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

Great. Welcome, everybody. I'm Matt Sykes, I run the life sciences, tools and diagnostics team in New York. I have the pleasure of welcoming Roland Sackers, CFO of Qiagen. Roland, thanks for being here.

Well, thanks for having me.

Maybe I thought just to set the stage a little bit. Just talk about some of your recent performance. You did announce the financing last night, just some of the recent updates and then we can go into Q&A.

Yes, we even got the financing done. But let's stay out a bit. Yes, as you know, we actually had a good start into the year, we were able to beat actually in Q1 as well in Q2 both our revenue as well as our EPS guidance for each quarter. We're able also to update our guidance, come to that as well and increase now EPS all the way to $2.16 for the full year. We started by $2.10 into the -- moving into the year. So I think that's going quite well. But I do see what it's probably more important for the investors is that we still believe and therefore, updated our guidance that there's an underlying acceleration in our industry. It was quite obvious that the start for most life science group companies into the year was a more challenging one. We were probably one of the few companies, we actually had even a positive growth rate. Most companies were actually shrinking, which is quite natural post-COVID, it looks somewhat different and you have to get COVID out of the numbers. Nevertheless, for the second part of the year, we are now expecting more or less an underlying growth rate around 5%, which I do think is a nice step up from the first 6 months. And if you put that into perspective, that still is a difficult one but China is probably still for most companies shrinking environment. You clearly see that particularly in the U.S. with elections still coming up, there's a lot of uncertainty in the market, particularly when it comes to larger investments, buying instruments, which are costing easily 6 digits. I would say we expect a nice underlying improvement, and that is clearly driven that with a very simple reason that 85% of our business is a consumable business. You -- as long as you go to work, you have to burn our consumables in lab, and there's clearly a very healthy environment. And we also do that in a very profitable way. As I said, we were able to increase our EPS guidance for this year. We also just recently had a Capital Market Day, where we laid out a midterm plan all the way up to 2028, where we expect a revenue CAGR of 7% and then a profitability goal of 31% of adjusted operating income margin by '28, which is a significant improvement also compared to now. Again, we guided clearly is already I would say, a company with the above-average profitability. Nevertheless, there's good reasons to believe and happy to go through that today as well that we're able to improve that more or less year-over-year. Last but not least, as you said, we clearly also did a refinancing more or less yesterday. Started with $400 million convertible note, started with $450 million, into the market, we're able to upsize it to USD 500 million coupon of 2.5%, a conversion premium of 44%. And so I would say, good and attractive terms, both for the investors as well for us. Main purpose is, we have to refinancing another $500 million, which will come due November this year. And therefore, I think again, quite successful in terms of transactions. And I'm glad that we have that in brackets out of our way, and we can focus more on the underlying business, again. But as I said, the consumable trends are very healthy.

Great. Maybe starting with the long-term guide you gave at the Capital Markets Day. Maybe talk a little bit about your expectations at a segment level to drive that 7% topline growth to '28.

