Bio-Rad Laboratories, Inc.

Thank you for standing by. My name is Prila and I will be your conference operator today. At this time, I would like to welcome everyone to the BI-RAD fourth quarter and full year 2024 results conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press store followed by the number one on your telephone keypad. And if you would like to draw your question, please press the star one again. Thank you. I would now like to turn the conference over to Edward Cheung, Head of Investor Relations. You may begin.

Thanks, operator. Good afternoon, everyone, and thank you for joining us. Today, we will review the fourth quarter and full year 2024 financial results and provide an update on key business trends for Bio-Rad. With me on the call today are Norman Schwartz, our Chief Executive Officer, John DiVincenzo, President and Chief Operating Officer, and Roop Lakharaju, Executive Vice President and Chief Financial Officer. Before we begin our review, I would like to remind everyone that we will be making forward-looking statements about management's goals, plans, and expectations, our future financial performance, and other matters. These statements are based on assumptions and expectations of future events that are subject to risks and uncertainties. Our actual results may differ materially from these plans goals, and expectations. You should not place undue reliance on these forward-looking statements, and I encourage you to review our followings with the SEC where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today. Finally, our remarks today will include references to non-GAAP financials, including net income and diluted earnings per share, which are financial measures that are not defined under generally accepted accounting principles. Investors should review the reconciliation of these non-GAAP measures to the comparable GAAP results contained in our earnings release. With that, I will now turn the call over to our Chief Operating Officer, John DiVincenzo.

Hello, and thank you everyone for joining today's call. Since joining Bio-Rad five months ago, I'm excited to share the progress we've made in aligning our strategic priorities, focusing on execution, and achieving key milestones in our transformation. First, I'm pleased to report that we successfully met our revised 2024 guidance for both revenue and operating margin as presented last August. Our clinical diagnostic business performed slightly better than forecasted, while our life science segment was affected by continued softness in the biopharma market. Despite some revenue challenges, we achieved gross margin expansion in 2024 through our productivity improvements. Driven by our lean initiatives in our manufacturing sites and supply chain, execution of our global footprint rationalization, and effective cost management. These will be sustained improvements in our P&L in 2025. I'm also excited to announce that we've entered into a binding offer to acquire Stila Technologies, a move we believe will significantly complement our digital PCR portfolio. Going forward, Stila's platform would enhance our product strategy in applied research and clinical diagnostics, allowing us to expand our offerings in digital PCR. We expect the transaction to close by the end of Q3 2025, subject to consultation with relevant employee representatives, regulatory approvals, and customary closing conditions. Additionally, we've taken further steps to streamline our cost structure. These actions are designed to better position Bio-Rad for success as we move toward our strategic and financial goals for 2025 and beyond. Looking across our markets, we saw the continued trends we've experienced over the past year. Diagnostic performed as expected with broad-based global demand. However, the Asia-Pacific region saw a decline due to the earlier than expected adoption of a reimbursement change for diabetes testing in China during the fourth quarter. This adjustment, not related to volume-based procurement, standardizes rates for certain clinical diagnostic tests nationwide. We don't currently anticipate further reimbursement changes for diagnostics in 2025. Keep in mind that China represents high single-digit percentage of Bio-Rad's total revenue. In life science, we are seeing a modest recovery, though demand in biopharma in China remains soft. We did see a seasonal uptick from academic customers and biopharma research accounts. And our process chromatography sales improved in the second half of 2024, and we expect growth in this area in 2025. We were also encouraged with the increased activity in new programs using our media, which bodes well for the future outlook for our process chromatography business. For our droplet digital PCR portfolio, we saw continued strong demand for reagents and consumables with low double-digit growth year over year. Interest in our assays for oncology and cell and gene therapy applications remains high. and we're maintaining strong win-loss ratios for our platform. Entering 2025, we expect a gradual recovery, particularly in the biopharma sector. While demand for instruments remains soft, we are having more conversations with biopharma customers and building a healthy order funnel. However, this gradual pace of recovery is likely to impact the uptake of life science instrumentation in the short term. In the academic segment, research funding globally has been soft throughout 2024, and we have not factored in a change in dynamics for 2025. However, we need more information to understand the impact, if any, of last week's announcement on the cap for US NIH indirect funding. In Europe, funding remains mixed with modest increases in Germany and the UK, while France continues to be soft. And in Asia, We're seeing some early signs of improvement in research funding in China due to its stimulus programs. So in 2025, our focus remains on operational and commercial excellence. We aim to increase consumables attachment and prioritize e-commerce as part of our growth strategy. And as I've discussed with many of you, innovation remains at the heart of Bio-Rad's long-term growth strategy. Beyond our anticipated acquisition of Stila, we're excited about key updates to our portfolio. including a refreshed NGC chromatography platform, the ChemiDoc Pro imaging system, and a new version of our QX600 digital PCR system for the diagnostic market. We're also expanding our process chromatography portfolio with the launch of a larger 45-centimeter prepack column and additional Nuvia resins that enhance purification capabilities. Our QX continuum program is making significant progress, and we continue to see it as an important part of our digital PCR portfolio in 2025 and beyond. So given the moderated revenue growth outlook, we view 2025 as a stepping stone towards stronger, profitable growth. We will continue driving innovation, enhancing our supply chain, and implementing cost and productivity initiatives to support margin improvement. As the life science market normalizes, we believe BioRat is well positioned to leverage top-line growth. Thank you for your continued support. I will now pass you to Rup to review the financial results. Thank you, John.

