Qiagen N.V.

Ladies and gentlemen, thank you for standing by. I am Katie, your call operator. Welcome and thank you for joining Kiogen's fourth quarter 2025 earnings conference call webcast. At this time, all participants are in a listening mode. Please be advised this call is being recorded at Kiogen's request and will be made available on their internet site. The prepared remarks will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone. Please press star star followed by zero for operator assistance. At this time, I'd like to introduce your host, Daniel Vendorf, Vice President of Head of Relations at QIAGEN. Please go ahead.

Thank you, operator, and welcome to our call for the fourth quarter of 2025. We appreciate your time and interest in QIAGEN. Joining on the call today are Cherry Bernard, our Chief Executive Officer, and Roland Zuckers, our Chief Financial Officer. Also joining us is Dr. Dominika Maturana from our Investor Relations team. As always, today's call is being webcast live and will be archived in the IR section of our website at www.kyogen.com, where you can find the press release and presentation accompanying this call. 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 20F and other filings with the U.S. Securities and Exchange Commission. We will also refer to certain financial measures not prepared in accordance with U.S. generally accepted accounting principles or GAAP that provide additional insights into our performance. Reconciliations to the most directly comparable GAAP figures are in the release and presentation. All references to earnings per share refer to adjusted diluted EPS. With that, let me hand the call over to Thierry.

Thanks a lot, Daniel. Hello and good morning, good afternoon or good evening, depending on where you are in the world. And thank you once again for joining us. I am very pleased today to confirm that Kayagen continued to perform and delivered a solid finish to 25 with results in the fourth quarter, again above outlook. We exceeded our targets for both sales and adjusted earnings, once again placing QIAGEN among the fastest growing companies in our industry. This reflects continued execution across the business and the trust our customers place in us, even in a challenging environment. I also want to recognize the dedication of our teams around the world. Their work has been essential in delivering those results. So let me walk you through our key messages for today. First, we exceeded our outlook for the fourth quarter, and we also delivered solid full year 2025 results, at the high hand of our expectation with adjusted earnings again above our guidance. Net sales were $540 million in the fourth quarter, growing 1% at CER and exceeding our outlook for flat sales development against the fourth quarter of 24. Adjusted diluted EPS was $0.62 at constant exchange rate, exceeding our outlook of about $0.60 constant exchange rate again. For the full year of 2025, net sales were $2.09 billion, up 5% at CER, and at the upper end of our outlook of about 4-5% growth. Adjusted diluted EPS increased to $2.40 at CER. This was above our outlook, which we increased twice during the year and reflects our ability to deliver in a challenging environment. Second key message, we reached important milestones across our portfolio. We want to highlight here that across our growth pillar, Sample Technologies, Quantiferon, KayaStat, KayaQuity, and KayaGen Digital Insight, they all achieved combined sales of $1.49 billion at CER in 25, delivering 8% growth at CER again. The current trajectory keeps us on track for at least $2 billion in combined sales from our growth pillars by 2028. This reflects continued demand across our portfolio and the increasing relevance from areas where we have decided to invest for the long-term growth. Sample technologies continue to grow with sales up 5% at CER in the fourth quarter and 2% CER again for the full year. This is an indication of the demand for automated consumables as laboratories continue to push to automated sample prep. In addition, during the year, we completed the acquisition of Parse Biosciences, extending sample technologies into single-cell analysis and adding exposure to this very rapidly scaling field. Quantiferon delivered continued growth with sales up 5% at CER in the fourth quarter and 10% CER again for the full year, supported by ongoing conversion and a large and still under-penetrated latent TB testing market. We are executing here on a clear strategy to drive further conversion. Kayakuity, our digital PCR solution, delivered double digit growth in consumables and an installed base that exceeded 3,200 instruments globally since we launched it. as digital PCR continues to gain relevance in applications requiring high precision and reproducibility. KayaStat grew 15% at CER in the fourth quarter and 24% CEREN for the full year 2025. Growth was supported by menu expansion and the growing installed base that exceeded 5,200 instruments. Last, our bioinformatic business, QIAgen Digital Insights, delivered continued growth in 2025, supported by demand across both discovery, research and academia, and clinical customers, and the integration of Genox, which further strengthened our clinical interpretation offering. Third message for today. we made further progress on profitability and cash flow while continuing to execute on disciplined capital allocation. For 2025, our adjusted operating income margin increased 80 basis points to 29.5%, reflecting continued efficiency gains across the business. Those improvements more than offset headwinds from tariffs or adverse currency movements and the previously disclosed dilutive impact from recent acquisitions. We also generated solid free cash flow of $453 million in 2025. This supported investment into the business, including the rollout of our upgraded ERP programs. At the same time, we continue to return capital to shareholders. Since 2024, Kayagen has returned more than $1.1 billion to shareholders to date and introduced an annual dividend payment while pursuing selective bolt-on acquisition to support our future growth. So, as we are heading into 2026, we clearly remain focused on execution, disciplined cost management, and continued investment into our growth pillars. Before handing over to Roland, I would also like to briefly acknowledge a change in our supervisory board. We are very pleased to welcome Mark Stevenson, who joined our supervisory board in January. Mark brings deep operational and global life sciences experience and we really look forward to working with him. At the same time, I would like to sincerely thank Ross Levin for his many years of contribution to QIAGEN. Ross stepped down from the supervisory board after taking on a new leadership role at Memorial Sloan Catering in New York, but we are grateful that he will continue to serve QIAGEN as chair of our scientific advisory board. With that, I'll hand it over to Roland for more details on the financials.

