DiaSorin S.p.A. ($DIA)

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the DiaSorin Full Year 2025 Results Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Mr. Carlo Rosa, CEO of DiaSorin. Please go ahead, sir.

Thank you, operator. Ladies and gentlemen, good afternoon, and welcome to the DiaSorin full year results. Today, we have a busy agenda. I'm going to make some business remarks. Then our current CFO, Mr. Pedron is going to take us through the 2025 financials, our future CFO, Mr. Alberto is going to discuss about guidance 2026, and then collectively, we're going to take questions. So let me start from 2025 business comments. 2025, I think, marked a year of good achievement for our company with success for our strategy in the different technologies with Immuno delivering 7% growth, Molecular Diagnostics year-on-year flat and we'll see later primarily related to the fact that the flu season this year is -- has been very weak. And then LTG delivering to expectation flattish compared to previous year. And again, we will discuss later, primarily due to the fact that on the Life Science segment, as I think is very well known by everybody, 2025 has not been an exciting year. Let me now turn to the specific technologies. Let's from Immuno. It's very clear that Immuno, we always talk about the success of our hospital strategy. In the U.S., we have delivered the number of hospitals that was targeted. And actually, if I go back and think about the 2023 plan, LTP, what was when we deliver our targets for the hospital strategy, our -- what the company was looking for is to get to 600 hospitals by 2027. And actually, I believe we're going to get to 600 hospitals by the end of 2026. So this strategy has been extremely successful. By the same token, we continue to launch specialty assays, hepatitis delta together with Gilead, we are the first and only company to have an FDA-approved hepatitis delta assay, which is a great opportunity in light of the expected approval of the new hepatitis delta drug. And the TRAP, which is an autoimmune assay, very specialistic. So we continue to fuel our -- globally our Immuno franchise with specialty products. When it comes to Molecular Diagnostics, I will be more specific later, but we continue with increasing the launch of the different panels in -- on the PLEX platform. Today, we have 4 approved and GI is submitted and expected to be approved in the next 60 to 90 days. We are -- as you know, I remind everybody, as far -- as of today, we are focusing our effort just in the U.S. market. So when I will talk about PLEX, just remember, it's only the U.S. and we continue to deliver the customizable mini-panel strategy. When it comes to NES, which is the small platform. As discussed already, we have the -- we got approval of our respiratory panel. We have submitted our GAS panel on NES, and we expect approval within H1 of 2026. We built a dedicated sales force in the U.S. of around 30 people with an investment with annualized is estimated to be around $10 million, that will allow us to launch efficiently and effectively NES in the non-acute and acute space in the U.S. In parallel, we have signed up 2 major distributors, Fisher Scientific that will work with our direct sales force in the acute hospital segment, and McKesson. I think the press release went out yesterday that is taking the exclusive distribution of our LIAISON NES in the non-acute in the U.S. together with, again, the dedicated 30 people that we have hired to support the business. Commercial launch is expected to be April 1. Moving forward with the business from a footprint organization, we have pretty much completed the phase out of our industrial plant in Germany. Again, to streamline our manufacturing footprint, all product manufacturing has been moved to Italy. And we are practically at the end of the process, and I would like to thank all our German employees that have been extremely collaborative and professionals in allowing the company to close the plant in good order and not to provide any disruption of supply to the customers. When it comes to Chicago and Cypress, which are the 2 sites where we manufacture PLEX and NES, we have completed all the investments, which have been in the order of $30 million. And now we have the capacity in place to sustain the launch of the 2 platforms. When it comes to China, we have -- we believe that we continue to see that the macro environment in China is actually not improving, to say the least. VBP policy now is adopted in all the provinces, but what we are seeing is that even in Shanghai and Beijing that supposedly were not touched by VBP, now clearly, VBP is also the factor applied into these very large markets. And so the effect of VBP will hit China in its entirety. Because of that and because of the fact that we honestly don't see for DiaSorin a space as a supplier of commodity non-specialty assays. In China, we decided to close our manufacturing site in Shanghai and discontinue the local manufacturing project. Unfortunately, we funny enough, Murphy's Law, we are making the decision when we just got approval of all the products. But I think that, again, our view on the Chinese market continues to be very negative and the ability to compete in that market with the 2 products, I don't think is there. And although as I think we have discussed, we are now resorting to a different strategy, which is the specialty strategy in 2 areas. One is TB, where we are successful globally together with QIAGEN and the other one is on the GI immune strategy. We expect the TB product to be approved by the summer. So we will start our TB campaign in the summer and the Calprotectin assay to be approved within 2026, beginning of 2027. So again, China, we are redirecting the effort. We are taking away all costs associated with being a nonspecialist player and investing to become a specialty player in that market, which we honestly believe is the only way for a company like DiaSorin to continue to survive and make good business in the Chinese market. When it comes to 2025, again, we have been experiencing, I think, overall headwinds and tailwinds. Let me remind everybody what happened last year. Tariffs clearly have been impacting the P&L last year, although we believe that those tariffs, which is in the range of $9 million, again, I'm talking about the cash component, will -- we will be able to get them back sometime in 2026. But last year, they did impact our P&L. The NIH funding cuts did impact the business of our partners in life science. And in fact, and this is the reason why we have a flat overall LTG business, which, as we have discussed a few times, is a combination of high single-digit growth of the diagnostic component, but high single-digit decline of the life science. We have been experiencing volume normalization in Europe, testing volume. And I'm using Germany as an example. Germany used to grow on an annualized rate around 6%, 7% from volume testing perspective at the end of '24, beginning of '25. And we actually saw that by the end of 2025, that is more around 1%. And I'm using Germany because it's a very large market, but I