Earnings Call: Q1 2021

May 14, 2021

Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the DiaSorin First Quarter 2021 Results Conference Call. As a reminder, all participants are in a listen only mode. After the presentation, there will be an opportunity to ask questions. At this time, I would like to turn the conference over to Mr. Carlo Rosa, CEO of DiaSorin. Please go ahead, sir. Yes. Thank you, operator. Good afternoon. Welcome to the quarter 1 DiaSorin conference call. As usual, I'm going to make some general comments about the business and then I will turn the microphone to Mr. Petrone, the CFO of the company that is going to provide you is going to take you through the numbers. Let me first start to say that, as usual, I'm going to comment numbers at constant exchange rate because as you know, dollar variation has been significant and this product effect is fairly significant in Q1. And I will talk about the COVID business and ex COVID business to give you a view about how we see the market developing. Let me start for once from the ex COVID business. I believe that the company performed extremely well in quarter 1. As you've seen, plus 6% versus quarter 1 last year, We introduced a couple of adjustments to allow us to understand the very real trend. The first one, we took out the effect of some one off regarding the vitamin D contract with Quest that, as you know, was there last year is not any longer in our revenue this year. And then the Siemens effect meaning that last year, Monsanto, the Siemens, Eliza will stop as per contract and therefore, Motire was converted to Clear was converted and the remaining Eliza revenues been dissipating throughout the last few quarters and now we're almost nil. If you look at the product, it's not there. So if you take out these two effects you look at how the business performs, the growth is 6%, which is an indication that in several geographies, notwithstanding pandemic, the lab business in the hospital business is returning to relatively normal course as far as specialties are concerned. As you know, we our revenues are skewed towards specialties. We suffered last year because nonelectric surgeries were actually not performing now with the clinical patients going back to get tested and to be monitored, then we see again the use of specialties going up to where they were. So extremely comfortable with the way that this business is doing specifically from a geographical point of view as we have discussed few times. U. S. Is actually the lion's share of the growth and this is because of the fact that the hospital strategy is paying out. The TB product line T cell together with Cajun is working very well as we also have seen from Cajun comment on the tuberculosis business. And to gain that, that goes together with a series of specialties, primarily gastric retestino that we have launched in the U. S. And they follow suit together with TB on the same customer base. Europe, same thing. Notwithstanding pandemic is clearly stronger here at the time, notwithstanding that in all the main countries, the base business is returning to normality. And again, we are gaining from the fact that some of the ATP business that was developed together with Cajun now with all the installed base and our customer gain is providing traction to our traditional ex COVID business. Now let's talk about the elephant in the room, let's talk about COVID. And as you know, as far as COVID is concerned, we look at COVID in 3 different technologies. And I'm going to comment the 3 technologies from molecular, serology and COVID antigen high throughput testing. Now let's talk about molecular. And when we look at molecular, we need to actually come in U. S. And Europe separately. As far as the U. S. Is concerned, public data shows that the molecular testing has been significantly decreased volume wise from peak time, which was actually Q4, say around December, January this year. Public data show that daily testing peak is 1,600,000 around December and now we are closer to 1,000,000. And the projection is that by the summer, it's going to plateau at 750,000 Tcfs per day. We see in the U. S. The trend of our business to follow pretty much the path, all driven by the fact that there is less request for the time being of testing volume. We don't see any effects of our pricing also because, as you know, the reimbursement scheme under the emergency situation is still in place, allowing customers good reimbursement for all the testing, which is before. Now if we look at Molecular Europe, we see a completely different trend. We see a little bit of softening, but really not so remarkable. And this has to do with 2 effects. First one, certainly has to do with the fact that pandemic is still in place, strong demand in the major geographies where we play. I remind you that during COVID time when there was shortage of systems and reagents, we elected to give priority in Europe to certain countries, namely Italy, Spain and partially in France. And therefore, we built and installed base primarily in hospitals in these three countries because of the fact that again testing volume in these countries continues to be strong and because of the positioning of our platforms, which have been typically used in emergency room or hospital admission of remission of patients. We don't see today any decline. To the contrary, we see an expansion of the cell base because there is more need on smaller system and commercially less need of high throughput system