Good day. I'm Melinda, your PGI call operator. Welcome, and thank you for joining Qiagen's Fourth Quarter 2023 Earnings Conference Call Webcast. Please be advised that this call is being recorded at Qiagen's request and will be made available on their Internet site. The prepared remarks will be followed by a question-and-answer session. At this time, I'd like to introduce your host, John Gilardi, Vice President, Head of Corporate Communications and Investor Relations at Qiagen. Please go ahead.

Thank you, operator, and welcome to all of you today who are joining us for this call. We appreciate your interest in Qiagen. Our speakers are Thierry Bernard, our Chief Executive Officer, and Roland Sackers, our Chief Financial Officer. We also have Phoebe Loh from the IR team with us. This call is being webcast live and will be archived on the investors section of our website at www.qiagen.com. You can also find a copy of the quarterly results press release and presentation on our website. We will begin with some remarks from Thierry and Roland, followed by a Q&A session. Before we start, let me note that we are going to have an Analyst and Investor Day on Monday, June 17 in New York. An invitation to the event will be going out in the next few weeks, but please mark this in your calendars. And also before we start, let’s briefly go over our safe harbor statement. The views expressed during this conference call and the responses to your questions represent the perspectives of management as of today, February 7, 2024. We will be making statements and providing responses to your questions that convey our intentions, beliefs, expectations or predictions for the future. These forward-looking statements fall under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. They involve risks and uncertainties, and actual results may differ materially from those suggested by these forward-looking statements. Factors that could influence results are mentioned in our filings with the U.S. Securities and Exchange Commission. These filings are available on the SEC’s website and also on our website. Qiagen disclaims any intention or obligation to update any forward-looking statements. Additionally, we will refer to certain financial measures not prepared following Generally Accepted Accounting Principles or GAAP. All references to EPS refer to diluted EPS. You can find a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measure in our press release and presentation. Now I would like to hand over the call to Thierry.

Thank you, John. Hello and good morning, good afternoon or good evening depending on where you are in the world and thank you once again for joining us. Thank you for your continuous interest in our company, Qiagen. We continue today reporting another solid year, and a strong performance in the fourth quarter. Amid the dynamic macro environment, our teams continued to execute, delivering solid sales and installed base growth. This is a further testament to how our strategy of balance and focus has positioned our portfolios well to expand our leadership in both Life Sciences and Molecular Diagnostics. Let me go through the key messages for today as we dive into the details: First, we exceeded our outlook for net sales and adjusted EPS for the fourth quarter and achieved our full-year outlook. Net sales for the fourth quarter were $503 million at constant exchange rates, which exceeded our outlook for at least $500 million. Our non-COVID base business delivered one of the top performances in the industry with 8% constant exchange rates sales growth over the prior year fourth quarter. This was driven by ongoing strong demand for consumables that accounted for over 85% of total sales. Net sales for the full year were $1.97 billion at constant exchange rates, and this was on point for our sales outlook for 2023. Our non-COVID sales also grew 8% constant exchange rates for the year compared to 2022. Adjusted earnings per share for the fourth quarter were $0.55 at constant exchange rates, above the outlook for at least $0.53 at constant exchange rates. For the full year, adjusted diluted EPS were $2.09 at constant exchange rates and above the outlook for at least $2.07 at constant exchange rates. Our second key message. Our teams executed well to deliver growth and build value in our portfolio, achieving some important milestones in our pillars of growth. First, Sample Technologies capped the year with 6% constant exchange rates growth in non-COVID-related sales and over 1,500 new automation systems placed in the market in 2023. The QuantiFERON latent TB test reached more than $400 million of annual sales for the first time and also had 3 consecutive quarters of sales above $100 million during the year. The QIAstat-Dx syndromic testing platform grew 7% constant exchange rates in non-COVID sales for the full year 2023 and passed several key milestones. Over 1 million cartridges of QIAstat were shipped in 2023 and driven by double-digit constant exchange rates sales growth outside the U.S. Globally, full-year sales of meningitis and gastrointestinal panel doubled compared to 2022. In addition, the fourth quarter saw the highest number of quarterly placements for the year, bringing the total number of cumulative placements to over 4,000 systems. The QIAcuity digital PCR system also performed well, delivering double-digit full-year sales growth at constant exchange rates and met the milestone of over 2,000 cumulative plasma placements. Our third message, we again delivered a high level of profitability as we remain dedicated to investing in research and development. The adjusted operating income margin rose to 28% in the fourth quarter even as we continue to invest in expanding menus and driving innovation in our portfolio with about 9% of our sales going into research and development. And our last point, we have initiated our full-year '24 outlook taking into account the volatile macro environment against the solid trends of our non-COVID business. For 2024, we have set an outlook for at least $2 billion of sales at constant exchange rates and for adjusted EPS of at least $2.10 at constant exchange rates again. Roland will give you more details on our outlook assumptions later in the call. Before I hand over to Roland, I would like to welcome our two new members to our Supervisory Board. In March, Eva van Pelt will be joining the Board, bringing with her extensive experience in our industry. Most recently, Eva served as Co-CEO of Eppendorf, a privately held German Life Science Company, and previously held positions with Siemens, Accenture, Hitachi Data Systems, and Leica Microsystem. A month later in April, Bert van Meurs will also be joining the Board. Bert is currently a member of the Executive Committee at Royal Philips N.V. in the Netherlands, where he's leading their image-guided therapy business as well as the precision diagnosis business. We are pleased to have Bert's industry experience, as well as his knowledge of operating in the Netherlands. They will both be a very valuable addition to our diverse board, and we are looking forward to their contributions. Now I would like to hand over to Roland for a review of our results.

