BIO-RAD LABORATORIES, INC. — Call Transcript 2026

Great. We're going to go ahead and kick it off. I'm Tycho Peterson from the life science team. I'm pleased to have Bio-Rad with us today. We've got Roop. Maybe just to kick it off, Roop, we could do a quick state of the union here, 1Q macro, obviously, a bit choppy. We'll get into that in a bit. I think importantly, obviously there's been some headlines, a lot of focus on high-level operational items at the company. Just talk for a second on, you've been at the company for a while now, how would you characterize things at this point, areas like innovation, infrastructure, go to market, commercial? What are the real priorities here in the near term? First of all, Tycho and Matt, thanks for having Bio-Rad at the conference here. Really appreciate it. Been with the company for about two years now, it's been a lot of change. Part of that change is me coming on board, but also other new leadership that's come on board over the past couple years, 18 to 24 months, let's call it. One of the aspects here is just as a new leadership team coming together, really aligning on, obviously end markets are awfully choppy, as you've said, and they're evolving as we speak. At the same time, it gave us an opportunity to really look at our business, the different elements of both the tools side and the DX side, and understand what's working, what could be better, and these sort of things. Based on that overall evaluation, we've spent a lot of time going through every area, really, if you will, right. There's commercial transformation that's happening in terms of how we think about end markets, how we think about the accounts, where there's growth opportunities, these sort of things. Where we have a right to win, how do we do more in those areas, as an example, right. Greater pricing discipline. The list goes on. If I go into the operational areas, really looking at our manufacturing capacity, our distribution network. As an example, we've been talking about China for China for over five, six, seven years, and with no actions. We decided it's something we needed to do. We specifically identified certain SKUs that we thought would be beneficial in China, and we stood up a manufacturing capability within 90 to 120 days. When you get into the operational areas, R&D, we've really reevaluated our overall R&D portfolio. I'm sure you're going to get into it, right? When we look at our R&D from a historical standpoint, it hasn't been great in terms of the returns there. We recognize that there's an importance in ensuring that we have the vitality that we need for future growth. We've spent a lot of time really looking at the portfolio analysis. It's resulted in certain impairments we've taken, as an example, in the fourth quarter of this last year. It's also helped us refocus in terms of digital PCR, where we have leadership, and we're doing more in that area, right? One of the things we talked about in our Q1 call is a transition of our over 400,000 assays on our historical digital PCR platforms over to the Stilla platforms, which is the acquisition we just completed last year. These are things that just to drive improved execution and focus has been a critical area. Those are just a few examples in terms of what we've been trying to transform towards improved execution. You can call it's kind of plumbing areas, if you will, that over time, we think will build towards improved financial results and improved growth opportunities in the marketplace. Yeah, maybe we can just follow up on the R&D kind of initiatives. What really hasn't worked historically? What are the focus areas to improve productivity going forward? As you said, the returns historically haven't been great. Yeah. If I look at the R&D side, there's two aspects to it. There's the internal R&D. I'll come back to that here in just a moment, but we've also been acquisitive over the past few years. Just historically, we've been acquisitive, and it's been an important part of our overall strategy. That's been no different over the last, let's call it six-eight years. The challenge is where we had focused in terms of M&A opportunities was earlier stage companies that needed to go through that R&D phase and really get to commercial viability. Quite honestly, it hasn't worked out as well as we would hope, and that's both on the DX side as well as on the tools side. We have reevaluated how we think about M&A, where we want to focus, the types of companies we want to focus. The Stilla transaction is an example of that, which closed June 30th of last year, wherein it's a company in droplet digital PCR, which is exactly where our specialty is. They had a product on market that was already selling, that had revenue, that had a commercial basis, which we could then take our commercial infrastructure as well as our R&D capabilities and add value there and accelerate growth. That's exactly what we're seeing when you look at 24% year-over-year instrument growth in ddPCR for us this last quarter. That's a result of the work we've been doing on that R&D improvement, but also the value of what the new Stilla platforms and the collective portfolio that we have within the marketplace. How about replacement cycle opportunities? I am just thinking about Bio-Plex next gen launch coming next year. I think you have got an install base over 400 units, at least last time you disclosed. What are your expectations there on magnitude of the upgrade replacement cycle? Yeah. We're looking forward to the next gen platform to be coming out, it's on track to do so. As we think about it, there's a couple of different aspects here that we focused on. One is obviously just getting that next gen platform out there in terms of replacement strategy with existing install base, like you said. The other part of it, though, is we've been focused on menu expansion and an instrument without menu is really not of value for those users, and we recognize that. We've been focused on menu expansion. I think between install replacement cycle, new market share opportunities with that menu expansion, those are the kinds of things and how we're thinking about it. Again, it's that improved execution and approach, if you will, the ability to go deliver on that which we're driving. Any way to frame how you think about where pull-through can go with menu expansion? I assume most of the installs would be reagent rental, as you roll them out. Yeah, there's reagent rental, there's obviously the consumable pull-through, which are both, I think it's a little bit early to really talk about what the amounts might be, but we're excited about the potential of that menu expansion and how that can open up further market share for us. To go back to the earnings call, the 1Q call, you gave a little more, I'd say, precise comments on M&A, in particular, $100 million-$500 million range plus some smaller bolt-ons, less focus on transformational deals. Should we interpret that as you being closer to the finish line on something? Then does this specifically take larger M&A off the table down the road? Yeah, I appreciate the question because we get a lot of questions around M&A. Again, historically, Bio-Rad's been acquisitive in both larger deals and smaller deals, early-stage deals. There seemed to be a bit of confusion as to where is our focus, if you will. First of all, this concept of transformative deals we wanted to take off the table. Now, arguably, the revenue range, because we are focused on companies that have on-market products, have revenue and profits in terms of the targets. That was important to help people understand we're agnostic in terms of whether it's tools or DX. At the end of the day, what our focus is from an M&A standpoint is really to help drive incremental value to our customers first and foremost, that gives us differentiation, that has revenue and profits and cash flow, that can then accelerate our margin expansion story and free cash flow improvement story. Those are the things that we're focused on. When we think about M&A, that's how we want it, part of the criteria that we evaluate it from. This concept of transformative deals, we don't need transformative deals. The idea here is how do we drive additive capabilities that can then leverage our infrastructure and therefore drive an accelerated op margin expansion. You mentioned you're agnostic to life sciences versus diagnostics. Any potential to add a third leg to that stool with a new vertical or no? To me, for us, it's not about adding a third leg. I think what we look at is things that are synergistic to the existing business and how we can create value from the commercial capability and infrastructure we have, the R&D capability and infrastructure we have. It's not about adding a third leg, it's about finding something where we're already playing in tools, where we're already playing in DX and be additive to that. How about pruning the portfolio, divestitures, anything that we should be thinking about on that front that's non-core? Yeah. Bio-Rad's transformed itself over the decades really, when you think about being around for over 70 years. That's a process by which, or a consideration that always has to be a part of your evaluation. We're looking at it as if, can we invest more to do more and have a right to win? Is this the right place to play in? If it's not, where else should we play? That's where the M&A comes into place. Divestitures is another part or another angle of that we need to be willing to contemplate. Maybe we could just flip to end markets. Anything you're seeing lately from a customer behavior standpoint, coming out of 1Q, setting aside the Middle East for now, but biopharma versus academic? Seems like we've heard from some of your peers, biopharma got a little bit better in April and May. Yeah. If I break it down from a biopharma standpoint, what we've seen is those in later stage, closer to commercial realization, receiving funding, having activities through those clinical areas and these sort of things. If you look at earlier stage discovery kind of areas, that's where it's still soft and unfortunately, when you look at our customer base, it's a bit more skewed towards that discovery stage. Part of what we've been talking about is where do we have an opportunity to play in the later stage companies that are closer to commercial, what value we can add there so we can participate in that part of the market. When you look at academia and government, and I'm sure you'll have some incremental questions, I think it's different based on region. Obviously, we know about the U.S. and NIH. I think the NIH being +1% is everyone looks at that headline says that's great. When you look at the underlying how those grants are being cascaded into people's hands for use, they've changed their methodology, and that's having effect on the customers in terms of how they think about money and what they can use and these sort of things. You look at the amount of new grants, it's at a lower level than it's been at historically. It's a changing dynamic here in the U.S. I think people are cautious as a result of those changes from a government support standpoint. When you look at Europe, it's softened over the course of, I'll say, the last 9-12 months. That's something that we're cognizant of. When you look at some positive areas, we see APAC as an area that's been positive. Seen it on an uptick, especially in Korea and Japan, and then areas like Australia, et cetera. China is the one where it's been relatively stable for us overall, whether it's tools or DX, but it's something we're very mindful and paying attention to. I guess just to follow up on A&G here in the U.S., do you subscribe to the view we could start to see some catch-up spending over the summer? Is the multi-year funding dynamic and labs just hoarding funds too much of a headwind? We don't believe that there's going to be a catch-up, quite honestly. I think people are wanting to get research done first and foremost, right? It's imperative that we have that as part of the overall ecosystem. With that said, people continue to be cautious in terms of how they spend the money, where they spend the money, and we think that that's going to continue through the rest of the year. We don't expect a catch-up. Maybe just jumping into some of the businesses, digital PCR instruments up 24% in the quarter. Can you unpack some of the underlying demand drivers and how much of this is tied to the replacement cycle for the QX700 versus competitive wins? Yeah. We're obviously very happy with the instrument growth on a year-over-year basis for our droplet digital PCR platforms. When we look at that, there's a few different contributing factors, even in a soft market. Number one, it really speaks to the value and the extensive portfolio we have, number one, and just in terms of the instruments. Number two, it also speaks to the differentiation that our over 400,000 assays that we have on our droplet digital PCR platforms. Also reinforced by the amount of publications. We have more technical publications than anybody else. We have over 12,000 publications, and that just gives further validation in terms of the ability for our instruments to be used in research to really add value. I think where considering the soft environment overall, where you have differentiation, you have an opportunity to win, and I think that's what we saw in that first quarter, and