Biomerieux S A Unsp/Adr

Hello and welcome to the BioMero H1 2025 Financial Performance Call. Please note this webcast is being recorded and for the first part, participants' lines will be in listen-only mode. You will have the opportunity to ask questions at the end of the presentation. This can be done by pressing pound key 5 on your telephone keypad. I will now hand the conference over to Americ Fichet, Head of Investor Relations.

Hello, everyone. Good afternoon and thank you for joining this call. Please note that this conference call will include forwarding statements that may change or be modified due to uncertainties and risks related to the company's environment.

Accordingly, we cannot give any assurance as to whether we will achieve this objective.

I also remind you that today's call is being recorded and that a replay will be available I will now hand the call over to Thierry, and then we will open the call to discussion and questions.

Thierry? Hello everyone, good morning, good afternoon. So I'm going to share with you, first of all, key highlights for this first half of the year, and then I'll follow up with business highlights, then I will hand over to Dionne, who will share an extensive update on the financial performance and then I will hand over to me to discuss about guidance that will be issued for the full year 2025 and will open for joining. So, key highlights, if we look at the key numbers for the first half of 2025, a very strong 9.4% sell growth, which we see as a very solid performance in the market. mostly driven by double-digit growth in all of the Go28 growth drivers, together with strong performance for respiratory panels. What we believe remarkable in the first half of the year is that together with this 9.4% sales growth, we've managed to achieve close to 24% light-for-light increase in profitability. So we are now moving from profitability that was 16.4% at the end of 2023 to 18.2% at the end of June 2025. So very solid performance. And finally, and you know it was a topic that we were working on in the context of our Go28 plan, generation of cash flow. We have tripled, more than tripled free cash flow generation. but 170 million euros in the first half of 2025 versus the first half of 2024. Now, if we go into the different levers and dimensions of a Goal 28 plan that we shared with you at the beginning of 2024, Go for Growth, I'll come back in detail on the same growth drivers, but beyond those growth drivers, it's worth mentioning that the first half was very busy with new launches that are obviously instrumental for future success and sales roles. We've also strengthened our R&D portfolio with two acquisitions in the first half. Point of Care Immunization Solutions with the acquisition of Spinship and the acquisition of Neglaration Sequencing with a US company based in Boston, Day Zero Assets. And all of that is embedded into a 12% of sales invested in R&D for now and for the years to come. Going simple, we'll come back to that in detail and Guillaume will also share with you. Very, very glad with very strong success. You've seen the 24% improvement of EBIT, which is the result of both efforts on many dimensions, the procurement, the manufacturing, the G&A improvements. very satisfactory and definitely a little bit faster than our expectations. GoStronger relates to the engagement of the employees and we are also ahead of the plan. Last year, the voice template shows we are in the top 25 companies, we are in the top 5% in terms of engagement from the employees of PalioMario. And finally, going responsible, we are very much on track with the CSA Ambition. I would like to highlight the 27% reduction in greenhouse gas, absolute reductions, while, as you can see, we are growing very quickly. So, moving on to the business performance, and I start as usual with the four growth drivers that we identified with Go28. So, first of all, BioFire non-respiratory panel. We continue the expansion. We have launched two new panels in the first half of 2025. a mid-plex GI panel that is targeting 11 pathogens associated with gastroenteritis, and that allows to address segments of the market where the reimbursement and coverage, especially in the US, goes from 5 to 11 parameters, so that allows to maximize the level of coverage while maximizing the diagnostics And we are continuing the deployment of commercial levers, cross-selling strategy. I would like to highlight a very satisfactory performance on, now we have a majority of customers that are using at least three panels. And as we are broadening the menu of panels, obviously it will help and support, but three additional percentage points in each one. And the other element, which is also more for the future years and quarters, relates to install base. We already know the largest install base in the market with more than 37,000 units. We don't give anymore, because the market is mature, the quarterly installations for BioFireTorch. However, very happy to share with you that when we look at H1, the number of net new installations, between the losses and the gains, the new installations are actually stronger in H1-25 than in H1-24, so we are not only increasing the install base, we are accelerating the increase of the install base. Growth driver number 2 is the Spotfire. So Spotfire, I won't come back to the very competitive features of the solution, maybe mentioning the very recent FDA approval of NasalSquad So, until now, we needed a nasal pharyngeal swab that we have all experienced in the context of COVID. Now, with the nasal swab, we have a light invasive, especially very relevant for pediatric patients, that will hopefully help and support continuous growth of a crossfire solution. We have a number of infections in Q2 that is a bit slower because it's a very low respiratory come back to that but overall very strong increase in h1 of our install base 1600 additional instruments and very much in line with our plan and we are growing uh 143 percent so very much in line with our target for the end of the year to double outside growth writer number three is probably a problem child for this person We are below our expectations, to be honest, mostly related to China, so 3.3% sales growth with a very strong impact of Chinese decline and the market decline in China that has continued in Q1 and Q2. We'll come back to that when we come back to the guidance. Excluding China, it's interesting to see that we're still growing very nicely, 6%. And taking share is more or less a duopoly market, and we are seeing the competition actually with negative stakes. So we have a very strong dynamic in instruments. We believe a competitive position is strong, but obviously because of China, we don't have expectations. It's worthwhile saying, to the credit of the commercial team, that even though the inflation is now very low, we've managed to increase prices by two points in H1 versus H1-24. The fourth growth driver, very, very positive at 10%, very on industrial applications, so actually a little bit above ambition. We are seeing very strong dynamics, very much driven by pharma quality control, with reagent sales of 15%. And what is very nice in this growth and very satisfying is that it's very much driven by the innovation that we've launched in the last few years. So I will mention three. The first one is BioFire Mycoplasma. We have an industrial application using a BioFire platform for pharma customers. Very strong growth of sales in H1 and very strong dynamics. G-Nut is also a molecular solution mostly used for food, but we are seeing very strong dynamics also on this new system. And finally, We have an environment monitoring new solution called Scrupy Enterprise that is showing very very good promise and also very strong drivers, not only for iCrypt but for the future. And still, even though the market is obviously more complicated with inflation, we managed to increase pricing by 2 points. Now to give you the full perspective of the product portfolio, I need to mention BioFire Respiratory Panel. So we've been growing actually 12%. Q2 was lower, plus 1%, very much driven by very low epidemiology. And also worth saying, Q1 last year, we are growing 17%, so very strong basis. So we've managed to actually not reduce the sales in spite of the lower epidemiology. We're seeing limited tricerogen, so overall strong performance in H1. Immunoassays, Again, this one is the other problem child that we have, with a bit of a more disappointing performance in H1, very much driven by China. The positive note on HumanOS 8 is the new system that we launched on Vidas, VidasTube. It actually would now have 2600 instruments installed, and 700 only in H1 2025, so we are starting to see a good ramp-up of new installations for VidasTube, which is also a good factor for the future. And with this, I hand over to Guillaume who will go through more details on the financial performance. Thank you Pierre, hello everyone. So this is a wrap-up of what Pierre presented. You see the full scale of the group by product range and the different overall drivers of our 9.4% organic growth.

