Q3 2025 Qiagen NV Earnings Call

Speaker #3: Ladies and gentlemen , thank you for standing by . I am Katie , your global meet call operator , welcome . And thank you for joining Cajun's third quarter 2020 earnings Conference Call webcast .

Speaker #3: At this time , all participants are in a listen only mode . Please be advised that this call is being recorded at Cajun's request and will be made available on their internet site .

Speaker #3: The prepared remarks will be followed by a question and answer session . If you would like to ask a question , you may press star followed by one on your touchtone telephone .

Speaker #3: Please press the star . Zero for the operator assistance . At this time , I'd like to introduce your host John Gilardi Vice President , Head of Corporate Communications at Kyojin .

Speaker #3: Please go ahead .

Speaker #4: Thank you . Operator and welcome to all of you to who are joining us for this call for the third quarter of 2025 .

Speaker #4: We appreciate your time and your interest in Kaijin . So joining the call today are Terry Bernard , our Chief Executive Officer , and Roland Sackers , our chief financial officer .

Speaker #4: Also joining us today is Daniel Vandorf , our new head of IR and Doctor Dominican from our Investor Relations team . Before we begin , I'd like to share that our next deep dive on sample technologies is planned for Friday , November 21st .

Speaker #4: The invitation was just sent out to you , so please register for the event . Dominica has done an outstanding job leading the creation of this series , and we look forward to another engaging session .

Speaker #4: As always , today's call is being webcast live and will be archived in the IR section of our website at WW . Com here you can find the press release and presentation accompanying this call .

Speaker #4: Please also 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.

Speaker #4: 20 F and other filings with the US Securities and Exchange Commission . We will also refer to certain financial measures not prepared in accordance with us generally accepted accounting principles or GAAP , that provide additional insights into our performance .

Speaker #4: Reconciliations to the most directly comparable GAAP figures are in the release and presentation . And all references to earnings per share refer to diluted EPs .

Speaker #4: With that , let me hand the call over to Terry .

Speaker #5: Thank you . John and hello everyone . Good morning . Good afternoon or good evening to all of you joining us from around the world .

Speaker #5: I'd like to start by thanking the teams across our company and across the world for their ongoing dedication and strong execution in this challenging macro environment .

Speaker #5: Their focus and collaboration enabled us to deliver another solid quarter . In fact , the 24th consecutive quarter in which we met or exceeded our target .

Speaker #5: We continue to see the clear merits of our strategy to prioritize high growth areas of molecular research and testing . While maximizing the reach of our portfolio to customers across both the life sciences and diagnostics .

Speaker #5: This approach continues to . Provide balance and stability even in those very volatile and uncertain conditions . This performance in 2025 also enables us to advance key capital allocations initiatives that are strengthening our business and creating value .

Speaker #5: Two important developments were announced yesterday . First , the acquisition of path Biosciences that expands our sample technologies portfolio into the very fast growing , AI driven single cell market .

Speaker #5: Second , a 500 million synthetic share repurchase to be completed in January 2026 that will bring total shareholder returns since 2024 to above our 2028 goal for at least 1 billion return to shareholders .

Speaker #5: We remain strongly committed to our 2028 ambitions , even again in this challenging environment , we have significantly strengthened key pillars in our portfolio and continue to posicion cyagen towards our 7% sales targets from 24 to 28 .

Speaker #5: We are also on track to move well above our 31 adjusted operating income targets by the end of 2028 . Despite currency and integration headwinds .

Speaker #5: So we are combining top execution with decisive actions to deliver solid , profitable growth . So let me walk you through our key messages for today .

Speaker #5: First , we once again exceeded our targets for the first quarter . And delivered one of the fastest growth rates in our industry .

Speaker #5: Net sales rose 6% to $533 million . Where while results are constant , exchange rates were up 5% and ahead of our 4% CER target .

Speaker #5: More importantly , core sales excluding recently discontinued products , increased 6% year over the prior year period . Adjusted diluted EPs was $0.61 at both actual and constant exchange rates , and therefore above our outlook for at least $0.58 .

Speaker #5: Those results again underscore the strength of our differentiated portfolio and the success of our efficiency initiatives in delivering a consistent performance quarter after quarter over the past six years .

Speaker #5: Second key message our growth pillars continue to perform strongly in 2025 . Cryostat diagnostics grew 11% , driven by strong instrument placements and double digit consumable growth on demand across our clinical syndromic testing panels .

Speaker #5: Quantiferon also grew 11% CR , supported by continued latent TB conversion from the skin test and broader adoption worldwide sample technologies returned to growth with sales rising 3% CR on demand for automated consumables .

Speaker #5: Despite cautious capital spending , acuity , our digital PCR platform maintained double digit growth with robust consumable demand . More than offsetting slower instrument sales among life science customers .

Speaker #5: And digital insight . Our bioinformatic portfolio delivered solid double digit growth , driven by growing demand for clinical bioinformatics and also the integration of genomes , which has further enhanced our growing edge of AI driven solutions for interpretation of clinical next generation sequencing data .

Speaker #5: Third , key message our strong performance so far in 2025 is allowing us to again raise our earnings target while confirming our cells outlook .

Speaker #5: This reflects the success of our efficiency initiatives and disciplined execution . Despite currency headwinds and the adverse impact of tariffs and the current US government shutdown , we continue to improve profitability and maintain solid growth .