Good afternoon. I'd like to start with a review of the fourth quarter of full-year 2024 results. Net sales for the fourth quarter of 2024 were approximately $668 million, which represents a 2% decline on a reported basis versus $681 million. in Q4 of 2023. On a currency neutral basis, this represents a 2.3% year-over-year decrease and was due to lower sales in our life science segment. Sales of the life science group in the fourth quarter of 2024 were $275 million compared to $291 million in Q4 of 2023, which is a decline of 5.5% on a reported basis and approximately 6% on a currency neutral basis. Currency neutral sales decreased across all regions. Excluding process chromatography sales, core life science group revenue increased 2.5% year-over-year and 2% on a currency neutral basis. Core life sciences growth was driven by consumable sales that improved low single-digit sequentially and amid single-digit year-over-year. Sales of the clinical diagnostics group in the fourth quarter of 2024 were approximately $393 million, compared to $389 million in Q4 of 2023, which is an increase of 0.9% on a reported basis and 0.7% on a currency-neutral basis. Growth of diagnostics was primarily driven by increased demand for quality control and blood typing products. Offsetting the higher demand, our diabetes portfolio experienced a revenue decline due to the intra-quarter China reimbursement change that reduced sales by an estimated mid-single-digit million approximately 75 basis points and affected Q4 gross margin by the same amount. On a geographic basis, currency neutral sales increased in EMEA and Americas. Q4 reported GAAP gross margin was 51.2 percent as compared to 53.8 percent in the fourth quarter of 2023. The decrease in gross margin was driven by a restructuring expense further right-size our footprint and the impact of the reimbursement reduction for diabetes tests in China. As John alluded to earlier, we are continuing to proactively manage our cost structure, including the recent implementation of a 5% workforce reduction to further align headcount for our global organization. The impact of these actions is contemplated in our guidance and should yield savings of $50 to $55 million in 2025, with fully annualized savings of approximately $60 to $65 million in 2026. SG&A expenses for fourth quarter of 2024 were approximately $204 million or 30.6% of sales compared to $207 million or 30.4% in Q4 of 2023. Research and development expense in the fourth quarter was approximately $80 million or 11.9% of sales compared to $64 million or 9.4% of sales in Q4 of 2023. C4 operating income was approximately $58 million, or 8.7% of sales, compared to $95 million, or 14% of sales in C4 of 2023. During the quarter, interest and other income resulted in net other income of $9 million, which is unchanged versus the prior year. The change in fair market value of equity security holdings, which are substantially related to the ownership of Sartorius AG shares, led to a $977 million loss, which resulted in a reported net loss of $716 million, or $25.57 diluted loss per share. The effective tax rate for the fourth quarter of 2024 was 21.2% compared to 18.4% for the same period in 2023. The effective tax rate reported in these periods was primarily affected by the accounting treatment of our equity securities. Moving to the non-GAAP results, non-GAAP financial measures which exclude certain atypical and unique items that impact both gross and operating margins and other income are detailed in the reconciliation table in our press release. Fourth quarter non-GAAP gross margin was 53.9% compared to 54.4% in Q4 of 2023. Fourth quarter non-GAAP operating margin was 13.8% compared to 15.5% in 2023. Non-GAAP effective tax rate for the fourth quarter of 2024 was 20.9% compared to 22.3% for the same period in 2023. Finally, non-GAAP net income for the fourth quarter of 2024 was $81 million or $2.90 diluted earnings per share. And now for the full year results. Net sales for the full year of 2024 were $2,567,000,000, which represent a 3.9% decline on a reported basis versus $2,671,000,000 in 2023. On a currency neutral basis, this represents a 3.6% decrease and was driven primarily by lower sales in our life science segment. Sales of the life science group for 2024 were approximately $1,028,000,000, compared to $1,178,000,000 in 2023, which is a decline of 12.8% on a reported basis and 12.6% on a currency neutral basis. Quarantine neutral sales decreased across all regions. Sales of the clinical diagnostics group for 2024 were $1,538,000,000 compared to $1,489,000,000 in 2023, which represents a 3.3% increase on a reported basis and 3.7% growth on a currency neutral basis. Growth of diagnostics was primarily driven by increased demand for our quality control and blood typing products. On a geographic basis, currency neutral revenue grew across all three regions. As we had targeted, overall full year non-GAAP gross margin reached 55% compared to 54.2% in 2023. The year-over-year margin increase was driven mainly by the impact of operational improvements made throughout the year and a favorable product mix. Full-year non-GAAP SG&A expense was $799 million or 31.1% of sales compared to $815 million or 30.5% in 2023. The