Obviously, molecular as a whole with BioFire RP, non-RP and SpotFire is a very strong driver. taken all together it's actually plus 18% organic growth on molecular and industry applications as already mentioned it's also a very nice growth rider.

Overall it's important to say that with 9.4% organic such a strong performance is probably one of the best in the overall diagnostics market if you look at other players. Looking at the same but by geography, you see that the main source of growth for this H1 was coming from North America at 15% organic and Latin America at 17% organic. Notably molecular in the US was very strong from BioFire and SpotFire. EMEA was softer at plus 4% despite the solid growth in BioFire non-RP and blood culture reagents. The Asia-Pacific performance was very contrasted with China, we mentioned already, overall down 17%, while actually Japan had a very strong growth, boosted by the success of Spotfire in Japan. And India continues to grow double digits, notably on Vidas Immunoressence.

So overall, 2% in Asia-Pacific, more than offsetting China in the region.

Now if we go to the overall PNN view, and I will comment on the right column on a like-for-like basis, you see that with 9.4% growth of sales, we generated 11% organic growth of gross profits, so an improvement of 80 basis points of the gross margin, thanks to a favorable product mix. on the equipment reagents, but also the bio-fire share, which as you know is high margin in the overall mix of reagents, as well as part of our Go28, GoSimple pillar with a contained rise in manufacturing costs and lower transportation costs in H1. FDNA costs were up 7.7% in H1, with a significant one-off to mention in this line, which is the MyShare program, this employee shareholder plan with favorable conditions for employees to buy shares, which costed, accounting-wise, 8 million euros in this line in H1. So, excluding MyShare, we are even growing, let's say, only 6% on SG&A, which reflects as well the Go28 initiatives on simplification and efficiency. I will come back to it in a minute. R&D up 3% at 12.2% and as Pierre mentioned, this includes on the 12.2% the spin shift running costs that are mostly in this R&D line. So overall, thanks to Go28, you can see an improved operating leverage with 24% organic growth on CBIT, while we grow sales by 9.4%. Last comment on this page is FX for an exchange which was neutral on CBIT in H1, despite the Euro appreciation over Q2, and thanks to our hedging policy in place.