believe that this problem is actually replicating around Europe. And again, it's normalization clearly after the COVID effect, in my opinion. And then last but not least, the flu season, no need to comment, but the flu season has been very poor in 2025 and also Q1 of '26, we continue to see the same effect. And because of the fact that a good chunk of our business for molecular is flu, clearly, we are tactically suffering from lack of revenues in this segment. From a tailwind perspective, clearly, PAMA implementation has been delayed post 2026, and this has lowered the level of pressure on our customers. And so I believe that from a pricing perspective, we do not foresee an impact coming from PAMA. Now let's dip a little bit more into the numbers and let's look into Immuno. Our Immuno franchise, we like to look at total and then take out what we believe are the one-off effect. But if you look at the Immuno franchise, full year growth 7%. If we take away 2 effects, which are China, the China decline, which was almost 18% and the outbreak effect that we commented a few times, then the growth of the franchise would have been 9%, which -- so it means that solid, healthy growth of our Immuno business. North America continues to be one of the leading markets for DiaSorin. We had full year growth of 15%. But if you look at quarter-to-quarter, quarter 3, 14%. Quarter 4, 14%. So the performance of North America is clearly extremely solid there. Europe, we saw that by year-end, it's mid-single digits, which I think is okay when it comes to the European market, which does have dynamics, as we know, of growth expectations, which are very different from the rest of the world. China has been very negative. And overall, during the year, we lost EUR 8 million in China in revenues, which is minus 19% versus prior year. Clearly, we saw these effects softening in Q4, but what we are seeing moving forward, though, is that this VBP effect, I think, will continue now into provinces that so far were not really touched by this. And so my view when it comes to 2026, certainly is not positive about this. If we look at Molecular, as you know, our Molecular business is fundamentally flat but -- year-on-year, but with different components. Looking at the 3 different legs of the business, as you know, let me remind you, we look at the business as the -- what we call targeted, which is our Molecular franchise that came in original from the DiaSorin and Focus, we have the franchise, which is the multiplexing franchise, and then we will have the NES. If we now talk about the targeted franchise, we see that -- which, I mean, overall is close to $100 million. There are 3 different segments into this. We have what we call specialty. The specialty targeted, which closed at around EUR 40 million annualized with growth rate full year '25 of over 35%. And by the way, fairly constant quarter-to-quarter. So this continued to drive the growth of this franchise. But by the same token, we have a respiratory component, which is 40% down compared to last year. The good news is that now it's becoming very small, is between EUR 10 million to EUR 15 million. But the seasonal effect was -- has been so far very heavy because of the respiratory season. And finally, we have what we call ASR, which is again roughly EUR 40 million, very profitable business, which are reagents that we sell to laboratory in the U.S., roughly 200 customers to do LTD (sic) [ LDT ] assays in the U.S., which is flat and not expected clearly to be a significant growth driver, but it's a very significant profit, very profitable business for the DiaSorin, and on top of that, it's allowing us typically to launch as LDTs, some of the specialty assays and then meanwhile, file with run clinicals and get the FDA approval that then will allow us to move to the full kit. So this franchise, I believe, is solid, and will continue to deliver the growth, transforming this -- the business from very dependent on respiratory to fundamentally to be very dependent from the growth of specialties. The first -- the second segment is the multiplexing. The multiplexing for us is the combination of VERIGENE I plus the LIAISON PLEX. Full year growth of this business, all-in, has been around 9%. Clearly, there has been an effect here, which has to do a lot again with flu and flu season in 2 ways. The business that we had with VERIGENE I had a flu component. But more than anything else, all the LIAISON PLEX business that we actually are building, it's all respiratory for a very simple reason that we just got blood in mid of 2025. So it's very clear that we have a double whammy situation in this case. So if we look at LIAISON PLEX per se, we had an objective to close 150 customers in the U.S. and in fact, we closed 147, which -- so we are at target. We have placed roughly 1,000 systems with these customers in the U.S. Again, this is U.S. only because we did not make this platform available outside the U.S. 40% of the contracts that we close are fixed and 60% are flex, which means now that -- and the weight of the flex business is increasing clearly because all the new placements we are making are fundamentally based on flexibility on building the mini-panels. If you look at customer split, 90% are hospitals and 10% are commercial labs. Clearly, if we look at the revenue contribution so far, commercial labs represents a little bit over 50% of the business, and this is because of the fact that we closed some very large contracts. In commercial, and namely the one that was made public was the Quest agreement where Quest now has transitioned to the LIAISON PLEX platform for all the respiratory business. GI panel clearance, as said, expected in the next 60 to 90 days. And this clearly will accelerate penetration in the U.S. -- in the U.S. hospitals, also because the GI panel is the one that allows to the full extent the use of the mini-panel -- customized mini-panel concept. When it comes to the nonautomated business, which is the legacy business, left -- clearly is left unattended is declining minus 6% full year and is supposed to continue to decline simply because this is a business that we're not invested in, is a cash cow and still very profitable with like all the cash cow businesses. LTG, we spoke about the LTG before. It's a very -- so it's a 50-50 business. As you know, the split is 50% diagnostics, 50% life science. When it comes to the diagnostic business, it grew 9% last year. And -- but when it comes to the life science business, it actually declined 9%, and this is why it made the LTG business fundamentally flat. We'll talk about the expectations for this business in 2026. But I believe that in 2026, we are expecting moderate growth, primarily driven by the fact that there are initial signals that the life science business is going to do better than last year. Also because in full honesty, last year was for everybody in the business, a very terrible year, right? And so a recovery of that business is mathematically expected. At this point, I believe that I will let P.G. take care of the comments on the financials and then I'll make some further remarks. P.G.?

