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Kim Kelderman

Thanks, Dave, and good morning, everyone. Thank you for joining Bio-Techne's third quarter compos school. I'm pleased to report that we delivered yet another strong quarter with 6% organic revenue growth while operating in a relatively uncertain macro environment.
Our differentiated performance was evident across our product portfolio, namely within our core agents, our automated analytical solutions, and in our cell and gene therapy offerings. This result was once again delivered with an emphasis on profitability as the operational efficiencies we continue to put in place led to an adjusted operating margin of 34.9%. The team continues to do an excellent job balancing investments to position the organization for future growth with initiatives to drive efficiencies, and by doing so we are maintaining our industry leading profitability.
Our performance by and market in Q3 was led by low-double digit growth in Pharma, which we expected to return to historical growth rates in calendar 2025 following the realignment of the R&D pipelines during March of 2024. We saw early signs of this improvement in our fiscal second quarter with that positive momentum continuing into our third quarter.
Going into calendar 2025, we did not anticipate the major US policy shifts impacting the academic and markets. This started on February 7, with the NIH issuing guidance of a flat internet cost reimbursement rate of 15% across all NIH grants.
With the incoming NIH director announcing that he will be evaluating the impact of the proposed 150% cap, along with the federal judge implementing a permanent injunction on this policy, it remains to be seen how this will play out.
In the meantime, however, our US academic customers are facing uncertainty around the future funding of their research projects. This can impact purchase decisions, particularly around capital equipment. Another policy shift that has been announced by the new secretary of the Department of Health and Human Services is getting a much higher priority around combating chronic diseases like cancer, diabetes, and neurological disorders.
Once the dust settles around the overall level of the NIH funding, Bio-Techne stands to benefit from the NIH grants geared towards these diseases, as our product portfolio is perfectly aligned with those research areas.
Now let's discuss our growth drivers in the protein sciences segment where strong execution drove demand for a market leading catalog of resource free agents, protein analysis tools, and cell therapy workflow solutions which resulted in 7% organic revenue growth. Starting with our core portfolio of research use only proteomic reagents, I want to highlight. And over the last 49 years, we have amassed a catalog of over 6,000 proteins and 400,000 antibody types.
This biological content is relied upon by our global customers to gain novel insights into biological pathways to develop and manufacture advanced therapeutics, and to enable precision diagnostics. In addition, we license and supply our contents to other life science tools companies for usage in their essays and consumables.
Looking ahead, we are encouraged by the FDA's recent announcement to advance public health by replacing animal testing in the development of monoclonal antibodies and other drugs with more effective human relevant methods.
The FDA's emphasis on reducing animal testing opens an opportunity for bio-techniques, organoid solutions for both making and analyzing organoids. Organoids which better mimic human physiology than traditional cell cultures or animal models offer an ethical, cost-effective, and faster alternative for assessing drug efficacy, toxicity, and mechanisms of action.
Annually we sell over 50 million of our core reagents, including proteins, small molecules, and media for organoid solutions in the market that has been growing north of 20%. With this recent announcement by the FDA, we expect that the growth of organoid solutions will accelerate and that this will also be a tailwind for our GMPD agents once these solutions advance into the clinic.
Staying with our GMPD agents, here, we saw growth in the high single digits in Q3. We serve over 500 customers who rely on our GMPD agents for their cell therapies across all stages of development. As a reminder, customers in late-stage clinical trials can make large, less frequent orders, making a trailing 12-month growth metric more reflective of underlying demand.
Our GMP agent's business sits just over 30% growth on a TTM basis. The next growth driver in protein sciences for this quarter was our protein analytical instrumentation business, especially in our biologics platform, more.
As a reminder, Maurice is packed into bio-production processes for protein identity, protein charge, and protein purity testing purposes. The Maurice family of instruments is enjoying robust growth from our pharma and CRO partners and is gaining traction as a gene therapy QAQC platform.
Biologists could double digits in the quarter with broad-based strength in both instrument placements and consumer rules pull through. Now, we will move to the growth drivers within our diagnostics and spatial biology segment, which delivered 2% organic avenue growth in the quarter.
The growth across the divisions in the segment was in general consistent with order timing having a significant impact on our OEM diagnostic reagents business as well as on our surgeon carrier screening and oncology business.
The underlying markets and our performance remained healthy with year-to-date growth in the high single digits for the diagnostic reagents and low-double digits for their portfolio. A surgeon continues to launch innovative products that leverage its proprietary chemistry to resolve difficult to analyze genes.
For example, we launched the AmplideX Nanopore carrier screening plus kit, which utilizes Oxford Nanopore's long read sequencing technology to directly capture many complex genomic variants in a single workflow.
Also within the segment, we continue to drive ongoing utilization and penetration of our ExoDx prostate cancer test, which increased over 30% for the fiscal year-to-date. Spatial biology, which has the highest exposure to US academic and markets within the company, has been most impacted by the NIH uncertainty.
However, despite this uncertainty, our combat instrument was still able to achieve double-digit growth in this quarter. The comet platform provides full automation and multiomic capabilities. These remain key competitive differentiators and enable new scientific discoveries and accelerated drug development.
During the quarter, we made excellent progress upgrading the comet install base with multiomic capabilities, which provides images of RNA and proteins on the same tissue sample. This positions the system for steady ramp in consumable spool through of RNA's core agents as well as our portfolio of newly validated spatial antibodies.
Before I hand the call over to Jim, I would like to address the most recent dynamic around tariffs which has impacted the global economy. While the tariff escalation, which began in April, has understandably had an impact on our life science tools industry, it does represent a clear opportunity for bio-techniques.
We may not be immune to tariff escalations, but by utilizing our global operational footprint, we are extremely well positioned to mitigate most tariff impacts to our bottom line very quickly. Jim will provide more details, but we mobilized a small specialized and highly effective team within our company to focus on several workstreams.
One workstream is around the optimization of our global footprint for regional production, which is of course not subject to cross-border tariffs. The second work stream is to focus on utilization of our global supply chain.
And we also initiated a work stream to make targeted price and or surcharge adjustments with the intent to minimize impacts to our customers. The output from this team has yielded excellent results which we believe will fully mitigate the cost impact of the tariffs as currently configured by the end of the current quarter, which happens to align with the start of our fiscal 2026.
The work done will also position us very well to quickly minimize the impact of future tariff changes. This approach allowed the vast majority of our 3,000 employees to continue to focus on our strengths, which include providing our customers with the highest quality products.
To offer productivity tools to automate our customers' workflows, which will help offset some of the tariff-related cost pressures they may face, and we will continue to bring meaningful innovation to the market. And last but not least, we provide access to an expert commercial team that enables our customers to quickly choose the right products and the right solutions to enable their success.
If that, I will pass the call over to Jim. Jim?

