bioMérieux S.A. (BIM) Earnings Call Transcript & Summary

Good day, and welcome to the bioMérieux First Quarter Sales Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Aymeric Fichet. Please go ahead.

Thanks. Good afternoon, everyone, and thank you for joining us to review the Q1 2025 bioMérieux sales performance. I'm online with Pierre Boulud, CEO, together with Guillaume Bouhours, CFO. Please note that this conference call will include forward-looking statements that may change or be modified due to uncertainties and risks related to the company's environment, Accordingly, we cannot give any assurance as to whether we will achieve these objectives. I also remind you that today's call is being recorded and that a replay will be available on our website www.biomerieux-finance.com. I will now hand the call over to Pierre and Guillaume, and then we will open the call to discussion and questions. Pierre?

Thank you, Aymeric. Good morning, good afternoon, everyone. So I'm going to start before handing over to Guillaume. I'm going to start with 3 main topics. A quick overview of our commercial traction for Q1, a word on a GO 28 plan deployment, and then I'll say a few words on tariffs before handing over to Guillaume. So as you could see, Q1 2025, we achieved close to EUR 1.1 billion, 13% organic growth. So a very positive Q1 performance a little bit contrasted by franchise. So let me go a little bit more in detail through this. First piece of good news that we had in Q1, very strong RP sales up 21%, definitely supported by, unfortunately, a strong flu season, strong epidemiology, illustrating very well the medical value of the solution. We are seeing more than ever than the adoption of syndromic testing for respiratory testing is definitely taking traction. Also illustrating the competitiveness of BIOFIRE solution when there is demand, we're seeing the use of BIOFIRE system very systematic in the systems, in the market. So that's the first element, strong performance on RP. Second element is SPOTFIRE with record installations actually since launch. We have over 1,400 instruments installed in one quarter, very much reflecting the fact that we believe we have the most comprehensive respiratory panel in the market, fastest time to result, probably the best solution in the market for point-of-care testing in respiratory and very strong partnership with McKesson. So good dynamics with -- in the U.S., especially for what we call the true point-of-care testing and also very significant acceleration in Japan. Thanks to government subsidies. We are seeing the solution being more and more adopted in Japan, so excellent news for the months to come. The third element with regards to sales is BIOFIRE nonrespiratory, which is growing a little bit above our target, 11%, very solid traction, again, in the spirit of implementing a cross-selling strategy. Final highlight on the strong sales performance is industrial applications, growing 9% in Q1 very solid demand, very solid performance, especially in pharma with our cell and gene therapy clients. And we are seeing some clients moving from R&D products that are being actually marketed. So obviously, as the product gets approved, the number of batches and the importance of manufacturing gets higher. So we also increased our sales. So very strong and sustainable performance in the Pharma segment. So that's the highlight of the -- again, very strong performance for Q1. A word on GO 28 deployment. First, a word on what we call our innovation powerhouse. In Q1, we have launched 3 innovations in 3 out of 4 growth drivers from the GO 28 plan. First of all, non-RP. We got the approval of what we call gastrointestinal mid-plex panel that allows to address a new segment in the U.S. of patients that are covered between 5 to 11 targets. So with this mid-plex panel that is aimed at maximizing the diagnostic yield for the highest level of reimbursement. We expect to grow the patient population that will benefit from syndromic testing. The second innovation is in microbiology. We've launched a new VITEK COMPACT PRO system that is very much targeted for emerging countries, so lower throughput expectations, where actually the antimicrobial stewardship challenge is the highest. So we're excited with this launch together with the approval of our LUMED solution that was marked in Europe. Third, innovation that we launched for industrial application for food testing, we launched GENE-UP Typer. It's a molecular solution that allows to do genomic analysis very powerful for the food clients when they are exposed to listeria contaminations to help them identify the source of the contamination and manage the challenge. So we are excited also with this launch in one of the GO 28 growth drivers. With regards to growth impact, as you know, and as we communicated last month, we had a very strong profitability improvement organic by 20% in 2024. We continued in Q1 '25 to work on the simplification and the efficiency of bioMérieux at the same pace in 2024. Numerous actions ongoing. We keep talking about BIOFIRE automation, but also working diligently on headcounts, purchasing efforts, supply chain optimization, sorry. We're also working together with the R&D team following the integration of SpinChip to arbitrate R&D projects to make sure that the SpinChip R&D costs are fully embedded into a 12% of sales. So very good progress in the first quarter, very much in line with the GO 28 ambition that we have to [indiscernible]. The third element I wanted to share with you in this call is obviously an update on tariffs. The most -- the hottest topic across all industries, but also obviously within IVD. Of course, we acknowledged it's a super volatile environment, tariffs, foreign exchange rate, Guillaume will come back to that. So it's a very fast-moving situation with changes almost every day. So we have a specific task force that is continuously working and monitoring the situation first and building mitigation plans. So of course, we are looking at optimizing our stock management in this context, negotiating with the suppliers. We're starting to look into price increases to mitigate the cost of tariffs. Having said all of that, tariffs are not going to break good quality business. We have now a new geopolitical environment and we need to be able to adapt with agility to deal with this new geopolitical environment. So what we wanted to say during this call and as we are communicating our Q1 sales is given what we know, we are very confident on the 2025 guidance with at least 7% sales growth in 2025 and at least plus 10% sales growth at constant exchange rate. And with this, I hand over to Guillaume, who will give you a little bit more details on those different elements.

