Eurofins Scientific Sa

Ladies and gentlemen, welcome and thank you for joining Eurofins Q1 2024 Trading Updates. Please note that this call is being recorded and will later be available for replay on the Eurofins Investor Relations website. Throughout today's presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone to register for questions. For operator assistance, please press the star key followed by zero. During this call, Eurofin's management may make forward-looking statements, including, but not limited to, statements with respect to outlook and the related assumptions. Management will also discuss alternative performance measures such as organic growth and EBITDA, which are defined in the footnotes of our press releases. Actual results may differ materially from objectives discussed. Risks and uncertainties that may affect Eurofin's future results include, but are not limited to, those described in the risk factor section of the most recent Eurofins annual report. Please also read the disclaimer on page two of this presentation, subject to which this call and Q&A session are made. I would now like to turn the conference over to Dr. Gilles Martin, Eurofins CEO. Please go ahead.

Hello, everybody, and thank you for joining our quarterly call. Well, we've had a very good start in the year 2024. Things are working according to our plans. We are continuing to invest significantly to build out our network and build out very large hub laboratories. And we continue to open many spoke laboratories, local labs for microbiology or for blood sampling in some areas in our clinical business. As you can see, the startups, we invest a lot in startups, but they start to have a meaningful impact in our total growth. So this is encouraging. This is something we will be continuing. And we flagged the amounts that we're investing there over the next few years. So this is an important part of our growth. We have resumed our inorganic growth. We've acquired a few more companies this quarter than we did before. Acquisitions are lumpy. All our objectives are five years objective. Whether you look at what we think could be the average organic growth over five years, or the volume of M&A each year. This is, of course, something that is not exactly plannable. We only do M&A if they provide, we think, a very good return, and we have a hurdle rate that we have set at 16% pre-tax for any of our investments, organic or inorganic, so we pass on many acquisitions, and we only do those that fit. We acquired the larger acquisition last year or this quarter, was a company that fits well with our transplant testing business. We are the leader in providing testing for transplant hospitals. Ascend in California is also a leader in that, especially on the dialysis segment, so pre-transplant or post-transplant. So we are expanding our franchise. In clinical diagnostics, for those of you who haven't followed in detail what we do, we don't want to be all things for all people. We don't want to be a generalist where we can avoid to be. So we don't want to be a lab corporate request. We are focusing on areas where through innovation, we can create new tests and those tests can provide superior growth and the superior profitability. So in America, we are refocusing to be almost a pure player focused on transplant testing. And in Europe, we have some countries where in order to have market access like France or Spain or Germany, or the Netherlands, we need to have a broader range of testing, including a lot of routine testing. But this is not a strategy worldwide. In clinical, we look at it country by country. We also will not be in all countries. We've been active in that market since 2014, which gave us a fairly good overview of the situation in clinical diagnostics around the world. And we know now in which countries we want to be, to do what, and what type of return we can expect. So we are very selective in clinical diagnostics. We are at the same time refocusing in some countries and expanding in some others and some markets. So that's for the clinical diagnostics. Some of you noted we had a setback last year. We flagged it in Q1 at the conference call. And if you read our offshore report, you will find more details. We have developed a new test, which initially got a very positive response by Medicare, a combination test expression. and cell-free DNA testing combined. Unfortunately, effective in March last year, there was a change of reimbursement policy, which meant that test cannot be sold. So we had to shut down the whole activity, lay off about 50 salespeople or something of that order of magnitude that were focused on that activity. And we need to invest for two or three years or two to four years in the new clinical trials to validate the benefits of those tests or actually an improved test we are working on. and see if we can create the half a billion dollar market that we are looking at initially. So this is, we flagged that last year, unfortunately delayed, but otherwise we have all the components now to serve completely the needs of transplant hospitals with a range of virology testing, organ testing, donor testing prior to transplants, including for for egg and cell therapy and all those potential grafts, not only kidneys or heart. So we are definitely the market leader in America. And we believe we're investing 10 million, at least 10 million losses in that activity for the clinical trials. But we believe that long term, it can