We are -- on the bigger picture, we are engaged in 2 business segments. One is life science academic environment, which is roughly half of our business as a clinical business, which is also 50%. Within life science, we have 3 areas. One is academic, other pharma and the third one is what we call applied testing and the share is 20%, 20%, 10%. So it's 20% public funding academia, 20% is pharma companies, 10% is particular human identification, some food testing, things like that. Overall, healthy market environment, what we notice, of course, is that in particular now with -- in the U.S. with, I would say, at least a perception of uncertainty around public funding, bigger ticket items are harder to sell. Clearly also has to do with somewhat that we all had a fantastic one during COVID in selling instruments, not only in the clinical environment, but clearly also in some of service facilities. And there is also something what you have to have in mind, but we clearly see that there is not a good environment right now if things cost more than USD 100,000. The good news for us, for Qiagen, is more or less only 2 items. One is which we just stopped is NeuMoDx. So that doesn't hurt us anymore. And the second topic is few instruments within sample preparations. All other new launches like the QIAcuity, which is our digital PCR offering; QIAstat, which is our decentralized testing of for example they are below 30 -- or [ around $30,000 ] -- here we actually have a quite normalized instrumentation business at least so far. The one thing that, of course, which is also to notice, which is not helpful is stimulus packages, which get announced but not getting pushed forward. Single good example is a bit like China. We all know that China has a couple of issues. One is a macro issue, GDP is also not helpful for the healthcare in general. And of course, if there is an expectation out at some point of time, there is a larger stimulus package coming. Every company does exactly the same, waiting for the stimulus because why should I buy the instrument by myself if in whatever 3-months, somebody else helps me to pay for that. And then, of course, if it is not happening or not happening in scope that people expected, you have this kind of delayed function as well. So I think this is also something that we're seeing right now. Let's say some hope for incremental inflows which might or might not happening. So people are in a bit of a wait and see mode. But again, nevertheless, we wouldn't increase our revenue guidance if the underlying consumable growth wouldn't be as healthy. And I think that's the one thing we shouldn't forget we all sold in the last, I don't know, 3 years, typically instruments, which we typically sold in a period of 5 to 7 years. And also our customers try to catch up and utilize them either by menu expansion or also pharma companies still have quite a backlog in certain areas. So we see actually pull through on the instruments which are in the market actually doing quite well. And that is, again, helping us to give a positive momentum and even what we believe is expecting acceleration. On the clinical side, I would say, similar trends now finally COVID is out of the numbers. And while there is still COVID, there's not much COVID testing anymore. But there's clearly a lot of respiratory going along. We have seen a larger RSV wave last year. We have seen actually -- you might have seen the CDC actually yesterday announced a new statement that we rather expect a more severe respiratory season this year, and in particular, driven by a couple of different items. So symptomatic testing might stay on a high volume level as it is right now because people also want to know. In the good old days, pre-COVID, people just stay at home. Now you want to know what is the back and what does it mean to you, and that is on a high level. But I would say also here, areas for us, which are also important like our TB testing are doing very well because that is also important to understand on Qiagen is significant -- significant parts of our growth are coming not that we are entering new markets, that are coming from that we are converting sometimes even 120-year-old technologies like TB, which is literally 120-year-old skin test is a new modern in that case, IGRA technology, which just have better specificity or sensitive terms. And take TB as an example, in TB, still 60%, 65% of the overall market is 120-year old skin test, which specificity is more or less slightly better than flipping a coin and you require same visits and whatever. So having here more viable is very typically 99-plus percent reliable test as we're offering, it has also significant scientific advantages and that becomes now more and more accepted by the market.

Got it. Maybe focusing on QIAcuity and QIAstat. In your longer-term forecast, you show that those 2 products are going to outgrow the market. Maybe just talk a little bit about sort of product development and market expansion, which you just kind of briefly touched on, but I want to dig a little bit deeper. Do you need to continue to develop new pillars as your existing ones mature? Or can you evolve your existing product line into menu expansion upgrades, adjacent markets, things like that?

I think if you look at -- will go through them all four of them and if you look on our pillars right now and QIAcuity and QIAstat are 2 of them. They're all U.S., you probably will say that they were all in the first inning, right, they're all early stage. We just brought instruments to the market. And also here, is similar to what I said, QIAcuity is our digital PCR offering. And digital PCR is an opportunity for our customers in pharma, in research and starting next year, end of this year, moving into next year also on the clinical side for 2 simple reasons. One, which is again eating into the -- as of today, $2.5 billion existing qPCR market. You offer a new digital technology we have for similar price points, the scientist just gets more information. It's a bit like at least I'm old enough that we still had a -- I still had a Nokia telephone, and it did the job right, I could call somebody. Today, we all have the iPhones or whatever, and we barely use it for making cellphones. We still calls, but we still can use it. It's the same here, right? We get many more information which are relevant for you as a scientist in a similar price point and a similar time point. And that is -- we will see how that rolls up the market. And the second opportunity, which is then eating into the -- somewhat into the sequencing market, but at the same time, it's also driven by the sequencing market is that with digital PCR or take a pharma company, a pharma company doing research, they typically know exactly these are the 5, 8 points where with my drug, I expect a change or I shouldn't see any change. The way they control in this date is with a lot of cases with sequencing. But sequencing, as we all know, is still very expensive and also literally takes few weeks from more or less preparation all the way. So we don't -- if you do that digital, you get it more or less for $100-plus in a day. So it has also a significant cost advantage. So I would say there's just 2 very simple scientifically based reasons why digital PCR will significantly change the landscape where we are and Qiagen together with one other company is a leader in that area. I would argue that we even have the best machines out there. Our disadvantage is so far is that we had a limited menu, but we expanded it particularly this year quite well. And we have seen the growth rate on consumable run rate in the second quarter was quite good. I think it's a nice opportunity. QIAstat is slightly different. QIAstat is our machine for decentralized testing. Again, if you think, in a hospital you have on the one hand side, a centralized lab that is when you take a sample, they send it in and they tell you call me in 3 days, and then tell you what you have. But of course, you have also needs on a weekend, you feel sick, your kid feel sick, you go to the emergency room and you want to know it now. It might be a respiratory symptom, might be a gastro symptom. And what these kind of machines do, they test at the same time for, in our case, up to 22 different pathogens, right? So you can see if this thing is respiratory? Is it just the flu? Is it RSV? Is it COVID? Is it blood flu? Whatever, right? And we have that in 45, 46 minutes, so you can wait for that. That is not standard care. It's not in standard care in London, right? And then if you leave the city, it looks very different. And what we see that COVID changed the landscape. People want to know. Nobody of you, I assume, other than you because you're a scientist, knew about CT values pre-COVID. Now you all know what it is and what it means, I hope so. You're quite sure how to do. And that is exactly people want to know what can we do, and that is driving that testing. And if you want to know, the doctor for sure wants to know. Our test has one advantage. It's not only that is incredible part now moving into also competitor or competitors, moving into other areas of diagnostics, for example, oncology. We not only can give you qualitative results. We also can give you quantitative results, so how much. And so that helps you in testing treatment decision even better. So I would assume that, that again is a market where we have also high double-digit growth quarter-over-quarter. It's going to continue just by the medical needs we're seeing right now.