Speaker #5: This is fully aligned with our 2028 ambitions for solid , profitable growth . Therefore , we now expect adjusted EPs of about $2 and $0.38 CR , an increase of $0.10 from our initial guidance for 2025 .

Speaker #5: At the same time , we continue to expect net sales growth of about 4 to 5% at constant exchange rate and more importantly , 5 to 6 CR growth for our core portfolio .

Speaker #5: This is definitely another solid and strong quarter demonstrating consistent execution, operational discipline, and clear strategic direction. And lastly, let me briefly address the announcement about our leadership transition.

Speaker #5: After more than ten years with this remarkable company , including six years as CEO , I and our supervisory board have agreed that this is the time to prepare for the next phase of growth .

Speaker #5: This decision comes after deep reflection and with full confidence in the strength of our company . The strength of our strategy and above all , the quality of our people .

Speaker #5: I will obviously continue to lead again until a successor is appointed to ensure a smooth and orderly handover. Our focus, my focus, remains unchanged.

Speaker #5: Executing on our strategy , delivering on our 2025 goals and advancing on our 2028 ambitions for solid and profitable growth . It is a real privilege to serve again and to work alongside such talented and dedicated colleagues , and I'm really confident that our company is well positioned for its next phase of growth .

Speaker #5: With that , I'll hand it over to Roland for more on the financials .

Speaker #6: Thank you . Terry and hello , everyone . Let me start with a few key financial highlights . First , Kylian remains one of the fastest growing companies in our industry .

Speaker #6: As core sales rose 6% at constant exchange rates . And profitability remained strong . Our adjusted operating income margin for the third quarter of 25 was steady at 29.6 , 29.6% of sales , 30% at constant exchange rates , absorbing more than 150 basis points of headwinds from currency movements and the impact of US tariffs and earnings per share at KR were $0.61 and well ahead of the outlook for at least $0.58 .

Speaker #6: Third , cash generation was also strong , with underlying operating cash flow of $466 million for the nine months of 25 , including about $45 million cash restructuring payments .

Speaker #6: And fourth , our balance sheet remains strong , giving us the flexibility to invest in innovation , pursue targeted bolt on acquisitions like Paz , and to increase returns to shareholders .

Speaker #6: As we are doing with our $500 million synthetic repurchase set for completion in January 26th . We have a long standing capital allocation strategy that has created value by directing resources to the highest return opportunities .

Speaker #6: Based on this new repurchase program , we are well ahead of our target to return at least 1 billion to our shareholders by end of 28 .

Speaker #6: We also anticipate that our leverage rate , our net debt to adjusted EBITDA ratio will move towards the industry average of approximately two times during 26 .

Speaker #6: As we consider additional capital , capital allocation in the new year . Now , let me take you through the details in terms of sales results among the four product groups , sampled technologies rose 3% CR and driven by consumables growth , especially automated kits that show double digit expansion compared to the year ago period .

Speaker #6: Instrument sales were slightly lower , but included good placements of the Shi'a symphony , kayak Connect and easy to connect systems in diagnostic solutions .

Speaker #6: Sales rose 4% at CR , but at a faster 8% excluding the discontinued normal mode system . The top performers were Caja Stud and Quantiferon , both growing 11% CR and supported by further expansion of our companion diagnostic pharma partnerships in PCR and nuclear acid amplification .

Speaker #6: Sales were stable compared to the third quarter of 24 at constant exchange rates . Our digital PCR platform acuity continued to grow as strong demand for consumables more than offset lower instrument sales amid cautious life science spending in the genomics and NGS product groups , sales rose 9% .

Speaker #6: CR and led by the Digital Insight Bioinformatics business , Judy sales grew at a double digit rate through a combination of solid group from the current business and first time contributions from the genome acquisition consumables for universal NGS panels also grew over the year ago quarter .

Speaker #6: Turning to the regions sales in the Americas rose 7% CR , supported by strong growth in the US against lower sales in Brazil and Mexico .

Speaker #6: In the Amia region , sales grew 4% CR , led by Germany , France and Italy , along with the Nordic region , the Asia Pacific region declined 2% .

Speaker #6: CR and reflecting a mid-teens CR . Decline in China over the same period . In 24 against higher sales in India , South Korea and Australia .

Speaker #6: Moving down the income statement , adjusted operating income grew in line with sales and reached $158 million as adjusted , operating income margin remained at 29.6% of sales compared to the third quarter of 20 .

Speaker #6: For , and the investments were 9.2% in the third quarter , 25 , compared to 8.9% in the year ago period . The vast majority of our R&D spending continues to focus on our pillars .

Speaker #6: These includes the upcoming launches of three new sample prep instruments , new panels for cryostat , the expansion of kayak applications in research , and the clinic , and also the development of the fifth generation for Quantiferon Tales , a marketing expenses showed the benefits of efficiency gains declining about one percentage point to 21.2% of sales from 22.2% in the third quarter , 24 , while our teams maintained an ongoing high level of customer engagement , general administrative expenses declined slightly to 5.7% in the third quarter , 25 , compared to 5.9% showing continued cost discipline , while investing in .

Speaker #6: IT upgrades such as the SAP system migration . Adjusted diluted EPs was $0.61 at constant exchange rates , exceeding the outlook for at least $0.58 CR .

Speaker #6: The adjusted tax rate was 18%, and this was consistent with our target moving to the cash flow. We saw an ongoing high level of cash generation for the first nine months of the year.