be a very nice growing market and a nice franchise for us. So that's for this activity. Overall, our business is doing well. We've had good growth in many areas. As usual, North America and the rest of the world have had higher organic growth than Europe. Europe is still somewhat subdued. We see some green sprouts and green things coming up, but it's not as marked as we would like. We hope that the next few quarters will show a catch-up in Europe. We have improvement also in profitability that can be even further increased once Europe fully pick up. So you can read on the press release the different level of growth. On page five, you can see of the slideshow breakdown of the revenues. So we've basically ended the COVID period. COVID revenues are over. Of course, we will do when we do multi-panel for flu and so on, when it's required, we'll test a bit of COVID, but that's really marginal. So we've had to compensate that, and now we've almost fully compensated that. This year, twenty twenty four will be a year where our total revenues should exceed the revenues we had in the peak of the year of twenty twenty one. So that's basically this year in twenty twenty four. We are really putting behind us the times the comparable of twenty three are, of course, mostly free of COVID. And therefore, you should be able to see the revenues and profitability improvements independently of that. So we've really grown to a much larger company than we were pre-COVID. And so what I was saying for acquisitions over five years, we think we can add about $250 million per annum of revenues on a pro forma basis because it won't be consolidated January 1st every year. So that means over five years, including 2023, 1.25 billion euros. And we might do a little bit more this year. We did a bit less last year, but that gives you an average of what we think is possible while achieving the, basically doing that with our own cash flow and reducing our leverage by 2027 further. So that gives you a bit of the breakdown of our growth on page five. And on page six, well, I just want to reiterate that we are comfortable with our objectives. We think the year is starting very well from that perspective. And we think we, if things continue like this, we should be able to achieve our objectives for this year. And also the objectives we've set for 2027, which include indeed significant margin expansion and cash flow expansion. But I have also to underline, Over the last two or three years, we have done some fairly heavy lifting in building our network, and we start to see the benefit of that, of reorganizing, realizing along a very efficient hub-and-spoke network. We are still doing very heavy lifting to rejuvenate our IT infrastructure in more resilient, more independent networks, higher level of security. That should be completed next year. A large part of it will be done this year, actually. We have invested massively in developing new solutions in some verticals that are deployed. We will now from this year in our food and environmental testing business line in Europe, start deploying on on full countries, the two or three full countries, the new suite of solutions, which will enable us to. to remove a lot of big patchwork of legacy solution, which over a two or three year timeframe should reduce our IT costs significantly, improve our efficiency, reduce our testing time, and more importantly, give us the clean data pools that are required to run some new applications based on artificial intelligence to remove more and more of the scientist time that is needed to look at results and interpret results before they are sent to our customers. Automations, we're doing a number of pilots of automation to reduce manpower. It will become harder and harder to hire analysts and technicians. And we are studying, and that's a lot of capex and a lot of cost and disruptions, but we have many pilot studies to define what is the right automation for all of the use cases we have in our various verticals. And of course, we benefit from having many labs doing the same thing all over the world. with different approaches. We're doing a lot of effort to benchmark them, to find the best processes, to optimize them, and then to automate what can be automated. So while we run the business, while we grow, while we improve our profitability, we are really doing a lot of heavy lifting for the long term to strengthen the competitive advantage of our group, of our different verticals, in the verticals where we see very strong potential growth on a secular basis for the next five to ten years. So that's a summary of this quarter, and we'll be happy, Laurent and I, to take questions.

Thank you, ladies and gentlemen. At this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. If you were using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press Star followed by one at this time. And please hold while we poll for questions. The first question today is coming from Suhasini Varanasi from Goldman Sachs. Suhasini, your line is live.

Hi, good afternoon. Thank you for taking my questions. I have two, please. One is on the clinical trial that you mentioned for transplant testing. Are you still running that trial at this point? Because I thought we understood that at the end of February, there was a press release that stated that you could apply for reimbursements, which probably would not need the clinical trial anymore. So I just wanted to get some clarification there, please.