decrease in dollars of SG&A expense was primarily due to a reduction in discretionary spending and lower employee-related costs. Full-year non-GAAP R&D was $282 million, or 11% of sales, versus $255 million, or 9.5% in 2023. The increase in non-GAAP R&D was primarily due to a one-time acquired in-process research and development expense of $30 million related to the Saber Bio acquisition. Full-year non-GAAP operating margin was 12.9% compared to 14.2% in 2023. which reflects the effects of revenue decline and the aforementioned in-process R&D expense, offset by favorable product mix and the impact of operational improvements. Lastly, the non-GAAP effective tax rate for the full year of 2024 was 23.6%. Moving to the balance sheet, total cash and short-term investments at the NFQ4 2024 were $1,665,000,000 compared to $1,628,000,000 at the end of Q3 2024. Inventory at the end of Q4 was $760 million, down from $804 million in the prior quarter, as we continue to make progress on reducing inventory. For the fourth quarter of 2024, net cash generated from operating activities was approximately $124 million, compared to $81 million for Q4 of 2023. For the full year of 2024, net cash generated from operations improved to $455 million versus $375 million in 2023, and was driven by the focused efforts in improving working capital efficiency. Net capital expenditures for the fourth quarter of 2024 were approximately $43 million, and full-year net capital expenditures were $166 million. Depreciation and amortization for the fourth quarter was $39 million and $152 million for the full year. Fourth quarter of 2024 free cash flow was approximately $81 million, which compares to $39 million in Q4 of 23. For the full year of 24, free cash flow was approximately $290 million, which compares to $218 million for the full year of 2023. Full year 2024 buybacks totaled 691,000 shares for approximately $202 million. Over the past years, we've deployed over $630 million for share repurchases. Considering the current dynamic environment, we expect to do further share repurchases and have approximately $577 million available for buybacks under the current board authorized program. Moving on to the non-GAAP guidance for 2025. We're guiding a currency neutral revenue growth for the full year to be between 1.5% and 3.5%, which excludes any revenue from acquisitions. On an as reported basis, Q1 is expected to be approximately 5% to 7% lower on a year-over-year basis, and then sequentially improving each quarter. The Life Science Group year-over-year currency neutral revenue growth is expected to be between 1.5% and 3.5%, with our process chromatography business poised to increase by single digits. Note that this outlook contemplates a soft academic environment but does not consider last week's proposed NIH indirect spending actions. Overall, NIH funding is not a significant component of our total sales. Specifically, we estimate that the U.S. academic and government segment represents approximately a high single-digit percent of biorevenue. A subset of our U.S. academic and government segment is federally funded research, including the NIH. We estimate our total federally funded research exposure as approximately 4% of our revenue. For the diagnostics group, we estimate currency neutral revenue growth to be between 2 and 3%. As a reminder, our growth outlook for clinical diagnostics includes approximately 100 basis point impact in 2025 due to the partner's exit from the donor screening business approximately a 60 basis impact from the reimbursement reduction for diabetes testing in china full year non-gap gross margin is projected to be between 55 and 55.5 percent and includes the approximately 60 basis point incremental gross margin headwind related to the reimbursement reduction for our diabetes business on a quarterly basis we expect q1's gross margin to be like q4 2024. subsequent to q1 We expect steady sequential improvement because of the continued productivity and efficiency benefits from our operational initiatives and improved sales volume. We look to target exiting the year in the high 55% gross margin range. Full year non-GAAP operating margin is projected to be between 13 and 13.5%. This includes the 60 basis point effect from the reimbursement change, as mentioned earlier, as well as the headwinds from the strengthening of the U.S. dollar, representing approximately $70 million for 250 basis point headwinds through 2025 revenue, and an approximate 40 basis point drag on operating margin. In addition, we are making nice progress with Saber Bio, which we purchased last summer, and plan to achieve a key development milestone in 2025. The result is a potential $10 million R&D expense or a 40 basis point impact which would impact both GAAP and non-GAAP results and has been considered in our guidance range. We estimate the non-GAAP full year tax rate to be approximately 23%. CapEx is projected to be approximately $160 to $180 million as we continue to invest in our infrastructure to support our multi-year transformation. We anticipate full year cash, free cash flow approximately $310 to $330 million for 2025 as compared to $290 million for 2024. With that, I'll now turn the call over to Norman for his remarks.

