Azenta (NASDAQ:AZTA) reported fiscal second-quarter 2026 results that management said fell short of expectations, citing execution shortfalls and a cautious demand environment—particularly in North America—along with ongoing weakness in capital equipment spending.
“Candidly, we are not satisfied with our second quarter results,” President and CEO John Marotta said. Organic revenue declined 3% in the quarter and adjusted EBITDA margin was 5.4%, which Marotta said did not meet the company’s expectations. He attributed the performance to “execution-related shortfalls within our control” as well as “a more cautious, prolonged demand environment,” especially in North America where customer spending and research funding remain constrained.
Quarterly performance and key drivers
Lin said adjusted EBITDA was $7.8 million, or 5.4% of revenue, down 320 basis points year over year. He attributed the margin decline primarily to lower volumes and reduced fixed-cost absorption, as well as quality rework costs tied to automated storage systems and an increase in inventory reserves. Gross margin was 44.3%, down 110 basis points versus the prior year, including approximately $2 million of quality costs associated with automated storage rework.
Free cash flow, including B Medical, was $5 million in the quarter, which Lin said was driven by working-capital improvements and higher deferred revenue. The company ended the quarter with $565 million in cash equivalents and marketable securities and no debt outstanding.
Segment results: strength in biorepositories, pressure in North America Multiomics
In Sample Management Solutions (SMS), revenue was $81 million, up 2% reported and down 3% organically. Lin said Biorepository Solutions—roughly 40% of the SMS segment—posted high single-digit growth, while Consumables and Instruments delivered modest growth supported by demand across the installed base. Offsetting that, he said orders for automated and cryogenic store systems were pressured by lower capital spending, resulting in a low double-digit decline in core products. SMS gross margin was 47.4%, up 40 basis points, which Lin said reflected improved biorepository margin and an accounting adjustment that more than offset headwinds from lower volumes, quality rework, and an inventory reserve.
In Multiomics, revenue was $64 million, flat on a reported basis and down 2% organically. Lin said results reflected a decline in global Sanger sequencing and lower volumes in North America due to softer demand and increased competitive intensity. Within the segment, he said Next Generation Sequencing grew mid-single digits and gene synthesis also grew mid-single digits, supported by oligo demand in China. Multiomics non-GAAP gross margin was 40.2%, down 300 basis points year over year, driven by lower fixed-cost absorption and unfavorable regional mix tied to reduced North America volumes.
During Q&A, Marotta provided additional detail on the quarter’s cadence. In Multiomics North America, he said demand improved in the first two months, but “our month three spike seasonality just did not materialize,” while competitive intensity—particularly in gene synthesis—“really did intensify” during the quarter. In SMS, Marotta said the company had visibility into its capital equipment pipeline but did not see expected conversions, pointing to two “multimillion-dollar” deals—one cryo biotech deal and one automated government store—being pushed out due to factors such as funding delays and site readiness.
Operational actions and transformation initiatives
Marotta emphasized ongoing transformation work, including deployment of the Azenta Business System to improve execution. He said on-time delivery in the Consumables and Instruments business improved from “approximately 15%–70%,” and Multiomics turnaround times improved—highlighting the launch of Lightning RNA-Seq, where turnaround time was reduced from roughly 20 days to 5 days.
On automated stores, Marotta said remediation efforts are continuing for three remaining stores and now expects the remaining work to be completed by the end of fiscal Q3. Lin added the company expects some additional quality-related costs in Q3. Lin also described structural changes aimed at improving accountability and execution, including restructuring the engineering organization into three teams—new product development, current projects, and sustaining engineering—alongside a shift from highly customized systems to a more modular product strategy and the hiring of an experienced project manager.
In Multiomics, Marotta said Azenta has shifted its transformation focus to the segment in 2026 and described the effort as “a structural overhaul.” He announced that Trey Martin has joined as President of the Multiomics business to lead the transformation. Marotta said Martin will focus on initiatives including optimizing the site and laboratory footprint, strengthening commercial excellence and pipeline conversion, accelerating Azenta Business System deployment, and advancing the technology strategy.
Lin also disclosed a significant non-cash impairment recorded during the quarter: $112.4 million for Multiomics and $36.6 million for Sample Management Solutions, which he said was driven by factors including a sustained decline in the company’s stock price, a decreased near-term outlook, and macroeconomic and geopolitical uncertainty. Lin also noted an additional $6 million non-cash loss related to assets held for sale tied to B Medical Systems, which remains classified as discontinued operations.
Updated fiscal 2026 outlook and long-range plan timing
Management lowered its fiscal 2026 outlook. Marotta said the company is taking a cautious approach given less predictable order conversion and continued variability in life sciences funding and customer capital deployment. Lin said Azenta now expects:
- Reported revenue of approximately $603 million to $621 million, including UK Biocentre
- Organic revenue ranging from down ~2% to up ~1% year over year (down from prior guidance of 3% to 5% growth)
- Adjusted EBITDA margin ranging from down ~125 bps to flat year over year (versus prior expectations of ~300 bps expansion, excluding UK Biocentre)
- Free cash flow expected to improve ~10% to 15% year over year (versus prior expectations of ~30% improvement)
At the segment level, Lin said Azenta now expects SMS to grow low single digits organically (down from mid-single digits) and Multiomics to decline mid-single digits (down from low single-digit growth previously). For the second half, Lin said the company expects organic revenue growth in the low single digits in fiscal Q3, followed by a low single-digit decline in fiscal Q4 due in part to a tough comparison against a record quarter in fiscal Q4 2025. He also said adjusted EBITDA margins are expected to improve sequentially, reaching the low double-digit range in Q3 and stepping up more meaningfully in Q4.
Marotta said the company is pushing out its long-range plan timeline by one year, from 2028 to 2029, while keeping the same financial targets. He said the shift reflects the current-year guidance reset and reiterated confidence in strategic priorities including scaling biorepositories, advancing gene synthesis technology, and innovating in automated solutions.
On capital allocation, Marotta said the framework remains unchanged, with priorities including productivity and gross margin improvement, organic growth investments, disciplined M&A, and returning capital to shareholders when appropriate. He also said integration of the UK Biocentre Limited acquisition is progressing as planned. Regarding the previously announced B Medical transaction, Marotta said the counterparty had not secured required financing by the expected closing date, and the company is evaluating paths forward while receiving weekly updates; Lin said any need to reconsolidate would be assessed at the next quarter point, June 30.
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.
