Bio-Rad's Q3 2025 revenue was in line with outlook and operating margin beat consensus at 11.8% non-GAAP, up year-over-year on cost discipline, even as currency-neutral sales declined 1.7% and gross margin fell to 53.5%. Process chromatography again posted strong double-digit growth, lifting the full-year outlook to high teens, while core Life Science weakened on academic and biotech softness and a tough one-time-order comp. Management maintained full-year guidance, expecting Diagnostics to return to growth in Q4 as the China diabetes reimbursement headwind annualizes, and framed process chromatography normalizing to high single digit growth in 2026.
Good afternoon, everyone, and thank you for joining us. Today, we will review the third quarter 2025 financial results and provide an update on key business trends for Bio-Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer, Jon DiVincenzo, President and Chief Operating Officer, and Roop Lakkaraju, Executive Vice President and Chief Financial Officer. Before we begin our review, I would like to remind everyone that we'll be making forward-looking statements about management's goals, plans, and expectations, our future financial performance, and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially from these plans, goals, and expectations.
You should not place undue reliance on these forward-looking statements, and I encourage you to review our filings with the SEC, where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today. 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. In addition to excluding certain atypical and non-recurring items, our non-GAAP financial measures exclude changes in the equity value of our stake in Sartorius AG in order to provide investors with a better understanding of Bio-Rad's underlying operational performance. 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. With that, I'll now turn the call over to our Chief Operating Officer, Jon DiVincenzo.
Thank you, Ed, and good afternoon, everyone. Thank you for joining us today. We are pleased to share Bio-Rad's third quarter 2025 results, which reflect solid execution across our business. 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. Many research customers continue to face uncertainty and are cautious with their budgets. 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. We also made meaningful progress advancing our droplet digital PCR strategy. During the quarter, we completed global sales training on our new QX platforms, and our teams are actively engaging customers. While it's still early, we are encouraged by the customer receptivity to the new products, particularly in the entry-level segment. Our sales funnel for these new systems is building nicely, though we recognize that selling cycles remain extended given the broader funding climate. We also continue to expand our DDPCR-based diagnostic strategy through two key partnerships: Gencurix and Biodesix. Gencurix made Bio-Rad the exclusive distributor of their droplets oncology testing kits across Europe. This partnership leverages our strong commercial footprint in the region and helps accelerate the adoption of DDPCR-based cancer tests.
We also expanded our partnership with Biodesix to provide greater access to critical biomarker testing for advanced breast cancer. Biodesix is validating our ESR1 assay in its CLIA-accredited labs and offering testing services for its customers. Operationally, our teams continue to execute well, advancing our lean initiatives and maintaining cost discipline. In summary, we're pleased with the progress we're making, balancing near-term execution with continued investment in innovation and long-term growth. I will turn the call over to Roop, who will take you through our financial results in more detail.
Thank you, Jon, and good afternoon. I'd like to start with a review of the third quarter 2025 results. 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. On a currency-neutral basis, this represents a 1.7% year-over-year decrease and was driven by both our Life Science and Clinical Diagnostics segments. Sales of the Life Science segment in the third quarter of 2025 were $262 million compared to $261 million in Q3 of 2024, essentially flat on a reported basis and a 1.5% decrease on a currency-neutral basis, driven by the constrained academic research and biotech funding environment. Currency-neutral sales decreased in the Americas, partially offset by increased sales in Asia-Pacific and EMEA.
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. As a result, we expect fourth quarter process chromatography revenue to be lower sequentially and on a year-over-year basis. For the full year 2025, we expect high teens growth for this product area versus our prior low double-digit growth outlook. Excluding process chromatography sales, our core Life Science segment revenue decreased 6% year-over-year and 7.8% on a currency-neutral basis. The softer Q3 performance reflects ongoing softness in the academic research and biotech markets, as well as a tough comparer due to large one-time orders in the year-ago period.
