Eurofins Scientific SE (ERF) Earnings Call Transcript & Summary

Hello, and welcome to the Eurofins Scientific H1 2020 Results Conference Call. [Operator Instructions] During this call, Eurofins' management may look forward to these statements included, but not limited to, statements with respect to the outlook and related to assumptions. Management will also discuss alternative performance measures, such as organic growth, which are defined by the fitness of our press releases. Actual results may differ materially from objectives discussed. Risks and uncertainties that may affect European's future results includes, but are not limited to, those described in the Risk Factors section of Eurofins annual report and the half year report. Please also read the disclaimer on Page 2 of this presentation, subject to which this call and the Q&A session are made. Today, I'm pleased to present to Dr. Gilles Martin, Eurofins' CEO. Please begin.

Hello, everybody, and thank you for joining our half year results call in the middle of the summer. We are living in difficult times and through very unprecedented times. We have done our best to present a result in a transparent way as possible so you can draw your own conclusions. I will mention the slide of the slide show. We have a short introduction of 10, 15 minutes, but the bulk of this call is as usual planned for questions and answers. On Page 4 of the Slide 2, we have summarized the financial results of the group in the first half. Of course, the results would have been better, should there not have been the COVID pandemic. We started a very strong January and February, and we already had some impact in China and Asia in March. Then impact started in France. In the second quarter, the situation was very difficult in some European countries, France, especially, where we have a lot of revenues, was severely hit with some of our laboratories were ordered to close. And some of the industries, even the clinical diagnostic testing being much slower because people didn't go to the doctor. Nonetheless, I will go to Page 5. Nonetheless, our team worked very, very hard to try to mitigate this impact. And in the end, I think we can say things worked out fairly well. We mitigated, to a large extent, the impact of the pandemic on our revenues, on our profits and on our cash flow. What we have seen is that our end markets are very resilient. Food needs to be safe. It has to be tested. Of course, the part of our work that deals with testing food in restaurants was impacted, as restaurants got closed or environmental testing was probably the most impacted of our activities. In those areas that were or are still a little bit impacted, we had to do some cost reduction, unfortunately, to adjust our scope to what our clients were doing. But overall, we have found our business to be very resilient, our core business. And some of our other activities were extremely dynamic. Our BioPharma activities were very dynamic as the research for vaccine and pharmaceutical products to fight COVID intensified, and this is even picking up a momentum right now. So the first thing we did is to try to protect our staff, we instituted social distancing. And then we decided to work to develop solutions to fight the disease. We are not a big diagnostic company. It's probably the first time you heard about Eurofins activity in IVD was when we reported our Q1 results. Well, the small teams have done wonders, and they've developed now, which is an outstanding range of products to combat the COVID-19 pandemic, and took a bit of time to get all the government's approval and some are still pending. But we know we have a very, very strong portfolio, and I'll talk about it a bit more. And what we also did is we decided to do something to help our clients. Of course, first, in the food industry, but also the clients we serve in other industries and new clients to return safely to work. We acted on that on a test basis on own side and our own laboratories to make sure we do what we can to keep our employees safe. And we've developed, which is now an outstanding program, to detect recurrence of the disease in one workplace or a government building and basically be able to isolate the first patients who turned up positive before they can contaminate too many others. And one element of that is the Eurofins Sentinel, which is a unique solution, will talk to you about later. And even yesterday, we launched a lower cost pooled COVID-19 PCR test that could turn out to be very handy, if government decides to test millions and millions of people almost on a twice a week basis. And of course, the modalities for sampling has to be improved and facilitated, but it could be that this type of test is required. In the end, it could be, if the pandemic doesn't go away. And if the vaccines do not work out as well or as fast as we want, that we will all have to do a lot of tests. I will go to Slide 7 -- sorry. And for the next section, I will ask Laurent Lebras, who is our CFO, to comment on the financial figures. And then I'll comment more in details on the operational aspect.

Thank you, Gilles. Good afternoon, everyone. I'm happy to present our 2020 first half financial results. Starting with organic growth on Page 7, which despite the COVID-19 disruption was strong, 5.1% in the first half and 6.1% organic growth in the second quarter, much better than our peers and in line with the top IVD players. Showing again the strong resilience of our end market and the agility of our teams in this first half. Associated to a strong growth of revenue. We also performed a series of cost-saving measures, which resulted in a strong increase of our EBITDA that you can see on Slide #8. Our reported EBITDA was at up 19.7% for the first half, a strong increase of 260 basis points year-on-year or adjusted EBITDA at 21.2%, again, a strong increase year-on-year. And even if you look at the EBITDA of our more mature companies, all the ones present in the group before 2017, their EBITDA reached 22%, which is a very strong increase of 350 basis points year-on-year. And all this in the first semester, which is traditionally the weakest half of the year. In line with our objectives, the separately disclosed items decreased by 20% year-on-year. You can see the details on Page 9. They now account for about 7% of the adjusted EBITDA, which is in line with most of our peers and which is also confirming the near completion of our 5-year infrastructure program, which we started in 2015. Moving to Slide 11, about cash flow generation. Thanks to our strong growth of profit. We also had a strong growth of cash flow. Our net cash flow from operations increased by 92% year-on-year to EUR 445 million. Our free cash flow increased by 185% to EUR 315 million. Our net working capital was controlled, it decreased to 5.3% despite the inventory buildup for the COVID-19 testing activities. And you can also see that we had stable CapEx and a reduced M&A spend. Focusing on CapEx on Slide 12. This stood at 5.6% of revenues, flat year-on-year despite the COVID-19 ramp-up of capacity. They are now well below our depreciation percentage in terms of revenues. And they contribute strongly to free cash flow generation and EBITDA to cash conversion. Moving to Slide 13. Our first half was also marked by a significant deleveraging. We were able to reduce our leverage by 0.7x, and we now are at 2.54x. Thanks to the free cash flow and the equity raise that we successfully performed in May, we were able to repay all our short-term borrowings and to bring forward by 1 year our deleveraging objective of 2.5x maximum. Even before we issued our first half results, we got an investment-grade rating from the Moody's rating agencies based on our Q1 results. So to conclude, moving to Slide 14. We had a very strong first half in 2020 on all fronts: revenues, profits, cash flow generation and deleveraging, which all resulted in a basic EPS increase of 57% year-on-year. Thank you for your attention. Now I'm giving back the mic to Gilles for the business review.

