BIO-RAD LABORATORIES, INC.

Previous wording

This discussion should be read in conjunction with the information contained in both our consolidated financial statements for the year ended December 31, 2024 and the condensed consolidated financial statements for the three months ended March 31, 2025.

Current wording

This discussion should be read in conjunction with the information contained in both our consolidated financial statements for the year ended December 31, 2024 and the condensed consolidated financial statements for the three and six months ended June 30, 2025.

Previous wording

The following table shows Cost of goods sold, Gross profit, components of operating expense, Gains from change in fair market value of equity securities and loan receivable, and Net income as a percentage of Net sales:

Current wording

The following table shows Cost of goods sold, Gross profit, components of operating expense, (Gains) losses from change in fair market value of equity securities and loan receivable, and Net income (loss) as a percentage of Net sales:

Previous wording

An accounting policy is deemed to be critical if it affects our financial statements materially and requires subjective or complex judgments by management. An accounting estimate is deemed to be critical if it requires assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. Management believes that there have been no significant changes during the three months ended March 31, 2025 to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Current wording

An accounting policy is deemed to be critical if it affects our financial statements materially and requires subjective or complex judgments by management. An accounting estimate is deemed to be critical if it requires assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements. Management believes that there have been no significant changes during the three and six months ended June 30, 2025 to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Previous wording

There have been no substantial changes in our significant accounting policies during the three months ended March 31, 2025, compared with the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

There have been no substantial changes in our significant accounting policies during the three and six months ended June 30, 2025, compared with the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

Net sales ("sales") for the first quarter of 2025 were $585.4 million compared to $610.8 million in the first quarter of 2024, a decrease of 4.2%. On a currency neutral basis, first quarter 2025 sales decreased by approximately 1.5% compared to the same period in 2024. The decrease in sales was primarily driven by lower sales in our Life Science segment.

Current wording

Net sales ("sales") for the second quarter of 2025 were $651.6 million compared to $638.5 million in the second quarter of 2024, an increase of 2.1%. On a currency neutral basis, second quarter 2025 sales increased by approximately 1.0% compared to the same period in 2024. The increase in sales was primarily driven by higher sales of process chromatography products.

Previous wording

The Life Science segment sales for the first quarter of 2025 were $228.6 million, a decrease of 5.4% compared to the same period last year. On a currency neutral basis, sales decreased 3.5% compared to the first quarter in 2024, driven by ongoing challenges in the academic research market, particularly in the Americas. Currency neutral sales decreased in the Americas and Asia Pacific, partially offset by increased sales in EMEA.

Current wording

The Clinical Diagnostics segment sales for the second quarter of 2025 were $388.8 million, essentially flat compared to the same period last year. On a currency neutral basis, sales decreased 0.7% compared to the second quarter in 2024. The currency neutral sales decrease was primarily driven by lowered reimbursements for diabetes testing in China, partially offset by increased demand for our quality control and immunology products. Currency neutral sales decreased in Asia Pacific, partially offset by increased sales in EMEA and the Americas.

Previous wording

Selling, general and administrative ("SG&A") expense for the first quarter of 2025 was $208.8 million or 35.7% of sales, compared to $214.9 million, or 35.2% of sales for the first quarter of 2024. The decrease in SG&A expense was primarily due to lower discretionary spending and employee-related costs, partially offset by higher restructuring costs.

Current wording

Selling, general and administrative ("SG&A") expense for the second quarter of 2025 was $207.7 million or 31.9% of sales, compared to $194.7 million, or 30.5% of sales for the second quarter of 2024. The increase in SG&A expense was primarily due to higher employee-related costs.

Previous wording

Research and development ("R&D") expense for the first quarter of 2025 was $73.5 million or 12.6% of sales, compared to $66.4 million or 10.9% of sales in the first quarter of 2024. The increase in R&D expense was primarily due to higher restructuring costs, partially offset by lower employee-related expenses.

Current wording

Research and development ("R&D") expense for the second quarter of 2025 was $60.5 million or 9.3% of sales, compared to $58.9 million or 9.2% of sales in the second quarter of 2024. The increase in R&D expense was primarily due to higher project related spending.

Previous wording

Interest expense for the first quarter of 2025 and 2024 was $12.0 million and $12.3 million, respectively, which primarily consisted of interest expense related to the $1.2 billion Senior Notes.

Current wording

Interest expense for the second quarter of 2025 and 2024 was $12.6 million and $12.3 million, respectively, which primarily consisted of interest expense related to the $1.2 billion Senior Notes.

Previous wording

Gains from change in fair market value of equity securities and loan receivable was $31.8 million and $422.2 million for the first quarter of 2025 and 2024, respectively. The change in the fair market value primarily resulted from the recognition of holding gains of $29.0 million in the first quarter of 2025 compared to $402.3 million in the first quarter of 2024 on our position in Sartorius AG. In addition, holding gains from the change in fair market value of our loan receivable of $4.6 million in the first quarter of 2025 compared to $12.3 million in the first quarter of 2024 contributed to the change.

