Earnings Call: H1 2019

Sep 4, 2019

Good day, and welcome to the BioMaru First Half twenty nineteen Financial Results Conference Call. Today's conference is being recorded. All lines will be muted for the duration of the conference and there will be a question and answer session following the presentation. At this time, I would like to turn the conference over to Mr. Sylvain Morgu. Please go ahead, sir. Good day, everyone, and welcome to all of you. It's a great pleasure to welcome you to this webcast. So before leaving the floor to Alexandre and Guillaume, who will present Guillermoire's half year results, I would like to make a very short introduction to provide you a couple of information. So first of all, I wanted to inform you that we released our press release this morning at 7 a. M. The press release can be found on the open page of the website. And if you have not received our news release or if you would like to be added to the company distribution list, please feel free to send an email to investor. Relations atbiomeru.com. In addition, please note that the slides of the meeting are also available on the homepage of the website or can be downloaded directly from the webcast. And promptly after the end of the meeting, the webcast and the call will be available in replay directly on our website. I will not read the next slide, which is about the disclaimer, but I recommend you to take note of its content that reminds me of the usual disclaimer about the forward looking statements. And now going to the presentation flow, Alexandre will start by giving you his main messages after the 1st 6 months, and then Guillaume will continue with the financial review. And finally, we will hold the Q and A session. We will take first the questions from the conference call and then from the chat of the webcast. And now Alexandre, Florentius. Thank you, Sylvain. Good day. Good afternoon to everyone. So I will start by giving the key takeaway messages for H1. So we will announce our results this morning. So basically, when you look at sales, so we displayed an organic growth of 5.5%, which is an an acceleration compared to Q1. And we also displayed a contributive operating income of 15.5%, growing by 7%. All in all, you can see that, I would say, the main drivers of commercial growth for these last 6 months have been around molecular biology, FINRA, which displayed a nice growth, around 21% in H1 with more than 1200 new systems installed in the last 6 months. And add back to general store performed well with the fantastic double digit growth. I would say the key events of in terms of M and A business development for the 1st 6 months were first, the acquisition of Invisible Sentinel that we already discussed with you, let's say, in Q1. And to note also that we took a concrete stake at HIBOR. We were previously in 55%, and now we moved to control to 67% of the company. So we believe we had a satisfactory result this 1st 6 months, which is leading us to confirm our objective of the guidance for 2019 with sales of organic gross sales between 7% to 8.5%, while we'll keep also the guidance to have a contributive operating income between €385,000,000 to €400,000,000 So in our volume, we are all about infectious disease. We are about sepsis. We are about consumer health. We, of course, are the leaders in syndromic testing with Filmorhea. But I would say one essential flagship of BioMarin is the fight around AMR, which is antimicrobial resistance. And as you know, it is becoming it is today a worldwide public threat in every country. Every MOH is talking about this or handsets around this. To fight AMR, you need education, you need good practices in hygiene, you need new drug development and you need good diagnostic. There are not so many new drugs under development. So we believe that diagnostics has a stronger role to play to fight AMR through the right amplification of the pathogen and also through pushing for the right antibiotic treatment. And I would say that BioMarin is perfectly suited today to right decide because we have the full suite of solution, whether this is using molecular immunoassay or microbiology type of, say, solution that we have. Also, what we are doing also is we're investing also, of course, in the solutions. The key fact will be around bringing new innovation. I would say there's a strong focus also on the medical education and support. This is also what we are doing with such initiatives as the Global Point Prevalence Survey all around the world. So we are really pushing the company to bringing also this medical value around AMR. Next one. Now if you come back on some key units around the 1st 6 months. Regarding immunoassays, I would say we can talk about mixed picture for the 1st 6 months as we are still under pressure on the U. S. Market, mainly with PCT. PCT is still a growing market in the U. S. And today, we are also working to develop our solutions with the lower middle size type of hospitals. We faced this 6 months linked to the lab consolidation also big pressure on the virus routine test in Europe, in the Europe part of Europe, Middle East and Africa. And also, maybe it's the H1 event that we won't see in H2. We got immunoassay also. We have some credit or logistic issues in some parts of the world, mainly Middle East, that impacted us in H1. But when you look at the immunoassay also, what is important, I mentioned HIBIUM. So we moved to a stronger contract stake. With HIBIUM, which is a Chinese, an English company, which performed well in the first H1 with double digit growth. And it is becoming and it has become more and more important for us, first working on the China market. We launched a new test called Vias PTX for the monitoring of chronic kidney disease. And also, we are investing in a pipeline of innovative products that you know, some of them you know, such as the nephroject, also LatAm tuberculosis