Q2 2025 Qiagen NV Earnings Call
Ladies and gentlemen, thank you for standing by. I am Katie your Global meet call operator.
Welcome, and thank you for joining Kaya's, Q2 2025 earnings conference. Call webcast. At this time, all participants are in a list and only mode, please be advised, that this call is being recorded at Kaya, Jen's request and will be made available on their Internet site.
The prepared remarks will be followed by a question and answer session. If you would like to ask a question, you may press star 1
on your touchtone. Telephone, please press the star key followed by 0 for operator assistance.
At this time, I'd like to introduce your host, John Gilardi, Vice President and Head of Corporate Communications at QIAGEN. Please go ahead.
Thank you, operator and welcome to all of you to our call today. For the second quarter of 2025, we appreciate your time and interest in kyogen. Joining me today are Terry Bernard our chief executive officer and Loan sacrifice our Chief Financial Officer. Also joining us is Dr. Dominica marterra from our IR team, today's call is being webcast live and will be archived in the Irish section of our website at www5
Copy of the results press release and the presentation are also available on our website. Before we begin, please note that this call will include forward-looking statements. Actual results may differ materially from those projected due to a number of factors outlined in our most recent Form 20-F and other filings with the U.S. Securities and Exchange Commission. We will also refer to certain financial measures not prepared in accordance with U.S. GAAP that provide additional insight into our performance. Reconciliation to the most directly comparable GAAP figures are in the release and presentation. All references to earnings per share refer to the diluted EPS. And with that, let me turn over the call to Terry.
Thank you, Joe and hello, good morning, good afternoon, or good evening to everyone around the world. Thanks again for joining us.
Kaya, Jen delivered, another clean and solid quarter in Q2 of 2025.
Indeed, our sales growth is among the highest in the industry. And on top of that, we are increasing our outlook for the year.
This performance reflects focused, execution and give us confidence to deliver on our upgraded 2025 targets.
We are building a solid foundation to deliver more growth in 2026 on our path for solid and profitable growth against our 2028 targets.
So let me walk you through our 4 key messages for today.
First.
We exceeded our outlook for Q2 with solid growth and improved profitability.
Growth at constant exchange rates.
Core sales are more important metric for caen since they exclude discontinued products like pneumonics and dials.
Those cells also grew 6% CER over the same period in 2024.
Adjusted diluted earnings per share was $0.60 and $0.62 at constant exchange rates, ahead of our target.
And driven by the strong improvements in operational. Profitability.
Second key message.
Our growth pillars performed strongly.
Kstat grew 41%, at CER.
This was driven by strong instrument placement that once again, exceeded our quarterly goal of at least a hundred and 150 system.
We continue to see solid demand across all regions and benefit from our menu expansion initiatives for syndromic testing.
11% CER supported by solid gains in the Americas. But also in EMA as we maintain momentum in driving conversion of latent TB testing for the traditional skin test,
Let us remember that around 60% of the global market still relies on the skin test.
And this underscores the significant remaining potential for conversion.
Kayaku.
Our digital PCR platform delivered, double digit, CER growth and supported by healthy demand for consumables. Companion, diagnostic deals, while instrument placement were slightly below the prior year. Reflecting cautious Capital spending Trends among customers.
Kayen digital insights our bioinformatic business maintain momentum in a challenging environment.
Here, we expect new growth in purses from the acquisition of GOES and the Franklin Cloud platform for AI-driven interpretation of next-generation sequencing data for clinical labs.
And in Sample Technologies, although total sales were flat against the second quarter of 2024. We saw solid mixed single digit growth in automated consumables
Our teams are moving ahead to launch three new platforms, with the first state in late 2025.
Third key message.
We have upgraded our full year. 25 sales Outlook.
Based on this solid start to the year in a complex and volatile microenvironment.
We now expect 4 to 5%. Net sales, growth at constant exchange rate up from the previous Target for about 4% growth.
More importantly, we are now expecting 5% to 6% CER growth in our corporate revenue, up from the prior outlook of about 5% growth.
We are also confirming the adjusted earnings per share Outlook of about 2.35 cents at CER. Which as you remember, we upgraded in April and represent an increase of 7 cents compared to our initial guidance for the year,
So amid this external volatility we remain focused on execution and Agility to deliver on our targets and capture the right growth opportunities.
And as the fourth point,
we have an expanded range of ways to create value for shareholders customers and other stakeholders.
Following our annual general meeting in June, we paid our first ever annual dividend and now have authorization for another synthetic share repurchase of Earth to 500 million dollars over the coming 18 months.
50 million dollars already returned to shareholders since 2024 we are well on track.
To reach our goal of returning, at least, 1 billion dollars to shareholders, by the end of 28 absent, once again of significant m&a.
At the same time.
