Biomerieux S A Unsp/Adr

Hello and welcome to the BioMario Half-Year 2026 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.

Thank you, hello everyone, good afternoon and thank you for joining this call. I am with Pierre Boulud, CEO, together with Guillaume Bouhours, CFO. Please note that this conference call will include forward-looking 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 these objectives. I also remind you that today's call is being recorded and that the replay will be available on our website www.biomérieux-finance.com I will now hand the call over to Pierre and then we will open the call to questions. Pierre?

Hello everyone, good afternoon. So a couple of words on the agenda first. I will first of all share a few highlights on the business The first half of the year. Then I'll head over to Guillaume, who will go into more details around the financial performance and 2026 outlook. And I'll finish the call with a few words on ambitions for 2027 and 2028. So you've heard the disclaimers from Aymeric. Moving on, on the H1 highlights. So as you've seen, we are reporting a sales growth that accelerated in Q2, plus 5%, 7.3% excluding respiratory panel sales. That is compensating a lower Q1, that was at 3.9% of decline, significantly impacted by the low respiratory epidemiology. Our SEBIT at the end of H1 declined by 5% organically, reflecting especially the modest sales evolution that we had in Q1. We kept a sustained focus on innovation, I come back to that, with multiple product launches in H1 Almost 300 million euros of pre-cash flow generated in H1 growing 76% versus H1 2025 and Guillaume again will share more details on this cash flow generation. Moving into to give you a bit more color on the financial performance. I would like to give a bit more qualitative comments on the different pillars of the Go28 initiatives. I've already mentioned multiple launches. So Q2 was heavy actually in terms of innovation. We have filed in June a revised panel for biofire gastrointestinal panel that includes its performance and its relevance in the market. With regards to point of care, we are accelerating with the filing of the vaginitis panel to the FDA and to the European authorities. And we are very happy to get the approval in June of Spinship, the first test on Spinship, the immunoressense platform that we acquired last year for high sensitive troponin. Finally, in industry, a couple of launches I would like to highlight, Gyneptyper for Salmonella, very common contamination that we see in the food industry that allows to better identify the source of the contamination and axelix acquisition that is further strengthening offering in the pharma quality control with regards to go simple making also good progress in q2 headcount evolution is very much under control we actually have 200 accounts less at the end of June versus end of December, so managing costs efficiently, and especially with the reduction of workforce in China following the difficult 2025 that we have gone through, and also decided to accelerate the closing of the San Jose site by one quarter. We are progressing also on SG&A efficiency and implementing the different operating models that we have engineered. With regards to COGS improvement, I would like to highlight two elements. Automation for BioFire. We are now at 60% of BioFire approaches 100% automated. And with regards to procurement, additional savings above 10 million. With regards to Go Stronger, we've conducted a voice of employee and we are, for the third year in a row, within the top 25% of the healthcare industry in terms of engagement. With regards to our sustainability objective, we are very much on track with the CSR ambition. At the end of June, we have reduced by 31% our greenhouse gas absolute emissions. So moving into business highlights, I would like to highlight Q2 performance. As I said, very strong performance actually in Q2. A good 28 growth drivers have grown 8.5% in Q2. And if you allow me to start with BioFire non-respiratory, we've grown 7.5%. Further increase of our install base, we keep increasing the number of instruments that are in the market and leveraging a cross selling strategy. With regards to spot fire, very strong performance. If I look at reagents only in Q2, we grow 40% in the context of low epidemiology and 400 instruments installed in Q2. with no specific one-off either in Japan or in the US. It's actually the strongest Q2 since launch, further demonstrating a good commercial uptake. We are now at 7200 instruments, so the install base is 60% bigger than it was in June 2025. In microbiology, very much in line with the 2026 guidance, we've seen improvements in China, we've also seen improvements in instrument sales, as you know, we are slow in Q1, and very solid dynamics in blood culture. Finally, industrial applications, very strong 9% sales growth, with very strong performance for reagents, growing double digits, with price increase 6%, a little bit of tricerogen, very similar to what we've experienced in the past, 2 to 3 percentage points, and even though it impacts us less than in Q1, a couple of points, but lower respiratory epidemiology, immunosafety almost flat, with good dynamics on virus Q2. Now with this, I wanted to highlight Q2, but I'm handing over to Guillaume to share with you performance for H1.

