Qiagen N.V. (QGEN) May 12, 2026 Conference Transcript

Thanks for joining us for our next session. My name is Mike Riskin. I'm on the Bank of America Life Science Tools and Diagnostics team, and we're excited to be hosting KIAGEN. We're joined by Roland Sackers, Chief Financial Officer, and Dominica Martorena. For the format will be a fireside chat Q&A as usual. Raise your hand if you've got any questions. Happy to let you jump in. Roland, I had some updates yesterday from you in terms of the board meeting updates, things like that. Anything specific you want to call out from there? We saw some changes to the board, a little bit of an update on CEO timing. So maybe you could talk through some of the key takes from that.

Thanks for having us. It's always a pleasure to be here. It's a long trip, but it's for sure a best-wilder trip. And again, thanks for having us two days fully booked. But I do think what is important, and you mentioned it, that yesterday we released the proxy for the upcoming AGM. And I do think it has a couple of exciting news. And I think let's start with getting certain things out of our way. Probably very important is we are asking for approval of more share by banks. We ask, you know, Kaigen has this, I would say, setting that we do two different kind of share by banks. One is open market share by banks or on the market. Here we ask for an approval of up to 10% of our total capital. And the second one is what we call in Europe's synthetic share buyback, which is also here we ask them for approval of another $200 million of synthetic share buyback. Again, it's for approval. The typical approval holds for 12 to 18 months, and then it's up to the board to execute them whenever they believe it's a good timing for them. But nevertheless, if you see that in combination with the $500 million share buyback, which we did already generate this year and also what we did over the last few years, you can see that there's a clear commitment also here again on increasing shareholder returns. Second topic was that we continue to, call it in brackets, refresh our supervisory board. We have just seen that a new board member was actually on stage here before, which is Bob, the CFO of Fest Pharma, which I think is a great addition given his track record, his industry experience, so we are very much looking forward that he gets elected on the AGM in June. And at the same time, one of our founders, Metin Kolpan, who was by definition, of course, for many years on our supervisory board, is stepping down and becomes non-voting honorary chairman of the board. So I think Butch is again on the one side a great recognition of what he did over the last 40 years for Kaijin at the end of the day. Last but not least, you were also referring to the actual status of the CEO search. What we also said is that TRIE stands for re-election on the upcoming board, AGM, to be a management director for Kaizen until we are announcing an incoming CEO. I think what we are believing right now is an H2 event. and I think what you can read into that is that Kaizen is still looking into different directions. You still know that there is an ongoing strategic review and therefore, again, I think it's also quite clear that the board but also any potential candidates want to see how that works out. At the same time, I can guarantee you we don't have any shortage of candidates so we do believe that is a good timing for the company.

And then you mentioned the share buyback. There's also a dividend increase too, right?

Oh, you're absolutely right. I shouldn't have forgotten that. We are also increasing our dividend by 40% to $0.35 EPS, which again shows also our commitment to shareholder returns. For us, it's an important signal that we also feel very confident about cash generation in the company. And we are committed to our net debt to EBITDA goal, which we launched more or less earlier this year. Okay.

Okay. All right. Um, maybe let's talk about the other, uh, the update, other update from the last couple of weeks, the, you know, the one key results you guys gave a flash and then, and then a full result, um, last week, um, you know, I had to update the full year guide. There are a couple of different moving pieces. Um, I think the, the most notable one was quantifier on tied to immigration.

Um, maybe just talk through how the quarter played out relative to your expectations, you know, where the surprise came from, just sort of how you're incorporating that into your forward outlook yeah first and foremost and it hasn't changed for the year as you know we are focusing on five pillars of growth four of the five pillars of growth we just confirmed full stop within the fifth pillar which is quantiferon we clearly had to identify that's immigration piece of that business is going in a different direction than we initially thought just to putting things in perspective quantiferon is around about a 500 million dollar business for us 90 of that business no change at all the 10 immigration piece of 50 million dollars is something what we had to revisit and particularly in the u.s and somewhat in the middle east so just to break that 50 million down even further 15 million is in europe one five no change at all we believe that is an ongoing business for us we haven't seen any change 30 million is more or less the u.s part we took that out fully given the political landscape right now we don't even see any opportunity that it comes bought back in any reasonable time frame of course it's going to be the base as of q1 next year but we have to go to the periods and there's another five million roundabout which is related to the middle east business which we have in quantiferon which again is clearly a business which we believe at least temporary with ongoing war is somewhat impacted nevertheless we took it 100% I would argue that at some point in time it comes back because there will be still a construction and other workers have to fly into these countries and but again it's hard to to say when that is going to happen and if you have to we set the guide we rather than count every corner and every stone and and and see that so Q1 everything was all as expect as we expected it we were at the end of $10 million down, $8 million was what I just mentioned.

