Qiagen N.V.

You have seen in our recent deep dive on Quantiferron, the number of citations, the number of publications, taken the value of our partnership for automation with not only Diaserine, but also Tikkan Hamilton. And all these together reinforces the continuous global performance of Quantiferron. And I insist on global, it is growing all over the world in North America, Europe, Middle East, Asia Pacific.

Thank you,

Terry. The next question comes from Doug Schenkel of Wolf Research. Please go ahead,

Mr. Schenkel.

Hi, good morning, good afternoon, everybody. And thank you for taking the questions. So just a couple on guidance. Given Q1 strength and given how you're guiding Q2, our math suggests that essentially you're assuming a deceleration in top line growth to around 4% in the second half. I definitely could be doing the math wrong, but if I'm not, I just wanna see if there's something you're seeing that's moderating from a growth standpoint. It doesn't sound like that's the case. So you're really cutting through all of this. Is this just prudent conservatism in the current environment? So that's the first question. And then the second is, again on guidance, you're maintaining your 4% constant currency outlook for the full year at the top line, recognizing how the environment has changed over the last few weeks and few months. Are there specific areas that we should be thinking of that are doing better than original plan? And then if so, what are the offsets? Thank you very much.

So Doug, thanks a lot. You call that conservatism, I would call it realistic ambitions. Your math is not necessarily wrong, but you have also seen that the volatility in our economic environment or geopolitical environment has not improved, not at all. So we are still living in a kind of and operating in a shaky environment. And this is why we prefer to remain prudent. But obviously, as soon as we have more visibility, we will not hesitate to upgrade and update our top line also guidance. But we need to have more weeks of visibility behind us before doing this. And so on the guidance for 4%, which is 5%, excluding the dielunox and pneumatics divestment, we based that guidance, taking into account that volatility, taking into account and weathering the current discussions or debates around tariffs in the world, for examples, at the same time factoring the still cautious environment on spending, especially for capital sales, factoring also the discussion around research funding in different countries of the world, but also leveraging the very good start of quantifieron, of KayaStat, of QDI and the good performance of

QIAquity in consumables.

The next question comes from Patrick Donnelly with Citi. Please go ahead, Mr.

Donnelly. Hey guys, thank you for taking the questions. Maybe one

just on the tariff exposure, probably for Roland, can you just run through what you're seeing on that front, any mitigations, we've heard from some others, you know, maybe some of the diagnostic reagents are more on the exempt side with China. I know you guys don't have a ton of exposure there, but

can you just talk through what you're seeing on that front and what the impact could be?

Yeah, hi Patrick.

Yeah, I think overall, just to put things in perspective, as you know, it's clearly a very volatile environment and I'm quite sure there will be more changes. And by the way, there's one of the points to you just raised that there's nothing company specific, which will change the direction right now. We really are a bit more conservative right now in terms of the outlook for the year. Same is true here on the tariff side. We feel actually that we were well-prepared moving into that year. As you know, we ramped up quite early our inventory levels, we reviewed our supply change in ways. We clearly looked on also a couple of company processes. All of that, which I think allowed us to, I guess, mitigate most of this impact, which we right now are seeing. There's clearly also the benefit that we are working closely with our customers in sharing some of this impacts. At the same time, I think it's also very fair to say that we see right now also somewhat lower tax environment in general, which is helping us not only to compensate, but as you have seen with our guidance increase on the EPS side, even overcompensating for the impacts we see on the tariff side. Have in mind that we do not have anything material from China into the US. That is nothing but important for us. As you know, from the US into China right now, in general, that is something that is not really material. And therefore, I would say for us, it is really something that we were so far very well able to manage, which is US to Europe. Oh, Europe to the US,

sorry. Yeah, that's helpful, Lola, thanks. And then maybe a quick one just on the margin levers for this year. The expansion has been pretty healthy. Can you just talk about the levers as you work your way through the year on the margins, just the puts and takes, and again, how we should think about the progression as the year goes. Thank you.

