Bio-Rad Laboratories NYSE: BIO reported first-quarter 2026 results that fell within its revenue guidance range, while management emphasized that geopolitical disruption in the Middle East and continued weakness in academic research demand are weighing on growth and profitability expectations for the year.
Middle East conflict creates outsized headwind
President and COO Jon DiVincenzo said Bio-Rad is operating in a “dynamic operating environment,” with the “most notable” external pressure tied to the ongoing conflict in the Middle East. He noted the region “has been one of Bio-Rad’s fastest-growing markets for several years,” and disclosed that in 2025 it represented “over 9% of our diagnostic segment,” primarily driven by Bio-Rad’s blood typing franchise.
DiVincenzo said the conflict “substantially reduced our first quarter 2026 revenues,” and “depending upon the timing of resolution, will be a significant headwind for revenue and margin for full year 2026.”
CEO Norman Schwartz told analysts the company’s exposure may be higher than some peers because Bio-Rad has been “very successful in our diagnostic business, winning a number of tenders across the countries in the region.” He said the region’s scale is now “mid-single digit for the company on the whole,” and that channel activity “certainly slowed down,” resulting in the company not reaching expected revenue levels after previously anticipating “solid high mid double-digit growth in that region.”
Q1 revenue rises on a reported basis, declines currency-neutral
EVP and CFO Roop Lakkaraju said first-quarter 2026 net sales were approximately $592 million, up 1.1% on a reported basis from $585 million in the prior-year quarter. On a currency-neutral basis, however, sales declined 4.2% year over year, which Lakkaraju attributed to lower sales in both the Life Science and Clinical Diagnostics segments.
- Life Science revenue was $229 million, flat on a reported basis and down 4.3% currency-neutral, “primarily driven by ongoing challenges in the academic research market, particularly in the Americas.”
- Clinical Diagnostics revenue was approximately $364 million, up 1.9% reported and down 4.1% currency-neutral, “primarily driven by revenue declines from our EMEA region as a result of the regional conflict in the Middle East.”
Lakkaraju quantified the disruption in diagnostics at an $11 million impact in the quarter due to effects on demand and logistics, adding that the challenges are expected to continue through the remainder of 2026.
Life science trends: constrained academic demand, ddPCR instrument growth
DiVincenzo said academic demand remains constrained, particularly in the Americas, where customer budgets have been impacted by changes in funding. He added that while NIH funding increased modestly year over year, Bio-Rad’s customer surveys suggest continued disruption and “a lag between funding approvals and purchasing activity.”
On the biopharma side, DiVincenzo said the company is seeing “early signs of stabilization,” with later-stage companies more robust than early-stage biotech. He said Bio-Rad expects “gradual improvement through the year,” and described commercial actions including segment-level prioritization, focusing coverage on customers with active funding, accelerating conversions from Bio-Rad’s installed base, and pursuing competitive displacement opportunities.
Digital PCR was highlighted as a strategic differentiator. DiVincenzo said ddPCR instrument revenue grew 24% year over year in the quarter, calling it an encouraging leading indicator given consumable pull-through typically follows within six to 12 months. He credited the QX700 platform for driving competitive wins and conversion from qPCR, supported by an extensive assay menu and a growing publication base. DiVincenzo said the company has enabled “over 99%” of its digital PCR assays to be available on QX700, ahead of schedule.
Lakkaraju said Bio-Rad’s ddPCR portfolio was “essentially flat” in Q1 due to softer biopharma consumables as customers shift R&D priorities, despite instrument growth. In the Q&A, DiVincenzo said consumables were soft across academic and some biopharma customers, attributing it to project timing and comparing it to strong consumables growth in the first half of the prior year. Lakkaraju added that the consumables decline was “low double digits.”
Lakkaraju also said the company’s Stilla acquisition “is on track to be accretive by mid-year,” and that QX700 is contributing to both revenue growth and margin expansion.
Diagnostics performance, margin pressures, and operational actions
DiVincenzo said clinical diagnostics delivered “modest reported growth of just under 2%,” but performance was affected by Middle East disruption impacting demand and logistics. Outside the region, he said the segment performed as planned, with “signs of strength” in quality systems and immunohematology. He added diagnostics margins were hurt by a “disproportionate share of supply chain cost pressures,” prompting work to rationalize manufacturing capacity and address issues through procurement and manufacturing actions.
Bio-Rad also discussed steps to improve agility and reduce exposure to tariffs. DiVincenzo said the company began manufacturing select life science instruments “in China for China” during the quarter to improve responsiveness, support tender competitiveness, and “minimizing tariff exposure.” Schwartz also cited the initiative as an example of building capabilities to better serve local demand.