Thank you very much. Well, there's a range of application. And the question is, what will be the ultimate applicability of the test? The new test OmniGraph that we have, and we have a new generation of that test, has actually a very good predictive value. And we believe if the outcome of our three or four years clinical trial is positive, it could be able to replace surveillance biopsy, which means a lot of testing at regular intervals. There are other use cases that are less frequent, that are more so-called for-cause, when there is something strange clinically for the patient. Um, it can be done, um, if all the clinical signs or other testing signs are there, which is a much narrower indication. And so what we are trying to navigate together with the Medicare administrator is exactly what scope we can market to. So we have retreated significantly. We have closed the, um, the, uh, what is it called? Um. the local nephrology doctor activity that we had. We were talking to local doctors following graft patients. We are refocusing on working with the major transplant hospitals. Now with ASCEND, we have a broader access to the maintenance of the centers that do the maintenance of people with kidney failure. and we can develop some more, some broader strategies to have a complete offer to transplant patients, to patients with kidney problems, also very early, prior to graft, and that's why we really believe in investing in that franchise. It's going to be a longer journey to really get to a full market, but the data we see means our test is really a very good tool to limit the number of biopsies in a broad range of indications. how much, how broad that can be, which will also define the total accessible markets will depend on the studies that we have. But probably the press release in February was that we can already do a bit more than we thought we could do after the change of recommendation at the end of March 2023. I see.

Got it. Okay. That's clear. Thank you. The second question is on the margin expansion that we should think about for first half, please. I know your full year guidance implies something like 90 to 100 basis points of expansion on a year-over-year basis. So for first half, can we still think about the 90 to 100 basis points on a year-over-year basis, or is it more back-end loaded? I understand the seasonal changes in the margins, but just on a year-over-year basis, how should we think about expansion potential for first half, please? Thank you.

Thank you. Yeah, on the complement of your other question, of course, we've had a very significant drop of revenue after this change of reimbursement. And that's why it has been flagged again. But this is behind us. Now we are running at a level which is low. And normally from there, we only expect positive surprises on the TGI side. For the margin, we don't see why we shouldn't have a good improvement also in the first half. And I mean, we have higher margins in the second half. With the progression, we don't see why the progression should be any worse in the first half than in the second half.

Thank you very much.

Thank you. The next question is coming from Annalise Vermeulen from Morgan Stanley. Annalise, your line is live.

Hi, good morning. I have two questions as well, please. Just on this Omnigraph situation, you know, you sound relatively confident in this endeavor going forward. I'm just wondering what gives you that confidence that the new trial and how that progresses from here will will be successful. I know you've spoken about it already, but sort of any more color on that going forward? And also the discontinuation, are there any margin implications from that we should think about? That's the first one.

Thank you. You know, we wouldn't be spending 10 million per annum or more on those clinical trials if we didn't believe, based on the data that we have, we already have a lot of testing data that our test brings a lot of medical benefits. What will be enough to convince the Medicare plan administrators is, of course, a different question. And we might have intermediary data before the end of the study that is insufficient. And it's a broad spectrum, as I mentioned on the previous question. What are the use cases? And also, what use cases are, we have already a better prescription than the standard cell-free DNA test. Because for surveillance, cell-free DNA is definitely not applicable according to the latest protocols. But the question is, are you talking about an addressable market that's going to be 1 billion or 100 million or 200 million? And that's what will depend on the evidence we gather and also on the communications we have with the key opinion leaders. Because, for example, CareDx has been somewhat very optimistic as to the quality of their test, which is only a cell-free DNA test. and we need to clarify a lot of those matters with the key opinion leaders because all the companies might have muddied a bit the understanding of key opinion leaders about the possibilities and the performance of each of the available tests. And if any negative, we've already had it because we had last year all the restructuring that was associated with disclosure that went through the second half of last year. Now what we have, we will have ongoing losses that are included in our target for 100 million for our startups, but we don't see the losses getting any worse than they have been recently.

Okay, understood. And then secondly, just on pharma, you haven't really touched upon pharma or the biopharma space in your opening remarks. I know when we last spoke, you again seemed confident in that market going forward and also your exposures within that. Given that the news flow in that space still seems muted at best, has there been any change in your thoughts, particularly for the near term, in that market that you can share?