Thank you Pierre, hello everyone. So let's look at the H1 organic growth overall plus 0.2% organic thanks to the 5% in Q2 that Pierre just highlighted. So overall on H1 we see the following trends biofire non-RP at plus 5.5% with again low epidemiology impacting pneumonia there in Q1 and a solid 7% in Q2. Biofire RP, we discussed it on much lower epidemiology than last year I think it's important to highlight reagents overall in H1 plus 35% despite, as you all know, a lower, much lower epidemiology in H1 26 and H1 25. Microbiology is overall plus 4% in H1. Notably, very strong dynamic on bacterial air, so on blood culture reagents. And I think Pierre mentioned the positive Price increase that we are able to deliver in microbiology. Immunohistamines minus 3, but actually when we exclude and we know the trend of China and cocalcitonin, PCT, when we exclude those two, we are on a slight growth path, positive. And these two applications continue to deliver well, as Pierre mentioned with acceleration even in Q2, plus 7% overall in H1, with reagents sales up double digits, including also there some price increases between 1 and 2%. If we turn now to the view of H1 by geography, a few comments there. So North America, overall minus 1%. Of course, it's the region that is most exposed in our portfolio to respiratory with BioFire RP and SpotFire. Yet, we saw in the region solid growth in industry applications, in non-respiratory panels, and in microbiology. Latin America continued on a super good dynamic, overall plus 11% organic NH1 and actually solid on all product lines in that time. EMEA, as you can see, plus 2% organic, notably good growth on BioFire non-RP, industrial applications, and microbiology. Asia-Pacific delivers minus 3%, but it's actually a very contrasted picture inside Asia-Pacific, where China was down 6% overall in H1, and I remind you of the coveted microbiology, For us, we also had a negative trend in Japan that's a bit new and that was mainly due to changes expected in the regulatory coverage population for spot fire in Japan. On the other hand, in Asia Pacific, we saw very strong growth in India and a very good level of growth in South Korea, balancing China and Japan overall. So with that, let's look to our income statement. So I will comment mainly on the organic, so it's called the change like for like on the right column. So I said we sell up 0.2% organic, we deliver the gross profit slightly down, minus 1%, and actually margin on an organic basis, minus 70 basis points. This is due to a slightly unfavorable product mix, of course with a lower share of biofire RP, one of our high profit products. Also an increase in our manufacturing projects spend and the impact of the Middle East events twofold. One that you can expect on the transport cost of our products from the early prices, but also some raw materials that are plastic based Important to note in terms of tariffs, so I'm talking about the US tariffs, they were quite neutral year on year from H-125 to H-126, as we have the new tariffs applied in H-126 which were not in place in H-135, but these were offset by the fact that we were able to apply for reimbursement of 2025 extra tariffs, the ones that were let's say rebuffed by the Supreme Court and that we received the reimbursements for more or less similar amounts to the tariffs we paid for each one. Moving to SG&A, so our sales, general and administrative costs were overall as you can see down 2% in each one due to lower variable compensation for our teams and also the effect of Go28 efficiency initiatives and additional new cost measures, we'll come back to that, to adapt to the slightly slower growth. R&D expenses plus 5% in H1, leading to 13% of R&D for their sales. So overall, as Pierre said, SEBIT is down 5% on a night-for-night basis, with a margin of 15.9%. The margin itself is down 100 basis points on an organic basis. In fact, negative minus 35 million and the effect of change of score acquisitions of minus 5 million. With that, we can have a look at the income statement below SAVE-IT. So first, the line of amortization of acquired intangibles came back to a normalized level at minus 14 for H1 after a very significant impact last year, which was a partial impairment of specific prevailing technology. Our net financial expense moved to minus 5 million euros in H1, the slight move compared Income tax on the PNL is, let's say, pretty stable in terms of effective tax rate, 23.4%. Overall, they bring an adjusted EPS that is down minus 4% organic, so pretty similar to the evolution organic of SEBIT, and minus 17% in terms of reported, also similar to the reported SEBIT evolution. We can move to the cash flow. So Tiger Value delivers a very strong cash flow in H1. So from an EBD of 440 million euros, slightly down, we had actually a cash generation from working capital, thanks to a good management of receivables with notably a good cash collection from customers in the US. Inventory is actually down, so that's positive, thanks to The other key element in the cash flow is definitely tax payments. So just to remind you that the U.S. tax reform, where it has no specific impact in the PNL, but has a cash impact, so a timing impact, a very favorable for Biomérieux. That's what you see in the downturn of cash payments from 123 million euros last year H1 to 28 million euros this year H1. CapEx at 7% of sales, very slightly down in million euros, two-thirds of it is manufacturing, mainly for capacity automation, about one-third for placement of new instruments, mainly spot fire, for our customers. So overall, a free cash flow at a very nice level of almost 300 million compared to 170 million last year, and put by Homérieux Balance Sheet at a strong position of a net cash of 200 With that, a few words on our 2026 outlook that we actually would like to reiterate and confirm. So, based on the solid Q2 2026 that Pierre has detailed, and we must highlight a lower comp basis in H2 last year, which was at 3% versus plus 9 in H1 last year. We confirm the 2026 sales guidance, for plus three to plus five organic cells evolution in 26, and Cebit guidance of zero to 10% organic growth of Cebit. That being said, I would like to maybe preempt, and I'm sure you have usual question on what's the underlying assumption of the respiratory season. So basically if Q4 2026 respiratory season is in line with Q4 2025, which itself was 10% below Q4 2024, we would expect full year 26 sales growth to stand more towards the bottom of the annual guidance range. On the opposite, if there is a strong epidemiology in Q4, this would have a positive impact on respiratory panels, spot fire sales and pneumonia panel sales. On SEBIT, it's important to mention that we see a slight improvement in the prospects of foreign exchange impact for the year, but now we revised to minus 40 to minus 50. I remind you that we had an impact of minus 35 in H1, so we took the bulk of it in H1. And in CAPEX, we also revised slightly down from initially 9% of sales to more around 8% of sales. And with that, I would like to hand over back to Pierre for the outlook of 2027 and 2028.

