Ladies and gentlemen, thank you for standing by. I am Katie, your call operator. Welcome, and thank you for joining QIAGEN's Q3 2024 Earnings Conference Call Webcast. 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.

So thank you, operator. And thank you to all of you for joining us for our quarterly results call. We're pleased to have you with us and appreciate your interest in QIAGEN. This call is being webcast live and will be archived in the IR section of our website. You can also find a copy of the quarterly results, press release and the presentation on our website. Now I'd like to remind everyone that we will be discussing forward-looking statements on this call. Actual results may differ materially from those projected in any statements that we make. The factors that could cause our actual results to differ materially are discussed in our most recent Form 20-F on file with the SEC and also available on our website. In addition, we will be referring to certain financial measures not prepared following generally accepted accounting principles or GAAP. We believe these non-GAAP measures provide useful information to investors. You can find a reconciliation in our release. All references to EPS refer to diluted EPS. So Thierry Bernard, our Chief Executive Officer; and Roland Sackers, our Chief Financial Officer, will start with some remarks on the key initiatives for the quarter, followed by a Q&A session. With that, let me hand over the call to Thierry.

Thank you, John. Hello, and good morning, good afternoon or even good evening depending on when you are in the world, and thank you for joining us. I'm very pleased to share that our teams have once again exceeded our targets and delivered another solid quarter of results. Thanks to our heavily recurring revenues, which represent over 85% of our sales, we are very well on track to achieve our goals for 2024 in this still challenging macro environment. I want here to recognize the impact of our outstanding QIAGENers. But before we get into the performance of quarter three, let me take a moment to celebrate some truly remarkable achievements. 2024 is another year where our QIAGEN customers were awarded Nobel prizes for their invaluable contribution to advancing science and improving healthcare. This is a real testament to the impact of our customers on our daily lives. As we celebrate our 40th anniversary in 2024, we are more committed than ever to delivering the highest quality product that will support future Nobel prize winners in helping to make improvements in life possible. So now let me highlight our key messages for Q3. First and foremost, we exceeded our outlook for sales and adjusted earnings in the third quarter. We delivered $502 million of sales in the third quarter, representing 6% growth at constant exchange rate. This exceeded the outlook for at least $495 million at CER. Growth excluding the NeuMoDx franchise was also 6% CER. To be noted, we saw a 10% growth in our Diagnostic Solutions product group. Consumables and related revenues grew 8% CER over Q3 of 2023 and contributed 89% to our sales. We continue to see cautious customer spending on instruments and those sales declined 9% CER. Adjusted diluted EPS were $0.57 and results at constant exchange rates were $0.58 and this was $0.03 above our outlook for at least $0.55. Second key message, we achieved several important product launches and key milestones. This positions QIAGEN strongly for future growth as we set our ambitions towards delivering on our 2028 commitment. As a first highlight, QIAstat had a very strong quarter with 40% CER sales growth driven by increasing demand worldwide and more than 150 placements of instruments in the third quarter. We have now received four FDA clearances for QIAstat panels and this includes the announcements just this week of the clearance for the meningitis/encephalitis panel. Let me here express my appreciation to our QIAstat team for this tremendous accomplishment. But we are not done yet on our menu expansion plan. In September, we also received new approvals in Europe under the new IVDR regulations for the QIAstat instruments along with the respiratory and gastrointestinal panels. Across QIAGEN, we now have over 80% of our regulated product transferred to this new and more rigorous regulatory framework. Building on the success in syndromic testing, we are also expanding the ecosystem for QIAstat into precision medicine, QIAstat as the only syndromic system endorsed by a pharmaceutical company. And we have signed a number of pharma collaborations to use this technology in precision medicine applications. Most recently, we announced collaboration with AstraZeneca and Eli Lilly. The goal is to provide QIAstat tests to help guide treatment decisions for various chronic diseases with AstraZeneca and also new tests for Eli Lilly for using diagnosis of Alzheimer's disease. If we move now to the QIAcuity digital PCR system, we have also seen significant progress. A key development was the addition of 100 new validated assays to support our customers in areas, such as cancer research, inherited genetic disorders, and infectious disease surveillance. We can now offer well over 2,400 different high-quality assays developed specifically for digital PCR that are accessible to our customers through our online GeneGlobe portal. Another key development in digital PCR was creating a version of QIAcuity for clinical applications. The first placements have been made after the FDA approval in September of QIAcuity Diagnostics. A four-plate version designed specifically for clinical customers and with an initial focus on oncology. QIAcuity diagnostics offers many capabilities that make it a better solution for customers against QPCR or next-generation sequencing. It is very well suited for monitoring cancer progression and supporting clinical decision-making in a very meaningful way. And now we continue to build out the application portfolio for QIAcuity diagnostics. Turning now to the third key message. We again delivered a significant improvement in profitability and free cash flow. Our adjusted operating income margin improved by 3% to 29.6% of sales from the third quarter of 2023. This came from a combination of factors, including efficiency gains across the business as well as the decision in June to discontinue the NeuMoDx system by 2025. In terms of free cash flow, here we saw a 73% increase to $364 million in the first nine months of 2024. Last, we are reaffirming our full-year '24 outlook for net sales and we are increasing our target for adjusted EPS. The net sales outlook continues to be at least $1.985 billion at constant exchange rates. This takes into consideration the solid base business performance to date in 2024 as well as the reduced sales expectation for NeuMoDx and those are tracking as we had expected for '24. We have increased our adjusted EPS target to at least $2.19 from the prior outlook, which was $2.16 also at CER. Last, I would also here like to mention a change in our Executive Committee. Jonathan Sheldon, our Head of the QIAGEN Digital Insight business has stepped down from his role. Let me express our appreciation to Jonathan for his many important contributions to developing our bioinformatics business and we wish him all the best in his future endeavors. Those of you who attended our Capital Markets Day in New York had the chance to meet Dominic John from our QIAGEN Digital Insights team and I'm looking forward to working with him and the rest of the QDI team. So as a quick summary, our teams are committed to delivering on the goals for 2024 in a challenging macro environment. Doing so will position QIAGEN for further profitable growth in 2025 and put us on the course to achieve our midterm targets for 2028. I would like now to hand over to Roland for a review of our financial results.

