Q2 2024 Qiagen NV Earnings Call

[music].

John Gilardi: Now I would like to introduce your host, John Gilardi, Vice President of Corporate Communications and Investor Relations at Qiagen. Please go ahead.

Investor Relations at Qiagen. Please go ahead.

Unknown Executive: Thank you, Katie, and welcome to all of you for joining our call. We appreciate your interest in Qiagen. Our speakers today are Thierry Bernard, our Chief Executive Officer, and Roland Sackers, our Chief Financial Officer. This call is being webcast live and will be archived on the Investors section of our website at www.qiagen.com. You can also find a copy of the quarterly results press release and presentation on our website. We will begin with remarks from Terry and Roland, followed by a Q&A session. So let's go over the Safe Harbor Statement.

Speaker Change: Thank you Katie and welcome to all of you for joining our call. We appreciate your interest in Qiagen. Our speakers today are Terry Bernard our Chief Executive Officer, enrolling <unk>, our Chief Financial Officer.

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

Speaker Change: We will begin with remarks from Terry enrolling followed by Q&A session. So let's go over the Safe Harbor statement I would like to remind everyone that we will be discussing forward looking statements actual results may differ materially from those projected in any statement that we make the factors that could cause our actual results to differ materially are discussed in our most recent form <unk>.

Unknown Executive: I would like to remind everyone that we will be discussing forward-looking statements. However, actual results may differ materially from those projected in any statement that we make. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F on file with the SEC and also available on our website. You can also find a reconciliation to the most directly comparable gap measures in our press release and in the presentation. Now I'd like to hand it over to Terry.

Thierry Bernard: Our team at Qiagen executed well in the second quarter, delivering growth over the second quarter of 2023, as well as sequential growth from the first quarter of 2024. They also signal our conviction to accelerate our performance and achieve our updated outcomes. Executing on our 2024 targets will put us on a good trajectory to achieve the new midterm targets we outline at our Capital Markets Day that are underscored by our commitment to solid and profitable growth. Now, let me get you to our key messages for the quarter. P.S.

Thierry Bernard: Qiagen marked another quarter of exceeding our outlook for sales and adjusted earnings, an increase of 1% at CER, constant exchange rates, over the second quarter of 2020. Most important, and also up 8% at CER in our Diagnostic Solutions product group in light of our decision announced in June to phase out the Pneumonic System. The trend that we have seen in the industry this quarter was the impact on instrument sales. Customers are indeed still cautious on capital investment, and also 55 cents at CER.

Speaker Change: Yeah.

In quarter two of 2024.

Speaker Change: Overall, our instrument sales were down 10%.

Speaker Change: And if you include pneumonia, because they were down 6% CER.

Speaker Change: Customers are indeed still cautious on capital investment.

Speaker Change: And that includes larger scale instrument purchases as well.

Speaker Change: Adjusted earnings per share were 55 cents and also 55 cents at CER.

Speaker Change: D CS three cents above our outlook for at least 52 cents.

Speaker Change: Second key message our teams delivered important product advances in our portfolio serving customers from life science to clinical diagnostics.

Speaker Change: Let's start with chaos that our system for Syndromic testing.

Thierry Bernard: And we see this trend improving in the second half of the year on the back of two important product launches in the United States. First, our teams launched the new gastrointestinal panel in record time in early July after we received FDA clearance in June. From marketing to operations to the sales force, this was a tremendous execution. Those milestones are important catalysts for attracting new customers in the U.S., and more new tests are on the way, one involving respiratory targets and two for gastrointestinal targets.

Thierry Bernard: We are also extremely excited about the expansion of QIAstats into new applications with our pharma partners for companion diagnostics that will help guide treatment decisions for patients. If you remember, we noted at our capital market day that we now have in place the first pharma collaborations for Kiastat diagnosis, and those involve panel tests for chronic diseases. Our goal, together with our pharma partner, is to offer tests on Kiastat that can be done rapidly while the patient is still undergoing a clinical examination and could leave with a prescription if deemed a candidate for a given medicine. Decisions when it matters. On QuantiFerron, we welcome the recent update to the American Academy of Pediatrics guidelines in the U.S. for latent tuberculosis screening in children.

Speaker Change: The first pharma collaborations for carriers that diagnostic and those involve panels test for chronic diseases.

Speaker Change: I will go together with our pharma partner is to also test on carrier start that can be done rapidly. While the patient is still undergoing a clinical examination and could leave with a prescription is team a candidate for a given medicine.

Speaker Change: This indeed embodies our approach to clinical and molecular diagnostics.

Speaker Change: This is even when it matters.

Speaker Change: Unquantifiable, we welcome the recent update to the American Academy of Pediatrics guidelines in the U S. Four later in tuberculosis screening in children.

Thierry Bernard: Children of all age groups are now eligible for testing using quantiFERON, and this could open up incremental latent TB tests to be converted every year. In any case... As you know, a key element of our strategy also involves reviewing our portfolio in light of market trends. You saw this this year again with the announcement in June about our decision to phase out Pneumodics. This was indeed a difficult decision involving what we see as a great system and a great platform.

Speaker Change: Children of all age groups are now eligible for testing using quantify them and this could open in perimeter latent TB test to be converted every year.

Speaker Change: In any case.

Thierry Bernard: But the market dynamics changed after the pandemic COVID-19, and we did not see a realistic pathway to developing this system in a value-creating way. These decisions underscore our unwavering commitment to focus on where we can develop profitable leadership positions. And last message, we have updated our 2024 outlook based on the solid core business performance in the first half along with the new MODX decision. Our sales for the first half of 2024 were about $15 million CER above our output.

Thierry Bernard: And this played a very key role in our decision to update the Fourier Cells Outlook for at least $1,985,000,000 at CER while also taking into consideration our decision on new modules. We have also raised the outlook for Adjusted EPS by $0.02 to $2.16 as we step up to our commitment to solid, profitable growth. This is also underscored by the Adjusted Operating Income Margin Target at 28.5% of sales and the outstanding free cash flow generation.

Speaker Change: Also underscored by the adjusted operating income margin target of 28, 5% of sales and the outstanding free cash flow generation.

Roland Sackers: And now I would like to hand over to Roland for a review of the financial results. Thank you, Terry. Hello everyone.

Speaker Change: And now I would like to hand over to her now for a review of the financial results.

Teri: Thank you Teri.

Roland Sackers: Thank you as well for joining our call, and it was a pleasure to see many of you at our Capital Market Day event. Let me also go through some highlights and provide some perspectives on our performance. Our outperformance in the first half of 2024, both in terms of sales and profitability, played a key role in our updated outlook for the year. Let me go through some of the highlights now.

Teri: Hello, everyone. Thank you Isabella for me for joining our call and it was a pleasure to see many of you at our capital market day event.

Teri: Let me also go through some highlights and provide some perspectives on our performance.

Teri: As a first point our results for the second quarter shows improving sequential trend from Q1 24. These results put us on a trajectory to have heaps. The goals, we have set for the year.

Teri: Compared to the first quarter 'twenty four there was no material change in non operational results suggests it takes where it was at 19% and the share count at $224 million. Both in line with our guidance as a result, adjusted operating income and adjusted net income but was cool. It's a same rate of four person.

Roland Sackers: The adjusted operating income margin rose by one percentage point to 28.4% of sales for the second quarter over the year-ago period. This gives us confidence in achieving the target of at least 28.5% for the full year and a step toward our goal for an adjusted margin of at least 31% in 2028. On cash flow trends, free cash flow rose 56% in the second quarter to $129 million US dollars over the year-ago period and was up an even more impressive 86% to $225 million US dollars for the first half of the year.

Roland Sackers: We are seeing the impact of measures to ensure a high level of cash conversion from the rising level of adjusted net income. These actions include stepping up our accounts receivable and accounts payable teams at our hubs in Warcliffe and Manila. While keeping an eye on inventory levels, we are taking steps to ensure that we have adequate supplies to avoid disruption, especially in light of concerns about the current macro environment and supply chain stability.

Roland Sackers: Let me now give you some additional views on our results for the second quarter. Among the product groups, we saw higher sales in the second quarter of sample technologies, diagnostic solutions, and PCR nucleic acid amplification over the year-ago period. In sample technologies, the 1% CER growth came from consumables and particularly strong growth in kits used in our automation systems. And this comes after the launch of upgraded systems, in particular, KayaKube Connect and EZ2 Connect.