Thank you, Thierry. Hello, everyone. Thank you as well from me for joining our call. Let me first discuss our results for the fourth quarter and the full year and then share some views on our outlook for 2024. As you saw in our press release, net sales for the fourth quarter of '23 were $509 million, up 2% from the year-ago period, even against a substantial decline in COVID-19 revenues. We saw modestly positive currency movements against the U.S. dollar, which helped sales at actual rates. Consumables and related revenues led the performance, rising 10% constant exchange rates for non-COVID product groups. Sales of instruments declined 2% constant exchange rates for the non-COVID product groups in the fourth quarter of '23, signaling the conservative spending environment for capital sales. At the same time, we achieved some important milestones for placements, especially for QIAstat-Dx and QIAcuity as we continue to see good placement trends for reagent rental agreements with multi-year consumable contracts. Overall, sales for the full year showed a decline of 8% against '22, reflecting the drop off in COVID-19 testing, while we delivered 8% constant exchange rates growth in the non-COVID portfolio that represented over 90% of total sales in '23. Looking at the non-COVID growth for the year at 8% constant exchange rates, this included strong performance from QuantiFERON, growing well above our target rate of at least 10% constant exchange rates while also having to absorb the volatility in our OEM business. Taking out both of these factors, non-COVID sales were still up 7% constant exchange rates in '23 over '22. Among our four product groups, the first is Sample Technologies, which represents about 1/3 of total sales. For the non-COVID products, this sales growth was at a mid-single-digit constant exchange rates for both Q4 '23 and for the full year over the same period in '22. Our second product group, Diagnostic Solutions, also represents about 1/3 of sales and delivered mid-single-digit constant exchange rates sales growth in '23. Within this product group, the QuantiFERON TB test continued to capture growth from conversion of tuberculin skin testing to modern blood testing and finished an outstanding year with 24% constant exchange rates growth over '22, achieving more than $400 million for the first time. For the QIAstat-Dx system for syndromic testing, sales faced some headwinds from COVID-19 testing but saw underlying non-COVID sales rising at a solid single-digit constant exchange rates. Results for NeuMoDx, our integrated clinical PCR testing platform also reflected the significant headwinds from the high level of revenues from COVID-19 testing in '22. In the third group, which involves PCR nucleic acid amplification products, sales declined 1% constant exchange rates in the fourth quarter. This was much better than the overall trend during the year with sales for '23 down more than 20% compared to '22. As we have been mentioning, the reason for the sharp drop-off in these sales in '23 has been the volatility in orders from our OEM third-party customers that use our reagents for their own products. An important driver in the PCR/nucleic acid product group is QIAcuity, our group of digital PCR platform. Here, we saw dynamic growth during '23 as our teams exceeded the goal for at least $70 million of annual sales. This growth was driven by increasing consumables pull-through along with new placements especially in the biopharma sector. Genomic NGS is our last product group. This includes our QIAGEN Digital Insights Bioinformatics business and the QIAseq consumables portfolio designed for use with any third-party next-generation sequencer. The QDI business had another solid performance in Q4 and for the full year, delivering double-digit constant exchange rates growth in '23 over '22. In terms of sales on a geographic basis, the Americas delivered mid-single-digit constant exchange rates growth in the fourth quarter of '23 in terms of total sales, with non-COVID product groups rising 9% constant exchange rates over the fourth quarter of '22. We also had a similar trend on a full-year basis with sales for non-COVID products rising 10% constant exchange rates over '22 on the back of solid growth in QuantiFERON and the Life Science portfolio driven by QIAcuity. The Europe, Middle East, and Africa region grew at a double-digit constant exchange rates pace for both the fourth quarter and the full year when excluding COVID-19 headwinds. In terms of COVID-19 sales, the top-performing non-COVID sales countries for the fourth quarter included France, Germany, Italy and the United Kingdom. In the Asia Pacific, Japan region, sales in the fourth quarter were also affected by COVID-19 headwinds from '22. They were also modestly lower over the year-ago period for the non-COVID product groups as well. This was due to the double-digit constant exchange rates sales decline in China where macro-driven demand was weaker than expected in the fourth quarter. For the full year, China sales declined at a low single-digit constant exchange rates over '22, but this was more than offset by higher sales in the rest of the region especially South Korea and India. Let's now review the rest of the income statement. For the fourth quarter, adjusted operating income rose 6% to $142 million from the fourth quarter of '22, and we also generated higher operating income on a reported basis over the year-ago period. This led to an adjusted operating income margin of 28% for the fourth quarter, up from 27.1% in the same period of '22. We delivered this improvement despite the adjusted gross margin falling to 65.7% in the '23 quarter, a decline of about 1.3 percentage points from the fourth quarter of '22. This was due to an adverse change in product mix as well as low utilization levels for some manufacturing capacity that we have built up to support new product launches. We expect the gross margin to improve as we build up sales in these newer products. In terms of R&D expenses, this remained at a high level at 9% of sales and unchanged from the fourth quarter of '22. This was also in line with our '23 goal for investments at 9% to 10% rate. Sales and marketing expenses benefited from improvements in greater focus on efficiency and customer engagement, especially through digital channels. These expenses were 23.1% of sales in the fourth quarter of '23, down about 1.4 percentage points from last year. General and administrative expenses were also less than in the fourth quarter of '22, falling to 5.6% of sales compared to 6.4% a year ago. For the full year, the adjusted operating income margin was 26.9% of sales compared to 30.6% in '22, supporting against a high level of R&D investments while absorbing investments for commercialization. We also faced a lower adjusted gross margin for the year at 66.4% of sales compared to 67.7% in '22, and again, for the reasons outlined earlier. To close out the income statement, adjusted EPS for the fourth quarter was $0.55 at constant exchange rates and above the outlook of at least $0.53 CER. For the full year, adjusted EPS was $2.07 at actual rates, while results at constant exchange rates were $0.02 better at $2.09 due to some adverse currency trends against the U.S. dollar on a full-year basis. As we have mentioned earlier, a key factor in '23 was the non-operating income benefit from interest income due to the significantly higher interest rate environment compared to '22. Turning to cash flow, the 2023 reflects the lower levels of sales and net income compared to '22 as we move beyond the pandemic. Operating cash flow was $459 million for '23 while free cash flow was $310 million. Beyond the impact of lower sales and profitability, we are in a period of higher working capital requirements. This is due to our decisions to maintain a relatively high level of inventories in light of the challenging geopolitical and macro environment. We want to ensure that Qiagen can provide products to customers around the world without disruptions. This trend is also reflected in the ongoing high levels of inventories on the balance sheet. Continuing with the balance sheet, our liquidity position was about $1.1 billion at the end of '23 compared to $1.4 billion at the end of '22. Taking into consideration the recent synthetic share repurchase, which we returned about $300 million for Qiagen shareholders. Our leverage ratio would be about 1.1x net debt to EBITDA compared to 0.6x at the end of '23 and 0.5x at the end of '22. Keep in mind that for '24 we have about $600 million of debt reaching maturity and this builds on having repaid about $400 million of debt during '23 from existing cash reserves. We are reviewing other ways to deploy cash within our disciplined allocation strategy, which has proved its value over the last decade. Given our healthy balance sheet and strong cash flows, we want to continue creating value by investing internally into the business as we see with our announcements about the multiyear investment in the Qiagen Digital Insight business, as well as through targeted bolt-on acquisitions that complement our portfolio. I would now like to hand back to Thierry.