Speaker #6: Over the same period in 24 , operating cash flow was $466 million . For the 25 , compared to 482 million in the same period of 24 .

Speaker #6: But the 25 results included about $45 million of cash restructuring payments related to the efficiency and portfolio initiatives , free cash flow was 336 million USD , which was slightly below the same period of 24 due to the higher levels of planned capitalized , IT investments .

Speaker #6: Accounts receivables declined to about 53 days , compared to about 56 days at the end of 24 . As our teams continue to improve in this area , at the same time , days of inventories were 151 days .

Speaker #6: At the end of the third quarter of 25 , compared to 193 days at the end of 24 . And again reflected benefits from our efficiency initiatives .

Speaker #6: Efficiency initiatives . The improving level of profitability and strong cash flows is further strengthening our healthy balance sheet . This gives us the opportunity to make disciplined decisions to invest in innovation , pursue targeted bolt on acquisitions and increase returns to shareholders .

Speaker #6: As you saw with the developments . This is a this is complemented by our decisions to increase returns to shareholders with a new repurchase set for completion on or about January 7th , 2026 .

Speaker #6: This $500 million return program comes after we completed a $300 million synthetic share repurchase in January , and also paid our first annual dividend of $54 million in July .

Speaker #6: So based on this capital allocation decisions announced and also our and also our considerations for further deployment in 26 to attractive return opportunities , we expect qiagen's leverage ratio to move towards the industry average of about two times net debt to adjusted EBITDA .

Speaker #6: In closing , our strong financial position supports our commitment to solid , profitable growth . We are deploying resources in areas offering the highest returns all designated to improve our position to deliver on our 28 ambitions and create long term value .

Speaker #6: He said . Let me hand the call back to three .

Speaker #5: Thank you Roland , and as usual , let's have a look at the progress across our product portfolio and particularly focusing on our pillars of growth .

Speaker #5: You probably remember that we are targeting around $1,000,000,490 billion in combined sales from our five pillars for 2025, representing a growth of around 8% CAGR.

Speaker #5: So, based on the results to date, in Q3 2025, we remain well on track to achieve the goal for this group. Let's start with sample technology.

Speaker #5: We continue to advance our next wave of automation and have taken an important step with the acquisition of Pars to extend this leadership by moving into new technologies regarding the upcoming instrument launches .

Speaker #5: Those are perfectly on track. Kaya Symphony Connect has now been installed at the first customers, and the initial feedback has been very positive about the performance and enhanced connectivity.

Speaker #5: Amini and Kaya Spring Connect also both remain on schedule for launch in 2026, and early field tests for Kaya Spring Connect are confirming very strong demand for an advanced high-throughput solution.

Speaker #5: It is indeed extremely interesting to note that we have already received purchase orders for Kaya Spring Connect . We have also recently marked the fourth thousand placement of Kaia Connect , reaffirming our leadership in automated sample processing beyond automation , we are expanding the reach of our sample technology portfolio with the acquisition of pars , a pioneer in scalable , instrument free single cell analysis , Path has developed a breakthrough instrument free combinatorial barcoding technology that removes the need from for droplet based system and enables analysis of millions or even billions of cells .

Speaker #5: Instead of thousands . This enables delivering more insight at a fraction of the cost for solutions are already used by more than 3000 laboratories worldwide , including every top pharmaceutical companies and leading research institutions .

Speaker #5: So this acquisition is really opening up new dimensions for Qiagen in this fast growing single cell market and fits perfectly with our sample to insight strategy .

Speaker #5: Fast also creates synergies with our Qdii bioinformatics business , connecting large scale single cell data generation with powerful AI driven interpretation . Together , we can accelerate discovery , build virtual cell models , and help researchers unlock new frontiers in AI based drug discovery .

Speaker #5: And next generation biology . So tune in for our sample technology's deep dive session on November the 21st , and you will learn more about the exciting area of our portfolio .

Speaker #5: Turning now to start , we continue to expand our syndromic testing portfolio worldwide with the launch of a new instrument version in the US , and we are preparing for more panels submissions in 2025 .

Speaker #5: In September , we received the US FDA clearance for Qiastat-dx diagnostic rise . The higher throughput version of our syndromic testing platform . Korea STAT diagnostic rise automates up to 18 tests simultaneously , processing as many as 160 samples per day , with very minimal hands on time .

Speaker #5: So this high volume version is particularly attractive to our largest customers . Also , in this third quarter , we were well above 150 Qiastat-dx placement , which is once again a testament to the continued growth and stronger customer adoption of Qiastat-dx system when it comes to menu expansion , we remain perfectly on track to submit the blood culture panel in the the US and in Europe .

Speaker #5: By the end of 2025 . On our digital PCR platform , we continue to expand the assay menu and where we are on track to sell at least a thousand USA in 2025 .

Speaker #5: So now back to Roland with the details on our outlook for the year .

Speaker #6: Thank you . Terry . Let me now turn to the outlook for the rest of 25 . We continue to expect another year of solid , profitable growth as our teams drive operational efficiency and disciplined execution across the portfolio for the full year .

Speaker #6: We are reaffirming our outlook for total net sales growth of about 4 to 5% at CR . The expansion remains broad , based across the business .

Speaker #6: More important , our core portfolio is expected to grow about 5 to 6% CR . Since this excludes sales from discontinued products . You saw that impact on our results for Q3 25 with core sales rising a percentage point faster than total sales .

