They promised us the Star Trek replicator and all we bought had been some plastic trinkets. With a number of notable exceptions, 3D printing has largely been a nothing burger for buyers as the guarantees of “distributed manufacturing” and “a 3D printer in each family” by no means actually panned out. On the healthcare aspect, 3D printing has made inroads within the dental house, although maybe probably the most thrilling thesis – 3D bioprinting – simply hasn’t seen a lot progress.
Having the ability to print organs or tissue on demand sounds nice, however we’re nonetheless ready for that to maneuver out of R&D labs. Once we first invested in BICO Group (BICO ST), that was our thesis – discover publicity to a 3D bioprinting agency with traction versus the mess Organovo (ONVO) turned out to be, one thing which we took loads of flak for declaring again within the day when ARK was flirting with them. In the present day, we’re going to see if BICO Group deserves to stay in our disruptive tech portfolio by answering two questions. Has income development stalled? Has our thesis modified?
The Authentic Thesis
Six years in the past we first highlighted BICO Group (then CELLINK) in a chunk that criticized Organovo’s lack of income development (we’re nonetheless ready for that development). At the moment, BICO had a market cap of $250 million and was below our $1 billion cutoff. A couple of years later that modified and we determined to open a place due to, “constant income development, no affect from The Rona, an growing share of consumables, and much-needed foreign money and nation diversification.” A yr later, we cautioned on their flurry of acquisitions stating, “buying corporations this aggressively comes with some dangers round not having the ability to sufficiently vet them, or not having the ability to combine operations.” Then one other yr handed, and we expressed a priority “that BICO could have flubbed extra of their acquisitions apart from Ginolis.”
That brings us to probably the most related article on BICO, final yr’s piece titled BICO Group’s Founders Exit. What’s Subsequent? After an inside probe of “the corporate’s aggressive gross sales tradition throughout the years 2017-2021,” no wrongdoing was discovered, but all three founders exited and a brand new CEO was introduced on board. We famous that natural development could be the important thing metric to look at and had been advised to anticipate “double digit development” going ahead.
Stalling Income Development
BICO Group’s income development goal was legitimate from 2023 and reiterated late final yr – double-digit natural development in fixed foreign money. Right here’s how that’s been going thus far.
The corporate claims “income efficiency on par and even higher than our life science friends” reflecting “gentle demand from primarily Diagnostics and the Academica & Analysis segments by way of CapEx constraints, in addition to weak demand from China.” In different phrases, the identical excuses we heard final yr. “The gentle demand has lasted longer than anticipated,” says the corporate. Sure, sure it has.
We’re then given a glimmer of hope – indicators of gradual market restoration with consumables recovering first (additionally reported by their friends). That’s disheartening as a result of it implies BICO’s options are “good to have” and never a part of some vital enterprise course of that require constant utilization. Lastly, we’re advised they’re carefully monitoring U.S tariffs as a result of 61% of revenues final yr got here from North America.
That is the second yr of declining development and the “industrial and operational excellence” mantras are getting previous. This can be a firm with three impartial segments, solely one among which is exhibiting indicators of development – “lab automation.” Whereas that may give us some hope as we await 3D bioprinting to take off, it’s a crimson herring. There are different methods to play the lab automation theme, names like Thermo Fisher Scientific (TMO) or Danaher Company (DHR), although neither supply pure play publicity, and we’re not conscious of any tickers that do. (Are you?)
Nonetheless, all of it comes right down to this. Our preliminary thesis was 3D bioprinting which now accounts for lower than 20% of revenues. And that quantity could have simply dropped dramatically.
BICO and 3D Bioprinting
BICO has a behavior of exhibiting income development (or lack thereof) as a rolling quantity which tends to obfuscate what’s truly taking place. That’s most likely as a result of quarterly revenues are so variable. Nonetheless, we will see the pattern transferring within the improper route at each the quarterly and annual ranges for the 3D bioprinting phase.
At below 20% of complete revenues, this phase isn’t precisely exhibiting “skate to the place the puck might be” conduct. And it’s solely going to worsen. BICO made the choice to divest Nanoscribe which can now be handled as discontinued operations from This fall 2024.
About 5 years in the past we famous that Nanoscribe was doing a little exceptional work – 3D printing on the nanoscale – which hinted on the type of nanobots that Drexler had as soon as imagined. In 2021, BICO stepped in and bought the corporate for $40 million and added it to the 3D bioprinting phase. Now they’ve determined that “resulting from its vital footprint outdoors life science” the operation must be bought, and the $28 million they obtained was used to pay down debt. That ought to scale back 3D bioprinting revenues by about $20 million or a discount of 38% primarily based on complete 3D bioprinting revenues of $53 million in 2024.
All issues being equal, 3D bioprinting revenues ought to now sit someplace round 17% of complete revenues which suggests we’re getting even much less of the 3D bioprinting publicity we initially signed up for.
A Painful Postmortem
BICO Group has largely failed in its aspirations to develop organically and thru M&A. The concept of buying complimentary development failed as a result of the founders – all of whom exited – clearly weren’t appearing competently. Failed execution isn’t one thing you possibly can predict. The brand new CEO appears to spout mantras about returning to development -BICO 2.0 – however the proof is within the numbers.
When exiting any disruptive tech firm, we at all times search for substitute publicity. On this case, 3D bioprinting continues to be largely a narrative. First it was printing organs, then it was printing meals, then it was about printing faux meat. None of those themes are compelling besides the notion of printing organs on demand. Looks like xenotransplantation would possibly get there first. Pig organs are the closest to human organs so why not simply develop them on demand?
3D printing has largely been a disappointment for buyers and fans. We felt compelled to have publicity, and our forays into distributed manufacturing – Protolabs (PRLB) and Xometry (XMTR) – spun wheels, although the latter has been exhibiting indicators of life these days with continued income development. As for BICO Group, income development has stalled with little hope in sight, whereas our unique thesis is changing into an ever-dwindling part of complete publicity. Two damaged guidelines, one final result.
Conclusion
Firms that aren’t rising revenues aren’t disrupting something. BICO Group’s frenzy of acquisitions appears to have been poorly deliberate, and now at the least a number of are being unwound at a loss. In the meantime, natural development has stalled with the identical excuses being provided up annually. Even when double-digit development is on the horizon, the publicity we wish – 3D bioprinting – continues to say no, much more so with the latest divestiture of Nanoscribe. This isn’t a “skate to the place the puck might be state of affairs,” and there’s little incentive to stay round ready for this turnaround story to lastly understand “BICO 2.0.”