Yeah, thanks for that question, because I think it allows me also to reemphasize one important message. As you know, on the one hand side, we said before that we discontinued Noamodi X, in particular last year, but this only accounts for somewhere around 40 to 45% of the overall margin improvement. I think Tiyin, one of the earlier calls alluded to that we have actually ongoing, what we call, QIAGEN efficiency programs, and they are actually adding up quite nicely. That goes all the way from digitization initiatives. As you know, we also, to a certain extent, we organized the company end of last year, and this all is helping actually quite nicely to improve margins. So we expect also clearly for this year to end up north of 30%, and again, outside any larger, whatever, terif macro impacts, which might or might not happen, but in that environment which we're seeing right now, I think we feel very confident that we stay north of 30% and clearly expanding from that level also going forward.

Our next question comes from Tycho Peterson of Jeffreys. Please go ahead, Mr. Peterson.

Hey, thanks. I wanna probe on some of the other guidance assumptions. Academic and government's obviously been a pressure point. We've seen most of your peers kind of recalibrate expectations for the year. Just curious what you guys are baking in for US academic and government for the rest of the year, and then instrument softness. Curious if you're assuming any stabilization or recovery on instruments in particular for QIA acuity, and then Roland, you kind of alluded to maybe potential drivers of upside in the back half of the year. Curious where you think that could come from. Awesome.

So thanks Tycho. I mean, so first of all, as you know, 90% of our revenues are coming for consumables. So I believe therefore that with this, we are probably a bit less exposed to huge cuts in academia and research, but obviously like any company involved in research and academia testing, we feel that there is a slow environment and we remain cautious. That drives, by the way, when I answered the questions from Doug, why we continue to maintain our guidance. It's just being cautious because the environment is not moving that fast. That being said, I believe that we are a bit more protected. And I believe also that most of our sales in research and academia are still mainly around sample take and those are expenses that are very difficult to completely eliminate. For capital sales, our assumption continues to be that we should see a level of normalization in the second half of the year or early 2026. So you see it's very difficult to predict that. We continue to say that there is a normal cycle of renewal in instruments in labs. It's very difficult to say exactly or to know when it's going to happen, but we believe it has to normalize at a certain point in the coming months. Roland, do you want to take the second part of the question?

Yeah, again, just to add on that, on the instrumentation side, of course, have in mind also that most of our instruments clearly have price points, which are probably for instruments on the lower side. So that's clearly also helpful. And you see particular Kaya start and also QE2 doing quite well. And again, I don't see any reason that that should change over the course of the year. In general of upsides, I think you have seen where we started very well and strong into the year from Kaya start, where again, what is really driving that is the menu expansion. As you know, we got a significant number of products approved last year through the FDA, and that clearly helps us not only in the US, where we speak gastro and meningitis, to expand on that, the larger instruments going online. So there's a lot of things being helpful. We added menu quite nicely to the Kaya QE2. You know that we added 100 panels last year. We're going to add another 100 panels this year. Therefore, the consumer pull-through continues to be quite strong. So I would say it's a mix of new launches and clearly also what we believe that the focus, which I think Kaya now is driving since quite some time, still pays off.

And our next question comes from Michael Riskin, Bank of America. Please go ahead, Mr.

Riskin. Great, thanks for taking the question. I think Tyco touched on NIH, or sorry, I think one of the earlier questions touched on NIH and government policy. We'll talk a little bit about the pharma, biotech and market, what you're seeing there. I think it's been a little bit weaker to start the year. Obviously, there's still a lot of noise and there's tension for more noise from ongoing discussions or from pharma-specific tariffs. Just curious if you're seeing anything different in budgets relative to how you were going into the year. And I'll throw in my second one at the same time. The capital deployment front, the initiation of the dividend, a little bit more color on the buybacks. Just curious how you're going to balance capital allocation priorities between those two and M&A going forward. Just give us hearing.