Thank you, Pierre. So let me provide you a bit more color and details on Q1. So again, sales of EUR 1.1 billion, organic growth of 13% on the top line. Of note, as you've seen, a positive currency effect on the sales, EUR 11 million, mainly driven that the U.S. dollar was pretty strong, was pretty strong in January and February that has completely reversed since then, and we'll come back to that on full year impact. Second element, so as you've seen, a very strong BIOFIRE respiratory panel sales, up 21% on an organic basis, driven mainly by the very strong respiratory season, even qualified by some as historic high season, especially in North America and EMEA. Our GO 28 4 growth drivers are up 12% organic overall. We will start with BIOFIRE nonrespiratory super robust performance at 11% organic, in line or as Pierre said, very slightly above our 2025 full year guidance. We mentioned that in the EMEA, despite the competition that is not new in this region, we have a very strong dynamic with double-digit growth for non-RP in EMEA in the quarter. Overall, globally, the pricing for the non-RP has been flat. So stable pricing in Q1 '25 versus last year Q1, and non-RP represents 35% of the reagent sales during the quarter. We said it the IB expansion has been very positive in Q1 with plus 600 net units, I remind you, it's net installed with our customers. I take this opportunity about the IB of BIOFIRE to let you know that we will stop communicating this BIOFIRE installed base number on a quarterly basis. There are several reasons for that. First, on such a large installed base, we believe the quarterly numbers are not so material. We are on -- more than 27,000 instruments on our installed base. We also, I must say, received a number of feedback from investors to stop giving these figures, knowing that last year, we also, for those who follow bioMérieux that it created unjustified volatility on the quarter-on-quarter. And last point, when you look at comparables on syndromic, actually, nobody of our comparable players report IB of syndromic on a quarterly basis. And again, this is due to also to the maturity of this product. I remind you, we don't report on every quarter our VITEK or BACT or VIDAS IB. Now turning to SPOTFIRE, EUR 54 million sales in Q1, up more than 160% organic growth. As Pierre said already, a very strong acceleration of our instruments installation plus 1,400. This performance on the IB up 45% in only one quarter. This performance is driven by the continued expansion in the U.S. Pierre mentioned a very good partnership, a very efficient partnership with McKesson and also a strong acceleration. We qualified a one-off in Japan, thanks to a very specific government subsidy that ended at the end of March that was pushing for the customers to get equipped. In detail, by the way, the U.S. installations were themselves similar in Q1 '25 as they were in Q4 '24. So we believe we are very much in line to reach our target for this year, which we said is doubling sales for SPOTFIRE at EUR 190 million for 2025. Turning to microbiology, 4% organic growth, which is slightly lower than expectations. The performance is impacted by China with a pretty strong pressure on the overall healthcare spend in hospitals in the country and a pretty high comparable effect last year. We have another effect on the blood culture specifically inside microbiology, which is linked to our competitor supply issue last year, you might remember, it was broadly discussed. So these supply issues from competition last year have had the effect that customers have adapted their use of blood culture bottles with less consumptions in the past few months, and we see that as a market effect also impacting us. Excluding China, still, overall, the VITEK and BACT sales are up 7% with about 2 percentage points price increase. Finally, Industrial Applications, very good performance, 9% organic fully in line with our guidance for the year. Reagent sales are up double digits. And as Pierre already highlighted, the Pharma segment, which is about half of the overall industrial applications is particularly dynamic. And it is nice to mention that after softness in instrument sales last year, we see instrument sales back into positive growth territory. In immunoassay, the negative performance continues to be driven by the global acceleration in procalcitonin sales decline, more than 20% decline that still represents about 20% of our immunoassay sales. We also see a strong effect of China on VIDAS and on [indiscernible]. It's still pretty small for bioMérieux, but this specific segment is under significant pressure on the price and competition. Overall, a very dynamic quarter that makes us very confident in achieving our 2025 top line guidance of at least 7% growth. Before moving to the Q&A, some details on the very volatile environment that Pierre mentioned. So China, I mentioned already, there is the impact on immunoassay linked to volume-based pricing extension. And there is also this impact on microbiology, which is not volume-based pricing, but more a global policy in China to pressure the hospitals on their spend, which we definitely see on healthcare spend broadly not specific to bioMérieux. Tariffs, so it's probably worth explaining the exposure of bioMérieux on tariffs. It's basically 3-fold exposure as we already mentioned, bioMérieux, the sales of bioMérieux in the U.S. come from products that are about 85% produced in the U.S. which is a pretty good footprint in the current environment. Yes, the first exposure is that 15% of the products we sell in the U.S. are coming from outside of the U.S., especially from France and a bit from Italy, so 15% of U.S. sales. Second exposure, I would say, like any U.S. player, and we are very much a U.S. player in the U.S., we import some raw materials for our manufacturing in the U.S. We import raw materials and components from China, from Europe mainly. And this is, of course, a second exposure to tariffs. Third exposure is our exposure to the China, I would say, counter tariff, if I may. So China represents 5% of bioMérieux sales. Vast majority of what we sell in China is actually imports from the U.S., mainly on microbiology products. We are monitoring very closely the situation, as you can expect, not easy as the rules are changing every day in the past 7, 8 days. While the growth impact could be significant for bioMérieux. There are a number of short-term actions that we are investigating or for some already taking to mitigate impacts. I can mention that, for example, the shipping of instruments into China before the tariff escalation days. We start to negotiate with our suppliers as well. We have built and, let's say, started in China, a plant for BACT bottles, blood culture bottles that we are ramping up, accelerating in terms of ramp-up. We are trying to maximize the use of raw materials that are already in the U.S. These are more short-term actions, and we will work on medium-term actions in case the tariffs were to be maintained at those levels. I would like also to explain the foreign exchange. Even though so U.S. dollar, as you saw, was pretty strong in January, February, weakened very much in the past few weeks. So euro has a very strong appreciation against many currencies, not just U.S. dollar, but in most currencies over the last few weeks. The good news is that we have -- as you know, we have a policy to hedge most of our currency. A significant part of our currency exposure for the year, and this is pretty effective. So we still have an impact, but that is not so material. We review our currency effect on contributive EBIT for the year to be around minus EUR 35 million to minus EUR 40 million from around minus 30 million 1.5 months ago. Overall, we will monitor the situation on tariffs and FX notably, but we are confident at this stage to reach the 2025 annual guidance for at least 10% organic growth of EBIT. With that, I propose we move to the Q&A session.

