DiaSorin S.p.A.

This is the course for conference operator. Welcome and thank you for joining the Diasorin H1 2025 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.

Thank you, operator. Ladies and gentlemen, good afternoon and welcome to the H1 first-after results conference call. As usual, I'm going to give some general comments on the business, and then Mr. Petronov, as usual, is going to take you through the numbers. Quarter one was a solid quarter for the Soren in terms of top-line growth and EBITDA margin. Quarter two revenues, ex-COVID growth, 7%, in line with the expectation, making H1 25x plus 8%. Quarter two, EBITDA margin, 36%. H1. EBITDA 35%, so in line what we expect to achieve by year-end. And Mr. Pedro will then comment on the fact that typically on our EBITDA, we have a seasonality and a difference between each seasonality too. But overall, we confirm guidance of 2025. As usual, I'm going to comment on the business by all the different business lines. I'm starting from Neurodiagnostics. Neurodiagnostics grew 8% in Q2 and in Q1, in line with expectations and confirming the strong positive trend for our CLIA business in all the geographies. Except for China, I'm going to make a comment about China. If you consider the immunodiagnostic growth X in China, it would have been 10%, both in Q2 and in H1. So the franchise, as we have seen in the past, continues to deliver growth according to the different programs that we discussed many times. If we now go by geography in immunodiagnostics, North America, which is one of the most relevant geographies for immuno grew 14% in the quarter and the growth is driven by the continued success of our hospital strategy We have a target of reaching, adding 100 new hospitals by the end of the year, and we are tracking perfectly compared to the target. And clearly, as we have discussed many times, this is due to our unique menu of specialties that makes the Gliasonica Lauer platform very suitable for this market. When it comes to Europe, good performance, plus 6% in quarter two, driven by the success of the liaison platform. As we discussed many times in geography, we are very much penetrated, so our result is relies on the fact that we keep adding products to our existing install base of their own platforms. So Europe overall continues to deliver high mid-to-high single digits, which is what we expect GeoGeography to do. When it comes to the rest of the world, we exposed the performance in the quarter despite political tensions in some countries, and the good results have been driven by strong growth in direct markets, mainly in Brazil, Mexico, and Australia, and in those geographies where we serve through local distributors. Last but not least, I would like to discuss China. China, as we have discussed now since almost two years, is becoming a very difficult market to operate. We experienced in the quarter a double GDP decrease due to the already announced and expected impact on GDP. The market research is difficult. I think that a few other companies already reported and did comment on Osmono Institute China, so I don't think we should spend more time. For the foreign, China represents less than 5% of the revenue, so even if we are struggling in this market, it does not impact the overall company performance. If we look by technology, so by product, together with our school panel, continues to drive the growth of the business, both in Europe and in the U.S. And we are launching this product also in secondary geography, so we expect that when we get the saturation of the primary markets, secondary markets will help us out to continue to grow. these franchises. But what I think is very remarkable is that also established product lines like hepatitis B or even vitamin D are experiencing growth again. And especially vitamin D is very interesting. We've been losing vitamin D for many years and now we reach a position where We are selling this product in the hospital market where, together with the rest of the menu, we can bundle it, we can secure it, and we clearly enjoy the volume increase for this parameter, which is actually happening across the globe. We continue to see positive signs of acceleration in North America. And we have reached 40 active customers by the end of H1. I remind everybody that we have a target of 35 new customers by the end. So we are well in the position to deliver these targets by the end. What I think is worth noting is that we recently signed a very relevant contract in the U.S. It is a million-dollar business, so it is the first time that we were able to sign for this assay group that decided to use now the name BES across sites and being part of the medical practice. So I'm very positive about the future of it. Now, let's move to molecular diagnostics. With molecular diagnostics, I would like to point out that we need to exclude, in order to fairly compare 25 with 24, we need to exclude the Aries contribution, the Aries contribution, which was 5.5 million in 2024. Eris, I remind everybody, is a Luminex legacy platform that we decided to discontinue last year. So we had sales through H1, but we didn't have anything this year. So if we look at the molecular diagnostics, ex-COVID, the performance in Q1, excluding Eris, growth was 8%. Sorry, I said in Q1, but I was talking about Q2. So in Q2, 2025 growth to the area is 8%. If we look at the Bay region and the ozone plagues, platforms together, what we call our multiplex syndromic business, the branches in quarter two grew 11%, and 18% in H1 2025. Clearly, after the strong start in quarter one, where we had a 25% growth, there is an expected lower pace in the second quarter because the Atomplex, the panel we launched, is a respiratory that clearly in the Q2 and Q3 is not carrying demand, and then it's related to the to the respiratory season, so we expect an acceleration of growth coming from end of Q3 heading to Q4, as it always happens