Bio-Techne (TECH)

Life sciences company Bio-Techne (NASDAQ:TECH) missed Wall Street’s revenue expectations in Q3 CY2025, with sales falling 1% year on year to $286.6 million. Its non-GAAP profit of $0.42 per share was in line with analysts’ consensus estimates.

Company Overview

With a catalog of hundreds of thousands of specialized biological products used in laboratories worldwide, Bio-Techne (NASDAQ:TECH) develops and manufactures specialized reagents, instruments, and services that help researchers study biological processes and enable diagnostic testing and cell therapy development.

The life sciences subsector specializing in research tools and consumables enables scientific discoveries across academia, biotechnology, and pharmaceuticals. These firms supply a wide range of essential laboratory products, ensuring a recurring revenue stream through repeat purchases and replenishment. Their business models benefit from strong customer loyalty, a diversified product portfolio, and exposure to both the research and clinical markets. However, challenges include high R&D investment to maintain technological leadership, pricing pressures from budget-conscious institutions, and vulnerability to fluctuations in research funding cycles. Looking ahead, this subsector stands to benefit from tailwinds such as growing demand for tools supporting emerging fields like synthetic biology and personalized medicine. There is also a rise in automation and AI-driven solutions in laboratories that could create new opportunities to sell tools and consumables. Nevertheless, headwinds exist. These companies tend to be at the mercy of supply chain disruptions and sensitivity to macroeconomic conditions that impact funding for research initiatives.

Bio-Techne competes with several life sciences tools providers including Thermo Fisher Scientific (NYSE:TMO), Danaher (NYSE:DHR), Agilent Technologies (NYSE:A), and Abcam (NASDAQ:ABCM). In the spatial biology and diagnostics space, competitors include 10x Genomics (NASDAQ:TXG) and NeoGenomics (NASDAQ:NEO).

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $1.22 billion in revenue over the past 12 months, Bio-Techne is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Bio-Techne grew its sales at a decent 9.9% compounded annual growth rate. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Bio-Techne’s recent performance shows its demand has slowed as its annualized revenue growth of 3.1% over the last two years was below its five-year trend.

We can better understand the company’s sales dynamics by analyzing its organic revenue, which strips out one-time events like acquisitions and currency fluctuations that don’t accurately reflect its fundamentals. Over the last two years, Bio-Techne’s organic revenue averaged 2.7% year-on-year growth. Because this number aligns with its two-year revenue growth, we can see the company’s core operations (not acquisitions and divestitures) drove most of its results.

This quarter, Bio-Techne missed Wall Street’s estimates and reported a rather uninspiring 1% year-on-year revenue decline, generating $286.6 million of revenue.

Looking ahead, sell-side analysts expect revenue to grow 3.5% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and implies its newer products and services will not accelerate its top-line performance yet.

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Bio-Techne has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average operating margin of 20.2%.

Analyzing the trend in its profitability, Bio-Techne’s operating margin decreased by 16.5 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 17.1 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

In Q3, Bio-Techne generated an operating margin profit margin of 16.6%, up 2.8 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Bio-Techne’s remarkable 9.5% annual EPS growth over the last five years aligns with its revenue performance. This tells us it maintained its per-share profitability as it expanded.

In Q3, Bio-Techne reported adjusted EPS of $0.42, in line with the same quarter last year. This print was close to analysts’ estimates. Over the next 12 months, Wall Street expects Bio-Techne’s full-year EPS of $1.93 to grow 6.6%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Bio-Techne has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 22.4% over the last five years, quite impressive for a healthcare business.

Taking a step back, we can see that Bio-Techne’s margin dropped by 11.6 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

Bio-Techne’s free cash flow clocked in at $22.22 million in Q3, equivalent to a 7.8% margin. The company’s cash profitability regressed as it was 11.1 percentage points lower than in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Bio-Techne’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 7.9%, slightly better than typical healthcare business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Bio-Techne’s ROIC has decreased over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Bio-Techne reported $145 million of cash and $394.5 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $429.9 million of EBITDA over the last 12 months, we view Bio-Techne’s 0.6× net-debt-to-EBITDA ratio as safe. We also see its $3.37 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its revenue missed and its organic revenue fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 5.9% to $57.50 immediately following the results.

Updated: December 4, 2025 at 10:51 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Bio-Techne.

Bio-Techne doesn’t pass our quality test. Although its revenue growth was good over the last five years, it’s expected to deteriorate over the next 12 months and its subscale operations give it fewer distribution channels than its larger rivals. And while the company’s impressive operating margins show it has a highly efficient business model, the downside is its cash profitability fell over the last five years.

Bio-Techne’s P/E ratio based on the next 12 months is 31.5x. This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $69.17 on the company (compared to the current share price of $63.38).