We are continuing to invest organically in the business. Our teams are also actively reviewing value and creating M&A opportunities.
Our differentiated portfolio across Diagnostic, and Life Sciences is indeed strong and Performing. Well, this is reflected in a strong record of execution and a clear commitment to implementing and executing on our strategy and creating value.
With that, I will add it over to Ron for more on the financials.
Thank you to and hello everyone. We delivered strong financial results in the second quarter of 2025,
Our profitability continued to improve supported by disciplined execution. And a clear focus on operational efficiency.
Let me take you through the key financial highlights now.
First, they shift another increase in our adjusted operating income margin it. Rose to 29.9% of sales up 1.5 percentage points from the same quarter last year.
This Improvement was driven by several factors first and foremost, the efficiency initiative launched in 2024. This included the decision to discontinue normal mod x, which more than offset, the adverse impact from currency movements against US dollar, and the new tariffs
Cost discipline across organization played in important role. We have also maintained our focus and investing in growth and innovation.
Based on the solid results. For the first half of 25, we are tracking toward an adjusted operating income margin of about 30% for 25.
Compared to 23. This would represent about 300 basis points of margin Improvement which underscores the scalability and strength of our operating model.
Second, it delivered strong cash flow in the first half of 2025 while absorbing cash payments for the efficiency program and portfolio decisions.
Net cash from operating activities. Was 3001. Million us?
Unchanged from the first half of 24.
This reflected the solid business expansion and benefits from Tata working Capital Management.
Our balance sheet remains, very strong, giving us flexibility to invest in Innovation, pursue targeted m&a. And continue with journey Capital to shareholders.
This year we have already returned over 350 million to shareholders through the Sienna million dollar share repurchase program in January and the 54 million of dividends paid in July.
Let me now walk you through some additional details on our sales performance in the quarter.
Starting with cyber Technologies. Sales were broadly unchanged from the second quarter of 24.
We saw good Trends in our focus on automated consumers across several regions.
Instrument sales held steady over the year ago period supported by continued placements of our core platforms.
Diagnostic Solutions sales roles at 11% at constant exchange rates with strong contributions across our regulated products and led by Kaya study ex sales up 41% CR and quantiferon sales Rising 11% CR.
we also saw another quarter of double digit Revenue growth in companion, Diagnostics revenues,
In PCR and nuclear acid. Amplification sales School, 3% Crescent over the year ago. Period character saw positive growth rate in consumables, but instrument sales were soft due to cautious customer spending.
Turning to genomics and NGS product group. This sales were also stable in the year over year period.
Open the qiagen digital insights, by informatics business reflected double-digit gains, among clinical customers, which absorbed softer Trends. Among research customers that are facing continued funding pressure,
We are also working through the shift from the multi-year licenses to SARS based subscriptions.
Turning to the regions. Since in the Americas Rose 7%, CR supported by strong growth in the US and Mexico.
8% CR led by France and Italy growing at double-digit rates along this contributions from Germany, Switzerland, and the Middle East.
The asia-pacific region declined 4% CIA with sales down at the low tncr.
Weight in China, over the same period in 24.
Moving down the income statement, adjusted operating income Rose a strong. 13% to 160 million and led to the adjusted operating income margin, improving to 29.9% of sales in Q2 in Q2 25 from 20 area 0.4% in Q2 24.
On a constant exchange rate basis, the margin was even more sharply to 30.8% in the 2 5.
This improvement was driven by a combination of higher sales and ongoing efficiency initiatives.
the adjusted cost margin benefited from a quarter with a solid product, mix, but had to absorb the impact of new tariffs and currency movements, and decline to 66.7% from 67.2% in Q2 24,
And the Investments were 8.99% in Q2 25 compared to 9.9% in the year ago. Period and aligned with the target for about 9 to 10% on an annual basis.
There is a marketing expenses where 22.1% compared to 23.1% in Q2 24 reflecting efficiency, gains while maintaining targeted customer engagement.
General administrative expenses. Were slightly lower at 5.7% in Q2 25 compared to
5.8% year above ago, we have good cost discipline while continuing to support strategic it upgrades
In terms of adjusted EPS at constant exchange rates, this results were above the Outlook and that was even with an adjusted tax rate at 20% against our Target, for about 19% which continues to be our 25 goal.
Turning to cash flow. We generated 3001 million in operating cash flow during the first half of 25 compared to 300 million in the 24th period.
This performance is even more Noseworthy given that the 25th included about 36 million of cash, restructuring payment related to our efficiency initiatives and portfolio, streamlining actions.
We cash flow was 270 million. Slightly below the 225 million in the first half of 24.
This reflects higher planned investment into digital initiatives, particularly the sap system upgrade that is now in the implementation phase.
We continue to improve our working Capital Management. Thanks to operational discipline.
