Bio-Rad Reports Mixed Q4 2025 Results Amid Funding Pressures and Margin Challenges

Bio-Rad Laboratories, Inc. announced financial results for the fourth quarter and full-year ended December 31, 2025, reporting modest revenue growth amid a challenging environment of geopolitical uncertainty and constrained academic research funding. Fourth-quarter 2025 total net sales were $693.2 million, an increase of 3.9 percent compared to $667.5 million reported for the fourth quarter of 2024, driven by higher sales in the Clinical Diagnostics segment.

The Chief Executive Officer stated that 2025 was a challenging year with geopolitical uncertainty and continued pressure on academic research funding affecting end markets. While the company delivered modest revenue growth and strong free cash flow, gross and operating margin performance fell below expectations. The recent acquisition of digital PCR developer Stilla Technologies has been successfully integrated, and the company is pleased with the initial market adoption of its expanded ddPCR product portfolio.

On a currency neutral basis, quarterly sales increased 1.7 percent compared to the same period in 2024. Life Science segment net sales for the fourth quarter were $267.9 million, a decrease of 2.6 percent compared to the same period in 2024. On a currency neutral basis, Life Science segment sales decreased by 4.0 percent compared to the same quarter in 2024, driven by constrained academic research and biotech funding. Currency neutral sales decreased in the Americas partially offset by increased sales in EMEA and Asia Pacific.

Clinical Diagnostics segment net sales for the fourth quarter were $425.3 million, an increase of 8.4 percent compared to the same period in 2024. On a currency neutral basis, net sales increased 5.6 percent versus the same quarter last year. The currency neutral sales increase was primarily driven by quality controls, blood typing, and diabetes products, partially offset by lower sales of infectious disease products. Currency neutral sales increased in all regions.

During the fourth quarter of 2025, the Company recognized a change in the fair market value of its investment in Sartorius AG, which substantially contributed to a net income of $720.0 million, or $26.65 per share, on a diluted basis, partially offset by the $172.8 million impairment of purchased intangibles and related items, compared to a net loss of $715.8 million, or $25.57 per share, on a diluted basis, reported for the same period of 2024.

GAAP gross margin was 49.8 percent for the fourth quarter, down from 51.2 percent in the prior year. Non-GAAP gross margin was 52.5 percent versus 53.9 percent, including $13 million in one-time inventory and write-offs. The company recorded an operating loss of $119 million compared to $58 million operating income last year, driven by $173 million of impairment charges from discontinued and reprioritized R&D. Non-GAAP operating margin was 12 percent, compared to 13.8 percent prior year.

The effective tax rate for the fourth quarter of 2025 was 22.5 percent, compared to 21.2 percent for the same period in 2024. The effective tax rate reported in these periods was affected by the change in fair market value of the investment in Sartorius AG as well as shifts in the geographical mix of earnings. The non-GAAP effective tax rate for the fourth quarter of 2025 was 25.3 percent, compared to 20.9 percent for the same period in 2024. The higher rate in 2025 was primarily driven by shifts in the geographical mix of earnings and implementation of new tax legislation.

Non-GAAP net income was $68 million and $2.51 per diluted share for the quarter, down from $81 million and $2.90 per share. The Q4 non-GAAP earnings per share of $2.51 missed analyst forecasts of $2.71 by 7.38 percent. SG&A expense was $221 million, or 31.9 percent of sales, compared to $204 million, or 30.6 percent, in the prior year with the increase mainly tied to employee costs. Research and Development expense was $70 million (10.1 percent of sales), down from $80 million (11.9 percent) in Q4 2024; non-GAAP R&D was $66 million versus $68 million prior year.

On a reported basis, net sales for the full-year of 2025 increased 0.7 percent to $2,583.2 million, compared to $2,566.5 million for the prior year. On a currency neutral basis, full-year 2025 revenue remained essentially flat year-over-year. Full-year 2025 reported net sales for the Life Science segment were $1,021.1 million, a decrease of 1.3 percent compared to the prior year on a currency neutral basis, primarily driven by the constrained academic research and biotech funding environment. Full-year 2025 reported net sales for the Clinical Diagnostics segment were $1,562.1 million, an increase of 0.8 percent compared to the prior year on a currency neutral basis, driven by quality control and blood typing products partially offset by lower reimbursement rates for diabetes testing in China.

