DiaSorin S.p.A.

Good afternoon. This is the Coruscant Conference Operator. Welcome, and thank you for joining the DSR in full year 2024 results conference call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Carlo Rosa, CEO of Diasorin. Please go ahead, sir.

Yes, thank you, operator. Good afternoon and welcome to the full year conference call. We're going to make first some comments on the full year results and then I move to the quarter four. In 2024, revenue and profitability are in line with the planned budget and the guidance, despite geopolitical tensions and microeconomics headwinds. Specifically, when it comes to the immuno-SA business, we perform very well in the main geography, U.S. and Europe, whereas, as we will see later, we continue to experience growth difficult situations in China, although that represents a very small portion of our revenues when it comes to molecular. Molecular overall in the year performed better than the initial assumptions. Clearly, this for us has been a transition year because we launched successfully the liaison plex with the respiratory panels. And this better result of molecular over the year clearly compensated the LTG software performance compared to expectations because of the life science situations as we've been discussing over the last quarters. And overall... From a pricing perspective, which is something that we did discuss a few times in the last quarter, we've implemented a pricing program that was in place and overcompensated the inflectionary effects that we, as an industry, we registered in 2024. So overall, I believe that 2024 was a very good year, and we... to the point that I remind everybody we raised our guidance twice upward, clearly, in 2024. Just a couple of comments on the different legs. If we go back to immuno. Clearly, our U.S. hospital strategy is working well and delivering according to expectation. Let me remind you that our idea was to get to 400 hospitals served by year-end, which was achieved. So we are perfectly in plan with the LTP. The LTP calls for 600 systems installed, 600 hospitals by the end of 2027. When it comes to MIMED, we had the first active training custom hospital systems. I need to be very careful here because when it comes to MIMED, we need to talk about the hospital system because placements do follow the concept of hub and spoke, right? So multiple installations between key and liaison Excel. And as we discussed, we do have as a target 75 hospital system by the end of 2025. When it comes to Europe, 2024 has been a very strong year with double-digit growth as a combination of successful placements, increasing volumes, and outbreaks in certain areas of Europe. And then last but not least, we finally started to get a regulatory approval for the first products manufactured in China. And we expect that by 2026, we are going to have the full menu approved in the Chinese market. If we go to molecular, everybody knows we launch in September our liaison plex with a respiratory panel. We got a second panel approved shortly thereafter, and we submitted two blood culture panels expecting approval in 2025. In November, I made a comment. I said we had a funnel in the U.S., clearly, with 100 customers with equivalent to 500 placements. We are well on track, and we'll discuss later about that. We're well on track to hit our target. LiaisonPlex has been received well. extremely positively by the customers, and I'm going to give more color later when I talk about the quarter. Liaison Nest, we are wrapping up the clinical study, as expected, and we're going to be filing within the next quarter or so, so also Liaison Nest on track. And finally, let me just comment to the LTG. We certainly had a good performance of the LTG business, better than a FedTech, notwithstanding the unfavorable environment in life science. In fact, at the end of the year, LTG grew by 3% compared to previous year, clearly driven by... Very good performance of our diagnostic partners. That overly compensated weaknesses in the life science that we have seen at the beginning until mid-year 2024. So from a 2024 perspective, a very satisfactory result. Now let's go to quarter four. As usual, I'm going to comment the quarter four at constant exchange rate. We had an excellent quarter, total revenues 310 million in the quarter, with a growth of 5% year-on-year in quarter four, excluding COVID, in line with expectations and in line with guidance of 2024 full year. When it comes to COVID, clearly there is a softening of testing. In the quarter, we had 6 million euros of revenues, 26 million in full year 2024. And we see that testing continues to decrease. If now we go to, I would like to comment each individual segment of the business, starting from immunodiagnostic. Immunodagnostic, ex-COVID, 6% in the quarter with good performance in U.S. and Europe. You notice a deceleration versus previous quarters, but that is due to TAFCOM versus Q4-23 because in Q4-23, we had exceptional instrument revenues. Indeed, if we go down and look at CLIA reagent in the quarter, and not immuno, CLIA reagent grew 9% in the quarter. This is net of clearly negative EVP impact in China. In the U.S., in North America, CLIA grew 14%. And this is related to the hospital strategy where we keep, again, as I said before, expanding our presence in U.S. hospitals. In Europe, in Q4, 8% growth. For immuno and CLIA, 9%. So we continue to see a very strong growth for our immuno franchise in Europe as well. Export in Q4 was negative, but this is mainly due to the Iran market, where in Q4 last year we had, again, shipments that did not materialize in Q4. So it's a phasing issue. China, we continue to experience headwind, as we have been experiencing since many quarters. double digit decrease in Q4 as a result of VBP in certain provinces and the fact that we continue to see overall tough competition coming from local competitors. Clearly, for the SOAR in China is a very now small percentage of our business moving forward. So long story short, Q4 immunodiagnostic, very strong in North America and very strong in Europe. tough comparison to last quarter of last year due to some phasing and the fact that we had instrument sales last year related to certain tenders. Now let's