Finally, our remarks today will include references to non-GAAP financials, including net income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release. We have also posted a supplemental earnings presentation in the Investor Relations section of our website for your reference. Revenue was consistent with our outlook, and operating margin exceeded consensus, a testament to the discipline and agility of our teams in what continues to be a challenging and evolving macro environment.
Our Clinical Diagnostics segment remains stable across our product areas, aside from the reimbursement rate headwind in China, which we expect to analyze in the fourth quarter. In our Life Science segment, process chromatography delivered a strong performance, helping offset the continued softness we're seeing in academic research and biotech funding. This sentiment was reflected through continued weak instrument demand and some softness in consumables. However, through disciplined cost management and tight control of our discretionary spending, we achieved margin outperformance for the quarter.
While it's still early, we are encouraged by the customer receptivity to the new products, particularly in the entry-level segment. In summary, we're pleased with the progress we're making, balancing near-term execution with continued investment in innovation and long-term growth. Net sales for the third quarter of 2025 were approximately $653 million, which represents a 0.5% increase on a reported basis versus $650 million in Q3 of 2024. Within the Life Science segment, our process chromatography business experienced strong double-digit growth on a year-over-year basis due to the timing of customer orders within the quarter.
| Metric | Period | Current guidance |
|---|---|---|
| Total currency-neutral revenue growth | FY2025 | Flat to 1% (maintained) |
| Non-GAAP gross margin | FY2025 | 53.5%-54.5% (maintained) |
| Non-GAAP operating margin | FY2025 | 12%-13% (maintained) |
| Free cash flow | FY2025 | $310M-$330M (maintained) |
| Process chromatography growth | FY2025 | High teens (raised) |
| Process chromatography growth (framing) | FY2026 | High single digit (normalization) (new framing) |
| Metric | YoY | Note |
|---|---|---|
| Net sales | +0.5% reported (-1.7% currency neutral) to ~$653M | Driven down currency-neutral by both Life Science and Clinical Diagnostics segments |
| Life Science segment sales | Flat reported (-1.5% currency neutral) at $262M | Constrained academic research and biotech funding environment |
| Core Life Science ex-process chromatography | -6% (-7.8% currency neutral) | Academic/biotech softness and tough comp from large one-time orders in year-ago period |
| Clinical Diagnostics segment sales | +0.6% reported (-1.8% currency neutral) to ~$391M | Lower diabetes testing reimbursement in China |
| Non-GAAP gross margin | 53.5% vs 55.6% | Higher material costs and reduced fixed manufacturing absorption |
| Non-GAAP operating margin | 11.8% vs 11.3% | Proactive cost actions and net reductions in IP R&D expense |
| Non-GAAP net income | $61M ($2.26 EPS) vs $56M ($2.02 EPS) | Excludes Sartorius equity value change |
| Free cash flow | $89M vs $123M | Lower operating cash generation versus prior year |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Process chromatography | Low double digit FY outlook | High teens FY outlook; Q4 expected lower sequentially and year-over-year on order timing; FY2026 framed at high single digit | Strong near-term, normalizing |
| Academic/government research funding | Stabilizing in Q2 | Still cautious; no budget flush expected amid NIH budget uncertainty and U.S. government shutdown | Soft/cautious |
| China diagnostics | Soft, DRG impact noted, no VBP | Still soft; expect return to growth in Q4 as diabetes reimbursement annualizes; no new VBP expected into 2026 | Soft, improving into q4 |
| ddPCR portfolio | QX700 launched, Stilla closed | Sales training complete, funnel building, strong entry-level receptivity, new Gencurix/Biodesix partnerships; still expecting flat for the year | Improving |
| Biotech funding | Slow recovery | Gradual improvement anticipated into 2026 | Gradual improvement |