really not just the first quarter, because we saw that in the fourth quarter as well. Things that we're doing like migrating our assay library to the QX700 series instruments, which is the former Stilla instruments, just further reinforces our differentiation and value that we provide to our customers. How about consumables for digital PCR, like down mid-single digit? Was it similar in academic and pharma? Now that you've ported over, I think, as you said, 99% of the assays, how should we think about that transition on demand? Yeah. There's a bit of lag time from when the instruments are sold to when you'll see that consumable pull-through really get to normalized pull-through rates, if you will. Then that's usually a 6-12 month cycle we've seen, at least historically. With the softer market, does that elongate? Possibly. That's something we're cognizant of and that we're tracking and evaluating. As we think about consumable pull-through, it's mid-single-digit decline on a year-over-year basis. Sequentially, it was a little bit worse than that, and which speaks to, I think, just the end market softening even further as we went through the end of 2025 into the beginning of 2026. At the end of the day, research is still getting done. We need to be able to support our customers, and we're focused on that from helping support their consumable needs and usage. Maybe switching over to Process Chrome then. 1Q tracked to plan, but obviously you had a big reset coming out of 4Q from up high single to down mid-teens. Maybe just talk about the portfolio there. Is it 8 to 10 commercial programs and then a lot of clinical programs? Maybe give us a sense of the scale there and how do we think about your visibility into that market going forward? First of all, the visibility is good in terms of what we have with our customers. Our account teams do a really nice job in working with the large pharma companies to really understand where they're going, what they're trying to do. That's something we've focused on improving over the years since the destocking periods. With that said, when you look at the distribution of the vast amount of our revenue comes out of those in the commercial phase. They've got therapeutics on market, whether it's vaccines or drugs. When you look at the greatest number of customers we have, it's actually those in the clinical phases. One of the things that we've seen is over the past few years, an increase in the number of customers that are in those early-stage clinical phases evaluating what resins to use, as a reminder, we play in the polishing stage in a kind of a niche area, a critical area, but a niche area. We're not playing in the broader bioprocessing that others might be. For us within there, once you're specced in, you're in. Once you're specced in in that clinical stages, you're in there through that commercial phase, and then it's just a question of how significant is the drug in the marketplace or how successful is it in the marketplace? Has your longer-term outlook for that business changed? Just thinking ahead to 2027, it'll have the benefit of easy comps. Can that business get back to high single-digit growth? Yeah. Our focus is with the reset that we needed to do because of the government policy change in vaccines. For us, getting to a high single digit is the ultimate goal. I think we're being cautious and really understanding the end market dynamics, because there is a lot of government policy, at least rhetoric, I'll say. Some of it's actual changes that are being implemented. There's also rhetoric out there, and so we want to see how that might evolve. We feel very good about the amount of activity we have with our customers and what they're doing. I think it's a little bit of where it settles out, and that's why we set more of a near-term mid-single-digit expectation with the idea that we need to build towards a high single-digit growth rate over time. Quality Controls, this business growing mid-single digits for this year. You continue to see strength. You're making investments. Talk about some of the priorities for that part of the portfolio. Yeah. Quality Controls, we are the market leader in Quality Controls. It's an important area for us in our diagnostics side of the business. Because we have a right to win in that area, part of what we evaluated when we looked at our R&D spend is how do we do more there? We've moved money over to Quality Controls or incremental investment in Quality Controls, and really look at how do we win in all regions. We are especially strong, for example, in the Americas. We have opportunities for growth in other regions. What more can we do in those areas, and how can that help drive that mid-single-digit growth rate that we see in Quality Controls historically? Today, can we see that improve over time? Maybe just rounding it out on life sciences, obviously digital PCR, Process Chrome get most of the attention, but you still have 50% of that portfolio away from those businesses. Can you just talk about some of the other drivers, whether it's qPCR or any smaller markets that are starting to emerge? First of all, one of the things that we have is also a nice applied sciences business that really is driven off of our droplet digital PCR platform in food science, as an example, in wastewater management. That's a nice area of business. That's an opportunity for further growth, potentially, and that's how we've looked at it in terms of incremental investment. That's another area. When you look at qPCR, we've got a very nice install base there. As we think about the dynamics in the marketplace, one of the things we're evaluating is what more can we do from a qPCR standpoint, and that's an opportunity. You look at areas like Western blot imaging. One of the challenges from an end market standpoint is Western blot is one of these areas that new labs need to have, and new lab startups have declined, and so there's headwind from that standpoint. We have some R&D happening in that area in terms of driving incremental improvements in the platform that we have over time and how that might help us participate and drive growth in that area, even with new lab startups declining potentially. Shifting over to clinical, setting aside Middle East for a minute here. You've indicated that growth could, going forward, be below the 3% pre-COVID CAGR. Maybe talk about what's driving that change and how we should think about opportunities for the business to do better. I think we've touched on a number of areas that are the potential drivers to help us. The ddPCR area, and I'll say PCR overall is an opportunity, especially considering our assay library and the positioning we have there. We talked about Quality Controls in the diagnostics area. Ultimately, we do think it's unfortunate with the conflict that's happening in the Middle East and the impact it's having on our business and other businesses. Ultimately, all of that gets dealt with and hopefully gets back to normalcy. When it does, we believe because of the position we already have, Middle East is an opportunity for further growth. We're also seeing strength in areas like APAC as a region, and that's another important growth area for us. There's a number of elements here that we think over time, even considering some of the challenges here in the U.S. or in Europe, there's opportunities for growth in other ways. On the Middle East, can you help us baseline what assumptions were previously embedded there and how you're thinking about the recovery cadence and mix across the portfolio? It seems like some markets, like hospitals, could come back again sooner. Yeah. I think obviously that was maybe a surprise to folks in terms of the news of the Middle East and how strong it is for us. That's been a focus area over multiple years for us, and our commercial teams have done a really nice job. If you think about it, the Middle East effectively is as big as China for us. Just to frame that for folks. I think that's lost, and it's especially strong on the DX side there. As we thought about the Middle East and the conflict, and Middle East includes those that are affected by the conflict regions, but also more broadly, there's other areas like Turkey or North Africa that aren't affected by the conflict specifically. It's a broad area, if you will. What we did is we were much more cautious in terms of those that are the conflict areas and pulled that down in terms of the expectations for the rest of the year, while leaving the other areas there. I think as the conflict, and there's resolution to all of it, infrastructure rebuild and these sort of things will be prioritized. Ultimately, the Middle East is focused on investing in improved healthcare, and therefore, when it gets back to a more normalized environment, then the growth opportunities are going to be there again. China, diabetes-related VBP headwinds are the primary driver of the high single-digit decline last year. I guess, how do we think about the setup for the remainder of this year in China? What's embedded around tender dynamics, pricing, volume? Yeah. China is, knock on wood, relatively stable for us, both on DX and tools. Just as a reminder, we haven't been affected by VBP, right? Let's put that to the side. What we were affected by at the end of 2024 is rate reimbursement change, specifically in our diabetes portfolio. Obviously, we've lapped that from an annualized aspect. We haven't seen any other potential headwinds at this point in time. We don't necessarily think that there's other rate reimbursement. China is focused in driving reduced healthcare costs, and so they're continuing to evaluate what other opportunities they have to do that. We need to be close to the end markets. It sounds like you're not concerned that there could be risks on VBP going forward, and there's been increased focus on NHSA policy. Less of an issue for you guys, obviously, but could there actually be upside around microbiology? We've heard about that from some of the peers. Yeah. We're obviously trying to position ourselves to drive opportunities for growth in China. When you look at, and specifically what I'm pointing to is the China-for-China investment that we made, and now producing certain SKUs on the tools side in China. We think that'll give us an opportunity to participate in more tenders, and as a result of that's incremental growth opportunities. Quality Controls has been strong for us in China, and part of what we're evaluating is can we do more there from a quality control standpoint. China's an important overall market, one that can't be forgotten, and that's how we look at it. We're evaluating how can we win more and drive some growth there. Got a couple of minutes left. I'm not going to let you off the hook without asking about Sartorius. I guess, the word is optionality. Help us understand just how you're thinking about that internally. Is it all or nothing? Could you sell down some of the stake for a deal? How do you think about the various paths here? Yeah. It doesn't surprise me we couldn't get through one conversation, but that's okay. It's the norm. Sartorius, we've been very explicit in that it provides us optionality. It is at our discretion. Could we sell something of it? Yes, we could sell something of it more near-term for a particular purpose, whether that's another M&A deal, these sort of things. The control is in our hands in terms of what we do. Now, with all that said, when you look at where Sartorius is, they had a recent Capital Markets Day. They've got, obviously, very specific plans for growth. Arguably, with the end markets the way they are, it's an undervalued stock in of itself. When you look at our position, it has an opportunity for growth, and if we don't need to do anything with that stake, then allow it to grow over time as their valuation improves as well. One question we've gotten is just the potential to spin the shares to your shareholders ahead of the trust dissolving in 2028. Is that something that is under consideration? Well, we look at all sorts of things. I think what might make sense, how does it ultimately create value for Bio-Rad and create value therefore for our shareholders is ultimately how we think about it. We'll look at all the options that could be potentially out there, and evaluate those accordingly. Just, I guess, last one on the tax issue, because this comes up a lot. I know we talked about it on our call after the quarter, but just get people comfortable with the idea that you've been accruing and that you're not going to have that tax liability, because I think that's still an open-ended question from our discussions. Yeah, I appreciate that call-out. When the accounting rules changed and this whole mark-to-market concept had to be implemented, one of the things that the company did is as we mark-to-market the Sartorius value of the shares, we also put a tax liability on the balance sheet to the tune of 22.7% of the value of the stake that we have. You see that fluctuation. That is on the balance sheet. There's obviously a cash flow if ever there was a use of those shares, and therefore there's a tax liability incurred. You have the P&L taken care of, but you have the cash flow that needs to be the outflow for that. That is sitting on the balance sheet. That's been disclosed in the financials for a number of years now. Great. Think we'll leave it at that. Thanks, Roop. Thanks, Tycho

