Jacob Johnson

Jacob Johnson asked for an update on the 2026 outlook, specifically if any early Q1 trends, Stelara expectations, IRA announcements, or upcoming biosimilar launches have altered the previously reiterated guidance. He also questioned the target pace for expanding the advanced practitioner model, key limiting factors, and the investment plan for these capabilities.

Answer

EVP and CFO Meenal Sethna confirmed no changes to the 2026 guidance, stating that despite industry noise and Q1 activity, trends align with expectations. President and CEO John Rademacher added that the team is confident in the guide and sees nothing changing their perspective. Regarding the advanced practitioner model, Rademacher noted a collective approach of new greenfield sites and existing site conversions, with continued growth expected. He identified corporate practice of medicine at the state level and payer credentialing as limiting factors, emphasizing ongoing investments in commercial and clinical resources.

Jacob Johnson asked for an update on the 2026 outlook, specifically if any Q1 trends, Stelara expectations, IRA announcements, or upcoming biosimilar launches have caused management to be more cautious or change their guidance. He also inquired about the target pace for converting and opening new advanced practitioner sites in 2026 and beyond, key limiting factors, and the investment plan for these capabilities.

Answer

EVP and CFO Meenal Sethna stated that the guidance remains unchanged, as no substantial differences have been observed in Q1 trends or the broader landscape. President and CEO John Rademacher added that trends are aligning with expectations, despite the usual Q1 activity. Regarding advanced practitioner sites, Rademacher explained that growth involves both new greenfield sites and conversion of existing infusion suites, with progress dependent on state-level corporate practice of medicine regulations and payer credentialing. He noted continued investments in commercial and clinical resources to drive utilization.

Jacob Johnson asked for an update on business development trends in the biocatalysis business with mid-sized pharma and for details on the new agreement with Pfizer, specifically if it was related to PAXLOVID.

Answer

COO Kevin Norrett reported good traction with mid-tier pharma and large biotechs, as these customers are often new to biocatalysis and receptive to partnership. He also confirmed the new Pfizer agreement is for a non-COVID program that Pfizer is licensing to take in-house, representing an expansion of the collaboration beyond PAXLOVID.

Jacob Johnson of Stephens Inc. asked why customers prefer enzymatic synthesis for RNA building blocks if costs are comparable to chemical methods, how to think about the revenue opportunity from these building blocks, and whether customer perception of Codexis has changed recently.

Answer

President and CEO Dr. Stephen Dilly cited benefits like higher purity, environmental sustainability, and easier onshoring of production as reasons for customer preference. COO Kevin Norrett noted the NTP opportunity with mRNA players is significant. CFO Georgia Erbez mentioned they are evaluating how to report revenues from new business lines. Both Dr. Dilly and Mr. Norrett confirmed a 'sea change' in perception, with Codexis now viewed as the leader in enzymatic RNA synthesis, leading to more high-level engagement with customers.

Jacob Johnson from Stephens Inc. asked for details on the IFC supply and demand dynamic, questioning how much of the 2025 revenue guidance of $12-$15 million is dependent on new supply coming online. He also requested clarification on the drivers of the Q4 product gross margin dip and which factors, like FX or freight costs, could persist into the new year.

Answer

Executive Vivek Jayaraman explained that recent BLA approvals allow them to address known demand in new states and that they entered the year with sufficient manufacturing supply to meet the guidance, though they continue to ramp up production to match increasing demand. Executive Kevin Green added that the Q4 gross margin pressures were mostly episodic, but noted that a strengthening U.S. dollar could remain a watch-out item, potentially impacting the revenue line while benefiting the bottom line due to euro-sourced products.

Jacob Johnson of Stephens questioned if the implied Q4 growth rate is the correct baseline for 2025 expectations and asked for details on the value proposition of the next-generation LED illuminator for Cerus's customer base.

