Bio-Rad Laboratories Inc.
10/29/2025 | Press release | Distributed by Public on 10/29/2025 14:19
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
This discussion should be read in conjunction with the information contained in both our consolidated financial statements for the year ended December 31, 2024 and the condensed consolidated financial statements for the three and nine months ended September 30, 2025.
Overview. We are a multinational developer, manufacturer and worldwide distributor of our own life science research and clinical diagnostics products. Our business is organized into two reportable segments: Life Science and Clinical Diagnostics, with the mission to provide scientists with specialized tools needed for biological research and health care specialists with products needed for clinical diagnostics.
We sell more than 12,000 products and services to a diverse client base comprised of scientific research, healthcare, education and government customers worldwide. We do not disclose quantitative information about our different products and services as it is impractical to do so based primarily on the numerous products and services that we sell and the global markets that we serve.
We manufacture and supply our customers with a range of reagents, apparatus and equipment to separate complex chemical and biological materials and to identify, analyze and purify components. As our customers require standardization for their experiments and test results, much of our revenues are recurring in nature.
As a company with global operations, approximately 41% of our year-to-date 2025 consolidated net sales are derived from the United States and approximately 59% are derived from international locations, with Europe being our largest international region. The international sales are largely denominated in local currencies such as the Euro, Swiss Franc, Japanese Yen, Chinese Yuan and British Sterling. As a result, our consolidated net sales expressed in dollars benefit when the U.S. dollar weakens and suffer when the dollar strengthens. When the dollar strengthens, we benefit from lower cost of sales from our own international manufacturing sites, and from lower international operating expenses. We regularly discuss our changes in revenue and expense categories in terms of both changing foreign exchange rates and in terms of a currency neutral basis, if notable, to explain the impact currency has on our results.
Current global economic and geopolitical conditions remain uncertain, and we rely on the support of many governments for both research and healthcare. Reduced government spending, along with ongoing challenges in the biopharma market and among small biotech companies, continues to negatively impact our business. Additionally, the market in China, which represents a mid-single digit percentage of our year-to-date 2025 consolidated net sales, remains uncertain as a result of these factors. We expect these conditions to continue through the rest of 2025.
Results of Operations
The following table shows Cost of goods sold, Gross profit, components of operating expense, (Gains) losses from change in fair market value of equity securities and loan receivable, and Net income (loss) as a percentage of Net sales:
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Cost of goods sold | 47.4 | 45.2 | 47.4 | 45.4 | |||||||||||||||||||
| Gross profit | 52.6 | 54.8 | 52.6 | 54.6 | |||||||||||||||||||
| Selling, general and administrative expense | 31.7 | 30.8 | 33.0 | 32.1 | |||||||||||||||||||
| Research and development expense | 10.9 | 14.0 | 10.9 | 11.4 | |||||||||||||||||||
| (Gains) losses from change in fair market value of equity securities and loan receivable | 75.8 | (122.0) | 6.8 | 88.5 | |||||||||||||||||||
| Net income (loss) | (52.4) | 100.5 | 2.1 | (59.4) | |||||||||||||||||||
Critical Accounting Policies and Estimates
An accounting policy is deemed to be critical if it affects our financial statements materially and requires subjective or complex judgments by management. An accounting estimate is deemed to be critical if it requires assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. Management believes that there have been no significant changes during the three and nine months ended September 30, 2025 to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
There have been no substantial changes in our significant accounting policies during the three and nine months ended September 30, 2025, compared with the significant accounting policies described in Note 1 to the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2024.
Three Months Ended September 30, 2025 Compared to
Three Months Ended September 30, 2024
Results of Operations - Sales, Margins and Expenses
Percentage sales growth in currency neutral amounts are calculated by translating prior period sales in each local currency using the current period monthly average foreign exchange rates for that currency and comparing that to current period sales.
Net sales ("sales") for the third quarter of 2025 were $653.0 million compared to $649.7 million in the third quarter of 2024, an increase of 0.5%. On a currency neutral basis, third quarter 2025 sales decreased by approximately 1.7%, compared to the same period in 2024. The decrease in sales was primarily driven by lower sales in both Life Science and Clinical Diagnostics segments.
The Life Science segment sales for the third quarter of 2025 were $261.8 million, essentially flat compared to the same period last year. On a currency neutral basis, sales decreased 1.5% compared to the third quarter in 2024, driven by the constrained academic research and biotech funding environment. Currency neutral sales decreased in the Americas, partially offset by increased sales in Asia Pacific and EMEA.
The Clinical Diagnostics segment sales for the third quarter of 2025 were $391.2 million, an increase of 0.6% compared to the same period last year. On a currency neutral basis, sales decreased 1.8% compared to the third quarter in 2024. The currency neutral sales decrease was primarily driven by the lower reimbursement rates for diabetes testing in China. Currency neutral sales decreased in Asia Pacific, partially offset by increased sales in the Americas and EMEA.
