Earnings Call Transcript
QIAGEN N.V. (QGEN)
Earnings Call Transcript - QGEN Q1 2021
Operator, Operator
Ladies and gentlemen, thank you for standing by. I am Tracy, your PGI call operator. Welcome, and thank you for joining QIAGEN's Q1 2021 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. At this time, I would like to introduce your host, John Gilardi, Vice President, Head of Corporate Communications and Investor Relations at QIAGEN. Please go ahead.
John Gilardi, Vice President, Head of Corporate Communications and Investor Relations
Thank you, operator. And thank you to all of you for joining us today for our conference call. Speakers today are, Thierry Bernard, the CEO of QIAGEN; and Roland Sackers, the Chief Financial Officer; also joining us is Phoebe Loh, our Senior Director of Investor Relations. Please note that this call is being webcast live and will be archived on the Investors section of our website at www.qiagen.com. A copy of the press release is also available in the same section. Before we begin, let me cover our safe harbor statement. The presentation as well as the discussions and responses to your questions on this call reflect management's views as of today, May 4, 2021. We will be making statements and providing responses to your questions that state our intentions, beliefs, expectations, or predictions of the future. These constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. QIAGEN disclaims any intention or obligation to revise any forward-looking statements. For more information, please visit the SEC website for these filings. We will also be referring to certain financial measures not prepared in accordance with U.S. GAAP. You can find a reconciliation of these figures to GAAP in the press release and the presentation for this call. I would now like to turn over the call to Thierry.
Thierry Bernard, CEO
Thank you, John. And welcome all to our conference call today. As usual before we begin, I would like to again wish you, and your families and loved ones good health and all the best during these times. As you have seen yesterday, the first quarter of 2021 marked another strong quarter for us as we moved through various stages of the pandemic, with vaccination progressing in many countries, of course, some at a pace faster than we had expected. The U.S., for example, Israel, or the UK, are proceeding quicker, while other regions, such as parts of Europe, are slower. Demand for our product groups using COVID testing overall remains at similar levels to what we saw at the end of 2020. However, this varies between regions. Beyond the pandemic, research labs have reopened, and diagnostic testing in other areas of healthcare is coming back into play. QIAGEN teams continue to execute diligently and manage the demand on our product portfolios, while preparing to work through the headwinds that will be created by a reduction in COVID-19 testing demand as vaccination rates increase. Indeed, QIAGEN is well-positioned with our five pillars of growth in these exciting times of change in the molecular testing landscape. We are poised to make a significant impact with a series of new product launches in the coming years, especially supported by menu expansion in QIAquick, QIAstat, and NeuMoDx. Now please let me go through our key messages for today. First, our teams have once again exceeded the outlook for the first quarter of 2021 in terms of sales growth and adjusted EPS. This is now the sixth quarter in a row where our QIAGEN team has exceeded our guidance. Net sales grew 48% at constant exchange rate (CER) over the same quarter of 2020. This beat our outlook of at least 45% CER growth. Adjusted earnings per share was $0.60 CER and above our outlook for about $0.60 to $0.62. As we have said before, we put a very serious amount of attention on ensuring that we execute on our commitments. The performance of our non-COVID product groups leads to our second key message. As you have heard QIAGEN say before, those results in Q1 2021 are once again proving that we are COVID-relevant, but we are not COVID-dependent. Sales in the first quarter of 2021 for non-COVID product groups reflected an acceleration from the end of last year, growing 16% CER over the first quarter of 2020. Our third key message relates to the ongoing demand for COVID-19 testing solutions in the first quarter. This remains at a high level, on par with the fourth quarter of 2020. Sales for those product groups grew 186% CER to $203 million, up from $69 million in the first quarter of 2020. More importantly, this also compares to sales of $200 million in the fourth quarter of 2020. We confirm, as we said during our Deep Dive Day in December 2020, that we expect this to slow down progressively in Q2 and H2 2021. And as a final key message, we are reaffirming our full-year outlook for 2021. For the full year, we continue to expect sales growth of about 18% to 20% CER over 2020. This is based on expectations for sales growth from COVID-19 product groups to subside as the year progresses but anchored by continued improvements in demand for non-COVID product groups compared to trends in 2020. For adjusted EPS, we continue to expect about $2.42 to $2.46 at CER once again. This reflects our plans to invest in our five pillars of growth and strengthen our competitive profile to drive sustainable growth once we move through the pandemic. Now I would like to hand over to Roland.