look at molecular diagnostic. Molecular diagnostic in Q4 ex-COVID is pretty much flat, so plus 1% in a quarter. But again, we need to look at the different components of the business separately. When it comes to our targeted molecular business, which is the Diasorin business, the original Diasorin business, so the business we bought from Focus, there is a double-digit growth, above 20%, and this is thanks to the introduction to the U.S. market of the Candida Oris product, where we continue to see a tremendous traction and success also in 2025. In Q4, I need to remind you that we have discontinued the ARIES platform as part of the plan that was the synergy plan that was presented to the market after the Luminex acquisition. So we are missing in Q4 the ARIES revenues, and we had in Q4 2023 last buy orders. So again, there is a delta which was expected in this quarter due to the discontinuation of the areas. And then last but not least, and not surprisingly, as everybody else has reported, mild start to flu season in Q4, but strong Q1. And so you will see that in Q1 there is going to be a recovery of the of the respiratory revenues. Now, let's focus a little bit more on Plex. Okay. As said before, full launch started in September 2024. We launched it in the U.S. respiratory. We got first blood culture approved, second, and then the two additional blood culture panels blood panels submitted to the FDA in September and November 2024, and we expect them to be approved by mid-year 2025. GI clinical study ongoing and submission in 2025. This means that as per our long-term planning, by 2026 we're going to have the full multiplexing panel approved on Eliasson Plex. In order to guide or explain the way that our business is performing, we decided that moving forward, we are not going to talk about placements, customers, but we're going to talk about total revenues. And this is because we look at multiplexing as a franchise, a combination of the veraging one, which is a business, historical business, where we're building on, and clear the liaisonplex, which is the increment, the new platform that we're going to be building on our install base and adding certainly new customers. So the... Launch has been extremely successful, and our ambition for 2025 is that we are going to grow the overall franchise, so the region one, plus the Plex to 75 million euros, so a growth of 25% over prior year as a combination of new accounts and conversion of some respiratory accounts with price increases from the origin one to the liaison Plex. Um, this, uh, corresponds pretty much to, uh, the additional around 150 customers, uh, Plex customers by year end. Again, I'm not going to comment any longer from now on in terms of how many customers we add per quarter. Uh, I'm just indicating what is the, um, what the budget of the assortment today is going to be for Plex. And I will continue to update the market in total multiplexing revenue growth versus 2024. What's very interesting is that when it comes to the existing customers that are using now daily zone Plex in the U.S., my last comment was that 50%, which I think it was November, 50% were flex customers. and 50% were actually fixed. Clearly, moving on, now the situation is that we have more flex than fix, right? And so we see that the adoption of our customer base of the flex concept is really providing an advantage versus current solutions that only provide either fix or mini panels. Last but not least, which is a very interesting, I think, point, strategy for the assorting. If I look at the current Plex customer base, 20% are commercial labs and 80% are hospitals. Why is this strategic? Because, as you know, this goes hand in hand with the immuno strategy, where we intend to continue to develop the hospital business combination of immuno and molecular solutions. The, just one comment overall, the varying other panels, which are so non-respiratory, are relatively flat. Now finally, final comment, Q4 on LTG. The LTG in Q4 did better than expected. So we have a growth of 4% in the quarter, and it is a combination of diagnostic, growing but also we are seeing that the life science is recovering and we saw also life science slowly growing back in Q4 as well and we actually continue to see a very favorable LTG trend in the first month of 2025. you need to understand that for us, this business is not purely life science, but a combination of partnership with diagnostic and life science and biopharma. So we actually serve with this technology three different segments in the market. One more update, which is more on a clinical side of MiMed, which I think is very interesting. There have been a slew of publications that came to the market as a result of independent clinical studies that have been run by MiMed. I think they are available on the MiMed website. And I would like to point specifically to three studies, very interesting. The first one has been published on 4,000 patients through across 10 different urgent care centers. And the key finding of the study is that there is a 63 percent reduction in unnecessary antibiotic prescription. And 70 percent of previously potentially missed bacterial infection have been now correctly identified. This is a very, very, very important data point to support the adoption of MIMET. The second study on 1,000 patients in 17 centers in the U.S. and Europe, which is very interesting, where they were comparing MIMET to procalcitonin, and the conclusion is that MIMET-BV outperformed standard care calcitonin, distinguishing between bacteria and viral infection. Quite often we get questions from investors about what's different between PCT and BV, and this study clearly shows that BV is much better in classifying bacteria versus virus. The third study, which goes more on the pharmacoeconomic side, is demonstrating that there is a significant cost saving up to 250 pounds per patient in case of co-infection if you adopt the MiMed testing prior to administering the antibody. So not only you do have a clinical impact, you also have an economic impact to the hospital budget. All said and done, I'm going to now leave the microphone to Mr. Petron, our CFO. He's going to drive you through the numbers, and then we're going to go to Q&A.