Roland Sackers: While we saw some weaker sales trends for manual kits, the increase in automation consumers is a testament to our conversion ability. In Diagnostic Solutions, we were pleased with the ongoing strong performance of Quantiferon, which sailed up 11% CER in marking the fifth consecutive quarter above $100 million in revenue. Kayastat DX sales also rose at a robust pace, growing 12% CER over the second quarter of 2023 on significant gains in consumables and an ongoing good level of instrument placement.

Roland Sackers: The recent expansion of the U.S. test menu gives us increasing confidence in exceeding the 24 sales target of at least 100 million U.S. dollars. In the PCR product group, ChiAcuity delivered robust growth in consumable sales. We continue to see good demand trends for instruments as well. We are especially pleased with the demand for the higher throughput QIA-QUT4 and QIA-QUT8 versions that are popular with biopharma R&D and manufacturing customers, as well as larger academic research facilities. We believe this will translate into an even higher consumable pulse rate.

Roland Sackers: In the Genomics NGS product group, sales of the Qiagen digital insight business rose at a high single-digit pace, and here we saw good sales trends for both the research and clinical portfolios. At the same time, we anticipate improving demand trends for our NGS portfolio in the second half of the year and for this product group to return to growth as we saw in the first quarter. Let's now move to results for the region. Sales were 7% CER in the Europe-Middle East-Africa region, with top performances in Germany, Italy, and the United Kingdom.

Speaker Change: It was 7% the Europe Middle East Africa region is a top performance in Germany, Italy, and the United Kingdom kind of start to exit this region drove robust with double digit growth in both consumables and instruments. We also saw growth above the global average for quad deferral on continued.

Roland Sackers: Kayastat-X sales in this region were robust, with double-digit growth in both consumables and instruments. We also saw growth above the global average for quantiferon as customers continued to convert from the tuberculin skin test. In the Americas, sales were stable compared to the second quarter of 2023, as single-digit consumer growth was offset by the cautious spending environment for instruments. In the Asia-Pacific-Japan region, sales declined 3% CER in the second quarter, led by higher sales in Japan, Australia, and India.

Teri: Conversion from the tubercle in skin test.

Teri: The America sales were stable compared to the second quarter of 'twenty see a single digit consumable growth was offset by the cautious spending environment for instruments.

Teri: In the Asia Pacific, Japan region sales declined 3% C O in the second quarter and led by higher sales in Japan, Australia and India.

Roland Sackers: Results for China showed a single-digit CER decline over the second quarter of 2023, but it grew at a significant double-digit rate sequentially from the first quarter of 2024. Let's now review the rest of the income states. The adjusted cost margin was 67.2% of sales, an increase of about 30 basis points from the second quarter of 2023 on beneficial changes in the product mix towards higher consumable sales. Additional margin benefits came from lower operating expenses in R&D, selling and marketing expenses, and administration in the second quarter over the year-ago period.

Teri: Results for China showed a single digit C. A decline over the second quarter of 'twenty, three but grew at a significant double digit rates sequentially from the first quarter of 'twenty four.

Teri: We currently anticipate the challenging macro conditions in China to continue.

Teri: Let me just remind you China makes up less than 6% of our global sales.

Speaker Change: That's not a abuse the rest of the income statement.

Roland Sackers: The favorable trends show the impact of our initiatives on effective cost management while making targeted investments to fuel growth and support our targets of at least 28.5% for the full year of 2024. As for NOIMODX, given that the decision came in June, we did not see any material impact on operational expenses other than the restructuring charges taken in the second quarter that was excluded from adjusted results. As for the third quarter of 2024, we currently expect the charges to total approximately 30 to 40 million dollars related to this decision.

Teri: <unk> million dollars in operating expenses.

Teri: We continue to expect restructuring charges to total approximately $40 million Suez or completion of the program in 'twenty, five and visible at 75% involving noncash items.

Teri: As for the third quarter of 24. He currently expect the charges to total approximately $30 million to $40 million related to the it related to this decision.

Roland Sackers: As for adjusted EPS, results at constant exchange rates were at $0.55 and $0.03 ahead of the outlook for at least $0.52. Turning to cash flow, results for the second quarter were a continuation of the good outcome seen in the first quarter of twenty four. Operating cash flow for the first half was up 63% to 300 million US dollars over the same period in 23 years.

Teri: As for adjusted EPS results at constant exchange rates were at 55 cents and three cents ahead of the outlook for at least 52 cents.

Teri: Just that Texas was at 19% and the average number of diluted shares at $224 million were both in line with our expectations.

Teri: Turning to cash flow results for the second quarter were a continuation of a good outcome seen in the first quarter of 'twenty four.

Teri: Operating cash flow for the first half was up 63% to see in that billion dollars over the same period in 'twenty three.

Teri: In terms of working capital management accounts receivables fell by nearly $30 million since the end of 'twenty three while our days of sales outstanding was 58 days and Heska made with in this recent trend.

Roland Sackers: Pre-cash flow also improved in the first half of 2024, rising 86% to $225 million from the first half of 2023. At the same time, we saw increased CAPEX levels for software development, including for the upgrade of our SAP system, which is tracking well against our plans. For the second half of 2024, we anticipate an ongoing strong level of underlying cash flow generation largely in line with the levels seen in the first half of the year, excluding one-time cash charges related to restructuring.

Roland Sackers: The same is true for free cash flow levels with similar levels of capex spending as in the first half. As for our financing, we had a payment of about $100 million for a German private placement that reached maturity in the second quarter. We also have $500 million of convertible notes reaching maturity in September and anticipate having to repay another $500 million of convertible notes in 2025 as well. I would now like to hand over to Thierry.

Thierry Bernard: Thanks a lot, Roland. And now, let me give you an update on some progress across our portfolio. First, at Kayakuity, we are ramping up our commercial presence as we seek to drive dynamic growth and gain share in the digital PCR market. If you remember, initially, we started with academia and then biopharma. And now we are targeting new markets, including forensics and clinical applications. In forensics, where we have a top three leadership position driven by our sample prep portfolio, we have a new partnership with the U.S. Federal Bureau of Investigation (FBI) to develop a first-of-its-kind digital PCR assay. It is designed to enhance DNA quantification in human samples, which boosts forensics analysis and ultimately contributes to improving public safety.

Thierry Bernard: And as for the clinical market and digital PCR, the launch of the QIAQ-WITI diagnostic version is perfectly on track for later this year. The first assay for FDA submission, a BCR-ABL assay for use in hematology patients, is also on track for approval in 2021. We still have ample room for growth in the academia and biopharma markets, and our teams are ramping up customers' activation campaigns. If we move now to Qiagen Digital Insights, Powerful Analytics to Understand Genomics, our bioinformatics portfolio, we are harnessing the power of AI-driven content combined with human curation to provide the industry-leading bioinformatics portfolio.

Thierry Bernard: Customers rely on QDI by Qiagen for results in minutes, even seconds, that would have taken days and weeks with other options. G-speed is possible today, and this is distinguishing in our industry given the high level of profitability.

Thierry Bernard: We are deepening our commercial teams with new sales specialists, and we are investing further in research and development. This will help us to deliver at least 14 AI-enhanced products to our customers by 2028. In sample technology, This is the foundation, I remind you, of our offering in Life Science and Molecular Diagnostics, where Qiagen is enabling endless possibilities with DNA and RNA. The introduction of this instrument will increase the capacity to process nearly 200 samples in a few hours. A host of new kits are being developed and ready for launch, including new kits for free-circulating DNA and microbiome target isolation.

Speaker Change: 2020 right.

Speaker Change: In sample technologies.

Speaker Change: This is the foundation I remind you of our offering in the life science and molecular diagnostic where qiagen is enabling endless possibilities with DNA and RNA.

Teri: For them the first step in many lab workflows.

Speaker Change: We are moving ahead with plans to launch two important instruments in there.

Speaker Change: Grade with due care Symphony connect this is planned for the second half of 2025.

Teri: And our entry into high throughput automation will be anchored with the launch of chaos print connect early 2026.

Speaker Change: The introduction of this instrument will increase the capacity to process nearly 200 samples in a few hours.

Speaker Change: A host of new kits are being developed and ready for launch, including New kids for free circulating DNA and microbiome target isolation.

Speaker Change: Across our portfolio you can therefore see that can't get any stronger than even before.

Roland Sackers: We have a differentiated portfolio targeting growth above the market we serve, and we will continue to invest in strengthening this differentiation. Now, back again to Roland with the details on the outcome. Thank you, Thierry.

Speaker Change: We have a differentiated portfolio targeting growth above the market, we serve and we will continue to invest in strengthening these differentiation.

Speaker Change: Now back again to her along with the details on the outlook.

