Earnings Call: H1 2021

Sep 1, 2021

Good day, and welcome to the BioMarriott Half Year 2021 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Frank Adnan. Please go ahead, sir. Thank you. Thank you, Nathan. Good day, everyone, and thank you for joining review performance of Via Maria, our half year performance. Before leaving the floor to Alexandre Maria, Chairman and CEO and Guillaume Boer, CFO, I will just make a very short introduction to provide you with a couple of information. First of all, our press release was released this morning at 7 a. M. This press release can be found on our Investor section of our website. And promptly after the end of the meeting, the webcast, the slides and the call will be available in replay in our website. Now going to the presentation contents. After reviewing the performance of the 6 months of 2021, we will hold the Q and A session. Questions can come from the conference call and from the chat of the webcast. If you wish to ask a question, please make sure to identify yourself, name and company. Very last word concerning the presentation. Starting with the presentation, with the usual disclaimer. I recommend you to take a note of its contents that remind the usual disclaimer about the forward looking statements you can see on the first slide display on the screen. Now I hand the call over to Alexandre Nier. Thank you. Thank you, Frank. Good afternoon. Good day to everyone. Thank you for joining this webcast dedicated to our H1 results that we announced this morning. So I will start directly with the performance of Bioenergy. In H1, I believe there's been a solid performance. When you look at the sales, we have been in line with what we have announced, showing an organic growth of plus 12%. Also, you want to notice a very nice improvement of the profitability. The contributivity are showing being close to 44%. 24%. Yes. Also, we're expecting that you see the free cash flow and the leverage that BioMarriott is almost a debt free company. When we look more in terms of the business trend, but you can see that in Mercaberge, we had 2 different parts of the year with because of thanks to the succession success in the U. S. And we saw less demand for Epiphanol in the U. S. In Q2, even if the signals, I would say, are start to be back to a stronger demand. Microbiology performed very well, same for immunoassay, I would say, and the industry business. So if you look at BioPhylates, what I mentioned, so now we are our installed base is important. We have more than 20,000 units sold and placed and installed worldwide. What we saw in H1 contrast between Q1 and Q2 is a growth of 7% in H1. We're also seeing also that the non ARP panels are now back to ratio growing at 30% and being now 34% of the total sales of funeral panels. This first half of the year also has been quite rich in terms of launching of new products, new systems. In microbiology, we CE marked our new mass speculating platform called BiTEKMS Prab, which is under control of the launch. And we have also recently signed a core distribution agreement with the company at specific dates for the European market in the field of rapid ASP. Molecular, BioFire, everybody was in UA before BioFire was the first one to be de novo approved panel. And now we also recently launched an ete energy solution with Episex SARS CoV-two for the detection of the variant. ImmunoSA, we've been quite busy and successful, launching new parameters on the Vyglass range, and we started with nephrotic Vyglass for acute kidney injury. We also launched TB Agra for detection of latent TB as well as dengue tygas also, which is an important arbovirus. So if I come back on microbiology, in H1, plus 13% organic sales growth, and we are better than the in terms of growth, so growing better than the pre pandemic level. This performance was led by automated IDIS but culture, especially North America on Aspect. As I mentioned, control of the Vitekines Prime, which is very nice proprietary and a differentiated platform for the amplification of VACTICE. Immunoassays, strong momentum with close to 30% organic sales growth. So the growth was fueled also by the big effect going back to better, I would say, clinical and business condition in Q2, but also fueled by our COVID-nineteen related parameters and such, of course, as the SARS COVID test, but also parameters such as D dimer and 13. Good launches of our solution, as I mentioned, and also a good pipeline. And also, we have announced the acquisition of our company, Banyan. We had partnership and investments in this company. Obviously, the company having the marker for traumatic brain injury. One result is maybe the trend around PCT, which continues to be under pressure in the U. S, both in terms of volume and ASP. Industrial application, performing very well at 17% growth in H1. I would say it's maybe more than a recovery with stronger growth both in CisTEN and reagents. And we see this growth both in food and biopharma applications. With this short introduction, I will now leave the floor to Guillaume Gourous for the financial results for H1. Thank you, Alexandre. Hello, everyone. So first, you have here a full view of the H1 sales by range. So Alexandre already commented and gave you some color on industry, on immunoethylene and microbiology. Molecular, just to mention that we have BioFire at plus 7%, the whole molecular range is at plus 3%. The other molecular decreased coming back to based on the super high level of 2020 and coming back more to closer to their pre pandemic level on other molecular. I think for the rest, we have already commented. A bit more details on the BioFire on some elements. So you see here the installed base