Thank you, Roland. And now, as usual, please allow me to take a moment to go over some of the progress our teams have made in advancing our portfolios. First of all, we continue to build on our leading position in sample technologies with portfolio expansion and installed base growth. It is where we have a clear focus on key growth areas such as microbiome and liquid biopsy. In those areas, our deep expertise gives us significant differentiation. This quarter, as an example, we have again expanded our best-in-class microbiome portfolio with the launch of the RNeasy PowerMax Soil Pro Kit for isolating RNA from challenging soil samples rich in PCR inhibitors. While you have heard companies in our industry talking about challenging trends in instrument demand, our teams all over the world have still made significant progress in the last year in placing new platforms. At the end of 2023, there are now over 40,000 cumulative placements of the QIAcube family and over 5,700 cumulative placements of EZ1 and EZ2, both extremely popular solutions for low-throughput sample prep automation. For higher throughput, there are now over 3,300 cumulative placements of our flagship system, the QIAsymphony. The upgrade for this platform is in development and will include new onboard connectivity elements together with additional features to even better enable high-demand, high-volume applications such as liquid biopsy. In our diagnostic portfolio, we continue to see strong global expansion of our products while also facilitating growth through partnerships. For example, you may have seen the recent announcement of our expansion in the Middle East. This includes an agreement for the QuantiFERON latent TB testing to be used in Oman's new screening program where over 800,000 people will be tested over a span of 2 years. This represents the healthy trends we are seeing in the increase of global latent TB testing and the conversion from the old skin test to the modern blood-based testing. We have also signed an agreement with the Ministry of Health in Saudi Arabia to support their public health and infection control initiatives. In addition to the development of the new national latent TB screening program using the QuantiFERON-TB test, this includes an effort to eliminate meningitis through the WHO program utilizing the QIAstat diagnostic platform. This represents another good example of how syndromic testing is being employed more and more to detect meningitis. In fact, we saw the highest quarterly sales yet for the QIAstat platform for meningitis in Q4 of 2023. Another example, through our companion diagnostic program, Qiagen and Myriad Genetics entered into a collaboration to provide next-generation sequencing and digital PCR solutions to pharma companies for the development of cancer tests. This adds to the over 30 active partnerships we have with pharma companies, where we are one of the only companies to offer development of assays based on all 3 modalities: PCR, next-generation sequencing, and digital PCR. In PCR and nucleic acid amplification, we have launched new kits and software updates for QIAcuity digital PCR to expand capabilities in pharma, biopharma, and food and drug safety. The new kits ensure precise quantification, increased sensitivity, and cost efficiency for applications specifically used by these customers. While the software update further equips QIAcuity to be especially well suited for labs that must meet GMP standards by helping to automate the critical task of documentation for reporting and audit trails. In our next-generation sequencing and genomics product group, we have recently entered into a new strategic partnership with Element Biosciences to offer NGS workflow on their AVITI System. This follows our strategy to offer platform-agnostic next-generation sequencing consumables and bioinformatics solutions. In this way, Qiagen has been systematically partnering with sequencing platform providers to enable the use of Qiagen's QIAseq library prep kits and validated panels as well as Qiagen Digital Insight solutions on a very large range of sequencing instruments. With regards to our QDI, our bioinformatics business, we have made the decision to accelerate our own investments with the goal of expanding this leading portfolio into new geographic regions and market segments. This investment is planned over the next 5 years and will support new product launches and additional expansion of the knowledge bases that are powering our QDI solutions. Also planning this program is the extension of the use of artificial intelligence and augmented molecular intelligence as well as new solutions for rapid NGS analysis in clinical labs. So as you can see, we continue to build value in our portfolio with a strategy that is leveraging our strong global footprint, deep network, and innovation through expertise. And now back to Roland to give you more details on our outlook for '24.