and also other viruses. If I come back on the molecule, remember that in Q1, we had a growth of only 13%. It was linked, I would say, to mild flu season compared to a strong flu season the year before. And we displayed a nice growth of 31% in Q2. It was interesting to note that the sales outside of the U. S. Are increasing now to present 17% of the worldwide sales of the film array. We keep adding our future growth driver into around the development of new panels and squeezing the consumption of test and panels on our platforms, working and growing internationally and developing, investing also for new panels and also upgrading the fire fire instruments. Worth to notice also that remember maybe last year, we talked about Palmetto. I think discussing with the American Medical Association, we were granted P and A codes for Filmorhea, which are proprietary codes, which are overwriting and exiting CPD codes. I would say, as you know, it's always it's only impacting the outpatients, not the majority, of course, of the patients for using fumarate. It's still good. It's a good signal because having this pill record, we have also to negotiate, like we did with Spamato, a new reimbursement. All in all, we believe that the work we are doing is also showing, I would say, stronger recognition of the value of a single week testing. So I think this type of cost of the investments are working for 3 years outside of the TAM reduction. Also, I would say, limiting some previous restrictions around the use of the syndromic testing. With that being said also, we most talk for the pneumonia panel, but we are convinced around the strong medical and the technical value of this new panel for BioMerieux. On the slide, it's just a really good example of the value that the Pneumonia Panel is bringing. And basically, when you compare the use of Fumarate to a classic culture method, you get the results faster, you detect the right resistance and basically you have a stronger impact on how to monitor the patients. I think with this part, I can now leave the floor to Guillaume, who's going to come back on the financial results of H1. Thank you, Alexandre. Good day, good afternoon, everyone. So let's review our financial and operational performance. We start with the total sales. So published growth is 9%. As you can see, the currency effect was favorable this semester with a +29000000, majority coming from the U. S. Dollar. We also have the contribution of our recent acquisition, especially Ibium and Invisible Sentinel in terms of scope additions and an organic growth that we will review together in details of plus 5.5%. Let's look now at the organic growth by range, our 4 major ranges and applications. So microbiology was up 3.7% in the semester with a good performance of the 2 major ranges inside microbiology, the Vytec identification and antibiotic stability testing as well as the Baxi alert blood culture, we are both performing well inside microbiology. Immunoassays, Alexandre explained already in detail the minus 3% with the major effects coming from volume in Europe due to lab consolidation, price pressure in the U. S, especially on the PCT parameter and, as mentioned by Alexandre, some, let's say, nonrecurring effects on logistics and credit issues in Middle East Africa. BioFire and Molecular overall, plus 18%, in which 21% sales growth for the BioFire range only, with a very well distributed growth over its 4 major panels. Industry grew 3.7% overall on the semester. Inside this, it's important to note that reagents were up 6%, while equipments on the high base were slightly down. So still a very strong demand from the pharma industry as well to note the ramp up of our new, let's say, molecular biology range for food applications called GENUP. Let's review now the organic growth by geography. Americas, our first region, North and South America together, represent 45% of group sales, was up 6.7%, which is a mix of, let's say, contrasted elements and trends. Of course, BioFire, with its domestic sales in the U. S, was a strong growth driver, double digit over the semester. Microbiology reagents were also up inside these figures for Americas. And this offset, of course, as mentioned already, the price pressure on PCAT sales in the U. S. EMEA was up almost 2%, 1.8% exactly, with a soft growth of BioFire in the region as well as industry and to note some one off declines in Middle East Africa that are one offs in terms of, let's say, credit issues with customers or distributors or logistics subjects like customs that we expect to solve actually in the coming months. Asia Pacific, very regular strong growth at 11%, pretty similar to the last year and still a very solid performance fueled by China, India and Southeast Asia. If we now jump to the P and L, we review the 5.5 percent organic growth on the top line. Gross margin, as you can see, improved from 54.3% to 55.7%. It was a pretty significant increase. The first reason is actually the product mix that was favorable. As usual, higher growth of Biofryer range with, let's say, stronger margins than the average of the group help on the product mix. We can also mention on the gross margin a better operational efficiency. What we mean by that is manufacturing, purchasing, supply chain, all having positive effects. Other operating income, to note this semester, increased in terms of income, and this reflects higher R and D tax credits as well as a higher rent income from third parties. SG and A, more importantly, was up 11% on a like for like basis, reflecting our increased sales and marketing initiatives, especially to support the growth of BioFire worldwide and in the U. S. And abroad. R and D was up 7.6% on a like for like basis, with additional R and D effort and investments in microbiology as well as, of course, molecular biology. Important to note and not visible on this page, but as mentioned in the