Q3 2023 Qiagen NV Earnings Call

Speaker 1: Ladies and gentlemen, thank you for holding. The conference will begin shortly.

Ladies and gentlemen, thank you for holding the conference will begin shortly.

[music].

Ladies and gentlemen, thank you for standing by I am just here Global me call operator.

Speaker 1: Ladies and gentlemen, thank you for standing by. I am just your global meat call operator.

Speaker 1: Welcome and thank you for joining QIAGEN Q3 2023 Earnings Conference Call Webcast.

Welcome and thank you for joining Qiagen Q3, 2023 earnings conference call webcast.

Speaker 1: At this time, all participants are in a listen-only mode. Please be advised that this call is being recorded at QIAGEN's request and will be made available on their internet website.

At this time all participants are in a listen only mode.

Be advised that this call is being recorded I cryogens request and will be made available on their internet website.

Speaker 1: The prepared remarks will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touch tone telephone.

The prepared remarks will be followed by a question and answer session. If he would like to ask a question you May press star followed by one on your Touchtone telephone.

Please press the star key followed by zero for operator assistance.

Speaker 1: Please press the star key followed by zero for operator assistance.

Speaker 1: At this time, I would like to introduce your host, Mr. John Gilardi, Vice President, Head of Corporate Communications and Investor Relations at QIAGEN. Please go ahead, sir.

At this time I would like to introduce your host Mr. John Gilardi, Vice President and head of corporate Communications and Investor Relations at Qiagen. Please go ahead Sir.

Speaker 2: Thank you, Jess, and thank you all of you for joining us today for this call. We appreciate your interesting chaijin. Our speakers today are Terry Bernard, our chief executive officer and Roland Sackers, our chief financial officer. We also have Phoebe Lowe from the IR team.

Thank you Jess and thank you all of you for joining us today for this call. We appreciate your interest in Qiagen. Our speakers today are Terry Bernard our Chief Executive Officer enrolling Soccer's, our Chief Financial Officer, We also have to be below from the IR team joining us as well.

Speaker 2: If call us being WebCast live and we'll be archived on the Investors section of our website at www.kidger.com. You can also find a copy of the quarterly results, press release and presentation on our website. We'll begin with remarks from Terry and Roland and then move into a Q&A session. Before we start, let me briefly go over the safe harbor.

This call is being webcast live and will be archived on the investors section of our website at Www Dot Com you can also find a copy of the quarterly results press release and presentation on our website.

I will begin with remarks from Terry enrolling and then move into a Q&A session. Before we start let me briefly go over the Safe Harbor statement. The views expressed during this conference call and our responses to your questions represent the prospectus of management as of today October 31st 2023, we will be making statements and providing responses to your questions I can be earned.

Speaker 2: If you use Express during this conference call and responses to your questions represent perspectives of management as of today, October 31, 2023. We will be making statements providing responses to your questions that convey your intentions, beliefs, expectations, or predictions for the future.

Tensions beliefs expectations or predictions for the future. These.

Speaker 2: These statements fall under the safe harbor provisions of the Private Security's litigation reform act of 1995. They involve risks and uncertainties and actual results made different materially from those suggested by these statements.

These statements fall under the Safe Harbor provisions of the private Securities Litigation Reform Act of 1995, they involve risks and uncertainties and actual results may differ materially from those suggested by these statements factors that could influence results are mentioned in our filings with the SEC.

Speaker 2: Factors that could influence results are mentioned in our filings with the S.

Speaker 2: are also available on the SEC website and also on our own website.

These are also available on the SEC website and also on our own website qiagen disclaims any intention or obligation to update any forward looking statements. Additionally, we will refer to certain financial measures not approved I'm sorry, not prepared following generally accepted accounting principles or GAAP.

Speaker 2: Kajin is claimed to any intentional obligation to update any forward list.

Speaker 2: Additionally, we will refer to certain financial measures not approved. I'm sorry, not prepared. Following generally, except the accounting principles or gap. All references to EPS refer to the looting.

All references to EPS refer to diluted EPS you.

You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in our press release and presentation I'd like to now hand over the call to Terry.

Speaker 2: I find a reconciliation to these non- GAAP financial measures to the most directly comparable GAAP measures in our press release and presentation. I like to...

Speaker 3: Thank you, John . Good morning, good afternoon or good evening, depending of course of where you are in the world and thank you for joining us.

Thank you John and good morning, and good afternoon, or good evening, depending of course of where you are in the world and thank you for joining us.

Speaker 3: We delivered another quarter of solid results that exceeded our outlook in an increasingly volatile macro-environment.

We delivered another quarter of solid results that exceeded our outlook you know an increasingly volatile macro environment.

This confirms again the resilience of our portfolio.

Speaker 3: This confirms again the resilience of our portfolio.

Speaker 3: Our performance continues to be driven by our strategy of focus and balance.

Our performance continues to be driven by our strategy of focus and balance.

Speaker 3: Focus on our pillars of growth and balance in serving over 500,000 customers.

Focus on our pillars of growth and balance in serving over 500000 customers in.

Speaker 3: in the life sciences and molecular diagnostics with our broad geographic presence.

In the life Sciences, and molecular diagnostic with our broad geographic presence.

At the same time.

Speaker 3: We are obviously closely monitoring increasingly challenging geopolitical and macro-environment.

We are obviously closely monitoring increasingly challenging geopolitical and macro environment.

Speaker 3: and taking actions to reduce as much as possible the impact on our business.

And taking actions to reduce as much as possible.

On our business.

Speaker 3: We believe that we are very well positioned to finish this here in a strong position.

We believe that we are very well positioned to finish this year in a strong position.

Speaker 3: Committed to delivering solid-sense growth and improved earnings in the fourth quarter.

Committed to delivering solid sales growth and improved earnings in the fourth quarter.

Speaker 3: as we prepare for more growth and expansion in 2004 and a year ahead. Let me quickly go to our

As we prepare for more growth and expansion in 2024 and the years ahead.

Let me quickly go through our top messages for today.

First we exceeded our outlook for net sales and adjusted EPS for the first quarter.

Speaker 3: We exceeded our outlook for net sales and adjusted EPS for the third quarter.

Speaker 3: driven by solid growth in the non-covid-based business and the high level of profitability.

Driven by solid growth in the non Covid business.

At a high level of profitability.

Net sales were $470 million at constant exchange rates.

Speaker 3: Net sales were $470 million at constant exchange rates, which exceeded our outlook for at least $465 million.

Which exceeded our outlook for at least $465 million.

Speaker 3: Our non-COVID product sales rose 5% CER, and this was supported by 10% CER growth in sales of highly recurring consumables revenues that accounted for well over 85% of total sales.

Our non Kobe products sales rose, 5% CER and Gs was supported by 10% CER growth in sales of highly recurring consumable revenues that accounted for weight over 85% of total sales.

Speaker 3: For the first 9 months of the year, those sales grew 8% CER.

For the first nine months of the year are those sales grew 8% C E R.

Speaker 3: Overall, research showed a decline of 5% to $476 million reflecting, of course, the significant drop-off in COVID testing revenues from 2020.

Overall results showed a decline of 5% to $476 million, reflecting of course, the significant drop off in Covid testing revenues from 2022.

We continue to track towards $160 million to $165 million of sales for 2020 free.

Speaker 3: We continue to track towards $160 to $165 million of sales for 2023 in our COVID-19 product group.

COVID-19 product group.

Speaker 3: Remember that we had a hundred and forty three million dollars of sales from this group in 2019 before the pandemic.

Remember that we had $143 million of sales from this group in 2019 before the pandemic.

Speaker 3: In terms of profitability, adjusted earnings per shares were 50 cents CER. And once again, above the outlook for at least 48 cents CER.

In terms of profitability.

Adjusted earnings per share were 50 cents C R and once again the outlook for at least.

48 cents C E R.

Our second key message.

Speaker 3: Our key pillars are driving the solid underlying performance. Just to conclude.

I will keep it allows all driving the solid underlying performance.

Just to call out a few.

Speaker 3: The quantiferontivitis may intend the momentum we have seen during 2023. Growing 25% ER over the third quarter of 2022 and delivering the second consecutive quarter of sales above $100 million.

Quality people on TB test maintained the momentum we have seen during 2023 growing 25% CAGR over the third quarter of two focal in 'twenty, two and delivering the second consecutive quarter of sales about $100 million.

Speaker 3: What are the key drivers? Of UC once again, the strong conversion trends from use of the tuberculine skin test.

What other key drivers.

Where do you see once again the strong congressmen trains from use of the Jabil kidding skin test.

And those are examples.

Speaker 3: The Cuyacquity Digital PCR system delivered over 40% sales growth at constant exchange rates driven by new placement and increasing bio-farm consumable sales.

<unk> created digital PCR system did you brought over 40% sales growth at constant exchange rates, driven by new placements and increasing biopharma consumable sales.

Speaker 3: The Kiastat Diagnostics Syndromic Testing Platform also did well this quarter, with a combination of growth in consumables driven by double-digit CER gains in non-COVID testing and placements above the same level achieved in the third quarter of last year.

Okay, Yes that does.

Ignostic Syndromic testing platform also did well this quarter with a combination of growth in consumer board driven by double digit CER gains in non COVID-19 testing and placements above the same level achieved in the third quarter of last year.

I will first message.

Speaker 3: We continue to maintain a high level of profitability as we invest into research and development that will help driving future growth trends.

We continue to maintain a high level of profitability as we invest into research and development that we'd hired driving future growth trends.

Speaker 3: The adjusted operating income margin was 26.6% in the third quarter and we achieved this level while investing around 10% of sales into research and development.

The adjusted operating income margin was 26, 6% in the third quarter and we achieved this flavored while investing around 10% of sales.

Through research and development.

Speaker 3: We see those investments as an important way to create new relays of growth for tomorrow.

We see those investment as an important way to create new relays of growth for tomorrow.

And then one last point for today, we are reaffirming our full year outlook for two 420 feet.

Speaker 3: And our last point for today, we are reaffirming our full year outlook for 2020.

Speaker 3: Our Outlook 23 remains for net sales of at least $1.97 billion at constant exchange rate and for adjusted earnings per share of at least $2.07 CER.

Our outlook 23 remains for net sales of at least $1 97 billion at constant exchange rate and for adjusted earnings per share of at least $2 seven C E R.

Speaker 3: We are, of course, closely monitoring the increasingly volatile geopolitical and macro trends. Inflation.

We are of course closely monitoring the increasingly volatile geopolitical and macro trends.

Inflation.

The war in Ukraine, and now in the Middle East.

Speaker 3: supply chain issues, the economy in China. Those are a lot of moving parts to observe in terms of macro trends.

Supply chain issues do you couldnt be in China.

Those are a lot of moving parts to observe in terms of macro trends.

Speaker 3: Before I hand over to Roland, I would also like to mention a change in our leadership.

Before I hand over to Harlan I would also like to mention a change in our leadership team.

Speaker 3: After leading our molecular diagnostic business since 2020, Jean-Pascal Viola has been appointed senior vice president, head of corporate strategy and development. He remains a member of the executive committee.

After leading our mollitude molecular diagnostic business since 2020 <unk>.

Pascal Viola has been appointed senior Vice President head of corporate strategy and development you remains a member of the Executive Committee.

Speaker 3: We here want to capitalize on Jean Pascal's contribution to Kay Agents since 2007 and his proven track record in business development.

We here want to capitalize on jump as gas contribution to carrier journey since 2007, and his proven track record in business development.

Speaker 3: After a rigorous selection process, we would like to welcome Fernando Behrs as our new Senior Vice President, Head of Molecular Diagnostic Business Area, and member of the Executive Committee.

After a rigorous selection process.

We would like to welcome Fernando Bell as our new senior Vice President head of molecular diagnostic business area and member of the Executive Committee.

Yeah, and Andrew joins <unk> after more than two decades in the life Sciences and molecular diagnostics industry.

Speaker 3: Fernando joins QIAGEN after more than two decades in the life sciences and molecular diagnostics industry.

Speaker 3: He most recently led the genetic testing solution business at ThermoFischer's Scientific and previously spent over two decades at Siemens and his last role as global head of the molecular diagnostic business unit at Siemens Health Finance.

He most recently led the genetic testing solution business at Panama Fisher scientific.

And previously spent over two decades at Siemens and his last role as global head of the molecule that diagnostic business unit at Siemens Healthiness.

Speaker 3: We welcome Fernando to the team and are convinced that his passion for innovation and customer focus will help us achieve our ambition.

We welcome found a lot of the similar convinced that his passion for innovation and customer focus will help us achieve our ambitions.

Speaker 3: And now, I'd like to hand over to Roland for a review of our results in greater detail.

And now I'd like to hand over to hold on for a review of our results in greater detail.

Thank you Teri Hello, everyone sector as well for me for joining our call. Let me first discuss our results for the third quarter and first nine months of the year and then share some views on our outlook.

Speaker 4: Thank you, Terje. Hello everyone. Thank you as well for me for joining our call. Let me first discuss our results for the first quarter and first nine months of the year and then share some views on our...

Speaker 4: As you saw in our press release, net sales for the 3rd quarter of 2023 were 476 million USD at actual rates and 470 million USD at constant exchange rates.

As you saw in our press release net sales for the third quarter of 23, well for about 76 million U S dollars at extra words, and Florida 70 million U S dollars at constant exchange rates, we saw a modest impact from currency movements against U S. Dollar so sales declined 5% compared to the year ago period, while it was all.