Thank you Guillaume. So let's move now towards the mid-term outlook. So what we wanted to share with you is what we see that since 2024, the world has changed. We've seen a worsening of geopolitical environment that translates into a higher focus on defense and military stand. that comes in many countries at the expense of the healthcare budget and that translates into financial pressure on our clients. So these evolutions make a Go28 plan even more relevant since we target to be more agile, more customer focused, more efficient in order to better serve our customers. Q1, as we shared, was heavily impacted by the epidemiology and the respiratory season. This impact has now faded into Q2. And we have now a clearer understanding of the dynamics into different businesses. So to reflect this new environment, and now that we are seeing better situation following the epidemiology impact of Q1, and we think this environment will stay in the next few years. We have decided to adjust our financial perspectives for 2027 and 2028. So with regards to sales growth, we now aim at 3 to 6% annual sales growth for 2027 and 2028, with a very in the same focus on the growth drivers that were identified for 2028. I'll come back to that. We also continue the implementation of all the initiatives that we had in the Go Simple plan for the plan and from a profitability perspective we now aim to grow a bit higher than the organic sales growth that we just revised for 2027 and 2028 at Construct, H&M and Scope. With regards to going stronger and going responsible we actually kept So if we go into the go for growth and the respective growth drivers, this is a kind of summary slide of what we support this revised objective of 3 to 6 percent annual organic sales growth in 2027 and 2028. So with regards to HyPlex, actually the assumption that we've made at the end of 23, beginning of 2024 with regards to pricing erosion, market share evolution are very consistent with what we're seeing now and actually very much in line with the plan but we have adjusted to a market growth that is slower than what we expected especially for non-respiratory we are expecting a market to grow 10 to 15 percent Very dynamic market to grow 10%. We are seeing the market growing slower than that because of the financial constraints. So if that slower market grows, our new ambition is to grow from 4% to 8%. Spotfire, we've adjusted to take into account the fact that we are giving an objective in euros, but at 20-23 euro exchange rate. and also take into account the fact that with the success of Spotfire we are now more dependent on the respiratory season and Guillaume was mentioning it for 2026. So it's actually a very similar objective to the objective that we had but we give it in terms of percentage of growth in 2027 and 2028 that goes between 25 to 40% growth versus what we've seen in 2026. Microbiology, the adjustment relates to China. When we communicated the plan in early 2024, we did not expect China to decline close to 15% in 2025. Guillaume said it's progressing a bit with a sales decline of 6% in H1. But still, since China stands for 10% of global microbiology sales, we've kept all the other assumptions unchanged, actually. So if we go one by one on the different segments, so for non-respiratory panels, we still We believe, in spite of the competitive announcement that we have the best-in-class solutions, built in terms of time-to-result, there is no better solution in the market today, even though they were more recently launched in terms of time-to-result, we still have the largest menu in the market. With Fireworks, we are actually capable to give epidemiologic data to our clients on a very regular basis. By the way, the cyclosporiasis outbreak in the US is a clear demonstration that having cyclosporiasis into the iPlex panel allows to do real-time surveillance of what's happening in the US in terms of outbreak. The third element, the fourth element I would like to mention is we're still growing our install base by 3000 units in two years, between end of 2023 and the end of 2025, so we will increase our install base by close and a very high-level customer service that is highly acknowledged and recognized by our customers. Together with Best-in-Class Solutions, we keep bringing up-to-date panels. GIE was launched in 2025. We've just communicated that we are updating a GIE panel making it even more competitive. We're planning to launch a new manager at this panel. Spotfire. So as I said, very similar ambition versus what we were sharing earlier. We are uniquely positioned with 110% of the assays that we're launching that are flyaway. The tree truly allows us to address the point of care market. We have still the fastest time to results and most comprehensive respiratory menu. As I shared, very strong traction and dynamics, 7,200 instruments since launch. 400 additional instruments in Q2 only and it's very exciting we are starting to expand the Spotfire menu outside of the respiratory infections with the vaginitis panel launch in Q2 26 as we committed to in 2024 we are also preparing for STI launch in 2028 and meningitis panel launch in 2028 so that will allow to Microbiology, maybe a few highlights here. First, blood culture practice is normalizing after the challenges from a major competitor with regards to bottle supply. So we are seeing very dynamic sales in blood culture in 2026 that will further support the use of the U.S. to come. We are the only player that is capable to have a fully integrated offer on identification and the only one that's capable to provide fast identification with BioFire BCID, but also fast antibiogram with Vitec Reveal. And we keep bringing innovation. We've already launched the small Vitec replacement, Vitec Compact Pro. We are ramping up Vitec Reveal. We are going to launch Vitec Pro, which is a big Vitec in 2027 and planning to launch the small virtual Bacterialert 3D in 2028. And as I said, China is a big deal in microbiology, 10% of the microbial sales. So as we are not expecting the market to grow as it used to be, we are localizing manufacturing for instruments to make sure that we can tap into the Chinese market evolution in the years to come. Industry. As I said, we've kept the ambition similar to what we said beginning of 2024. We're seeing a strong need for quality control, both in food and in pharma. Strong traction in pharma, especially with regards to cell and gene therapy. We've launched GenUp for Mycoplasma. We are launching SpotFire for Mycoplasma for Pharma Quality Control. We just invested into Axelix that is an additional cytometry solution for Pharma Quality Control. So we are seeing a strong traction that we are planning to keep in the years to come. The two additional segments that are not growth drivers but obviously have an impact on our total sales evolution are BioFire Respiratory Panel and ImmunoSales. So BioFire Respiratory Panel, what we're seeing, as I said, is this high-flex market to not grow as fast as we expected. So it used to be flat sales for respiratory. We're now expecting minus 5, which is a combination of a slow price erosion. 1-3% and a bit of reduction of volumes. Knowing that, of course, what is the big driver for RP sex is epidemiology. We've seen it in Q1 2024, very strong sales growth. We've seen it unfortunately in Q1 2026. with very strong decline, so that's the main driver for the evolution of ERP panel. Immunoissays, very similar evolution, the only addition here is that we include into immunoissays evolution the launch of Spinship, and we'll come back to you when we are closer to launch, possibly due for, launch is now expected in Europe in September. So that's for the Go for Growth drivers for the next two years. With regards to Go Simple, a couple of comments here. First of all, in 2024 and 2025, we've actually over-delivered in terms of SEPIT improvement. So we've demonstrated that the different initiatives were actually translating into actual improvement and operational leverage. Now, in the context We are looking into adding, accelerating some initiatives and adding some new ones to make sure that we are capable to bring a seedbed to a growth that is higher than the organic cell growth. It will take additional effort for the organization that we are working on for 2027 and 2028. The last two dimensions of the plan, going stronger. We are still very active. This is a very important topic for us that relates to deployment of core behaviors, core processes simplification. We still aim to be in the first quartile. We've been there in the last three years and we're still working to make sure that we continue to strengthen team members engagement. the sustainability dimension and CSR roadmap we've updated this roadmap in at the beginning actually of 2026 so we've kept it unchanged what's important but probably most noticeable is we've added an ambition to decline a scope free emissions by 35% in 2034 so the teams are actively working on this and so far we're very much in line with the target So now closing the call, before we get into the Q&A, key takeaways to share. As you've heard, we are seeing a solid Q2 2026 performance, posting 5% organic cell growth. That allows us to confirm the 2026 guidance. We are taking the opportunity of this Q2 communication and the stabilization of performance to update and adjust 2027 and 2028 financial perspective. So we now plan an organic sales growth to be between 3 and 6% and a CP growth to be higher and Organic Senkos. While we are doing this, we keep investing into the future that translate into the hopefully soon approval of Spotfire by G90s, BioFire GI, new version of a panel, the launch of SpringShift, and new instruments in Microbiology, as well as the update of the industrial application solutions with Genev5. And with this,