Yeah, well, we have a mixed view in biopharma. We have some segments which are a bit softer, especially on the earlier phase, discovery, as we already commented upon at the beginning and your result presentation or last year when there were questions, we have other areas, especially on oncology, on co-vaccines, which are growing very nicely. We're making very significant investment also in our CDMO sector on some new activity in the biologic space generally. And so we're bullish on that area on a three to five year basis. Um, we think this should be an activity that is above or on average, or over a long period, slightly above or growth objective, at least at our growth objective or slightly above. So, we're, we're positive of that. And okay, the biotech is a bit more affected at the moment. So the earlier phases, we are more active for big pharma, which is much less affected and will continue to invest. We will refocus more and more on biologics and ATMPs. And we're investing for that. If you visit our site in Milano, we are very, very much expanding the activities for biologics. And we're having actually we're spending in biopharma a lot of capex and we have a lot of unused space until it's being qualified because we believe in the expansion of many segments of that market on a fairly long term basis.

Understood. Thank you. And then just one final, hopefully quick one. Obviously, you've stepped up acquisition spend already so far this year relative to what we did last year. If you look, if I'm just taking an average of the deal spend, it looks like you've done some larger deals year-to-date compared to what we would have seen historically. Do you think that's something that will continue for the rest of this year, or do you think there'll be some smaller deals still in there as well?

The majority of the deals we do are small, ball-time acquisitions. from 1, 2 million to 10 million in revenues. We've done a few larger deals. The larger deals are the most difficult to predict. You never know if you are going, which one are going to come up for sale and if you're going to agree with the seller on the value, what other bidders will do. So I think the bulk over those five years, the bulk of our acquisition should remain smaller acquisitions and here and there, there will be a larger one. I don't foresee super large ones, but you never know what will happen in two or three years. This is, as already mentioned, the most difficult thing to predict. But we are very disciplined. This is an indication. We never talk of guidance at Eurofins, and maybe that's a misunderstanding. We don't give a guidance because we don't know what the future will be. What we share with you is what we think are reasonable objectives for a long period, on average. And we believe over a long period, Over the five years plan that we announced at the beginning of last year, that if we add 1.25 billion of revenues from acquisitions over that period, that's a reasonable objective. We have a mix more shifted towards smaller deals.

Okay, understood. Thank you.

Thank you. And just a reminder, it's star one if you wish to ask a question today. The next question is coming from James Rose from Barclays. James, your line of life.

I've got one, please, and going back to transplant genomics as well. I think TruGraph and Viracore track are still available and available sales and are within core organic growth. Could you give us the size of those businesses and give us an idea of how those sales are progressing? And do you think the future outlook of those tests are also linked to the clinical trials for OmniGraph?

Thank you. Um, yes, I know, because we are running actually in parallel, all those tests in the, in the trials. So we don't know exactly what the reimbursement authorities views will be. Unfortunately, it's not only about science. It's also about opinion. Sometime in the end, it's only people who decide and independently true graft as a, as a very good predictive value, uh, combining both tests, increase the predictive value. the PPV and the NPV. So we believe both should be used in conjunction. But that's unfortunately not only up to the doctors to decide, but also to the payers. And that's what we are navigating. At the moment, the revenues of TGI are very low. We're talking, I don't know, sub 15 million per annum. So it's really marginal in the greater scheme of things for Eurofins. Although we have had in Q1 of last year quite a big peak. That's probably what we made in revenue in one quarter. in Q1 of 23, and then it fell off a cliff back to three or four million per quarter. So that gives you an overview of that. It's very hard to predict at which pace we can change the perception of both doctors, key opinion leaders, the main hospitals, and then at which point maybe we can restart a business focused on community nephrologists for ongoing surveillance of patients who have received the graft. but we are optimistic that this time will come and we'll have, we have from what we see, because we do a lot of literature surveys and research and studies of what else is available. We still feel that the two tests that we have, that we are also rejuvenating because we've reduced the cost of running them. They were done with NGS. Now we're doing them with, with another technology, which is much more cost effective and faster. We do believe that either those new tests alone separately or in combination, or as a, again, combination test will find their market and it could be a very significant market. Of course, this has to happen. We have to prove it, but this is our belief.