that grew from about 10,000 to 20,000 in the span of 18 months. So pretty strong extraordinary increase. In the 1st semester, so the 2,800 additional net units, we have about 60% in the U. S. And 40% outside of the U. S. And as you can see, a big majority were actually sold systems. Interesting to know that in the U. S, 40% of H1 installations were with new customers even in the U. S. And of course, a lot outside of the U. S. We wanted to show you a bit of the monthly trends at the bottom of this page. The way to read it is that you have the monthly respiratory panel sales in the U. S, in green for 2021 and in white for 2020. So you see, of course, in green what we have discussed together quite a lot, which was the pretty strong decrease of demand in March, back in March that we discussed together in April from the January, February levels. The second element is that the demand stabilized from the March level. You can see that April, May, June are somehow equal to March level on a monthly basis. And as Alexandre said, we can also share with you, and I think it's been widely commented as well that U. S. Testing is going up again in since maybe 6 weeks or so. Hospitalization rates back up again also in the U. S. And we have seen, as a consequence, recently, but a clear ramp up of demand end of July August for respiratory panels in the U. S. Moving to our sales by geography. So America is still, of course, our first region overall with 46% of sales. So the 5% growth is a bit contrasted between very positive on the performance from the performance of microbiology, industry, non respiratory biopharma panels growing fast. Also very good dynamic of Latin America. And of course, some less positive, the slowdown of respiratory, which I just commented in details, but also, as Alexandre mentioned, competitive pressure on our procalcitonin, VITAS, per se, in the U. S. EMEA, very strong, 18% growth. Of course, very strong, but on the lower comp basis for Q2 last year on the non BioFire ranges. So very solid in all key ranges on BioFire on the other ranges. And third one is Asia Pacific, also a very strong growth at plus 25%, strong momentum, also of a recovery from a low comp last year. Especially strong, if we can mention, in India, we have a good positioning of Vydas immunoassay business in India that was very much used for the diagnosis of COVID related patients in the 1st 6 months. And as well also to mention pretty big success of Biofriere in Japan becoming one of our big country outside of the U. S. Now for this range. Moving to the global sales. You see here, let's say, the bridge. So we've already discussed plus 12% organic. The total reported is plus 6.6% with, let's say, the usual FX impact. U. S. Dollar was moving quite a lot compared to last year H1. And also some devaluations, especially Latin America of currencies. Now we can comment on the profit and loss. So again, the way to read is that you have the comparable like for like change on the last column. So the plus 12% for sales translated into plus 18% for gross profit. You see that gross profit improved from 55.3% last year to 58% in H1 this year, thanks to positive mix effect as well as, of course, higher volume and the related effect on the gross margin. Before commenting on SG and A and R and D, just taking a step back together to remind everyone that we have this phantom shares plans that most of you know very well, but these were bonus plans for retention purpose for U. S. Teams put in place 3, 4 years ago, but that were indexed paid in cash, but indexed to the BioMarin new share price, so quite some volatility depending on the share price change in our P and L. For the Phantom shares, we had EUR 42,000,000 expense in H1 2020, coming down to only €2,000,000 expense in H1 this year, so a big improvement. Also to mention that they are now over, meaning that we have, let's say, settled and paid the last tranche of Phantom shares to our U. S. Teams in April. These elements are actually split into different functions. So you have some in sales and marketing, in G and A, in R and D. So that also is important when we look at our different lines. So commenting now on SG and A, you see a plus 3% increase on a like for like basis, which actually includes lower phantom share expense, as I just mentioned. And on the opposite, pretty important expense for our employee ownership plan called MyShare that we do every 2 years, that was a big success this year and a €10,000,000 expense in our P and L in H1. Still, I want to mention that these levels of SG and A are very low in terms of travel, very low in terms of marketing, Congress spend, of course, and not at recurring levels. R and D. R and D seems to be at minus 6% on a like for like basis, but again includes this decrease of PSAP expense that was also, of course, for R and D teams. So if we take out this phantom shares effect, R and D expenses are actually stable year on year. Overall, as Alexandre already presented, contributed operating income, 3.74%, almost 24% of sales, so record level, up 59% versus last year. Moving now below EBIT. So we have our usual BioFire acquisition related costs. So the amortization of intangible assets linked to the acquisition, flat, flat apart from currency impact. Important to note, pretty significant reduction in our net financial expense. So you see moving from minus 13 to minus 7 for H1. This is linked to lower debt level. We will see that in a minute with the cash flow and also lower cost of debt, thanks to a good, let's say, successful refinancing of some of our debt last year in June 2020, where we see now the results. Income tax at 23% effective tax rate, No major exceptionals. I would just comment