Got it. And maybe turning to the most recent quarter, similar to peers across tools, instruments remain challenging. You talked about the price point. So you're less affected than perhaps some of your peers. But maybe just talk through your expectations for instruments in the back half of '24 and in '25? And your ability to continue to offset instrument weakness with strong consumable demand? And maybe ask in a different way, as you look at that '28 forecast of 7%, like how do you think about consumables versus instruments? And is there some conservatism in how you're thinking about instruments as a part of that longer-term guide?

Our assumption right now is that we do expect somewhat an improvement this year also for instrumentation, but not necessarily becoming positive all the way through. We had like minus 6% ex-NeuMoDx. Instrument, negative growth in the second quarter. And again, compared to others, is still quite good. Nevertheless, it is something what we expect will probably take some time because we need again or more important, our customers need visibility. And perception is sometimes even worse than reality. What I mean is it is better for customers to know that my funding is 10% down, than they don't know it and it might be only 5% down because they need an environment they can work on and work in. And that is, I think, in certain areas, particularly in the U.S., not given yet. And I think the election will clear a lot of that. Of course, the one thing that is also very interesting is funding in the U.S. is typically bipartisan driven, right? So they always find a way. But right now, everything is overshadowed by the discussion and so on, who is the next President or whatever you call it. And so there's a lot of areas which probably will -- we have to go through. Europe is a bit better. It's not an easy environment, but I would say visibility is somewhat better. China we talked about.

Got it. And then maybe moving to QuantiFERON. TB offering remains key topic of conversation for you in Qiagen. Maybe talk through the 2 kind of elements, what is going to continue to drive that conversion from skin. You talked about the sensitivity. So clearly, that's a reason. But given the share that skin has, there's clearly some reluctance to make that switch. So one, how do you drive that? And two, it's difficult to respond to competition that's not yet on the market. But as you think about years out from now, assuming it's a more competitive market, how does Qiagen address that? And how do you compete and win?