[Operator Instructions] We will take our first question from Odysseas Manesiotis with BNP Paribas.

Firstly, on the U.S. raw materials that you're importing from China. Could we get an approximation of how much of the COGS this accounts? And then I have a follow-up.

Thank you for the question. So at this stage, we try to give the -- I would say, the broad exposure with the 3 levers that I have explained. But we -- again, as things have not stabilized yet, we will avoid to give super detailed on the exposure. Again, the tariffs themselves are changing every day. Our own actions on how we can mitigate the tariffs are also in the build and some are being triggered. But again, I think our exposure, the most important is our exposure as a U.S. manufacturer is probably quite likely similar to other U.S. players as we try to find a supply where we find the best ratio of quality and cost on our different supplies, which sometimes comes from Europe or China.

Got it. And on the production ramp-up in China for the BACT/ALERT bottles, could you give us a sense of where that would take you in terms of imports from the U.S.? Would it say that could it move you to essentially producing the majority locally of what you're making in China?

The target is definitely -- and that was already the target. So we are glad to have this plan that we have built over the past 3 years. The target is to produce in China BACT bottles for China. And when I say that, it means 100% of the market -- China market bottles coming from our Suzhou plant. Then of course, we are in a ramp-up. This is the second year. In the current environment, we intend to accelerate the ramp-up and also to accelerate potential localization of raw materials in China as well.

We will take our next question from Kavya Deshpande with UBS.

I've got 2, please. My first was just on the BIOFIRE non-RP sales. Could you clarify for us whether all regions are growing at least in line with the GO 28 guidance for 10% growth for this franchise, please? And then the second is on SPOTFIRE. Obviously, a very strong quarter for installations. Could you just give us a bit more color on whether installations are still largely competitive displacements and whether that's a similar dynamic both in the U.S. and Japan.

Yes, thank you. Maybe I can take it. So non-RP sales growth, it's growing in every region. I'm not sure I can confirm that every region is growing above 10%. There is a bit of a mix. Maybe to give a little bit of color on -- within the -- because you can grow at a level of granularity by type of panel. What we've seen in every region is our BCID sales. So the sales that are actually related to positive microbiology blood culture results are growing a little bit less in this first quarter. And we see it as a very direct impact of the microbiology market that is slowing down a little bit in developed countries. So in U.S. and in Europe, BCID was a little bit lower. But overall, very much in line with our plan, Kavya, and very confident with the 10% sales growth that we communicated for 2025 guidance. Your second question on SPOTFIRE competitiveness displacement, totally confirming what we said until now that is -- in the U.S., it's 100% of replacement. In Japan, there is a significant point-of-care market, maybe not exactly the same competitors, but we are very happy to see that the Japanese authorities see SPOTFIRE as a very competitive and an opportunity actually to strengthen point-of-care testing for respiratory syndromes. So it's installed into GP offices or pediatric offices where there is a need for and already point-of-care testing.

We will take our next question from Maja Pataki with Kepler.

