Bio-Rad Laboratories, Inc.

Hello, everyone, and welcome to today's BioRad third quarter 2024 results conference call and webcast. At this time to get started, all participants are in a listen-only mode, but later you will have the opportunity to ask questions during the question and answer session. You may register to ask questions at any time by pressing the star and one on your touchtone phone. Please note today's session is being recorded, and I'll be standing by should you need any assistance. It is now my pleasure to turn the floor over to Head of Investor Relations, Edward Chung. Welcome, sir.

Good afternoon, everyone, and thank you for joining us. Today, we will review the third quarter 2024 financial results and provide an update on key business trends for Bio-Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer, John DiVincenzo, President and Chief Operating Officer, and Rubalak Raju, Executive Vice President and Chief Financial Officer. Before we begin our review, I'd like to remind everyone that we'll be making forward-looking statements about management's goals, plans, and expectations, our future financial performance, and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially from these plans, goals, and expectations. You should not place undue reliance on these forward-looking statements, and I encourage you to review our filings with the SEC where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today. Finally, our remarks today will include references to non-GAAP financials, including net income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release. With that, I'll now turn the call over to our CEO, Norman Schwartz.

Thanks, Ed. We certainly appreciate all of you joining us on the call today. To start, I mean, maybe the best way to start out to say we had a solid quarter, revenue better than what we had targeted, and margins ahead of expectations, all driven by product mix, productivity gains, and good cost management. Looking at our markets, the third quarter reflected a continuation of the market trends we've experienced over the last year across our business segments. It was nice to see our clinical diagnostics business back to normal, delivering stronger than expected year-over-year growth in the quarter. And I would say growth was broad-based across the portfolio in all regions, with an outsized contribution of our quality control portfolio in Asia Pacific helping to drive performance. While largely in line with expectations, our life science group continues to experience a modest pace of recovery, reflecting ongoing soft demand in biotech and biopharma and in China. We increasingly believe that the gradual pace of recovery likely continues into 2025 and weighs on the uptake of life science instrumentation over the coming quarters. Similar to the prior quarter, our process chromatography materials posted year-over-year decline related to ongoing destocking activities at several very large customers who previously overstocked due to the critical importance of our products for specific key therapeutics. Outside of these customers, we are starting to see a return to normalized ordering patterns and continue to anticipate a return to growth for our process media portfolio in 2025. Our Droplet Digital PCR franchise grew mid-single digit in the quarter, and was bolstered by additional IP-related royalties. I would say despite the ongoing constrained funding environment for instruments, our DD-PCR reagents and consumables continue to expand both quarter over quarter and year over year. Overall, we're continuing to see strong interest in our recently launched DD-PCR assays targeted at the oncology and at the cell and gene therapy markets, and continue to maintain a strong win-loss and loss ratio for our digital PCR platform in our current market segments. Well, we were pleased to see the positive trend for capital raises for biotech and biopharma markets continuing into the third quarter. I would note that customers remain cautious on the funding environment and conservative on capital deployment. Likewise, large pharma continues initiatives to reduce operating expenses in the form of corporate restructuring and R&D reprioritization. In the academic segment, we are seeing a slightly softer global funding environment after what I would call a long period of strong research support. In addition to the slightly lower than anticipated NIH budget for the year, key European markets, I would say, remain mixed with lower funding in Germany and the UK, offset by modest improvements in places like France and some other EU countries. And of course, the Asia Pacific remains challenging, reflecting the ongoing economic headwinds there. Operationally, we continue to progress our corporate transformation with efforts in supply chain and core process improvements, continuing to support our stronger margins. Of note during the quarter, we opened a new Asia distribution center in Singapore, which is a key component of our logistics network. This hub allows for efficiencies, enabling direct shipments to all Asia Pacific regions and generally simplifies our network and improves customer service levels. We also continue to expand applications both directly and through partnerships to advance our droplet digital PCR platform. We made an additional equity investment in Oncocyte focused on transplant rejection monitoring and launched the next in a series of VeriCheck assays internally aimed at supporting the safe and effective production of cell and gene therapies. And related to the continuum QX DDPCR platform in development. While we previously expected to launch in Q4, we've now taken the decision to postpone its introduction. So once we have a better line of sight for introducing the platform, we'll provide you an update on that. Additionally, we completed the acquisition of Saber Bio, a novel platform utilizing our core droplet technology that enables high throughput discovery of novel antibodies and T cell receptors. On balance, I would say our cost and productivity initiatives have paid dividends despite the challenging markets. And as we look forward and think about eventual market normalization for our life science business, We believe that Bio-Rad will further benefit from that top line leverage. So that about sums it up for me. I'd now like to turn it over to John. John?