James Hippel

Thanks, Kim. I'll start with some additional details on our Q3 financial performance and then give some thoughts on the financial outlook for the remainder of the fiscal year. Starting with the overall third quarter financial results, adjusted EPS was $0.56 compared to $0.48 in the prior year, with foreign exchange having an immaterial impact. GAAP EPS for the quarter was $0.14 compared to $0.31 in the prior year.
Q3 revenue was $316.2 million, an increase of 6% year over year on an organic basis, and 4% reported. Foreign exchange was unfavorable to revenue growth by 1%, and investors also had a 1% impact to revenue. By geography, North America increased low single digits year over year driven primarily by our pharma customers.
Europe increased mid-single digits year over year led by strength from academic customers. And China decreased mid-single digits as the economic situation there is still challenging. Encouragingly, the rest of Asia increased mid-teens, with our team executing very well on improving market conditions.
By end market in Q3, biopharma increased mid-single digits while academia was flat in the quarter. Below revenue on the P&L, total company adjusted gross margin was 71.6% in the quarter compared to 71.9% last year, down slightly due to unfavorable foreign exchange.
Adjusted SG&A in Q3 was 29% of revenue compared to 30.3% in the prior year, while R&D expense in Q3 was 7.8% of revenue compared to 8.5% in the prior year. The decrease in SG&A and R&D was driven primarily by the benefit of structural streamlining and diligent expense control, which was partially offset by ongoing strategic growth initiatives.
Adjusted operating margin for Q3 was 34.9%, up 190 basis points compared to the prior year to the impact of favorable volume leverage, productivity gains, and cost controls partially offset by the impact of foreign exchange.
We continue to execute cost containment measures and prioritize our growth initiatives to drive efficiencies throughout the organization with the goal of maximizing operating leverage while we are in this dynamic macro environment.
Looking at our numbers below operating income, net interest expense in Q3 was $0.8 million, decreasing $2.3 million compared to the prior year due to lower net debt levels.
Our bank debt in the balance sheet as the end of Q3 stood at $330 million. Other adjustment in non-operating income was $3 million quarter, an increase of $1.4 million compared to the prior year. The increase was driven by the foreign exchange impact related to our overseas cash pooling arrangements. Moving further down the P&L, our adjust effective tax rate in Q3 was 21.5%, down 50 points compared to the prior year due to geographic mix.
Turning to cash flow and return of capital, $41.1 million of cash was generated from operations in the quarter, and our net investment in capital expenditures was $10.1 million. Also during Q3, we return capital to shareholders by way of $12.6 million in dividends and $100 million through stock buybacks. Also, our board of directors has recently approved a new share repurchase program authorizing the repurchase of up to $500 million of common stock.
We finished the quarter with $158.9 million average deluded shares outstanding. Our balance sheet finished Q3 in a strong position with $140.7 million in cash, and our total leverage ratio remains well below 1 times EBITDA. Going forward, M&A remains a top priority for capital allocation.
Next, I'll discuss the performance of our reporting segments starting with the protein sciences segment. Q3 reported sales were $227.7 million, with reported revenue increasing 6% compared to the prior year. Organic revenue growth was 7% for the quarter, with foreign currency exchange having an unfavorable impact of 1%.
The segment's organic growth was driven by large pharma customers across the portfolio. Operating margin for the protein science assignment was 45.6%, an increase of 140 basis points compared to prior year, primarily due to the impact of favorable volume leverage, cost management, and structural alignment initiatives.
Turning to the diagnostics and spatial biology segment, Q3 sales were $89.2 million, with both reported and organic growth increasing 2% compared to the same quarter last year. Segment growth was consistent across the businesses, with stronger performance in our automated spatial instrument comment, as well as continued strong growth in our ExoDx prostate cancer test.
Moving on the diagnostics and spatial biology segment operating margin at 9.4%, the segment operating margin was relatively consistent with the prior year 9.3%. We anticipate improvement in the diagnostics and spatial biology operating margin as the comet platform continues to scale. In summary, Q3 was a solid quarter overall.