Thank you, Thierry. Hello, everyone. Thank you as well for me for joining our call. We are pleased with our performance in the fourth quarter and full year 25 as we delivered results above our outlook for the fourth quarter on both sales and adjusted diluted EPS at constant exchange rates. 2025 was overall another solid year for QIAGEN in terms of execution and delivering on our commitments. Let me frame our performance around three key messages. First, we delivered solid results with sales for 2025 at the high end of our outlook with continued strength in consumables and our growth pillars amid a cautious funding and capital spending environment. Second, we improved profitability. Expanding the adjusted operating income margin by 80 basis points over 24 on efficiency gains and operation in discipline. These actions more than offset material headwinds from tariffs and currency movements. And third, we continue to deploy capital in a disciplined manner. We are investing to support future growth while increasing returns to shareholders. Our strong free cash flow enabled us to make investments into both on deals like PaaS and Genox. while also returning over 1.1 billion US dollars to shareholders since 2024. With that context, let me focus on the financial drivers behind our results. For the fourth quarter, net sales grew 1% CER and exceeded our outlook for flat sales development against the same period in 2024. Adjusted diluted EPS was 62 cents at CER and above our outlook for about 60 cents. For the full year, sales increased 5% CER and this was at the high end of our outlook. Our growth pillars delivered 8% CER growth for the year and reached our goal for $1.49 billion of combined sales at CER. So we are on track to achieve our 28th goal for at least $2 billion of combined sales from these products. Adjusted diluted EPS for the full year were $2.40 at CR for 25, which was $0.12 above our initial outlook for the year and compares with $2.18 in 24. Let me now provide some additional insights into sales trends for the fourth quarter and for 25. Among our product groups, sample technologies delivered with single-digit CR groups for the fourth quarter, and this was complemented by low single-digit growth in diagnostic solutions and genomics, while sales in our PCR product group declined at a single-digit rate. In sample technologies, sales grew in the fourth quarter was driven by higher demand for automated consumables used on our instruments, and results are included first-time contributions from the past acquisitions that was completed in December. For the full year, sample technologies delivered 2% CER growth in line with our expectations as trends improved over the course of the year. In diagnostic solutions, sales increased 1% CER in the fourth quarter. ChiaStat DX sales were up 15% CER, driven by double-digit growth in consumables as we continue to benefit from the full core menu in the U.S., QuantiFerron delivered 5% CR growth and supported by continued conversion from the skin test. In the PCR product group, sales declined 9% CR in the fourth quarter. Consumables for use on the Chiacruity digital PCR system continued to deliver double-digit growth as we continued to place over 100 instruments per quarter in a challenging capital spending environment. Days of other PCR consumables, however, declined due to factors that included the challenging funding environment and lower OAM contributions compared to the 24-period. In the genomics and NGS product group, sales grew 2% CER in the fourth quarter, driven by double-digit growth in the QIAGEN digital insight bioinformatics business. At the same time, sales of NGS consumables were under pressure. Turning to the regions. Sales in the Europe-Middle East-Africa region led to performance and were up 5% CER for the fourth quarter. Top performing countries included Belgium, the Netherlands, Spain and the United Kingdom. In the Americas, sales declined 1% CER, this results in the United States being flat at constant exchange rates. A factor reflecting this was the US government shutdown. In the Asia-Pacific-Japan regions, Sales were flat in the fourth quarter. Results in China declined at a low TeamCR rate for the fourth quarter over the year-ago period, but keep in mind that this country represents only about 4% of total sales in 2025. Turning to the full year results. For 2025, the adjusted operating income margin rose 80 basis points to 29.5% compared to 2024. and this was achieved despite facing about 120 basis points of combined headwinds from tariffs and adverse currency movements. In other words, the underlying profitability strengthened, meaningful during 2025. Excluding these external headwinds, the margin expanded by roughly 200 basis points in 2025, and this was well above our initial target for at least 150 basis points of improvement, and this was before the tariffs were announced. This performance reinforced our confidence in exceeding our 28 target for a margin of at least 31%, and we are reviewing this target with plans to provide an update. For the full year, we raised our adjusted EPS outlook twice during 25 and ultimately delivered results of $2.38 on a reported basis and results at CER of $2.40. Turning to cash flow. Operating cash flow in 25 was $654 million compared with $674 million in 24, reflecting strong earnings generation. The results for 25 also absorbed about $54 million of cash payments for the efficiency initiatives. Pre-cash flow was $453 million for 25. reflecting higher capital expenditures related primarily to IT investments that include the SAP system upgrade. We continue to deploy capital in a disciplined manner, balancing investment in the business with returns to shareholders. As you know, we completed the purchase of PaaS in December, while in January we returned US$500 million to shareholders through a synthetic share repurchase. On a performer basis, net leverage stood at about 1.3 times net debt to adjusted EBITDA in January 26 as our leverage improves. We have financial flexibility to support continued investment into organic growth and targeted vote on acquisitions while also increasing returns to shareholders. And that also includes our annual dividend payments planned again from mid 26. Taken together, Our 25th performance reflects solid execution on sales growth, margin expansion, and disciplined capital deployment as we look for another year of solid profitable growth in 2026. With that, let me hand the call back to Thierry.