in these hospitals because this implementation of testing now is becoming the relevant part of the COVID testing adoption. So combination of Europe holding and the U. S. Declining according to market volume, we have now developed a certain view visavis the year end guidance that I'm going to describe later. But you understand from the time being molecular wise, this is what we see. Let's comment on serology. Serology for us is what we always said, the part of the business that we believe is going to take longer as a necessity to monitor vaccine response, not necessarily in the general population, but in certain very specific populations, lots of publications have been now demonstrating that in immunocompromised patients, in dialysis patients, so in certain populations, their response to vaccine is different from the normal population. And therefore, we see adoption of testing of serology testing and monitoring that is for us significant. We have, as you know, an extensive installed base of Liaison XL. And you see this volume growing on a monthly basis, high single digits. We also have serology used in secondary countries like in Brazil and India where there is still a growing number of cases and lack of solutions, molecular solutions. And therefore, we see in this country is also the adoption of Serology growing. And we continue to be positive about the fact that serology adoption will continue and especially in those countries like the U. S. Where we believe eventually monitoring is going to be added as part of the physical checks, annual physical checks provided by insurance companies. So very positive about that product and very positive about the opportunity of that product. Last but not least, high throughput antigen testing. High throughput antigen testing has been developed by Diasorin in light of the fact that we believe high volume of an expensive molecular testing was going to become an economic issue in several situations. And we thought that a sensitive high throughput antigen test could provide a solution. For the time being, we have not seen that shift. We have seen antigen testing clearly being decentralized as shown by many of our competitors who play in that field. By the same token, it's public knowledge that we are participating as a primary supplier of LabCorp to the national tender in the U. S. For returning to school. You know the tender has been postponed already a couple of times, opening of this tender. We are enrolled in the tender as a supplier of laughter. So depending what laughter is going to be awarded, we are going to get or not or we are not going to get certain volumes. But clearly, we are all waiting, I think everybody is waiting to understand what the Biden administration is going to do vis a vis implement this testing for school reopening. In the U. S. Now we are towards the end of the school season. So we are talking about adopting this kind of testing starting from August when the school reopened in the U. S. So now if we look at our guidance for the second half, it's very clear that what we built in is uncertainty visavis COVID. We are confident about our base business. But when it comes to COVID, we design 2 fundamental scenarios. One scenario, which is which corresponds to the high level of the guidance is that we're going to be repeating H2, so the COVID revenues in second half similar to what we experienced in H1. And that entails 2 things. That entails that we're going to have some specific pesos, some revenues coming from the school contract with Accruent and a combination of robust respiratory system, okay, which means that COVID flu and differential diagnosis will be needed in 2021 winter time, when clearly symptomatic patients are going to show up, still there are going to be debates about efficacy of vaccine, long term efficacy of vaccine and so adoption of molecular testing will be there. That's the best case scenario. Then we have a base case scenario and the difference between 2 is roughly €80,000,000 €90,000,000 where we are not going to get pretty much contribution, significant contribution from the school reopening program. And together with that, the season, the respiratory season is going to be lighter than what expected because vaccine will prove to be extremely efficient and before need of COVID testing adoption is not going to be as strong as somebody can foresee. I believe you will appreciate the fact that this uncertainty is clearly shown by all diagnostic companies. And so I think we're going to get better visibility when we enter into the second half. One more comment or 2 more comments before I turn the microphone to Pierciotto. First one has to do with an announcement we made over the fact that we have initiated a collaboration with Lumos. Lumos is, I remind everybody, an American company that provides what I would call second generation laminar flow technology. We are in the process of launching 2 COVID products, COVID serology and COVID antigen testing in some target European countries, mainly focused on the Italian market. And we are testing the pharmacy setting, because we believe that as you know we have a strategy of decentralized testing with the LIAISON NET for molecular and now the LIAISON IQ for antibody or antigen testing. And therefore, we have deployed this system through a set of large distributors in Italy. Italy has 19,000 pharmacies, and we are we want to understand how the system is perceived, what's the story behind COVID testing, you're clearly using