And our teams executed extremely well, especially considering the turbulent market conditions induced by NIH funding and tariff uncertainties. Up to this point in the year, our overall top line results have been in line with our expectations at the beginning of the fiscal year, while our bottom line has exceeded our guidance.
However, as we approach the finish of our fiscal year, there was no way to predict last July that our market would be facing the uncertainties of future NIH funding and tariffs that we are now experiencing. These uncertainties have only increased in April with the escalation of tariffs that began on April 2, filed by the recent Trump administration's proposed fiscal year 2016 budget, which includes a 40% cut to NIH funding.
Let me frame up how we think about our exposure to these two major uncertainties and explain why we are so well positioned to turn these lemons into lemonade. First, on the uncertainty of NIH funding. As a reminder, approximately 12% of our annual revenue is from US academic customers, and we estimate that roughly half of that is sourced from NIH grants.
Also, during Trump's first administration, he proposed NIH cuts ranging up to 20% every year. However, in each of those four years, Congress actually passed increases to the NIH budget with bipartisan support. So we view the potential for severe cuts to NH funding over the next four years as rather unlikely. However, even in the most severe scenarios, the decrease in funding would have an immaterial impact to our overall long term double digit growth rate expectations.
And that's before you consider our lemonade, which is that Bio-Techne stands to benefit from a potential shift in NIH's emphasis on areas of research where our products are the most impactful. Next, I'll address the uncertainty swirling around the ongoing tariff war.
As it stands today, if we were to take no action to absorb all tariffs, the recent increases in global tariffs would amount to approximately $20 million annual impact to our adjusted operating income. Most of this exposure is coming from Chinese tariffs on our proteomic analytical instrument platforms, imported into China from the US.
As Kim stated in his remarks, we have focused teams who are driving work streams to negate the tariff impact to Bio-Techne and our customers with the highest priority on leveraging our global footprint to regionally diversify our instrument manufacturing.
Our lemonade with respect to tariffs is the speed by which we can negate the impact of these tariffs to our bottom line and position the company even better to mitigate any further tariffs should they escalate from here.
This speed will allow us to not be distracted internally, but rather double down our focus on our customers, especially as they are facing the same uncertainties. As we close out the remainder of fiscal year 25, the additional macro uncertainties around tariffs and potential budget cuts that arose this past month are likely to cause further distraction for our customers.
Thus we expect our growth momentum will temporarily slow to the low single digits in Q4. With respect to the bottom line, there will likely be a temporary headwind due to tariffs, resulting in adjusted operating margins being 100 basis points to 150 basis points lower than Q4 of last year.
However, we are confident that the bottom line impact of current tariffs will be fully mitigated by the time we start our fiscal year 26, positioning us extremely well to continue our differentiated financial performance.
That includes my prepared comments and with that I'll turn the call back over to the operator to open the line for questions.

Question and Answer Session

Operator

Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. (Operator Instructions)
The first question comes from Puneet Souda with Leerink Partners.

Puneet Souda

Yeah, hi, guys. Thanks for taking my questions here. Maybe the first one, on the guide, could you provide more context into that, Jim, in terms of the impact you're expecting on academic and it's just, it's a meaningful reduction versus what you had before and what you're seeing in the quarter. So it does beg a question was there a pull forward that you saw on the pharmacy side, and as a result you're seeing, more impact in the 4th quarter. Also on the pharma side, if you could clarify. I think you said low double digit at first, but then, mid-single digit for biopharma. So could you just clarify what was the growth in pharma, in large pharma?

