Qiagen N.V.

Ladies and gentlemen, thank you for standing by. I am Katie, your call operator. Welcome and thank you for joining QIAGEN's preliminary Q1-2026 earnings conference call webcast. At this time, all participants are in a listening mode. Please be advised that this call is being recorded at QIAGEN'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 the star key followed by zero for operator assistance. At this time, I'd like to introduce your host, Daniel Vendorf, Vice President, Head of Investor Relations at QIAGEN. Please go ahead.

Thank you, Katie, and welcome to our call on our preliminary results for the first quarter of 2026. In light of the update to our 2026 outlook, the pre-announcement was issued in line with German disclosure requirements yesterday evening. We are planning to publish full Q1 2026 results on May 6th, 2026. We appreciate your time and interest in QIAGEN. Joining the call today are Thierry Bernard, our Chief Executive Officer, and Roland Sackers, 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 Investor Relations section of our website at www.investorrelations.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 US Securities and Exchange Commission. We will also refer to certain financial measures not prepared in accordance with US Generally Accepted Accounting Principles, or GAAP, that provide additional insights into our performance. Reconciliations to the most directly comparable GAAP pickers 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, and good morning, good afternoon, or good evening, depending on when you are in the world. Thank you for joining us, and thank you also for your interest in the Kaizen. As you saw in our announcement for our preliminary results for the first quarter of 2026, we deliver strong profitability as achieved the outlook despite mixed sales results. Sales were below our target due mainly to significantly lower immigration testing demand and continued caution among US life sciences customers. The important point, however, is that four of the five pillars achieved or exceeded our expectation, and we do continue to believe in the long-term opportunities for quantification. While we are taking a prudent approach to the updated outlook, we see tangible drivers for stronger growth trends in the second half of the year. Let me now highlight some key messages. First, we delivered adjusted EPS of 54 cents at constant exchange rates, in line with our outlook, despite mixed sales trends and a powerful macro environment. Net sales were $492 million, up 2% on a reported basis, but down 1% at CER, and below our outlook for at least 1% growth CER. This reflects the mixed performance, with solid momentum across many areas of the portfolio, offset by the weaker than expected quantifier sales. Despite the lower sales, discipline's execution supported earnings and enabled us to deliver on our adjusted EPS outlook. Second, our growth pillar delivered a solid performance with 4% increase of sales CER. Sample technologies grew 9% at CER and also rose 3% CER, excluding the past acquisition. Diacuity delivered double-digit CER sales growth on gains in both consumables and instruments. Our bioinformatics business, KyaGen Digital Insights, delivered solid single-digit CER cells growth, led by growth in clinical applications. And KyaSTAT diagnostic cells declined 1% CER, facing a tough comparison to a stronger three-year-year quarter. At the same time, for KyaSTAT, consumables were up on double-digit growth for GI and men's anxiety spanase, where instrument placement continued at a growth at a good pace. As I mentioned at the start, quantifier on sales declined, and those were down 5% CER. This was mainly due to significantly lower immigration testing demand in the US and in the Middle East. This impact is exclusively isolated to immigration-related volumes. We did not see changes in pricing, competition on or underlying demand in the key patient testing markets. We continue indeed to see stable ordering patterns and solid growth in the remaining 90% of the quantifier on business. As we have said before, the underlying market for latent TB testing is growing at about 4% to 5% annually, and we now see the U.S. market growing about one percentage point lower at this time due to the immigration situation. Overall, we expect sequential improvement over the course of the years for quantitative testing. Third key message. We maintain a high level of profitability in the first quarter with our disciplined approach to managing the business and making value-creating investments. The adjusted operating income margin is expected to be at about 27.4%. This reflects continued efficiency gains while absorbing headwinds from tariffs and currency as well as the impact from the past acquisitions. Fourth, we have updated our outlook for 2026 to reflect those developments and a more cautious macro