Answer

COO Vivek Jayaraman acknowledged the Q4 forecast reflects current visibility but pointed to positive trends creating a tailwind into 2025, deferring formal guidance. President and CEO Obi Greenman described the new illuminator's value proposition as enhanced reliability, ease of use, and improved throughput, which are critical for customers who have fully adopted the INTERCEPT system.

Jacob Johnson asked for clarification on the global uncertainty impacting OraSure, specifically questioning the significance of PEPFAR and NIH academic funding risks, and requested an update on the Sapphiros blood collection device's regulatory timeline.

Answer

President and CEO Carrie Eglinton Manner confirmed that the risk from PEPFAR funding uncertainty is the most immediate concern, with about $1 million of impact factored into Q1 guidance, while the academic funding situation is being monitored but has not yet shown a significant slowdown. She also stated that the Sapphiros device is still anticipated to go through the regulatory process in 2025.

Jacob Johnson from Stephens asked if the Q4 core revenue growth guidance of approximately 5% is a reasonable baseline for 2025 modeling and questioned how the company plans to deploy its nearly $280 million cash balance.

Answer

CFO Ken McGrath noted that while Q4 benefits from a lower prior-year comparable, the company anticipates 'moderate growth' in 2025, driven by initiatives like the Diagnostics Direct Syphilis test and the Saphris partnership. CEO Carrie Eglinton Manner stated that formal 2025 guidance will be provided in February. Regarding capital, she emphasized a focus on accelerating growth through both internal innovation and external opportunities, including bolt-on acquisitions, leveraging their strong balance sheet to pursue multiple strategic options.

Jacob Johnson of Stephens sought a qualitative explanation for the recent success and design wins with the ATF technology, asking if it was due to long-term sales efforts, the key account strategy, or other factors.

Answer

President and CEO Olivier Loeillot attributed the ATF wins to a combination of factors. He explained that customers often begin with lab-scale ATF solutions and scale up over several years. As the technology's reputation grows, adoption accelerates. He noted that recent wins, including a major commercial drug, have moved very quickly and that the technology is also gaining traction in new modalities beyond monoclonal antibodies.

Jacob Johnson asked about the demand trends in the clinical piece of the business, particularly from emerging biotech, and the outlook for operating expenses into 2025.

Answer

President and CEO Olivier Loeillot acknowledged that emerging biotech is the one area of continued concern, citing declines in biotech funding and clinical trial starts. CFO Jason Garland indicated that while there will be moving parts in 2025 OpEx, the company expects to gain additional leverage at the operating margin level, driven by gross margin improvements.

Jacob Johnson asked for clarification on whether contractual payments from the lost commercial CDMO customers are included in the guided 1% revenue headwind. He also inquired if the loss of these clients has negatively impacted business development activities.

Answer

EVP & CFO Flavia Pease confirmed the contractual payments are included within the 1% headwind guidance. Chair, President & CEO James Foster acknowledged that while losing the clients is not helpful for sales efforts, the CDMO business is well-staffed with enhanced capabilities and continues to see significant demand from a healthy pipeline of clinical-phase clients.

Jacob Johnson of Stephens, Inc. asked about the apparent strategic shift in the Contract Manufacturing segment towards higher-growth, higher-return projects. He questioned if this was a deliberate change or an opportunistic move and if it could alter the segment's long-term growth profile.

Answer

CEO Eric Green confirmed a deliberate strategic shift to move the Contract Manufacturing business further downstream into higher-value services like drug device assembly and packaging. He explained this is intended to differentiate the business and add incremental value by leveraging global customer relationships, while maintaining a long-term growth expectation in the single-digit range for the segment.

Jacob Johnson asked about the rationale for narrowing the organic growth guidance despite a strong Q3, whether a $19 million customer incentive fee was previously contemplated, and the company's visibility on returning to 2023 margin levels after the destocking period.