If you wish to register for a question, please dial pound key 5 on your telephone keypad or submit a question through the chat. If you wish to withdraw your question, please dial pound key 6. The next question comes from Odysseus Manisiotis from BNP Paribas. Please go ahead.

Hi, thank you for taking my questions. So firstly on your new 27-28 targets, they imply pretty material deceleration in growth from what the midpoint of your 26 guide implies for H2. So you're essentially going from around 7-8% to around 4.5%. Could you touch on areas where you may have been particularly conservative and is there anything else other than market-wide factors that you mentioned on spending that are driving this in terms of competition, price pressure, even let's say Cepheid's upcoming Hyplex launch. So that's the first question. And the second one, regarding what backs your growth ambitions after 28. So you've touched on a few drivers here with Spotfire SDI, Spinship, the smaller virtual instrument. I'm thinking, Should we be thinking about a re-acceleration after 28? Is this a bit of a time where you won't be taking as many product launches as usual? Or should we be viewing that 28 post growth trend similar to what we're seeing to 28? Thank you.

Yeah, thank you, DCS. So let me take your two questions in order. So the first one that relates to I think the right way to look at it is if you want to triangulate this ambition, I would triangulate with Q2. I mean, obviously, Q1 was very much, as I said, very much impacted by epidemiology. So we still have a low epidemiology in Q2, but it feels like a more solid basis. And in Q2, sales growth is 5%. It's actually very close to the midpoint of our long-term guidance, so that's the way I would look at the next year. So not in the spirit of deceleration, but more in the spirit of continuing the trajectory that we've seen in Q2. And of course, there are upsides and downsides versus Q2. A lot of things will happen, but I think it's a solid guidance in a context where we are capable to generate 5% sales growth in Q2. Your second question relates to evolution of our sales after 2028. Well, that would be the object probably of a new capital market day. I mean, today we really want to focus on giving you better perspectives on how we are seeing 2027 and 2028. Of course, the investment that we make in innovation in 2016 in the years to come. So too early to say how we translate in terms of sales dynamics, but the idea is to continue to grow faster than the market in the years to come.