that we have an uncertainty like a lot of companies present in the U. S. Looking forward, based on the U. S. Tax reforms, terms and timing that could come later. So overall net income at €277,000,000 up 60% year on year. I propose that we move to the cash flow statement. So in line with EBIT that I just commented, EBITDA is significantly up. We have a working capital consumption this H1 of minus 86% minus €86,000,000 sorry. A significant part is from inventory. So just to remind everyone, BioFire range was under allocation or back order back in December, so of course, very low inventory. We came out of backorder in March, which meant we were able to rebuild our inventory of finished products and equipments, which is good news in terms of serving our customers, but of course, it's visible in our cash flow. Payables and receivables moved, let's say, in line with the activity. And in the social and tax debts, we have a pretty significant impact, some that are very recurring, the seasonality of yearly bonus payments, yearly profit sharing payments. And another one, which is more one off, which is this phantom share last tranche payout to our U. S. Teams for €35,000,000 in April out of this amount. CapEx expenditure to comment, is 9% of sales, a bit up compared to last year with, among others, some capacity investments in our facilities and plants in the Salt Lake City as well as automation for BioFire and also in China, plants in Suzhou. So overall, free cash flow of €145,000,000 exactly in line with last year, but at a high level actually, that helped to decrease again the debt position to €32,000,000 debt, so almost neutral, and that includes €100,000,000 of IFRS 16 lease debt. And with that, I hand over back to Alexandre on the outlook. Thank you, Guillaume. So I would say that based on this the solid performance that we stayed in H1, there's also on the current dynamics. And even if, as we say, it's an evolving on sometimes unpredictable environment into COVID, We can really confirm, I would say, our objectives are for the year to be to have a sales growth between a neutral to around 5% and also under the CIBIT and should be in line with last year performance. So with this being said, if this is okay with you, we can start with the Q and A session. Thank you. We'll take our first question from Maja Pataki with Kepler. Please go ahead. Good afternoon. Thanks for taking my questions. I would like to start with 3. The first one and apologies if I have missed that, but Alexsandro, could you give us an indication of the percentage of respiratory of BioFire in the U. S. And out of the U. S? The slides were moving too fast, so I couldn't really follow track if you have given that. My second question is, given the many dynamics that we're seeing in your immunoassay portfolio, can you remind us how big the U. S. PCT market is as a percentage of immunoassay sales? So just give us a rough idea of how much it is. And the last question is with regards to your balance sheet and your appetite for acquisitions. Is that something that has gotten increased attention again from the company? Or is that something where you take a very pragmatic approach saying if something comes along, we'll take it. If not, we'll find the way we are? Thank you. Okay. Thank you. So I won't take your question on the other. So I will tackle the last one. Balance sheet, yes, as we said, we are debt free company. So I would say it gives us a room of maneuver. But we'll be I don't know if we'll be pragmatic, but we'll be strategic. And what is the interest for us is everything which is linked to technologies, which can have an impact for the benefit of the patient or for the consumers looking at industrial application. So we remain active in that space, our following our strategy around the value differentiation. So we stay active on this front in terms of scrutiny and screening. I would say your first question, I'm not sure I have the answer, it's the split mainly for the U. S. What I've shown on the side that we see an increase of non RP in H1, also 30% of the reagent is non RP. The international split for Filmora is 70% U. S, 30% outside of the U. S. More specifically for the U. S, Charlie, it was your question. I'm not sure I have the answer, but maybe Guillaume, you have it. No, but we don't enter into the cross, let's say, details. So again, 30 4% non RP in H1. And as I exactly said, 30%, 70% for U. S, non U. S, which is actually pretty high level for the non U. S. And probably the highest in some years. The last question was on PCT. So let me know what I can say that PCT is about overall 30% of the Vydas business. Then I don't think we enter into details of the U. S. Part, but you know the share of U. S. And of course, in PCT, it's a bit higher than our global share of U. S. Okay. Thank you for that. Thank you. We'll take our next question from Michael Jungling with Morgan Stanley. Please go ahead. Great. Thank you very much for taking my questions. I have a few please. So hopefully this is okay. Firstly, when it comes to BioFire, you mentioned that the non respiratory panels continued to accelerate growth in the quarter. Can you comment on whether this is very much sort of an impact from the vaccination effect, people going back to normal ways of testing? Or is there a sort of definitive trend where customers are trying to fill the void of COVID testing and therefore trying to drive the utilization of the machine to a higher level that would be interesting. Secondly on Luminex, do you have a feeling about their masking technology helping to reduce lab costs? Is this something that you would like to introduce in your offering? And then thirdly, on gross margin of 58% in