Thanks a lot, Roland. Let me share with you a bit of perspective on our product portfolio. Starting with sample technologies, as you know, a key focus for Kayagen. In December, we completed the acquisition of PaaS Biosciences, extended our sample technologies portfolio into single-cell analysis. PaaS are the scalable, differentiated chemistry that strengthens our sample-to-insight workflows and opens a long-term growth opportunity. Recent launches, such as Evercode wall-blood fixation, enable immediate fixation at collection and extend parses reach into translational and clinical research workloads. Alongside this expansion and acquisition, we execute on our next generation automation roadmap. In 2025, we successfully launched Kaya Siphoni Connect, took initial orders for Kaya Spring Connect and remain on track for the launch of Kaya Mini. Within sample technologies, strategic high-value applications to continue to gain traction. One example is our liquid bioc sample preparation portfolio, which grew by more than 30%, reflecting this increasing relevance in sample technologies. Despite cautious capital spending, our sample technologies install base grew to around 31,400 cumulative placements. Looking 2026, we will launch Kaya Sprint Connect and Kaya Mini together with additional kits, supporting automation across more than 30 applications for Kaya Sprint Connect and more than 15 applications for Kaya Mini. Over time, this will increase instrument use and recurring consumables. Full IVDR launch for Kaya Symfony Connect remains on track for mid-2026. Kaya Spring Connect is planned for February and Kaya Mini for fall of 2026. Moving to Quantiferon, where we continue to invest, enabling laboratories to manage rising testing volumes with higher throughput and more efficient workflows. A key step here is the next generation of Quantiferon TB Gold Plus second assay developed in collaboration with Diasorium. Last year, we completed the European launch of this high-throughput assay. This new generation of chemistry enables laboratories to test up to 75% more patients per hour while reducing turnaround time by around 25%. Building on this European launch, we are planning a U.S. launch of this higher-throughput chemistry in 2026. In parallel, we are also exploring how AI-based approaches can support clinical decision-making in latent TB infection, particularly in the context of increasing testing volumes and the need to guide preventive treatment. Turning to KayaStack, where we expanded the menu and the install base over the year. In 2025, we submitted our first blood culture identification panels for clearance in the U.S. and in Europe. These submissions extend chiostat diagnostics into bloodstream infections and sepsis-related applications, building on panels across respiratory, gastrointestinal, and meningitis testing. We also expanded the install base with cumulative KIA stat placement exceeded 5,200 instruments worldwide in 2025. We continue to invest in new panels, particularly a panel for complicated urinary tract infections where KIAgen will be the first with a comprehensive syndromic solution. At the same time, we are also advancing our work on a pneumonia panel. In parallel, we continue to develop companion diagnostics with our pharma partners on KayaStat. Next, KayaQuity, digital PCR, continues to see steady adoption as customers convert from qPCR and NGS to digital PCR. In 25, cumulative KayaQuity placement exceeded 3,200 systems worldwide. This reflects continued uptake of digital PCR with higher precision. absolute quantification and more standardized results are required. Our focus remains on expanding the assay portfolio and improving workflows. Gene expression remains an important use case for QIAquity alongside applications such as cell and gene therapy. Automation is another key focus with the launch of a nanoplate handling solution co-developed with Hamilton on the Microlab Star platform, enabling walk-away automation and more standardized workflows for regulated environments. Last, QIAgen Digital Insights, where we continue to develop bioinformatics portfolio to support both research and clinical use. This includes progress with Franklin, following the Genote acquisition, integrated QIAgen's curated knowledge with AI-enhanced workflows to support genetic interpretation and clinical reporting. AI has been embedded across QDI, and we are continuing to support research, data science, and commercial solutions by improving workflows, consistency, and the use of high-quality genomic content. For the next two years, our focus is to continue developing at least 14 AI-enabled software solutions within QDI. We are also preparing to integrate large-scale single-cell datasets from past biosciences into the QDI portfolio, connecting single-cell data with downstream analysis to support predictive modeling across research and transnational. And now, back to Roland for the outlook.

