Qiagen N.V. (QGEN) Earnings Call Transcript & Summary

Hi. Good morning, everyone. My name is Matt Sykes with Goldman Sachs. I'm the senior research analyst for the life sciences tools and diagnostics sector. And this morning, we're happy to kick off the 42nd Annual Goldman Sachs Global Healthcare Conference with QIAGEN. With me, I have Roland Sackers, the Chief Financial Officer; John Gilardi, the Vice President, Head of Corporate Communications, Investor Relations; and Phoebe Loh, the Senior Director of Investor Relations. Thank you, everyone, for joining us. I thought maybe what we start out is I kind of turn it over to you, Roland, to set the stage for us to talk about perhaps the most recent quarter, expectations for the year, and just kind of set us up with how you're thinking about things these days.

Yes. Thanks, Matt. And again, thanks for having us. And as I said before, I'm very much looking forward to a real-life conference in California and getting some more Sun. It's really something that we are lacking here in Germany. Nevertheless, let me start -- kick it off for a second, and I would start with, of course, things you are well aware of, that we had a good start into the year. We were able to beat on both -- on revenues and EPS in the first quarter. I would say it's also important to mention that, within the first quarter, particularly our non-COVID business, came in quite strongly well and overall 16% CER growth rate for our non-COVID business. That was actually driven by rather a broad portfolio growth for it. So it was not really one product which did exceptionally well. It was really many different product lines. QuantiFERON, 22% growth rate. Overall instrumentation on the non-COVID side, north of 40%. We have seen clearly DNA sample preparation, again, also very solid double-digit growth rate. So it was really on a broad basis. And clearly, also Q1 last year, was not like a COVID quarter. Already 2 months of that quarter was -- were quite regular. In all fairness, clearly, March was impacted by COVID. Nevertheless, I would say, still a good performance on the non-COVID side. On the COVID side, I would also say a good start to the year. We have seen clearly it was, I think, 3 million lower than Q4. Nevertheless, it remained at a quite high level. What we do see is clearly a certain shift within the testing. We see now product areas like mutation detection clearly coming out, wastewater testing areas, which are clearly are on the forefront compared to, for example, regular screening and testing. But I would also argue overall PCR testing within the first quarter remained on track. What is also important to note is that in terms of profitability, we have seen the gross margin around 68%. That is probably also what we expect for the rest of the year. It's a bit lower than I would say what you should typically expect and probably also lower what you should expect then next year. That has to do with 2 factors. One is clearly still a significant contribution coming from the instrumentation business. And second is, clearly, we're heavily investing still in production. It went up on the non-COVID side. So there's clearly a lot of cost which goes in validation, quality control but also, clearly, on the capacity side, which has a negative impact on gross margin. As I said, I do think that is fading out over time. On the operational cost side, I would say it's fair to argue is that, while we increased our R&D spending, particularly to increase our menu on NeuMoDx, to a certain extent on QIAstat. We clearly see leverage on the SG&A side, and we do believe there is more leverage to come on the SG&A side going forward. So overall, profitability was good for the year. And therefore, we were actually quite pleased for the year. With that, I think this is probably a good opportunity for many questions.

Sure. That's very helpful. You described a little bit about it, but one kind of question that we always get -- and I know you talked about the non-COVID business, a very strong quarter. You expect some -- maybe some softness in the back half of the year as the environment remains volatile. But perhaps you can help us understand a little bit better the puts and takes between the COVID, non-COVID as we progress through the year and how those kind of offset each other as we progress through '21 and maybe into '22.

Yes. I do think what is clear is that we were clearly expecting that on the COVID testing side that there is a softness coming in over the rest of the year. And I do think that is exactly what we're seeing right now and probably going to increase for the rest of the year, particularly in the U.S. I would say Europe and Asia is actually doing quite well. But U.S. is clearly -- given also where they are in terms of vaccination orders, I would argue that things are probably more impacted than in the rest of the world. On the other hand, the non-COVID business is doing better than we expected. We see also a continuation of that trend. There's certain parts of the business where we're even now getting close to 2019 performance. We do expect that, that acceleration is going to continue. And we probably dig into the 5 growth drivers in more detail going forward. I think the other thing that we should have in mind, of course, that volume is not everything, right, because volume is one thing, and as I said, volume might get impacted. But we see clearly also a new quality of testing. Again, talking about sequencing, talking about genotyping, so more or less figuring out which mutation is on the forefront. And just like -- clearly, tests which come out on a very different price point than I would call it even a regular test and not even talking about antigen test, so I would say there's also a certain mix within the overall -- a mix change within the overall COVID testing market.