the first half, seriously impressive. What do you think is the likely scenario in the second half? Is 58% margin too high? What are some of the puts and takes that would prevent you from getting a margin close to 58% or so in the second half? Thank you. Okay. I will take your first question. The fact that we saw an increase on the non RP panels in Q2 is a signal that the vaccination campaign worked. In fact, maybe also that there is more than one virus circulating. And it's true that I believe it went back also to hospitals without being on the COVID. So I think it's a trend. It's maybe a more normalized trend, I think, to see that in Q2. Your question on Luminex, who has a masking approach, no, that's something we want to do or we want to promote. That is the beauty of the funeral rate to offer this exhaustive view and we believe full syndromic approach is the one with the best of the benefit for the patients. So I don't see why we will not provide the relevant information if it is available. The last question? Yes. On the last question, thank you for the question on gross margin. As you see, we guide on the contribution EBIT. It's and we don't guide line by line. Yet I can make a few comments. But the gross margin is very, of course, pretty dependent on the product mix. Obviously, we have slightly different levels of margins by product range. We don't give the exact figures, but we as we usually say, BioFire and Vyadas are actually among the highest in gross margin. So you see that these are also the 2 that are pretty dependent and evolving fast linked to COVID. So it's difficult to, let's say, to predict if those are going to be accelerating or decelerating fast. It changes almost from 1 month to the next. So highly dependent on product mix in H2. Okay. And can I please follow-up on the masking technology? I appreciate that the whole idea is to provide as much information as possible. But if the lab operator would like to have masking, is it not their choice if they want to invoke it or not? I mean, providing them with the flexibility, is it not something that could potentially be detrimental to your offering if you did not have it? I don't think so. I think the beauty and the value of Filmora is this exhaustive approach. And why not giving the full information if we have it? So it will be the choice, but I believe the technology of Fumarate is meant to provide comprehensive and relevant information. This is what we defend. Okay. Thank you so much. Thank you. We'll take our next question from Hugo Solvett with P&P Paribas. Please go ahead. Hi, hello. Thanks for taking the questions. First, on the TB test that you have launched in Europe earlier this year. Can you maybe share with us some feedback that you're getting in the control launch phase urine? 2nd, a quick follow-up on the gross margins in H1. Can you give us a sense of the evolution of the gross margin in Q1 and Q2? I know you don't usually get into that much details, but that would help us understand the evolution for H2 and maybe how much of the gains that you have had in H1 you think are sustainable into next year? And lastly, on the CapEx in China, can you remember us please what projects these are linked to? Thank you. Okay. I can take the last one in CapEx in China. I think this is linked to our projects. I know that For long time, our strategy is to be more Chinese in China. So we have manufacturing and R and D projects in China. 2 of them are Suzhou. 1 is related to Hyvion production of ImmunoSA. And the second one is linked to the production of a bottle of your bottles in China. So these are the 2 main projects that we have there. Your first question on the TBI, which is a very large, not first as you say, CE Mark and it's Control launch, but then also first good feedback, I would say, the key features around the test lines, it's around the first performance and the second one is around the automation. So first, a good feedback on this initial launch and same good feedback also on the back for the control launch. On the gross margin, as you said, Hugo, we don't enter into the details of margin in Q1, Q2. There's no big swing, I would say. That's all. It was probably your concern. Okay. Thank you very much. And one quick follow-up, if I may, on the instrument placement slowing down sequentially and coming back to pre COVID level. Any other factors we should have in mind aside from hospitals and your clients having already bought a lot of instrument last year? No. If I if I as you exactly said, it's a level that is similar to the levels of quarterly new installations that we had pre COVID, which is a good level. Don't think that there is any obvious effect at this stage to highlight. Okay. Thank you very much. Thank you. We'll take our next question from Dela Louise with Societe Generale. Please go ahead. Hi, thank you. A quick follow-up on this one regarding BioFire installation. When I look at historical pricing and revenue for BioFire, we were running in a range of €65,000 to €72,000 or equivalent for on a yearly basis. We have a clear rupture here in H1. So I try to understand what's the pricing issue on the back, if there is any more comment to have? Is it depending on the panel sold? Can you elaborate a bit more on what we should keep in mind regarding regarding the pricing on the value span? And any comment would be very appreciable. Regarding Industrial Application, again, it's growing largely above a simple V shape recovery. So any comments, what's new, How we should look forward? We have a very comparable a variable comparable base in H2 coming up. So can we get any comments on this one? Alexandre, you rapidly mentioned your positive feedback regarding VTech