The next question comes from Isiah Noor from Morgan Stanley. Please go ahead.

Hi, good afternoon, Pierre and Guillaume. Thanks for the question. I'd love to start with Spotfire. So your new guidance of 25 to 40% using 2026 as the jump off point would imply something like 400 to 410 million or so of sales by 2028 versus your prior target of 450. Would be great to know what the main drivers of this change are. Is it just flu or do you see the need to embed more pricing and competition from newcomers to the market? And then my second question is on instrument sales. So in the last quarter, you called out multiple headwinds from geopolitical uncertainty, pressure on hospital budgets, delays in capital investment decisions. Do you think that the instrument purchasing this quarter was somewhat of a release of that pent-up or pressure demand last quarter, and we're still kind of in a weak demand environment? If you could give us an update on the instrument outlook embedded in your guide, that would be great.

Maybe I can start with the equipment, thank you Aisha. So equipment sales actually we saw a good pick up in Q2, plus 5% overall on equipment sales, which still leads to an overall H1 equipment sales of minus 7.5. because again as you rightly pointed Q1 was very much down so yes it's improving it's also one of the elements that helps among others of course as Pierre mentioned to see clearer things on the base of Q2 for the market trend and the future and to come back to your first question on SpotSpire so you're right to say that when you apply the midpoint more or less based on a 2026

for a little bit more than 400, 410, 400 million euros in 2028. And the main difference is actually exchange rate impact, which as we kept saying in the last couple of years, the euro has been devaluated. It was the only guidance that we are giving in euros So it was starting to be a bit misleading to give a Euro target based on 2023 exchange rate. So to make it simpler and easier to forecast for you guys, we give a progression in percentage like we're doing for the other product ranges.

Perfect, understood. And if I could just follow up, could you elaborate a little bit on this change in Japan reimbursement or policy change and whether that's a one-off quarter dynamic or do you expect it to continue in the second half?

I can take it. It's actually very illustrative of the worsening of the market conditions I was talking about. We are very successful with SpotLayer It's not a market share challenge. It's actually the Japanese authorities are restricting the use of spot fire panels, have decided to restrict the use of spot fire respiratory panels to quote, high risk patients. Unquote. So it limits the use of this very valuable, of course, Unfortunately structural on the one hand. On the other hand, the authorities together with the clinical associations are still in the process of defining what a high risk patient means. So there was a preliminary understanding that was for instance it's only children So there is a bit of a wait-and-see period that is impacted short-term sex evolution in Japan that will hopefully be clarified in the coming months. But the bad news is still there. and the coverage of SpotSpire panels in Japan. By the way, while we were seeing this, overall SpotSpire reagents have grown 40%. It was a negative, but overall we still have very strong performance on SpotSpire.

Understood. Thank you very much.

The next question comes from Anna Ratcliffe from Bank of America. Please go ahead.

Anna, we don't hear you. Maybe you are on mute. No. So operator, yeah.

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

Good afternoon, Pierre and Guillaume. Thank you for taking my questions. My first was on the 2026 guidance for respiratory panels. If I heard correct, Guillaume, I think you said the bottom end of the range is likely if the Q4 season this year is in line with last year. From the outpatient data we have, it looks like volumes are still below last year, even as the comparators have become a lot weaker in the past few weeks. Is there something that you are seeing in your specific inpatient data that is giving you confidence that the Q4 flu season will be at least in line or grow versus last year? And then my second question was around the non-respiratory guidance for this year. It seems to now imply an acceleration from about 5.5% in the first half to over 10% in H2. It's obviously also a lot stronger than your medium-term guidance for this franchise. So just curious to know what is driving that and whether that's the new GI panel or something else giving you that confidence there.

Thank you. Thank you, Kasia. So maybe coming back on the 26 guidance on RT, just to repeat, because you're right, it's an important point. If the Q4 and the season at the end of the year, so Q4 26 is at the same level as Q4 25, We would expect our sales to be at the bottom end of the guidance. It's an important precision overall on the range. I don't think we might always debate on the data during the summer, especially in the southern hemisphere, etc. We don't believe that much can be actually derived from summer data In any way to the winter season. So we more look at it in a simple way and taking assumptions. And that's why we give you if it's at the same level of last year, which was, by the way, special as well. Last year was actually low October, November, super high December. So overall, let's talk Q4 overall. And that's The color we can give. And we will see all together if the epidemiology becomes average or stronger by the end of the year, but at this stage we don't know. Non-RP does imply your right, I think your calculation is correct, maybe a bit lower than 10 for H2. And we've seen this acceleration from Q1 to Q2, and Q2 was pretty solid at 7%.