Let's zoom together on GoSimple.

Pierre already mentioned the progress. As a reminder, GoSimple is not a few landmark big initiatives, but quite the opposite. It's actually more than 50 different factions being rolled out and delivering on efficiency. So here we want to give some examples. In the COGS category, Cost of Good Source, we can mention that we successfully internalized the manufacturing of our mass spectrometry instruments by TechMS Prime. in the U.S. and in Italy, with a significant reduction in the cost of the instruments, from purchase larger to actually now internally manufactured. On automation, we are making, continuing to make progress on the automation of the biofire reagent manufacturing, now at 30% of the volume on fully automated lines. Third example on COGS, major progress on purchasing or procurement with successful negotiation and also sometimes resourcing, delivering savings on sometimes direct materials among these figures, but also on indirect services. I mentioned earlier in the P&L, a lower transportation cost. This is partly due to purchasing efforts. In support functions, we are working on the new HR operating model that has been finalized in terms of design and we also implemented actually a simplified budget and performance monitoring in finance for the company. In commercial operations, I want to mention the ongoing transformation of global customer service departments as well as the finalization of design for the new marketing operating model. As you can hear, when it's about finalizing design, it means that we will deploy in the future of these initiatives. So we are also preparing for additional efficiency in the next three years of GO28. Overall, these examples and other initiatives translate into notably limited headcounts evolution. We are at about 2% increase in headcounts to be compared to the 9% top line increase. And as you saw in the P&L, contained controlled SG&A increase. Now turning to the P&L Profit and Loss below Contributive EBIT. There is this line about amortization of acquired intangibles, which this H1 has a very significant one-off in the impairment of the reveal technology. As a reminder, Reveal is a FAST-AFT anti-susceptibility testing technology that we acquired in 2022, the company's specific diagnostics. We obtained FDA approval in mid-2024 and we launched commercially in the US in H2 2024. We see today that this market segment, the market segment itself of FAST-AFT, is developing slower, much slower than our expectations. And therefore, our own commercial ramp-up on Reveal is below expectations and below our plans. As a consequence, we have revised our plans and we recognize in H1 a partial impairment of 146 million euros of these assets. It's about two-thirds of the value that is being tested, so about 80 million. is still in the books. We still believe actually strongly in this technology and it's the strong medical, the high medical value that it brings for the most critical sepsis patients. Below in the profit and loss, you see that net financial income improved versus last year thanks to exchange gains on many cash positions and hedging. Tax is relatively stable at 24.7% effective tax rate, actually 24.1% on a recurring basis. And overall, net income is down 25% due to this one-off reveal internment, but it's actually up 45% year-on-year, excluding this one-off reveal impact. Now moving to free cash flow. A very strong free cash flow overall compared to last year, more than triple, at 170 million euros. You can see that the first explanation is that our improvement in EBITDA, which is pretty nice. Working capital requirement was also less negative than last year. We have inventories up 25 million euros in H1. One of the key elements was that, as part of what I explained earlier, internalizing the manufacturing of our biotech MS Prime instruments. We took over all the inventory from our external supplier. That was part of H1 effort. And also we finished our BactiAlert raw material. You remember the story of Bacti bottles last year. Also to mention Watson Capital, a really nice, let's say, improvement on the receivables. It's an efficient cash collection, notably in the US in H1. CapEx are pretty stable in a month at 7.5% with investments, especially on the US manufacturing side, capacity automation, as well in CapEx as the investment in our install base with placement in some markets, such as Spotfire in the US. The 170 million euros of free cash flow were notably spent on business development with the Spinship and Day Zero that Pierre already mentioned. And overall, the groups value shift is very strong with the net debt of only 126 million euros, 0.1 times 12 months EBITDA. We can now turn to the outlook for 2025 and I will start by giving you some updated tariffs exposure from, of course, what the tariffs have been announced today. So we have basically a three for the exposure to tariffs. The main ones are on the U.S. side. We manufacture 85% roughly of what we sell in the U.S. is manufactured in the U.S. So we have an exposure on the 15% of finished products that we import into the U.S. from the main Europe and the small parts of Australia. Second exposure are the imports for U.S. plants of raw materials and components from outside of the US, mainly Europe, sometimes China or Mexico. And then the third one is the import into China of microbiology instruments and biotech reagents. Overall, taking all that together, trying to update our calculation, we believe we should have an impact, but that you will see embedded in the guidance, about 5 to 10 million on CBIT in 2025. So it's maybe an H2 impact, not much in H1. And our first estimate, complex, for 2026, would be a growth impact of about 35 million euros. When I say growth, it means it's before mitigation actions, such as procurement, negotiating with the supplier or resourcing, supply chain, or commercial, of course. And with that, I hand over to Pierre. Yes, so it's the final slide on the revised guidance. So, as you As you can see, we have three types of guidance because of China. The major impact of safe regional self-guidance is China. It shows on two lines, actually, microbiology, where the significant share of private states in China and in the United States, where we don't believe it's relevant to maintain the guidance that we had before. The rest of the guidance is actually very similar and very much in line with what we shared. Biofire non-NFP at plus 10%, post-fire double insects, industry applications around 9%, and biofire respiratory panels flat. Assuming a medium flu season, and I just want to highlight here that we've given a bracket 6 to 7.5% to reflect the uncertainty of the respiratory season. Of course, as you know Q4-24, actually the end of Q4-24 was strong from a respiratory season perspective. So for respiratory panels, even though we show today a cell growth, we cannot expect an impact based on the epidemiology. That's for safe. With regards to SEBIT, there is a very strong performance of H1 at 24%. We are now in a position to review guidance upwards between 12 to 18% of organic EBIT improvements. We've also revised a little bit of ethics impacts. Guillaume was sharing a neutral impact in H1. We still expect to see, unfortunately, an impact in H2. But for the full year, that could be 25 million euros, where we actually guided on 35 to 40 initially. And the last slight update to the guidance is CAPEX, which we now see coming up to 9% of the quantitative sales versus 10-11% as we mentioned at the beginning of the year. And that's pretty much it for us. So, Enric, I think you will handle the Q&A.