Thank you, Thierry. Hello, everyone. Thank you as well from me for joining our call. We are pleased to report strong financial results for the third quarter. Let me give you four key figures to highlight that performance: a 3 percentage point improvement in adjusted operating income margin to 29.6%; an 18% increase in adjusted operating income; an 11% rise in adjusted net income compared to the same period last year; and a 73% increase in free cash flow for the first nine months of '24 to $364 million. Looking ahead, we are confident in our ability to achieve our full-year targets. We have reaffirmed our outlook for net sales of at least $1.985 billion at CER and we increased the adjusted EPS target to at least $2.19 at CER. This is up $0.09 from the outlook we gave in January. Let me now give you some additional insights into our results and sales trends from the quarter. In terms of sales, we saw higher sales in the sample technologies, diagnostic solutions, and PCR product group over the third quarter of '23, while sales in genomics NGS group were unchanged. In sample technologies, we saw 1% CER growth over the year-ago quarter, driven by demand for consumables, in particular, kits used on our instruments and automation systems. This growth trend is coming from the launch of upgraded systems, in particular, QIAcube Connect and EZ2 Connect. We are preparing for important new system launches in '25 and '26 and we expect this to drive further growth. In Diagnostic Solutions, sales rose 10% CER and were led by the strong growth in the QuantiFERON TB test, which marked the sixth consecutive quarter of sales above $100 million. QIAstat-Dx grew at a dynamic 40% CER pace, thanks to significant double-digit sales gains in consumables and also double-digit growth in instrument sales. We are seeing growth across all regions and are on track to exceed the '24 sales goal of over $100 million in revenues and also deliver on our target for over 600 new system placements for the year. In the PCR product group, we saw double-digit CER growth in various consumable kits. This was especially the case for consumables used on the QIAcuity digital PCR system where consumable sales grew at a very strong double-digit pace and we are on track for an overall double-digit sales growth in '24 over '23. But like others, we continue to see cautious spending by customers on new instruments. At the same time, customer interest is strong and we are confident in future growth opportunities in the Life Sciences and also increasingly in clinical healthcare with the recent launch of the QIAcuityDx version. In the genomics NGS product group, sales were unchanged in the third quarter of '24 over the year-ago period. We saw improving trends for sales of universal kits that are used to prepare samples for processing on sequencers. Sales in the Digital Insights business declined at a low single-digit CER rate. This was due mainly to the transition of customers, particularly in the pharma industry from longer-term license agreements to Software as a Service or SaaS subscription contracts. But we saw good growth in our clinical business and the midterm growth trends are clearly in favor of QDI given the growing levels for genomic data being generated by our customers. In light of that potential, we are planning to host a virtual deep dive event for you in December to share more perspectives on the QDI business. Further information will be announced soon about this online event. Let's now move to results for the regions. We are investing to strengthen our international presence and this was reflected in results for the quarter. In the Europe, Middle East, Africa region, sales rose 8% CER. The top performing countries included France and Italy and we are seeing the contributions from our expansion initiatives in the Middle East. In the Americas, sales rose 6% CER over the third quarter of '23 with solid growth in consumables that more than offset lower instrument sales in light of the cautious spending environment. In the Asia Pacific, Japan region, sales were down 2% CER in the third quarter. China continued to decline at a high single-digit CER rate over the year-ago period. The challenging market conditions continue in China and we are cautious in predicting a path to recovery. However, it's important to note that China only made up about 5% of our sales in the third quarter. The rest of this region delivered single-digit CER growth, thanks to our business expansion in Australia, Japan, India, and Singapore. Let's now review the rest of the income statement for the third quarter. As I mentioned earlier, adjusted operating income rose 18% to $149 million. Key contributors to the improved operating margin were across all lines in the adjusted gross margin as well as lower levels of R&D investments and SG&A costs as a share of sales over the year-ago period. The outcome was the adjusted operating income margin increasing 3 percentage points to 29.6% of sales. These results underscore our commitment to solid profitable growth while also freeing up resources to reinvest into targeted growth opportunities. The adjusted gross margin was 66.5% for the quarter and an increase of 40 basis points from the third quarter of '23. The biggest contributor was QIAstat-Dx, which had a favorable impact on the consumable product mix, and we also had benefits from higher production capacity utilization. Additional contributions came from the sample technology consumables business and QIAstat Digital PCR. R&D investments were 8.9% of sales, down about 1 percentage point from the year-ago period. In particular, the stop of R&D projects in NeuMoDx has been driving this decrease. Sales and marketing expenses declined about 1.2 percentage points and this was mainly due to effective cost management through our efficiency programs. At the same time, we are stepping up targeted investments into our pillars. General and administrative expenses were steady at 5.9% of sales as we maintain a high level of IT and cybersecurity investments combined with efficiency gains. Regarding the restructuring cost for NeuMoDx and related projects, we continue to expect total charges of approximately $400 million and for about 75% to be noncash. The bulk of this charge came in the second quarter results with a pretax charge of about $350 million, of which 80% involved noncash items. We incurred about $60 million of additional charges in the third quarter and expect about $20 million to $25 million for the fourth quarter. Some remaining charges may come in the first half of '25 as we complete the program. As for adjusted EPS, reported results were $0.57 while results at constant exchange rates were $0.58 and $0.03 ahead of the outlook for at least $0.55. This confirmation of solid profitable growth enabled us to raise the full-year outlook by $0.03. The adjusted tax rate was 20% and above the estimate for about 19% while the average number of diluted shares at 224 million was in line with our expectations. Turning to cash flow. We are pleased to see continued improvements in our results for the third quarter. Operating cash flow for the first nine months of the year increased by an impressive 56% to $482 million over the same period in '23. This is even after absorbing payments related to restructuring decisions. We have seen a steady improvement in working capital, which has decreased by about $198 million and stood at 6.4% of total assets at the end of the third quarter and down from 9.8% at the end of '23. Accounts receivable have also fallen by about 10% since the end of '23 and stood at 55.5 days at the end of September. Another contributing factor to the improved cash flow was a reduction this year in inventories by about $80 million since the end of '23. Free cash flow for the first nine months of '24 grew at a faster pace than operating cash flow rising 73% to $364 million compared to the same period in '23. This is particularly impressive given the increase in CapEx levels. This primarily went towards software development and, in particular, the upgrade of our SAP system. So we are on track for solid cash flow trends in '24 and even after including the charges related to the NeuMoDx decision. As for our financing, we raised about $500 million in September through the issuance of a new net share sale convertible bond due in 2031 with a 2.5% coupon. This successful offering received robust demand, reflecting investor confidence in our future growth prospects. The proceeds will be used to support our strategic growth initiatives and also to repay upcoming debt obligations. We have $500 million in convertible notes reaching maturity in the fourth quarter. We also expect to repay another $500 million in '25 due to an early redemption option for convertible notes reaching maturity in '27. With that, I would now like to hand back to Thierry.