Yes. And just focusing on COVID for one last question. Could you talk about where some of the COVID revenues actually might be fairly durable? I mean I'm thinking about surveillance with NGS, wastewater. Maybe -- you referenced geographic areas where inoculations may take time or even T cell testing. Could you just talk about where you think sort of the durability of certain aspects of COVID testing may last longer?

That's clearly a question where you have to assume a lot of -- or you have to work with assumptions for it. But I would assume what you see now in many countries which were on the forefront of testing that they all were quite easily go to a vaccination level around 60%, and then it really starts to slow down. And it's really tough for most countries to go even close to 70% vaccination ratio. If that trend continues in that way, it's quite obvious that COVID testing is going to remain because there is a significant group within the population which is not protected by vaccination. And what we all learned in the meantime is that, while vaccination is doing a great job in protecting you for getting severe sickness, it has only a limited impact in terms of spreading the disease. And therefore, I think testing will be always required. We do believe that certain trends continue, as we said, on particularly the antigen and serology testing. You see that, that came down much quicker than, for example, the PCR-related testing. And we even see in certain countries that they established now more routine testing on the PCR side. Wastewater is still on the forefront. Europe is still picking up. Other countries were here more aggressively. Give you another number. Genotyping, in December last year in Germany, only every 900 positive result for genotype. And now it's every 30s. Now so you can see there's clearly still a total number of genotyping going up. Again, we have to see how it goes. But nevertheless, I think it has a current trends. So I think we always have to balance it. And I think that's the one thing I really want to stress. The good situation for QIAGEN is that we clearly have a good hedging situation with COVID and non-COVID. We clearly had significant decreases in large parts of our business from QuantiFERON about DNA sample preparation and others when COVID was up. And I do think that is going to balance out over time.

Got it. Great. And maybe if we turn to the sample prep business. It's a highly attractive business for you. You have significant share. How are you thinking about the growth trajectory for that business as we move beyond COVID? And just maybe give some views on that as we go through the year.

Yes. Again, the assumption is always the most difficult one to take, which is how, when and where is COVID going to settle in, right, because you can have -- at the end of day, you can have kind of 2 base scenarios: you can rather have a scenario where you see it goes quite back to whatever is the new normal within a 3, 6 months period, or it rather goes down driven by different mutations and different [ wafers ] going around the world over a longer time period. So I think that is -- it's a question which nobody has an answer on right now because it's really very much mutation driven. And if you see, for example, that in the U.K., now the #1 mutation is -- now the -- again, the mutation coming from India. And that again shows how quickly things can change and with all the impacts. Nevertheless, assuming that we reach that point at a given time, I'm quite confident that also the DNA sample preparation side, we continue to see a solid single-digit growth rate driven in particular -- also, that certain business continued to do quite well. We see also that, again, a lot of testing in the research environment as well as the clinical environment were reduced, and funding is still there. We see increased funding going into health care, particularly to diagnostics. So I would say the volume increase compared to pre-COVID is clearly to be expected.

Got it. You kind of led to my next question, which is on the funding landscape. Just given your presence, you have a good view. We got an initial proposal from the current administration for a 20%-plus increase. And while it's just a proposal, I'd argue that governments around the world are going to be hard-pressed not to increase spending on health care. So what type of tailwind do you think will filter down to QIAGEN? And do you feel this will be pretty global in nature in terms of the funding landscape?

We see similar trends in Europe, yes, and also in the U.K., which is now, as we all know, a separate budget, that there's clearly an interest to increase health care research. It's quite obvious that there are certain areas where we'll probably have a focus. Again, infectious diseases will be high. Oncology will continue to be high. And areas like genomics and others are clearly going to recover and probably have even -- to deal with the backlog. So I will assume that overall environment is for companies like us and our industry incrementally beneficial. I also assume that the risk many people see on hardware and excess capacity is not going to play out, at least not for QIAGEN, as major as some people see it. Why? It has to do with the setup where we're in. There's 2 factors. First of all, a lot of this excess instruments were sold to governmental institutes who were really focusing on pandemic control. They are not going to turn into a [ quest for lab growth ]. They'd rather keep the stuff and put it under storage for the next pandemic scenario, but this capacity is going out. And this is not a capacity QIAGEN was dealing. It's because we are not selling this ultra high-throughput instrument environment. We're rather on the mid-throughput environment. I would even rather make the argument that some of this capacity which was -- [ they also find ] governmental institutes goes back to the private sector and probably filling some -- filling up peers, some of the people filling out or filling. And the second topic is clearly -- that has to do with specific situation. QIAGEN is dealing it, which is that we clearly have a strong footprint in sample preparation, meaning if you have a solution for sample prep, e.g., for example, for COVID, that doesn't mean that you have a sample preparation solution for any other product or test available. And again, QIAGEN is -- has probably 20 different technologies around sample preparation probably in more than 200 different applications. It took us 20 years to develop them. There's no chance that a new player or even existing player change that market share in any reasonable time frame.