And the $30 million change in immigration outlook, quantifier, tied to immigration in the U.S., is that tied to any new specific policies? Is that just sort of like an implementation change? Why so sudden? Why so drastic now versus fourth quarter, third quarter, second quarter last year? I mean, assuming this is tied to the administration, why now?

It's a very fair question. and you can hopefully believe that we beat ourselves over the last couple of weeks quite significantly, shouldn't we have seen it earlier. But I think the matter of the fact is we, as well as our customers, have not seen that more or less before Q1 happened. Have in mind this immigration-based testing is not done in any kind of specialized, dedicated lab environment. It is done in the very normal lab facilities, whatever you think of, Quest, LabCops, Arup, you name them. And so it's happening in a very general setting. And we had very normal order income actually all the way into January. So in January, things started to change when we went to our customers and asked, okay, guys, what's going on? And together with our customers, we looked into the different labs, and then we figured out certain regions have no impact, and certain regions have a different impact. So again, if you just looked at it in Texas, significantly larger impacted, Middle East and some other areas not impacted at all. Then you start again to look at that. Then now in hindsight, you can clearly argue, as you know, certain immigration topics changed legislation-wise in June last year, but it didn't have any larger impact. A big step up in terms of countries, which actually mid of January, I'm not sure if that made an impact, but sometimes things flip over. So, but I think what we also have to learn is that there's a lot of, you call it like libertarian organizations doing healthcare for also illegals. And that is probably also where we have to realize now that they're running in funding situation and others. So, things adding up. We took here probably a very cautious view, but just saying it's hard to identify for us what exactly stays and what not. Take out 100% and it gets better.

And what about, you know, you mentioned the 90% that's not immigration, the other 450 million. What's the underlying assumption for growth rate there in 2026 and beyond?

We haven't reset the bar yet right now. So, again, we believe right now that, you know, overall, we had this kind of 5%, 6% growth rate. I think that is probably, for the remaining part, still a reasonable assumption. But we still have to figure out how quickly is now the resetting of the inventory level is going to happen. I would assume that it probably takes at least a second quarter and then it should improve somewhat in the second quarter, sorry, in the second half of the year, particularly in Q4.

And is it too early to say for 2027 and beyond, especially that U.S. immigration bid? Is there an expectation that comes back at some point? Is it just sort of easier to just not even think about it and pretend it's not there? How are you approaching it?

So one thing we shouldn't forget, and again, it got confirmed today on a different location, everybody is i think agreeing that the overall late tb testing market is growing we say four to five others say five to six percent i think our four to five percent is still on the conservative side still assuming which i think nobody disputes either that that skin test market is still 60 percent of the total market i think it's fair to believe that we will grow at least that market growth and hopefully better than that this ongoing penetration okay i think you're alluding to an analyst day that that happened earlier today from one of the other uh competition in the competition with your events yeah yeah uh from one of the other major diagnostic vendors um just anything you kind of took from that in terms of updates on on their test and their um their offering again not much surprise for us but as it looks like probably for some shareholders because share price reacted positively i think there's a couple of news which uh further all i think it got confirmed what was rumored before that uh they are missing a couple of parameters and particular are CD4 and CD8, which are very critical for selected groups of patients, again, particularly if you're looking on immunocompromised patients and so on. So I'm quite sure that that will have an impact. Second, I think the workflow expectations were probably somewhat overestimated. Looks like that they're still quite manual steps. Didn't even articulate it, from my knowledge, to an extent that it was clear to the market. No news on U.S. launch, at least what we have seen so far. So I would say, again, for us, no surprise for probably some shareholders, some incremental news.

So that's Quantifiron. We handled that. Let's talk about the other component of the full year guide revision was sort of just the broader life science market and expectations for that. Like you said, didn't really factor in a big way for 1Q because it really did seem to be immigration specific. But you are taking down your assumptions for the rest of the year. What drove that? How did that play out on the quarter? And why do you think the new outlook is more representative?

