Repligen (NASDAQ:RGEN) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Repligen Corporation reported record revenue of $209 million for Q3 2026, reflecting 12.5% organic growth and an expansion of adjusted operating margins by 170 basis points year-over-year.
The company closed the acquisition of BioLife, contributing to increased 2026 revenue guidance and an expected $24 million revenue contribution from BioLife for Q4.
Repligen is optimistic about 2027, projecting at least 25% top-line growth driven by BioLife integration and robust order activity, especially in capital equipment.
The company experienced significant growth in chromatography, which increased over 50%, and proteins, which increased over 40%. Filtration declined by 11% due to system orders scheduled for 2027 delivery.
Repligen extended its supply agreement with Ecolab and reported strong performance in analytics, driven by demand for consumables and services, with recent recognition of its technology in USP standards.
Management noted strategic investments in innovation and AI to drive future growth and expressed confidence in achieving long-term margin expansion targets, with BioLife expected to be accretive.
The company remains cautious but optimistic about market conditions, with a focus on capitalizing on emerging growth opportunities in Asia Pacific and the bioprocessing industry.
Full Transcript
Jillian (Operator)
My name is Jillian and I will be your operator. Following Management’s prepared remarks, we will open the call for questions. If you would like to ask a question, please press Star one to raise your hand. To withdraw your question, press Star one again. To provide an opportunity for as many participants as possible, we ask that callers limit themselves to one question. I will now turn the call over to Jacob Johnson, Vice President of Investor Relations for Repligen.
Jacob, please go ahead.
Jacob Johnson (Vice President of Investor Relations)
Thank you, Operator, and good morning, everyone. Welcome to Repligen’s 2026 third quarter earnings call. Joining me today are President and Chief Executive Officer Olivier Lillaud and Chief Financial Officer Jason Garland. Earlier this morning we issued our earnings release and supplemental presentation, which are available on the Investor Relations section of our website. Before we begin, please note that today’s discussion will include forward-looking statements and certain non-GAAP financial measures. Actual results may differ materially from those expressed or implied by these statements due to risks and uncertainties described in today’s earnings release and our SEC filings. Reconciliations of non-GAAP to GAAP measures are included in today’s earnings release and supplemental materials. These adjusted financial measures should not be viewed as an alternative to GAAP measures, but are intended to best reflect the performance of our ongoing operations.
With that, I’ll turn the call over to Olivier.
Olivier Lillaud (President and Chief Executive Officer)
Thank you, Jacob. Good morning, everyone, and welcome to our 2026 third quarter call. We had a record quarter with 209 million of revenue. This is a significant milestone as we surpass our prior peak in the second quarter of 2022. We believe this is another proof point that the industry is poised for its next phase of growth. It also highlights the benefits of our diversified portfolio, as this was driven in part by proteins and chromatography. In addition, we were delighted to close the acquisition of BioLife earlier this month. This combination further expands our capabilities in the rapidly growing cell therapy end market and strengthens our long-term growth platform.
We will discuss our initial observations and integration efforts in a moment. But first, we delivered 209 million of revenue in the third quarter, which represented 12.5% organic growth while expanding adjusted operating margins by 170 basis points compared to the prior year. This was an excellent result as we were lapping a very strong quarter in the prior year. Our ability to outpace market growth very significantly this quarter is a testament to our team’s strong execution in a market that is still recovering. Following these strong results and incorporating the BioLife acquisition, we are increasing our 2026 guidance.
Jason will provide more details. Our updated 2026 guidance includes an expected 24 million revenue contribution from BioLife for the period following deal close in our fourth quarter. This assumes BioLife annual 2026 revenue on a pro forma basis will be approximately US$114 million above the midpoint of BioLife’s most recent guidance. The business is performing well, and we are very confident about delivering our deal model for 2027 and beyond. With the recent acquisition and ongoing integration, we are taking a prudent approach to our initial assumptions, and for the remainder of 2026 we are narrowing our organic growth outlook to 12% to 13% at the midpoint. This represents a 50-basis-point increase and assumes fourth quarter growth is within the full-year range. This also means we will deliver again on our full-year commitments and outpace markets significantly.
As I reflect on our end markets, we remain encouraged by the continued improvement in the bioprocessing industry. Importantly, our funnel and order activity continue to strengthen. This is particularly true for capital equipment. Capital equipment orders increased mid-teens year over year and was the highest orders quarter in five years, while revenue declined. The tap has not opened as quickly as we would have expected this year; however, we continue to see encouraging signs in our funnel and order book.
We are building a backlog for 2027 and will enter next year in a better position than we did in 2026. As a result, we remain encouraged that we are seeing a gradual improvement in capital equipment demand, with a notable pickup in orders for our systems. We’re actively executing initiatives that will strengthen our equipment business and prepare us for the next phase of growth. This includes continued investment in innovation, as well as strategic efforts designed to deepen customer engagement and support large-scale manufacturing expansion projects.
One example is our Integrated Solution Team, which is focused on addressing customer capacity expansion, such as onshoring. Consumable demand remained outstanding, with 20% growth in the quarter, while Services was even stronger with greater than 20% growth. Our services team continued to execute extremely well. Year to date, our services team has increased the number of systems under contract by nearly 40% despite a muted capital equipment revenue environment. In addition to the incremental service revenue, this allows us to be closer to our customers and provide further insight into their needs.