Thanks, Rup. Just maybe take a minute and build on John and Rup's comments. I think that 2024 was certainly a productive year. First, we assembled a new leadership team that's been tasked with driving performance at Bio-Rad. They've certainly hit the ground running, kind of focused on improving top line growth and driving margin expansion, all despite the headwinds in several of our key end markets. As for the innovation and building on our core portfolio, I think we've advanced our DDPCR platform with expanded applications, introduced new key portfolio refresh products like the chemi.go imaging system, and grown our cell biology product offerings. I think it's important that we also made investments in companies with potentially best-in-class diagnostics using our DDPCR technology, like Genoxcopy and Oncocyte. To support our growth initiatives, we have looked to M&A to complement what we're doing internally. I think a good example is our anticipated acquisition of STILA, which should broaden and accelerate our ability to provide enabling tools in the digital PCR space. As mentioned, we also recently acquired Saber Bio, an entirely new platform utilizing our core droplet technology, really enabling high-throughput discovery of novel antibodies in T-cell receptors principally for the biopharma market. So all in all, I guess I'd like to reiterate that we view our strategy and our focus for the future growth of the company to be very much intact. In clinical diagnostics, our business has returned to its normalized growth rate post-pandemic. We have leading market positions here globally for our core platforms. and are investing to support their growth while building a position in new molecular diagnostic segments. Similarly, in life science, we continue to focus on the biopharma area, especially for our digital PCR and process chromatography products, as well as new development around cell biology. And of course, you know, we continue to invest to broaden our offerings in digital PCR and other focus areas in our academic markets. I guess in summary overall, I believe we're well aligned and well positioned to drive long term growth in our markets as we move through this current dynamic period. And thank you all for your support and interest in Bio-Rad. So with that, maybe I'll turn it back over to Ed, Ed?