MS. Can you say a bit more regarding the launch and client perception? Thank you. Okay. So by KMS early in order to say I control most at this stage, which goes well. No, what I can tell you on Vytek MS that it's now a proprietary platform. It's important and we made a few nice improvement in terms of features, I would say the database, I would say the time to results, serviceability also around the instrument. It's a bench top also. So this is, I would say, early days are quite promising, but this is these are early days. Regarding industrialification, we see a base effect positive one maybe on the food side compared to Q2 last year where all restaurants and food subsidies were closed. But still, pharma is still doing very well. So in order that the trend, I would say the trend is good. There is some basic, I believe, on the food side. But Pharma, I believe, I don't remember all the figures that last year was also a good year for Pharma. We are well positioned on the Pharma industry with a quality control and also there are many, many new biotech companies and maybe more vaccines also being produced where we so I think this is a good trend on the stratification. First question was on value, 5 years. Yes, sorry. The first question, we're not sure we understood the pricing. We can comment that there is no significant change or move on our average selling price on the yes, of the reagents. So we are not sure exactly of your analysis. And regarding the instrument yes, but regarding the instrument pricing, how is the breakdown? No, no change either. As I mentioned, 80% was sold in H1 and 20% placement, which of course is maybe to be factored in your model, I'm not sure. But no significant change or no issue, which was your question. Okay. Yes. Okay. Thank you. Thank you. We'll take our next question from Peter Welford with Jefferies. Please go ahead. Hi, thanks for taking my questions. And so a few. First of all, just sticking with the pricing theme. I appreciate that there's not been any significant change so far. Can I just ask if you're hearing any early signs with regards to your negotiations with hospitals at the moment for future contracts going into the winter months? Are you seeing any signs of any increased competitive presence and pricing impact there? Or are discussions very much focused still on the properties of the instruments and the relative menus? And really, price is not yet a factor for any of the discussions that you're having with customers? Secondly, just curious on your views for the current wave of COVID on the low plex versus multiplex split. I think, obviously, there was a Bauhausiban for all sort of methodologies during the last wave. But now that, I guess, capacities have increased across the spectrum, what are you seeing at the moment with regards to which customers are using a low plex versus a multiplex approach over the recent weeks for COVID testing? Thirdly, then just on OpEx. I wonder if you could just talk a little bit about what potential costs were avoided in the first half due to COVID. I guess I'm just thinking given the contribution of EBIT outlook is reiterated despite the strong margin in first half. Other factors we should be considering with regards to costs in the second half that perhaps were mitigated in the first half as now that the world is coming back to normal or new normal? And then finally, I wonder if you could give us some sort of visibility on the overall COVID related. I appreciate it's difficult concept, but overall COVID related sales for BioMerie in the first half, a number of your competitors talk about non COVID and COVID sales. Or perhaps otherwise, could you perhaps give us some insight into what your immunoassay COVID sales were in that line, if possible? You mentioned a number of the COVID related products that you have within immunoassays. Thank you. It's a good list of questions. Guillaume, if you want, if you agree. Maybe if I start with OpEx, in no order. So yes, your question is about cost avoided in H1. So the nature of cost avoided is around, of course, travel costs, marketing also, meaning marketing, promotion, congress costs, so quite a lot in sales and marketing. And it's really significant cost saving, probably several tens of millions in the different lines of the P and Ls compared to what would be non COVID, not compared to last year because last year was also very big savings for the same reason. So I hope that answers your question. Of course, question mark for H2. There are some countries, regions where we can start at least in the U. S, of course, but even in Africa, in in other regions, we can start to retravel to resee our customers, to have these kind of activities that will drive, of course, higher cost, but for growth. Your last question was on COVID related sales. So it's a bit tricky for us, and that's why we don't actually follow COVID related sales or report in that way, and I'm going to explain why. Again, in fact, two examples ImmunoSA and BioFire. So in BioFire, RP2.1, as you know, is a test for 27 pathogens, of which COVID is 1. Of course, it existed before COVID with RP2, which was a huge sales. So in a way, it's of course, it's COVID related, but it's not all COVID. It will not disappear in any way even if COVID was true, which is not realistic, of course, disappear tomorrow. Second example is on immunoassays. We have about 55% of our sales on high medical value, which includes in this category for us, procalcitonin, of course, dedicated to COVID SARS CoV-two serology. Some parameters that Alexandre mentioned are used for COVID patients' diagnostics or for monitoring like D dimer for thrombosis or ferritin. So a bit of the same, meaning that