Thank you, Carlo. Good morning, good afternoon, everybody. Thank you for joining DSR in Q424 Earnings Call and for the interest you are showing in our company. In the next few minutes, I'm going to walk you through 2024 financial performance, and then I will turn the line to the operator for the usual Q&A session. Full year total revenues at €1,185 million are above a previous year by 3% or €37 million, despite the expected decrease in COVID sales, which are down by €33 million, and the carve-out of the flow cytometry franchise back in Q1 2023. The business XCOVID is growing at constant exchange rate by 7%, as we heard, therefore in line with the full year guidance. 2024 COVID sales accounted for €26 million vis-à-vis €60 million in 2023, thus broadly in line with our outlook, which was calling for €30 million. The FX impact in the year is negligible. Let's now turn to Q4 revenues ex-COVID at constant exchange rate, which grew by 5% as a result of a solid performance of the new franchise, up by 6%, as we heard, with clear revenues up by 9%, despite what we heard once again happened last year in Q4, actually in 2023 Q4, for the reasons that Carlo just discussed about. We had a good performance of the LTG franchise, up by 4%, thanks to mainly recovering instrument sales, which brings 2024 full-year performance of the whole LTG business to 2%, positive 2%. And the flattish performance of the molecular franchise, plus 1%, where, once again, the very good start of the liaison plex RSP panel and the strong growth of the targeted specialty product lines have been offset by the mild beginning of the flu seasons, as per CDC data, and a tough comp with Q4 when we had some last-time by-orders of the iris reagents, as discussed a couple of minutes ago. 2024 full-year adjusted gross profit at €782 million is better than last year by €33 million, or 4%, with a ratio of revenues of 66%. which is better than 2023, which closed at 65%. All the initiatives aimed at improving operation processes and containing costs allowed us to preserve margins, despite, as we know, some inflationary pressure and the manufacturing costs were incurring in our new plant in Shanghai, which has not reached its full capacity production yet. As I said last quarter, I do really believe this is a remarkable indicator of the success of the efforts we put in place to safeguard our profitability. Q4-24 shows a similar dynamic, both in terms of margins at 66% vis-à-vis 65% of 2023 and growth versus previous year. 2024 adjusted operating expenses at 469 million euro are basically in line with 2023, with a ratio of revenues of 40% vis-a-vis 41 of last year, confirming the trend we discussed during previous quarter's call. Q4 adjusted OPEX at 125 million euro are in line with previous year as well. As expected, Q4 is recording an increase in the operating expenses rate compared to the beginning of the year, as we saw last year, by the way, mainly because of the phasing of some projects and throw-up of some costs, mainly insurance, health insurance costs in the U.S. This means, to be clear, that Q4 24 is higher than the average quarterly rate we should expect for our OPEX during 2025. 2024 other adjusted operating expenses were negative €10 million, therefore recording an increase of €11 million compared to the previous year. This variance is mainly due to a tough comp with 2023, which closed with an income of €1 million as a result of some material one-off positive elements recorded in the previous fiscal year. Additionally, in 2024, there were several one-off expenses which made this variance even wider. I do really believe it is important to consider this substantial swing between 2023 and 2024, driven largely by non-recurring items, to fully appreciate our journey to increasing margins. I will further explore this when I discuss the adjusted EBITDA evolution. As a result of what was just described, full year adjusted EBIT at 303 million euro or 26% of revenues is higher than 23 by 20 million euro or 7%. 2024 adjusted interest income at 4 million euro is 1 million short compared to 2023 because of the lower yield on our cash balance coming mainly from a reduction on interest rates in the second part of 2024. And the adjusted tax rate at 23% is a touch higher than 2023, which closed at 22%. 24 adjusted net result at €236 million, or 20% of revenues, is better than 2023 by 12 million, or 5%. Lastly, full year 2024 adjusted EBITDA stands at €394 million, or 33% of revenues, which which is 19 million euros better than 2023, and aligns with the full year guidance. Q4 profitability, also 33%, is better than the 32% achieved the previous year. As mentioned earlier, to better appreciate the base business EBITDA margin expansion from 2023 to 2024, it's important to consider that in 2023 we had a material and non-recurring earning elements in other adjusted operating income. Excluding these, the path to EBITDA margin increase would have been even more apparent. As we will see in a minute, this is confirmed by the 2025 EBITDA guidance, which represents another step forward toward the 2027 margin expansion journey set during the last capital market day. Let me now move to the net financial position. We closed 2024 with a net debt of €618 million, therefore recording an improvement of €159 million compared to the end of 2023, mainly as a result of the very sound free cash flow generated during the year, €241 million vis-à-vis €209 million in 2023. As a result, our net debt to EBITDA ratio is down to 1.6% from the 2.1% we saw at the end of 2023, continuing the deleveraging trajectory shared during the last capital market day. Let me now finish my remarks moving to 2025 guidance, as always expressed at previous year exchange rates. So we expect revenues ex-COVID to grow by about 8%, with COVID sales around €20 million, and therefore total revenues of the company to grow by about 7%. We also expect an increase in our adjusted EBITDA margin, which in our guidance will be moving from the 33% we had in 2024 to about... 34%, which we are guiding for in 2025. Please note that this guidance includes the very recent tariffs, which have been introduced and are now enforced between U.S., Canada, Mexico, and China. Before concluding, let me please remember that diasporic financials are highly exposed to the U.S. dollar. As a rule of thumb, consider that for every one cent movement of the dollar against the euro, the assuring revenues move by about 6 to 8 million euro on a yearly basis. And the adjusted EBITDA moves by 2, 3 million euros. With that said, let me please turn the line to the operator to open the Q&A session. Thank you.