James Hippel

Alright, I don't recall saying anything about biopharma, but so to clarify, large pharma was a double-digit growth for the quarter with respect to -- we think about Q3 versus Q4, Kim mentioned in his comments that you know we have -- our reagents, our quality reagents are also sold to other life science tools companies or partners, as call it ingredients into some of their products.
And we had some nice orders come from those customers who are largely serving from our customers as well this most recent quarter and some of those orders we don't expect to repeat again the selling Q4. So that's going to be part of the reason for the step down on organic growth but as it pertains to academia, we started our Q3 in academia very strong in January and then of course, in February with all these announcements, there was a great slowdown in academia and then it kind of stabilized again in March, and we kind of expect that stabilization to occur or continue throughout Q4, but thus be lower than where we were in Q3.
I think the biggest question, and I think we we're being somewhat conservative, but I think prudent to be conservative on the on the pharma side to expect, double digit growth in pharma in Q4 given the tariff environment that has been announced as of April 2, which is, didn't really impact Q3 as much as it could Q4 is really, I think one of the biggest. A difference in the guide is in 4 versus how we perform in Q3. And then with regards to where our expectations were at the very beginning of the year, clearly, yeah, even though our performance year-to-date has more or less been in line with those expectations, how we got there is quite different, meaning large pharma has outperformed where we expected to be up to this point in time, but clearly we didn't expect the situation with the academic in the US policies.
And then, since you may ask about smaller biotech or pharma, we talked about that being gradually gaining momentum in our first half of the year, but that momentum somewhat stalled, it didn't go backwards, but it somewhat stalled in Q3, and I think that's just a nature of the overall global economic uncertainties where our biotech customers are most susceptible to that in terms of where their next dollar might come from down the road. So I think it's highly more highly sensitive to the more macro environment and that's what we're seeing from them. So hopefully that helps.

Kim Kelderman

And Puneet, this is Kim. Good morning. Thank you for your question. And you mentioned pull forward, right? In Q2, we posted 9% organic growth, but had mentioned that three of that were probably because of early demands like by our customers. So we are very transparent in that and this quarter though, we do not see that. So we do not have a carve-out related to pull forwards. We do think this was really based upon momentum in the end market of large pharma.

Puneet Souda

Got it. That's helpful. And then, since we're fiscal year 2026 is around the corner, wondering, what you can provide there just given a lot of -- I appreciate the uncertainty, but with China, NIH, and with tariffs, I appreciate you quantifying at least the gross impact, but how should we think about 2026 and this may be a specific question on China. I believe it's 50-50 instrumentation and consumables for you there. How should we think about the China growth rate in 26?
Thank you.

Kim Kelderman

Yeah, Puneet, yeah, 2026, we usually do a soft guide at the beginning of a fiscal year, which is about three months from now. And the one thing that we feel relatively certain about is that we expect that there will be more clarity from the different headwinds, in our end markets over those three months, but it seems to be that of course, a lot of turbulence has been installed upon NIH as well as on the tariff situations, but we think that more clarity will come in the coming months, coming quarters, and that will definitely help us quantifying the impact for biotech in the coming year.
Your question around China. I think you know tariffs, as I mentioned in my prepared remarks, fortunately are very negatable for Bio-Techne. I'm very positive about how we can offset the tariff impacts and negate them and we'll just have to see how the Chinese economy holds up and how their internal funding works. We definitely saw a little bit of a step back from our initial guide, right?
So we had mentioned that China was stabilizing earlier in the fiscal year. We had mentioned that it would crawl back to the black, and it was definitely on that trajectory, but this last quarter with all the turbulence, you could certainly see a step back into mid-single digits negative and you know that's very much driven by the tariffs and by the local economical activities.

Operator

Thank you.
Dan Leonard with UBS.

Dan Leonard

Thank you. My first question is on tariffs. I would love to understand your exposure a bit better. I mean, China is 9% of your revenue, and I think you quantify the analytical instrument exposure into China, but as Puneet mentioned, you sell more than analytical instruments into China, and I would assume that most of that is manufactured outside of China. So any kind of color commentary, Kim, you can provide on why that tariff headwind is not larger.

