Bio-Techne (TECH) Q3 FY26 earnings call: guidance and Q&A

Given the step-down in emerging biotech revenue to high single-digit decline, what were the intra-quarter trends, and what is the outlook for improvement?

Management was surprised by the high single-digit decline in emerging biotech, as funding had rebounded significantly. They noted that while late-stage biotech funding was up, early-stage funding (which impacts core reagents) was down. Sales force interactions are increasing, but they are maintaining a cautious forecast for Q4, assuming no clear improvement yet, but expect a recovery in H1 FY27.

“But you're right. It did step down to negative high single digits instead. And that really is the whole for our quarter, and it fits very nicely to exactly the gap in our biotech end market.”

asked by Matthew Larew · answered by Kim Kelderman

Considering the removal of headwinds and peer expectations, is a mid-single-digit growth range reasonable for Bio-Techne by the end of calendar 2026 (early FY27)?

Management is encouraged by the outlook for FY27, expecting at least mid-single-digit growth. They highlight that company-specific headwinds will be behind them, academic markets are stabilizing, and pharma remains strong. The key variable is biotech, where the 2-3 quarter lag between funding and spending suggests an uptick in H1 FY27.

“Yes, I mean, again, we won't be giving any kind of even soft guidance around '27 until next quarter. But as I've mentioned in my prepared comments, we're very encouraged about the upcoming fiscal year. So many of these headwinds that are company-specific will now finally be behind us.”

asked by Matthew Larew · answered by James Hippel

Despite current market challenges, can Bio-Techne still achieve mid-single-digit growth in fiscal 2027, and what gives management confidence?

Management believes they would be disappointed if they didn't achieve at least mid-single-digit growth in FY27, citing current indicators pointing to market normalization. They note that even with current headwinds, underlying growth was low single digits. Confidence stems from stabilization in academic markets, strong pharma, and early indicators like proteomic analysis and spatial biology performance, which often inflect first.

“So with regards to fiscal year '27, I mean, based off the wins we have right now, we think we'd be disappointed if we didn't do at least mid-single-digit growth because all the indicators are pointing towards a gradual normalization of the market.”

asked by Puneet Souda · answered by James Hippel

Given softness in the core reagent business and competitors showing recovery, what gives Bio-Techne confidence it's not losing market share in R&D Systems and Novus Biologicals?

Management attributes some of the core reagent softness to the OEM order timing impacting Q3 and notes that their comparables were double-digit growth last year, unlike some competitors. They are confident in their market position, stating that their combined protein and antibody portfolio grew low single digits even after excluding the large OEM order.

“And if you look at our comparables with double-digit growth last year, it's almost 20% last year. and compared to some of the other companies that you're talking about having negative numbers to compare against -- we've done our math in our homework and also, of course, our market work. And we're relatively confident that we're actually still pretty well of.”

asked by Puneet Souda · answered by Kim Kelderman

What are the current trends in China, and what is the visibility and expectation for continued growth?

Management is excited about the fourth consecutive quarter of positive growth in China, observing significant momentum, especially in advanced therapeutics. They recently met with government officials and customers, confirming strong activity. They expect continued momentum and strengthening, noting their direct market presence and strong customer connections.

“And there's a lot of activity. You can clearly see a momentum in the market, especially around the advanced therapeutics. And so for us, we are not surprised that we are in growth mode again. We call that 1 right a year ago. And there's no reason to believe that, that is going to weaken, I would expect a continued momentum and strengthening of that particular end market, specifically after our visit.”

asked by Patrick Donnelly · answered by Kim Kelderman

Can you provide an updated view for Q4 end markets, competitive dynamics in biotech funding, and which portfolio parts would recover first from emerging biotech customers?

For Q4, management assumes Q3 performance levels across all end markets: strong pharma, slow but steady academic improvement, and continued Q3 performance for biotech. Kim clarified that biotech funding mix shifted, with 75% going to late-stage (82% to Phase II) in the prior year, impacting early-stage discovery where core reagents are used. Jim expects proteomic analysis and spatial biology to be early indicators of biotech recovery, similar to their performance in academic markets.

“The very simple answer is our base case is we're assuming basically the same level of performance across all our end markets in Q4 that we saw in Q2. Pharma already is very strong. Academic is going in the right direction, albeit slowly. So therefore, we don't see a meaningful move but nonetheless, continued progress. And then with biotech, we're assuming the same kind of performance we saw in Q3 for Q4.”

asked by Justin Bowers · answered by James Hippel