BICO Group Dashed Our 3D Bioprinting Dreams

They promised us the Star Trek replicator and all we got were some plastic trinkets. With a few notable exceptions, 3D printing has largely been a nothing burger for investors as the promises of “distributed manufacturing” and “a 3D printer in every household” never really panned out. On the healthcare side, 3D printing has made inroads in the dental space, though perhaps the most exciting thesis – 3D bioprinting – just hasn’t seen much progress.

Being able to print organs or tissue on demand sounds great, but we’re still waiting for that to move out of R&D labs. When we first invested in BICO Group (BICO ST), that was our thesis – find exposure to a 3D bioprinting firm with traction as opposed to the mess Organovo (ONVO) turned out to be, something which we took a lot of flak for pointing out back in the day when ARK was flirting with them. Today, we’re going to see if BICO Group deserves to remain in our disruptive tech portfolio by answering two questions. Has revenue growth stalled? Has our thesis changed?

The Original Thesis

Six years ago we first highlighted BICO Group (then CELLINK) in a piece that criticized Organovo’s lack of revenue growth (we’re still waiting for that growth). At that time, BICO had a market cap of $250 million and was under our $1 billion cutoff. A few years later that changed and we decided to open a position because of, “consistent revenue growth, no impact from The Rona, an increasing percentage of consumables, and much-needed currency and country diversification.” A year later, we cautioned on their flurry of acquisitions stating, “acquiring companies this aggressively comes with some risks around not being able to sufficiently vet them, or not being able to integrate operations.” Then another year passed, and we expressed a concern “that BICO may have flubbed more of their acquisitions besides Ginolis.”

That brings us to the most relevant article on BICO, last year’s piece titled BICO Group’s Founders Exit. What’s Next? After an internal probe of “the company’s aggressive sales culture during the years 2017-2021,” no wrongdoing was found, yet all three founders exited and a new CEO was brought on board. We noted that organic growth would be the key metric to watch and were told to expect “double-digit growth” going forward.

Stalling Revenue Growth

BICO Group’s revenue growth target was valid from 2023 and reiterated late last year – double-digit organic growth in constant currency. Here’s how that’s been going so far.

The company claims “revenue performance on par or even better than our life science peers” reflecting “soft demand from primarily Diagnostics and the Academica & Research segments through CapEx constraints, as well as weak demand from China.” In other words, the same excuses we heard last year. “The soft demand has lasted longer than expected,” says the company. Yes, yes it has.

We’re then given a glimmer of hope – signs of gradual market recovery with consumables recovering first (also reported by their peers). That’s disheartening because it implies BICO’s solutions are “nice to have” and not part of some critical business process that require consistent usage. Finally, we’re told they’re closely monitoring U.S. tariffs because 61% of revenues last year came from North America.

This is the second year of declining growth and the “commercial and operational excellence” mantras are getting old. This is a company with three independent segments, only one of which is showing signs of growth – “lab automation.” While that might give us some hope as we wait for 3D bioprinting to take off, it’s a red herring. There are other ways to play the lab automation theme, names like Thermo Fisher Scientific (TMO) or Danaher Corporation (DHR), though neither offer pure-play exposure, and we’re not aware of any tickers that do. (Are you?)

Still, it all comes down to this. Our initial thesis was 3D bioprinting which now accounts for less than 20% of revenues. And that number may have just dropped dramatically.

BICO and 3D Bioprinting

BICO has a habit of showing revenue growth (or lack thereof) as a rolling number which tends to obfuscate what’s actually happening. That’s probably because quarterly revenues are so variable. Still, we can see the trend moving in the wrong direction at both the quarterly and annual levels for the 3D bioprinting segment.

At under 20% of total revenues, this segment is not exactly exhibiting “skate to where the puck will be” behavior. And it’s only going to get worse. BICO made the decision to divest Nanoscribe which will now be treated as discontinued operations from Q4-2024.

About five years ago we noted that Nanoscribe was doing some remarkable work – 3D printing at the nanoscale – which hinted at the sort of nanobots that Drexler had once imagined. In 2021, BICO stepped in and acquired the company for $40 million and added it to the 3D bioprinting segment. Now they’ve decided that “due to its significant footprint outside life science” the operation should be sold, and the $28 million they received was used to pay down debt. That should reduce 3D bioprinting revenues by about $20 million or a reduction of 38% based on total 3D bioprinting revenues of $53 million in 2024.

All things being equal, 3D-bioprinting revenues should now sit somewhere around 17% of total revenues which means we’re getting even less of the 3D-bioprinting exposure we originally signed up for.

A Painful Postmortem

BICO Group has largely failed in its aspirations to grow organically and through M&A. The idea of acquiring complimentary growth failed because the founders – all of whom exited – clearly weren’t acting competently. Failed execution isn’t something you can predict. The new CEO seems to spout mantras about returning to growth -BICO 2.0 – but the proof is in the numbers.

When exiting any disruptive tech company, we always look for substitute exposure. In this case, 3D bioprinting is still largely a story. First, it was printing organs, then it was printing food, then it was about printing fake meat. None of these themes are compelling except the notion of printing organs on demand. Seems like xenotransplantation might get there first. Pig organs are the closest to human organs so why not just grow them on demand?

3D printing has largely been a disappointment for investors and enthusiasts. We felt compelled to have exposure, and our forays into distributed manufacturing – Protolabs (PRLB) and Xometry (XMTR) – spun wheels, though the latter has been showing signs of life lately with continued revenue growth. As for BICO Group, revenue growth has stalled with little hope in sight, while our original thesis is becoming an ever-dwindling component of total exposure. Two broken rules, one outcome.

Conclusion

Companies that aren’t growing revenues aren’t disrupting anything. BICO Group’s frenzy of acquisitions seems to have been poorly planned, and now at least several are being unwound at a loss. Meanwhile, organic growth has stalled with the same excuses being offered up each year. Even if double-digit growth is on the horizon, the exposure we want – 3D bioprinting – continues to decline, even more so with the recent divestiture of Nanoscribe. This isn’t a “skate to where the puck will be situation,” and there’s little incentive to stick around waiting for this turnaround story to finally realize “BICO 2.0.”