Thanks a lot, Roland. I want to take a moment to talk about the progress our teams have made across our portfolio. Firstly, regarding sample technology, we are broadening our collection of advanced applications in various areas, including liquid biopsy. QIAGEN is a leading provider of liquid biopsy sample preparation solutions and uniquely offers all three key technologies: circulating tumor DNA, cell-free DNA, and exosomes. Our portfolio has been essential for our customers for many years, initially benefiting those in research studying different types of cancer and other diseases, and now increasingly supporting commercial labs worldwide that provide liquid biopsy tests. Many of these labs are prominent names recognized as leaders in this field. We are reinforcing our leadership by expanding our portfolio to include urine samples, beyond our initial focus on blood samples. In our joint venture with Becton, Dickinson, we recently introduced the PAXgene Urine Liquid Biopsy sets. This new kit meets critical needs for collecting, processing, and storing DNA from urine samples for analysis. Key applications in both research and clinical healthcare include detecting markers for minimal residual disease analysis to monitor treatment responses and identify therapeutic targets. We continue to innovate in this area to enhance the use of liquid biopsy, particularly to improve precision medicine and facilitate the tailoring and monitoring of treatments for better patient outcomes globally. Now, regarding QuantiFERON, our test for detecting latent TB continues to play a vital role in the global fight against tuberculosis, which is on the rise and has again become the world's leading infectious disease killer, overtaking COVID-19. According to the WHO Global Tuberculosis report for 2024, released a few weeks ago, there were 8.2 million new TB diagnoses in 2023, marking the highest number recorded since monitoring began in 1995. This also represents a significant increase from the 7.5 million new cases reported in 2022, reflecting the impact of limited testing during the pandemic. We utilized our expertise and resources during this resurgence of the world’s deadliest infectious disease by hosting the Global TB Summit in London in October, our fifth annual event, attracting over 10,000 participants through a hybrid of in-person and virtual sessions. Detecting latent TB is crucial, as it's estimated that one in four people worldwide tests positive, potentially leading to new active TB cases. Given that skin tests still account for over 50% of the global market for annual latent TB testing in regions like the US and Europe, the growth potential for QuantiFERON is significant. To boost conversion from skin tests to our QuantiFERON latent TB test, we are already involved in national screening programs in more than 15 countries. We are on track to exceed our sales target of at least $450 million in 2024, with ongoing conversion from skin tests and overall market growth contributing to midterm growth. We are also initiating a new growth avenue with the QuantiFERON test for Lyme disease detection in partnership with DiaSorin, and are awaiting an FDA decision as we prepare for the 2025 testing season. Across the QIAGEN portfolio, it's clear our company is in a strong position, and we are actively working to enhance our competitive advantage. Now, I’ll hand it back to Roland for details on our outlook for the year.