Current wording

(Gains) losses from change in fair market value of equity securities and loan receivable amounted to a gain of $334.4 million for the second quarter of 2025, compared to a loss of $2.9 billion for the second quarter of 2024. The change in the fair market value primarily resulted from the recognition of holding gains of $326.6 million in the second quarter of 2025 compared to holding losses of $2.9 billion in the second quarter of 2024 on our position in Sartorius AG. In addition, holding losses from the change in fair market value of our loan receivable of $2.4 million in the second quarter of 2025 compared to a loss of $22.7 million in the second quarter of 2024 contributed to the change.

Previous wording

Other income, net for the first quarter of 2025 was $37.2 million compared to $34.6 million for the first quarter of 2024. The increase in Other income, net of $2.6 million was primarily attributable to higher interest and investment income in the first quarter of 2025 compared to the first quarter of 2024.

Current wording

Other income, net for the second quarter of 2025 was $16.2 million compared to $18.2 million for the second quarter of 2024. The difference in Other income, net of $2.0 million was primarily attributable to lower interest and investment income in the second quarter of 2025 compared to the second quarter of 2024.

Previous wording

Our effective income tax rate was 23.3% and 21.8% for the first quarter of 2025 and 2024, respectively. The effective tax rate reported in the first quarter of 2025 was primarily driven by geographical mix of earnings and 2024 was primarily driven by the unrealized gain/loss in equity securities. The difference in the rate is primarily driven by the unrealized gain/loss in equity securities.

Current wording

Our effective income tax rate was 23.2% and 22.3% for the second quarter of 2025 and 2024, respectively. The effective tax rate reported in the second quarter of 2025 was primarily driven by the unrealized gain/loss in equity securities and the geographical mix of earnings, and 2024 was primarily driven by the unrealized gain/loss in equity securities.

Previous wording

The Clinical Diagnostics segment sales for the first quarter of 2025 were $356.8 million, a decrease of 3.2% compared to the same period last year. On a currency neutral basis, sales decreased 0.1% compared to the first quarter in 2024. The currency neutral sales decrease was primarily driven by lowered reimbursements for diabetes testing in China, partially offset by increased demand for our quality control products. Currency neutral sales decreased in Asia Pacific, partially offset by increased sales in EMEA and the Americas.

Current wording

The Clinical Diagnostics segment sales for the first six months of 2025 were $745.6 million, a decrease of 1.5% compared to the same period last year. On a currency neutral basis, sales decreased 0.5% compared to the first six months of 2024. The currency neutral sales decrease was primarily driven by lowered reimbursements for diabetes testing in China, partially offset by increased demand for our quality control products. Currency neutral sales decreased in Asia Pacific, partially offset by increased sales in EMEA and the Americas.

Previous wording

Consolidated gross margin was 52.3% for the first quarter of 2025 compared to 53.4% for the first quarter of 2024. Gross margin for the Life Science segment for the first quarter of 2025 increased by approximately 1.7 percentage points as compared to the same period last year. The increase in gross margin was primarily driven by product mix and cost control measures, partially offset by higher restructuring costs. Gross margin for the Clinical Diagnostics segment for the first quarter of 2025 decreased by approximately 2.9 percentage points from the same period last year. The decrease in gross margin was primarily driven by higher restructuring and material costs.

Current wording

Consolidated gross margins were 52.7% for the first six months of 2025 compared to 54.5% for the first six months of 2024. Gross margins for the Life Science segment increased by approximately 0.2 percentage points, essentially flat as compared to the same period last year. Gross margin for the Clinical Diagnostics segment for the first six months of 2025 decreased by approximately 3.3 percentage points from the same period last year. The decrease in gross margin was primarily driven by higher material costs, reduced fixed manufacturing absorption and higher restructuring costs.

Previous wording

Foreign currency exchange gains, net consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk. Foreign currency exchange gains, net was $2.7 million and $2.0 million for the first quarter of 2025 and 2024, respectively. Gains and losses are primarily due to the estimating process inherent in the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts.

Current wording

Foreign currency exchange (gains) losses, net consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk. Foreign currency exchange gains, net were $1.6 million and $3.7 million for the first six months of 2025 and 2024, respectively. Gains and losses are primarily due to the estimating process inherent in the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts.