Just to be very clear, we actually haven't changed too much. The one thing what we changed is particular Quantiferon immigration-based tip. It's testing the 35 million. The second area which we have tested was rather OM-related. These are literally a handful of customers who do typically high seven-digit deals with it. Here we just took a more conservative view, even if we sometimes have orders in hand, but the political landscape is sometimes very difficult to read, right? So, for example, we have larger contracts with U.S. governmental institutes, where typically we have an ongoing business. But sometimes, given particular Z environment, you're not sure if they're able to execute on Z. now when we had to revise our guidance for quantiferin in brackets anyway we turned every stone and see is there any potential risk just to make sure that things never happen at least not likely not happening again so we identified more or less two of this kind of isolated topics so overall life science business as demonstrated with our sample prep business i think it's moving in the right direction we anyway always had a quite stable life science business you remember that sample prep in general last year was good we were always cautious on the sentimentation side we do believe it's going to improve somewhat but that is not the driver for our acceleration this year the driver for our acceleration from h1 to h2 is further of all there's 200 basis points of headwind from discontinuation of business last year which was neumodex and dynaludox as of june 30th last year that will stop by definition mid of this year so 200 basis points improvement of that another 200 basis points comes particular out of new product launches which is in our case particular sample prep you know about kaya sprint our new high super machine you know about kaya symphony which is also on the market so there's no launch risk but of course things have to accelerate by time so i would say this incremental 200 bips or 20 million dollar revenues is not unlikely given the 700 million dollar base we're having and last but not least We also do believe that Parse, our recent acquisition in the single-cell business, should accelerate and probably do also better than the expecting $40 million, which we put into our numbers earlier this year. So I would say there's literally no larger impact from a life science acceleration in our numbers. Of course, we like to see that, don't get me wrong. And I think there's also early indication also in the instrumentation side, but I wouldn't call it victory yet.

Yeah, I mean, you touched on Parse. Let's go there. It looks like that was a little bit better than expected in the first quarter, at least relative to your 40 million assumption for the full year. You know, it's tough to draw any conclusions from one queue, but just anything specifically that you could call out that drew that strength?

I think just the technology, the single cell technology that is very much requested and also together with the scalability of that part of the business and just the proof points that we have on large data sets. That's just something that makes us very confident to overachieve the about $40 million that we set for 2026. And here also, just the synergies that we see also with our bioinformatics business is an important piece as well. So it's not just about sample tech and Parse being part of the sample tech business, but also our bioinformatics business that we have.

One of the benefits we have in CLAV is our past technologies that is instrument-free, so you can use it just by using the product itself, which in that environment is not a bad situation. The second thing where we're seeing right now we're doing actually quite well is in front of pharma customers. I do think Kaijin is, of course, giving our global presence a good acceleration factor for the overall past business.

So I think the combination of that plus what you just said, integration with our bioinformatics franchise which will take a bit more time um should be helpful to drive that business going forward so you're still assuming 40 million for the year you just kind of see there's more upside than downside okay um going back to what you were talking about earlier role in terms of the new product launches in uh in sample tech um you know that's kind of factored into the guide that's part of the second half ramp um you know what are your assumptions anything you can give in terms of your assumptions for that contribution um confidence in that and that coming through um it's a good it's a good thing on instrumentation business you typically have a pipeline and i would say the

pipeline so far is building quite nicely so i would say we feel this particular is this kaya sprint which is our new high throughput platform i think the pipeline build goes quite quite well and we should see the first numbers already in the second quarter but as you said correctly much more important in a third and fourth quarter and we also expect given that is a high super platform that the consumable pulse who starts quite nicely majority in the beginning will be live science so i think also there will be as always we're a general business but there will be really at least 50 percent also straight sales which which should be helpful for us so again i think that is something where we have good confidence symphony same thing here we of course working with particular customers like the gardens or notaries or whatever who are already existing customers to roll that out because it has significant advantages for them as well so again on the sample prep side is again as you know right now we have the organic growth of three percent if we're able to keep that and grow that over time that's a nice thing for us okay okay And you talked about, you know, earlier in the session, you talked about how outside of Quantiferon, if you think about the growth pillars, you know, the other four were on track.

Your assumptions for the other four for the rest of the year have not changed. Just sort of maybe let's talk a little bit about Kai Stat, Kai Acuity, QDI, sort of how the quarter played out.