Thank you, Thierry. Let me now provide more perspectives on our updated outlook for '24 and also on the fourth quarter. We have reaffirmed the outlook for full year net sales of at least $1.985 billion at CER taking into consideration the solid growth in our base business and reduced sales from NeuMoDx after the decision to discontinue the system. For the fourth quarter, we have set an outlook for net sales of at least $520 million at CER, an increase of about 2% CER from $509 million in the fourth quarter of '23. This includes a headwind of about 1 percentage point from the NeuMoDx decision. So in effect, underlying 3% CER growth over the fourth quarter of '23 leaving the second half with a growth rate of 4% to 5%. This confirms our expected acceleration and year-on-year growth rates for the second half of '24 compared to results in the first half of this year. On adjusted earnings per share, our updated outlook for the year is for at least $2.19 at CER and another upgrade based on the significant improvements in profitability. Remember that this compares to an outlook at the start of the year for adjusted EPS for at least $2.10 CER as we double down on our commitment to solid profitable growth. Adjusted earnings per share for the fourth quarter are expected to be at least $0.60 per share also at CER compared to $0.55 in the fourth quarter of '23, so another good improvement. As for the impact on currencies, based on recent movements, we do not expect any change from what we announced at the end of the second quarter. We are expecting an adverse impact on full year net sales were about 1 percentage point and an adverse impact of about $0.02 per share on adjusted EPS results. I would like to now hand back to Thierry.

Thanks a lot, Roland. We are coming to the end of our call. So let me summarize our key messages for today, and then we'll move into the Q&A session. First, we had a very solid performance for the third quarter that exceeded our outlook on net sales and also on adjusted earnings. Despite the quite challenging macro environment and cautious spending among customers on instruments, our heavily recurring revenues at over 85% of sales continue to deliver solid growth. We were especially pleased with the performance of our sample technologies, diagnostic solutions, and PCR product groups. We also saw the innovation power and commitment to efficiency in our teams through a steady number of new product launches with an improved adjusted operating income margin at 29.6%. It is fair to say that QIAGEN is delivering on its target on sales, is delivering on profitability, delivering on cash flow generation, and on product development. This makes us confident in achieving the updated outlook for '24 and positioning our company for more solid profitable growth in '25 and the years ahead. And with that, I'd now like to hand back to John and the operator for the Q&A session.

We'll go first to Patrick Donnelly with Citi.

Thierry, maybe on QuantiFERON, another nice double-digit growth quarter here. Can you just talk about, I guess, the drivers, the sustainability of this type of growth going forward? The competitive landscape certainly seems to have quieted down from our perspective. Obviously, there's some noise over the last few quarters, but no impact clearly to your business. So maybe just talk about what you're seeing again, the growth going forward? And then I have a follow-up after that.

Yes, you have seen another double-digit quarter, highlighting the sixth quarter above $100 million revenues. The main driver for us remains the same. We are very coherent; we have a fantastic potential to convert skin tests, which still account for more than 50% of this market. It's an antiquated technology and QuantiFERON in its blood format offers value to our customers. Second, the partnership with DiaSorin gives value to customers as well. We continue to convert traditional QuantiFERON customers to DiaSorin but we also are adding the QuantiFERON test to the DiaSorin installed base. It's a successful partnership. And anytime we convert the customers, we can do it at a premium price. And third, thanks to many years of publication, proof of our technical efficiency, and medical education, we are converting more and more countries to have latent TB testing in their guidelines against tuberculosis. I would highlight that, Patrick, as the three key drivers. We believe that it's a sustainable growth ahead of us but you have seen in our Capital Markets Day that we announced an objective of $600 million in revenues for QuantiFERON by the year 2028, which gives us a projected 6% to 7% CAGR for the coming years.