First off, again, we shouldn't forget all the time that is not only true for TB testing, it's for the whole clinical environment. It's a sticky industry, right? And you still have this kind of environment where people believe I'm doing that since 10 years, and my patients are very happy. We're going to do that over time right and thing on HPV testing, right? And still the majority of women get testing for cervical cancer with their skin test, where everybody knows IGRA is also in the 50%, 60% of for the right results, where an HPV test is in the 99-plus-percent same cost point, but it's just changing medical practice, right? And then you have situations like that talking about HPV, first saying that in Turkey where governmental gets pushed, we have significant better healthcare than we have in Germany, where only the private insurance company is paying HPV test, the public not. Turning back to TB. I do think it's important to see that we are coming with the IGRA test now the new standard. You see the number of papers, number of references, the numbers of KOLs significantly accelerating. And you can see that also in our reflection of numbers. Again, you have seen last year, we're growing 20% and so on. So you see this it is always very difficult to gain the first 10%, 15% of market share because then you have to change that mindset. Once you -- as we are now, let's say, in the 20-plus percent market share you see, okay, there is some -- there's a new player in town, more or less. And everybody want -- in particular, the large labs offering that, and they make tons of money with that. We shouldn't forget that as well. Everybody else wants to offer it because it becomes also a competitive element. So I would say it will still take years, but the acceleration level is where we're getting to. We shouldn't also forget that there's always the competitive market. Everybody only things that is only Qiagen in the market, which is not true, right? [ Oxford ] now heavily is in the market as we are since 2012. There was always a handful of Asian players in the market. [indiscernible] was in the market, left the market, is now back into the market. So it is always a competitive environment. But I think the way we set and we're able to get to this larger position we are having right now is by 2 reasons, we never stood still in developing tests. I think we are now in the first generation. And we also were working on automated solutions. And here, together with our very good partner of DiaSorin, I think we have actually the leading platforms out there. We all know that there is a market which might attract more players going forward. In all fairness, we are aware of this, I don't know the rumour since 2012, there was always somebody coming or not. Now it looks a bit more serious. So I would assume that we are seeing that. But at the same time, there's no regulatory or any other tests going on because it is public, which we should be aware or we are aware of. So it is clearly still quite some time out. Nevertheless, for us, what is important is that the customers believe and trust and like our products. and we were able to increase prices last year and this year, which I think is also confident for the quality and also the work that we're offering. So we feel good about it.

And then maybe one more on TB. Just you touched on a little bit the level of automation, particularly versus one of your existing competitors right now. How important is that in the decision-making process for those customers? And two, how sticky is the customer once they get a QuantiFERON and once they start doing that? Is it very difficult to displace them?

I think it works what I said before, in both directions. If you want to get in, it takes you a long time. But once you're in, you're in for a long time because the switching costs are quite high because -- for a couple of reasons. First of all you have to validate everything. As you know, we are in a regulated environment. And just a validation typically takes months and cost a lot of money, right? And then so you only validate for something where you're quite sure that it has an advantage, right? as on better reach, wider impact, better automation. I'm quite sure that nobody else will have a better automation because we know which platforms are out there and the DiaSorin platform is top-notch. There's no question. I think nobody is going to be that. I think it's also important to understand. I think that's one mistake also a lot of people who are just not as much in the details are doing is QuantiFERON is also not a centralized product, non-market, not a customer group, right? It is furthermore even in lab environment, very decentralized. So more or less every lab wants to offer it because it's also quite a profitable testing environment for the lab. So then they don't necessarily like to sell and send it to a centralized lab because we get, let's say, somewhere between $15 and $30 a bit. The reimbursement U.S. is $150. So they can make good money with that and why should I send it in. So it's a lot of labs offering that. It's also a reason why not even all -- not even close to half its automated, right? So there's also the opportunities. But I think the other reason is also, it is very diverse customer segment. So, one hand side is labs, but then, of course, we have significant parts of our customers are immigration driven testing, immigration offices, prisons, armies, congregated living, healthcare workers, if you are a nurse or -- back-to-school testing, very different environments. So you have to have a specialized sales force that took us 10 years to have his dedicated sales reps. In fact it's very different persons than the guys who are just going into the centralized lab and selling, okay, this is my portfolio of 20 different tests, including that right? So again, it's not also an easy to enter market.

Got it. I'll ask one more question, and then I'll open it up to the audience in case there's any questions. But shifting to Sample technologies. How do you drive above-market growth given your large presence in the market today? And how are you positioned with some of the faster-growing areas like liquid biopsy, microbiome areas like that?