Kim Kelderman

Yeah, Dan, thank you very much for your question. Yes, China's 9% of revenues. That's a good point. Usually right over the last couple of years it was 50/50 if it comes to the mix between consumable balls and instruments. Over the last year that has actually shifted a little bit, so that's not the real ratio anymore. But nonetheless, we -- let's say, it's 50% of our instruments. We have a very clear and fast pathway to be able to move some of the instrumentation manufacturing that we right now have in the US to another location, and that's the benefit of having a global footprint.
Another Bio-Technec location that would be exempt from import fees into China. So that and that is really the largest part of the tariffs. Our consumable part is vastly different if it comes to the tariffs. We've actually over the last couple of weeks noticed that we do not pay any tariffs on importing those and that really negated most, those two activities really negated most of the tariff exposure going into China.

James Hippel

If I could just add also the not all the instruments and all the cartridges for the instruments are produced in the US today. So it's not a one for one exposure and it also allows for an easier transition of the instruments that are not currently made or that are currently made in the US for China to allow those to be moved to the facility where there are instruments being made for China.

Dan Leonard

Understood, thank you for that clarification. And then just a follow up. Does the current tariff situation impact at all you're thinking on having more of a local manufacturing footprint in China?

Kim Kelderman

And then I think it doesn't, the tariffs have not changed our position there. We always had a mindset of China for China. And yeah, actually, last year we talked about Bio-Techne having opened a new facility in the Shanghai area to serve the Chinese market, and we're actually quite glad that we have this footprint. Because it might actually be a very -- will come in handy in the coming quarters as well if necessary, right? But we're really happy with the layout as we have it, because the local manufacturing in the different regions and there is minimizing cross-border tariffs is definitely a tailwind right now.

Operator

Thank you.
Matt Larew with William Blair.

Matt Larew

I think maybe I'll just circle back on the first question actually as you'd originally built the guide for this year, which I think you've called fairly well, it was exiting in the high single digits and in the streets were used as a proxy for fiscal 26, as you alluded to, much has changed. But to the point, Jim on sort of lemons and lemonade, it feels like maybe the lemons are accumulating in your term and the lemonade takes a little longer to squeeze out. So 8.5% organic growth for next year, is maybe the way you're guiding us for fiscal 25, at least more reasonable starting points than the Maple Street at today.

James Hippel

Yeah, I mean what I would say Matt, is that what we're experiencing right now is very abrupt, but we also, I think everyone hopes will be somewhat temporary, right? Our momentum going into Q3 was very strong. We were basically on our projections for smaller biotech. We were on our projections and trajectory for China and academic was holding up very well as it has been consistently up until this last couple of months, and in pharma was actually ahead of our expectations.
So it's really this temporary -- I call it temporary jolt of uncertainty caused by proposed changes in policies and tariffs, and I think once that uncertainty is resolved and becomes more certain, almost regardless of what the outcome is, we will be extremely well positioned to basically resume the trajectory that we are on. With our, now is that a quarter out or six months out or a year out, hopefully we'll have more clarity in three months, but you know at some point the uncertainty becomes more certain.

Matt Larew

Okay. And then, obviously the margins were very strong, the strongest in a couple years here and, year to year that was mostly driven from spending leverage. I think, OpEx up something like 5% year-to-date as the top plan has recovered. And you mentioned in the comments, but can you just speak to sort of that tension between ongoing cost containment and investment and where you're seeing additional opportunities to drive leverage?

James Hippel

I mean, the teams have been doing a great job, actually for a couple of years now and with regards to managing that balance between investments and cost containment and alignment of our structure according to the various profiles of our business and that, it has just basically continued and we've been especially been diligent on the on the you know k call discretionary cost side.
The past three months or so, especially with the increased uncertainty that we've been seeing in our end markets, a time of uncertainty is the last the last time that you want to shift gears with regards to accelerating investment or any kind of discretionary spend. So I think the outperformance we saw in our margin was a combination of the revenues coming in as we had expected, but really holding back on the cost, seeing the kind of uncertainty build throughout the quarter that we did just to make sure that we're extremely well prepared for fiscal year '26 in particular when these uncertainties start to become more certain.

Kim Kelderman

And I think, it's the tension between, it's not even tension really. We always said that we didn't want to get ahead of our skis if it comes to our cost positions, so we've been very prudent, like Jim mentioned, the discussion that you spent. But we also have been really focused on efficiencies, right? So we have management processes in your company that we've definitely looked at and streamlined. We have integrated further some of our acquisitions to increase efficiencies, the digital side, we have looked at ERPs and the different software packages for efficiency gains. And then last but not least, our operational processes and the margin boost from the operations is also fantastic.
So those have definitely been driving our results and in the meantime on the R&D side, we have a very detailed process we call it prioritization to really rank and stack all the investments in all the different R&D projects and make sure that we fund the ones that are of strategic importance and that have good returns of investment. And we have a fantastic clarity on where to invest and there we manage the balance between the two very, really well.

Operator

Thank you.
Daniel Markowitz with Evercore ISI.