Services represented 7% of our revenue in the quarter, and we expect it to become a larger mix of our business going forward. In short, our base business remains strong, as highlighted by our 12.5% organic growth in the third quarter. Our funnel and orders suggest a continued improvement in the end market. In addition, we continue to execute our innovation strategy to drive above-market growth. Moving to our performance by end market, biopharma revenue drove growth while CDMOs declined on a difficult comparison. Year to date, we have seen similar trends for both customer bases. Biopharma growth was strong in all regions, as Europe returned to growth on a more favorable comparison, while year-to-date biopharma growth has been driven by strength in North America and Asia Pacific. Emerging biotech grew mid-single digits on a difficult comparison from last year.
Demand trends remain healthy, as year-to-date emerging biotech revenue has increased in the high teens. New modalities were relatively flat but grew high single digits, including the impact of a certain gene therapy platform. This was led by nearly 30% growth in cell therapy. In addition, gene therapy demand grew on an absolute basis and north of 25% excluding that gene therapy headwind. We continue to believe new modalities will be accretive to our medium-term outlook, and we’re excited to expand our capabilities with the addition of BioLife.
Moving to our strategy update, I wanted to share some initial observations on our first few weeks of ownership of BioLife. I will leave you with the most important takeaway. First, we are even more excited about the strategic rationale of bringing our organizations together and the value we will create for patients, customers, and shareholders. Jason and I were fortunate to spend time with our teams at BioLife sites, and I recently joined the BioLife team again in both Basel and Indianapolis to celebrate the closing.
We walked away impressed by our shared culture of innovation and customer centricity. We are thrilled to expand our offerings for the cell therapy market. Customer feedback has been very encouraging, and we have received a number of positive responses after the acquisition. After months of thoughtful planning, our combined teams are now focused on executing the integration plan and realizing the opportunities we identified ahead of closing. In fact, our teams are hosting an integration workshop in Waltham as we speak. We have already completed actions to deliver a sizable portion of our operating expense synergies. This includes capturing public company and certain leadership costs, which represent more than half of our anticipated year-one synergies.
As it relates to cost of goods sold, our team is already hard at work evaluating potential options to improve CryoStor scrap rate. Finally, our commercial teams are now collaborating to achieve revenue synergies. We recently cross-trained both commercial teams. We continue to believe our offerings will benefit from BioLife’s trusted customer relationships. In addition, our Asia Pacific team has begun to explore the opportunities to increase awareness of CryoStor in the region, particularly in China.
As we look ahead to 2027, we remain focused on outpacing market growth. Assuming the market is growing high single digits, and with the acquisition of BioLife, we are positioned to grow our reported top line at least 25% next year. Absent a material change in foreign exchange rates, this will result in our revenue exceeding one billion US dollars, which represents another significant milestone for our company. Additionally, I wanted to spend some time on our Asia Pacific strategy, as Jason will discuss in more detail. We had another very strong quarter in China with greater than 40% growth. We’re advancing several strategic initiatives to strengthen our position in the market, including ongoing technology transfer with our OEM partner as we work to recapture share. Notably, China recently published its latest five-year biotech plan. The government expects the industry to grow at over 20% CAGR through 2030.
This speaks to the growing activity in this country, and we remain convinced China will be the fastest growing biopharmaceutical market in coming years. Beyond China, there are significant growth opportunities in the broader Asia Pacific region. Last week we opened a new Repligen Training and Innovation Center in South Korea. This underscores our commitment to a strategically important market that has become one of the world’s leading hubs for biologics and CDMO manufacturing.
Before I turn the call over to Jason, I’ll provide some more detail on our franchise-level performance. I will note that all references to our 2026 expectations are on a reported basis. Starting with filtration, as expected, the previously disclosed ETF headwind was most pronounced in the third quarter and resulted in an 11% decline in filtration revenues. I note this includes a two-point headwind from our Polymem divestiture and foreign currency, so the decline was slightly greater than we expected.
This was largely timing-related, with most of our systems orders planned for delivery in 2027 per customers’ request. We are encouraged by the hardware backlog we are building for next year. We now expect filtration to be flat to slightly down for the year. This includes the inorganic impact from the sale of Polymem. Turning to chromatography, revenue grew over 50%, with some help from a favorable comparison in the prior year. This was again driven by growth in OPUS columns, with continued growth from CDMO and biopharma customers. In particular, we continue to see significant traction with large-scale columns. We now expect chromatography growth of at least 30% for the full year.
We had another great quarter in proteins, with more than 40% growth, again driven by strength across our portfolio, including positive traction in ligands, growth factors, and our custom and catalog resins. We’re also pleased to share we recently extended our supply agreement with Ecolab and are excited about our continued partnership. Our protein strategy is working marvelously, and we continue to expect mid-teen growth for the full year. Our analytics franchise had another record quarter with 20% growth, a strong outcome given we faced our most difficult prior-year comparison. The growth was driven by robust demand in consumables and services, while capital equipment remained healthy. Our downstream protein concentration analytics offerings were recently recognized in the USP Chapter 507 standard. These are widely accepted quality standards used by biopharma manufacturers and regulators.
This is a significant milestone that provides external validation of the technology and strengthens our credibility with biopharma customers. From a commercial standpoint, this recognition should help us reduce barriers to adoption, support broader development of SoloVPE across products and sites, and strengthen the longer-term opportunity for FlowVPX as customers adopt the technology more broadly. In addition, we have seen traction recently with our PAT-enabled systems, which further expands the FlowVPX opportunity.