Thanks, Norman, for the introduction and thank you to everyone who's joined the call today. It is a privilege to address you for the first time as the President and Chief Operating Officer of Bio-Rad, a company I have known for over 30 years in my career in the life science tools market. And additionally, as a customer over the last seven years, while leading LabCorp's central lab business, where my team enjoyed a strong relationship with Bio-Rad with both the life science and diagnostic product groups. I've long considered Bio-Rad a scientific leader, and I am generally excited to join an organization with such a distinguished history and extensive portfolio across the enterprise. Having been on board for And I am thoroughly impressed by the dedication, innovation, and resilience that define our company. As we navigate the continually evolving industry landscape, I am confident that we are strategically positioned to achieve our goals and deliver sustained value to our stakeholders. My immediate focus is on profitable revenue growth, targeting growth rates at or above market. I also share Norman and Ruth's renewed commitment to consistently meeting our financial targets. Our dedication to operational excellence is steadfast. We are concentrating on enhancing customer satisfaction and driving efficiency, while fostering a culture of continuous improvement. As you've seen this year, this organization appreciates the opportunity to significantly improve our operating margin, and we are targeting and executing continued margin expansion across our portfolio. In fact, about a year ago, Bio-Rad introduced a new leader of global supply chain and manufacturing, Sidat Evran. Having personally previously worked alongside Sidat at Perkin Elmer, I have complete confidence in the team he has established to continue driving margin expansion and delivering the highest quality products to our global customers. Thank you personally for your continued support and trust in Bio-Rad. I look forward to engaging with you more as I settle into this role, and I will now pass it on to Rube to review the financial results.

