Matt Larew

Matt Larew inquired about quantifying the impact of one-off issues (tooling mix, maintenance, emergency medicine) on Q4 margins and the company's confidence in the underlying margin improvement trajectory, as well as capital allocation priorities, including M&A and the new buyback plan.

Answer

CFO Vanessa Kanu stated that while not happy with the transitory operational issues, the rest of the business's margin is healthy, expecting H2 margins to be stronger than H1 and full-year margins to be within the long-term target range. CEO Stephan Tanda discussed M&A focus on bolt-ons, technology, and geographic breadth, while Vanessa Kanu reiterated the consistent capital allocation policy, including discretionary share buybacks.

Matt Larew asked if the company could quantify the one-off issues (tooling mix, maintenance, emergency medicine impact) that affected Q4 margins, and about the capital allocation priorities, including the new buyback plan and M&A opportunities for 2026.

Answer

CFO Vanessa Kanu stated that while the operational issues in beauty and closures were disappointing, they should be transitory and non-recurring, with the rest of the business showing healthy margins. She reiterated expectations for stronger H2 margins and full-year margins within the long-term target. President and CEO Stephan Tanda discussed M&A focus on bolt-ons with good management, technology acquisitions, and geographic breadth. CFO Vanessa Kanu confirmed no change in capital allocation policy, prioritizing growth investments while using the discretionary buyback authorization for flexibility.

Matt Larew asked about the company's growth cadence, specifically if the underlying message for calendar year 2026, excluding specific items, is mid-single-digit growth with improvement throughout the year. He also inquired about the sequential decline in gross margins and their expected trend for the balance of the year.

Answer

CFO Jim Hipple confirmed the low single-digit view for the full year, requiring mid-single-digit growth in Q4. President and CEO Kim Kelderman clarified that excluding GMP headwinds, the underlying growth would be in that ballpark. Jim Hipple attributed the gross margin decline to an unfavorable mix of reagents versus instruments, and within diagnostics and spatial biology, with a larger influx of lower-margin OEM customers. He expects the mix to gradually improve in Q3 and Q4.

Matt Larew inquired about Bio-Techne's growth cadence, specifically the underlying growth ex-items for fiscal Q1, Q2, and the projected mid-single-digit growth for calendar 2026, including the 100 basis points headwind in fiscal Q4. He also asked for clarification on the sequential decline in gross margins and the expected trend for the balance of the year.

Answer

Jim Hipple, Bio-Techne's CFO, confirmed the low single-digit full-year view, requiring mid-single-digit growth in Q4. Kim Kelderman, President and CEO, added that the underlying growth, excluding GMP headwinds, was in the ballpark of mid-single digits. Jim Hipple attributed the sequential gross margin decline to an unfavorable product and customer mix, expecting gradual improvement in Q3 and Q4 as the mix unwinds more favorably.

Matt Larew of William Blair asked what customer outreach has revealed about the specific catalysts that would unlock budgets amid current uncertainties. He also inquired about the company's M&A strategy following recent portfolio reshaping, including target profiles by segment and profitability.

Answer

CFO James Hippel suggested that customer behavior in the academic market is currently more conservative than even a worst-case funding outcome, implying that any resolution or certainty would be an upside catalyst. President & CEO Kim Kelderman reiterated that M&A is the highest priority for capital, focusing on high-margin, high-volume products that align with core reagents, cell therapy, and the ProteinSimple instrument franchise.

Matt Larew with William Blair inquired about the long-term durability of AI-driven discovery demand, its role in the drug discovery ecosystem, and the financial implications of manufacturing over 50,000 genes for data characterization, including prior period volumes and data delivery economics.

Answer

CEO Emily Leproust and President & COO Patrick Finn confirmed the durability of AI demand, citing repeat large orders and expanding customer penetration. Emily projected AI as a primary discovery pass, potentially costing $250,000 for antibody discovery in two weeks. She noted the 50,000 genes for characterization were concentrated in Q4 and Q1, with data delivery pricing ranging from $50 to $400 depending on the product.

Matt Larew asked about the durability of demand for AI-driven discovery, questioning if it's a short-term trend or a new ecosystem component, and inquired about the prior period's gene characterization numbers and the economics of delivering data versus DNA.

Answer

Emily Leproust, CEO and Co-Founder of Twist Bioscience, confirmed the durability of AI demand, citing repeat large orders and increasing penetration across top pharma, tech, and well-funded startups. She projected AI as a future 'first pass' in drug discovery, offering faster antibody discovery at a similar cost. Regarding the 50,000+ genes for characterization, she noted it was backloaded into Q4 and Q1, marking a significant increase, and detailed data pricing ranging from $50 for fragments to $200-$400 for antibody data.