Understood. That's helpful. I mean maybe we'll shift to the 5 pillars. You realigned some of your segment reporting, gearing towards areas of growth. And these revenue streams represent a pretty solid portion of your overall TAM. So maybe talk about the thought process behind that realignment and maybe the incremental growth that we should expect to see just given the level of focus and attention on these 5 areas.

Yes. Let's kick it off with quantifiable. As I said, great start in the year, 22% growth rate for the quarter, for sure, going to continue for the rest of the year. Probably also is a good likelihood to be even above what we guided for. Competitive landscape hasn't really changed. While there was an announcement about, in particular, bioMérieux coming into the market, it's quite obvious, with their instrumentation platform, VIDAS, we -- it will be difficult for them to take anything away from us. And at the time, we actually see that customers are really increasing very close already to '19 levels. We expect that it probably even be will be above '19 levels over the course of the year, and that is not going to change. Similar trends, as I said, first, for sample preparation, a very good start within the year on the DNA side. It's quite obvious that RNA, which is COVID-related testing, will soften over the course of the year. That is something that we expected. It's always hard to predict how far it will go and in which time frame it goes. Still, there's a reason to believe that the fourth quarter probably might be even better than the third quarter. But again, it depends a bit on, again, overall mutation developments. Nevertheless, having said that, it's quite obvious that, at the same time, the DNA testing will probably make its movement to that. And therefore, I think that is a good hedge situation for us. Digital PCR, good start into the year. We are off to 600 placements for the full year. I think that hasn't really changed. [ Consumer ] run rate is probably slightly above on what we thought. We have to see how that trend continues, but there's no reason probably for believe -- for us to believe that we will be below our guidance there as well. QIAstat and NeuMoDx, there's clearly a -- NeuMoDx, a COVID-related portion to that as well, and we have to see how that plays out, particularly U.S. versus Europe. So I would say that is something where we have to do some more work around that. But at the same time, we made nice progress around QIAstat, and that should be helpful for us as well.

Great. And maybe -- you mentioned that -- DiaSorin. Maybe just talk about some of the partnerships you developed recently. You've got Illumina with NGS. DiaSorin in automation with QuantiFERON. Could you just talk about the decision to partner with these companies? And is that something you look to continue to do over time? And what do these companies add to your capabilities?

DiaSorin clearly has one benefit which we do not have, this meaning they have an automated solution for [ more assays ] and, clearly with the LIAISON platforms, 2 outstanding quite new machines and also with very good placements. In particular, COVID, of course, was being very helpful for them as well. So what we combined here is our QuantiFERON test for latent TB and also, going forward, for Lyme and introduce that to their hardware solutions so that every customer who wants to start with latent TB testing or Lyme testing has a kickstart. And this something like doesn't have to buy the new hardware solutions. So I would really think that it is a good win-win situations for them. It's clearly a nice addition in terms of menu compared to other offerings. And for our customers on the consumable side, it avoids additional investment in any hardware setup, and they don't have to buy any incremental instrument. It went out quite well. Again, clearly, COVID was for the last year somewhat of an issue. Nevertheless, we have seen how it developed this year. And the DiaSorin partnership is a significant [ part successful ].

Great. Just switching to the financials a little bit. You talked about margins in your opening comments. I just want to dig in a little bit there. On the investment side, you're ramping up NeuMoDx, and you're expanding the test menu capabilities as well for QuantiFERON and just investing overall in the 5 pillars of growth. So how should we think about margins over the course of this year and into next to the extent that you can give us some kind of color on that?