Yeah, it's always some doing better, some are doing okay. I think outstanding, as we talked about, I'm not going to repeat it as sample prep, clearly a healthy start to the year. I think the same is true for Kaya Acuity, double-digit consumable growth rate, double-digit instrumentation growth rate. As you know, we have a significant project in enhancing our portfolio in terms of SLM panels. In the last few years, we launched every year around about 100 different SS panels on the machine. This year we said publicly it will be several hundreds. So we do believe that end of this year probably even the second half of the year we have probably the broadest menu available we also have gene globe where people can define their own assays we produce them ship them to them which is a with a great advantage customer loves it um has that uh i would say good start into the year given that respiratory last year in h1 was a was a huge business um we also told you ahead that also q2 will be not the easiest quarter for us because of the respiratory headwind placement numbers in Q1 were good, quite sure I think Q2 will be also very healthy. Gastro double-digit growth rate, meningitis double-digit growth rate, so I think we are on track to having our $160 million revenues here as well. QDA, also solid start, high single-digit, it's okay.

And outside of the growth pillars, PCR, Janela Mix, CDX, that was a little bit more mixed, a little bit spotty in the quarter. Is that more of an end-market dynamic, given and the softness you're seeing in A&G? Is that specific customer issues?

It's somewhat expected, in all fairness, probably a bit weaker than we thought. We do believe it was double-digit negative. We believe it should probably more like mid to high single negative. Of course, have in mind that also in that area we stopped like our ipsogen and some other products, so there's an impact of that which has to rush out. At the same time, it's probably also somewhat of the conversion to digital PCR. It's a reason why we expect some negative numbers into that. So I think we will have a bit more focus on that, stabilizing it in the area I indicated, and that should be helpful as well.

From an end market perspective, are you seeing any stability in ANG? Have things sort of resettled at a lower level? We'll talk about biotech and pharma as well.

I would think things are moving in the right direction. I think it's still a bit on the level of let's have some more confidence. But, again, you know that we last year, also last year, we had a quite solid consumer business overall. I don't think that has changed. I think what has changed now over the last couple of weeks is that we get more requests for proposals for instruments. Again, we're not calling it victory yet, but at least people trying to familiarize themselves what's going on.

Is it, you know, you mentioned reagent rental. Is that coming up more and more where people are a little bit more?

On the diagnostic side, I think it's a typical part of that. on the life science side sometimes, but it's not a big tool. Okay, okay.

And in terms of specifically US A&G versus Europe or potentially China, anything to call out by region?

China is settling, as you know, for us it's like a 4% of share. We have seen some improvements, still negative. I hope, or we hope, that end of this year we are only slightly negative, maybe flattish. So it's improving but it's not a positive it's not a positive territory okay um let's talk about uh below the let's talk about operating margins and and leverage um yeah you um you know despite some of the top line weakness you're still able to um deliver some impressive numbers on on the app side of things um you know just walk us through the bridge there what's allowing you to do that despite the further just to repeat what you just said we reconfirmed the operating income number for this year, 29.5% at constant exchange rate, so this extra rate is probably 29 plus percent, which is despite the negative impact we have from the past acquisition, because we clearly said we are doubling down on R&D investment, so it's 100 basis points diluted for the year. And so I think nevertheless, we still see gross margins stepping up somewhat, not only this year, but also particularly cloud so next year mix getting more favorable big drive for us is still the kaya stat utilization ratio because as you know this whole production environment was built during covid so there's room for us to go into that and getting into better standard costing mix as i said in general but we also have 40 initiatives we call it of course kaya efficiency programs and which are ongoing and there's certain largest programs in like the rollout of our new ERP system. We are going to SAP HANA which we do in steps but of course we're moving on here. It's all digitalization of the company we have now in the meantime 60% of our orders coming in a digital way which again clearly takes quite a significant number of costs out of the system. So there's a lot of detailed projects which we track quite well and as you know they helped us to improve margins over the last two years i don't see any reason why that should change over the next few years we have i think a commitment out by 31 by by 28 we clearly said before that we are able to increase that target now we will wait for the new ceo to launch it but i don't think the underlying tonality is not going to change okay yeah we'll talk about the midterm targets in a bit but um on the on the 26 margins um just to be clear did you are you taking any incremental cost actions post 1q to sort of reaffirm those numbers or is that just still you know i would say we still have cost action but

the plan of the underlying uh long-term plan okay okay so on the on that midterm framework you know you previously outlined um so that you know seven percent core sales CAGR the 31 operating margin which seems to be coming on the higher end of that, $2 billion of growth pillar revenue. You've had some tweaks there, here and there, but how comfortable are you with those midterm targets? I think you're comfortable with the $2 billion.