Speaker 4: We saw a modest impact from currency movements against US Dollar, so sales declined 5% compared to the year ago period, while results at constant exchange rates were down 6%.

At constant exchange rates were down 6%.

Speaker 4: As has been the trend during 2023, this was again a quarter with a substantial decline in COVID-19 revenue.

S F P. The tread you're twenty-three since once again a quarter was a substantial decline in COVID-19 and revenues.

Speaker 4: Instruments HILTS lets a performance rising 1% CER as our teams generated growth despite more conservative customer spending.

Instrument sales led to performance rising 1% CER as our teams generated growth despite more conservative customer spending trends even in this environment. We still saw solid placements of lower price point instruments, such as sky acuity and chaos that the ex U.

Speaker 4: Even in this environment we still saw solid placements of lower price point instruments such as Kaya QT and Kaya Stati.

Speaker 4: We continue to see good placement trends for reagent rental.

We continue to see a good placement transport reagent rental agreements since agreements among molecular diagnostic customers involve placements linked to multi year consumable contracts and help secure future consumable commitments.

Speaker 4: This agreement, among more molecular diagnostic customers, involves placements linked to multi-year consumable contracts and helps secure future consumable commitments.

Speaker 4: Among our four product groups, let's start with some technologies which represents about one third of tools here.

Among our four product groups, let's start with softer technologies, which represents about one sort of total sales.

Speaker 4: Here we had growth at a low single digit CR rate for the non-COVID products and this represented nearly 90% of sales within this product.

Have you had growth at a low single digit C. I'll wait for the nonwoven products.

Is that that nearly 90% of sales with this product.

Speaker 4: Overall self-decline 13% CER and this was due to the very tough comparison against 22 results and the drop-off this year in COVID-19 testing them.

Overall sales declined 13% CER and just supposed to do which was a very tough comparison against 22 with knowledge and so drop off this year and COVID-19 testing demand.

Speaker 4: Diagnostics solutions, our SRECKEEN PRODAR group, all to represent about one third of sales.

Diagnostic solutions, our second product group also represents about one sort of sales.

Speaker 4: The quantum theorem on latent TB test was the main driver with all regions delivering sales growth of about 20% CR or better. The strong conversion trend from the traditional skin trend test is continuing across the world, but this is still a market that is no below 40% tennis.

The collective fear on latent TB test Wassa main rival with all regions delivering sales growth of about 20% CR I'll bet. All so strong conversion trend for the traditional skin trend test is continuing across the broad but this is still a market that is still below 40%.

Trade it.

Speaker 4: Diagnostic solution also includes the KIA Statique System for the Syndromeic Testing. This hails Ross-Borp-Effentia as non-COVID applications delivered solid group of 16% with more than overrated, which more than overrated the COVID-19 testing had wins from 20.

Diagnostic solution also includes the chaos that the X system for Syndromic testing.

Sales rose, 4% CER, that's not covered applications delivered solid growth of 16% CER with Mazda and overweight, which was it all related to COVID-19 testing headwinds from 'twenty two.

We continue to see excellent non COVID-19 utilization in Europe with underlying growth of double digit C or wait for non corporate application set represented about 30% of total sales.

Speaker 4: We continue to see excellent non-COVID utilization in Europe with underlying growth at double digit CR Our wait for non-COVID applications that represented about 30% of toll sales.

Speaker 4: Noim Mutex, our integrated clinical PCR testing platform, saw a sales decline in the third quarter. This was due to had wins against the high level of COVID testing in Webnews in Q3 2020.

Normally eggs or integrated clinical PCR testing platform saw a sales decline in the third quarter. So it's supposed to do two headwinds against the high level of Covid testing revenues in Q3 22.

Moving onto the P C a new kit as it happens.

Speaker 4: Moving on to the PCR nuclear acid amplification polar group. This helps decline 25% CER in the third quarter.

Amplification product group sales declined 25% see out in the third quarter.

Speaker 4: SV has been discussing on these calls during 23. The reason was a sharp drop of insults to our OM third party customers that use our reagents for their own products.

Yes, we have been discussing on this call. It's doing twenty-three. So reason was a sharp drop off in sales to our website party customers that use our reagents for their own products.

Speaker 4: Extruding this factor, non-COVID-CLs for this product group, rose at a single digit CRS.

Excluding this sector non COVID-19 sales for this product group posted a single digit CR rate.

At the same time kayak commodity digital PCR continued to deliver growth above 40% CER and is tracking volt to what's a 'twenty three goals.

For at least $70 million of annual sales.

Speaker 4: This grove is coming from a combination of increasing consumer worlds, pulls through along with solid trends in new places.

This growth is coming from a combination of increasing consumables pull through along with solid trends in new placements.

Speaker 4: In Q3, these levels were about the C-AGO quarter and for all three versions involving the one plate, four plate and eight plates.

Do you see these levels well above this year ago quarter and for all three versions involving the one plate for plate it plate system.

Genomics and yes, it's a lost product group as it evolves.

Speaker 4: The NOMX NGS is our last product group and it involves our energy digital insight bioinformatics business and our products for use with any next generation.

Did you call out your digital insight Biopharma ethics business at our products for use with any next generation sequence, though.

Speaker 4: The QDI business had another solid performance with sales growth at about 20% C.R. in the short quarter and maintaining a double digit C.R. growth rate for the first nine months of C.R.

Security I business had another solid performance with sales growth at about 20% CR is a short quarter and maintaining a double digit C alcohol for it for the first nine months of C. L.

Speaker 4: Here we are seeing the fastest growth in our clinical applications and complemented by double digit growth as well in discovery and research.

Yeah, we are seeing the fastest growth in our clinical applications and complemented by double digit growth as well at discovery and research applications.

Moving to sell it on a geographic basis Americas.

Speaker 4: Moving to sales on a geographic basis. The Americas again delivered growth in terms of total sales, rising 1% CR and as a faster 4% CR weight for the non-covid business.

<unk> delivered golf and drops off towards sales why is it 1% CER and as our foster 4% CR rate for the non Covid business is a key driver was clearly quantified one and supported by the softer technologies and kayak acuity portfolios and just continue to trend seen in the second quarter.

Speaker 4: The keyed one of our clearly quanted fair run and supported by the sound protectologies and kaiacuity portfolios and discontinued the trend seen in the second quarter.

The Europe Middle East Africa region, who had an even stronger pace than cause serious threat for non COVID-19 product groups why is it at a double digit CER rate.

Speaker 4: The Europe Middle East African region who had an even stronger pace than the Americas was held straight from non-COVID polar groups rising at a double-digit CRS.

Speaker 4: Among the top-performing countries from non-Covid results, there are France, Switzerland and the United.

Amongst the top performing countries for non Covid results about France, Switzerland, and United Kingdom.

Speaker 4: The Asia Pacific Japan region had a decline at low single digit CR rates from non-COVID-C.

The Asia Pacific, Japan region had a declined at low single digit CR rates for non Covid sits.

Speaker 4: Non-COVID-Sales in China declined at a low single-digit CR rate as well. Let's now review the rest...

Corporate sales in China declined at a low single digit C outlet as well.

Let's now review the rest of the income statement.

Speaker 4: Adjusted operating income declined 12% to 126 million US dollars from the third quarter of 22, reflecting the lower sales base due to the pandemic revenues last year.

Adjusted operating income declined 12% to 126 million U S. Dollar swaps was third quarter of 22, reflecting the la Salle space due to the pandemic revenues last year.

Speaker 4: They're just operating income margin for the short port of 26.6% of sales.

The adjusted operating income margin for the third quarter was 26, 6% upsets.

Speaker 4: Keep in mind that in the third quarter we face currency headbands of at least 50 basis points on the margin.

Keep in mind set in the third quarter, we faced currency headwinds of about of at least 50 basis points on the margin.

Speaker 4: The keyed weibar was a decline in the adjusted cross margin to 66.1% of hair.

The key driver was the decline in adjusted gross margin to $66 one per cent upsets.

Speaker 4: Among the effectors was the lower levels of capacity utilization and the change in porous.

Longs affect us, what's the lower levels of capacity utilization and the change in product mix.

Speaker 4: At the same time, we continued to make significant investments in R&D, which remained at about 10% of sales and in line with our full year goals.

At the same time, we continued to make significant investments in R&D, which remained at about 10% of sales and it alive as our full year goals.

Speaker 4: Sales and marketing expenses benefited from improvement in the quality and efficiency of customer engagement.

They had some marketing expenses benefited from improvements in the quality and the efficiency of customer engagement.

Speaker 4: This expenses were 23.4% of sales in the third quarter, up from 22.9% last year, or the significantly higher COVID driven sales.

Expenses were up 24% of sales for the third quarter up from 22, 9% last year, what is significantly higher COVID-19 driven sales space.

Speaker 4: General administrative expenses were 6.0% of sales and slightly lower than in the short quote of 22 and 6.2% of sales.

General and administrative expenses were 6.0% of sales and slightly lower than in the third quarter of 'twenty two at six 2% of sales.

Speaker 4: close out the income statement, adjusted EPS for the short port of a 50 cents at constant exchange rate and above the outlook for at least 48 cents CR and also 50 cents at actual rate.

To close out the income statement adjusted EPS for the short part of US 50 cents at constant exchange rates and the bus outlook for at least 48 cents see Oh, its a 50 cents at extra works.

Speaker 4: The terms of non-operating net income factors we have seen incrementally higher interest income during 23 and this high interest rate environment.

In terms of nonoperating net income factors, we have seen incrementally higher interest income during 'twenty suite and this high interest rate environment.

Speaker 4: At the same time, our interest expenses have declined. And this is due to Kyliea having repaid nearly $900 million during the last 12 months of maturity, maturing debt from existing cash reserves.

It's the same time, our interest expenses have declined and this is due to college and having repaid nearly $900 billion. During the last 12 months of maturity, but doing that from existing cash reserves.

Speaker 4: Starting to cash roll, results for the first nine months of 23 reflect the lower sales and profit levels compared to 22.

Turning to cash flow.

For the first nine months of 'twenty, three reflect the lowest sales and profit levels compared to 22.

Speaker 4: Operating cash flow was $308 million for the first nine months of the year, while free cash flow was $210 million US dollars.

Operating cash flow was $8 million for the first nine months of the year why free cash flow was $210 million.

Speaker 4: As we have mentioned on the earlier calls for 23, we are in the pede of higher working capital requirements due to our decision to increase inventories in light of the challenging geopolitical and macro environments.

As we have mentioned on earlier calls for 'twenty. Three we are in a period of higher working capital requirements due to our decision to increase inventories in light of such challenging political and market environment. We want to ensure that qiagen has adequate product availability to self customers.

Speaker 4: want to ensure that Cuyahjin has adequate product availability to serve customers.

Speaker 4: This is all to see in the balance sheet in terms of the increase.

This is also seen as a balance sheet it jumps off the increase in inventories.

Speaker 4: At the same time, accounts receivables has been trending into a positive direction with days of failed outstanding or DSOs at 54 days at the end of September 23 and down from 58 days a year ago. This is due to the operational improvements achieved by our receivables.

At the same time accounts with few votes has been trending into a positive direction with days of sales outstanding audio stores at 54 days at the end of September 23, and Dawn from 58 days a year ago. So this is due to the operational improvements Ashish ball receive alerts tubes.

Continuing with the balance sheet, our liquidity position was about $1 billion at the end of the third quarter, which has started from one $4 billion at the end of 'twenty two.

Speaker 4: The liquidity position was about $1 billion at the end of the short quarter, which is done from $1.4 billion at the end of 2020.

Speaker 4: As a result, our leverage ratio at the end of the third quarter stood at 0.7 times net depth to adjust it A with R and increase from 0.5 times at the end of 20.

As a result, our leverage ratio at the end of the third quarter stood at one seven times net debt to adjusted EBITDA, an increase from five times at the end of 'twenty two.

Speaker 4: One of the drivers for improving our leverage and capital efficiency was the decision to repay about 900 million dollars of debt from existing cash reserved as I mentioned.

One of the drivers for improving our level of extra capital efficiency, what's the decision to repay about $9 billion of debt from existing cash because as I've mentioned.

Speaker 4: of this amount for a million dollars of convertible notes we have paid out in September .

This amount for a $1 billion of our convertible notes were paid at September 20th suite.

Speaker 4: Looking ahead, we have an additional $100 million of debt.

Looking ahead, we have an additional $100 million of debt.

Speaker 4: reaching maturity next June and another $500 million in November 24.

Reaching maturity next June and then that was a five for that billion dollar in November 24.

Speaker 4: Another $500 million of convertible notes could require repayment in December 25th.

Another $5 billion of convertible notes could require repayment in December 25.

Speaker 4: We continue to review ways to deploy cash within our Discipline allocation strategy that involves targeted M&A as well as share approaches programs. Given our healthy balance sheet, we want to continue our approach to create value by investing into the business and increasing returns. I would not...

We continue to review ways to deploy cash within our disciplined allocation strategy that involves targeted M&A as well as share repurchase programs.

Given our healthy balance sheet, we want to continue our approach to create value by investing into the business and increasingly the chance I would.

Now like to hand back to you.

Speaker 3: Thank you Roland, if you allow me, I'd like now to take a moment to run through some of our progressies in advancing our portfolio this quarter.

Thank you all and if you'll allow me I'd like now to take a moment to run through some of our progress he's in advancing our portfolio of this quarter.

Speaker 3: First, we continue to sharpen our focus on our pillars of growth and expand in our key areas of expertise to drive sustainable growth in various applications.