the COVID time opportunity to deploy and install this. So for the time being, we're not built financial expectations because we want to see what the contribution will be. But this is a program that to me is very important for the company because it's the first step into a segment that we stated before we want to play strategic role in the near future. Last comment I want to make is and I would like everybody to remember is the fact that we have a sales of initiatives with new products coming. Different level of diagnostic visavis the viral versus bacterial infection, which is largely to be dominating space of clinical needs. And last but not least is the China plan. And the China plan to me, which is on time, and I would like to remind everybody that strategically companies today have to develop a China for China strategy because the message sent by the Chinese government over the COVID pandemic is that they clearly want to be independent from European or American technology when it comes to diagnostic. And there is strong indication that if you want to be a player, you need to be a player perceived as a Chinese true contributor and not necessarily an exporter to China. So keep a note on that. Clearly, this is not going to affect short term numbers, but mid term numbers, I believe any company that want to bet on the fact that growth will continue to come from China and to find a smart strategy to now move their setting into China. And I remind you that the way I define smart for a company in the fact that we are operating in China through a joint venture with the Chinese government that guarantees us visibility what's strategic for China these days and moving forward. So said that, I'm going to leave the mic to PG and then I'm going to take it back for Q and A. Giordof? Thank you, Carlo. Good morning and good afternoon, everybody. In the next few minutes, I'm going to walk you through the financial performance of DiaSorlin during the Q1 of 2021. As usual, I would like to start with what I believe are the main highlights of the period. We closed the quarter with an increase in revenues at constant exchange rate of around 60%. Q1 confirms a steady recovery in the ex COVID business as just discussed. In spite of the previously if you look at loss the vitamin D business increase and the termination of the distribution of the Sima and Cementialysis products. COVID-nineteen sales accounted for €102,000,000 in the quarter, slightly better than the last quarter of 20 20 at constant exchange rate vis a vis 4,000,000 in Q1 2020. Q1 gross margin at 69.4 percent of revenues is a touch better than Q1 2020, which closed at 69.1 percent and marks an improvement compared to the last quarter of 2020, which closed at 67.6%. Q1 adjusted EBITDA at €130,000,000 recorded an increase of €65,000,000 or 101% compared to Q1 2020, with a margin of 48.6% on revenues compared to 36 0.9% of 2020. The growth at constant exchange rate is 110% with a margin of 49%. Q1 2021 reported EBITDA is €118,000,000 and the difference vis a vis the adjusted EBITDA is due to €12,000,000 one off costs related to the Luminex acquisition. Lastly, keep confirming our ability to generate a very healthy free cash flow €80,000,000 in the quarter with an increase compared to Q1 'twenty of €40,000,000 or 100%. The net financial position is positive for 3 €94,000,000 with no debt and €430,000,000 cash. The difference between the two being driven by the rights of use introduced by IFRS 16. Let me now go please through the main items through the main lines of the P and L. Q1 2021 revenues at €267,000,000 grew by 53% or €92,000,000 compared to last year. The profit constant exchange rate, as we said, is 60%. The weakening of the U. S. Dollar against the euro is the main reason behind this FX headwind. The increase in revenues is the result that we see as we saw of the steadiest recovery of the export business and of the COVID contribution. Q1 2021 gross profit at €185,000,000 grew by 54% compared to last year, closing the Q3 with a ratio of revenues of 69.4% compared to 69.1 percent of the same period of 2020. The margin increase compared to Q1 2020 is a result of higher operating leverage, driven by higher volumes, partially offset by different product mix, namely more COVID molecular sales, which enjoys slightly lower margin. I believe it is also worthwhile to underline the gross margin increase compared to Q4 2020, which recorded a similar level of revenues, €271,000,000 versus 2 €7,000,000 of Q1 2021 and the lower marginality, 67.6% versus 69.4% of Q1 2021. This variance is mainly driven by a favorable clear product mix and lower instrument sales and more importantly, by some efficiencies coming from cost reduction initiatives implemented in the molecular manufacturing processes towards the end of last year, which are now bearing frozen. Total operating expenses at €68,000,000 or 25.4 percent of revenues have increased by 3.3% compared to last year. During the quarter, all our subsidiaries have experienced a general slowdown in some activities, mainly travel driven by the lockdown measures implemented by the government of most of the geographies in which we do business. Q1 2021 other operating expenses of €14,000,000 increased by €9,000,000 or 150% compared to last year. This variance is entirely driven by the one off expenses prorated to Luminex acquisition, which accounted for about €12,000,000 in the quarter. As a result of adjusted EBITDA, Q1 2021 EBITDA at €103,000,000 or 38.7 percent