It's clearly not easy if you are by, I don't know, 60-plus percent, but most analysts believe market leader to do much better. But I think we have a couple of opportunities coming up in the next 2 years, which as far -- even as fast is somewhat unique. While everybody, I guess, knows quite well that we have a, whatever, 60-plus percent market share within overall sample prep, most people didn't realize that we are in certain parts of sample prep, I've not even present. In particular, it's the highest throughput market. Qiagen never had any instrument addressing the high throughput market. We are going to enter that market. We never wanted to enter that market until we believed we have also an automated offerings, which is really top notch. We believe that is something that we are able to launch in '26. And nobody's questioning that we have the menu. So I think we have clearly the chemistry, which will outperform everybody and it's nothing new, typically what our Sample-prep technology does. But we were missing the automation on the highest throughput. We have a symphony for the mid throughput, we have the cubes and others for the -- lower to mid throughput. So that is an area where I think we just can gain. And we'll see how good we do, but that is clearly helping us incrementally growing the market. Just the 2 other things which are, I think we'll roll in over time is that clearly also with all the incremental COVID revenues, which we had, we had incremental money, which we can put into R&D, and we also were able to fund more efforts within sample-prep development and that will roll in, which, by the way, also includes another new machine for QIAsymphony, our mid throughput platform, which we are significantly updating, particularly also in terms of collection and workflow features, which also again should be incrementally helpful for us. So I think these are probably the 2 main points over the next 2 years. Again, it's not an easy target to be significantly better. But if we get that somewhere between 3% and 5% growth rate, that would be nice.

Got it. Any questions from the audience? I've got plenty more. Maybe just shifting to your bioinformatics business, QDI. It's becoming a fairly material presence within your revenues now, and it obviously is what I think above 80% recurring subscription-based model, so it's an attractive business for you. How do you expect to expand in the clinical market? And what level of impact should we expect moving forward in terms of topline contribution related to QDI as that continues to expand?

Yes. So far, I think, as we said, it's a nicely developing business. It's going to some changes. As you said, we are moving away from this license big ticket business to the small kind of a SaaS model, which CFO anywhere likes more, of course, it's getting more predictable. And the margin for us is quite healthy but it go into the change. So again, we see, what I said before, instruments also like the big license sales is also difficult with the pharma guys because they have people like me and telling you, okay, wait 6 months, come back in 6 months and so on. But the one thing which is clearly the underlying challenge, which will remain is that Qiagen and many other companies did a good job in helping scientists of this world to extracting information. So we have tons of information, but the interpretation of that information is now the challenge. And there, we need the tools out of biopharmaceutic which also Qiagen is providing where, as you said, we are by far the #1 player in that area. And given that extraction sequencing or whatever, we just mentioned and discussed before, is rather accelerating and therefore, more data is getting available and areas like oncology and personalized medicine are also driving that kind of need. I'm quite positive on the midterm that ticks a double-digit growth environment. I would expect some volatility in the short and midterm, but this change of modeling from big license deal into more or less payback extraction model, but I think that is -- was a temporary impact.

Got it. Maybe shifting to some of the financials. If we look at sort of -- you've had a pretty impressive operating margin expansion during what I would consider to be a pretty challenging period. At the Capital Markets Day, you did a bridge chart with multiple factors that lead to that greater than 31% target. If we look at these factors and if I can remember correctly, I think it's portfolio streamlining process optimization, site network strategy, innovation. I know the answer is all of them, but it would be helpful if you could maybe sort of prioritize sort of what sort of the low-hanging fruit, what are sort of the longer-term goals? And what are -- what's the biggest lever do you think that margin expansion of those priorities that you guys have mentioned?

Of course, there's never something low hanging, right? I do think a couple of things probably to be a bit easier to judge and even on the Capital Market Day because we kicked them off, particularly NeuMoDx, [indiscernible] was an important decision for Qiagen. It was a platform which really had a good performance during COVID because it was a higher throughput platform. But as I said before, we also believe that for some time, selling this kind of machines gets more difficult. And therefore, we will also experience a loss-making situation by stopping that. I think that has a significant positive input to our profitability. Unfortunately, it doesn't kick in immediately because as a reasonable company, you have to help customers transfer and it takes us till mid of next year. So the positive impact will phase in over time, and we will get the full benefit probably in the second half of next year. Nevertheless, that is already all about, let's say, 100 basis points, right? And so that's a big part of that. Second driver is clearly the still existing underutilization in our production environment because we all had to build out a lot of capacity during COVID. And of course, we can utilize that for other products as well, but you have to go into the revenues. As we're growing right now, it's happening, but it doesn't happen overnight. So I think that is also going to happen. [ Mix ] we also have is being helpful. I would say, R&D, 9% to 10% is always where we feel quite comfortable on the ratio in output. And on the sales and marketing side, we have more or less everything in place what we have to have. I'm quite sure that the 31% is not the last announcement from us on that aspect all the way to '28.