It is worth mentioning on non-ERP that the cyclosphera outbreak in the US is actually detected with a high-flex panel available in the market. So we are seeing a very significant upstitch. We don't know for how long, but in the US we are seeing a very strong evolution of a GI panel. Just to explain, everyone knows that Cyclospora is a pretty severe gastro-syndrome, parasite, which currently is an outbreak in the US.

They are talking about more than 5,000 cases now, 5,000 to 10,000. Thank you very much. The next question comes from Charles Pittman, King from Barclays. Please go ahead.

Hi guys, thanks so much for taking my questions too, if I may. Firstly, maybe just with respect to the FY27-28, thank you very much for the divisional breakdown in the presentation, but I'm just wondering if you could give us a little bit more detail on how you think about the gross margin mix development over the period, given these new growth mix and tariff expectations, just how you think about that directionally. And then just on Spotfire, a couple of quick clarifications. Can you just confirm there were no one-offs for Spotfire into Q's supporting out 400? Can you confirm that the meningitis is coming in 28 versus what I understood was a 27 launch? And just any further comments you can give on the liaison, Nez, any impact from launch initially, given this was a concern of investors after their launch in April? Thank you.

I can take the Spotfire questions and Guillaume will answer on the gross margin. So Spotfire... So first question, yes and confirmation that there is no one-off in the 400. As you know and we commented a little bit in Q1, we had significant one-offs in Japan and in the US with bigger deals. So in Q2, none of this, so the 400 is a normalized number. Manage IT is a good peak. We are now looking into 2028 versus 2027. To be honest, it's still tentative. Maybe it can be accelerated, maybe it can be a bit delayed, so that's why we give overall years. It's also the main, actually, the test is ready. What is generating the uncertainty is the speed of the clinical trial, so a bit early, but the latest plan we have is more With regards to the competition of Liaison S, I mean what we said when it was announced, it's actually a pretty crowded market already. There are multiple competitors, we have low market share, so of course a lot of respect for the launch of this new system and it doesn't dramatically changed the competitive environment. We're still seeing, and actually Q2 is proving, we're still seeing Spotfire as a very competitive solution, and there is definitely room for every solution in the market, hopefully a little bit more for Spotfire.

For the gross margin, for the gross margin, thank you Charles for the question, but I don't think we at this stage give details on the line by line, but what I can say, I think it's important Restate what Pierre has already mentioned is our commitment to deliver on the cost side to have these new guidelines of Seville growing organically faster than Seville grows. For that, we commit to deliver on growth-oriented initiatives and to launch new efficiency and cost initiatives. We are looking, as we speak, on different fronts and as you can understand some will impact gross margin, some will impact sales and marketing, G&A and even pretty likely some will impact R&D so it's difficult yet to say at this stage you know exactly depending on choices how gross margin specifically will evolve but I think the most important is our global commitment.

Thank you very much, appreciate it.

The next question comes from David Westenberg from Piper Sandler. Please go ahead.

David, the line is super bad. Can you do something on your side? I'm trying.

Better now? No? No. Is it closer to the mic? All right. My mic's on.

I want to talk about Spotfire and how it did in Q2. Can you talk about maybe new customer wins versus cannibalization? What characteristics do you think it's going to make it better than competitors in the coming quarters? Where's the lowest fruit? And how should we think about instruments in Q in 2026 and the impact on 27 and 2028 guidance, if you can hear me?

So I understand your question is on Spotfire, evolution of the infrastructure base. so there is no cannibalization as you know because we are primarily in the point of care segments so we are not seeing any cannibalization with BioFire product range in the hospital setting so it's all new customers it's also all competitive wins because in most 99% of the cases for Q2 and H1. We don't give guidance on the evolution of the number of instruments. And usually what we see is a stronger... Actually, Q3 is really the very end of Q3.

Just on the follow-up on the 2027-2028 guide, you mentioned you do expect to grow CBDA higher than revenue. You have been growing R&D, but you've been cutting on the SG&J front in the near term. What levers do you have? Theoretically, if you're coming in at the lower end of the guidance in terms of 2027-2028, What kind of levers do you think you would use on the OpEx line to make sure that you still can grow CBDA above revenue? Thank you.

Yes, at the lower end of the sales guidance, to answer your question, it probably would take more time, but if we are at the lower end of the section, it's still 3% to 4% growth. So we believe at 3.4% growth we still have operating leverage that we can deploy and that would allow to grow our profitability faster than text. So as we are going to prepare for 2027 budget and 2028, maybe we give a little bit more color into what we are planning to do for 2027. But we believe, and that's the reason why we communicated this guidance, that even at the low end of the guidance in terms of sales growth, we are capable to create profitability improvements together with lower sales growth.

Thank you.