Speaker 2: Great. We're going to go ahead and kick it off. I'm Tycho Peterson from the life science team. I'm pleased to have Bio-Rad with us today. We've got Roop. Maybe just to kick it off, Roop, we could do a quick state of the union here, 1Q macro, obviously, a bit choppy. We'll get into that in a bit. I think importantly, obviously there's been some headlines, a lot of focus on high-level operational items at the company. Just talk for a second on, you've been at the company for a while now, how would you characterize things at this point, areas like innovation, infrastructure, go to market, commercial? What are the real priorities here in the near term? Great. great We're going to go ahead and kick it off. we're going to go ahead and kick it off I'm Tycho Peterson from the life science team. i'm tycho peterson from the life science team I'm pleased to have Bio-Rad with us today. i'm pleased to have bio-rad with us today We've got Roop. we've got roop Maybe just to kick it off, Roop, we could do a quick state of the union here, 1Q macro, obviously, a bit choppy. maybe just to kick it off roop we could do a quick state of the union here 1q macro obviously a bit choppy We'll get into that in a bit. we'll get into that in a bit I think importantly, obviously there's been some headlines, a lot of focus on high-level operational items at the company. i think importantly obviously there's been some headlines a lot of focus on high-level operational items at the company Just talk for a second on, you've been at the company for a while now, how would you characterize things at this point, areas like innovation, infrastructure, go to market, commercial? just talk for a second on you've been at the company for a while now how would you characterize things at this point areas like innovation infrastructure go to market commercial What are the real priorities here in the near term? what are the real priorities here in the near term

Speaker 1: First of all, Tycho and Matt, thanks for having Bio-Rad at the conference here. Really appreciate it. Been with the company for about two years now, it's been a lot of change. Part of that change is me coming on board, but also other new leadership that's come on board over the past couple years, 18 to 24 months, let's call it. One of the aspects here is just as a new leadership team coming together, really aligning on, obviously end markets are awfully choppy, as you've said, and they're evolving as we speak. At the same time, it gave us an opportunity to really look at our business, the different elements of both the tools side and the DX side, and understand what's working, what could be better, and these sort of things. First of all, Tycho and Matt, thanks for having Bio-Rad at the conference here. first of all tycho and matt thanks for having bio-rad at the conference here Really appreciate it. really appreciate it Been with the company for about two years now, it's been a lot of change. been with the company for about two years now it's been a lot of change Part of that change is me coming on board, but also other new leadership that's come on board over the past couple years, 18 to 24 months, let's call it. part of that change is me coming on board but also other new leadership that's come on board over the past couple years 18 to 24 months let's call it One of the aspects here is just as a new leadership team coming together, really aligning on, obviously end markets are awfully choppy, as you've said, and they're evolving as we speak. one of the aspects here is just as a new leadership team coming together really aligning on obviously end markets are awfully choppy as you've said and they're evolving as we speak At the same time, it gave us an opportunity to really look at our business, the different elements of both the tools side and the DX side, and understand what's working, what could be better, and these sort of things. at the same time it gave us an opportunity to really look at our business the different elements of both the tools side and the dx side and understand what's working what could be better and these sort of things Based on that overall evaluation, we've spent a lot of time going through every area, really, if you will, right. There's commercial transformation that's happening in terms of how we think about end markets, how we think about the accounts, where there's growth opportunities, these sort of things. Where we have a right to win, how do we do more in those areas, as an example, right. Greater pricing discipline. The list goes on. If I go into the operational areas, really looking at our manufacturing capacity, our distribution network. As an example, we've been talking about China for China for over five, six, seven years, and with no actions. We decided it's something we needed to do. We specifically identified certain SKUs that we thought would be beneficial in China, and we stood up a manufacturing capability within 90 to 120 days. Based on that overall evaluation, we've spent a lot of time going through every area, really, if you will, right. based on that overall evaluation we've spent a lot of time going through every area really if you will right There's commercial transformation that's happening in terms of how we think about end markets, how we think about the accounts, where there's growth opportunities, these sort of things. there's commercial transformation that's happening in terms of how we think about end markets how we think about the accounts where there's growth opportunities these sort of things Where we have a right to win, how do we do more in those areas, as an example, right. where we have a right to win how do we do more in those areas as an example right Greater pricing discipline. greater pricing discipline The list goes on. the list goes on If I go into the operational areas, really looking at our manufacturing capacity, our distribution network. if i go into the operational areas really looking at our manufacturing capacity our distribution network As an example, we've been talking about China for China for over five, six, seven years, and with no actions. as an example we've been talking about china for china for over five six seven years and with no actions We decided it's something we needed to do. we decided it's something we needed to do We specifically identified certain SKUs that we thought would be beneficial in China, and we stood up a manufacturing capability within 90 to 120 days. we specifically identified certain skus that we thought would be beneficial in china and we stood up a manufacturing capability within 90 to 120 days When you get into the operational areas, R&D, we've really reevaluated our overall R&D portfolio. I'm sure you're going to get into it, right? When we look at our R&D from a historical standpoint, it hasn't been great in terms of the returns there. We recognize that there's an importance in ensuring that we have the vitality that we need for future growth. We've spent a lot of time really looking at the portfolio analysis. It's resulted in certain impairments we've taken, as an example, in the fourth quarter of this last year. It's also helped us refocus in terms of digital PCR, where we have leadership, and we're doing more in that area, right? When you get into the operational areas, R&D, we've really reevaluated our overall R&D portfolio. when you get into the operational areas r&d we've really reevaluated our overall r&d portfolio I'm sure you're going to get into it, right? i'm sure you're going to get into it right When we look at our R&D from a historical standpoint, it hasn't been great in terms of the returns there. when we look at our r&d from a historical standpoint it hasn't been great in terms of the returns there We recognize that there's an importance in ensuring that we have the vitality that we need for future growth. we recognize that there's an importance in ensuring that we have the vitality that we need for future growth We've spent a lot of time really looking at the portfolio analysis. we've spent a lot of time really looking at the portfolio analysis It's resulted in certain impairments we've taken, as an example, in the fourth quarter of this last year. it's resulted in certain impairments we've taken as an example in the fourth quarter of this last year It's also helped us refocus in terms of digital PCR, where we have leadership, and we're doing more in that area, right? it's also helped us refocus in terms of digital pcr where we have leadership and we're doing more in that area right One of the things we talked about in our Q1 call is a transition of our over 400,000 assays on our historical digital PCR platforms over to the Stilla platforms, which is the acquisition we just completed last year. These are things that just to drive improved execution and focus has been a critical area. Those are just a few examples in terms of what we've been trying to transform towards improved execution. You can call it's kind of plumbing areas, if you will, that over time, we think will build towards improved financial results and improved growth opportunities in the marketplace. One of the things we talked about in our Q1 call is a transition of our over 400,000 assays on our historical digital PCR platforms over to the Stilla platforms, which is the acquisition we just completed last year. one of the things we talked about in our q1 call is a transition of our over 400,000 assays on our historical digital pcr platforms over to the stilla platforms which is the acquisition we just completed last year These are things that just to drive improved execution and focus has been a critical area. these are things that just to drive improved execution and focus has been a critical area Those are just a few examples in terms of what we've been trying to transform towards improved execution. those are just a few examples in terms of what we've been trying to transform towards improved execution You can call it's kind of plumbing areas, if you will, that over time, we think will build towards improved financial results and improved growth opportunities in the marketplace. you can call it's kind of plumbing areas if you will that over time we think will build towards improved financial results and improved growth opportunities in the marketplace

Speaker 2: Yeah, maybe we can just follow up on the R&D kind of initiatives. What really hasn't worked historically? What are the focus areas to improve productivity going forward? As you said, the returns historically haven't been great. Yeah, maybe we can just follow up on the R&D kind of initiatives. yeah maybe we can just follow up on the r&d kind of initiatives What really hasn't worked historically? what really hasn't worked historically What are the focus areas to improve productivity going forward? what are the focus areas to improve productivity going forward As you said, the returns historically haven't been great. as you said the returns historically haven't been great

