Brandon Couillard

Brandon Couillard asked about the assumptions for Average Selling Price (ASP) growth from the Q4 2025 baseline of $560 and whether any true-up revenue is included in the 2026 revenue guidance. He followed up by inquiring about the sales force expansion plans for 2026 for both prenatal and oncology, and whether the company expects to accelerate this growth or make adjustments in response to competition or new product launches.

Answer

Ross Taylor, CFO, clarified that the 2026 revenue guidance *excludes* true-up revenue. Ozan Atay, Co-founder and CEO, detailed sales force growth plans: prenatal is expected to grow from approximately 150 to 185 reps, and oncology from 45-50 to 60-65 reps by year-end. He explained that this systematic growth pace is chosen to ensure the maintenance of high test quality, turnaround times, and overall service levels, while also balancing prenatal and oncology growth to sustain GAAP profitability.

Brandon Couillard asked if the 2026 guidance assumes ASP growth from the Q4 2025 baseline of $560 and if it includes any true-up revenue. He also inquired about the sales force expansion plans for 2026, specifically if the company expects to accelerate growth or make adjustments in response to competition or new products.

Answer

Ozan Atay, Co-founder and CEO of BillionToOne, clarified that the revenue guidance does not include true-up revenue, though historical ASP calculations do. Ross Taylor, Chief Financial Officer, suggested making adjustments for true-up revenue when considering ASP. Mr. Atay outlined sales force growth plans for 2026: prenatal from ~150 to 185 reps and oncology from 45 to 65 reps. This systematic growth pace is chosen to maintain test quality, turnaround time, and service, while balancing prenatal and oncology growth for GAAP profitability.

Brandon Couillard inquired if the 70% gross margin in Q3 2025 represents a new baseline for BillionToOne, and what additional areas offer opportunities to lower the cost per test over the next one to two years. He also sought clarification on true-up revenue in the Q4 guidance and key data readouts or reimbursement milestones for 2026.

Answer

Ross Taylor, CFO, suggested expecting gross margins to remain in the high 60s% for the next several quarters, noting the negative mix shift from faster-growing, lower-margin oncology products. Oguzhan Atay, Co-founder and CEO, added that individual product gross margins are expanding due to growing ASPs and decreasing COGS from increased lab capacity utilization. Taylor confirmed Q4 true-up revenue is expected to be 3-5% of revenues, consistent with prior quarters. Atay highlighted securing the first Medicare/MolDX coverage for Northstar Select Response as a major 2026 milestone.

Brandon Couillard asked about the 70% gross margin in Q3, whether it represents a new baseline for 2026, and what additional areas exist to lower COGS per test. He also sought clarification on any true-up revenue embedded in the Q4 revenue guidance and major clinical or reimbursement milestones for 2026.

Answer

Ross Taylor, CFO, indicated that while not providing 2026 guidance, maintaining gross margins in the high 60s% is a reasonable expectation, noting a negative mix shift from faster-growing oncology products. Oguzhan Atay, Co-founder, CEO, and Board Chair, added that individual product ASPs are growing and COGS are decreasing, expanding each product's gross margin. Ross Taylor confirmed Q4 true-up revenue is expected to be 3-5% of revenues, consistent with prior quarters. Oguzhan Atay identified the biggest 2026 milestone as securing the first Medicare/MolDX coverage for Northstar Response.

Brandon Couillard from Wells Fargo asked if China's 6% growth was primarily stimulus-related, seeking details on end market performance there, and inquired about regional weakness in the Applied Markets Group (AMG), specifically if it was concentrated in the Americas.

Answer

President and CEO Padraig McDonnell stated China's 6% growth was better than expected, with a small stimulus win, and expressed optimism for mid-to-high single-digit long-term growth. Angelica Riemann, President of the Agilent CrossLab Group, clarified that AMG softness was primarily in the Americas, linked to academic and government hesitancy. Simon May, President of the Life Sciences and Applied Markets Group, added that Europe showed more stability.

Brandon Couillard asked if the 6% growth in China was entirely stimulus-related and requested insights into specific end markets there, inquiring if any were turning more positively or if it remained status quo. He also asked for color on the AMG markets by region, specifically where weakness was observed, and if it was primarily in the Americas.

Answer

President and CEO Padraig McDonnell stated that China's 6% growth was better than expected, with a slight pre-Lunar New Year spend and a small GACC stimulus (Agilent won ~30%). He expects China to be a $300 million per quarter business, growing mid to high single digits long-term, driven by innovation, strong install base, and alignment with China's Five-Year Plan priorities (AI, healthcare, green development, new regulations). He noted Agilent is under-indexed in DX and Pharma but over-indexed in Applied Markets, where strength continues. CFO Adam S. Elinoff clarified that softness in AMG markets was primarily in the Americas, with reasons for optimism due to stable NIH budgets and blocked overhead research cost caps, but continued customer hesitancy in making larger investments. Simon May, President of the Life Sciences and Applied Markets Group, clarified his earlier Europe comment was forward-looking, envisioning more stability and cautious optimism for incremental improvement there.

Brandon Couillard inquired about CareDx's volume guidance for the year, specifically comparing the 12% forecast to the 17% exit rate, and asked about the anticipated contribution from Epic Aura and assumptions regarding transplant procedure growth.

Answer

President and CEO John Hanna stated that the guidance does not assume an increase in transplant procedural volume and it is too early to quantify the lift from Epic Aura, with more detailed guidance expected in Q2. COO Keith Kennedy added that the patient and digital solutions business is projected to grow 8-12% next year, with software margins in the mid-sixties and product margins ranging from 50-60%.