Speaker #6: Additionally, we raised our target for adjusted earnings per share to about $2.38 CR, reflecting our ability to improve profitability faster than sales while absorbing the headwinds of currency movements and U.S. tariffs.

Speaker #6: This marks an increase of $0.10 in our adjusted EPs target from the start of 2025 . For full year 2025 , we continue to anticipate tariffs to create a relative headwinds of about 90 basis points on adjusted gross margin .

Speaker #6: As we work on implementing various mitigation actions . Now on to the fourth quarter , where we have decided to take a view that the impact of the US government shutdown continues until the end of the year .

Speaker #6: In light of that factor , and also the current macro trends , we are targeting for total net sales to be steady at constant exchange rates compared to the fourth quarter of 24 .

Speaker #6: And for our core sales and the core sales to rise about 2% , CR adjusted EPs is expected to be about $0.60 at constant exchange rates .

Speaker #6: As we look at the currency impact , market trends for the full year , we continue to expect a positive impact of about one percentage point on net sales , but an adverse impact of about $0.02 on adjusted EPs for the fourth quarter , currency movements are expected to have a positive impact on net sales of about one percentage point , but an adverse impact of about $0.01 on adjusted diluted EPs on a separate note , I am pleased to introduce Daniel Wendorf , who joined Kagan as .

Speaker #6: Of November 1st as our new vice president and head of investor relations , reporting directly to me . Some of you may know Daniel from his prior role as Investor relations team at Merck in Germany and earlier as a research analyst covering Kaizen and the life science sector .

Speaker #6: He joins a strong IR team . John Gilardi will continue in his role as vice president , corporate communication . We said , I would like to now hand the call back to Trey .

Speaker #5: Thank you , Roland . And so we are coming to the end of our call . So to give you a quick summary , again , definitely delivered another strong and solid quarter .

Speaker #5: Once again exceeding our outlook . And just as important , we took decisive action to strengthen our portfolio and increase returns to shareholders .

Speaker #5: All aligned with our 2028 ambitions . Our differentiated pillars mainly serving the continuum from basic research to clinical diagnostics , continue to perform very well .

Speaker #5: New product launches and additions to our portfolio are on the way to create new relays of growth . We definitely remain focused on creating value through profitable growth , operational excellence and disciplined capital deployment , while maintaining flexibility to pursue attractive acquisition opportunities like pass .

Speaker #5: With the increase to our adjusted EPs target for 2025 and a new $500 million share repurchase , we are definitely delivering on our commitments to value creation by positioning Qiagen for continued momentum as a top performer in 2026 and way beyond .

Speaker #5: With that , I would now like to hand back to John and the operator for the Q&A session . Thanks a lot for your time .

Speaker #3: Thank you , ladies and gentlemen . At this time we will begin the question and answer session . Anyone who wishes to ask a question may press star , followed by one on their touchtone telephone .

Speaker #3: If you wish to withdraw your question , you may press star followed by two to ensure we can accommodate as many people as possible , please limit yourself to one question and if necessary , one follow up your microphone will also be muted after you finish asking the questions .

Speaker #3: Anyone who has a question may press star , followed by one . At this time , one moment for our first question , we'll take our first question from Jack Meehan with Nephron Research .

Speaker #7: Hi everyone , and congrats , Terry . John enjoyed working together , but I doubt this will be the end for my question , I wanted to focus on the parse acquisition .

Speaker #7: Just had a few questions on that . Just first , if you could talk about how the deal came together and what brought them to the top of the list of targets as you consider tuck in M&A and then if you look at the competitive landscape for single cell , it is very competitive .

Speaker #7: You kind of have an entrenched leader with Tenex . And then Illumina talks about instrument free approach with fluent . So if you could just talk about the differentiation of the technology and kind of why it's better in Qiagen's hands and what you can do with it , that would be great .

Speaker #7: Thank you .

Speaker #5: Thank you , Jack , and thanks for your nice comments . So first of all , for me and for the company , the acquisition of parse is the typical very good examples of a very good use of our cash for a strategic bolt on acquisition .

Speaker #5: First , it is strategic . Second , it is extremely synergistic with our existing portfolio . Third , it is accretive to our top line growth .

Speaker #5: And fourth , it will be accretive to our financials in a very reasonable time frame in less than three years . But because there are different knowledges around parse , let me come back first on what does parse offer and what could be the everyday applications .

Speaker #5: This is a company that we are following since 2017 . We have always believed at that single cell was a natural extension to our sample prep technology .

Speaker #5: And since we know them , what has amazed us that is that they constantly executed on what they told us they would deliver either growth or product development .

Speaker #5: So let us let us remember first that single cell analysis is literally turning biology from a blurry group photo into a real sharp portrait of every individual cell .

Speaker #5: As a result , scientists all over the world they can now study millions to billions of cells at once . For example , to try to see which ones are driving cancers or other technologies .

Speaker #5: Groups . All the cells , all the cells together . So researchers cannot really see which specific cells are actually causing the disease .

Speaker #5: Path makes the level . This level of insights completely possible , and we will combine this with AI driven tools from our Qdii portfolio .

Speaker #5: So why did we select parse ? There was no way for Cyagen . Obviously to invest into a me to product or portfolio of solutions .

Speaker #5: First of all, Parse is the fastest growing company in single cell analysis and is a very natural extension of our sample prep portfolio.

