BIO-RAD LABORATORIES, INC. (BIO)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion should be read in conjunction with the information contained in both our consolidated financial statements for the year ended December 31, 2025 and the condensed consolidated financial statements for the three and six months ended June 30, 2026.

Overview.  We are a multinational developer, manufacturer and worldwide distributor of our own life science research and clinical diagnostics products. Our business is organized into two reportable segments: Life Science and Clinical Diagnostics, with the mission to provide scientists with specialized tools needed for biological research and health care specialists with products needed for clinical diagnostics.

We sell more than 12,000 products and services to a diverse client base comprised of scientific research, healthcare, education and government customers worldwide. We do not disclose quantitative information about our different products and services as it is impractical to do so based primarily on the numerous products and services that we sell and the global markets that we serve.

We manufacture and supply our customers with a range of reagents, apparatus and equipment to separate complex chemical and biological materials and to identify, analyze and purify components. As our customers require standardization for their experiments and test results, much of our revenues are recurring in nature.

Approximately 39% of our 2026 consolidated net sales are derived from the United States and approximately 61% are derived from international locations, with Europe being our largest international region. The international sales are largely denominated in local currencies such as the Euro, Swiss Franc, Japanese Yen, Chinese Yuan and British Sterling. As a result, our consolidated net sales expressed in dollars benefit when the U.S. dollar weakens and suffer when the U.S. dollar strengthens. When the U.S. dollar strengthens, we benefit from lower cost of sales from our own international manufacturing sites, and from lower international operating expenses. We regularly discuss our changes in revenue and expense categories in terms of both changing foreign exchange rates and in terms of a currency-neutral basis, if notable, to explain the impact currency has on our results.

We rely on the support of many governments for both research and healthcare. Current global economic and geopolitical conditions remain uncertain, and the need for governments to control their spending, along with ongoing challenges among small biotech companies, continues to limit opportunities for growth and negatively impact our business. The market in China, which represents a mid-single digit percentage of our year-to-date 2026 consolidated net sales, remains uncertain as a result of these factors. We expect these conditions to continue through the rest of 2026.

Additionally, the recent escalation of regional conflicts in the Middle East has adversely affected demand and logistics in the EMEA region, particularly within our Clinical Diagnostics segment. These disruptions impacted our results during the first half of 2026 and, given the continued uncertainty regarding the duration and scope of the conflict, we expect these conditions to continue to adversely affect the EMEA region for the remainder of 2026.

31

Results of Operations

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:

Critical Accounting Policies and Estimates

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, 2026 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, 2025.

Three Months Ended June 30, 2026 Compared to

Three Months Ended June 30, 2025

Results of Operations – Sales, Gross Margins and Expenses

Percentage sales growth in currency-neutral amounts are calculated by translating prior period sales in each local currency using the current period monthly average foreign exchange rates for that currency and comparing that to current period sales.

Net sales ("sales") for the second quarter of 2026 were $651.0 million compared to $651.6 million in the second quarter of 2025, essentially flat. On a currency-neutral basis, second quarter 2026 sales decreased approximately 1.9% compared to the same period in 2025. The decrease in sales was driven by lower sales in Life Science segment.

The Life Science segment sales for the second quarter of 2026 were $252.0 million, a decrease of 4.1% compared to the same period in 2025. On a currency-neutral basis, sales decreased 5.1% compared to the second quarter in 2025, primarily driven by ongoing challenges in the academic research market. Currency-neutral sales decreased in the Americas and Asia Pacific, partially offset by increased sales in EMEA.

32

The Clinical Diagnostics segment sales for the second quarter of 2026 were $399.0 million, an increase of 2.6% compared to the same period in 2025. On a currency-neutral basis, sales increased 0.3% compared to the second quarter in 2025, primarily driven by growth in quality systems, diabetes and blood typing products, partially offset by lower sales of infectious disease products. Currency-neutral sales increased in the Americas, partially offset by decreased sales in Asia Pacific.

Consolidated gross margin was 53.1% for the second quarter of 2026 compared to 53.0% for the second quarter of 2025. Gross margin for the Life Science segment for the second quarter of 2026 increased modestly by approximately 0.5 percentage points as compared to the same period in 2025. Gross margin for the Clinical Diagnostics segment for the second quarter of 2026 remained flat compared to the same period in 2025.

Selling, general and administrative ("SG&A") expense for the second quarter of 2026 was $212.0 million or 32.6% of sales, compared to $207.7 million, or 31.9% of sales for the second quarter of 2025. The increase in SG&A expense was primarily due to higher employee related costs.

Research and development ("R&D") expense for the second quarter of 2026 was $61.2 million or 9.4% of sales, compared to $60.5 million or 9.3% of sales in the second quarter of 2025. The increase in R&D expense was primarily due to higher project related spending.

Results of Operations – Non-operating

Interest expense for the second quarter of 2026 and 2025 was $12.1 million and $12.6 million, respectively, which primarily consisted of interest expense related to the $1.2 billion Senior Notes.