Yeah, we can now open the Q&A session. And we will have the first question from Anshan Verma from J.P. Morgan.

The next question comes from Anshan Verma from J.P. Morgan. Please go ahead.

Hi, good morning. Two questions for me, please. Firstly, can you elaborate a bit more on what you're seeing on the ground in microbiology in China? And given that you've upgraded guidance for the full year, but when do you expect any improvement in the market and what sort of visibility do you have? And then the second one is, can you help us understand the drivers of H2 margins a bit better? Can we expect growth margins to improve year over year in H2, perhaps at a similar magnitude to H1? And how sustainable do you think the H1 margin momentum is? Essentially, try to understand what gives you confidence in the upgraded EBIT growth guidance. Thank you.

Okay, so I start with the first question on the dynamics in China, and Guillaume will try to give a bit of color on H2, financial performance. So with regards to microbiology in China, what we're seeing is a very strong cost containment plan in the Chinese healthcare system. that is impacting microbiology among other categories. And in microbiology, it's really a reduction of stock, reduction of use of bottles. It's a massive and drastic effort to reduce the cost of the health care system that impacts microbiology. We are not seeing volume-based pricing happening in microbiology. We are not seeing a spectacular competition move. It's really driven by the market decline. I hope that answers your question. And honestly, I mean, for the rest of the year, we are kind of assuming that it will stay like this. We are not seeing the light at the end of the tunnel for the rest of the year. And a revised guidance with a bracket 6% to 7.5% sell-off. So we, again, as Pierre said, we factor the very strong H1 and as well the prospects for H2, including, as Pierre mentioned,

respiratory panel, which should be lower, especially in our assumption of a medium season means lower in Q4 than in Q4 2024.

That will have an impact on profitability overall. But overall on the trends of OPEX, we expect to pursue, of course, the Go28 efficiency trend that we are seeing and delivering.

with continued operating leverage as we deliver. So we factor all this into this 12% to 18% range for the year.

And again, I would say like the top line, the main viability on the bottom line is linked to actually top line RPCs and effects.

The next question comes from Kavya Deshpan from UBS. Please go ahead.

Good afternoon. Thank you for taking my questions. I just had a couple on spot fire, please. So the first one was just around placement. So I completely understand Q2 is the seasonally weakest quarter. Maybe this time there was a bit of additional pull forward from Japan. But considering all of this sort of maybe phasing effect, would it be reasonable to expect in Q3 that, you can do a bit better than last year's Q3, so maybe like 650 placements. And then just to follow up, so I saw that the Spotfire 15 tax panel had obtained a new PLA code in the U.S. as of the 1st of July. Do you think this provides a reimbursement tailwind for that particular panel in the U.S. in H2?