Matt Larew asked about Twist Bioscience's reiterated expectation to hit EBITDA break-even in fiscal Q4, specifically regarding the breathing room and commitment given a lower top-line start to the year. He also asked about the macro picture included in the guidance, considering recent positive updates for pharma/biotech and academic customers.

Answer

Adam Laponis, CFO, stated that Twist assumes the macro environment will remain stable and does not predict improvements. He confirmed the EBITDA break-even expectation for Q4, noting that the guidance includes the acceleration of a commercial customer's ramp and only 1-2 points of growth from MRD products, emphasizing caution in timing the MRD ramp.

Matt Larew questioned the company's confidence in achieving adjusted EBITDA break-even by fiscal Q4 2026, given the lower top-line start to the year and the reliance on an NGS customer ramp and MRD contribution. He also asked Adam Laponis about the macro assumptions embedded in the fiscal 2026 guidance, particularly concerning pharma, biotech, and academic customers.

Answer

Adam Laponis, CFO, stated that the macro environment assumptions are cautious, not predicting improvement from current conditions. He confirmed that the guidance assumes an acceleration of the commercial customer's ramp and a conservative 1-2 percentage points of growth from MRD products, acknowledging the difficulty in timing the full ramp of new products.

Matt Larew asked about the growth drivers for the Synbio business, questioning the contrast between recent single-digit growth and the historical 20% CAGR, and seeking clarity on customer order trends and the expected impact of new products.

Answer

CEO & Co-Founder Dr. Emily Leproust explained that underlying Synbio growth was over 20% when excluding a large, non-recurring order from the prior year. She identified future growth drivers as penetrating the 'long tail' of smaller customers and launching a rich pipeline of new products, with AI in drug discovery acting as a catalyst. She noted a strategic shift to rebalance efforts from gross margin improvement back toward accelerating top-line growth.

Matt Larew inquired how recent ecosystem changes, such as manufacturing regionalization and the rising use of AI in drug discovery, are influencing customer preferences for outsourcing and the adoption of Thermo Fisher's Accelerator solution. He also asked about the impact of AI on drug discovery and wet lab activity, specifically for AI-first biotechs and larger pharma companies.

Answer

Marc Casper, Chairman, President, and Chief Executive Officer, highlighted the strong performance of the clinical research business and the Accelerator solution, which is driving significant authorization wins and new contracts by reducing development timelines and improving decision-making. He noted that collaboration with OpenAI aims to further enhance efficiency in drug development. Regarding AI's impact on wet lab work, Mr. Casper observed a methodical strengthening in early research demand and believes that AI, by linking wet lab data with insights, ultimately leads to more confident research and increased wet lab experimentation, expressing optimism about this intersection.

Matt Larew inquired about how recent ecosystem changes, such as manufacturing regionalization and the rising use of AI in drug discovery, are influencing customer preferences for outsourcing, particularly concerning Thermo Fisher Scientific's Accelerator offering. He also asked about the impact of AI on wet lab activity and demand for instruments among AI-first biotechs and larger pharma companies.

Answer

Marc Casper, Chairman, President, and CEO, highlighted the strong performance of the Clinical Research business and the success of the Accelerator solution in driving meaningful authorization wins by shaving time and cost from drug development. He noted that collaboration with OpenAI aims to further enhance efficiency in Clinical Research. For drug discovery, he observed a methodical strengthening in early research demand and expressed optimism about the intersection of AI and wet lab research, believing that increased confidence from AI insights leads to more, not less, wet lab experimentation.

Matt Larew asked about any changes in customer conversations regarding potential onshoring activity and equipment opportunities, and how Repligen's current capabilities compare to five years ago in participating in larger-scale projects.

Answer

Olivier Loeillot, President and CEO, highlighted Repligen's transformation into a broad actor in hardware solutions, now receiving RFPs for significant hardware investments, especially with its differentiated hardware portfolio combined with PAT technology. He anticipates first orders from onshoring projects in H2 2026, with sales from 2027-2028, and expects Repligen to play a major role.

Matt Larew asked about any changes in the cadence or nature of customer conversations regarding potential onshoring activity and equipment opportunities, and how Repligen's current ability to participate in larger-scale projects compares to five years ago or during the COVID-related capital equipment resurgence.

Answer

President and CEO Olivier Loeillot noted encouragement from recent announcements regarding pharma tariffs and MFN. He stated that Repligen has evolved into a broad hardware solutions provider, actively receiving RFPs for significant hardware investments globally. Loeillot emphasized Repligen's differentiated hardware portfolio, especially when combined with PAT technology, as a key advantage. He anticipates first orders for onshoring projects in the second half of 2026, with sales commencing from 2027-2028, expecting Repligen to play a substantial role.