First we continue to sharpen our focus on our pillars of growth and expanding our key areas of expertise to drive sustainable growth in values application.

Speaker 3: While we are directing investment into growing our new pillars of growth, such as chiastat diagnostic or chiacuity, we are obviously not complacent in our established leadership in sample tech or quantiferon.

Why do we are directing investments into growing our new pillars of growth such as Sky yesterday agnostic. Okay. Yeah. Queasy, we are obviously not complacent in our established leadership in central take well quantified.

First of all.

Speaker 3: First of all, in our market leading sample technology portfolio, we continue to make progress in automation upgrades with the recent launch of the T-Sue Lizer 3-Instream.

Our market, leading sample technologies portfolio, we continued to make progress on automation upgrades with the recent launch of the tissue laser free in three months.

Speaker 3: This instrument is used as a key tool in sample description of difficult-to-isolate samples in early steps of RNA or DNA isolation, such as those involving bone, tissue, or environmental samples like soil or plant matter.

This is Fremont is used as a key tool in sample description of difficult to isolate samples in early steps of air isn't it.

DNA solution, such as those involving bone tissue or environmental standards like soy or plant matter.

Speaker 3: The prior generation of this instrument has been seated in over 14,000 publications and is part of a comprehensive lineup of automation that will position skyagents to answer a broad range of customer demands for sample process.

The prior generation of these instruments has been citied in over 14000 permutation and as part of a comprehensive lineup of automation that weighted positions <unk> to win and serve a broader range of customer demands for sample processing.

Speaker 3: Through the complete upgrade of our sample preparation systems, we have ensured these platforms are not only delivering state-of-the-art technology for the highest quality processing, but also modern solutions for connectivity, which is used for real-time monitoring of runs, cloud management of data, and remote service monitoring.

Crude a complete upgrade of our sample preparation systems. We haven't shown these platforms are not only delivering state of the art technology for the highest quality processing, but also modern solutions for connectivity, which is used for redesign monitoring overruns cloud mandates.

Amount of data and remote service monitory.

Another example is the mix of debt that will come with the release of an upgraded version of our flagship platform seafood, which will onboard connectivity elements and additional features to even better and they go to high volume application such as liquid biopsies.

Speaker 3: Another example is the next update that will come with the release of an upgraded version of our flat-ching platform kaiasipony, which will own bound connectivity elements and additional features to even better enable high volume application such as liquid biops.

Speaker 3: We also continue to leverage our deep sample prep expertise through some of the more dynamic growth applications, such as expanding our microbiome portfolio.

We also continue to leverage our deep sample prep expertise through some of the more dynamic growth application such as extending our microbiome portfolio.

Speaker 3: Our teams recently launched comprehensive workflows, like the Microbiome Whole Genome Sequencing 6-Sets, to enable diverse microbiome research, including gut health, soil microbiology, and antibiotic resistance.

Our teams have recently launched comprehensive workflows like the microbiome whole genome sequencing six sets to enable diverse microbiome research, including good health. So microbiology and then see about your cheek resistance.

Unknown Executive: Ladies and gentlemen, thank you for holding. The conference will begin shortly. Thank you for standing by.

Speaker 3: Those complete kits leverage our leading microbiome DNA extraction and include library preparation for whole genome sequencing and dedicated bioinformatics.

Those complete kits liberates, our leading microbiome DNA extraction and include library preparation for whole genome sequencing and educated bioinformatics.

Speaker 3: Another notable SampleTech expansion is the launch of our kits in our KayaWave portfolio.

And those are no table sample take expansion is the launch of eyewear kits in our <unk> portfolio.

Speaker 3: The KIA Wave, Eren Easy and multi-analysed DNA Ereni kits were added to the collection of alternative version of the most popular KIA Jean kits, which have been redesigned to use considerably less plastic and cardboard.

Okay, Yeah wave Aaron easy Admiralty analyze DNA or RNA kits were added to the collection of tenancy version of the most popular okay. You didn't kits, which have been redesigned to use considerably less plastic and cardboard.

Jess: I am Jess, your global meet call operator. Welcome and thank you for joining KIAGEN's Q3 2023 earnings conference call webcast. At this time, all participants are going to listen only mode. Please be advised that this call is being recorded at KIAGEN's Q3 request and will be made available on their internet website. The prepared remarks will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press the star key followed by zero for operator assistance.

Speaker 3: Those sustainable kit versions are part of our broader initiative to reduce our environmental footprint and achieve milestones toward our STBI validity target of net zero by 2005.

Those sustainable keep veterans.

Part of our broader initiative to reduce our environmental footprint and achieve milestones towards our STB I validated target.

Net zero by 2050.

Speaker 3: Moving now to the quantiFERON franchise. We continue to see strong expansion into the market for this product led by the leading quantiFERON TB goal plus test for latent tuberculosis testing.

Moving now to the quantity of our franchise, we continue to see strong expansion into the market for this product led by the leading quantity pier one GB gold plus test for latent tuberculosis testing.

John Gilardi: At this time, I would like to introduce your host, Mr. John Gilardi, vice president ahead of corporate communications and investor relations at KIAGEN. Please go ahead, sir. Thank you, Jess. And thank you all of you for joining us today for this call. We appreciate your interesting KIAGEN. Our speakers today are Thierry Bernard, our chief executive officer, and Roland Sackers, our chief financial officer. We also have BB Lo from the IR team joining us as well.

Speaker 3: As you have seen in our results, the TB test continues to see strong demand from the continuous successful conversion from the tuberculin skin test alongside with our strong solution for automation with diastereoids.

As you have seen in our results. The TB test continued to see strong demand from the continuous successful conversion from the troubleshooting skin test alongside with our strong solution for automation with Oh, sorry.

Speaker 3: This undercuts the power of quantifier differentiation in the latent TB testing market as an established and proven technology with unparalleled automation options.

This underscores the power of quantity of almost differentiation in the latent TB testing market as an established and proven technology with unparalleled automation options.

John Gilardi: This call is being webcast live and will be archived on the investor's section of our website at www.kIAGEN.com. You can also find a copy of the quarterly results, press release, and presentation on our website. We'll begin with remarks from Terry and Roland and then move into a Q&A session.

Speaker 3: Our teams ongoing public health work leverages established relationships to promote the importance of test and treats strategy for eradicating deadly TB infections across the globe. This month, for example, Kaya Jen once again hosted the annual tuberculosis summit, bringing together experts, healthcare professionals, policy makers, disease survivors to discuss emerging tools and strategies for TB management.

Our team's ongoing public health will leverage these established relationships to promote the importance of test and treat strategy for eradicating Dade leads you've been fixing it infections across the globe.

This month for example, Qiagen once again hosted the annual tuberculosis submit bringing together experts health care professional policymakers gz survival to discuss emerging emerging tools and strategies for keeping management.

Unknown Executive: Before we start, let me briefly go over the State Farber statement. The views expressed during this conference call and responses to your questions represent the perspectives of management as of today, October 31st, 2023. We will be making statements providing responses to your questions that convey your intentions, beliefs, expectations, or predictions for the future. These statements fall under the State Farber provisions of the Private Security's litigation reform act of 1995. They involve risks and uncertainties and actual results made different materially from those suggested by these statements.

Unknown Executive: Factors that could influence results are mentioned in our filings with the SEC. These are also available on the SEC website and also on our own website. KIAGEN has quimped any intentional obligation to update any forward-looking statements. Additionally, we will refer to certain financial measures not approved—sorry, not prepared—following generally except in accounting principles or GAP. All references to EPS refer to diluted EPS. You can find a reconciliation of these non-GAP financial measures to the most directly comparable GAP measures in our press release and presentation.

These accredited event so record breaking participation with over 2005 hundred people attending through our webcast or in person in London.

Speaker 3: This accredited event saw record-breaking participation with over 2,500 people attending through our webcast or in person in London.

Speaker 3: This summit was to drive significant investment in the fight against TB and empower health care professionals and policy makers by providing them with the latest knowledge, insight, and best practices.

The semi works to drive significant advancement in the fight against TB and ample we're a health care professional and policymakers by providing them with the latest knowledge insights and best practices.

While 40 people won't plays an essential role in the global fight against Jupiter. Two doses. We are also leveraging the quantity of people and technology to assist in the exploration of cell mediated immune response in oncology and autoimmune diseases.

Speaker 3: While quantiferum plays an essential role in the global fight against tuberculosis, we are also leveraging the quantiferum technology to assist in the exploration of cell-mediated immune response in oncology and autoimmune diseases.

Speaker 3: Just recently, as you have seen in our press release, we launched the quantiferon eBV assay for research use only to facilitate research in building the understanding of Epstein-Barr virus infections and related malignancies.

Just recently as you have seen in our press release, we launched the quantity of people EBV assay for research use only to facilitate research in building the understanding of Epstein Barr virus infections and related malignancies.

Unknown Executive: I'd like to now hand over the commentary. Thank you, John.

This builds on the existing portfolio of IBD test for monitoring CA.

Speaker 3: This builds on the existing portfolio of IVD tests for monitoring CMI response and cytomegalovirus, a Lyme disease assay, and the research use only T cell response assay.

Thierry Bernard: Good morning. Good afternoon or good evening, depending, of course, of where you are in the world and thank you for joining us. We delivered another quarter of solid results that exceeded our outlook in an increasingly volatile macro-environment. This confirms again the resilience of our portfolio. Our performance continues to be driven by our strategy of focus and balance. Focus on our pillars of growth and balance in serving over 500,000 customers in the life sciences and molecular diagnostics with our broad geographic presence.

Hey, My response, and cytomegalovirus or a lyme disease assay and the research use only T cell response assays.

Thierry Bernard: At the same time, we are working obviously closely monitoring, increasingly challenging geopolitical and macro environments and taking actions to reduce as much as possible the impact on our business. We believe that we are very well positioned to finish this year in a strong position, committed to delivering solid sales growth and improved earnings in the fourth quarter.

Speaker 3: So you can see we are building on a strong base in our quantiferon franchise.

So you can see we are building on our strong base in our culture people and franchise we.

Speaker 3: We see a solid road to continue double-digit growth in the next few years by leveraging this highly differentiated proprietary technology through well-established commercial channels. And now back again to Roland to give you more details on our outlook for 2020.

We see a solid road to continued double digit growth in the next future few years by leveraging these highly differentiated appropriately is appropriate technology.

Well established commercial challenges and now we're back again to hold onto give you more details on our outlook for 2023.

Speaker 4: Thank you, Thierry. Let me provide more perspectives on our outlook for 2023 and also for the fourth quarter. As noted earlier, we have reaffirmed our full-year sales outlook for at least 1.97 billion U.S. dollars at constant exchange.

Thank you Terry let me provide more perspectives on our outlook for 'twenty three and also for the fourth quarter. As noted earlier, we have thought our full year sales outlook for at least 1.97 billion U S. Dollar at constant exchange rates in terms of COVID-19 sales for 'twenty to 'twenty three.

Speaker 4: In terms of COVID-19 sales for 2023, we continue to expect about $160,165 million US dollars.

Continue to expect about 162, one out of $65 million.

Speaker 4: Remember that in 2019, we had $143 million of sales from products that were redeployed for use during the pandemic. And these were mainly sample technologies for use in obtaining RNA. So we clearly see 2023 as the last full year of significant COVID-19.

And remember that in 2019, we had $143 million of sales from products that are redeployed for use during the pandemic.

We're mainly software technologies for use in obtaining a N E. So we clearly see 'twenty 'twenty suite is the last full year of sickness for significant COVID-19 headwinds.

Thierry Bernard: As we prepare for more growth and expansion in 2024 and a year ahead, let me quickly go to our top messages for today. First, we exceeded our outlook for net sales and adjusted EPS for the third quarter, driven by solid growth in the non-COVID-based business and the high level of profitability. Net sales were $470 million at constant exchange rates, which exceeded our outlook for at least $465 million. Our non-COVID product sales rose 5% CER and this was supported by 10% CER growth in sales of highly recurring consumables revenues that accounted for over 85% of total sales.

Speaker 4: In regards to our OM business, these sales are tracking at about $90 million for the year.

And I got through our web business sales are tracking at about $90 million for the year.

Two fabs is so pre COVID-19 sales were in the range of 70 million plus U S dollar and we've liked.

Speaker 4: frame this, the pre-COVID OM sales were in the range of 70 million plus U.S. dollars and we would like, we would expect this business to normalize to that level again next year. In terms of regions, we are closely monitoring fast-changing geopolitical and macro trends during the world.

We expect this business to normalized towards that level again next year.

In terms of regions, we are closely monitoring fast changing your political and macro trends doings about it.

Speaker 4: continue to have a cautious view on China, where the environment has not improved as is reflected in the results for the third quarter.

We continue to have a cautious view on China, whereas the environment has not improved as is reflected in the results for the third quarter.

Speaker 4: We are also closely monitoring the situation in the Middle East. In that region we are actively working to support our distributors during this challenging time.

We're also closely monitoring the situation in the middle East in that region. We are actively working to support our distributors during these challenging times.

Thierry Bernard: For the first nine months of the year, those sales grew 8% CER. Overall, research showed a decline of 5% to $476 million, reflecting, of course, the significant drop-off in COVID testing revenues from 2022. We continue to track towards $165 million of sales for 2023 in our COVID-19 product group. Remember that we had $143 million of sales from this group in 2019 before the pandemic. In terms of profitability, adjusted earnings per shares were $0.50 CER and once again, above the outlook for at least $0.48 CER.

Speaker 4: We have reaffirmed our outlook for just EPS to at least $2.7 at but hands are back down slightly don't like profits man.