Speaker 1: Yeah. If I look at the R&D side, there's two aspects to it. There's the internal R&D. I'll come back to that here in just a moment, but we've also been acquisitive over the past few years. Just historically, we've been acquisitive, and it's been an important part of our overall strategy. That's been no different over the last, let's call it six-eight years. The challenge is where we had focused in terms of M&A opportunities was earlier stage companies that needed to go through that R&D phase and really get to commercial viability. Quite honestly, it hasn't worked out as well as we would hope, and that's both on the DX side as well as on the tools side. We have reevaluated how we think about M&A, where we want to focus, the types of companies we want to focus. Yeah. yeah If I look at the R&D side, there's two aspects to it. There's the internal R&D. if i look at the r&d side there's two aspects to it. there's the internal r&d I'll come back to that here in just a moment, but we've also been acquisitive over the past few years. i'll come back to that here in just a moment but we've also been acquisitive over the past few years Just historically, we've been acquisitive, and it's been an important part of our overall strategy. just historically we've been acquisitive and it's been an important part of our overall strategy That's been no different over the last, let's call it six- eight years. that's been no different over the last let's call it six- eight years The challenge is where we had focused in terms of M&A opportunities was earlier stage companies that needed to go through that R&D phase and really get to commercial viability. the challenge is where we had focused in terms of m&a opportunities was earlier stage companies that needed to go through that r&d phase and really get to commercial viability Quite honestly, it hasn't worked out as well as we would hope, and that's both on the DX side as well as on the tools side. quite honestly it hasn't worked out as well as we would hope and that's both on the dx side as well as on the tools side We have reevaluated how we think about M&A, where we want to focus, the types of companies we want to focus. we have reevaluated how we think about m&a where we want to focus the types of companies we want to focus The Stilla transaction is an example of that, which closed June 30th of last year, wherein it's a company in droplet digital PCR, which is exactly where our specialty is. They had a product on market that was already selling, that had revenue, that had a commercial basis, which we could then take our commercial infrastructure as well as our R&D capabilities and add value there and accelerate growth. That's exactly what we're seeing when you look at 24% year-over-year instrument growth in ddPCR for us this last quarter. That's a result of the work we've been doing on that R&D improvement, but also the value of what the new Stilla platforms and the collective portfolio that we have within the marketplace. The Stilla transaction is an example of that, which closed June 30th of last year, wherein it's a company in droplet digital PCR, which is exactly where our specialty is. the stilla transaction is an example of that which closed june 30th of last year wherein it's a company in droplet digital pcr which is exactly where our specialty is They had a product on market that was already selling, that had revenue, that had a commercial basis, which we could then take our commercial infrastructure as well as our R&D capabilities and add value there and accelerate growth. they had a product on market that was already selling that had revenue that had a commercial basis which we could then take our commercial infrastructure as well as our r&d capabilities and add value there and accelerate growth That's exactly what we're seeing when you look at 24% year-over-year instrument growth in ddPCR for us this last quarter. that's exactly what we're seeing when you look at 24% year-over-year instrument growth in ddpcr for us this last quarter That's a result of the work we've been doing on that R&D improvement, but also the value of what the new Stilla platforms and the collective portfolio that we have within the marketplace. that's a result of the work we've been doing on that r&d improvement but also the value of what the new stilla platforms and the collective portfolio that we have within the marketplace

Speaker 2: How about replacement cycle opportunities? I am just thinking about Bio-Plex next gen launch coming next year. I think you have got an install base over 400 units, at least last time you disclosed. What are your expectations there on magnitude of the upgrade replacement cycle? How about replacement cycle opportunities? how about replacement cycle opportunities I am just thinking about Bio-Plex next gen launch coming next year. i am just thinking about bio-plex next gen launch coming next year I think you have got an install base over 400 units, at least last time you disclosed. i think you have got an install base over 400 units at least last time you disclosed What are your expectations there on magnitude of the upgrade replacement cycle? what are your expectations there on magnitude of the upgrade replacement cycle

Speaker 1: Yeah. We're looking forward to the next gen platform to be coming out, it's on track to do so. As we think about it, there's a couple of different aspects here that we focused on. One is obviously just getting that next gen platform out there in terms of replacement strategy with existing install base, like you said. The other part of it, though, is we've been focused on menu expansion and an instrument without menu is really not of value for those users, and we recognize that. We've been focused on menu expansion. I think between install replacement cycle, new market share opportunities with that menu expansion, those are the kinds of things and how we're thinking about it. Again, it's that improved execution and approach, if you will, the ability to go deliver on that which we're driving. Yeah. yeah We're looking forward to the next gen platform to be coming out, it's on track to do so. we're looking forward to the next gen platform to be coming out it's on track to do so As we think about it, there's a couple of different aspects here that we focused on. as we think about it there's a couple of different aspects here that we focused on One is obviously just getting that next gen platform out there in terms of replacement strategy with existing install base, like you said. one is obviously just getting that next gen platform out there in terms of replacement strategy with existing install base like you said The other part of it, though, is we've been focused on menu expansion and an instrument without menu is really not of value for those users, and we recognize that. the other part of it though is we've been focused on menu expansion and an instrument without menu is really not of value for those users and we recognize that We've been focused on menu expansion. we've been focused on menu expansion I think between install replacement cycle, new market share opportunities with that menu expansion, those are the kinds of things and how we're thinking about it. i think between install replacement cycle new market share opportunities with that menu expansion those are the kinds of things and how we're thinking about it Again, it's that improved execution and approach, if you will, the ability to go deliver on that which we're driving. again it's that improved execution and approach if you will the ability to go deliver on that which we're driving

Speaker 2: Any way to frame how you think about where pull-through can go with menu expansion? I assume most of the installs would be reagent rental, as you roll them out. Any way to frame how you think about where pull-through can go with menu expansion? any way to frame how you think about where pull-through can go with menu expansion I assume most of the installs would be reagent rental, as you roll them out. i assume most of the installs would be reagent rental as you roll them out

Speaker 1: Yeah, there's reagent rental, there's obviously the consumable pull-through, which are both, I think it's a little bit early to really talk about what the amounts might be, but we're excited about the potential of that menu expansion and how that can open up further market share for us. Yeah, there's reagent rental, there's obviously the consumable pull-through, which are both, I think it's a little bit early to really talk about what the amounts might be, but we're excited about the potential of that menu expansion and how that can open up further market share for us. yeah there's reagent rental there's obviously the consumable pull-through which are both i think it's a little bit early to really talk about what the amounts might be but we're excited about the potential of that menu expansion and how that can open up further market share for us

Speaker 2: To go back to the earnings call, the 1Q call, you gave a little more, I'd say, precise comments on M&A, in particular, $100 million-$500 million range plus some smaller bolt-ons, less focus on transformational deals. Should we interpret that as you being closer to the finish line on something? Then does this specifically take larger M&A off the table down the road? To go back to the earnings call, the 1Q call, you gave a little more, I'd say, precise comments on M&A, in particular, $100 million-$500 million range plus some smaller bolt-ons, less focus on transformational deals. to go back to the earnings call the 1q call you gave a little more i'd say precise comments on m&a in particular $100 million-$500 million range plus some smaller bolt-ons less focus on transformational deals Should we interpret that as you being closer to the finish line on something? should we interpret that as you being closer to the finish line on something Then does this specifically take larger M&A off the table down the road? then does this specifically take larger m&a off the table down the road

Speaker 1: Yeah, I appreciate the question because we get a lot of questions around M&A. Again, historically, Bio-Rad's been acquisitive in both larger deals and smaller deals, early-stage deals. There seemed to be a bit of confusion as to where is our focus, if you will. First of all, this concept of transformative deals we wanted to take off the table. Now, arguably, the revenue range, because we are focused on companies that have on-market products, have revenue and profits in terms of the targets. That was important to help people understand we're agnostic in terms of whether it's tools or DX. Yeah, I appreciate the question because we get a lot of questions around M&A. yeah i appreciate the question because we get a lot of questions around m&a Again, historically, Bio-Rad's been acquisitive in both larger deals and smaller deals, early-stage deals. again historically bio-rad's been acquisitive in both larger deals and smaller deals early-stage deals There seemed to be a bit of confusion as to where is our focus, if you will. there seemed to be a bit of confusion as to where is our focus if you will First of all, this concept of transformative deals we wanted to take off the table. first of all this concept of transformative deals we wanted to take off the table Now, arguably, the revenue range, because we are focused on companies that have on-market products, have revenue and profits in terms of the targets. now arguably the revenue range because we are focused on companies that have on-market products have revenue and profits in terms of the targets That was important to help people understand we're agnostic in terms of whether it's tools or DX. that was important to help people understand we're agnostic in terms of whether it's tools or dx At the end of the day, what our focus is from an M&A standpoint is really to help drive incremental value to our customers first and foremost, that gives us differentiation, that has revenue and profits and cash flow, that can then accelerate our margin expansion story and free cash flow improvement story. Those are the things that we're focused on. When we think about M&A, that's how we want it, part of the criteria that we evaluate it from. This concept of transformative deals, we don't need transformative deals. The idea here is how do we drive additive capabilities that can then leverage our infrastructure and therefore drive an accelerated op margin expansion. At the end of the day, what our focus is from an M&A standpoint is really to help drive incremental value to our customers first and foremost, that gives us differentiation, that has revenue and profits and cash flow, that can then accelerate our margin expansion story and free cash flow improvement story. at the end of the day what our focus is from an m&a standpoint is really to help drive incremental value to our customers first and foremost that gives us differentiation that has revenue and profits and cash flow that can then accelerate our margin expansion story and free cash flow improvement story Those are the things that we're focused on. those are the things that we're focused on When we think about M&A, that's how we want it, part of the criteria that we evaluate it from. when we think about m&a that's how we want it part of the criteria that we evaluate it from This concept of transformative deals, we don't need transformative deals. this concept of transformative deals we don't need transformative deals The idea here is how do we drive additive capabilities that can then leverage our infrastructure and therefore drive an accelerated op margin expansion. the idea here is how do we drive additive capabilities that can then leverage our infrastructure and therefore drive an accelerated op margin expansion

Speaker 2: You mentioned you're agnostic to life sciences versus diagnostics. Any potential to add a third leg to that stool with a new vertical or no? You mentioned you're agnostic to life sciences versus diagnostics. you mentioned you're agnostic to life sciences versus diagnostics Any potential to add a third leg to that stool with a new vertical or no? any potential to add a third leg to that stool with a new vertical or no

Speaker 1: To me, for us, it's not about adding a third leg. I think what we look at is things that are synergistic to the existing business and how we can create value from the commercial capability and infrastructure we have, the R&D capability and infrastructure we have. It's not about adding a third leg, it's about finding something where we're already playing in tools, where we're already playing in DX and be additive to that. To me, for us, it's not about adding a third leg. to me for us it's not about adding a third leg I think what we look at is things that are synergistic to the existing business and how we can create value from the commercial capability and infrastructure we have, the R&D capability and infrastructure we have. i think what we look at is things that are synergistic to the existing business and how we can create value from the commercial capability and infrastructure we have the r&d capability and infrastructure we have It's not about adding a third leg, it's about finding something where we're already playing in tools, where we're already playing in DX and be additive to that. it's not about adding a third leg it's about finding something where we're already playing in tools where we're already playing in dx and be additive to that