every year. When it comes to the endosomal plexus, we now have completed our blood panel, so now we have a full blood panel approved in the US, which is allowing us to start quoting. in this market that for us is very relevant because the legacy version one platform was still holding a good market share in this particular segment. So for us it's defensive, even defensive panel plus is allowing us the ability to clearly increase pricing in this segment and moving from one technology to the other. He's giving credibility to the Zonplex platform. Now we have four different panels that can be used. And he's speaking about the ability of the company to deliver on the availability on additional menu on this platform. Clearly the next one to come that will complete our offering, phase one offering, is a gastrointestinal panel. that we will submit by the end of 2025, so in Q4 we expect to submit the product in line with expectations and get it approved beginning of next year. Now, if we move then to the molecular diagnostic, the other segment, which we call targeted, MDX, this is the story MDX platform. The business grew 10% in quarter two and 12% in H125. The non-respiratory panel, they're growing 40%. They represent half of the business, more or less. They grew 40%. Thanks to, again, the specialty positioning we've been discussing several times. One of the most successful passes we have is Candida auris, where we are the only one in the market and is getting some traction in the U.S. market. Respiratory panels in the second quarter decreased due to a softer tail of the flu season versus previous year. And also, let's remind ourselves that in this case, We are comparing to a border cell outbreak last year, which it is not repeated here, and is affecting comparison between respiratory Q2 versus respiratory Q2. We are submitting as a defensive posture in this platform a new four-flex panel for the way to be COVID-19. to get too far with competition. We expect to have this approval next year. So for the next two seasons in 2026, we're also in the MDX platform and we're going to have the complete offer. When it comes to the liaison net, which is our three-way platform, We have filed the ABCR panel and applied for a waiver in July 2025 in line with the expectation of the investor day, 2023 investor day, and we expect the launch of the system in H1 next year, so we'll be able to participate with the 2026 system. New season, next panel to come, currently under development, group extra, that again we believe is going to be available next year. So we are also building momentum on the liaison. Last but not least is the LPG, the licensed technology. We had a very good H1. We grew 10% in H1 versus three years, 7% in quarter two. I need to draw your attention to the results because if you look at the latest technology, half of the business is diagnostic, half of the business is life science. The diagnostic portion is doing well because we are supplying clearly companies that do need to have single digits in this space. When it comes to the life science, clearly we are suffering the results of what all our business partners are reporting, so softening of the instrument revenues, part of the revenues we have is related to instrument that we make and we sell to the business partners that then sell it to the research community. What is very interesting and is working for us so far is that reagent revenues in life science are still growing, clearly not as the past, but as if there has been a repositioning of the limited funds these days of researchers more on reagents than capex, which makes sense. So, in the H1, very good results. We expect some softening, clearly, in H2, but we really need to understand how these volatile markets will be performing in 2025, going into 2026. Other initiatives that I would like to comment are two. One is the closure of our German manufacturing site. As outlined during our last investor day in 23, we remain committed to driving operational efficiency across the group. And this is because we foresee that the pricing environment in this space is not seen to improve. It can only improve if companies can be innovative and launching specialty products like we continue to do, but for the products on the market, there is always, historically in this space, there has been price pressure that continues. Therefore, we continue to do whatever we can to improve our profitability in the manufacturing side, and in this very specific case, we are concentrating fundamentally our manufacturing capacity in two sites, one in Italy, one in the U.S., one to serve globally our ImmunoSA franchise, and one that is serving primarily the U.S. market, and this is why we are not so exposed to tariffs these days. We invested in capacity and automation in this site, and so after the last review, it did not make sense to continue to manufacture in Germany. We are in current negotiation, and we are going to treat fairly our employees that have been working with this company for many years, delivering great results. I expect that by next year, exposure will happen and products will be transferred to Italy. The last remark I would like to make is to do with that we have a collaboration that I think is very interesting with Gilead. that was announced last year about the hepatitis delta virus. You know, Gilead is trying to get a tier and new drug approved in the U.S. And together with Gilead, we are bringing an assay that will be used in the U.S. to screen for those patients that are candidates for the drug. We have submitted to the FDA. We responded to the last set of questions, and so we expect that this assay will be approved in the next quarters or so, and that clearly will help and support our differentiation in the U.S. market, continuing to drive our extractive franchise growth. Now, I'm done with my comments. I'm going to pass the microphone to Mr. Fedron and then we'll ask questions.