That's very helpful. Thank you. Thank you. The next question is coming from Himanshu Agarwal from Bank of America. Himanshu, your line is live.

Hi. Thank you for taking my questions. I just have actually two questions. One first one is on the M&A. I understand M&A can be lumpy, but based on your M&A pipeline and given the progress year to date has been quite strong. Can you comment on the pace of M&A going forward, at least for 2024? Just trying to understand the M&A contribution in the revenue guidance for 2024. So that's the first one.

Sure, we're more likely to hit the objective of 250 million annualized revenue from acquisitions. We could do even more, but you know, until a deal is signed, it's not signed. And then even if it's signed, we're dependent on sometime competition authorities view and how fast they will process a request, whether they will support an acquisition or, or limited somehow. So it's really hard to. to predict. Frankly, if you ask me now, I think we should be able to do more than 250 this year, maybe a bit compensate what we didn't do last year, but there's certainly no certainty about that.

And second, can you give us an update on the review of underperforming businesses that you mentioned during the full year results?

Yes, so we've marked a couple of small businesses for either closure or disposal or sales. And we are appointing bankers with its small businesses. Are you talking 20, 30, 50 million revenues in aggregate, maybe a hundred million? It's not a, it's not a huge amount, but there are some areas where we say, okay, we're not going to become number one. We don't see how we can build competitive advantage, lasting competitive advantage. So we draw the focus on something else. We don't have to do all our activities in every country where we are present. And some of them, we have global clients who want us everywhere, but others maybe not. So we are looking at that with no taboos.

Okay, thank you. And just a quick one, a quick clarification question on the working day impact. It seems like there was a negative 1.3% percentage point impact in Q1. And maybe I'm looking at different sources, but based on the data that I track, it seems like there was one day less in France, but one day more in Germany, while the U.S. had the same number of days. So I'm struggling to reconcile the 1.3 percentage point impact. If you can just help me, what caused it, please.

In Q1, from what I see, there was less than one day difference in overall. I mean, we could publish it. We've got some of you who say, okay, you should publish that in advance, and I think we're not to do it. The problem is This has to be weighed by the revenues of each each country. We can have an order of magnitude. We know in advance based on forecast, but of course, it depends on what we buy and what we so the exact number and the currencies, of course, because the dollar Euro has been fairly volatile and hard to predict also. So that's why giving a in advance. The exact working day impact is a bit challenging. But if you want the breakdown France at 64 days, um this year and 65 last year the united states was equal germany at 63 days this year and 65 days last year and then well we i could go on country by country but the the total impact is uh i think 0.9 or 0.0 or one day or 0.8 day which is 1.2 percent okay thank you By the way, this is something it's like the FX effect. There's nothing we can do about that. This is going to be what it's going to be. And, you know, the FX effect going forward, I don't know who can guess it at the moment. The current euro dollar exchange, which is the main thing, because North America is 40 percent of European revenues, looks like the year to go. If it were to stay like this should be fairly neutral. But who knows where the dollar will be and the euro will be six months from now. So it's very hard to let you know in advance what things will be. You all know what the percent of revenue Eurofins does in the U.S., and you can make your guesses. We publish enough data about the geographic split of our revenues.

Thank you.

Thank you. The next question is coming from Alan Wells from Jefferies. Alan, your line is live.

Hey, good afternoon, Gilles. Three from me, please. Just the first one. Just on OmniGraph, I'm just interested in kind of the decision-making process. Why are you deciding to make it discontinued now? Obviously, we've known this issue since last year. Given the impact drops out from 2Q, why discontinue it now?

We've discontinued it earlier. It has been going on for basically the last three quarters of last year. Some of your colleagues pointed to that. We were in discussion earlier. we have the authorities and we're hoping that we got some, maybe we push through some intermediate solution where we can continue to still sell it. But now it appears we will not achieve that short term. And in view of the impact now, I think it's something that should be flagged. It's not something that we're continuing. And unless we really get a new, a completely new decision by the authorities or either based on the medical evidence that we are creating, through clinical trials or through whatever other reason, it is meaningful enough that this has to be considered discontinued.

