Life Science Tools and Diagnostics/CROs: 1Q in the Rearview: Tools & CRO 1Q26 KPI and Forward Implications

Research evidence excerpt

Life Science Tools and Diagnostics/CROs: 1Q in the Rearview: Tools & CRO 1Q26 KPI and Forward Implications

Portfolio Manager Summary

Volatility rules the day in 1Q26; some stock reactions fair, others puzzling

— We are providing the 1Q26 edition of Tools & CRO KPIs; as always, we welcome investor and

industry feedback as we plan to evolve this product over time

— Our goal is to provide a one-stop refresher and consolidated directional guide of key company

commentary and metrics. We believe this cross-sectional analysis of the Tools and CRO

industries will assist in trendspotting; mosaic enhancement; conference and management

meeting prep; benchmarking; PM presentations; and stock selection and position sizing

— The one-liner on Tools from 1Q is show me the money; investors remain hungry for proof of the

oft-referenced end market recovery finally yielding top-line / earnings momentum. CROs one-

liner is where’s the credit; with the industry trough clearly in and KPIs improving (short of

MEDP), we’re looking for when improved performance / bookings will finally be reflected in

stocks and potentially overcome the negative sentiment driven by AI.

— Tools stocks will have to deliver organic beats on the go forward to put a floor on the valuation

grind and we see outsized upside skew to CRO valuations on margin pull-through from AI

initiatives and / or industry acceleration to MSD+ organic growth; both proof points of AI as a

tailwind or benign to terminal value contra the (25%) average multiple contraction in CRO since

February heights

— Commentary across the Tools / CROs in 1Q26 still supports fading headwinds and expectations

around in key end markets / trends look improved for 2026. We note, however, that the bar