Thank you, Carlo. Good morning. Good afternoon, everyone. Thank you for joining us here in H1 2025 Learning School and for your continued interest in our company. Over the next few minutes, I will walk you through the soaring financial performance for the first half of the year. And then, like always, following my remarks, I will open the line for the Q&A session. So, 2025 year-to-date revenues reached 619 million euros, up 5% of 30 million compared to the same period last year. This growth was achieved despite the expected declining COVID sales, which were down 7 million, and the 7 million FX headwind, primarily due to the depreciation of the US dollar against the Euro as we anticipated during our previous earnings calls. On that note, let me please remind you that on a full year basis, every one cent movement in the USD-EUR exchange rate typically impacts the earnings revenues by approximately 6 to 8 million Euros. And I just reviewed that by 2 to 3 million euros again. Given that the average USD-EUR exchange rate in H2 last year was at 1.08, I believe it's fair to expect an additional effect headwind in the second half of 2025. Excluding COVID at a constant exchange rate, we saw our core business grow by 8% in the first six months of 2025, as said, in line with FURIA guidance. Carol already covered all the performance by geography and technologies, so I'm not going to comment more. In the second quarter, revenues excluding COVID at constant exchange rate go by 7% for more or less 19 million euros. As we said and as we heard in spite of the continuation of the ARIES platform in 2024. As mentioned earlier, we see a significant foreign exchange headwind in the quarter amounting to roughly 11 million euros. These, combined with the expected declining Covid-related revenues, resulted in a shyer reported revenue growth of 2% at the current exchange rate. Gross profit for the first half of 2025 reached €46 million, representing 60% of total revenues. This marks an improvement of 16 million, or 4%, compared to the same period last year. In Q2 specifically, the growth margin remained stable at 66% of revenues, in line with Q2 2024, and consistent with the level we have seen over the past few quarters, in spite of the fact that we started to see some impact from the tariffs of moving goods, importing goods into the U.S. Adjusted operating expenses for the first half of 2025 totaled €232 million, representing a 1% increase year-over-year, or 2% at constant exchange rates. As a percentage of revenues, operating expenses declined to 37%, down from 39% in H1 2024. This improvement in operating leverage is a key driver of our margin expansion, as we have consistently emphasized in prior revenue calls and during our capital market days. Adjusted other operating expenses for the first half of 2025 were negative $6 million, $1 million better than the same period in 2024. I would also like to address the reported other operating expenses. Each in the quarter has been affected by the initiation of a disaster and decommissioning plan for our immunodiagnostic manufacturing site in Germany, which we expect to complete by the end of 2026. This initiative, as we said, is aligned with the ongoing strategy to optimize our global manufacturing footprint. similar to the actions we have taken in the past, such as the redactures of our Irish and South African facilities. These reflect our continued efforts to adapt to the evolving macroeconomic conditions and enhance our long-term competitiveness. The one-off charge recorded in Q2 of about 8 million euros reflects the first part of this program. and we expect additional 6 to 8 million euros to be booked by the end of 2026, to eventually cover the full scope of these initiatives, including, among others, the cyber-commissioning costs, project-related expenses, fixed assets records, and so on and so forth. We anticipate a positive BIDA impact of approximately 6 to 8 million euros annualized once the plan is fully implemented. Third, this is one of the levers supporting our path towards improved profitability, targeting the BIDA margin outlined during the last capital market day. The results of these dynamics adjusted interest for the first half of 2025 reached €167 million, representing 27% of readiness. These reflect an increase of €14 million, or 9% compared to the 20 years back here. Adjusted interest expenses for the first half of the year were just under €1 million. compared to an income of 2 million in the same period of 2024. This shift was driven by lower yields on our cash investments, reflecting the decline in