As the industry continues its journey towards AI and digitization, we have engaged with several key customers who are sharing their AI-enabled process development and manufacturing strategies. This highlights the growing importance of our advanced PAT and digital twin capabilities. Given momentum in downstream demand and a growing contribution from our upstream analytics, we now expect analytics growth of at least 30%. Before I hand the call over to Jason, I wanted to reiterate how proud we are of our Q3 results, how we outpaced industry growth again, and how excited we are about the growth opportunities in front of us. This is especially true as we add BioLife cell therapy capabilities to our portfolio. The progress we are making in delivering our strategy is increasingly reflected in our results. This is a testament to our team’s strong execution and hard work.
We have several initiatives underway to drive future growth, including our Integrated Solution Team and Asia Pacific strategy. Combined with our Fit for Growth investment and Transformation Office, these efforts are helping us build the capabilities and discipline needed to deliver profitable growth. Now I turn the call over to Jason for the financial highlights.
Jason Garland (Chief Financial Officer)
Thank you, Olivier, and good morning, everyone. Today we are happy to share another strong quarter of results in Q3. These results from our continued execution coupled with the strategic acquisition of BioLife allow us to increase our guidance once again. I look forward to sharing the details shortly. Before we discuss the quarter, let me highlight that unless otherwise noted, all financial measures discussed reflect adjusted non‑GAAP measures. As shared in our press release, we delivered strong third quarter revenue of $209 million. This is reported year‑over‑year growth of 11% or 12.5% growth on an organic basis, which excludes the impact of acquisitions, divestitures, and foreign exchange. The previously announced sale of PolyMem was slightly under a one‑point headwind to reported growth and foreign currency was also just under a one‑point headwind as the dollar has strengthened.
And for clarity, we recognized de minimis tariff refunds in the quarter. As Olivier provided details on our product franchise performance, I’ll now share more color on our regional performance starting with quarterly revenue mix. North America represented approximately 49% of our total, EMEA represented 34%, and Asia Pacific and the rest of the world represented approximately 17%. North America grew 6% driven by strength in proteins and analytics while lapping our strongest quarter in the prior year.
EMEA grew over 20% on broad‑based strength and a favorable comparison, and Asia Pacific declined slightly on a tough comparison with record sales in the third quarter of 2025. We continue to deliver on our strategic priority of Asia Pacific growth with third quarter orders breaking our prior record. Asia Pacific demand remains very healthy with high‑teens growth year to date. China demand was again robust with greater than 40% revenue growth in the quarter and strong orders.
Year to date, China sales have grown greater than 50%. Transitioning to profit and margins, despite the anticipated mix headwind, we had strong margin performance in the third quarter. Adjusted gross profit was $111 million and adjusted gross margin was 53%. This was a 30 basis point decline versus last year and consistent with our expectation that the third quarter would represent the low point for gross margin in 2026. Volume leverage and price execution were positive drivers of margin expansion but were more than offset by product mix and inflation.
Tariffs had a de minimis impact on margin, and year to date, gross margin has increased 140 basis points versus last year. Continuing through the P&L, our adjusted income from operations was $33 million in the third quarter, up 24% year over year. This translated to an adjusted operating margin of 15.9%, which was an increase of 170 basis points year over year. Adjusted EBITDA was $44 million in the quarter, or 20.9% adjusted EBITDA margin. Underlying our margin expansion in the quarter was strong leverage achieved with a modest adjusted opex growth of 5%.
Given recent trends, we plan to make some investments through the end of this year to support our expected growth in 2027. We will remain thoughtful about balancing investments in the business and expanding margin. I would note our GAAP results include a $41 million intangible asset impairment related to an intellectual property license agreement that was signed many years ago that unfortunately did not lead to a positive outcome. As an unusual non‑cash and one‑time event, the impact of this charge is not included in our adjusted results.
Moving to the bottom line, adjusted net income was $30 million, a 16% year‑over‑year increase. Our third quarter adjusted effective tax rate was 25%. Due to the timing of a specific item in the quarter that we do not expect to repeat, our full‑year outlook is unchanged at approximately 22%. Adjusted fully diluted earnings per share for the third quarter was $0.53 compared to $0.46 in the same period in 2025, or an increase of 15%. We continue to see strong earnings conversion from our robust revenue growth.
Finally, our cash, cash equivalents, and marketable securities position at the end of the third quarter was $863 million, up $53 million sequentially from the second quarter. This was driven by strong cash flow from operations, primarily offset by $5 million of CapEx in the quarter. In October we deployed approximately $550 million of cash, including fees and net of cash received, for the BioLife transaction. As a result, our pro forma cash balance is currently greater than $300 million.
I will now outline the improved outlook in our adjusted financial guidance. For clarity, our guidance includes the contribution of BioLife for the period following the closing of the acquisition on October 6th. As Olivier mentioned, given the momentum of our underlying business and with the partial quarter contribution from BioLife, we are increasing our guidance. We are now guiding to $844 to $852 million of revenue, or $848 million at the midpoint.
At the midpoint, this represents 14.5% to 15.5% reported growth or 12% to 13% organic. This is an increase of 50 basis points at the midpoint versus our prior organic growth guidance. This assumes approximately $24 million of revenue from BioLife. This is offset by approximately one point of headwind from the sale of our PolyMem operations we announced earlier this year. In addition, we now assume neutral foreign currency which had been a tailwind in our prior guidance.
Our reported growth of 14.5% to 15.5% assumes the following across our franchises: filtration is expected to be flat to slightly down. Chromatography will grow greater than 30%. We expect proteins to grow mid‑teens. Analytics is expected to achieve more than 30% growth, and as I previously mentioned, we expect $24 million from a partial quarter contribution from BioLife. We will initially share BioLife revenue as a separate franchise, though over time we may evaluate our overall franchise reporting structure.