Roland Sackers, CFO
Thank you, Thierry. Hello, and thank you as well from me for joining us for this call. I would like to update you on some key financial results from the first quarter. As Thierry noted, our sales results for the first quarter were 48% at constant exchange rate, up 52% at a reported rate to US$567.2 million due to positive currency movements against the U.S. dollar, especially with the euro. Moving down the income statement, the adjusted gross margin declined about one percentage point to 68.7% of sales, due to the higher share of instrument sales, which typically have a lower gross margin than our consumable kits. In addition, there was an overall increase in production costs compared to the first quarter of 2020 associated with the ramp-up of capacity to support higher demand. The growth in sales outpaced the increased operating expenses for the first quarter of 2021. This led to the adjusted operating income margin rising to a record 34% of sales in Q1, up from 27% in the year-ago period. In addition to production scale-up activities, investments into our five pillars of growth also involved R&D expenses. We are moving ahead to implement plans to expand test menu capabilities for the NeuMoDx integrated PCR clinical testing system and the QIAstat solutions for syndromic testing. We are also building out the test portfolio based on our QuantiFERON technology, which can be used in diagnostics to detect latent diseases. We continue to see a positive impact on our business activities and benefit from increased capacity scaling and leverage efficiencies in sales and marketing expenses, which declined to 20% of sales in the first quarter of 2021 from 26% in the same period of 2020. We are using these advantages to develop our digital customer channels and support our global operational response to the pandemic. As we mentioned earlier, adjusted EPS reached $0.65 CER per share, significantly faster than rates in sales. The adjusted tax rate was 19% of sales and slightly above our guidance. Turning to cash flow trends, we saw a significant increase in free cash flow to about US$82 million in the first quarter of 2021, thanks to robust sales growth that absorbed about US$46 million of investment into property, plant, and equipment. The development of the operating cash flow also came with a reduction in days of sales outstanding, which declined to 54 days compared to 56 days in the fourth quarter of 2020 and 68 days in the first quarter of 2020. This was most felt in countries of the EMEA and Asia-Pacific/Japan regions, as collections have steadily improved since early 2020. In terms of our balance sheet, our net debt increased to US$1.1 billion at the end of the first quarter, compared to US$1 billion at the end of the first quarter of 2020. This modest change reflects about US$498 million of net proceeds from the issuance of zero-coupon cash convertible notes last year, against payments of about US$296 million for the settlement of convertible notes that were due in 2021, as well as about US$41 million paid out for the maturing of two tranches of our job and private debt instruments. This resulted in a leverage ratio of 1.3 times net debt to adjusted EBITDA at the end of the first quarter of 2021, compared to 1.6 at the end of the first quarter of 2020 and 1.5 at the end of 2020. I would now like to provide a more detailed view of our 2021 sales for the first quarter. In terms of sales by product groups, sales of sample technologies, one of our five pillars of growth, was up 42% CER to US$227 million. This was due, in particular, to strong demand for DNA extraction kits, accelerating since late 2020. We also continue to experience ongoing solid demand for automated and sample preparation kits used in COVID-19 testing. The trend from automated to manual RNA kits that we saw in the second half of 2020 has now stabilized. As a reminder, sample technology sales on an underlying basis, excluding pandemic sales, are led by DNA testing and are also moving weighted to our customers in the life sciences, so we are seeing an assumption of this trend so far in 2021. Tests and diagnostic solutions were US$150 million, rising 52% CER. This involves our molecular testing solutions for use in clinical healthcare. QuantiFERON-TB sales reached US$57 million in the first quarter and were up 22% CER, led by the strongest demand in the U.S. as testing resumes after the 2020 slowdown. This performance also marks a sharp improvement from the 20% CER decline in the first quarter of 2020 and only 3% CER growth in the first quarter last year. Sales of QIAstat-Dx and NeuMoDx solutions remained at high levels and are on track for the year. We are closely monitoring COVID testing demand trends in various regions, but these platforms have applications well beyond COVID testing. The top priority right now is to expand our test menus as we are building up manufacturing capacity to serve the growing installed base. Other portfolios in this product group include our precision medicine assays, companion diagnostics core development revenues, and a women's health portfolio including HPV. We see mixed sales in these areas as activities affected by the pandemic are changing at varying speeds. The PCR nucleic acid amplification product group represents PCR solutions and components for use in research and applied testing. These sales were up 84% CER in the first quarter, reaching US$117 million. These results also reflect the ongoing high level of COVID-19 sales, including OEM products used by other diagnostic companies. Another driver was ongoing sales expansion of our QIAcuity digital PCR platform launched in the second half of 2020. The last product group