The story has been updated to include comments from the company's earnings call.
NEW YORK – After years of "unwinding" from massive investments by the life sciences and diagnostics industries during the COVID-19 pandemic, Bio-Techne is preparing for a return to normalized market growth in the upcoming year, executives said on a conference call discussing the firm's fiscal Q4 and full-year 2024 financial results on Wednesday.
Bio-Techne CFO Jim Hippel said that the firm is pleased with its strategic portfolio positioning as the life sciences industry corrects post-COVID-19, and noted that the firm's annual revenue is higher today than before this unwinding began.
He added that original equipment manufacturers have completed their destocking, biotechnology funding has improved since 2023, and large pharmaceutical customers will likely complete their realignment of research and development pipeline priorities by the end of calendar year 2024 — all of which are indications that the market may begin to recover starting in the second half of 2024, although there is no way to know how long the recovery will take.
In addition, the announcement earlier this year of the Chinese government's $70 billion stimulus package across multiple industries, including life sciences, should encourage instrument growth in the region starting in 2025, Hippel said.
Bio-Techne CEO Kim Kelderman noted that the firm's instrumentation growth rates have been under pressure in both China and in the biopharmaceutical end markets, but consumables related to those instruments have been growing in the double-digit percent range. The firm is "very confident that the installed base is getting utilized optimally" and with funding environments improving, "there will be a drive to get increased capacity in the field and that will drive our instrumentation numbers," Kelderman said.
Because the Chinese stimulus program is intended to last for three years, the "moment these funds become available, we will benefit short term, and then I feel it will be a positive driver for the coming years ahead," he added, noting that the impact of the stimulus will likely not translate to revenue growth until the second half of 2025.
The industry is on the "gradual road to end market recovery" over the next 18 months, and Bio-Techne is making the case for organic revenue growth in fiscal year 2025, Hippel added. The firm expects growth in at least the low-single-digit percent range for the first half of its fiscal year 2025, with the potential to accelerate to mid- or high-single-digit growth as the Chinese stimulus funds are released and large pharmaceutical customers' budgets normalize in the second half of the year, he said.
"Trying to predict when that full market recovery happens is hard to do," he added. "I think there [are] still green shoots this quarter; they just haven't quite sprouted yet."
Overall, the firm's fiscal Q4 revenues rose 2 percent year over year.
For the three months ended June 30, the company reported revenues of $306.1 million compared to $301.3 million a year ago, slightly missing Wall Street analysts' average estimate of $306.5 million. Its Q4 organic revenues were up 1 percent year over year.
Diagnostics and Genomics revenues were $90.7 million, up 15 percent year over year from $79.0 million. Organically, the segment's revenues were up 9 percent. Kelderman said that molecular diagnostics organic revenue growth topped 20 percent and that fiscal Q4 volumes for the firm's ExoDx Prostate test increased by almost 35 percent. The company's other molecular diagnostics business Asuragen saw overall growth in the mid-teens percent range.
In the spatial biology business, demand for the firm's Comet instrument — obtained in Bio-Techne's acquisition of Lunaphore last year — has outpaced manufacturing capacity, but the company is continuing to implement production process improvements to scale up its capacity, Kelderman said. He added that the capacity problem "should be going away" in the first quarter of fiscal year 2025.
Protein Sciences revenues were $214.0 million, down 4 percent year over year from $223.0 million, with organic revenue down 3 percent. A business in the segment has met the criteria as held for sale and was excluded from its fiscal third and fourth quarter results, which reduced fiscal Q4 sales in the segment by 1 percent, Bio-Techne said in a statement.
The firm's automated immunoassay instrument Ella and its related consumables saw double-digit growth in the quarter and has had rapid adoption among contract research organizations, Kelderman said.
Both the biopharmaceutical and academic end markets were down in the low-single digit percent range during the quarter, although Kelderman noted that biopharma is continuing to stabilize and was relatively consistent sequentially.
Geographically, North America and Europe saw declines in the low-single digit percent range, while China saw declines in the high-single digit percent range in line with expectations. Asia Pacific outside of China grew in the low-double digit percent range, Hippel said.
Kelderman noted that the Protein Sciences segment has the most exposure to both China and biopharma end markets and thus is positioned "to see the most significant improvement as these end markets start to take off."
Bio-Techne reported Q4 net income of $40.6 million, or $.26 per share, compared to net income of $75.5 million, or $.47 per share, a year ago. Its adjusted EPS for the recently completed quarter was $.49, meeting the analysts' average estimate.
For full fiscal year 2024, Bio-Techne reported revenues of $1.16 billion, up 2 percent from $1.14 billion in 2023, and in line with the consensus Wall Street estimate. Its 2024 organic revenues grew 1 percent year over year.
Full-year 2024 Diagnostics and Genomics revenues were $326.4 million, an increase of 12 percent year over year from $292.6 million, and Protein Sciences revenues were $830.9 million, a decrease of 2 percent year over year from $845.7 million.
Kelderman said that the ProteinSimple portfolio saw growth in the mid-single-digit percent range during the fiscal year, including double-digit growth for instrument-related consumables.
For fiscal 2024, the firm reported net income of $168.1 million, or $1.05 per share, compared to $285.3 million, or $1.76 per share, in 2023. Its adjusted EPS for 2024 was $1.77, slightly missing the consensus Wall Street estimate of $1.78.
Bio-Techne ended fiscal 2024 with $151.8 million in cash and cash equivalents and $1.1 million in short-term available-for-sale investments.
In a separate announcement on Wednesday morning, Bio-Techne said that its board of directors decided to pay a dividend of $.08 per share, payable Aug. 30 to all common shareholders of record on Aug. 19.
In Wednesday afternoon trading on the Nasdaq, Bio-Techne's shares were down 6 percent to $73.39.