We continue to expect 110 to 160 basis points of gross margin expansion for the year, so with BioLife we will likely be above the midpoint of this range. We are raising our adjusted operating income guidance to a range of $135 to $139 million and our adjusted operating margin guidance to 16% to 16.3%. This represents 220 to 250 basis points of operating margin expansion. Our updated guidance reflects our strong year‑to‑date performance and includes BioLife, which is accretive to our operating margins.
We’re extremely pleased with our margin performance this year. Our disciplined cost control and strong execution have allowed us to outperform our initial expectations. As I mentioned previously, we do expect to make investments in the fourth quarter and into 2027 to support future growth. Moving to the income statement, our guidance assumes $18 million of adjusted other income. This reflects favorable interest income trends due to rising rates offset by the cash deployed for the BioLife acquisition. This will reduce interest income to approximately $1.5 million in the fourth quarter. As mentioned earlier, we continue to assume an adjusted tax rate of approximately 22%. Putting this together, we expect adjusted fully diluted earnings per share to be between $2.05 and $2.09.
This is up $0.34 to $0.38 versus 2025, or up 21% at the midpoint. The midpoint reflects a $0.01 increase from our prior guidance. This assumes BioLife is slightly dilutive to earnings given we will recognize nearly a full quarter of expenses but a less proportionate amount of revenue from BioLife in the quarter. As Olivier mentioned, we have already completed actions to deliver a sizable portion of our operating expense synergies. As a result, we are well positioned to deliver on at least $0.05 of year‑one accretion in 2027.
We expect CapEx spend to continue being approximately 3% to 4% of 2026 revenue. For additional context, at the midpoint, our guidance assumes fourth quarter organic growth is in the range of our updated full‑year outlook. We also expect fourth quarter gross margin to be within our full‑year guidance. We expect operating expenses to be up low double‑digit million sequentially as we plan to make some investments in our base business and it will include a contribution of nearly a full quarter of BioLife operating expenses.
Before I close, I want to touch on our medium‑term margin outlook and also provide an update on our strategic IT investments and AI efforts. First of all, margin — we have outlined a path to 30% EBITDA by 2030. We are not formally updating these targets, but as we have mentioned previously, BioLife will be accretive to our growth and margins. With BioLife, we believe we could achieve this milestone earlier. This gives us the opportunity to explore reinvesting some of this benefit in areas that accelerate revenue growth instead of achieving this target sooner.
Potential investments include additional commercial resources and R&D innovation spending. As evidenced by our year‑to‑date performance, we are committed to margin expansion and have made good progress towards our goals this year. We continue to see opportunities from volume leverage, productivity, and net pricing. We will balance this with the investments required to support and drive future growth. One area we have invested in this year is strengthening our IT organization and modernizing our capabilities.
We have world‑class tools and have onboarded key talent this year, including a new CIO. Our team is focused on optimizing our data infrastructure as the foundation for more broad‑based internal AI deployment. We have made considerable progress on these efforts, including AI pilots which are showing tangible results. We plan to leverage these initial learnings more broadly in our organization. In addition, we have launched regular training to empower our employees in their use of AI tools.
Finally, our operations team is working to drive productivity at our manufacturing sites through increased investments in automation. We’re excited about the extensive list of opportunities ahead of us. As we wrap up the call, Olivier and I would like to thank our global Repligen team for another quarter of strong execution. Our record results, increased guidance, progress on the BioLife integration, and continued investments in innovation and growth are all reflections of the team’s hard work and commitment. We believe we are well positioned to continue outpacing the market and creating long‑term value for our customers and shareholders. With that, I’ll turn the call back to the operator and open the lines for questions.
Jillian (Operator)
We will now begin the question and answer session. Please limit yourself to one question. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Brendan Smith with TD Cowen. Brendan, your line is open. Please go ahead.
Brendan Smith (Analyst at TD Cowen)
Great. Thanks for taking the questions, guys. Maybe wanted to ask one on kind of this combined Repligen‑BioLife outlook. I guess how should we think about maybe the cadence of integration benefits here and really where you see the most potential maybe for immediate or near‑term upside versus some other aspects that will likely take a bit more time? And I guess how much of your vision for this integration is really contingent upon any reacceleration of cell therapies broadly, or do you kind of see the current state of that space enough to drive growth there kind of heading into next year?
Just any color on your kind of underlying assumptions there would be great. Thanks.
Olivier Lillaud (President and Chief Executive Officer)
Hey, good morning, Brendan. And thanks for the question. So as far as the first part of the question is concerned, we have already completed actions to deliver a sizable portion of our operating expense synergies, as we mentioned earlier. This really includes capturing some of the public company and certain leadership costs. But also we are working on longer-term type of action, which is the bag opportunity. And as you know, they had a pretty high scrap rate and we are working on it with them to improve that.
And that’s a little bit more in the, what I call, mid- to long-term type of action here. As far as the cell therapy market is concerned, I think we mentioned in July when we signed the deal we made very careful assumptions as far as the growth of the business for the next five to ten years. And we said we are capitalizing mostly on the current commercial drugs’ very high growth. And in fact, those commercial drugs have been growing more than 20% in sales over the last several quarters. Now, we’ve assumed, to be really on the safe side, that there could be no FDA approval of cell therapy for the first two years after we acquire the business.
And as you certainly know, Brendan, there have been three cell therapies approved this year already. So we are very confident about our ability to deliver on the business model for BioLife in 2027 and beyond as well.
Jason Garland (Chief Financial Officer)
And I’d just add that there’s no change in our view of being at least $0.05 accretive for that first 2027 year.