environment. Net sales 2026 are now expected to grow about 1% to 2% CER with adjusted diabetes expected to be at least at $2.43 CER again. The updated outlook reflects lower expectations for QuantiFerrand, continued caution among the US life sciences customers, volatile OEM customer ordering trends, and ongoing geopolitical uncertainty for 2026. At the same time, we see very tangible reasons for FATOS's growth of about 4% CER in the second half of 2026. This includes the end of headwinds from the discontinuation of Pneumodyx and Dialinux, benefits from new project launches, a sequential improvement in Quantiferon, and better-than-expected contribution from PaaS, and last, a modest improvement in life sciences demand. With that, I'll hand it over to Roland for more details on the financials. Thank you, Thierry, and good morning, good afternoon. Let me now take you through the financial details behind this announcement and make us more updated outlook. As Thierry said, Q1 was a mixed quarter. The heat of adjusted EPS execution was slightly below target. the preliminary net sales of 492 million US dollars were up 2% on a reported basis and down 1% on constant exchange rates. The positive impact of about 3 percentage points on sales at actual rates was in line with our planning. Same was the case for adjusted diluted EPS of 54 cents on a reported basis and 54 cents at constant exchange rates in line with our outlook. Let me now review the sales results. Scamper Technologies delivered 170 million USD of sales, up 9% CER compared to the first quarter of 2025. Excluding the past acquisition, which is performing very well, this year it rose 3% CER. Growth was supported by demand for automated consumables and instrument placements, as we saw good trends worldwide. In diagnostic solutions, sales were 185 million US dollars and down 4% CER. The main driver here was the 5% CER decline in grant deferred sales, which overshadowed solid trends in many patient testing groups. Chiropractic sales were down 1% CER, which was expected, given the tough prior year comparison to a period with a very strong respiratory season. Diagnostic solutions also included a year-over-year headwind as expected from the mid-25 discontinuation of the non-MODEX system. PCR Nucleic Acid sales declined 30% CR to $69 million. With this product group, Triacurity delivered double-digit CR sales growth. However, we also saw significantly lower sales in other areas, including PCR consumers and the OEM business. as we felt the impact of life science funding constraints. And in the Genomics NGS product group, sales were up 4% CER with $57 million. This was supported by QIAGEN Digital Insights, which grew at a solid single-digit CER pace, driven by growth in clinical bioinformatics. Let me now turn to profitability. We are expecting We are expecting a just operating income margin of about 27.4% in the first quarter of 2026, supported by ongoing efficiency gains as we absorb the impact of tariffs and currency movements, while also investing into the future of the past single-cell analysis business. With that, let me head back to the call to Trini. Thanks a lot, Roland. Let us step back a bit for the quarterly numbers and share a few reasons why, at Kayagen, we continue to feel confident about the portfolio and the path to stronger growth. The message here is that our pillars continue to move ahead and only the 2026 sales target for Quantiférant has been adjusted. As we mentioned earlier, the issue with quantifieron is isolated to immigration demand. Importantly, this does not change our view of the long-term opportunity. Trends in other patient testing groups remain solid, and the underlying market for latent TB testing continues to grow. As you have probably seen, New data published around World Tuberculosis Day further reinforced the role of Quantiferon in detecting latent TB infection, in particular in high-risk and immunocompromised population. We are also advancing scalable laboratory workflows for Quantiferon. A new generation of chemistry for Quantiferon detection on liaison system with our partner Glycerin is now being rolled out in the U.S., in addition to the earlier launch in Europe and other areas of the world. We are also seeing targeted screening initiatives ramp up in various fashion groups, diabetes or dialysis, particularly as well those being prescribed biologic therapies and immunocompromised individuals. Looking ahead, we will host a virtual quantitative spotlight session on May the 7th. where we will provide you with more details on our strategic priorities, workflow automation plan, and the additional enhancements that underscore the long-term opportunity of this product. Turning to sample technology, this remains one of the clearest examples of the portfolio moving ahead as forecasted. We continue to advance our automation strategy with our three new system