Thank you, Laurent. We don't normally present organic growth of competitors in our slide. But since we've had some people, who like us very much, criticized us for a long time on organic growth, we thought we should show that. Under business review, on Page 16, what we have seen in the first half is that overall, in spite of very, very troubled economic conditions and operational conditions our end markets, the industries we serve and the clients we serve need our services even in times of crisis. And we were once in a big crisis in the Great Recession in 2008-2009, the lowest part of this, we still had positive organic growth of a couple of percent. And I think we're going to see the same this year. Even if we don't count the COVID-19 testing or reagent revenues, we will probably see that our core business is very resilient as a whole. Of course, we have a mix of businesses with various growth rates. And obviously, the clinical testing normally doesn't have a huge growth rate, others grow faster. But on the other hand, clinical testing is also very resilient. On a full year basis, we've seen already in July, some catch-up of the doctor's visit that couldn't take place before. What we've also seen in the first half of this year is that our decentral model with more than 900 companies make us very reactive, make us very agile and it was amazing to see when we launched a call for our best scientists around the group to develop multiple testing solutions to fight COVID-19 and solutions to test personal protection equipment like Mars, to test respirators and find solutions for our clients and basically any company to protect their employees in the workplace. We were extremely fast in developing a whole range of services. If you go on our website, on COVID-19 response, you will see the range of things that we've developed in very, very little time. And some of those tools are very, very good. So that was, for me, very impressive to see our teams mobilized to develop that. We -- as I said, we are not a big IVD company. We are a tiny IVD company. This is something we did mostly because of our internal needs, because we want to be very innovative in what we offer the clients of our laboratories. So I think our own IVD companies was more historically for an R&D point of view, to be fast in developing new solutions and standardize this. But this is turning -- proving handy and we supported those small IVD companies to develop product in record times. So it's a nice complement to overall mix. I would go to Slide #17. So this gives you an overview of the things we've been developing of the Q1 result, we talked a bit about the development of PCR testing kits and the development of some serologic antibodies kits. What happened in the meantime is we put together what we call the SAFER@WORK program, which is a range of services to help companies bring their employees back to work. It's impossible to test everybody every day. I mean. If you have gotten a little stick in your nose, you know that it's not terribly pleasant, so you cannot do that every day. And so you have to use a mix of solutions that are risk-based but that can catch an outbreak before many employees get infected. And we've put together services that can start with the Sentinel program, which is a program that can detect early onset of the disease, for example, by testing wastewater or by testing worn masks or by testing simply the work environment. We published a couple of papers on this. It's working very well. So in areas with blue virus prevalence, this is something that can be used. Then based on that and other artificial intelligence-based tools, we can help companies set up staff testing, but set it up in the right facilities at the right place at the right time. And the right frequency, so that not everybody has to be tested every 2 days, which is a very burdensome and probably not acceptable. So we think together, we have really an outstanding program, and we're starting to get excellent response this is something we launched about a month ago. And we already signed more than 500 programs. And we've got very large numbers in discussion right now. What we also launched recently is also a point-of-care testing, a very sensitive antibodies test. It's not for acute epidemic, but in many areas on a population that is historically in Section 3, that can also prove very useful. And also what we announced in the last couple of days, we launched, as I mentioned, pooled PCR test that can reduce the cost significantly, not necessarily for clinical testing. It's not for all uses, but for uses of surveillance, and detection of recurrence of virus, it can be very, very useful and cost-effective. And we completed our portfolio for PCR testing with DNA extraction kits because one of the bottleneck of the testing is the extraction of RNA before the analysis. On Pages 18 and 19, you will see a description of those programs. We can go back to that in the question and answer session, but there is a strong demand for our SAFER@WORK. And overall, the industry hasn't really decided how they should response. It's more a matter of we are waiting to see what the governments will do. And we have to deal with many scenario. Nobody knows how this whole thing will unfold. We can be very optimistic and say, okay, after the second wave, this will be over. The vaccines will work enough to completely suppress the virus. So it doesn't infect other people when people catch it, but nobody knows. We could also be faced as the WHO is saying for a prolonged period where the virus is circulating, and where at some point, it will become a responsibility of companies to contribute to the fight against the virus and to put in place very reliable prevention measures. And as a company that focuses on serving the industry, this is what we have been focusing on building. It's very early days. But we get very positive response to our SAFER@WORK program and our Eurofins COVID-19 Sentinel solutions. So on Page 20, you see, for example, one of our stands at the -- in Austria as the Formula 1 country. We are the partner of Formula 1 to test everybody who is allowed on the circuit on a regular basis at frequent intervals during those races, and we're happy to contribute to help companies go back to business. And this is something we're also discussing with airlines with a lot of different groups of industries, which are extremely hard hit by the virus and with proper prevention and adequate testing and especially risk-based testing, a high level of security can be achieved. On Page 21, you see a couple of pictures of our team at Paris Airport. France is starting to set up a testing program, required testing program for passengers who arrive from certain higher risk destinations, high-risk origins. And so this could be something that will be increasing in many countries. We've already won mandates to do that at France's largest airport, also in Germany, setting up in Frankfurt airport where we already have set up there. It requires a lot of effort, a lot of staff, but this could be something that countries will have to do, especially this fall and this winter, if the virus continues to spread. On the next page, Page 22, you see some pictures at the Austria, Red Bull Ring for the Grand Prix and at Silverstone in the U.K. On Page 23, we mentioned some of the product launches we did in the area of COVID testing. And we can go back to that in case of questions. On Page 24, we're giving a bit more comments on the COVID-19 pooled PCR test. At the moment, the reimbursement for the PCR test varies between, I think, something like EUR 50 in Europe, probably lower in some Asian countries and $100 in the U.S. This is all right for clinical testing, where, for medical reasons, somebody needs to know if the patient is positive or not. This probably will end up being too much. If you have to test the whole population and at regular intervals. That's why we've been working on a number of solutions that could significantly reduce the cost of testing for monitoring and surveillance. This is the first one, and we just started pooling with 5 samples. So it could be, of course, more and we are working on a number of other solutions that we hope to release over the next few weeks or months. The holy grail in this area is doing it immediately and doing it for $1. Whether that will be available anytime soon, and doing it at home for $1. We don't know, but we definitely are working to reduce the cost from the current levels and increase the speed. So that's on Page 25. I don't have any secrets to reveal now, but what I can say is after some initial time to get the R&D teams deciding on what were the right priorities because there are hundreds of things we could have been working on. We feel now they are working on a number of very, very -- potentially very good tools to fight the disease that will complement what we already have in our portfolio. On Page 27, I'll briefly comment on how we see the future. Obviously, it's impossible to know. Now, we -- when we talked after Q1, we thought there would be a huge need for testing in the next 2 months. What happened is that actually, there was a need for testing in April and May. But then in June, it started to be that labs in Germany and France were basically not using their capacity. So it's very hard to predict anything. For the second half of the year, we're all hoping that the virus had gone away and that life was slowly returning to normal. Well, the -- what I saw today is with the virus coming back and at a higher levels in Spain, France and Germany, we might not be there quite yet. So it's impossible to predict anything, both for our core business and for our COVID testing. What we do have, however, is a built-in edge. So normally, we feel our business should be more or less back to normal, to a large extent, everywhere. And we believe that, hopefully, authorities will take measures that make full lockdowns not necessary. If they do a proper prevention and testing. And if the virus continues to circulate, we probably will have to test a lot more that we are doing at the moment. So everything I'm going to say about the outlook, of course, has to be qualified because nobody really knows where this whole thing will go as a whole and in geography, but we feel we are well positioned for most of the scenarios that could unfold. Therefore, we think our objective, which is a secular objective. We've set that objective more or less 10 years ago to do about 5% organic growth this year, even corrected for the lower base last year due to the cyber attack. We should be able to hit EUR 5 billion revenues or a bit less if we don't do EUR 100 million of M&A contribution. We feel our EBITDA margin or EBITDA should be at the EUR 1.1 billion as we expected, and we should be able to generate about EUR 500 million of free cash flow. What we've done also as the pandemic started is we decided that the world would enter a phase of very high uncertainty. So while we are comfortable with our leverage and the rate of reduction of the leverage in normal times, this was no longer the case in the situation we are finding ourselves. So we decided to accelerate the deleveraging to go back to 2.5 faster than the end of 2021. And that's why we stopped our dividend and we did a capital increase last month. So as a result, we are already almost at 2.5. And probably, we will be able to improve on that in the second half of the year. We will continue to do that. It is our intention. We are comfortable in the range of 1.5% to 2.5%. But the closer we are to the bottom of the range, the more headroom we have if some interesting acquisition comes up. So we'd rather be at one -- cruise at 1.5 and have more strategic options. In terms of the broader outlook, we believe that for the year, the outlook is rather good, considering we have this COVID testing and reagent edge that probably will accelerate. If the pandemic expands and if it hits a bit the rest of our business. And overall, midterm, I think it's pretty obvious for everybody that testing is very important. That testing can be used to prevent problems downstream, can be in food, can be in environment, can be anywhere. The range of pathogens we are confronted with and will be confronted with is increasing, will continue to increase. In the end, testing is the most cost-effective way to prevent people from getting sick of things getting out of control. So we feel probably even beyond this pandemic, there will be more and more need for testing and our positioning is right. Now of course, there are a lot of challenges ahead. I think we're very well positioned. And the speed of reaction of our teams and the agility of our labs has demonstrated that we can navigate very difficult circumstances. So of course, we are all looking forward to difficult times. But we think we're in a good position. So that is it for introduction. I would like now to turn the microphone to you for questions and answers.