I have actually a few. So I'll just go through them. Pierre, if we look at the GO 28 plan, and we look at microbiology, particularly in Q1 due to softness in China, you're a bit off from the target that you set for yourself over the plan. But how are you thinking about China for the rest of the year in microbiology? Do you believe that there is going to be an acceleration in growth? Or do you expect this softness in China to persist throughout the year? The second question is on the immunoassay franchise, down 9% in Q1, quite far away from flattish revenues. How should we think about the franchise going forward? And does that pose a risk to more than 7% growth or the 7% growth target for the period? And just a housekeeping question. Could you tell us how much the special one-off effect was of instrument placements in Japan in the quarter? And how should we think about the SPOTFIRE phasing in Q2, Q3? Because I recall last year in Q2, we were all a bit disappointed about SPOTFIRE revenues and placements. Just to avoid that, how should we think about that? And my last question for now is there has been the announcement about the partnership between Oxford Nanopore and [indiscernible]. And I was wondering what your views are on this partnership given the fact that you are competing with [indiscernible] in the point-of-care market. And you have a stake in Oxford Nanopore, how do we score that circle?

I go in order from the first one. Microbiology and especially evolution in China. So to be transparent with you, a little bit surprised by the decline in microbiology because there is no price reduction in microbiology. There is no volume-based pricing in microbiology. And what we're seeing is the general environment in the Chinese hospitals market, a huge level of cost constraints that is spreading beyond the kind of obvious targets that were immunoassay immunochemistry. So it's a little bit of lateral impact that we are experiencing in microbiology. We -- it's complicated to tell you what's going to happen in China, but we see it as a bit of a one-off and short-term impact. It may last for a few more months, but we don't see it as a long-term impact for microbiology. As you know, microbiology has been developing a lot in China in the last few years. We are by far the market leader. We're a little bit less exposed to China competition in microbiology than in immunoassays. So we still see it as an opportunity for growth. Hence, the manufacturing plan that Guillaume was talking about that is aiming at manufacturing in China, 100% supply for BACT bottles. So complicated to give you a full estimate on what's going to happen for microbiology in China, but there is a little bit of an impact of the -- principally an impact of the overall cost constraints on the healthcare system in China. On your second question on immunoassays or maybe just a word on microbiology because you mentioned the gap in Q1 versus GO 28 guidance. Just to remind you, we had actually a very strong performance in 2024, ahead of the target. And we guide for 6% to 8% over the period of the plan. So it may be that this year, we're a little bit below or a little bit higher, but we are still very confident in the capacity to achieve the GO 28 targets for the years to come. Immunoassays, yes, lower number, very much impacted by China, by the way. Again, the strong Q1. I would tend to say this -- I mean, even though there is a more kind of structural element for us in immunoassays with [indiscernible]. We are actually very close to what we were expecting from -- in terms of expectations from a budget perspective for immunoassays. So too early to say that you're right to say it's a slow start unlike RP, which is a big start. But too early to say that we want to change our target or our guidance. We're still aiming at stabilizing the sales for immunoassays. We still have some elements to believe that we can recover. So a lower start at the end of Q1. And if and when we see that we have news to integrate, we integrate, but we confirm the overall guidance at 7% growth for 2025. One-off in Japan, so Guillaume said a word about -- actually, I mean, the 2 big countries that generate most of the installations are the U.S. and Japan. We are seeing very continued traction in the U.S. So it's only good news actually to have the acceleration in Japan. You're right to point out that Q4 and Q1 are stronger quarters in terms of installation. So we expect Q2 to be lower. So to -- in the spirit of managing expectations to your point. And we had a little bit of volatility last year when we communicated Q2 numbers. We expect Q2 to be lower because at the end of the respiratory season, there is significantly less clients that want to equip themselves with a point-of-care system for respiratory. So we are seeing Q2 much lower to be transparent with you, the biggest part of Q3 is also lower. We're really seeing August and actually September getting better and then 2 big quarters that are Q4 and Q1. So that's the pattern that we've seen that we expect to see again in 2025. Finally, partnership with Oxford Nanopore. But first of all, we -- it's also a question for Oxford Nanopore. We don't have -- we didn't sign an exclusivity partnership with Oxford Nanopore. So they have the right to select different partners in a way, [indiscernible] selecting long-read sequencing solution for infectious disease is a confirmation that we are -- that it's a good technology to deal with infectious disease. Our plan is to still launch the [indiscernible] solution that was, by the way, displayed at the ESCMID Congress in the next few weeks, and that will be a very innovative sequencing solution in partnership with Oxford for diagnosing multi-resistant tuberculosis.

We will take our next question from Aisyah Noor with Morgan Stanley.

My first one is on the tariff for Guillaume, I guess. What are you assuming happens for now? If you could kind of elaborate? You mentioned that the growth impact could be significant. By your assessment, how big is this growth impact before any mitigating efforts, i.e., would it be in the double or triple-digit million magnitude here? And would you -- can you clarify whether you could qualify for any exemptions like the narrow protocol that some of the other companies are talking about? And then my second question was a quick follow-up for SPOTFIRE. Do you still intend to report the quarterly installed base for SPOTFIRE, if not BIOFIRE, given the largest player in low-plex testing is still reporting this KPI?