of revenues has increased compared to 2020 by 109 percent or €54,000,000 The tax rate at 23.8% is slightly higher than what we recorded in 2020, 23%. This increase is mainly driven by the fact that some one off costs driven by room next acquisitions are not tax deductible. Q1 2021 net result is €78,000,000 or 29.3 percent of revenues is higher than previous year by €40,000,000 or 107%. Lastly, quarter 1, 2021 adjusted EBITDA of €130,000,000 or 48.6 percent of revenues is higher than 2020 by 101%. The variance at constant exchange rate is positive by 110% with a ratio of revenues of almost 50%. This result is mainly coming as we saw from the good gross margin and the operating leverage delivered by the increase in revenues amplified by a muted increase in operating expenses, which in the quarter accounted for about 25 percent of total sales visavis38 percent of Q1 2020. As we have discussed, the only difference between adjusted EBITDA and reported EBITDA is the mentioned one off costs related to the Luminess acquisition. Lastly, let me just cover 2021 full year guidance already been explained by CAGR. So as usual, the previous year cost and exchange rate, total revenues to increase between 15% 25%, out of which the business ex COVID represents an increase of around 15% and the adjusted EBITDA margin between 44% 47%. In this definition of adjusted EBITDA, we mean without considering Luminex acquisition related one off expenses that we will book from here till the end of the year on top of the one we booked in Q1. Please, like always, consider that the Australian financials are highly exposed to the U. S. Dollar and even more so now that the United States represents about 40% of the total group sales. Therefore, as the usual rule of thumb, consider that for every $0.01 movement of the dollar against the euro, the Australian revenues moved by about €3,540,000 on a year basis. Now let me please turn the line to the operator to open the Q and A session. Thank you. Excuse me. This is the Chorus Call conference operator. We will now begin the question and answer The first question is from Maya Pataki with Kepler. Please go ahead. Yes. Hi, good afternoon and thank you very much for taking my question. I have 2 right now and then I'll go back into the queue. Could you please provide us a rough split of the COVID-nineteen revenues? How much was roughly molecular and serology just as you did in Q4? That's my first question. With regards to the Lumos partnership and rollout of the Liaison IQ in Italy, I understand it's early days and therefore nothing is included in your guidance. But could you provide us maybe just a rough indication on how pricing is positioned and how we should how we could think about I I will hi, Maja. I'm going to take the second question and then I'll let P. G. Take the first one. Look, here the business model in the pharmacy business is completely different because you go through distribution, right? And then so you don't have pretty much a lot of cost under, let me say, the transfer price of the distributor. Okay. So between the transfer price of your distributor and your pretax, there isn't much. So what I'm learning is that you are going to be I mean, good product should really leave you a margin that sits between 25% 35%. Okay. The difference is that all that then goes pretty much down to your bottom. And so we have again learning the space, but my sensation is that if you have a product that is generating that kind of margin is leaving the rest fundamentally to the wholesaler and to the pharmacist that actually is taking the lion's share of the margins when it comes to this diagnostic product. But by the same token, they're also taking the lion's share of the cost because they must now hire, especially in Italy, they have to have a biologist or a physician come in for some success. So my expectation is that we are going to have that kind of margin, but the contribution then to your bottom is going to be not bad. Did you? Yes. I believe, hey, Maja, I believe you asked about the breakdown of public sales in Q4. No, in Q1, just like you did in Q4. Okay. Cool. Not a big difference there. I mean, Winnet has given a size breakdown, but I believe saw we discussed a few times that the contribution of the new diagnostic product, so the GM and the antigen was between €5,000,000 to €7,000,000 per month. So I believe you can use that as a ballpark number to get the Q1 sales of the immuno bucket, let me say, and all the rest is more accurate. Okay, great. Maybe just quickly a follow-up. Carlo, thank you very much for the scenario analysis or the base case and best case scenario that you've given us with the guidance. And I do understand the difference. But just to double check, so you're not in your best case scenario or high level scenario, you are not assuming to see an acceleration in serology testing? So you basically think it's whatever is coming from serology or antigen test is basically what we're seeing in Q1 throughout the year and not that there is a higher expectation of the antibody test with regards to the vaccine immunity? I'm okay, separate for one second. So serology, you mean antibodies I think. Sorry, yes, antibodies, sorry, yes. Yes, because then we have the antigen testing. So I believe that we continue to see this business trail up. But I think that what is going to move and it's not a bad business for the time being as you have seen by what PG is saying, certainly it is worked by the molecular opportunity. But I believe that you're going to you will see a change in this when two things happen. 