Thank you, John, and good afternoon. I'd like to start with a review of the third quarter 2024 results. Net sales were 650 million, which represents a 2.8% increase on a reported basis versus 632 million in Q3 2023. On a currency neutral basis, this represents a 3.4% year-over-year increase and was driven primarily by higher sales in our clinical diagnostic segments. Sales of the life science group were approximately 261 million compared to 263 million in Q3 of 2023, which is essentially flat on a reported and currency neutral basis. Currency neutral sales decreased in the Americas, offset by an increase in EMEA. As Norman alluded to earlier, additional IP related royalties contributed to the Q3 life science revenue, as well as gross margin performance. Note that royalties can vary quarter to quarter and on a full year basis. Royalties generally represent less than 1% of our total revenue. Excluding process chromatography sales, which can fluctuate quarter to quarter, our life science group revenue increased 3.5% year over year and 3.9% on a currency neutral basis. Core life science growth was driven by consumable sales, that improved low single digit sequentially and mid single digit year over year. Sales of the clinical diagnostics group were $389 million compared to $368 million in Q3 of 2023, which is an increase of 5.6% on a reported basis and 6.4% on a currency neutral basis. Growth of the clinical diagnostics group was primarily driven by increased demand for quality control products and a favorable compare for our immunology products that were affected by supply constraints in the third quarter of 2023. Growth of the quality control portfolio also benefited from the timing of shipments and contributed to the stronger pull-through consumables during the quarter. On a geographic basis, currency neutral year-over-year revenue for the diagnostics group posted growth across all three regions. We are pleased with the growth rate for the clinical diagnostics group in 2024. As we think about 2025, we do see some potential headwinds impacting this business, such as China and one of our partners exiting the donor screening business. Q3 reported GAAP gross margin was 54.8% as compared to 53.1% in the third quarter of 2023. The increase in gross margin was primarily driven by improved productivity, lower logistics costs, and a mix of revenue. The higher royalties contributed 30 basis points. SG&A expenses were essentially flat between the third quarter of 2024 versus the year-ago period. For Q3 2024, SG&A spend was $200 million, or 30.8% of sales, compared to $201 million, or 31.8% in Q3 of 2023. The decrease in dollars of SG&A expense was primarily due to a reduction in discretionary spending and moderated employee-related expenses, including variable compensation. Research and development expense in the third quarter was $91 million as compared to $43.5 million in Q3 2023. The higher year-over-year R&D was attributed to the one-time acquired in-process R&D expense of approximately $30 million, and a one-time decrease in the fair value of contingent consideration of approximately $15 million in Q3 2023. Q3 operating income is approximately $64 million or 9.9% of sales compared to $91 million or 14.4% of sales in Q3 of 2023. Lower operating income is driven by the one-time in-process R&D expense, which decreased operating income by approximately $30 million. This was partially offset by the revenue mix and continued proactive expense management initiatives. During the quarter, interest and other income resulted in net other income of about $18 million compared to about $20 million in the prior year. The effective tax rate for the third quarter of 2024 was 24.2% compared to 22.5% in the year-ago period. Tax rate reported in these periods was primarily affected by the accounting treatment of our equity securities and the geographical mix of earnings. The change in fair market value of equity security holdings, which are substantially related to the ownership of Sertorius AG shares, resulted in a $793 million gain and drove the reported net income of $653 million or $23.34 diluted earnings per share compared to net income of $106 million or diluted earnings per share of $3.64 in Q3 of 2023. Moving to the non-GAAP results. Non-GAAP financial measures, which exclude certain atypical and unique items that impact left gross and operating margins and other income, are detailed in the reconciliation table in our press release. Third quarter non-GAAP gross margin was 55.6% compared to 53.9% in Q3 of 2023, reflecting the revenue mix, ongoing focus on productivity, and operating efficiencies. Non-GAAP SG&A in the third quarter of 2024 was 30.3% versus 31.7% Q3 of 2023. Non-GAAP R&D as a percentage of sales in the third quarter of 2024 was 13.9% compared to 9.2% for Q3 of 2023, primarily due to the aforementioned one-time in-process R&D expense. Third quarter non-GAAP operating margin was 11.3% compared to 12.9% in 2023. The lower margin was driven by the one-time acquired in-process R&D expense, which reduced our Q3 non-GAAP operating margin by approximately 30 million, or 450 basis points. This was partially offset by the gross margin improvement and cost management initiatives. The non-GAAP effective tax rate for the third quarter of 2024 was 28.8% compared to 23.9% for the same period in 2023. The higher rate in 2024 was driven by a geographical mix of earnings and the accounting treatment of the one-time in-process R&D expense. Finally, non-GAAP net income for the third quarter of 2024 was $56 million or $2.01 diluted earnings per share compared to $68 million or diluted earnings per share of $2.33 in Q3 of 2023. Moving on to the balance sheet, total cash and short-term investments at the end of Q3 2024 was $1.62 billion unchanged versus the end of Q2 2024. Inventory at the end of Q3 was $804 million, essentially flat compared to the prior quarter. Inventory when adjusted for currency impact between Q2 and Q3 2024 would be down approximately 2%. For the third quarter of 2024, net cash generated from operating activities was approximately $164 million, compared to $98 million for Q3 of 2023. Net capital expenditures for the third quarter of 2024 were approximately $40 million, and depreciation and amortization was $39 million. Third quarter 2024 free cash flow was approximately $123 million, which compares to $54 million in Q3 of 2023. For the full year 2024, We expect free cash flow to be approximately $300 million versus $218 million in 2023. As we look toward 2025, free cash flow will continue to be a key focus. Adjusted EBITDA for the third quarter of 2024 was $107 million, or 16.4% of sales, which includes the one-time in-process R&D expense. During the third quarter, we repurchased approximately 330,000 shares of our stock for about $97 million at an average purchase price of about $293 per share. We continue to be opportunistic with our buybacks and still have approximately $577 million available for share repurchases under the current board authorized program. Moving on to the full year 2024 non-GAAP guidance. We are maintaining our full year 2024 revenue guidance. with currency neutral year-over-year revenue expected to decline 2.5% to 4%, reflecting the slower gradual pace of biopharma and market recovery and growth for the clinical diagnostics group. We are increasing our full-year non-GAAP gross margin range, which we now expect to be between 55% to 55.5% versus 54.5% and 55% previously. The increase reflects a combination of revenue mix and the impact of cost improvements implemented. Similarly, we are increasing our full-year non-GAAP operating margin to be between 12.75% and 13.25%, and our full-year adjusted EBITDA margin is now expected to be between 18.5% and 19%. Both include the Q3 in-process R&D expense which has an approximate 125 basis point impact. That concludes our prepared remarks. We will now open the line to take questions. Operator?

Gentlemen, thank you. At this time, ladies and gentlemen, if you would like to ask a question, please press star and 1 on your touchtone phone. You may remove yourself from the queue at any time by pressing the pound key. Once again, that is star and 1 if you would like to ask a question over the phone. We'll hear first today from Patrick Donnelly at Citi.