Daniel Markowitz

Hey, thanks for taking the question. The first one I had is based on the guidance, it seems like four margins are expected in like the 32%-ish type range, and that's before tariff mitigation flows through. Is it fair to assume that fiscal '26 margins at that 4Q exit rate of about 32% makes sense, or should we be more prudent given the macro could imply that 26% organic needs to come down a few percent?

James Hippel

Yeah, I mean, we're not going to comment on guidance for fiscal year '26 at this point in time, again, given all the uncertainties we're still dealing with. And so some of the top line, hopefully those uncertainties become more certain or less uncertain three months from now we can provide some more direction then. All I can share with you today is that I think this quarter demonstrated that we are positioning the company extremely well for whatever fiscal year 2026 brings and market perspective.

Daniel Markowitz

Great. And then just one follow up, on A&G specifically just using peer comments, it implies that the US academic and government and market could see like 10% to 15% incremental headwinds in calendar 2025. Is there any reason to believe this wouldn't be an appropriate way to think about it? Is your exposure a little bit different? And then just what are the kind of cost offsets and a reasonable decremental margin profile on these US academic and government revenues?

James Hippel

Yeah, I mean, I can't come out specifically on the 10% to 15% except to say that our thoughts are this is that, first of all, the money that's largely being spent now by academic and probably for quarters to come are from grants that we've already been approved and released. So we're really talking about the impact of probably counting your 2026 and beyond with regards to whatever gets decided upon with regards to NIH budgets. And as a reminder, I think everyone understands its history, but I'll repeat it.
This is -- this has happened before in a prior Trump administration where there were severe cuts proposed and a bipartisan congress actually increased budgets every single year. So again, I think it's a bit overblown with regards to what the impact of budgets will be. But in the meantime, it's understandable that, and we have, several members of our board who come from academia and there's, of course, they've shared with us that there's natural concern around this all this uncertainty, and it causes distraction for them to as they think about where their next funds might come from for future grants.
So that's why I think certainty as to where the budgets are at will be the most important thing to calm down the academic market. That all being said, much of the double digit increases that have occurred in NH funding over the past four or five years since COVID. Has been directed more towards infectious disease, vaccine development, things around COVID and such that is not our sweet spot where our portfolio plays.
And so, we've heard the administration say they want to defocus those areas and so if that's where the cuts happen, that will likely ultimately be much less, if any, impact to us and could actually be a tailwind, which is the lemonade I spoke of with regards to funds being redirected more towards. Traditional chronic diseases such as cancer, diabetes, and neurology, and that's again where our portfolio strengths are. So that's how we think about it.

Kim Kelderman

Yeah, and Daniel, thanks for the question. Let me add to that. Fortunately, Europe academics were really strong, right? So it's interesting to see that dynamic which we might continue to see. But in the meantime, you think about our portfolio and how it also maps towards the academic market. Arguably, you would think that instrumentation is probably more impacted than our consumables, and we've seen that in our numbers, and our consumables are relatively flat in the US academic markets.
80% of our revenues come from consumables, 10% from services. And that's obviously, a very favorable mix. If you then look at the other 10%, that's instrument related. Now these instruments are actually on a relatively low price point, around $50,000, which then also you would expect is a little bit different decision-making process, so lower CapEx. But then in the meantime, they are positioned to automate very clunky yet fundamental processes in your laboratories and basically take cost out and increase your efficiencies, which might be something that you really would like during times of constraint.
So the positioning of those are just really good. And then last but not least, we're just really happy that we also have fantastic commercial excellence, right? So we have consultative selling.
From our team that you know a team of experts that can help you pick the right reagents really quickly, make sure that your experiments are repeatable and give you the right results. And in the meantime, for convenience, we have a very much valued partnership with Thermo Fisher Scientific where we utilize the fissure channels for ease of ordering and with that the academic market, we feel that we are from all angles as well positioned as you could be.

Operator

Thank you.
Dan Arias with Stifel.

Dan Arias

Yeah, hey, good morning guys. Thanks, Jim. I'm sorry, but I think I need to go back to the academic stuff here. You're calling out the headwinds there which makes total sense and then you're guiding organic down next quarter partially with that in mind, but I think your comment was that even under the most severe scenarios, funding would have an immaterial impact to getting to double digit growth long term. So you know if the budget over the next couple of years is down 20%, 30%, 40%, which is in line with the proposals for 2026, is the idea that you can still get back to double digits once the smoke clears on the other macro elements? I think I just need a little help with how you're framing that over the 2026, 2027 period.