And then maybe just as we're kind of turning eyes towards '25 here, I know the closing remarks there, you kind of highlighted it should be another healthy year. Can you just talk about the moving pieces, both on the revenue, and then maybe Roland can chime in on the margin piece, high level as we think about next year? I mean, any reason why you guys wouldn't be kind of in that high end of the mid single-digit type range next year on the revenues? Any headwinds we should be aware of, and then the same question on the margins for Roland?

And starting with the top line and then Roland on the margin expansion. I mean if you look at the paradigm of our growth pattern in '24, Patrick, you see that acceleration and we forecasted it, we disclosed that the acceleration in H2. If you look at the overall H2, we're going to be between 4% to 5% growth. We have momentum in some portfolios. QIAstat, as we highlighted, QuantiFERON, sample tech is back on growth. And we have, as Roland said, new instruments coming up in '25 and '26. Digital PCR, we have very differentiated solutions and consumables are growing very well. We had, in the last three years, the fastest growth of the installed base in digital PCR. Roland said that our QDI bioinformatics business was going to transition, but the fundamentals of the business are very solid. More NGS testing, more oncology testing are calling for more bioinformatics analysis. So I'm trying to express that the growth pillars of QIAGEN are leveraging good market opportunities, differentiations, and features of our menu expansion. With that in mind, I believe that with the performance of 4% to 5% growth in H2, we are well on track to continue on a very decent growth for '25 and to achieve our 7% CAGR '24 to '28 as said in New York in June 2024.

I can add to what Thierry mentioned. We have observed a significant increase in profitability in the latter half of the year compared to the first half, and I strongly believe this trend will persist into the fourth quarter, with margins expected to be higher than in the third quarter. We are on track to achieve at least 28.5% for the full year 2024 as previously indicated. It's crucial to understand the composition of this, as the discontinuation of NeuMoDx had a significant impact. Most of the margin improvement expected will show in the first half of the year 2024, while a portion, possibly one-third, is directly related to IVD impacts that are reflecting in this year's numbers. Other improvements will contribute more to the 2025 figures, as we are still assisting our customers. We have a lot to manage, which will likely extend into the middle of next year. Additionally, we are continuing our efficiency improvement program launched a few quarters ago. We are identifying opportunities across the company to empower decentralized organizations, leading to several efficiency gains that are currently driving margin improvement. We are committed to this path, and I anticipate continued margin enhancement next year.

Firstly, could you give us a bit more color on the QIAstat placements since the GI panel launch and the mini panel launch? What share of these placements have been competitive, was there an acceleration since last quarter? And could you also share what part of these placements were placed on reagent rental contracts? And then I have a follow-up.

I want to start by highlighting that Q3 showed impressive results, with over 150 QIAstat placements, outpacing our competitors. While I wouldn't attribute this solely to the GI approval, it's essential to recognize that the US remains the leading market for syndromic testing and continues to grow. Currently, QIAstat offers a minimal menu that includes respiratory, GI, and meningitis tests to stay competitive. Additionally, we are introducing a mini panel for respiratory in the US and will soon roll out a mini panel for GI, further strengthening our momentum. In terms of placements versus capital sales, we’re aiming for a balance of 50% placements and 50% capital sales across the region. Importantly, we have been performing well in Europe and other regions even before the US and QIAstat came into play, and as we move into 2025, we are becoming more competitive in the US market. This gives us confidence in achieving our commitment made in New York in June, targeting revenue of $200 million by 2028.

And a quick one on capital deployment. So is larger M&A still likely as you were talking about earlier in the year or is there more of a bias towards buybacks?

I mean we are extremely active on both fronts. You have seen us active on buybacks at the beginning of the year. I think the main question for us is what is best for our shareholders at a given time. We have a very solid balance sheet. We have taken a commitment once again in New York that absent any significant M&A, $1 billion return to shareholders until 2028. We are still committed to achieving that. At the same time, QIAGEN is on the hunt for interesting value creation accretive M&A to reinforce our portfolio and we see M&A as an option to increase the growth potential of our portfolio.

Thierry, maybe one for you to start out just high level. As you think about sort of the mix of growth that you've achieved over the past year, QuantiFERON has obviously been a significant driver. And as you talked about sort of the long-term normalization of that growth closer to 6 to 7. How are you thinking about the mix of the portfolio to drive incremental growth as QuantiFERON normalizes a little bit? I'm assuming it's a combination of QIAstat, QIAcuity and QDI, but I would just love to hear how comfortable you are with the portfolio mix to continue to drive that incremental growth if we get that normalization in QuantiFERON?

