BIO-TECHNE Corp (TECH)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following management discussion and analysis (MD&A) provides information that we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the effect of acquisitions and changes in foreign currency at the corporate and segment level. We also provide quantitative information about discrete tax items and other significant factors we believe are useful for understanding our results. The MD&A should be read in conjunction with both the unaudited Condensed Consolidated Financial Information and related Notes included in this Form 10-Q, and MD&A of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended June 30, 2025. This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements entitled “Non-GAAP Financial Measures” and “Forward-Looking Information and Cautionary Statements” located at the end of Item 2 of this report.

OVERVIEW

Bio-Techne and its subsidiaries, collectively doing business as Bio-Techne Corporation (Bio-Techne, we, our, us or the Company) develop, manufacture and sell biotechnology reagents, instruments and services for the research and clinical diagnostic markets worldwide. We use our deep product portfolio and application expertise to develop and sell integral components of scientific investigations into biological processes and molecular diagnostics, revealing the nature, diagnosis, etiology and progression of specific diseases. Our products aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses.

We are committed to providing the life sciences community with innovative, high-quality scientific tools that allow our customers to make extraordinary discoveries and treat and diagnose diseases. We intend to build on Bio-Techne’s past accomplishments, high product quality reputation and sound financial position by executing strategies that position us to serve as the standard for biological content in the research market, and to leverage that leadership position to expand our prescence in diagnostics and other adjacent markets. The Company’s strategic pillars for long-term growth and profitability are to grow and leverage the core, capitalize on high potential markets, market expansion through innovation and acquisition, deliver best-in-class customer experience, and develop people through a transformative culture.

Our Protein Sciences segment is a leading developer and manufacturer of high-quality purified proteins and reagent solutions, most notably cytokines and growth factors, antibodies, immunoassays, biologically active small molecule compounds, tissue culture reagents and T-Cell activation technologies. This segment also includes protein analysis solutions that offer researchers efficient and streamlined options for protein characterization, automated western blot and multiplexed ELISA workflow. Our Diagnostics and Spatial Biology segment develops and manufactures diagnostic products, including FDA-regulated controls, calibrators, blood gas and clinical chemistry controls and other reagents for OEM and clinical customers, as well as a portfolio of clinical molecular diagnostic carrier screening and oncology assays. This segment also manufactures and sells fully automated multiomic spatial biology instrumentation and advanced tissue-based in-situ hybridization assays (ISH) for research and clinical use.

RESULTS OF OPERATIONS

Net Sales

Consolidated net sales for the quarter ended March 31, 2026 decreased 2% to $311.4 million compared to the same prior year period. Consolidated net sales for the nine months ended March 31, 2026 were $893.8 million, a decrease of 1% from the same prior year period. Organic revenue for the quarter ended March 31, 2026 decreased 2% compared to the prior year. Foreign currency exchange had a favorable impact of 2% and non-recurring prior year revenue from a business held-for-sale had an unfavorable impact of 2%. Organic revenue for the nine months ended March 31, 2026 decreased 1% compared to the prior year. Foreign currency exchange had a favorable impact of 2% and non-recurring prior year revenue from a business held-for-sale had an unfavorable impact of 2%. Organic revenue for the quarter ended March 31, 2026 was primarily driven by unfavorable volume and product mix in our Protein Sciences segment, partially offset by favorable performance in our Diagnostics and Spatial Biology portfolio.

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Gross Margins

Consolidated gross margins for the quarter and nine months ended March 31, 2026 were 66.9% and 65.7%, respectively, compared to 67.9% and 65.5% for the same prior year periods. Excluding the impact of costs recognized upon the sale of acquired inventory, amortization of intangibles, stock-based compensation expense, restructuring and restructuring-related expenses, and the impact of a business held-for-sale, adjusted gross margins for the quarter and nine months ended March 31, 2026 were 70.4% and 69.7%, respectively, compared to 71.6% and 70.6% for the quarter and nine months ended March 31, 2025, respectively. Fluctuations in consolidated gross margin and adjusted gross margin, as a percentage of sales, have primarily resulted from changes in product mix. We expect that, in the future, gross margins will continue to be impacted by the mix of our portfolio growing at different rates.

A reconciliation of the reported consolidated gross margin percentages, adjusted for acquired inventory sold, intangible amortization, stock compensation expense, restructuring and restructuring-related charges, and the impact of a business held-for-sale included in cost of sales, is as follows (in thousands):

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(1)March 31, 2025 amounts relate to the Protein Sciences segment business that met the held-for-sale criteria on December 31, 2023. March 31, 2026 amounts relate to the Diagnostics and Spatial Biology segment business that met the held-for-sale criteria on June 30, 2025.