is Genomics NGS, which includes our universal NGS products and bioinformatics solutions. This sale returned to growth after challenges during 2020, rising 17% CER to US$50 million in the first quarter. In terms of bioinformatics, we saw good incremental growth in applications for clinical oncology. These results also include growing contributions from the newly launched QIAseq NGS portfolio for screening positive COVID samples for viral variants. I would like to now discuss our results by non-COVID and COVID-19 product group. As we have been saying, the results for this quarter emphasize the strong performance of our non-COVID portfolio and give us confidence for growth once we move beyond the tailwinds of the pandemic. Non-COVID groups grew 16% CER this quarter over Q1 2020, as research activities and regular diagnostic testing showed further increases. In addition to the return of high demand in sample technologies and QuantiFERON consumables, we saw strong performance from other core portfolios, including universal NGS kits, which grew 32% over Q1 2020 for non-COVID related application sales of precision medicine assets, which returned to pre-pandemic growth levers and the solid contribution of non-COVID applications of the QIAcuity digital PCR. We have seen significant improvement in non-COVID product groups in the last two quarters, and we see this as a signal of improving trends to expect during 2021. Sales in our COVID-19 solutions remained healthy in the first quarter, with levels similar to Q4 2020. We saw ongoing solid demand for sample preparation technologies, PCR solutions, and third-party reagents, and as mentioned also, some incremental sales of next-generation sequencing products used for variant analysis. On the next slide, I would like to review our sales by geographic region. For the second quarter in a row, the America region delivered growth of about 40% CER. Double-digit gains in sales of QuantiFERON TB boosted the performance for this region. Brazil and Mexico also delivered growth at high levels, as sales in both countries far outpaced the rate in the region as a whole. The Europe, Middle East, and Africa regions continued the strong trends from 2020 and led the performance for the first quarter of 2021. Within the region, Germany, France, Italy, and the United Kingdom experienced robust growth as demand returned for non-COVID product groups and was complemented by ongoing sales for COVID testing solutions. Sales in the Asia Pacific, Japan region were bolstered by more than 70% CER growth in China, particularly due to our life science customers. India, South Korea, and Japan all experienced an uptick in sales as customer work in non-COVID areas increased over the year-ago period when the pandemic began. Growth from these countries offset weaker trends in Australia. I would like to now hand back to Thierry.
Thierry Bernard, CEO
Thank you, Roland, and I'd like to invite you for a quick update now on the progress QIAGEN teams have made regarding our five pillars of growth. In this slide, for example, you can see a brief overview of our portfolio expansion goals for 2021 and our status after the first quarter. We are continuing to focus on our roadmap and on providing robust menus to support strong growth in all areas beyond COVID testing. In sample technologies, for example, in which QIAGEN has a large portfolio of market-leading sample extraction solutions, we continue to leverage our experience and innovate to bring new solutions to the market. As an example, in the first quarter, we launched QIAcube Connect for molecular diagnostics and the new QIAprep kit. I will give you more details on these new products in the next slide. As we continue to successfully roll out the QIAcuity digital PCR platform, our teams are working to expand the field of research applications for those systems. For example, a new workflow for integrating digital PCR and exosome-based liquid biopsy for the detection of bladder cancer from urine samples is being released into clinical trials. The QIAstat diagnostic syndromic testing system now features a new connectivity solution that we call QIAsphere. This is a cloud-based platform allowing users to monitor tests and instruments remotely. We continue to be focused on menu expansion and capacity scale-up to support the use of installed platforms beyond COVID testing needs. For NeuMoDx, our integrated PCR testing platform for core labs, we are also on track for two FDA submissions planned for this year. In the first quarter of 2021, as you can see, our U.S. menu has grown with the receipt of the Emergency Use Authorization for a four-plex test with simultaneous detection of flu A and B, RSV, and SARS-CoV-2. In our QuantiFERON franchise, we are moving forward with planned launches with the recent release of the LymeDetect assay on DiaSorin LIAISON platform. This assay was developed as part of our ongoing partnership with DiaSorin to leverage our proven QuantiFERON technology on their large installed base of testing platforms. I will share once again more details on this opportunity in the next slide. Let's go back to the sample technologies. As you know, our sample technologies product group has performed well throughout the pandemic. Since Q4 2020, we are seeing significant demand returning from sample preparation kits used in applications outside of COVID. Sales in our non-COVID kits grew over 22% in Q1 2021 versus Q1 2020, demonstrating once again the strength of our sample technologies business and proving that we are not dependent on the pandemic. On this slide, I would like to highlight a few launches in this product group. As noted before, the QIAcube Connect instrument for automated