Thank you. This is the Coruscant Conference operator. We will now begin the question. and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. We kindly ask to pick up your phone when asking questions. Anyone who has a question may press star and one at this time. The first question is from Kavya Deshpande of UBS. Please go ahead.

Hi, Carlo. Hi, PG. Thank you for taking my questions. The first one was just on the guidance for 2025. So you've obviously had a very strong 24. But just thinking about some of the headwinds next year, such as, you know, the tough kind of European immunodiagnostics comparator, China maybe. When you exclude these, is it fair to say your guide actually probably implies like 9% to 10% underlying growth on the top line? And are there any other factors in that 2024 comparator that we should be thinking about when modeling? And then my second question was just on immunodiagnostics. So your target of 600 hospitals in the U.S. by the end of 2027, when we think about the liaison XXL comparison, Does that potentially expand that addressable market? Is that how to think about the opportunity going forward from here?

Thank you. Look, I'm trying to resonate on how to answer here. Let's start from the second one, which is easier. The XXL is, you know, one of the biggest mistakes that companies can make in diagnostic is to when you have a very extensive install base is to launch a system that is not going to also protect your install base. Because then, clearly, your install base is aging and the new system is not protecting and then it's a full recipe for a disaster. So long story short, the XXL, as we've indicated, is providing 30% to 35% with several features, right? but a 35% increased throughput to the existing Excel. And that is fundamentally allowing us on a cost base that is comparable. And this is fundamentally allowing us to do two things. For the next 10 years, right, we can expand. into the hospital market, laboratory markets, and also since everybody is expecting consolidation increase volume, will allow us to follow the trend. By the same token, it will allow us to go back to the base, our existing 7,000 system installed base, and protect that when that is going to be aging. we will substitute with a new system that fundamentally same footprint and better throughput though. So long story short, I believe that we will continue to be as a specialist into the same segment, which is pretty much the whole market because we are today in very large commercial labs. Think about Quest and LabCorp as a specialist. with the current XL, and so the XXL will continue to grow there, and by the same token, we can also serve the mid-segment and high-segment of the hospital market. Now, if I go back to the first question you said, yeah, if I could cancel China from the map and just look at the other market outside China, we expect that we continue to grow double-digit in the main market. So US will continue to be a double digit market for us and Europe is going to be a high single digit market. Australia, Brazil, I mean everywhere where we are direct, we will continue to see double digit growth in 2025. When it comes to other geographies, what we call export, it clearly is a touch-and-go situation there because, as we saw in Iran, I mean, where we do have presence in certain markets, it goes as it goes, right? I mean, it's a flight-by-night operation in certain situations. However, our expectation for the overall export market, right, ex-Iran, is that that should deliver a growth in immune around,

seven percent so uh six or seven percent right so it's not going to be so diluted vis-a-vis the rest of the geographies thank you very much thank you the next question is from maya pataki of kepler please go ahead hi good evening carlo pg everyone a couple of questions from my site please um i would like to start with a bigger picture uh question carlo on On the U.S., on the mess that we're seeing in the U.S., it's great news that you're not going to have any impact from the tariffs. You're solidly positioned from your manufacturing standpoint. There are a couple of things that are moving targets, I understand. Still, it could have a potential impact like vaccination hesitancy, stop of the U.S. aid funds. Generally speaking, I guess a positive for the diagnostic market. Then on the other hand, discussions on the NIH budget cuts and headcount reductions at the FDA. How do you navigate through the news flow mess and what kind of push and pulls do you expect to have from everything that is happening in the U.S.? That would be my first question. My second question on China. So you're going to have a broader product portfolio manufactured in China as of 2026. How shall we think about China from then on? Is it going to be a growth market for you? Or what is it in your plan that is going to happen with China? And my last question is, I was trying to take notes. I'm not sure I got it. My understanding was that in the beginning you said that you're well on track to have 100 customers with LiaisonPlex by the end of 2025, representing roughly 500 placements. And then throughout the call, I thought that you said 150 Plex customers. Maybe I misunderstood, but I just want to make sure that I know which number to take. Thank you.

