Bio-Rad Laboratories, Inc. (BIO) Earnings & Analysis

Latest quarter

Bio-Rad reported third-quarter revenue of $656.4 million, up from $653.0 million a year earlier. Its filing attributed the increase to Clinical Diagnostics, where sales rose 2.7% to $401.8 million, driven on a currency-neutral basis by quality systems and diabetes products.

The filing said Life Science sales fell 2.8% to $254.6 million. Bio-Rad attributed the currency-neutral decline to lower process chromatography sales and challenges in academic research, partly offset by increased Droplet Digital PCR sales.

Gross margin fell to 50.1% from 52.6%, which the filing attributed to higher restructuring costs. Bio-Rad also reported an operating margin of −7.57%, compared with 10.0% a year earlier, and free cash flow of $96.4 million, compared with $89.2 million.

Diluted earnings per share were $17.02, compared with −$12.70 a year earlier. The filing reported a $583.2 million holding gain on Bio-Rad’s Sartorius investment, versus a $505.1 million holding loss a year earlier. On a non-GAAP basis, CFO Roop Lakkaraju reported diluted earnings per share of $2.65.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Roop Lakkaraju said Life Science sales excluding process chromatography increased 2.5% on a currency-neutral basis in the third quarter. He said the Droplet Digital PCR portfolio grew 7% on that basis, with instrument revenue up more than 20% year over year. Clinical Diagnostics growth, he said, reflected the timing of orders for quality systems and diabetes products.

In response to a question about the instrument business, President and COO Jon DiVincenzo said the portfolio had attracted new customers, including in the academic market, although some were not yet using their platforms at full capacity. He said he could not project continued 20% growth. DiVincenzo also said consumable demand had improved but “pull-through has not yet normalized, and that could continue into 2027.”

On China, DiVincenzo said updated healthcare guidelines were creating pricing pressure in the diagnostics market. Lakkaraju told analysts that Bio-Rad was still assessing the guidelines and expected a single-digit millions impact in 2027. DiVincenzo said the biopharma environment had improved from later-stage work toward discovery, while academic spending remained below its usual level.

Lakkaraju said non-GAAP gross margin improved year over year in the third quarter, while Bio-Rad recorded an approximately $50 million non-cash impairment of Life Science intangible assets as it prioritized investment returns. For the fourth quarter, he expected gross margin to decline sequentially as the product mix shifted toward instruments, process chromatography revenue declined and fuel prices remained higher.

Asked about capital allocation, Lakkaraju said Bio-Rad would approach repurchases opportunistically and seek acquisitions that add customer differentiation, revenue growth and margin expansion. He said the restructuring plan was proceeding, with the full effect of expected $30 to $35 million savings starting in 2028. On the next year’s outlook, he said “we’ll lay out 2027’s guidance at the year-end call.”

Guidance

Lakkaraju said Bio-Rad now expects full-year non-GAAP gross margin in the upper half of its 53% to 54% guidance range; its previous guide covered the full range. He also said the company expects non-GAAP operating margin in the upper half of its 10% to 12% range, rather than the full range previously given.