In terms of profitability, we have reaffirmed our outlook for adjusted EPS to at least $2 seven at constant exchange rates.

Speaker 4: a significant part of our cost structure is variable, which enables agility in cost management while continuing to invest in the business.

A significant part of our cost structure is variable, which enabled agility in cost management, while continuing to invest in the business.

Speaker 4: This remains a top priority as we position QIAGEN to continue delivering solid growth in the Middle East.

<unk> remains a top priority as we position qiagen to continue delivering solid growth and submit to them.

Speaker 4: As for currency movements and based on rates as of October 27, we expect a negative impact on full-year net sales of about one percentage point and at least two cents per share negatively impact on adjusted EPS results.

As for currency movements and based on rates as of October 27, we expect a negative impact on full year net sales of about one percentage point and at least two cents per share negatively impact on adjusted EPS results.

Speaker 4: Moving to the fourth quarter, our outlook is for net sales of at least 500 million U.S. dollars CER. Adjusted earnings per share are expected to be at least 53 cents per share, also at CER.

Moving to the fourth quarter, our outlook is for net sales of at least 5 billion U S. Dollar CER adjusted Unexpressed shall I expect it to be at least 53 cents per share also let's see.

Thierry Bernard: Our second key message, our key pillars are driving the solid underlying performance, just to call out a few. The quantifier on TB test may maintain the momentum we have seen during 2023, growing 25% CER over the third quarter of 2022 and delivering the second consecutive quarter of sales above $100 million. What are the key drivers? Obviously, once again, the strong conversion trends from use of the tuberculine skin test. Ernst, Another Example The Kaya-Quity digital PCR system delivered over 40% sales growth at constant exchange rates driven by new placement and increasing bioforma consumable sales.

Speaker 4: As for currency movements and based on rates as of October 27, we expect a neutral to slightly negative impact on both net sales and adjusted EPS for the first quarter. I would like to now hand back to three.

As for currency movements and based on rates as of October 27, we expect a neutral to slightly negative impact on both net sales and adjusted EPS for the fourth quarter.

I'd like to now hand back to you.

Speaker 3: Thanks, Roland. We are now coming close to the end of our presentation. So let me provide you with a quick summary before we move into the Q&A session. First.

Thanks for all we are now coming close to the end of our presentation. So let me provide you with a quick summary, before we move into the Q&A session first.

Speaker 3: Amid the ongoing volatile microenvironment, Kaiyashan has delivered another solid performance in the third quarter of 2020.

Amid the ongoing volatile macro environment Qiagen has delivered another solid performance in the third quarter of 2020 free.

Thierry Bernard: The Kaya-stat diagnostics syndrome testing platform also did well this quarter, with a combination of growth in consumable driven by double digit PCR gains in non-COVID testing and placements above the same level achieved in the third quarter of last year.

We achieve our outlook for both net sales and adjusted EPS with good demand for our technologies in our non Covid based business.

Chicken.

Speaker 3: Those results were driven by resilient performance for our key pillars in both life sciences and molecular diagnostics.

Those results were driven by resilient performance for our key P. Laos in both life Sciences and molecular diagnostic.

Speaker 3: Our strengths in SampleTech and QuantiFerron are complemented by the solid progresses the team are making in expanding our footprint in QIAstat diagnostic and QIAquity digital PCR system.

Our strength in central Tech and quantify them.

Complemented by the solid progress is the team are making in expanding our footprint in chaos that diagnostic and cash equity digital Pcr system.

Thierry Bernard: Our third message. We continue to maintain a high level of profitability as we invest into research and development that will help driving future growth trends. The adjusted operating income margins was 26.6% in the third quarter, and we achieve this level while investing around 10% of sales into research and development. We see those investments as an important way to create new relays of growth for tomorrow.

As always we continue to maintain a high level of profitability and are using our healthy balance sheet to create value through organic and inorganic investment.

Speaker 3: And lastly, we have reaffirmed our full year outlook for 2020.

And lastly, we have reaffirmed our full year outlook for 2020 feet.

Speaker 3: As we move through the end of the year, we are diligently keeping an eye on the global landscape to understand how these dynamics carry into 2024.

As we move through the end of the year, we are diligently keeping an eye on the global landscape to understand all these dynamics carried into 2024.

Despite the currently challenging environment, we see a solid midterm outlook for both the life Sciences and diagnostic market and are well positioned to continue to deliver sustainable growth in the coming years with that I would like now to hand back to join in to the operator for the question and answer questions.

Speaker 3: Despite the current challenging environment, we see a solid midterm outlook for both the life sciences and the agnostic market, and our well-position to continue to deliver sustainable growth in the coming years. With that, I would like now to hand back to John and to the operator for the question and answers questions. Thank you.

Thierry Bernard: And our last point for today, we are reaffirming our full year outlook for 2023. Our outlook 23 remains for net sales of at least $1.97 billion at constant exchange rate, and for adjusted earnings per share of at least $2.07 CR. We are, of course, closely monitoring the increasingly volatile geopolitical and macro trends. Inflation. The war in Ukraine, and now in the Middle East. Supply chain issues, the economy in China. Those are a lot of moving paths to observe in terms of macro trends.

Yeah.

Thank you ladies and gentlemen at this time, we will begin the question and answer session anyone who wishes to ask a question May press star followed by one on their touch tone telephone.

Speaker 1: Thank you, ladies and gentlemen, at this time we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touch tone telephone. If you wish to withdraw your question, you may press star followed by two.

If you wish to withdraw your question you May press star followed by tail.

Speaker 1: To ensure we can accommodate as many people as possible, please limit yourselves to only one question and if necessary, one follow-up. Your microphone will also be muted after you finish asking the question.

To ensure we can accommodate as many people as possible. Please limit yourself to only one question and if necessary one follow up your microphone will often needed after you finish asking any questions.

Speaker 1: Again, anyone who has a question may press star, followed by one at this time. One moment for the.

Again anyone who has a question you May press star followed by one at this time.

Thierry Bernard: Before I hand over to Horor, I would also like to mention a change in our leadership team.

One moment for the first question please.

Thierry Bernard: After leading our molecular by agnostic business since 2020, Jean Pascal Vallola has been appointed senior vice president, head of corporate strategy and development. He remains a member of the executive committee. We here want to capitalize on Jean Pascal's contribution to CHN since 2007, and his proven track record in business development.

The first question comes from Catherine Schulte with Baird. Your line is open. Please go ahead.

Speaker 1: The first question comes from Catherine Schulte of Baird. Your line is open. Please go ahead.

Speaker 5: Hi, thanks for the questions. Great to see these results amidst a lot of pressures on the space. I wanted to start on the life science side of your business. We've heard some peers talking about farmers spend caution intensifying throughout the quarter. Meanwhile, academia has been pretty healthy. I think NIH outweighs were up over 20% in the third quarter. Can you just talk through the trends you saw throughout the quarter in those customer groups and your expectations for this end market's going forward?

Hi, Thanks for the question, it's great to see these yourself and that's a lot of pressure.

I wanted to just start on the lifestyle.

We've heard some peers talking about pharmacy spend.

And thanks for pointing out the corner Meanwhile spend.

Thierry Bernard: After a rigorous selection process, we would like to welcome Fernando Bairz as our new senior vice president, head of molecular by agnostic business area, and member of the executive committee. Fernando joins Kai and Jean after more than two decades in the life sciences and molecular diagnostics industry. He most recently led the genetic testing solution business at Thermo Fisher Scientific and previously spent over two decades at Siemens and his last role as global head of the molecular diagnostic business unit at Siemens Health Finance. We welcome Fernando to the team and are convinced that his passion for innovation and customer focus will help us achieve our ambitions.

It's been pretty healthy I think.

To wrap up by 20% in the third quarter guidance can you just talk through the trend you saw throughout the quarter and those customer groups and your expectations for the market going forward.

Thanks, Catherine and thanks for the questions Yeah, So you'll see all of you.

Speaker 3: Yes, obviously we are following also what some competitors are saying on the market. It is obvious that funding for the biotech industry is a bit under tension. However, we see still a very good demand for the life science product of Cuyahgen especially in life science. What you have to, in simple tech, I'm sorry. What you have to understand is that especially in life science, whether we talk drifting, dammet.

See we are furloughing or so what are some competitors or are selling on the market ease of use that our funding for the biotech industry ease a bit on the attention.

However, we.

We see still a very good demand for their life science product of Qiagen, especially in life Science, what you have to do in sample taken I'm, sorry, what you have to understand it.

That especially in life science wherever we took central tank or you ends yes.

Speaker 3: sample tech or UNGS at our self-directed to ease the research of the academic sector.

Roland Sackers: And now, I'd like to hand over to Horor for a review of our results in greater detail. Thank you, Thierry. Hello everyone.

Our self directed to ease or the researcher a jacket in the sector.

Speaker 3: We are not a very high budget in those spending, but we are a fundamental part of those spending. So it's difficult to eliminate QIAGEN even in times of difficult

We are not a V.

Roland Sackers: Thank you as well for me for joining our call. Let me first discuss our results for the first third quarter and first nine months of the year and then share some views on our outlook. As you saw in our press release, net sales for the third quarter of 23 were 476 million US dollars at actual rates and 470 million US dollars at constant exchange rates. We saw a modest impact from currency movements against US dollar, so sales declined 5% compared to the year ago period, while result at constant exchange rates were down 6%.

Very high budget in those spending, but we are a fundamental part of those spending so it's difficult to eliminate qiagen even.

In times of difficult economic environment.

Speaker 3: Sample take is the first and crucial step for any biological run. Yet it is not the most expensive path.

Central take is the first and crucial step for indeed biological room, yet it is not the most expensive part.

Speaker 3: of activities in those labs. And this is why I think we are pretty protected. That doesn't mean that our company is immune to adverse economic events, but we are monitoring this very carefully.

All activities in those lab and this is why I think we are pretty protected that doesn't mean that our company is immune to adverse economic events, but we are more needs I'll be monitoring this very carefully.

Roland Sackers: As has been the trend during 23, this was again a quarter with a substantial decline in COVID-19 revenues. Instruments yields let's a performance rising 1% CR as our team generated growth despite more conservative customers spending trends. Even in this environment, we still saw solid placements of lower price point instruments, such as Kaya Curity and Kaya Study X. We continue to see good placement trends for reagent rental agreements. These agreements among molecular diagnostic customers involves placements linked to multi-year consumable contracts and help secure future consumable commitments.

Speaker 3: As an example, we keep an eye on the government shutdown in the US and we are carefully analyzing what would be the budget increase if there is an increase for organizations like for example the CDC and the NIH. But we have it under control.

As an example, we keep at nine on the government shutdown in the U S. And we are carefully analyzing what would be the budget increase if there is an increase for our organization like for example, the CDC and NIH, but we have it under control.

Okay.

Speaker 1: The next question comes from Patrick Donnelly of Citi. Your line is open. Please go ahead.

The next question comes from Patrick Donnelly of Citi. Your line is now open. Please go ahead.

Hey, guys. Thanks for taking the questions Gary maybe you look at some of these lingering headwinds whether it's the OEM piece instrumentation, and maybe a little bit in China I guess, how do you think about the potential for these pits to continue into 2024 and impact the growth. There. Obviously, we've got some some commentary from peers about the first half.

Speaker 6: Terry, maybe if you look at some of these lingering headwinds, you know, whether it's the OEMP instrumentation, and maybe a little bit in China, I guess how do you think about the potential for these to continue into 2024 and impact the growth there? Obviously we've got some commentary from peers about the first half maybe being a little more subdued, given some of these headwinds. And then on the same topic for Roland, just how you think about the margin set up into next year if some of these headwinds do persist, just to leverage you guys out in the PNL. Thank you.

Roland Sackers: Among our four product groups, let's start with some technologies which represents about one third of toll sales. Here we had growth at a low single-digit CR rate for the non-COVID products and this represented nearly 90% of sales within this product group. Overall sales declined 13% CER and this was due to the very tough comparison against 22 results and the drop-off this year in COVID-19 testing demand. Diagnostic solutions of a second product group also represents about one third of sales.

Maybe being a little more subdued given given some of these headwinds and then on the same topic for Roland just how you think about the margin set up into next year. If some of these headwinds do persist just just the leverage you guys have in the P&L. Thank you guys.

Speaker 3: Thanks, Patrick. And we will take Roland and I this question just before going to the margins. So questions on OEM instrumentation in China. Obviously, Patrick, I'd like to have a crystal ball. It's obviously extremely challenging those days to forecast given the volatility. However, as we have said in Q2...

Okay.

Thanks, Beth weekend, we really take coronary and I just a question just before going to the margin so questions on OEM instrumentation in China, obviously.

But I think I'd like to have a crystal ball are it's it's obviously extremely challenging.

Challenging those days to forecast given the volatility however, as we have said in Q2, we strongly believe that our OEM business is now normalizing towards its pre COVID-19 at time, So I expect no more let's say Oh, yeah in a range of Brooklyn.

Roland Sackers: The quantifier on latent TB test was the main driver with all regions delivering sales growth of about 20% CER or better. The strong conversion trend from the traditional skin trend test is continuing across the world but this is still a market that is no below 40% penetrated. Diagnostic solution also includes the Kaya Study X system for the rhythmic testing. This hails rose for per cent CER as non-COVID applications delivered solid growth of 16 per cent CER with more than overweight which more than overweighted the COVID-19 testing had went from 22.

