
Bio-Techne Comes in Under Forecasts But Still Grows in Challenging Macro Backdrop; Levered to High Growth End Markets in Cell/Gene Therapy and Spatial Biology
11-1-23 (by: Scott Gleason) Bio-Techne Corporation has released its financial results for the first quarter ending September 30, 2023 with the company reporting 2% organic growth in first-quarter revenue, reaching $276.9 million, and a 3% reported increase. Consensus expectations from analysts were significantly higher at $287.8 million, but given peer reports to date the results come as no surprise given the challenging biotech funding environment and poor macroeconomic landscape in China which resulted in low teens revenue declines in the quarter. Management also noted destocking activity at OEM customers, similar to other life science tools providers. Notable achievements include a 49% increase in test volume for the ExoDx prostate test and a 39% rise in revenue for GMP proteins. Their ProteinSimple branded portfolio of instruments and consumables also saw substantial growth, increasing 9% in the quarter and more than 18% when excluding China. Management also noted that cell and gene therapy products grew over 25% in the quarter, with the companies GMP proteins being critical in the production of these products. Additionally, the company generated $59.4 million in cash flow from operations, representing a 6% increase from the previous year.
Bio-Techne operates in two primary segments: Protein Sciences and Diagnostics and Genomics. The Protein Sciences segment reported net sales of $204.7 million in the first quarter, a 2% increase from the previous year. Organic growth for this segment was also 2%. In the Diagnostics and Genomics segment, net sales for the first quarter reached $72.8 million, marking a 4% increase from the prior year.
The company also noted it is working on several additional advanced diagnostic tests using its exosome based platform, acquired when the company bought Exosome Diagnostics, including single gene mutation test for monitoring several different cancers, a next-generation prostate cancer rule in test, as well as a colorectal cancer screening test designed for early detection of both colorectal cancer and precancerous polyps.
Adjusted EPS decreased to $0.41 per diluted share, compared to $0.45 in the previous year and below street forecasts of $0.44. Adjusted operating income for the first quarter of fiscal 2024 also dropped 7%, while the adjusted operating margin was 31.4%, down from 34.8% in the first quarter of fiscal 2023. The company noted that the recent acquisition of spatial biology solutions provider Lunaphore negatively impacted operating margins in the first quarter.
Chuck Kummeth, President and Chief Executive Officer of Bio-Techne, expressed his satisfaction with the results, highlighting the impressive performance in Europe, which achieved 15% organic growth. He attributed this success to a strong focus on profitability, which led to an adjusted operating margin of 31.4%, in line with their expectations. The announcement also included the appointment of Kim Kelderman, current Diagnostics and Genomics President, as CEO, effective February 1, 2024. Kummeth expressed his confidence in Kelderman, stating that he is inheriting a talented and experienced team. Kummeth will continue to support Kelderman as a Senior Advisor until his retirement on July 1, 2024.