Thank you, Thierry. Let me now provide more perspectives on our outlook for '24 and also for the first quarter. As noted earlier, we have set an outlook for at least $2 billion of sales in '24 at constant exchange rates. This reflects total growth of at least 2% constant exchange rates that includes about 1 percentage point of headwinds as we overcome the last group of COVID-19 sales from the first quarter of '23. This means that we are expecting at least 3% constant exchange rates growth from the non-COVID portfolio. In terms of how we see this year developing like others, we are anticipating a more muted start into the year with a return to solid mid-single-digit constant exchange rates growth in the second half. Additionally, we have been closely monitoring dynamic macro trends and geopolitical risks across the globe as to how they could impact our industry. For China, we continue to take a cautious view and expect a modest single-digit constant exchange rates decline in total sales for the full year. The environment is not showing any signs of improvement yet. At the same time, this is not a market to ignore. We continue to implement our two-pronged strategy by commercializing the Qiagen branded portfolio directly as well as offering a local brand product in China. As we take a step back from '24, our conviction remains strong about the midterm growth perspective for Qiagen in the markets that we serve. This is a topic we will address in our Analyst and Investor Day planned for June 17 in New York. In terms of profitability, we have set our outlook for adjusted EPS of at least $2.10 at constant exchange rates. For the adjusted operating income margin, we are planning for an improvement of at least 1 percentage point for the full year '24 from the '23 level of 27% of sales while continuing to invest in the business to support our business. This includes the investments into QDI business in '24 as we plan to add more than 50 new positions, launch the sales of new products, and expand our global presence. We see these multiyear investments helping to accelerate growth in this profitable business. As we noted in the quarterly report, we anticipate significant pressure from non-operating income, and these factors represent about $0.10 of headwind for '24 results compared to '23. First, adjusted net interest income is expected to be between $25 million and $27 million for '24. This is half the '23 levels of $55 million. The decline is due to the fact that we have lower cash on our balance sheet, along with expectations for modestly lower interest rates during the year compared to '23. The second factor involves our expectations for an adjusted tax rate of about 19% to 20% in '24. This is up from 18% in '23. The increase is due to higher profit share in higher tax jurisdictions as well as countries taking actions to implement the OECD initiatives known as Pillar 2. The Netherlands implemented this at the end of '23. As for currency movements and based on rates as of January 31, we expect a neutral impact on full year net sales, but for an adverse impact of about $0.01 per share on adjusted EPS results. Moving to the first quarter, our outlook is for net sales of about $455 million at constant exchange rates. Keep in mind that this will be a period with significant COVID sales in '23. Adjusted earnings per share are expected to be at least $0.44 per share also at constant exchange rates. I would like to now hand back to Thierry.

