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Good to go?
Okay.
All right. Good afternoon, everyone. I'm Robbie Bamberger, senior research analyst covering life sciences and diagnostics here at Baird. We're pleased to welcome Qiagen this afternoon. Especially pleased to welcome Jon Pratt, who became Qiagen's CEO on September 1st, so we're catching him right at the 2-week mark. We also have Roland Sackers, Qiagen CFO, and Domenica from IR with us as well. Thank you guys for all making the trip. Jon, just before we get into the business, I wanted to start with you. You stepped into the CEO seat September 1st, so we're catching you 2 weeks in. What was it about Qiagen that made you want this job? In your conversation with the supervisory board, what were they telling you they wanted most for the next CEO of Qiagen?
Yeah. Thank you again. Good to be here. I guess I knew Qiagen. I've been involved in the space through Pall and through Beckman Coulter and through Waters for a long time. I knew Qiagen from an undergrad perspective.
Okay.
Almost every customer I touched was the blue boxes, so to speak. I knew the brand. Did a bit of research on the brand and, in terms of the customer intimacy and the quality of the people employed in Qiagen, it was a pretty exciting place to come. So I was intrigued to join. It took a long time because I was in the business of selling Filtration Group to Parker Hannifin, so there was a long transition period.
Yep.
It gave me chance to understand the company a lot. Supervisory board, they really felt that they obviously wanted the industry experience, allied experience. In no particular order, they were pleased that I'd lived and worked in the U.S. and U.K. As you can tell from my accent, I was not exactly born in Brooklyn. That fitted well. They wanted somebody that could bring some simplicity, shall we say, to some complexity. Strategic focus, very much execution driven. My experience with Waters and others was an execution kind of game in many, many ways. All the things aligned well there. Somebody that would fit with the culture.
Yep.
Lots and lots of things.
You spent most of your career in businesses that looked a lot like Qiagen. President of Beckman Coulter Life Sciences inside Danaher, senior roles at Pall, and then the Waters Division at Waters Corp. What are the maybe one or two things from those seats that you think could travel best to Qiagen?
I think the two things I'd highlight is R&D effectiveness, choice, prioritization, link to strategy. They're very much part of the Waters and Pall journey. The other one is, I would say commercial execution in all its forms. Beckman and Waters in particular, we benefited from upgrading kind of the commercial capabilities. The depth of technical capability is always there, but commercial execution in all its forms is something I would say that was important.
How are you spending your first 90 days, and when should investors expect to hear your view on the strategy and medium-term framework for Qiagen?
Yeah. Obviously, listen, learn phase, right? Diving deep. Had quite a bit of time pre-appointment to dive deep, but building on that, getting to know the enterprise, the people, the places and traveling to all of our facilities. Really trying to understand how we win in each of our growth pillars, and what the midterm outlook is of that, and frankly, where we probably should double down on and where we should manage differently. So, classic onboarding process, really.
Yep. Roland, I'll include you on this one. The strategic review of the company, framed it as a continuous process with three paths, continue organically, strategic partner, or a financially driven partner. Can you maybe walk through all of those three options from your seat now?
I don't think that I want to distinguish between the different parts of it-
Yep
I do think it's very fair to say, and Jon, I think, was alluding to that right now, there's clearly a path A and there's a plan B. Again, one thing is also very clear, we want to have, rather, a clear direction rather sooner than later. It's nothing what we want to decide end of this year, whatever. Of course, we need a clear path going forward, and I think we are all very much committed to that and delivering on that. Again, right now, by definition, I can't give you much more update other than that we're working hard to get, rather in weeks than in months, to a clear decision.
That makes sense. Thank you. Maybe diving into specific segments. Starting with diagnostics, which is your in vitro diagnostic test you sell into hospital and labs. The segment was down 2% constant currency in Q2, improving from 4% last quarter, down 4%. The big piece inside of it is QuantiFERON, 25% of revenue, the blood test for latent TB. Given lower immigration testing expectations, you took out $35 million from revenue, which is essentially all of your U.S. exposure. So maybe two quarters into that impact, where do we stand on immigration volumes? You took that essentially 100% of U.S. immigration testing exposure out. Does that still look like the right call, or is some of that coming back? How are you thinking about that?
Good question. Just slight adjustment. So we took out $35 million, that's correct, but $30 million U.S., $5 million Middle East.
Yep.
Where I do believe that the $5 million, or we do believe the $5 million Middle East over time will come back because I'm quite sure that that is an area where we probably will see either the war stops or they find a way to go back into routine work. As you know, it's particular about construction workers coming from some countries and work in this environment. In the U.S., I do believe, or we do believe, the $30 million probably will be out for quite some time because the legal immigration laws in this country have changed, and I don't think there's any indication that they change any quite soon. Nevertheless, I think it's also important to recognize that that is going to annualize more or less February next year. So we should see that that is fading away as a quite significant headwind.
And then maybe taking out aside immigration, what did the remaining 90% piece of QuantiFERON grow this quarter, and what are the drivers? Essentially, is that the right jumping point for 2027 as we look forward?
Again, if you do the math and just adjust for that apples to apples, that clearly leaves you in a kind of somewhere between 5% and 7% growth rate. I think that is probably also compared to the market growth, which is 4%-5%, probably a good assumption. I would say, overall, over time, that is also where we look at the business. As I said, immigration most likely will not come back. If it comes back, we are ready.
Yep.
I don't think that's going to happen. At the same time, that is the most important message about QuantiFERON. It is still a 50%-60% skin test market, so 120 old skin test, which still has the majority of the overall share, and the overall market is growing 4%-5%. There's a lot of room for us to expand in the market. We're clearly the number one player in that market, and therefore we continue to gain share.
Just confirming, the immigration comp should essentially be end of Q4, so then Q1 should be a clean quarter?
I would say February is the first month which is clean.
Okay. Thank you. Just for competition for QuantiFERON, who are the new entrants that you are competing against there, and in which geographies? Have you had a chance to change price or contract terms to defend any of your accounts, or is it pretty much still leader there?
The one thing we always have to remind the market on is QuantiFERON was always competitive, right?
Yeah.
Again, while we have significant market share, there was always players and there was always a GRAIL, there was always a BioMérieux, there is always a handful of Asian players. So it is not always. Yes, we are clearly the leading player.
Yep
but we are not the only player. Now, of course, there is another player, most likely over time, entering the European market. Again, there is no sign right now that that is happening to the U.S. Might happen, again, as they are saying, beyond 2027. If that is 2028 or 2029, time will tell. But we of course, we have not stand still, right? We clearly were very actively in working with our customers in long-term contract. We have now close to 60% of our customers in long-term, multi-year contracts. Again, we did a lot, and you have seen that around automation. The Inpeco solution will come end of 2027 to the market, which is the only one fully workflow automation available in the market. I do think we have a very strong setup.
Of course, we can talk about some details of the competitive environment in terms of testing, but we feel quite comfortable.
You have been building out new patient populations, just beyond traditional healthcare worker screening, immunocompromised patients, diabetics, now dialysis. Can you maybe just frame how large those new populations are and how much of them are actually in numbers today and which are still left to grow?
It is a smaller part compared to the rest of testing groups like healthcare workers and so on. But it is the fastest growing piece.
Nice
of the target groups that we're looking at. Yeah. That's basically what we're working on also to get more patient groups into the QuantiFERON test, and yeah.
Just to enhance on that a bit. About 10% of our overall IGRA QuantiFERON test is immunocompromised patients.
Okay.
That is also by far the fastest growing patient group. That is also, again, there's a lot of talk about incoming competition. This is actually one of the areas where they're struggling, because to address that perfectly right, you have to have a CD4, CD8 test. We do have that. Others don't have that.
Yep. Would you say the biggest of those other populations would be the immunocompromised patients?
Right now, yes. Over time, of course, diabetes, as you know,
Yeah
is an attractive market opportunity, because there is clearly a lot of patients around that and a lot of potentials. There is a clear correlation between them. Again, getting into latent TB, it is probably a bit more out, but it is clearly on the watchlist of some of the healthcare standard setters.
The fully automated Inpeco workflow and the AI risk scoring tool, those land in the second half of 2027. When do those actually become revenue for you, then how do you expect to monetize them?
Monetization starts more or less as early as in 2027, because at the end of the day, it is a huge opportunity, particularly for midsize to larger labs to have walk-away solution. Have in mind, QuantiFERON is also for our customers, one of the largest revenue generations they have in the lab. Having that in a walk-away solution is a significant step up. It is one of the limitation factors they are all having. We are looking forward to that as our customers are.
Let's move to QIAstat-Dx, your syndromic testing platform. Growth was 7% in Q2 after down 1% constant effects in Q1. You are guiding to low double digits in the second half of the year. I guess what is driving that recovery in H2 versus H1 besides a little bit of easing comps?
In all fairness, H1 was untypical for QIAstat-Dx because we were clearly, actually, also the whole industry, fighting very strong respiratory cells in H1 last year, right? On a more normalized basis for the second part of the year, we also expect that it returns to significant growth rate, most likely even double digit. On top of that, we were able to continue our portfolio expansion. We have seen that we brought BCID to the market. The next one is critical urine infections. I would say both is still going quite well. Placements of new instruments, but also portfolio build-out. Again, that we had a strong respiratory season last year was good news for last year, but you know it is what? It does not make your life easier the following year.
Is there any assumptions that you embed in for the flu season for the second half of the year?
As you know, we like that you all do these big conferences.
Yeah
because that is at the end of the day very helpful for us. Joking aside, I do think right now the tendency looking into Australia and U.S. is probably more regular or softer environment.
Got it. The blood culture panels are the most interesting new menu addition that you have, and you said you are confident of FDA approval by year-end. Can you maybe frame the size of that opportunity, what the realistic 2027 contribution looks like there?
It is a bit early to size it, but of course, they are important factors to the portfolio. Again, respiratory is and will be always the leading panel. Nevertheless, it makes it unique, and it makes a reason why customers choose your platform, and I do think that is important. As you know, my favorite term is always a bit like an espresso machine, right? We all like to have an espresso machine, and we all like that they have 20 different flavors. At the end of the day, we all typically buy the two or three we use the most, but having the choice is what differentiates it, and I think that is exactly the case here as well.
Yep. Great. Kind of moving on to sample technologies, which is your front end of every molecular test. The instruments and kits that essentially pull DNA and RNA out of the blood before anything gets analyzed. Sample technologies, it grew 9% this past quarter and Q1 as well. Organic was about 3%, excluding Parse Biosciences, and you have guided to double-digit growth in H2 on a reported basis. Can you maybe just walk through what gets us to that low double digit from 9% the last couple of quarters?
Yeah.
Yeah, I have the privilege of walking into an instrument replacement cycle. We have three new instruments from the highest throughput, which we typically did not compete in the very, very high throughput, right through now to the QIAmini, which is a benchtop instrument for individual scientists. Think price point south of EUR 10,000. Simplifying the individual scientist workflow. There are 100,000 of all those opportunities to install that, and enjoy the revenue from that as well. Those launches are here and now. The QIAmini is launching pretty much as we sit here. So that is creating some momentum in the back half as well.
Yep. Automated consumables, that grew high teens. How much of that base is automated versus manual now? How should we think about that conversion from just manual to automated over time?
Majority is clearly still manual, but as you know, we on purpose drive conversion to automation because at the end of the day, it is the trend. In every lab, you have an increase in volume, but you have less people available and fund enough to do the work. So I do think automation is a significant part of the solution. Second, of course, there are only very few companies like Qiagen, and we are clearly by far the leading player in providing this different automation level, as Jon was referring to it, on the low level and the mid throughput level, but also in the high throughput level, which is quite new for Qiagen. So we do believe there is a significant automation opportunity, and you have seen that, right?
If you go back the last three quarters, we have seen already a step up in underlying growth for sample prep, and we are still in the early days. So I do think there are more opportunities for us going forward.
You now have two of the three new sample prep systems in the market with QIAmini still to launch. You sized them at about EUR 20 million of incremental H2 revenue. Does that still seem about right? How is the placement funnel building there?
The good news is today is September 15th, means the QIAmini is launched as well. We have all three machines on
Oh, all three. Okay.
We have all three machines on the market, which is great news.
Yep.
There's no launch risk. Actually, you are right, we are a couple of weeks early.
Yep
Your numbers were right. It's good that we are early, which is also good. We feel comfortable. Again, clearly, this thing is also fair to say, we're not living in the easiest CapEx environment, particularly in the U.S. So we always have to balance that, and we have to see what the next couple of weeks and months are bringing. Some people are talking about budget flushes or not. That is a discussion we can have. Some people saying, "Okay, let's see what the results are on the midterms." That might ease up a bit of the confidence issues some people having. So I do think, overall, there's opportunities for us which might add on.
How many QIAsprint Connect systems have been placed, and how is the initial feedback that you're getting so far?
By definition, I'm not going to tell you how many we placed so far. But I think it's fair to say that our goal for this year is that we have around 150 systems in the market, and we feel good about that.
Yeah, the other thing I would add to that is I talked very briefly about commercial execution and building that muscle in Qiagen. It is a perfect time to do that with three new instruments into the core of the business in sample prep. A complete portfolio there and 100,000 new opportunities for the QIAmini. It fits really well into our commercial execution program. No comment on the 150, but you can guess where I think that should go.
Yep. That is helpful. What is the consumable pull-through per placement when you have that QIAsprint Connect, and how long until a new box is pulling through at that mature rate?
Again, it is a bit early days. I think we clearly said that this is a high throughput market opportunity, and that is a big market opportunity. As you know, while we are for sure, and nobody will disagree with that, the leading player in sample preparation, we have never had a, for certain reasons, play in the high throughput area. There is an area where, for example, there are 10,000 KingFisher machines in the market, right? Most of them are five, 10 years old, so there is a significant opportunity for replacements. QIAsprint is a new generation. It is a generational shift machine in terms of pull-through, in terms of time to result, one-fourth, all the new features you have to have, continuous load and random access load, fully automated and integrated into your LIMS system. We do believe that machine will make a difference.
Therefore should generate quite significant pulls.
I mean, we're sizing it. It's critical to commercial execution because that total cost of ownership, as you added. I would say this, these are the kind of instruments that generate their own revenue value in a full year when they're fully operational. So it's very much a revenue stream. That's why placements are absolutely critical.
Yeah.
If you think about it, the price of a unit when it's fully operational, fully running, it's delivering that in annuities plus service, so consumables plus service as you go forward.
Then sample tech instrument revenue growth was up mid-single digits in Q2. How much of the sample prep instrument strength is new launches versus underlying replacement demand?
It's a mix. Again, all of it's new placement, as you said before, QIAmini is just starting more or less this week. So again, we do believe there's clearly more contribution coming over time from the new ones. Nevertheless, overall sample prep automation also had a good start into the year. We have different types of machines, QIAcube, and so on. So overall, again, we are quite happy with the environment. Again, good academic market being a bit more stable. Absolutely.
Yep. Jon, is there anything you are bringing in in terms of the sales motion to sell new instruments at all from your past positions?
Yeah, it reminds me very similarly of journeys at Beckman and Waters. Instrument replacement cycle being very structured in the way you approach your replacement cycles. When you talk about a new launch, there are three possibilities. You displace a competitor, you upgrade your instrument upon cycle, and that cycle we are working through, but think five years-ish, you are thinking about new instrument cycle. Then there is greenfield, if you like, new placements. The QIAmini very much a new placement. The others have those other opportunities as well. Right from demand generation to sale.
That is all something that we installed in those enterprises, and it is exact parallel with the razor blade here at Qiagen.
Great. Parse, good acquisitions tracking above EUR 40 million you set for the year. I guess what is driving that upside versus your initial EUR 40 million expectation?
As you said, it's going quite well. Started the year with 40, probably more now, more than 45 million. I think there's two main reasons right now. One is, as you know, we have compared to others in the field, an automation instrumentation-free solution, which again, given what we discussed on CapEx environment, is clearly a plus. Second, which is as meaningful as we clearly have a different, that's the reason why you do acquisitions, right? We have a significant footprint also with biopharma customers. Therefore, I think bringing just Parse Biosciences much closer into this kind of environment helped us to secure quite a good number of contracts.
Then the liquid biopsy prep, that grew more than 30% in 2025. You noted Natera, Guardant Health, NeoGenomics as key customers. So how large is that piece now? How does volume growth at those customers then flow straight to you guys?
It's a smaller part of our sample tech, but it's an important part. You can also see it with the launch of the QIAsymphony Connect. That is specifically optimized also for liquid biopsy customers, dealing with different volumes that they're handling, and liquid biopsy samples are very tricky, so you need to have the highest quality possible, and that's what we provide with our kits and with our automation. So it's for us a focus, and keep in mind that those customers are relying on a good sample preparation. Without the sample preparation, you can forget about the rest. This is basically what we offer, and when they are growing nicely, then it's also good for us, and we're happy about that.
That's great. Moving to PCR nucleic acid amplification, you described the shift from being a PCR company to being a Digital PCR company. How far through that transition are you?
I'm not referring to American sports because I'm so young, but you would probably say we're not even the first inning, or we're just very early. No, it's early days. qPCR, as we all know, is a EUR 2.7 billion market opportunity. Digital PCR, if you look at all players in the market, are probably around, I don't know, EUR 500 million, EUR 600 million. So there's a lot of way to go, and both markets, of course, growing quite nicely. Just to reiterate what I said before, we had a great start into this year, give more or less close to 20% in Q1, close to 20% in Q2. I don't think the second half will be much different, and that in an environment where CapEx are still quite difficult, right?
Yeah.
Pull-through is adding nicely up. I think we did a great job in really expanding menu. We always had the outstanding machines. I think nobody's questioned that. But for quite some time, we were a bit under par in terms of portfolio. That has changed more or less with last year, so we still continue to expand menu. I think it's paying off quite nicely.
How does the margin profile differ between Digital PCR versus traditional PCR?
Both are good. No question. Again, both are, I would say, a CFO's darling. And actually, it's true for both. It is for instrumentation and consumables, where sometimes instrumentation, it can be a bit more challenging. But here we have both instruments, very healthy margins.
That's great. Maybe moving just to end markets, academic and government, you've said research funding improved in Q2 versus Q1. What are you assuming for academic growth into the second half? Flat or continued improvement there?
I would say our assumption is right now that we have, I would say, an underlying positive impression of the market development, but we do not believe there's any significant uplift. I would really defer that to 2027 when we have more insight how stable the NIH budget, in particular, the discussions around it. Have in mind, we are in a quite, I wouldn't say unique situation because it happens from time to time, but the money is actually being distributed. It's about does the money get spent? That is the confidence which is much more emotional and where we need stability, and I do think that is something. It's hard to influence for a company. It is really something what happens on a larger scale.
Yep. Pharma biotech, how is overall pharma biotech showing up in your order book, and is there a way to sort of parse out between early stage and later stage pharma biotech?
It's clearly an area where a lot of things are happening, right? AI, for example, is a big topic in that environment right now, and you have seen some of our announcement in general. I think it's also here. It's moving the right direction. It's not the single biggest part of our business, but clearly with some momentum.
Yep. Regionally, America's turned positive this last quarter. EMEA was negative. I guess, what drove that reversal, and what are you guys assuming also for China from here going on?
Yeah. Let's start with the latest one. China, for us, is around 4% of total to compare to other companies. I would say it's not as meaningful. We also see a slight improvement in China, but slight improvement means less negative, in all fairness. The good news for us here is we have a quite strong second brand in China. You might recall it's quite unique to Qiagen that in China we have not only the global Qiagen brand, but 2005, we actually acquired our single largest copycat and always kept it separate, own management, own R&D, own production. We clearly can see the difference between the Chinese brand in China and the global brand, and I do think that helps us to hedge some of the impacts, particularly also U.S. companies seeing.
On financials, tariff refund, you noted two-cent EPS benefit for the year is already in outlook with anything more being incremental. Can you maybe walk through the mechanics and timing of those tariff refunds?
Yeah. First of all, the $0.02 is net of customer refunds. That's one thing. We'll see how quickly the U.S. Department of the Treasury pays us, but we are quite sure that happens this year, and if it will be a bit more, even better. Let's see how it goes.
And then maybe just thinking about the pace of guidance through Q3 and Q4. Q3 is expected to grow 1%-2% constant FX, and then growth is expected to accelerate into Q4. Can you maybe just size that step up? How much of that acceleration is the comp on government shutdown and then also just overall sequential demand?
Very good question. Thanks for that. It's an important question as well. You gave part of the answer already by yourself. Have in mind, the difference is actually not too much between Q3 and Q4, apples to apples, because last year, two of the three months was a shutdown, literally in the U.S., so there's clearly a certain impact from the prior year. The second is also what we discussed, and I think Jon was alluding to, we feel quite comfortable on the new product launches right now. Again, it's not only sample prep, it's also sample prep.
Yep.
We have the same thing what we discussed on QIAcuity, same thing what we discussed on QIAstat. And we have still a lot of other business where we launch new products. So we do believe the new product, particularly also the instrumentation placements, goes quite well. That will more or less close the gap of EUR 5 million-EUR 10 million to the step-up. I'm quite sure that is not a big idea for us.
We've about a minute left. Would you maybe just cap off what are your two biggest opportunities for the next year? Two or three, whatever.
Yeah. I think I've alluded to it, right. Organic growth focus, commercial excellence in all its forms. I think there's a pricing opportunity that we haven't talked much about that's very real. I think our sample prep, instrumentation renewal, similarly on QIAcuity as well, and then our menu expansion on QIAstat. At the end of the day, that's about executing on those products that were all introduced this year. So that's priority A as we go into the new year. Of course, we've got to refine the strategy a little bit of the company. We're going through a process. We'll probably have a market stay at some point, think spring, summertime, when we refine that. So those would be my two focuses for now. Do you want to add anything to that?
Perfectly said.
Awesome. That's about all the time we have. So with that, please thanks Jon, Roland, Domenica for the conversation, and appreciate you guys for coming.
Thank you very much. Appreciate it.
Thanks for having us.
Thank you. Cheers. Thank you.
Thank you.
Yeah, welcome. Really appreciate it.