Those are good questions, Michael. Thanks a lot. On the pharma side, I would say on direct testing sales, we are pleased with the performance of especially solutions like QIAQT on the pharma side. This is where we get the best pull-through on our large throughput QIAQT system. We call it the eight-plate system. So we don't see any specific downgrading of the situation here. What I would say, what we believe is encouraging is that we see a growing appetite, again, of pharma company for companion diagnostic. And you see that this is a good activity for QIAGEN. This is where we are probably the leader in the world. We are the only company offering pharma companies with solution not only on PCR companion diagnostic, but also NGS companion diagnostic and also digital PCR. And you have seen recently also that we have opened contracts on QIAstat. So we see a pretty good demands here and we are pretty confident that this should continue. On capital allocation, we continue to try to optimize the management of our healthy balance sheets. As you know, we have three priorities. First of all, investing into our organic growth, which is R&D. QIAGEN maintains a healthy investment on R&D ratio to sales. It's around nine to 10%. It's a good ratio, but we always need to make sure that that ratio is paying off and that we have good return factors from those research and development investment. Second, the new announcement of share buybacks are just proving our active listening to investors and to analysts. Many of you have been telling us for the last years that dividends could open up our stock price to different kind of investors. We listened, we took our time and we decided to come with that policy. And we perfectly understand that it's a long-term policy as well. And the increase to up to 500, it's an authorization. That doesn't mean that it's going to happen on the given date. We said that we have 18 months to deploy that, but it's also that confirm vision and willingness to return the appropriate level of capital to our shareholders. They deserve that. And we believe also in our company. Third, it's M&A. It's not one against the other or it's not that M&A is going to become less of a priority. We believe in M&A to create value. It has to be synergistic with our current portfolio. We mainly focus on what we say Bolton or what we call Bolton. And I would invite you to stay tuned because we have a very, very good pipeline. And I think we are in a position potentially to close some of those M&A in the coming weeks.

And our next question comes from Jan Koch with Deutsche Bank. Please go ahead, Jan.

Good afternoon. Thanks for taking my questions. My first question is on sample tech. What kind of growth should we assume over the coming courses, given that the comps are actually getting a bit tougher? And do you expect a catch up in instrument sales once you have launched the new instruments driven by pent up demand? And then secondly on quantiferon, could you remind us of the market potential you are seeing in China? Given that China is not really a focus market for your partner, do you believe that the install base of instruments in China is sufficient to grab that market opportunity once you receive the necessary approval?

Thanks a lot, Jan. On sample tech, this is a strategy, but let me highlight something. What the current numbers are not really showing is that where we have decided to clearly put the research and development efforts in what we call high value sample tech, application like liquid biopsy, minimal residual diseases, microbiome research. We are growing and we are in some of those fields growing at double digit. And this is exactly where we want to go. Second, to your point, obviously, there is no other competitor in sample tech with such a program of investment into new system. And it's not new. It has started three years ago when we started to upgrade KayaQ with KayaQ Connect, EZ1 to EZ2, and now we have those freelancers. So all these together makes us believe that the guidance that we gave you in New York during our capital market day last year in June to come back to a growth of around 3% per year is really achievable. To Quantiferon in China, honestly, at the moment Quantiferon in China is the leading blood-based test for lethant TB. We have many competitors that are very local, that are not elsewhere, but in China. It is not our top priority. We will bring the workflow of automation with diasterein to the regulatory authorities, but the growth of Quantiferon absolutely does not depend of the performance in China. I would not qualify China as a priority for Quantiferon. It's a market. We are using all our presence, including with diasterein, to continue to take market shares, but this is

how we would see it.

And our next question comes

from Jack Min with Nephron Research. Please go ahead, Jack, your line is open.

Thank you. Hello, everyone. Wanted to ask about the PCR strength in the quarter through two lenses. First was, if you look, the 14% growth, chiacuity, high single digits, it implies everything else grew in the high teens. So I was just wondering if you could talk about why that was so strong. And then on chiacuity, it seems like things are going well on the consumable side, but it does also feel like that prior $105 million target might be a little bit of a stretch given the instrument environment. We're just curious if you had any updated thoughts on that too. Thank you.

Thank you, Jack. And so on the first question, first of all, especially if you compared which, what has been disclosed by some competitors, I mean, we are growing in digital PCR. We continue to sell or to place instrument, obviously, given the environment on capital expenses. Of course, we would like to be able to place more, but we still grow and we are posting, as you said yourself, very nice growth in consumable. So we are definitely taking market shares and you have seen from other disclosure that is not necessarily the case elsewhere. So on the rest of the PCR portfolio, what was quite interesting and encouraging this quarter was the performance of our OEM sales. And you remember that this is also an activity of KaianGen where we have always said it's difficult sometime to plan for a growth on the quarterly basis because those are mainly bulk sales. So you have sometime high quarters, lower quarter, the quarter after. So overall OEM for us is on a yearly basis, roughly $80 million activities, but it performed very well in Q1. So now addressing your, is this a stretch or is there a stretch on Cuyacquity? For sure, we acknowledge that the capital sales environment, especially in research lab of Academia is not helping. But honestly, Jack, I mean, this solution, Cuyacquity is taking market shares. It has been probably the fastest growing install base ever in diagnostic and life science. We continue to grow in consumables as Roland said, as we said during this call, I don't judge the efficient, I will not judge the efficiency of that solution just on a yearly, let alone on a quarterly basis. We confirm what we told you. We are on our way to get above $200 million by 2028 and this solution deserves to be the number one on the market on digital PCR. And we confirm that ambition.