Okay. And then second question, just a comment you made in your opening remarks, you talked about refocusing the U.S. diagnostics business on transplant. I think there was a previous question mentioned in Viracore, and obviously more broadly you've got exposure in that diagnostics business to cardiovascular, immunology, infectious disease, and prenatal screening as well. What does that refocusing, that comment about refocusing on transplant mean for those other businesses?

Well, those other businesses, you know, they are not really big. They are not meaningful. We didn't manage to achieve market leadership in, for example, prenatal testing. Our activities there are really not meaningful. Actually, that has been already discontinued. I think a year ago, two years ago. So we're looking at each cardiovascular is very small. And we keep those businesses. They run. But it's not businesses where we see ourselves investing in a big way. And so and Viracore is virology, but for transplant. Viracore is working mainly for transplant hospitals. And we are working as a partner of the generalist labs because what we offer is hyper specialized and focused on the transplant use case. So that's anything we have outside of that is in the meantime, very small.

Okay. And I think a lot of those businesses were kind of built via acquisition. Would those acquisitions be written down or was it just the size of them means that they don't meet a threshold that you guys say internally?

Yeah, they're not very big. We've already had a lot of write-off over the years on those small businesses. They were also paid for during COVID. That's the other thing is we made those businesses did a lot of COVID testing during COVID. So either way, even though they didn't develop as we wanted, they generated more than their value in COVID activity in the meantime.

Okay. And then the final question, just more broadly, if I look at the growth numbers, obviously there's a bunch of adjustments going through on the kind of growth, but it seemed like to me that there was some sequential slowing in growth into Q1. Almost certainly would have expected some continued pricing tailwinds. So I'm just trying to understand sequentially what's been going on. What are the drivers there? I think you talked about the farmer business being mixed in your comments to Anneliese's question, but is that overall organic growth stable sequentially or declining? And then maybe you can maybe add a little bit of color about what's going on in food, which you flagged as being pretty tough, and environment as well.

Yeah, well, you know, I wouldn't read too much from one quarter to the next in anything. We think over the next five years, The organic growth target that we've set, about 6.5%, is as good a guess as one can make. We're a little bit above last year. Whether it's meaningful, I don't know. What the exact next quarters will do, we will see. I don't see any long-term trends. I'm more interested in long-term trends. What the businesses we have, we are investing in, should do in an economic environment, which is somewhat subdued in Europe. We are not in a We have lower growth in Europe than we should have. When that will switch overall is difficult to say. So the main difference we see is still geographic. Within each continent in North America, we have good growth generally. And the fastest growth in Q1 was in environment this year. It's followed by food testing and then biopharma. Clinical was the lowest, I think, as I remember. And in Europe, also environment did well. Food is starting to pick up. And the rest of the world, we have more varied, less homogeneous activities. It depends from country to country. But the rest of the world did better than Europe and North America. We're not so much in China. It's a continent which has its question marks, lots of opportunities, but also challenges for foreign companies. So maybe unlike other companies, we have not bet a lot on China. China makes less than 2% of our revenues. But we still have activities there. We try to serve our global clients there, and we're expanding our network. So looking forward, I still think the growth will be highest in the rest of the world for us, followed by the US and Europe last, unless we see a very strong recovery in Europe. Food testing is subject to food contamination crisis. There haven't been a lot in Europe recently. There haven't been a lot of food scares, so overall clients can maybe spend a bit less if they haven't been reminded that they have to be careful and their brands could be affected.

Thank you. Can I just ask one follow-up on the growth side? The pricing discussions, I mean, typically a lot of that happens early on in the year. Maybe just a few comments on how pricing on more broadly across the portfolios looking coming into 2024 as we move through 2024?

Well, pricing, of course, we pushed less price increase in 2024 than 2023 because we can only push what is in line with everybody's expectation. Depending on the markets, maybe we're 3%, something 3% plus, which was in line with more or less everyone's or two, between two and four, let's say, everyone's inflation expectation. Of course, if inflation falls, as the central banks expect, then we'll start to catch up what we lost in 2022. If inflation picks up, we'll have to add, but we have now more mechanisms in our contract to have mid-year price increase in case inflation is higher than the expectations.