Got it. You touched on it for a second there. R&D you've been very consistent at sort of the percentage of sales that you expect to have around 10%. On the SG&A side, though, you have expanded some of your commercial footprint in certain areas. QIAcuity, this is one example that comes to mind. So how are you thinking about SG&A spend over the next few years, particularly as you're trying to move into some adjacent markets to expand the growth potential of some of your pillars? And where do you still need to increase your commercial presence, if at all?

I think the one thing just to balance that, while we still do quite targeted investments like on specialist and others, there's one other benefit. We are not talking too much about but that has significantly changed and is still changing with COVID, which is selling B2B to our customers. Our online share is now probably, let's say, 60-plus percent, and that for healthcare is quite good. And have in mind that 85% of our revenues are recurring sales. To be honest, you don't need any sales, that once you bought our machine, our new machines work a bit like good old days where you had hotel, mini bars there you could take something out, you take it all and you get -- get rebuilt. We have machines now worldwide. So there's a lot of time which you said available for sales rep to do what is really important to look for new customers to sell a new workflow. As also the way how you sell that's changed, you're not selling consumers anymore, you're not selling machines anymore, you sell integrated workflows because you have a slightly different discussion with customers, which I think is sample as well. But this allows you also to run more or less your team work gets less but you can focusing on this dedicated discussion with customers. Therefore, you have more focused people like on TB, like on QIAcuity or like QIAstat because you discuss with them a particular in brackets problem.

So you're describing sort of a more flexible capabilities when it comes to SG&A spend I'm wondering with NeuMoDx and the savings you're getting from that? And I know it's more next year, back half and then probably into '26. But how are you thinking about sort of the ratio of keeping some for profitability contribution versus investing in new areas? Have you kind of targeted where those savings will go?

Yes. And as you know, I think the guidance we gave, we still kept clearly some flexibility for us, right? And so I would say there's still if there's opportunities arising on the R&D side or on specific marketing campaigns or whatever, we feel that we have the flexibility without any larger impact to our guidance. So I think that is not the case. And if we even don't need that, it's even better, right? So I would say right now, there wasn't any reason for us to be super aggressive or whatever because we had, I would say, a decent record over the last more or less 3 years and also the start of the year was good enough.

And then just on capital deployment, of the 2028 topline guide of at least $2 billion, how much of that is sort of dependent on future M&A, if at all? And then secondly, sort of what pockets of the business do you see an opportunity for inorganic investment? You've often commented about bolt-ons as sort of being the preferred strategy. But maybe just talk about if there's been any evolution in your thoughts on capital deployment.

Also here, as you said, capital allocation policy is quite steady, right? We always look on organic opportunities. We, of course, like to do inorganic smaller bolt-on deals as well. But I would say we also have a track record since 2012, which we now recently increased and returning cash to shareholders with share buybacks or the synthetic share buybacks where you actually -- which is a Dutch thing where you have actually the best of both. We're able to reduce the number of shares, but you still have a -- in most jurisdictions, tax free cash out to shareholders, which we did already earlier last year. We just got another $300 million approved on the AGM. And there, we said there's a $1 billion reserve for that all the way to '28. So I think you see a combination of that. Why are we saying bolt-ons? Of course, if there's another TB kind of opportunity where we can acquire a business, which has a nice growth, we are not going to shy away, right? I still recall in 2012, it was $20 million in revenues at that time. We paid $300 million, everybody like you hammering on us and how can you pay $300 for businesses with $20 million revenues. In the meantime, we have now close to $2.2 billion accumulated revenues with high gross margins. Most people will argue it was a good deal. And if we have that opportunity, again, happy to do so. But the likelihood is probably more the 3 smaller ones while, of course, we would review larger ones if the offer good returns as well.

Got it. We are out of time, but I do have one last question. It's just sort of what do you feel is sort of the most underappreciated from investor perspective about Qiagen? What would you like investors kind of come away with?

I think it's the resilience of the portfolio. I know that right now, there's a lot of focus on certain topics. But I think our real strength is that we actually have a really balanced footprint; life science, we have clinical, as well as 50-50. And it typically is not everything always goes perfect, but one it balance out quite nicely. The same is true within the 5 pillars of growth, decentralized, centralized. We have a lot of consumers, 85%. The likelihood that we will grow this company, let's say, north of 10% is not high because of that. But at the same time, that we always do better than majority in the industry. I'm also quite sure because it is a, I would say, a company with a strong brand reputation, high-quality products. And on top of that, we are also somewhat profitable.

Got it. Roland, thank you very much. Appreciate your time.

Thank you, Matt.