Executive Summary / Key Takeaways

• Bio-Rad Laboratories is strategically leveraging its differentiated digital PCR (ddPCR) technology and expanding its bioprocessing portfolio to drive future growth, exemplified by the Stilla Technologies acquisition and new platform launches.
• Despite persistent macroeconomic headwinds, particularly in academic research and biopharma funding, and challenges in the China diagnostics market, Bio-Rad is demonstrating operational resilience through cost management and efficiency initiatives.
• The company's financial performance in Q3 2025 showed stable revenue and improved non-GAAP operating margins, supported by strong process chromatography sales and durable consumables demand.
• Bio-Rad maintains a robust liquidity position with $1.40 billion in cash and short-term investments as of September 30, 2025, and is actively returning capital to shareholders through share repurchases, with $284.60 million remaining under its current program.
• The outlook for 2025 anticipates flat to 1% currency-neutral revenue growth, with sequential margin improvement in Q4 driven by revenue mix and cost discipline, positioning the company for potential margin expansion in 2026.

A Legacy of Innovation Meets a Dynamic Future

Bio-Rad Laboratories, Inc. ($BIO) has cultivated a rich history spanning over 70 years as a multinational developer, manufacturer, and global distributor of life science research and clinical diagnostics products. Founded in 1952, the company's mission centers on equipping scientists and healthcare specialists with specialized tools for biological research and clinical diagnostics. This enduring commitment has established Bio-Rad as a key player in markets ranging from biopharmaceutical manufacturing and food safety to science education, offering a comprehensive suite of instruments, systems, reagents, and consumables designed to separate, purify, characterize, and quantitate biological materials.

The current industry landscape is marked by intense competition and evolving market dynamics. Bio-Rad operates alongside formidable rivals such as Thermo Fisher Scientific , Danaher Corporation , Agilent Technologies , and Illumina , each vying for market share in various segments. Broad industry trends, including inflationary pressures, geopolitical conditions, and shifts in government funding for research, significantly influence demand and operational costs. For instance, approximately 41% of Bio-Rad's year-to-date 2025 consolidated net sales originate from the United States, with 59% from international locations, making it susceptible to foreign currency fluctuations and diverse regional policies. The company's strategic response to this complex environment centers on continuous innovation, operational excellence, and targeted inorganic growth to solidify its competitive standing.

Technological Edge: The Heart of Bio-Rad's Strategy

At the core of Bio-Rad's strategic differentiation lies its advanced technological portfolio, particularly in Droplet Digital PCR (ddPCR) and process chromatography. The company's ddPCR technology offers a highly precise and sensitive method for nucleic acid quantification, providing tangible benefits over traditional PCR methods. This precision is critical for applications like oncology diagnosis, cell and gene therapy, and rare mutation detection, where minute quantities of target DNA or RNA need to be accurately measured.

Recent innovations significantly bolster this technological moat. The acquisition of Stilla Technologies, completed on June 30, 2025, strategically strengthens Bio-Rad's ddPCR offerings. This integration expands the ddPCR portfolio with new platforms, including the QX Continuum and the rebranded QX700 Series instruments. The QX Continuum, designed to potentially replace qPCR, offers a 96-well plate standard format, bringing enhanced precision and sensitivity to a broader range of applications. The QX700 Series, alongside the Continuum, provides customers with simplified workflows and flexibility across various budget levels, enabling Bio-Rad to compete effectively in both entry-level ddPCR and high-end qPCR markets where it previously had limited presence. This expansion is expected to drive market share and increase the overall user base for ddPCR.

Beyond ddPCR, Bio-Rad continues to innovate in its process chromatography business, a segment crucial for biopharmaceutical manufacturing. The company has launched a larger 45-centimeter pre-pack column and additional NUVIA resins, enhancing purification capabilities for bioprocess customers. These advancements directly contribute to improved efficiency and yield in biopharmaceutical production, offering a competitive advantage in a critical and growing market. The strategic intent behind these technological developments is clear: to enhance Bio-Rad's competitive moat by offering superior performance, broader market access, and cost-effective solutions, thereby driving higher average selling prices (ASPs) and better margins in key growth areas.