Speaker 3: We strongly believe that our OEM business is now normalizing towards its pre-COVID time. So I expect a normal, let's say, OEM range of revenues around 70 to 80 million dollars in a normalized

Iran $70 million to $80 million.

Normalized environment.

China.

It is oh views that a lot of players in the market, we're expecting a sequential improvement of the Chinese market.

Speaker 3: It is obvious that a lot of players on the market were expecting a sequential improvement of the Chinese market starting in Q1 of this year.

Starting in Q1 of this year.

This has not happened and.

Speaker 3: And it's clear as well that the anti-corruption campaign in healthcare launched by President Xi

And it's clear as well.

The anti corruption campaign in the health care launched by President XI.

Roland Sackers: We continue to see excellent non-COVID utilization in Europe with underlying growth at double digit CR rate for non-COVID applications that represented about 30% of toll sales. Non-COVID X our integrated clinical PCR testing platform saw sales decline in the third quarter. This was due to had wins against the high level of COVID testing in revenues in Q3-22. Moving on to the PCR nuclear acid amplification product group, this hails decline 25% CER in the third quarter.

Speaker 3: is adding to other challenges met by foreign companies on this market.

He is adding to all the challenges met by foreign companies on this market.

Pressure towards localization.

Delays in.

Speaker 3: Commission and registration from a regulatory standpoint. The so-called VBP's police...

The mission and the registration from a regulatory standpoint.

So called V b piece bodies.

However.

Speaker 3: However, China is a very important market. Both for life science and clinical diex and stick is probably already the second market in the world.

China is a very important market both for life science and clinical diagnostic is probably already the second market in the world.

So I do not see a fundamental improvement on the market in the coming six months for example, but I believe.

Speaker 3: So I do not see a fundamental improvement on the market in the coming six months, for example, but I believe

Roland Sackers: As we have been discussing on these calls during 23, the reason was a sharp drop of insults to our OM third party customers that use our reagents for their own products. Extruding this factor, non-COVID sales for this product group hosted a single digit CR rate. At the same time, Curiosity Digital PCR continued to deliver growth above 40% CR and is tracking the world towards a 23-goal of at least $70 million of annual sales.

Speaker 3: in the long term potential of this market because of the needs of the population and the patients locally.

In the long term potential of this market because of the needs of the population on the patients locally.

Obviously.

Speaker 3: Foreign companies have to adapt their strategy to fit obviously into the Chinese priority.

Foreign companies have to adapt their strategy to fit obviously into the Chinese priority. So we need to keep a cool head. It's an important market, it's not going to bounce back immediately but the long term perspective are good.

Speaker 3: So we need to keep a cool head, it's an important market, it's not going to bounce back.

Speaker 3: Immediately, the long-term perspectives are good. Instrumentation. Kair.

Instrumentation.

Roland Sackers: This growth is coming from a combination of increasing consumers pulled through along with solid trends in new placements. In Q3, these levels were above the year-goal quarter and for all three versions involving the one-plate, four-plate and eight-plate system. Dynamics NGS is our last product group and it involves our courage and digital insight by a dramatic business and our products for use with any next generation sequencer. The QDI business had another solid performance with sales growth at about 20% CR in the third quarter and maintaining a double digit CR growth rate for the first nine months of the year.

<unk> always stated that because of the influx of.

Speaker 3: still, as we say, of instrument during the COVID period, the post-COVID period would see in many labs more trends to work placements of instruments than capital expense.

As we say of instrument during the Covid period.

The post Covid period would see in many labs more trends to walk placements of instruments done capital expenses.

Speaker 3: in the diagnostic world. We are used to that at Kaia-Gen.

In the diagnostic world, we are used to that.

I still believe.

Speaker 3: that labs, on average, continues to renew and upgrade their instrumentation every five years. There is no scientific rules here, but it's a well-adopted and well-accepted KPI in our market.

That large on average continues to renew and upgrade their instrumentation every five years. There is no scientific rules here, but it's a well adopted and well accepted a dip here in our market. So.

Speaker 3: whether it is capital sales or placement, kayak, as a financial answer.

Whether it is capital sales or placement qiagen.

Roland Sackers: Here we are seeing the fastest growth in our clinical applications and complemented by double digit growth as well in discovery and research applications. Moving to sales on a geographic basis, the Americas again delivered growth in terms of total sales rising 1% CR and has a faster 4% CR rate for the non-COVID business. The key driver was clearly quantifier on and supported by the sample technologies in CHQT portfolios and discontinued the trend seen as a second quarter.

As a financial answers for all those options.

Speaker 3: It is true that it's a bit more constrained, but once again, we believe that the market for diagnostic life science and clinical is solid.

It is true that it's a bit more constrained, but once again, we believe that the market for diagnostics life science and clinical is solid.

And we'll continue to have pretty solid growth rate as well in the coming months.

Speaker 3: and will continue at pretty solid growth rate as well in the coming month.

What are moving to the margin.

Speaker 4: Sure, hi Patrick. Yeah, I think also the margin is still volatility and clearly also increasing uncertainty in the market.

Sure Hi, Patrick Yeah, I figure out sort of the margin that you laid out while days I would say, it's still a volatility clearly also increasing uncertainty in the market.

Roland Sackers: The Europe Middle East Africa region who had an even stronger pace than the Americas with sales rate for non-COVID polar groups rising at a double digit CR rate. Among the top performing countries for non-COVID results were France, Switzerland and the United Kingdom. The Asia Pacific Japan region had a decline at low single digit CR rates for non-COVID sales. Non-COVID sales in China declined at a low single digit CR rate as well.

Speaker 4: I do believe that we had shown in the past that we have our hands around our expenses quite well around and I don't think that is going to change going forward. So even in the more in brackets in the scenario where you assume a more muted growth rate moving from 23 to 24, I still believe that we should be able to deliver actually also mobilar around. yeah.

I do believe that we had shown at a pause that we have all our hands a lot of our expenses are quite well around and I don't think that it's going to change going forward, but so even in a more in brackets.

And now you are where you assume a more muted growth with moving from 'twenty three 'twenty four I still believe that we should be able to deliver actually are also very reasonable margin improvement, there's clearly and we said it also on the call today. What now we are also accelerating some of our R&D investments because we took.

Speaker 4: There is clearly, and we said that also on the call today, right now we are rather accelerating some of our R&D investments because we do believe there is a good opportunity for us to invest.

Roland Sackers: Let's now review the rest of the income statement. Adjusted operating income declined 12% to 126 million US dollars from the third quarter of 22 reflecting the lower sales base due to the pandemic revenues last year. The adjusted operating income margin for the third quarter was 26.6% of sales. Keep in mind that in the third quarter we face currency headlines of at least 50 basis points on the margin. The key driver was a decline in the adjusted cross margin to 66.1% of sales.

<unk> is a good opportunity for us to to invest we continue to see more and more leverage opportunities on the sales and marketing side. We have seen that went into on the administrative side and all I think for the last 24 months that are where you are.

With a lower overall revenue was still up quite significantly Oh admin expense ratio and that's more potentials of onset as votes are all in a single at the EBIT line disappear.

Even in a more difficult environment enough room for us to improve margins.

Roland Sackers: Among the effectors was the lower levels of capacity utilization and the change in product mix. At the same time, we continued to make significant investments in R&D which remain at about 10% of sales and in line with our full year goals. Sales and marketing expenses benefited from improvement in the quality and efficiency of customer engagement. This expenses were 23.4% of sales in the third quarter, up from 22.9% last year, or the significantly higher COVID driven sales base.

Speaker 1: The next question comes from a Daniel Areas of Steeple. Your line is open. Please go ahead.

The next question comes from Daniel areas at Stifel. Your line is open. Please go ahead.

Speaker 7: Hey, it's Paul on for Dan, thanks for the questions. Just in terms of kind of getting a sense of your comfort level heading into 2024, you talked a little bit last quarter about being more or less comfortable with a sort of high single digi across trajectory, just kind of baseline expectation.

Hey, Paul on for Dan Thanks for the questions.

In terms of kind of getting a sense of.

Hi, good level heading into 2024, you talked a little bit last quarter about being more or less comfortable with that sort of single digit growth trajectory just kind of baseline expectation should we expect that that's come down.

Speaker 7: Should we expect that that's come down since what we were kind of talking about three months ago? Do you have a sense for, as inflation is normalizing and so forth, what the pricing realization might be just in terms of directionality for next year?

You know, what we were kind of talking about three months ago and do you have a sense for as inflation is normalizing and and so forth what the what the pricing.

Roland Sackers: General administrative expenses were 6.0% of sales, and slightly lower than in the third quarter of 6.2% of sales. To close out the income statement, adjusted EPS for the third quarter of a 50 cents at Constance Exchange rate, and above the outlook for at least 48 cents CR and also 50 cents at actual rate. In terms of non-operating net income factors, we have seen incrementally higher interest income during 23 and this high interest rate environment.

Realization might be.

Just in terms of directionality for next year.

Okay.

Thank you Paul So I'm.

Speaker 3: I'm not sure that I have ever seen a number like high single digit growth for 2024, but what we have always said we believe that we have the people

I'm not sure that I have ever seen a.

Number like high single digit growth for two forgone in 'twenty four but what we have always said, we believe that we have the people.

Speaker 3: and the product portfolio for QIAGEN, both in life science and clinical diagnostic, to be above market growth.

And the product portfolio for carriage in both life science and clinical diagnostic.

Roland Sackers: At the same time, our interest expenses have declined, and this due to courage in having repaid nearly 900 million dollars during the last first months of maturity, maturing debt from existing cash reserves. Starting to cash flow results for the first 9 months of 23 reflects the lower sales and profit levels compared to 22. Operating cash flow was 308 million dollars for the first 9 months of the year, while 3 cash flow was 210 million US dollars.

To be above market growth.

And I still believe and these were delivered in that market.

Speaker 3: Once again, that market might be experiencing some pressure and pressures those days.

Once again that market might be experiencing some Christian.

And pressures those days, but it's a good market I believe that COVID-19 has definitely proven their relevance.

Speaker 3: I believe that COVID-19 has definitely proven the relevant.

Speaker 3: of life science diagnostic and clinical diagnostic.

Blackstone's diagnostic and clinical diagnostic.

Speaker 3: in the health care value chain. This is not disappearing. So even in the market.

In the health care value chain. This is not disappearing.

Roland Sackers: As we have mentioned on the earlier calls for 23, we are in a pede of higher working capital requirements due to our decision to increase inventory in light of the challenging geopolitical and macro environment. We want to ensure that Qiagen has adequate product availability to serve customers. This is also seen in the balance sheet in terms of the increase in inventory. At the same time, accounts receivables have been trending into a positive direction with days of failed outstanding or DSOs at 54 days at the end of September 23 and down from 58 days a year ago.

So even in the market is a bit softer.

Speaker 3: It's still a growing market and what we feel at Cayenne is that regardless the level of the market growth, we have the portfolio to be above that market.

It's still a growing market and what we feel that occasion is that regardless of the level of the market growth, we have the portfolio to be above that market growth.

Speaker 3: At the moment we are clearly focusing on achieving 2,023 and our guidance in the volatile environment. As you know, we give our guidance for the year around early February . This is what we are going to do this.

At the moment, we are clearly focusing on achieving 2020 free and that will get you don't seem to go like that environment. As you know we give our guidance for the year around early February. This is what we are going to do this year, but we strongly believe that we have the people and the product portfolio to systematically beat the market growth.

Speaker 3: But we strongly believe that we have the people and the product portfolio to systematically beat the market growth.

<unk>.

Speaker 3: On inflation, yes, it has receded compared to 2022. However, QIAGEN didn't start to implement price increase because there was a hyperinflation last year. QIAGEN has a systematic policy of price increase every year around January , well shared with our customers because we sell value, we sell innovation and we invest in R&D.

On inflation, yes. It has receded compete compared to 2022. However, okay. You didn't you didn't start to implement price increases because there was a hyper inflation last year qiagen as a systematic 40 seat of price increase every year around January Welch.

Roland Sackers: This is due to the operational improvements achieved by our receivables teams. Continuing with the balance sheet, our liquidity position was about 1 billion dollars at the end of the third quarter, which is down from 1.4 billion dollars at the end of 22. As a result, our leverage ratio at the end of the third quarter stood at 0.7 times net debt to adjust it Aveda and increase from 0.5 times at the end of 22.

With our customers because we sell value, we said innovation and we invest in Iran.

Speaker 3: In a normalized environment, we believe that a normal price increase of between 2.5, 3.5 per year, according to different geographies, is what we need to look for. And as I said before,

In a normalized environment, we believe that our no more price increases of between 2535 per year. According to different geographies is what we need to look for and as I said before.

Roland Sackers: One of the drivers for improving our leverage and capital efficiency was the decision to repay about 900 million dollars of debt from existing cash reserves as I mentioned. Of this amount, $4 million of our convertible notes were paid out in September 23. Looking ahead, we have an additional $100 million of debt reaching maturity next June and another $500 million in November 24. Another $500 million of convertible notes could require repayment in December 25.

Speaker 3: I always think that NetNet, a company like KayaGen in a normalized environment, should expect a NetNet impact of price increase of around 50 to 100 basis points.

I always think that net net.

Company like Qiagen in a normalized environment should expect net net impact of price increase of around 50 to 100 basis point.

Okay.

Speaker 1: The next question comes from Falco Free Jax of Deutsche Bank. Please go ahead.

The next question comes from alcohol free Jack's Deutsche Bank. Please go ahead.

Thank you very much and now.