Thank you, Thayee. Let me now provide some additional perspectives on our outlook for 26 and for the first quarter. Our ambition remains to deliver solid, profitable growth as we continue to navigate a challenging microeconomic environment. Against this backdrop, we remain on track toward our 28 ambitions of around 7% core sales CAGR from 24 to 28, an adjusted operating income margin of at least 31%, at least $2 billion of sales from our growth pillars and sustained shareholder returns, having already delivered more than $1 billion since 24. For the full year 26, we are initiating an outlook for sales growth of at least 5 percentage points CER and adjusted earnings per share of at least $2.50 at CER. Starting to the first quarter. We expect net sales growth of at least 1% CER compared with sales of $483 million of the first quarter of 2025. The growth rate for the first quarter compared to the full-year target reflects three temporary factors. First, we are absorbing the year-over-year impact from the discontinuation of Neumod X and Diane Works. which represents a headwind of about $10 million or about 2 percentage points in the first quarter. We will see the same impact in the second quarter of 26, but then it rolls off since these products were discontinued in June 25. Second, and like others in our industry, we continue to see cautious life signs, customer spending trends, carrying over from 25 into the beginning of 26. We have reflected an estimated impact of about 10 million dollars in the first quarter or about 2 percentage points of growth. At the same time, we continue to expect an improvement in the funding environment over the course of the year. And third, Quantifierung faces a strong comparison to results in the first quarter of 25. when sales rose 16% CER and supported by tender activity in the Middle East and Latin America. As a result, we expect Quantiferon to grow at a low single-digit CER rate in the first quarter of 26, representing a headwind of about $6-7 million or about 1% point of headwinds to a normalized full-year run rate for 26 of about 6% CER growth. Turning to earnings. Our outlook for the first quarter is for adjusted earnings per share of at least $0.54 at CER compared to with $0.55 in the first quarter of 25. Operational efficiency remains a priority in 26 and continues to support profitability. At the same time, earnings for the first quarter of 26 are expected to absorb the $0.02 dilutive impact of the past acquisition as well as an adverse impact of about $0.02 from the U.S. tariffs that were implemented later in 2025. For the first half of 2026, we currently anticipate sales growth of about $0.02 to $0.03 CR, followed by an acceleration in the second half of the year. The acceleration in the second half reflects various factors and let me provide a bridge to our full-year outlook. As a first point, The comparison impact from the roll-off headwinds from NeumodX and Dynalulux contributes about two percentage points of incremental growth. New product launches, including the three new sample prep instruments, as well as new offerings for KayaStatDX and KayaQt are expected to add an additional two percentage points of growth. As a next point, acceleration year by year, growth from quantifierung starting in the second quarter of 26 is expected to provide about half in percentage point of incremental growth. And improving US academic and governmental funding trends together with a higher contribution from PASS in the second half are expected to add approximately another half percentage point. Taken together, These factors fully explain the bridge from approximately 1% growth in the first quarter to at least 5% growth for the full year. Turning to margins. We expect the adjusted operating income margin 26 to remain at about 29.5% of sales as efficiency gains and broad-based growth are expected to offset margin headwinds of about 160 basis points from the past acquisition, adverse currency movements, and tariffs. This underpins our full year 26 target for adjusted EPS of at least $2.50 DER and a step up from our 25 results. Let me also provide some perspectives on the currency trends against the US dollar. For the full year, our currency expect a tailwind of about 1 percentage points on sales and a neutral effect on adjusted EPS results. For the first quarter, we currently expect a tailwind of about 2-3 percentage points on sales and a neutral impact on adjusted EPS results. Overall, we have taken a prudent approach in setting our outlook, reflecting current market conditions and known headwinds while positioning Kyogen to continue to rank among the fastest growing companies in our sector. I would like to now hand back to Thierry.

Thank you, Roland, and before we go to the Q&A, let me quickly summarize our key messages for today. First, looking back on 2025, KayaGen delivered another solid quarter and closed the year with consistent execution across the business. The growth pillars grew at 8% CR, and this is among the fastest in our industry. This, once again, reflects the strength and balance of our portfolio across life sciences and diagnostics. At the same time, we remain obviously mindful of our environment. We continue to operate amid macroeconomic uncertainty, cautious capital spending and ongoing volatility, which requires discipline and focus in how we manage the business. Looking ahead, Our growth pillars are positions to continue growing in 2026, supported by a very strong pipeline of new product launches and portfolio additions. While we continue to see a cautious life sciences funding environment and softer capital spending, we expect conditions to improve gradually over the course of the year. Keep in mind that our outlook for the first half of 2026 is clearly impacted by many base effects from last year, and we are relentless about the contributions ahead from the upcoming new product launches. We expect our growth pillars combined to step up again in 26, targeting growth of around 9% at CER. Sample Technologies is targeting sales of around $720 million CER. Quantiferon, around $535 million. KayaStat, around $160 million. KayaQuity, around $100 million. And QDI, around $125 million. As you clearly see, our focus remains on discipline execution and operational excellence. In 2025, adjusted diluted EPS grew to $2.40 at CER and we continue to return capital to shareholders. With the completion of the $500 million share we purchased at the beginning of 2026, we delivered on our commitment for solid profitable growth. Those results are keeping us on track against our 2028 ambitions of about 7% sales CAGR, at least 31% adjusted operating income margin, at least $2 billion of sales from our growth pillars, and the shareholder returns of at least $1 billion, which, as I just said, we already exceeded. With that, I'd like to thank you again for your attention and hand back to Daniel and the operator for the Q&A session. Thank you.

Thank you very much, Thierry. Operator, I think we can now go into the Q&A session.

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 your touchtone telephone. If you wish to withdraw your question, you may press star 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 finish asking questions. Anyone who has a question may press star followed by one at this time. One moment for the first question. We'll take our first question from Tycho Peterson with Jefferies.