Hey, guys. Thank you for taking the questions. Maybe to pick up right where you left off there on the margins, you know, it was nice to see the gross margins in particular come through healthy there. Can you talk about, I guess, it sounded like mix and productivity initiatives, what you're seeing on the margins? Again, obviously adjusted the guide a little bit there as well. Just talk about the expectations here as we work our way through the end of the year and the rate jumping off point for 25. I know you've been there for a couple quarters now. I'm sure a lot of time is spent in kind of analyzing the opportunities. I think our view and a lot of people's views, there's a lot of margin leverage there. So maybe just a high level talk about that. And again, the right way to think about kind of the end of the year and jumping off into next year.

Yeah, thanks, Patrick. Appreciate the question. I guess multiple folds of the question. I guess the bottom line is, from a gross margin standpoint, part of what we've talked about is the improvements we're making are sustainable improvements. And part of what we've been moderating or modulating is just the mix, just because it's higher consumables, which are stronger margins, lower box sales at this point. But keeping in mind that obviously we expect that to turn at a future point. The other piece of this is when you look at some of the royalties that we received in Q3, that was kind of one time they were a bit higher. And again, that's something that just is variable between quarters. So there's a number of different pieces, but I think what is important is we've talked about sustainable improvements. We've made those sustainable improvements in terms of the cost structure within our factories and in our logistics environment. And I think that does carry forward into the new year. I think as we think about, you know, 2025, you know, if you look at kind of where we are centering you all kind of midpoint around 55% for the end of this year, with that, you know, uptick that in the margin range that we've taken in the fourth quarter for the full year, I think that's a reasonable jump off point for us. And then how we, you know, then the question is, how much more room is there? depending upon how 2025 looks and absorption and these sort of things. So hopefully that's helpful.

Yeah, no, certainly is. And then maybe on the process Chrome side, obviously been a focus for a few quarters now. It sounds like maybe turning the corner a little bit, you know, some customers still on the restocking side. Can you just, I guess, talk about where we are there? What, if there's a percentage of customers you look at that are still kind of working through the restocking versus, you know, some level of normalcy, you know, it'd be helpful just to dive into that a little bit.

Yeah, so I guess we've seen some sequential improvement, and of course, you know, we've talked about our bioprocessing being a bit unique compared to the broader market, right? I think there are some others that are seeing some improvement. Ours is unique to where we play in the bioprocessing space, if you will, and specifically in that polishing stage. And so with the amount of inventory that our customers broadly bought in the prior years, that de-stocking continues. Now, with all that said, we are seeing improvements from the second half of 24 versus the first half of 24. We do think that those customers continue to make progress in depleting their inventory and getting back to a more reasonable or normalized buying pattern, but that's going to take through 2025, because different customers are depleting at varying rates, and potentially into early 2026. But we do think, and I think we said it in the call, that there's growth that we expect in the process chrome for 2025 over 2024.

Yes, that's very helpful. Thank you. And then one last one for Norman, if I can. On the Sartorius stake, certainly getting elevated level of questions on that over the past couple months, has your guys' view on that changed at all in terms of willingness to potentially monetize it versus hold it for the next few years? Again, it seems like it's rising in terms of an investor topic, so I just want to talk through that and your guys' commitment to it versus willingness to maybe look at some options. Thank you, guys.

Yeah, I don't think that our view has really changed at all. You know, it still is certainly a monetizable asset, you know, given where we are, given our kind of cash position and so forth, you know, and the value of Sartoria, the Sartoria stake now seems to be rather depressed in the market. We don't see a need to do any monetization at the moment, but it still is monetizable.

Right. Thank you, Norm. I appreciate it. Thanks, Patrick.

Our next question will come from Dan Leonard at UBS.

Thank you. I just wanted to make sure I captured properly all your framing thoughts for 2025. You gave a few call-outs on revenue, the equipment headwinds persisting in life sciences and in diagnostics. I think you mentioned China and then Ortho exiting the donor screening business. Is that a full, fair summary of the call-outs? And is it possible to frame the magnitude of these headwinds versus what you would consider a trend line?

Hey, Dan, it's Rup. Thanks for the question. I guess in terms of the list of items, you know, the general biopharma, you know, biotech market softness and maybe that's captured in your initial element there is one. And obviously the last comment around process chrome where we think that there is some improvement that we expect to see in 2025. So maybe I'll just add those and maybe they were implied in your list there. So as we think about other items at this point, I think that's a good list. We are obviously going through our planning cycle still. I think it's a little early to give a much more concrete framing of 25, but wanted to also help you all understand kind of the dynamics that we're thinking through as part of the plan and how 25 might come together. with the understanding that we want to drive, you know, obviously top-line growth and margin expansion as we move forward.