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 $0.2 million for the second quarter of 2026 compared to foreign currency exchange losses, net of $1.1 million for the second quarter of 2025, respectively. Gains and losses are primarily due to the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts.

(Gains) losses from change in fair market value of equity securities and loan receivable was gain of $458.0 million and $334.4 million for the second quarter of 2026 and 2025, respectively. The change in the fair market value primarily resulted from the recognition of holding gains of $430.0 million in the second quarter of 2026 compared to holding gains of $326.6 million in the second quarter of 2025 on our investment in Sartorius. In addition, holding gains from the change in fair market value of our loan receivable of $15.1 million in the second quarter of 2026 compared to holding losses of $2.4 million in the second quarter of 2025 contributed to the change.

Other income, net for the second quarter of 2026 was $23.4 million compared to $16.2 million for the second quarter of 2025. The increase in Other income, net of $7.2 million was primarily attributable to higher interest and investment income in the second quarter of 2026 compared to the second quarter of 2025.

Our effective income tax rate was 31.5% and 23.2% for the second quarter of 2026 and 2025, respectively. The effective tax rate reported in these periods was primarily affected by the change in fair market value of our equity securities, shifts in the geographical mix of earnings and enactment of new tax legislation during the period.

Six Months Ended June 30, 2026 Compared to

Six Months Ended June 30, 2025

Results of Operations -- Sales, Margins and Expenses

Percentage sales growth in currency-neutral amounts are calculated by translating prior period sales in each local currency using the current period monthly average foreign exchange rates for that currency and comparing that to current period sales.

33

Net sales ("sales") for the first six months of 2026 were $1.24 billion, an increase of 0.5% compared to the same period in 2025. On a currency-neutral basis, sales decreased 3.0% compared to the first six months of 2025. The decrease in sales was driven by lower sales in both Life Science and Clinical Diagnostics segments.

The Life Science segment sales for the first six months of 2026 were $480.5 million, a decrease of 2.2% compared to the same period in 2025. On a currency-neutral basis, sales decreased 4.7% compared to the first six months of 2025, primarily driven by ongoing challenges in the academic research market, particularly in the Americas. Currency-neutral sales decreased in the Americas and EMEA, partially offset by increased sales in Asia Pacific.

The Clinical Diagnostics segment sales for the first six months of 2026 were $762.6 million, an increase of 2.3% compared to the same period in 2025. On a currency-neutral basis, sales decreased 1.9% compared to the first six months of 2025, primarily driven by lower sales of infectious disease products. Currency-neutral sales decreased in EMEA and Asia Pacific, partially offset by increased sales in the Americas.

Consolidated gross margins were 52.7% for the first six months of 2026 and 2025. Gross margins for the Life Science segment and the Clinical Diagnostics segment for the first six months of 2026 remained essentially flat compared to the same period in 2025.

Selling, general and administr

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the information contained in our consolidated financial statements and the accompanying notes which are an integral part of the statements. Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed on February 14, 2025, for the discussion of the comparison of the fiscal year ended December 31, 2024 to the fiscal year ended December 31, 2023.

Overview.  We are a multinational developer, manufacturer and worldwide distributor of our own life science research and clinical diagnostics products. Our business is organized into two reportable segments: Life Science and Clinical Diagnostics, with the mission to provide scientists with specialized tools needed for biological research and health care specialists with products needed for clinical diagnostics.

We sell more than 12,000 products and services to a diverse client base comprised of scientific research, healthcare, education and government customers worldwide. We do not disclose quantitative information about our different products and services as it is impractical to do so based primarily on the numerous products and services that we sell and the global markets that we serve.

We manufacture and supply our customers with a range of reagents, apparatus and equipment to separate complex chemical and biological materials and to identify, analyze and purify components. As our customers require standardization for their experiments and test results, much of our revenues are recurring in nature.

27

We rely on the support of many governments for both research and healthcare. The current global economic outlook is still uncertain as the need to control social spending by many governments limits opportunities for growth. Approximately 40% of our 2025 consolidated net sales are derived from the United States and approximately 60% are derived from international locations, with Europe being our largest international region. The international sales are largely denominated in local currencies such as the Euro, Swiss Franc, Japanese Yen, Chinese Yuan and British Sterling. As a result, our consolidated net sales expressed in dollars benefit when the U.S. dollar weakens and suffer when the dollar strengthens. When the dollar strengthens, we benefit from lower cost of sales from our own international manufacturing sites, and from lower international operating expenses. We regularly discuss our changes in revenue and expense categories in terms of both changing foreign exchange rates and in terms of a currency neutral basis, if notable, to explain the impact currency has on our results.

Current global economic and geopolitical conditions remain uncertain, and we rely on the support of many governments for both research and healthcare. Reduced government spending, along with ongoing challenges in the biopharma market and among small biotech companies, continues to negatively impact our business. Additionally, the market in China, which represents a mid-single digit percentage of our 2025 consolidated net sales, remains uncertain as a result of these factors. We expect these conditions to continue in 2026.