Thank you, Carlo, and welcome, everyone, as Carlo said, to our 2025 Fourth Quarter Earnings Conference Call. As usual, during the next few minutes, I will provide an overview of our financial performance for the full year, after which, as Carlo just reminded us, he and Alberto will cover 2026 guidance. And we will then proceed to the usual Q&A session. So 2025, full year revenues were just short of EUR 1.2 billion, reflecting a 1% or EUR 10 million increase compared to the same period last year. This performance was achieved notwithstanding a EUR 13 million reduction in COVID-related sales, once again as expected, and the EUR 34 million negative impact from foreign exchange rate, primarily due to the depreciation of the U.S. dollar against the euro as we have discussed many times during our last earnings calls. Excluding COVID and at constant exchange rate, our core business has achieved a 5% full year growth, therefore, in line with the guidance. Carlo previously outlined the factors contributing to this performance, the robust results from the new franchise despite the challenges in China and the outbreaks in Europe in 2024, normalization within the LTG franchise following a favorable phasing in the first half of 2025 and a stable trajectory for the overall Molecular business, which has been negatively impacted by a very mild start of the flu season. And as you might remember, the discontinuation of the ARIES platform. 2025 adjusted gross profit at EUR 778 million accounted for 65% of our revenues. This represents a decrease of EUR 4 million or 1% compared to 2024, mainly driven by tariff impact which at the P&L level in the year accounted for EUR 4 million, a different product mix and the negative FX impact. With constant exchange rate, adjusted gross profit would have increased by almost EUR 20 million or 2%. Adjusted operating expenses for the full year were EUR 474 million, marking a 1% decrease from the previous period, whereas at constant exchange rate, the expenses increased by 1%. As a percentage of revenues, OpEx declined to 39%, down from 40% in 2024. The small rise in absolute value at constant exchange rate was mainly due to the higher labor costs from the annual salary review and increased depreciation tied to the recent product and platform launches, including LIAISON PLEX, which had been previously in development. This minimal increase reflects our disciplined approach to cost management. I'd also like to address the reported statutory operating expenses, which in Q4 has been impacted by the initiation of the divestiture plan of our manufacturing site in China that Carlo just talked about. This project will be completed by the end of 2026. These initiatives, which was prompted by a material change in the Chinese market as we heard, is consistent with DiaSorin ongoing strategy to optimize our global manufacturing footprint like previous actions, such as the divestiture of our Irish and South African facilities and the commissioning of our manufacturing site in Germany. These steps demonstrate our continued effort to adapt to the evolving macroeconomic conditions and enhance our long-term competitiveness. We anticipate that the one-off charge related to the full scope of this initiative will not exceed EUR 22 million, EUR 20 million of which has been booked in Q4 '25 with the vast majority being noncash costs, primarily intangible and fixed asset write-off. The monetary total impact will be less than EUR 3 million. We estimate that this initiative will bring an annualized saving was completed of about EUR 6 million. As a result of these dynamics, 2025 adjusted EBIT reached EUR 304 million, representing 25% of revenues, confirming the profitability we had in 2024. This reflects an increase at constant exchange rate of EUR 13 million or 4% compared to the same period last year, whereas the resulted current FX is in line with 2024. Adjusted interest expenses for the full year were slightly above EUR 1 million compared to an income of EUR 4 million in 2024. The primary factor behind this variance was a reduction in our cash balances and investment yields, reflecting the decline in interest rates. As discussed in previous earnings calls, the normalized tax rate is adjusted to 25% following the conclusion of the Patent Box regime for our Italian legal entity. For the full year 2025, the tax rate is about 29%. And this is due to a couple of one-off events that occurred in the fourth quarter, the more significant impact resulting from the resulting tax and dividends from the U.S. subsidiary and the impact of not accrued taxes deduction of the impairment cost related to the divestiture of the Chinese manufacturing site in light of the limited visibility on future taxable profits in our Chinese legal entity. These items are not expected to occur again in 2026. So we will go back to a normalized tax rate of 25% in 2026. 2025 adjusted net result at EUR 223 million or 19% of revenues is lower than '24 by EUR 13 million or 6% as a combination of the negative FX impact accounting for EUR 12 million and higher interest and tax rate expenses. The adjusted EBITDA for the full year 2025 is EUR 394 million, accounting for 33% of total revenues, therefore, in line both in absolute -- with the absolute figure in the revenue ratio recorded in 2024. At constant FX, adjusted EBITDA reported an increase over 2024 by EUR 15 million or 4%. The margin is slightly exceeding 33%, in line with the annual guidance. Q4 '25 profitability at constant exchange rate, just short of 32%, is about 140 basis points lower than the corresponding period in 2024, mainly due to the variations in product mix and the impact of the tariffs, which accounted for EUR 2 million or thereabouts in the quarter. Before turning to the net financial position, let me share a brief comment on the tariff situation in the U.S. On March 5, the U.S. Court of International Trade, so-called CIT, issued a nationwide order requiring U.S. Customs and Border Protection to refund IEEPA-based tariffs following the U.S. Supreme Court's February 20 ruling that the IEEPA does not authorize tariff actions. The order applies to all importers, thereof to DiaSorin as well. The Court of International Trade has given Customs and Border Protection 45 days to prepare the system for this activity. We will keep on monitoring the evolution of this very complicated situation and update investors consequently. As of today, the potential P&L upside related to 2025 tariffs is about EUR 4 million, as we said, plus EUR 1 million, EUR 2 million for the first 2 months of 2026. From March on, IEEPA tariffs have been replaced by the new tariff scheme imposed under Section 122, which is included in our 2026 guidance. Turning to our net financial position. We closed 2025 with a net debt amounting to EUR 580 million with an improvement of EUR 38 million compared to the same -- to the end of 2024. This reflects a solid free cash flow of just short of EUR 210 million, compensated by cash outflows, including EUR 97 million in payments to shareholders exercising with global rights after the recent implementation of the announced voting rights mechanism as well as EUR 63 million distributed as dividends to our shareholders. Before Carlo and Alberto present the 2026 guidance, I'd like to share a few personal remarks. As you might know, this is going to be my last earnings call in DiaSorin since in April, I will be moving to a different professional chapter of my life. As I wrap up my time here, I just want to say a big thank you to all my DiaSorin colleagues, my super amazing team, Carlo, obviously, and the old Board. The last 15 years has been an incredible ride, full of teamwork, growth, achievements that I will always remember. DiaSorin has been like a second home to me throughout these years and I have every confidence that it will continue to excel and accomplish even greater things in the future. I'm also certain that Alberto, who has been an integral part of my team since I joined DiaSorin, will be an outstanding CFO. And to all the analysts and investors I had gotten to know over the years, it's been a real pleasure interacting with you. Thank you for your insights and open and constructive dialog. I wish you guys the best going forward.