press release, some, I would say, special items in H1 to explain, first, our phantom shares scheme in the U. S. That we explained already in the past, which is a viable compensation for our U. S. Employees, which amount is linked to the share price of BioMarion, so moves up and down with the share price. For the Phantom share scheme, we had a provision of €26,000,000 in the first half, linked to the strong increase of BioMarion share price to be compared this €26,000,000 provision to €10,000,000 in the first half of twenty eighteen. So this is a positive, let's say, special item. We have some one off to mention as well, negative. We decided in the U. S. To sorry, the opposite, of course. The Phantom share is negative 26,000,000 as compared to minus 10,000,000 last year. We had some positive one offs, too important to mention. We decided to freeze the U. S. Pension plan, which was on a defined benefit scheme yet. And that has, let's say, a very accounting actuarial impact of +11,000,000 in our P and L in the first half. And the second one off, which was actually a litigation win in France on social charges, which has a positive provision release of €6,000,000 actually, all in, with negative on PISA and the positive the 2 positives are quite neutral if you take those 3 together. So all in, contributive operating income is at €198,000,000 up 11% on an organic basis, a margin of 15.5%. And as you can see, the only reason actually why the margin does not increase in terms of percentage is the dilutive effect of our recent acquisitions, especially Astute, Q1 of last year that was for the first time included, Ibium and Invisible Sentinel. Let's move now below contributing operating income. So we have a stable amortization of BioFire acquisition price, €9,000,000 per semester. Net financial expense was slightly up at €14,000,000 due to the slightly higher cost of Chinese financing for the Ideom acquisition. Income tax is at a pretty low effective tax rate of 20.8%. We will see in a minute more detail on this. And so overall, net income group share at €141,000,000 up almost 5%. A quick zoom on the tax rate. So from a 32% French tax rate, actually, we derive with our mix of countries, recurring effective tax rate still at 23%. The only, let's say, notable nonrecurring major nonrecurring item in this first half was the calculation of one of the effects of the U. S. Tax reform of 2,008 that actually was, let's say, published by U. S. Administration this year, which is called FDIRI, so foreign derived intangible income, which actually improved our effective tax rate by almost 2 points. Few words about the cash flow statement. So EBITDA is, of course, up in line with EBIT. Working capital was, this semester, up by €37,000,000 primarily driven by a significant increase in our inventory. And this increase of inventory is partly linked to growth, of course, especially for the molecular activities and partly into a rebuild of our safety stock on some key raw materials that we decided to do during the first half. Income tax is slightly higher than last year and actually back to normative level for the low for different reasons last year. CapEx is at 10% of sales, €123,000,000 driven by especially industrial investments. We add capacity for manufacturing and plants. And we can mention, especially for the modular range, future growth. So all in, the free cash flow, and this is the first line green, is at €55,000,000 to be compared last year to €98,000,000 when we exclude, of course, in last year's free cash flow, the exceptional contribution to the U. S. Pension plan that we did in the first half last year. So slightly down for the reasons I mentioned, especially on working capital and higher CapEx. We use this cash flow for acquisitions, Invisible, Continental and Ivo. And overall, our net debt stands at €422,000,000 It includes the misstatement of IFRS 16 for rent, which actually increased, accounting wise, the debt by €97,000,000 during the half the first half. So now our net debt stands at 0.8%. So still a very solid and reasonable level, giving us headroom for acquisition and additional investment. Few words about the outlook. Alexandre already explained that we maintain our guidance for the year on organic growth and EBIT. Just to mention that on top of the organic growth guidance for sales, we revised our view on the ForEx impacts, of course, with ForEx moving. Actually, we said neutral. 6 months ago, we believe now that on sales, the impact should be around €45,000,000 FX impact positive. On the contributive operating income, so all in €385,000,000 to €400,000,000 Just to mention that the FX impact on EBIT, which we said would be potentially around minus 5, we believe now it should be better than that, so around neutral. And on the opposite side, the acquisition impact, I think we had mentioned around €10,000,000 for the year, would be probably around minus €15,000,000 €15,000,000 for the year. So actually, these 2 on ForEx and scope tend to offset. That's it. And I think we can turn to questions. Thank you. We will take our first question from Katherine Tennyson of Bank of America Merrill Lynch. Please go ahead. Your line is open. Thank you for taking my questions. I have 3, if I may. The first two is on the Molecular division and the final one on guidance. Just if you mind for the first one, could you please give us a little bit of color on how you've seen the competitive landscape in molecular in the United States change since one of your competitors has ramped up their presence there in Q2? And secondly, within molecular, as you've had a growing contribution ex U. S. From the BioFire, I believe from 15% to 17%, Can you comment on the regional price differences that you see within BioFire and how we should think about that impact on the margin going forward? And then my final question on the full year guidance. If we look at the H1, H2 