Roland Sackers: Let me now provide more perspectives on our updated outlook for 2024 and also for the third quarter. As we mentioned earlier, the new outlook for net sales is for $1.985 billion CER, and this compares to the previous outlook for at least $2 billion CER. This takes into consideration the strong first half of 2024 that was ahead of our outlook by $15 million CER, especially the solid performance from Kyastatix and Quantiferon.

Herlong: Thank you Terry let me now provide more perspectives on our updated outlook for 'twenty four and also for the third quarter.

Speaker Change: You mentioned earlier in your outlook for net sales is 4198 5 billion U S. Dollar CER and this compares to the previous outlook for at least 2 billion U S dollars since it takes into consideration our strong first half of 'twenty. Four that was ahead of our outlook by $15 million C E.

Herlong: Especially we saw solid performance from KR statics and quantify it on and it also reflects an update due to the normal X decision as we now expect these sales to be about $25 million compared to previous target for at least $55 million.

Roland Sackers: It also reflects an update due to the Neumodex decision, as we now expect the sales to be about $25 million CER compared to the previous target of at least $55 million U.S. dollars. Consumables and related revenues are expected to continue driving growth, while larger-scale instrument sales remain challenging. For the short quarter, we have set an outlook for net sales of at least $495 million CER, an increase of about 4% CER from the short quarter 23, sales of $476 million. This includes a headwind of about one percentage point from the NOI-Modi X decision.

Speaker Change: Consumables and related revenues I expect it to continue driving growth by larger scale instrument sales remained challenging.

Thierry Bernard: In effect, an underlying 5% CR growth over the third quarter of 2023. This confirms our expected sequential growth that we anticipate for the second half of 2024 over the same period in 2023. On adjusted earnings per share, our updated outlook for the year is for at least $2.16 at CER, and this is an upgrade from our previous outlook for at least $2.14 at CER. I want to also note that there is an increase of $0.06 from the initial outlook at the start of 2024 as we double down on our commitment to solid profitable growth.

Thierry Bernard: Adjusted earnings per share for the third quarter is expected to be at least $0.55 per share, also at CER, compared to $0.50 in the third quarter of 2023, so a nice improvement. As for the impact of currencies, based on recent movements, we are now expecting a negative impact on full-year net sales of about 1 percentage point and an adverse impact of about 2 cents per share on adjusted EPS results. I would like to now hand it back to Thierry.

Herlong: Compared to 50 cents in the third quarter of 'twenty three so a nice improvement.

Speaker Change: As for the impact of currencies based on recent movements. We are now expecting a negative impact on full year net sales of about one percentage point and an adverse impact of about <unk> <unk> per share when adjusted EPS results.

Speaker Change: Like to now hand back to tea.

Thierry Bernard: Thanks a lot, Roland, again, and we are coming to the end of our call. So before we move into the Q&A session, let me quickly summarize today's key points. First... We are very pleased with the results for the first half of 2024 and what we see as a company delivering among the fastest growth and improvement in profitability in our industry. The solid results for the first half give us increasing confidence in achieving the updated 2024 outlook.

Speaker Change: Thanks, a lot all of them again, and we're coming to the end of a cold so before we move into the Q&A session. Let me quickly summarize today's key points first.

Speaker Change: We are very pleased with the results for the first half of 2024, and what we see as a company delivering among the fastest growth and improvements in profitability in our industry.

Speaker Change: Solid results for the first half give us increasing confidence in achieving the updated 2020 for outlook.

Thierry Bernard: Second, our strategy of balance and focus is proving its value as we roll out new products and strengthen our offering to customers from the life sciences to the molecular diagnostics field and capitalize on our broad global presence. A key element is the fact that nearly 90% of our sales are coming from highly recurring revenues, and this bolsters our business in a challenging macro environment marked these days by slower capital investment.

Herlong: Thicker.

Herlong: Our strategy of balance and focus it's proving its value as we rollout new products and strengthen our offering to customers from the life sciences to the molecular diagnostic field and capitalize on our broad global presence.

Herlong: A key element is the fact that nearly 90% of our sales are coming from a highly recurring revenues and this bolsters our business in a challenging macro environment marked those days by slower capital investments.

John Gilardi: We have, as you know, focused on our sharpened growth drivers. Kayak Witch. We also invest in our proven leadership in sample technologies and also in quantiferon. The Qiagen of today is about delivering sales growth combined with improved profitability. This is what we have demonstrated with our results for the first half of 2024, and we are determined to do so in the second half as well. With that, I'd now like to hand it back to John and the operator for the Q&A session.

Herlong: We have as you know focus on our sharpened growth drivers.

Speaker Change: Okay, Yeah, Cui T J.

Speaker Change: <unk> start and Qiagen digital insight as areas, where we are accelerating investment for growth.

Speaker Change: We also invest in our proven leadership in sample technologies, and also and quantify them.

Speaker Change: It was a major focus do not prevent qiagen from having all the significant growth potential such as genomics and precision medicine and companion diagnostic and also H I G. You might not need education, and forensics, where qiagen is already a top player.

Herlong: Above all.

Herlong: Okay IGN of two days about delivering sales growth combined with improved profitability in line with our commitment to solid profitable growth for the coming years.

John Gilardi: Thanks a lot for your attention. 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 a star followed by one on their touchtone telephone. If you wish to withdraw your question, you may press the star followed by two. To ensure we can accommodate as many people as possible, please limit yourself to one question and, if necessary, one follow-up. Your microphone will also be muted after you finish asking the question.

Operator: Anyone who has a question may press a star followed by one at this time. One moment for our first question, please. The first question comes from Catherine Schulte with Baird.

Catherine Schulte: Hi, thanks for the questions. Maybe just first, as we think about the back half guide, the third quarter looks like you're getting back to about mid single-digit growth and probably exiting the year in a solid mid single-digit range. You know, how should we think about that as a jumping off point for 25?

Thierry Bernard: And maybe compare that with your 7% long-term CAGR that you laid out at your CMD last month? Thanks. Thanks, Catherine.

Thierry Bernard: I would say that what it shows is that we are perfectly executing. On what we said at the beginning of the year, you remember, we signaled clearly to you and to the market. When we get our guidance for 2024, we will have a slower H1 and then progressively accelerate and come back to a performance in HU that would be very comparable to our performance in 2024. And this is why you have our Q3, which is at 4% growth. If you exclude Pneumodics, it's 5% growth.

Speaker Change: Ignored clearly to you and to the market.

Speaker Change: When we get our guidance for 2024 that we would have a slower each one and then progressively accelerate and coming back to our performance in a true that would be very comparable to our performance in 2023.

Speaker Change: And this is why that.

Herlong: You have our Q3, which is <unk>.

Herlong: At 4% growth, if you exclude new mortgage at 5% growth and 5% or so growth in Q4.

Thierry Bernard: And 5% also growth in Q4. Q3 will be driven by, first of all, the introduction of new products in our portfolio. In H1 of 2024, you will have no impact of the GI approval in the U.S.

Herlong: Q3 will be driven by <unk>.

Herlong: First of all the input of new products in our portfolio.

Speaker Change: In H one of 2024, you have no impact of the GAA approval in the U S. You have no impact on the KAR quitting diagnostic approval also in the U S. This is impacting.

Thierry Bernard: The second, and this is going to show acceleration. So it's fundamental for us to accelerate. We have the pipeline and the portfolio to do so. And this would position Qiagen then to deliver on the expected three years of plan guidance that we gave on our capital market day in New York. All right, great.

Herlong: The second half.

Herlong: Second in Q in H. Two you have also the confirmation of the investment that we are doing for now a bit more than six months into our bioinformatics QD I business and this is going to show acceleration.

Herlong: Third you'll probably know that traditionally the.

Speaker Change: The second half of the year is always stronger and faster and grow for quantify them because it's impacted by our impactful marketing activities, especially in the U S with our back to college back to school campaign.

Herlong: So it's fundamental for us to accelerate we have the pipeline and the portfolio to do so and this would position Qiagen then to deliver on the expected three years plan guidance that we gave in our capital market day in New York.

Catherine Schulte: And then great to see consumables returning to growth as well. What are your expectations for instruments versus consumables in the back half of the year? We have always signaled to the market that, for many factors, Thank you. We'll go next to Michael Ryskin, America.

Speaker Change: Alright, great. Thank you and then they could be consumables returning to go by what are your expectations for instruments versus consumables in the back half of the year.

Speaker Change: We have always signaled to the market that are.

Speaker Change: For many factors.

Speaker Change: First of all are you an influx of capital sales during the Covid pandemic era second let's never forget that.