Hey, Maya. Actually, both numbers are correct. But I will go back. Okay. Okay. You know that I'm a magician, right? I will explain to you why they are correct. Please do. So let's start from the first question, which is the big pictures about the U.S. Look, I'm going to say a terrible thing, but actually if you decrease vaccination, you have outbreaks. You saw the one now in Texas with measles. Yeah. And so unfortunately, every time vaccination goes down, infection goes up, and we have the kings, the assortment of measles, mumps, varicella, herpes, name it, all these kind of bugs, we do have a very high market share. And so, unfortunately, if Americans decide to vaccinate less, we're going to benefit, not enjoy, benefit from it. When it comes to the NIH, I mean, your guess is as good as my guess. So far, we don't, clearly, we don't serve the NIH directly, but our partners, Thermo Fisher and Bio-Rad, all these people do serve the NIH. I don't think that today there is any visibility, to be honest with you. So I would wait until dust settle. And for the time being, as you know, what they've been cutting is budget related to expenses, right? Funding so far has not been cut. But I think they have, they're not allowing now the universities to take more than 15% as overhead. because they say everything else has to be spent in the lab. So how that is going to turn, I think we don't know. Also because every day is a new day in the U.S., right? These days. So let's see. FDA, for the time being, we have not seen delays, although we don't know. Okay, good. Honestly, I mean, every day you read and you hear something different about what's happening in the U.S. For the time being, the FDA has not been an issue for us in terms of vacancies. I will update you a quarter from now. The overall hospital business, private lab business, I mean, commercial lab business, we have not seen any impact, and we don't expect to see any impact from at least what we know today. China. China, I think we've been very honest because we were one of the first ones to say that China is going the wrong way, and I continue to say China will continue to go the wrong way. And this is why for us it's not strategic any longer. However, as said, we are well positioned if something is going to change because now we're going to have our products made there. We're going to have the liaison Excel. We expect that by the end of Q2, we're going to have a China-made liaison Excel approved. We submit it, and that clearly will allow us to participate to certain tenders. But on the short term, don't hold your breath on China. I mean, it's no good, I think. But it's not big damage for the authority. Now let's go to the magic 100 to 150. Two different time horizons. I refer to the comment I made in November. And I said, we have a funnel of 100 customers which correspond to 500 systems. The funnel we are working on. What I said now is that in 2025, our ambition in the U.S. is to have 150 customers running our platforms, right? And that will allow us to increase our multiplexing franchise because what's not obvious is that we do have a few tens of millions as we speak of verigine revenues. And so now we look at this franchise as a combination of verigine plus Plex. So our ambition is to get to 75 million in multiplexing business in the U.S., which does represent a 25% growth versus 2024.

Brilliant. Carla, just one add-up. One of the things that I've forgotten to ask you specifically, if there were any cuts introduced to Medicaid, which I believe is in debate and feared and everything, My understanding is that Medicaid covered patients are roughly 20% of overall covered patients or insured patients in the US. Do you think this is a fair assumption for the overall diagnostic space as well?

I was closer to... I thought it was more 30%, to be honest with you. Okay, so it's slightly higher. But don't forget that in the past... it started with Obamacare and Obama, right? There was actually a program to reduce reimbursement over five years, and it was 30%, so it was a significant number. And eventually that program was actually stopped by Trump 1, right? And then the discussion has been lingering there. Back then, I keep saying, to be honest with you, Maya, that My concern in the U.S., or generally speaking, right, except for any draconian measure, right, but my concern when it comes to pricing has to do more with competition rather than, you know, the government and reimbursement are really driving pricing down significantly. Okay. Okay. So my concern, not that much.

Okay. Thank you very much.

The next question is from Aisha Noor of Morgan Stanley. Please go ahead.

Hi, good afternoon, Carlo and Peter. Thanks for taking my question. My first one is on liaison Plex. So thank you for the sales guidance of 75 million for 2025. My question is what portion of this view expects to be from the very gene converted accounts versus new placements? My second question is on China. Apologies if I missed it, but did you provide an update to this 5 to 6 million euro impact you anticipate from VBP in 2025? And if so, could you just provide some color around the timing of this, you know, VBP, what regions are affected, or any impact you anticipate on a more broader scope of targets? And then my last question is on your outlook for the immuno business. just trying to understand the mix of the growth drivers in that portfolio, you know, between quantiferons, you know, MeMed, Lyme, what are the biggest components that could drive the, you know, move the needle the most for immuno growth this year? Thank you.