1st, more data are going to be generated with the different vaccine visavis long lasting, I mean, how relevant it is to monitor the antibody response, because if long term studies and I'm saying about now 12, 18 months are going to show that there is a response, the response pretty much stays up, then the need for monitoring is going to be less. But the second thing is the second element you need to consider is that the initial clinical data set are demonstrating that that may be true for general population, but then you have lots of subpopulation related to clinical, certain clinical disease that where certainly the vaccine response has not been as strong and not related clearly to a clinical situation. But when you talk about the old age group where you know that immune response is not as strong as in younger people, but those are the ones that are susceptible to the infection and we need to understand how long that response will last. The second element you need to consider as it happened, I already I think did comment on this one, As it happened with vitamin D in the U. S. Specifically, which is going to move the needle because it provides immediately 40,000,000, 50,000,000 tests per year is the fact that the SARS CoV-two serology is introduced into the yearly checks provided by the insurance companies. I believe all these is going to be more a 2022 effect, right? Because by year end, you're going to have more studies to understand immuno response of vaccine and then decisions about monitoring are going to be taken next year. As far as we are concerned, PG saying is a business that is fluctuating between 5,000,000 €7,000,000 per month that we expect to continue to trail up between now and the end of the year. Okay. And pity, just last question on the guidance. On the EBITDA margin guidance that you're providing, the range of 44% to 47%. Is it as straightforward as to think that if you hit 15%, we're going to be at 44% and if you hit 25%, you're going to be at 47%? Or are there several layers of cost savings that could put you anywhere in the range loose of the fact where revenues come in? I mean, you know that there are many moving parts projects, cost saving initiatives, which I mean, as I said, approach, we're already seeing the results. Some others are going to be kicked off pretty soon. But there are many moving parts. Think about OpEx for example, right? So we need to make some assumptions in terms of traffic. I mean that because people will start to go back and go and seeing customers and so on and so forth. So a ballpark, short answer is yes, but with some flexibility. Okay. Thank you very much for that. If I may make a comment, which I think is a general comment about this, which is to me fascinating is the fact that think about our overall industry that was able within 12 months time to express testing capacity of 4,000,000,000 tests, right? I think that there are the estimate today that worldwide today there is a manufacturing capacity of roughly 4,000,000,000 tests. All that capacity came with investment and hiring people, right. And I think what is going to be interesting vis a vis margins is that you're going to have now all this cost that if you have not been building that cost as a variable cost, then it's going to eventually hit your P and L. And as far as diasol is concerned, I believe we have been extremely careful and disciplined about making sure that cost is a variable cost and we are taking out that cost when we see manufacturing volume going down. But just reflect on the fact that I see and it is incredible, you see companies saying that they've been investing 100 of 1,000,000 into infrastructure and I really want to understand what is going to happen to all this cost when the volume and we hope it's going to happen is going to pretty much go back to almost 0. Just a reflection. Thank you very much, Carlo. The next question is from Peter Welford with Jefferies. Please go ahead. Mr. Can I just ask first of all, just sticking with the outlook, just to understand the base outlook, the base business of 15%? Is that on the same basis as the 6% number that you provided this quarter? So in other words, if excluding the Siemens Advisor, the flu business, obviously, volatility and the Quest contracts? Or is that 15% on an absolute reported basis for 2020 numbers? Secondly then, if I could just ask just with regards to antigen testing in particular. I know you commented about the economic alternative in LabCorp in the U. S, which I think is fascinating. But I wonder if you could comment at all on the emerging markets. Are you seeing in places, for example, like Brazil and India, are you seeing any adoption of antigen testing there as an alternative to the sort of more costly and infrastructure intensive PCR testing? Or is that really not materialized to a significant extent either so far this year? And then thirdly, if I could just ask just on the Lumos product again. Just going to be that is Italy a test market, but obviously it's a market you know well. But I guess just thinking beyond Italy, can you just give us some thoughts into which other countries in, I guess, in Europe could be attractive, but equally which ones perhaps have other unique challenges that we need to consider just to consider longer term? Thank you. Okay. I'll take the question about the antigen and then the question about Lumos. As far as antigen is concerned, look, the