BIO-RAD LABORATORIES, INC. — Call Transcript 2026

I'm Dan Leonard, the life science tools and diagnostics analyst at RBC, and we're thrilled to have with us from Bio-Rad, Roop Lakkaraju, CFO, and Ruben Argueta from Investor Relations. Thank you both for joining. Thanks for having us, Dan. Appreciate it. We've got some ground to cover and only 25 minutes to do it. I thought, Roop, to set the table, if you could just reflect back on your recently reported quarter. Well, what worked? What were the challenges? We reported first quarter results at the end of April. Obviously, it's a dynamic environment, and markets are continue to evolve. I think for us, maybe I'll highlight a few different things. Number one, when I look at where our digital PCR instruments are, we had 24% year-over-year growth. We were very pleased with that. That's especially attributable to our QX700 series products, which are a result of the Stilla acquisition that we completed last year. You know, the Stilla acquisition, upon acquiring them, we looked at getting to accretiveness within 18-24 months. We're actually ahead of that schedule. Kinda reiterated that within 12 months we'll be accretive, so we're pleased with that. When you look at some of the R&D improvements execution we've made, that's also reflected with our digital PCR platform. We were able to port 99% of our assays. We've got over 400,000 assays on digital PCR. Those were ported over ahead of time, so that just reinforces the value proposition of our QX700 platform, so that was very nice to see. Quality controls on the diagnostic side continue to be strong for us, we like that, and we think there's greater opportunity there in terms of growth over a longer-term period. We reiterated kind of see mid-single-digit growth there on quality controls, so that's, you know, something that's nice. You know, from an end market standpoint, obviously, there's the Middle East conflict, that presented some challenges for us. Specifically in the Middle East, we've got blood typing products that we're in. We're really strong. Blood typing outside of the Middle East was actually strong for us in other parts of the world. APAC was especially strong. Free cash flow, $78 million, which we were pleased with again. That's a focus for us. About $48 million of share repurchases that we did. All things considered, you know, it's challenging end markets, but team navigated, you know, with positive areas, both on the tools side as well as diagnostics side. Okay. That's a great start. I wanna dive into some of these details, but before we do, there was an article in The Wall Street Journal on Sunday that you have a new shareholder. I was wondering if you would care to comment? Yeah. We value our engagement and feedback from our shareholders. It's very important to us. We take that very seriously. With that said, we don't talk about any specific conversations with our shareholders and, you know, kinda leave it at that. Okay. Great. Well, with that out of the way, let's dive into some of the business trends. You mentioned the Middle East as a challenge, and I think investors were caught a bit off sides by your diagnostics exposure in the Middle East. Could you elaborate a bit on that and maybe use this as an opportunity to talk about your diagnostics exposure more broadly? Yeah. It's a fair point. Obviously, Middle East is encompassed within our EMEIA region overall, which we report as a group. Middle East, over the past few years, has been a very strong area for us, especially in the diagnostics specific area. It's about 9% of our diagnostics revenue. Our team has really done a great job of positioning us with the tenders that happen in region. You know, if you think about it with 9% of diagnostics, the Middle East for us is somewhat similar to our China exposure, which is around mid-single digits, kind of as an enterprise. You know, it's an important growth area for us. It's unfortunate with what's happening in the Middle East and the conflict. I think longer term, we believe, you know, post the conflict, that and hopefully it resolves itself soon, there's an opportunity for us to get back to growth in the Middle East. Okay. Just in terms of business mix and how your diagnostics business might be different than every other diagnostics business that Wall Street looks at, I think it'd be interesting to talk about China. We hear a lot of different things on diagnostic trends in China. Everybody has a bit of a different business there. With Bio-Rad's business, what are you seeing in China? What do the opportunities look like? Yeah. For China, you know, it's been relatively stable, I'll say, for us. You know, a couple of years ago, we had the reimbursement rate change associated with our A1C products there. We obviously took that rate reduction, lapped in 2025, Q4 of 2025. Outside of that, we haven't been affected by VBP, that's not an area that's affected us. Where we see strength, you know, China diagnostics is, it's split about 50/50 between tools and diagnostics for us. Really we've got a strong position in quality controls in China, that continues to show strength for us in China. We expect we'll continue to see that. Okay. Before we pivot away from diagnostics, it sounds like your quality controls portfolio is one of the standout portfolios in your business overall from your prepared comments at the start talking about the quarter mid-single digit growth rate. Can you elaborate a bit further on what gets you excited about that franchise? What are the growth opportunities? Yeah, I mean, quality controls is an important area. It's required. We've got market leadership in that area. We're actually putting more investment into that area. We see additional opportunities for growth, and that's kind of how we look at it. Really on a global scale, in terms of the quality controls. It's not any specific region, but we see the opportunity on a global basis. Okay. That's a 100% consumables business, correct? Yes, that's correct. Got it. Presumably, the margin profile then is attractive. It is attractive. I especially like the margin profile of quality controls. Okay. Yeah. All right. Well, let's pivot to the life sciences market. Can you walk us through the trends you're seeing by end market in life sciences? Yeah, it's a great question because I think it's continuing to evolve. I think from a If I look at U.S. academic and gov, it's been soft. Obviously, I think there's been a lot of headlines around the NIH, you know, +1% from a budget standpoint. I think that's good. However, the ability to get that money into institutions' hands has been a bit challenging, and I think that's been created a little bit of that softness in terms of what we're seeing. Obviously, you know, 24% digital PCR instrument growth on a year-over-year basis. That was very strong. We like that. What we've seen, though, is consumable pull-through, and this isn't just a U.S. phenomena, it's we're seeing this in Europe as well, slowing for us. You know, I think it really is lab activity slowing down, as people prioritize, you know, payroll and these sort of things. Obviously, there's work still being done, but not at the rate that we thought we would expect to see coming into the year, that's been a little bit of surprise. Europe softening was an evolving item for us, something we'll continue to monitor as well. You know, separate from that, our applied markets for digital PCR, think of that as food science, has been strong, stable, we like to see that. You know, when you look at We've got certain franchises like Western blotting, critical area for new lab startups and you know, that's an instrument that goes into every such new lab. When you don't have new labs starting up, that creates a little bit of a headwind there as well. We're seeing some of that dynamic especially within the U.S. Okay. What about biopharma? Biopharma. You know, large pharma for us is stable. It played out the way we expected, that's obviously within our process chromatography area. As we think about the broader biopharma aside from large pharma, it's a little bit of a mixed bag. You know, when you look at earlier stage companies, there's still slowness there. There's softness there. As you go to later stage companies, they have seen funding getting into their hands, they're seeing some of that. Unfortunately, our portfolio skews a little bit more towards that earlier stage set of companies that are more in that development phase. We're seeing a little bit of softness there on a continued basis. We do think as the year progresses, we expect that to improve slightly, but we're not expecting, you know, strong end market shifts or anything like that. Okay. You mentioned the digital PCR business a couple of times. Can you talk a bit about the broader portfolio there and how your market segmentation strategy is working? The team's done a really nice job in terms of really with the Stilla acquisition and broadening our portfolio and availability. We've got our historical platforms, the QX200, QX600, and QX ONE. One of the things with the Stilla acquisition, we were able to position them appropriately within the end marketplace, and one of the things we were doing previously is needing to discount the 200 and 600. No longer needing to do that because of the breadth of our portfolio. That's been nice to see. You know, with the Stilla platform, and especially the entry-level product of the Stilla series, the QX700 series, what we've seen is qPCR conversion, which we kind of was part of our investment thesis for the acquisition. It's played out as expected, that was nice to see in terms of qPCR conversion as well as market share pickup in terms of new digital PCR. We think on a longer term basis, that's gonna continue to be a growth driver for us. When we think about the consumables pull-through, you know, obviously, I mentioned right now we're seeing a little bit of softness on that consumable pull-through. We think over time, because of the instrument sales that we have, that ultimately the consumable pull-through will happen there, which will help kind of reinforce the value proposition. Is qPCR conversion a good thing for Bio-Rad or a headwind for Bio-Rad? Well, I mean, we've got historical qPCR platform, right? Where we weren't playing in qPCR is kind of the higher end of qPCR. You start to see with these price points of high-end qPCR and entry-level digital PCR, that those price points are comparable, if you will. They're not exactly the same, but they're comparable. The value proposition starts to get reinforced in terms of instead of that high-end qPCR, maybe a digital PCR instrument can be applicable. We see an opportunity to continue to sell, and we do sell from a qPCR sampling our instruments. We obviously see digital PCR opportunities as well. Okay. I think we have time to touch on process chromatography. Two quarters ago, you mentioned some specific idiosyncratic headwinds. That's well understood