Speaker 2: How about pruning the portfolio, divestitures, anything that we should be thinking about on that front that's non-core? How about pruning the portfolio, divestitures, anything that we should be thinking about on that front that's non-core? how about pruning the portfolio divestitures anything that we should be thinking about on that front that's non-core

Speaker 1: Yeah. Bio-Rad's transformed itself over the decades really, when you think about being around for over 70 years. That's a process by which, or a consideration that always has to be a part of your evaluation. We're looking at it as if, can we invest more to do more and have a right to win? Is this the right place to play in? If it's not, where else should we play? That's where the M&A comes into place. Divestitures is another part or another angle of that we need to be willing to contemplate. Yeah. yeah Bio-Rad's transformed itself over the decades really, when you think about being around for over 70 years. bio-rad's transformed itself over the decades really when you think about being around for over 70 years That's a process by which, or a consideration that always has to be a part of your evaluation. that's a process by which or a consideration that always has to be a part of your evaluation We're looking at it as if, can we invest more to do more and have a right to win? we're looking at it as if can we invest more to do more and have a right to win Is this the right place to play in? is this the right place to play in If it's not, where else should we play? if it's not where else should we play That's where the M&A comes into place. that's where the m&a comes into place Divestitures is another part or another angle of that we need to be willing to contemplate. divestitures is another part or another angle of that we need to be willing to contemplate

Speaker 2: Maybe we could just flip to end markets. Anything you're seeing lately from a customer behavior standpoint, coming out of 1Q, setting aside the Middle East for now, but biopharma versus academic? Seems like we've heard from some of your peers, biopharma got a little bit better in April and May. Maybe we could just flip to end markets. maybe we could just flip to end markets Anything you're seeing lately from a customer behavior standpoint, coming out of 1Q, setting aside the Middle East for now, but biopharma versus academic? anything you're seeing lately from a customer behavior standpoint coming out of 1q setting aside the middle east for now but biopharma versus academic Seems like we've heard from some of your peers, biopharma got a little bit better in April and May. seems like we've heard from some of your peers biopharma got a little bit better in april and may

Speaker 1: Yeah. If I break it down from a biopharma standpoint, what we've seen is those in later stage, closer to commercial realization, receiving funding, having activities through those clinical areas and these sort of things. If you look at earlier stage discovery kind of areas, that's where it's still soft and unfortunately, when you look at our customer base, it's a bit more skewed towards that discovery stage. Part of what we've been talking about is where do we have an opportunity to play in the later stage companies that are closer to commercial, what value we can add there so we can participate in that part of the market. When you look at academia and government, and I'm sure you'll have some incremental questions, I think it's different based on region. Obviously, we know about the U.S. and NIH. Yeah. yeah If I break it down from a biopharma standpoint, what we've seen is those in later stage, closer to commercial realization, receiving funding, having activities through those clinical areas and these sort of things. if i break it down from a biopharma standpoint what we've seen is those in later stage closer to commercial realization receiving funding having activities through those clinical areas and these sort of things If you look at earlier stage discovery kind of areas, that's where it's still soft and unfortunately, when you look at our customer base, it's a bit more skewed towards that discovery stage. if you look at earlier stage discovery kind of areas that's where it's still soft and unfortunately when you look at our customer base it's a bit more skewed towards that discovery stage Part of what we've been talking about is where do we have an opportunity to play in the later stage companies that are closer to commercial, what value we can add there so we can participate in that part of the market. part of what we've been talking about is where do we have an opportunity to play in the later stage companies that are closer to commercial what value we can add there so we can participate in that part of the market When you look at academia and government, and I'm sure you'll have some incremental questions, I think it's different based on region. when you look at academia and government and i'm sure you'll have some incremental questions i think it's different based on region Obviously, we know about the U.S. and NIH. obviously we know about the u.s and nih I think the NIH being +1% is everyone looks at that headline says that's great. When you look at the underlying how those grants are being cascaded into people's hands for use, they've changed their methodology, and that's having effect on the customers in terms of how they think about money and what they can use and these sort of things. You look at the amount of new grants, it's at a lower level than it's been at historically. It's a changing dynamic here in the U.S. I think people are cautious as a result of those changes from a government support standpoint. When you look at Europe, it's softened over the course of, I'll say, the last 9-12 months. That's something that we're cognizant of. When you look at some positive areas, we see APAC as an area that's been positive. I think the NIH being +1% is everyone looks at that headline says that's great. i think the nih being +1% is everyone looks at that headline says that's great When you look at the underlying how those grants are being cascaded into people's hands for use, they've changed their methodology, and that's having effect on the customers in terms of how they think about money and what they can use and these sort of things. when you look at the underlying how those grants are being cascaded into people's hands for use they've changed their methodology and that's having effect on the customers in terms of how they think about money and what they can use and these sort of things You look at the amount of new grants, it's at a lower level than it's been at historically. you look at the amount of new grants it's at a lower level than it's been at historically It's a changing dynamic here in the U.S. it's a changing dynamic here in the u.s I think people are cautious as a result of those changes from a government support standpoint. i think people are cautious as a result of those changes from a government support standpoint When you look at Europe, it's softened over the course of, I'll say, the last 9-12 months. when you look at europe it's softened over the course of i'll say the last 9-12 months That's something that we're cognizant of. that's something that we're cognizant of When you look at some positive areas, we see APAC as an area that's been positive. when you look at some positive areas we see apac as an area that's been positive Seen it on an uptick, especially in Korea and Japan, and then areas like Australia, et cetera. China is the one where it's been relatively stable for us overall, whether it's tools or DX, but it's something we're very mindful and paying attention to. Seen it on an uptick, especially in Korea and Japan, and then areas like Australia, et cetera. seen it on an uptick especially in korea and japan and then areas like australia et cetera China is the one where it's been relatively stable for us overall, whether it's tools or DX, but it's something we're very mindful and paying attention to. china is the one where it's been relatively stable for us overall whether it's tools or dx but it's something we're very mindful and paying attention to

Speaker 2: I guess just to follow up on A&G here in the U.S., do you subscribe to the view we could start to see some catch-up spending over the summer? Is the multi-year funding dynamic and labs just hoarding funds too much of a headwind? I guess just to follow up on A&G here in the U.S., do you subscribe to the view we could start to see some catch-up spending over the summer? i guess just to follow up on a&g here in the u.s do you subscribe to the view we could start to see some catch-up spending over the summer Is the multi-year funding dynamic and labs just hoarding funds too much of a headwind? is the multi-year funding dynamic and labs just hoarding funds too much of a headwind

Speaker 1: We don't believe that there's going to be a catch-up, quite honestly. I think people are wanting to get research done first and foremost, right? It's imperative that we have that as part of the overall ecosystem. With that said, people continue to be cautious in terms of how they spend the money, where they spend the money, and we think that that's going to continue through the rest of the year. We don't expect a catch-up. We don't believe that there's going to be a catch-up, quite honestly. we don't believe that there's going to be a catch-up quite honestly I think people are wanting to get research done first and foremost, right? i think people are wanting to get research done first and foremost right It's imperative that we have that as part of the overall ecosystem. it's imperative that we have that as part of the overall ecosystem With that said, people continue to be cautious in terms of how they spend the money, where they spend the money, and we think that that's going to continue through the rest of the year. with that said people continue to be cautious in terms of how they spend the money where they spend the money and we think that that's going to continue through the rest of the year We don't expect a catch-up. we don't expect a catch-up

Speaker 2: Maybe just jumping into some of the businesses, digital PCR instruments up 24% in the quarter. Can you unpack some of the underlying demand drivers and how much of this is tied to the replacement cycle for the QX700 versus competitive wins? Maybe just jumping into some of the businesses, digital PCR instruments up 24% in the quarter. maybe just jumping into some of the businesses digital pcr instruments up 24% in the quarter Can you unpack some of the underlying demand drivers and how much of this is tied to the replacement cycle for the QX700 versus competitive wins? can you unpack some of the underlying demand drivers and how much of this is tied to the replacement cycle for the qx700 versus competitive wins

Speaker 1: Yeah. We're obviously very happy with the instrument growth on a year-over-year basis for our droplet digital PCR platforms. When we look at that, there's a few different contributing factors, even in a soft market. Number one, it really speaks to the value and the extensive portfolio we have, number one, and just in terms of the instruments. Number two, it also speaks to the differentiation that our over 400,000 assays that we have on our droplet digital PCR platforms. Also reinforced by the amount of publications. We have more technical publications than anybody else. We have over 12,000 publications, and that just gives further validation in terms of the ability for our instruments to be used in research to really add value. Yeah. yeah We're obviously very happy with the instrument growth on a year-over-year basis for our droplet digital PCR platforms. we're obviously very happy with the instrument growth on a year-over-year basis for our droplet digital pcr platforms When we look at that, there's a few different contributing factors, even in a soft market. when we look at that there's a few different contributing factors even in a soft market Number one, it really speaks to the value and the extensive portfolio we have, number one, and just in terms of the instruments. number one it really speaks to the value and the extensive portfolio we have number one and just in terms of the instruments Number two, it also speaks to the differentiation that our over 400,000 assays that we have on our droplet digital PCR platforms. number two it also speaks to the differentiation that our over 400,000 assays that we have on our droplet digital pcr platforms Also reinforced by the amount of publications. also reinforced by the amount of publications We have more technical publications than anybody else. we have more technical publications than anybody else We have over 12,000 publications, and that just gives further validation in terms of the ability for our instruments to be used in research to really add value. we have over 12,000 publications and that just gives further validation in terms of the ability for our instruments to be used in research to really add value I think where considering the soft environment overall, where you have differentiation, you have an opportunity to win, and I think that's what we saw in that first quarter, and really not just the first quarter, because we saw that in the fourth quarter as well. Things that we're doing like migrating our assay library to the QX700 series instruments, which is the former Stilla instruments, just further reinforces our differentiation and value that we provide to our customers. I think where considering the soft environment overall, where you have differentiation, you have an opportunity to win, and I think that's what we saw in that first quarter, and really not just the first quarter, because we saw that in the fourth quarter as well. i think where considering the soft environment overall where you have differentiation you have an opportunity to win and i think that's what we saw in that first quarter and really not just the first quarter because we saw that in the fourth quarter as well Things that we're doing like migrating our assay library to the QX700 series instruments, which is the former Stilla instruments, just further reinforces our differentiation and value that we provide to our customers. things that we're doing like migrating our assay library to the qx700 series instruments which is the former stilla instruments just further reinforces our differentiation and value that we provide to our customers

