-Rad Laboratories, Inc.

Reported 2025-10-29 · figures from the Bio-Rad Laboratories, Inc. Q3 2025 earnings call.

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