Well, thank you, Roland. And we are getting now into the Q&A session. So let me provide you with a quick summary. First, amid the ongoing volatile macro environment, Qiagen has delivered another quarter of meeting or beating our outlook. We exceeded our outlook for the fourth quarter for both net sales and adjusted EPS. We also achieved our full-year 2023 sales outlook driven by top-tier growth in our non-COVID portfolio. Our performance in 2023 definitely shows the relevance and power of our portfolios of solutions to customers around the world and the impact of our strategy. Second, throughout 2023, our teams all over the world continue to execute on our goals to build value in our portfolio, meeting key milestones on sales growth and solid installed base expansion. This includes over 1,500 sample preparation instruments, over 700 QIAstat platforms, and over 700 QIAcuity newly placed in 2023, all fueling strong consumables growth going forward. Third, we again delivered a high level of profitability while also maintaining our commitment to disciplined capital deployment, as you saw with the ongoing high level of R&D research and development investment in 2023, the multiyear investment plan for our bioinformatics business, and the $300 million recently returned to shareholders. And lastly, we have announced an outlook for 2024 that demonstrates the strength of our portfolio amid a challenging macro environment. While we fully acknowledge a shift in the first part of the year 2024, this takes into account the more subdued market demand in the first half given the current condition such as a lack of visibility on funding and conservative spending in labs going into election year in many countries. But we expect a marked improvement as the year unfolds as we return to a strong mid-single-digit constant exchange rates sales growth for the second half of the year. We strongly believe that this sets up Qiagen for solid midterm sales growth and improving profitability. We are, therefore, very well positioned to continue delivering a compelling growth profile in our industry. With that, I now would like to hand back to John and the operator for the Q&A session. Thank you all.

Ladies and gentlemen, at this time, we will begin the question-and-answer session. The first question comes from Derik De Bruin of Bank of America. Please go ahead.

Hi. Good morning. Thank you for taking my question. Just curious, can you elaborate a little bit more on the OEM headwind and sort of, like how you see that coming through for 2024 on what's there. And I know you're going to have an Analyst Day in June. But I think when you look at a more normalized market environment, do you feel comfortable in sort of, returning to mid- to high single-digit consistently constant exchange rates growth rate once markets normalize on a more basis? Thank you.