Yes, maybe -- thank you very much, Aisyah. So yes, the installed base of SPOTFIRE, we intend of SPOTFIRE, we intend to continue to report on a quarterly basis. The difference is that it's a product that is still recent and that therefore, the quarterly figures help everyone understand the, I would say, the ramp-up of the product itself, whereas again, it's not the same argument on BIOFIRE, which is a very major product launched more than a decade ago. So yes, we will report quarterly ID of SPOTFIRE. So coming back to tariffs. So we do not qualify for the exemption. Thank you for the question. It's good to mention because I, of course, all this is moving all the time. We understand there is a temporary exemption for some pharma companies, but MedTech are not part of this temporary exemption, not today. Again, the rules change every day. So no exemption, no specific exemption. The growth impact and sorry, I repeat it growth. I think you understood that for everyone, I'm not talking growth of the sales. I'm talking growth impact on the EBIT and the cost would be, yes, very significant, probably triple digits. If we were to do nothing and have no impact on a full year basis, Again, it's very difficult at this stage to assess. We took assumptions in our guidance that the U.S. and China tariffs will stay exactly the same for the next 9 months, which probably is not quite likely, again, as they change all the time, but this is what we assumed. We'll see how they stabilize. And we also took into account that, again, we will not be impacted by the gross amount because we have a number of levers. I mentioned some of them that we are already working on. And so the net impact will be much more limited, especially in 2025, which makes us at the end, confident to be able to confirm our guidance of at least 10% organic growth. And of course, this very strong Q1 helps us also to be confident on this full year.

We will take our next question from Dylan van Haaften with Stifel.

So just firstly, just on SPOTFIRE. If we kind of compare to the prior year, which is obviously early, but the installed base is roughly 3x higher and revenues are 2x higher roughly. Should we kind of think that with the high installed base additions that the per unit installed base -- sorry, the per unit reagent consumption is a bit lower? And how should we be thinking about the 2Q and 3Q here before sort of the respiratory season kind of kicks in again? Just on a modeling basis, any color would be super helpful. And then I have a follow-up.

Okay. So I'll start answering, Dylan. Thank you for the question. So you're right to say, as we grow the installed base and we grow into this point-of-care setting, there is less patient traffic sorry for -- it's a bad word, but we have less tests per machine. We also have, as you know, on SPOTFIRE, we sell 15 targets and 5 targets at a different price. And in the point-of-care setting, we're also selling more 5 targets than 15 targets. So there is a volume thing. There is also a mix impact that plays against the burn rate. So that's one element. Having said that, what we're seeing is a significant increase when we compare Q1 2025 with Q1 2024. So when you compare from 1 year to another, we have more than doubled the sales. And as you know or remember, our guidance for 2025 is to double our sales performance in 2025 versus 2024. So we see -- and by the way, we've increased by 1,400. So we increased the installed base by 45% in just 1 quarter in Q1 2025. So we are seeing both an acceleration of -- and an improvement in terms of new instruments. And you're right to say, a level of burn rate, which is a little bit lower. The combination of the 2 makes us very comfortable to achieve this doubling of sales in 2025.

Excellent. That helps a lot. And maybe just to kind of understand, so like if we go back and maybe think about the first 12 months of, let's say, the first adopters of SPOTFIRE, could you give us sort of an indication of what kind of ramp they are, sort of what kind of level we should kind of envisage that the new vintage should be running at on a relative basis? Obviously, it's not like-for-like and it's -- but in broad terms.

I think it's difficult to -- sorry, it's difficult to provide such level of details. Yes, there is a ramp-up. But I think the most important impact is this mix effect that Pierre mentioned that as we grow more on the pure point-of-care or traditional point-of-care outside of the hospitals, we see the average consumption per unit lower on that segment than the hospital segment. And again, please remember that we, [indiscernible] have been in this specific segment only 18 months. So I'm not sure we are yet super experts of the ramp-up and on the consumption of the different types of settings.

All right. Understood. And maybe just one final one, also on SPOTFIRE. So we obviously had McKesson kicking in, in the third quarter, and then we had this one-off in Japan. Maybe just on Japan, could you quantify that for us a little bit? And also just on McKesson, should we kind of envisage that it's going to keep rolling? Or should there be sort of a slowdown, let's say, when the McKesson distribution sort of gets recomped in the third quarter?

Sorry, you said third quarter, but McKesson really started last year, April 1, it was the start of their fiscal year. Of course, they started at a time where the market itself is not the most active in terms of new installations, but they were in the market with us. You probably mentioned third quarter because, again, that's where the market was more on the buy cycle and we were together successful. So no, as Pierre said, the partnership is ongoing for a year now. It's -- we are very pleased and we understand they are as well and we take market share, which is our ambition with SPOTFIRE and as you understand, Dylan, we are far from saturating the market. So there is -- we don't see good reasons to be honest, to see a slowdown with McKesson. And as we said, Japan is a huge point of care market. So we benefited from this specific subsidies program for a few months, which was a great news because it allows to accelerate the installations, but we still aim at installing the SPOTFIRE in Japan. So we are very far. We have a very small market share actually from an installed base perspective. So we are very far from having saturated the market opportunity.