all these are a number of these are COVID related, but except the pure SARS CoV-two serology, they are not totally linked to COVID. They are also treating other emergency patients. They were before and they are continuing to. So the end of baseline is not so obvious to measure. I hope it answers your question, even though it's not exactly a percentage like some of our competitors do. But again, if you have we don't have a low plex single test for COVID or antigen for COVID, that in this case would be exactly COVID related sales. COVID low and multiplex pit, I must say, is difficult. There is no follow-up in the industry. Do you have a view, I'm not sure we can No. As we said, I think there is room for singleplex, for lowplex and for syndromic. But basically, what we currently see in the U. S. Is the rate of physician increasing and the demand for wildfire increasing. We believe it's a market for everything, but it's a few more ways, but also well adapted to the situation and also to the medical relevant situations. That That was the first question, I guess. First question was on pricing. Do we have advanced signals of negotiation with hospital, increased competition? So we mentioned increased competition, but it's not new at all. On the PCT, price in the U. S, of course, in the U. S. But apart from that, most of the ranges, there's no change. Regarding Premier Agent, no significance or no ASP change. The competitors that we had before are still there and now being part of either group, but we don't see an acceleration of the pressure there. There's also a question, a written question. Maybe I can read it or you can read it. Yes. Have you seen any increase in returns of BioFire instruments as vaccination rates have in terms of trended higher? No, not to my knowledge. We lose some customer, but I would say overall, net net, we continue to gain more customers than we potentially use even in the U. S. Itself. So that's a normal trend, positive. The second question and we'll read them. Do you have more questions? Vedanita, go ahead. We'll take our next question from Scott Bardo with Berenberg. Please go ahead. Yes. Thanks very much for taking my questions. So the first question, a very specific technical one, please. Could you please quantify what BioFire sales were for Q2? And also give us the revenue number, please, for the comparable year. I know that was a bit of a funny year because you had that sort of defense contract. So I'd just like to understand actually what your sales were because I think you haven't explicitly pulled it out or sorry if I've missed that. The second question please just relates to some of your assumptions underpinning your full year guidance this year. I think you note a trend of increasing demand for respiratory panels amid this escalating COVID crisis. Would you say you have factored that uptick in within your reiterated sales guidance or not? So I'll pause there if possible. Thank you. Quantification of the value for your sales in Q2 this year compared to Q2 last year. That's the first question. Yes. Not so far, it's relevant because in Q2 2020, we have not launched fully launched our solution with COVID-nineteen. So I'm not sure about the relevance of doing this, but we have the numbers. It was €180,000,000 in Q2. EUR 180,000,000 Q2, okay. This quarter, yes. Okay. Thank you. And the question then about what is embedded within your guide, your reiterated guidance, your sort of COVID assumption, if you like, given this current dynamic? What we do, we look at the H1 results and the current dynamic. It's quite difficult now to predict what will happen next. But I would say, at this stage, this is the guidance we are comfortable with. I don't think I can say more at this stage. Yes. And as you've seen with the range that is pretty a bit wide with the that corresponds to the evolving situation. Again, as we mentioned, pretty good signals up in July, August. But as we have seen earlier this year, it can also go in the other direction very fast. No, I understand. Sorry, Scott, the 1.80 was reagents only. If you want with everything, it's $194,000,000 including equipment and everything. Very good. Thank you. Yes, so the nature of the guidance question was this really, I mean, you've made the observation that COVID is at least starting to surge again and lead to extra demand. I just wanted to understand whether it would be a wrong conclusion that were it not for this delta variant, you wouldn't have achieved this current revenue guidance, 0% to 5%. Is the COVID spike helping you obtain your guidance? Or do you see it as sort of upside to your previously communicated guidance before then? That? I can answer between neutral percent to 5%. So it's also quite a risk maneuver or maneuver. I think this is important because there is a volatility. And today, so it's quite sad to say that the trend is good because it means that situation is not good on the statutory front. But we don't know for sure what to expect in the weeks or the months to come. So that's the best guidance or the most efficient guidance we can give you at this stage. No, understood. And thank you. And just maybe last one on guidance before I jump back in the queue. Obviously, you've seen excellent margins in H1, 23.8%. If I'm my calculations are correct, your reiterated guidance implies 15.5% margin in H2 on the contributive EBIT level, which is obviously a very sharp contraction indeed from what we've just witnessed. So I guess the nature of the question again is, is this a degree of conservatism? And if not, what better informs next year or indeed the future of Bimera? Is it the 15.5% or is it the 23.8 percent? Thank you. Thank you, Scott. Tara, again, we