at this point. Is it possible to talk about how your process chromatography business is doing, excluding those couple of idiosyncratic headwinds? It's actually, it's played out how we expected it coming into the year. Okay. Right? Considering those specific dynamics that you mentioned, outside of that, it's played out the way we think. Long term, it's still an important area and an opportunity for growth for us. Okay. Final question on life sciences. You have a new strategy in China. Can you update us on the Bio-Rad China strategy? Yeah. I think the, you know, what the specific item is we stood up in a very relatively short timeframe, with about 120 days, China manufacturing capability for certain of our tools SKUs. This is something that had been thought about for quite some time within Bio-Rad. For those of you that, you know, speak to Bio-Rad on a regular basis, I'm sure that's come up in conversation. We felt that it was important and an opportunity for us that we're missing out in terms of some of those tenders. Therefore standing this manufacturing capability up in China for China, we think is a growth opportunity to help support our China business on a long-term basis. Bio-Rad has lots of SKUs. Yes. Which did you stand up locally in China? How do you even make that decision? Yeah, I mean, without getting into specific SKUs, I guess we went through a specific kind of evaluation of where the opportunities are in the end market, where we have good positioning and a right to win, if you will, from our marketing perspective, and then that's where we focused in terms of the SKU capability. Got it. All right. Well, Roop, as I mentioned, we resumed coverage of Bio-Rad very recently. We've been getting questions on the back-end loading nature of both street forecast for 2026. Yeah as well as guidance for the full year. Can you speak to that? What are some of the idiosyncratic factors within Bio-Rad which give you that second half waiting in 2026? That's a great question. Obviously, Dan, appreciate picking up coverage on Bio-Rad. Always appreciate your support. You know, from a phasing standpoint, our historical phasing is about 48% of our revenue in the first half, 52% in the second half. When we look at the phasing right now, it's roughly 47% first half, 53% second half. Not dissimilar. Now, with that said, when you look at kind of our profile through the year, it's as expected, right? Q1 is traditionally the low point from a revenue standpoint. We see it step up reasonably kind of in that 5%-6%, which is what it's doing this year for Q2. Q2, Q3 can be either relatively flat or a slight uptick in Q3, depending upon end market dynamics. Q4 usually steps up. That's exactly the profile we're seeing. When we look at the specific elements that are supporting that growth, obviously part of that is continued digital PCR growth that we expect to see. When we look at specific movements from Q1 to Q2 or into Q3 and Q4, it's very specific to, for example, lot releases and quality controls. They happen at certain times of the year. We talked about it extensively last year. Same dynamic was there. We have that same dynamic. When you look at, you know, how things are moving and growing in Q3 and then into Q4, that's specific to quality control assessments. Yeah. We have certain blood typing opportunities, that we see, instrument opportunities, later in the year. The movements within the year are specific to either, certain opportunities that we see or lot releases associated with quality controls or the digital PCR done. Is there anything, I mean, to that digital PCR dynamic, is there any assumption around a budget flush in Q4 that your guidance is predicated on? That budget flush topic is always of interest to investors. No, it doesn't, it's not predicated on a budget flush. Okay. All right. Well, Norman doesn't have prepared remarks on every quarterly earnings call. He did on your Q1 earnings call. He talked about an ambition to get to mid-teens EBIT margins in the near term. Can you elaborate on that and how do you get there from your current ten-ish % level? Yeah. I think, you know, and I appreciate your comment that, you know, not every quarter Norman, has prepared comments. I think when we feel like that there's, things that ought to be reiterated or reinforced, it is important for him to provide those comments. You know, as it relates to that mid-teens. Mm-hmm. Mm-hmm. op margin, you know, we've got opportunity from margin expansion. That is a focus for us, as part of the relatively new leadership, let's call it, right? At the end of the day, we wanna drive to market growth rates. You know, we can debate, I'm sure, what market growth rates are today. As part of that, margin expansion, we have margin expansion opportunities. We've got free cash flow improvement opportunities as well. We've talked extensively about that. We have actions underway in each of those areas. I think what Norman wanted to reinforce is, from his perspective, op margin expansion is of importance to him and to all of us, right? I think there's a perspective of just the dual class share, you know, governance framework and everything that is that truly an important aspect? I think it was to reinforce really, hey, it is, and the actions we're doing are to drive towards that in the near term, and then longer term, see how we can grow beyond that. In terms of drivers, I think there's numerous drivers. Obviously, it'd be nice for the end markets to improve. Even without that, we have margin expansion opportunities from our perspective. When you look at pricing discipline, we've improved that over the course of the last couple of years in the time I've been here and John's been here and other folks within the new leadership team. We're gonna continue to reinforce that, and especially where we've got market leadership opportunities. As we think about within the COGS area, there's opportunities within You know, when you look at our capacity, and absorption levels, there's some opportunities there to try and right-size some things, and really rationalize our footprint appropriately. We've done that to some extent historically. We'll continue to look at that as an opportunity. We look at procurement, buying power as an opportunity. We've made improvements in logistics and both rate and lane improvements, and we'll continue to look at those. Then, of course, there's OpEx rationalization and productivity improvements that we're looking at and have implemented and will continue to implement as we move forward. As an example, last year, in February of 2025, you know, we did a fairly large restructuring to right-size some of our operating costs. We'll continue to look at these things in terms of driving that operating margin expansion near term and long term. Is it possible to quantify how much of the bridge from a 10% today to a 15% near term, how much of that would be top line independent compared to top line dependent? I think there is a level of independence there in terms of actions that we can take to drive that expansion. Part of that top line is also the mix of the top line. You know, life science tools tends to be good margin for us as it relates to diagnostics, and so that mix of revenue helps. Obviously, I mentioned earlier, our QX700 series products, you know, are a good it's a good set of instruments from a margin standpoint. So that mix of revenue also contributes to that support. Good. Like you mentioned, we could debate the market growth rate. Yes, we can. Okay. Well, what about, you know, levers on the balance sheet that might not show up necessarily in operating margin? We talk sometimes about inventory turns. Yeah. Can you walk through your thinking on that? Yeah. You know, inventory is obviously important, to support, you know, the types of products we have. Some of them are a quick turn. They need to get in customer hands within a very short time period 'cause they're temperature controlled, these sort of things. When we look at inventory as a whole, you know, quality controls is one area which, because of its business model, requires additional inventory, and these sort of things. We wanna be mindful of that and protect that franchise from that standpoint. When you look at the rest of our inventory opportunities, we see that in terms of working capital efficiencies that we can drive there. Our supply chain teams are actively working on that. Another area that we're looking at is days payable outstanding with vendor terms, right? When you look at where that is, there's opportunity for improvement, and especially as it relates to where our DSO is. We've made improvements in the AR collections and these sort of things over the last couple of years, and the quality of our AR, the aging has improved. All of this contributes towards that working capital, efficiency standpoint, and cash conversion efficacy. The other part of it is, you know, we're continuing to rationalize our CapEx and really, you know, that's come down when you look at it from a prior few years versus where we were in 2025, while doing specific investments that we thought we needed to do. We'll continue to look at CapEx, rationalization as well and really invest where it's needed and ensure we're getting the return for those investments. A big chunk of your CapEx is reagent rental in the diagnostics business. Yeah correct? It is. You know, it's not a majority or anything like that. It's a reasonable percentage, it's nowhere near, you know, 50%. Okay. Yeah. How do you measure return on R&D? The R&D as a % of revenue is an area on the P&L that sticks out. Yeah. We've talked openly about the R&D investments we've made over the years, and that R&D kind of product vitality index hasn't been where we want to see it. We've made improvements in terms of our R&D execution efficacy, I think. In general, our operational efficacy, execution efficacy, if you will, right? From an R&D standpoint, we go through and we're rationalizing and really evaluating what's the return, what's when do we expect to see revenue from the investments we're making on this to really drive the vitality improvement. We're investing in areas that we think offer us an opportunity from a growth perspective. Hence, you know, when you look at some of the R&D movements, to porting the assays onto the Stilla platform, right? That's ahead of schedule. Well, that's purposeful, right? We put the resources behind that versus saying that's something by the end of the year we might be able to do, right? We're looking at these opportunities. We're investing further in quality controls 'cause, again, market leadership, there's an opportunity for more. We're really looking at this in a structured way to drive R&D returns at a far higher level of returns than what we've had historically. Got it. Well, Roop Lakkaraju, I was told to keep on schedule. We've got 30 seconds left. We'll leave it there. Thank you so much for your time. Thanks, Dan. Appreciate it.