(2)Adjusted gross margin percentage excludes both revenue and gross margin for the businesses that met the held-for-sale criteria during the respective periods.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased 28% to $109.3 million and decreased 13% to $339.2 million for the quarter and nine months ended March 31, 2026, respectively, from the same prior year periods. The decrease in expense for the quarter and nine months ended March 31, 2026 was primarily due to non-recurring arbitration award in the prior year and ongoing cost management initiatives.

Research and Development Expenses

Research and development expenses decreased 5% to $23.5 million and decreased 4% to $70.8 million for the quarter and nine months ended March 31, 2026, respectively, from the same prior year periods. We continue to make strategic growth investments in research and development as we also employ our cost management initiatives.

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Segment Results

Protein Sciences

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Protein Sciences’ net sales for the quarter and nine months ended March 31, 2026 were $226.2 million and $643.4 million, respectively, with results decreasing 1% and remaining flat, respectively, compared to the same respective prior year periods. As of December 31, 2023, a business within the Protein Sciences Segment met the criteria as held-for-sale; this held-for-sale business has been excluded from the segment’s fiscal 2026 and 2025 operating results. Organic revenue for the segment decreased 4% in the quarter ended March 31, 2026. Foreign currency exchange had a favorable impact of 3%. Organic revenue for the segment decreased 2% for the nine months ended March 31, 2026. Foreign currency exchange had a favorable impact of 2%.

The operating margin was 44.2% and 40.8% for the quarter and nine months ended March 31, 2026, respectively, compared to 45.6% and 42.2% in both comparative prior year periods. The segment’s operating margin decreased primarily due to unfavorable volume and product mix, partially offset by ongoing profitability initiatives.

Diagnostics and Spatial Biology

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following management discussion and analysis (“MD&A”) provides information that we believe is useful in understanding our operating results, cash flows and financial condition. We provide quantitative information about the material sales drivers including the effect of acquisitions and changes in foreign currency at the corporate and segment level. We also provide quantitative information about discrete tax items and other significant factors we believe are useful for understanding our results. The MD&A should be read in conjunction with the consolidated financial information and related notes included in this Form 10-K. This discussion contains various “Non-GAAP Financial Measures” and also contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statements entitled “Non-GAAP Financial Measures” located at the end of this MD&A and “Forward-Looking Information and Cautionary Statements” and “Risk Factors” within Items 1 and 1A of this Form 10-K.

OVERVIEW

Bio-Techne develops, manufactures and sells life science reagents, instruments and services for the research and clinical diagnostic markets worldwide. With our deep product portfolio and application expertise, we sell integral components of scientific investigations into biological processes and molecular diagnostics, revealing the nature, diagnosis, etiology and progression of specific diseases. Our products aid in drug discovery efforts and provide the means for accurate clinical tests and diagnoses.

We manage the business in two operating segments – our Protein Sciences segment and our Diagnostics and Spatial Biology segment. Our Protein Sciences segment is a leading developer and manufacturer of high-quality biological reagents used in all aspects of life science research, diagnostics and cell and gene therapy. This segment also includes proteomic analytical tools, both manual and automated, that offer researchers and pharmaceutical manufacturers efficient and streamlined options for automated western blot and multiplexed ELISA workflow. Our Diagnostics and Spatial Biology segment develops and manufactures diagnostic products, including controls, calibrators, and diagnostic assays for the regulated diagnostics market, advanced tissue-based in-situ hybridization assays and instrumentation for spatial genomic and tissue biopsy analysis, and genetic and oncology kits for research and clinical applications.

PENDING MERGER WITH MERCK KGAA, DARMSTADT, GERMANY

On June 25, 2026, the Company entered into the Agreement and Plan of Merger (the “Merger Agreement”), with Merck KGaA, Darmstadt, Germany, a German corporation with general partners (“Parent”), and EMD Holdings NewCo, Inc., a Minnesota corporation and a wholly-owned subsidiary of Parent (“Merger Sub”). The Merger Agreement provides that, on the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving as a wholly-owned subsidiary of Parent.

At the effective time of the Merger (the “Effective Time”), each share of the Company’s common stock, par value $0.01 per share, (each, a “Share”) (other than Company Restricted Stock (as defined in the Merger Agreement)) issued and outstanding immediately prior to the Effective Time (other than Excluded Shares (as defined in the Merger Agreement)) will automatically be converted into the right to receive $73.00 in cash (the “Merger Consideration”), without any interest thereon and less any required tax withholdings and all of such Shares will cease to be outstanding and cease to exist.