Hey, thanks. I want to start out on some of the new product launches, you know, Chiacuity, Chiastat, adding 200 basis points to growth in the back half of the year. Maybe just give us a little more color on the products. You know, is this about new markets or deeper penetration? And, you know, what gives you confidence they'll contribute to growth out of the gates? And then on kind of acuity, you know, help us bridge to the $250 million target by 2028 because, you know, you have missed your targets there the last couple of years. So talk about what you think really, you know, gets you to that target by 2028. And then just one follow-up on quantifier on the assumptions for the back half of the year bridge. I think you previously said growth targets would, you know, include competitive entry. Is that still baked in and by how much? Excellent.

Thank you, Taiko, and I will try to make sure that I'm not forgetting any of your questions. On the new products and the impact of at least 2% extra growth from H2 compared to H1 of 26, the way you need to see it is that at least three of those new launches are opening completely new markets from Kaya Jet. Of course, the new panel of KayaStat, the blood culture panel, is opening new segment of customers, new needs. So it's an add-on. In sample tech, KayaSprint marks the entry of KayaGen into very high throughput sample technologies, where we are not at the moment. Therefore, new market. KayaMini is offering or will offer automations for low throughput labs or very small volume research, new market. So you can see that it's justified and realistic to add growth in the second half of the year because of those impacts. Kaya Symphony Connect will be not only upgraded Kaya Symphony, but probably also convince other customers to adopt this technology. So that's why we are confident in this number. On Kayakwiti, you are perfectly right, Taiko, over the last two years, because our sales on digital PCR are mainly directed at the moment in research and academia, we have disclosed that we have been impacted by a more sluggish environment of capital expenses in research and academia. so that created a bit of delay in revenues coming from instrumentation from digital past year. The consumables have been good. For the last three years, we systematically grew at double digit, but instruments were a bit below our expectation. But again, what are we talking about here? When we see or when we say below our expectation, if I take 2025 as an example, we still put more than 500 new CAI equity on the market. If you look at Q4, we put more than 100 systems in Q4, 100 new CAI equity. Those systems will obviously generate consumables tomorrow. So, we have indeed given a target of $250 million revenues by 2028 for digital PCR at CAI AGEN. We might have a slight delay because of the sluggish capital expense environment, but what is important to us is that we continue to grow, we capture new markets, and we grow consumables at double digits while still placing a significant number of instruments every year. Now for Quantiferon. We explained the profile of the growth for 26. H1 is impacted by base effect coming by tenders and significant contract in Q4 of 24 and Q1 of 25. You will see quantiferon picking up in Q2, and obviously those base effects will progressively disappear, and you'll see quantiferon accelerating to achieve probably above 6% growth, let's say between 6% and 7% growth in 2026, which is perfectly aligned With the target that we gave during our capital market day in June 24, QuantiFerron will be $600 million revenues by 2028.

Thank you. We'll take our next question from Jack Meehan with Nefron.

Thank you. Hi, everyone. Thierry, I wanted to get your thoughts. There were headlines a few weeks ago around Categen as a potential deal target. Again, I was wondering what comments, if any, you can share on that.

Thanks for the question, Jack, and I was expecting a question on this. I mean, it's fair to say that our market is still and will still go in through consolidation. That's point number one. At the same time, Kayagen is delivering and focusing on delivering on our solid plan for the coming years, the plan that we disclosed in New York in June 24, 7% CAGRs on the top line, at least 31% EBIT margin, 2 billion from our pillars of growth. So this is where we are focusing. At the same time, we do not comment on rumors. We are always open for discussion that could create value for shareholders. And I cannot say more at this stage.

Understood. And appreciate the execution has been really solid and you still have your hand firmly on the wheel, but also did want to ask about the CEO succession search. Just was wondering when you think we might have an update on that.

What is important for the board and for the company is to find the best person for the job. So we have a search ongoing. As we said in Q4 of 25, this is both an external and internal search. It's advancing very well, but we need to take the necessary time once again to find the best person for the job. In the meantime, We do have a management fully dedicated to QIAGEN. It's not only Thierry. It's the entire executive committee and also 5,700 of QIAGENers all over the world. We will obviously update you as we can progress.

Thank you. We'll take our next question from Casey Woodward with JP Morgan.

Great. Thanks for taking my questions. I wanted to ask on the margin expansion piece. The bridge to 2026 didn't seem to include any operating margin improvement this year outside of the efficiency program, which will fall apart with the policy and tariff headwinds, unless I'm misinterpreting your comments there. So maybe just can you walk us through how you're thinking about organic operating leverage across the business and how some of the new product volume is expected to contribute to the bottom line this year?

