Scientific Industries Q3 2025 Earnings Call - Strategic Shift to Bioprocessing and AI-Driven Innovation Accelerates

Bailey, Conference Operator: Today, and welcome to the Scientific Industries Report’s third quarter, fiscal year 2025 financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Joe Dorame, Managing Partner. Please go ahead.

Joe Dorame, Managing Partner, Scientific Industries: Thanks, Bailey. Good morning, and thank you for joining us today to review Scientific Industries financial results for the third quarter of 2025 ended September 30, 2025. With us today on the call are Helena Santos, Chief Executive Officer; Daniel Donadio, CEO of SBI; and John Moore, Chairman. After the conclusion of today’s prepared remarks, we’ll open the call for questions. Before we begin with prepared remarks, I would like to remind everyone certain statements made by the management team of Scientific Industries during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under risk factors in documents filed by the company with the Securities and Exchange Commission, including the annual report on Form 10-K for the year ended December 31, 2024. Forward-looking statements speak only as of the date the statements were made. The company can give no assurance that such forward-looking statements will prove to be correct. Scientific Industries does not undertake and specifically disclaims any obligation to update any forward-looking statements except as required by law. Now, I’d like to turn the call over to Helena Santos, CEO of Scientific Industries. Helena?

Helena Santos, Chief Executive Officer, Scientific Industries: Thank you so much, Joe, and thank you for joining us today. This quarter, and indeed this year, marked a pivotal moment in our company’s journey. As highlighted in our previous earnings call, we closed a significant chapter after 70 years with the divestiture of our legacy Genie products division, and this happened in mid-August. Since then, our team has been fully focused on ensuring a smooth transition to the buyer for all aspects of the Genie product line. What does this mean? This means that we are assisting them with the transition of the production, the engineering, customers, and suppliers. We expect to complete the process and, most importantly, secure the final installment of the sale price over the next three to six months, depending on how they move. Turning to our benchtop lab equipment operations, we remain committed to building value in our Torbal division.

To this end, we’re actively pursuing new growth opportunities with our legacy scales and continuing to innovate across our VIVID pill counter portfolio. This quarter, very recently actually, we introduced an exciting new AI-driven feature to our VIVID workstation. This enhancement offers customers actionable insights. It strengthens regulatory compliance for them and delivers meaningful cost savings as well. It’s just the first of several strategic improvements that we have planned in order to position the VIVID as the premier pill counting solution in the market. On the bioprocessing front, our team is focused on completing the DOTS platform and refining its core components that have been already introduced into the marketplace. Mr. Donadio will share further details in just a few moments. As we approach the end of the year, we acknowledge the challenges, particularly in the bioprocessing sector, as Mr.

Donadio will go into, but we remain confident in our direction. I believe that the decisive actions we’ve taken during the year and our relentless pursuit of innovation have set us on the right path for sustainable growth. I thank you for your continued trust and partnership, particularly with our valued shareholders. With that, I’ll hand things over to Daniel Donadio for more on our financial and operational progress of the bioprocessing segment. Daniel?

Daniel Donadio, CEO of SBI, Scientific Industries: Thank you, Helena, and good morning, everyone. The market environment we’ve been navigating in the bioprocessing segment throughout this year remains largely unchanged. Budgets across academia, biotech, and industry continue to be tight, internal competition for funding is high, and purchasing decisions are more scrutinized than ever. While a few peers have pointed to early signs of stabilization, we are operating with the clear assumption that 2026 will remain a challenging, highly selective year for capital spending. In such an environment, customers are more risk-averse, new technologies face higher adoption hurdles, and products must be more mature, more robust, and better aligned with real-world workflows at launch. That is why we are fully focused on completing the DOTS platform, strengthening product-market fit, and ensuring that each product in the pipeline meets a high bar of customer validation before market scaling.

At the same time, we are seeing growing strategic interest in our platform. As biomanufacturing organizations explore the role of AI and advanced analytics in their processes, they recognize that these approaches require dense, high-quality data, the kind our sensing technologies are designed to generate. Together with the increasing number of OEM discussions, this signals meaningful long-term opportunity as the platform matures. With that context, let me walk you through our R&D and commercial progress in the quarter. On the R&D side, we made solid progress across all major elements of the DOTS platform this quarter. Starting with biomass sensing, our focus has been on BioR2, the miniaturized biomass sensor for STIR bioreactors. Here, we implemented important algorithmic upgrades that significantly improved performance at high cell densities, a key requirement for industrial applications.

Early external evaluations of BioR2 have been very encouraging, especially given the compact form factor of the device, and in parallel, we advanced our OEM gateway architecture so that the sensor can be integrated smoothly into automated bioprocessing environments. In dissolved oxygen sensing, we completed the production optimization of our DO nanoparticles and supported their commercial launch. This is an important step because it extends the DOTS platform to buffered flasks and other formats where pill-based sensors are not ideal. The first customer feedback confirms that this extension addresses a real need in day-to-day process development. We also continue to make meaningful progress in pH sensing. Our pH pill prototypes now cover the full microbial pH range with reduced calibration requirements and easier handling compared to earlier iterations. Lab work remains very promising, and we are preparing for customer evaluations in the first quarter of 2026.