Speaker 1: I'm Dan Leonard, the life science tools and diagnostics analyst at RBC, and we're thrilled to have with us from Bio-Rad, Roop Lakkaraju, CFO, and Ruben Argueta from Investor Relations. Thank you both for joining. I'm Dan Leonard, the life science tools and diagnostics analyst at RBC, and we're thrilled to have with us from Bio-Rad, Roop Lakkaraju, CFO, and Ruben Argueta from Investor Relations. i'm dan leonard the life science tools and diagnostics analyst at rbc and we're thrilled to have with us from bio-rad roop lakkaraju cfo and ruben argueta from investor relations Thank you both for joining. thank you both for joining

Speaker 2: Thanks for having us, Dan. Appreciate it. Thanks for having us, Dan. thanks for having us dan Appreciate it. appreciate it

Speaker 1: We've got some ground to cover and only 25 minutes to do it. I thought, Roop, to set the table, if you could just reflect back on your recently reported quarter. Well, what worked? What were the challenges? We've got some ground to cover and only 25 minutes to do it. we've got some ground to cover and only 25 minutes to do it I thought, Roop, to set the table, if you could just reflect back on your recently reported quarter. i thought roop to set the table if you could just reflect back on your recently reported quarter Well, what worked? well what worked What were the challenges? what were the challenges

Speaker 2: We reported first quarter results at the end of April. Obviously, it's a dynamic environment, and markets are continue to evolve. I think for us, maybe I'll highlight a few different things. Number one, when I look at where our digital PCR instruments are, we had 24% year-over-year growth. We were very pleased with that. That's especially attributable to our QX700 series products, which are a result of the Stilla acquisition that we completed last year. You know, the Stilla acquisition, upon acquiring them, we looked at getting to accretiveness within 18-24 months. We're actually ahead of that schedule. Kinda reiterated that within 12 months we'll be accretive, so we're pleased with that. We reported first quarter results at the end of April. we reported first quarter results at the end of april Obviously, it's a dynamic environment, and markets are continue to evolve. obviously it's a dynamic environment and markets are continue to evolve I think for us, maybe I'll highlight a few different things. i think for us maybe i'll highlight a few different things Number one, when I look at where our digital PCR instruments are, we had 24% year-over-year growth. number one when i look at where our digital pcr instruments are we had 24% year-over-year growth We were very pleased with that. we were very pleased with that That's especially attributable to our QX700 series products, which are a result of the Stilla acquisition that we completed last year. that's especially attributable to our qx700 series products which are a result of the stilla acquisition that we completed last year You know, the Stilla acquisition, upon acquiring them, we looked at getting to accretiveness within 18-24 months. you know the stilla acquisition upon acquiring them we looked at getting to accretiveness within 18-24 months We're actually ahead of that schedule. we're actually ahead of that schedule Kinda reiterated that within 12 months we'll be accretive, so we're pleased with that. kinda reiterated that within 12 months we'll be accretive so we're pleased with that When you look at some of the R&D improvements execution we've made, that's also reflected with our digital PCR platform. We were able to port 99% of our assays. We've got over 400,000 assays on digital PCR. Those were ported over ahead of time, so that just reinforces the value proposition of our QX700 platform, so that was very nice to see. Quality controls on the diagnostic side continue to be strong for us, we like that, and we think there's greater opportunity there in terms of growth over a longer-term period. We reiterated kind of see mid-single-digit growth there on quality controls, so that's, you know, something that's nice. When you look at some of the R&D improvements execution we've made, that's also reflected with our digital PCR platform. when you look at some of the r&d improvements execution we've made that's also reflected with our digital pcr platform We were able to port 99% of our assays. we were able to port 99% of our assays We've got over 400,000 assays on digital PCR. we've got over 400,000 assays on digital pcr Those were ported over ahead of time, so that just reinforces the value proposition of our QX700 platform, so that was very nice to see. those were ported over ahead of time so that just reinforces the value proposition of our qx700 platform so that was very nice to see Quality controls on the diagnostic side continue to be strong for us, we like that, and we think there's greater opportunity there in terms of growth over a longer-term period. quality controls on the diagnostic side continue to be strong for us we like that and we think there's greater opportunity there in terms of growth over a longer-term period We reiterated kind of see mid-single-digit growth there on quality controls, so that's, you know, something that's nice. we reiterated kind of see mid-single-digit growth there on quality controls so that's you know something that's nice You know, from an end market standpoint, obviously, there's the Middle East conflict, that presented some challenges for us. Specifically in the Middle East, we've got blood typing products that we're in. We're really strong. Blood typing outside of the Middle East was actually strong for us in other parts of the world. APAC was especially strong. Free cash flow, $78 million, which we were pleased with again. That's a focus for us. About $48 million of share repurchases that we did. All things considered, you know, it's challenging end markets, but team navigated, you know, with positive areas, both on the tools side as well as diagnostics side. You know, from an end market standpoint, obviously, there's the Middle East conflict, that presented some challenges for us. you know from an end market standpoint obviously there's the middle east conflict that presented some challenges for us Specifically in the Middle East, we've got blood typing products that we're in. specifically in the middle east we've got blood typing products that we're in We're really strong. we're really strong Blood typing outside of the Middle East was actually strong for us in other parts of the world. blood typing outside of the middle east was actually strong for us in other parts of the world APAC was especially strong. apac was especially strong Free cash flow, $78 million, which we were pleased with again. free cash flow $78 million which we were pleased with again That's a focus for us. that's a focus for us About $48 million of share repurchases that we did. about $48 million of share repurchases that we did All things considered, you know, it's challenging end markets, but team navigated, you know, with positive areas, both on the tools side as well as diagnostics side. all things considered you know it's challenging end markets but team navigated you know with positive areas both on the tools side as well as diagnostics side

Speaker 1: Okay. That's a great start. I wanna dive into some of these details, but before we do, there was an article in The Wall Street Journal on Sunday that you have a new shareholder. I was wondering if you would care to comment? Okay. okay That's a great start. that's a great start I wanna dive into some of these details, but before we do, there was an article in The Wall Street Journal on Sunday that you have a new shareholder. i wanna dive into some of these details but before we do there was an article in the wall street journal on sunday that you have a new shareholder I was wondering if you would care to comment? i was wondering if you would care to comment

Speaker 2: Yeah. We value our engagement and feedback from our shareholders. It's very important to us. We take that very seriously. With that said, we don't talk about any specific conversations with our shareholders and, you know, kinda leave it at that. Yeah. yeah We value our engagement and feedback from our shareholders. we value our engagement and feedback from our shareholders It's very important to us. it's very important to us We take that very seriously. we take that very seriously With that said, we don't talk about any specific conversations with our shareholders and, you know, kinda leave it at that. with that said we don't talk about any specific conversations with our shareholders and you know kinda leave it at that

Speaker 1: Okay. Great. Well, with that out of the way, let's dive into some of the business trends. You mentioned the Middle East as a challenge, and I think investors were caught a bit off sides by your diagnostics exposure in the Middle East. Could you elaborate a bit on that and maybe use this as an opportunity to talk about your diagnostics exposure more broadly? Okay. okay Great. great Well, with that out of the way, let's dive into some of the business trends. well with that out of the way let's dive into some of the business trends You mentioned the Middle East as a challenge, and I think investors were caught a bit off sides by your diagnostics exposure in the Middle East. you mentioned the middle east as a challenge and i think investors were caught a bit off sides by your diagnostics exposure in the middle east Could you elaborate a bit on that and maybe use this as an opportunity to talk about your diagnostics exposure more broadly? could you elaborate a bit on that and maybe use this as an opportunity to talk about your diagnostics exposure more broadly