James Hippel

Yeah sure, Dan, thanks for the question. So yeah I mean, at the end of the day when you look around our strategic plan, the key academic is, it's even -- it's an important part of our business because it feeds into the biotech and karma, etc.
It has never been the key growth driver for our growth plans and our projections never assumed academic being a double digit grower and more like a mid-single digit grower which it historically has been. And so, quite simply, I took the details of our strategic plan. And assumed the worst, absolute worst case scenario was a 40% cut in our academic revenue across the board and then from there a gradual increase, to historical growth rates of 3% to 5%, and we were still overall at a double digit growth rate, over a five year period.
So yes. I've taken that most severe situation into account in stating that it would still be a double-digit growth trajectory given our strategic plan.

Dan Arias

Okay, thanks for that. And then just maybe on selling gene, apologies if you did give it, but I didn't catch it. Is there a growth rate for the quarter? And just given what we're talking about some of the fluctuations in pharma ordering patterns, can you just sort of orient orientate us around what a good growth rate for GMP reagents selling gene would be for this year since it's pretty important to the model? Thanks so much.

Kim Kelderman

Yeah, then the cell gene therapy product line, we talked about the trailing 12 months, right? And that was 30%, a little over 30% for the 12-month period. And as we had quarters where it was 90%, 60%, 10%, and the swings in between, and that's just because the customers further along in the clinical process, so in phase 3, they order less frequently and larger orders, and that makes it lumpy. So that's why we always look at our 12-month trailing and that sits north of 30%.

Operator

Thank you.
Thomas Deversy with Nephron Research.

Thomas Deversy

Hey guys, thanks for taking the question. My question is just diagnostic, the genomic organic growth. I know you have more difficult cubs in the second half of the year, but would have expected, I guess, a urid overall to kind of be more, I guess, unaffected by changes and so just curious whether there's -- I guess, just, timing issues, related to some of the diagnostic and you know with portfolio?

Kim Kelderman

Thank you, Paul, for the question. I think that we, overall, we in my prepared remarks, I mentioned that, of course, we looked very stringently at what is going on and in detail understand why the growth rate was lower than we usually have, but it is the diagnostic reagents division as well as a surgeon with the larger account there's, like I mentioned earlier, there's just the larger orders where timing becomes very important. So we definitely look by on account of to account basis.
Are we losing shares, the market slowing down and there's a clear no and no. So it was definitely a timing related dip for those two businesses, which is not uncommon. And that's why I look back at the year-to-date numbers for those two businesses which are in both cases healthy, high single and low double for those two divisions. Our diagnostic tests from the point of view, the prostate test has been growing. Very nicely in line with the other quarters, around 30% for the year.
And then last but not least we have our spatial biology division which has been seeing some headwinds from the NIH funding issues. That's the division that's mostly or most severely exposed to NIH markets and certainly did not have the growth numbers. We have seen over the last couple of quarters, last couple of years, and there we just look back at do we have a fantastic offering? Are we competitive with our implementation? Do we win the deals that we compete in? And there also everything is very healthy.
It is a purely and market driven headwind in that division. So that that gives you basically the flavors of the four divisions in the segment.

Thomas Deversy

Great, thank you.

Operator

Thank you.
Patrick Donnelli with Citi.

Patrick Donnelli

Hey guys, thanks for taking the questions. Maybe one on the biopharma piece that you talked about mid-single digit growth this quarter. Can you break that down a little bit? I just wanted to talk about the biotech piece in particular. I know you talked a little bit about GMPs, but can you talk about what you're seeing from the biotech customer base? Certainly been a concern across the industry just given the volatility of the funding backdrop, so curious what you're hearing from the customers there and expectations on that front.

Kim Kelderman

Yeah, thank you, Patrick. We certainly know that large pharma continues to be ahead of biotech in the recovery, right? Biotech is 30% of our revenues and large pharma are 30%, and biotech was flattish in Q3. And we believe that, biotech funding is obviously very sensitive to capital markets, and those are very sensitive to economic uncertainty and that typically leads to more frugal spending, and that's what we saw this quarter and that we expect next quarter.

Patrick Donnelli

Okay, alright, that's helpful. And then if you don't mind, just a quick update on what's happening with Wilson Wolf, what the trends were this quarter, I just want to keep an eye on that as we go as well. Thanks.

James Hippel

Yeah Patrick, this is Jim. Thanks for the question. So yeah, Wilson Wolf continues to perform very well. They had growth very solidly into the into the double-digit growth rates at this most recent quarter. So they were projecting to have a very strong year in our, in what will be calendar year 2025 for them going into the year 2026. And so far, they're right on track for that.

Patrick Donnelli

Alright. Thanks sir.

Operator

Thank you.
Sung Ji Nam with Scotia Bank.

Sung Ji Nam

Hi, thanks for taking the questions. Maybe if I could go back to pharma, biopharma, the sectoral tariffs that are under discussion that expanding US manufacturing, restoring, etc. But potential pressure on the early stage or early discovery development work. Just curious how bio-technique is positioned in that environment or if you have different thoughts in terms of how the tariffs could play out. Thanks.