Thank you. Thank you, Shadia, for your question. So on Spotfire, so first question, We don't want to give specific projections on Q3, Q4. What we know by experience now is that Q4 and Q1 are the big quarters in terms of placement because that's when the respiratory season happens. Q2 is usually lower. We don't give specific guidance for placement in Q3 or Q4 or even the full year. But what we're saying, which we feel very healthy is that we keep doubling ourselves every quarter. So very much even if there is less epidemiology, we are seeing that we are getting the traction that we need to get based on the install base that we have. And remember that we had a Q1 that was, actually we said it, Q1 was extremely high. It was related to the one up in Japan. With regards to your next question on PLA change, market access reimbursement, the short answer to your question is the coverage of point of care respiratory panels in the US is very dependent also by states, so they are depending on the state, some states reimburse very well 15 plex, some much lower, depends on the conditions. The same for the 5 plex. So we're not seeing, the way I would answer your question is we're definitely not seeing any headwind with regards to reimbursement as we speak, but no specific tailwind either related to the PLA that you're mentioning that is filling out in the first draft.

Sure, thank you very much.

Thank you, Xavier.

The next question comes from Isia Noor from MIZ. Please go ahead.

Hi, good afternoon. Thanks for taking my question. I have two as well. My first one is on the biofire placements, which I understand you no longer provide, but could you comment on whether your U.S. installed base for biofire grew year on year, and what trends are you observing in the U.S., given your number two competitor has been talking about winning a lot of U.S. business in the first half? And then my second question is for Guillaume on the SEBIT development. Your new guidance implies around 18% margin, which is a big step up versus 2024. If I understand correctly, this is driven by your Go Simple program, which is ahead of schedule, but also positive mix from molecular being stronger and then micro and immuno being weaker. So if you look into 2026, is there a potential that you see a reversal of this dynamic so your Go Simple benefits are weaker than this year? and your mix normalizes to more micro and amino. So is there a chance here where your margin also takes a step down? Not asking for guidance for 2026, but just want your thoughts on the potential for a slower growth in 2026. Thank you.

Okay. That's a good question.

That's a long question for Guillaume, but I'll start with the first one on biopayer placement. So maybe to remind you and the whole team, but I'm sure you have it in mind, when we communicated our guidance for Go28 plan, we actually knew the competition and we embedded into flat sales for RP and 10% sales growth for non-RP, the fact that there will be a little bit more intense competition, so market share erosion and a bit of price erosion, so it's fully embedded into our guidance. For our plan, Go28, but obviously also for Go25, So what we're seeing is very much in line with the plan that we have, and we strongly believe that, actually, it's a big market, especially non-RPA is a market that will keep growing, so there is room for all players, and in this big market, we still expect to grow 10%. So that's what I can tell you, competitive dynamics, and as I mentioned earlier, We had placements actually in H1 that were better than in H1 in 2024. And in the US, we are also seeing positive improvements in terms of physical pace. So at this stage, I mean, don't take me wrong, I would love to have less competition, but at this stage, we're seeing the competition performance very compatible with what we're seeing for our own plan. First, thank you very much to recognize that you see in the figures what we had, let's say, promised and put forward with the simple efficiency, which definitely is visible and probably ahead. So the initiatives as well as the mix, you're very right. Reversal, I don't see how we could have a reversal.

it's quite relatively obvious that molecular is growing faster than microbiology and even going forward in the guidance that we have given already on Go28 trends overall, average trends. So I don't see this as any way to reverse all or would reverse. And then the Go simple initiatives, as we mentioned, we have initiatives that have already delivering that you see in the figures that we try to explain, to give you some examples.

We already also have some that are in the making, when I said design, operating model, etc., that we deliver over the coming, let's say, quarter to ten years. So more to come as well. So I don't see a way that it would reverse, actually. Yeah, any negative?

Okay, that's very helpful. Yeah, that's very helpful. Thank you. And if I can just follow up quickly with Guillaume as well on the tariffs. Can we annualize the 5 to 10 million number you're expecting this year to about 10 to 20 million for next year, or do you expect some mitigation factors to come into play?

Yes, thank you for your question, Paris.

So actually what I mentioned is that the annualization, we did the calculation, which is 35 million euros growth impact in 2026. We already have some actions that we have been working on to mitigate some of it. We need to continue to work. It's still very recent, but we believe it's manageable in our Go28 plan, this 35 million impact. It's significant, but manageable.

Thank you very much.

The next question comes from Maha Stephanie Pataki from Kepler. Please go ahead. Hi, good afternoon.

I have a couple of questions, and I'll take them one by one. First of all, can we circle back to China, please? Can you remind us how big China is as a total of group and what it represents of micro and imuna at this point in time? And then also, how big is the risk that China has might just not return to growth. We've seen a couple of companies that have talked about softness in China before you, and those companies continue to struggle. So China going ex-growth, what would that do to your Go28 guidance? And then I'll have another one after that.