split, it implies that there's is quite a step up that we should see in H2 for top line growth in order to reach the lower end. How much of this is from molecular rollouts? And how much of this is from the offset of the increase in the immunoassay changes? Thank you. Thank you. So we'll take the first one, the change of landscape in the U. S. So as you know okay, we are the leaders, the promoters of the Cinematheque in the U. S. It's an attractive space. What has changed in H1? I believe that the FDA equivalents for QIAGEN and also Luminex came with a new version. Gotcha. Okay. So but basically, where we see a bit more players on the field, that's something we are ready to tackle. All in all, I would say the dynamic of Biofriere in the U. S. Is still very good. And we keep on, I would say, working on the key differentiation we have. The biggest one, I would say, is around the quality and the breadth of the panel that we have today on the market. So far, I would say, yes, there are more players, but we have not seen a indication, I would say, in our market penetration. The second question was around bio fire prices outside of the U. S. I would say that, all in all, I think we are able to preserve and to present, I would say, the medical value of the solution. There are no, I would say, significant price differences on a worldwide basis. Sometimes we adapt to adapt. But I would say, all in all, we the positioning is around the medical and the technical value of the solution. Regarding the ramp up in H2 compared to H1, I'm assuming you will see the plan is to see an acceleration as we as Q2 accelerated versus Q1. I know we had some of the nonrecurring effect, as we mentioned, in Middle East. I would say also that maybe the 1st semester has been a bit low in terms of sales of instruments. So all in all, at this stage, we confirm the initial guidance to be between 7% to 8.5 percent. I would say that the regions are going right dynamic, and I think that's the best indicator for the company. Thank you. We will take our next question from Romain Zane of Exane. Please go ahead. Your line is open. Yes. Good afternoon. Thanks for taking my question. I have 3. The first one is on industrial application. How do you explain the persisting softness on food testing into a Q2 and especially on instruments, if I'm right? And is the acceleration expected into H2 for the group linked to a catch up in that Industrial Application division? The second question is on Molecular Biology. When we look at the sales organic growth or also the instrument placement, it's not obvious that you perceive any, let's say, new pressure from competition. However, the investments on Molecular Biology and BioFire in particular seems increasing. So is that fair is that a fair statement to say that you are able to contain any potential increase in competition, but it requires higher investment on your side in terms of R and D and marketing. And last question, just on the cash flow, how should we expect the trend in H2, especially thinking about any material, let's say, seasonal change in working cap or CapEx normalization in the 2nd part of the year? Thank you. Regarding industry, that stood at industry on a yearly basis. So this last year, we were more going around 7% to 8%. So we are off to a low start. What is performing quite well still is the pharma applications, very, very nice growth in that space. And I would say on the food side of the G net is a good growth. We need to monitor a bit more Q1 was also good, I would say, a bit slower food in the U. S. And I think also we should see an acceleration in the add back region during H2. But to come back and I think it was said, I think that the region sales of industry are around 6% in H1. So I think before I go recover a bit with the wage instruments, we should come back to higher growth in H2. I think at least from my side, there's no specific worry to have around the global dynamic of industry. Your second question was around the investment we do in molecular. Yes, we do investment in molecular. You have seen also recently that last year that also the BBA increased our investment in R and D and they are linked to molecular. To be frank, they're not so much linked towards competition because we know that competition will come and they're dialing to the fact that we believe we want to keep on leading the race, I would say. We believe also that the funeral rate is an innovative platform. So these are the types of things we are working on. We're working on new panels, working on improving the instruments. And we keep having investments in marketing also to make sure we promote the medical value of this solution. But I think that's something we would have done in an outside competition because we believe in the evolution of this platform. The first question is more for you. On cash flow, so about the trend in H2, I can say a few words even though, of course, we don't give a cash flow guidance, but still. On the CapEx, we are right in line with our guidance of about 10% of sales. I believe we and we reiterated 14% of sales for the full year. We are in a pretty solid investment plan, especially investing for the future additional capacity for Finnaira growth in the coming years, but not only that, of course, also strengthening our manufacturing footprint and setup everywhere. First on the CapEx, in terms of working capital, I can mention that so I mentioned that some of the working capital increase on inventory are quite happening in the first half are quite structural. When I mentioned that we rebuilt some safety stock that we need or inventory levels, if you go safety levels for some key raw materials as we could do in H1. But beyond that, I can mention some seasonality effect. Usually, in terms of days, we tend to increase inventory in H1 as some of the activities actually prepare for the next full season, especially by the