As I said, gross margin for this year, probably similar than what we have seen in Q1. Going forward, as of today, I would expect that there is a trend to better gross margins driven by, again, better utilization and less investments to build out of our production facilities. I think we are -- will be done with most of these investments by end of this year and get the deleverage on all of that. Overall, we also expect midterm faster growth rate and higher-margin products. Also, mix in general should be helpful for QIAGEN. We are going to continue to invest in R&D. So also, over the course of this year, you should see in absolute dollar numbers there's a certain increase on the R&D dollar side -- R&D expense side, while leverage in SG&A is going to continue. R&D expenses probably will go back in '23 and beyond, probably 8%, 9% of revenue range, when we have more or less concluded our menu expansion on the NeuMoDx side, which is critical for us. As you know, we have -- on NeuMoDx, we have 14 -- 13 or 14 panels approved ex U.S., particularly in Europe, but we're clearly missing the FDA-approved test panels for the U.S. That is something that we're pushing forward quite heavily and -- but clearly, it takes some time as well. On the QIAstat side, we clearly have respiratory and meningitis. For Europe, we have respiratory. For the U.S., we're going to add gastro in the U.S. for this year and meningitis next year and add then more. So I think it is more limited, but these are the focus points of R&D.

Got it. And then just on the flip side, you talked about your digital capabilities. And then on the expense side, there's been less travel to a certain extent. But -- so there's likely some cost savings that you achieved during COVID that might be durable. But can you just talk about how you're thinking regarding expenses and also about your current digital offering? You already have an impressive percentage of digital sales. But also, on the service and support side, how has it changed post COVID? I find that a lot of companies in this space had very effective digital strategies for service and support, but the customers weren't always willing to engage with them. But during COVID, they had to and then actually realized they were actually really good offerings. Just wondering, how much of those digital capabilities on the service and support side has changed post COVID? And then maybe also talk about on the sales side how you're continuing to advance through your digital strategy.

Yes. Again, for QIAGEN, digital clearly makes a difference today. While, again, I think 3.5 years ago, when we started the initiative, we had around about 20% of revenues coming through digital channels; we've now north of 60%, I think 64%, 65% as of today. So it's clear, in the meantime, the majority of revenues coming out of digital sales. And we continue to improve. As we discussed before, all our new automation solution have digital capabilities, on ordering, on maintenance, so that clearly makes a difference for the customers and for us, of course, as well. And we clearly see that there is now, with COVID, also an increased demand for these solutions. That clearly comes out with the cost benefits. There's no doubt around that. That, for example, allows our sales reps instead -- particularly for a company like QIAGEN, where 80% of our revenues are recurring revenues. So instead of having sales reps working on recurring revenues, they rather could spend time on lead generation for new instruments for other solutions. And I do think that is very beneficial and frees up some space. We clearly also have a good setup in terms of cost structure with our shared service centers, where we also do a lot of customer service and service solutions from -- starting from steering our service -- field force all the way down to, again, taking customer calls. And that works out quite nicely as well. So I would say there's room for improvement. Nevertheless, we shouldn't forget that, clearly, post COVID compared to pre COVID, we are going to leave with a much higher revenue base, right? And while we don't know exactly where it's going to settle in, it will be higher than when we had pre COVID, and that leverage will remain.

Got it. Maybe just getting a little more detail. Just on the TB space, in particular, we've got a new entrant via an acquisition. So how are you thinking about the competitive landscape there? I know you said in the past your main competition there remains the skin test, but how do you think the market dynamics might change at all in the TB testing space?

I would say in short and midterm, we're not too concerned because, while we believe it's a good competitor -- and you said it already. The skin test is still the majority. As I would say, skin test is probably still 75-plus percent of the total market. And even in the U.S., where I would say penetration is high, I would say the modern test is just slightly above 30%, 35% of market share. But the market -- the underlying market is still growing. So I would say there is enough space for companies to build into. Second, like in any clinical market, automated solutions are critical. And we do believe that, together with our partners, we have clearly superior automated solutions. So I would say the likelihood that somebody is changing because of a better or more competitive workflow is not really existent. I would agree it gets clearly more competitive on greenfield opportunities. So if somebody has [ invited us ] and doesn't have any other solution, that is clearly something where it's more competitive now for us. But as I said, we really haven't seen any changes here. We actually were off to even a stronger start than we expected. And also, the indications as of today was pointing to a direction that we will be above our own guidance for this year.

Got it. And then maybe shifting over to China. I know it was a real bright spot for you in Q1, growing around 70%. You've changed some management in that region. Could you just talk about the trends you're seeing there? And what is driving the growth? And how sustainable is what you're seeing in China?