Thank you, P.G. Clearly, this is a very emotional moment for everybody here. P.G. reminded me today that when he joined DiaSorin 15 years ago, our revenues were less than our OpEx today, which clearly shows that the company grew significantly and P.G. was very instrumental to work with us during this very interesting times. By the same token, I would like to welcome Alberto Donati, who is stepping in effectively today as the CFO of this organization. And as all the CFOs, it's going to be the duty and honor now to help us out to understand the guidance for 2026. Alberto?

Thank you, Carlo, and thank you, P.G. Good morning and good afternoon, everyone. I will now walk you through our guidance for 2026, which, as usual, will be expressed at a constant exchange rate using 2025 as a reference year. Now before getting into the numbers, allow me to briefly frame the macroeconomic environment we are operating in as 2026 will be characterized by some headwinds in the first part of the year. Specifically, we do expect a slower start of the year in the United States, and this is because they are partly impacted by the critical weather conditions in the first quarter as well as a much weaker flu season as has already been reported by many of our peers, which is weighing on our respiratory testing in the early part of the year. We also see a continued normalization of the volume in Europe, which is consistent with the trend that already observed in the second half of 2025. With all of this being said, for the full year of 2026, we expect the group revenues to grow between 5% and 6% at a constant exchange rate. As a reminder, this includes COVID sales, which were included in the 4% growth of 2025. So 5% for 2025 was excluding COVID. We are now giving the guidance, including COVID. But we do expect COVID sales to continue to deteriorate. From a quarterly standpoint, 2026 will be back-end loaded. So in the -- we expect a softer first half primarily explained by 2 factors. First, the LTG business was significantly front-loaded in 2025 as mentioned during last year conference calls and as reminded by Carlo, resulted in a tough comparison in the early part of 2026. Secondly, the flu season has been especially weak in the first quarter of 2026, which while we have embedded in our numbers a normal season for the second half of 2026. Additionally, considering the NES -- LIAISON NES with the launch of the ABCR panel and the LIAISON PLEX having the complete panel available in the second half with GI, those will primarily contribute in the second half of the year, which is naturally shifting a meaningful portion of the Molecular Diagnostics growth towards the back end of the year. From a profitability standpoint, we expect the group to deliver an adjusted EBITDA margin between 32% and 33% in 2026. And again, as usual, this is at constant exchange rate. This reflects the combination of a softer first half, driven by business facing and the product timing, and the commercial investments we made to ensure the successful launch of the NES platform, again, as mentioned by Carlo earlier, north of $10 million. We do expect progressive improvement in the second half of the year, supported by the volume recovery, the operating leverage and the contribution from the new product launches. Please consider that 2026 guidance does not take into account any potential negative impact related to the ongoing military conflict in the Middle East, which could affect the group sales in the region. It also excludes any possible indirect effect of the conflict, including the increasing logistical and distribution complexities potentially extending to the Asia Pacific region as well as inflationary pressures on cost. And before concluding, let me just reiterate that DiaSorin remains highly exposed to the USD, with approximately 50% of the group revenues, which are denominated in USD. And as a reminder, a rule of thumb is that every $0.01 movement of the USD versus euro has an impact of approximately EUR 6 million to EUR 7 million on an annualized revenue, and EUR 2 million, EUR 3 million on our adjusted EBITDA. I will now turn it to the operator for the Q&A.

[Operator Instructions] The first question is from Aisyah Noor, Morgan Stanley.

My first one is on the Immunodiagnostics guidance of mid-single-digit growth for 2026, which is a slowdown from 2025 of 7%. Can you explain why this is a slowdown if the China VBP impact is smaller year-over-year? And then my second question is on the McKesson partnership that you signed yesterday. What do you think will incentivize McKesson to push your products more strongly versus the competitor SPOTFIRE. Are you pricing it competitively? Is there higher fees to this partner? Basically, how do you ensure the success of this partnership? And then I'll have a follow-up after.

Thank you, Aisyah. Let me take the 2 questions. The immunoassay projection in 2026 foresees a normalization of testing volumes. As I said, we saw it progressively softening during 2025, and I'm talking about Europe. And therefore, we expect that this will have an effect in 2026, meaning that this is going to be the normal volume effect that we will expect in immunoassay. Please consider that in Europe it is 50% of the immunoassay revenues. So it does have an impact. Second question on McKesson. Look, these distributor platforms, they carry instruments from different companies. That is true. Although I believe that when we look at the POL market, there is what we -- and we map all the POLs in the U.S. by size. We believe today that there is a great opportunity provided by the fact that in the low, mid-volume POLs, there is no platform today, and I'm talking about modern platform that can serve that segment. And so we are talking about customers that are consuming between 100 -- sorry, 500 to 1,500 tests -- total flu tests per year. And we also saw in the market that the positioning of the SPOTFIRE actually is on a higher segment of the market, including where you find Cepheid, where you find also Abbott ID NOW, whereas in the lower smaller side of this business, you find ID NOW. And you know that today, ID NOW is the platform everybody is going after because it's a very, very old technology and really is not serving the purpose of this market. To be honest with you, when we went to McKesson, so we are learning this space. This is not a traditional space for DiaSorin. And we actually understood that the way we look at the market, so positioning of the product in a certain segment is exactly the reason why McKesson was looking at getting our platform exclusively for distribution. We have an exclusive relationship with them, clearly, with a minimum commitment that they need to guarantee for retaining the exclusivity. You asked for about McKesson right, not Fisher. So that's the answer for McKesson.

Yes, I did. And just a follow-up, maybe a question for Alberto. Could you give us some guidance on the FX impact on sales and EBITDA margin for the 2026 fiscal year?

Yes. So from an EBITDA perspective, just as a reminder, we did give the guidance at a constant exchange rate. What do we expect? We expect -- I mean as you know, as I reminded before, the impact for us is EUR 2 million to EUR 3 million every $0.01 movement that we have. Now in 2025, the impact on our top line was EUR 35 million, and at the bottom line was around EUR 15 million in 2025, allows us some flexibility in 2026 as we don't know where the dollar is going to be given the uncertainties of the market. So at the moment, the guidance is at constant exchange rate, knowing that for every $0.01 movement, we have a EUR 2 million to EUR 3 million impact on our adjusted EBITDA.

Aisyah, if I can step in. If you look at the latest Bloomberg consensus for the FX rate for 2026. And again, a lot of things are happening. But what you find today is 1.18, right? So since the average exchange rate for 2025 was 1.13, applying the rule that Roberto told you about, you would expect a negative FX impact on the top line of EUR 35 million, right, which is the difference from 1.18 to 1.13 times 7, which is the EUR 6 million, EUR 7 million that I was talking about on the top line. And I believe this is important for you guys to understand and master. Otherwise, it's going to get some complications when you will be working on your model and defining our consensus. Whereas if you go to the EBITDA level, again, it's EUR 2 million, EUR 3 million times this 5 we were talking about. So you get to top EUR 15 million. So at the end of the day, if you believe Bloomberg forecast for 2025 -- 2026, I'm sorry, eventually the FX impact on 2026 vis-a-vis 2025 is going to be similar to what we experienced in 2025 vis-a-vis 2024.

The next question is from Odysseas Manesiotis, BNP Paribas Exane.

Firstly, I wanted to get a bit of a feeling of what was the main driver for your growth expectations to be lower than what they were in Q3? I remember you were saying high single-digit growth was possible in '26 in Q3. I want to get a feeling of the key drivers of your expectations there? Was it -- I'm thinking, is there a bit of a small delay on the [ Calpro 3 ] launch, lower expectations on the NES or further presence in China, Germany and Europe? Sort of what are the main drivers here? And then I have a follow-up.

Listen, if I understood correctly, you were talking about the comment on high single-digit total business growth 2026 expectations, correct?

Yes.

Okay. I made a comment before. Two things. We are starting Q1 with a very, very low respiratory season, which is not what were clearly built in the expectation in Q3 last year when we were commenting 2026 numbers. You saw that some -- you saw it from comments and commentaries, which have been made by some of our competitors that the flu season is 25% to 50% lower than last year. So very significant which was not built in clearly in our expectations. The second one is the fact that in the European volume, we saw it decreasing also in Q4. As I told you, I gave you a number. Now we are at average 1% growth. We were sitting midyear with annualized around 3.5%, right? So there is a normalization, so called, of volumes that now we have seen and we expect to see moving forward. Last but not least, and again, I'm referring to commentaries, which have been made by some of the large U.S. operators, namely Quest and Labcorp. Q1 volumes, testing volume in the U.S. have been particularly low, and this is because of a very severe weather situation. Please go and listen to what Quest and Labcorp mentioned about quarter 1 that are still affected today. Those volumes is still affecting some of the U.S. business these days. This is why we believe that high single digit is not achievable and 5% and 6% are more realistic. We don't do respect though, guys, I think that Alberto made a good point. We are where we are, as we sit in Q1 in -- after 20 days of war. And so making a projection of what is going to happen at this point on -- from a costing point of view is mission impossible, okay? So from what we understand today, we believe that the business is going to grow 5% to 6%. And we believe as Alberto clearly explained, it is backloaded as a combination of mathematics on LTG, so tough comp, H1 versus H1 and the fact that H1 will completely miss the flu numbers.

That's very clear, Carlo. And on energy and logistics, I mean, I understand, as you said, it's a mission impossible to give specific guidance, including these. But just to get a sense of how bad this may get for you? I mean your consumables, are these largely made of oil-based plastics and historically, in times of higher energy prices, were you able to pass through costs comfortably to the customers. I remember that may have not been the case. Is that correct?

Okay. Listen, I was going to give you a rule of thumb. If the cost of energy stays where it is today, right? So with oil being over $100, to us, the impact on energy and logistics is around $5 million. okay? But my problem, to be honest with you, is not necessarily with energy and logistics because the logistic issue, if it doesn't solve, I think that we have a whole set of different problems, right? Today, the logistics issue is that we cannot ship through Dubai and we were shipping pretty much not only Middle East, but we were shipping Asia through Dubai, but that will be solved. To me, the real problem is the inflation on the raw material as we all know. And that is a completely different order of magnitude because it has to do with all the plastic and all the oil derivatives that everybody in this industry is using, right? And to make projection there is really mission impossible. But again, energy and logistics is around $5 million.

P.G., it was great working with you. I wish you all the best with the new role.

Thank you, Odysseas, likewise. Great working with you.

The next question is from Jan Koch, Deutsche Bank.

Thanks for providing the comments on the sales phasing in 2026. But what about profitability? Margins have been usually higher in H1 than in H2. Is this still the case in 2026? And then secondly, you have provided the growth rates of your automated multiplexing business in recent quarters. Could you provide that comment for Q4 as well? And finally, one housekeeping question. Could you help us with the expected D&A ratio in 2026 in view of the upcoming PLEX and NES placements?

Sorry, can you repeat the last question?

D&A ratio in 2026, I guess. Depreciation and amortization, I guess, D&A.

Absolutely.

Okay. First 2 questions.

First one was profitability phasing. I guess, Alberto can take it, right?

So as mentioned before, within the 32% to 33%, we have to take into consideration a few effects. First is that we do have a full year effect on the tariffs. We do also have a mix effect since we know that the molecular growth growing low double digit brings lower marginality, which is dilutive to the gross margin. And the net investment, Carlo mentioned it before, north of EUR 10 million, which brings us a natural under-absorption in the year of the launch, plus the further deterioration of the -- of China due to the VBP and the continuous pressure from locals and on pricing is posing us pressure on the EBITDA margin overall, but especially considering the tough comparison of the LTG in the first half, we do expect to see the EBITDA to be softer in the first half as a function of fundamentally, the lower sales on LTG and the operating leverage, and we then expect the EBITDA to recover in the second half as improvement supported by the volume that is recovering. Again, as I mentioned, the operating leverage and the contribution of the new product launches.

I guess the second question was automated in Q4, the automated multiplex, right? Jan?

Yes, absolutely the growth rates.

The growth rate in Q4, as said, was, I believe, slightly negative, minus 5%, but it's all flu volume. It's all related because placements, I give you a number of placements, but you can assume that the placement developed regularly. But from a revenue perspective, minus 3%.

Minus 2%. It's minus 2%, Carlo, the right number. It's in presentation.

Minus 2%, but fundamentally it's respiratory driven and volume effect.

Yes. The last question related to the depreciation/amortization, I understand correctly. So you know that we've been launching 2 platforms in -- between 2025 and 2026. So we do see an increase of the depreciation amortization linked to the start of the depreciation of all the tangible and intangibles that are linked to the launch of the NES platform.

All the best, P.G.

Thank you, Jan.

The next question is from Kavya Deshpande UBS.

My first one is just on the revenue guidance. You've been very clear about the headwinds that get you to the 5% scenario. I was just wondering at the top end is that the 6% growth scenario. Does that -- is that including what in your view is sort of the full contribution of all the potential product tailwinds you've got from the PLEX panels from, I guess, to a lesser extent, NES because it's early and QuantiFERON Gold Plus, et cetera. And then, Carlo, actually, one for you on China. I mean you've made a big step in terms of changing your strategy here. But I suppose what are you seeing on the ground that's making you think this is kind of still an attractive market for DiaSorin to stay in. And also, would it be possible to specify the exact China headwind you expect for 2026? I understand if not, but I thought I'd try.

Specifying the exact headwind. Look, as I said, in 2025 was around EUR 8 million, right? And caveat, I believe in 2026, it could be in the order of magnitude of EUR 5 million. But again, it's a toss of a coin, because the truth of the matter is that we were expecting VBP to be done and over with fundamentally and now what's happening is that VBP de facto is also rating Shanghai and Beijing. Shanghai and Beijing are clearly, as you can imagine a big business opportunity for us. But if you are asking and then if you're asking me, is there an opportunity for the DiaSorin in China? I believe is very practical short term. I see a market that is becoming extremely competitive, but competitive, meaning, as you know, that when you have the market leader that is leaving on the ground, CHF 500 million in revenues in 1 year, which is 20% down, I think, of that total revenues, the market is becoming a terrible market, where everybody is chasing all the opportunities with the aspiration on price, so the VBP concept, its fundamental has been driving all companies to go after all the business with a very low price. And this is why I'm saying we came to the conclusion that what we were thinking in 2019 when all this started and nothing of this was there and there was a very large significant profitable opportunity with mainstream products, evaporated. And now since the only opportunity for us is to become a specialty company and nd there are a couple of areas where the specialty is significant, you are left now with the fact that now manufacturing a specialty in China is dangerous because, as you know, nobody is guaranteeing you know-how. But by the same token, it's not needed because at that point, specialty being a specialty, if there's no VBP, there is no very high local competition. So the added value of being a local manufacturer is not there, it would be only increased risk of losing control of your technology. So this is China. On the revenue guidance, Kavya, you said on the 6%, I believe that we have a high -- 2026 is a very important year for DiaSorin because we have the launch of NES, okay? And we will discuss in May about expectations, strategic expectation on NES for DiaSorin, as you can imagine, as you saw from bioMerieux as well. The expectation is very relevant for us because the market opportunity is very relevant because the window, I believe, is the right window because an opportunity within the next 3 years to get to the market also with [ SDI ] and tap into that business as well. And so certainly, the 6% includes the fact that there is an additional technology and product line that will help us drive revenues next year. As said by the same token, it does foresee that the volume effect that we experience in different geographies is fundamentally. It went back to where it used to be pre-COVID.

The next question is from Charles Pitman King, Barclays.

I have 2, please. Maybe just firstly, I'm just wondering around how you're thinking in your guidance around the outlook for your LTP revenues given Roche is expected to launch the space soon. I believe it is expected to bring in some pricing pressures. So if you could just quantify again what revenue you're currently generating from TB and how you expect to kind of continue to grow through this over 2026? And then just secondly, coming back to your LTG revenues. You kind of highlighted that we've seen improving commentary from life science peers, but obviously, '25 was a bit of a balance of life science down, diagnostics up. Just wondering how you expect diagnostics to also be improving in whether or not you think that will be whether both end markets will improve to drive asset growth for LTG this year.

Okay. Listen, clearly, we are not going to disclose what are the revenue of LTP -- sorry, of tuberculosis. That's confidential information, especially in light of the fact that Roche supposedly relaunching the product. How do I -- so the question is what is your expectation about Roche in the market? I don't know because I don't know when they're launching, if they're launching and what they're launching. So hold your thoughts until May 13 because May 12, Roche is going to have their Analyst Day and they're going to talk about the good, bad and ugly about diagnostics? And then we are going to, a week later on the 20th, we're going to talk about LTP. And there, you're going to hear about what we assume about the Roche effect. Just one comment. Remember that the only thing that Roche said is that they're not going to lower price. Keep that in mind when we will see what happens when they hit the market. okay? But if you go to their Market Day, ask them, if it is true that they are waiting to lower the price. LTG. LTG, our diagnostic business is very healthy and somehow de-correlated from what you have seen in diagnostics because we are serving a couple of players that dominate their space. One Lambda, which is one of our customers today in diagnostic multiplexing, they have 80% market share in transplant. And business is a solid business that is growing single digits simply because the transplant number is growing. So this is why I'm saying I'm not expecting that to see a negative effect on the diagnostics side. By the same token, the life science business, as you very well know, was so poor in 2025, right? And we see that all that -- and fundamentally was driven by the U.S. market and fundamentally, it was driven by this NIH mumbo jumbo at least that NIH situation has been clarified. We know that funding has been guaranteed. We know that customers are applying for funding, and what we know is that investments -- if you look at 2025, we were hit most on equipment, right? And this is simply because with the uncertainty on fund labs and academia was not buying systems, what we are seeing is that the funnel on instruments is actually coming back, okay, from a very poor situation. So this is why I'm saying my LTG expectation from -- in 2026 is that we're going to have a moderate growth. But please listen to what the Thermo, the Millipore, the Bio-Techne and all these guys are saying because they are all DiaSorin Luminex customers.

All the best, P.G.

Thank you.

The next question is from Natalia Webster, RBC.

I have 3, please. The first is a follow-up on margins, Appreciating the various effects like tariffs in China to consider in 2026. But what else has changed from your previous expectations to reach the 36% to 37% level by 2027? And do you still expect margin expansion beyond 2026, with the continued dilution from the molecular growth. My second question is on Immuno guidance at the mid-single digits. Again, looking beyond this, once the European volumes have normalized, do you see potential for this to pick up back to the high single-digit levels that you've seen previously? And do you see that double-digit growth in North America specifically as sustainable going forward considering there's a couple of delays on a couple of the key specialty tests that you called out previously. And then finally, on your PLEX platform, are you able to talk a bit more about what you're seeing in the competitive landscape here. You've talked about the GI panel being important for more adoption in patient settings. Is this the main barrier there? Have you seen any pushback on other areas like the longer time to resolve versus competitors?

Okay. I'll take the last one, okay, right, on PLEX. If I understood correctly, you want to understand the competitive landscape. In my very humble opinion, the competitive landscape did not change and also meaning that you have a bioMerieux dominating this space with -- and now we are talking about the acute space or the hospital market because PLEX goes on the acute space. So from a competitive space, we are where we are. We honestly don't see in the U.S. QIAGEN today as a competitor. Also because QIAGEN so far has been very active and successful outside the U.S. and they are building, I believe, their presence in the U.S. market. And so the competitor, you need to go after in this place is always bioMerieux. On the time to result in this space, 1 hour or 2 hours doesn't make any difference to be honest with you, because you're talking about hospitalized patients or you are talking about commercial labs, right? And a commercial lab is a send-out sample and so it doesn't. So they collect, they get the result and then ship back within 1 shift. So 1 hour, 2 hours doesn't make a bit of a difference. Clearly, I'm not referring now to the SPOTFIRE, which is 30 minutes assay, that goes into a different segment, and that is where we compete with LIAISON NES that does have same or better time to first result. On the GI, I'm saying that, as I think I always commented that when it comes to the adoption of mini-panels, so the ability actually not to run all the 20-some-analytes, but build mini-panels GI is where you have most variability of parents. Because of the use of these different panels, which can be associated with dietary, which can be associated to infections, which can be associated with travel, bugs which you get into any countries during travel. So we estimate that in that sense, you have 7, 8 different panels that you really need to build in order to segment the different clinical situation that a doctor would have to face when it comes to the infections. When -- volume. I believe your question is, do you see volume going up? And my answer is no, I don't. I believe that we're going to go back to where volume was prior to COVID and whatever happened after COVID and primarily, in my opinion, driven by a combination of things. One is that is an economic situation. Volume typically reflects because there is a portion of this diagnostic procedure that is paid directly by patients out of pocket everywhere in the world. I have in mind Italy where if the health care budget is EUR 140 billion, the government pays for EUR 110 million and people chip in for $30 billion. So the availability of patients to pay off pocket really is very well correlated to how economies are doing, and I don't see that moving forward. From what we see today, economies are going to do great, right? So I don't see that incentive more off pocket, it will drive up volume. And again, we are going back to where we were in -- prior to COVID where it was expected that in the developed market on average volume would grow around 1% to 2%, which is where fundamentally we are today. On margins, Alberto, can you please comment.

Thank you, Carlo. Natalia, Alberto speaking. So on your question on EBITDA and the comparison with the 2023 plan of getting to 36% in 2027. Please consider that we are fundamentally living in a different world and I'm specifically referring to the macroeconomic and industry events, some of which are outside of DiaSorin control. Specifically, let me start with the China VBP. Carlo mentioned the impact that we had, which is around 1% of our top line, and this is primarily due to price reductions, which go directly to the bottom line. The second one is the NIH funding, which is affecting the growth of the LTG not only on instruments at the beginning, but there is a consequence also on the other product lines of the franchise being the consumables and the royalty for a franchise that has a high marginality and tariffs. And additionally, also, the company has decided to increase the spending and the investment of NES in order to ensure the success of the launch. So taking all of the above into consideration, the base business is, at the moment, delivering the marginality that we are expecting. But for 2027 onwards, please wait for the Capital Market Day when we are going to give our view until 2030.

And just on the North American Immuno business growing double digits. Do you see this as sustainable going forward particularly with the specialty tests that you talked about previously?

Can you please wait for May because we're going to go through all the drivers of growth. Overall, I believe that North America -- again, growth in North America, if you think about it, has been driven by hospital strategy plus high penetration in the big labs, right, which is today our business. TB certainly has been a growth driver for the company. And TB growth went high double digit today to whatever number QIAGEN is saying because I keep saying, it's a QIAGEN business. So I would recommend that as far as TB, you wait for QIAGEN to comment. And what they say clearly is applicable to DiaSorin. As far as the hospital strategy, we will continue to deliver the hospital strategy. As said, as far as the big laboratory business, I recommend that you listen to what they say, generally speaking, about the volumes because, again, their volume is our testing volume in that segment. In order to get a more strategic qualified by product line and expectations, I believe you need to wait for the May discussion.

Understood. And all the best, P.G.

Thank you.

Gentlemen, there are no more questions registered at this time. I turn the conference back to you for any closing remarks.

Thank you, operator. I think we are done. Thanks.

Ladies and gentlemen, thank you for joining. The conference is now over and you may disconnect your telephones.