Thank you, Derik. Regarding, first, the OEM question. As you have always understood, this is a specific business in our portfolio. It's made on very large deliveries, most of the time in bulk to a rather limited number of customers. So you have and we have always disclosed that to the market volatility year-on-year. The average revenue pre-COVID for our OEM business was around $80 million to $90 million. During COVID, it showed up to around $170 million. We are now getting back to normalization, but take into account that in 2023, we achieved close to $100 million with this business. So we expect in '24 a headwind compared to our normal performance of around $15 million to $20 million. This should normalize as the year goes by. Further, starting in '25, you should expect that business coming back to normally $75 million, $80 million year-on-year. To your question of our growth profile, we believe that we are building systematically for the last 5 years, a stronger Qiagen. We have the people. We have the product portfolio to systematically grow above market growth regardless of where that market growth is. So if the market is back to, let's say, mid-single-digit growth profile, we will be there, and we will be able to probably be slightly above that.

Hi, thanks for taking my questions. First of all, this time last year, you mentioned you would be negotiating renewal terms with DSR and for your QuantiFERON partnership. Have these negotiations ended? And is it reasonable to assume you'll be getting slightly better financial in terms of the results? And secondly, looking at the NeuMoDx guidance it seems you're expecting this one to outgrow most of your growth pillars this year. Taking into account your commentary that instrument placements shouldn't recover strongly in the near term. What will drive that significant consumables pull-through increase for these instruments? Thank you.

Thank you, Odysseas. Addressing the second part of your question, regarding NeuMoDx, the growth percentage is starting from a lower base of slightly over $40 million, with plans to exceed $50 million in 2024. This is due to our recent menu additions in the U.S., such as the approval of our CT&G, along with our LDT capabilities which contribute to growth. Additionally, we have around 330 platforms worldwide and significant menu availability in Europe, which we expect will enhance growth from our installed base. However, we are currently assessing the future of the NeuMoDx portfolio and will update you on our evaluations in due time. Regarding DiaSorin, it's important to clarify that since 2023, we have had the contractual option to bring another partner alongside DiaSorin in Europe, starting in 2024 for the U.S. Currently, this partnership with DiaSorin is functioning effectively, as we achieve customer conversions at premium prices. This collaboration has significantly influenced QuantiFERON's performance over the past three years. While we continuously explore opportunities, we believe that this exclusivity is well-justified and beneficial for both parties. Regarding the financials, we consistently work with DiaSorin to optimize the financial arrangements for both sides.

Great. Thank you for taking my questions. So I was hoping that you guys could dig into the 1Q guide a little bit more. Roland, I think you said in the prepared, you're assuming conditions are softer in the first half versus the second half, but you just grew 8% non-COVID in 4Q. So does seem to be a bit off trend. Maybe can you just elaborate on maybe what you're expecting as an OEM headwind in 1Q specifically? And then just as a follow-up, curious on QIAcuity, do you guys think you're taking share there? And maybe can you split out the competitive share gains between pharma and academic if you're seeing particular strength in pharma or if it's more across the board? Thank you.

Yes, there are a couple of key points to note. As we've mentioned, and as is evident from many companies in our industry, the overall macro environment remains challenging. Additionally, we've observed certain trends at Pacific that have become more pronounced over the past several weeks and months. Currently, the capital expenditures for larger projects are proving to be more difficult. We are noticing an increased demand for reagent rentals, while the environment for capital sales is more challenging. We believe this situation is primarily temporary, and we anticipate returning to a more consistent mid-single-digit growth trend throughout the year. However, it's important to note that the environment remains tough. In the OEM sector, we are experiencing a decline in the high single-digit range, with some figures around $8 million to $10 million in the first quarter when compared to 2023. It's also worth noting that historically, from 2016 to 2019, the decline in total revenues from the fourth quarter to the first quarter was typically around $50 million, so this situation is not particularly unusual.

Hello, Thierry and Roland. Thanks for taking my questions.

Hold on. Hold on. I'm sorry, I need to interrupt you. We're going to get back to your question. There was a second half of the question, which was on QIAcuity, which we did not answer yet. So I'm going to take that one, and we go back immediately to your question. Is that okay?

Sure.

Very good. Thank you. So on QIAcuity, yes, we do obviously can see show with our numbers that we are taking share, and we are taking market shares of our competition. Why? First of all, because our technology different from the traditional droplet technologies is more cost efficient and allows faster results. Second, because if you remember, we cover with 3 different instruments, 3 kinds of different throughput needs. Low throughput, one plate; mid-throughput, 4 plates; high throughput, larger plates. We have already developed a menu which is covering applications needed in academia, but also in the pharmacy, also the pharma business sector. This is definitely our main target for the months to come. And this is why you have seen a constant improvement of our digital PCR menu over the last 2 years, dedicated to the Pharma segment. And fourth, why do we believe so much into our digital PCR solution for the coming years as well is that not only can we leverage the growth of those applications in the life science market, but as you know, in 2024, we are going to make it a diagnostic, a clinical solution as well. In the first half of 2024, this platform will be FDA and IVDR approved. And in the second half of the year, we are planning to launch our first assay regulated for onco-hematology application, BCR-ABL. So as we have said since the beginning of the launch of that solution, we believe that we have the team dedicated to the solution to take the number one position in this market.