Speaker 2: How about consumables for digital PCR, like down mid-single digit? Was it similar in academic and pharma? Now that you've ported over, I think, as you said, 99% of the assays, how should we think about that transition on demand? How about consumables for digital PCR, like down mid-single digit? how about consumables for digital pcr like down mid-single digit Was it similar in academic and pharma? was it similar in academic and pharma Now that you've ported over, I think, as you said, 99% of the assays, how should we think about that transition on demand? now that you've ported over i think as you said 99% of the assays how should we think about that transition on demand

Speaker 1: Yeah. There's a bit of lag time from when the instruments are sold to when you'll see that consumable pull-through really get to normalized pull-through rates, if you will. Then that's usually a 6-12 month cycle we've seen, at least historically. With the softer market, does that elongate? Possibly. That's something we're cognizant of and that we're tracking and evaluating. As we think about consumable pull-through, it's mid-single-digit decline on a year-over-year basis. Sequentially, it was a little bit worse than that, and which speaks to, I think, just the end market softening even further as we went through the end of 2025 into the beginning of 2026. At the end of the day, research is still getting done. We need to be able to support our customers, and we're focused on that from helping support their consumable needs and usage. Yeah. yeah There's a bit of lag time from when the instruments are sold to when you'll see that consumable pull-through really get to normalized pull-through rates, if you will. there's a bit of lag time from when the instruments are sold to when you'll see that consumable pull-through really get to normalized pull-through rates if you will Then that's usually a 6-12 month cycle we've seen, at least historically. then that's usually a 6-12 month cycle we've seen at least historically With the softer market, does that elongate? with the softer market does that elongate Possibly. possibly That's something we're cognizant of and that we're tracking and evaluating. that's something we're cognizant of and that we're tracking and evaluating As we think about consumable pull-through, it's mid-single-digit decline on a year-over-year basis. as we think about consumable pull-through it's mid-single-digit decline on a year-over-year basis Sequentially, it was a little bit worse than that, and which speaks to, I think, just the end market softening even further as we went through the end of 2025 into the beginning of 2026. sequentially it was a little bit worse than that and which speaks to i think just the end market softening even further as we went through the end of 2025 into the beginning of 2026 At the end of the day, research is still getting done. at the end of the day research is still getting done We need to be able to support our customers, and we're focused on that from helping support their consumable needs and usage. we need to be able to support our customers and we're focused on that from helping support their consumable needs and usage

Speaker 2: Maybe switching over to Process Chrome then. 1Q tracked to plan, but obviously you had a big reset coming out of 4Q from up high single to down mid-teens. Maybe just talk about the portfolio there. Is it 8 to 10 commercial programs and then a lot of clinical programs? Maybe give us a sense of the scale there and how do we think about your visibility into that market going forward? Maybe switching over to Process Chrome then. 1Q tracked to plan, but obviously you had a big reset coming out of 4Q from up high single to down mid-teens. maybe switching over to process chrome then 1q tracked to plan but obviously you had a big reset coming out of 4q from up high single to down mid-teens Maybe just talk about the portfolio there. maybe just talk about the portfolio there Is it 8 to 10 commercial programs and then a lot of clinical programs? is it 8 to 10 commercial programs and then a lot of clinical programs Maybe give us a sense of the scale there and how do we think about your visibility into that market going forward? maybe give us a sense of the scale there and how do we think about your visibility into that market going forward

Speaker 1: First of all, the visibility is good in terms of what we have with our customers. Our account teams do a really nice job in working with the large pharma companies to really understand where they're going, what they're trying to do. That's something we've focused on improving over the years since the destocking periods. With that said, when you look at the distribution of the vast amount of our revenue comes out of those in the commercial phase. They've got therapeutics on market, whether it's vaccines or drugs. When you look at the greatest number of customers we have, it's actually those in the clinical phases. First of all, the visibility is good in terms of what we have with our customers. first of all the visibility is good in terms of what we have with our customers Our account teams do a really nice job in working with the large pharma companies to really understand where they're going, what they're trying to do. our account teams do a really nice job in working with the large pharma companies to really understand where they're going what they're trying to do That's something we've focused on improving over the years since the destocking periods. that's something we've focused on improving over the years since the destocking periods With that said, when you look at the distribution of the vast amount of our revenue comes out of those in the commercial phase. with that said when you look at the distribution of the vast amount of our revenue comes out of those in the commercial phase They've got therapeutics on market, whether it's vaccines or drugs. they've got therapeutics on market whether it's vaccines or drugs When you look at the greatest number of customers we have, it's actually those in the clinical phases. when you look at the greatest number of customers we have it's actually those in the clinical phases One of the things that we've seen is over the past few years, an increase in the number of customers that are in those early-stage clinical phases evaluating what resins to use, as a reminder, we play in the polishing stage in a kind of a niche area, a critical area, but a niche area. We're not playing in the broader bioprocessing that others might be. For us within there, once you're specced in, you're in. Once you're specced in in that clinical stages, you're in there through that commercial phase, and then it's just a question of how significant is the drug in the marketplace or how successful is it in the marketplace? One of the things that we've seen is over the past few years, an increase in the number of customers that are in those early-stage clinical phases evaluating what resins to use, as a reminder, we play in the polishing stage in a kind of a niche area, a critical area, but a niche area. one of the things that we've seen is over the past few years an increase in the number of customers that are in those early-stage clinical phases evaluating what resins to use as a reminder we play in the polishing stage in a kind of a niche area a critical area but a niche area We're not playing in the broader bioprocessing that others might be. we're not playing in the broader bioprocessing that others might be For us within there, once you're specced in, you're in. for us within there once you're specced in you're in Once you're specced in in that clinical stages, you're in there through that commercial phase, and then it's just a question of how significant is the drug in the marketplace or how successful is it in the marketplace? once you're specced in in that clinical stages you're in there through that commercial phase and then it's just a question of how significant is the drug in the marketplace or how successful is it in the marketplace

Speaker 2: Has your longer-term outlook for that business changed? Just thinking ahead to 2027, it'll have the benefit of easy comps. Can that business get back to high single-digit growth? Has your longer-term outlook for that business changed? has your longer-term outlook for that business changed Just thinking ahead to 2027, it'll have the benefit of easy comps. just thinking ahead to 2027 it'll have the benefit of easy comps Can that business get back to high single-digit growth? can that business get back to high single-digit growth

Speaker 1: Yeah. Our focus is with the reset that we needed to do because of the government policy change in vaccines. For us, getting to a high single digit is the ultimate goal. I think we're being cautious and really understanding the end market dynamics, because there is a lot of government policy, at least rhetoric, I'll say. Some of it's actual changes that are being implemented. There's also rhetoric out there, and so we want to see how that might evolve. We feel very good about the amount of activity we have with our customers and what they're doing. I think it's a little bit of where it settles out, and that's why we set more of a near-term mid-single-digit expectation with the idea that we need to build towards a high single-digit growth rate over time. Yeah. yeah Our focus is with the reset that we needed to do because of the government policy change in vaccines. our focus is with the reset that we needed to do because of the government policy change in vaccines For us, getting to a high single digit is the ultimate goal. for us getting to a high single digit is the ultimate goal I think we're being cautious and really understanding the end market dynamics, because there is a lot of government policy, at least rhetoric, I'll say. i think we're being cautious and really understanding the end market dynamics because there is a lot of government policy at least rhetoric i'll say Some of it's actual changes that are being implemented. some of it's actual changes that are being implemented There's also rhetoric out there, and so we want to see how that might evolve. there's also rhetoric out there and so we want to see how that might evolve We feel very good about the amount of activity we have with our customers and what they're doing. we feel very good about the amount of activity we have with our customers and what they're doing I think it's a little bit of where it settles out, and that's why we set more of a near-term mid-single-digit expectation with the idea that we need to build towards a high single-digit growth rate over time. i think it's a little bit of where it settles out and that's why we set more of a near-term mid-single-digit expectation with the idea that we need to build towards a high single-digit growth rate over time

Speaker 2: Quality Controls, this business growing mid-single digits for this year. You continue to see strength. You're making investments. Talk about some of the priorities for that part of the portfolio. Quality Controls, this business growing mid-single digits for this year. quality controls this business growing mid-single digits for this year You continue to see strength. you continue to see strength You're making investments. you're making investments Talk about some of the priorities for that part of the portfolio. talk about some of the priorities for that part of the portfolio

Speaker 1: Yeah. Quality Controls, we are the market leader in Quality Controls. It's an important area for us in our diagnostics side of the business. Because we have a right to win in that area, part of what we evaluated when we looked at our R&D spend is how do we do more there? We've moved money over to Quality Controls or incremental investment in Quality Controls, and really look at how do we win in all regions. We are especially strong, for example, in the Americas. We have opportunities for growth in other regions. What more can we do in those areas, and how can that help drive that mid-single-digit growth rate that we see in Quality Controls historically? Today, can we see that improve over time? Yeah. yeah Quality Controls, we are the market leader in Quality Controls. quality controls we are the market leader in quality controls It's an important area for us in our diagnostics side of the business. it's an important area for us in our diagnostics side of the business Because we have a right to win in that area, part of what we evaluated when we looked at our R&D spend is how do we do more there? because we have a right to win in that area part of what we evaluated when we looked at our r&d spend is how do we do more there We've moved money over to Quality Controls or incremental investment in Quality Controls, and really look at how do we win in all regions. we've moved money over to quality controls or incremental investment in quality controls and really look at how do we win in all regions We are especially strong, for example, in the Americas. we are especially strong for example in the americas We have opportunities for growth in other regions. we have opportunities for growth in other regions What more can we do in those areas, and how can that help drive that mid-single-digit growth rate that we see in Quality Controls historically? what more can we do in those areas and how can that help drive that mid-single-digit growth rate that we see in quality controls historically Today, can we see that improve over time? today can we see that improve over time