Okay. So let me start with the first question. I not, okay. I decided, that was very relevant for the soren is when it comes to multiplexing is uh at the end of the story's combination of technologies where is that we want to be at the end of 2027 right and we said we want to have 10 market share that pretty and pretty much is 200 million oh give or take right and so this is the way we drive the business and this is the way i want to explain the business to the investors otherwise if i get into how many How much are you converting? Was the price increased? Believe me, each analyst and every investor is going to do a different calculation, and I will spend more time trying to correct mistakes rather than look at what's relevant for the business. So track it. The $75 million this year will become $200 million, and this is what we are targeting. Second question, China VBP is a very short answer. Now, $5 million, $6 million already started in Q1. Because VBP now has been extended from the original panel, now they went also to, they included more assays, right? So the overall effect for the Azorin yearly is around 5 to 6 million in 2025. Third question is immuno. I keep saying that the beauty of the Azorin is that we are not a one-trick pony. I learned that expression in 2015 when vitamin D was 44% of our revenues. So we are far off the one-trick pony story. We win and we retain customers because we have an offering of specialties that go across many different segments. Certainly, quantiferin is a door opener and is a relevant assay to have in the hospital market because hospitals are doing quantiferin. And actually, as we discussed a few times, hospitals are sending out quantiferon, and now they have the ability with the better technology to do it in-house. Stool is a tremendous opportunity because IBD-IBS is exploding as a market, and we are very well positioned today to allow this growing volume to be done effectively on our platform. We have a lot to say when it comes to CalProtect in 3.0 that is going to be in my opinion, a revolution in the ability to properly diagnose IBD and IBS. Then you have all the infectious disease panel that follows suit. Let me just give you an example, which is not trivial. Take hepatitis HIV. Hepatitis HIV is one of the most commoditized menu you can imagine because Abbott, Siemens, Roche, you name it, they all have it. Our revenues, our hepatitis franchise in the U.S. as a result of the very, we are expanding the installed base in hospitals and every hospital is doing hepatitis. Today, that business is close to 60, 70 million euros and is growing more than double digit. Okay, so you're saying what's driving the soaring success It's a combination of certain specialties and all the Me Too products, very good quality. We have an infectious disease that follows suit as long as you start with the conversation with Stuhl, with TB, and now with Mimed. I made a comment already, as you know, that Mimed today is not many dollars, but a ton of interest by customers to Dr. Diasorin and drives placements of existing menu waiting for validation of MIME to be completed.

Understood. Thank you very much.

The next question is from Bilam Kanhaisan of CIFL. Please go ahead.

Hi, guys. This is Dylan. Good afternoon. So just two for me. So firstly, just on molecular, and we spoke about the respiratory season, and I think I mean, we knew there was going to be delayed season. I was just wondering, maybe we're expecting slightly stronger visibility just on Plex, maybe with more pre-buying happening in the 4Q relative to the 1Q. Any commentary there on, I guess, the purchasing patterns? And I guess then, secondly, just to check, just on the numbers of Verigene, I think you said it was a double-digit number underlying. And then if we think about the $75 million number then essentially, is it fair to say like Plexus, like low single digit, maybe even slightly higher incremental growth, let's say onto your year and year growth? Is that kind of the way we should kind of think about it? And is there anything outside of the China weakness and dollar weakness that you want to flag that gets you closer to sort of that 8% that you're guiding right now? Is there anything we haven't spoken about in this call so far?

Dylan, I'm... Answer the first question and third. So when it comes to purchasing pattern, it's actually the opposite. Hospitals do not tend to buy in season because they don't have time to validate. And so this is very interesting because notwithstanding that pattern that hospitals don't want to switch during the season, and we launched the system fundamentally during the season, we are having strong success, notwithstanding the fact that hospitals don't have a lot of time to validate, right? So the data that you see is not that, you know, we up-fronted revenues because they bought a lot during the season. It's the opposite, okay? Your third question, which is 8%, is there anything any headwind that we didn't take into account? Is that what you were interested to discuss?

Sorry, I'll rephrase. It's just that I think if I understand correctly what you're saying about Plex being incremental, I think it looks like something like 3% incremental growth year on year. And then basically everything else looks like business as usual. So that would point to something like on an underlying level that actually feels like it's accelerating, even excluding the China business. And I think you said already that much with saying that U.S. and Europe are kind of like, Europe is high single digit, U.S. is double digit. I was just wondering how we get to that 8% and whether that's, you know, whether that's maybe, I mean, obviously we'd ask if that's conservative, but I'm just wondering if that's conservative given just the Plex number even being incremental.

Hey Dylan, this is P.G. speaking. I will try to take it. I'm not sure I completely understood your question, but I will do my best. So I believe Carlo comments when I was saying double digit and so on and so forth, he was specifically talking about the immunobusiness, because as you might know, you know, our presence, molecular presence in Europe is not as big in the U.S., even though we're in the process of launching the Plex in Europe as well, but it's not as big as in the U.S., right? So if I can try to broadly, right, to dissect for you where these 8% guidance for 2025 is coming from, if I look at our three franchises, immuno, molecular, and LTG, what I think you should imagine is a molecular business to grow at a faster pace than the 8%. because you will see the impact of, you know, what Carlo has been discussing about. And this is, by the way, in line with our long-term plan when we guided the molecular franchise to grow, you know, low double digit increase, right? You should expect the immune franchise to grow more or less at the same pace of our full year guidance, right, which is once again in line with our long-term plan when we said high single digit. That was how we guided the market. And then LTG, and don't look at LTG every quarter because, you know, we have some bike shipments which can skew one quarter up and the following quarter down. But for the LTG franchise, you should expect a growth in 2025, which is below the 8% for the full DSR in business, right? So as a combination of these three franchises, right, you see the 8% we are guiding for. Awesome. Thank you so much, PG. Thank you.