Understood. So we shouldn't be thinking that this is sort of a flash in the pan, let's say, this 1,400 number that this is a pretty good starting point, obviously, and installs are going to be weaker in the second quarter sequentially, but it's not going to be sort of in the hundreds, in the low hundreds?

Yes, we don't give forecast per quarter, but we wanted to highlight the fact that, I mean, we're extremely happy with the Q1 number, and there is an element of bids. Q1 is a high month for installations bid that we benefited from this Japan specific subsidies program. It's probably on the high side. So we expect Q2 to be lower, yes.

We will take our next question from Marianne Bulot with Bank of America.

On SPOTFIRE as well. Could you maybe further explain a little bit Japan government subsidies and how it works, will the hospitals also receive some subsidies for the test and consumables? Or was it just for the equipment part? And the second question on SPOTFIRE as well. So the installed base has grown quite significantly this quarter. And based on your comments from the previous questions as well, could the EUR 190 million guidance be a bit conservative for this year? Or do you feel that there is a risk maybe that this Japan installations are a bit less utilized as the government funding boosted some of the placements?

Yes, thank you Marianne. So the subsidiaries plan in Japan. So what I understand is the plan from the Japanese authorities is to actually help the point-of-care setting to get equipped with the instruments. In Japan, you cannot place you need to remember that in U.S., we place an instrument, so there is absolutely no cost in the point-of-care setting for having a SPOTFIRE instrument. And then they have the rolling use of the reagents. In Japan by law, you cannot place. You have to sell. So to help in the point-of-care settings, the doctors who have access to respiratory testing they have decided and kudos to them to help the point- of-care settings to equip themselves with instruments. So it's great news for us because it accelerates the installation of SPOTFIRE instruments. It doesn't come together as far as I know, with a subsidy to diagnose more, but it helps them to have the most updated, most recent instruments into their offices to be able to diagnose better Japanese patients. That's the rationale for the test. For the subsidy in Japan. And there was a deadline, which was the end of March. So it may happen again. By the way, we don't know. And obviously, our teams are looking into it. But for now, it's -- we know it will not happen after the respiratory season. With regards to your question on the target, I mean, we've just stated 1.5 months ago a target, which was to double the sales. We are very, very happy with the strong performance in Q1, which is more than doubling the sales, way too early to say we are going to be above the target. At this stage, we confirm the target, which is EUR 190 million for 2025.

We will take our next question from Shubhangi Gupta with HSBC.

So my first question is Q1 had a very strong performance in America. So do you think -- and especially on the respiratory, I understand it is due to a strong flu season, but do you also think there's a pull forward of revenues ahead of the tariff uncertainty in Q1? And second, I understand there has been a pause on tariffs ex China, 90-day pause. So ahead of that, some companies might want to like build up the inventory. So could you comment where does your inventory level sit quarter-on-quarter or year-on-year levels? Some color there?

So maybe on the first one, which was -- if I understand your question was about the potential pull-forward effect into Q1. We have not -- it's difficult to measure for us, but we have no specific signal of any of that. So no, we have not seen anything on the -- that would be a pull forward. Second part, I was not sure.

Your question was on China, right? Your second question?

Second question is on your inventory levels. Can you give some color on your inventory levels?

Inventory level, so we report on a half year basis. But as we said earlier, we intend to continue to manage it in a good way. I mean the seasonality effect is usually that we have increasing inventory up to end of Q3 to prepare for the winter season, especially on the respiratory, and then we kind of decrease, especially with a strong Q1, you can be sure that our inventories are lower at the end of Q1. It's probably the lowest point of the year, but that's normal seasonal effect.

And maybe to complement because we talked about stock management in the context of tariffs. We have a bit of a higher stock in China from an instrument perspective because the teams have managed to import in China before the tariffs were raised, I think, between 6 months and 1 year of instrument consumption. So that kind of reduces significantly the impact on instruments coming from the U.S. in the Chinese market. So we are kind of managing the stock in this geopolitical environment in agile way, as I said earlier. So building stock where we believe it will actually allow us to minimize potential additional cost for bioMérieux.

Just a quick follow up. So related to your -- yes. So you mentioned you have higher stock in China. So similarly, do you also have like higher stock in U.S. because I understand right now, there is no additional tariff ex China from U.S. So at least from U.S., if you have to import from other countries ex China, so some companies might want to stock up there. So could you also give some color on your U.S. stocks?

We have significantly levels of inventory in the U.S. for our U.S. plants and for the U.S. market as well. So I'm thinking raw material and some finished goods, which we -- again, we mentioned earlier for the, let's say, normal safety stock and then cycle stock coverage for our products. But it will definitely help us in this period to mitigate some of the -- at least for a temporary part to mitigate some of the effects of the tariffs. We can maybe take some questions that are by writing. Pierre has a question on an update on specific diagnostics, meaning the performance of REVEAL, SPECIFIC REVEAL.