Speaker Change: This year is very specific in the world. It's one of the few years, where half of the world is going into election, and notably in key markets such as the U S. So anytime you have election, you have a bit of a wait and see attitude. So there is clearly.

Herlong: Some caution in capital expense in many labs, especially in life science.

Herlong: We expect.

Herlong: This.

Herlong: Situation to be shortly we have always said that laboratories are traditionally and on a regular basis investing into upgrading their capital sets. So we expect this movement to normalized progressively moving into 2025.

Speaker Change: Okay. Thank you well go next to Michael Rice.

Herlong: America.

Michael Ryskin: Great. Thanks for taking the question. I want to dig in on some of the portfolio developments you talked about, particularly digital insights. It sounds like you're making a lot of progress there and seeing some strength in the software business. Just wondering if you could talk about the underlying state of that end market, customer purchasing decisions, and broadly just what you're seeing in genomics. Thank you, Michael.

Michael Rice: Great. Thanks for taking the question.

Michael Rice: Wanted to dig in on some of the portfolio.

Michael Rice: Redevelopment you talked about.

He: He will lead the.

Speaker Change: Digital insights it's.

Speaker Change: It sounds like you're making a lot of progress there and things.

Speaker Change: Seeing some strength in the salt forbidden just wondering.

Speaker Change: If you could talk about the underlying stay.

Speaker Change: State of that end market and customer purchasing decisions.

Speaker Change: Broadly just what you're seeing in genomics.

Thierry Bernard: You know that we have basically two main classes of customers, as we have highlighted during our Capital Market Day in June for QDI, what we call the discovery phase, which has the research and academia customers, and also the clinical customers. Bioinformatics is especially driven by the demand for genomics data. The market is also driven by the fact that when you have an explosion of available genomics data, you still need to have very smart software to allow clinicians and laboratories to make sense of that data. In other words, to transform those trillions of data into actionable research or clinical input.

Speaker Change: Thank you Michael.

Speaker Change: You know that we have basically two main classes of customers of where as we have like we have highlighted during our capital market day in June for Q D. I.

Speaker Change: What we called the discovery, which is the research and academia customers and also the cluster the clinical customers.

Herlong: There is a significant need.

Speaker Change: Four.

Herlong: Bioinformatics, especially driven by the demand for genomics data.

Speaker Change: But the market is also driven by the fact that when you have an explosion available of available genomics data you still need to have very smart software.

Speaker Change: To allow clinicians and laboratory to make sense of those data he knows a word to transform those trillions of data.

Herlong: Into actionable research or clinical insights.

Thierry Bernard: And this is why he's pushing the dynamics of that market, because not only have we invested for many years, but we have also built an incomparable knowledge base thanks to years of manual data curation. And this is that combination of automation and AI and manual curation that makes Qiagen so special. All our competitors in that segment are basically bleeding money. Michael, Qiagen is like you.

Speaker Change: And this is why he's pushing the dynamic of that market.

Speaker Change: The press at TCT of Qiagen here.

Speaker Change: Is that not only we have invested for many years into artificial intelligence, but we have built also earned and comparable knowledge based.

Speaker Change: Thanks to years of menu all data curation.

Speaker Change: And he sees that combination of automation in the eye and menu all curation that makes qiagen. So specific in addition to that especially when you.

Speaker Change: Compare with.

Speaker Change: All our competitors on that segment.

Speaker Change: This activity is highly accretive for KH. It at every level gross margin and EBITDA margin EPS when our competitors are was basically bleeding money.

Speaker Change: This is why we believe that it's a market that it's interesting to invest in marketing and also research and development.

Speaker Change: Okay, Thanks, and if I can squeeze in.

Speaker Change: Sure.

Speaker Change: On quantity or on.

Speaker Change: Solid quarter double digit CER growth.

Speaker Change: Continued strength there obviously, there's been a lot of discussions about.

Speaker Change: Additional competition in our market, it's been another quarter theres been some.

Speaker Change: From a.

Speaker Change: Potential competitors download just wondering if you've had any conversations with your customers and what you're seeing in the market.

Speaker Change: In terms of peoples expectations in the future.

Speaker Change: Michael.

Speaker Change: Okay IGN is like cure, we hear and we listen to our comments from competitors, even when they are extremely contradictory.

Speaker Change: But this is not our focus.

Speaker Change: The first focus for us is to deliver on that.

Thierry Bernard: We hear and we listen to comments from competitors, even when they are extremely contradictory. 450 million euros in 2024 for Conti-Ferrand. We are on a good track, fifth quarter in a row exceeding a hundred million euros of sales. Once again, double digits.

Speaker Change: 450 millions guidance in 2024, four quantify wrong right.

Speaker Change: We are on good track fifth quarter in a row exceeding 100 million of shares once again double digit.

Speaker Change: Second is to make sure that we capture.

Thierry Bernard: The skin test market, because this is the main competition in that market. There are still probably around 60 million SCITS tests in the world, of which 16.16 million in the U.S. alone, so you understand that we have still... to deliver on the commitment we took during our capital market day in New York, which is bringing that franchise to $600 million by 2028, which is showing a 7% CAGR. That is our focus, and this is what matters, I believe. Thank you. We'll go next to Jack Meehan with Nefron Research. I believe, Jack, thanks for the question, that the situation should normalize on the back of one main reason.

Speaker Change: The skin test market because this is the main competition in that market. There are still probably around 60 million skeets test in the world of which 16, one six millions in the U S alone. So you understand that we have still.

Speaker Change: A lot of room to grow.

Speaker Change: Third.

Speaker Change: Is to deliver on the commitment we took during our capital market day in New York, which is bringing that franchise to $600 million by 2028, which is showing a 7% CAGR those out our focus and this is what matters I believe.

Speaker Change: Thank you we'll go next to Jack Meehan with Nephron research.

Jack Meehan: Thank you.

Jack Meehan: Good afternoon.

Jack Meehan: Wanted to start just to get your latest thinking on end market trends on the life science side for academic customers and also pharma customers.

Jack Meehan: How just you know in terms of spend trends how are you feeling about funding conditions and.

Speaker Change: I'm, just kind of the pace of the recovery here into the second half.

Jack Meehan: I believe Jack Thanks for the question that.

Jack Meehan: The situation should normalize.

Speaker Change: On the backs of one main reason.

Thierry Bernard: People will have more and more visibility on the funding situation. Remember that for a good part of H1, at least until April, if you just take the U.S. as an example, many labs did not know what the budget, for example, for NIH 2024 would be. Now they know it's flat this year. Will it be flat forever?

Speaker Change: People will have more and more visibility on the funding situation.

Jack Meehan: Remember that.

Speaker Change: For a good part of H, one at least until April if you just take the U S. As an example, many labs.

Speaker Change: Did not know what the budget for example for NIH 2024 would be now they know it's flat. This year will it be flat forever I don't believe so we have never seen that indeed she story for example, the NIH. So we have a light highlighted disclosures in the <unk>.

Thierry Bernard: I don't believe so. We have never seen that in the history, for example, of NIH. So we have highlighted these cautions in capital spending. But I believe that given the power of innovation in life science, once again, look at the microbiome. Who was talking about the microbiome six years ago? Now, many more residual diseases. Every year, you have a new push for expenses or more discoveries. So that means that we are very confident that this market will continue to grow. This year, it's a bit softer on capital sales, but that shouldn't last forever. Right, okay?

Speaker Change: Capital spending but.

Jack Meehan: But I believe that <unk>.

Jack Meehan: Given the power of innovation in life Science once again look at microbiome, who was talking about microbiome six years ago now minimal residual disease every year, you have a new push for expenses or more discoveries.

Speaker Change: So that means that we are very confident that this market will continue to grow.

Jack Meehan: This year, it's a bit softer in capital says, but that shouldn't last forever.

Jack Meehan: And then on Chi Acuity, just how do you feel like you're tracking relative to the, you know, over $90 million target? I think it implies a little bit of a step up in terms of the growth rate in the second half of the year. Just would love to hear more about your confidence in that. Thanks.

Speaker Change: Great, Okay, and then on.

Jack Meehan: High acuity.

Speaker Change: How do you feel like you are tracking relative to that you know over $90 million target I think it implies a little bit of a step up in terms of the growth rate in the second half of the year.

Speaker Change: Just would love to hear more about your confidence in that.

Speaker Change: Thank you Jack so so first of all let's.

Speaker Change: Not forget that.

Speaker Change: Cash equity.

Speaker Change: He's probably.

Speaker Change: The fastest growing.