Roland Sackers: We continue to review ways to deploy cash within our discipline allocation strategy that involves targeted M&A as well as share approaches programs. Given our healthy balance sheet, we want to continue our approach to create value by investing into the business and increasing returns.

Speaker 8: My question is how should we think about the future of the new multi-ex platform within your company and do you still believe you're the best owner? And then my follow-up would be on KayaSkab, the X, and whether you can remind us of the next steps when it comes to the test menu expansion. Thank you.

My question is how should we think about the future of the X platform within your company and then do you still believe you're the best owner and then my follow up would be unclear.

And then whether you can remind us of the next steps when it comes to the test menu expansion. Thank you.

Roland Sackers: Charles, I would now like to add back to you. Thank you, Roland.

Thank you if I could go on new Moody's. The first consideration is that we acquired that platform because we believe in it and we strongly believe that it's probably the best platform in the market.

Speaker 3: Thank you, 5Go. On new modics, the first consideration is that we acquire that platform because we believe in it and we strongly believe that it's probably the best platform on the market. For many features.

Thierry Bernard: If you allow me, I'd like now to take a moment to run through some of our progresses in advancing our portfolio this quarter. First, we continue to sharpen our focus on our pillars of growth and expand in our key areas of expertise to drive sustainable growth in various applications. While we are directing investment into growing our new pillars of growth such as Kaya Staddiagnostic or Kaya Quiti, we are obviously not complacent in our established leadership in sample tech or quantify.

For many features ease of use.

Pete.

Speaker 9: versatility, especially the ability to run the laboratory developed test in parallel to a regulated test in a very, very, very random access. This is the only platform able to do that. However, as we have this

Their facility, especially the ability to run.

The laboratory developed test.

In parallel to our regulated test.

They're very very very random access.

This is the only platform able to do that.

However, as we have disclosed.

Thierry Bernard: First of all, in our market-leading sample technology portfolio, we continue to make progress in automation upgrades with the recent launch of the tissue-licer free instruments. This instrument is used as a key tool in sample description of difficult to isolate samples in early steps of RNA or DNA isolation, such as those involving bone tissue or environmental samples like soil or plant matter. The prior generation of this instrument has been seated in over 14,000 publications and is part of a comprehensive line-up of automation that well-positioned Kaya genes to ensure a broad range of customer demands for sample processing.

We have experienced.

Stability issues at the launch of the platform.

Which is normal in this market.

And therefore, we have given.

Speaker 9: priority to fixing those stability issues over the last two years and a half. As a result,

Geraghty to fixing those fabs.

Stability issues over the last two years.

As a result.

We are experiencing delays.

It's a meeting and approving.

Speaker 3: Assays on the US market, which is still by far

Assays on the U S market, which is still by far.

Speaker 3: the main market for infectious diseases PCR testing.

The main market for in pictures diseases Pcr testing.

Pneumonia is doing well in Europe.

Speaker 3: We see non-COVID-assets double digit growth.

We see non Covid assays.

<unk> digit growth.

Thierry Bernard: Through the complete upgrade of our sample preparation systems, we have ensured these platforms are not only delivering state-of-the-art technology for the highest quality processing, but also modern solutions for connectivity, which is used for real-time monitoring of runs, cloud management of data, and remote service monitoring. Another example is the next update that will come with the release of an upgraded version of our flatching platform Kaya Symphony, which will own bone connectivity elements and additional features to even better enable high volume application such as liquid biopsies.

Speaker 9: At the same time, it is our duty to systematically and constantly review the performance of our product portfolio, market shares, growth, return on capital

At the same time.

It is our duty to systematically and constantly review.

The performance of our product portfolio.

Market shares.

Grove.

Return on capital invested.

And there is no dogma at carrier channel.

It is not because the product is part of.

Our five pillars of growth that it will be part of our priorities forever.

Speaker 3: Our five pillars of growth that it will be part of our priorities forever. The product and the team need to deliver.

Product and the team need to deliver.

Speaker 9: And so we are currently reviewing every kind of options for new modics. This is what we can say at the moment. On camera.

And so we are currently reviewing every kind of options.

Thierry Bernard: We also continue to leverage our deep sample prep expertise through some of the more dynamic growth applications, such as extending our microbiome portfolio. Our teams recently launched comprehensive workflows like the microbiome whole genome sequencing success to enable diverse microbiome research, including gut health, soul microbiology, and antibiotic resistance. Those complete kits leverage our leading microbiome DNA extraction and include library preparation for whole genome sequencing and dedicated bioinformatics. Another notable sample tech expansion is the launch of our kits in our Kaya Wave portfolio.

<unk>. This is what we can see at the moment.

<unk>.

The menu is going on.

Speaker 3: And I would differentiate two kinds of developers.

And I would differentiate two kinds of development.

The traditional menu to be competitive in Syndromic testing is already available for carriers that in Europe.

Speaker 3: The traditional menu to be competitive in syndromic testing is already available for KIA norie reading nagrea stroke box shut bet use

Speaker 3: I refer here to respiratory GI.

Refer here to respiratory G I.

And meningitis.

We are going to bring those assays as well in the U S.

Speaker 3: We are going to bring those assays as well in the US.

The next step.

Speaker 3: is to develop a completely differentiated assays that is not existing in our competition portfolio.

East to deployed a completely differentiated assays that is not existing in our competition portfolio.

Thierry Bernard: The Kaya Wave, RNAZ, and multi-analysed DNA RNA kits were added to the collection of alternative versions of the most popular Kaya gen kits, which have been redesigned to use considerably less plastic and cardboard. Those sustainable kit versions are part of our broader initiative to reduce our environmental footprint and achieve milestones toward our STBI validity target of net zero. By 2000 and CCC.

Speaker 3: And I refer here to what we call the complicated utf.

And I refer here to what we call the complicated utis.

Once we have launched that in Europe first we will continue the development.

Speaker 3: Once we have launched that asset in Europe first, we will continue the development.

Speaker 3: and registration of more traditional assays such as

And the registration of more traditional assays such as.

Speaker 3: Direct identification of blood culture positive, already research used only in Europe .

Direct identification of blood.

Blood culture positive already research use only in Europe.

Pneumonia.

Speaker 9: and then we will go probably to other kind of temples.

And then we will go probably towards your kind of <unk>.

Thierry Bernard: Moving now to the Quantifero franchise, we continue to see strong expansion into the market for this product led by the leading Quantifero TB Gold Plus test for Leighton tuberculosis testing. As you have seen in our results, the TB test continue to see strong demand from the continuous successful conversion from the tuberculine skin test alongside with our strong solution for automation with Diasauri. This and the course, the power of Quantifero differentiation in the Leighton TB testing market has an established and proven technology with unparalleled automation options.

<unk>.

So we are told Kinga.

Joint.

Speaker 3: or other kind of samples. This is the roadmap for Kaya Start, a solution where we believe we can really take the number two position on that market, which is a very growing market and expected to be around close to five billion total market size by 2020.

Or also kind of centers. This is the roadmap for carriers that solution.

A solution, where we believe we can really take the number two position in that market, which is a very growing market.

And expect it to be around close to 5 billion total market size by 2026.

Speaker 1: The next question comes from Jack Meehan of Nefron Research. Your line is open. Please go ahead.

The next question comes from Jack Meehan of Nephron Research. Your line is open. Please go ahead.

Thierry Bernard: Our team's ongoing public health work leverages established relationships to promote the importance of test and treat strategy for eradicating deadly TB infections across the globe. This month, for example, Chiagen once again hosted the annual tuberculosis summit, bringing together experts, healthcare professionals, policy makers, disease survivors to discuss emerging tools and strategies for TB management. This accredited event, so record breaking participation with over 2,500 people attending through our webcast or in-person in London.

Thank you and Hello, everyone.

Speaker 10: I wanted to focus on quantifier on.

I wanted to focus on Qantas air on.

So first could you just talk about you know.

Speaker 11: So first, could you just talk about, you know, how you're looking at kind of the competitive landscape and some of the differentiation for the test? Second, are there any macro sensitivities you see here and maybe finally just level of confidence that can sustain double digit growth in the 2024? Thank you.

How you're looking at kind of the competitive landscape and some of the differentiation for the test cell.

Second are there any macro sensitivity as you see here and maybe finally just level of confidence this can sustain double digit growth into 2024.

Yeah.

So Jack thanks for the questions.

Speaker 9: Obviously, the first thing about the differentiation of quantiferon.

Or do you see the first thing about the.

Differentiation of quantity.

Thierry Bernard: This summit works to drive significant investments in the fight against TB and empower healthcare professional and policy makers by providing them with the latest knowledge inside and best practices. While Quantifero plays an essential role in the global fight against tuberculosis, we are also leveraging the Quantifero technology to assist in the exploration of cell-mediated immune response in oncology and autoimmune diseases. Just recently, as you have seen in our press release, we launched the Quantifero EBV assay for research use only to facilitate research in building the understanding of Epstein-Barr virus infections and related malignancies.

The major growth driver.

We have decided to protect.

Speaker 3: and grow faster since 2016.

And grew faster since 2016.

Speaker 3: where we started the discussion and negotiation with Diaspora and for Automation.

Where we started the discussion and negotiation with digest marine for automation.

Many people are aware of the partnership with I guess some people sometimes forget about the partnership also with Hamilton in chicken for the front end automation of quantifier.

Speaker 3: Many people are aware of the partnership with Diacerin. Some people sometimes forget about the partnership also with Hamilton and TKAN for the front-end automation of quantiferon.

And therefore.

As of today.

Speaker 3: There is no more automated workflow and easier to use.

There is no more automated workflow and easier to use.

Thierry Bernard: This builds on the existing portfolio of IBD tests for monitoring CMI response and cytomegalovirus, a lime disease assay, and the research use only to cell response assays. So you can see we are building on the strong base in our Quantifero franchise. We see a solid road to continued doggal disease growth in the next few years by leveraging this highly differentiated, proprietary technology through well-established commercial channels.

Then quantity people.

Speaker 9: and from the back-end automation available in a very sizable install base of the liaison by Diacerin, either Excel or XS. Number one.

And from the backend automation really bought into a very sizable installed base of <unk>.

<unk> is owned by the serene either exit or axis.

Number one.

Number two.

The number of publications.

Speaker 3: around the quality, the value, the clinical superiority of quantiferon is unprecedented.

Iran. The quality the value to clinical superiority of quantifiable is unprecedented.

We are talking here about 20 years of public health medical education and publications.

Speaker 3: We are talking here about 20 years of public health, medical education, and publications.

Thierry Bernard: And now, back again, to hold on to give you more details on our outlook for 2023. Thank you, Trié. Let me provide more perspectives on our outlook for 23 and also for the fourth quarter. As noted earlier, we have reaffirmed our full-year sales outlook for at least $1.97 billion US dollar at consme exchange rates. In terms of COVID-19 sales for 2023, we continue to expect about $160-165 million US dollars. Remember that in 2019, we had $143 million of sales from products that were redeployed for use during the pandemic, and these were mainly sample technologies for use in obtaining RNA.

Philip.

Speaker 3: For the product itself, we continue to invest in R&D. As you have seen, for example, over the last three years, we move from the county fair on third generation to the fourth generation by adding CDA.

For the product itself, we continue to invest in R&D as you have seen for example over the last three years, we move from the country people fill generation to the fourth generation by adding C. D. Eight.

Speaker 3: which seriously increase the sensitivity of the test.

Which seriously increase the sensitivity of the test.

This is what explains the success of quantifiable continuous organic and Nonorganic investment.

Speaker 3: This is what explain the success of contipers. Continuous, organic and non-organic investment.

Thierry Bernard: So we clearly see 2023 as the last full year of significant COVID-19. Edwin's. In regards to our OEM business, these sales are tracking at about $90 million for the year. To frame this, the pre-COVID OEM sales were in the range of $70 million plus US dollar, and we would expect this business to normalize to that level again next year.

Speaker 3: To expand its market expenitration and where do we see the main potential for market penetration is still on the skin test.

To expand its market penetration and where do we see the main potential for market penetration is still on the skin test.

We believe that the skin market even in the U S.

Speaker 3: We believe that the skin test market, even in the U.S.

He's between still let's say, 30% to 40% penetration.

Speaker 3: is between still, let's say, 30% to 40% penetration. So there is a significant.

There is a significant room to grow.

Thierry Bernard: In terms of regions, we are closely monitoring fast-changing geopolitical and macro trends during the world. We continue to have a cautious view on China, whereas the environment has not improved as is reflected in the results for the short quarter. We are also closely monitoring the situation in the Middle East. In that region, we are actively working to support our distributors during this challenging times. In terms of profitability, we have reaffirmed our outlook for adjusted EPS to at least $2.07 at constant exchange rate.

So we are not complacent, despite being the number one.

Speaker 3: So we are not complacent despite being the number one.

We continue to invest.

Speaker 3: We continue to push Quantiferon in many countries. You have seen two years ago the guidance in Brazil in favor of Quantiferon. You have seen some emerging countries in Asia-Pacific adopting also Quantiferon.

We continued to push quantity people in many countries you have seen two years ago Gee guidance in Brazil in favor of quantity of people and you have seen some emerging countries in Asia Pacific adopting also quantifiable.

Speaker 3: So there is no complacency but there is a strong leadership sustained by R&D investment, partnership and this is what is fueling once again the 25% growth of Q3.

So there is no complacency, but there is a strong leadership.

Staying by LNG investment partnership and this is what is fueling once again to 25% growth of Q3.

We are confident that we can maintain double digit growth for these products.