launches for 2026 moving ahead and receiving positive customer feedback. As an example, KayaStream Connect was launched in February, and we are very encouraged by the first wave of orders with the first sales contribution expected in the second quarter. We also have the first orders for Kaya Symphony Connect after the launch in late 2025. Full IVD commercialization remains on track to begin in the middle of this year. Kaya Mini is also on track for launch later in 2026. We continue to see good traction in strategic high-value areas such as liquid biopsies. where triagen systems are being integrated into the workflows of major players. The PaaS business is also performing better than expected, and we are on track to exceed the 26 sales target of about $40 million. As you remember, PaaS gives us an entry into single-cell analysis, a highly attractive area where researchers need scalable workflows and high-quality data generation. This was also reflected at the recent AACR cancer research meetings, where we showcased applications across our oncology workflow. This includes our expanding capabilities in sample preparation, single-cell analysis, and digital insights. For Kayakriti, we continue to see strong momentum in digital PCR. Our focus, as you know, this year includes expanding applications such as gene expression while continuing to develop a portfolio of companion diagnostics with our pharma partners. Turning to chiostat diagnostics, we continue to broaden the panel menu and strengthen the platform for syndromic testing while also advancing our pharma partnership in companion diagnostics. In the first quarter, for example, we received U.S. clearance for the GI panels on the Kyostat Rise, which is, as you remember, the high-throughput version of this modular system. We now have the respiratory and GI panels clear for the Rise version. Kyostat is also being expanded into bloodstream infection testing. In Europe, we launched the first of the new blood culture panels in January, we also submitted the first panel to the FDA, and we are awaiting a decision. This marks a very important expansion beyond respiratory, GI, and meningitis to support better, faster clinical decision support. Finally, ThiaGen Digital Insights, our bioinformatics solution, continues to strengthen our sample-to-insert strategy with its status as a leader in bioinformatics. Within QDI, clinical bioinformatics remains the key growth area, double digit in this first quarter, as we are building capabilities through the integration of the Franklin platform from the recent acquisition of Genox. So across those areas, the message is very consistent. We are addressing the quantifieron immigration testing demand issue, while the rest of the portfolio moves ahead as planned. And now, back to Roland to discuss our outlook. Thank you, Thierry. Let me now provide some additional perspectives on our outlook for 26 and for the second quarter. As we have said, We are taking a prudent approach to reflect the developments in the first quarter and the current macro environment, while remaining focused on delivering solid, profitable growth. For the full year 26, we now expect net sales growth of about 1-2% at constant exchange rates, compared with our previous outlook for at least 5% CER growth. Adjusted diluted earnings per share are now expected to be at least $2.43 at CER compared with our previous outlook for at least $2.50 at CER. The updated outlook reflects two main factors. First, transference sales in 26 are now expected to be steady at a CER basis at around $500 million. This compares with our previous target for about 6% CR growth or about $535 million. We have reduced these expectations in light of the immigration testing demand. This customer group represents about 10% of total contrarian sales or about $15 million. We reduced this by about $35 million for 2016. and we have not seen changes in demand for the remaining $15 million, which is largely European immigration testing. This impact from Quantiferum reflects about 1.5 percentage points of headwinds to full year 26 growth compared to our prior year outlook. Second, we have taken a more cautious view on mainly US life science customer spending for a total of about $40 million, or about two percentage points of headwinds. This involves three components. About $15 to $20 million of headwinds comes from research customers in the US. Another $20 million comes from volatility in customer ordering in our OM business, which also includes government agencies in the US. And lastly, a few million dollars of pressure comes from the Middle East conflict and the broader geopolitical uncertainty that has developed since the start of the year. Turning to the second quarter, net sales are expected to decline approximately 2 percentage points CER compared to $534 million in Q2 2025. these sales trends take into consideration that 