Yes. So what we shared -- I don't know if we shared it in the call, but we shared on a regular basis, we are just launching in the U.S. So very first few weeks and months of commercialization. So I think it will take to have a few months of commercialization in the U.S. to be able to come back to the market and give you an update on where we stand with regards to VITEK REVEAL ramp-up in the U.S., acknowledging that this is a new category in the market, fast TSP, very, very limited offering until now. So very much growing as we did successfully with syndromic testing with molecular. We are aiming at growing the category. So -- and the U.S. is definitely a market of interest in that regard. So I suppose that based on 2025 performance, we'll be able to give you a little bit more color on VITEK REVEAL launch.

There's also a written question on the update on the development and commercialization of latent TB test, which we call the TB-IGRA for the U.S. market.

Yes. So in the U.S., we are in the process of doing the clinical trials. So in active discussions with the FDA, even possible that we started the trial or we are on the verge of starting. So we have a plan to get TB-IGRA test, latent TB test available in the U.S. as soon as we have completed the trials and it's been reviewed by the FDA. No change for the plan.

Not this year.

Not this year. It takes a bit of time to do the trial.

That's it for the written questions, maybe we can take questions from the call?

We will take our next question from Natalia Webster with RBC.

Firstly, following up on your previous question on microbiology you seem to be comfortable with the G028 guidance of 6% to 8%. But I wanted to confirm if you're now expecting to come in a bit below the 7% segmental guidance that was provided in March, this full year 2025. you commented on China, but you're able to quantify how much of microbiology is being impacted by the weakness in blood culture that you mentioned? Next, I just wanted to ask a more broader question on microbiology since your growth was still quite strong in North America. Are you able to comment on the progression of your market share here given your midterm strategy to become #1 across all segments. Then finally, on BIOFIRE, given the very strong performance in Q1, do you see the prior full year guidance for respiratory sales to be flat this year as conservative? Or was this largely built into your guidance provided in March?

Thank you. So I really actually put together your question one and your question four because you're right, we are starting a little bit low year in microbiology. And we're starting a little bit higher with regards to respiratory panel. So I mean, it's only 1 quarter, 25% of the year. There are a number of actions that are being taken by the teams to maximize the growth perspective from the sales perspective for the remaining of the year. So honestly, too early to revise any targets if we see a very strong evolution one way or another, obviously, we would. But what we see very clearly is that between potential risks and opportunities on the guidance, we are very confident to confirm the 7% increase, at least 7% increase in sales for 2025. So that answers your microbiology question and your ARP question. More specifically China microbiology, we have it's -- I tried to answer it a little bit earlier. We are seeing a bit of a slowdown in the first quarter, which is mostly related to macroeconomic environment in the health care system in China. Complicated to say when and how fast we will recover medium-term perspective, there is a need for more microbiology in China very strongly. There is a strong level of recognition for microbiology solutions. We have a strong market share in China. So it's more a matter of when than a matter of if it will recover. We keep monitoring the situation on a daily basis. The teams are super active. The very fact that we have local manufacturing in China should help also to navigate those challenges. But I can't give you an exact answer on when the market will recover. The third question on market share in the U.S. We are seeing actually a good traction in the U.S., very happy with the evolution. Again, in microbiology, we benefit from different elements. The first one is we have a very comprehensive offering, be it identification with VITEK MS PRIME, with VIRTUO, be it antibiogram with VITEK or now fast AST with VITEK REVEAL. We have a very comprehensive offering. The second element is versus the competition, we have the most updated systems, the most recent systems launch. It's true in every category. It's true for MALDI-TOF with VITEK MS PRIME. It's true for hemoculture with VITRTUO. It's true for AST with VITEK REVEAL. So we believe we are very well positioned to capture share. And the third element is we have a capacity to link and to cross-sell between the different solutions as we successfully did with BIOFIRE for the different clients. So very confident with our capacity to grow share in microbiology in the years to come and most importantly, in the U.S. market. I hope that answers your question.

Yes. Just a quick follow-up on the microbiology in terms of the change in customer behavior following the supply chain issues on the blood culture side, how much are you seeing that impact your sales? And how much do you expect that to continue?

It's a very good question. I'd love to have a precise answer. What we are seeing is a very -- I mean, you have to remember that our clients, especially with hemoculture, they are usually a mono supplier. So when they see a challenge in terms of supply chain, they start to be very cautious with the use of the bottles. And as you know, we've managed to protect all our clients. We are not in a backorder situation, but we are also in a very stretched situation in terms of supply. So the whole market, I think, is a little bit cautious. Our clients are a little bit cautious with the use of blood culture, reviewing, making sure that they are using it only if and when it's absolutely necessary for critical care patients, which is very healthy. As the supply to the market will normalize, we expect the situation to get back to normal. Unfortunately, we're getting over the respiratory season now, but we expect the situation to recover in the next few months as we're capable to -- all the players in the market are able to reassure the customers that we are able to secure supply.

We will take our next question from Jan Koch with Deutsche Bank.

I have two. The first one is on the expected currency impact on earnings which currencies are responsible for the high expected headwinds? And in relation to this, have you made further progress in reducing future negative impacts coming from currency fluctuations? And then secondly, on tariffs again, how confident are you in passing on those additional costs to your Chinese customers, given that you mentioned that there's a huge level of cost constraint in that market at the moment.