Answer

CFO Bernard Birkett confirmed the $19 million fee was anticipated and based on achieving volume targets. He clarified the guidance adjustment was mainly due to rounding and the timing of customer deliveries between Q3 and Q4. He stated that margins are expected to return to 2023 levels once demand and the product mix normalize, aligning with the company's long-range growth plan.

Jacob Johnson inquired about the drivers of the Healthcare capital equipment slowdown, asking if it was merely timing or a sign of hospital spending hesitancy, and also asked for details on the better-than-expected bioprocessing demand in the AST segment.

Answer

President and CEO Daniel Carestio explained that strong order growth indicates continued hospital spending, but customer project delays are pushing out shipment timing. Regarding AST, he expressed optimism that the inventory destocking in bioprocessing has troughed and that the business is returning to a more normalized growth trajectory.

Jacob Johnson from Stephens Inc. inquired about the Applied Sterilization Technologies (AST) segment, specifically the magnitude of a one-time equipment loss, its impact on margins, and the revised growth outlook. He also asked about the drivers behind strong consumable demand in the Life Sciences segment.

Answer

CFO Michael Tokich quantified the AST equipment loss as a ~200 basis point margin headwind, noting it was a larger-than-anticipated one-time event. CEO Daniel Carestio explained the moderated AST outlook is due to medtech growth not being as strong as hoped, though bioprocessing is recovering. He attributed Life Sciences consumable strength to easy comps and a recovery in core customer production.

Jacob Johnson of Stephens Inc. inquired about the financial impact and timing of the U.K. BioArc Ultra win and the potential effects of Illumina being added to China's 'unreliable entity list' on Azenta's NGS business.

Answer

CEO John P. Marotta confirmed the BioArc win was included in guidance and is a multi-million dollar project. CFO Lawrence Lin added that revenue will be recognized on a percentage-of-completion basis through early 2026. Regarding China, Marotta stated the risk is low as the company anticipated this and primarily partners with BGI, not Illumina, for its NGS services in the region. Lin quantified the China NGS business as 7-10% of Multiomics revenue, seeing no material risk.

Jacob Johnson inquired about the performance of the automated stores business, which was down in the quarter, asking if it was due to timing or broader capital equipment headwinds. He also asked for CEO John Marotta's perspective on the freezer market's differentiation and long-term outlook, and for an update on NGS pricing versus volume trends.

Answer

CFO Herman Cueto attributed the quarterly decline in stores to a very difficult year-over-year comparison and emphasized high visibility into the backlog for fiscal 2025. CEO John P. Marotta expressed a bullish outlook on the stores business, viewing it as a market conversion opportunity where Azenta's automation provides a significant competitive advantage. Regarding NGS, Cueto confirmed that price stabilization combined with increased volume drove the strong quarterly growth.

Jacob Johnson asked about Lifecore's ability to win late-stage or commercial tech transfer projects for its fill/finish capacity. He also questioned the gross margin trends for the remainder of the fiscal year, the impact of HA product timing, and any margin effects from the new 5-head filler.

Answer

CEO Paul Josephs confirmed that pursuing late-stage commercial site transfers is a key part of the company's strategy, with significant opportunities currently in the pipeline. CFO Ryan Lake addressed margins, stating that Q2's improvement was driven by higher revenue and a favorable mix. He reiterated full-year margin guidance in the low 30% range and noted the new filler's margin impact would be more significant in future years. Josephs added that operational efficiency efforts are also underway to improve margins over time.

Jacob Johnson from Stephens sought clarification on the Q3 growth in Clinical Solutions, asking if it was driven by new customers or lumpy orders from existing ones. He also asked for the outlook for Clinical Solutions in Q4, given the guidance for Lab Essentials. Finally, he posed a bigger-picture question about whether future growth will depend more on adding new customers or on increased spending from the current customer base as the macro environment improves.