Consolidated gross margin was 52.6% for the third quarter of 2025 compared to 54.8% for the third quarter of 2024. Gross margin for the Life Science segment and Clinical Diagnostics segment for the third quarter of 2025 decreased by approximately 1.7 percentage points and 2.5 percentage points, respectively, as compared to the same period last year. The decrease in gross margin was primarily driven by higher material costs and reduced fixed manufacturing absorption.
Selling, general and administrative ("SG&A") expense for the third quarter of 2025 was $206.8 million or 31.7% of sales, compared to $200.4 million, or 30.8% of sales for the third quarter of 2024. The increase in SG&A expense was due to higher employee-related and restructuring costs.
Research and development ("R&D") expense for the third quarter of 2025 was $71.3 million or 10.9% of sales, compared to $91.0 million or 14.0% of sales in the third quarter of 2024. The decrease in R&D expense was primarily due to higher in-process R&D charges associated with an acquisition in the third quarter of 2024, compared to the third quarter of 2025.
Results of Operations - Non-operating
Interest expense for the third quarter of 2025 and 2024 was $12.3 million and $12.1 million, respectively, which primarily consisted of interest expense related to the $1.2 billion Senior Notes.
Foreign currency exchange (gains) losses, net consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk. Foreign currency exchange gains, net were $2.9 million for the third quarter of 2025 compared to foreign currency exchange losses, net of $1.6 million for the third quarter of 2024. Gains and losses are primarily due to the estimating process inherent in the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts.
(Gains) losses from change in fair market value of equity securities and loan receivable amounted to a loss of $495.3 million for the third quarter of 2025, compared to a gain of $792.9 million for the third quarter of 2024. The change in the fair market value primarily resulted from the recognition of holding losses of $505.1 million in the third quarter of 2025 compared to holding gains of $761.1 million in the third quarter of 2024 on our position in Sartorius AG. In addition, holding gains from the change in fair market value of our loan receivable of $1.8 million in the third quarter of 2025 compared to holding gains of $25.2 million in the third quarter of 2024 contributed to the change.
Other income, net for the third quarter of 2025 was $8.3 million compared to $17.9 million for the third quarter of 2024. The difference in Other income, net of $9.6 million was primarily attributable to realized losses on equity investments in the third quarter of 2025 compared to the third quarter of 2024.
Our effective income tax rate was 20.7% and 24.2% for the third quarter of 2025 and 2024, respectively. The effective tax rate reported in the third quarter of 2025 and 2024 was primarily driven by the unrealized gain/loss in equity securities and the geographical mix of earnings.
Nine Months Ended September 30, 2025 Compared to
Nine Months Ended September 30, 2024
Results of Operations - Sales, Margins and Expenses
Sales for the first nine months of 2025 were $1.89 billion compared to $1.90 billion in the first nine months of 2024, a decrease of 0.5%. On a currency neutral basis, the first nine months of 2025 sales decreased by 0.7% compared to the same period in 2024.
The Life Science segment sales for the first nine months of 2025 were $753.2 million, essentially flat compared to the same period last year. On a currency neutral basis, sales decreased 0.3% compared to the first nine months of 2024 which was essentially flat. Currency neutral sales decreased in the Americas and Asia Pacific, partially offset by increased sales in EMEA.
The Clinical Diagnostics segment sales for the first nine months of 2025 were $1.14 billion, a decrease of 0.8% compared to the same period last year. On a currency neutral basis, sales decreased 0.9% compared to the first nine months of 2024. The currency neutral sales decrease was primarily driven by the lower reimbursement rates for diabetes testing in China. Currency neutral sales decreased in Asia Pacific, partially offset by increased sales in the Americas and EMEA.
Consolidated gross margins were 52.6% for the first nine months of 2025 compared to 54.6% for the first nine months of 2024. Gross margin for the Life Science segment and Clinical Diagnostics segment for the first nine months of 2025 decreased by approximately 0.5 percentage points and 3.0 percentage points, respectively, as compared to the same period last year. The decrease in gross margin was primarily driven by higher material costs and reduced fixed manufacturing absorption.
SG&A expenses increased to $623.3 million or 33.0% of sales for the first nine months of 2025 compared to $610.0 million or 32.1% of sales for the first nine months of 2024. The increase in SG&A expense was primarily due to higher restructuring costs.
R&D expenses decreased to $205.3 million or 10.9% of sales in the first nine months of 2025 compared to $216.3 million or 11.4% of sales in the first nine months of 2024. The decrease in R&D expenses in the first nine months of 2025 compared to the prior year period was primarily due to higher in-process R&D charges associated with an acquisition in the first nine months of 2024, compared to the first nine months of 2025.
Results of Operations - Non-operating
Interest expense for the first nine months of 2025 and 2024 was $36.9 million and $36.7 million, respectively, which primarily consisted of interest expense related to the $1.2 billion Senior Notes.