The next question is from Odisseas Manizotis of the NP Paribas. Please go ahead.

Hi, thanks for taking my questions. Just a couple of modeling ones. So on the Q4 mean asset weakness, just to think about how to model this for this year, factoring in the VBT weakness, is it fair to expect this one to grow higher than Q4 in the coming quarters, but a touch lower than what you grew last year in the first nine months? Secondly, I wanted to get a feeling of how your business is performing in North America, ex-Quantifern TB. Would saying around 8% to 9% CI growth to be a decent estimate for full year 24, or is it not much of a difference to the 10% you grew in the region last year? and uh a quick one for for pg as well i remember you saying around 40 to 50 million euros in capitalized r d for 2023 uh how did that look uh in in 2024 and what should we expect for this year thank you hey odysseus i'm gonna take some but not all of them so

For the Muno franchise, what I believe we were hinting when we discussed about China and the tough comp, I believe was very clearly captured by Carlo when he said, if you look at clear growth in the quarter, you have 9%, which is in line with what we saw in Q1, which resonates with what we saw in Q3, which was 10%. If I look at the growth without China, obviously the growth is even better. And I believe that for the whole of 2025, you will see that, you know, 4 or 5 million VBP impact, you know, as an headwind, meaning that the underlying business, obviously, you know, is doing better. And meaning, once again, that once that VBP effect is, let me say, under the belt, you are not going to see that headwind any longer. For the growth in North America without the quantiferum business, I'm not going to comment there. You know, I believe, as Carlos said, I refer to what Carlos said, meaning that, you know, we're not a one-trick pony. We have several business lines which are doing very, very well in our immunofranchise in the U.S. Quantiferum is definitely one of those, but we have much, much, much more. I'm sorry, this is, I don't remember. Oh yeah, the CAPEX R&D. I believe the right way to think about it is that in 24, You see the peak in terms of R&D CapEx because we are at the, let me say, the highest point of our effort of bringing new platform and new products to the market. Think about the Plex, which has been launched now. Think about the Ness. Think about all the clinical studies to support the different panels and products that we're going to launch. I'm expecting a deceleration, and that's budgeted for, by the way, in 2025 of that R&D CapEx, and even a further and steeper deceleration in 26 and in 27, right, simply because we will go back to, let me say, normal business, if I can use that word, because now we are working on several different platforms at the same time, and several different panels. So if overall you think about our CAPEX in 2024, which is around $130 million as a combination of R&D instruments we are placing in customer premises, which are staying in our books, I'm expecting that number, and that's also included in our long-term plan, to decrease materially not so much in 2025, where we will see anyway a deceleration, but even more so in 26 and in 27.

The next question is from Natalia Webster of RBC Capital Markets.

Please go ahead. Hi, thanks for taking my questions. Just following up on some of the previous ones around the expectations into 2025, I wanted to check if you're still confident in your mid-term guidance for the high single-digit to low double-digit sales CAGR to 2027 and the specific segmental guidance you provided within this, particularly on licensed technologies. You said you're expecting this to be lower than the group 8% in 2025. But are you expecting this to reach the sort of mid to high single-digit level that you guided for the midterm now that you're seeing some recovery from life sciences? Thank you.

Hey, Natalia. Hi, this is BG speaking. Yes, I mean, absolutely. We feel very comfortable with the midterm guidance we gave, and I believe the fact that we grow already In 2024, the business ex-COVID by 7% is very clear, and we are guiding for 25% at 8%. It's very clear without the impact of the PLEX, the NAS. You know, all of those programs which are coming our way, I believe we feel very, very comfortable with the high single to low double-digit guidance we get for the midterm. Absolutely, very, very comfortable with that. you can obviously have some, let me say, little movements amongst the three different technologies. So, you know, very difficult to say what's going to happen for the licensed technology. What we saw is that we closed 24 with a plus 2%. But as Carlo was saying, if you look at the performance of the diagnostics business, that is, you know, high single, mid to high single. It's actually 7%, right? And we've had the headwind for the life science business that everybody has discussed about. How long is that going to last? Very difficult to say, but I believe we're kind of shielded there compared to pure life science company for the reasons we've discussed. So the mid, let me say, the mid of the mid to high single-digit number we gave during the capital market day, I believe it's absolutely at a reach, barring the fact that, once again, these days it's very difficult to make predictions about what's going to happen in the U.S., but that's how we see it.

Thank you. That's helpful. And I guess just the same question on the margin. I mean, you're guiding to expansion to 34% in 2025, but are you still confident on that 36% to 37% target for 2027? And also just following up, apologies if I missed it, but did you quantify the impact you're assuming from tariffs as well?