Accounts for civil will will, were unchanged in the world 566 days, compared to the end of 24, as our teams continue to improve in this area.
it's the same time days of inventory, decrease to 159 at the end of the second quarter of 25 compared to 193 days, at the end of 24, in light of our efficiency initiatives,
as for the cash flow consideration in the second half of 25. Keep in mind that the dividend payment was made in July,
We ought to anticipate that about $500 million will be paid out in 2024 for the convertible notes, due to a likely early redemption.
In light of this topic, we are reviewing attractive non-dilutive refinancing opportunities during the second half of 2025. One option under consideration is to issue cash shell convertible notes with favorable terms.
As always, any refinancing will be aligned with our disciplined capital allocation strategy. Our strong financial position supports our proven capital allocation approach. This combines investing in strategic growth initiatives with increasing returns to shareholders. We said that we hand the call back to 38.
Thanks. So in addition to executing on sales and profitability,
we also execute on research and development. So let's now take a quick look at progresses across our product portfolio.
Starting with sample Technologies, where we continue to advance our next wave of automation.
On track on budget, specification and timing for Carrier Symphony, connect khayyam mini and Kaya spring connect.
Those system are designed to deliver flexible, throughput, improve Automation, and enhance digital connectivity across both clinical and research applications.
The first of them Kaya Symphony connect is on track for a control launch towards the end of 2025.
These platform.
Strengthens our position in high value application, such as liquid biopsy offering expanded capabilities and improved connectivity.
Khayyam mini and Kaya spring, connect our plan for H1 to 2026.
Together those platform with expand our install base and address the broader range of customer needs with scalable Innovative sample, preparation Solutions.
Early field test for Kaya spring connect and early feedback from Pharma. Companies have been extremely successful and we are seeing strong interest in this High throughput system.
Reflecting broader customer demand for Next Generation automation.
Second.
Kasat takes our syndromic testing platform. It has a growing footprint worldwide.
As you know, we are now offering a broad menu of FDA cleared syndromic panels across respiratory, gastrointestinal and menitis Target.
This includes free mini panels tailored for outpatient settings, helping to address reimbursement challenges specifically in North America.
The strength of our asset portfolio has driven strong instrument placement.
And in the first half of 2025, for example, we placed more chaos test systems in North America.
Than in hole of 2024.
With these developments, Kaya starts to build momentum as a flexible and fast-growing solution in the syndrome testing market.
Turning to QuantiFERON now, where we continue to drive successful conversions for the traditional skin test.
I cannot emphasize enough that customers continue to choose the Superior Solution built on quantity and the trusted Diasorin Liaison automation system.
But we are not being complacent.
We continue to strengthen this foundation with seamless lab integration through truly Universal automation.
We continue to invest and innovate; our current test aims to improve both automation.
And is of use, so stay tuned soon. We will be able to share some exacting news on this front.
Now, to highlight our digital PCR platform, which continues to expand its presence in oncology research, especially.
As you might have seen, we recently announced new Partnerships to develop and deliver Multiplex assets optimized for kayak equity and digital PCR.
ID solutions, for example is supporting asset development for cancer, mutation detection in circulating, 3, DNA and ffp tissue samples.
Another partnership trace your biotechnologies is working with us on minimal, residual disease test for solid tumors to support decentralized. Clinical trials, and future companion diagnostic.
First. In addition to that, Jen curix is developing third-party ivd oncology assets for our care Equity diagnostic, including application, in both tissue and liquid biosys.
Those Partnerships will reinforce kayak, which is role as a differentiated platform in oncology, and will open further opportunities in areas, such as transplant medicine, infectious diseases, and metabolic disorders.
if we turn now to Precision medicine, where kayen continues to strengthen its position as a trusted farmer partner,
Can RG mutations in patients with a rare type of bone marrow cancer.
This test will support phase 3, clinical studies.
We also began a collaboration with foresight diagnostic to transition their next Generation sequencing based Clarity ctdna assay for lymphoma.
This collaboration will transition this test from a central lab service into a kit for use in clinical trials.
and finally,
Turning to our bioinformatic activities and Kagan Digital Insights.
we acquired genox in May adding the Franklin Cloud platform to our clinical genomics offering
used in over 4,000 labs worldwide.
Franklin. Expands our capability in scalable.
AI based NGS, interpretation and fully complements, our qci through its of solutions.
Overall, with those developments across our portfolio.
We are now targeting about $1.49 billion in aggregated sales from our five pillars of growth in 2025, which represent about 8% growth over the prior year.
Based on the results from the first half, we are well on track to achieve this goal. Now, back to how long we will provide details on our outlook for 2025.
Thank you to you. Let me now provide some more perspectives on our outlook for 25 and the third quarter.
Our ambition remains clear the deliver another year of solid profitable growth and continued Improvement in operational efficiency.