interest rates. The adjusted tax rate increased from 23% to 25%, mainly due to the termination of the patent box regime for our Italian legal entity. As previously discussed during our last capital market day, this measure was not renewed by the Italian tax authorities, and the resulting impact on our effective tax rate was therefore anticipated. On a separate note, we do not expect any material impact on our tax rate from the recently approved so-called One Big Beautiful Tax Bill in the United States. Year-to-date adjusted MEP in Canada, totaled €125 million, representing 25% of revenue. This marks an increase of 5.4 million compared to 2024. Lastly, H1 adjusted EBITDA reached €214 million, exceeding prior year by 16.8 million at current change rate and by 10% at constant change rate. The BIDA margin of 35% of both at current and constant interest rates is better than the 34% recorded in 2024. With constant effects, the BIDA margin is almost 36%, benefiting from the favorable calendarization of LPG sales, typically associated with higher margins, and from disciplined cost management. As we observed last year, we anticipate higher operating expenses in the second half of the year, driven by our standard salary review, and by the timing of first and the stationary cost. The improvement in our margin is in line with the guidance and the past century profitability we have discussed many times in the past. Let me now turn to our net financial position. We closed Q2 2025 with a net debt of €608.3 million, an increase of €56 million compared to 2024 year-end. This variance is mainly the result of two key factors. On one end, we generated a historic 3-cash flow of almost €85 million in each one. On the other hand, this was more than offset by 97 million debts related to payments owed to shareholders who exercised their withdrawal rights following the recent adoption of the announced working rights mechanism, and then we have to account for 63 million euro dividends paid linearly to our shareholders. Before we move on, let me briefly update you on the ongoing Italian payback situation. Looks like we almost get to the final episode. The government mandated reimbursement mechanism tied to regional overspending on medical devices covered by the Italian National Health Service. Just a few days ago, as part of a decree enacted at the end of June, the Italian government introduced a settlement framework for outstanding labor obligations, related to the years from 2015 to 2018. Under this new provision, companies can resolve ongoing legal disputes by paying 25% of the original requested amount. a significant reduction from the 48% that we discussed in previous courses. Once attainment is made, and more further legal or administrative actions can be pursued by the authorities. As you may recall, we have built a provision on our balance sheet over the past few years to cover this risk. As a result of this legal development, we have no impact on our channels. However, we would expect a cash outflow of more or less 5 million euros. Given the fact that this expense will be deductible from a tax perspective, the net cash impact will be slightly above 3 million. It is worth noting that GDP3 does not address payback obligations for years beyond 2018. but we believe our current provisions remain adequate to cover any future exposures. Let me now conclude my remarks by sharing our outlook for full year 2025, which remains consistent with the guidance we confirmed during our Q1 turning school. As always, figures are constant exchange rate, assuming the USD-EUR exchange rate of 1.08, for 2024 as a reference, we expect readiness of student bodies to grow by approximately 8%, and we also confirm our guidance for an adjusted data margin of around 34%. Please note that our guidance already incorporates the anticipated impact of recent history studies across the geography in which we operate, but mainly the U.S. while we are exposed mainly to the US. While we acknowledge that the broader macroeconomic environment remains fluid, and while we await a further clarity following the recently announced trade agreement between the European Union and the US administration, based on the information currently available and considering the mitigation actions already implemented or underway, we do not expect a material impact on our profitability in 2025. We will continue to closely monitor developments in this evolving situation and will keep you informed as new information becomes available. With that, I now turn the line to the operator to begin the training session. Thank you.