Operational Discipline Amidst Headwinds

Bio-Rad's recent financial performance reflects a company actively adapting to a challenging macroeconomic environment through disciplined operational management. For the third quarter of 2025, Bio-Rad reported net sales of $653 million, a modest 0.5% increase on a reported basis compared to $649.70 million in Q3 2024. On a currency-neutral basis, sales decreased by 1.7%, primarily due to lower sales in both Life Science and Clinical Diagnostics segments. Consolidated gross margin for Q3 2025 was 52.6%, down from 54.8% in Q3 2024, mainly driven by higher material costs and reduced fixed manufacturing absorption. However, non-GAAP operating margin improved to 11.8% in Q3 2025 from 11.3% in Q3 2024, a testament to proactive cost actions and net reductions in in-process R&D expense.

For the first nine months of 2025, net sales were $1.89 billion, a 0.5% decrease from $1.90 billion in the same period of 2024. Consolidated gross margins for this period stood at 52.6%, compared to 54.6% in the prior year, again impacted by higher material costs and reduced fixed manufacturing absorption. Selling, general and administrative (SG&A) expenses increased to $623.30 million for the first nine months of 2025, up from $610 million in 2024, primarily due to higher restructuring costs. Research and development (R&D) expenses decreased to $205.30 million from $216.30 million, largely due to higher in-process R&D charges associated with an acquisition in the prior year period. These figures underscore the company's efforts to control discretionary spending and implement restructuring plans, including a 5% workforce reduction in late 2024, which is expected to yield $50-$55 million in savings in 2025 and $60-$65 million fully annualized in 2026.

Segment Performance & Strategic Focus

Bio-Rad's two primary segments, Life Science and Clinical Diagnostics, exhibit distinct dynamics. The Life Science segment, with net sales of $261.80 million in Q3 2025, saw a currency-neutral decrease of 1.5%. This was largely due to a constrained academic research and biotech funding environment, particularly in the Americas, leading to weak instrument demand. However, the process chromatography business delivered strong double-digit growth in Q3 2025 due to favorable timing of customer orders. For the full year 2025, Bio-Rad anticipates high teens growth for process chromatography, a significant uplift from earlier low double-digit projections. Excluding process chromatography, core Life Science revenue decreased 6% year-over-year in Q3 2025, reflecting ongoing market softness.

The Clinical Diagnostics segment reported net sales of $391.20 million in Q3 2025, a 0.6% increase on a reported basis but a 1.8% currency-neutral decrease. This decline was primarily driven by lower reimbursement rates for diabetes testing in China, a headwind expected to annualize in Q4 2025. Despite this, the segment remains stable across most product areas, with increased demand for quality control and immunology products partially offsetting regional pressures. Bio-Rad expects Clinical Diagnostics to return to growth in Q4 2025, supported by the annualization of the China reimbursement impact and the timing of quality controls portfolio revenue. The company's strategic focus in this segment includes maintaining leading market positions for core platforms and building a presence in the new molecular diagnostics segment, as evidenced by partnerships like Gencurix for oncology testing kits in Europe and Biodesix (BDSX) for advanced breast cancer biomarker testing.

Capital Allocation and Financial Strength

Bio-Rad maintains a robust financial position, providing significant optionality for strategic investments and shareholder returns. As of September 30, 2025, the company held $1.40 billion in cash, cash equivalents, and short-term investments, with approximately 18% held in foreign subsidiaries. This strong liquidity is complemented by positive cash flows from operating activities, which totaled $367.30 million for the first nine months of 2025, an increase from $331 million in the prior year, primarily due to improved working capital management.

The company is committed to returning value to shareholders through opportunistic share repurchases. During the nine months ended September 30, 2025, Bio-Rad repurchased 1.21 million shares of Class A common stock for $295.50 million. As of the same date, $284.60 million remained available under the 2023 Share Repurchase Program. Capital expenditures are projected to be between $160 million and $180 million for 2025, supporting ongoing infrastructure investments for its multi-year transformation. Bio-Rad targets full-year free cash flow of approximately $310 million to $330 million for 2025, an increase from $290 million in 2024, driven by continued focus on working capital efficiencies.