I guess, you know, again, I do think actually that 26 will be another significant margin improvement years for Kaizen because I think it's fairly fair to say that we do expect, we announced headwinds from the acquisitions of PaaS, as you know, that is an acquisition where we doubled up on the R&D, doubling down on the R&D investments. So there's clearly a certain delusion for us to, expect for this year. And that is 100 basis points for 2026. In addition to that, we have a combined headwind again, also from tariffs and ethics in 26. So there will be a net margin improvements improvement for about 160 basis points for this year, which again will be compensated, as I said, from pass and tariffs and expected currency headwinds. So 160 basis points, how does this break down? A larger part actually this year comes, and we talked about that in the past, from gross margin improvements. I would say probably somewhere between 75 and plus basis points in 26 comes from gross margin improvement. Have in mind, you will see an acceleration, quite significant acceleration in sample preparation growth. And clearly sample preparation is also one of the product groups, which has a significant cost margin contribution to QIAGEN. So that should be helpful. And in addition to that, we still continues to see outstanding growth around QIA-STAT. And you also know that in the past talked about that we're still running on an underutilization in terms of production utilization for QIA-STAT. So also here, better utilization will drive cost margin improvement. Last but not least, we still have ongoing 40 CAIA efficiency program on the operational expense side. They all will contribute not only in 26, also beyond. So again, we expect margin improvement this year. We expect to continue that in 27 and 28. And as Thuy said in his remarks, we clearly do believe we will see a significant step up north of the 31%, which was announced for 28.

Okay, we'll leave it there. Thank you.

We'll take our next question from Aisha Noor with Morgan Stanley.

Thanks so much. Hi, Thierry and Roland. Thanks for taking my question. My one question is on China. So can you confirm if you're exposed to VBP or any large tender renewals that we should be aware about? And what's the China growth outlook embedded in your guidance? Thank you.

Thanks for the question. We keep the same attitude and consideration towards China. As we have said for the last three years, it's not significant in our revenues anymore. Our exposure is 4% to China. It's a large market. It's too large of a market to be ignored. At the same time, it's too specific and too politically driven as a market to make it an investment case. We are not specifically more impacted by VBP because VBP has been implemented across molecular solution at least for the last three years in China. So it's nothing new for us. Last year was negative. We continue to think that China will be between low single digit to negative to at very best flat. And we do not expect in the current political situation, economic situation, and market situation of China to see a return of growth in the visible future. But again, our exposure is very limited, as I said, 4% of sales.

Thank you. We'll take our next question from with BNP Paribas.

Hi, thanks for taking my questions. Firstly, on Kaiasa, you finally have a complete high-volume platform during what seems to be a material year for replacing such instruments. Is it fair to assume that you'll do much better than the 600 replacements you did in 25?

Well, I appreciate that you always want more. But more than 600 placements into 4,025, it's already a good performance. So I prefer to leave it like this. We grow at 25%. for Q4. We grew at much more than double digit for 25. We gave you an objective of more than 160 million for 26, which shows again a double digit growth. We are a solid number two on this market. This is exactly what we wanted to achieve. And if we can beat our objective on new placement, we will do it. But let's execute first on the 160 million Let's execute on the product launches, on the market penetration, and that would be already good.

Thank you. And a follow-up on Quantifera. Could you give us a bit of additional color on the Q1 guidance here? I mean, is there any price component to your conservativeness there? And how exactly were these one-off tenders given the low shelf life of the kit?

Yeah, I think it's not a question of shelf life. It's a fair question, but it's just a comparison quarter on quarter on deal that we have been able to include in ourselves. It's a base effect. If you look at Cayagen's recent communication on Quantiferon, it did include over the last three years some press releases, some time of significant tenders. In Middle East, the contract with Oman was one of them. In Latin America, the contract in Brazil was another one of them. So those are creating a base impact compared to Q1 2026 because of their date of signature or renewal. As Roland explained during his comments, growth of quantifieron for Q1 2025 was close to 16%. We need to compare this with a normalized growth of Quantiferon over the year, which is 10%. In other words, we grew in Q1 of 2025 six points above the normal growth of Kyogen. It creates, necessarily, a base impact. This is not a conservative guidance. It's just a realistic guidance. Regarding prices, we were very clear when we issued the guidance for Quantiferon early 2025. We know that competition will increase on that market. We fought toward that in our number $600 million for 2028. And we always said that our plan commercially is to move even more customers to pre-annual contracts. This is good for the business. This is good for the franchise. If this sometimes goes with a bit of pricing flexibility, it's a good thing to do.

We'll take our next question from Michael Reichen with Bank of America.

Great. Thanks for taking the question, guys. I want to ask a little bit more in the OneQL book outside of quantifieron. You talked about some of the moving pieces there in terms of the comps, in terms of the pneumatic shutdown, things like that. I want to dive into your expectations for end markets. You had some comments on you expect end market improvement as you go through the year. But maybe you could just expand on that a little bit of how much of that is built into 1Q specifically, maybe as far as U.S. government shutdown or broader markets in general, and just what the degree of improvement you're embedding as you go through the year to sort of hit that back halfway up.

Thanks. So the first comment, Michael, is that the overall market, if I look at – some of our main competitors' recent earning calls, we see that they are in the same ballpark of guidance for Q1. Most of them, not to say all of them. It is clear, and we already said that last year, that if we consider the funding environment, especially for research and academia labs, and especially in the U.S., we believe that the situation is better now that it was six months ago. Why? Because six months ago, most of the comments were targeting a significant decrease of budgets like NIH, for example, when now we know that we are going to be probably seeing a slight increase in 26 of the NIH budget. max around 1%. This is good for the business. At the same time, we say today that we believe that many research and academia labs are still in a kind of wait and see attitude. Once they get more visibility, we believe, and it's embedded partially in our H2 expectation, that capital expense, especially in research and academia, will improve because they will have more visibility. So, we think that it's fair to assume that progressively, throughout 2026, the total market can come back to a growth of mid-single digits.