Okay. I can ask my question now, if that's okay. If you could talk a little bit about China and help us unpack the drivers of the weakness there. My understanding was you had a softer comp in Q4 2022 because of the COVID lockdowns. And from what your peers are saying this quarter, it sounds like a lot of the weakness is down to the Life Sciences market, which I believe is about half your China business. So could you clarify whether the China Diagnostics business is also in decline in the quarter? Just trying to understand the market dynamics within the different customer segments. And I'll leave it there first.

Thank you for your questions. First of all, just to highlight, our Life Science business in China is more than half of our activities for this market. And it is true that the Life Science sector in China is still not as bounced back from the COVID period. At the same time, we have constantly said that China is such a large market that it cannot be ignored. It is a specific market as well, where you need to localize your activities if you want to continue to be selected in many tenders, where the market is also sometimes affected by price constraints, it's what we call the VBP policy. In this regard, we have always said consistently since 2022 that the market will come back very progressively, and we were not expecting a return to growth at least before the end of '24. We believe that we are very well equipped to take a position in this market for three reasons. First of all, the premium brand of Qiagen for the top tier of the labs in China. Second, because to localize our product, we have a research development and manufacturing operation site. And third, and this is probably also very differentiated compared to competition because we have a second brand also in China, fully owned by Qiagen, but operationally independent from our Qiagen activities. They have their own management, their own sales force, and those are products developed in China, manufactured in China, and sold to Chinese customers. So with those three assets, we believe that, as I said before, we can take a position, but at the same time, we always insisted that if pre-COVID we were expecting a normal 10% growth year after year from the Chinese market. Post-COVID progressively, we would expect a mid-single-digit growth. This will not come before 2025.

Understood. And then the second question was just on M&A and your appetite to deploy capital from here given the recent share buyback program. Obviously, M&A activity among your peers has also picked up in the recent quarter. And then just quickly, if you could give us a contribution from Verogen in 2023, just to help us out with our models. Thanks so much.

So on M&A, we confirm our traditional strategy. You see that you know that we have a rich history essentially, especially of bolt-on acquisition. We have always said that we don't want to do M&A for the sake of M&A. We want to do M&A, not to spread the company's fame again. We are constantly working, looking at opportunities that fit in our current portfolio and especially would reinforce our pillars of growth. So it's a very focused M&A strategy. We have also said many times that we are looking at opportunities that could be during a short period of time, dilutive to our P&L but should be in a very visible time frame, accretive. We always said that we give it normally around two years before becoming accretive. And so we continue to clearly look at opportunities. We also said that given the strength of our balance sheet, we could also be looking at stronger or bigger than just bolt-on acquisitions. So this is a work in progress. Once again, what you have to keep in mind, it will have to fit very much into our existing portfolio and existing strategy. As regards to Verogen, we were expecting a contribution of around $20 million for the year 2023, and this is where we landed.

Hi, good morning. Good afternoon, everyone. Thanks for sharing so much on your guidance philosophy for the year. I know there's been a couple of questions on this and pacing. I want to take a different angle. So it's an uncertain time to say the least, and you would have been an outlier if you guided more aggressively in Q1. So to me, while the Q1 guide is lower than what we see in consensus models, I think the good thing is on the surface, it seems pretty derisked, factoring in comments that you've made on OEM headwinds, China dynamics, and how pharma growth is expected to pace in an election year. I guess my question is, where could we be wrong? What's the biggest risk to Q1 as we sit here today? And then looking past Q1, if you don't meet or even beat Q1 expectations, does the rest of the year start to look aspirational because it is really back-end loaded in terms of how you guided relative to the norm? Again, I get it. But again, I wanted to see what the risk is to Q1, if any, and then get your take on what we need to see beyond a strong Q1 to have more confidence in the outlook for the year in terms of you meeting or have been beating expectations.