[Operator Instructions] Our first question comes from Patrick Wood, Bank of America.

This is Patrick from Bank of America. I have 2, please. The first is on the COVID testing that you've seen so far, thank you for the EUR 55 million number. Can you give us a sense -- I'm guessing the vast majority of that is just straight down the line single target molecular tests? But I'm just curious if you guys are seeing any pickup in demand or initial green shoots in multiplexing or NGS on that side of things. So I'm just curious as to the rough mix that you're seeing within that about EUR 55 million? So that's the first question. And on the second side, within the BioPharma business, obviously, it's very minimal at this stage. But how should we think about the implication of delayed clinical trials and how that may affect that business over the next year or 2?

Thank you very much. Yes, you're right. Most of the testing is real-time PCR testing, single target. We have a test that is using NGS and we have other tests actually in the pipeline that we are working on. Well, we have at Diatherix a multiplex test with multiple respiratory pathogens. And in the state of emerging people focus more on COVID, I do agree with you, though, that when the winter will be coming, our multiplex test could prove very handy for people to know if they have a fever, if it's a flu or if it's COVID. I mean you have to know that the COVID testing is only 70% not accurate, but a lot of people do not have virus in their throats when you sample it. And therefore, it's not the test itself, which is, of course, negative. It's a sampling. And so they're still even -- if you test negative for the PCR test. It doesn't mean you don't have COVID. But if at the same time, it is positive for the flu, it's very likely. It's not certain, but it's very likely that you have the flu and not COVID. So those tests will come. And we also have a range of things we're working on in that matter. But you have to make them cost-effective and you have to make sampling easy for patients. That's, I think, one of the biggest bottlenecks. For BioPharma, the BioPharma has done well in the first half, but it's not all rosy. We do have a central lab, which has been, of course, like many others, hit by some delays in clinical trials. And it will probably continue to be the case over the next year or so if the situation doesn't return to normal. So while BioPharma as a whole does well, it's some components of it might do a bit less well as was the case already.

Our next question comes from Suhasini Varanasi, Goldman Sachs.

I have 3 please. One, can you comment on how the exit rate of the business was in June, excluding COVID-19? Or maybe some color on how the trends have been in July, now that the lockdowns have lifted in all the countries. And second one, on working capital, you have mentioned that you've taken advantage of some of the government schemes on deferrals. Is it possible to give a number on how much was the benefit on working capital and which will reverse in the second half of the year? And the last one is on SAFER@WORK. It's very interesting that you've already signed up 500 customers just in discussions with 700 more. And you've also mentioned that it can add materially to revenues. Is it possible to put a number around it, and at a few percentage points, 1%, 5%, will be good to have some color there?

Thank you very much. Yes, June was the strongest month of the 3 in terms of exit rate. June also had more working days. All the working days mean nothing at this time because it's all over the place. We have -- whether you have lockdown at that time in that country, how do you obviously say that -- do a weighted average of the working days, but still June was stronger, especially the second half of June. If we look at it, I think in our scope, France was hit the worst by the lockdowns. The lockdowns were very, very strict, very followed, and the whole building activity pretty much shut down for a year -- for a month or 1.5 months. So that -- but June was much better, especially the second half, other than COVID. We got the COVID numbers for you because we thought you'd asked a question for July, but we're only on August 6, and I don't have the rest of the results for July. My impression is the -- judging from the mood of our leaders is that July should be good, but that's what I can say. Working capital, I don't have the exact number. I think it's about the order of EUR 40 million or EUR 50 million as the governance schemes. And this is, of course, mitigated by all the stocks we have been doing for reagents, for testing for COVID, partly mitigated. So I don't have the exact numbers. But I think in order of magnitude it is something like that, between EUR 20 million and EUR 50 million. SAFER@WORK, it is just starting. And as I mentioned, companies are still not exactly sure what they need to do. In some companies, especially in the meat packing industry, they know they have a problem because the work environment is one where the virus can spread easily. The slaughter houses, et cetera, they've started to do something. The airlines are starting. It's -- I think the world is still trying to find its place. There are no regulations really. Maybe it's just starting for travel, testing required around travel. We work proactively. We won a contract to the Emirates with the UAE government to set up one of the first passenger pretesting program in the world. So all those things are really early days. We talked about what we did with the Grand Prix. We're talking with some companies about very large global programs. We are in a good position because we have clinical labs pretty much all big countries. Our strategy in clinical was not to be like doing everything for everyone, like LabCorp or QUEST or other larger players, something maybe in one country or 2 countries or certain geography. But to be a highly specialized on advanced molecular test in as many geographies as possible so we can distribute or advance test broadly. Like we do, we are the leaders in noninvasive prenatal testing in Europe, for example, which is a NGS-based test. We're strong in that area. We started in India and Japan. And we're also strong in Brazil, in the U.S., but now the advantage of that is that we can easily set up COVID testing site at this complex -- those high complexity sites around the world, and we're in a good position to respond to the need of truly global clients when you need testing everywhere. It's hard to put a number on it. And it's -- some of it is included, of course, in the COVID testing, it's not only environmental testing. Some of it is simply human testing, like what we did at Silverstone or at the Austria Grand Prix for Formula 1. So I think it's part of our view for the second half. And you could argue that 5% is conservative over the whole year, which would be a bit more than 5% on the second half. But nobody knows. So we've set the 5% objective 10 years ago, we figured out, we might as well stick to 5%. We'll see in reality what it is.