Yes, you are perfectly right, and thanks for the question. And I would refer you to what we presented in New York in June. We continue to believe in focusing and focusing on growth opportunities where we believe we can either reinforce leadership or take substantial market shares, reinforce leadership, it's sample tech and QuantiFERON, take meaningful market share. It is digital PCR, QIAstat syndromic testing and QIAGEN Digital Insight, our bioinformatics portfolio. And we gave you very precise data back in June. Sample tech, we believe we can achieve above market growth, 2% to 3% CAGR in the coming years because our strategy to invest in automation has paid off until now. Roland alluded to EZ2 success in Q3, to QIAcube Connect success in Q3. And we are going to launch three new instruments between 2025 and '26. QuantiFERON, we have explained the driver behind our expectation, conversion from skin tests. And we believe that by 2025, we will have Lyme approved together with our partner in the US; it's a differentiated assay. The success of Lyme will be conditioned by the success on the US market. QIAstat, and we said we gave a target of 6% to 7% to achieve $600 million for QuantiFERON by 2028. Then we said we believe we have a very leadership solution for digital PCR, strong growth in installed base, movement from the life science to clinical diagnostics. We are going to invest in more R&D, in more people on the field. We gave a target of $250 million by 2028. It's a significant double-digit growth, but the market is growing. The power of digital PCR versus QPCR or NGS is becoming more and more recognized. QIAstat, as I just said, we have a very precise plan for menu expansion. If you remember, direct identification of positive blood culture next year. Complicated UTI, a very differentiated assay because none of the competitors have it in their portfolio or their plan and pneumonia. In addition to that, our high-throughput system, QIAstat Rise will be approved in the US. That justifies our confidence to grow double digits and achieve $200 million by 2028, which proves what we said for the last three years, we will be a very solid number two in syndromic testing. QDI, Roland explained that we are transitioning our business, we follow the needs of our customers towards a more SaaS business that doesn't change the interest of the market. So investing for a double-digit growth on QDI and reaching $200 million by 2028 is still what we consider a realistic ambition, of course, but realistic objective. Those will be the mix of our growth. That doesn't mean that other parts of our portfolio will not grow. We are still very confident in our positioning in next-generation sequencing chemistry. We are still very confident in our positioning in forensic activities. And this is how we see the coming four years and starting with '25.

Roland, regarding your operating margin performance this year, you provided guidance in June indicating greater than 31% by 2028. It may be too early to reassess that, but I would like to understand the progress you've made, which seems to be exceeding your expectations. How are you considering the 2028 operating margin target based on this foundation as we approach the end of 2024?

No, it's a very fair question. And I would agree with what you just said that we clearly made good progression. And I do think and I shared it before that I also see, and we at QIAGEN see that we have a high confidence that the same is going to happen also in '25. So I wouldn't be surprised that at some point in time, we have to revisit that target in a positive way. But as you said, also, it's way too early.

So your stock has been stuck in a range for years. You've been underperforming the group and the market for a while. You're clearly not being rewarded for increasingly solid execution. This was a good quarter and it's not the first one this year. So with that in mind and keeping in mind the stock trades at a material discount to probably anything I can plausibly see you acquiring. I know you said you're going to return $1 billion to shareholders by 2028. We're aware of what you said at the Capital Markets Day and again, what you're saying today. I guess my question is like why not get going now? Like what are you waiting for? If you believe in your LRP, if you remain confident that competitive concerns are really just noise and it sure seems like you do. Why not bet on yourself and get more aggressive with the buyback as quickly as possible at this valuation?

Doug, it's an interesting question, and we can take it both, Roland and I. We never said that we wouldn't. We clearly signaled in New York that another one could come quite quickly, '25. Once again, it's always a question of the right moment and the best value creation. On the material discount and your first comment, I would just say, obviously, we look at the share price. I remain convinced that continuing to be extremely humble and executing quarter-after-quarter will pay off, demonstrating that the value of our portfolio is solid. So it's about execution and delivering not only on the top line but also on the operational efficiency, and then it will pay off. That's how I could address your question. But Roland, you might want to add something here.

Again, I would say we are very consistent with our share buyback policy since 2012 where we started. And as you know, typically, we started with $100 million incrementals per year, we just more or less in the last two years stepped it up now to $300 million incrementals, and you know that we have another $300 million incremental approved. So I would say there are opportunities for us and I would say it's also fair what you said, given also our cash flow, we have clearly the opportunity over time to step that up. So it's a fair question. And if we continue that way, it's an opportunity.