Sales of the Clinical Diagnostics segment in the third quarter of 2025 were approximately $391 million compared to $389 million in Q3 of 2024, an increase of 0.6% on a reported basis and a decrease of 1.8% on a currency-neutral basis. The decrease is primarily because of the previously discussed lower reimbursement rates for diabetes testing in China. On a geographic basis, currency-neutral sales decreased in Asia-Pacific, partially offset by increased sales in the Americas and EMEA. Q3 reported GAAP gross margin was 52.6% as compared to 54.8% in the third quarter of 2024. On a non-GAAP basis, third quarter gross margin was 53.5% versus 55.6% in the year-ago period. The decrease in gross margin was due to higher material costs and reduced fixed manufacturing absorption.
SG&A expense for the third quarter of 2025 was $207 million or 31.7% of sales compared to $200 million or 30.8% in Q3 of 2024. Third quarter non-GAAP SG&A spend was $202 million versus $197 million in the year-ago period. The year-over-year increase in SG&A expense was due to higher employee-related costs. Research and development expense in the third quarter of 2025 was $71 million or 10.9% of sales compared to $91 million or 14% of sales in Q3 of 2024. Third quarter non-GAAP R&D spend was $70 million versus $91 million in the year-ago period. The lower year-over-year R&D was primarily due to higher in-process R&D charges associated with an acquisition in the third quarter of 2024. Q3 operating income of approximately $65 million or 10% of sales was flat versus Q3 of 2024 on both a dollar and percentage basis.
On a non-GAAP basis, third quarter operating margin was 11.8% compared to 11.3% in Q3 of 2024, reflecting proactive cost actions we've taken in managing the business and net reductions in IP R&D expense. The change in fair market value of equity security holdings and loan receivables, primarily related to the ownership of Sartorius AG shares, contributed $398 million to our reported net loss of $342 million or $12.70 per diluted share. Non-GAAP net income, which excludes the impact of the change in equity value of the Sartorius shares, was $61 million or $2.26 diluted earnings per share for the third quarter of 2025 versus $56 million or $2.02 diluted earnings per share for Q3 of 2024. Moving to cash flow, for the third quarter of 2025, net cash generated from operating activities was $121 million compared to $164 million for Q3 of 2024.
Net capital expenditures for the third quarter were $32 million, and depreciation amortization for the third quarter of 2024 was $44 million. Free cash flow for the third quarter was $89 million, which compares to $123 million in Q3 of 2024. For the first nine months of 2025, we generated free cash flow of $256 million, resulting in a year-to-date free cash flow to non-GAAP net income conversion ratio of 126%. We remain on track to deliver full-year free cash flow of approximately $310-$330 million for 2025. During the third quarter, we purchased 212,578 shares of our stock for a total cost of $53 million or an average purchase price of approximately $249 per share. Year-to-date, we have retired 1.2 million shares through our buyback program at a total cost of approximately $296 million.
We will continue to be opportunistic with share repurchases and still have approximately $285 million available for additional buybacks under the current board-authorized program. Moving on to the non-GAAP guidance for 2025, we are maintaining our 2025 full-year outlook with total currency-neutral revenue growth being in the range of flat to 1%. Our full-year 2025 non-GAAP gross and operating margin outlook also remains unchanged at 53.5%-54.5% and 12%-13% respectively. While we don't provide quarterly guidance, we are offering some commentary to help frame what we're seeing in the current operating environment. On the Life Science side of our business, we continue to anticipate a modest revenue improvement in the fourth quarter. We do not expect any budget flush as research customers remain cautious with spending due to the uncertainties surrounding the final NIH budget and the U.S. government shutdown.
While it's encouraging to potentially have a relatively flat NIH budget for next year, we remain cautious on the pace of recovery for the academic segment heading into 2026. We continue to believe it will take some time for researchers to regain confidence in the longer-term funding outlook. Additionally, we continue to anticipate a gradual improvement with biotech customers. With respect to our diagnostics segment, we expect to return to growth in the fourth quarter with the China reimbursement headwind annualizing as well as the expected timing of revenue from our quality controls portfolios. While we aren't currently anticipating additional reimbursement challenges in China heading into 2026, we continue to see a soft macro environment in that region, which could dampen demand for our Clinical Diagnostics products. On margins, we continue to anticipate a slight step up in the fourth quarter gross margin, primarily driven by mixed revenue.
Combined with our continued focus on effective cost management, we expect operating margins to improve sequentially by at least 80 basis points. That concludes our prepared remarks. We will now open the line to take your questions. Operator.