Speaker 2: Yeah. It's a fair point. Obviously, Middle East is encompassed within our EMEIA region overall, which we report as a group. Middle East, over the past few years, has been a very strong area for us, especially in the diagnostics specific area. It's about 9% of our diagnostics revenue. Our team has really done a great job of positioning us with the tenders that happen in region. You know, if you think about it with 9% of diagnostics, the Middle East for us is somewhat similar to our China exposure, which is around mid-single digits, kind of as an enterprise. You know, it's an important growth area for us. It's unfortunate with what's happening in the Middle East and the conflict. Yeah. yeah It's a fair point. it's a fair point Obviously, Middle East is encompassed within our EMEIA region overall, which we report as a group. obviously middle east is encompassed within our emeia region overall which we report as a group Middle East, over the past few years, has been a very strong area for us, especially in the diagnostics specific area. middle east over the past few years has been a very strong area for us especially in the diagnostics specific area It's about 9% of our diagnostics revenue. it's about 9% of our diagnostics revenue Our team has really done a great job of positioning us with the tenders that happen in region. our team has really done a great job of positioning us with the tenders that happen in region You know, if you think about it with 9% of diagnostics, the Middle East for us is somewhat similar to our China exposure, which is around mid-single digits, kind of as an enterprise. you know if you think about it with 9% of diagnostics the middle east for us is somewhat similar to our china exposure which is around mid-single digits kind of as an enterprise You know, it's an important growth area for us. you know it's an important growth area for us It's unfortunate with what's happening in the Middle East and the conflict. it's unfortunate with what's happening in the middle east and the conflict I think longer term, we believe, you know, post the conflict, that and hopefully it resolves itself soon, there's an opportunity for us to get back to growth in the Middle East. I think longer term, we believe, you know, post the conflict, that and hopefully it resolves itself soon, there's an opportunity for us to get back to growth in the Middle East. i think longer term we believe you know post the conflict that and hopefully it resolves itself soon there's an opportunity for us to get back to growth in the middle east

Speaker 1: Okay. Just in terms of business mix and how your diagnostics business might be different than every other diagnostics business that Wall Street looks at, I think it'd be interesting to talk about China. We hear a lot of different things on diagnostic trends in China. Everybody has a bit of a different business there. With Bio-Rad's business, what are you seeing in China? What do the opportunities look like? Okay. okay Just in terms of business mix and how your diagnostics business might be different than every other diagnostics business that Wall Street looks at, I think it'd be interesting to talk about China. just in terms of business mix and how your diagnostics business might be different than every other diagnostics business that wall street looks at i think it'd be interesting to talk about china We hear a lot of different things on diagnostic trends in China. we hear a lot of different things on diagnostic trends in china Everybody has a bit of a different business there. everybody has a bit of a different business there With Bio-Rad's business, what are you seeing in China? with bio-rad's business what are you seeing in china What do the opportunities look like? what do the opportunities look like

Speaker 2: Yeah. For China, you know, it's been relatively stable, I'll say, for us. You know, a couple of years ago, we had the reimbursement rate change associated with our A1C products there. We obviously took that rate reduction, lapped in 2025, Q4 of 2025. Outside of that, we haven't been affected by VBP, that's not an area that's affected us. Where we see strength, you know, China diagnostics is, it's split about 50/50 between tools and diagnostics for us. Really we've got a strong position in quality controls in China, that continues to show strength for us in China. We expect we'll continue to see that. Yeah. yeah For China, you know, it's been relatively stable, I'll say, for us. for china you know it's been relatively stable i'll say for us You know, a couple of years ago, we had the reimbursement rate change associated with our A1C products there. you know a couple of years ago we had the reimbursement rate change associated with our a1c products there We obviously took that rate reduction, lapped in 2025, Q4 of 2025. we obviously took that rate reduction lapped in 2025 q4 of 2025 Outside of that, we haven't been affected by VBP, that's not an area that's affected us. outside of that we haven't been affected by vbp that's not an area that's affected us Where we see strength, you know, China diagnostics is, it's split about 50/50 between tools and diagnostics for us. where we see strength you know china diagnostics is it's split about 50/50 between tools and diagnostics for us Really we've got a strong position in quality controls in China, that continues to show strength for us in China. really we've got a strong position in quality controls in china that continues to show strength for us in china We expect we'll continue to see that. we expect we'll continue to see that

Speaker 1: Okay. Before we pivot away from diagnostics, it sounds like your quality controls portfolio is one of the standout portfolios in your business overall from your prepared comments at the start talking about the quarter mid-single digit growth rate. Can you elaborate a bit further on what gets you excited about that franchise? What are the growth opportunities? Okay. okay Before we pivot away from diagnostics, it sounds like your quality controls portfolio is one of the standout portfolios in your business overall from your prepared comments at the start talking about the quarter mid-single digit growth rate. before we pivot away from diagnostics it sounds like your quality controls portfolio is one of the standout portfolios in your business overall from your prepared comments at the start talking about the quarter mid-single digit growth rate Can you elaborate a bit further on what gets you excited about that franchise? can you elaborate a bit further on what gets you excited about that franchise What are the growth opportunities? what are the growth opportunities

Speaker 2: Yeah, I mean, quality controls is an important area. It's required. We've got market leadership in that area. We're actually putting more investment into that area. We see additional opportunities for growth, and that's kind of how we look at it. Really on a global scale, in terms of the quality controls. It's not any specific region, but we see the opportunity on a global basis. Yeah, I mean, quality controls is an important area. yeah i mean quality controls is an important area It's required. it's required We've got market leadership in that area. we've got market leadership in that area We're actually putting more investment into that area. we're actually putting more investment into that area We see additional opportunities for growth, and that's kind of how we look at it. we see additional opportunities for growth and that's kind of how we look at it Really on a global scale, in terms of the quality controls. really on a global scale in terms of the quality controls It's not any specific region, but we see the opportunity on a global basis. it's not any specific region but we see the opportunity on a global basis

Speaker 1: Okay. That's a 100% consumables business, correct? Okay. okay That's a 100% consumables business, correct? that's a 100% consumables business correct

Speaker 2: Yes, that's correct. Yes, that's correct. yes that's correct

Speaker 1: Got it. Presumably, the margin profile then is attractive. Got it. got it Presumably, the margin profile then is attractive. presumably the margin profile then is attractive

Speaker 2: It is attractive. It is attractive. it is attractive I especially like the margin profile of quality controls. I especially like the margin profile of quality controls. i especially like the margin profile of quality controls

Speaker 1: Okay. Okay. okay

Speaker 2: Yeah. Yeah. yeah

Speaker 1: All right. Well, let's pivot to the life sciences market. Can you walk us through the trends you're seeing by end market in life sciences? All right. all right Well, let's pivot to the life sciences market. well let's pivot to the life sciences market Can you walk us through the trends you're seeing by end market in life sciences? can you walk us through the trends you're seeing by end market in life sciences

Speaker 2: Yeah, it's a great question because I think it's continuing to evolve. I think from a If I look at U.S. academic and gov, it's been soft. Obviously, I think there's been a lot of headlines around the NIH, you know, +1% from a budget standpoint. I think that's good. However, the ability to get that money into institutions' hands has been a bit challenging, and I think that's been created a little bit of that softness in terms of what we're seeing. Obviously, you know, 24% digital PCR instrument growth on a year-over-year basis. That was very strong. We like that. Yeah, it's a great question because I think it's continuing to evolve. yeah it's a great question because i think it's continuing to evolve I think from a If I look at U.S. academic and gov, it's been soft. i think from a if i look at u.s academic and gov it's been soft Obviously, I think there's been a lot of headlines around the NIH, you know, +1% from a budget standpoint. obviously i think there's been a lot of headlines around the nih you know +1% from a budget standpoint I think that's good. i think that's good However, the ability to get that money into institutions' hands has been a bit challenging, and I think that's been created a little bit of that softness in terms of what we're seeing. however the ability to get that money into institutions' hands has been a bit challenging and i think that's been created a little bit of that softness in terms of what we're seeing Obviously, you know, 24% digital PCR instrument growth on a year-over-year basis. obviously you know 24% digital pcr instrument growth on a year-over-year basis That was very strong. that was very strong We like that. we like that What we've seen, though, is consumable pull-through, and this isn't just a U.S. phenomena, it's we're seeing this in Europe as well, slowing for us. You know, I think it really is lab activity slowing down, as people prioritize, you know, payroll and these sort of things. Obviously, there's work still being done, but not at the rate that we thought we would expect to see coming into the year, that's been a little bit of surprise. Europe softening was an evolving item for us, something we'll continue to monitor as well. You know, separate from that, our applied markets for digital PCR, think of that as food science, has been strong, stable, we like to see that. What we've seen, though, is consumable pull-through, and this isn't just a U.S. phenomena, it's we're seeing this in Europe as well, slowing for us. what we've seen though is consumable pull-through and this isn't just a u.s phenomena it's we're seeing this in europe as well slowing for us You know, I think it really is lab activity slowing down, as people prioritize, you know, payroll and these sort of things. you know i think it really is lab activity slowing down as people prioritize you know payroll and these sort of things Obviously, there's work still being done, but not at the rate that we thought we would expect to see coming into the year, that's been a little bit of surprise. obviously there's work still being done but not at the rate that we thought we would expect to see coming into the year that's been a little bit of surprise Europe softening was an evolving item for us, something we'll continue to monitor as well. europe softening was an evolving item for us something we'll continue to monitor as well You know, separate from that, our applied markets for digital PCR, think of that as food science, has been strong, stable, we like to see that. you know separate from that our applied markets for digital pcr think of that as food science has been strong stable we like to see that You know, when you look at We've got certain franchises like Western blotting, critical area for new lab startups and you know, that's an instrument that goes into every such new lab. When you don't have new labs starting up, that creates a little bit of a headwind there as well. We're seeing some of that dynamic especially within the U.S. You know, when you look at We've got certain franchises like Western blotting, critical area for new lab startups and you know, that's an instrument that goes into every such new lab. you know when you look at we've got certain franchises like western blotting critical area for new lab startups and you know that's an instrument that goes into every such new lab When you don't have new labs starting up, that creates a little bit of a headwind there as well. when you don't have new labs starting up that creates a little bit of a headwind there as well We're seeing some of that dynamic especially within the U.S. we're seeing some of that dynamic especially within the u.s