That concludes our prepared remarks today. We'll now open the line to take your questions. Operator?

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press the star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, you may press the star 1 again. One moment, please, for your first question. Your first question comes from the line, Patrick Donnelly with CDPs. Go ahead.

Hi. You have Lizzy on for Patrick. Thanks for taking my questions. I guess just on the life sciences guide, what does that imply, I guess, for DD-PCR growth at 1.5 to 3.5 percent? I know you said processed chroma is high school digit, but just wondering what DD-PCR is considered.

Yeah, so from a DDPCR overall, we gave an overall, it's more towards kind of the 1 to 2% from a DDPCR with ProcessChrome in a high single digit range.

Got it. And then just.

Just to reinforce and as a reminder, the acquisition that we just announced or proposed acquisition that we just announced isn't included in that range. And so, you know, we would see that as potentially being additive depending upon where that closes this year.

Got it. And then just on the margin guide, the gross margin guide for this year, the 55 to 55.5, I guess, can you walk through, you know, the different scenarios? Like what gets you the high end, what gets you the low end? And just be curious there, but that's it for me. Thank you.

Yeah, of course. So obviously the midpoint being about Uh, you know, at thirteen point, two, five percent, um, the, the ability to march up is really and market dependence, uh, primarily and and so academia is soft as we come into to the year. Uh, biotech biopharma, although there's some signals of improvement still remains relatively soft. And I think as we think about how China continues to evolve, can the stimulus actually provide any uplift, these sort of things? So, you know, those are things that can take us to the higher end. And I guess I would say, depending upon how those end markets react, if they were on the negative side or a little bit more negative than what we've assumed, that might lead us towards the lower end of that range.

Great. Thank you.

Question comes from the line of Dan Leonard with UBS. Please go ahead.

Hi, thank you. I have a couple. The first one on process chromatography, I just want to confirm my math here. Did that product line decline more than 50% in the fourth quarter and end up declining about 50% for the full year? Is that correct?

Yeah, that's about right, Dan.

And then, Rup, that's been a very wide variable. What's your conviction in that high single-digit growth forecast for 2025?

Yeah, we feel pretty strong about that. You know, with kind of a destocking that we've talked about continuing with our customers, obviously part of our conviction is around the direct customer conversations that we've been having. So we feel good about that high single-digit number.

Okay. And then as a follow-up, I just wanted to better understand the operating margin bridge for 2025. It looks like it's about 100 basis point year-on-year decline if you correct 2024 for the IPRD charge. And it sounds like that decline is entirely due to China diagnostics and foreign currency. So I guess, one, can you confirm that? Two, it sounds then like If that math is right, operating margins would have otherwise been flat. But how would that reconcile a flat operating margin picture with that 5% headcount reduction? So I know that's kind of a multi-parter there, but just any help you could offer.

Yeah, of course. So let me try and take it piece by bit there. In terms of the March, the first part is the China reimbursement is 60 basis points, right? So that's one. The best part of that is the FX effect, which is 40 basis points headwinds, so that gets you to about 100 basis points. The other piece that I mentioned, which is also 40 basis points that we factored into with the guide that we provided, which will likely be a Q3 event, is an additional $10 million one-time R&D, in-process R&D expense that will incur for the SaberBio acquisition that we just completed last summer. The development of the products there are moving along pretty well. And as such, there's some earnouts that would be achieved as a result of that. And therefore, that charge would be there. So the total of that is about 140 basis points overall, Dan. And so if you march that up from the guide, I'll say it from our guide perspective of 13.25% midpoint. That kind of gives you a sense of where we would be in kind of the mid to high 14% stands those sort of headwinds. As it relates to the 5% workforce reduction, obviously that was a difficult thing for us to do. However, what it does provide us is to offset otherwise some of the expenditures that would roll over on a year-over-year basis, whether that's merit and other aspects of that.

Okay. Thank you, Rup.

And your next question comes from the line of Brandon Collard with Wells Fargo. Please go ahead.

Hey, thanks. Good afternoon. Just on the Distilla acquisition, I mean, it's been around a while. You know, why now? What is complimentary about it that your portfolio didn't already have? And can you share any financials about the asset, revenue base, install base? I imagine, would the business be diluted? I guess if they're losing money, would it be diluted to margins and keep putting numbers around that?

This is John. I'll take the first part. I mean, it's true that the company's been around for a while, very solid team developing a portfolio, but they launched a new platform last year. It's kind of an all-in-one solution based on their proprietary chip technology, great workflow, and essentially they saw themselves with a great product without a real global reach. So that's why we're excited about bringing that into our portfolio with our, not only content that we have to put on and our expertise, but being able to get that out and support more researchers around the world. So I think that's the key point of why we're very attracted to it today.

Yeah, and Miranda, let me add to John's comments. The other part in terms of, I think, application here with the Scylla, potential Scylla products, it allows us to address not just the entry level of the digital PCR market, but also allows us to address the high end of the QPCR market where we don't today. As to the cannibalization, we don't think it's actually cannibalizing anything. We actually think it expands market opportunities for us and allows us to compete very effectively with other players in the marketplace. The way we think about it, it does have revenue today, and I think that's the other thing we promised in terms of as we think about our M&A strategy, moving towards companies with products that are on market that have revenue. And I think once we get them integrated, we think it should be accretive within 18 to 24 months from close. And obviously, we'll work to try and get that accretive even faster. But we think it'll be a value add. So hopefully that's helpful.