We have upgraded our full year. 25 outlook for total net sales to go about 4 to 5% at constant exchange rate up from the prior Target for 4.
More importantly, we have also increased our target for growth in our core portfolio, which excludes revenues from discontinued products.
Cross fields are now expected to go about 5% to 6%, with the CIA up from the prior target of 5%.
Let me point out that you will see a stronger difference between total and core sales in the second half of 2025, given the discontinuation of No Mod X and Dina Lunox in June.
This represents about $20 million of headwind from the sales of these products in the second half of 2024 that have been discontinued during the first half of 2025.
On the adjusted earnings per share, we continue to expect results of above of about 2.35 cents at Crescent.
We are increasing profitability ahead of sales as we see benefits from continuous contributions and efficiencies with a more stable, favorable tax rate, while also observing the impact of new tariffs.
For full year, 25, we anticipate tariffs to create a relative headwind of about 90 basis points on the adjusted cost margin as we as we are continuing to increase our mitigation strategy.
We have taken a realistic view on growth for the second half of 2025, just as we did in the first half, reflecting the cargo market and economic environment at the same time. We continue to see opportunities to deliver results above our targets.
For the third quarter of 2025, we are targeting at least a 4% CI group in total in that sales, growing at a faster rate of at least 5% CR. Go in the corporate folio.
Adjusted EPS is expected to be at least $0.58, at constant exchange rates.
As we look at the currency market trends, we expect a positive impact of about 1 percentage point on full-year net sales, but an adverse impact of about $0.02 on adjusted EPS, given the headwinds in the first half of this year.
For Q3 currency is expected to have a positive impact of up to 1 percentage points on net sales, but be neutral on adjusted eps.
6 and the coming years. We said I now hand it back to to you.
Thank you. Hold on. So we are coming to the end of our presentation, and before your questions, let me briefly summarize the key messages for the second quarter of 2025.
First, we delivered another solid quarter of results that were again above our outlook for both net sales and adjusted earnings.
In fact, our sales growth is among the highest in the industry.
Second our growth pillars are driving momentum across our portfolio from diagnostic to life science and the world. We are addressing critical customer demands in highly attractive and growing Market.
Per.
Based on the solid trends in the first half, we have upgraded our full-year 2025 net sales outlook, reflecting the strong start of the year. We have also confirmed our adjusted EPS target following our increase in April.
Fourth, we are advancing our Capital allocation that balance investments in kyogen with increasing shareholders returns.
At the same time, we continue to invest organically into the business in terms of innovation, digital infrastructure, and targeted MN ideas.
So, in closing, we are moving into the second half of the year from a position of strength quarter by quarter, year after year. We are building long-term value for our shareholders, and we are still determined to achieve our ambitions for solid, profitable growth.
And before ending the call, I want to let you know that we will be having another virtual deep dive session this year, highlighting, this time, our growth pillar sample technology.
We continue to receive, excellent feedback on our 2, previous deep, Dives on QDI. If you remember last year in December and quantifier, and we want to keep that very accurate short and winning format going with that. Thanks a lot for your attention. And I now like to hand back to John and the operator for the Q&A session. Thanks a lot.
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 1 on their touchtone telephone if you wish to withdraw your question, you may press star followed by 2.
To ensure we can accommodate as many people as possible, please limit yourself to only one question. If necessary, you may ask one follow-up; your microphone will also be muted after you finish asking your question.
Anyone who has a question may press star followed by 1 at this time.
1 moment for the first question, please.
The first question comes from, Luke sergot with Barclays.
This is Salem Salem on for Luke sergot. Thanks for taking our question. Um, just 1 on the quarterly Dynamics and 3Q, you're lapping a tougher compared to the first half. So what's really driving the confidence in the guy from a vis visibility perspective, and then, the 42 guide seems to step down just a little bit to the twoh percent range on a c growth basis. Anything that is worth calling out there on the perceived deceleration or is that sort of a risk adjusted based on uh visibility to quarters ahead. Thanks.
So, thanks Luke. Um, and that's a fair question. First of all, uh,
we are coming already from a quite high growth. So obviously increasing based on that high growth again, uh, uh, the guidance for the year is quite a performance. Second we continue to operate in a very volatile environment. I strongly believe that the question of tariff is not completely sold. Uh, uh, so it's still volatile. So
We remain realistic.
But also ambitious.
Last, do not forget, as Ron started to allude to, that what is interesting to look at, especially in Q4, will be the core growth rate. In Q4, especially, you will see that the impact of the discontinuation last year of Pneumonics and Diagnose onto this year is going to become important. Ron, would you have to add something to that?
Yeah. Thank you know I think the 1 thing to hear that as well, I don't think there's you will not hear from today or meet today that there's any particular reason why Q4 should be in any way significantly different than Q3 in terms of growth rate. So I'm not sure again, as I said, focus on the core growth rate and then you see it is not a significant difference from today's perspective.