Brandon Couillard from Wells Fargo asked Kevin Feeley, CFO, whether GeneDx anticipates a modest operating loss in Q1 2026, given the front-loaded sales rep hiring, and how OpEx is expected to ramp throughout the year towards a double-digit operating margin by Q4.

Answer

Kevin Feeley, CFO, clarified that GeneDx expects Q1 2026 adjusted net income to be near breakeven, not a loss, and will build positively throughout the year as the newly hired sales representatives become productive and investments yield revenue.

Brandon Couillard asked about the expected operating margin trajectory, specifically if a modest loss is anticipated to start the year given the front-loaded sales rep build, and how operating expenses are projected to ramp throughout the year.

Answer

Kevin Feeley (CFO) clarified that a loss is not expected, but Q1 will be 'right near breakeven,' pushing the boundary. He anticipates the company will remain positive and build up profitability throughout the year as the newly deployed sales representatives and other investments become productive.

Brandon Couillard asked which of the three BSI segments (BioSpin, Nano, CALID) is expected to lead in revenue growth in 2026. He also sought clarification on the ultra-high field MR systems, specifically if the company expects to return to three or four installations per year in 2027 and beyond, given only one expected in 2026. Finally, he asked for the penciled-in net interest and other expense for 2026 and how to think about free cash flow conversion.

Answer

President and CEO Frank Laukien stated that BioSpin is expected to be the weakest growth segment in 2026, with Nano, CALID, and BEST all expected to grow organically. He attributed BioSpin's lag to longer-term bookings and only one ultra-high field MR system in revenue for 2026, expecting a return to two or three installations per year in 2027 and beyond. EVP and CFO Gerald Herman expressed satisfaction with Q4 2025 cash flow ($207 million free cash flow) due to working capital conversion and inventory actions. He estimated net interest expense for 2026 to be around $35-$40 million, with some offsets from other income.

Brandon Couillard from Wells Fargo inquired about Bruker's expectations for net interest and other expense for 2026, and how free cash flow conversion is anticipated to perform this year following a strong Q4 2025.

Answer

Gerald Herman, EVP and CFO, estimated net interest expense to be in the range of $35-$40 million for 2026, with some offsets on the other income line. He expressed satisfaction with the strong Q4 2025 free cash flow of $207.3 million, attributing it to improved working capital performance and inventory actions.

Brandon Couillard inquired about the level of conservatism and stress-testing applied to Avantor's 2026 guidance, particularly after previous cuts, and sought details on additional investments beyond e-commerce and operations, questioning if these are one-time in nature and their potential impact on future margins.

Answer

Brent Jones, EVP and CFO, described the 2026 guidance as 'very prudent,' balancing numerous moving parts without being overly conservative or aggressive. He noted that Q4 2025 EBITDA margin serves as a starting point, with 2026 margins influenced by segment mix (BMP growing slower than VWR), headwinds in specific product lines (serum, electronic materials, NuSil), and ongoing trends in the VWR business. Emmanuel Ligner, President and CEO, reiterated that investments are self-funded through internal optimizations.

Brandon Couillard noted Bio-Techne's outperformance in operating margin expansion in the first half despite mix challenges, asking if the company's commitment to 100 basis points for the full year implies reinvestment in the second half, and how margins are expected to trend. He also questioned the significant decline in operating cash flow in the first half, which typically accounts for under half of the full year, asking about timing dynamics and the full-year cash flow outlook.

Answer

CFO Jim Hipple explained that a Q3 anomaly (timing of expenses last year) impacted comparisons. He expects continued sequential improvement in gross margin due to mix unwinding and higher revenue in the second half, with roughly half of the expansion from gross margin and the other half from increased revenue, aiming for 100 basis points improvement for the second half. For operating cash flow, he clarified that Q2 was strong, but Q1 was impacted by two main drivers: the amount and timing of bonus accrual payouts (a larger cash outflow year-over-year compared to a low payout in the prior year's Q1) and the timing of tax payments, which will gradually unwind.

Brandon Couillard noted Bio-Techne's outperformance in operating margin expansion in the first half despite mix challenges and asked if the company's decision to stick with 100 basis points for the full year implies reinvestment in the second half. He also inquired about the significant decline in operating cash flow in the first half and the full-year cash flow outlook.

Answer

Jim Hipple, Bio-Techne's CFO, explained that operating margin expansion in the second half would come roughly half from gross margin improvement and half from higher revenue, with Q3 being a tougher comp and Q4 easier. Regarding operating cash flow, he clarified that the Q2 cash flow was strong and on par with the prior year, but Q1 was impacted by the timing and amount of bonus accrual payouts and some tax payments, which will gradually unwind throughout the fiscal year.

Brandon Couillard asked about Revvity's free cash flow conversion, which has improved over the last two years, seeking more color on the levers driving this improvement and the target for free cash flow conversion in 2026.

Answer

Max Grykowiak, SVP and CFO, attributed the improved free cash flow conversion (near 90% recently, up from 70% previously) to working capital initiatives, the benefits of a portfolio with a higher recurring mix, and company-wide incentives. He expects continued momentum in 2026, targeting 85% conversion or greater, in line with their long-range plan.

Brandon Couillard asked about Revvity's free cash flow conversion, noting its improvement over the last two years, and inquired about the target for 2026, including the levers for continued improvement and the expected free cash flow for the year.

Answer

Max Krakowiak, SVP and CFO, stated that free cash flow conversion has been incredibly strong, averaging close to 90% over the past couple of years, a significant improvement from around 70% previously. He attributed this to working capital initiatives, a higher recurring product mix in the portfolio, and incentivized cash flow targets across the company. For 2026, he expects continued momentum, with the long-range plan (LRP) calling for 85% conversion or greater, which is the expectation for the year.