James Hippel

I'll start off this is Jim. Thanks for the question. I think part of the looming discussions we're hearing the administration around terrorists for pharmaceuticals is again part of the reason for the guide that we did for Q4. I think there's going to be, perhaps another level there is right now, another level of uncertainty as it pertains to our pharma customer base. And so we've seen how uncertainty impacts other parts of our end market. So we kind of expect the thing for pharma at least temporarily. I don't know.
It's probably anyone's guess as to how it ultimate plays that's hard to play. It's hard to put out different scenarios when we don't even know what the proposal is going to be with regards to tariffs on our pharma base. But I would say this, pharmas spent a good part of last year already realigning their pipelines for, what was the IRA Act, and that's not something they do, take lightly and it's a pretty great large endeavor. And for the most part, what we're hearing from our customers is that's behind them.
So, I think there'll be there clearly going to be some changes with regards to CapEx spending and so forth, but at the end of the day, the pharma companies overall are flush with cash. They're overall doing very well, and just because they need to perhaps spend some more on CapEx because that's what they need to do to move some manufacturing lines around. Doesn't necessarily mean that they'll cut that out of their, take that out of their P&L for R&D, but you know it's a good question remains to be seen.

Kim Kelderman

And let me add to that that. Overall, I mean the early stage Bio-Techne with the core agents was very much research oriented, but over the years we have definitely diversified our portfolio, made sure that we can continue to join a customer in their downstream processes into clinicals and into eventually a treatment.
So we have now our products way more distributed along the different stages and you can see that in some of our presentations where we're definitely playing discovery all the way through manufacturing and of course, also have a portion of our company aligned with the diagnostics and the treatments of diseases. So our portfolio is much more distributed than it has been a long time ago. So that means that even though there might be some shifts in where the pharma spending is, we feel that we're nicely distributed and therefore will benefit from the overall spend level.

Sung Ji Nam

Got it. That's helpful. And then just quickly on the spatial biology side, thanks for the color there and the exposure to the academic market. I was wondering about academic market outside the US whether spatial, could be growing faster. And then also the recent launch of the spatial protein proximity detection capability was curious if that could be also at, it could be utilized within pharma, and kind of you could talk about the competitive dynamics there for that particular application just not familiar with it?
Thank you.

Kim Kelderman

Well, thank, thanks for noticing it and, yeah, so I do believe, especially from the instrumentation point of view, where we still booked double digit growth, as I mentioned, we certainly look at our win loss rate rates and we're really happy where those sit, so we know that we're not losing shares. And if anything, we're really, we're doing really well with our placements, and.
And a very competitive offering. As you noticed, we have an instrument that is fully automated and it can run through multi-omics. It will pull through antibodies as well as the RNA scope for the RNA detection. And then on the consumable side we now have the capability of not only show your proteins as well as your RNA, but then also protein proximity, meaning protein interactions which can be extremely important in the development and the treatment of a disease.
So you can see that we've been building out the multiomics where there's truly no competitor already looking at just RNA and proteins, and now we're adding RNA proteins and protein interactions.
So that's truly unique if it comes to the offering and very high value to our customers. So we're very pleased with our competitive positioning there.

Operator

Thank you. That was the last question for the day. I would now like to hand the conference over to Kim Kelderman for closing remarks.

Kim Kelderman

Yeah, thank you very much for your insightful questions, and before we conclude the call, I'd like to formally welcome Dr. Amy Herr to the Board of Directors of Bio-Techne. Dr. Herr is currently a Chancellor's Professor of Bioengineering at the University of California, Berkeley, and she also serves as the Vice President of the Chan Zuckerberg Biohub Network.
Doctor Herr's appointment completes a two-year process to identify and appoint successors to retiring Director Randy Stier, who retired in 2024, and Dr. Roeland Nusse, who will be retiring later in 2025. Doctor Herr's deep biological and engineering experience are an ideal fit for our board of directors and the strategic direction of the company. Welcome, Doctor Herr.
And to conclude the call, I want to say that I am extremely proud of the team's continued execution in what has proven to be a prolonged period of uncertainty in our end markets. Our differentiated financial performance is a testament to the value our customers place on a uniquely positioned portfolio of research free agents, proteomic analysis tools, cell therapy workflow solutions, and diagnostics and spatial biology products.
This portfolio unlocks cutting edge discoveries and significant efficiencies for our customers. It also provides a strong foundation to sustainable value creation within Bio-Techne while we pursue our mission to improve the quality of life by catalyzing advances in science and medicine. Thank you very much for attending our call and have a great day.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.