Okay, so I'm speaking on the control of Guillaume and Henrik on the share of sales. I think it's 5%, as we speak. 6% of the good sales are in China in H1-25. Microbiology, I would say 10, 10-ish of cells in microbiology. So, the square is having an impact. So, to your, I mean, the whitewashing, again, I mean, whitewashing is beyond the decline, majorly, actually, yeah, very strong decline, that's good to know. So, whitewashing is, for the rest of the year, And that led to the revised guidance. We don't see the situation improving. We are kind of assuming it will keep declining at the same pace. I think Guillaume mentioned minus 17% H1. So we are projecting something of that nature between, it's mostly microbiology, but microbiology and immunocytes. And... And of course we need to work on 2026 impact. I admit at some point it will not reduce by 20% every year. The challenge in 2025 is that we are going from a very solid growth to a very solid decline. So it's a very brutal change of dynamics. I'm not sure it's sustainable for the Chinese healthcare market to design like 20% every year, but definitely something that we need to refine and work on with the teams as we prepare for 2026.

Got it. And then my second question, congrats on the strong RFP sales for H1 despite the fact that you had a very tough comparison base. And if we compare the non-RFP versus the RFP performance of BioFire, it might be a bit surprising that the RP continues to do better than the non-RP. I was trying to understand what the dynamics are there, because obviously there is probably lower penetration in the non-RP patient population. Is it just that it takes longer until those panels are being used, or is it because competition has increased that now everyone is eating part of the cake?

That's a very good question, Major. Thank you. Maybe three answers. The first one is, when you compare RP with non-RP and their relative performance in H1 2025, first of all, we have a very strong H1, very strong epidemiology in H1. Very, very strong. Probably the strongest we've seen in many years. So we have very strong dynamics in RP, which, to your point, we love and we enjoy. But you don't benefit that kind of epidemiology boost on non-herpes. Non-herpes, it's more growing and educating the market, and to your point, it takes a bit of time. So you don't have the ups and downs of herpes seasons on non-herpes, which, by the way, for the teams, the manufacturing teams, the supply chain teams, and for our results, good news. But when you compare the two, you have to take into account that Q1 was super strong. especially for ERP. The second element that you need to have in mind is I talked about the base effects of Q1 and H1-24. Non-ERP was extremely strong in H1-24. It was growing 19% way above expectations. So we had a very, very high basis on which to go. So what we are seeing is is very much in line with our plan and the 20% space rules. Finally, to your point, it's a market that takes a little bit of time to grow. And actually, I think that's probably the only area where adding competition is necessarily bad, because there are more companies making noise. And I strongly believe that, be it manageries, be it DCID, be it GI actually there is a benefit in growing the market and having more players in the market makes more noise and is growing the market. So it takes a bit of time and we are working on it but progressing as we planned.

Okay, and then quickly a last question, maybe a philosophical question, something that you can't answer at that point in time, but what do you make out of the developments in the U.S., you know, the debates about vaccinations, the changes at the CDC, the uncertainty that is rising? How are you – what are the internal discussions? Are you popping your champagne already or – Are you expecting this to be rather neutral for the group?

I have a general comment, a more specific comment from my members. The general comment is obviously having a lower vaccination rate is not positive for fighting against the threat of infectious disease. Unfortunately, it's scientific data, so it's bad news for the US, as we speak. If I take a very selfish, biomerious perspective, the challenge is if there is a big spread of the pathogen and the population is very poorly vaccinated, it will generate more people in hospitals. So unfortunately, it's very short term. That would be good news, but I genuinely believe that would not be a positive development for the country.

Okay. Thank you very much.

Okay, we have some online questions. The first one is from Marcos Armani. What potential return outside the US for BioFire and SpotFire?

Okay, thank you Marcos. It probably takes two answers. BioFire, what we've kept saying since Capital Marketer is that Overall, a good 50% of the IVD market is outside of the US, so we should see, I don't know when, but at some point, sales of BioFire being split between the US and ex-US, and today we are at 72%. So the room for growth outside of the US is immense for BioFire. And we keep working on it, and by the way, that's still where we grow faster, even if we keep growing based in the US. On Spotify, a very different story, because on Spotify, our plan to be transparent with you is US and Japan, mostly. That's where we expect the majority of the sales to come from. There may be evolutions for Spotify as point-of-care testing is being developed by the healthcare market in the world, but as you know in Europe it's still very patchy. We are working on it and these are topics of discussion that we have with public authorities on a regular basis, but the development of the point-of-care market in Europe is still very nascent and it's not assumed to develop in a good way yet.

Okay, another question from Arnaud Cadart, CIP. Congrats for the H1. One question on M&A. What are your thoughts on large players like Vector Dickinson and Terpo Tischer selling or looking for selling some IVD assets? Would you be interested in some of them or are you purely looking at acquisition in emerging technologies like you did in the past?