Thierry Bernard: So first of all, let's say it is probably the fastest growing installed base ever in life science. Since the very first day we launched Kayakweed... We have achieved a remarkable number of places. It's clear that because it is.

Speaker Change: Installed base Eva in life Science.

Jack Meehan: Since the very first day, we launched carrier equity, we achieve a remarkable number of placement.

Speaker Change: 13, Q PCR customers are converting competition.

Speaker Change: Second.

Speaker Change: It's clear that.

Speaker Change: Because it is.

Thierry Bernard: Up to now, mainly a life science play for Qiagen. Yes, Qiaquiti, even if we see a nice demand for our instrument, is slightly impacted by the caution. The good thing is that we are extending the reach of Kayakwiti in two dimensions. First of all, the clinical business.

Speaker Change: Up to now mainly or life science play for carrier Jen, Yes, Guy equity, even if we see a nice demand for our instrument.

Speaker Change: He is slightly impacted by the caution.

Speaker Change: On capital expenses in labs.

Speaker Change: But the good thing is that we are extending the reach.

Speaker Change: Kayak routine to dimension.

Speaker Change: First of all the clinical business.

Thierry Bernard: And this is the launch and the approval, the FDA approval of the platform in the second half, but also from the pharma. So QIAQITI now becomes also a very valid solution for companion diagnosis. And this is why we believe that we have the guidance for 2024 of 90 million within reach. Thank you. We'll go next to Dan Arias with Steve.

Speaker Change: And this is the launch and the approval the FDA approval of the platform in the second half, but also the pharma Socal equity now becomes also a very valued solution for companion diagnostic.

Speaker Change: And this is why we believe that we have the guidance for 2024 of 90 million within reach.

Jack Meehan: Thank you well go next to Dan Arias with Stifel.

Dan Arias: Hey, good morning, guys. Thanks for the questions. Thierry, obviously, Quantipyron is an important product for you guys here. And at the capital markets day, part of the discussion on maintaining your competitive position was just related to workflow. So, I'm just curious about the timeline associated with some of the automation improvements that you highlighted there. I don't think we covered that. If we did, I apologize.

Dan Arias: Hey, good morning, guys. Thanks for the questions curiosity quality out of important product for you guys here and at the capital markets day part of the discussion on maintaining your competitive position was just related to workflow. So.

Thierry Bernard: But I think automation was one of those critical elements of the offering there. So I would just sort of love to understand when the workflow is expected to change, and then maybe how the workflow is expected to improve over time. With all due respect, Dan, what we insisted on during Capital Market Day was, first, the strength of our partnership with Diasurin. Let's not forget that this is one of the major installed bases for immunoassays in the world. So we already have an extremely competitive backhand.

Dan Arias: I'm just curious about the timeline associated with some of the automation improvements that you highlighted there I don't think we covered that if we did I apologize, but I think automation was one of those critical elements of the offering there. So we'll just sort of love to understand.

Speaker Change: When the workflow is expected to change.

Speaker Change: And then maybe how the workflow is expected to improve over time.

Speaker Change: With all due respect done.

Speaker Change: What we insisted during the capital market day is first.

Speaker Change: On the strength of our partnership with <unk>.

Speaker Change: Let's not forget that this is one of the major installed base in immuno assays in the world.

Speaker Change: So we have already.

Speaker Change: The next trim the competitive backend.

Thierry Bernard: Workflow. This is an unparalleled automated workflow. Second, what we said in New York is that our agreement with Diasurin allows us potentially to add an automation partner. We have not yet taken a formal decision.

Speaker Change: Workflow.

Speaker Change: Second and sometimes the market forgets that is that we have also agreements with two leading fraud and automation companies T.

Speaker Change: T Cannon Hamilton and therefore, when you combine both.

Speaker Change: This is an unparallel automated workflow.

Speaker Change: Pick and what we said.

Speaker Change: In New York is that our agreement with Teva Serene, who knows us potentially to harden automation partner.

Speaker Change: We have not taken a formal decision we review options and all of you see we will inform the market in due time.

Thierry Bernard: We will review options, and, obviously, we will inform the market in due time. Okay. Thanks.

Speaker Change: Okay.

Speaker Change: Thanks.

Dan Arias: Thank you. We'll take our next question from Odysseas Manesiotis. Odysseas Manesiotis, with Barenberg.

Rcs Menace: Thank you we'll take our next question from Rcs Menace.

Speaker Change: A minute crts with Bamberg.

Rcs Menace: Hi, Thanks for taking my questions one Roland on margin.

Speaker Change: Sure.

Odysseas Manesiotis: I mean, you're at 28.4. Yeah, thank you. And thanks for the question. In the second quarter of 2024, I think there will be no material impact at all from Nordic on the operational expense side outside the restructuring charge. As you know, the decision came very late in the month.

Speaker Change: I mean youre at 28.4.

Speaker Change: Presenting this quarter.

Speaker Change: From Q1.

Speaker Change: Just wanted to get a feeling of how much of that is Nemo data Newmont, Dx, which I'm assuming is two thirds of the month and just to think on the latter quarters to where you can get to and respectively. The exit rate in 2025.

Speaker Change: It does seem like you can sort of cross 29 here is that a logical way to think about it and then I have a small follow up.

Speaker Change: Yeah. Thank you and thanks for the question.

Speaker Change: In the second quarter of 24, I think the there's no material impact at all from normalization of the operational expense side, all etcetera restructuring charge.

Speaker Change: The decision came very late in the months and of course as in I would probably argue with some extra costs, which we had to take but it.

Roland Sackers: And of course, there's even, I would probably argue, some extra costs which we had to take. But what is clearly important is that this is going to change in the second part of the year and clearly also continue into next year. I think we laid out to you and the market ahead of the capital market day that the transition out of non-MODX goes somewhat into the mid-to-late 2025, and that also means a ramp up in terms of contribution to the profitability we'll face over time.

Speaker Change: What is clearly important is that the debt is going to change in the second part of the year and clearly also continue into next year I think we laid out.

Speaker Change: To you in the market.

Speaker Change: Ahead of so kept the market the data.

Speaker Change: The transition out of our normal Rdx goes somewhat into mid of 2025 and it also means a web app in terms of contribution on the profitability will phase in over time.

Roland Sackers: And I do think what you're seeing here in the second quarter is clearly contribution from the core business, which also, I think, clearly, I want to mention that as well, will continue. So we feel comfortable in both that we will clearly be north of or at least at 28.5 for the full year. If you do the math forward, you clearly see that we have to be quite quickly north of 29% within that year.

Speaker Change: And I do think what you're seeing here in the second quarter is clearly.

Speaker Change: Contribution from the core business, which also and I think the clearly you want to mention that as well will continue so we feel comfortable and bowls that we will clearly be a nurse or at least that's a $28 five for the full year. If you do the math forward.

Speaker Change: You clearly see that we have to be quite correctly north of 29% was in that year, but were seeing it keeps us clearly lots of good comfort on our 2028 goal of 31% that we're we have that we achieve that and.

Speaker Change: As we said before it is a it's a beginning of a larger contribution from the operational expense side overtime does carry outs or contribution or even outside normally eggs from the gross margin side.

Roland Sackers: But I do think it gives us good comfort on our 2028 goal of 31% that we achieved that. And, as we said before, it's beginning to make a larger contribution from the operational expense side. Over time, there's also clearly a contribution even outside non-MODX from the gross margin side. All very clear, thank you. And a follow-up on the instrument front. So I mean, looking at the instrument sales are down 10%, you have a comment there saying that it does overshadow trends you're seeing on the rental reagent front. So I just wanted to know which franchises did better on instrument placements in H124 compared to H23. Thanks. Sorry, I was on mute.

Speaker Change: Oh very clear, thank you and a follow up on on the instrument run so.

Speaker Change: I mean looking at the instrument sales are down 10%.

Speaker Change: They're saying that it does have a shadow trends youre seeing on the rental reagent front. So I just wanted to know which franchises did better on instrument placements in H 124, compared to 23 things.

Speaker Change: Sorry, I was on mute, we said my understand I mean, the real comparison for me is Reza minus six because we stopped promoting in your mortgage so basically we need to account for these are basic.

Thierry Bernard: We said minus 10. I mean, the real comparison for me is rather minus 6, because we stopped promoting Pneumodic. So basically, we need to account for this Bayes effect. It would be a false perception that we are either losing market shares; we continue to increase the market penetration of QIAquity, of QIAstart, or of our sample taking. We simply highlighted that customers, especially in life science, are a bit slower to take decisions or sometimes they are postponing because, as I said before, they are waiting for some more visibility.