fire, but not only. And actually, this reverses as the flu season and not really the flu itself, but actually hospitals buying for the flu starts to ramp up in November, December. So it, of course, starts to reduce our inventory level in terms of days in H2. So these are the more explanations I can give with a broad framework that, again, we don't give cash flow guidance. Okay. Just a quick clarification about industrial applications. So in the step up you expect for the 2nd part of the year, industrial application is one of the lever to accelerate the group growth? Industry should do better end of the year than what it did in H1. Okay. Thank you. We will take our next question from Bill Quirk of Piper Jaffray. Please go ahead. Your line is open. Great. Thanks. This is Dan on for Bill. First, I wanted to piggyback off of an earlier question. BioFire has those proprietary codes for respiratory and GI multiplex testing. What is the latest on the multiplex panel reimbursement market in terms of maybe where the market is heading and what your strategy will be given that reimbursement dynamic? And maybe the timing of when we could find out that level of pricing when we could start to think about that? Thanks. So in fact, the PDA code now that allows to overrule not overrun, sorry, the CPD codes. Remember, it's only for outpatient testing. This is not for inpatients, which is the majority of the patients that are tested with FINORIC. And when you talk about inpatients, you don't talk so much about reimbursement. You talk about DRG, which is a global envelope, which is allocated to how to treat a patient or maybe, sorry, how to treat a disease. Most also, these 2 codes allowed us to enter to negotiate, I would say, new reimbursement with Palmetto and some of the ADTAs might follow. On the, I would say, the investments which are displayed on the slide, I think, we believe are good recognition of the value of Filmorhea, and I would say that it will be meaningful and also a technical benefit with this that over investment. I don't know if you can add anything more. Understood. And then one more for me. I saw that a competitor came out with some data on a TBI assay. I was just wondering what's the latest on Banyan from you guys. On business first, it's R and D stage. We will take our next question from Maya Parikh of Kepler Cheuvreux. Please go ahead. Your line is open. Yes, good afternoon. I'd like to ask 2 questions, one financial. If we're looking at EBIT that you the adjusted EBIT that you reported in H1 twenty nineteen, we've seen a bit of a margin decline, which you explained with the dilutive impact from acquisitions. However, could you confirm that if we adjust both H1 2018 and H1 2019 for FX, the Phantom share provisions and the impact from acquisitions that the margin decline would be actually greater than 100 basis points. And if that is correct, could you please elaborate why it is? Is it purely the dilutive impact from acquisitions? Or is it the higher investments in BioFire? And then the second question is related to the pipeline and that was mentioned in the slide pack, Alexandre. I've noticed that TB made it in there. I am not aware of the fact that it was ever in written mention somewhere. Could you give us an update on where in the where you are in the whole project? Okay. I talked to TV earlier. We'll take the easy question on the comparison. No, yes, to be frank, I think it's already we'll take another development. And to be frank, by OMA, we like to communicate on the new test when they are developed or close to ADA or CE marking. But in that case, apparently, it was known that we were working on this latent TB. So you say officially that we are working on it, that it is true. But we don't give dates at this stage. Still, that's still but R and D did not increase. Okay, fine. But I mean you also don't give data on NephroCheck when it comes to timing, yet we know that it is going to come. Is that the same for TB? Is it a question mark is behind the timing, but not behind the if it comes? Sorry, I lost it as part of it. Just on timing, not on visibility. I said development phase, not R and D phase. No, of course. I'm not saying I was forced to communicate, but since people communicate on our behalf, it's good that we endorse the fact that we are developing a test. It. Okay. Coming to EBIT for H1 and your question on adjustments. So just to I won't do the whole calculation, but I'll give you the elements. So FX, as we mentioned, has only a minor impact actually, a positive €1,000,000 on EBIT compared to 2019 as compared to 2018, so actually pretty small. So again, just for everyone, it's pretty significant on the top line FX with plus €29,000,000 But as you all remember, we have a strong U. S. Dollar on sale, but also a strong U. S. Dollar cost base. So that's why it's much lower or smaller impact on the EBIT than on the top line. So FX, only €1,000,000 difference. Acquisitions, they actually have around €10,000,000 negative impact when you add the additional quarter of Astute that we had this year and not last year. Invisible Sentinel contribution and IGM contribution, It's about €10,000,000 negative in terms of EBIT. So that's to be taken into account in our calculation. And then PSOP, I think we gave you, of course, minus 10% last year, moving to minus 26% in terms of provision this year. But we believe that when we when you do that, you should also take into account other one offs. And I mentioned the positive ones that we had in H1 this year with the freeze of the U. S. Pensions for €11,000,000 and the litigation win French social charges for cost 6. So actually, if you look at 1 year compared to the other, the piece up with these two effects kind of neutralize. And I hope with all this that you can have your own view on our margin percentage trend. Right. Can you just confirm, was there any one off last year in 2018, which wasn't put in the press release or something? Because I mean, you have been kindly giving us the impact from Phantom Shares. The FX was a €31,000,000 negative impact from acquisition was minus €4,000,000 So if you adjust the reported EBIT for all those impacts, what I see is a slowdown in EBIT margins if I adjust in H 2019 as well. So I was just wondering what is the driver behind that? I'm surprised that you see a decrease, but we did not no, except the PSAP, I don't think that we had any significant major one offs to mention last year in H1. Okay. Okay, great. Thanks. We will take our next question from Delphine Le Louvre of Societe Generale. Can we get more color on the BioFire and Filmora performance in the U. S, but as well as ex U. S, meaning, what is driving the growth? What sort of path of growth do you see there? Is it comparable to the one seen in the U. S? And more specifically for the U. S, can we get some more color regarding the usage in terms of panels, the reordering per client in average, how many fumarate do we have right now on a client base? What is the commercial ramp up that you're seeing now that you have a far more deeper experience with Filmorhea, both in terms of installed base and as well as client terms. Could you share with us more granularity on this performance? Thank you. Good question. Well, basically, the dynamic is good. We feel good. I think that the U. S. Are doing very well. And I would say outside of the U. S, we are doing even better. Of course, competition is coming, so we'll have to see. We'll see we have to adapt. But so far, we believe we are ahead because of the channel, because of the evolution of the platform. I think that all the ratios are good. When you look at the number of consumption of panels per instrument, the variety that the customers are not using one system for 1 panel. I think everything goes for me in the right direction. Differences are we know that maybe in Europe, now we have to do a different type of promotional because maybe the market and markets are different. So we have to work with the physicians and also with the pharmacies. So it takes more time in terms of education. I would say recognition of the value of Finray is stronger. We have good success in Latin America or even in countries where we don't have reimbursement. So this is why we do this really cool on marketing investment. But I think for me, it's a nice growth story. Like we're growing at 20% 5 years after the acquisitions, 8 years after the launch of Finoress. So I only have good things to say about this. Okay. But you can't, Alexandre, be more specific. I try to understand the evolution of the mix in the future and to get a sense for that. But of course, it's a beautiful story. I mean, no one has and I'm not sure you were also thinking about that when you acquire BioFire, but it's a wonderful it has been a wonderful path so far. So yes, for sure, but the breakdown between the GI, between the new I know, but even safer. The others are growing nicely. We just said that so far, Lemania has a slow start, but we still believe that Lemania, in a cost of time, will be in the top 3 clusters. Anne? I also mentioned that the growth of FINRA overall is well distributed between the 4 major panels. So RP, GI, meningitis and blood culture, they are, let's say, close to each other in terms of growth rate. That's what I meant. They all fuel strongly the growth even though, of course, they are not the same weight in terms of $1,000,000 or €1,000,000 They all grow strongly. Our next question comes from Scott Bardo of Berenberg. Please go ahead. Your line is open. Thanks very much for taking my questions. Apologies if I missed the explanation for this, but obviously, we've seen some slight deceleration in microbiology growth and somewhat lower growth in industrial applications, consistently weak immunoassay performance for the first half of the year. And of course, your guidance implies material acceleration in the second half of the year even to reach the lower end of guidance. So could you please explain to me actually of those businesses outside of BioFire, why we start to see, if you like, your base business pick up more meaningfully throughout the course of the year? That would be helpful to understand some of the moving elements there a bit better, please. Also just to understand your reiterated EBIT guidance contributive EBIT guidance at 38030s to 400. Were you aware of the likelihood of this 70,000,000 French settlement at the time of setting that guidance? Or I see you've reiterated that guidance today. So is that including this benefit that you see in the first half now? If you could clarify that, that would be helpful. And last question really, just like to understand a little bit better. And I appreciate you don't give an awful lot of clarity with respect to the makeup of BioFire. But perhaps you can give us some sense of given your considerable investments in this area, where are you with respect to consumable automation? What sort of benchmarking metrics are you having for bringing down cost of goods for cartridges, for example? Perhaps you can share some feelings there with respect to return on your investment. And also perhaps a sense of what percentage of placements are going into reagent rental and what percentage you're selling? That would be helpful. Okay. Many questions. Maybe I'll take the one on BioFire or commission of we are doing investments in BioFire, I would say, in every space. We announced that also that we are we announced last year, we said that we are investing in an additional site for manufacturing. This one is mainly linked to capacity. And of course, when we invest for capacities, it's a very positive platform, but we're also working on bringing more automation on the production line. We won't communicate on the cost of goods. But I would say everything we do, when you add more volume, you can read automation. That's what we are aiming for. But I would say that the main driver was to feel the to answer to the capacity and the strong demand. I'll come back to your first question. If I understood, well, your first question was to add more color on the H2 expected acceleration of growth. So again, of course, in H1, Q1 was having the base effect of the flu season. So if we think about acceleration, maybe we should look more at the Q2 of 7.4%. So actually, the step up compared to that, recent trend is not that high. I guess, in terms of elements, we mentioned actually Alexandre mentioned that instruments was pretty slow and even lower in H1. You expect it to pick up. There's also kind of seasonality sometimes of customers on equipment that tend to be sold and installed for revenue recognition in H2. So instruments is one reason. The other one that we mentioned is these one off or nonrecurring effects actually that we experienced several actually in Middle East, Africa, where we had in some areas some credit issues, other areas some customs logistics issues. Some of these are already solved or will be solved, and they are expected, of course, to accelerate and even catch up on these countries in H2. And then, of course, as Alexandre mentioned, there's an overall trend of, let's say, good recurring growth of our reagents in the different areas that is expected to pursue. These are the main, let's say, macro elements on H2 acceleration that we can give. Your second question was on the EBIT guidance and the elements of 1 offs. So as any debt litigation, we had I mean, of course, we did not know when we closed the accounts because we had known we would have taken this into our accounts for 2018. So we did not know. We were hoping to win, but you can never know with the litigation. So that was, of course, a postponing event. But of course, that was a positive event. But on the other side, we were not expecting to have and we had said that we were expecting, think, a 10% to 15% increase in the share price. And hence, we had included in our guidance the corresponding effect on the Phantom shares. And the reality was a very strong pickup in the share price in H1, which, of course, went way above our expectation on the PhantomShares provision. So again, positive, negative as compared to the guidance given very early March. Okay. Understood. And sorry, just to understand a little bit better. I mean, BioMarriott's financial guidance and prudence around the financial guidance has always been appreciated historically. But even to get to the lower end of the range, you need to see acceleration in the second half. I mean, would you say that the full range of your top line guidance is still in play? Or is it prudent and cautious to assume more the lower end given some of the impacts that you mentioned already this year? Can you give us some sense there? We communicate on the full range. Understood. And maybe just a technical question, please. I see that you've had some obviously, pretty favorable and helpful growth in Latin America, which supported your North American segment. Can you give us a feeling for how much the devaluation of the Argentinian peso contributed to that growth? Obviously, there's been some enormous currency volatility in Latin America. Maybe a sense of what your volume growth was would be helpful. Thank you. So 2 elements to answer. First, you should remember that last year, actually, we had a very negative effect in Brazil, especially we had 2 effects in H1 last year. We actually started SAP end of January in Brazil, and we decided not to invoice actually before the start. And had the yes, so we had the Q1 of Brazil, which was very low. On top, there was a transport strike all over the country in Q2 of 2018. So imagine the if I do understand that the base of 'eighteen for Brazil, which is a big part of Latin America, a significant part, was very low. So first, you have to keep that in mind, whereas, of course, in 'nineteen, we think was, let's say, running normally and with normal business activity. So there's a big effect there. And then on Argentina, you're very right, that's also a very key element. So actually, we were able the local team was able to pretty quickly react to the devaluation with a very strong price increase to actually follow our own cost, which is euro and dollar cost. So roughly 30% really, it's a rough figure, about 30% price increase in Argentina after the devaluation this year. And actually, that I'm talking about the August devaluation, but we did the same, unfortunately, with the August devaluation of 'eighteen as well. So you more or less have this element in the Argentinean part. Got it. And I'll now take some of your time, but one bigger picture question. And Alexandre, you're clearly comfortable and happy to continue to invest in innovation. After all, that's been a major driver for your share gains in the past as a company. And you've outlined some pipeline you're working on today. But one of your more recent launches, pneumonia, for which you're pretty optimistic as a company you can drive meaningful opportunity, Can you talk perhaps a little bit about why you're so confident this will materially contribute to the company? Any feelings for what timing or any signals that we can be confident this is working well? And perhaps a little bit on the reimbursement, are you managing to get good reimbursement here or premium prices or so? Can you talk a little bit about this? I'm confident that the Moderna because it's a real innovation because it brings medical value. It was a very sophisticated test to develop because for the first, you work with different type of sample, spectrum, PEL also, for positive, I would say. And I would say also that we added a resistance partner. So for me, we believe in it a lot because we believe it has an impact on the medical practice. Like every new innovative approach, I believe it might take some time, but the benefits are there. So as you know, we're not running the company on a yearly or quarterly basis. So for me, for the need long term, I think this one is a key differentiated test. Okay. Thank you very much indeed. We will take our next question from Christophe Gahan of ODDO. Please go ahead. Your line is open. Hello. Good afternoon. Actually, I have three questions and one clarifying the EBIT guidance. So just to make sure, as I understand, you were not aware about the phantom effect and were not aware about the one off positive effect that will be from litigation and so on. So this is why you do maintain your guidance, right? But why those exceptional elements are in the ROC actually in the ROC contributive? So yes, I think, yes, you understood well. We are not aware about the phantom share effect that went beyond what we had expected, negative. We are not aware about the litigation win in France that was a positive to offset. The only thing I can mention is we were aware, of course, because we decided on the U. S. Pension plan effect to freeze when we freeze the U. S. Pension plan that it would have a significant effect. So that was already included. Yes, so that's it. So in the guidance, you have this retirement plan in the U. S. Included, right? Yes. Okay. Second thing related to the marketing expenses. How long actually should we see new sales force and recruitment for BioPhar outside U. S? I think it's I think there are some countries. One country, we are still not promoting fumarate. Well, I think it will increase. It will be for fumarate, but it will be also, I would say, for the global medical value selling of BioMarriott. Fumarate is a key component of this, of course. But maybe we'll take Fumarate, maybe the enabler for BioMarriott to grow more into Medical Solutions All right. So we I'm not sure if that is so important, it will be. Okay. So we should not see necessarily the impact of BioFire in the fact that there is a significant increase in the marketing expenditure on H1. It's BioFire. It's selling high meaningful value with turning our sales effort not only to the lab but also to the physicians. For us to be We keep on investing in BioFire as long as we keep up, we are still only 17% outside of the U. S. And some panels are quite new. So no, it's actually require more important, I would say, every money investment we do for Biofaire is good news for Biofaire. Okay. Understood. And last thing, would you be able to share with us the impact of the investments in terms of manufacturing capacity in Salt Lake and the impact we should see in the next years in terms of gross margin for the Filmeray contribution? How much should we see more in terms of improvements given this mix effect? And how much have you already reached in terms of your plans for improving the gross margin of Filmaray? Okay. I will give you some elements, but not very detailed figures. Sorry for that. So in terms of investments, we have explained that we're actually building a full new manufacturing plant for BioFire in Sourcage on top of the existing. So it's actually a full addition of capacity. And I think given the growth rate that you see, that we've seen for the last 5, 6 years and that we expect to pursue, it's normal that we invest quite massively in new capacity in advance. So that's a significant part of our investment, and will continue. In terms of cost and cost and gross margin, that we don't disclose by product or by product line. We said every semester that as by the fire has higher than BioFire average higher than BioFire average gross margin. The higher growth of BioFire has a positive effect on the overall group gross margin. And Alexandre also mentioned that, let's say, of course, with the volume and the work we are doing in terms of manufacturing, hopefully at some time. At some point, more and more automation, we would, of course, have some positive effects on cost of goods sold. So we don't have any more questions from the call. We have a question from the webcast. So could you confirm that the impact of front of shares will fade from 2020 onwards? Yes. So yes, a very good question as well. Actually, I didn't have the opportunity to mention, and it's important that for we paid the 1st tranche of the Fortum shares in July. It's a 4 year scheme. So actually, the first grant was in 'fifteen. So the first payment was July 'nineteen. The effect of that, of paying, is actually that our volatility or impact on the EBIT will start to reduce. And actually, for H2, for example, I can mention to everyone that the €1,000,000 change in the share price has €1,000,000 impact on the EBIT, one way or another, of course. And going beyond that, we will see, of course, the Fortune shares impact to fade. We have another payment in 2020 and another in 2021. Thank you, Guillaume. And the second question from the webcast is that we are investing in immunoassay, IDEO, MasSUT, baculosid. And are we comfortable that Vyadust is a good platform to support the different projects? Yes. Well, I think immunoassay, I would differentiate Hylgium from Vyadust because Hylgium there is a clear type of platform, so keep the business, I mean, first, mainly at China market, such an approach. And the old guidance, I would say, is still a good platform to develop high risk value test. And it's also still a good platform to go into emerging fast developing countries where the size of laboratories are small to medium. Thank you, Alexandre. Thank you, all of you. And so next touch point with you will be for the Q3 results, sales results. This will be disclosed on October 22 this year. So thank you very much, and looking forward to discussing the results with you and to talking with you. Thank you. This will conclude today's conference call. Thank you for your participation. You may now disconnect.