In addition, we have started work on a pH nanoparticle variant to broaden our flexibility in terms of sensor formats. Our liquid injection system to the next generation moved forward as well. We refined the design and validated the initial hardware, and based on our user feedback, we have begun a usability-focused redesign that keeps bioreactor-grade dispensing accuracy while simplifying operation for everyday lab use. In enzymatic sensing, our glucose flow cell prototypes showed encouraging stability and response times, reinforcing this technology line as a strong complement to our existing sensing modalities of DO and pH, particularly for continuous monitoring and flow loop setups. Supporting all of this, the DOTS software backend was enhanced to handle broader sensor integration, more efficient calibration workflows, and higher data throughput, ensuring that the platform can scale as we bring additional components online.

As we move toward year end and into next year, our R&D efforts are concentrating on completing the remaining work on our pH sensing technology so that it can enter pilot projects with customers in Europe and the US in the first quarter of 2026, allowing us to fine-tune the product with the market and enable rapid adoption following its commercial launch later that year. On the commercial side, Q3 reflected the typical seasonality of our industry, with summer months and fewer conferences leading to a softer top of the funnel compared to the first half of the year. Even so, lead generation remained close to last year’s Q3, and year-to-date, we are still up 22%, supported by strong and diversified performance across our marketing channels. Despite the ongoing pressure on customer budgets, Q3 was our strongest revenue quarter of 2025, with a plus 50% above Q2.

July and September were the best-performing months of the year, with sales figures having returned to the previous year’s level for the first time. At the same time, Q3 marks our third consecutive quarter of sequential growth and suggests that while purchasing decisions remain selective, overall buying activity is slowly improving for our products as we adapt to the market environment. Another indicator here is a slight rebound in academia outside the U.S., where revenue contributions increased to 20% year-to-date, up from 5% earlier this year. Beyond the numbers, several developments highlight the strengthening momentum behind DOTS. The launch of our dissolved oxygen nanoparticles expanded our addressable market into buffered flasks, which is widely used in industry and particularly relevant in the U.S. market. Early demand from leading organizations confirms that both the need for this solution and the speed at which customers adopt meaningful extensions of the platform.

As such, the first batch of 500 DO nanoparticle units has already been entirely sold. Also, we are seeing new and rising interest from companies that have traditionally not been players in our space, exploring data-driven bioprocessing and AI-enabled workflows. Multiple global organizations have approached us to better understand how DOTS can support their initiatives, and we launched our first project where DOTS data is being used specifically to enable advanced analytics. While still early, these interactions reinforce the role our data infrastructure can play in the next wave of automation and process optimization. Customer loyalty, even in this market environment, remained a meaningful driver of performance as well. More than half of the year-to-date sales came from existing customers expanding their systems or enabling new users within the same organization, demonstrating the scalability of our installed base of more than 400 customers.

Finally, our OEM channels continue to gain traction. Revenue from existing OEM collaborations that started this year is approaching six figures year-to-date, and additional equipment manufacturers have initiated discussions about integrating DOTS into the next generation systems. Taken together, while the overall market continues to normalize only gradually, the quality of customer engagement, recurring expansion within our installed base, and growing OEM and AI-related interest give us increasing confidence in the long-term commercial foundation we are building. As we look ahead to 2026, we are steering the company through a selective and cost-cautious market by staying focused on what we can control: completing the DOTS platform, sharpening product-market fit, and deepening our role as an enabling technology for data-rich bioprocessing.

In the near term, that means finishing the work needed to bring our next DOTS components, particularly pH sensing, into customer pilots and then into commercial launch, and continuing to build on the commercial traction we are seeing across our installed base, OEM collaborations, and data and AI-driven projects. We remain realistic about the external environment, but confident that the combination of a growing platform, a loyal and expanding customer base, and increasing strategic interest from partners puts Scientific Bioprocessing in a strong position to benefit when spending normalizes and the next wave of bioprocessing investments begins. Thank you for joining us today, and with that, I’ll hand the call back to John, I believe.

John Moore, Chairman, Scientific Industries: Yes, I’d like to just conclude the call by saying that just to give a little perspective on the timing of the AI revolution and where we stand, we think with the sale of the Genie product line, we’ve positioned the company to participate in this of the hundreds of billions of dollars that have been invested in data center and power infrastructure that’s going to power the AI era. Our VIVID product line and our DOTS product line are going to position us for a new era of growth. The first commercial use of AI was in the conversion of the amber molecular dynamics programs used in synthetic biology from supercomputers to GPUs just in September of 2012. AI came to prominence in the mainstream only 36 months ago with the use of ChatGPT 3.0 in November of 2022.

Since then, it’s produced this avalanche of funding of data centers and power infrastructure. A lot of the world, including the big power turbine companies, were caught by surprise by this demand. Most recently, the team that developed the AlphaFold program in synthetic biology won the Nobel Prize in Chemistry in October of 2024. At SBI and Scientific Industries, we’ve anticipated a future where pharma, synthetic biology companies, pharmacies, and academic researchers are basically asking for devices that can power this new age and automate their systems, reduce costs. We’ve invested years in advance anticipating all of this, and we think that we and our shareholders are going to be big beneficiaries of this coming age. With that, we’re happy to answer any questions. There being no questions, I think we’ll call the call to a close.

Thank you so much for attending.

Bailey, Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.