Speaker Change: Hum.

Speaker Change: The first message would you say is is that first of all we continue to place or sell instruments.

Speaker Change: It would be a wrong perception that we are either losing market share as we continue to increase the market penetration of <unk> equity of carry after that or ever of our sample tech instrument, we simply in light I light at that customer.

Speaker Change: Customers, especially in life science are a bit slower to take decision or sometimes they are postponing because as I said before they are waiting for some more visibility.

Thierry Bernard: So, as we said, I mean, this is a movement that we expect and consider to be rather short term. Never forget that when you are in life science, it's very difficult when you cannot sell the instrument to do placement, but you can do placement in clinical.

Speaker Change: Sure.

Speaker Change: We say that mean this is a movement that we.

Speaker Change: We are expecting consider to be rather short term.

Speaker Change: Never forget that when you are in play in the life science, it's very difficult when you cannot sell the instrument to do placement, but you can do placement in the clinical. So this is why having that balance between both life science and clinical help us to mitigate that situation, but this is a situation that we monitor obviously very carefully.

Speaker Change: But I insist carrier Cui T K S that and central Tech instrument are increasing quarter after quarter on placement.

Speaker Change: Thank you we'll go next to Doug Schenkel with Wolfe Research.

Thierry Bernard: So this is why having that balance between both life science and clinical helps us to mitigate that situation. But this is a situation that we monitor obviously very carefully, but I insist. Hey, good morning, good afternoon.

Speaker Change: Hey, good morning, good afternoon, and thank you for taking the questions.

Douglas Schenkel: Thank you for taking the questions. Thierry, I want to start on the topic of portfolio optimization. So first, just really a quick question on Numodec. Is there any chance you will still find a buyer for that asset?

Doug Schenkel: Terry I want to start on the topic of portfolio optimization. So first just really a quick question on new modem.

Thierry Bernard: You know, just kind of want to level set on that. And then second, and this is really the more important thing I want to get at, Recognizing that the focus of your capital markets day was understandably on the growth pillars of your portfolio, around $600 million of your revenue, or I think I think that's about 30% of total revenue falls outside the growth driver. How active are you in evaluating other options for components of that part of your business?

Doug Schenkel: Is there any chance you still will find a buyer for that asset.

Rex: Just kind of want to level set on that and then second and this is really the more important thing I want to get at Rex.

Speaker Change: Recognizing that the focus of your capital markets day was understandably on the growth pillars of your portfolio around $600 million of your revenue or I think I think that's about 30% of total revenue falls outside the growth drivers.

Speaker Change: How active are you in evaluating other options for components of that part of your beds.

Thierry Bernard: I'm just wondering if there are other opportunities to optimize and reallocate resources while improving the overall growth and margin profile of the business beyond what you impressively described back in New York a month or so ago. Thanks, Doug. So first of all, on Pneumodics. Focus on Grove Driver.

Speaker Change: I'm just wondering if there are other opportunities to optimize and reallocate resources, while improving the overall growth and margin profile of the business beyond what you impressively described back in New York.

Speaker Change: Or so ago.

Speaker Change: Okay.

Speaker Change: Thanks, Doug So first of all on pneumonia acts Uh huh.

Speaker Change: While a company like Qiagen is is and we'd never be dogmatic, we need to be clear. We have started the process to discontinue to phase out the system I confirm that this system will be phased out now the priority for US is to go a long and a company of our customers to make sure that it's a smooth transition.

Doug Schenkel: Pickering.

Doug Schenkel: Since 2020.

Speaker Change: We insist.

Speaker Change: On that balance and focused strategy for carriage in.

Speaker Change: Focus on growth drivers.

Thierry Bernard: That doesn't mean that outside... We do not have significant growth potential, sometimes above double digits. I gave some examples today. Forensics and HID are double-digit growth potential for Qiagen. Precision Medicine and Companion Diagnostics are another double-digit growth potential for Care. But at the same time, if you remember...

Doug Schenkel: That doesn't mean that outside of those growth drivers, we do not have significant growth potential some time of both double digit I gave some examples today forensic NHI E ease of double digit growth potential for Cajun.

Speaker Change: Precision medicine, and companion diagnostic ease of Noser Delbert D G a growth potential for carriage it.

Doug Schenkel: But at the same time, if you remember.

Thierry Bernard: Especially in the presentation by Roland on Capital Market Day, we have that clear commitment of 250 basis points from our level to go above the current level of EBIT margin. The 31% EBIT margin that Roland was highlighting again, and Roland gave some details that it was divided between, if you remember the graph, 100 basis points, 50 basis points, and another 50 basis points across different activities, of which, continuing to optimize our portfolio was a key part.

Doug Schenkel: Especially the presentation of all in.

Speaker Change: The capital market day.

Doug Schenkel: We have that clear commitment of 250 basis point.

Speaker Change: From our liver current liver of EBIT margin to go above.

Hornell: The 31% EBIT margin that hornell was highlighting again and hormone gave some details that it was divided between if you remember the graph.

Speaker Change: 100 basis point 50 basis point, the newness of it is about.

Speaker Change: They just bought across different activities of which.

Speaker Change: Continuing to optimize our portfolio wiser keep out so we said you see new mortgages, because it's a big one.

Thierry Bernard: So we said you should see Pneumodics because it's a big one, but we are actively looking at the rest of the portfolio to prune what is not either making sense for Qiagen anymore or what could be better in another company. That's the strategy, and it will continue. Thank you. And if it's okay to just sneak in a quick modeling question for Roland. Roland, you know, we have about 52% of quantifier on sales in our model in the second half, with Q3 being seasonally stronger, as we've seen in the past. You know, Kyostat, even more in the back half, but with more in Q4 than Q3. Is that the right way to think about things?

Speaker Change: But we are actively looking at the rest of the potent afford you to prune what he's not he's making sense for qiagen anymore or what could be better in a novel compound that's their strategy and it will continue.

Speaker Change: Thank you for that and if it's okay to just sneak in a quick modeling question for Roland.

Roland: Roland I you know we have about.

Roland: About 52% of quantify or unfurl in our model in the second half with Q3 being seasonally stronger as we've seen in the past.

Cai: Yeah, Cai is that you know even more in the back half.

Speaker Change: But with more in Q4 than Q3.

Speaker Change: Is that the right way to Directionally think about things.

Cai: Yeah, No I think Iraq.

Speaker Change: It's quite obvious that we believe and it seem to you was very clear in his prepared remarks that we continue to believe that chaos that has a strong environment not only on the respiratory activities going on but clearly now with the launch of Sage Gi panel in the U S. We can address the U S market are much better.

Speaker Change: Not only with <unk>, but we clearly can even at west more tender opportunities. So that will have a larger impact quantitative fair on will stay and remain strong for the year. I think there's also a little concerned about that I still would expect that the chaos that also sequentially coughs and the Saddam fourth quarter just because.

Cai: So lots of what I, just said in terms of Gi, but do not underestimate all through what we should see from QD I unclear acuity over the west are obviously yeah.

Speaker Change: He was clearly referencing the investments we've made over the course of the year particular audio this year into acuity I and chaos acuity has a strong environment particular with no selling even the larger instruments into that market that will have an impact on consumable pull through as well.

Cai: Thank you we'll go next to Patrick Donnelly with Citi.

Patrick Donnelly: Hey, guys. Thanks for taking the questions maybe just one for me just on China. It sounds like it got a little bit better sequentially.

Patrick Donnelly: You guys are expecting much improvement for the rest of the year, but can you just talk about what trends you saw there maybe peel back the layers a little bit in terms of what looks better what looks worse and just the expectations for the rest of the year. It will be looking to 'twenty five as well. Thank you guys.

Patrick Donnelly: Thank you, Patrick. Roland was also clear in his comments that, first of all, our exposure to that market is rather limited. The second comment is confirmation of what we have been repeating for the last two years.

Patrick: Thank you Patrick.

Speaker Change: What is also clear in his comments that first of all our exposure to that market is rather limited.

Speaker Change: But less than 6% of our sales.

Speaker Change: He can comment it's a confirmation of what we keep repeating for the last two years.

Speaker Change: It's a specific market, but its two larger market.

Speaker Change: For being ignored so we take all the actions.

Thierry Bernard: So we take all the action, remain competitive despite the difficulties locally. This goes through further localization of our activities in research and development and manufacturing on products that make sense to become local in China. Second, I remind you that we are quite differentiated in the sense that we do have a second brand in China as well. It's a company that is consolidated with Qiagen, but which is managed differently than Qiagen locally and sells local products to Chinese.