only market that today has been engaging on high throughput antigen test is Russia, where we do have an extensive installed base and there has been adoption as in the other what we call primary markets where we serve direct of anti synthesis. When it comes to India and Brazil, I believe that these markets have been flooded by cheap Chinese made products, rapid antigen test. And there has been a very interesting I don't know if it's clear you didn't follow it, but one of the last flights actually flew into Italy from India carrying 200 and some passengers, 90 and they were all with they all had results done with an anti infect in India that said they were negative. I think 90 of them eventually when they were retested over here they were positive. That tells you a lot about the quality of some of the stuff that unfortunately goes around the world when it comes to these anti anti anti infective. But in the secondary markets, you are facing with the reality of markets where they don't have the FDA on one side or they don't have the European authorities. So the quality of some of these products is noteworthy price is certainly cheap. So positioning high throughput quality products like the ELIASON XL has been complicated. To the contrary, what we have seen though is that in some countries, again, India is a good example, we are having a good success with Cerrodi, IgG and IgM because those tests have been adopted on a high throughput scale to monitor patients because they now are becoming more monitoring tools in some of the clearly Class A larger institutions. But this advantage in testing is unfortunately today all cheap stuff in these geographies. The second question is which other markets? Look, we said in 'nineteen already that we would follow decentralization. We started the LIAISON, LIAISON mass molecular development together with TCC. Then the COVID hit. And the major issue pre COVID about decentralization and testing in setting outside the lab was the fact that in many countries, it was not legal to do such testing. So pharmacists did not have a license to perform this test. And Italy was not an exception, but with COVID, they made an exception. In the U. S. Also was complicated, but I don't know if you follow the recently a week ago, a bill has been filed to allow CMS reimbursement for diagnostic testing in pharmacist. Okay. So we believe that where we're starting from Italy, because we don't understand that market and because of proximity, Italy is a good place where we can learn the space, learn how to market, learn the distribution. But I keep saying that strategically the U. S. Is the place to be, because in the U. S. Is the only country in the world where they are starting to understand that the pharmacy business, which as you know is private, pretty much private business between Walgreens and CVS, They have understood that that business with Amazon competing on home delivery is doomed. And they are thinking about transforming their business model from a generic supplier of drugs and food as any pharmacy is today in the U. S. Into a health service qualified provider. And in that model then diagnostic will play a role, especially now if a government is opening to reimbursement. So long story short, Italy, good way to understand strategic is certainly the U. S. Market. And Peter, I guess I'll take the question on the 15 percent guidance. It's all in. So it's considering the whole as COVID business of 2020 and what we project we are going to reach in 2021. Please remember that Q2, Q3, Q4 of 2020 and the ex COVID business of those quarters in 2020 was affected by the sales in volume caused by COVID. Just on the top of my head, I believe that Q2, for example, the ex COVID business was down give or take 35%, I mean, not only for us, for your industry. And I believe this is going to give you more down to understand why we think 15% is a sensible guidance for the exorbitant in 2021. That's great. Thank you very much. The next question is from Scott Bardo with Berenberg. Please go ahead. Yeah. Thanks very much indeed for taking my questions. And thank you for providing some guidance framework for the full year, which I think is helpful. So first question on the group level guidance of 15% to 25 percent. I just want to understand this a little bit better. I think I understood your comments that at the upper end of the range, you're assuming that COVID remains broadly stable. So with that in mind, I think you're suggesting that both serology and antigen compensate for the anticipated decline in molecular. I want to understand a little bit then please with respect to this LabCorp tender. Can you give us some sense of potential magnitude for the size of this opportunity and whether you include all of this opportunity within the upper end of your guidance framework or just partially that would be helpful. Helpful. Secondly, and underneath this, your routine business or your normal business growth that you're highlighting to be around 15%. I just wonder if you can help us better understand the first start the beginning the start to this year. A 6% adjusted growth seems relatively low in the context of the sort of recovery growth that we've been seeing in the context of the rest of the industry. So I wonder if you could talk to any specific special items that would mean even that adjusted growth where it is right now. And lastly then on this 15% growth guidance for the routine business, help us understand whether this is all simply recovery