Brendan Smith (Analyst at TD Cowen)
Great. Thanks, guys.
Jillian (Operator)
Your next question comes from the line of Matt LaRue with William Blair. Matt, your line is open.
Matt LaRue (Analyst at William Blair)
Hi, good morning. I wanted to ask on filtration. You mentioned that was maybe slightly worse than expected for you in the quarter, but there was maybe some timing that affected that. Could you just talk about what led to that? Was it ATF or other parts of the franchise? And to the extent it was ATF, just curious if you could comment on ATF and what your confidence is looking into 2027 given that there were some pushouts earlier this year.
Olivier Lillaud (President and Chief Executive Officer)
Yeah. Good morning, Matt. So first of all, I’d like to say it’s a testimony that we have a really very diversified portfolio of products, because where filtration was maybe a little bit weaker than we expected, the other three franchises have been doing extraordinarily well. In fact, we had a record quarter for both analytics and chromatography in the history of the company. But yes, the revenue declined as expected. We had the headwind of the gene therapy program, we have the two-customer headwind on the ATF side, and also we saw the Polymen business, but it has been a little bit higher than we thought. And the reason is really simply because of the systems business. You heard us saying we had the highest quarter of orders in systems for the last five years, which is fantastic news. The less positive news was that these sales are going to come in 2027.
So the recognized sales of systems are sitting under filtration, because it’s a very broad portfolio of products under filtration, unfortunately are not going to happen either in quarter three or quarter four of this year. They’re all going to happen in 2027, which is why we are very confident filtration will be back to historical growth levels in 2027.
Matt LaRue (Analyst at William Blair)
Okay, thank you.
Jillian (Operator)
Your next question comes from the line of Dan Arias with Stifel. Dan, your line is open. Please go ahead.
Dan Arias (Analyst at Stifel)
Good morning, guys. Thank you, Jason. Can you just maybe talk about product mix and how you think that sets you up into next year? I guess I’m thinking specifically about filtration equipment. Historically, I think filtration has been above average and equipment below average. So how should we think about the impact of those contributions stepping up? If you guys are right about seeing a rebound there, do you think the net effect of mix is positive or negative as you look out a bit?
Jason Garland (Chief Financial Officer)
Thanks, Dan. Good morning. So first, just for clarity, the far majority of our equipment sits in the filtration franchise. The only thing of meaning that’s really outside of it would be our analytics business, where we sell our equipment through there. So that really is one and the same sort of dynamic. Filtration overall, to your point, ends up being accretive because of the pieces of ATF and other elements and some of the consumables flow that are above our margin. So for 2026, again, mix becomes a push plus or minus in terms of what we’re seeing this year versus last year. We’re still, as you know, going through our budgeting process for 2027, but see that as a similar case. So, again, even as the systems piece of the equipment, which to your point would be lower than the average, we’re going to have other pieces of filtration and the other segments that allow for a lift.
And then you’ve got, of course, proteins analytics that are accretive overall. So I think, in the end, mix becomes a plus or minus around the neutral level that we’ll be able to continue to manage.
Jillian (Operator)
Your next question comes from the line of Doug Schenkel with UBS. Doug, your line is open. Please go ahead.
Doug Schenkel (Analyst at UBS)
Good morning. I want to ask a couple of questions on equipment. Revenue continues to lag expectations despite improving order trends and a growing backlog. Olivier, Jason, can you describe what’s driving that disconnect? Is it customer project delays, delivery timing, and any other factors that are worth calling out? And then can you talk a little bit about book-to-bill and how much of the backlog represents committed orders with defined delivery schedules? I’m really trying to get at how much visibility and essentially what needs to happen for conversion into revenue to occur as we think about 2027.
Olivier Lillaud (President and Chief Executive Officer)
Thank you. Yes, good morning, Doug. I’ll start just by repeating: we had the highest order intake of capital equipment in quarter three of this year since 2021. And this is not a light statement. It’s something we’ve been waiting for a long time, and we think that’s really setting us up for a really great year, 2027. We already know today, end of October of 2026, that we’re going to enter into 2027 with a much stronger equipment backlog than we had when we entered in 2026.
So that’s definitely something we’re extremely happy about. The other good news is we don’t think the equipment tap has really opened yet. If you think about it, we’d expect to see it opening more than we have seen it so far. But even with the tap probably being only 5–10% open, we’ve managed to deliver the highest quarter of orders ever in the history of Repligen. So it means when the tap finally opens, it’s going to be potentially gigantic for all of us here in the industry, and we are really looking forward to it.
As far as revenue recognition is concerned, it’s good and bad. We probably won’t recognize a lot of it this year, but it’s all sitting in 2027. All of these orders that we’ve gotten so far are going to be recognized in 2027. It doesn’t go beyond. And to your question, is decision-making still being delayed? The answer is yes, absolutely. We’ve got the highest funnel—even after all of these orders, we still have the highest funnel we ever had on the equipment side.
What is still not completely there is the velocity of decision-making, the speed at which customers really push the button on an order. But the funnel is very high. The order intake has been at the highest. So we’re still very confident about what’s coming next. We want the tap to open more. That’s the only piece here.
Doug Schenkel (Analyst at UBS)
Okay, that’s super helpful. Thank you very much.
Jillian (Operator)
Your next question comes from the line of Casey Woodring with J.P. Morgan. Casey, your line is open. Please go ahead.