Yes. Thank you very much. So on FX, the main currencies where we see impact. So first, the high inflation -- hyperinflation hyper devaluation countries such as Argentina and Turkey, but we have others like Mexico, Colombia, India, as you can see, where the exposure is -- could seem less, but actually the variation in the currency are very significant. Fortunately, on some of those, for example, India, the rupee, we were hedged. So we actually offset some of the 2025 impact with our hedging in place. So that gives you, I would say, some color on where we see the major impact. And I should mention, of course, the USD, just to remember again to everyone that our global exposure on the USD currency is not major as we have, of course, a very high base of sales and profits, but also gross profit and also a high base of manufacturing and R&D and functions in the U.S. So net-net, currency-wise, the USD exposure is not huge. It's not 0 either. And the USD, of course, I mean, the projection that we had at the end of February was actually with a strong dollar, so positive effect. Today, it's much weaker dollar, so more a slightly negative effect in the new project.

Impact on pricing, I can say well, if you wish. impact on tariff impact on pricing. So a little bit too early to say. As you know, the measures that have been taken have 90% -- 90 days, sorry, kind of -- so we are not going to increase prices for 90 days. We have usually longer-term contracts. So we need to see where it goes. The second element I would mention is you're right that our customers have a limit to what they can take in terms of price increase. So we also want to make sure that we manage this in a careful manner. The third element is, I think we're demonstrating during the hyperinflation years that we are capable actually to increase prices. So this is a muscle, if you wish, that we have exercised in the last few years. So if we come back to a permanent inflation evolution, those discussions we need to have them together with our clients, of course.

And we will take a follow-up question from Maja Pataki with Kepler.

Apologies for that. But by now, I think I'm totally confused about what is included in your tariff calculation. When you indicate on the gross impact of the triple-digit amount on profit, are you -- are we -- are you taking into account that there is this 145 tariffs from China and that we have Europe at 10% now, but then it's going to go to 20%? Or what is included in this triple-digit gross amount that you're going to balance out? That would be very helpful to understand that.

Yes. Of course, Maja, no problem. Sorry, if it was not so clear. So today, in all our simulations, we take the current U.S. tariff on China, U.S. tariff on Europe at 10% and the China tariffs on U.S. at 125% as if they were to stay medium term. And we -- when I say growth, I mean, again, the very basic impact on the full year flows. But of course, this is not the reality as, again, first, this year is not full year. Second, the flows of a normal year are not the flows that we will manage in the future because as you heard, we are already triggering actions on the flows themselves. So localizing more in China for China, maybe more localizing more in the U.S. for U.S., negotiating with our suppliers, et cetera. So the most important is not so much the growth, but when we have visibility, will be the net. At this stage, we took our own assumptions on what could be the net. And with those assumptions, meaning our actions and the impact of our actions in front of the tariffs, we are, let's say, pleased to be able to confirm the 10% growth of EBIT for '25.

And may I just ask why you didn't assume that there might be a tariff in Europe of 20% after the 90 days?

Because honestly, we changed our simulation and calculation, I think, 7 times in the last 7 days, not because our calculation was wrong, but because as you all read every day, every morning, every evening, the rules are changing every day, even on Saturday and Sunday. So we had to take an assumption. I don't think any one of us knows what's going to happen. It changes all the time. Maybe the 10%, you're right, might become 20%, maybe they are going to negotiate going to be 5%, maybe it's going to be 40%. We don't know. So I just share with you, I would say, in the most transparent manner what we took, and we'll be very pleased to update that when things stabilize, I would say, which we believe is the most important. First, when tariffs stabilize, which is probably not yet the case, -- and when we have also, let's say, a good clarity on our side on the -- on our own actions and the effects they have.

And we have a follow-up question from Marianne Bulot with Bank of America.

A quick follow-up. Just on the BIOFIRE and the respiratory sales into Q1. Could you just comment on the growth you saw in the U.S. and if it was 10% or more?

Your question is on respiratory non-respiratory?

Non-respiratory in the U.S.

Yes, we don't -- I mean, sorry, Marianne, we don't give -- because otherwise, we need to give it by region. We have 4 regions, actually NORAM, LATAM, EMEA, Asia Pacific with significant sales growth. What we said, I think Guillaume said for us, the growth that we saw in EMEA is a good illustration of -- because it's a question on the capacity to grow significantly in a market where we have significant competition. In this case, it's QIAGEN with QIAstat it is very present in Europe. In -- but we don't disclose specific numbers for all regions because otherwise, it will generate a level of complexity in reporting and honestly, monitoring of the performance that will be a little bit complicated. But we are growing very nicely in the U.S. and very much in line with the plan. So very consistently together to deploy an overall 10% sales growth by the end of the year.

And there are no further questions conference back over to today's speakers for any additional or closing remarks.

I think we're good. Eric, you're closing the call?

Yes. Thanks a lot, and talk to you soon during conferences that we will attend over the next few weeks. Thank you, everyone.

Bye-bye.

Bye.

This concludes today's call. Thank you for your participation, and you may now disconnect.