If the Merger Agreement is terminated under certain specified circumstances, we or Parent will be required to pay a termination fee to the other party. The Company will be required to pay Parent a termination fee of approximately $230.5 million under specified circumstances, including termination of the Merger Agreement in connection with our entry into an agreement with respect to a Superior Proposal (as defined in the Merger Agreement) at any time prior to us receiving shareholder approval of the Merger Agreement, or termination by Parent if the Company’s Board of Directors effects a Change of Company Recommendation (as defined in the Merger Agreement). Parent will be required to pay the Company a termination fee of approximately $576.1 million under specified circumstances, including termination of the Merger Agreement due to the failure to consummate the Merger by the Outside Date (as defined in the Merger Agreement) as a

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result of the failure to obtain certain required regulatory approvals or due to a permanent injunction arising from Antitrust Laws or Investment Screening Laws (each as defined in the Merger Agreement) if certain other conditions are met.

Consummation of the Merger is subject to customary closing conditions, including: (i) the approval of the Merger Agreement (including the “plan of merger” for purposes of the Minnesota Business Corporation Act) by the affirmative vote of the holders of a majority of the voting power of all of the Shares outstanding and entitled to vote thereon at the meeting of the Company’s shareholders held for the purpose of voting upon the approval of the Merger Agreement; (ii) the expiration or termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and all other scheduled antitrust or investment screening law approvals having been obtained (or the applicable waiting periods having expired or terminated) (such approvals, collectively, the “Required Approvals”); (iii) no governmental entity of competent jurisdiction having issued or entered any order, injunction or decree or enacted, enforced, issued, promulgated, entered or adopted any law, in each case, that is continuing in effect and that prohibits, enjoins or otherwise prevents the consummation of the Merger; (iv) accuracy of the other party’s representations and warranties, subject to certain customary materiality or de minimis standards set forth in the Merger Agreement; (v) the other party’s compliance with its obligations and covenants required under the Merger Agreement, subject to certain materiality standards; and (vi) with respect to the obligations of Parent and Merger Sub, the Required Approvals not containing, individually or in the aggregate, a Burdensome Condition (as defined in the Merger Agreement). The Merger is expected to close by late 2026 or early 2027.

RECENT ACQUISITIONS

A key component of the Company's strategy is to augment internal growth at existing businesses with complementary acquisitions. As disclosed in Note 4, the Company completed the acquisition of Lunaphore in fiscal 2024 for $169.7 million, in a cash-free, debt-free acquisition.

OVERALL RESULTS

Operational Update

For fiscal 2026, consolidated net sales remained flat at $1.2 billion as compared to fiscal 2025. Organic revenue remained flat from the prior year. Foreign currency translation had a favorable impact of 2% and a business held-for-sale had an unfavorable impact of 2%.

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Consolidated net earnings for fiscal 2026 increased 148% compared to fiscal 2025. The increase in earnings was favorably impacted by a non-recurring impairment charge in the prior year, a non-recurring arbitration award in the prior year, and a recovery of assets held-for-sale. After adjusting for cost recognized upon sale of acquired inventory, intangibles amortization, acquisition-related costs, certain litigation charges, investment loss and other non-operating loss, stock-based compensation, restructuring and restructuring-related costs, impairment (recovery) of assets held-for-sale, and impact of businesses held-for-sale, adjusted net earnings decreased 1% in fiscal 2026 as compared to fiscal 2025. Adjusted net earnings was primarily impacted by unfavorable product mix and pricing pressures.

For fiscal 2025, consolidated net sales increased 5% as compared to fiscal 2024. Organic growth was 5% and foreign currency translation and a business held-for-sale did not have a material impact. Organic revenue growth was primarily driven by strong commercial execution in our Protein Sciences segment.

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Consolidated net earnings for fiscal 2025 decreased 56% compared to fiscal 2024. The decrease in earnings was impacted by a non-recurring loss on an arbitration award, impairment of assets held-for-sale, and restructuring and restructuring-related charges. After adjusting for cost recognized upon sale of acquired inventory, intangibles amortization, acquisition-related costs, certain litigation charges, gain on sale of investments, stock-based compensation, restructuring and restructuring-related costs, impairment of assets held-for-sale, and impact of business held-for-sale, adjusted net earnings increased 8% in fiscal 2025 as compared to fiscal 2024. Adjusted net earnings was primarily impacted by favorable volume leverage within Protein Sciences.

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RESULTS OF OPERATIONS

Net Sales

Consolidated organic net sales exclude the impact of companies acquired during the first 12 months post-acquisition and the effect of the change from the prior year in exchange rates used to convert sales in foreign currencies (primarily the euro, British pound sterling, Chinese yuan, and Swiss franc) into U.S. dollars.

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Consolidated net sales growth was as follows:

Consolidated net sales by segment were as follows (in thousands):

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In fiscal 2026, Protein Sciences s

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