Speaker 2: Maybe just rounding it out on life sciences, obviously digital PCR, Process Chrome get most of the attention, but you still have 50% of that portfolio away from those businesses. Can you just talk about some of the other drivers, whether it's qPCR or any smaller markets that are starting to emerge? Maybe just rounding it out on life sciences, obviously digital PCR, Process Chrome get most of the attention, but you still have 50% of that portfolio away from those businesses. maybe just rounding it out on life sciences obviously digital pcr process chrome get most of the attention but you still have 50% of that portfolio away from those businesses Can you just talk about some of the other drivers, whether it's qPCR or any smaller markets that are starting to emerge? can you just talk about some of the other drivers whether it's qpcr or any smaller markets that are starting to emerge

Speaker 1: First of all, one of the things that we have is also a nice applied sciences business that really is driven off of our droplet digital PCR platform in food science, as an example, in wastewater management. That's a nice area of business. That's an opportunity for further growth, potentially, and that's how we've looked at it in terms of incremental investment. That's another area. When you look at qPCR, we've got a very nice install base there. As we think about the dynamics in the marketplace, one of the things we're evaluating is what more can we do from a qPCR standpoint, and that's an opportunity. You look at areas like Western blot imaging. First of all, one of the things that we have is also a nice applied sciences business that really is driven off of our droplet digital PCR platform in food science, as an example, in wastewater management. first of all one of the things that we have is also a nice applied sciences business that really is driven off of our droplet digital pcr platform in food science as an example in wastewater management That's a nice area of business. that's a nice area of business That's an opportunity for further growth, potentially, and that's how we've looked at it in terms of incremental investment. that's an opportunity for further growth potentially and that's how we've looked at it in terms of incremental investment That's another area. that's another area When you look at qPCR, we've got a very nice install base there. when you look at qpcr we've got a very nice install base there As we think about the dynamics in the marketplace, one of the things we're evaluating is what more can we do from a qPCR standpoint, and that's an opportunity. as we think about the dynamics in the marketplace one of the things we're evaluating is what more can we do from a qpcr standpoint and that's an opportunity You look at areas like Western blot imaging. you look at areas like western blot imaging One of the challenges from an end market standpoint is Western blot is one of these areas that new labs need to have, and new lab startups have declined, and so there's headwind from that standpoint. We have some R&D happening in that area in terms of driving incremental improvements in the platform that we have over time and how that might help us participate and drive growth in that area, even with new lab startups declining potentially. One of the challenges from an end market standpoint is Western blot is one of these areas that new labs need to have, and new lab startups have declined, and so there's headwind from that standpoint. one of the challenges from an end market standpoint is western blot is one of these areas that new labs need to have and new lab startups have declined and so there's headwind from that standpoint We have some R&D happening in that area in terms of driving incremental improvements in the platform that we have over time and how that might help us participate and drive growth in that area, even with new lab startups declining potentially. we have some r&d happening in that area in terms of driving incremental improvements in the platform that we have over time and how that might help us participate and drive growth in that area even with new lab startups declining potentially

Speaker 2: Shifting over to clinical, setting aside Middle East for a minute here. You've indicated that growth could, going forward, be below the 3% pre-COVID CAGR. Maybe talk about what's driving that change and how we should think about opportunities for the business to do better. Shifting over to clinical, setting aside Middle East for a minute here. shifting over to clinical setting aside middle east for a minute here You've indicated that growth could, going forward, be below the 3% pre-COVID CAGR. you've indicated that growth could going forward be below the 3% pre-covid cagr Maybe talk about what's driving that change and how we should think about opportunities for the business to do better. maybe talk about what's driving that change and how we should think about opportunities for the business to do better

Speaker 1: I think we've touched on a number of areas that are the potential drivers to help us. The ddPCR area, and I'll say PCR overall is an opportunity, especially considering our assay library and the positioning we have there. We talked about Quality Controls in the diagnostics area. Ultimately, we do think it's unfortunate with the conflict that's happening in the Middle East and the impact it's having on our business and other businesses. Ultimately, all of that gets dealt with and hopefully gets back to normalcy. When it does, we believe because of the position we already have, Middle East is an opportunity for further growth. We're also seeing strength in areas like APAC as a region, and that's another important growth area for us. I think we've touched on a number of areas that are the potential drivers to help us. i think we've touched on a number of areas that are the potential drivers to help us The ddPCR area, and I'll say PCR overall is an opportunity, especially considering our assay library and the positioning we have there. the ddpcr area and i'll say pcr overall is an opportunity especially considering our assay library and the positioning we have there We talked about Quality Controls in the diagnostics area. we talked about quality controls in the diagnostics area Ultimately, we do think it's unfortunate with the conflict that's happening in the Middle East and the impact it's having on our business and other businesses. ultimately we do think it's unfortunate with the conflict that's happening in the middle east and the impact it's having on our business and other businesses Ultimately, all of that gets dealt with and hopefully gets back to normalcy. ultimately all of that gets dealt with and hopefully gets back to normalcy When it does, we believe because of the position we already have, Middle East is an opportunity for further growth. when it does we believe because of the position we already have middle east is an opportunity for further growth We're also seeing strength in areas like APAC as a region, and that's another important growth area for us. we're also seeing strength in areas like apac as a region and that's another important growth area for us There's a number of elements here that we think over time, even considering some of the challenges here in the U.S. or in Europe, there's opportunities for growth in other ways. There's a number of elements here that we think over time, even considering some of the challenges here in the U.S. or in Europe, there's opportunities for growth in other ways. there's a number of elements here that we think over time even considering some of the challenges here in the u.s or in europe there's opportunities for growth in other ways

Speaker 2: On the Middle East, can you help us baseline what assumptions were previously embedded there and how you're thinking about the recovery cadence and mix across the portfolio? It seems like some markets, like hospitals, could come back again sooner. On the Middle East, can you help us baseline what assumptions were previously embedded there and how you're thinking about the recovery cadence and mix across the portfolio? on the middle east can you help us baseline what assumptions were previously embedded there and how you're thinking about the recovery cadence and mix across the portfolio It seems like some markets, like hospitals, could come back again sooner. it seems like some markets like hospitals could come back again sooner

Speaker 1: Yeah. I think obviously that was maybe a surprise to folks in terms of the news of the Middle East and how strong it is for us. That's been a focus area over multiple years for us, and our commercial teams have done a really nice job. If you think about it, the Middle East effectively is as big as China for us. Just to frame that for folks. I think that's lost, and it's especially strong on the DX side there. As we thought about the Middle East and the conflict, and Middle East includes those that are affected by the conflict regions, but also more broadly, there's other areas like Turkey or North Africa that aren't affected by the conflict specifically. It's a broad area, if you will. Yeah. yeah I think obviously that was maybe a surprise to folks in terms of the news of the Middle East and how strong it is for us. i think obviously that was maybe a surprise to folks in terms of the news of the middle east and how strong it is for us That's been a focus area over multiple years for us, and our commercial teams have done a really nice job. that's been a focus area over multiple years for us and our commercial teams have done a really nice job If you think about it, the Middle East effectively is as big as China for us. if you think about it the middle east effectively is as big as china for us Just to frame that for folks. just to frame that for folks I think that's lost, and it's especially strong on the DX side there. i think that's lost and it's especially strong on the dx side there As we thought about the Middle East and the conflict, and Middle East includes those that are affected by the conflict regions, but also more broadly, there's other areas like Turkey or North Africa that aren't affected by the conflict specifically. as we thought about the middle east and the conflict and middle east includes those that are affected by the conflict regions but also more broadly there's other areas like turkey or north africa that aren't affected by the conflict specifically It's a broad area, if you will. it's a broad area if you will What we did is we were much more cautious in terms of those that are the conflict areas and pulled that down in terms of the expectations for the rest of the year, while leaving the other areas there. I think as the conflict, and there's resolution to all of it, infrastructure rebuild and these sort of things will be prioritized. Ultimately, the Middle East is focused on investing in improved healthcare, and therefore, when it gets back to a more normalized environment, then the growth opportunities are going to be there again. What we did is we were much more cautious in terms of those that are the conflict areas and pulled that down in terms of the expectations for the rest of the year, while leaving the other areas there. what we did is we were much more cautious in terms of those that are the conflict areas and pulled that down in terms of the expectations for the rest of the year while leaving the other areas there I think as the conflict, and there's resolution to all of it, infrastructure rebuild and these sort of things will be prioritized. i think as the conflict and there's resolution to all of it infrastructure rebuild and these sort of things will be prioritized Ultimately, the Middle East is focused on investing in improved healthcare, and therefore, when it gets back to a more normalized environment, then the growth opportunities are going to be there again. ultimately the middle east is focused on investing in improved healthcare and therefore when it gets back to a more normalized environment then the growth opportunities are going to be there again

Speaker 2: China, diabetes-related VBP headwinds are the primary driver of the high single-digit decline last year. I guess, how do we think about the setup for the remainder of this year in China? What's embedded around tender dynamics, pricing, volume? China, diabetes-related VBP headwinds are the primary driver of the high single-digit decline last year. china diabetes-related vbp headwinds are the primary driver of the high single-digit decline last year I guess, how do we think about the setup for the remainder of this year in China? i guess how do we think about the setup for the remainder of this year in china What's embedded around tender dynamics, pricing, volume? what's embedded around tender dynamics pricing volume