Great. Thank you, Gilles.

Thank you. The next question will come from Arthur Trostlove from Citi. Arthur, your line is live.

Hi there. Good afternoon, everyone. A couple from me. So I guess my first question was just in respect of Omnigraph. So my understanding is that you're continuing with clinical trials, yet you've obviously considered it to be discontinued, which would suggest that it's sort of finished. So I just sort of wondered what the logic of it being discontinued kind of actually was. The second question I had, I was reading some information and heard that molecular testing is performing especially well at the moment and that there's quite a lot of innovation in the diagnostic testing space generally. Are there any other of your tests that are

know perhaps under review from the cms or others in terms of whether they will be or whether they will continue to be funded thank you thank you yeah well it's discontinued because we simply closed that activity we had a whole franchise with i don't know 50 sales people that were addressing selling this to a to community nephrologist and we simply can't Now, if in two or three years we have a new test that passes the bar that is deemed required for reimbursement, we might restart an activity. But right now, we have absolutely no certainty that this will happen. We hope, of course, we invest in the research, but it's not something that we're not providing this service anymore. And molecular testing, no, unfortunately, we don't have a lot of proprietary tests. And if you look at it, maybe you have exact sciences, which has a test, which is as a specific reimbursement, but there are very few companies that have actually achieved what we had achieved with, um, with our test in TGI, which is a specific reimbursement number and reimbursement price for a proprietary test. You have, of course, a lot of companies that are providing noninvasive parental testing, some sort of cancer panel, and a couple of them might enjoy a specific reimbursement, but they fall often, at least in the US, in generic reimbursement tests for molecular testing. And so we do mostly, when you say molecular, we do a lot of PCR testing, but not based on complete genome testing or large parts of the genome testing, like the cancer panel. We haven't gone in oncology in a big way in clinical diagnostics, It's even larger clinical trials than especially if you want to do it on a prospective basis to detect de novo cancers. And first, we have to demonstrate that we are successful. We feel on a smaller target, more targeted market before going to our investors and say, okay, we're not going to invest 20 million per annum in clinical trials, but we're going to invest 100 or 200 million per annum to develop an appropriatory cancer test. which would be then not something for hereditary cancer that everybody can do and is more a probabilistic test. We already have tests in oncology for recurrence, and we sell that in Europe. It's nothing, but then you need to have a biopsy of the tumor to basically detect in the blood flow if there is recurrence of that tumor post-surgery or post-treatment. That's different. So the test for the holy grail in oncology to detect very early on the appearance of certain cancers, they require a lot of data to be approved and to get a reimbursement. So we're not doing that at the moment. Thank you.

Thank you. And that is all the time we have for today's question and answer session. We would like to turn the conference back to Dr. Gilles Martin for closing remarks.

Well, thank you to all of you for joining this call. As I said in the introduction, we are very happy about this quarter one. We think the business is moving in the right direction on all the aspects we are working on. Our outlook for the year remains very good. We have reiterated our objectives for the year and for the next four years. So we think we are in attractive markets. We are doing the best to to build what should be strong and lasting competitive advantage in this market, in those markets that we believe will be fast-growing markets for a long time. And they're also fairly resilient to the economic cycle. You see, even in a recession in Germany, it's not that our revenues are going down, they're going up, but slowly, slower than before. And with a mix of plus and minuses, we still achieve very good growth, while definitely the economic growth is not where it should be anywhere. We still have very good growth in spite of the muted economic situation, which I think says a lot about the quality of the markets we are focusing on. And we are building scale, efficiency, automation overall, the ability to offer better services to our clients than any of our competitors in our chosen markets. We spend money to do that, but we think on the long term, the rewards will be very good in terms of growth, cash flow, and profitability. So thanks to all of you who are supporting us, to all of you who are covering us, and I hope to be back with even better news at the second quarter result. Thank you.

Ladies and gentlemen, this call is now concluded. You may disconnect your telephone. Thank you for joining and have a pleasant day.