Matt Larew asked for color on the standout performance in capital equipment and China, questioning the drivers behind equipment demand and the source of optimism in the Chinese market. He also sought to reconcile the high-teens revenue growth from emerging biotechs with their muted order levels.

Answer

CEO Olivier Loeillot attributed the capital equipment strength to the differentiated nature of Repligen's systems, which increasingly integrate PAT technology, and noted the company is gaining share from a small base. For China, he credited the new leadership team and sees significant long-term growth potential. Loeillot acknowledged that while biotech sales were strong, muted orders reflect continued funding headwinds in that sector.

Matt Larew of William Blair asked about the long-term vision for Maravai, noting its history of aggregating assets and the new emphasis on the standalone value of the BST business. He also inquired about a potential timeline for completing the strategic review to reduce uncertainty.

Answer

CEO Bernd Brust acknowledged Maravai's past as a holding company and explained the BST business is highlighted because its value is often overlooked. He stated that strategic decisions on M&A will be made after the business is stabilized. Regarding a timeline, Brust pointed to the rapid pace of changes already made as evidence that they will act 'rather sooner than later.'

Matt Larew from William Blair inquired about the triggers for unlocking customer spending amid macro headwinds, the dynamics of new account growth versus average spend per customer, and the drivers behind the strong gross margin performance.

Answer

CEO Stephen Gunstream stated that customers are seeking predictability and are moving from a 'wait and see' mode to active decision-making. He attributed new customer growth to commercial investments, while lower spend per customer reflects the macro environment. CFO Matt Lowell explained that strong gross margins were driven by revenue leverage and manufacturing efficiencies, and while he guided cautiously for the back half, he reiterated the long-term target of 70% drop-through on incremental revenue.

Matt Larew asked about the unexpected manufacturing reorganization at MaxCyte's largest customer, seeking clarity on the duration of the impact and the level of certainty about future operations. He also inquired about the potential for further operational efficiencies given the flat revenue trend versus increased spending in recent years.

Answer

President and CEO Maher Masoud clarified that the issue with the largest customer is a short-term manufacturing consolidation with no expected long-term impact on licensing revenue, and that MaxCyte has visibility into their plans. Regarding expenses, Masoud emphasized the company's commitment to achieving profitability with its existing capital, noting that they successfully absorbed SecurDx's costs while still modestly decreasing year-over-year OpEx and will continue to seek efficiencies.

Matt Larew of William Blair asked about the reasons for new order delays in the Engineering segment and the timeline for its recovery, and also sought confirmation on the continued improvement in the vials business.

Answer

CFO Marco Dal Lago clarified that Engineering order delays were due to customer CapEx decision timing, not lost deals, and that the guidance reflects this shift. CEO Franco Stevanato added that demand remains strong and completing legacy projects will enable new orders. Regarding vials, Dal Lago confirmed that strong order intake supports the full-year growth forecast, with Stevanato noting a gradual market normalization.

Matt Larew of William Blair noted that HVP guidance was raised back to its original level despite ongoing labor constraints at a European facility and asked for the resolution timeline and potential for upside.

Answer

CEO Eric Green acknowledged the ongoing hiring ramp at the European facility but expressed confidence in the team's execution. He clarified that the restored guidance reflects confidence not just in resolving that constraint, but also in the strength of multiple other growth drivers, including biologics, GLP-1s, and Annex One, which provide a solid foundation for HVP growth.

Matt Larew inquired about the portion of the per-visit business engaged in productive, innovative contract discussions and asked how the rate and margin of new case rate contracts would compare to traditional Medicare fee-for-service when fully optimized.

Answer

President and CEO Chris Gerard stated that while the portion of business with innovative conveners is currently small, they are prioritizing capacity for these partners. He projected that fully optimized case rate contracts could achieve gross margins in the 40-42% range, up from an initial 18-22%, which would significantly close the reimbursement gap with Medicare fee-for-service.

Matt Larew of William Blair inquired about the current margin differential between Medicare Advantage and traditional fee-for-service business, and also asked about the impact of telehealth on home health utilization.

Answer

EVP and CFO Scott Ginn stated that Medicare Advantage margins are in the 25-30% range, significantly lower than the mid-40s for fee-for-service. President and CEO Chris Gerard added that new case rate contracts are expected to improve MA margins. Gerard also explained that increased physician use of telehealth for patient consultations is leading to missed opportunities to identify the need for home health services, acting as a headwind to utilization.