won't give guidance on next year. As you know, it's not at all our habit, and it's even more difficult in this current fast evolving environment. But your comment on H2 is, of course, very relevant. But just to mention that, of course, the range of sales is a key element that can make the difference on the percentage as well between the top and the bottom of our guidance. We also have usually accelerated spend in some areas in our company. Typically, R and D spend tends to accelerate in the second half for internal reasons. And the 3rd element, which I mentioned earlier with, I think, Peter's question is that we had a lot of, of course, huge cost avoidance in H1 as well as last year. They are restarting activities now in some region, in some countries, as I said earlier, be it travel, but be it also sales and marketing activities that we were not able or customer facing activity that we were not able to do earlier. Yes. And maybe final point is also depending on the performance, there are also the adjustment in H2 usually of all the performance related compensation, be it sales commission and everything. Yes, that's very clear. So it sounds to me through your description that the H2 margin is more normalized or more representative. Would you agree with that? What I would agree with is that the H1 margins are not normalized at all. And I said that when I highlighted that the SG and A on a very low basis, which are not recurring because we still have embedded high savings that we will not we don't intend actually to sustain in the medium run. So it's another way to say it, but I think quite similar that at least the 24% is not normalized for sure. Thank you. Thank you. One second. Okay. Just to reiterate the written question, I have a question from Jacob Berry from Edel Point regarding Seysil and Genexcel success in Q1 and Q2? And do we think that low tech solutions will continue to take some share from higher target and keypEX this full season? KNX has planned to launch a low tax panel on that KF side. Would you ever do the same? So it's difficult for me to comment on the competition. I think what I said, I think there is room for singleplex, for the place and for multiplex. And we will remain with the Filmora on the multiplex front, which is a better way to preserve the technology and it's a better way to serve the patient in our view. But I think there is room for everyone on what we mentioned just what we see and there is also a demand for syndromes. There is a question, second one on pneumonia panels. Actually, in line or above the non RPA growth that Alexandre mentioned, so 30% plus, which is continuing to develop as a strong medical added value panel in our range. And linked to that, there was a question on the FDA approval for joint infection, it's called now the new panel. So we can just say that it's under FDA filing, and we would not want to comment on the timing that the FDA will need to go to approval. So no concern. It's under the FDA review. Another question on the in the light of this ratio of biopharma sales as we implemented in cost saving measures. No, we are monitoring. We are working in a pragmatic way. So we do, I would say, nothing specific to report. We don't put the long term in danger, and we are pleased that and again, BioFire is not a solution only for COVID. It's a solution for respiratory disease. And we have many, many more panels. So we will keep on investing in this range, both in our manufacturing. But we operate the company in a way nice proper way and professional way. The other question is what success have you achieved, if any, trying to get customer with a bit BioFire for IP to purchase non IP panels. So yes, it's going with reduction. That's the plan. I thought that the anti percent the market was only around COVID and rescue activity. But the nature of the game for us is to increase the X number of panels and it goes in the right direction. We can mention, you remember that our KPI is more on the customers that actually consume 1 panel versus the consumers that are 2 and more multi panel consumers or buyers, I should say. And this percentage of multi panel customers increased from 53% last year to 56% in H1. So we would say it's a factual measure of what Alexandre just mentioned. And it's clearly part of our strategy. Last written question, maybe if you can So the last written question is that we have not increased our guidance despite much better than expected H1 results. Does that mean that we expect the worst performance in H2? Again, I think I already answered. I already answered, especially when answering to Scott on the different elements, being the sales, volume and range for the H2 accelerated spend, especially in R and D, but not only and restarting customer facing activities. Let's come back, Anita, to the any questions under the phone. Thank you, sir. We have a follow-up question from Maja Pataki with Kepler. Please go ahead. Thank you for taking the follow-up questions. I have 2, please. Going back to the operational costs that you expect in H2 and going forward, I understand you don't want to give us an indication on how to think about margins going forward. But a lot of companies have been revisiting how they're doing marketing events and travel related costs. And many companies come out saying, well, we don't think we're going to go back to where we were pre COVID, where we're actually seeing some structural savings coming through that will be sustainable going forward. Is that something that you're seeing as well? Or is your business model just not suited to having some more fancy marketing events? And the second question, Alexander, I was wondering if you could give us some thoughts