Got it. That's, that's super helpful. Thank you for that. Uh, and then 1 on, sorry. Sorry, it's 1 question. Let's move to the next question. Sorry.
Appreciate it. Thank you.
Thank you. We'll go next to as Asia nor with Morgan Stanley.
Hi. Thanks for taking my question. I'll keep it 1, um, just on Kaya stat, could you unpack the 41% growth a little bit? Uh, how much was flu related. Respiratory, Demand versus new, pull through on the ghee and me panels and versus new account wins in the US. Um, and I'll ask my follow-up as well to this. Which is are you able to disclose the installed fee for Kaya stat? As of the latest quarter? Thank you.
So thanks Aisha for your questions. So, um, if you remember um the
Specificities of this market for syndromic.
More than 70% of the market is made up of respiratory. So, respiratory remains the main driver of that growth and performance.
but,
From a purely percentage even if the base is lower, we are extremely pleased with the growth of testing on the eye. And now also manage it is specifically in Europe and starting in the US. We start also in that 41% to see the impact of the mini panels in the US. You remember that? We are a unique company in the
Understand that we can offer both large panels and also mini pallets.
Forth.
There is uh also a good impact of capital sales and placement in those numbers. As we have said, first of all, we are way ahead of our quarterly objective of 150 system. And as we said today, if you just take the example of the US in H1 of 2025, we put more system more cast out on the market that in the full year of 24. So it's basically what is driving this performance. I'd like to finish by saying as well that even if Kaya stat, is the only syndromic system which has been endorsed by Pharma company for companion diagnostic, there is no influence of companion, Diagnostic in the growth of H1 and the growth of Q2 it's purely testing and instrument placement performance.
Thank you. We'll go next to yanu.
With do.
Good afternoon. Thanks for taking my questions. Um, my first question is on your product, uh, group other could you remind us of what is included here and, and how could you quantify the revenue from the discontinued, um, system within that, um, line in H1? And should we expect a return to know to a more normalized growth rate from Q3 onwards? And then, secondly, um, follow up on cars that
The X. Um, could you speak a bit um about the regional breakdown of that growth. Uh we have seen in in Q2
I will let hold on, answer for other and the discontinuation, but remember that in previous school school, we, we gave you the numbers for what was for, for example, pneumonics in uh, H1 of this of this year, by the way, pneumonics is fully discontinued as of June 25. We closed the, uh, um, um, uh, um,
Termination of this instrument Ron, for this first question on the quantification and other and then I will come back to you with Kaya stat split geography.
Yeah, thank you hian. Um, I think overall as we said, uh, um, we clearly going to stop it down and, uh, we had autism in the first half. When for both combined, it's probably around 20 million and also the Delta compared to last year. It's also a 20 million dollar number, so it is a sizable impact for us. That's the reason why we again focus on the, uh, overall impact. Um,
Um, on the overall impact in terms of core growth rates and focus on the core numbers because that is well able to Apple on your second question on, what is another it? It it is a mix of of several factors. Therefore, its other, uh, it is from starting from from from Fred. Uh, uh, uh uh reimbursements. It has also, the do, of course, the certain reallocations we get from the Freights, uh, all the way down to
Uh certain uh 1 time deals we do with with with certain customer groups.
It's a bit more bumpy.
Everything we have fully reorganized the leadership, the team with fully specialized people on the field now. And what we find interesting here and do your question as well. Is that we see countries that are becoming quite significant in term of revenues in some emerging areas. I would give you a couple of example, South Africa, for example, Saudi or part of Middle East, where we have significant market shares. So this is a bit the geographic contribution.
Thank you. We'll go next to Tau Peterson with Jeffries.
Hey thanks. I want to Probe on, maybe just uh your views on kayak cutie for the back half of the year, you know, keeping in mind your target for 600 to a thousand, you know, systems this year. Can you just talk about, you know, expectations for the back half of the year? How you're feeling about kind of far more uptake and then you know, thoughts on competitive Dynamics, your main competitor. Uh uh you know, did an acquisition of Stella. They have some new launches and are targeting kind of the lower end of the market with improved Automation and complexity. So, just curious how you feel about, you know, competitive Dynamics, um, and then, before I jump off, just 1 clarification. Did you lower the target for QDI from 200, million to 240 million by 28? I think I heard that. Thanks.
So Tau thanks a lot for the question. We did not review any Target that we gave for 2028 uh not for QDI or not for any other uh portfolio priorities. Second on the back end uh of H2 for kayak equity.