Thank you. This is the Chorus Call Conference Operator. We will now begin the question and answer session. Anyone who wishes to ask a question may press the star and 1 on their custom telephone. To remove yourself from the question queue, please press the star and 2. We kindly ask you to pick up your phone when asking questions. Anyone who has a question may press the star and 1 at this time. The first question is from Aisha Noor with Morgan Stanley. Please go ahead.

Hi, good afternoon. Thanks for taking my question. My first one is on China. So your competitor was talking about a DRT or debundling dynamic that's happening and impacting panel-based testing in assays. Have you heard about this and are your products within the scope of this debundling plan? And then my second question is for Pier Giorgio on the margins. Could you explain a bit why the gross margin was down 30 bps, or slightly on here, I guess, but the EBITDA margin is up 100 bps, so 35%, because this reflects a higher mix of partnership revenues in UNO or any other mixed dynamics we should be aware about.

Thank you.

Yes, I'll take the question about China. Yes, I know what DRG is. I think that, and we heard about it, I believe that this confirms what China is trying to address, which is fundamentally cutting costs. Right, so DRG together with BBT are two ways to do it. And interestingly enough, This has nothing to do with foreign companies per se. This is actually addressing the market and is at the same time hitting the Chinese local players and the international companies. So to me, nothing new under the sun. Truth of the matter is that China will become a less profitable market for everybody. because of driving less consumption and through the DRG systems and pushing down the price through the VBP. That doesn't mean that China is not an interesting market simply by sheer size is that I believe the strategy for China is not to rely on existing mutual products but to focus on The strategy of the company is very, very specific specialty products that would help differentiate and the clinical value of which is clearly leaving this product outside the scope of VBP and on the same token outside the pressure of the DRG. As far as the authoring is concerned, we discussed about this a few times. We are going through registration of the TV product. There is a great TV market in China. And we expect this product to be available starting from next year. And then all the gastroenteric line that is not registered for us, where there is no active competition, is also participating in the authoring process today. Then when it comes to the margin question, it's easy, please.

Hey, Alistair, thanks for the question. So the margins in the first half of the year grew more at the same pace as the top line in spite of the impact of price, just short of 1.5 million. And despite the fact that I'm talking about China, our manufacturing industry plant in China is now fully operative, which means that in our cost of goods sold, we are expensive because of the manufacturing site itself. Whereas during 2024, the site was not operative yet, so we could capitalize some of those costs. By the way, let me share with you all that we got the registration for the first two products from the changes here, which we take news and from the manufacturing of our right side in China. Considering this, in fact, I believe overall the gross margin number is the number we're happy with. If you learn, we have a budget. And why, in spite of having a similar margin, our data is richer in terms of marginality, it mostly comes from operating leverage. As you might see from our C&L, the ratio of operating expenses of the revenue moved from 39% of 2024 to 37% of 2025. So the EBITDA margin expansion is mainly coming from operating leverage, which is the official concept.

Thank you. And then just to quickly follow up on that response, Giorgio, how are you thinking about the margin development for the second half, given you are now a bit ahead of your full-year target of 34%?