Speaker 3: we are confident that we can maintain a double-digit growth for this product.

Thierry Bernard: A significant part of our cost structure is variable, which enables agility in cost management while continuing to invest in the business. This remains a top priority as we position Khaijin to continue delivering solid growth in the midterm. As for currency movements and based on rates as of October 27, we expect a negative impact on full-year net sales of about 1 percentage point and at least 2 cents per share negatively impact on adjusted EPS results.

Speaker 1: The next question comes from Matt Sykes of Goldman Sachs. Your line is open, please go ahead.

The next question comes from Mac Sykes of Goldman Sachs. Your line is open. Please go ahead.

Speaker 12: Thanks for taking my questions. Good morning. Congrats on the quarter in a tough environment. Just two quick questions. I'll ask them both up front, but just first on R&D.

Thanks for taking my questions. Good morning, congrats on the quarter in a tough environment.

Just two quick questions I'll ask them, both upfront, but just first on R&D.

Speaker 12: that 10% level, we kind of look at what it could end up for 23, probably be about 100 base points above where you were for 22 and probably 200 above the year before. Just wondering, is that 10% for the level we should be thinking about R&D investments in terms of percentage of sales as we think into 24?

That 10% level, if we kind of look at what it could end up for 'twenty, three it'd probably be about 100 basis points above where you were for 'twenty, two and probably 200 above the year before just wondering is that 10% sort of the level, we should be thinking about about R&D investments in terms of percentage of sales as we think into 'twenty four.

Thierry Bernard: Moving to the first quarter, our outlook is for net sales of at least $500 million US dollars CER, adjusted on extra share expected to be at least $0.53 per share also at CER. As for currency movements and based on rates as of October 27, we expect a neutral to slightly negative impact on both net sales and adjusted EPS for the first quarter.

Speaker 12: And then, secondly, the spread and non-COVID product growth in Europe versus the Americas, is there anything we can read into that from a customer type or a product or segment that accounted for that difference in growth? Thanks.

And then secondly, the spread and non Covid product growth in Europe versus the Americas is there anything we can read into that from a customer type or a product or segment.

That accounted for that difference in growth. Thanks.

Thierry Bernard: I would like to now hand back to three. Thanks for long.

Yeah.

Speaker 4: Yeah, I'm going to the question. You can go ahead or if you want to. Yeah, I just say I could probably take some deep question. Yeah. And I think it's very straightforward.

Yeah, Thanks for that.

Thierry Bernard: We are now coming close to the end of our presentation, so likely provide you with a quick summary before we move into the Q&A session. First, amid the ongoing volatile microenvironment, Khaijin has delivered another solid performance in the third quarter of 2023. We achieve our outlook for both net sales and adjusted EPS with good demand for our technologies in our non-covid-based business. Second, those results were driven by resilient performance for our key pillars in both life sciences and molecular diagnostic.

Sure.

You can you can go ahead or if you want yeah, Yeah I would.

As I say I could probably could take the R&D question, yes.

Thierry Bernard: Our strengths in sample tech and quantiferum are complemented by the solid progresses the team are making in expanding our footprint in Kaya State Diagnostic and Kaya Quity Digital PCR systems. Third, as always, we continue to maintain a high level of profitability and are using our healthy balance sheet to create value through organic and inorganic investment. And lastly, we have reaffirmed our full year outlook for 2023. As we move through the end of the year, we are diligently keeping an eye on the global landscape to understand all these dynamics carried into 2024. Noor.

And I think it's.

As far as trade for what clearly what notice you good opportunities to drive some R&D activities. Given also our overall profitability and that thing is growing quite well along even in a more difficult environment.

Speaker 4: Clearly, right now we see good opportunities to drive some R&D activities, given also our overall profitability, and that things are going quite well along, even in a more difficult environment.

Speaker 4: I would assume now looking into next year that we are probably next year while there between somewhere let's say 9 and 10% I don't think that we will have next year any need for staying let's say 10 plus percent so I do think there is some some leverage there nevertheless we continue of course to invest next on

I would assume now looking into next year that probably next year, rather between sometimes it's at night and 10% I don't think that people have next year any need for stiglitz at 10 plus percent. So actually we think there's some some level of edge out. Nevertheless, we continue of course to invest and expand our menu.

Thank you all and I'm the spread on the non Covid growth I don't think that there are major differences.

Speaker 3: Thank you all on and I'm the sprayed on the non-COVID growth. I don't think that there are major differences.

Speaker 3: between American and European customers, but we have also a difference in our portfolio at the moment. So the non-COVID in North America is very much driven by Conti Ferron, by Digital PCR, especially in the bioforma. This is where we have the main concentration of bioforma customers, and this is where we are taking significant market shares, but also UNGS.

<unk> American and European customers, which we have also a difference in our portfolio are at the moment so the non COVID-19.

America is very much driven by quantifiable, but digital PCR, especially in the Biopharma. This is where we have the main concentration of Biopharma customers and this is where we are taking significant market shares.

I'll show, you engineers with or in Europe, where you have compared to the U S. A great Joe menu.

Speaker 3: whether in Europe , where you have, compared to the US, a greater menu.

Thierry Bernard: Despite the currently challenging environment, we see a solid midterm outlook for both the life sciences and the agnostic market and our well-position to continue to deliver sustainable growth in the coming years.

For <unk>.

Speaker 3: non-COVID on Kayastat, for example, you have a greater immune from non-COVID on Pneumonics, you also have this this impact.

Got it Okay. That's tied for example, you have a greater when you from Covid on your mood leaks. You also had this this.

Impact obviously.

Speaker 3: Obviously, we are also growing our market shares for countries in Europe , Europe , to a lower level than the US.

John Gilardi: With that, I would like now to hand back to John and to the operator for the question and answers questions. Thank you. Thank you, ladies and gentlemen, at this time we will begin the question in the answer session. Anyone who wishes to ask a question may press star followed by one on their touch tone telephone. If you wish to withdraw your question, you may press star followed by two. To ensure we can accommodate as many people as possible, please limit yourselves to only one question and if necessary, one follow-up. Your microphone will also be muted after you finish asking the question. Again, anyone who has a question may press star followed by one at this time. One moment for the first question, please.

We are also growing our market shares for <unk> in Europe year on year to a lower level than the U S. We are also growing our market share in digital PCR. So it's rather basically adjusting the statues of our product for you rather than the difference is over.

Speaker 3: We are also growing our marketing in digital PCR. So it's rather basically adjusting the status of our product for you rather than differences of customers. I would end up saying that...

Of customers I would end up seeing that.

Speaker 3: We focus now at Kajajan as you know since 2000 and that.

We focus now what Qiagen as you know since 2000 and that.

Speaker 3: 21 clearly on the on the non-COVID. This is our core business. We know that we have a range of products available if COVID surge again anytime, but the focus is really on the non-COVID.

21, clearly on the on the non coffee this is our core business.

We know that we have a range of products, we're really bored at COVID-19 surge or getting.

Anytime, but the focus is really on the non COVID-19.

Catherine Schulte: The first question comes from Katherine Schulting with Averd. Your line is open. Please go ahead. Hi, thanks for the questions. Great to see these results amidst a lot of pressures on the space. I wanted to start on the life sciences side of your business. We've heard some peers talking about pharma spend caution intensifying throughout the quarter. Meanwhile, academia has been pretty healthy. I think NIH outlets were up over 20% in the third quarter. Can you just talk through the trends you saw throughout the quarter in those customer groups and your expectations for this and markets going forward?

Speaker 1: The next question comes from Casey Woodring of J.P. Morgan. Please go ahead.

The next question comes from Casey what ring of J P. Morgan. Please go ahead.

Speaker 13: Hi, thanks for taking my questions. Maybe one for Roland, just can you walk through the debt repayment schedule, how you're thinking about that, and implications for interest in common, interest expense maybe give us a level set for 2024 that we can model. Thank you.

Hi, Thanks for taking my questions, maybe one for Roland just can you walk through the debt repayment schedule, how youre thinking about that.

Thierry Bernard: Thanks, Katherine. Thanks for the questions. Yes, obviously we are following also what some competitors are saying on the market. It is obvious that funding for the biotech industry is a bit under tension. However, we see still a very good demand for the life science product of KIAGN, especially in life science. What you have to, in simple tech, I'm sorry, what you have to understand is that especially in life science, whether we talk simple tech or UNGS, that are self-directed to either the research of the academic sector, we are not very high budget in those spending, but we are a fundamental part of those spending.

The implications for interesting come in.

Interest expense, maybe give us a level set for 2024 that we can model. Thank you.

Speaker 4: I think I get to the details more or less during the call, but nevertheless, I would assume that as I just said, in the remarks, we went down round about $400 million in terms of repayments on end of September , which probably has an impact now on the net interest expense for fourth quarter compared to the third quarter. It's probably $1.5 million US dollars.

Sure Casey I think I get you the details more or less during the call, but nevertheless, I would've assumed that suggests that we are.

In the remarks, we went down the harder part for a million dollar in terms of repayments till end of September, which probably has an impact on all of the debt interest expense.

For the fourth quarter compared to the third quarter is probably a one 5 million U S dollars.

Speaker 4: and for next year probably again depends of course where interest rates are going all in I do think there is an impact on around about two to three cents EPS on the net level as well so I think that probably helps you as I said there's a couple of free payments next year planned as well.

And for next year, probably again it depends on of course, the interest rates are going are all and I do think there is an impact.

What about a two to three cents EPS.

On the other net level that's about it so I think that's probably hard to as I said, there's a couple of prepayments nexia plant as well.

Speaker 4: And it's clearly also, again, 100 million in June next year and 500 million in November 24.

And is clearly also again hum that million in June next year, and a five centimeter in November 24.

Thierry Bernard: So it's difficult to eliminate KIAGN even in times of difficult economic environment. Simple tech is the first and crucial step for any biological run, yet it is not the most expensive part of activities in those labs. And this is why I think we are pretty protective. That doesn't mean that our company is immune to adverse economic events, but we are monitoring this very carefully. As an example, we keep an eye on the government shutdown in the US, and we are carefully analyzing what would be the budget increase if there is an increase for organizations, like for example the CDC and the NIH, but we have it under control.

Speaker 4: And on the convert side there might be another 500 million to

And ons or come through outside there might be another 500 on December 25.

The last question comes from Andrew Brachman of William Blair. Please go ahead.

Speaker 1: The last question comes from Andrew Brockman of William Blair. Please go ahead.

Speaker 14: Hey guys, good morning and thanks for taking the questions. Maybe just on the sample tech business, you've obviously made a lot of investments there in automation over the last handful of years. Can you just give us an update around what you're seeing and those customers who have upgraded? And I guess how should we be thinking about additional investments in automation for that business going forward? Thanks.

Hey, guys good morning, and thanks for taking the questions.

Maybe just on the sample type business, you've obviously made a lot of investments there in automation over the last handful of years can you just give us an update around what youre seeing in those customers, who have upgraded and I guess, how should we be thinking about additional investments in automation for that business going forward. Thanks.

Speaker 3: Thanks Andrew. I think it was the right decision when we started, let's say five years ago, to systematically upgrade our automation. As a reminder, Kayakube became Kayakube Connect. Is it one?

Thanks, Andrew I think it was the right decision when we started.

Let's say five years ago to systematically upgrade our automation as a reminder, okay. Yeah Q became caveat cube connect.

Is it one became easy too.

Uh Huh and all the time, adding new features as we said in today's presentation to next steps is symphony.

Speaker 3: And all the time adding new features. As we said in today's presentation, the next step is Kaya Symphony.

Patrick Donnelly: The next question comes from Patrick Donnelly of City. Your line is open. Please go ahead. Hey guys, thanks for taking the questions. Thierry, maybe if you look at some of these lingering headwinds, whether it's the OEMP instrumentation, maybe a little bit in China, I guess how do you think about the potential for these to continue into 2024 and impact the growth there? Obviously we've got some commentary from peers about the first half maybe being a little more subdued, given some of these headwinds.

Patrick Donnelly: And then on the same topic for Roland, just how you think about the margin set up into next year, if some of these headwinds do persist, just to leverage you guys have in the PNL. Thank you guys. Thanks Patrik, and we will take corner and I have this question just before going to the margin. So questions on OEM instrumentation in China. Obviously Patrick, I'd like to have a crystal ball. It's obviously extremely challenging those days to forecast even the volatility.

Where we are not only adding it.

Speaker 3: new connectivity features, but we are increasing the volume input, which is fundamental to better answer our already existing customers in liquid biopsy and taking more.

New connectivity features but we are increasing the what do you mean put which is fundamental to better ensure.

We're.

Already existing customers in liquid biopsy and taking more customers.

This was a fundamental strategy.

Speaker 3: This was a fundamental strategy to enhance our market share and confirm our leadership.

And then I'm a market hasn't confirmed our leadership.

And we see customers.

Speaker 3: And we see customers who are manual customers before sometimes being obviously moving to those automation platform, automated platform.

Who are menu world customers before sometimes being obviously moving to those automation a platform automated platform.

The next steps, but it's really too early to speak in detail about it to date.

Is to think about how your throughput automation, but we will come back to you in detail.

Patrick Donnelly: However, as we are selling Q2, we strongly believe that our OEM business is now normalizing towards its pre-COVID time. So I expect a normal, let's say, OEM range of revenues around $70 to $80 million in a normalized environment. China, it is obvious that a lot of players on the market were expecting a sequential improvement of the Chinese market starting in Q1 of this year. This has not happened, and it's clear as well that the anti-corruption campaign in healthcare launched by President Xi is adding to other challenges met by foreign companies on this market, pressure towards localization, delays in permission and registration from a regulatory standpoint, the so-called VBPs policy.