Speaker Change: To remain competitive despite the difficulties locally.

Speaker Change: He goes through further localization of our activities in research and development and manufacturing on products that make sense to become local in China.

Pick: Pick and I remind you that we are quite differentiated in the sense that we do have a second Brian in China, where it's a company, which is consolidated we scared yet, but which is managed differently than qiagen locally and selling local products to Chinese companies.

Thierry Bernard: And third, we have said, and we confirm, we do not see any structural improvement on the market, at least before the second half of 2020. But, once again, it's a significant potential, it's a significant size, it's the second market in the world, it cannot be ignored. Thank you. We'll go next to Matt Sykes with Goldman. Yeah, thanks for taking my questions. Good morning.

Speaker Change: And third we have said and we confirm we do not see any structural improvement on the market at least before the second half of 'twenty five.

Pick: But once again, it's a significant potential to significant size, it's the chicken market in the world it cannot be ignored.

Matt <unk>: Thank you we'll go next to Matt <unk> with Goldman Sachs.

Matt Sykes: You made some comments about confidence in trends in the NGS business improving in the second half. Could you just talk a little bit about what's giving you that confidence and what you're seeing in that market specifically to show improvement in the second half this year? I mean, it's a rather balanced view.

Matt: Yeah. Thanks for taking my questions good morning.

Speaker Change: You made some comments about confidence in trends in the NGL business improving in the second half could you just talk a little bit about what's giving you that confidence in what you're seeing in that market specifically.

Speaker Change: To show improvement in the second half this year.

Thierry Bernard: It's just that you remember, Matt, that... Back in 2019, we took a very fundamental strategic decision at Qiagen. And where are we relevant and where are we going? It's in chemistry, i.e., and we became completely platform agnostic on those two dimensions. And I believe that the market evolution confirms that decision because, since 2019. You see the growth of more and more relevant players in Next Generation Sequencing Beyond Illumina. Look at PacBio, look at Elema, look at Single X, look at MGI, for example.

Speaker Change: I mean, it's a rather balanced view, it's just that.

Speaker Change: You remember a match that.

Speaker Change: Back in 2019, we took a very fundamental strategic decision at Qiagen.

Speaker Change: Which was in genomics and sequencing to focus where we are stronger.

Armstrong: And where are we relevant Armstrong.

Armstrong: It's in chemistry I E.

Speaker Change: Providing a platform with our kids.

Armstrong: And in value informatics.

Armstrong: And we became completely platform agnostic on those two dimension.

Speaker Change: And I believe that the market evolution confirmed.

Speaker Change: Decision because since 2019.

Speaker Change: You see the growth of more and more relevant players.

Speaker Change: In next generation sequencing beyond Illumina will get back value look at element, you'll get a single next look at EM.

Speaker Change: M. A M G. I for example.

Matt Sykes: So, our offer, both in bioinformatics and in chemistry, fits the needs of those players. And so this is why we said we have a Bayes effect in Q2 of 2024, but the market remains significantly active, and we provide added value solutions. So the demand is there. And just one quick follow-up, just on QIACUITY, on your comments about share gains, can you kind of talk about how much you're seeing in terms of displacing existing competition versus converting those QPCR customers? And it's a very fair question, Matt, but when we have a very differentiated platform like Kayakwiti, we go after every opportunity. Competitive Deal. So it's a balanced set of wins.

Speaker Change: Sure our offer both in bioinformatics and in chemistry fit their needs for those players and so this was a.

Speaker Change: Why this is why we said we have a base effect in Q2 of 2024, but the market remains significantly active and we provide that adds value solution. So the demand is there.

Speaker Change: Got it and just one quick follow up just on high acuity on your comments about.

Speaker Change: Share gains can you kind of talk about how much you're seeing in terms of displacing existing competition.

Speaker Change: <unk> is converting those QC Q P C our customers.

Speaker Change: And it's it's a very fair question, Matt, but when we have a very differentiated platform like equity.

Speaker Change: We go after every opportunity.

Speaker Change: Competitive deal.

Speaker Change: New deal a year conversion to customers to the technology of digital PCR Sweetser balance a set of wins what is clear is that.

Thierry Bernard: What is clear is that given the features of the system, specific technology, not droplet-based, fully integrated box, capacity to address different workflows because I remind you that we have a small workflow. Plus now covering the menu not only in Research Academia but Biopharma and Tomorrow Clinical. Thank you. We'll go next to Dan Leonard with UBS.

Speaker Change: Given the feature of the system specific technology not droplet days.

Speaker Change: Fully integrated boxes capacity to address different workflows, because I remind you that we have.

Speaker Change: Small workflow.

Speaker Change: Jim throughput higher throughput, so we address different needs.

Speaker Change: Personnel covering menu not only in research academia, but biopharma and tomorrow clinical.

Speaker Change: We have fundamental good assets that are allowing us to not only win against competition, but also bring newcomers to digital Pcr.

Speaker Change: Thank you we'll go next to Dan Leonard with UBS.

Dan Leonard: Thank you. Just one cleanup on the CHI ACQUITY. Did you give the growth rate for that platform in the quarter? And then, Terry, can you help me better frame the importance of the BCR-ABL product? Thank you.

Dan Leonard: Thank you just one clean up on the Cat acuity did you give the growth rate for that platform in the quarter and then Terry can you help me better frame the importance of the D. C are able product. Thank you.

Thierry Bernard: So we said that we have a significant healthy and good growth in the consumables for QIAQUITY Q2, and I can tell you that it's above double digits. And we said as well that we continue to have hefty demand for our platform, especially the higher throughput platform, and then BCR-ABL. For BCR-ABL, yeah, for BCR-ABL also. The play here... Let me go back to history.

Speaker Change: So what we said that we have a significant a healthy and good growth in the consumer board for carry equity Q2, I can tell you that it's above double digit.

Speaker Change: And we said as well that we continue to have a heavily demand for our platform, especially the higher throughput platform.

Speaker Change: And then B C are able or bcl, yeah, four Bcf a day or so.

Speaker Change: The play here.

Thierry Bernard: First of all, when we decided to move Kayakwiti from life science to also clinical diagnostics, we made another decision; we said we would focus on oncology. When we said we would focus on oncology, we made a third decision. We said where we are going to be very relevant here is in what we call hemato-oncology, of which BCR-ABL is the main marker. So I'm not going to give you any specifics. I'm not telling you the size of the market; I'm just telling you it's the most relevant marker.

Speaker Change: Let me go back to history first of all when we decided to move cash equity from.

Speaker Change: Life Science to also clinical diagnostic we made who knows her decision we said we'd focus in oncology.

Speaker Change: When we said we focus in oncology, we made the third decision, we said, where we are going to be very relevant here is when we say on what we call a mature oncology of which BCE. Our ABL is the main a marker.

Speaker Change: So I'm not going to give you a specific size of the market that just didn't reach the most relevant market.

Thierry Bernard: Second, there is a significant potential where we can prove the superiority of a digital PCR approach, a more precise ability to quantify results versus other technologies, especially qPCR. And for us, it's also, The very healthy performance of H1 on Kiastat 12% growth is absolutely not impacted by GI. That shows you the strength of the solution.

Speaker Change: Second there is a significant potential where we can prove the shipyard Yuri tee of a digital PCR approach more precise ability to quantitate resorts vast juice also technologies, especially Q PCR and for US It's also making.

Speaker Change: Making a lot of sense, because you might remember that we have a range of product in a matter of oncology, what we call. The each so jay in the range of product, which is coming now.

Speaker Change: Not at the end of its life cycle, but which is quite mature and lips lifecycle. So convert he get to digital PCR will be very helpful as well.

Speaker Change: Thank you we'll take our next question from Falko Friedrichs with Deutsche Bank.

Falko Friedrichs: Thank you my question is on the GI panel launched for the chaos that.

Falko Friedrichs: Can you give us some insight as to to what extent that is already making a bit of a difference in your discussions with customers and how should we think about the financial contribution of the panel launched in the second handles this year. Thank you.

Speaker Change: You'll have to see it.

Speaker Change: In two ways.

VAALCO: VAALCO is exactly what <unk> said, so first award highlighting that.

Speaker Change: The very healthy performance of H, one on chaos that 12% growth is absolutely not impacted by Gi that shows you the trend of the solution.

Falko Friedrichs: Second we always disclose that part of the acceleration of cast that for each too with come from Gi and it's very simple because in the U S. We had customers already using chaos that for respiratory and they were waiting for these new panels to complete their solution to patients, but you had also.

Speaker Change: As your customers, saying.