20-feron sales continue at a largely unchanged level from the second quarter of 2025. While we believe in the full-year target for Kyostar DX sales, we have purposely taken a more conservative view on these product sales for the second quarter in light of the strong year-ago comparison. The pillars as a group are expected to grow about 4-5% CER in the second quarter compared to the 4% CER growth in the first quarter of the year. And as a reminder, the second quarter will be the last period with headwind from the discontinuation of Noemod X and Dynalunox. For adjusted diluted EPS, these are expected to be at least $0.60 at CER in the second quarter compared to $0.60 in the prior year period. Operational efficiency and disciplined cost control remain a key priority for GIAGEN and continue to support profitability despite lower expected sales. At the same time, Earnings in Q2 will absorb a diluted impact of around $0.01 from the past acquisition. Let me now address four drivers for faster sales growth in the second half of about 4% CER. About 2 percentage points of incremental growth come from the roll-off of headwinds from the discontinuation of NeumodX and Dynalunux and unchanged from our prior expectations. Second. About 2 percentage points are expected to come from new launches including the sample prep instruments and additional offerings for Piastat, AX and PiA-QLT. This is also unchanged from prior expectations. Third. About one percentage point is expected to come from improving year-over-year growth from 20-serum as we anticipate growth in the second half of 2026 compared with the first half. Finally, about half a percentage point of improvement is expected from a combination of the past acquisitions transforming better than our target for about $40 million of sales in 2026 and modestly better trends in US life science funding as the year progresses. Taken together, these factors explain the expected bridge from sales declining about 1-2% CER in the first half to a growth rate of about 4% CER in the second half to reach our target for about 1-2% CER growth in the year overall. And looking ahead, in terms of mid-term growth, we see very positive trends for collagen as she works through a period of rebasing on the fair-on-demand. The pillars of the group are expected to grow about 7% for 26, and we see this continuing at a healthy pace in the future and supported by quantifiering returning to a more normalized growth rate in 27. With a series of new product launches on the way, in particular the new instruments and sample technologies, this provides even more confidence in delivering faster sales growth. The pillars are also increasing as a share of total sales. They are now at about 75% of total sales and rising, and we are taking actions to stabilize the base business. Let me also briefly address currency trends. For the full year, we currently expect a tailwind of about 1 percentage point on sales and a neutral impact on adjusted EPS. This is unchanged from our previous assumption. For Q2, we expect a tailwind of about 1% points on sales and a neutral impact on adjusted EPS. Overall, we have taken a prudent approach in updating our outlook, reflecting current market conditions and known headwinds. At the same time, we remain focused on disciplined execution, protecting profitability and returning to growth in the second half of 2026. Last but not least, We also confirm our adjusted EBIT target of 29.5% CER for the full year. I would like now to hand back to Thuyen. Thank you, Roland. Before we go to the Q&A session, let me go over a brief summary of this call today. Q1 was a mixed start to the year, but we delivered adjusted EPS in line with our outlook through discipline execution. The sales shortfall was driven mainly by the quantifiable immigration testing demand we set, and we are addressing this directly and proactively. We continue to view this as a way but absolutely not a chance in the long-term opportunity for latency testing. Trends in older patient testing groups remain solid, and we expect sequential improvements during 2026. The rest of the portfolio continues to execute on target. Sample technologies, CalAquity and CalAgen Digital Insights delivered solid growth in this first quarter of 2026. New product launches and portfolio additions support our confidence in stronger growth trends in the second half. We have updated our 2026 outlook to reflect what we are seeing in Quantiferon immigration testing trends as well as ongoing caution among US life sciences customers and the broader macro environment. But at the same time, we see tangible reasons for faster sales growth in the second half of the year. So in closing, we are updating expectations prudently and we are staying really focused on delivering solid, profitable growth. With that, I now would like to hand back to the operator for the Q&A session. Thanks a lot.