Building on a question regarding operating expenses, I won't go through every variable, but it was a strong margin quarter. NeuMoDx is now contributing, which will positively impact margins. You've discussed various ways to optimize processes, and while we won't return to normal next year, we will be much closer than we have been for some time. I understand you prefer not to revisit multi-year targets, but considering those optimization methods and the relative efficiency we've achieved in operating expenses over the past couple of years, is there anything I should consider as we assess the margin outlook for next year and the potential for significant incremental improvements?

I believe we can address this again. As Roland mentioned earlier, there are opportunities for improvement compared to the targets we set in June. However, I want to emphasize that our profit and loss statement is already quite strong compared to our competitors. We have demonstrated our commitment to operational efficiency, and you can see the results. This involves not only decisions like NeuMoDx but also better site utilization and optimizing our site network. You may have noticed our decision to move the San Diego operations for Verogen to Germantown or Frederick, which is a significant effort to reduce costs. The improvement in QIAstat's cost of goods has greatly contributed to our margin improvement in Q3, thanks to our focus on quality purchasing and procurement, along with streamlined end-to-end processes. Our investment in upgrading our ERP to SAP HANA will prove beneficial. It is likely a stronger investment than many companies are making in digital initiatives. So, while there are opportunities, let’s focus on delivering the numbers we provided first before we consider what comes next. Roland, do you have anything else to add?

I believe that looking at things from a different angle shows that we are experiencing certain developments occurring much quicker than we anticipated. We have recently received four approvals for QIAstat in just a few weeks, which is excellent news. This progress allows us to reassess some of our research and development projects and possibly speed up certain initiatives, as there are several areas currently performing well. I also want to emphasize that we expect to see significant margin improvement in the fourth quarter of next year. Regarding the question posed by Matt earlier, the 31% figure will need to be reviewed at some point.

My first one is on the QDI business where you called out a low single-digit decline. What portion of your sales is subscription versus licensing today and was the shift to subscription already happening before but accelerated in the quarter? And how does this shape your view around the growth ambitions for QDI versus what you communicated at the Capital Markets Day, I think 15% growth in 2028?

It has not happened just overnight. It's a trend; we listen to our customers, especially our pharma customers, the biggest customers, and this is the evolution they want. It doesn't change the volume of the contract. It changes the way we recognize the revenues over time. The interest for our solutions has not decreased. If you look at the performance of QDI clinical, it was very much growing. It's a bit softer in research and academia, but because research and academia is a bit softer these days, it will pick up at a point as well. So long story short, we are accompanying our customers in their also model evolution, listening to them. It's the good thing to do, I think. It's not changing the nature of the volume of our contract or the interest in our portfolio. And therefore, our ambitions to achieve $200 million by '28 are not changing. We are number one. But never forget, compared to competition, we are profitable, number one. It's accretive also to our P&L. And this is something also that we need to highlight. It's a profitable business for QIAGEN. It's not the case in the rest of the market.

And then my second one was on QuantiFERON. So keen to get your updated thoughts on signing a secondary distribution partner. Just what would be the biggest hurdles to signing on a new partner? Is it the right instrument, the right licensing terms? Because partnerships are not foreign to you; you've got partnerships with Astra, Lilly, McKesson. It's not like you've not done this before. If you could talk through your considerations there, that would be great.

As we have said many times, we are remaining open to different options. The first thing that we want to highlight and it is important is that the partnership with DiaSorin works well and has proven to be efficient. By contract, we now have the right to add one new partner per geographic region where we are together operating with DiaSorin. We review options; installed base would be a criteria, real willingness of a would-be partner to invest. We need to show also commitment of that would-be partner to invest into the business in market creation, in demand creation. So basically, we are in the best of many worlds at the moment at QIAGEN. On one hand, we have a very successful partnership. On the other hand, we have options to take potentially other partnerships. We'll see; time will tell.

I want to follow up on sample prep, which I think has just touched on a little bit. Just you talked about market growth, you've talked about CAGR relative to that for the out years. But just the performance this year, I just want to dig into that a little bit more. It's still an important part of the business and you're outperforming in diagnostics clearly. But just anything more you can call on that in terms of confidence in reaccelerating maybe some of the one-timers that are impacting that this year, whether that's on instruments or broader market demand? Just help us bridge that back to low single digits.

Thank you for your question, Michael. We have a strong market presence in both manual and automated segments, and for the past four years, we have focused on automation. This focus involves upgrading our existing systems with new features and introducing new devices. Over the last two and a half years, we've primarily upgraded our current systems, such as transitioning QIAcube to QIAcube Connect and EZ1 to EZ2. In the next two years, we plan to combine these efforts. We will upgrade QIAsymphony, which remains a key instrument in laboratories worldwide, to QIAsymphony Connect with new features launching at the end of 2025. We announced our entry into a new high-throughput sample tech segment, which we revealed in New York. Additionally, we will introduce a new smaller throughput benchtop system, with more details to come around JP Morgan. We have three new automation solutions on the way, and based on our results from the last two quarters, we are seeing growth again. While it's a modest 1%, it's growth driven by our strong market share. We believe this momentum can continue and potentially even pick up, as we will offer new solutions for both high-throughput and low-throughput customers. We're confident that we can achieve around 3% CAGR over the next few years, which would exceed market growth, strengthen our leadership position, and deliver on the commitments we've shared in New York.