on the partnership with specific diagnostics. I was always under the impression that current available technologies are not really what you are looking for. So it would be good to consolidate why you're trying why you're doing this Thank you. Thank you. I'll take your first question. Yes, like everybody, we're thinking about working a bit differently when it's in the marketing approach. So these are clearly the and 2% we've been a bit forced to work like this, but there is good into some of the actual activities working differently. So we'll keep that in it. And we are like the result. I believe we have got our marketing approach and expenses to hopefully post COVID growth. Your second question, I think, we always said that's what's interesting for us. We believe there is a lot there are still lots of unmet needs in the field of microbiology and mainly in the field of the fast AMR and tumorcable resistance. And we found in a specific diagnostic company, which has an interesting technology, which is clearly addressing this need and to reduce time to results, mainly for Fabry's patients, and this is after a blood culture identification. So the idea to partner with them because it's a new technology that's recently been CE Mark and the idea is to work with them, help them work the technology, working with TOLs and see if it works well because they are on the right topic and it was an interesting technology. So I believe we work jointly with them to see and evaluate the potential of technology. Thank you. Thank you. And we have another follow-up question from Scott Bardo with Berenberg. Please go ahead. Yes, thanks very much for taking the follow-up. Some bigger picture questions for me, please. Alexandre, Baumaru is global leader in molecular diagnostic, but you serve the market quite heavily then with syndromic testing, which is still a small component of that industry. Could you please share some more strategic thoughts about the necessity or potential to expand into other categories of the molecular diagnostic market, be it lowplex, multiplex, low plex, single plex or even indeed how important next generation sequencing is as a consideration for the company in the future. So big picture question, but I would appreciate. And the second question, please. Again, just trying to get some of your industry perspectives, please, Alexandre. When I look to the Diagnostics industry over this Q2, a lot of companies have seen robust recovery in their otherwise normal routine businesses. And actually, some of the performances we've seen by and large have been relatively strong growth or healthy growth on the 2019 year, an undisrupted 2019 year. So things back to the business. When I see BioMarriott's recovery, it's pleasing to see, but it is in a sense just closing the gaps to the absolute levels you already reported. So no growth on an undisrupted number 2 years ago. I guess my question is, is there anything peculiar about end market product portfolio, which means that your recovery wouldn't have been more significant than what we've seen this Q2 for your routine business? Thank you for your question, but not sure I agree. I think we are displaying quite good numbers in H1, also mostly in Q2. With Microbiology, we are both pre pandemic levels. I mean, I would say that's plus 30% in Air France industry plus 17%. I believe you saw good ratio and good numbers. And I'm not sure who to compare, who you compare us with. But also to be frank, I think it's a nice recovery, but it's I believe also a bit more than a recovery. But then again, we have to be prudent because brand new experience in all over the world and not the whole world is back to a normal situation. And your first question on molecular, syndromic is a niche, but a nice and growing niche where we have a leadership positioning and I believe it will keep on growing. Otherwise, we wouldn't have seen all these movements in terms of acquisitions in the first half of the year. We don't have we not only have a syndromic care, we also have a solution with our gene, our Argena, which can provide a single text testing, also the extraction. So I think will always be interesting to complement the range. But so far with what we have, we are also able to deliver quite a nice growth. And I think there is a bright future ahead for the syndromic approach. Yes, that's very good. And next generation sequencing, sorry, have you any thoughts about the relevance and importance of that within your infection control? ENGIE, yes, it has for me, it's interesting. It has the potential to enter into the space of infectious disease. Today, it's mainly for oncology To answer more widely in the space of infectious disease, I think time to resolve cost and flexibility still need to improve. I think it goes in the right direction. Today, the way we see it is mainly for prediction of variance, which is a very good use of sequencing. But clearly, sequencing, the same as mass spectrometry, it's a technology we are that is pretty nice to see that as a potential. But I still believe that it's very difficult to predict that the molecular is still the right solution to tackle the current needs of infectious disease testing. Very good. Thank you very much, Emmanuel. Thank you. Thank you. It appears there are no further questions at this time. Mr. Edmund, I'd like to turn the call back to you for any additional or closing remarks. So I would like to thank you all, everyone, for their participation. Just for your information, our next communication will be on October 21 for the Q3 results. And so far, I'm available for any more questions. Thank you all. Have a good day, a good afternoon, good morning. Thank you. Bye bye. Thank you.