DiaSorin S.p.A.

Good afternoon, this is the Coruscall Conference Operator. Welcome and thank you for joining the Diasorin Half Year 2026 Results Conference Call. As a reminder, all participants are in listen-only mode, and 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 the Sorin. Please go ahead, sir.

Thank you, operator. Good morning, good afternoon, and welcome to the second quarter conference call. As usual, I'm going to comment on the results at constant exchange rate, and then our CFO, Mr. Donati, is going to take you through the numbers. So, quarter two to 2026 recorded a growth of 4%, and if actually we exclude two outliers, China and molecular growth would have been 5%, molecular respiratory. And this is confirming the expected quarterly progression provided during the full year 25 results in March. If we look at the three Technologies of the Sorin S.p.A. segment immunodiagnostic grew 4% in Q2, 5% ex-China. Fundamentally, return to growth is supported by double-digit performance in the U.S. as we have discussed during the Q1 results. Quarter 1 was actually affected by this talking on quantiferon. plus weather conditions in the U.S. So the growth of 4% globally is driven by U.S. and it's also recording a normalization in Europe and the impact of VBP in China. And we're going to talk about it later. And clearly in Q2 there are no one-off effects that has happened in Q1. If you look at molecular diagnostic, plus 1% in quarter two. Ex-respiratory, that as we have discussed many times, has affected the results of a lot of companies in H1. So without respiratory would be 4%. And as we're going to comment later, we have strong growth in our strategic product lines. And then finally, LTG, plus 7% in quarter two. And we see initial signs of recovery, especially in life science. But as we have discussed, H1 was a tough call compared to last year because of the ordering pattern. So this result is expected and has been discussed already in the quarter one call. So now let's deep dive in the technologies and let's first cover the immunodiagnostics. As we said in Q2, plus 4%, which is actually normalizing H1 growth to plus 2%. If we look at the different geographies, and we start from the U.S., the U.S. performance is back to historical growth with a hospital strategy that continues to deliver new hospitals. And we confirm our expectation of reaching 600 hospitals by the end of 2026. As said before, weather impact and TB destocking that we experienced in Q1 is behind us. And so we have experienced a double-digit growth in TB as well in the U.S., By the same token, specialty tests continue to show strong momentum in the U.S., and it's noteworthy that hypertension, which, as we have discussed, is a key product line for the S.sorin, we are experiencing an acceleration of our hypertension portfolio following the recent guidelines changes that Ironman, everybody, recommended to screen patients All patients suspected of hypertension right away with aldosterone and renin, which are two products that we carry both in Europe and the U.S. As far as LTB, again, is concerned, we see double growth in the U.S. and we see double-digit growth in Europe as well. And so this talking is important. is behind us. And for those of you who are interested, we have clearly not seen any activity by Roche so far. They presented the assay, but we don't see them yet on the market in Europe, notwithstanding the fact that the product got approved in Q2. Ex-US and Europe. If we look at all the other direct business ex-China, which means Australia, India, Brazil and Mexico, strong performance in Q2, 12% growth versus last year. If we look at our export business, it actually declined 7%. where we have been seeing Middle East clearly impacted due to the current situation, especially in Iran, where we had a very nice business. And comparing to Q2 last year, where we had over a million and a half of revenues this year, we registered no revenue. So we have this delta that we expect to continue to see In China, the business continues to decline, roughly 25%. In line with previous quarters, we see no end to the effect of EBP and competition by local suppliers. And honestly, at this stage, we don't expect H2 to show different results. It's been discussed many times. China for the Sorin is becoming a very small market, although, again, it continues to decline double digits. The only good news on China is that we expect to receive, by the end of the summer, approval of the TBSA. So starting from Q4, we will start to commercialize the liaison products in China as well. Now let's talk about molecular. I'm going to talk about the different technologies here. If you look at Q2 overall, the business has been slightly growing, 1% plus 1%, notwithstanding, again, the effect of a very soft flu season. If we go through the different franchises, and we start from the liaison MDX, which represents approximately €100 million of annualized revenues, we look at this business in actually three subsegments. We have targeted specialty, which is roughly €45 million of business annually. and this is growing very well for the Sorin in Q2 is up 25% versus last year and clearly this is fueled by the launch of all the specialty assays as we have discussed in the previous calls. We have still in this technology a smaller respiratory business which represents roughly 10 million of annualized revenues and this continues to decline. Minus 20% in Q2 and minus 35% in H1. Finally, roughly 40 million euro of ASR. ASR are those reagents that we use for, that customers use to develop LTDs in the US. And this business is very, it really depends on the ordering pattern in Q2 was relatively flat. We expected to be flat or low middle digit, single digit growth, sorry, single digit growth by rent. Again, all the impact here is really determining how this business is performing on a quarterly basis. Now let's move to multiplexing Q2 plus 7%. This clearly shows Multiplexing for us means the Virgin One Legacy product and the Liaison Plex. The growth of the business so far is heavily reliant on respiratory panel, as you can imagine, because we got approval of the blood panel recently, and we just launched them, and we really got approval of the GI panel in the last few weeks. So the plus 7% takes into account clearly a very negative impact on the flu season, although the rest of the proline is growing nicely and compensating the decline of flu. We have roughly 150 customers when it comes to Plex. The flex adoption continues to be very well received from the market with the vast majority of our clients choosing flex. So just to give an indication, only a third of our placements today are with the fixed, whereas the rest is primarily with flexed. My customer type, 90% hospitals and 10% commercial labs. So we have initiated to develop the business around the private labs and then we migrated very rapidly into the hospital systems in the U.S. that took longer to close, but we expect to represent the bulk of placements moving forward. So we're very happy about the way that this product line, the Plex, is received on the market, and we expect, by the way, to launch this product with now the full panel in Europe starting from Q1 of 2017. When it comes to the liaison net, we literally just started the commercialization of this product line through our distributors. I'm not going to provide numbers because those would not be of any significance. It is noteworthy that we have received also a fighting approval for our second assay, the group A strep. So now we have the full panel, and we are going to give better resolution in the Q3 and the Q4 calls, when also we are going to have a better understanding of the seasonal impact of flu in 2026. Last but not least, the LTG. The LTG, as we discussed many times in 2025, was... Haven is skewed toward H1, and then we had a light H2. And, again, this has to do with ordering pattern. Q2 was surprisingly very good, better than we expected. We grew 7%, and fundamentally we see a recovery in life science and biopharma business. And so we are confident that we're going to deliver by year-end, mid-possibly to high single-digit growth on this business. At this point, I'm going to leave the microphone to our CFO who's going to take you through the numbers. Thank you.