sample processing has now been launched globally for diagnostic applications. This system is the latest addition to the QIAcube family of instruments and builds on the successful launch of the QIAcube Connect in research application. The new placements in clinical labs will add to over 9,800 systems installed from the QIAcube family worldwide. We are also expanding our proprietary QIAprep portfolio with the newly launched artus SARS-CoV-2 prep kit, which has been CE marked and is now submitted for Emergency Use Authorization in the U.S. The QIAprep technology, if you remember, was initially launched in October last year in a kit for viral epidemiology, and we have seen significant demand for this product to automate rapid processing of RNA viral samples on standard labs equipment. The new kit launched in April combines liquid-based sample prep with PCR assay technology to enable clinical labs to rapidly scale up COVID testing. I would also like to highlight an upcoming launch for the new generation of QIAGEN EZ1 sample processing in three months, which is extremely well-known worldwide for its ease of use. The EZ2 connect instruments will feature connectivity, much like the QIAcube and QIAstat instruments, using the cloud-based QIAsphere solution popular for remote monitoring. In the third quarter, platforms will launch for research and pharmaceutical applications, as well as in forensic labs for human identification applications, and a clinical platform is planned for launch early 2022. For this, I would like to remind you what we explained in our QIAGEN Deep Dive Day in December that every automated sample prep solution from QIAGEN has already an upgrade automation launched on the market: QIAcube, EZ1, EZ2 QIAcube Connect, and we are still working on an upgrade of our flagship instrument, QIAsymphony. Looking forward, in 2021, we expect continuous acceleration of our non-COVID sample technology products quarter-over-quarter. Here again, we are focused on executing on a solid roadmap for this portfolio to drive our post-pandemic business while, of course, being also prepared for any future pandemics. Let's spend some time on QuantiFERON. As you have seen, we have recently announced the CE marking of our new Lyme disease test for use on DiaSorin LIAISON platform. This new test addresses an unmet need for early detection of this debilitating disease. It has been designed to support earlier disease detection, which is critical for those suffering from Lyme disease, with the goal to prevent severe illness in those infected. DiaSorin is the perfect partner for this test and to take over the commercialization, given their portfolio of more than 8,000 instruments installed worldwide. The combination of QuantiFERON technology for the detection of T cell response with DiaSorin's existing assays to detect B-cell response offers a new level of clinical detection. This is indeed an attractive market as Lyme disease cases are constantly on the rise, especially in the U.S. and Europe, driving an increase in testing volumes year after year. In Europe alone, for example, more than 230,000 people are estimated to contract Lyme disease every year. On a global basis, the annual market opportunity is about $400 million to $600 million for Lyme disease testing. And as a next step, we already announced that we are now going to work on the U.S. submission, and we will keep you informed. The second part of our agreement with DiaSorin is obviously the continuous automation of our QuantiFERON solution. We have developed options for customers to create fully automated workflows for the QuantiFERON-TB test using the LIAISON system. This allows QIAGEN to reach new customers through new commercial channels while offering, at the same time, DiaSorin a differentiated test to embed in their broad menu. Beyond the existing successful cooperation on the LIAISON XL instruments, the large volume system, QIAGEN and DiaSorin have commercial actions now centered on the lower volume LIAISON XS platform. The partnership with DiaSorin is really gaining traction in the U.S., and we are looking for recovering strong trends in Europe as well once the pandemic subsides. The latent TB market is returning to growth after the pandemic pressures in 2020, with sales rising 22% at constant exchange rate in the first quarter of 2021. The real competitor is the tuberculin skin test given that only 25% of the more than 70 million global latent TB tests are converted to modern blood-based testing. So there are still significant greenfield conversion opportunities. Our automation strategy enables us to target a wide range of mid to high throughput laboratories in any market. Also, the launch of our QIAreach TB is coming out soon this year, which is a version of our QuantiFERON-TB test for low resources, high burden countries. This test will run on a small device that can be used in the field with battery power. So we are on track to achieve our 2021 sales goal of over $230 million for the QuantiFERON franchise. Our partnership with DiaSorin is bearing fruit and helping us expand in both industrialized and emerging markets. Moving now to the appointment of a new Supervisory Board Member. I'd like to introduce you to our newest Supervisory Board Member and welcome Thomas Ebeling to QIAGEN. Thomas joined the Board in February and brings with him a wealth of experience in international management, particularly in healthcare, given his previous roles as CEO of the German media company ProSieben and Division CEO role at Novartis involving pharmaceuticals and consumer health. With the addition of Thomas, the Supervisory Board of QIAGEN now has eight members. I'd like now to hand back to Roland.