Speaker #5: Examples . Path is already present in more than 3000 labs in the world . Second path offers an instrument free kit allowing any lab to use it without costly hardware .

Speaker #5: Third , and perhaps more importantly , path differentiates because it can process millions to billions of cells far more than any other system and far more than the competitors that you mentioned .

Speaker #5: As a result, we consider that it is a very natural fit for Sample Tech, but also with synergies with our QDII and also next-generation sequencing chemistry.

Speaker #4: Yes .

Speaker #5: Yeah .

Speaker #3: Thank you .

Speaker #5: Jack . Does he answer your question ? Jack , does it answer your question ?

Speaker #7: Yes. Hello. It does. Thank you.

Speaker #5: Thank you .

Speaker #3: Thank you I'm sorry . We will take our next question from Hugo Silva with BNP Paribas .

Speaker #8: Hi , guys . Thanks for taking my question . I'd like to focus on cryostat , please . Can you talk to the traction for the new panels ?

Speaker #8: Gastro and meningitis . And how do you see them driving ? Acceleration going forward . And as some of the instruments played during Covid will likely arrive at the end of their life cycle soon , can you maybe talk to the opportunity for potential market share gains here ?

Speaker #8: Thank you .

Speaker #5: Thank you . We go so cryostat continues to deliver . I mean it's very interesting to see again , a double digit growth in Q3 .

Speaker #5: And we all know that Q3 is always normally a kind of softer quarter for cryostat . Why ? Because the syndromic testing market is still driven by respiratory panels .

Speaker #5: And we all know that in most of the Western world , Q3 is rather a low time for respiratory infections . So 11% growth in Q3 , 150 more placements of system is a good performance .

Speaker #5: Respiratory panels are 70% of the syndromic market , but it's very interesting to see at the growth of our GI panels and meningitis and especially where we can grow like for example , in the north of Europe or in North America , or in Middle East for GI and for meningitis , Hugo , we are growing at more than double digits .

Speaker #5: This is very encouraging and especially in the US . I remind you all that the US is still the main market for syndromic testing .

Speaker #5: So yes , as you said , obviously some of the customers that we installed during Covid will come from renewal and basically renewing with once again , a case that is the perfect choice .

Speaker #5: Why ? Because since Covid , they have much more panels opportunities and they will get more in 2026 with the launch of the Blood Culture panel and the the complicated UTI , by the end of 26 for Europe and 27 for the rest of the world .

Speaker #5: So we are well on track to execute on our guidance for 2025 and for syndromic testing . We go . We will definitely beat our midterm guidance that we gave in our capital market day in New York , which was , as you remember , $200 million revenues by 2028 .

Speaker #5: I continue to say with the rest of the company that in syndromic testing , again , will be a very solid and competitive competition , competitive number two on the market .

Speaker #8: Very clear. Thank you very much.

Speaker #3: Thank you . We'll take our next question from Doug Schenkel with Wolfe Research .

Speaker #9: Good morning . Good afternoon everybody . Couple quick questions on the diagnostics side . First on Qiastat-dx . You now have the three key panels respiratory , GI and meningitis approved in the US .

Speaker #9: I'm just curious how you have seen these contribute to platform growth since then . I know it's relatively early , but I just want to see if placements and utilization are tracking in line with expectations .

Speaker #9: And then on Quantiferon , you guys have done a very good job this year with the investment community . You know , basically talking about the importance of some of the automation capabilities enabled via your partnership with Diasorin .

Speaker #9: You know , I'm just curious if as we sit here today , you know , given I feel like we've heard less about , you know , any competitive disruption to the franchise , but if there's anything new to talk about , there , whether it's via the partnership or more broadly , you know , given performance looks quite good there .

Speaker #9: Thank you .

Speaker #5: Thank you , Doug . So I think the main example that I can give for the impact of those three panels on our US performance for cryostat is as we already disclosed at the end of Q2 , Doug , we placed more instruments in six months in the US in 2025 .

Speaker #5: Than we did in the full year of 24 . I think this is the best testament that those three panels now are really helping .

Speaker #5: In addition to that , we have reshuffled the team . We have dedicated sales rep for cryostat in every territory in the US , so that helps .

Speaker #5: So in 25 we are going to exceed our target for instruments for the US . And the growth is very solid . So I'm very confident on Quantiferon .

Speaker #5: I keep the same approach together with the team . We always believed that competition would come one day to this market , and this is why for the last ten years , Doug , we have prepared for that .

Speaker #5: Even when there was no names or no precise dates , we are prepared . This is why we built that automation partner with Diasorin .

Speaker #5: But not only with Diasorin , with also thicken and Hamilton . This is why we consistently improve the technology itself . We are now at the fourth generation of Quantiferon and this is why also we continue to focus on what is still today .

Speaker #5: The main competition , which is skin test . I remind everybody once again that we still have to convert more than 50 million skin tests in the world , and if you just take the US , it's around probably 15 , a bit more than 15 , 1.5 millions of skin tests that we need to convert .

Speaker #5: And then we are prepared. We are prepared. And the last thing I would say that makes me very optimistic for Quantiferon dog is that despite those good results, despite the fact that we continue to grow at double digits, we continue to prepare for the future.

Speaker #5: I started to speak about this in our Q2 earnings expect in the coming weeks and months to see an announcement improving the workflow of Quantiferon , the ease of use , and we are also working on further enhancements of the test .