Speaker 1: Okay. What about biopharma? Okay. okay What about biopharma? what about biopharma

Speaker 2: Biopharma. You know, large pharma for us is stable. It played out the way we expected, that's obviously within our process chromatography area. As we think about the broader biopharma aside from large pharma, it's a little bit of a mixed bag. You know, when you look at earlier stage companies, there's still slowness there. There's softness there. As you go to later stage companies, they have seen funding getting into their hands, they're seeing some of that. Unfortunately, our portfolio skews a little bit more towards that earlier stage set of companies that are more in that development phase. We're seeing a little bit of softness there on a continued basis. Biopharma. biopharma You know, large pharma for us is stable. you know large pharma for us is stable It played out the way we expected, that's obviously within our process chromatography area. it played out the way we expected that's obviously within our process chromatography area As we think about the broader biopharma aside from large pharma, it's a little bit of a mixed bag. as we think about the broader biopharma aside from large pharma it's a little bit of a mixed bag You know, when you look at earlier stage companies, there's still slowness there. you know when you look at earlier stage companies there's still slowness there There's softness there. there's softness there As you go to later stage companies, they have seen funding getting into their hands, they're seeing some of that. as you go to later stage companies they have seen funding getting into their hands they're seeing some of that Unfortunately, our portfolio skews a little bit more towards that earlier stage set of companies that are more in that development phase. unfortunately our portfolio skews a little bit more towards that earlier stage set of companies that are more in that development phase We're seeing a little bit of softness there on a continued basis. we're seeing a little bit of softness there on a continued basis We do think as the year progresses, we expect that to improve slightly, but we're not expecting, you know, strong end market shifts or anything like that. We do think as the year progresses, we expect that to improve slightly, but we're not expecting, you know, strong end market shifts or anything like that. we do think as the year progresses we expect that to improve slightly but we're not expecting you know strong end market shifts or anything like that

Speaker 1: Okay. You mentioned the digital PCR business a couple of times. Can you talk a bit about the broader portfolio there and how your market segmentation strategy is working? Okay. okay You mentioned the digital PCR business a couple of times. you mentioned the digital pcr business a couple of times Can you talk a bit about the broader portfolio there and how your market segmentation strategy is working? can you talk a bit about the broader portfolio there and how your market segmentation strategy is working

Speaker 2: The team's done a really nice job in terms of really with the Stilla acquisition and broadening our portfolio and availability. We've got our historical platforms, the QX200, QX600, and QX ONE. One of the things with the Stilla acquisition, we were able to position them appropriately within the end marketplace, and one of the things we were doing previously is needing to discount the 200 and 600. No longer needing to do that because of the breadth of our portfolio. That's been nice to see. The team's done a really nice job in terms of really with the Stilla acquisition and broadening our portfolio and availability. the team's done a really nice job in terms of really with the stilla acquisition and broadening our portfolio and availability We've got our historical platforms, the QX200, QX600, and QX ONE. we've got our historical platforms the qx200 qx600 and qx one One of the things with the Stilla acquisition, we were able to position them appropriately within the end marketplace, and one of the things we were doing previously is needing to discount the 200 and 600. one of the things with the stilla acquisition we were able to position them appropriately within the end marketplace and one of the things we were doing previously is needing to discount the 200 and 600 No longer needing to do that because of the breadth of our portfolio. no longer needing to do that because of the breadth of our portfolio That's been nice to see. that's been nice to see You know, with the Stilla platform, and especially the entry-level product of the Stilla series, the QX700 series, what we've seen is qPCR conversion, which we kind of was part of our investment thesis for the acquisition. It's played out as expected, that was nice to see in terms of qPCR conversion as well as market share pickup in terms of new digital PCR. We think on a longer term basis, that's gonna continue to be a growth driver for us. When we think about the consumables pull-through, you know, obviously, I mentioned right now we're seeing a little bit of softness on that consumable pull-through. You know, with the Stilla platform, and especially the entry-level product of the Stilla series, the QX700 series, what we've seen is qPCR conversion, which we kind of was part of our investment thesis for the acquisition. you know with the stilla platform and especially the entry-level product of the stilla series the qx700 series what we've seen is qpcr conversion which we kind of was part of our investment thesis for the acquisition It's played out as expected, that was nice to see in terms of qPCR conversion as well as market share pickup in terms of new digital PCR. it's played out as expected that was nice to see in terms of qpcr conversion as well as market share pickup in terms of new digital pcr We think on a longer term basis, that's gonna continue to be a growth driver for us. we think on a longer term basis that's gonna continue to be a growth driver for us When we think about the consumables pull-through, you know, obviously, I mentioned right now we're seeing a little bit of softness on that consumable pull-through. when we think about the consumables pull-through you know obviously i mentioned right now we're seeing a little bit of softness on that consumable pull-through We think over time, because of the instrument sales that we have, that ultimately the consumable pull-through will happen there, which will help kind of reinforce the value proposition. We think over time, because of the instrument sales that we have, that ultimately the consumable pull-through will happen there, which will help kind of reinforce the value proposition. we think over time because of the instrument sales that we have that ultimately the consumable pull-through will happen there which will help kind of reinforce the value proposition

Speaker 1: Is qPCR conversion a good thing for Bio-Rad or a headwind for Bio-Rad? Is qPCR conversion a good thing for Bio-Rad or a headwind for Bio-Rad? is qpcr conversion a good thing for bio-rad or a headwind for bio-rad

Speaker 2: Well, I mean, we've got historical qPCR platform, right? Well, I mean, we've got historical qPCR platform, right? well i mean we've got historical qpcr platform right Where we weren't playing in qPCR is kind of the higher end of qPCR. You start to see with these price points of high-end qPCR and entry-level digital PCR, that those price points are comparable, if you will. They're not exactly the same, but they're comparable. The value proposition starts to get reinforced in terms of instead of that high-end qPCR, maybe a digital PCR instrument can be applicable. We see an opportunity to continue to sell, and we do sell from a qPCR sampling our instruments. We obviously see digital PCR opportunities as well. Where we weren't playing in qPCR is kind of the higher end of qPCR. where we weren't playing in qpcr is kind of the higher end of qpcr You start to see with these price points of high-end qPCR and entry-level digital PCR, that those price points are comparable, if you will. you start to see with these price points of high-end qpcr and entry-level digital pcr that those price points are comparable if you will They're not exactly the same, but they're comparable. they're not exactly the same but they're comparable The value proposition starts to get reinforced in terms of instead of that high-end qPCR, maybe a digital PCR instrument can be applicable. the value proposition starts to get reinforced in terms of instead of that high-end qpcr maybe a digital pcr instrument can be applicable We see an opportunity to continue to sell, and we do sell from a qPCR sampling our instruments. we see an opportunity to continue to sell and we do sell from a qpcr sampling our instruments We obviously see digital PCR opportunities as well. we obviously see digital pcr opportunities as well