Speaker Change: I'm very interested but as long as you don't have at least two panel I cannot justify the investment now they can show. The fact that we have it now and as I said in my comments. It has been a tremendously quick movement from approval to launch.

Dan Leonard: Explain why Kayastat will be one of our main growth drivers in the second half of the year. Okay, thank you. We'll take our next question from Hugo Solvet with BNP Paribas. Hi, this is Curtis Moyles on behalf of Hugo.

Speaker Change: Explain why chaos that will be one of our main growth drivers in the second half of the year.

Speaker Change: Okay. Thank you.

Speaker Change: We'll take our next question from Hugo Chavez with BNP Paribas.

Hugo Solvet: Thank you for taking my question. The first one here is I'm looking at the slide on page eight, how you're talking about the adjusted EPS outlook for the rest of the year. It looks to me like we only included two cents out of the three cents about performance in H1. I'm just curious, can you give a little bit of color?

Curtis Smillon: Hi, This is Curtis smile on for Hugo. Thank you for taking my question.

Curtis smile: First one here is I'm looking at the slide on page eight.

Curtis smile: How you're talking about the adjusted EPS outlook for the rest of the year.

Speaker Change: It looks to me like Neil Neil 32 cents added three outperformance on H. One I'm. Just curious can you give a little bit of color have you done there to keep some room to maneuver or maybe are you planning to invest a little bit more than you had initially planned. Thank you.

Roland Sackers: Have you done this to keep some room to maneuver? Or maybe you are planning to invest a little bit more than you had initially planned? Thank you. Roland, would you like to take the EPS? Sure, happy to. No, I think, a fair question.

Speaker Change: How long would you like to take the P. S.

Roland Sackers: As you noted correctly, we had overperformance not only in revenues for Q1 and Q2, but we also had the same thing for EPS. Clearly, we had already increased our outlook quite significantly when we started with 2.10 for the year, to 2.40, and now to 2.16. At the same time, we also confirmed that our EBIT margin improvement goes from 28 now to 28.5%. And as you said, with that, we clearly will have a significant improvement.

Speaker Change: Sure happy to so no I think a fair question.

Speaker Change: As you noted correctly, we had over performance not only in revenues for Q1 and Q2, but we also had the same thing for EPS.

Speaker Change: Clearly, we increased already outlook quite significantly when we started this to turn into the year to two fruit 40 now to 2016.

Speaker Change: At the same time, we also confirmed that our EBIT margin improvement goes from 28 to 28, 5% and as you said is that.

Speaker Change: We clearly will have a significant improvement and if you do the math, you'll see there'll be even coming very close to 30%, leaving that yet so I would say I'm not too many companies out there with a significant profitability profile with us and having some room to even do better wouldn't be a bad thing let's see.

Roland Sackers: And if you do the math, you see that we're even climbing very close to 30% for the year. So I would say there are not too many companies out there with a significant profitability profile like us, and having some room to even do better wouldn't be a bad thing. Let's see. Thanks. And if I could just have one follow-up on coming back to QuantaFair on TV. I mean, it's obviously relatively strong in H1.

Hugo Solvet: Can you discuss maybe your confidence level around potentially delivering above the guidance for the full year? And also, maybe just to tag on the end of there, I think we understood recently that Revity will be launching the new workflow in the US and China soon. Do you expect this to kind of impact the competitive intensity at all? Or maybe will that impact your business at all going forward?

Speaker Change: Okay. Thanks, and if I could just have one follow up on going back to quantifying T D.

Speaker Change: Obviously relatively strong in H, one can you discuss maybe a company thought around potentially delivering above the guidance in the full year.

Speaker Change: Also maybe just to tag on the end of their I think we understand recently that remedy will be launching a new workflow in the U S and China. Soon do you expect this to kind of impact the competitive intensity, all or maybe will that impact your business at all going forward. Thank you.

Thierry Bernard: Thank you. So to the second half of your question, immediately. And let's be clear, we respect every competitor. The product announced by Revit is nothing new; it has already been on the market. It has not changed, so far, the paradigm of growth for QuantiFerron or the paradigm of market shares between the two companies.

Speaker Change: So to the second half of your question immediately.

Speaker Change: Be clear we respect every competitor.

Speaker Change: The product announced by our ABTS nothing new it has already been on the market. It has no change so far the paradigm of growth for quanta film or the paradigm of market shares between the two the two companies.

Speaker Change: Best of luck to them, but it's already on the market and is not new.

Speaker Change: They can or are we going to beat the guidance.

Thierry Bernard: I mean, we are always trying, Roland, John, myself, and this company, to be ambitious and realistic. So let's go to the guidance of 450 million. Believe us, if we can beat that, we will not hesitate to do so. But first, let's go to 450 million.

Speaker Change: I mean, we are always trying or wrong, John myself and this company to be ambitious.

Speaker Change: And vicious and realistic so let's go to the guidance first of 450 million believers. If we can beat that we will not hesitate to do so but first lets go to $450 million.

Speaker Change: Okay.

Thierry Bernard: Thank you. We'll take our final question from Dan Brennan with T.D. Cowan.

Speaker Change: Thank you, we'll take our final question from Dan Brennan with TD Cowen.

Speaker Change: Okay.

Dan Brennan: Last but not least, guys, congrats on the quarter. Maybe just one for Roland to start, just on the back half of your margin ramp. So I think you've got pneumatics, what, at about a point benefit in the back half. So can you just kind of unpack how we think about, you know, gross margins and the different opex lines in the back half and, you know, how is the leverage coming through there?

Speaker Change: Last but not least guys congrats on the quarter.

Dan Brennan: Maybe just one for Roland to start just on the back half your margin ramp. So I think you've got pneumatics, what at about a point benefit in the back half. So can you just kind of unpack, how we think about gross margins in the different opex line in the back half and how we can leverage coming through there.

Speaker Change: Yeah, I know I have in mind, a good question that I have in mind that as I said before we will phasing dawn and Onboarding slightly right and that means we still have are clearly impact.

Speaker Change: On our profitability also in the second part from the <unk>. So I don't think that gross margin change to most of this year that has probably more to come next year.

Speaker Change: But we clearly do you expect on operational side to get some incremental impact again step by step because clearly some sales and marketing activities and Andy you ramped on Suenos and operational activities, but it will take some time.

Speaker Change: I think we will see a combination of a what I would call probably as of today our core.

Speaker Change: Core improvements or a business outside number they still are gaining traction.

Andy: Efficiency and.

Speaker Change: <unk> is sliding into that as well.

Speaker Change: Great and then maybe just one on sample prep that was a nice beat versus our expectation, we tell pretty healthy growth ex COVID-19.

Speaker Change: What are you seeing there what do you think happened or what's kind of baked into the guide in Q3 and Q4 I mean, we could argue that there's kind of a maybe deceleration baked them, which could look conservative. So just kind of walk through some of the drivers and the assumptions here. Thanks.

Roland Sackers: I think first of all, the first thing I would say is that we can be happy to see sample tech coming back to a positive evolution. That's the first highlight. The second highlight is that we said, I see that as the translation that our strategy to upgrade our instruments is a good one. Remember, Kayakube became Kayakube Connect, EZ-1 was upgraded to EZ-2, and we announced in New York that we would launch two new platforms. So it justifies that strategy; it validates that strategy.

Speaker Change: I think first off here.

Speaker Change: The first thing I would say is that we can be happy to see some protect coming back to a positive evolution. That's the first highlight.

Roland Sackers: The second highlight is that we said.

Speaker Change: That it was mainly driven by our performance in automated sample take I see that as the translation that our strategy to grades that were in three months is a good one remember okay. Yeah cube Dickey became carrier connect is it one was upgraded to easy to and we announced in New York that we.

Roland Sackers: We launched two new platform, so it justifies that strategic validate our strategy at.

Andy: At the same time I still see this market for Qiagen Azure, it's a low single digit.

Andy: And so we need to continue to develop added value application and assays, especially as we said in New York in the field of liquid biopsy in the field of microbiome in the field of minimal residual disease and if we do that we will continue to grow at a low single digit, but it's a recurring business and highly profitable.

Unknown Executive: With that, I'd like to close this conference call and thank all of you for your participation. If you have any questions or comments, please do not hesitate to reach out to us. Thank you very much. Ladies and gentlemen, this concludes the conference call. Thank you for joining us and have a pleasant day.??

Speaker Change: With that I'd like to close this conference call and I. Appreciate all of you for your participation. If you have any questions or comments. Please do not hesitate to reach out to us. Thank you very much.

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

Speaker Change: [music].