Casey Woodring (Analyst at J.P. Morgan)
Great. Thank you for taking my questions. I just wanted to clarify the 2027 comments you made earlier. What’s the implied organic growth rate you’re assuming, or maybe asked another way, what do you expect as far as M&A contribution from BioLife in 2027? Just been trying to pin down where you expect organic to land next year. And then on your assumption of the high single-digit market growth rate for next year—you know that’s the same you’re assuming for this year—things seem to be improving from an underlying perspective. So I guess the question there is just how conservative is that end-market view from your perspective, and what could drive upside to that? Thank you.
Olivier Lillaud (President and Chief Executive Officer)
Yes, good morning, Casey. So let me start with the first part of the question. That framework is not a formal guidance for 2027, and you know that very well. We are only giving guidance towards the end of February, and we’re aiming to do the same this year again. But we just wanted to highlight the very strong reported growth we’re going to experience next year with the acquisition of BioLife, and the fact we’re going to exceed a billion US dollar sales threshold in 2027.
That’s a really big milestone for our company. Obviously, who would have thought Repligen would be above a billion US dollars back a couple of years ago or so, and that’s really why we decided to provide that data point. We are still going through the budget exercise right now, and bear with us—we’ve only consolidated BioLife now for about 20 days or so, and we’re still learning about the business and figuring out exactly how 2027 will play out. What remains exactly the same as before is we are still aiming to outpace market growth by more than 500 basis points, which, by the way, we’ve done for the whole of 2025, and we are very close to the 500 basis points above market in 2026.
Even though we had headwinds, we might be only 300 basis points above. So that’s really staying exactly the same for next year. As far as the overall market growth is concerned, we’re just watching and listening to what people say right now, and it’s fair to say that at this stage people are pretty careful about how 2027 will play out. I think there are two big swing factors for the market growth case next year. The first one is really going to be capital equipment pickup. And again, even though we had a fantastic order intake in quarter three, as I just mentioned to Doug, we really want to see the tap opening much more fully than we’ve seen right now.
That could be a huge swing factor for the overall market growth. And the second one I would just mention is probably FDA approvals—this year has played out pretty nicely so far on the cell and gene therapy side. It’s a little bit lower on the monoclonal antibody side and biosimilars. So I’ve always said we want to see more FDA approvals, and that could be another big swing factor for 2027.
Casey Woodring (Analyst at J.P. Morgan)
Understood, thank you.
Jillian (Operator)
Your next question comes from the line of Puneet Sauda with Leerink Partners. Puneet, your line is open, please go ahead.
Puneet Sauda (Analyst at Leerink Partners)
Hi guys, thanks for the questions here. I’ll keep it to one. Just on the key topic around onshoring, wondering, Olivier, anything in the order book that you’re seeing suggesting onshoring contribution right now? What’s the latest thought on that and how do you think that plays out
Olivier Lillaud (President and Chief Executive Officer)
Thank you. Yeah, thanks for the question, Puneet. I think you heard us saying we’ve won several RFPs so far this year, which for us is a great sign because we didn’t even have a seat at the table back a year ago. We won one RFP in quarter one, one RFP in quarter two and two RFPs in quarter three. Close to three. In fact, we didn’t count the number three because it was more going on the analytical side of the hardware portfolio. But anyway, so we’ve won several RFPs.
Now the question is, are they all onshoring related or not? And I’ll tell you very openly, sometimes it’s a little bit difficult to pinpoint, yeah, this is onshoring or this is just something that would have happened anyway and I can still tell you like I don’t think we’ve seen the beginning of the onshoring project’s potential that I’m absolutely convinced we’re going to see over the next few years. Now, when we entered into 26, I really thought we would see a lot of those RFPs that are purely onshoring related coming our way and we’ve probably only seen very few of these. I do still believe we’re going to see many more coming once our customers, our big pharma companies, feel a bit more confident about how to split their capex between the US, Europe and Asia. And I really think this is going to come sooner than later now. So still very bullish about it.
It’s fair to say we are probably 9 to 12 months delayed versus what I thought we would be today. But certainly RFPs coming next year and certainly some deliveries towards the end of next year and mostly in 28 and beyond here.
Puneet Sauda (Analyst at Leerink Partners)
Got it. That’s helpful. Thank you.
Jillian (Operator)
Your next question comes from the line of Dan Leonard with RBC Capital. Dan, your line is open. Please go ahead.
Dan Leonard (Analyst at RBC Capital Markets)
Thank you very much. I was hoping you could talk more about biosimilars as a growth driver. We just saw the first biosimilar for Keytruda filed with the FDA and with that context, can you speak to when the biosimilar inflection might occur for your business and how do you feel about your wallet share in the biosimilar market more broadly?
Olivier Lillaud (President and Chief Executive Officer)
Yeah, good morning, Dan. We are really excited about what’s coming on the biosimilar side. And in fact, when you think about ATF, which as you know has been a little bit more pressured this year with those two headwinds with the two customers, we’ve had numerous good news on the ATF side, one of them being like by the end of quarter three we had won almost as many new products, as many new customers as we had for the full year of 2025. But very importantly, a lot of these are going into biosimilars and we started to see a really notable pickup in biosimilar for ATF.
And that’s something we’re really excited about because for the reason you mentioned, there will be a lot of product falling in the patent cliff over the next two to three years. And to be designing in multiple of this is going to be a very nice tailwind for us over the next several years for sure.
Jillian (Operator)
Thank you. Your next question comes from the line of Matt Hewitt with Craig Hallum. Matt, your line is open. Please go ahead.