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

Good afternoon. Thanks for taking my questions. My first one is on microbiology. Could you speak about the improvements you have seen in China? Have hospitals decided to use more blood culture bottles again? And what are your expectations for China for H2 here? Secondly, on BioFire, Danaer announced plans to enter the Hyplex market with its third generation system. Given the large installed base, how do you view the competitive risk? And have you included that in your new 2027-2028 targets? And then finally, I want clarification on tariffs. Sorry if I missed that, but does your H-1C bit include any positive impact from tariff refunds?

Thank you, Yann. Maybe I'll take the last one first on tariffs. So yes, to clarify, we did apply for reimbursement of 20-25 tariffs that became I think they say non-constitutional in the US. We did apply and we got the reimbursement actually cash-wide and so P&L-wise as well we have about 30 million of positive impact in our H1 P&L. Yet I mentioned it's neutral if you compare to 2025 because in H1 2025 the tariffs were not yet in place and we paid in H1 2026 The 15% mainly, the 15% on imports mainly from Europe into the US. So between the H-126 paid and the H-225 reimbursed, it was overall neutral and neutral compared to last year 25. I just remind everyone talking about tariffs that we actually manufacture in the US about 85% and of course gives a relative exposure of the value-model to U.S. types. With that maybe... Maybe China to give a bit of color.

So Guillaume highlighted we had a decline of sales by 6% which is still negative and yet much better than 2025 as you pointed out. So two elements. The first one is a bit of... We said it when we commented in 2025, it was not so much pricing or market share, it was very much market deceleration. We've seen a lot of stock reduction at hospital and distributors level that are a bit of one-offs. So now it's part of the improvement. We don't have that additional effect that we had in 2025. The other element is the localization of instruments is working. We have localized the manufacturing of two bacteria alerts that are available. We are planning to have Virtuo very soon approved in terms of localization in Poussord and H26. We also have localized Vitek Compact Pro in China and we already manufacture locally blood culture bottles. So all of this together has also helped to recover better and be more dynamic in the market. So we are very much in line with the plan that was mid single digit decline in China. That's what we've seen in H1, that's what we expect in H2 2026. Your second question relates to BioFire and the announcement from Dananer Cepheid on their new system. So first of all, it kind of demonstrates the value of HyPlex testing in the eyes of Danaher. We are very happy to see that having HyPlex molecular solution is recognized by a big player like Danaher. They've announced a new system actually to be able to launch HyPlex solution. We still need to see beyond the system what are the panels with which performance and targets they plan to have. They haven't communicated any paradigm beyond the system, any new panel launch. So when we know better from them, we'll be able to give you more color on how we plan to be competitive against this new system.

Great, thank you.

The next question comes from Philip Omnu from JP Morgan. Please go ahead.

Thanks, guys, for taking my question. Just on your 26 guidance for organic growth for 3-5, that assumes a pretty big step up in the second half to around 8%. Firstly, are you able to share whether you expect Q3 to be within that 3-5 or could it be higher and therefore how back and loaded are you assuming is the facing of the organic growth for the year to be? And secondly, when it comes to your confidence or your visibility in the rest of the business outside of respiratory, how much confidence or visibility do you have in order to hit the low end if flu was below or at the same level as 2025? And then just a quick clarification on the tariff refunds please. Can you confirm that the benefit that you saw in this quarter is the full amount that you paid in 2025 and therefore we shouldn't expect any more tariff refunds to come through in Q3 or Q4?

Almost a full amount of the reimbursement, there's a very small amount of below 2 million that is left to be reimbursed for the image too. We hope for that, but the bulk of it, as I mentioned, 13 million was actually reimbursed and paid and recognized And then if we move to the 26th sales guidance. So again, I think the most important is to restate what I said again. We are mainly on the trend of the Q2 will deliver in H2, and respiratory, which of course is the main uncertainty. If we factor a Q426 at the same, similar level of epidemiology as Q425, we would be around the bottom of the game. And let's see what it gets. It can also be stronger, and again, stronger would mean for us Naptic on respiratory panels but also pneumonia and also spot fire obviously.

Cool, thanks guys.

Okay, I'm going to read the question from Anna from Royal Bank of Scotland because she has an issue with her headset. So she would like I would like to have an update comment on your view on competitive positioning on both BioFire and SpotFire. Across both technologies, it seems like competition is increasing. Second question, looking beyond 2028, specifically for SpotFire, how do you see the balance of increasing competition versus your non-RP launches driving an acceleration in growth? And the last question is, For the mid-term, mid-term, sorry, CBIT downgrade from inflation, all prices that would be at high levels for the mid-term.