Speaker #5: So there is no complacency in our approach . We are number one , but we know that we need to defend that at the position and we are ready .

Speaker #5: We are ready commercially . We are ready also from a product standpoint .

Speaker #9: Jerry , I don't know if you can still hear me , but if you can , I just want to thank you for those answers and more importantly , for for all the great work you've done over the years , you've really done a great job through a tough period in the industry , bringing a new level of discipline to the company .

Speaker #9: So I really appreciate that and thanks for everything . Look forward to seeing you in a few weeks .

Speaker #5: This is very humbling . Thank you so much .

Speaker #3: Thank you . We'll take our next question from Casey Woodring with JP Morgan .

Speaker #10: Great . Thank you for taking my questions . You know , maybe just to start on academic and government , maybe just walk through , you know , if you can quantify what the shutdown impact is on the quarter .

Speaker #10: I know that you're assuming those shutdowns for the entirety of the quarter and for Q and then some of your peers have talked about European academic and government spend improving in three .

Speaker #10: Q and taking a bit more optimistic stance there on the forward outlook . So can you just elaborate on what you're seeing in academic and government ?

Speaker #10: Maybe between regions ?

Speaker #5: Yeah . Thanks for the question , Casey . I mean , obviously the . New events since we had a quarterly release , is that we are in a shutdown in the US and it's fair to acknowledge as well that nobody and I believe me , I ask many other CEOs , you probably know that I am still chairing our industry association in the US , and nobody knows when it's going to stop .

Speaker #5: So we took a conservative assumption , which is , okay , we are going to be in a shutdown . Probably until the end of the year .

Speaker #5: If it stops before, we might see an improvement in our target. So far. But let's take a cautious and realistic approach.

Speaker #5: So obviously the shutdown has an impact on our sales because it impacts obviously an already constrained environment in academia and research , where we know that people were very cautious to spend on capital expenses .

Speaker #5: But sometimes on consumables . I believe that is able to mitigate that impact for some reason . First of all , because , well , while we are not immune , obviously to it , but I believe that we sales product or very high value for this academia and research labs .

Speaker #5: So it's very difficult to basically not use our product . Second , we do not sell huge price tag instruments , for example .

Speaker #5: So our solutions are . First very important . Second , it's not a big , big budget , but we see an impact .

Speaker #5: This is an impact on sales of consumables on a daily basis . And this is an impact also on sales of instruments . But overall , I think it's under control .

Speaker #5: It's fully factored in . Our current guidance and I remind you , Casey , in that environment , unlike many competitors or peers , we have maintained our guidance for the year .

Speaker #5: Top line . And we have also improved our guidance from a profitability standpoint . I think this is a testament to the strength of the company .

Speaker #10: Understood . Thank you . And would just reiterate what Doug said . Terry , thanks .

Speaker #5: This is very nice of you . I appreciate that . Thank you .

Speaker #3: Thank you . We will take our next question from Asa Neur with Morgan Stanley .

Speaker #11: My question , my one is on tariffs . So thank you for the guide of 90 Bips impact on the margin . Are you able to be a bit more explicit about the dollar value of these tariffs , whether these are gross or net of mitigation efforts and whether we can annualize this impact for 2026 ?

Speaker #5: Thank you . Roland , would you like to take this one ?

Speaker #6: Yeah , sure . No . Again , I think we are the 90 Bips this year is of course , the net impact .

Speaker #6: And I think what we said going forward is we have ongoing mitigation . So we do not necessarily expect an increase for next year as mitigations more or less kicking in particular .

Speaker #6: Also early next year . So we do not , with the knowledge out of today and unfortunately that is an area where one tweet can change a lot and but all the information we're having right now , we do not expect that it becomes a larger impact for us .

Speaker #11: Okay . Thanks , Roland . And if I can follow up on that , on on the pricing dynamics , these tariffs are that you're placing on your products .

Speaker #11: We're hearing from some of your peers that there could be some resistance to the surcharges that are being passed through, potentially resulting in some delay or a pushout of demand into the next quarter.

Speaker #11: Just curious , is there something you are seeing or are you comfortable that these surcharges are passing through ? Thank you .

Speaker #5: Well , I , I think we can we can take this question . The both of us . I can tell you I've been for something like more than 20 years now and unfortunately , on the field , it is always a negotiation when you want to price to , to to pass a price increase .

Speaker #5: Always a negotiation . Customers when you are selling value are understanding this because let's not forget that invests 10% of our sales in R&D .

Speaker #5: They see that . So the surcharge of coming from tariff , it's not a price increase surcharge that we communicated to customers . It's not an easy discussion , but we explain we explain the reason and we explained that we need to share the burden as well .

Speaker #5: And it has generated results in our quarter as well . So never easy . We do not see customers postponing decision for this .

Speaker #5: It is a discussions . We are always pragmatic . Obviously , because we respect customers , but we are also insisting that we need to pass them .

Speaker #5: I think , Roland , you wanted to add something also to that .

Speaker #6: No , I think I think you covered it . Very . No , I think you covered it very well . It's an end of the day again .

Speaker #6: It depends . It is nothing . But we do very again . We clearly look on where we have pricing power and which region , which product via the contracts for us .

Speaker #6: More important is that I would say again , if you look on the financial results of this year , that we balance it out quite well , we were able to increase EPs one more time .