Thank you, Carlo. And good morning and good afternoon, everybody. And thank you again for joining us on H1 2026 Earning Calls. And thank you also for the continuous interest that you're constantly showing in our company. In the next few minutes, I'm going to walk you through the financial performance of the first half of the year, specifically with particular focus on the second quarter, and we'll then turn the line to the operator for the usual Q&A session. As we navigate through the results, you will see that H1 confirms the improvements we anticipated. Revenues came in flat at a constant exchange rate for the first half, while Q2 specifically delivered a return to growth at 4% at constant exchange rate, demonstrating the normalization, the progressive normalization of some of the extraordinary factors that impacted in Q1. As a result, we remain confident in achieving the full year guidance for 2026. Now, starting from revenues, H1 came in at €602 million, which was again flat at constant exchange rate compared to H1 2025, while at current exchange rates, revenue declined 3%, reflecting a total forex headwind of €20 million for the first six months of the year. The picture, however, is improving as the year progresses, because in Q2 2026, revenue grew 4% at constant exchange rate, and 3% at current exchange rates, with a much smaller Forex headwind of just 3 million in the quarter, which is a significant step up from Q1 when the Forex drag alone was around 17 million euros. This revenue improvement in Q2 reflects both the feeding of the extraordinary items that penalized Q1, Carlo mentioned them before, the exceptional weather events in North America, the stocking of certain large private customers in North America as well, and a more favorable base for currency translation. Moving to profitability, H1 adjusted gross profit came in at 390 million euro, which was minus 1% at constant exchange rates compared to H1 2025, and minus 4% at current exchange rates with a Forex headwind of 12 million. The adjusted gross margin remained S.p.A. is flowing directly to the gross margin line. The Q2 2026 adjusted gross profit was confirmed as 65% of revenues, and this is aligned with the same quarter of the previous year, notwithstanding the impact of the tariffs, which only marginally impacted Q2 2025, while at around 100 basis points impact in our Q2 2026 margin. Moving to the adjusted operating expenses for H1, they amounted to $241 million at cost and exchange rate, representing 40% of revenues. Now, if we exclude the commercial investment related to the next launch in North America, OPEX growth versus prior year is fundamentally entirely attributable to the inflationary impacts, including The annual salary increases, and this is again a reflection of the discipline cost management across the organization. H1 2026 adjusted EBIT came in at 149 million, 10% reduction at constant exchange rate, a 12% reduction at current exchange rate with a Forex headwind of around 4 million euro. The EBIT margin was 25% at current exchange rate and 24% at constant rates. The net financial expenses, again adjusted, were approximately $7 million in H-1 compared to $1 million in the prior year period. Now, this increase was mainly driven by lower interest income, which was a reflection of both lower market interest rate and lower average cash balances, as well as higher financing costs related to the credit facilities of the group. And this increase in borrowing and the reduction in the cash balances were primarily attributable to the ongoing share-buy-back program. Moving to the EBITDA, H1 2026, EBITDA closed at 194 million, down 7% at constant exchange rate and 10% at current exchange rate, reflecting a negative foreign impact of around 5 million euros. The EBITDA margin was 32% at both constant and current exchange rates, as confirmed by our guidance as well. And the year-on-year decline primarily reflects the impact of the VBP in China and the planned commercial investment to support the liaison nest launch in North America. Notably, the EBITDA margin improved from 31% in Q1 to 33% in Q2, benefiting from stronger revenue performance and so also demonstrating the operating leverage potential of the business. And as I was mentioning before, this trend is fully consistent with our expectations for the year and supports our confidence in achieving the full year EBITDA margin guidance of 32% to 33%. Turning to our balance sheet, and as well as the cash flow performance, we delivered a solid result despite the challenging revenue environment that affected us in Q1. Our net financial position showed the net debt of 844 million euro at the end of Q2 compared to 580 million in December 2025. These are 265 million movement that reflects on one side the good operating cash generation The free cash flow in H1 was 58 million compared to 83 million in H1-25, primarily due to the planned build-up of inventory to support the liaison-less launch. And this was more than offset on the other side by 233 million in share-by-back cash outflow under the program that the board, the shareholders' meeting approved back in January, and the payment of dividends for 65 million euros. Looking ahead, we expect for H2 cash generation to improve again in the second half of the year, supported by the stronger earning performance and a gradual normalization of inventory levels as the NAS rollout progresses. Now, going back for a second to the share buyback, as of today, the company has purchased around 3.6 million shares, representing approximately 6.5% of the share capital for a total of $236 million. And this is around 95% of the total program. Now, in light of the H1 results that I just mentioned and that came in line with our expectation, we are confirming our full-year guidance at constant exchange rates with a revenue growth 5% to 6% and an adjusted EBITDA margin 32% to 33%. I'll now hand over to the operator for the Q&A session.