Outlook and Growth Catalysts

Bio-Rad's management is maintaining its 2025 full-year outlook, projecting total currency-neutral revenue growth in the range of flat to 1%. This guidance reflects a cautious stance on the pace of recovery in academic and biotech markets, with no expectation of a significant budget flush from research customers due to ongoing uncertainties surrounding the NIH budget and potential U.S. government shutdowns. While a relatively flat NIH budget for 2026 is encouraging, management anticipates it will take time for researchers to regain confidence in longer-term funding.

For the fourth quarter of 2025, Bio-Rad expects a modest revenue improvement in Life Science, with ddPCR instrumentation poised for a rebound into 2026. The Clinical Diagnostics segment is projected to return to growth as the China diabetes testing reimbursement headwind annualizes and quality controls revenue timing aligns. On margins, a slight step-up in Q4 gross margin is anticipated, primarily driven by revenue mix, and operating margins are expected to improve sequentially by at least 80 basis points, reflecting continued cost management. Longer-term, Bio-Rad aims for high single-digit growth in process chromatography and sees opportunities for margin expansion in 2026 through operational initiatives, supply chain improvements, and enhanced buying power leverage. The company's strategic investments in ddPCR, including the Stilla acquisition and the QX Continuum platform, are expected to be key growth catalysts, expanding market reach and driving adoption in both research and diagnostic applications.

Risks and Competitive Dynamics

Bio-Rad operates in a highly competitive and regulated environment, facing several pertinent risks. The company's significant investment in Sartorius AG (SARTF), while a substantial asset, introduces volatility to reported net income due to fair market value changes. Global economic and geopolitical conditions, including inflationary pressures and trade barriers, continue to impact raw material costs and demand, particularly in China, which represents a mid-single-digit percentage of Bio-Rad's year-to-date 2025 consolidated net sales. The uncertainty in government funding for academic research and challenges in the biopharma market pose ongoing headwinds, especially for instrument sales.

In the competitive landscape, Bio-Rad's niche focus and technological precision differentiate it from larger, more diversified players like Thermo Fisher Scientific (TMO) and Danaher Corporation (DHR). While these competitors may offer broader portfolios and greater scale, Bio-Rad's specialized tools, particularly in ddPCR and certain chromatography applications, provide a qualitative edge in performance and accuracy for specific research and diagnostic needs. However, Bio-Rad's smaller scale can lead to higher operating costs compared to the cost leadership of some rivals. The company also faces intellectual property risks and the need to continuously innovate to stay ahead of technological advancements from competitors like Agilent Technologies (A) and Illumina (ILMN), particularly in rapidly evolving fields like genomics and advanced analytics. Regulatory changes, such as those from the FDA and EU IVDR, and the evolving landscape of AI in healthcare, present additional compliance costs and competitive pressures. Bio-Rad's strategic response includes regionalizing supply chains, implementing surcharges to mitigate tariff impacts, and focusing on operational efficiencies to maintain its competitive position and drive profitability.

Conclusion

Bio-Rad Laboratories stands at a pivotal juncture, strategically leveraging its deep technological expertise in digital PCR and bioprocessing to carve out a resilient growth trajectory. Despite a challenging macroeconomic backdrop characterized by cautious academic and biotech funding, and specific regional headwinds in China, the company's commitment to innovation and operational discipline is evident. The successful integration of Stilla Technologies and the rollout of new ddPCR platforms underscore a clear strategic direction to expand market opportunities and enhance its competitive moat through differentiated technology.

While the path forward demands continued vigilance against competitive pressures and macroeconomic uncertainties, Bio-Rad's strong balance sheet and focused capital allocation provide the flexibility to invest in future growth and return value to shareholders. The anticipated sequential improvements in margins and a return to growth in key segments signal a company poised for stronger, profitable expansion. For discerning investors, Bio-Rad represents a compelling opportunity to invest in a company with a rich history of innovation, a clear technological roadmap, and a disciplined approach to navigating complex market dynamics, all aimed at delivering sustainable long-term value.