Speaker 1: Okay. I think we have time to touch on process chromatography. Two quarters ago, you mentioned some specific idiosyncratic headwinds. That's well understood at this point. Is it possible to talk about how your process chromatography business is doing, excluding those couple of idiosyncratic headwinds? Okay. okay I think we have time to touch on process chromatography. i think we have time to touch on process chromatography Two quarters ago, you mentioned some specific idiosyncratic headwinds. two quarters ago you mentioned some specific idiosyncratic headwinds That's well understood at this point. that's well understood at this point Is it possible to talk about how your process chromatography business is doing, excluding those couple of idiosyncratic headwinds? is it possible to talk about how your process chromatography business is doing excluding those couple of idiosyncratic headwinds

Speaker 2: It's actually, it's played out how we expected it coming into the year. It's actually, it's played out how we expected it coming into the year. it's actually it's played out how we expected it coming into the year

Speaker 1: Okay. Okay. okay

Speaker 2: Right? Considering those specific dynamics that you mentioned, outside of that, it's played out the way we think. Long term, it's still an important area and an opportunity for growth for us. Right? right Considering those specific dynamics that you mentioned, outside of that, it's played out the way we think. considering those specific dynamics that you mentioned outside of that it's played out the way we think Long term, it's still an important area and an opportunity for growth for us. long term it's still an important area and an opportunity for growth for us

Speaker 1: Okay. Final question on life sciences. You have a new strategy in China. Can you update us on the Bio-Rad China strategy? Okay. okay Final question on life sciences. final question on life sciences You have a new strategy in China. you have a new strategy in china Can you update us on the Bio-Rad China strategy? can you update us on the bio-rad china strategy

Speaker 2: Yeah. I think the, you know, what the specific item is we stood up in a very relatively short timeframe, with about 120 days, China manufacturing capability for certain of our tools SKUs. This is something that had been thought about for quite some time within Bio-Rad. For those of you that, you know, speak to Bio-Rad on a regular basis, I'm sure that's come up in conversation. We felt that it was important and an opportunity for us that we're missing out in terms of some of those tenders. Therefore standing this manufacturing capability up in China for China, we think is a growth opportunity to help support our China business on a long-term basis. Yeah. yeah I think the, you know, what the specific item is we stood up in a very relatively short timeframe, with about 120 days, China manufacturing capability for certain of our tools SKUs. i think the you know what the specific item is we stood up in a very relatively short timeframe with about 120 days china manufacturing capability for certain of our tools skus This is something that had been thought about for quite some time within Bio-Rad. this is something that had been thought about for quite some time within bio-rad For those of you that, you know, speak to Bio-Rad on a regular basis, I'm sure that's come up in conversation. for those of you that you know speak to bio-rad on a regular basis i'm sure that's come up in conversation We felt that it was important and an opportunity for us that we're missing out in terms of some of those tenders. we felt that it was important and an opportunity for us that we're missing out in terms of some of those tenders Therefore standing this manufacturing capability up in China for China, we think is a growth opportunity to help support our China business on a long-term basis. therefore standing this manufacturing capability up in china for china we think is a growth opportunity to help support our china business on a long-term basis

Speaker 1: Bio-Rad has lots of SKUs. Bio-Rad has lots of SKUs. bio-rad has lots of skus

Speaker 2: Yes. Yes. yes

Speaker 1: Which did you stand up locally in China? How do you even make that decision? Which did you stand up locally in China? which did you stand up locally in china How do you even make that decision? how do you even make that decision

Speaker 2: Yeah, I mean, without getting into specific SKUs, I guess we went through a specific kind of evaluation of where the opportunities are in the end market, where we have good positioning and a right to win, if you will, from our marketing perspective, and then that's where we focused in terms of the SKU capability. Yeah, I mean, without getting into specific SKUs, I guess we went through a specific kind of evaluation of where the opportunities are in the end market, where we have good positioning and a right to win, if you will, from our marketing perspective, and then that's where we focused in terms of the SKU capability. yeah i mean without getting into specific skus i guess we went through a specific kind of evaluation of where the opportunities are in the end market where we have good positioning and a right to win if you will from our marketing perspective and then that's where we focused in terms of the sku capability

Speaker 1: Got it. All right. Well, Roop, as I mentioned, we resumed coverage of Bio-Rad very recently. We've been getting questions on the back-end loading nature of both street forecast for 2026. Got it. got it All right. all right Well, Roop, as I mentioned, we resumed coverage of Bio-Rad very recently. well roop as i mentioned we resumed coverage of bio-rad very recently We've been getting questions on the back-end loading nature of both street forecast for 2026. we've been getting questions on the back-end loading nature of both street forecast for 2026

Speaker 2: Yeah Yeah yeah

Speaker 1: as well as guidance for the full year. Can you speak to that? What are some of the idiosyncratic factors within Bio-Rad which give you that second half waiting in 2026? as well as guidance for the full year. as well as guidance for the full year Can you speak to that? can you speak to that What are some of the idiosyncratic factors within Bio-Rad which give you that second half waiting in 2026? what are some of the idiosyncratic factors within bio-rad which give you that second half waiting in 2026

Speaker 2: That's a great question. Obviously, Dan, appreciate picking up coverage on Bio-Rad. Always appreciate your support. You know, from a phasing standpoint, our historical phasing is about 48% of our revenue in the first half, 52% in the second half. When we look at the phasing right now, it's roughly 47% first half, 53% second half. Not dissimilar. Now, with that said, when you look at kind of our profile through the year, it's as expected, right? Q1 is traditionally the low point from a revenue standpoint. We see it step up reasonably kind of in that 5%-6%, which is what it's doing this year for Q2. That's a great question. that's a great question Obviously, Dan, appreciate picking up coverage on Bio-Rad. obviously dan appreciate picking up coverage on bio-rad Always appreciate your support. always appreciate your support You know, from a phasing standpoint, our historical phasing is about 48% of our revenue in the first half, 52% in the second half. you know from a phasing standpoint our historical phasing is about 48% of our revenue in the first half 52% in the second half When we look at the phasing right now, it's roughly 47% first half, 53% second half. when we look at the phasing right now it's roughly 47% first half 53% second half Not dissimilar. not dissimilar Now, with that said, when you look at kind of our profile through the year, it's as expected, right? now with that said when you look at kind of our profile through the year it's as expected right Q1 is traditionally the low point from a revenue standpoint. q1 is traditionally the low point from a revenue standpoint We see it step up reasonably kind of in that 5%-6%, which is what it's doing this year for Q2. we see it step up reasonably kind of in that 5%-6% which is what it's doing this year for q2 Q2, Q3 can be either relatively flat or a slight uptick in Q3, depending upon end market dynamics. Q4 usually steps up. That's exactly the profile we're seeing. When we look at the specific elements that are supporting that growth, obviously part of that is continued digital PCR growth that we expect to see. When we look at specific movements from Q1 to Q2 or into Q3 and Q4, it's very specific to, for example, lot releases and quality controls. They happen at certain times of the year. We talked about it extensively last year. Same dynamic was there. We have that same dynamic. When you look at, you know, how things are moving and growing in Q3 and then into Q4, that's specific to quality control assessments. Yeah. Q2, Q3 can be either relatively flat or a slight uptick in Q3, depending upon end market dynamics. q2 q3 can be either relatively flat or a slight uptick in q3 depending upon end market dynamics Q4 usually steps up. q4 usually steps up That's exactly the profile we're seeing. that's exactly the profile we're seeing When we look at the specific elements that are supporting that growth, obviously part of that is continued digital PCR growth that we expect to see. when we look at the specific elements that are supporting that growth obviously part of that is continued digital pcr growth that we expect to see When we look at specific movements from Q1 to Q2 or into Q3 and Q4, it's very specific to, for example, lot releases and quality controls. when we look at specific movements from q1 to q2 or into q3 and q4 it's very specific to for example lot releases and quality controls They happen at certain times of the year. they happen at certain times of the year We talked about it extensively last year. we talked about it extensively last year Same dynamic was there. same dynamic was there We have that same dynamic. we have that same dynamic When you look at, you know, how things are moving and growing in Q3 and then into Q4, that's specific to quality control assessments. when you look at you know how things are moving and growing in q3 and then into q4 that's specific to quality control assessments Yeah. yeah We have certain blood typing opportunities, that we see, instrument opportunities, later in the year. The movements within the year are specific to either, certain opportunities that we see or lot releases associated with quality controls or the digital PCR done. We have certain blood typing opportunities, that we see, instrument opportunities, later in the year. we have certain blood typing opportunities that we see instrument opportunities later in the year The movements within the year are specific to either, certain opportunities that we see or lot releases associated with quality controls or the digital PCR done. the movements within the year are specific to either certain opportunities that we see or lot releases associated with quality controls or the digital pcr done