Okay. One clarification, Rup. I think you said first quarter reported revenue down 5% to 7%. I guess that implies organic is down 5%. maybe low to mid singles, then do you expect, you know, a return to positive growth starting in the second quarter of the balance of the year that we think about sort of the phasing?

Yeah, I think that's a reasonable way to think about the phasing.

Okay, and then last one, just on the RIF and the cost structure streamlining, can you give any more color around kind of what areas are targeted, what parts of the P&L will see that manifest, and why now, and is this part of the larger evaluation of the portfolio or strategy of the company.

Yeah, I mean, I think the why now, I think as we continue to evaluate our business, business structure and where we stand firm from a performance standpoint and just from an overall market perspective with the softness across different areas, we thought it's something, you know, it was the appropriate time to take such action. With that said, it's broad-based. The majority of the actions are in the OPEX area. There is a little bit up in the infrastructure area within COGS, within our supply chain organization, but the predominance of it sits within our OPEX areas, R&D plus some SG&A areas.

Very good. Thank you.

And your next question comes from the line of Jack Meehan with Nephron Research. Please go ahead.

Thank you. Good afternoon. Wanted to start with the first quarter forecast. If I heard it right, you know, you're assuming down 5% to 7% on sales. Can you talk about what you're assuming by segment within that? And I guess just why the trend would be so different than kind of what we saw in the fourth quarter?

Yeah, thanks, Jack. So, maybe just a clarification to make sure everyone's got it right. The 5% to 7% is on a year-over-year basis to give that comparative there. So, that's that. Obviously, from a sequential standpoint, it also would be down from a Q4 2024. To your point as to the why, there's a few different dimensions there. Number one, the continued softness within the academic market and biotech, biopharma. The other thing is we've now factored in the full effect of both the donor screening business as well as the China reimbursement piece there. And then you've got FX headwinds that are all factoring into there. And then over, as we get through the year sequentially, we expect to see some level of recovery both in the diagnostic space for us as well as the life sciences space for us.

Got it. And just to clarify, that down 5% to 7% year-over-year, that's an all-in number inclusive of FX headwinds?

That's right.

Okay. And it sounds like based on the commentary you said, it's probably roughly even across both segments in the first quarter?

Yeah, just in terms of the downtick.

Correct, yep.

Yeah, that's reasonable, Jack.

Okay. And then I wanted to turn to China. So you said, you know, the region's high single-digit percentage of revenue, you know, these reimbursement pressures concentrated in the diagnostics business and diabetes today, you know, if it's a $20 million kind of annualized cut you're talking about, it seems like pretty meaningful relative to probably what the exposure is. So I was just wondering if you could confirm that. And then second is just any thoughts around that spreading to other areas of the testing portfolio?

Yeah, maybe I'll start with the latter because that's obviously one of our concerns, and especially as China adopted the reimbursement rate change for the A1C earlier, because originally it was supposed to kick in in 2025, and they brought it into fourth quarter, mid-fourth quarter. And so we learned of it in the mid to late November timeframe. you know it so we related to that we don't think we don't expect at this time and obviously things seem to be subject to change but we don't have any expectations that it should affect us in other areas that we support in the marketplace so I think that's one aspect of it in terms of the effect of it the I guess I think the way we said it in the script is not 20 million. I think that, Jack, that's the number you used there. More in the mid-teens kind of levels is what you ought to take out of that.

Okay. Yeah, I think I was tacking on 5 million or so in the fourth quarter. Thank you. Yeah.

that's what I was thinking um and then the last one um do you have a cash flow target for the year it seemed like you made some progress on the working capital um just be curious how you're thinking about that for 25. yeah free cash flow I gave a range of uh kind of 310 to 330-ish kind of range okay so and we finished that 290 so incremental amounts and obviously we're working towards further improved working capital efficiencies across the board Okay. Thank you. Thanks, Jack.

And once again, if you would like to ask a question, please press the star 1 on your telephone keypad. Your next question comes from the line of Connor McNamara with RBC Capital Markets. Please go ahead.

