Bio-Techne (NASDAQ:TECH) has reported a 2% organic growth in Q1 of fiscal year 2024, despite facing challenges in the biotech funding environment and economic hurdles in China. The company's growth pillars, including GMP proteins, ExoDx prostate, and Protein Simple, have shown strong performance. Kim Kelderman has been appointed as the incoming CEO, effective February 1, 2024, while Chuck Kummeth will retire on July 1, 2024. The company remains committed to its ESG initiatives and corporate sustainability.
Key takeaways from the call include:
- Bio-Techne's Q1 revenue was $276.9 million, a 2% increase on an organic basis, with adjusted EPS at $0.41, a decrease of 9% compared to the previous year.
- The Protein Sciences segment reported sales of $204.7 million, with 2% growth, while the Diagnostics and Genomics segment reported sales of $72.8 million, with 4% growth.
- Despite the challenging macro environment, the company expects overall organic growth to be flat in Q2 and anticipates a recovery in the second half of the fiscal year.
- The ExoDx prostate test and spatial biology business performed well, particularly in gene therapy applications.
- The integration of Lunaphore, a recent acquisition, is progressing smoothly.
- The company's focus on cell and gene therapy, proteomic analytical tools, and diagnostics and genomics positions it well for future growth.
Bio-Techne reported strong performance in its Exosome Diagnostics and spatial biology businesses, driven by marketing efforts, clinical data, and Medicare updates. The company is optimistic about the progress of Lunaphore's launch and expects it to grow over 100% for the fiscal year. However, the operating margin of the Diagnostics and Genomics segment decreased due to the impact of the Lunaphore acquisition, strategic investments, and an unfavorable product mix.
The company's management team will focus on productivity and selective investments in growth pillars. Despite the challenging macro environment, Bio-Techne is committed to managing profitability and continuing organic investments. The company expects flat organic growth in Q2 due to the weakening macro environment in China and the softening biopharma end market in the US.
During the earnings call, Bio-Techne CEO Charles Kummeth mentioned that they are seeing an improvement in bulks and run rate business, and they are hopeful for growth in proteins and antibodies. Regarding China, Kummeth mentioned that they expect the market to remain flat for the next quarter or two, but they are optimistic about the future and believe that healthcare is still a priority in China.
Bio-Techne reported a year-on-year growth of 170% and expressed optimism about future partnerships and acquisitions. The company acknowledged that biotech funding has been a headwind, with a drop in run rates and larger deals not closing in recent weeks. However, they expect a rebound in activity in the next fiscal year. The company's ProteinSimple franchise has seen success in areas such as Exosome, spatial, and cell and gene therapy, with plans to expand production and invest in GMP proteins.
During the earnings call, Charles Kummeth, the speaker, acknowledged the need to sustain the business amid a market decline and mentioned that there is still funding to keep things running but not for new programs. He expressed optimism for the future, stating that the industry will rebound, and the company is well-positioned to capitalize on it.
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