Okay, so of course Thermo Fisher is still in the process, but for BD we've obviously witnessed the transaction with Waters. It's a significant change for BD, so we expect a little bit of disruptions between selling and closing, but we're watching. Waters is not extensively present into the segments where we are. So we're not seeing obvious synergies on the topic that we're looking at, mostly microbiology. But of course we'll be looking at the development of the situation as we see. And as I said, until now, H1, we're in a very competitive position.

Okay, we'll come back to my question.

The next question comes from Jan Koch from Deutsche Bank. Please go ahead.

Good afternoon. Thanks for taking my questions. I would also like to start with BioFire. With a competitor launching a high-throughput multiplex instrument, I'm interested in your assessment of the market size for such a net solution. Could you elaborate on the current utilization levels of your BioFire instruments within large reference laboratories in NDS? And then secondly, regarding VTEC Reveal, Could you provide an update on your 2028 sales targets? And given that this business segment is probably still quite loss-making, are you planning to implement any kind of cost management measures? And then finally, on industrial applications, given that reagent sales grew by 9%, while the overall industrial segment grew by 11%, that implies about 20% growth in instruments. Could you provide further comments or color on the dynamics contributing to this strong growth?

Okay, thank you for your good questions. So let's start with BioFire high throughput system launched by the competition. It actually already exists in Europe. It's just been recently approved in the US, so we know it. It's a level of automation, actually, especially for the loading of the reagents. We see it as an interesting development, but very targeted for very few clients. I mean, to go into that level of automation, you need to be a very high-level user of the solutions. It's just been recently launched, so we'll be looking at the impact on the market and, of course, We will play with what is coming. The second element, the second question is on ViTech Reveal. We have two sub-questions actually. The 2028 target for Reveal was already embedded into a microbiology site. It was not on top off. Instead of giving you a target and reviewing, we don't do it for any other Microbiology project, we keep 6-8% targets for Microbiology in the Group 28 plan, which we believe is a very relevant target, including a lower number for Vitec Reveal. It will work, it doesn't have a massive impact on the total sales for Vitec Reveal and the total sales for the Group, so we think it's still manageable. And maybe two comments on your sub-questions on cost management. On the top line, I just want to highlight the fact that, when you do the impairment test, I'm speaking of the control of Guillaume, or the Overlook's impairment test process, we look at the assets in isolation. But the improvement that it brings, the overall offering of BioMervio in microbiology, and the capacity to show that we are leaders, that we bring innovation, even if biotech level doesn't bring as much as we expected initially, is still very valuable. And it shows in the discussion that we have with the microbiology labs every day. So, as Guillaume said, we keep working on developing it. We see it as a very strategic offering that brings significant medical value. So, we are working very diligently to make it a success. And it has already a positive impact on the perspective of BioMérieux offering in microbiology. Now, you're rightly reading the point of managing cost in a context where the sales are not at the level we expect. We've already made the decision to accelerate the integration of the specific diagnostics company that was at the origin of Biotech Reville into Biomérieux and the R&D organization of Biotech Reville is now reporting into the microbiology team of Biomérieux. so that we fully leverage the expertise, the capabilities, and we generate some efficiencies on working together. So that's the very first step to better manage the cost in the context of the supply, which is not where we wanted it to be. Finally, industrial applications, a very fair point. We are actually growing faster on instruments than on reagents. echoes the comment I was making that what's very positive in the growth of industrial applications is that our new solutions are very successful. So it comes together with successful new solutions, new systems that will pave the way for future growth in reagents. So very healthy cell growth that to your point is not only coming from reagents, also from a very nice increase of the base of a new system.

Great, thank you. Thanks again.

The next question comes from Natalia Webster from RBC. Please go ahead.

Hi, thank you for taking my questions. Just a couple of follow-ups on the microbiology outlook, please. Firstly, just outside of China, you previously talked around some issues around the demand for blood culture also in other regions, including the U.S. in Q1. Just curious to see if this is improving Q2 and if you'd say that this market has now normalized ex-China. Secondly, just following up on that question around the Go28, seem to still be happy with a 6% to 8% for microbiology as a whole, despite the downgrade to 3% this year. So are you just able to comment a bit more about how your other launches are going and what you really expect to drive this in 26 to 28, given the lower expectations for VITAC reveal? And then finally, just a confirmation around The CBIC guidance just wants to check that the tariff impact will be included within the underlying CBIC guidance for the full year and also for the mid-term. Thank you.

Maybe that's the easiest way. Let's start with the last one.

You? Yes. So, yes, on the last one, CBIC guidance, yes, we confirm that we include. In the 2025 upward revised guidance, the tariff impact, as we estimate, 5 to 10 million, that's included. And again, our message on the long-term is that we believe that the 35 million growth is significant but manageable with mitigation actions and inside the overall targets of Go28.