Foreign currency exchange (gains) losses, net consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk. Foreign currency exchange gains, net were $4.5 million and $2.0 million for the first nine months of 2025 and 2024, respectively. Gains and losses are primarily due to the estimating process inherent in the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts.
(Gains) losses from change in fair market value of equity securities and loan receivable amounted to a loss of $129.1 million for the first nine months of 2025, compared to a loss of $1.68 billion for the first nine months of 2024. The change in the fair market value primarily resulted from the recognition of holding losses of $149.5 million in the first nine months of 2025 compared to holding losses of $1.71 billion in the first nine months of 2024 on our position in Sartorius AG. In addition, gains from the change in fair value of our loan receivable of $4.0 million in the first nine months of 2025 compared to holding gains of $14.7 million in the first nine months of 2024 contributed to the change.
Other income, net for the first nine months of 2025 was $61.7 million compared to $70.7 million for the first nine months of 2024. The difference in Other income, net of $9.0 million was primarily attributable to realized losses on equity investments in the first nine months of 2025.
Our effective income tax rate was 39.8% and 21.3% for the first nine months of 2025 and 2024, respectively. The effective tax rate reported in the first nine months of 2025 was primarily affected by the unrealized gain/loss in equity securities, acquisitions, valuation of our deferred tax assets, stock-based compensation, and geographic mix of earnings. The tax rate for the first nine months of 2024 was primarily affected by the unrealized gain/loss in equity securities.
Liquidity and Capital Resources
Bio-Rad operates and conducts business globally, primarily through subsidiary companies established in the markets in which we trade. Goods are manufactured in a small number of locations, and are then shipped to local distribution facilities around the world. Our product mix is diversified, and certain products compete largely on product efficacy, while others compete on price. Gross margins are generally sufficient to exceed normal operating costs, and funding for research and development of new products, as well as routine outflows for capital expenditures, interest and taxes.
As of September 30, 2025, we had available $1.4 billion in cash, cash equivalents and short-term investments, of which approximately 18% was held in our foreign subsidiaries. The amount of funds held in the United States can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as acquisitions and borrowings. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and foreign cash flows (both inflows and outflows). It is generally our intention to repatriate certain foreign earnings to the extent that such repatriations are not restricted by local laws, and there are no substantial incremental costs.
Additional liquidity is realized through positive cash flows from operating activities, and is readily available via the sale of short-term investments and access to our $200.0 million unsecured Revolving Credit Agreement, available through February 2029, and to a lesser extent international lines of credit. Borrowings under the Revolving Credit Agreement are available on a revolving basis and can be used to make acquisitions, for working capital and for other general corporate purposes. We had no outstanding borrowings under the Revolving Credit Agreement as of September 30, 2025, however, $5.7 million was utilized for domestic standby letters of credit that reduced our borrowing availability.
In March 2022, we received $1.2 billion in cash proceeds from the issuance of Senior Notes. The $400 million and $800 million Senior Notes mature in March 2027 and March 2032, respectively and interest on the Senior Notes is 3.3% and 3.7% per annum, respectively. Interest is payable semiannually in arrears on March 15 and September 15 of each year.
Management believes that our cash, cash equivalents and short-term investments , together with cash flow from operations and the Revolving Credit Agreement will be adequate to meet our current objectives for operations, research and development, capital additions for manufacturing and distribution, plant and equipment, information technology systems and acquisitions of reasonable proportion to our existing total available capital for the next twelve months and beyond.
Cash Flows from Operations
Net cash provided by operations was $367.3 million and $331.0 million for the nine months ended September 30, 2025 and 2024, respectively. The increase in operating cash flows was primarily due to improved working capital.
Cash Flows from Investing Activities
Net cash used in investing activities was $155.5 million and $129.7 million for the nine months ended September 30, 2025 and 2024, respectively. The increase was due to net cash outflows for the acquisition of Stilla, partially offset by change in net outflows primarily due to the timing of our purchases, maturities and sales of marketable securities and investments.
Cash Flows from Financing Activities
Net cash used in financing activities was $286.5 million and $192.6 million for the nine months ended September 30, 2025, and 2024, respectively. The increase in net cash used in financing activities was primarily attributable to higher payments for share repurchases. During the nine months ended September 30, 2025, we repurchased 1,205,381 shares of Class A common stock for $295.5 million and during the nine months ended September 30, 2024, we repurchased 690,857 shares of Class A common stock for $203.6 million. We designated these repurchased shares as treasury stock. As of September 30, 2025, $284.6 million remained available for repurchases under the 2023 Share Repurchase Program. Repurchases under the 2023 Share Repurchase program may be made at management's discretion from time to time on the open market.
Recent Accounting Pronouncements Adopted
We did not adopt any new accounting pronouncements during the nine months ended September 30, 2025.
Bio-Rad Laboratories Inc. published this content on October 29, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on October 29, 2025 at 20:20 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]