Yes, fortunately, of course, the 70%, not only because we had to change management, right, because that would be too easy. But it's clearly true that we had a composition of internal and external factors. And while we were clearly changing, as you said, management last year and clearly having the benefit that Thierry, clearly, as some of you might know, he worked for many years in China. He knows the market and knows the people there quite well. It's also clear that going back to normal in China is probably the most advanced globally right now. So that's being helpful. But at the same time, which is not as well known in the Western world, is there's from time to time still certain COVID outbreaks, and QIAGEN is able -- or was able, particularly in Q1, also to participate on the COVID testing side on some of these outbreaks with products. So I would say it's a combination of all 3 factors: very strong non-COVID business, a healthy COVID-related business but also a better and more efficient QIAGEN setup in China combined with investments, which we are still going to do. So I do think it stays with a healthy double-digit for growth rate for us.

Great. And maybe taking a question I got from the audience. And the question I get quite often, and I think you do, too, is just trying to -- for investors, trying to understand the benefit of a rapid installed base growth. But then the -- maybe on overcapacity instruments on a post-COVID basis and how -- whether it's consumables pull-through or other things, like, how do you think about the benefits of growing your installed base as rapidly as you did but then, either through menu expansion or other ways, trying to find -- keep those utilization rates up over time?

Yes. I think we have to differentiate on which kind of instrument we are talking. For the moment, I don't really have any concerns about -- on sample preparation automated solution because, as I said, [ some of that ] high-throughput machines will just go out of life in terms of going to storage somewhere, just focusing on pandemic solution. Sample prep is a low-throughput to a mid-throughput market. Customers want to have rather flexibility, variability. And that is where we actually gain market share in between. And I do think, as I said, with increased budget, with increased funding and increased focus on health care, we will see well that increase on that market that is going to continue. On the decentralized market, which for us is mainly QIAstat, it, of course, depends also very much on, for example, how the next respiratory season is going to be because it's quite obvious that, I would say, last season, there was, in all fairness, no flu season, right? Because [ nowadays ], we are all very nice, and we're wearing our mask and keeping social distance. So it was a tough year for flu. I'm not sure if that is going to happen in the next flu season as well. And again, if you will go into a season with more flu, then, of course, symptomatic testing will be -- have a quite significant boost again because then people want to go -- or go to the doctor and want to know. Okay, I have fever, I have coughing, but is it COVID? Is it a flu? Or what is it? And again, as we talked about before, it's clearly a test coming with a different price point, right, compared to a COVID test. So I think that is rather driven by these kind of factors. And I think there's a good number of players out there being part of that market, but the QIAGEN machine has clearly advantages in workflow and convenience, and we continue to [ place ]. And so I do think we get also our shares there. NeuMoDx. I would also think here is something where we have to be taking a regional different view. While, ex U.S., we have a full menu, can participate in the overall ramp of the market, U.S. very much was -- is very much driven by COVID and by the LDT market. That is clearly a market which should be -- will be more challenging if COVID comes down rapidly. Then we have to focus on LDT probably for a limited period. But as I said, that is -- or was a U.S. topic for us.

Great. Maybe if we turn to capital deployment. I mean your balance sheet is in good shape, and you continue to generate a pretty significant amount of free cash flow. So how are you thinking about M&A? We've already talked about sort of the organic investments. But how are you thinking about M&A in the current environment?

First of all, I do think Thierry was very clear in the past that we feel very comfortable on our 5 growth drivers. Now we have a good menu on hand to drive this forward. Nevertheless, I do think it's also fair to say that we believe that bolt-on acquisitions enhancing on our 5 growth drivers is clearly something that we are always willing to do. And I would be surprised if you see things coming up here over the course of the year as well. Nevertheless, given the cash we have on hand, given the cash flow we have seen in Q1 and also cash flow we see for the rest of the year, I am quite sure we, without any issue, can do both, bolt-on acquisitions but also, for example, continuing with our capital allocation via share buybacks.

Yes. And one question we've gotten quite a bit is, when you think about the M&A environment, when you think about the level of cash flow that's been generated overall by the sector and then the valuations, we've heard some companies shifting more towards the private side bolt-ons, maybe even earlier stage and taking on a little bit more risk. How do you feel about the competition for assets, the valuations? And has that shifted your perspective at all on capital deployment?

I think the fight around assets is disproportional to the size of the asset. I would say is bigger the asset is, the hotter is the competition because it's quite obvious that there is a couple of players with very deep pockets and a lot of flexibility. But they need also sizable assets to make a difference to their own numbers. I would say, by more technology-driven assets, that is sometimes different. It doesn't mean that you -- [ it doesn't have value ], that -- I wouldn't say that. But it's still a lot of development work to do to create the value. And that is something where companies like QIAGEN can play a role. Again, I still recall the day when we acquired QuantiFERON. And we got clearly a lot of, [ don't know how to say that right ], but -- input from our investors. How can you buy that company for USD 300 million (sic) [ USD 355 million ] and totally overpriced. And now with -- whatever we end this year, let's say, $250 million in revenues, nobody is even arguing about that. And we are -- actually, as you know, we are rising that number quite quickly and with significant gross margin [ rather at the 80s ]. So we do -- we still drive to get to return period somewhere between 6, 7 years. So again, I do think you have to be selective, but I do think the size of the market we are fishing in, it is not as difficult than some of the larger markets.

Yes. And as I think about how broad your platform is, the ability to drop in technologies and have them benefit from your reach, distribution and platform, how do you think about QIAGEN in terms of the infrastructure that you've built and your ability to drop in these new technologies and effectively compete very quickly with these new -- with new type of technologies over time?

I think there's an advantage most people are underestimating because one advantage we're having is, I would say, we're clearly on the front end, front end meaning the sample preparation market. And if you've seen, for example, our recent acquisition was QIAstat-Dx. They were clearly using QIAGEN technology. So integration-wise and development-wise, it was easier for us than for anybody else because, I guess, if somebody knows QIAGEN sample preparation, then it's QIAGEN, And that is a significant part of many developments. So I would say we even have a certain development advantage. And in particular, again, if we talk about taking a consumable PCR technology base and putting it on one of our machines, nobody should be hopefully being able to do that better than we are.

Got it. And maybe in the last few minutes we have left, just maybe talk about what do you think is sort of most misunderstood by the market about QIAGEN, currently. And what kind of key points would you make to help them better understand the QIAGEN story as we move forward?

Even if I don't like to talk about it, but I do think the one thing which is clearly, call it, underappreciated by the market is that, with the failed transaction last year, we went to a quite extensive and long period of change within our shareholder structure. We clearly had a lot of shareholders who were [ driven from being ] shareholders because of the transaction. And it clearly took quite a significant time frame to evolve that shareholder structure. And that is something that unfortunately took its toll also the share price performance. I think it's also a reason why we were and still are underperforming compared to the overall market. The good news for us is we were clearly being able to develop a quite attractive shareholder structure now over the last couple of weeks. We have seen very good names coming back again. Shareholders who were shareholders of us before the overall transaction came back. So I think that is something which, again, we are happy about because we rather want to work with people who are -- with long-term views and are supportive of us.

Great. And maybe one last question from the audience. It's more kind of going back to the regions. As we think about U.S. versus Europe and we think about over the course of this year, I think there's an expectation that there's going to be a cadence of recovery that will differ just based on the COVID situation. But can you talk a little bit about, maybe from a regional basis, where you see kind of growth accelerating and maintaining when you look at U.S. and Europe?

What we have seen in Q1 is that, actually, we had very solid growth rate in Asia. We had very solid growth rate in Europe. I don't think that is going to change any time short. U.S. is clearly right now probably most advanced in the shift from COVID to non-COVID business, and I do think that is going to continue. The good news for us is there are certain markets which are also just opening up. In the U.S., for example, if you think about our QuantiFERON franchise, a significant part of QuantiFERON is back-to-school testing. We all know that hasn't happened. That is going to happen probably August, September time. Immigration really hasn't started yet. I would expect the world traveling is probably also starting probably after the summer wave. So there's a lot of things which also will have impact there. Still, the one thing that is tough for us to get our hands around is what is the time frame on this shift because every news here changes it, and we have to see how that plays out. But again, as I said, the benefit for us is we clearly have an underlying hedge between COVID and non-COVID. We have to see how perfect is this. But to be honest, I'm more excited about that non-COVID part is going up because it is a long time. And also, it gives us also our life back.

All right. Well, we're out of time, but I want to thank you very much, Roland, John, Phoebe, for joining us. Really appreciate all the color you provided.

Thank you, Matt. Good to see you.

Bye.

Thank you.