So, I believe in the second half, the growth margin will not change materially from the 66%. If anything, you know, we could change it a bit because we are expecting more molecular sales, huh? and less LPG phase. Carlo explained why it's fair to expect that in H2, LPG phase should not grow at the same pace we saw in H1, and a structure of LPG phase that's consumable to have royalties which are a richer margin than a molecular phase. So because of the product mix, we expect H2 to be a little bit lower in terms of gross margin. At the same time, existing last year, I'm expecting an increase in office. Usually, not usually, always in our company, we have a salary review cycle across the whole corporation in July. which means we should expect an higher cost of labor in H2, which is gonna increase OPEX in absolute value, H2 to H1. Please consider that we will save 65% of our OPEX and labor costs, and so that's why it's pretty important to understand why overall OPEX are gonna increase. So, since we closed H1 at 35%, I'm expecting overall, you know, an EBITDA margin in H2 around 33-ish percent, which should allow us to close the year around 34% of constant exchange rate, which is our target for the full year.

Perfect. Thank you very much.

Thank you.

The next question is from Hugo Solvay with BNP Paribas. Please go ahead.

Hi, guys. Thanks for taking my question. I got three things. First two on MIMED. Tony, are we okay?

Yes, we can go.

Okay. First two on MIMED. First, it is our contract you mentioned. Does this represent some commitments and how long will it last? Second on MIMED, they announced last week a security block test. I'm curious if this technological development falls in the scope of the non-exclusive partnerships that you have with them. And lastly, from the discontinuation of the cement ELISA business, can you share both the revenue loss that will be associated with the discontinuation and also the saving for the $15 million one-off cost? Thank you.

Okay, we made $1 million. I pointed it out because if the... is a contract that is covering a healthcare system where you have the core facility, you have the clinic, and so it shows then when a healthcare system is looking at implementing these new tools, it's a significant business. Okay, and so far we have wins in individual hospitals, but now this is the first time that we are really getting a full system to buy the hub and spoke positioning of this product. And this is why I'm saying with this kind of account, and there are hundreds of systems in the U.S., we really expect that now the size of the business we're going to be gaining is more significant than in the past. On the fingerprint, I don't know what they announced, but it's not honestly related. The contractual relationship with us and MIMET is confidential, so I don't want to comment on that. On the ARIES, it's not ELISA, it's the ARIES, it's the all-molecular platform of Luminex. The contribution in H1 was $5.5 million. were sold last year in while we were sold in the plant other manufacturing equipment to clearly buy a REN that was finished and now we have zero static control with any type. And the last comment was?

I believe it was on the discontinuation of our manufacturing site in Germany. I believe, Ugo, you know, that since I'm confused and it's nothing to do with Stiemen's ELISA, we, if that's what you refer to, right? I believe you said Stiemen's ELISA, correct?

Yeah, it was my bad day.

Thank you. No, no, no. Let me just explain. So we did buy back in the past. It was a 2017... and they like the business from humans but we never manufacture it so nothing to do with that our so i i understand the confusion can come from the federation uh announced that we are um from our manufacturing site in germany and that is a nuclear manufacturing site but we are moving production to italy and we are not expecting any loss of revenue. It's clear products will keep on serving customers during the transition phase, no revenue impact. And the phasing, I believe you asked me about the phasing of the one-off cost. I said 8 million now I'm expecting potentially a couple of more million in the second part of the year 2-3 million and then the remainder 2-4 million euro are going to be booked in 2026 we expect to be done with this program by the end of 2026 thank you thank you

Our next question is from Jan Koch with Deutsche Bank. Please go ahead.

Good evening. Thanks for taking my questions. I also have three. The first one is on your molecular business. I was positively surprised that you grew by 11% in the automated market business. Could you speak a bit about the drivers behind this growth? Was that driven by your blood panels or did your customers already build some support for the upcoming food season? You mentioned that you expect a softening in H2 and that we shouldn't expect the same growth rate as in H1, but are you projecting a decline in revenue in H2, considering that you're trading meaningfully above your full year outlook in that business? And then lastly, on pricing in relation to tariffs, and you seem to be better positioned than some other diagnostic companies when it comes to tariffs. This allows you to realize positive pricing effects that could support your margins down the road.