Our next question comes from Will Kirkness, Jefferies.

And 3 questions, please. The first one, just on the margin. I wondered if you could give us the building blocks of that improvement. So in proportion maybe some cost savings from operational leverage. Second on the COVID tests, the EUR 55 million of revenues you referenced in July, I just wondered what that represented as a utilization of your current capacity. And whether the margin was in line with the 25% that I think you mentioned last time you spoke. And then just finally, on the guidance. During the FY '20 guidance back. I think previously, there was an FY '21 guidance as well, [ EUR 5.4 billion ] and [ $1.25 billion ] EBITDA, [ $600 million ] of free cash flow. Yes, just the ingredient, I wonder if there's any comment on that.

Thank you very much. Yes. No, the margin is -- I think our margin is still low, and it's still low because we are just finishing our 5-year infrastructure building, where we are building those large hub-and-spoke labs. We're in the middle of it. We are finalizing the build-out of our large site in medicine in the U.S. for food testing. We still have material reorganization costs in the first half and some of it lingering in the second half. To basically put our business in order, to really have the shape that we need to be really efficient everywhere. We still have massive IT spend, especially following the cyber attack. We're upgrading all of our IT system. We have massive software development costs to finalize our software. So we are definitely not where we should be on an ongoing basis. But little by little, some of the benefits of that start to trickle. We have some catch up, of course, for the cyber attack last year. The cyber attack, we did some estimates of the business we missed last year. Of course, it's only an estimate. What we would have done in June and the rest of the year is nobody will ever know. But since your people ask a question, we said, okay, if we had EUR 62 million more in June last year, organic growth last year would have been 5.5%, 6.3%, I believe, if we are correct, for the Boston Heart disaster. Then at this year, it will be a bit less in the first half, and I think we'll catch up the EUR 50 million that are missing in the second half. So that -- all of that contributed -- those extra revenues, they contribute to the bottom line. But I think it's still not satisfactory. We still suffer from a lot of things that are not going as they should be. But I hope on a more normalized situation, we won't suffer. We're doing also management improvements and leadership improvements in several areas. On the COVID test, yes, our utilization is low. On serology, I think every clinical company will tell you that there's not a lot of serology testing being done. I think the world has still to figure out what and when they're going to use serology. Actually, on serology, we're working on a range of all the tests that might be even better when the vaccines will be introduced to monitor the vaccine's effectiveness and so on. So I think there's a lot more to say about potential for serology testing. At the moment, serology testing is not happening in a great quantity. And PCR testing, yes, July, especially the earlier part of July, was way below capacity. We're still ramping capacity. We might even have to ramp capacity beyond what we had talked about earlier. But it won't be used every single day and every single week in every single country. There are still huge bottlenecks in sampling patients and bringing the samples to the labs, in getting the IT in order to get reimbursement. The reimbursement for all those tests is highly complex. The bureaucracy that has to be done to get paid by insurance and government is sometimes quite significant. So all those things take time. So I don't know. I mean, it could well be that we have a capacity that is not utilized fully just because some labs will be overwhelmed and other labs won't get the samples. But we have to have extra capacity anyway. And that's why we probably will be building out. We are building out the capacity beyond the 100,000 tests a day that we mentioned earlier. And I still hope that the virus will get controlled, and we'll never have to use that. And it will go back to normal. So we don't know. As to 2021, we're sorry, we -- it's a good question. We should have thought about it. We didn't think about it. Frankly, this is so hard to see how even the next 4 months will pan out that even if I had to do it, I wouldn't be sure. But we gave a very optimistic outlook. We think Eurofins will be in a good place. So of course, you would have to do many scenarios for 2021 about the COVID prevalence, whether the vaccines work, whether the actions are used, what level of COVID surveillance is required, whether our normal business can be fully back to normal in all-in components. It's very difficult. But on broad brush point of view, I think we should do very well in 2021 in pretty much all of the scenarios I can think of. But nothing -- nobody knows.

Okay. If I could just close on back on that -- the margin point around the COVID testing. So you said 25% before?

Yes. I think it's -- the margin -- actually, our margin should improve because as we get our own reagents approved in most countries, the cost of our own reagents is lower than the cost of the reagents we are buying from third parties. So at the level of current reimbursement is, I believe that margin of 25% you mentioned is correct. But it depends. Some countries have different reimbursement price, every situation is different. It depends if we have to do the sampling, which is very expensive, each sampling station is costing a couple of thousand euro a day just to maintain a sampling station, and you never know how many patients will show up. So it's difficult to know. And that's why it's good that the reimbursement is high in U.S. because you also don't get paid for samples you test. Sometimes for some obscure reason the insurance will not reimburse. And so you have to take a mixed view on what you're going to get paid.

Our next question comes from Edward Stanley, Morgan Stanley.

All right. I've got 2 as well, please. The first one, on the EUR 55 million you talked about in July, sorry to belabor this point. But can you give any kind of idea of what proportion of that EUR 55 million came from SAFER@WORK really starting to ramp up? And following that, how long are these contracts typically being signed on? Or are they for a quarter or a year or longer, I'm just curious? And how sticky this SAFER@WORK revenue could be? The second point on serology, you've already mentioned that utilization revenue has been great so far. But of the 10 million test kits per month that you said that you were producing or could produce per month, how many of those have you sold? And will you really see meaningful upside when reimbursement starts? And I'm just curious how quickly you can dial back CapEx in this area until reimbursement starts, is it quite flexible? And the final question. On the insurance claim. It looks like the insurance has gone through the EBITDA line. And given that it's a relatively material boost to the EBITDA margins, is that something that we can expect more insurance claim in the second half, more than the EUR 10 million? Or is it impossible to estimate at this point?

Thank yes. Well, I think in July, there's not so much in SAFER@WORK. Of course, the Formula 1 program is part of it. We gave you some numbers on it. A lot of it is clinical-- it's simple clinical testing. I think the SAFER@WORK programs will take time to ramp materially. We could see some significant amount in Q2. They are not long term programs. Nobody knows how the world will look like 1 year from now. We -- I mean, some companies may not even be in business if the lockdowns continues for a year or 2. I don't know how many hotels and airlines will still be in operation. So it's still very difficult to predict. I wouldn't know the average duration of the contract is, whether it is 3 months, I wouldn't know. I think we would all have to be very adaptive to the situation. But the good thing is we are not a COVID testing company. We are doing that to help everybody get back to their normal lives. We are doing that contribute. Our goal is to be doing our normal work of testing food, testing the environment, helping the pharma industry develop new products and doing innovation in clinical testing to fight cancer or detect genetic diseases and things like that. This is all our bread and butter. This is our core business. This is what we want to go back to doing as soon as possible. And in fact, had we been able to do that undisturbed by COVID-19, we would have had even significantly better results this first half, I believe. But on the other hand, if this pandemic doesn't get under control soon, yes, we might generate very material revenues from contributing to the fight against the disease. And we don't have to make more money there than we would have made in our normal business, but we think we should have sufficient margin to compensate at least. In serology, I'm not sure it's only a matter of reimbursement. I think it's more a matter of use case. People don't really know what they're going to do with the results. So public authorities are not pushing for it. They're submitting -- they are rather pushing people to get a PCR test if it can be done. And I think the used cases have yet to be firmly established in the health care system. When people get tested to know, well, did I have the virus, and it can be beneficial if people still feel some thyroid or other symptoms to know if they have had the disease, it's sometime used when there's not enough PCR kits. We introduced, by the way, recently a very nice point-of-care test for serology testing that's very sensitive. We've got good evaluation of that. And so this test could be deployed in areas where there's no PCR testing because it gives you a results in 10 minutes. And in a population, which is virus naive, you get a pretty good view of the situation with this point-of-care test. Insurance, yes, I think we got EUR 10 million reimbursement. I think it affects the reported EBITDA, not the adjusted, but Laurent, you may comment on that, please?

Yes, Gilles. I mean, we are in daily conversation with insurers even today. And we got EUR 10 million last year, EUR 10 million this year, and we hope to get very shortly some amount, but it's very hard to predict how much we will get and when we will get it. But normally, we should be able to announce something shortly.

And it's booked in the -- between...

Yes other income and expenses, and we didn't exclude it in the adjusted EBITDA because we didn't exclude the cyber impact in our EBITDA either in the previous year.

Can I follow-up with a quick one, given that you -- quite a -- you say you're not a COVID testing company. Can you tell us what food and environmental [ drop down ] and what the exit rates are to get a feel for how quickly those 2 end markets are recovering around the world view?

No, I think the -- I don't have the exact numbers month-by-month or week-by-week. I think we've lost a little bit in food and environment, a few percent. If we looked at the business outside of COVID, where probably in the second quarter, down a few percent, but much less than other peer companies, if you look at it, and the second half of June was very strong. So I think we probably are -- we're already in positive territory. In terms of organic growth on the rest of the group in the -- as we exited June. But of course, you don't know. If there are new lockdowns coming very strong loan coming again in October, November, nobody knows what's going to happen. It's -- the things that were hit is mostly where we have to sample, where we have to send people in a restaurant or hotel to take samples or in a supermarket, those activities are, of course, difficult to do when there is a lockdown. But overall, I think those activities were very resilient. When I look at the -- what all the testing companies have published, it seems to me that we are much more resilient in those activities, which probably is because our activities are, to a large extent, 90% plus pure testing.

Our next question comes from Thomas Burlton, Joh. Berenberg.

I wanted to -- just a couple more for me, please. Just to follow-up on the comments around insurance reimbursement. I just wanted to clarify that your guidance for the full year, whether that is in any way dependent on you getting further insurance reinvestments in the second half or whether we should think about that more as a sort of additional income? And then just another point, actually, on the July exit rate you gave for COVID testing with monthly figure of EUR 55 million. You also made the comment that that is currently increasing significantly week-on-week. I appreciate it's early days in August. But is it credible and reasonable to actually think that therefore, based on the demand you're seeing, and the capacity around IP you're seeing in August and September should probably be -- we should be thinking about a number above that EUR 55 million.

Yes. Thanks, Tom. Yes. No. I think Laurent could tell you exactly when we did the objective for 2020 whether any components included reimbursement by insurance, maybe the cash flow objective did, Laurent can comment on that later. Now anyway, we're in a different situation now. And my guess would be that with or without insurance reimbursements, we should be able to meet our objectives. That's how we can see it. There's such a level of uncertainty, as some of you noted, we could potentially overshoot significantly or not if things go really bad, but for reasons that I don't -- cannot think of right now, but that are always possible. So that's one aspect. Yes, the second half of July was stronger than the first half, I believe. The question and the difficulty with COVID is to put the samples in front of the lab available capacity. And it's all a matter of having the right sampling people or working with people who can sample the patients and then getting the reimbursement for that in the right place. And I think that's more the challenge to know how the capacity will be utilized. But my feeling, unfortunately, from what I hear, is that the demand will probably increase in the next few months, unfortunately. And what I'm really worried about is a winter, where a lot of people will get sick for -- or the fall from other pathogens and cold. And it's very hard to know if you have a cold or it's a beginning of COVID. So I think the situation may become very, very difficult, and we're asking government to make sampling of patient easier so that people can maybe keep at home and just get tested when they feel they need to be tested without having to go anywhere. So we're working towards that also. And -- but the legislation is different in each country, it will not be possible everywhere. So governments really have to find a way to make it easy for people to get tested and then find a way for labs, that have capacity to get those samples and test them because they can change from 1 week to the next. In one region, the labs are completely swarmed and the next region, the labs are empty. And that's going to be, I think, for everybody, the challenge going forward.

Just one follow-up, if I could. Apologies if I missed it when you mentioned this earlier. Can you say sort of what benefit exactly you got or quantify any benefit you've got from sort of government support schemes or use of furlough schemes or anything of that nature, kind of when you had laboratories closed for any period of time in Q2, to quantify the cost benefit or maybe the margin benefit in the first half, that would be helpful, please.

Yes. Thank you very much. Well, not so much on the P&L point of view. I mean, in China, has been finally 1 of the most generous countries indemnifying governments. There was a CARES Act in the U.S. also where we get -- I think we got $1 million or $2 million for our labs that were shut down. But the -- I think the P&L impact is fairly not material, as I think I understand. What I was mentioning is more on a cash flow point of view that we got the ability to defer some social charges and some taxes from the first half to the second half, maybe that will be pushed further out by the governments. We don't know yet. Laurent, do you want to comment on that?

No. That's correct. I mean we got mostly deferrals in terms of payments on social charges and tax from Q2 to Q3. But some governments are not extending this scheme anymore, so we might have a negative effect in the Q3.

Now we might use some of the reagent supply we've put together. I think overall, I have a look at your notes. I think, Tom, I think it's -- the way you look at things is pretty good. I mean you estimated what impact our core business has had, and then you added the COVID testing. I think that's 1 of the best way to look at it. And then each of you can make their own model. Some of you -- you guessed, our core business was down 2% in Q2 or something like that. And the COVID made a certain amount and then you come to the total. I think since nobody knows the future, it's probably the proper way to look at it and to say, okay, we think the core business will be hit by this much or will grow. We think our core business will grow in the second half. And then on top of that, will come COVID. But if you are more pessimistic than us and you think our core business will be down in the second half, you can probably put a number on that. And then add whatever COVID reagents and testing revenue, you think is likely I think that's probably the best way to model the future if you want to make scenarios. And 2021 will be the same. It depends how optimistic or pessimistic, you want to be about the economy and the lockdowns. I think even we've locked down the hit to our revenues and our core business is fairly moderate. And of course, we generate some more and more substantial COVID revenues. I mean if you look at it, EUR 55 million in July, that's an annual run rate of EUR 650 million out of nowhere. That's pretty substantial. But I don't know. Nobody knows what exactly this virus will do anywhere in the world. I mean we have things we are working on that could be extremely powerful that could generate very mature revenues, but it depends on whether they work, whether we can roll them out fast enough or whether there is demand for it, whether the governments approve them or not. So it's very hard to know. We prefer our long-term shareholders to just think of Eurofins as we are a resilient company. We think on a long-term basis, 10 years basis, 5% organic growth per annum is probably something we can achieve. We have a well-balanced set of businesses. We've some that are a bit more fast growers in normal times than others, but all of them together should enable growth and stability. This is what we want for our employees, to be able to offer them stable jobs. We innovate a lot so we think for innovation going forward. We could potentially see a boost. And if, unfortunately, the pandemic continues, yes, we might overshoot that a little for a while. But we don't hope for that. We hope for a situation to go back to normal.

Our next question comes from Allen Wells from Exane.

Three, I guess, very quick sort of follow-ups or follow-ons on previous questions, if I can. The first one, obviously, the strong margin improvement, 210 basis points year-on-year. Is there any way you can maybe quantify or help us with the building blocks to ask a question earlier slightly differently, like how much of that improvement is from the benefit from investments and efficiency? How much is from COVID, how much the cost controls? And kind of like the government support part of that might be limited? But that would be my first question. And secondly, just 2 quick ones. Probably the EUR 50 million government support on the cash side, did I understand what you expect the majority of that to be paid back in the third quarter or the second half? Or will actually some of that drop into 2021, as these different messages coming from different companies depending on where they're operating at the moment? And then finally, just following up on the SAFER@WORK, how do you price these contracts? You've obviously given us some quite helpful numbers out there on PCR testing and serology tests. I mean how do you price SAFER@WORK, if you can give us some detail there?

Thank you very much. Yes, I think the margin improvement overall is not all that huge. We're still finalizing our reorganization program. I think, as you say, little by little, we get an impact from efficiency. We got some improvement because we didn't have the cyber attack hit. That's a component, obviously. The margin on COVID is probably compensating the margin that we lost on the growth because actually, if I look at it, our core business, it's not that we're missing revenues, we're missing growth on our core business. So on that growth, the COVID revenues compensate that. We might have a bit of cost control indeed because we deferred salary increases for the second quarter. And government support is not really mature on the P&L. Indeed it's a very small amount. SAFER@WORK at the moment, is mostly clinical testing for employees. The cost for the -- what is it called, the Sentinel testing is a bit lower than the clinical testing for a sample, but it's usually a lot of sample, if you do it on the whole site. The cost for wastewater testing is a bit higher. I think it's more like EUR 200 because it's more elaborate for sampling and for extracting the sample. So that's the orders of magnitude. But the bulk of it so far is mostly clinical testing. Sorry, I don't have the exact details on the breakdown on the margin. We don't -- we don't necessarily look at it this way.

And on the deferred tax repayment? Is that mostly this year will unwind? Or it will sum up into '21?

I think this year, for the most part. But Laurent, I mean, I don't know what governments will do because some of them are talking about continuing those programs. Laurent, do you know anything better?

No. What we see today is that in the countries where we are the most active, like France or U.S., France has asked to pay back the Q2 social charges and taxes we were deferred in July. So we paid them in July. But now they are talking about extending the measures in maybe the end of Q3 or Q4, so it's very uncertain. And in most countries, this is more or less what it does. I mean it is visibility month-by-month or week-by-week. So we don't have better visibility at this stage, unfortunately.

Our next question comes from Steven Goulden, Deutsche Bank.

I just got a few, if you don't mind. I just wanted to ask you about the -- just on your organic growth calculation. If I look at the acquired revenues for last year, it was, I think, EUR 134 million on a pro forma basis. But obviously, if I look at the -- the way that the organic growth is calculated for the first half, I think, you stripped out about EUR 36 million. So that kind of implies a pretty drastic drop on the organic of the acquired businesses. And obviously, most of that is skewed towards the second quarter. So I just wondered if that's the right calculation. And whether or not there was anything else going on in that approach. The second question I have, just in terms of the -- your outlook for the second half, I mean, obviously, within your BioPharma division, it appears there was at least some delay to clinical studies and clearly within clinical diagnostics, people were avoiding going for tests. Are you seeing catch up demand coming there? And if so, to what extent are you seeing that? And I guess, why then are you only sort of guiding to roughly mid-single digits for the second half? And then on the COVID testing, you're actually able to tell us what the revenue contribution from COVID testing was in the second half? Or how many tests you've done? And then final one for me, sorry, just on the free cash flow definition. Obviously, in line with new standards, as you said, you stripped out the lease capitalization from the CapEx number, which in this quarter, in this half, I think, had about EUR 40 million. So on a full year basis, I guess, that has about EUR 80 million to free cash flow. Is the EUR 500 million definition on the new standard? Or is that on the old standard?

Thank you very much, too. So I'm not sure your question on the organic growth I followed, I will ask Laurent to answer that. I don't know actually if we looked exactly at that detail. Laurent, do you want to answer the first question?

Yes. I mean, the EUR 36 million you're referring to is basically the consolidation of 2019 acquisition at 2019 FX rates for EUR 36 million. But your question, Stephen, is that you imply that this is a severe cut versus the pro forma of last year, that's what I get from your question?

Yes, that's correct. Just if -- kind of a simple half of what you had in your account dossier.

Okay. I'm checking with the team, and I will get back to you in 1 minute on the precise answer to this cut, if any?

I don't think anyway, that's EUR 134 million would correspond to EUR 36 million or half of twice. I think it's unrelated numbers, as I can see, because we haven't had like any massive erosion anywhere. Outlook for H2 and catch up demand. Yes, we might have a little bit of catch-up demand in clinical diagnostics. I heard that for France, but it's hard to quantify on the full year. BioPharma, the central lab is a very small part of our BioPharma. I think it's less than EUR 100 million out of over EUR 1 billion. The clinical trials, the delays that some of your colleagues mentioned will -- that have hit our central lab, don't have a material impact on the overall BioPharma, which is quite strong. Yes. And stripping out exactly the COVID, we haven't done it well enough in the first half to really be able to report anything officially about it. But as you saw, it compensated -- more than compensated whatever the revenues we lost due to the lockdown. But it is not as high in July. It was definitely a high point compared to the month before. It's not our average [ maybe ] in the first -- in the second quarter. And the free cash flow definition. Again, I'll ask Laurent to answer that question, please.

Yes. So coming back to the first question, the EUR 36 million is the increase versus what was already consolidated last year. So this is why you think that there is a discount, but there is no discount actually. These companies are basically in line with their pro forma. So what you show -- I mean, what you see in the organic growth table is just the part which was not consolidated last year. Going to the free cash flow definition. So indeed, I mean, under IFRS 16, there are 2 ways to present your free cash flows. One, which we opted for last year and which some of you told us was not the most readable way. And we also discussed with the regulatory body in Luxembourg, and which recommended to basically opt for a simplification where basically only cash outflows, real cash outflows and not accounting entries are reflected in the cash flow statement. And this is why we changed the presentation in this first half, and we put a note, and we gave you the pro forma for last year to be able to compare. So the objective that we made were in -- under the old definition.

If you see that we did something like EUR 300 million in the first half, which is normally the weaker half of the year, where we had a bigger hit of the lockdown and the COVID testing didn't pick up yet. I think we probably are comfortable with the EUR 500 million for the full year. And again, when we go back to that objective, we haven't changed this 5% for 10 years. And we're not -- and that's not a guidance, by the way. We're not guiding. We are just saying, this is an objective that we think we should be able to achieve and it could well be we do way better than that. It's -- but our objective is 5% and remains 5%. And we have no reason to believe that we should miss it. As we can see, of course, that view can change if developments change. But so far, we believe we can meet our secular objective of 5% organic growth this year. Even if we don't -- if we correct for the missing revenues due to cyber last year. It could be we do way more than that in the second half. As a citizen, I don't hope for that because that would mean the COVID pandemic would be -- yes, not going in the right direction. But yes, it could be we do much more than that, but we'll see.

Our next question comes from Geoff Michalet from ODDO BHF Asset Management.

One more for me. I just wanted to know where are you on the Boston Heart Diagnostics side. Are you still restructuring it in a good way and will it probably breakeven this year?

Thank you. Yes. Well, that has been a nightmare for us the last 3 years. But in the end, as we said last year, it's very small now. And of course, the cardiovascular testing took a hit like any clinical testing in the second quarter. On the other hand, we've turned that lab into a COVID testing lab in the meantime. And in the meantime, the cardiovascular testing has picked up again. As things normalize in the U.S. and we start to generate substantial amount of COVID testing from that side. So I don't think and I don't hope this will be a drag anymore in the future on our on our earnings and revenues and growth. And that's why we didn't mention it. Thank you for asking it.

Our next cost comes from Mohit Rathi, with Baader Europe.

So I have got 2 questions. Firstly, can you please throw some light on the diverse performance of food testing business in the Europe and North America because I see that in the Europe, it was down, but in North America, it was up. So can you please talk about the demand dynamics there? And secondly, can you please provide volume and price breakup of the H1 organic growth? I'm just trying to understand if there is any competition or pricing pressure? And how has been that -- how has been that progressing over the years?

Thank you very much. Yes, you're right. I think the difference between food test in Europe and North America, as in Europe, we have a bit more of work for the retailers and restaurants, where we do something in their store and in their restaurants. And that part was hit. Whereas in North America, we do mostly pure testing, where we -- our clients send us the samples, so they have to organize the same thing on their sites. And that's 1 of the reasons. And on top of that, the lockdowns in France were very hard, very strong. So a lot of the activity froze for pretty much a month and so that, I think, explains the difference. Volume and price. I wish I would know. We have a very diverse business with 900 sites. They do also -- each of them a bit different thing. Some use a price list. Some do -- like BioPharma is just a project-based business. So it's not really comparable from year-to-year. For food and environment, we try to do reviews with our managers on a business by business, on volume and price evolution. And where we do it, we -- when I get the question, normally, when we do a 5% organic growth, it's probably 1.5% to 2% price growth and the rest volume or things like that. I don't have any indication that it would be different in the first half of this year for the places where we have the data. But I don't think we'll ever have that data for the full group, unfortunately.

[Operator Instructions] Our next question comes from Saul Casadio, MUSG (sic) [M&G.]

It's Saul Casadio, M&G. Congratulations for the good results despite the circumstances and for achieving your investment-grade rating. I have 3 questions, if I may. One on the business, one on the rating and one on the capital structure. Starting with the business. And if I understand correctly, the EUR 55 million revenue for July, the COVID-19 related revenue, they mainly come from proprietary, the diagnostic test that you have been able to develop. And that's the part I would like to understand if that's correct, that's what I would like to understand. But it is my understanding, you're predominantly in this business, you manage clinical diagnostic labs, which normally execute test developed by other companies like Abbott, Becton Dickinson and Roche, this sort of company. So I would like to understand how you were able to seize this opportunity and develop this test, that will be interesting to understand? The second one on rating. The corporate family rating came out a couple of weeks ago. I was expecting to be followed soon after by the ratings of the senior notes and the hybrids. I wonder whether you could give us an update on that. And on the capital structure, looking at the capital structure on long-term view now that you have achieved investment-grade rating at the corporate family rating level and considering that the heavy CapEx phase of your development is -- predominantly is behind. Do you still see a role for the hybrids going forward? Or do you think that they will be naturally phased, let's say, rolled into senior unsecured paper?

Thank you very much. Yes, we haven't said very much about our IVD products businesses. For a large number of years, we have been developing our own test, our own molecular test. We have a range of molecular test for CMO testing and food pathogen testing for a long, long time. And for a while, we have been deciding to invest to develop a broader range of molecular testing, not only for food testing, but for also IVD testing. The main purpose of those businesses were to supply our own labs to make this independent from vendors on one side. And on the other side, to be able to be faster in deploying in our labs worldwide, new tests that we develop. Because if you do the other things, which is called laboratory developed tests, for which we have 3 EUAs in the U.S. for COVID. Each lab has to do a lot of work to validate it and justify it, whereas if you by a product that has either CE-IVD or as an FDA 510(k) clearance. For example, you can use it with less validation. So that was the original idea when we started this very small business line 5 years ago or 3 years ago. In the meantime, of course, that has proven beneficial for COVID because we cannot have reliable supplies, especially we could not in March or April from IVD suppliers. And so we've been able to use the knowledge of our scientists in our lab to support the smaller IVD companies we had and to develop those products. And I agree with you, I'm amazed that how fast we were able to develop all those products. You have probably never heard of Eurofins as an IVD product supplier before COVID because our company was fairly small. But in spite of that, by working together between the scientists in our labs and the scientists in IVD companies, we were able to put together a complete portfolio. And in the first half, we still bought a lot of reagents from third parties because we didn't get approval for our own agents everywhere as fast as we wanted. I think going forward, we should be able to have a higher percentage of the test we use in labs come from our internal reagent producers. It won't be everywhere. There are all kinds of restrictions and limitations, but this should increase. I will let Laurent answer the rating of our various lab instruments, Laurent.

Yes. Moody's indeed is rating our debt instruments, and they should announce it today or tomorrow. So I cannot release it now if it's under the control, but today or tomorrow, you should see it.

And regarding your last question on the capital structure, I mean we will see how things develop. Indeed, it could be if we don't do a lot of acquisitions, we do mostly organic development that we won't need all that hybrid. And naturally, we will reimburse it, refund it, repay. However, we like it. It's really a risk, a very low-risk type of instrument. And we -- after 2 crisis, we had a great recession of 2008-2009, and this COVID crisis, we have seen that our business is very resilient and we can withstand a crisis. But nonetheless, I think instruments like hybrid, the last one, I think we're paying 3.5%, that are not too expensive that are not really causing any reimbursement risk in case of a very, very prolonged, very difficult economic situation has proven helpful. So I can't say we'll never reissue or replace some or all of those hybrids. It's increasingly unlikely we would need all of them, but time will tell.

Our next question comes from Andy Grobler, Crédit Suisse.

Just one from me, if I may. You mentioned earlier about changing one of the Boston Heart labs into a COVID testing. When you look forward and taking, I guess, a more positive view that the need for testing disappears in 1 or 2 years or whenever it may be, how quickly can you change that capacity into other usage? And what are the costs and kind of effects of making that change at some point when it's no longer hopefully needed.

Thank you very much. Yes actually, what we did since BHD had unfortunately shrank over the last 2 or 3 years, we had a lot of empty space in the lab. So what we did is we reused some of that empty space to set up COVID testing. And all the investments, they've already gone through our CapEx spend. So they are there. And the payback on those investments is relatively short at the current reimbursement rate. You're talking of a few months. So that won't really be an issue. More importantly, what we're also doing for the COVID pandemic is developing our ability to serve consumers directly, developing our online systems, developing new approaches that are more patient and consumer centric. And that will also develop well, we believe, in the next 6 to 12 months. And we're working on our offer regarding ways to help people help themselves to not get sick because the whole of the clinical diagnostic, not the whole, but the bulk of it is focused on helping people who are sick. And this is, therefore, reimbursed by insurance. But we believe there is much more public health benefit to be had from helping people not get sick. And especially, as we know, a lot of the chronic diseases come from obesity, overeating and other problems. So clinical diagnostics can also have a use for that in prevention. That would be probably more self-paid or employer stayed than insurance reimbursed. This is a business we are developing out of Boston Heart, and of course, COVID is not helping for people to focus on this aspect, but also using the time to get ready for that. So we think we're going to make something out of this platform. Especially, as you mentioned, over the next 2 or 3 years, we have a bit of time to do that. And the investments we do in IT and online platform, et cetera, for COVID will lend themselves very well to that.

And Gilles, just more broadly than Boston Heart, I guess that the kit that you put in for the COVID testing, just to understand if that particular test is no longer needed, can that be repurposed for other usage relatively easily? So you're not -- you're not going to be stuck with a lot of kits that's no longer useful at some stage.

Yes, yes. It's anyway -- compared to the size of the testing, it's not so much. And if you look at it, that even at the low utilization that we're having, we could generate EUR 55 million of revenue, that's an annual run rate of EUR 650 million. I think the CapEx related to that was probably less than EUR 50 million. So it's not super CapEx intensive. So it's not so much. And yes, all of that can be reused for other molecular tests. Now of course, the market for all those other molecular tests won't be at the size of the COVID test immediately, with what we are doing in our labs is we are working on developing a range of tests. And actually, I'm very excited about that. Because, again, we went into clinical diagnostics because of our impression that the way clinical diagnostic is used today could be enhanced by more preventive actions and by more patient-centric actions. That's why we bought Diatherix in the U.S., which has panels of detection of respiratory pathogens that cover 25 different pathogens in one run. So if somebody is coughing or somebody goes to the doctor instead of being prescribed an antibiotic just to see what's going to happen, we can know immediately if it's a virus or bacteria and if it's resistant to antibiotics and then which antibiotics could work. We feel this type of approach has a huge potential. We've talked about it for rare disease. We've talked about it around birth, to help people conceive better. There are many, many other areas where molecular testing can have a very strong impact on patients and patient lives and their health. And over time, we will develop assays that can be used on those instruments, both in terms of infectious disease, in terms of women's health. You have a lot of things. You have all the STDs issues that are largely under diagnosed. You have also testing like around HPV. You've got a range of things that will go molecular and for which we are working to develop oral interesting solutions in addition to, of course, what our suppliers, our IVD suppliers will provide us. So we want -- if COVID stops tomorrow, of course, we will have a huge overcapacity, but it would have been paid for already. And that capacity may take some time to be used, but eventually, we will use, I think, a large part of it.

There appears to be no further questions. So I will now hand back to speakers for any of their remarks.

Well, thank you very much. Thank you very much to all of you who joined our call. As you noticed, we are in the middle of a pandemic, a lot of people are suffering badly, and I hope none of you or your families were affected. That's why we don't want to be -- sound overoptimistic or overly satisfied with the developments. We are relieved that we're able to mitigate the impact of the crisis on our company. We think our contribution in the second half of this year to COVID -- the fight against COVID-19 can be very meaningful. We work very hard to develop a very broad range of services. Our reach to clients is not as large as it should be, so that enough clients can benefit from the services. Of course, our clinical diagnostics, they develop the test, but they don't have the safe force and the installed base than the Roche or an Abbott or Becton Dickinson have. So of course, we have a small share of the reagent, a very small share of the reagent market, but it doesn't matter. What matters is we have a sure supply for all labs. We can provide unique solutions to clients, especially business and industry, when they want to bring their staff back to work. I'm very optimistic and bullish as to what we can offer and we really thought through what we're doing. What we have done is develop solutions that really make sense from a cost effectivity point of view for employers or for governments to help people go back to a normal working situation. We employ it in our labs. It can be done. It's cost-effective, it can have a very strong impact in detecting very early any cluster and mitigating the clusters. All those tools are -- can be implemented. We have trained our teams, hundreds of people around the world to implement them with clients. And this is something that can really have a positive impact for governments and companies, so really will play our part in the fight again COVID. Maybe it's going to be a lot more revenues than the 5% organic growth that we mentioned. But in the end, it doesn't matter. That's not the objective. The objective is that we contribute to limiting the number of deaths, to contribute to helping everybody go back to work safely, that we contribute to everybody recovering their normal life, their social activities, hopefully, [ one day]. That has been our objective. And yes, it's good that we can compensate with that the business that we would have done otherwise. And if we do a little bit more and if results this year are much better than our objective, so be it. This is money we will invest for R&D in the future and for developing new innovative solutions that can have a strong impact for everybody to eat safer food, to live in a safe environment. And also to prevent diseases. So this is why our company is here to make a contribution to the life -- a positive contribution to the life of everybody. And I'm very proud and thankful to our teams for all the work they did. And I think the result in the first half really demonstrates how fast we can mobilize and contribute. So I wish you all to be safe. I wish you all as good as possible summer in spite of all the restrictions that are slowly creeping back in. And I hope to be able to meet you in person in the not-too-distant future. It doesn't look too good for the second half of this year, but we'll see. Best wishes to all of you, and thank you very much.

This now concludes our conference call. Thank you all for attending. You may now disconnect your lines.