Matt Hewitt (Analyst at Craig-Hallum)
Good morning and congratulations on the strong quarter. I was hoping to touch on the margins a little bit. I think you noted that you’re seeing some higher inflationary pressures. And I’m just curious, is some of the investment that you’re making internally on AI and some of the manufacturing efficiencies that you’re investing in, is that a function of looking for ways to offset some of those inflationary pressures or how are you addressing that?
Thank you.
Jason Garland (Chief Financial Officer)
Yeah. Hey, good morning, Matt. So, yeah, it’s a great question. You know, again, I think just like everyone else, the overall, whether you stem it from oil or overall general inflationary pressures, we certainly have some of that as well. At first, I’d say our sourcing team is doing a fantastic job in finding offsets and helping to negotiate and work with suppliers to find the best solution. So that’s really our first line of defense on that, I think.
Then when you look at that broader overall, how do we expand our gross margin? How do we continue to drive productivity? That’s where exactly the efforts that the team has been driving is jumping in, particularly on the AI side. Whether it’s more, I’ll say, intelligent inspections to drive better quality. We’ve done a lot of work this year and we’ll continue to do next year on automation itself, right, in terms of the advancements that we can generate.
And, you know, we’ve had a lot of great focus from the manufacturing team to help that broader picture of continuing to drive 100 plus points of gross margin expansion like we target and are doing this year. And the other great news is that we’ve added a lot of good IT leadership underneath and behind the manufacturing efforts to again add a different set of technologies, a different way to look at our data infrastructure to drive smarter decision making. And really excited about the progress we’ve made internally on our overall AI and I’ll call rather modernization and fit for growth execution. So thanks for the question, Matt.
Matt Hewitt (Analyst at Craig-Hallum)
Thank you.
Jillian (Operator)
Your next question comes from the line of Mac Etalk with Stevens. Mac, your line is open. Please go ahead.
Mac Etalk (Analyst at Stephens)
Hey, good morning and thank you for taking my questions. Maybe, Olivier, sticking with the equipment and maybe one on analytics, just I think recently you noted that 80% of systems sold over the prior last three months included process analytics, up from maybe, call it, 20 to 25% last year. Can you just provide us an update with how that attachment rate’s trending in 3Q and what’s driving the setup? Is it customer pull-through? Is it integrated solutions, bundling, onshoring, RFP mix, et cetera?
Thank you.
Olivier Lillaud (President and Chief Executive Officer)
Good morning, Mac. Yeah, no, we are very excited about what’s going on on the analytical side. I mean we had another record quarter, in fact the record quarter ever for the company with 20% growth. Interestingly enough, beyond equipment, we had very strong sales of both consumables but also services. You heard me saying earlier we are now servicing 38% more of our system versus the beginning of this year and it’s still a long runway. So service is going to be really accretive to our growth over the next several years.
But one of the big events really that happened recently for us is the USP chapter 507 recently recognized our SoloVPE technology as being really the technology which is aligned with the official standard to measure protein concentration. And that’s a really, really big milestone for us because where we knew people were using our technology mostly today for protein concentration, and as you just alluded to it, this is going to be another big accelerator for the FlowVPX side of the picture, which is really in-line protein concentration tool that indeed our customers are using now much more broadly than they were a year ago.
And you’re right, 75–80% of any system we are selling, there is a FlowVPX attached. And that’s one of the other reasons why this analytical business has been growing very nicely. And we love it obviously a lot because beyond the growth of analytics, this is also enabling us to differentiate ourselves very, very strongly on the equipment side, downstream equipment side. And with the upcoming TAP opening much more broadly, we think that’s going to become a huge differentiating advantage for us. So a lot of great stuff happening on the analytical side.
I’ll just end up by saying, as you know, we’re in the upgrade cycle of the SoloVPE install base where we’ve seen quite a lot of upgrade already. We’re still pretty much at the beginning of the cycle here. So we are really poised for several other great quarters of our analytical product portfolio. And finally on the 908 side where I was always open saying integration has taken us more time than probably expected initially, we are now really running full speed and our funnel of opportunity has increased by 50% in the beginning of the year.
So this should be another really nice tailwind for our analytical business in 2027 and beyond as well.
Mac Etalk (Analyst at Stephens)
I appreciate the color.
Jillian (Operator)
Your next question comes from the line of Justin Bowers with Deutsche Bank. Justin, your line is open. Please go ahead.
Justin Bowers (Analyst at Deutsche Bank)
Thank you. Good morning, everyone. So, Olivier, just sticking with PAT, it sounds—can you refresh us on the opportunity in terms of the replacement cycle for Flow? And then, part two is just, it sounds like systems are the primary driver of the filtration revisions. Can you discuss how the consumables piece of the franchise is performing this year?
Olivier Lillaud (President and Chief Executive Officer)
So on PAT, I kind of already answered quite a bit of your question with Mac earlier. I mean we think—I made the analogy to the iPhone when the first iPhone was launched with a camera where nobody really thought, why do I need a camera, I have my own camera, it’s beautiful. And now probably 80% of people buying a new iPhone is because of the better quality of the camera. So I think the analogy is like people didn’t really realize there was a tool called FlowVPX that would enable them to measure protein concentration in line and this now that they probably bought one or two systems over the last two to three years they realized that they love it and that this is becoming a really big key differentiator and that now they would not even imagine probably running a system without having the ability to measure protein concentration live.
So according to that this is becoming really a big differentiator for us. I forgot the second half of your question. Can you repeat again?
Justin Bowers (Analyst at Deutsche Bank)
Yeah, it was just around filtration and it sounds like the systems have come in a little lighter than what your expectations were. So just trying to understand how the consumables piece is trending versus expectations and how that’s performing this year.