On 1 hand. Uh, we are confident that we can achieve our targets because when you look at the number of instruments, we have to achieve in H2 compared to what we put on the market in H2 of 20204. It is very comparable so we did it in 24. I see no reason not to do it in 25. Of course, as we always said, we operate in an environment where there is cautious, uh, Capital expense, uh, spending, especially in research, and Academia lab. But again, that, uh, um, headwind, we believe that we can achieve our Target now, increase or renewed competition, we welcome that Tau first of all, for us, it proves that this is a very attractive and dynamic Market. We believe that that market is still growing at double digit.
The fundamentals of our competitive, uh, positioning have no change.
Explorer system to use.
Much more automated than any competition and greater cost of ownership.
Uh, um, this has no change, we fully acknowledge that by your ad has met an acquisition. We fully Respect by your ad. I don't think that the market shares of Stila were basically disruptive of what's going to be basically a competition between our 2 companies. This being said, I have said many times that I believe that this system, the quality of kayak Equity deserve to become the number 1 in digital PCR. And I still hold to that statement that we will become number 1 on that market.
Thank you. We'll take our next question from Harry Gillis with bear.
Hi thank you very much for taking the questions, you talked about the very encouraging feedback for your new instruments in Sample Technologies. Could you provide some more color on how we should think about the trajectory of their contribution to revenue growth over the next few years. Um, and then related to, that just wondering if you're still seeing any deferrals of orders in Sample Technologies ahead of these launches, uh, I'm asking because the sort of flat instrument growth, this quarter looks like a sequential Improvement versus
This is last quarter, so just trying to to to piece together the different moving Parts here. Thank you.
Yeah, that's a fair question. And uh you are right. Uh um.
Why are we confident?
because,
Our strategy that we have reaffirmed in our Capital Market Day last year.
Is to invest in automation.
for example, take
and,
If you look at Q2 results, we see automated consumables growing.
In Q2, automated sample tech is encouraging. Now, in addition to that, we are coming...
With 3 new system, no other company on the market active in Sample. Tech has this kind of investment and innovation
so,
Impact, on our numbers has been described in our Capital Market Day last year.
we said,
That our ambitions.
By 20208 will be to grow.
To $650 million in revenue for Sample Tech.
Which will give us.
A 2 to 3%, kegger until then, and this will mainly come from those instruments.
Thank you. We'll go next to Dan Leonard with UBS.
Thank you very much. Uh, Terry, you talked about continued automation efforts with quantiferon and and said, stay tuned. What are you alluding to are? Are you able to broaden your Partnerships and automation Beyond DSR and or is there any contractual exclusivity that would prevent you from doing so?
Well, we are very happy with our partnership with quantifier. We repeated that a lot. Uh, the situation works very well. We see, no need at the moment for adding necessary other partners.
But that doesn't prevent us from continuing to invest on the test.
How do you invest on the test?
1.
You make it simpler to use.
Second.
You increase the potential throughput of the kit.
This is 2 things we are working on. And by the way, to gather also with dasuri, it's a bit early to give you all the details. But in the coming, let's say 2 quarters, you'll know more
Third. As, you know, we are also developing a new current for emerging country. We call it the Kaya reach, this is due to be launched around 2027, we are still on track, so this is the way it's not necessarily adding a new partner, the partnership with dassault and works very well is making the test even better.
Quicker.
Able to stand more volume and easier to use.
Thank you, we'll go next to Jack mehan with Nephron.
Thank you. Good morning, good afternoon. Um, I wanted to talk about the operating margin forecast for the year. Um, it’s just slightly lower, you know, at approximately 30% for the year. Can you just talk about, um,
Tariff assumptions FX versus like kind of operational factors how things are looking for. Your
Yeah. Hi. Jake know, as I said on the call, first of all, I have 2 things. We had a very good 1, also in the second quarter, and we do not expect it to be very, uh, in any way different in the second half of the year. We improved 150 basis points, uh, in the second quarter, X currencies and and and I do think while absorbing a head Finn from from Tales as you know we said that that a couple of time for 2025 we feel very comfortable that it doesn't change our absolute numbers as a lot of mitigation. Uh, on the way again, from changing our internal supply, waste the way. Uh, uh, we produce, uh, discussion with suppliers, where we distribute transfer pricing all the way to sharing with customers. Nevertheless relatively, of course, it it has an impact because, um, again, if you
Pay a certain terms and model. Of course, we do comply with the laws and therefore, paying tariffs as well, and you only get reimbursed to a certain extent, it has a relatively impact, not necessarily absolute down to, um, um, on to EPS so, long story short. Uh, we do believe that probably for this year, it is around about a 90 basis point in Impact. Uh, we still continue to see even more mitigation coming in. So might be a bit better. But of course, what you see, that has an impact. So I would say right now we are aiming to the 30%, we might preserve. We might be a tick lower than that. Nevertheless still a significant Improvement. Uh, absolute dollar was EPS wise, uh, still a very strong, very happy with the 2335 which is out there.