During the year of 2025, the Company recognized a change in the fair market value of its investment in Sartorius AG, which substantially contributed to a net income of $759.9 million, or $27.85 per share, on a diluted basis, partially offset by the $172.8 million impairment of purchased intangibles and related items, compared to a net loss of 1,844.2 million, or $65.36 per share, on a diluted basis, reported in 2024. Non-GAAP net income for 2025 was $270.5 million, or $9.92 per share, compared to $291.1 million, or $10.31 per share in 2024.

The effective tax rate for the full-year of 2025 was 23.7 percent compared to 21.3 percent in 2024. The higher rate in 2025 was driven by the change in fair market value of the investment in Sartorius AG as well as shifts in the geographical mix of earnings. The non-GAAP effective tax rate for the full-year of 2025 was 23.7 percent compared to 23.6 percent in 2024.

Free cash flow was $119 million for the quarter, up from $81 million; full-year free cash flow of $375 million, converting at 138 percent of non-GAAP net income. The company repurchased 1.2 million shares in 2025 at $296 million total; no shares were repurchased in Q4, with $285 million remaining available under the buyback program. The company achieved a 6.6 percent share count reduction since Q1 2024 through $494 million in repurchases.

The ddPCR portfolio showed mid-single-digit year-over-year growth in Q4, attributed to the QX700 platform meeting revenue expectations. Process chromatography revenue grew over 20 percent for the full-year 2025, but with quarter over quarter and year-over-year declines in Q4 due to order timing. Funding conditions improved during 2025, though funding is skewed towards later-stage biotech companies, with a modest improvement anticipated.

Strategically, Bio-Rad expanded its Droplet Digital PCR leadership through the acquisition and integration of Stilla Technologies and advanced its oncology diagnostics strategy via partnerships with Gencurix and Biodesix to distribute and develop in vitro diagnostic oncology assays. The company also broadened global access to over 1,200 clinical diagnostics products through new registrations in more than 60 countries and strengthened commercial leadership with the appointment of an Executive Vice President of Global Commercial Operations.

The company maintained a strong balance sheet, ending 2025 with $1.541 billion in cash and short-term investments, down from $1.665 billion at the end of 2024. This reduction was primarily due to share repurchases totaling $296 million and the completion of the Stilla Technologies acquisition on June 30, 2025. The investment in Sartorius AG increased significantly to $5.669 billion from $4.469 billion in the prior year.

Management initiated actions to strengthen operational rigor, improve forecasting and planning, and drive greater consistency across manufacturing, procurement, and logistics. The Stilla acquisition will be accretive by mid-2026, six to twelve months earlier than the initial view. The Chief Operating Officer said gross margin did not meet expectations or what Bio-Rad Laboratories, Inc. is capable of delivering, citing higher than expected supply chain costs in Q4.

Looking ahead to full-year 2026, Bio-Rad guided to non-GAAP, currency-neutral revenue growth of approximately 0.5 to 1.5 percent and an expected non-GAAP operating margin of about 12.0 to 12.5 percent. Currency-neutral revenue growth is expected between 0.5 percent and 1.5 percent company-wide; Life Science segment flat to 0.5 percent, Clinical Diagnostics segment 1 percent to 2 percent growth. Full-year 2026 non-GAAP gross margin is projected at 54 percent to 54.5 percent; non-GAAP operating margin at 12 percent to 12.5 percent.

Process chromatography is projected to decline approximately mid-teens percent in 2026 due to recent changes to government regulations on certain therapeutics usage and vaccines, as well as customers' improved production efficiencies. Full-year non-GAAP operating margin is projected to be impacted by a 50 basis point headwind from the reduced process chromatography sales. Management described continued cautious spending in academic and government end markets, constraining instrument demand. Guidance for 2026 anticipates sequential revenue and margin improvement by quarter, assuming no recurrence of elevated Q4 supply chain costs.