Hey, guys. Thanks for the question. First off, on the NIH exposure, we appreciate the color and the numbers you gave around that. And I recognize it's only been a week, but have you had conversations with customers, and how are they changing their buying patterns? Has this put them on a halt of spend, or was there already some slowdown that they were anticipating some NIH cuts? How should we think about that, if that's the case, how that's rebounding?

Yeah, I think it has come as a little bit of a shock to researchers, and I think they're they're in kind of a little bit of a wait and see mode as to what really happens. So I would imagine, especially for capital equipment, that that'll probably be probably more effective than anything else in the near term.

Okay, great. Thanks for that. Just on the overall end markets and life sciences, what kind of assumptions are you making for a rebound in the back half of the year? Are you assuming a gradual improvement with things returning kind of to normal at the end of the year, or how are you thinking about end markets?

Yeah, I guess, Connor, I wouldn't necessarily say we're going to say that it's going to get back to normal, because I think that's an open question as to what is the new normal. With that said, we are... expecting to see improvement as we go through the year uh with uh you know we'd anticipate q4 being you know kind of the highest quarter but it's a sequential improvement from q1 to q2 and through the rest of the year got it and then last one for me is just on the ddpcr franchise can you talk about uh you know how that market is progressing both from a competitive standpoint and just you know um from the

acquisition and then from continuum or, you know, how should we think about the market growth and your ability to maintain share in the GDPR market?

I mean, it's you know, it's certainly a competitive market. You know, today we've got a number of players in the market and and of course, we continue to invest in in the technology both internally and through acquisition. You know, we we you know, as we look forward, we look to the segmentation of our product line, of our platforms within that product line. And, of course, you know, continuing to build on the kind of assay portfolio is an important consideration as well. So, I don't know, you know, I think there continue to be lots of opportunities there. And, of course, we have yet really scratched the surface on the diagnostic side.

Yeah, so the Scylla platform actually allows us at a price point to compete where we don't participate today, which is a robust part of the marketplace. And I think that that's part of the excitement. It kind of bridges kind of where we are with continuum once that launch later this year to really the be with the high end QPCR marketplace and kind of more lower end segments of the DBPCR platform. From a competitive standpoint, it allows us to participate in a market we don't really compete in today.

Great. Thanks, guys. Appreciate the questions.

Thanks, Carter.

And your next question comes from the line at Tyco Peterson with Jeffrey Spies. Go ahead.

Hey, thanks. So on digital PCR guidance, up one to two for the year, you know, does that assume equipment's down again this year? And maybe can you put a, you know, finer point on the declines?

Yeah, Tycho, it doesn't presume that it's down, but its instrument is still relatively soft. Consumables continue to be strong and were strong through Q4. We're expecting that to continue into 25. And so that's kind of the major assumption there is that instruments, and that's really tied to biopharma, biotech, continue to be soft as well as academia.

Okay, and then for this year, you laid out a handful of new product introductions. I guess, any way to think about contributions from those in aggregate?

They're not overly significant. They're not significant in terms of the introductions. They'll build into 2026 and beyond, which is the most critical piece of getting them out to the market.

Okay. Two other quick ones. I guess the messaging on capital allocation, I think you've kind of been messaging you could do bigger deals. You've obviously invested in Geneoscopy and Oncocite. You did the deal today. So are you still focused on, I guess, smaller scale? Are you considering larger assets? And how do you think about balancing that with the buyback?

Yeah, I think that that it's there. There are a couple of factors there. As you as you know, we we've done a lot of kind of earlier stage things in the last couple of years, and I think we certainly have pivoted now. You know, still is a great example to things that come with, you know, our revenue generating. And and as I think John said, you know they fit in our portfolio and and You know, I think we can accelerate that through our global distribution. And then, yeah, so mid-sized or larger deals would be on our radar screen.

Okay. And the last one, just on pricing, what are you kind of assuming X to China diagnostic dynamics?

Yeah, I guess if I net the China effect, we're somewhere around 1%. We're kind of one and a half-ish thereabouts without it in that ballpark.

Okay, thank you.

Thanks, Deco.

And I'm showing no further questions at this time. I would like to turn it back to Edward Tung for closing remarks.

All right, thank you for joining today's call. We hope to catch up with you in person in the coming months. We're also finalizing plans for an investor day that we're targeting for mid-November. We'll look to get out a save-the-date notice as details become more concrete. And as always, we appreciate your interest, and we look forward to connecting soon. Thank you.

Thank you, presenters. And ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.