Let me start from the last. When it comes to tariffs and how to react to tariffs, honestly, we don't know yet because we don't want to take a position which is unique. customers in the US are very sensitive to tariffs. The administration is very sensitive to tariffs. Fortunately, the impact is relatively small. So if the whole industry decides that We want to pursue a pricing case to cover tariffs. We are going to follow through. If the industry decides that this is not the case, then we're not going to do it. But again, I'm not so concerned. As you said, first, if we want to do it, we can do it because we're specialists. And second, I'm not so concerned because the entity of the amount of what we have. LPG, yes, certainly if you do the math, you would expect decline to happen in the following quarters. But at that, I think that we need to really wait and see how the situation is moving, what happens to the next quarter. But certainly, mathematically, if we want to, year-end, we project 2 to 3 percent growth, then we're going to have an H2, which should be lower than H1. On the molecular 11 percent, no, that is not a stock issue, it has to do with the fact We continue to close accounts, set up systems, and we are actually getting ready for the coming season. Typically, customers stock up in quarter three for the season, not in quarter two.

Great. Thank you.

Thank you.

The next question is from Dylan Van Hasten with SQL. Please go ahead.

Excellent. Good afternoon, guys. Thanks for taking my questions. So just one follow-up, just on Diezenbach. If I look at, could you maybe just highlight what basically the gross margin differences are between the two facilities? And then I have a follow-up question just on the measles ASR that you guys announced. I know it's early days, but is this one of the ways that you guys are positioning towards, let's say, let's call it like a pro-infection policy happening in the U.S.? ? Do you see similar opportunities to capitalize on, and should we be thinking of this in broader terms?

Thanks.

Let me start from the nasal question. We typically use, we have a very large business of ASR, and we always use the ASR as a way to probe the market. In this case, thanks. It would be difficult to comment on pro-infection in the U.S. Certainly, today there are in certain states a raising number of, I mean, we all read newspapers, labs are set up, are using ASR, and they set up their own MDG because, you know, ASA is currently approved. Today, we have seen that a certain number of accounts are setting these assays up in terms of what is going to happen. We really don't know. Especially with these entrepreneurs, I hope that we're not going to be selling this product because otherwise the problem would be a very severe one. When it comes to this, look, I don't think that you should be looking at this in terms of percentages. We should be really looking at this like we continued throughout our history. We've always been, even with very hefty margins, because it was made as early as we continue to push for operational excellence and in this very specific case we do have capacity in our, we built capacity for future expansion in our Italian sites from the automated, Germany is already partially servicing our Italian sites so we came to the conclusion that It would not make sense to make investments, more investments in Germany, but to consolidate everything on the side that was able to get all the volume at a very competitive cost. And that's the decision. Again, this is not one of the situations like there is where we kill a technology. We are transferring existing products, clean products, from one side to the other one and we clearly continue to provide these products to other customers and this is why we don't plan to see any effect on revenues is a margin improvement.

Perfect. Thank you very much.

The next question is from Natalia Webster with RBC Customer Market. Please go ahead.

Hi, thanks for taking my questions. I have three, please. The first one is on tax I appreciate Q2, Q3 is generally lower in terms of demand, but are you able to provide some more color around the demand of things for the Plex and the Plex concept in general? How you're progressing towards the 150 active customers by year end and the 15 million of incremental revenues? And if you're seeing an increase in interest from customers now that you have the three blood culture panels, or are there some customers in the pipeline that are still holding off until you have the PI panels too? My second question is on China. If you could just confirm if the double-digit declines you saw in Q2 are in line with your expectations for the around €45 million ECP headwinds you previously guided to on an annualized basis. And my third question is if you're able to give us any updates on Lime Detect and any feedback you have from the SBA there. Thank you.