Roland Sackers, CFO
Thank you, Thierry. As noted earlier, we are reaffirming our current full year outlook for net sales to rise about 18% to 20% CER. For adjusted EPS, we expect $2.42 to $2.46 at constant exchange rate, based on a weighted average of about 234 million shares outstanding for the year. For the second quarter, we anticipate sales growth of about 20% CER from $443.3 million in the same period of 2020 and adjusted EPS of about $0.62 to $0.64 CER from $0.55 in Q1 2020. As for currencies, based on rates as of April 30, 2021, we now expect a currency tailwind of about two to three percentage points on full year sales at actual rates. For adjusted EPS for 2021, we expect a currency tailwind of about $0.02 to $0.03 per share. For the second quarter, we expect a currency tailwind of about three to four percentage points on full sales at actual rates. For adjusted EPS for Q2, we expect a currency tailwind of about $0.01 per share. We are expecting continued improvements in non-COVID product groups during the year, especially in the second quarter of 2021 compared to the year-ago period. We are also anticipating sales for COVID solutions to be in line with year-ago levels in the second quarter of 2021. The outlook for full-year 2021 is based on expected softer sales for COVID product groups in the second half of the year. These expectations include plans for investments in R&D and clinical trials to strengthen the competitive profile of our five pillars of growth beyond the pandemic. With that, I would like to hand back to Thierry.
Thierry Bernard, CEO
Thank you, Roland. And now it's time to go to our Q&A session. But before this, let me provide you all with a very quick summary. First, we had another strong performance for the first quarter, executing once again on both sales growth and adjusted EPS, coming in above our outlook. Our teams all over the world continue to deliver on commitments to secure growth from our portfolio, in particular, our five pillars of growth. Second, strong sales trends in our non-COVID product groups with sales growth of 16% CER in the first quarter of 2021 demonstrates once again the strength and sustainability of our business as we prepare to move beyond the pandemic in the coming quarters. Third, we continue to invest to strengthen our five pillars of growth that are set to underpin our growth trends. This includes menu expansion plans for QIAstat diagnostic and NeuMoDx, fueling the commercialization of the QIAcuity digital PCR instrument, and securing our leadership in sample technologies. And as the last point, we are reaffirming our outlook for sales and adjusted EPS growth in 2021, anchored by improving trends in non-COVID product groups as we also continue to serve customers as the pandemic evolves. In closing, we are off to a strong start in a dynamic year and well-positioned to emerge in a more competitive position beyond the pandemic. With that, I'd like to hand back to John and the operator for the Q&A session. Thanks a lot for your attention.
Operator, Operator
Okay. The first question comes from Patrick Donnelly of Citi. Please go ahead.
Patrick Donnelly, Analyst
Great, guys. Thanks for taking the question. Thierry, maybe just on the guidance, can you just talk about your comfort level on the guide compared to three months ago when you gave it? I'm just wondering, was there a cushion back then and now the COVID trends are coming down a bit, that margin for error is a bit smaller? We are just looking around at pretty much every other company with testing exposure has pulled down guidance over the past few weeks. Obviously, we're seeing what's happening in the U.S. volumes as you touched on, just want to talk to your confidence level in the guidance today. As you discussed during the call, clearly, execution on numbers is a big focus for you guys, so just wanted to get color on this piece?
Thierry Bernard, CEO
Yes, thanks, Patrick for the question. And obviously, I mean, we are on the market and we follow the evolution of the market every day. I would insist on a couple of points. First of all, there is a wide diversity of situation on the COVID-19 testing front. It is true that demand has been softening in some geographies, the U.S., Israel, for example, but the demand is still extremely strong in other areas, such as parts of Europe, and in Brazil, Russia, or India showing that there is still room for significant testing demands. What I mean by this is that regarding testing volumes, we are entering a phase of increased volatility. Is this taking QIAGEN by surprise? No, because we have always said from 2020 that we were expecting numbers in 2021 to still assume a significant level of COVID demand in H1. Then plateauing with lower demand in H2. At the same time, quarterly acceleration of our non-COVID solutions. This is exactly what we are executing as we speak. So yes, there is volatility, but we are coming from Q1 with a strong acceleration of the non-COVID portfolio, which is where we focus our attention. We believe the COVID testing need will continue to be diversified geographically. QIAGEN has solutions for all those needs. This is also a very strong message. We have not only testing solutions for detection of the virus, but if you want to do surveillance programs with NGS or wastewater, we have a solution. If you want to test for the efficiency of vaccines, we have a solution with our T-cell testing. So, we have solutions covering the whole range of potential COVID beyond the current situation. That's why we are confident in our forecast. Obviously, as we say, volatility is increasing, but at the same time, we have solid numbers that are proven by our Q1 results. And now it's up to execution quarter after quarter until the end of the year.
Operator, Operator
Our next question comes from Daniel Wendorff from Commerzbank. Please go ahead.
Daniel Wendorff, Analyst
And I have one and then a small follow-up on the financial side. My first question would be on your installed instrument basis. Can you maybe comment on how the growing installed base of instruments is already helping consumable sales, and how it may have influenced non-COVID test growth in Q1? And that would be my first question. And then, a question on your strong operating cash flow development in Q1. How should we think about capital allocation over the next quarters, maybe also going into 2022 on the basis of your strongly rising cash flow? Thank you.
Thierry Bernard, CEO
To your first point, and then I will let also Roland chime in on the cash flow results. Daniel, to your first question, we continue in Q1 to increase the size of our installed base for very relevant instruments. We have increased the number of NeuMoDx, QIAstat, and QIAcuity systems in the field. This is going as per plan. Therefore, this gives us a good expectation. As you know, QIAcuity, QIAstat, and NeuMoDx are not COVID dependent; those are menu or application plays. Once we have those installed systems in the field, the game now in Q2, Q3, Q4, and beyond the pandemic is to make sure that the menus we have available on QIAstat and NeuMoDx are going to be consumed by those installed systems and the same for QIAcuity. So it's always difficult to compare the first quarter of the year with the fourth quarter of the previous year because there is always an acceleration of capital sales at the end of the year when hospitals sometimes use their last budget. The good thing for us is that we have seen continuous progression in the installation of NeuMoDx, QIAcuity, and QIAstat systems. Does that answer your question, Daniel?
Roland Sackers, CFO
Yes. On the second part of your question, Daniel, it’s quite obvious that we had a very strong start in the year, also in terms of operating and free cash flow more or less $134 million operating cash flow, $82 million in free cash flow significant up. We also believe that we will see strong trends for the remainder of the year compared to last year. That puts us in a very comfortable position to anticipate capital allocation in terms of value-enhancing bolt-on acquisitions, which clearly still create value in the market for us. At the same time, we have a good track record since 2012 for share buybacks, so both are clearly on the table.
Operator, Operator
We will now take our next question from Scott Bardo from Berenberg.
Scott Bardo, Analyst
Yes. Thanks very much for taking my questions. Good afternoon. So the first question, please, I think there's some evolving evidence now of pretty strong demand for low-plex testing also for COVID-19, whereas some of the syndromic and multiplex testing are somewhat disappointing in the competitive landscape. I wonder if this is a dynamic that you are also seeing and whether you, after this first quarter, have any need to change your placement and financial goals both for QIAstat and NeuMoDx? So that's question number one, please. And second quick follow-up, we see now another competitor enter the market for latent tuberculosis testing. I know you've expected this for some time. They're claiming certain workflow advantages. I wonder if you expect to see any dent in your QuantiFERON tuberculosis franchise as a result of this new entrant.
Thierry Bernard, CEO
Very good. So thanks, Scott, for the two questions. First, the demand for low-plex testing. What I would highlight first and foremost is that we have a solution for any kind of flexing on COVID-19. If you want just to have a singleplex, we have it on NeuMoDx and on other solutions. If you want to have a low-plex, as you have seen, we just got our approval for the four-plex on NeuMoDx. We have it. If you want to have a larger plex, we have it on QIAstat. So basically, we cover the needs and we follow the evolution of those needs. This is why we believe it was extremely important to go beyond the singleplex and have a short-plex. The jury is still out on the market for this. The good thing is QIAGEN has a breadth of portfolio that covers all those needs. Second, on the latent TB and the arrival of new competitors. Scott, without wanting to sound arrogant, I believe that latent TB is the perfect example with QIAGEN of a company not being complacent while being number one in the world. We have prepared for the arrival of competition for the last three years, being the only company offering a fully integrated automated workflow from front-end to back-end research with DiaSorin. When you look at our partnership with DiaSorin, we explained today that we not only cover high throughput or mid-throughput needs, but we can also cover low throughput needs, which is a significant competitive advantage for us. While I welcome the arrival of specialized infectious disease competitors, I believe they will help us prove the efficiency of latent TB testing. Our real competition is the tuberculin skin test, as only 25% of the more than 70 million global latent TB tests are converted to modern blood-based testing. There are still significant opportunities for us to grow in this market. Our automation strategy enables us to target a wide range of mid to high throughput laboratories in any market.
Operator, Operator
The next question comes from Doug Schenkel of Cowen. Please go ahead.
Doug Schenkel, Analyst
Hi. Good afternoon, everybody. My first question is on guidance, and I guess it's a two-parter. The first part is earlier this year, you provided guidance for QuantiFERON, QIAstat, and NeuMoDx. Do you have specific targets for each of those line items? I just want to confirm that the targets there are unchanged. I was hoping you could also comment on quarterly revenue pacing for the year. You've guided Q2 revenue flat to down slightly sequentially. I'm just wondering if your expectation is for linear improvement over the balance of the year, or if we should be assuming a really back-end loaded year with most of the revenue in Q4. Also, your net debt to EBITDA is below two times, I think coming out of the quarter, and you continue to drop a lot of cash, in part because of high margin COVID-19 revenue, but also because of the core. How are you thinking about capital deployment over the balance of the year? Thank you.
Thierry Bernard, CEO
Very good. I think I can try to answer your different questions. I reached out and also asked Roland to chime in. First of all, on the targets for QuantiFERON, QIAstat, and NeuMoDx. As we have said, we believe clearly that the target for QuantiFERON this year, especially when you look at such a strong Q1 at 22% growth is in our hands. We are confident in this one. For NeuMoDx and QIAstat, which are two products that are both extremely relevant for COVID at the moment, as we said, they are independent of COVID. We have also said that yes, there is increased volatility in the market. We believe that altogether we can reach our target. We might be a bit above in one of those, a bit below in another, but the progression of market share is happening. We are here confident. Again, I insist that we are managing these two platforms both during and post-pandemic. It’s obviously important that we deliver on NeuMoDx and QIAstat for the U.S., and for Europe. Execution is key here. On the pacing of quarters, we expect strong confirmation of recovery and strong additions of revenue coming from non-COVID solutions in Q2. We did really well in Q1, and while we should not forget the last quarter of the year is different, we feel confident about our overall guidance. Roland, would you like to add anything?
Roland Sackers, CFO
Yes. Just let me be very straightforward. Brian, again, just very clear, we expect sequential growth quarter-over-quarter on the non-COVID side throughout the year, including for the second quarter against the first quarter, non-COVID. It is quite obvious, I think. Thierry said it very clearly. We feel very confident about the full-year guide as well. The question is really again under quarterly allocation due to volatility in COVID. But it's not necessarily a full-year basis. What is most important is we did quite well in the first quarter and we shouldn’t forget that the fourth quarter is typically strong for operational reasons.
Operator, Operator
Our next question comes from Jon Peterson of JPMorgan.
Unidentified Analyst, Analyst
Hi guys. This is Casey on for Tycho. I guess more broadly speaking on COVID product revenues, how much downside risk is there in the back half of the year now, given what has been described by several of your competitors as an imminent shift in PCR volumes toward those highly automated high-throughput platforms? How do you see this dynamic playing out, and how much would this affect the COVID revenue portion and sample technologies and maybe the OEM portion?
Thierry Bernard, CEO
I would just repeat what we have said many times. We have built our guidance for 2021 on the assumption of a progressive softening and roll-off of demand for COVID testing throughout the year. There is volatility, which can change very quickly. We are prepared because we have solutions for every need related to COVID. Specifically, on your question regarding high throughput systems, you understood that we have launched QIAprep, which is an extremely high throughput solution. Our sales for QIAprep in Q1 already increased compared to Q4 of last year. So again, we have a very broad portfolio, potentially the broadest offer for COVID solutions on the market, addressing every need of the pandemic. We can confidently confirm our numbers, anticipating softening throughout the year, which is in our assumptions.
Operator, Operator
The next question comes from Dan Brennan from UBS.
John Sourbeer, Analyst
Hi, this is John Sourbeer on for Dan. Thanks for taking the question. China growth recovered pretty strong at 70% in the quarter. Can you talk a little bit about the geographic outlook for 2021 and what specifically you're seeing in China? With regards to China, can you describe any changes you've seen in your business there since 2019? And then just on COVID, can you provide a little more color on what is the outlook for durability for your COVID revenues beyond 2021? Thanks.
Thierry Bernard, CEO
Sure. I will address directly your last part of the question, which is about COVID-driven solutions beyond 2021. I confirm that we do not rely on significant numbers to ensure the growth of QIAGEN beyond the pandemic. QIAGEN is a non-COVID dependent company. Everything that might come if there is a resurgence in some geographies because of volumes or service, we will be ready, but it’s early for me to give numbers here. We have the solutions; we are ready to act and respond to customer needs. On the geographic situation in China, due to a recent change in top management, we are taking advantage of that change to strengthen our distribution network. China is a good example of a market that can move quickly. We have more COVID-related sales expected in China, in Q1, particularly from our second brand, Shenzhen. We are managing China completely post-COVID. The key success factors for us are monitoring our commercial partners’ network and continuing to find solutions to expedite the registration process for our technologies with NMPA, the equivalent of the FDA in China. We believe China can deliver double-digit growth and that is our expectation. Does that answer your question?
Operator, Operator
Our next question comes from Falko Friedrichs from Deutsche Bank.
Falko Friedrichs, Analyst
Thank you. Good afternoon. My question is on the 16% growth in the non-COVID business, a pretty impressive number. How much of this was pent-up demand or catch-up demand from last year? And how of this can really be sustainable throughout the year, in your view? And then a quick follow-up is on your COVID-19 antigen test. Do you still plan to go ahead with that launch? If yes, when do you think that this can take place?
Thierry Bernard, CEO
Thanks for the question. Regarding catch-up versus recovery, it's extremely difficult to give you numbers. What is clear is that volumes for testing, such as TB testing, for oncology testing, just to name a couple, are returning to levels close to those seen in 2019. We have seen that sequentially from Q3 of last year to Q4, and now confirmed in Q1. I believe this is sustainable since patient needs are increasing for testing. As for the antigen test, we now have two antigen solutions. We have a solution dedicated to Europe at the moment, which is proving that QIAGEN remains a very agile company. Some markets, particularly in Europe, like Germany, are asking for significant antigen testing, and we have found a solution with a partner. We have also resubmitted our QIAreach antigen solution, which combines an antibody solution to the FDA, and we are in constant communication with the FDA, anticipating this product approval before the end of H1. We have these products included in our assumptions and numbers for H2.
Operator, Operator
Our last question comes from Brian Weinstein from William Blair.
Brian Weinstein, Analyst
Hey guys, good afternoon to you, and thanks for taking the question here. I appreciate the commentary on the year-over-year growth and how that's improving. But really when we look sequentially here, the Q2 guide is flat to down sequentially in the quarter. I know this was somewhat asked in a prior question, but it would make three straight quarters at sort of $365 million to $370 million range. Also, this quarter, we saw NeuMoDx down about $3 million sequentially on the larger installed base, QuantiFERON is actually down a little bit, I think $1 million or so sequentially. So, I'm just trying to understand how you guys are thinking about the sequential movement here, because it would appear to us that Q2 would likely have to have some conservatism in it, or is it really just a flattening out of the actual dollars here? I know it was someone asked before, but I wasn't quite clear on the answer. So, I wanted to kind of go back into the sequentials and kind of what you guys are seeing there.
Thierry Bernard, CEO
Yes, please, Roland, you go there, and then I will. Yes, please.
Roland Sackers, CFO
Yes. Let me be straightforward. Hi Brian. Again, just very clear; we expect sequential growth quarter-over-quarter on the non-COVID side throughout the year, including the second quarter against the first quarter. It’s quite obvious. Thierry said it clearly. We feel confident about the full-year guide as well. The question really is about quarterly allocation because there is no doubt that there is volatility on the COVID part of the business. We don’t know if volatility may affect the numbers in the first quarter, or not. What is most important is that we did quite well better than expected in the first quarter in all regards. And we shouldn’t forget that Q4 is typically when we see higher growth rates.
Operator, Operator
Our last question comes from Hugo Solvet of Exane BNP Paribas.
Hugo Solvet, Analyst
Hi guys, thanks for taking my questions. I have two. On QIAstat-Dx, if I remember well, last year, you had a fair share of placements in reagent rental models. Just wondering if you are seeing any change here since the beginning of the year, or do you still place products with a certain visibility on consumable sales? And the second question, I think, Thierry, in your prepared remarks, you mentioned that the trend for manual to automated stabilized. Can you just give us an indication on where it has stabilized compared to what you were expecting in H2 2020? Thank you.
Thierry Bernard, CEO
To your first question, you go, thanks for the two questions. First of all, we are still selling much more than placing QIAstat systems. The same is true for NeuMoDx. We have still placed a healthy number of QIAstat systems in Q1, and we ensure those systems are not just COVID-19 driven. We are engaging customers on assays such as GI, meningitis, and others while trying to secure pre-renewal contracts that ensure ongoing use. Regarding automation versus manual, we confirm what we said last year that gradually automation will prevail at the QIAGEN level of sales over manual. We have now a ratio of roughly 65% automated to 35% manual sales, proving our relevance in automation within the sample technology space. Many countries, particularly in the emerging world, are still finding manual workflows useful.
Phoebe Loh, Senior Director of Investor Relations
Thank you.
Thierry Bernard, CEO
Okay. With that, Thierry and Roland, I'd like to end the call and thank all of you for your participation. If you have any questions or comments, please do not hesitate to reach out to Phoebe and me for further discussions. Thank you very much.
Operator, Operator
Ladies and gentlemen, this concludes the conference call. Thank you for joining, and have a pleasant day.