On profitability, Lakkaraju said consolidated gross margin was 52.3% for Q1 2026, unchanged from Q1 2025. On a non-GAAP basis, gross margin was 53.1% versus 53.8% a year ago. He attributed the non-GAAP decline to several factors, including unfavorable manufacturing absorption tied to decreased Middle East revenue (40 basis points), a higher instrument versus consumables mix (30 basis points), higher freight fuel surcharges (20 basis points), and foreign exchange (20 basis points).
Operating income was approximately $34 million versus $24 million in the prior-year quarter. Non-GAAP operating margin was 6.6% compared to 10.8% in Q1 2025, reflecting the lower gross margin year over year.
Bio-Rad reported a net loss of $527 million, or $19.55 per diluted share, driven primarily by a $562 million contribution from the change in fair market value of equity security holdings and loan receivables related to its Sartorius AG stake. On a non-GAAP basis, net income was $51 million, or $1.89 per diluted share, compared with $71 million, or $2.54 per diluted share, in Q1 2025.
Updated 2026 outlook and capital allocation
Given continued disruption tied to the Middle East conflict, Bio-Rad lowered its full-year 2026 non-GAAP guidance. Lakkaraju said the company now expects currency-neutral revenue growth between -3% and +0.5% for the year.
- Life Science currency-neutral revenue growth is expected between -3% and -1%, reflecting continued academic funding challenges and an adverse impact from the Middle East conflict in the “high single-digit millions,” while still modeling a modest biopharma recovery.
- Clinical Diagnostics currency-neutral revenue growth is expected between -3% and +1%. Lakkaraju said Bio-Rad projects “mid-single digit growth” for its quality controls business, while the remaining diagnostics portfolio excluding quality controls is expected to decline between “negative mid to low single digit.”
For margins, Bio-Rad projected non-GAAP gross margin of 53% to 54% for 2026, citing lower revenue and reduced fixed cost absorption along with higher freight rates. Non-GAAP operating margin is expected to be 10% to 12%, with a non-GAAP tax rate of about 22%.
Lakkaraju said Bio-Rad updated its 2026 free cash flow estimate to $290 million to $340 million. In Q1, net cash provided by operating activities was $108 million, capital expenditures were about $30 million, and free cash flow was $78 million.
The company repurchased 176,000 shares in Q1 for approximately $48 million. Lakkaraju said that since Q1 2024, Bio-Rad has spent $542 million to repurchase 2.1 million shares at an average price of about $261, and had approximately $237 million remaining under its current authorization as of March 31.
Schwartz also addressed M&A strategy, calling it a “key lever” in the company’s long-term plan to accelerate top-line growth and margin expansion. He said Bio-Rad’s focus has shifted toward companies with “demonstrated revenue and margin profiles,” with target acquisitions in the $100 million to $500 million revenue range that complement the current business. He said the company is “not at the moment focused on anything transformative.”
On the company’s Sartorius position, Schwartz said Bio-Rad remains “thoughtful, disciplined stewards of the asset,” describing it as monetizable and providing optionality that is evaluated with the same rigor as other capital decisions.
Looking ahead, management reiterated a focus on controlling what it can operationally. In response to questions about margin protection, Lakkaraju said Bio-Rad has begun reducing discretionary spending and is evaluating broader structural actions, while noting it was “a little bit early” to provide specifics. DiVincenzo added the company is reviewing mitigation options for higher logistics costs, including potential surcharges.
For quarterly phasing, Lakkaraju said Q1 is typically Bio-Rad’s lowest quarter and expected that pattern to hold in 2026. He said the company anticipates about a 5% lift from Q1 to Q2, a slight lift into Q3, and a seasonal jump in Q4, with contributions from areas including quality controls batch releases and blood typing in other regions.
About Bio-Rad Laboratories NYSE: BIO
Bio-Rad Laboratories, Inc is a global provider of life science research and clinical diagnostic products. The company operates through two primary business segments: Life Science and Clinical Diagnostics. Within the Life Science segment, Bio-Rad offers instruments, reagents and consumables for protein analysis, cell biology, gene expression and other molecular biology applications. The Clinical Diagnostics segment supplies quality control products, blood-typing reagents and instruments, and molecular diagnostic assays used in blood screening, infectious disease testing and routine clinical laboratories.
Founded in 1952 by David and Alice Schwartz and headquartered in Hercules, California, Bio-Rad has grown its footprint across the Americas, Europe, Asia-Pacific and other regions.
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