And, Rup, you mentioned that free cash flow will be a focus in 2025. Is that a comment in relation to inventory days, and what is the plan there?

Yeah, it absolutely is a comment around inventory levels that we have. and inventory turns, I'll say, right, or inverse of that would be in your days. And I think, you know, it's not going to necessarily be a step function improvement, Dan. We do expect a gradual improvement of that as we continue to have our supply chain initiatives focused in that area. And just as, you know, top line returns to growth and we can use that inventory towards supporting our customers.

Great. Thank you.

Thanks, Dan.

Our next question will come from Brandon Culliard at Wells Fargo. Please go ahead.

Hey, thanks. Good afternoon. Ruth, the guide would seem to imply, at least at the low end, revenue is kind of flat sequentially in the fourth quarter. You know, typically you do see a seasonal bump. Is that just conservatism in terms of holding the range for the full year and It sounded like there was at least some pull forward in diagnostics into the third quarter. Are you able to quantify that in any way?

Yeah, so great catch on the range. It really is conservatism, Brandon. I think, you know, we want to leave ourselves. I think, you know, as you think about the midpoint on what we just painted, it's reasonable. I mean, at the end of the day, the full year guide that we gave when we updated our outlook at the Q2 call, you know, stays intact, right? So I think that's kind of where I'd leave that. And I apologize. Can you pull forward? Yeah, you listened carefully there. We did have a little bit of pull forward from Q4 to Q3 that customers kind of decided they wanted it sooner. In terms of quantification, it's in the low single-digit millions. It's not that tremendous, but it's obviously of significance.

James Onley- Okay that's helpful and then in digital PCR. James Onley- You know, I guess, nice to see it growing year over year, are you seeing any green shoots in terms of demand if you backed out the royalties in the period wasn't still up you know, year over year and. James Onley- Just what is exactly going on with the qx continuum launch I think Norman mentioned the decision to you know. Is there a problem with the system itself? Is that a strategic decision? Just kind of unpack what's, you know, behind that deferral. Thanks.

Brendan, maybe I'll start with your initial question and then I'll actually turn it over to John who can give some further perspective. I think on the DDPCR area, so the pull ahead was actually not in DDPCR. And what we are seeing is sequential improvement in Q3 over Q2. So, you know, again, it's gradual improvement. It's not overly significant. The second half is stronger than the first half. So, we're seeing some progress, but the rate at which it's happening, I think, is pretty moderated. And so, you know, we're hoping for stronger you know, kind of signals as we get into 2025, but we'll see. With that, John, I'll turn it over to you if I could.

Yeah, thanks. This is John DiVincenzo. As you can imagine, when I joined at the beginning of September, I had various reviews of the portfolio and joined Norman and Rupp with reviews specifically on Continuum. We still believe in the platform very much at this point. you know, hearing from the team and a little bit of refinement, let's say, in the performance of the platform is kind of leading us to kind of be prudent and say, listen, we're still doing well in the marketplace. We're not seeing, you know, a situation where we have to launch it right away. And as the market leader, we want to make sure that we hit our kind of high product standards. So it's more refinement, I would say, in the performance of the system. Okay. Thank you. Thanks, Brandon.

Jack Meehan with Nephrin Research. Your line is open. Please go ahead.

Thank you. Good afternoon. I wanted to ask about just the comment that you made about the China market for diagnostics heading into 2025. We've had a few of your peers call out, you know, some VVP related pressure in the quarter. I was curious if that's what you're referring to or just latest on what you guys are seeing in the China market for diagnostics?

Yeah, thanks, Jack, for the question. And yeah, it's not VBP related specifically, right? And so we actually, knock on wood, haven't seen much effect to this point from a VBP standpoint. Our comment in calling out China probably similar to many others. There's a lot of different dynamics that are happening in China. And I think from a macro standpoint, because there are so many different aspects to it, just being very mindful of how that's evolving, what that impact is for 25 and really beyond 25. And so I think it was more of just pointing it out that it's still in flux from a broader market standpoint, and therefore it's things we're needing to consider and understand. Great.