Olivier Lillaud (President and Chief Executive Officer)
Yeah, exactly. So the two are somewhat linked to each other, Justin, if you think about it. I mean particularly on the ATF side, I mean if people delay buying equipment and so on, then you might have a little bit less of the flow of new consumable coming. So where the flow of consumable from existing products that have been either on the market, commercialized or in late phase is at a good level, it’s fair to assume like there was less hardware installed over the last six to 12 months and probably less new consumable order coming from this lack of new hardware.
But as I mentioned earlier, in the first nine months of the year we got as many new customer slash new application wins as we had for the full year of 2025. So I’m really very confident that we are going to be back to very nice growth trend for ATF from 27 onwards. And then outside of ATF we had a pretty good performance of our flat sheet cassette business which is probably one of the few areas where we really have a direct competition, not a lot of differentiation and it’s fair to say we are gaining market share on that side because that part of the business has been doing really well this year.
And then finally fluid management, where the growth overall has been nice. We were probably hoping to see even more growth than we have, which is maybe one of the other factors why filtration finally is a little bit lower than we thought. But from a margin point of view, as you know, fluid management margins are quite significantly lower anyway. Thank you.
Jillian (Operator)
Your next question comes from the line of Michael Pollark with Wolff Research. Michael, your line is open. Please go ahead.
Michael Pollark (Analyst at Wolff Research)
Hey, good morning. I want to better understand the BioLife fourth quarter guidance and what it might suggest for a good 2027 model inputs. So 24 million for the fourth quarter. You didn’t own it for six days, so almost a full quarter. The year ago in fourth quarter ’25 was about 25 million. So it looks like you’re modeling it flat to maybe up a little bit on a, you know, full quarter basis, and, you know, it had otherwise been a 20% growth asset.
So I want to understand, is this just a normal model haircut? Hey, you’re learning a bunch more, so let’s model a little lower than where they were running, or is there something specific about that adjustment? And then the related question is, just running into ’27, is the good number for now the 115, you know, the current run rate, or is 135, kind of 20% growth, still reasonable for modeling purposes? Thank you.
Jason Garland (Chief Financial Officer)
Yeah, no, great question. I think we just really need to impress that in those first days of October they had a lot of shipments and were responding to some very specific customer needs and so on. I’ll say on a run-rate basis there was a disproportionate amount of sales in those first days, and so it really isn’t the math of a flat year over year. So I would caution you to take that view. And of course we’ll continue to see how they’ll deliver in the fourth quarter and then into next year. Again, I think you’re thinking about all the pieces in the right way. We again have just owned them for, what we say, 20 days, you know, and so we’re continuing to get our arms around their ’27 outlook. Certainly we have our models and expectations. But before we finalize the budget and a guide on that, we’re going to spend the right time to do it.
Again, no change in the view overall though that they’ll still be at least five cents accretive for us, kind of top to bottom in the P&L. So really excited about what we’ve learned. And Olivier highlighted that we’re even more excited as we’ve spent more time there and excited about the market. So more to come to talk through that.
Olivier Lillaud (President and Chief Executive Officer)
And Mike, just to add to what Jason said, with the 24 million plus what they recognized during the first few days of October, plus quarter three results, we’re aiming for a full-year 114 million US dollar sales for the BioLife business, which is above the midpoint of the last guidance Rod gave at the last earnings call he had for BioLife separately.
Jillian (Operator)
Your next question comes from the line of Paul Knight with KeyBanc. Paul, your line is open. Please go ahead.
Paul Knight (Analyst at KeyBanc Capital Markets)
Thanks, Olivier. And could you talk to the Ecolab renewal? And also, looking at this 40% proteins growth, is this to imply that we’re now at kind of critical mass of the years of development at that particular product line, and 40% could happen again in the quarter or years ahead?
Olivier Lillaud (President and Chief Executive Officer)
Yeah. Good morning, Paul. So starting with Ecolab, yes, we’re indeed very pleased that we have just extended our supply agreement with them. This is really building on the very strong and productive partnership we’ve had between the two companies. I’ve been with Repligen for the last three years. I have to say we’re becoming closer and closer, supporting each other, and they have an incredible momentum. So we see a really meaningful opportunity to build on that success in several years ahead of us.
As far as a broader protein franchise is concerned, you heard me saying, and I love all of my four big franchises, but this one I think we’ve done a stunning job to just reinvent ourselves, because we were a pure OEM supporter of three companies back a few years ago. So beyond, now, the Purolite collaboration, we have our own destiny in our hands very broadly on both growth factors but also on our own custom catalog resin for non-monoclonal antibody applications.
And we’ve had incredible traction for the last several quarters now. In fact, year to date our protein business has been growing 34%. So it’s still a bit lumpy, which is why quarter four will be a little bit more challenging. We have high comp in quarter four for protein, but we’ve got so many opportunities across the entire protein franchise that the next several years are going to be extremely exciting for that franchise here.
Jillian (Operator)
We have reached the end of the Q&A session. I will now turn the call back to Olivier Lillaud for closing remarks.
Olivier Lillaud (President and Chief Executive Officer)
Thank you, Jillian. And thank you all for joining us today. We are really very pleased with our record third quarter results. Also very encouraged by the continued momentum we have across our business. With the addition of BioLife and the strategic investment we are making across our entire portfolio and all regions, we’re extremely well positioned to capitalize on the growth opportunities ahead of us. Thank you again and have a great day.
Jillian (Operator)
This concludes today’s call. Thank you for attending. You may now disconnect.
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