So your questions for microbiology, so as you said very rightly, outside of China, microbiology is growing 6%, which is a very decent growth. It's at the bottom end of our 6-8% Go28 target. You have to remember that 2024 was actually very strong. We were actually above the top, above 8%. So, I mean, unfortunately, I would love to be in control of the market evolution, but there will be stronger year and lower year. So really, in terms of, for us, it's very much in the spirit of the Go 28 target. And this year will be a little bit slower because of China. The other element, you are coming back to the block culture kind of crisis. I would not say the market is fully normalized yet. What we're seeing is it's very much depending on the geographies because a competitor got into backorder, not in every country at once. So some countries were more impacted than others. And in the countries that were impacted, even though the supply is now normalized from the competitor. As you know, there was no backorder on the other side. There are still a bit of restrictive use of puzzles, I would call it this way. We are seeing clients being a little bit careful, making sure that they use the minimum level of puzzles to not put themselves into danger. So I think it will take probably a few quarters to get back to a full normal use. And again, we were building actually a very dynamic 2024. So there is also a point of comparison for 2025 because of the trial. Your question on bi-tech reveal? No, no specific question.

No, some more questions online. Some questions from Christophe Raphael from Hondo. On the headcount, for how long do we expect to limit the increase in headcounts? India, can we get an update on the market share, percentage of sales, level of profitability?

I think we don't disclose those details on a country basis. And Biofire, can we have a split between RP and non-RP for H1? so i i can start with the instant evolution uh because as you know we actually uh when we published 2024 we communicated zero zero percent zero percent additional in 2024. uh this first half we're at around two percent um there is no plan actually to uh to to limit it it's not uh not a task that is made to the teams. What we're doing, and Guillaume alluded to that in the most simple description, is we're working on improving efficiency. So when we get more efficient, we don't need to recruit more people because you manage to actually absorb the workload of the additional work with the people that you have. So when we need to recruit, when and where we want to increase the capabilities, we do. And there are some areas where we actually invest and have more people. But some other areas are reducing. An obvious one is the automation of biofire. When you automate the manufacturing of biofire reagents, you reduce quite significantly actually the number of people that are employed in the light. So it has an impact also on the total evolution of the plant. So it's not an objective. But it's definitely an indicator of efficiency, in my mind, that shows into the improvement of the profitability. And RP, yes, RP, non-RP, so RP is actually 60, 60% of our RP, non-RP, biofiber panels space overall in H1.

We have one question from Ed Paul.

So you have now impaired specific diagnostics, but not fully. Is there an idea we could see further impairment down the line? And what are the criteria here? So maybe for you, Guillaume?

Yes, so to remind everyone, it's a partial impairment, about two-thirds of the value that is tested. The goodwill is not tested, the goodwill is part of the overall microbiology goodwill. So the value that is left remaining on the books is about €80 million. And of course, the criteria for further impairments would be to have another, let's say, slower or lower than planned performance in the coming years.

And another question from Ed was margin progress was quite stellar. Can you break down the 200 bits improvement? How much was pricing?

How much was mix and how much is efficiency from operating leverage from SG&M?

Thank you very much for the recognition of the stellar margin improvements. In terms of mix, I will try to give you the different elements on not exactly as the split of the 200, but yes. On the price, we mentioned about 2% price improvement on microbiology and on industry applications, and a slight, small erosion of price on the respiratory panels, flat for the rest.

And on the mix, we mentioned that it has a significant part of the AC disc of gross margin improvement in it.

And that's it. So maybe one last question from Edward Broutin. Do you expect to benefit from the one big beautiful bill in the US on the R&D and CapEx side?

Do you expect any temporary tailwind to P&A, tax rate, cash tax output?

Thank you for the question. Indeed, we don't expect much on the R&D CapEx side except there is a some cuts on the R&D tax credit in the U.S., but not very significant for BioMérieux. Overall, it's manageable. What is very positive is more the cash side of tax, which, not to make it too complex, but drives for an expense, in fact, an expense of the R&D year on year, whereas the U.S. administration previously was a capitalization, depreciation of R&D expense, which will basically, with the transition, have possibly a very positive impact in terms of cash outflow, tax outflow, very positive impact in 2025 and 2026. So we'll come back to that in the full year, but we should expect a very positive inflow there.

Okay, thank you, Guillaume. And with that, if there is no more questions, we can close the call. Talk to you soon, and most probably for all of you on November 3rd for the presentation of the Q Suite financial performance.

Thank you very much. Thank you. Have a good day. Bye.