from the declines last year or whether you're now starting to embed any material contribution from new product launches like Liaison, XS and others? Thank you. Okay, Scott. I will try to take the first question. I'm not sure I understood the second question to be honest with you. But when it comes to the first question and the upper range of the upper range of the forecast here. I think that as said, what we are saying is that we now have visibility on H1 and the upper range means that we're going to have H2 in line with H1. I think it is undeniable that you're going to have you're are not going to go back to 1, okay, unless disaster happen, right? But you're not going to go back to 1,600,000 tests per day in H2, okay? So we are going to have we forecast that the molecular is not going to be as strong as in H1. But we believe that you're going to have still growing demand for over the what they are projecting of 750,000 tests per day, which is what today consensus says about the current volume driven by a respiratory authority. Certainly not going back to the EUR 1,600,000, but delta there would be actually filled by a tender that as you know has been a public information is a tender asking for 25,000,000 tests per month. U. S. Is divided in 4 quarter end and last quarter clearly is looking for a chunk of this business. They're going to be providing solutions, a combination of molecular and antigen. And so in the upper end of the curve of the guidance, we see that you're not going to have a same contribution of molecular same as H1. Level of overall COVID revenues is the fact that antigen will still end. Hopefully, I cannot tell you what to expect because then I would be actually I will be talking about LabCorp numbers, which I cannot do. Okay. But that is the way I interpret or we try to figure out the upper range. 2nd question, you're saying 6 percent is low. Well, let me tell you that it is very I'm reading, I think the same things you're reading about what other competitors, other companies are reporting. And I think it's very difficult to compare nodes between companies because in my opinion, if you look at last year in Q1, you had to affect. You have relatively stable U. S. Business because U. S. Was not in the same situation as Europe. You had Europe growing, especially in certain geographies because of a stock effect. Customers, especially private labs, were buying lots of goods and expecting disaster in delivery and moving forward because remember we were closing borders, there were no flights and so forth in Europe, which was not experienced in the U. S. And then you had China, and China was actually tanking pretty much starting already from February March. So depending on the weight of revenues of the different companies in these three environments, you would actually notice, you would see that you have a different effect on what is called pay business. Okay. This is why I'm not look at trying to compare what we do versus others do because I don't understand how they define base on the comparison visavis their base business. But let me just give you a grain of let me just give you a number, which is to me very interesting. If I now look at 2019, okay, 2019 Q1 and you look at 20,21 Q1, now we are talking about an improvement on the base business around 6%, 8%. Okay. In spite of Quest, in spite of Aerosol. So don't do the carve out. So the 6% 2021 versus 2020 is different from the 6% to 8% improvement I'm talking about versus 2019 with all in. And if I look now at that number, now I'm saying that my base business is actually doing not bad. Bad. That's clear. Thank you. And in your that makes sense. And given your 15% growth guidance for the base business, is that just purely recovery, Mr. Rosa? Or are you expecting contributions from new launches already in that number? No, I believe that look, when we look at new launches, you're talking about the Lyme season, which will be effect. We are launching the product in Europe and we still there are lots of uncertainties about adoption guidance and so forth, so you don't see the effect this year. And now we're and then new launches, we are talking about MiMed year end, but the contribution in 20 21 is going to be very low. The 15% is built on the fact that, as I told you, the U. S. Is doing fantastic for us and on the LIAISON business with the gastroenterology and the play with QIAGEN and the fact that now LabCorp has started to use our own LIAISON XANT solution for the ATP for which us and Cajun are extremely fond of. So the growth is the growth that is coming is actually coming from the current business and current programs that are actually taking place, especially in the U. S. And with lots of emphasis on the hospital strategy that is paying out as I said before. Understood. Thank you. And very last quick one for me just to be entirely clear. Is your new guidance framework now superseding your previous guidance for 40% or so growth in H1? Or are you still confident that you can achieve this sort of 40% H1 expectation within the context of your new guidance? Scott, this is Georgios speaking. Super seeding, this is a new guidance. Even though back of an envelope calculation, I guess, H1 will land pretty close to what we said in the previous guidance. Very good. Thank you, guys. I'll hop back in the queue. Gentlemen, Mr. Rosa, there are no more questions registered at this time. I turn the conference back to you for the final comments. Okay. Thank you, operator. Take care. Bye bye.