Speaker 1: Is there anything, I mean, to that digital PCR dynamic, is there any assumption around a budget flush in Q4 that your guidance is predicated on? That budget flush topic is always of interest to investors. Is there anything, I mean, to that digital PCR dynamic, is there any assumption around a budget flush in Q4 that your guidance is predicated on? is there anything i mean to that digital pcr dynamic is there any assumption around a budget flush in q4 that your guidance is predicated on That budget flush topic is always of interest to investors. that budget flush topic is always of interest to investors

Speaker 2: No, it doesn't, it's not predicated on a budget flush. No, it doesn't, it's not predicated on a budget flush. no it doesn't it's not predicated on a budget flush

Speaker 1: Okay. All right. Well, Norman doesn't have prepared remarks on every quarterly earnings call. He did on your Q1 earnings call. He talked about an ambition to get to mid-teens EBIT margins in the near term. Can you elaborate on that and how do you get there from your current ten-ish % level? Okay. okay All right. all right Well, Norman doesn't have prepared remarks on every quarterly earnings call. well norman doesn't have prepared remarks on every quarterly earnings call He did on your Q1 earnings call. he did on your q1 earnings call He talked about an ambition to get to mid-teens EBIT margins in the near term. he talked about an ambition to get to mid-teens ebit margins in the near term Can you elaborate on that and how do you get there from your current ten-ish % level? can you elaborate on that and how do you get there from your current ten-ish % level

Speaker 2: Yeah. I think, you know, and I appreciate your comment that, you know, not every quarter Norman, has prepared comments. I think when we feel like that there's, things that ought to be reiterated or reinforced, it is important for him to provide those comments. You know, as it relates to that mid-teens. Yeah. yeah I think, you know, and I appreciate your comment that, you know, not every quarter Norman, has prepared comments. i think you know and i appreciate your comment that you know not every quarter norman has prepared comments I think when we feel like that there's, things that ought to be reiterated or reinforced, it is important for him to provide those comments. i think when we feel like that there's things that ought to be reiterated or reinforced it is important for him to provide those comments You know, as it relates to that mid-teens. you know as it relates to that mid-teens

Speaker 1: Mm-hmm. Mm-hmm. Mm-hmm. mm-hmm mm-hmm Mm-hmm. mm-hmm

Speaker 2: op margin, you know, we've got opportunity from margin expansion. That is a focus for us, as part of the relatively new leadership, let's call it, right? At the end of the day, we wanna drive to market growth rates. You know, we can debate, I'm sure, what market growth rates are today. As part of that, margin expansion, we have margin expansion opportunities. We've got free cash flow improvement opportunities as well. We've talked extensively about that. We have actions underway in each of those areas. I think what Norman wanted to reinforce is, from his perspective, op margin expansion is of importance to him and to all of us, right? op margin, you know, we've got opportunity from margin expansion. op margin you know we've got opportunity from margin expansion That is a focus for us, as part of the relatively new leadership, let's call it, right? that is a focus for us as part of the relatively new leadership let's call it right At the end of the day, we wanna drive to market growth rates. at the end of the day we wanna drive to market growth rates You know, we can debate, I'm sure, what market growth rates are today. you know we can debate i'm sure what market growth rates are today As part of that, margin expansion, we have margin expansion opportunities. as part of that margin expansion we have margin expansion opportunities We've got free cash flow improvement opportunities as well. we've got free cash flow improvement opportunities as well We've talked extensively about that. we've talked extensively about that We have actions underway in each of those areas. we have actions underway in each of those areas I think what Norman wanted to reinforce is, from his perspective, op margin expansion is of importance to him and to all of us, right? i think what norman wanted to reinforce is from his perspective op margin expansion is of importance to him and to all of us right I think there's a perspective of just the dual class share, you know, governance framework and everything that is that truly an important aspect? I think it was to reinforce really, hey, it is, and the actions we're doing are to drive towards that in the near term, and then longer term, see how we can grow beyond that. In terms of drivers, I think there's numerous drivers. Obviously, it'd be nice for the end markets to improve. Even without that, we have margin expansion opportunities from our perspective. When you look at pricing discipline, we've improved that over the course of the last couple of years in the time I've been here and John's been here and other folks within the new leadership team. I think there's a perspective of just the dual class share, you know, governance framework and everything that is that truly an important aspect? i think there's a perspective of just the dual class share you know governance framework and everything that is that truly an important aspect I think it was to reinforce really, hey, it is, and the actions we're doing are to drive towards that in the near term, and then longer term, see how we can grow beyond that. i think it was to reinforce really hey it is and the actions we're doing are to drive towards that in the near term and then longer term see how we can grow beyond that In terms of drivers, I think there's numerous drivers. in terms of drivers i think there's numerous drivers Obviously, it'd be nice for the end markets to improve. obviously it'd be nice for the end markets to improve Even without that, we have margin expansion opportunities from our perspective. even without that we have margin expansion opportunities from our perspective When you look at pricing discipline, we've improved that over the course of the last couple of years in the time I've been here and John's been here and other folks within the new leadership team. when you look at pricing discipline we've improved that over the course of the last couple of years in the time i've been here and john's been here and other folks within the new leadership team We're gonna continue to reinforce that, and especially where we've got market leadership opportunities. As we think about within the COGS area, there's opportunities within You know, when you look at our capacity, and absorption levels, there's some opportunities there to try and right-size some things, and really rationalize our footprint appropriately. We've done that to some extent historically. We'll continue to look at that as an opportunity. We look at procurement, buying power as an opportunity. We've made improvements in logistics and both rate and lane improvements, and we'll continue to look at those. Then, of course, there's OpEx rationalization and productivity improvements that we're looking at and have implemented and will continue to implement as we move forward. We're gonna continue to reinforce that, and especially where we've got market leadership opportunities. we're gonna continue to reinforce that and especially where we've got market leadership opportunities As we think about within the COGS area, there's opportunities within You know, when you look at our capacity, and absorption levels, there's some opportunities there to try and right-size some things, and really rationalize our footprint appropriately. as we think about within the cogs area there's opportunities within you know when you look at our capacity and absorption levels there's some opportunities there to try and right-size some things and really rationalize our footprint appropriately We've done that to some extent historically. we've done that to some extent historically We'll continue to look at that as an opportunity. we'll continue to look at that as an opportunity We look at procurement, buying power as an opportunity. we look at procurement buying power as an opportunity We've made improvements in logistics and both rate and lane improvements, and we'll continue to look at those. we've made improvements in logistics and both rate and lane improvements and we'll continue to look at those Then, of course, there's OpEx rationalization and productivity improvements that we're looking at and have implemented and will continue to implement as we move forward. then of course there's opex rationalization and productivity improvements that we're looking at and have implemented and will continue to implement as we move forward As an example, last year, in February of 2025, you know, we did a fairly large restructuring to right-size some of our operating costs. We'll continue to look at these things in terms of driving that operating margin expansion near term and long term. As an example, last year, in February of 2025, you know, we did a fairly large restructuring to right-size some of our operating costs. as an example last year in february of 2025 you know we did a fairly large restructuring to right-size some of our operating costs We'll continue to look at these things in terms of driving that operating margin expansion near term and long term. we'll continue to look at these things in terms of driving that operating margin expansion near term and long term

Speaker 1: Is it possible to quantify how much of the bridge from a 10% today to a 15% near term, how much of that would be top line independent compared to top line dependent? Is it possible to quantify how much of the bridge from a 10% today to a 15% near term, how much of that would be top line independent compared to top line dependent? is it possible to quantify how much of the bridge from a 10% today to a 15% near term how much of that would be top line independent compared to top line dependent

Speaker 2: I think there is a level of independence there in terms of actions that we can take to drive that expansion. Part of that top line is also the mix of the top line. You know, life science tools tends to be good margin for us as it relates to diagnostics, and so that mix of revenue helps. Obviously, I mentioned earlier, our QX700 series products, you know, are a good it's a good set of instruments from a margin standpoint. So that mix of revenue also contributes to that support. I think there is a level of independence there in terms of actions that we can take to drive that expansion. i think there is a level of independence there in terms of actions that we can take to drive that expansion Part of that top line is also the mix of the top line. part of that top line is also the mix of the top line You know, life science tools tends to be good margin for us as it relates to diagnostics, and so that mix of revenue helps. you know life science tools tends to be good margin for us as it relates to diagnostics and so that mix of revenue helps Obviously, I mentioned earlier, our QX700 series products, you know, are a good it's a good set of instruments from a margin standpoint. obviously i mentioned earlier our qx700 series products you know are a good it's a good set of instruments from a margin standpoint So that mix of revenue also contributes to that support. so that mix of revenue also contributes to that support