I think it's fair enough to say that the mix will change, that we're probably a bit short on Quantifero, most likely, but that we will overshoot on sample prep and probably some others, the Kaya QT and for sure Kaya Start. So again, the mix will change. The $2 billion should probably stay. We are done already with the share value back. which was a billion, we will clearly overshoot that. But we announced not only this year, but also more or less, hopefully the shareholders are going to approve in June. The margin committed 6%, 7%. We'll see a bit, right? It might be a 7%, might be a stretch. Let's see how we go.

Okay. And you talked about share buybacks at the beginning with the AGM. You just kind of touched on it now. You talk about new capital deployment priorities going forward. Just between the dividend increase and the share buybacks, is there room left for M&A? So how do you privatize that?

I think our commitment to all three areas has not changed, and I wouldn't put any kind of either or into that. So first and foremost, we clearly want to invest in the organic role of the company because it still has the biggest return opportunities for us and therefore for all our stakeholders. Second is we like to do bolder acquisitions like we did this past. I think it was a great fit to the company We don't need something transformational, but if something fits to our portfolio and accelerating the portfolio growth, happy to do so. Likely, of course, that these deals happen quite regularly, somewhat remote. So while we're reviewing, quite busy. So I think there's enough opportunity, given also the underlying cash flow and the leverage we're having, that we can continue in doing shareback increasing dividends over time as well. So I don't think it's an end, it's an either or it's really end. okay and on the flip side of that you've not been shy about divesting or discontinuing or you know one way or another trimming things that either are non-core underperforming um do you feel the portfolio is pretty well cleaned up at this point or is there more room to fine-tune um i would say so far we feel quite comfortable again let's see if i don't think there's any larger strategy change if there's a new leadership team or so uh but you never know so i would say that's something what we have to demonstrate but in general the growth drivers deliver right now somewhere between six and seven percent growth rate i don't think that that is questioning anything and i do think

the leverage probably right now comes out of operational efficiency and that should give us also enough room to grow margins going forward okay and on the you know going back to the topic of the ceo change um you know could you give us any insight in terms of the criteria the board is using or sort of what are the priorities um is you know you've outlined certain strategic initiatives and moves is the goal to find a ceo that fits within that framework or is there a view where you might have a new ceo and and some of that framework could change um i probably think the way uh the searches are done in this world is that i would not expect any larger surprises

for at least for the board because typically as you know this this uh candidates go in the meantime tend to quite a dedicated search process, have to present their cases and so on. So I think everybody knows quite well from both perspectives what to expect and that there is no larger surprise, right? At the same time, I do think what the board expectation is, in the US you would probably call it looking for somebody in brackets who has seen the movie. So somebody who worked in life science, who worked on a clinical side as well, because we clearly have a business in both parts of the industry. We clearly would love to have somebody who has experience with Europe and the U.S. because we have an operational setup, which is actually very global as well. So there is a good set of candidates out there, and so I'm quite comfortable that we have the right candidates.

Last couple of minutes left. Any questions from the audience? If not, Roland, maybe our standard closing question. or a mark, sort of what do you think is most underappreciated? What are some of the bigger debate points you're hearing? Anything you want to clarify to investors or make sure people take with them as they walk away?

I'm not sure that there's something underappreciated. I think there's a lot of things overappreciated, which was the fear about current fear on the world is falling apart. And so I really hope that with some of the news coming out probably today and then hopefully get more interpretation over the next couple of days And hopefully the products finally make it to the market, that people will figure out that there is still the leader in Quantiferon Latin TB market. And that's Kyogen, and that we continue to grow with Quantiferon, but also in particular outside Quantiferon. That is all what we want to demonstrate, because nobody questioned, I think, that we delivered quite, I would say, a series of 26 quarters in a row in terms of revenue and EPS performance. that is what we want to do going forward as well.

Well, on that note, we'll wrap it up there. Thank you so much. Thanks, everyone. Thank you.