Speaker 1: Yeah. China is, knock on wood, relatively stable for us, both on DX and tools. Just as a reminder, we haven't been affected by VBP, right? Let's put that to the side. What we were affected by at the end of 2024 is rate reimbursement change, specifically in our diabetes portfolio. Obviously, we've lapped that from an annualized aspect. We haven't seen any other potential headwinds at this point in time. We don't necessarily think that there's other rate reimbursement. China is focused in driving reduced healthcare costs, and so they're continuing to evaluate what other opportunities they have to do that. We need to be close to the end markets. Yeah. yeah China is, knock on wood, relatively stable for us, both on DX and tools. china is knock on wood relatively stable for us both on dx and tools Just as a reminder, we haven't been affected by VBP, right? just as a reminder we haven't been affected by vbp right Let's put that to the side. let's put that to the side What we were affected by at the end of 2024 is rate reimbursement change, specifically in our diabetes portfolio. what we were affected by at the end of 2024 is rate reimbursement change specifically in our diabetes portfolio Obviously, we've lapped that from an annualized aspect. obviously we've lapped that from an annualized aspect We haven't seen any other potential headwinds at this point in time. we haven't seen any other potential headwinds at this point in time We don't necessarily think that there's other rate reimbursement. we don't necessarily think that there's other rate reimbursement China is focused in driving reduced healthcare costs, and so they're continuing to evaluate what other opportunities they have to do that. china is focused in driving reduced healthcare costs and so they're continuing to evaluate what other opportunities they have to do that We need to be close to the end markets. we need to be close to the end markets

Speaker 2: It sounds like you're not concerned that there could be risks on VBP going forward, and there's been increased focus on NHSA policy. Less of an issue for you guys, obviously, but could there actually be upside around microbiology? We've heard about that from some of the peers. It sounds like you're not concerned that there could be risks on VBP going forward, and there's been increased focus on NHSA policy. it sounds like you're not concerned that there could be risks on vbp going forward and there's been increased focus on nhsa policy Less of an issue for you guys, obviously, but could there actually be upside around microbiology? less of an issue for you guys obviously but could there actually be upside around microbiology We've heard about that from some of the peers. we've heard about that from some of the peers

Speaker 1: Yeah. We're obviously trying to position ourselves to drive opportunities for growth in China. When you look at, and specifically what I'm pointing to is the China-for-China investment that we made, and now producing certain SKUs on the tools side in China. We think that'll give us an opportunity to participate in more tenders, and as a result of that's incremental growth opportunities. Quality Controls has been strong for us in China, and part of what we're evaluating is can we do more there from a quality control standpoint. China's an important overall market, one that can't be forgotten, and that's how we look at it. We're evaluating how can we win more and drive some growth there. Yeah. yeah We're obviously trying to position ourselves to drive opportunities for growth in China. we're obviously trying to position ourselves to drive opportunities for growth in china When you look at, and specifically what I'm pointing to is the China-for-China investment that we made, and now producing certain SKUs on the tools side in China. when you look at and specifically what i'm pointing to is the china-for-china investment that we made and now producing certain skus on the tools side in china We think that'll give us an opportunity to participate in more tenders, and as a result of that's incremental growth opportunities. we think that'll give us an opportunity to participate in more tenders and as a result of that's incremental growth opportunities Quality Controls has been strong for us in China, and part of what we're evaluating is can we do more there from a quality control standpoint. quality controls has been strong for us in china and part of what we're evaluating is can we do more there from a quality control standpoint China's an important overall market, one that can't be forgotten, and that's how we look at it. china's an important overall market one that can't be forgotten and that's how we look at it We're evaluating how can we win more and drive some growth there. we're evaluating how can we win more and drive some growth there

Speaker 2: Got a couple of minutes left. I'm not going to let you off the hook without asking about Sartorius. I guess, the word is optionality. Help us understand just how you're thinking about that internally. Is it all or nothing? Could you sell down some of the stake for a deal? How do you think about the various paths here? Got a couple of minutes left. got a couple of minutes left I'm not going to let you off the hook without asking about Sartorius. i'm not going to let you off the hook without asking about sartorius I guess, the word is optionality. i guess the word is optionality Help us understand just how you're thinking about that internally. help us understand just how you're thinking about that internally Is it all or nothing? is it all or nothing Could you sell down some of the stake for a deal? could you sell down some of the stake for a deal How do you think about the various paths here? how do you think about the various paths here

Speaker 1: Yeah. It doesn't surprise me we couldn't get through one conversation, but that's okay. It's the norm. Sartorius, we've been very explicit in that it provides us optionality. It is at our discretion. Could we sell something of it? Yes, we could sell something of it more near-term for a particular purpose, whether that's another M&A deal, these sort of things. The control is in our hands in terms of what we do. Now, with all that said, when you look at where Sartorius is, they had a recent Capital Markets Day. They've got, obviously, very specific plans for growth. Arguably, with the end markets the way they are, it's an undervalued stock in of itself. Yeah. yeah It doesn't surprise me we couldn't get through one conversation, but that's okay. it doesn't surprise me we couldn't get through one conversation but that's okay It's the norm. it's the norm Sartorius, we've been very explicit in that it provides us optionality. sartorius we've been very explicit in that it provides us optionality It is at our discretion. it is at our discretion Could we sell something of it? could we sell something of it Yes, we could sell something of it more near-term for a particular purpose, whether that's another M&A deal, these sort of things. yes we could sell something of it more near-term for a particular purpose whether that's another m&a deal these sort of things The control is in our hands in terms of what we do. the control is in our hands in terms of what we do Now, with all that said, when you look at where Sartorius is, they had a recent Capital Markets Day. now with all that said when you look at where sartorius is they had a recent capital markets day They've got, obviously, very specific plans for growth. they've got obviously very specific plans for growth Arguably, with the end markets the way they are, it's an undervalued stock in of itself. arguably with the end markets the way they are it's an undervalued stock in of itself When you look at our position, it has an opportunity for growth, and if we don't need to do anything with that stake, then allow it to grow over time as their valuation improves as well. When you look at our position, it has an opportunity for growth, and if we don't need to do anything with that stake, then allow it to grow over time as their valuation improves as well. when you look at our position it has an opportunity for growth and if we don't need to do anything with that stake then allow it to grow over time as their valuation improves as well

Speaker 2: One question we've gotten is just the potential to spin the shares to your shareholders ahead of the trust dissolving in 2028. Is that something that is under consideration? One question we've gotten is just the potential to spin the shares to your shareholders ahead of the trust dissolving in 2028. one question we've gotten is just the potential to spin the shares to your shareholders ahead of the trust dissolving in 2028 Is that something that is under consideration? is that something that is under consideration

Speaker 1: Well, we look at all sorts of things. I think what might make sense, how does it ultimately create value for Bio-Rad and create value therefore for our shareholders is ultimately how we think about it. We'll look at all the options that could be potentially out there, and evaluate those accordingly. Well, we look at all sorts of things. well we look at all sorts of things I think what might make sense, how does it ultimately create value for Bio-Rad and create value therefore for our shareholders is ultimately how we think about it. i think what might make sense how does it ultimately create value for bio-rad and create value therefore for our shareholders is ultimately how we think about it We'll look at all the options that could be potentially out there, and evaluate those accordingly. we'll look at all the options that could be potentially out there and evaluate those accordingly

Speaker 2: Just, I guess, last one on the tax issue, because this comes up a lot. I know we talked about it on our call after the quarter, but just get people comfortable with the idea that you've been accruing and that you're not going to have that tax liability, because I think that's still an open-ended question from our discussions. Just, I guess, last one on the tax issue, because this comes up a lot. just i guess last one on the tax issue because this comes up a lot I know we talked about it on our call after the quarter, but just get people comfortable with the idea that you've been accruing and that you're not going to have that tax liability, because I think that's still an open-ended question from our discussions. i know we talked about it on our call after the quarter but just get people comfortable with the idea that you've been accruing and that you're not going to have that tax liability because i think that's still an open-ended question from our discussions

Speaker 1: Yeah, I appreciate that call-out. When the accounting rules changed and this whole mark-to-market concept had to be implemented, one of the things that the company did is as we mark-to-market the Sartorius value of the shares, we also put a tax liability on the balance sheet to the tune of 22.7% of the value of the stake that we have. You see that fluctuation. That is on the balance sheet. There's obviously a cash flow if ever there was a use of those shares, and therefore there's a tax liability incurred. You have the P&L taken care of, but you have the cash flow that needs to be the outflow for that. That is sitting on the balance sheet. That's been disclosed in the financials for a number of years now. Yeah, I appreciate that call-out. yeah i appreciate that call-out When the accounting rules changed and this whole mark-to-market concept had to be implemented, one of the things that the company did is as we mark-to-market the Sartorius value of the shares, we also put a tax liability on the balance sheet to the tune of 22.7% of the value of the stake that we have. when the accounting rules changed and this whole mark-to-market concept had to be implemented one of the things that the company did is as we mark-to-market the sartorius value of the shares we also put a tax liability on the balance sheet to the tune of 22.7% of the value of the stake that we have You see that fluctuation. you see that fluctuation That is on the balance sheet. that is on the balance sheet There's obviously a cash flow if ever there was a use of those shares, and therefore there's a tax liability incurred. there's obviously a cash flow if ever there was a use of those shares and therefore there's a tax liability incurred You have the P&L taken care of, but you have the cash flow that needs to be the outflow for that. you have the p&l taken care of but you have the cash flow that needs to be the outflow for that That is sitting on the balance sheet. that is sitting on the balance sheet That's been disclosed in the financials for a number of years now. that's been disclosed in the financials for a number of years now

Speaker 2: Great. Think we'll leave it at that. Thanks, Roop. Great. great Think we'll leave it at that. think we'll leave it at that Thanks, Roop. thanks roop

Speaker 1: Thanks, Tycho Thanks, Tycho thanks tycho