And then I had a follow-up on Process Chrome. I just was hoping you could check my math. I was backing into something like a 40% decline in the quarter, you know, based on the headwind you talked about for the segment. Does that sound about right? And can you just talk about what the guide assumes for the fourth quarter for that business, like in terms of the headwind?

Yeah, I mean, really, the headwind is not so much a headwind, but just the rate at which customers are destocking and working their way through uh from you know as we think about uh the overall kind of decline um and you you were saying on a year-over-year basis jack is that correct correct yep yeah um i mean it's uh not as bad as the first half it's obviously improved from a sequential standpoint but you're looking at you know the high 20s in terms of a year-over-year

Okay, great. And then last question is just the tax rate. I heard the factors you called out mix and the R&D $30 million. What's like a good normalized tax rate to use as we look out to 2025?

Yeah, I mean, again, I think it's a little bit early on 25 for me to give you specifics. We need to see how our own plan comes together in the geographic mix of the income, but somewhere around 22% is probably not unreasonable at this point in time, just as a placeholder.

Perfect. Thank you.

You're welcome.

And once again to our phone audience, that is star and one. If you would like to ask a question today, we'll hear from Tycho Peterson at Jefferies.

James Rattling Leafs. hey thanks um I want to push a little bit more on this continuum or maybe discontinue them. James Rattling Leafs. Given the kind of uncertain timelines here because you were saying, you know in early September you're reiterating the year end timeline so. James Rattling Leafs. I know you're saying it's fine tuning, I mean why can't you put you know, a timeframe on it is it next year is it beyond that and then. Can you also talk on pricing in digital PCR? You know, we have picked up that you guys have gotten a little bit more aggressive about discounting across the portfolio in digital PCR. I'm curious if you can talk on pricing.

Yeah, we'll start with continuum. And so I guess, I mean, Norman, please jump in. I guess, you know, having been a part of some of these conversations, Tycho, I think, you know, part of this is John coming in with his eyes and experience and really, evaluating kind of where we're at. And at the end of the day, BioRed's known to put high quality products out there. And we, you know, that's obviously important. And we thought it didn't, you know, meet up to the standards at this point in time. And therefore, we thought it was more prudent to delay the launch. In terms of, listen, I'll just be blunt. You know, we've given numerous dates, and those dates haven't come to fruition, as you're pointing out. And so, at this point, we think it's more reasonable to say, let us work through it and, you know, this is an important area of the market and, you know, we'll bring the market or the product out at the appropriate time and we'll obviously keep you informed of that.

Okay.

Yeah. Yeah. I mean, yeah. Sorry, Tycho.

Go ahead, Norm.

Yeah, just, you know, it's just a matter of, you know, you get to always get to that intersection of, you know, optimism versus precision. And, you know, we want to have a good product in the market.

And, Tycho, I'll pick up your second question. John and Norma, please jump in. From a DDPCR pricing standpoint, you know, overall we've, obviously it's gotten to be a competitive marketplace. We recognize that. And as a result of that, we want to be appropriately reactive to the market in terms of how it's moving. And so I think that's part of how we've approached it from a commercial standpoint.

Okay. Uh, follow up and then maybe this is splitting hairs too much, but on bio process, um, you talked about inventory levels that, you know, your customers have, and you, you talked about de-stocking continuing, uh, that, that, uh, you know, in contrast to kind of what we hear from a lot of your peers. So can you maybe just touch on that dynamic?

Yeah, go ahead. No, please go ahead. You know, it just has to do with the specific customers we have and the level of stocking that they. that they took in these very critical materials were just a little bit different than the rest of the market.

Tycho, remember, we don't play broadly across all stages of the bioprocessing. We're in a very specific area towards the end before the volume manufacturing of the therapeutics. That's unique to us, and because of the importance of our residents, our customers stocked up quite significantly, and they continue to work their way through that.

Okay. Last one, just wondering if you can quantify the impact of the partner exiting donor screening.

What do you think about that going forward? It's in the low double digits kind of spectrum.

Okay.

Thank you.

Millions, yeah.

And that was our final question from the audience for today's conference. Gentlemen, I'll turn it back to you for any additional or closing remarks that you have.

Thank you for joining today's call. We'll be at the UBS Global Healthcare Conference in Palos Verdes next month and the City Global Healthcare Conference in Miami in early December. So we hope to catch up with some of you in person in the coming months. And as always, we appreciate your interest and we look forward to connecting soon.

Ladies and gentlemen, this does conclude today's Bio-Rad conference, and we thank you for your participation. You may now disconnect your lines.