Speaker #6: Now we're at $0.10 up . If you look on the overall margin expansion for collagen , again , I just want to remind everybody I know , I'm sure that you know it quite well .

Speaker #6: 23 we ended the fiscal year with adjusted Ebit margin of 26.9 24 . We ended the year with an adjusted Ebit margin of 28.7 .

Speaker #6: For this year . Again , if you do the forecast , CR , we end with an Ebit margin of 30% . So we have now in less than 24 months , an Ebit margin improvement of 310 basis points .

Speaker #6: I think that speaks for itself . How we are able to manage it , including clearly headwinds like US tariffs .

Speaker #11: Thanks very much .

Speaker #3: Thank you. We'll take our next question from Patrick Donnelly with Citi.

Speaker #12: Hey , guys . Thank you for taking the questions . And Thierry , my congrats as well on a great run . Can you just talk about high level , the moving pieces ?

Speaker #12: We should be thinking about for 2026 ? Obviously the four Q exit rate has a little bit of a shutdown in it . So just trying to think about high level .

Speaker #12: The approaches to 26 , both on on revenue maybe for you , Terry . And then Roland I know you touched on the the margins there and anything high level we should be thinking about as we head into next year .

Speaker #12: Thank you guys so much .

Speaker #5: Yeah . We'll ask Roland to start with the overall picture and I will come back on the revenue as well . Roland .

Speaker #6: Yeah I think again , talking about on the margins , let me kick it off . Also on Q4 , as I said , we are probably ending the year with a margin of CR rise of 30% for the first quarter .

Speaker #6: Also , while it's clearly a more challenging quarter in terms of the US shutdown , we still expect also a constant exchange rise , Ebit margin of 29.5% still quite high .

Speaker #6: Yes , we have a bit more currency impact , negative impact in that quarter . But nevertheless , I would say still quite strong .

Speaker #6: And I think that also makes us confident for next year . So so for me , it's very clear that we also expect an underlying margin improvement , not only for 26 .

Speaker #6: And I know that you all expecting us , that we will update the margin for 28 , and we're going to do so .

Speaker #6: And you will see an significant increase there . But of course I don't do that today . So one thing , of course , I want you to have in mind is while we will have an underlying margin improvement next year , it's quite obvious that as we just talked about , tariffs is to a certain extent still some headwind .

Speaker #6: And of course , the Argos acquisition is also , to a certain extent , a headwind . Nevertheless , we will more or less go into the year similar to what we did this year .

Speaker #6: And I do think we had a good run this year so far .

Speaker #5: And to complete that . Patrick , thanks for the comments . And and the way we see it with the team is quite simple .

Speaker #5: Two years ago , we took a commitment to the market , which was very simple , 7% sales growth , carrier , 31% Ebit margin .

Speaker #5: As Roland highlighted , 2 billion of revenues coming from our pillars of growth . The obsession of management , the priority and the focus is , regardless of the market environment .

Speaker #5: We deliver on this . And what I mean by this is that it is clear that since our last capital market day sales are becoming more difficult , you see this with our competitors .

Speaker #5: You have seen most of our competitors or peers downgrading their outlook or extending their range of potential growth . So what we believe is that if the situation doesn't improve .

Speaker #5: In 2006 and 26 , we are positioned to go probably around five , slightly above everything , including with the acquisition of pass .

Speaker #5: If the situation doesn't improve , if the situation improves , because also of our organic portfolio , but also the input from pass , we could be between 5 and 7% of growth .

Speaker #5: This is not a guidance call . Let's make it clear . I'm giving you we are giving you with Roland some flavors . Obviously we monitor the situation , but what is important is that if you look at what this management is doing to do , and it's not just theory , it's all the team is that regardless of the environment and it complexity , we do smart move with our cash generation and balance sheet to improve our portfolio of products .

Speaker #5: Genome pass and we take actions also to continue to improve our profitability . In other words , I would also say that we will position kyogen again regardless of the environment , to deliver on the expectation on the market from an EPs standpoint , in 2026 .

Speaker #3: Thank you . We will take our next question from Luke . Sirgo with Barclays .

Speaker #13: Great . Thanks for the questions . Here . Can you talk about just from the . Pass acquisition , you know , plans that you guys are investments that you guys are , that you would need to take either on the automation side or anything that you can leverage on your existing portfolio here to , to to add scale or make it more user friendly across a broader customer base .

Speaker #5: Thanks . I mean , it's already extremely user friendly and this is why imagine this is still a young company . More than 3000 customers worldwide .

Speaker #5: It's a significant and humbling performance . I think . Second , you know that one of the differentiation is that it's completely instrument free .

Speaker #5: So it makes the ease of use extremely customer friendly . Third , there is something that we didn't go into details today . That pass has built , which I find also interesting , is Giga Lab capacity to address especially higher throughput , higher volume customer demand .

Speaker #5: So, I see a lot of interesting synergies—immediate portfolio synergies. Someone selling sample tech at Kaizen can also sell Pass Tomorrow.

Speaker #5: And I would say a lot of people from parts can immediately sales also and leverage our sample tech portfolio . Our qdi solution as well .

Speaker #5: Second there is another natural buy definition . We are much more global company than pass . So we can immediately obviously expand the geographic footprint .

Speaker #5: And so it's in our business case to continue to support this portfolio with R&D investment . And the two teams are now going to work together as well to see what more synergy from a development standpoint , can we put to make sure that we ensure the continuum of solutions from sample tech , but also qdi and also our sequencing chemistry and all this linked with AI ?