Okay. Okay. That's helpful. And then maybe I can dig into sample tech a little bit. In the slide, you called out a $720 million target for 2026. Just to confirm, that includes parsed contribution in it of about $40 million. And then just confirming that. And then the second part of that question would be just how much of that do you expect to be contribution from some of those new automation solutions in sample tech. Is that a meaningful contributor in 2026 in that part of the portfolio or is that just gonna take a little bit longer to ramp? Thanks.

So you're perfectly right for your numbers. We said 720 million total sample tech. It includes indeed around 40 million contribution from PaaS. And as we discussed you and I yesterday, PaaS contribution will be Higher if you compare H1 to H2 for parts, we are probably at 40% for H1 and 60% for H2 in terms of weight in their revenues. So you're perfectly right on that. Now, if you consider the new launches, Kaya Symphony Connect, Kaya Spring Connect and Kaya Mini, they are fully embedded in the 2% extra growth coming from the new products that we are planning H2 to H1.

Thank you. We'll take our next question from Kavya Deshpande with UBS.

Good afternoon. Thank you for taking my questions. Just a couple on Kiostat, please. So firstly, on the guidance for 2026, is there anything you might be able to share on what you're assuming in that guide for the U.S. respiratory season in 2026? And then secondly, I think you shared a couple of years ago, that at the point of your last CMD, over 50% of Kyostat customers were using more than two panels. Would you have any update on this? It would be good to get that, just given you've done a lot of menu expansion since then. Thank you.

That was our first question. I think we have seen that, again, the respiratory season was significant from December 25 to probably now. We'll see what is going to happen in the coming weeks. You perfectly read, I believe, that there are harsh winter conditions in the U.S. as we speak, but it's too early to say. What I can tell you is that I believe that respiratory issues will remain significant for the years to come. And that's why the respiratory panel on syndromic, like chiostat, are so important. I think people are more aware, they are more aware of flu, whether it's A and B, RSV, obviously COVID, or other respiratory pathogen. So I believe that it's going to become a well-established panel and testing for the years to come. That's why it's key to have this panel. And as you know, in the US, not only we have it in a long format, large number of pathogen, but we have it also on a short format. a more reduced number of pathogens. So to your second part of your questions, what's the proportion of customers using more than one panel? It's clear that the 50% continues to increase because that's the relevance of adding panels consistently year after year. And as you know, those panels are very coherent. They address mostly infectious diseases laboratories. So yes, this number is improving as well.

Perfect. Thank you very much.

We'll take our next question from Harry Gillis with Barenburg.

Thank you for taking the questions. I have two on the midterm guidance. Could you just confirm whether your target for 70% sales growth through to 28 or the 2 billion from your growth pillars stands excluding the contribution of past? then secondly you've previously talked about being well ahead of your 31 margin target in 28 but i noticed you haven't really talked about that recently and obviously you know you talk about 180 basis points of negative effects impacts in paris over the uh this year and and over 25 and 26. are you still well ahead of this target despite these headwinds or or should we now assume that's not the case

So we mentioned that, and I will also ask Roland to chime in at a point. So first of all, to your first question, the 7% CAGR. We gave that CAGR in June of 2024 in our CMD Capital Market Day in New York. You will agree with us that since 2024, the economic environment has become even more volatile tariffs, volatility in currency evolutions, geopolitical instability, funding difficulties for research and academia. Confronted with those difficult and volatile market conditions, this is the role of management to take the necessary capital allocation to defend our growth profiles, and this is perfectly what is behind the acquisition of companies like Genox and Parse, fully synergistic with our portfolio, accretive to our top line, and financially accretive in a reasonable time frame. So because our environment has worsened, it's fair to say that the 7% now fully includes also the recent acquisitions. If the market improves quicker, we might even beat that. But at the moment, let's focus and execute on the 7% all in. To the second question, Roland alluded to it, and I will also invite him to give his opinion. We believe we can beat the 31%. At the same time, we say the market is still difficult around us, so let's see what could be a new guidance analyzing different factors before we come to the market. Roland, on this point?

Yes, thank you, Thierry. Again, just to give you some further thoughts to that. Again, as I said before, we clearly do expect that the growth in 26 is particularly driven by a very strong growth of our pillars of growth. Pillars of growth are going to grow 9%. sample prep is going into high single-digit area, chiostatinase significantly double-digit, chiacuity significantly double-digit, QDI double-digit as well. These are all high margin products, so we will see an impact here as well. I do think, and again, also just looking at 25, it's a pool of evidence, right? Sorry that we didn't know that the U.S. is implementing tariffs, but if I exclude that, and again, putting currency movement to the side, we gave out a target of 150 and we were achieving 200. Again, we are not, just for a single year, that's a significant improvement. We're not standing still this year. And I'm quite sure that we have this, our 40 initial operational efficiency program, a lot of things which we still can move. So that it's not that we have to generate idea. It's about execution. And I do think that that is well on its way. So yes, there will be something north of 31%. I do think it's fair that also to say that we will take the time to announce it because we're in a management position here. It doesn't mean that the numbers are going to change, but I think it's also fair that whoever comes in has to review the number and has the opportunity to review the number and then we go to the market.