Critical Accounting Policies and Estimates

The accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. However, future events may cause us to change our assumptions and estimates, which may require adjustment. Actual results could differ from these estimates. We have determined that for the periods reported in this Annual Report on Form 10-K the following accounting policies and estimates are critical in understanding our financial condition and results of operations.

Accounting for Income Taxes

We operate in multiple jurisdictions and our profits are taxed pursuant to the tax laws of these jurisdictions. Our effective income tax rate may be affected by the changes in or interpretations of tax laws and tax agreements in any given jurisdiction, utilization of net operating loss and tax credit carryforwards, changes in geographical mix of income and expense, and changes in our assessment of matters such as the ability to realize deferred tax assets. As a result of these considerations, we must estimate income taxes in each of the jurisdictions in which we operate. This process involves estimating current tax exposure together with assessing temporary differences resulting from the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in the consolidated balance sheets.

We assess the likelihood that our deferred tax assets will be recovered from future taxable income, considering all available evidence such as historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax strategies. When we determine that it is not more likely than not that we will realize all or part of our deferred tax assets, an adjustment is charged to earnings in the period when such determination is made. Likewise, if we later determine that it is more likely than not that all or a part of our deferred tax assets would be realized, the previously provided valuation allowance would be reversed.

28

We make certain estimates and judgments about the application of tax laws, the expected resolution of uncertain tax positions and other matters surrounding the recognition and measurement of uncertain tax benefits. In the event that uncertain tax positions are resolved for amounts different than our estimates, or the related statutes of limitations expire without the assessment of additional income taxes, we will be required to adjust the amounts of the related assets and liabilities in the period in which such events occur. Such adjustments may have a material impact on our income tax provision and our results of operations.

Impairment of Goodwill

We conduct a goodwill impairment analysis annually in the fourth quarter or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business. We test goodwill at the reporting unit level. Significant judgments are involved in determining if an indicator of impairment has occurred.

We first may assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test included in U.S. GAAP. To the extent our assessment identifies adverse conditions, or if we elect to bypass the qualitative assessment, goodwill is tested at the reporting unit level using a quantitative impairment test. We generally estimate the fair value of the reporting units in goodwill impairment assessments using an income approach, which includes an analysis of the future cash flows expected to be generated and the risk associated with achieving such cash flows. This approach requires significant management judgment including the discount rate that is applied to the discretely forecasted future cash flows to calculate the present value of those cash flows and the estimate of future cash flows attributable to the reporting unit. Actual results may differ from management’s estimates. There were no impairments of goodwill for the years ended December 31, 2025, 2024 and 2023.

Revenue Recognition

We recognize revenue from operations through the sale of products, services, license of intellectual property and rental of instruments.

We enter into contracts that can include various combinations of products and services, which are generally accounted for as distinct performance obligations. The transaction consideration is allocated between separate performance obligations of an arrangement based on the stand-alone selling price (“SSP”) for each distinct product or service.

We recognize revenue from product sales at the point in time when we have satisfied our performance obligation by transferring control of the product to the customer. We use judgment to evaluate whether and when control has transferred and consider the right to payment, legal title, physical possession, risks and rewards of ownership, and customer acceptance if it is not a formality, as indicators to determine the transfer of control to the customer.

Fair Value Measurements

We elected the fair value option under ASC 825, Financial Instruments for accounting of the Loan to Sartorius-Herbst Beteiligungen II GmbH to simplify the accounting. The Loan includes certain value appreciation rights that are due upon repayment of the Loan. The fair value of the Loan and value appreciation right is estimated under the income approach using a discounted cash flow, and option pricing model, respectively. The significant assumptions used to estimate fair value of the Loan include an estimate of the discount rate and cash flows of the Loan and the significant assumptions used to estimate the fair value of the value appreciation right include volatility, the risk-free interest rate, expected life (in years) and expected dividend. The inputs are subject to estimation uncertainty and actual amounts realized may materially differ. An increase in the expected volatility may result in a significantly higher fair value, whereas a decrease in expected life may result in a significantly lower fair value. All subsequent changes in fair value of the Loan and value appreciation right, including accrued interest are recognized in (Gains) losses from change in fair market value of equity securities and loan receivable in our consolidated statements of income (loss).

29

Results of Operations - Sales, Gross Margins and Expenses

Comparison of the Year Ended December 31, 2025 to the Year Ended December 31, 2024

The following table shows Cost of goods sold, Gross margin, components of operating expense, and Net income (loss) as a percentage of Net sales:

Net sales

Percentage sales growth in currency neutral amounts are calculated by translating prior period sales in each local currency using the current period monthly average foreign exchange rates for that currency and comparing that to current period sales.

Net sales ("sales") for the year ended December 31, 2025 were $2.58 billion, compared to $2.57 billion for the year ended December 31, 2024, an increase of 0.7%. On a currency neutral basis, for the year ended December 31, 2025 sales were essentially flat compared to the same period in 2024.

The Lif

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]