Previous wording

Bio-Rad operates and conducts business globally, primarily through subsidiary companies established in the markets in which we trade. Goods are manufactured in a small number of locations, and are then shipped to local distribution facilities around the world. Our product mix is diversified, and certain products compete largely on product efficacy, while others compete on price. Gross margins are generally sufficient to exceed normal operating costs, and funding for research and development of new products, as well as routine outflows for capital expenditures, interest and taxes. In addition to the annual positive cash flow from operating activities, additional liquidity is readily available via the sale of short-term investments and access to our $200.0 million unsecured Revolving Credit Agreement that we entered into in February 2024, and to a lesser extent international lines of credit. Borrowings under the Revolving Credit Agreement are available on a revolving basis and can be used to make acquisitions, for working capital and for other general corporate purposes. We had no outstanding borrowings under the Revolving Credit Agreement as of March 31, 2025, however, $5.7 million was utilized for domestic standby letters of credit that reduced our borrowing availability. As of March 31, 2025, our short-term investments include the net cash proceeds from the sale of Senior Notes of $1.186 billion. Interest is payable semiannually in arrears on March 15 and September 15 of each year. Management believes that this availability, together with cash flow from operations, will be adequate to meet our current objectives for operations, research and development, capital additions for manufacturing and distribution, plant and equipment, information technology systems and acquisitions of reasonable proportion to our existing total available capital for the next twelve months and beyond.

Current wording

Bio-Rad operates and conducts business globally, primarily through subsidiary companies established in the markets in which we trade. Goods are manufactured in a small number of locations, and are then shipped to local distribution facilities around the world. Our product mix is diversified, and certain products compete largely on product efficacy, while others compete on price. Gross margins are generally sufficient to exceed normal operating costs, and funding for research and development of new products, as well as routine outflows for capital expenditures, interest and taxes. In addition to the annual positive cash flow from operating activities, additional liquidity is readily available via the sale of short-term investments and access to our $200.0 million unsecured Revolving Credit Agreement that we entered into in February 2024, and to a lesser extent international lines of credit. Borrowings under the Revolving Credit Agreement are available on a revolving basis and can be used to make acquisitions, for working capital and for other general corporate purposes. We had no outstanding borrowings under the Revolving Credit Agreement as of June 30, 2025, however, $5.7 million was utilized for domestic standby letters of credit that reduced our borrowing availability. As of June 30, 2025, our short-term investments include the net cash proceeds from the sale of Senior Notes of $1.2 billion. Interest is payable semiannually in arrears on March 15 and September 15 of each year. Management believes that this availability, together with cash flow from operations, will be adequate to meet our current objectives for operations, research and development, capital additions for manufacturing and distribution, plant and equipment, information technology systems and acquisitions of reasonable proportion to our existing total available capital for the next twelve months and beyond.

Previous wording

At March 31, 2025, we had available $1.66 billion in cash, cash equivalents and short-term investments, of which approximately 18% was held in our foreign subsidiaries. The amount of funds held in the United States can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as acquisitions and borrowings. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and foreign cash flows (both inflows and outflows).

Current wording

At June 30, 2025, we had available $1.4 billion in cash, cash equivalents and short-term investments, of which approximately 21% was held in our foreign subsidiaries. The amount of funds held in the United States can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as acquisitions and borrowings. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and foreign cash flows (both inflows and outflows).

Previous wording

Net cash provided by operations was $129.9 million and $69.8 million for the three months ended March 31, 2025 and 2024, respectively. The increase in operating cash flows was primarily due to lower cash paid to suppliers and employees, partially offset by higher payments for (compared to proceeds from) foreign exchange contracts.

Current wording

Net cash provided by operations was $246.4 million and $167.4 million for the six months ended June 30, 2025 and 2024, respectively. The increase in operating cash flows was primarily due to improved working capital.

Previous wording

Net cash provided by investing activities was $2.9 million compared to net cash used for investing activities of $43.1 million for the three months ended March 31, 2025 and 2024, respectively. The change is primarily due to the timing of our purchases, maturities and sales of marketable securities and investments.

Current wording

Net cash used in investing activities was $112.5 million and $74.0 million for the six months ended June 30, 2025 and 2024, respectively. The increase was primarily due to net cash outflows for the acquisition of Stilla, partially offset by change in net outflows primarily due to the timing of our purchases, maturities and sales of marketable securities and investments.

Previous wording

Net cash used in financing activities was $97.7 million and $0.0 million for the three months ended March 31, 2025, and 2024, respectively. The increase in net cash used in financing activities was primarily attributable to higher payments for purchases of treasury stock.

Current wording

Net cash used in financing activities was $234.0 million and $96.6 million for the six months ended June 30, 2025, and 2024, respectively. The increase in net cash used in financing activities was primarily attributable to higher payments for share repurchases. During the six months ended June 30, 2025, we repurchased 992,803 shares of Class A common stock for $242.1 million and during the six months ended June 30, 2024, we repurchased 360,476 shares of Class A common stock for $105.7 million. We designated these repurchased shares as treasury stock. As of June 30, 2025, $337.4 million remained available for repurchases under the 2023 Share Repurchase Program. Repurchases under the 2023 Share Repurchase program may be made at management’s discretion from time to time on the open market.

Previous wording

We did not adopt any new accounting pronouncements during the three months ended March 31, 2025.

Current wording

We did not adopt any new accounting pronouncements during the six months ended June 30, 2025.