Azenta (NASDAQ:AZTA) reported fiscal first-quarter 2026 revenue of $149 million, up 1% on a reported basis but down 1% organically, as continued macro uncertainty and cautious capital spending weighed on parts of its portfolio. Management reaffirmed full-year guidance calling for 3% to 5% organic revenue growth and roughly 300 basis points of adjusted EBITDA margin expansion, while acknowledging that the turnaround “will not be a straight line” and that the second half of the year is expected to carry more of the growth and profitability improvement.
Quarterly results reflect mixed demand and margin pressure
Chief Executive Officer John Marotta said organic revenue declined about 1% in line with expectations, citing uneven market conditions, weakness in capital spending, and uncertainty tied to academia and government funding. He added that bookings were impacted by “weak capital spending and the government shutdown at the end of the calendar year,” which he characterized as a timing issue expected to shift into future quarters rather than change the full-year outlook.
Gross margin was 44.1% in the quarter, down 360 basis points from the prior year. Lin said the margin decline included the impact of “additional costs related to rework” and lower leverage from volume, though he emphasized ongoing efforts under the company’s Azenta Business System (ABS) to improve efficiency.
Segment performance: strength in biorepositories, NGS, and China offset by capital-intensive softness
In Sample Management Solutions (SMS), revenue was $81 million, flat reported and down 2% organically. Lin said growth in biorepositories and modest growth in consumables and instruments were offset by declines in Automated Stores and Cryo, which management tied to macro-driven budget constraints and slower bookings.
SMS gross margin was 45.4%, down 370 basis points year over year. Lin said the decline was primarily driven by higher rework costs on Automated Stores projects and a “non-recurring item.” He estimated the full-year impact from Automated Stores remediation at $3 million to $5 million, with remediation efforts expected to be completed by the end of the second quarter.
In Multiomics, revenue was $67 million, up 1% reported and flat organically. Lin highlighted continued strength in next-generation sequencing (NGS) and growth in gene synthesis, supported by “strong oligo demand in China,” offset by meaningful declines in Sanger Sequencing. Geographically, Europe and Asia were described as strong, while North America remained softer due to budget constraints and temporary disruption from the government shutdown. Lin noted China delivered 26% organic growth during the quarter.
Multiomics non-GAAP gross margin was 42.6%, down 350 basis points year over year, which Lin attributed to regional mix and “loss leverage from lower North America sales volume.”
Operational issues in Automated Stores and actions to improve execution
Management spent significant time on the call addressing quality-related costs in Automated Stores. Marotta said the company had “18 stores” with quality issues and that it was “starting to lapse some of those,” with “only a few more” remaining to resolve. He said these issues were more visible this year given a softer first-half demand environment.
In response to questions about whether fixes are permanent, Marotta described a restructuring of the R&D organization supporting Automated Stores, separating responsibilities across new product development, manufacturing process introduction, percentage-of-completion project execution, and sustaining engineering. He said ABS is also helping by improving visibility and control over project execution.
Lin provided a breakdown of year-over-year adjusted EBITDA decline in the quarter, citing approximately $2 million related to stores quality issues, about $1 million from lab inefficiencies in North America due to mix, and roughly $0.7 million in non-recurring inventory-related charges.
Guidance reaffirmed; second half expected to accelerate
Azenta reiterated its fiscal 2026 outlook for 3% to 5% organic revenue growth, with Multiomics expected to grow at a low single-digit rate and Sample Management Solutions expected to deliver mid-single-digit growth. Lin said the company continues to expect acceleration in the second half as commercial investments and growth initiatives “gain traction.”
On profitability, Lin reaffirmed a target of approximately 300 basis points of adjusted EBITDA margin expansion, describing a framework that still assumes improvement driven by both gross margin and operating expense leverage. He also pointed to expectations for more than 30% year-over-year improvement in free cash flow generation.
When asked about visibility into the second-half ramp, management cited several factors, including:
- Improving North America commercial execution following a “reboot” and the ramp of new sales hires (Lin referenced bringing in more than 25 representatives with a typical 3- to 6-month ramp).
- ABS and productivity initiatives, including Kaizen events in labs and manufacturing.
- Price initiatives focused on certain businesses, which management said were put in place around the start of the calendar year and are expected to ramp in the second half.
While management declined to provide quarterly guidance, Lin said investors should expect an uplift in the second quarter versus the first, with the bulk of growth occurring in the second half.
Capital allocation: B Medical sale, repurchase authorization, and M&A activity
The company’s results continue to treat B Medical Systems as discontinued operations. Lin said Azenta recorded an additional $10 million non-cash loss related to assets held for sale during the quarter and reiterated expectations that the B Medical sale would close on or before March 31, 2026.
Azenta ended the quarter with $571 million in cash, cash equivalents, and marketable securities, up $25 million sequentially, and no debt outstanding. Free cash flow, including B Medical, was $15 million, driven by increased customer deposits and deferred revenue, partially offset by working capital usage.
Management also discussed its $250 million share repurchase authorization approved in December 2025. Marotta said the company is evaluating capital deployment across multiple “levers,” including productivity and gross margin initiatives, growth investments, M&A, and share repurchases. He said Azenta is “very busy” on M&A and expects to use capital across these priorities over the next few years, while comparing potential returns against buybacks.
About Azenta (NASDAQ:AZTA)
Azenta, Inc (NASDAQ: AZTA) is a life sciences technology company specializing in sample management, cryogenic storage and genomic services for research and clinical applications. Formerly the Life Sciences division of Brooks Automation, Azenta provides integrated solutions that enable customers to store, track and analyze biological samples with high levels of automation, data integrity and efficiency. Its offerings span automated storage systems, biorepository management software and end‐to‐end sample tracking workflows.
In addition to hardware and informatics platforms for sample storage, Azenta’s Genomics business delivers next‐generation sequencing (NGS), DNA synthesis, and molecular biology services.