And then maybe just a modeling tie-up on NeuMoDx. I think you've been very consistent in sort of like the wind down and the timing of that. But just as we look ahead to 2025, I mean, any way to size just how much contribution there will still be to the model next year? I realize that you're winding it down. We're expecting about a 1% headwind from NeuMoDx year-over-year. Is that about right or could it be a little bit less, a little bit more than that?

Yes, thank you for highlighting that we are executing well here. Again, we are not on the call for '25. But the way I invite you to see it is that we will still have some revenues in Q1 and Q2. Our sites for NeuMoDx in Ann Arbor will be definitely shut down at the end of Q2. And therefore, the way you should see it probably is no revenues anymore on NeuMoDx in H2 of 2025.

One quick one maybe for Roland. So instrument revenue was down year-on-year but was flat sequentially. Curious what you're embedding for instrument growth sequentially in 4Q, if you're taking in any sort of seasonal step-up or assuming kind of continued stabilization there? And then I have one follow-up.

We believe that the fourth quarter will see a modest improvement in instrumentation growth compared to the previous quarter. This is one factor to consider, although we are also facing challenges from NeuMoDx. We expect that products like QIAstat, QIAcuity, and others will contribute positively to instrumentation. However, overall performance will remain negative, though it will be better than in the previous quarter.

So the way I invite you to see QIAGEN in liquid biopsy is one that of a pioneer. Our penetration of the liquid biopsy market is not just 2024. And again, as I said today, we are the only company fully mastering the three key technologies necessary to perform good liquid biopsies, cfDNA, CTCs, and exosomes. And second, we are an enabler. It's using liquid biopsy-based solution by QIAGEN that big names on the market, the Guardant Health, the Natera and many others in the world can perform their solution. And being an enabler is a very smart positioning because more and more companies investing in liquid biopsy have to use your solutions, but you are not necessarily exposed to downside like change of coverage in reimbursement, so on and so forth. And this is where we want to insist in our position, being a top enabler of liquid biopsy solution providers, mainly in oncology application but beyond oncology. You will see also, as we said in New York, our portfolio in sample tech will invest beyond instrumentation also in much more added value consumable sample tech and mostly around liquid biopsy because this is where we have value and we can also generate quite high pricing as well. So that's the positioning that we want to take that we are already leveraging from but that we want to strengthen.

Maybe just following the US election earlier this week, a key topic here has been just sort of tariffs broadly. So recognizing that QIAGEN is a sort of very global business. Can you maybe just sort of level set us on how you're thinking about any exposure there? And then I guess bigger picture any impact to the way you're sort of thinking about running the business in light of some of these potentially broad policy directions that we've been hearing about?

And we can also take this question, the two of us, obviously. The first thing I would say is that, as you said, we are a global company and one of the strengths in the company is that our geographic presence is extremely balanced between the US but also Europe and emerging countries. So that's a strength. Second, we believe that it's very fast too early to take some statements. Obviously, we listen to the candidates' platform and we built our model accordingly. We'll see what happens. It's a bit premature. What is very clear as far as the US is concerned, first of all, it is still and by far the main market for healthcare and for healthcare innovation in the world. Being in the US present commercially but also with R&D and manufacturing is extremely important and there is no way we are going to change that. For the rest, we need to see and to look for the coming months and constantly adjust our policies and actions according to a decision that might be made but that's what I would say at this stage. Roland, would you like to add some color to that?

Along the lines, Andrew, I do think it's very straightforward, and we’ve said, there's no details to leave, and that clearly takes some time before that is going to happen. But nevertheless, some of the facts are clearly in the programs, which were announced ahead of the elections. And the ones which are probably more concrete on the corporate tax side, and it's quite obvious as Thierry said, we're having around 50% of revenues in the US with also having a significant local sites in a couple of places in the US. There's clearly also a corporate tax liability for QIAGEN. So we have to see what that means. There's also a bigger question now what happens to the whole Pillar 2 developments globally, because I'm quite sure that with President Trump that agenda is going to change as well. And as you know, we were rather expecting rising corporate tax rate in the midterm plan as well. So again, there's no final answer on that but I do think there becomes more questions. Tariffs, as we all know, always go in two directions. There's never just one side adding tax another side and nobody is reacting to that. Therefore, I would say if that is going to happen that is something that is affecting companies globally in any direction there you have to wait for the details.

With that, I'd like to end the call and express our appreciation to all of you for your participation. And please do not hesitate to reach out to Dominica and me with any questions or comments, topics that you want to address. Thank you very much. Bye-bye.

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