Thank you.

Thank you. We'll take our next question from Dan Brennan with TD Cowen.

Great. Thank you. Thanks for the questions, Thierry and Roland. Maybe just first one, just back to Quantiferon, if you don't mind, just on the pricing comment, Thierry, has this been consistent with what's been happening in the market over the last couple of years, or is this kind of more of a newer strategy just to try to lock in some customers, maybe making some price concessions? Just wondering if you can kind of elaborate on that.

No, no, it's not a new strategy, Dan. We disclosed that very transparently more than a year ago. We see an evolution of competition and we need to fight also to make sure that we can move an already important base of customers that are on a pluriannual contract to more customers on pluriannual contracts. So it's always a negotiation. We just disclosed last year that we need to be ready also to make some concessions. But if it secures a deal for two or three years more, I think those are interesting concessions. Obviously, they have to be reasonable. What I can guarantee you, Dan, is that overall, we continue to pass price increase every year on quantifieron as well. So if you look at the performance on pricing 2025 for quantifieron, it was positive. I was just saying that when it's necessary, we need to be Flexible. That's it.

Terrific. And then maybe just a follow-up. I know there was a question earlier back on, like, you know, strategic landscape, things like that, which I'm sure you're limited in what you could say. But maybe could you speak to a little bit the market environment? You know, you've been delivering on your plans and, you know, kind of ahead of plans in some cases, you know, for the 28 targets. But when you look at, like, where the market sits today, you know, you've got, you know, some pressure, you know, on academic and pharma, even though things might be getting better, and unclear if customers want to deal with less players. So while you're executing, when you think about QIAGEN's ability to win or to be successful or to create your whole value as a standalone versus maybe, you know, maybe as part of a bigger company, like, has anything changed over the last year or two just given the market dynamics? Thank you.

We have all seen that the market dynamic has been impacted by volatility and uncertainties over the last two years and three years, especially in research and academia. I think clinical has been a bit better. To your question, QIAGEN has a clear plan for sales, for our pipeline, for new launches, for profitability. We disclosed that plan in New York in June 24. And so far, we are executing as per this plan. This is where we focus. Yes, the market has become more difficult. But as I said, we found also solutions to continue to support our growth in addition to our organic growth. Those are the acquisitions of very interesting technologies, Franklin or PaaS. We will continue to do that. Kayagen invests and will continue to invest on average between 9 to 10% of our sales into research and development. This translates into launches of new products. Three new systems, for example, in sample tech this year. This is unprecedented. So it's clear that should laboratory in research and academia start again to invest in capital expense, We are coming with new solution. KayaGen will probably will be one of their priorities. This is what I can say, that the market has not been easier, more volatile, but the fundamentals of the market, both life science and clinical remains extremely strong. When we will have more visibility on economic evolution and funding, I think it's fair to say, a mid-single-digit growth profile for this market is perfectly acceptable and realistic.

Thank you. We'll take our next question from Doug Schenkel with Wolf Research.

Hey, guys. Thank you for taking my questions. One on guidance and then one on disclosure requirements. Simply put, I'm having a hard time getting the math to work. It could be me, but let's for a second assume it's not. If we grow revenue around 5% reported, if operating margin remains flat, net of deals FX, If we keep non-operating items about flat year over year and we reduce share count to 209 million, I think those are all your key guidance assumptions, as well as you provided tax rate. If I put this together, you end up actually above 260 per share, if I'm doing the basic math right. You guided to 250 or better. What are we missing? So that's the first question. The second on disclosure requirements You know, keeping in mind that you cited, I think it was German disclosure requirements as one of the key reasons that you disclosed the plan when you did, I'm wondering what would be the logical next required disclosure. Obviously, a new hire would need to be disclosed, but is there anything else under regulations that you would likely have to disclose in advance of that event? Thank you.

I do not want to disappoint you, Doug, on your numbers, but I do think you look like that some of your team is missing one number because one number, of course, is significantly going to change, which is the net interest contribution, because we clearly did an acquisition, we clearly did a significant share of our bank program is $500 million. So the net interest number is probably somewhere between $40 and $45 million down. So that is probably the number you are missing in your calculation. And yeah, on disclosure requirement, again, germ law is complicated. So I'm lucky enough, I was never becoming a lawyer. And we're clearly working with our lawyers on this topic all the time. Again, the general rule is it says material news in a market regardless of which topic and you will have the feeling that there is information in the market which is clearly based on call it leaked information or change the share price into a significant extent. The company has to comment on that. And that is regardless of any topic, right? And so I would say that it's a framework. As I said, we typically leave these decisions to our lawyers to judge. And again, any kind of information, if that is an important event which we have to pre-announce or not, you haven't seen anything from Kyogen so far.

Thank you. That will conclude our question and answer session. At this time, I'd like to turn the call back over to Mr. Vendorff for any additional closing remarks.

Thank you very much. I would like to close this conference call and thank you for your participation. If you have any questions or comments, please do not hesitate to contact us. Thank you very much.

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