I think 1 thing, but I do think it's important to stress as well. If you look on the 5 pillars of growth, uh, the combined goal for this year, as you know, is in a combined 1.49 million, uh, we feel, uh, very well on our way to make and probably even beat that number as well.
Thank you. We'll go next to Doug Shankle with Wolfe research.
Uh, thank you for taking my questions. Uh, 2, topics. First on m&a, given the strength of the business. Um, the strength of the balance sheet, your cash flow. Um, how are you thinking about the m&a funnel, as we see here today? And and what are the parameters that we should expect your applying as you as you look at potential deals. So, that's the first topic.
The second is on margins, you're clearly, trending ahead of the lrp targets for 28 that you laid out at the investor day.
Um, where are you seeing the most upside to um, initiatives pursuant to margin Improvement and you know, how should we think about the sustainability of those Trends? Thank you very much.
Thank you, dog. If we can, uh, take that question, the two of us. Uh, we run on, first of all, on them in. We do not change our approach.
We are used to do successful. Bolton acquisition.
Genox is the latest example.
Our pipeline.
For interesting opportunities. From now to the coming months,
Is extremely solid.
The criterias.
First of all, it has to be synergistic.
with our
growth priority and pillars of growth.
This company has been heavily.
Focusing over the last 6 years we are not going to use m&a to spread the company thin again. So focus and synergies with where we are currently with customers to allow us to take more shares of wallet at customers is key.
Second.
Those deals need to make Financial sense for the company, and therefore create value for our shareholders. In other word, we have the strength to accept some dilution. For some time, I would say, 2 years up to maximum 3 years, but we see, and we need to see a clear Pathways to accretion and profitability. Those are the 2 main criterias and on the gross margin. You remember that in?
Uh, and in debit margin in the lrp. We presented a clear, uh, pathway and waterfall or where we were acting to improve that Target of 31%. So, how long can describe where we believe? We have more upsides?
Yeah, and I think it's very clear, also presenting here. Now, from today's number that we are clearly tracking. Well, ahead of that. Nevertheless, we clearly also are in an environment where the microeconomics, uh, gets more difficult to forecast. Therefore, as, you know, we decided not only for this year, but also probably last year. So after quite well, to rather take a, a realistic view on the environment, giving us some flexibility so that we, I would say, uh, can deliver on the numbers, uh, as we promised and hopefully come in, as we did now a couple of times even nicely better. So we haven't changed our policy around that now, moving into the second half. Nevertheless, I do think what is going to drive us and help us. Also north of 206 into the more or less 28, uh, environment is on a 1, in side, our digital initiatives. Uh, we are rolling out quite a number of digital initiatives within kaisen, but also facing, uh, and C.
Earlier that might be also a good point. Then uh in the I don't know, sort of first quarter. It is within that period it is very much driven on Marco News. And uh once we have that out of the way,
We'll take our next question from Hugo. So with BMP, Perry ball
Hi guys. Uh thanks for taking my questions and uh congrats on the quarter given uh out of it is out there for a lot of people. So uh just on NIH. Could could you discuss or NIH account involved in Q2 and uh share maybe some early feedback on Academia and life science. Customers following Congress what last week and uh whether or not you believe that uh,
More significant digits flush in life science is something that could happen upon improving visibility. Thank you.
Thank you, we go for the question. So, um, as we keep saying for the last, I think now, probably 2 quarters.
It's interesting to note that the direct sales of Kaya Jen.
To agencies like NIH or the CDC.
Are doing well.
We are not impacted at the moment.
By So-Cal, budget cuts. It is probably because, first of all,
What they are using from Kaya. Jen are not big, big Capital expense or budget. So I believe that we are probably below the radar screen when it come to cuts. And also, because as they use mainly, a lot of components like enzyme oligos or sample prep. It's very difficult to substitute stores product.
nonetheless, we are observing carefully, the situation and it's clear that
If those Sales Direct to NIH, and CDC are not impacted. We are in a quite
sluggish.
Context in research and Academia especially on Capital sales. I wouldn't say for everything but for Capital sales we have said that many times
Now coming to what happened to the Congress recommendation and vote last week?
I think it's still early to say,
I think it's also fair to insist that at the moment.
In the US.
There is 1. Main decision maker and that decision maker is the president.
So, let's observe what's going to happen in the coming negotiation.
kayen will probably
budget.
A decrease budget for NIH next year.
but we also believe that the cuts
will probably be less drastic.
That what was rumored?
A month for 2 months ago.
So long story short probably still a decrease in 26 probably to a lesser magnitude.
Than what was said, some time ago. But let's remain cautious and observe.
We'll take our next question from Dan Brennan, with TD Cowen.