Also for margin, we do feel very, very comfortable with the midterm guidance. We closed 2024 with 33%. And by the way, the guidance was upgraded, reviewed upward during the year. The budget for 20, the guidance for 25 is 34%. So we are absolutely in the trajectory I was telling you to 36, 37%, and no doubt there. For the tariffs, you know, the impact of, What has already been approved by the Trump administration and the counter tariffs put in place by, you know, Mexico, China, and Canada is negligible. You know, it's embedded in our guidance, but it's negligible because, as you know, most of the products we sell in the U.S. are manufactured in the U.S. We have, you know, a very big manufacturing footprint there. And so, as things are today, we don't see issues.

Great, thank you. The next question is from Jan Koch of Deutsche Bank. Please go ahead.

Good afternoon. Thanks for taking my questions. I have three, if I may. I have to try my luck on the Plex again. So the 75 million euros you mentioned as a target for multiplex, does that assume negative growth of your very gene business in 2025? And secondly, of the customers that have already received a Plex system, how many slots do they activate on average? And then finally, coming to the terrorist question again, thanks for providing the comments on the potential impact. In case the situation escalates further, how easy is it for you to pass on additional costs to your customers? Are there any differences between your segments in terms of pricing power?

Again, sorry, I don't want to... I don't want to annoy anybody, but I have no intention whatsoever to enter into detail of cannibalization, price increase, and so forth because it's very confusing when it comes to Plex. So I kept saying we have a target to get to $200 million in the plan, and next year the $200 million talks to the $75 million target. which is a combination of new accounts, conversion of existing accounts, price increase, and so forth. Okay. When it comes to the second question is to do with tariffs.

Yeah, it was the third. The second was about Plex customers, but I'm not sure I completely understood what the question was. I understood the third one. The third one. I can start taking the third one about tariffs. Okay. So what I said is the current guidance for 2025 does include the new tariffs, which have already been, let me say, which became a reality, right, because of what the Trump administration did and the counter tariffs from China, from Canada, from Mexico. What's going to happen in the future, man, it's very difficult to say, very, very difficult to say. Yeah, and then I believe the question was, would you have pricing power to offset those tariffs? You know, and how can you allocate a different pricing power by segment? I guess that was the question, right, Ian?

Yeah. Listen, if I may take one, during the inflation period, I think our industry, as everybody else, learned that if there is a rationale behind, you are allowed to increase your pricing, which we did very successfully. So if there is an increase due to tariffs, the whole industry is going to go back and put pressure on the customer's for price increases, right? And this is what exactly everybody is saying. Eventually all these tariffs will bring more inflation because of price increases. So we will do all we can by contract to achieve that.

Okay, understood. And maybe in terms of the second question, let me rephrase that one. Given that the Plex has six slots, How many slots are being used by an average customer so far?

What we are seeing so far is that many customers are asking to have most of the slots filled. Let me put it in that way, meaning that most of the chassis, that's how we call the frame, right, that our customers are installing are filled with all of the slots. all of the available slots.

Understood. Thank you.

Thank you.

The next question is from Shubhanji Gupta of HSBC. Please go ahead.

Hi. Thanks for taking my question. So my first question is on the LTG business. So it's more of a clarification. So you mentioned you're seeing some improvement in the life science as well as the biopharma segment. So could you give some color on what portion is life science and what portion is biopharma? Second, on the molecular diagnostic business. So in Q4 sequentially, could you give some color on the growth of instruments versus reagents for Q4 versus Q3?

Hey, hi, this is P.G. I will take it. So broadly speaking, When you think about our LTG business, 50%, half of it is represented by diagnostic companies, diagnostic companies, right? And 50% is what we call life science, biopharma, academia, research, you know, all the rest, right? And what we said is on the 50%, which is diagnostics, you know, we are very protected because you don't see the headwind that you see on the life science. We are not sharing numbers of exactly how much we saw increase or decrease in instruments or royalties or bid. But the main message is that where we suffered the most in 2024 is on instrument sales, like most of the industry capex, let me say. Whereas we didn't see such, let me say, a headwind. on beads and royalties because of the installed base, obviously, which keeps the pooling beads.

Thank you. Just a quick follow-up on the LTG business. So you have some exposure to the academic customers. So is that direct exposure? And I know this has been covered earlier, but do you have any direct exposure to NIH because you have exposure to academic customers?

Well, first you need to understand it's B2B. So we don't know where these instruments are going to because we sell it to Thermo Fisher, we sell it to Bio-Rad, we sell it to Biotechnique, and they go and they sell themselves. Right? So we don't know. if there is a big exposure with the NIH. What I know, what we see, is that there is a good chunk of these systems that are actually going outside the U.S., first, and second, because we sell to a partner in the U.S., and they distribute worldwide. The second thing that we see is that there is a growing biopharma business for them, okay? When it comes to the NIH exposure, as I said I think before, we need to wait for their comment in Q1. So we will learn from them how they see the NIH situation.

Mr. Rosa, Mr. Pedron, there are no more questions registered at this time.

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