Speaker 1: Good. Like you mentioned, we could debate the market growth rate. Good. good Like you mentioned, we could debate the market growth rate. like you mentioned we could debate the market growth rate

Speaker 2: Yes, we can. Yes, we can. yes we can

Speaker 1: Okay. Well, what about, you know, levers on the balance sheet that might not show up necessarily in operating margin? We talk sometimes about inventory turns. Okay. okay Well, what about, you know, levers on the balance sheet that might not show up necessarily in operating margin? well what about you know levers on the balance sheet that might not show up necessarily in operating margin We talk sometimes about inventory turns. we talk sometimes about inventory turns

Speaker 2: Yeah. Yeah. yeah

Speaker 1: Can you walk through your thinking on that? Can you walk through your thinking on that? can you walk through your thinking on that

Speaker 2: Yeah. You know, inventory is obviously important, to support, you know, the types of products we have. Some of them are a quick turn. They need to get in customer hands within a very short time period 'cause they're temperature controlled, these sort of things. When we look at inventory as a whole, you know, quality controls is one area which, because of its business model, requires additional inventory, and these sort of things. We wanna be mindful of that and protect that franchise from that standpoint. When you look at the rest of our inventory opportunities, we see that in terms of working capital efficiencies that we can drive there. Our supply chain teams are actively working on that. Yeah. yeah You know, inventory is obviously important, to support, you know, the types of products we have. you know inventory is obviously important to support you know the types of products we have Some of them are a quick turn. some of them are a quick turn They need to get in customer hands within a very short time period 'cause they're temperature controlled, these sort of things. they need to get in customer hands within a very short time period 'cause they're temperature controlled these sort of things When we look at inventory as a whole, you know, quality controls is one area which, because of its business model, requires additional inventory, and these sort of things. when we look at inventory as a whole you know quality controls is one area which because of its business model requires additional inventory and these sort of things We wanna be mindful of that and protect that franchise from that standpoint. we wanna be mindful of that and protect that franchise from that standpoint When you look at the rest of our inventory opportunities, we see that in terms of working capital efficiencies that we can drive there. when you look at the rest of our inventory opportunities we see that in terms of working capital efficiencies that we can drive there Our supply chain teams are actively working on that. our supply chain teams are actively working on that Another area that we're looking at is days payable outstanding with vendor terms, right? When you look at where that is, there's opportunity for improvement, and especially as it relates to where our DSO is. We've made improvements in the AR collections and these sort of things over the last couple of years, and the quality of our AR, the aging has improved. All of this contributes towards that working capital, efficiency standpoint, and cash conversion efficacy. The other part of it is, you know, we're continuing to rationalize our CapEx and really, you know, that's come down when you look at it from a prior few years versus where we were in 2025, while doing specific investments that we thought we needed to do. Another area that we're looking at is days payable outstanding with vendor terms, right? another area that we're looking at is days payable outstanding with vendor terms right When you look at where that is, there's opportunity for improvement, and especially as it relates to where our DSO is. when you look at where that is there's opportunity for improvement and especially as it relates to where our dso is We've made improvements in the AR collections and these sort of things over the last couple of years, and the quality of our AR, the aging has improved. we've made improvements in the ar collections and these sort of things over the last couple of years and the quality of our ar the aging has improved All of this contributes towards that working capital, efficiency standpoint, and cash conversion efficacy. all of this contributes towards that working capital efficiency standpoint and cash conversion efficacy The other part of it is, you know, we're continuing to rationalize our CapEx and really, you know, that's come down when you look at it from a prior few years versus where we were in 2025, while doing specific investments that we thought we needed to do. the other part of it is you know we're continuing to rationalize our capex and really you know that's come down when you look at it from a prior few years versus where we were in 2025 while doing specific investments that we thought we needed to do We'll continue to look at CapEx, rationalization as well and really invest where it's needed and ensure we're getting the return for those investments. We'll continue to look at CapEx, rationalization as well and really invest where it's needed and ensure we're getting the return for those investments. we'll continue to look at capex rationalization as well and really invest where it's needed and ensure we're getting the return for those investments

Speaker 1: A big chunk of your CapEx is reagent rental in the diagnostics business. A big chunk of your CapEx is reagent rental in the diagnostics business. a big chunk of your capex is reagent rental in the diagnostics business

Speaker 2: Yeah Yeah yeah

Speaker 1: correct? correct? correct

Speaker 2: It is. You know, it's not a majority or anything like that. It is. it is You know, it's not a majority or anything like that. you know it's not a majority or anything like that It's a reasonable percentage, it's nowhere near, you know, 50%. It's a reasonable percentage, it's nowhere near, you know, 50%. it's a reasonable percentage it's nowhere near you know 50%

Speaker 1: Okay. Okay. okay

Speaker 2: Yeah. Yeah. yeah

Speaker 1: How do you measure return on R&D? The R&D as a % of revenue is an area on the P&L that sticks out. How do you measure return on R&D? how do you measure return on r&d The R&D as a % of revenue is an area on the P&L that sticks out. the r&d as a % of revenue is an area on the p&l that sticks out

Speaker 2: Yeah. We've talked openly about the R&D investments we've made over the years, and that R&D kind of product vitality index hasn't been where we want to see it. We've made improvements in terms of our R&D execution efficacy, I think. In general, our operational efficacy, execution efficacy, if you will, right? From an R&D standpoint, we go through and we're rationalizing and really evaluating what's the return, what's when do we expect to see revenue from the investments we're making on this to really drive the vitality improvement. We're investing in areas that we think offer us an opportunity from a growth perspective. Hence, you know, when you look at some of the R&D movements, to porting the assays onto the Stilla platform, right? That's ahead of schedule. Yeah. yeah We've talked openly about the R&D investments we've made over the years, and that R&D kind of product vitality index hasn't been where we want to see it. we've talked openly about the r&d investments we've made over the years and that r&d kind of product vitality index hasn't been where we want to see it We've made improvements in terms of our R&D execution efficacy, I think. we've made improvements in terms of our r&d execution efficacy i think In general, our operational efficacy, execution efficacy, if you will, right? in general our operational efficacy execution efficacy if you will right From an R&D standpoint, we go through and we're rationalizing and really evaluating what's the return, what's when do we expect to see revenue from the investments we're making on this to really drive the vitality improvement. from an r&d standpoint we go through and we're rationalizing and really evaluating what's the return what's when do we expect to see revenue from the investments we're making on this to really drive the vitality improvement We're investing in areas that we think offer us an opportunity from a growth perspective. we're investing in areas that we think offer us an opportunity from a growth perspective Hence, you know, when you look at some of the R&D movements, to porting the assays onto the Stilla platform, right? hence you know when you look at some of the r&d movements to porting the assays onto the stilla platform right That's ahead of schedule. that's ahead of schedule Well, that's purposeful, right? We put the resources behind that versus saying that's something by the end of the year we might be able to do, right? We're looking at these opportunities. We're investing further in quality controls 'cause, again, market leadership, there's an opportunity for more. We're really looking at this in a structured way to drive R&D returns at a far higher level of returns than what we've had historically. Well, that's purposeful, right? well that's purposeful right We put the resources behind that versus saying that's something by the end of the year we might be able to do, right? we put the resources behind that versus saying that's something by the end of the year we might be able to do right We're looking at these opportunities. we're looking at these opportunities We're investing further in quality controls 'cause, again, market leadership, there's an opportunity for more. we're investing further in quality controls 'cause again market leadership there's an opportunity for more We're really looking at this in a structured way to drive R&D returns at a far higher level of returns than what we've had historically. we're really looking at this in a structured way to drive r&d returns at a far higher level of returns than what we've had historically

Speaker 1: Got it. Well, Roop Lakkaraju, I was told to keep on schedule. We've got 30 seconds left. We'll leave it there. Thank you so much for your time. Got it. got it Well, Roop Lakkaraju, I was told to keep on schedule. well roop lakkaraju i was told to keep on schedule We've got 30 seconds left. we've got 30 seconds left We'll leave it there. we'll leave it there Thank you so much for your time. thank you so much for your time

Speaker 2: Thanks, Dan. Appreciate it. Thanks, Dan. thanks dan Appreciate it. appreciate it