Thank you, Doug. I can address that question. Regarding risks for Q1, I don't identify any specific portfolio risk. The main concern I would mention, which affects more than just Qiagen, is the overall economic environment. It's important to remember that half of the world is entering election season this year, and we believe that labs are still somewhat hesitant to rebuild their purchasing capacity. This is my primary challenge. Roland's explanation of our 2024 guidance also indicated that we expect growth to accelerate, particularly between the first and second halves of the year. While missing Q1 is not our goal, if it were to be slower, I wouldn’t necessarily view that as jeopardizing our full-year outlook. It would be premature to make such a conclusion. We anticipate a logical sequential improvement in our performance quarter by quarter. Additionally, many of our new product launches expected to contribute to our results in 2023 are scheduled for the second half of the year. We plan to introduce GI for QIAstat in the U.S. in the second half and expect the meningitis QIAstat launch in Q4. We also anticipate seeing significant contributions from our QIAcuity clinical diagnostics in the second half. Those are my views. Roland, please go ahead.

Welcome back. As I mentioned earlier, I've taken a look at the year leading up to COVID, as those figures provide valuable insights into what we observed previously. The revenue and profitability distribution for the first and second halves of 2024 appears aligned with what we experienced in 2016 and 2019. Therefore, I believe this ramp-up is quite normal for the year. Also, I think it's important to reframe what was previously mentioned. While some might view the situation as challenging, I prefer to express that we anticipate a return to normalcy in the latter part of the year. The downturn is primarily in the first half, and if we compare it to the full year of 2013 or even the second half of 2023, we expect a positive shift in the latter part of the year.

Thank you. Good afternoon. My question is on QIAstat-Dx please, which was a little bit slower in Q4 than what we used to from this platform. Can you speak a bit about the dynamics in the fourth quarter also from a regional perspective? And outside of the test menu expansion that you've just referenced, what makes you confident that 2024 will be another step forward for the platform? Thank you.

Thank you, Falko. To clarify regarding the geographic growth, due to the delay in GI registration in the U.S., the majority of the growth for QIAstat is presently coming from Europe, the Middle East, and Asia Pacific. These regions are the primary contributors to QIAstat's success. It is also encouraging to see that even with just one respiratory panel in the U.S., we are continuing to deploy systems and gain market share against competitors, which highlights the strength of our platform. We are confident for several reasons. First, we anticipate that GI and meningitis testing will be available in the U.S. in 2024. By the end of 2024, having the three primary panels for syndromic testing available in the U.S. will significantly enhance the growth dynamics of QIAstat in that market. It’s important to note that North America remains the largest market for syndromic testing. Secondly, we have improved our high-throughput QIAstat solution, known as QIAstat rise, and will be relaunching it in 2024, both in Europe and the U.S. In summary, as we stated during our last Investor Day on December 8, 2020, QIAstat has a double-digit growth potential, and we are on track to secure the second position in that market. While claiming to be number one in syndromic testing would be purely aspirational, our goal is to position QIAstat to genuinely become the number two player in that sector, and we are committed to achieving this objective.

Good morning. Thanks for taking my questions. Just one for me. Just can I appreciate the capital equipment environment you guys outlined in relation to the guidance in Q1 and '24. But maybe just on the level of recurring revenue that you have and a lot of that is expressed in Sample Technologies. Could you maybe just give us a little bit more color on the cadence and your view on Sample Technologies over the course of the year? You obviously gave a full year guide for that business, but I would just love to understand how the cadence of that business is going to do over the course of the year, particularly in Q1 and then the back half of this year.

I think as we described for the rest of the business, we expect a sequential acceleration here as well. Taken if you especially consider the purely non-COVID part of that Sample tech business, we will be completely aligned with the guidance once again that we gave on December the 8, 2023, which is between low to mid-single digits. We were very close or slightly above mid in 2023. We expect to be slightly lower this year, but still in that guidance of mid to low single digits. Third, Sample tech is definitely the portfolio where, in addition to our current leadership, we want to continue to be on the attack. And what I mean by this is that not only are we the only company, which has systematically upgraded its instrument for the last 3 years, QIAcube becoming QIAcube Connect, EZ1 becoming EZ2, every time with new features. As we said today, again, we will launch an upgraded version of QIAsymphony, our platform, by the end of 2025. And we are also planning new development in Sample tech automation that we will probably disclose during our Investor Day on June 17.

Thank you, Thierry. And with that, I'd like to end this call. If you have any questions or comments, please don't hesitate to reach out to Phoebe and me, and we're always available to help you. Bye-bye.

Ladies and gentlemen, this concludes the conference call. Thank you for joining, and have a pleasant day.