Speaker #5: Let's not forget that a good driver also from that acquisition is that we take another dimension with AI in our portfolio .

Speaker #13: Okay , that's helpful . And then I guess from a acuity perspective talked about the consumables up double digits . You know , can you can you just break out what you're seeing there from across the biopharma side ?

Speaker #13: Like how much of your your acuity piece is actually being sold into that market versus the A and G market . And then a follow up on on just what you're seeing from a competitive dynamic versus especially the new offerings from the droplet technologies .

Speaker #5: So once again , I mean , as usual , we display we deeply I'm sorry . Respect our competition . What we see is that our direct competition is basically presenting numbers that are not really comparing to our performance .

Speaker #5: We are still in double digits. We continue to invest. I said during the call that there are a significant number of new applications in academia and research every year that we are making available for our customers.

Speaker #5: You know that the solution is also now available for clinical customers is what we call the Acuity Diagnostic. And we see a very good performance from our companion diagnostic.

Speaker #5: So from a direct customers usage such as biopharma QC controlled by pharma is boosting way over double digit and pharma customers are becoming a significant .

Speaker #5: Now segment of customers . And they are very interesting . Why ? Because first of all , they're throughput their they're volume of consumable is higher than any other segment .

Speaker #5: And they are very demanding customers . Second , the portfolio of companion diagnostic digital PCR based is even surprising to us in full transparency .

Speaker #5: It's growing very fast and I remind you this positions very well because we are the only company at this moment able to offer to biotech and pharma companies companion diagnostic solutions that are PCR based , NGS based or digital PCR based .

Speaker #5: So we are confident double digit is a good performance . We are a bit impacted by this slow capital expense and so we feel it in our number of placements .

Speaker #5: But once again , what are we talking about ? We are still placing above 100 systems per quarter . And this is good for the future of digital PCR because those placements are going to generate obviously consumables .

Speaker #13: Great . Thank you .

Speaker #3: Thank you . We will take our final question from Jan Cook with Deutsche Bank .

Speaker #14: Yeah . Good afternoon . Thanks for squeezing me in . My first question is on the announced acquisition of PaaS . Could you elaborate on the growth and margin Ebit margin profile of this business ?

Speaker #14: If I have done the math correctly , it looks like you don't assume any kind of Ebit contribution from this asset in 2026 .

Speaker #14: And could you also share this specific milestones that are required to trigger the additional 55 million payment ? And then my second question is on the sample tech business .

Speaker #14: Obviously very encouraging to see that business returning to growth in Q3 . But did you benefit from any one offs in the quarter , and what kind of growth do you expect in Q4 in view of the government shutdown ?

Speaker #5: Very good . Thanks for the question . I will ask Roland to take the financial on pass from a contribution to our financials , and then I will address the sample tech question .

Speaker #5: Roland .

Speaker #6: Yeah . Hi . Hello . Jan . And I do think again what we what we announced is , as you've seen , that we expect the dilution of about $0.04 for 26 while we expect revenues of about 40 million .

Speaker #6: So if you do the math , you clearly can see it has a bit dilution . Of course . Also for that year and but nevertheless , we do expect it to become the creative in 28 .

Speaker #6: It is a significant growth opportunity . Again . Again , a the revenue growth where it is quite exciting . So yeah , it is dilutive a margin wise for , for , for next year .

Speaker #6: And it's something what we , what we have to what we have to eat . And we will clearly trying this underlying to to compensate and maybe even to overcompensate for that .

Speaker #6: But I would expect on the mid-term there is a nice acquisition coming up as this business has healthy gross margins for Chalazion and therefore the growth rate is going to help .

Speaker #5: Thank you . Roland , and for simple text , there is no one off in Q3 and I think I hope that you will be able to attend our deep dive on the 21st because there we will go into details showing you , I hope , and demonstrating that we are perfectly executing on our strategy .

Speaker #5: And what is this strategy ? Ian , for the last four years , we have really , really invested into further automation . Kayak cube became Kayak Cube Connect .

Speaker #5: Is it one became is it two ? Qiasymphony connect is currently being installed . And in the first semester of 26 , you will have two new instruments with Chimene and Kayak connect .

Speaker #5: So automation is the way to go . Second is investing into very high added value applications . The first that comes to my mind , obviously , is liquid biopsy .

Speaker #5: This is not a number that we publish a lot , but do you know that sample tech liquid biopsy by Cryogen is growing way over double digit .

Speaker #5: And when I say double digit I'm not talking the ten marks way over that . And this is where we need to invest .

Speaker #5: And third is investing into technologies of the future . The demonstration is is pass . So there is no time off . I expect that for the full year 2025 and especially because of the shutdown , we will be basically overall flattish for the year .

Speaker #5: But I continue to confirm our ambition to grow in the 28 objective because those instruments are going to help and they are perfectly factored in .

Speaker #5: The ambitions that we gave you back in New York two years ago , which is roughly 3% growth rate and reaching $750 million .

Speaker #5: Revenues .

Speaker #13: Great .

Speaker #14: Thank you .

Speaker #4: Okay . Terry and Roland , thank you very much . And with that , I'd like to close this conference call . And again , thank you for your participation .

Speaker #4: If you have any questions or comments , please don't hesitate to reach out to us . Thank you .