The next question comes from Dan Brennan with TD Cowan. Please go ahead, Mr.

Brennan. Great, thank you. Thanks for the questions. Maybe one for Roland and then for Terry. Just Roland, just back on the tariff math, if you could, did you guys ever size what the gross impact is? Obviously you're doing a terrific job offsetting it, but I'd be interested to see just what that impact is on the gross side and if between cost actions and moving production and suppliers, anything you can share on kind of how you're offsetting that, just a little more detail since it is just a topic. And then B, Terry, for you, on M&A and a prior question, did I hear you say something about the next couple of weeks? Like, is there something, can you just discuss what the pipeline looks like there? And then just finally, kind of what are you guys assuming for the rest of the year for Kaiastat after the really strong quarter in first quarter? Thank you.

Ronald, you want to take the first part?

Yeah, thank you, Dan. Yeah, to be honest, I wish I could because the reason why I think it's not as easy for us is because we started actually already quite early last year with some of the mitigation actions. As I said, we changed quite a bit internal procedures. We really went up inventories. And therefore, it is not actually to set a baseline. But I think what is fair to say that our assumption right now is probably that it would be probably a few cents EPS for that period. Nevertheless, as I said, there's clearly an area which we were able to offset so far. So I would say we feel comfortable that is in that given environment, something that we can cover quite nicely. And then we have to see where it moves. But I would say so far, we feel quite comfortable. We're still looking into that. It says other areas where we can improve. Again, a big impact for us is clearly also that we are actively working with our customers and explain to them the actual situation.

Thank you, Roland. And to follow up on the question on M&A, what I confirm is that it's clearly one of the top priorities of our capital allocation. As you know, we have a very healthy balance sheet. We have a very long lasting experience of M&A, especially Bolton. And I just can tell you that our pipeline is very solid. We are engaged in very discussions that are coming to now, I hope, closing. But as you can imagine, it always takes two to tango. And as long as the signature is not done, I don't say anything. But yes, I confirm that in the coming weeks, we should be in a position to communicate on some of those. That's the first one. On Kaya Start, obviously, as you know, this winter has been once again a quite strong respiratory season. We have been able to answer customer needs here. But our growth is not just respiratory. All the parameters, GI's and meningitis. So let me put it like this. It's a strong start. And so we confirm our guidance for Kaya Start, and we believe that it will be double digit at the end of the year once again.

And

the

next question

comes from Katherine Schulte with Bayard. Please go ahead, Ms.

Schulte. Hey, guys. Thanks for the questions. Maybe first on China. I know it's a small part of your business, but seeing some decent declines there. What does that look like on the diagnostic side versus life sciences? Just be curious if there are any different trends between those two buckets. My second question would be on QDI. Can you just talk about what you're seeing there? I think you said you grew high single digits in the quarter, and you're expecting 15% in that longer term outlook at your investor day. So just curious if you're still confident on that side.