Okay, Terry operator, Roland Thank you very much for your time today on the call. If you have any follow up questions. Please do not hesitate to reach out to me. Thank you very much again for your interest in Qiagen Bye bye.

Speaker 2: Okay, Terry, Operator, Roland, thank you very much for your time today on the call. If you have any follow-up questions, please do not hesitate to reach out to PBME. Thank you very much again for your interesting comments.

Speaker 1: Ladies and gentlemen, this concludes the conference call. Thank you for joining and have a pleasant day. Goodbye.

Ladies and gentlemen, this concludes the conference call. Thank you for joining and have a pleasant day Goodbye.

Okay.

Okay.

[music].

Speaker 15: And.

Patrick Donnelly: However, China is a very important market. Both four life science and clinical diagnostics is probably already the second market in the world. So I do not see a fundamental improvement on the market in the coming six months, for example, but I believe in the long-term potential of this market because of the needs of the population and the patients locally. Obviously, foreign companies have to adapt their strategy to fit obviously into the Chinese priority.

Okay.

Speaker 15: And.

[music].

Patrick Donnelly: So we need to keep a cool head. It's an important market. It's not going to bounce back immediately, but the long-term perspectives are good. Instrumentation. Coyagin always said that because of the influx of steel, as we say, of instruments during the COVID period, the post-COVID period would see, in many labs, more trends to work placements of instruments than capital expenses. In the diagnostic world, we are used to that at Coyagin. I still believe that last on average continues to renew and upgrade their instrumentation every five years.

Patrick Donnelly: There is no scientific rules here but it's a well adopted and well accepted KPI in our market. So whether it is capital sales or placement, Qiagen, as a financial answer for all those options. It is true that it's a bit more constraints but once again we believe that the market for diagnostic life science and clinical is solid and will continue at the pretty solid growth rate as well in the coming months.

Roland Sackers: Roland moving to the margin? Sure, Patrick. Yeah, I think also the margin is to yield it out while days I would say still volatility and clearly also increasing uncertainty in the market. I do believe that we had shown in the past that we have our hands around our expenses quite well around and I don't think that is going to change going forward. So even in the more in brackets in the scenario where you assume a more muted growth rate moving from 23 to 24, I still believe that we should be able to deliver actually also very reasonable margin improvement.

Roland Sackers: There is clearly and we said that also on the call today right now we are rather accelerating some of our on the investments because we do believe there's a good opportunity for us to invest. We continue to see more and more leverage opportunities on the sales and marketing side. We have seen that trend in an administrative side now I think for the last 24 months that we are here while we have lower overall revenues still have quite significantly reduced our expense ratio and there's more potentials around that as well. So all in I think on the avial line that should be even in a more difficult environment enough room for us to improve margins.

Paul: The next question comes from a Daniel areas of stifle your line is open please go ahead. It's Paul on for Dan thanks for the question. Just in terms of kind of getting a sense of your comfort level heading into 2024 you talked a little bit last quarter about being more or less comfortable with a sort of high single digit growth trajectory just kind of baseline expectation. Should we expect that that come down since you know what we're kind of talking about three months ago and do you have a sense for as inflation is normalizing and so forth what the pricing. Realization might be just in terms of directionality for next year. Thank you Paul.

Thierry Bernard: So I'm not sure that I have ever seen a number like high single digit growth for 2024 but what we have always said we believe that we have the people and the product portfolio for key agenda both of my science and clinical diagnostic to be above market growth. And I still believe in this wherever in the smart. Market. Once again, that market might be experiencing some pressure and pressures those days, but it's a good market.

Thierry Bernard: I believe that COVID-19 has definitely proven the relevance of life science diagnostic and clinical diagnostic in the healthcare value chain. This is not disappearing. So even in the market is a bit softer. It's still a growing market. And what we feel at Cayagen is that, regardless the level of the market growth, we have the portfolio to be above that market growth.

Thierry Bernard: At the moment, we are clearly focusing on achieving 2,023 and I will guidance in a volatile environment. As you know, we give our guidance for the year around early February. This is what we are going to do this year. But we strongly believe that we have the people and the product of portfolio to systematically bid the market growth. On inflation, yes, it has received it compared to 2022. However, Cayagen didn't start to implement price increase because there was a hyperinflation last year.

Thierry Bernard: Cayagen has a systematic policy of price increase every year around January. Well shared with our customers, because we sell value, we sell innovation, and we invest in R&D. In a normalized environment, we believe that a normal price increase of between 2.5, 3.5 per year according to different geographies is what we need to look for. And as I said before, I always think that net net, a company like Cayagen in a normalized environment, should expect a net net impact of pricing increase of around 50 to 100 basis points.

Falko Friedrichs: The next question comes from Falco FreeJacks of Deutsche Bank.

Falko Friedrichs: Please go ahead. Thank you very much.

Thierry Bernard: My question is, how should we think about the future of the new Modi X platform within your company, and do you still believe you are the best owner? And then my follow-up would be on Kaya Stead, the X, and whether you can remind us of the next steps when it comes to the test menu expansion. Thank you. Thank you, Falco. On new Modi X, the first consideration is that we acquire that platform because we believe in it, and we strongly believe that it's probably the best platform on the market.

Thierry Bernard: For many features, ease of use, speed, versatility, especially the ability to run, the laboratory developed test in parallel to a regulated test in a very, very random access. This is the only platform able to do that. However, as we have disclosed, we have experienced the ability issues at the launch of the platform, which is no more in this market. Priority to fixing those stability issues over the last two years and a half.

Thierry Bernard: As a result, we are experiencing delays. It's a meeting and a proving assays on the US market, which is still by far the main market for infectious diseases, PCR testing. New modics is doing well in Europe. We see non-COVID assays double digit growth. At the same time, it is our duty to systematically and constantly review the performance of our product portfolio. Market shares, growth, return on capital invested. And there is no dogma at Qiagen.

Thierry Bernard: It is not because the product is part of our five pillars of growth, that it will be part of our priorities forever. The product and the team need to deliver. And so, we are currently reviewing every kind of options for new modics. This is what we can say at the moment.

Thierry Bernard: On Kaya Statdex, the menu is going on, and I would differentiate two kinds of development. The traditional menu to be competitive in syndrome testing is already available for Kaya Stat in Europe. I refer here to respiratory GI and meningitis. We are going to bring those assays as well in the US.

Thierry Bernard: The next step is to develop a completely differentiated assays that is not existing in our competition portfolio. And I refer here to what we call the complicated UTIs. Once we have launched that assays in Europe first, we will continue the development and registration of more traditional assays such as direct identification of blood culture positive, already research used only in Europe, pneumonia, and then we will go probably to other kind of temples whether we are talking joint or other kind of samples.

Thierry Bernard: This is the road map for Kaya Statde. A solution where we believe we can really take the number two position on that market, which is a very growing market and expected to be around close to five billion total market size by 2026.

Jack Meehan: The next question comes from Jack Meahan. I'm Neffron Research. Your line is open. Please go ahead. Thank you. Hello, everyone.

Thierry Bernard: I want to focus on Kwanaffair on So first, could you just talk about, you know, how you're looking at kind of the competitive landscape and some of the differentiation for the test. Second, are there any macro sensitivities you see here and maybe finally just level of confidence this can sustain double digit growth in the 2024. Thank you. So Jack, thanks for the questions. I think about the differentiation of quantifer. A major growth driver that we have decided to protect and grow faster since 2016, where we started the discussion and negotiation with Diasaurine for automation.

Thierry Bernard: Many people are aware of the partnership with Diasaurine. Some people sometimes forget about the partnership also with Hamilton and Tikan for the front end automation of quantifer. And therefore, as of today, there is no more automated workflow and easier to use than quantifer. And from the backend automation, available in the very sizable install base of the liaison by Diasaurine, either Excel or XS. Number one, number two, the number of publications around the quality, the value, the clinical superiority of quantifer is unprecedented.

Thierry Bernard: We are talking here about 20 years of public health, medical education, and publications. Third, for the product itself, we continue to invest in R&D. As you have seen, for example, over the last three years, we move from the quantifer for generation to the fourth generation by adding CD8, which seriously increase the sensitivity of the test. This is what explain the success of quantifer. Continuous organic and non-organic investment to expand its market expenditure.

Thierry Bernard: And where do we see the main potential for market penetration is still on the skin test. We believe that the skin test market, even in the US, is between, still, let's say, 30 to 40% penetration. So there is a significant room to grow. So we are not complacent despite being the number one. We continue to invest. We continue to push quantiferons in many countries. You have seen two years ago the guidance in Brazil in favor of quantiferons.

Thierry Bernard: You have seen some emerging countries in Asia-Pacific adopting also quantiferons. So there is no complacency, but there is a strong leadership, sustained by R&D investment, partnership, and this is what is fueling once again the 25% growth of Q3. We are confident that we can maintain a double digit growth for this product.

Matthew Sykes: The next question comes from Matt Sykes of Goldman Sachs. Your line is open, please go ahead. Thanks for taking my questions.

Roland Sackers: Good morning, congrats on the quarter and tough environment. Just two quick questions I'll ask them both up front, but just first on R&D, that 10% level, we kind of look at what it could end up for 23, probably be about 100 base points above where you were for 22 and probably 200 above the year before. Just wondering, is that 10% for the level we should be thinking about R&D investments in terms of percentage of sales as we think into 24?

Roland Sackers: And then secondly, the spread and non-COVID product growth in Europe versus the Americas. Is there anything we can read into that from a customer type or a product or segment that accounted for that difference in growth? Thanks. Thanks for the question. You can go ahead or not if you want to. Yes, I think it's very straightforward. We clearly, right now, see good opportunities to drive some R&D activities, given also our overall profitability and that things going quite well along even in a more difficult environment.

Roland Sackers: I would assume now looking into next year that we are probably next year rather between somewhere let's say 9% and 10%, I don't think that we will have next year any need for staying let's say 10% plus percent. So I do think there is some some leverage there. Nevertheless, we continue of course to invest next time our menu.

Thierry Bernard: Thank you, Roland. I'm the spread on the non-COVID growth. I don't think that there are major differences between American and European customers, but we have also a difference in our portfolio at the moment. So the non-COVID in North America is very much driven by quantiferon by digital PCR, especially in the bioforma. This is where we have the main concentration of bioforma customers and this is where we are taking significant market shares, but also UNGS.

Thierry Bernard: Whether in Europe, where you have compared to the US, a greater menu for non-COVID on Kajastat, for example, you have a greater menu for non-COVID on new modics. You also had this impact. Obviously we are also growing our market shares for quantiferon Europe, year on year, to a lower level than the US. We are also growing our market share in digital PCR. So it's rather basically adjusting the status of our product for you rather than differences of customers.

Thierry Bernard: I would end up saying that we focus now at Kajajan, as you know, since 2000 and that. 21, clearly, on the non-COVID. This is our core business. We know that we have a range of products available if COVID surge again anytime, but the focus is really on the non-COVID.

Casey Woodring: The next question comes from Casey Woodring of JP Morgan. Please go ahead. Hi, thanks for taking my questions.

Roland Sackers: Maybe one for Roland, just can you walk through the debt repayment schedule, how you're thinking about that and implications for interest in common, interest expense, maybe give us a level set for 2024 that we can model. Thank you. Sure, Casey, I think I get you the details more or less during the call, but nevertheless, I would assume that as I just said, in the remarks, we went down round about $400 million in terms of repayments or end of September, which probably has an impact now on the net interest expense for the fourth quarter compared to the third quarter is probably around $5 million in US dollars.

Roland Sackers: And for next year, probably, again, depends of course where interest rates are going, all in, I do think there is an impact on a run of $2 to $3 cents EPS on the net level as well. So I think that probably helps you. As I said, there's a couple of three payments next year planned as well. And it's clearly also, again, $100 million in June next year and $500 million in November 24. And on the comfort side, there might be another $5 million in December 25.

Thierry Bernard: The last question comes from Andrew Brackman of William Blair. Please go ahead. Hi, guys. Good morning. Thanks for taking the questions. Maybe just on the sample tech business, you've obviously made a lot of investments there in automation over the last handful of years. Can you just give us an update around what you're seeing and those customers who have upgraded? And I guess how should we be thinking about additional investments in automation for that business going forward? Thanks. Thanks, Andrew.

Thierry Bernard: I think it was the right decision when we started, let's say, five years ago to systematically upgrade our automation. As a reminder, Kaya Cube became Kaya Cube Connect. Is it one became easy to? And all the time adding new features. As we said in today's presentation, the next step is Kaya Symphony, where we are not only adding new connectivity features, but we are increasing the volume input, which is fundamental to better answer our already existing customers in liquid biopsy and taking more customers.

Thierry Bernard: This was a fundamental strategy to enhance our market share and confirm our leadership. And we see customers who were manual customers before sometimes being obviously moving to those automation platforms, automated platforms. The next step, but it's a bit too early to speak in detail about it today, is to think about higher throughput automation, but we will come back to you in due term.

Unknown Executive: Okay, Terri, operator, Roland, thank you very much for your time today on the call. If you have any follow-up questions, please do not hesitate to reach out to PBMe. Thank you very much again for your interesting hydrogen. Bye-bye.

Unknown Executive: Ladies and gentlemen, this concludes the conference call. Thank you for joining and have a pleasant day. Goodbye.

Unknown Executive: Bye-bye.