Great. Thank you. Uh, thanks for the questions. Maybe just, um, 1 just on the guide. I know it was asked earlier and Terry, you just kind of mentioned it, but given the fourth quarter guy, does imply that like kind of flattish core growth. Um, it like, are you seeing anything today? That would suggest that or is it just pure conservatism on that front? And then could you just give us what the breakout is for the um discontinued product? Like how much?
How much is that contributing to core growth in the back half of the year? And then the final point, I know Roland, you talked about you feel that you are being conservative. Just kind of, if you look at your five-polar guidance, which you've kind of maintained, what area would you point to as the most conservative? Thank you.
Well, it's done. Now you appreciate your stamina and push a lot but but I mean, I don't think that I heard speaking about conservatism
Realism, I think, is the terminology used.
and uh,
we are already performing better than the market. In addition to that, we are increasing our sales guidance for the year. So it's very solid.
Obviously, if you can uh uh beat that, you'll be the first to know. And again in Q4
Where I will focus is the core growth.
Because in Q4, this is where we might have a better base impact from new modic and dial, you notes.
Uh, uh, uh, for core growth in Q4, not at all. This is not in our new guidance.
Yeah, on on your question, then on the details for the 5 plus of course. Um, and I think you're absolutely right. We feel very comfortable that we're going to deliver as promised uh, the 1419 for an aggregate. I think it's also quite obvious to see that some of them are doing very well. We talked today at length on Kaya, starting quantify on, and it is not hard to predict that both probably do some but better than predicted. I think it's also very clear to say that kayak in the 1 has very good positive growth rate in terms of consumables. Uh, but I think we also alluded on the call since imitation environment and the life science remains probably somewhat challenging so that might come in probably close by might be a bit lower. We will see that. But all in we are above that, uh, on the others, I think they are more or less On Target. So I would say that is probably the, if you if you're looking for a trade-off, which is probably a positive trade-off, that is a trade-off. We are probably most likely going to face
Thanks America.
Great. Um thanks for taking the question. Um I've got to I'll just ask them both together 1. I think um in the prepared remarks, you guys um flat China was down, I want to say mid teens. Um, if you could just
Segment, our product line, um, sort of your expectations in China for the rest of the year. And then second would be, um, you know, the starting season. I think it's a blue toy for someone to ask if there was pull forward or not. Um, and I didn't hear that. So, if you could just comment on any indication from any of your customers of stocking, any unusual timing on purchasing decisions, just giving concerns on tariffs and and other things down the road. Um, just you know, confidence that there's no weird ordering patterns. Thanks,
Thanks Mike. And we lost you for uh something like 5 or 6 seconds. So I I believe I got your question on China uh especially in which field, we were believing that it was more depressed or not. So so China for us, we haven't changed our mind. Uh um, we don't see the market bouncing back, at least before the second half of 2026.
It is now less than 4%.
Of our revenues. We know that the local government is trying to help the market by, uh, pouring some incentives for example, on Capital expenses. At the same time, they continue also to push international company to localize, and it's also the vbp program. So,
I would keep the same attitude for China.
It's too big of a market to be ignored. It's too specific to make it an investment priority. We see China being negative to the end of the year in the same basically uh percentage than H1. We don't see it really bouncing back in 2026 and as we always say,
Even when China will stabilize and normalize, we will not expect more than single single, uh, uh, uh, uh, uh, meet single digit growth from this country, when it will normalize. That's that's uh, our plan for China.
For your question on Kaya stat. Know, there is absolutely no pool or inventory building from a customer, um, ahead of the respiratory historics testing season. It's too early to say that it's going to be or it might be a strong respiratory season. This year, we are observing, what is happening, for example, in go.
graphic like New Zealand Australian so on, but there is absolutely no, uh, uh, not normal, uh, built on the numbers at 41% growth for Q2,
Thank you. We will take our last question from Casey woodrig, with JP Morgan.
Thank you.
So uh, uh for sample take, uh, once again, uh, uh, is also contributing to the growth for automated Solution. That's what I would highlight, uh, uh, for this call. And this is where our strategy is. Is that answer your questions?
For QDI the split, uh, um, uh, life science or what we call Discovery for QDI. And clinical is still slightly in favor of a discovery, but we are moving progressively to 50, 50% split of sales or remarkably, well, balanced split between clinical and uh and
um, uh, uh, um, um, um, and, uh,
Research and Academia. Um, and for the split of transition to the sis, I mean, it varies a bit quarter by quarter because sometimes those are deals that are uh uh uh um uh sign for uh uh a longer period. So you saw that we accelerate that transition in q1. It slowed down a bit in Q2 and we expect basically a continuous move now in Q3 and Q4.
So with that, we're going to end the call here. Thank you very much for your participation. If you have any questions or comments, please do not hesitate to reach out to Dominican me. Thank you very much.
Ladies and gentlemen, this concludes the conference call.