So thanks, Katherine, for the question. I mean, on China, I think there is no specific change to what we come saying in the last three years. China is too big of a market to be ignored. And at the same time, it's too specific and too complex of a market and too risky of a market those days to make it a priority. It's a very limited percentage of our sales. Roland spoke about that. At the moment, it's at 4%. The market is very specific in the sense that they favor local manufacturing and they will always favor local manufacturers. It does impact not only life science but also diagnostic solutions. But as far as kaiagen is concerned, we continue to grow in quantiferon every quarter. We have more difficulties and we are more impacted by that context that I described on life science and other activities. That's the way to see it. Again, too large of a market to be ignored, too complex, too risky to make it a priority. QDI, what we are pleased with in Q1, and we communicated that, if you remember, in the deep dive we organized in December, this leading position from kaiagen, I remind you that at around $100 million, we are the leader on the market. Not only the leader, but we are also a profitable leader unlike competition. It's moving, it's evolving to a SaaS business model. And we took, we said in December that it will take probably a year. We start to see that normalization already in Q1. What we were pleased with in Q1 is that both activities of QDI, as Roland said, not only clinical, but also discovery, were doing better than Q4 and Q3 of last year. So this is encouraging. Now, for the ambition for this year, I would put it as a high single digit. That's our objective and this is what we want to deliver. And I continue to believe that the full normalization and transition to that SaaS business model will happen throughout 2025.

And we'll move to our next question from Matt Sykes with Goldman Sachs. Please go ahead, Mr.

Sykes. Thank you. Good morning. Thanks for my questions. I'll leave it to Juan. Just wanted to focus on sample tech. You guys have talked about a pretty clearly articulated strategy to improve growth in that area through the launching of the automated instruments and you've given us a timeline. I guess my question is, given that timeline and given sort of the capex constraints that are currently in the environment from the customer side, do you feel that the value proposition, the cost savings or higher throughput that you're offering through this automation will help penetrate through maybe a sustained weaker capital equipment environment so you could still see that acceleration in sample tech as we move through 26?

Well, Matt, we believe so. This is our assumption because none of those systems are Me2. They all come with innovation. And this is visible to customers. When I said about Kaya Symphony and our customers in liquid biocity, this is the feedback at the moment. I said that Kaya Sprint was already highly regarded by some major pharma potential partners. This is encouraging. Why? Because they bring innovation in cost saving, in time to result, in easy to use handling. So we believe that this will help us despite the constrained environment to bring them to customers and get those contracts. Obviously, if capital expense remains very low, we might see some delays around 25 and 26, but over the long run, our ambition for 28 remains unchanged because those are instruments that are bringing value and differentiation.

Thank you.

And our last question comes from Casey

Woodring with JP Morgan. Please go ahead, Mr. Woodring.

Great. Thanks for fitting me in, guys. Roland, you mentioned expecting to reach your 31% midterm margin goal well ahead of 2028. Does that well ahead mean 2026 or 2027? And I guess what are the variables that would get you there in 2026 versus 2027? And then on the companion diagnostics, you said that the partnership revenue there grew double digits in the quarter. Can you just give us a sense as to what you're expecting from a revenue perspective from the Companion Diagnostics Partnership revenue, how that's growing, and then how to think about that opportunity moving forward? Thank you.

Hi, Casey. I think we had so many news today that I want to keep something for probably later into the year. So again, we will update that number, as we said, at a given point when we also feel that we were well on our way with our planning for 2026. Again, for me, there's no question that we're going to reach it. There is no question that's going to reach earlier. But we also want to give you the right magnitude because we probably have to update not only the 2026 number, but also the 2028 ambition. So give us a bit of time. And as always, once you feel ready, we will go out.

And to your question on CDX, on Companion Diagnostics, we see a potential, and we have always disclosed the same, of double digits. Those products are bringing value to pharma. You know that we have probably the most extended network of pharma contracts in the market. We have more than 35 main contracts with pharma. And what is very interesting is that we keep adding solutions. And four years ago, five years ago, KayaGen Companion Diagnostics was mainly PCR. And then we added NGS capabilities. And then more recently, we added digital PCR. And then last year, as you have seen, we added syndrome capabilities. So it's healthy. It's a very good window for our technology as well. As you know, also, we have signed a network or what we call Day One Laboratory Contract, because what is the key of Companion Diagnostics, Casey, is that anytime the drug is available, you need to make sure that the test is available at the same time. So we have a network of partners labs all over the world that make sure that as soon as a drug hits the market, we are ready to test the patient as well. And this is why we believe that a double-digit growth for this business is perfectly achievable.

Okay, Terry and Roland, thank you very much. And thank you for all of you for joining our call. Let me close it here. If you have any questions or comments, please don't hesitate to reach out to Dominic and me. Thank you very much. Bye-bye.

And ladies and gentlemen, this concludes today's conference call. Thank you for joining and have a pleasant day. Goodbye.