OK, so let me start with the first one, competitive positioning, and then I talk about the beyond 28 and Guillaume to take the CBIT evolution. So complete dispositioning is a broad question. Let me say it this way. What we're seeing for biofire, and I said it a little bit when we were sharing the perspective, was that we are not seeing a significant degradation of market share in respiratory panels. We're seeing price erosion, we're seeing market share erosion, but the assumptions that we had in 2024 are actually proving to be very correct at the end of June 2026. So I know it's been a very regular question and challenge raised in the context of competitive launches. More than competitive challenges, that's what I would say for BioFire. And of course, we've tried to integrate the evolution of the competition in the revised guidance. It's a best estimate of what we're seeing. 4-8% in the years to come, given what we believe is the superior system in the market, with the broadest menu, and very strong infobase, that by the way keeps increasing in H1 2020. With regards to Spotfire, again, very different picture because in this case, we don't have a high market share to protect for actually taking share. So as I said, the competitive environment is a little bit less sensitive to us because we are more in a market share uptake. As I said, we are very much in line with the plan. As you pointed out, there are new competitors in the market. It's a huge market. We are still a very marginal player in this market so we believe there is ample room for growth in this market with the caveat of we are getting more and more depending upon the respiratory season which is a good segue to your second question post 2028 Probably, if and when we do a new capital market day, it could be a good topic. As we said, until 2028, the impact of vaginitis, STRI, meningitis is included in the guidance for 2028, but it is not very significant yet. But of course, as we move forward, and we believe and we aim to bring very differentiated solutions, We hope to take share in this point-of-care market so that is aiming at taking a de-risking if you wish AESL from respiratory season on spot fire in the years to come. I'm not in a situation to give you now an order of magnitude number Guillaume.

Mid-term 7-bit evolution, Guillaume. 7-bit evolution. Thank you very much. Thank you. Back in 2024, tariffs, just to mention tariffs, in the US of 15% were not present at the time. With days, our case on the current, and that's very difficult, the current oil price, which is slightly below $100 per barrel, and this was absolutely not the same environment before that. We can mention on inflation also the chips, electronics, We say crisis, which is actually the drug of AI that centers on the whole world of I think our new guidance takes into account this new context as we know it today of course we don't factor in new macro environment or new war or anything like that but at least the environment as we know from what we saw and we had back in early 2024.

And just, Anna, just one follow-up question for 2026. For the 0 to 10% Cebit evolution in 2026, are you able to comment on what will drive You closer to the upper or lower end of the range, how much will it be dependent on operating leverage mix or respiratory season?

The main dependency as usual at this stage of the year is definitely on the strength of the respiratory season. This is, as we explained, what drives the top line in the range and definitely that's what will drive the bottom line. If you do the mathematical calculation,

H2 equals Q2, i.e. if we grow 5% in H2, we would be at 3% stealth growth for the Kruger. So that kind of builds a bit the bottom of the guidance if you wish, and to Guillaume's point, then of course we are very dependent upon the respiratory season, but as we said, respiratory season 2026 Q4 equals respiratory season Q4

To take one question from Christophe Rafferty on price, the question is on industry applications, but I'll be a bit broader to recap on pricing effects. So industry applications, to your question, was able to increase price by slightly less than 2% in H1. We also are able to increase price in microbiology by around 2% which actually makes price increases in about 50% of our overall portfolio and sales whereas on BioFire we decrease about 1% prices on non-respiratory overall and slightly less than 3% less than 3% price erosion on respiratory panels on BioFire so again 50% with price increases but 40% of the portfolio with slight price decreases. And by the way, when you look at the overall price effect on Ballymager, it's therefore pretty neutral.

Let's go for maybe three extra written questions. The first one is the question is, is the 3% to 6% annual growth a target or an ambition?

I think it's important to restate what is actually the way we wrote it in the

Maybe one question from Arnaud Cadart from CIC. As you mentioned, with the revised guidance for 27 and 28, the market is less responsive to innovation. Why maintaining intact the R&D initiative?

Well actually we don't keep them intact, we keep reviewing R&D portfolio to make sure that we adjust the innovation that we launch to the market conditions. So our objective is clearly to reach by the end of 2028 very much in line with the Goal 28 plan 12% for ECS research and development. Now it's more what is it that we bring in terms of innovation that will resonate based in terms of We are looking at a portfolio of innovation taking into account this new environment.

And maybe just a second question from Arnaud, could you update us on the launch of Spotfire in France?

Yes, so as you know in France there is not a point of care market that is formally organized. What we are capable to do is to launch Spotfire in the hospital environment. So it's mostly available to emergency departments. There are two new news. The first one is we've actually got the approval for Europe of the Lumplex Spotfire for Respiratory that was not available in Europe yet. It was launched in Q2. So we expect it to further expand in Europe and of course in France. The second new news that relates to France The decree is out, but there is no funding. So as we speak, we are working together with authorities to see how we can organize for a proper reimbursement for that kind of solution. outside of the hospitality industry.

And maybe the very last question from Thibault Vouliamachi from All Invest. Should investors expect BioMérieux to play a more active role in industry consolidation in order to strengthen its medium-term growth profile?

Well, I would view an M&A stage of change. One, we keep looking at what we call bolt-on And of course, if and when we see adjacencies, additional segments where we believe we can A quite strong position, this is something that we keep exploring, but they need to be strategically and financially reasonable, so no pressure that relates to this revolution of midterm management.

OK, so thanks a lot. Thanks for your questions and your participation to this call. And our next touchpoint will be on October 30th for our Q3 sales performance.

Thank you, everyone.

Have a good day. Bye bye.