Answer

President and CEO Stephen Gunstream confirmed Q3 Clinical Solutions growth was a combination of new customers and larger orders, with no single transformative order. CFO Matt Lowell added that Q4 Clinical Solutions revenue is expected to be lower due to seasonality and a specific large order cancellation that may be reordered in 2025. Stephen Gunstream concluded that while the company is taking share by adding new customers, a market recovery would provide a dual benefit of easier customer acquisition and higher spending per customer.

Jacob Johnson questioned whether the company's strategy to sell more products would involve inorganic M&A in addition to organic development. He also asked for context on the updated core revenue guidance, which could imply a sequential decline in Q4.

Answer

CEO Maher Masoud confirmed the strategy is a combination of both organic and inorganic growth, emphasizing that any new product must align with the company's high gross margin and strong cash balance model. Regarding guidance, Masoud explained the company set a conservative floor of 'at least 5%' growth to ensure it could be met or exceeded, reflecting a disciplined approach to forecasting after a consistently strong year.

Jacob Johnson of Stephens inquired about the drivers behind the implied sequential step-up in Q4 EBITDA margin and asked if the incremental costs in Engineering and Fishers would accelerate their respective recoveries.

Answer

CFO Marco Dal Lago attributed the expected Q4 margin expansion primarily to gross profit improvement, driven by higher volumes, a better product mix toward high-value solutions, and improved performance at the Latina and Fishers plants. He confirmed the incremental costs are investments to secure future profitability in both areas.

Jacob Johnson from Stephens Inc. asked about the drivers of the positive 'other income' line, specifically the contribution from Wilson Wolf, and inquired about the expected pacing of operating expenses for the remainder of the fiscal year.

Answer

CEO Kim Kelderman confirmed that Wilson Wolf is seeing great momentum with over 30% growth, contributing to the 'other income' line. CFO Jim Hippel clarified that a significant portion of the favorability also came from FX translation on cash pooling arrangements. Regarding operating expenses, Hippel reiterated the full-year margin outlook, noting that Q2 faces a larger headwind from incentive comp reinstatement than Q1, but that productivity initiatives are in place to drive margin expansion in the second half of the year, contingent on revenue recovery.

Asked for an update on the large pharma strategy and demand, and whether cell and gene therapy demand is still lagging behind traditional biologics. The questions were asked by 'Mac' on behalf of Jacob Johnson.

Answer

The executive stated that the large pharma strategy is generally on track, with no recent changes in demand from these customers. They confirmed that cell and gene therapy demand continues to lag behind mammalian biologics, as funding has not yet fully returned to that sector.

Inquired about the quarterly bookings figure which seemed light, asking for other business development metrics or anecdotes. Also requested an update on the progress of the company's large pharma strategy.

Answer

The executive explained that quarterly bookings can be erratic and the long-term trend is more important. The pipeline behind the backlog is showing positive dynamics due to easing financial markets and onshoring trends. The large pharma strategy is a slow process but is progressing well, with strong interactions, positive feedback from audits, and new customer additions.

Inquired about utilization at the Bloomington facility in FY24 and the long-term growth opportunity for fill/finish. Also asked about the strategic view on newer modalities like cell therapy and plasmids, specifically the tolerance for near-term margin drag versus long-term potential.

Answer

Bloomington is a launchpad for new therapies with a strong pipeline, especially in prefilled syringes and GLP-1s. For newer modalities like cell and gene therapy, they are strategically important and have long-term promise. The company will manage costs to mitigate the near-term margin drag from underutilization while not jeopardizing the long-term growth opportunity.

Inquired about utilization at the Bloomington facility in FY24, the long-term outlook for fill-finish, and the company's tolerance for near-term margin drag from new modalities like cell and gene therapy.

Answer

The company stated that Bloomington's utilization will be driven by new therapy launches, particularly in the high-demand GLP-1 category. They remain strategically committed to new modalities like cell and gene therapy for long-term growth and are focused on managing costs in the near term while waiting for the market to mature.