Okay. Again, as I said, Lime Detect, we are in discussion with the agency when it comes to the clinical requirement on this product, which is a very innovative product. So I don't have any updates. At this moment, online, the fact when it comes to China, in fact, yes, 4 to 5 million is what we have disclosed, and this is what we expect. When it comes to the first question, which has to do with black color, yes, we continue on our development, on our fail process of placing systems in the U.S. We have a combination of some large commercial labs and hospital markets, and we are in line with our expectations in terms of number of accounts that we want to sign by year-end. I believe that the good news is that we signed up recently a very large commercial lab that is going to be using our platform and deployment of systems. We'll start in quarter three to be all active in quarter four. So that's good news about this platform. When it comes to flex, I think that we continue to educate the market on the concept that full panel is significantly more necessary. And the flex concept today is adopted in two different ways. One is the traditional way that you explained, which is also called up to one. and the other one is the adoption of different mini-panels that the different customers, depending on their own population, decide to apply. So we are discovering that providing full versatility to the system to customers, because again, we never ever recommend a panel, we sell one basic panel of seven, and then they build on it. We see that customers are really using for respiratory these technologies in different ways. And what we are also thinking from what we learned so far is that, and again I go to the AGI, GI is a very interesting panel because there, the amount of mini-panels that you can imagine is very much more than a respiratory, because as we discussed in the past, not only you have seasonal, you have a traveler panel, you have an elderly panel, and then you have a different mini-panel that you can set up to serve a different population of people who really have a system service. So it's certainly, I believe one of the analysts wrote a piece saying that they are listening to customers and customers are saying that Flex is very interesting, but it requires some thoughts in understanding how to apply. And that's certainly the case. But this is the competitive advantage. Otherwise, we would have the fourth box on the market with the same as pretty much all the incumbents are already offering. So that doesn't honestly surprise me, actually, is what I expect to see. They use our technology differently than others. They see it as different, and therefore they buy from the authority rather than from some of the incumbents.

Great. The next question is from Tavia Deshpande with UBS. Please go ahead.

Hi, Carlo. Hi, Gigi. Thanks for taking my question. She wanted to ask about North America and UNO. So you've been accelerating versus against some tough comps for two quarters now. Is this a reflection of a step up in new customer wins or is this existing customers consuming more of the menus? And then just to follow on from that, should we expect North America and the United States to continue accelerating NHG, especially as I think the comps get slightly tougher as well? Thank you.

Hi, Kavya. Listen, first, you know, you always take me off guard when you ask me about quarter to quarter because it's impossible to predict. I understand everybody has to look at the business in quarters, but trends in quarters can be all over. I think that you need to look at consistency of growth. And the authority has been, this franchise has been consistently growing year on year over the past five years. And this, again, has to do with a combination of two things, in my opinion. The hospital strategy that is working very well, so you are expanding our install base. Now that we have an install base in hospitals, now we are increasing the load, what we call the load on the customers, so we try to sell more products. while we are building a new customer base. And by the same token, we have a great, great relationship with the two major labs in the U.S. that continue every year to take more products from the authoring, so on the commercial lab site. Therefore, the growth you see consistently is that GV is working very well for the company. And, again, I think during the call I said that we have a target for 100 hospitals in 2025, and we are over 50 already in H1. So no problem to say that, again, for the 50 years in a row, we are going to make our projections. How is it going? Quarterly three, I honestly don't know. To me, and I understand that you guys need to look at the way the business is delivered on a quarter, but I would not read in this business a good quarter on a bad quarter as a specific indicator that something is really happening. Look at the consistency. And in this case, our U.S. business has been very consistent in Juneau, and I don't see any reason why it should not continue with this consistency. Thank you very much. Thank you.

Mr. Rosa, Mr. Perron, there are no more questions registered at this time. Thank you, operator. Thank you all. Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect.