DiaSorin SpA

MIL:DIA

Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the DiaSorin Full Year 2024 Results Conference Call. [Operator Instructions]

At this time, I would like to turn the conference over to Mr. Carlo Rosa, CEO of DiaSorin. Please go ahead, sir.

Yes. Thank you, operator. Good afternoon, and welcome to the full year conference call. We're going to make, first, some comments on the full year results, and then I move to the quarter 4.

In 2024, revenue and profitability are in line with the planned budget and the guidance despite geopolitical tensions and macroeconomic headwinds. Specifically, when it comes to the immunoassay business, we performed very well in the main geography, U.S. and Europe, whereas we will see later, we continue to experience difficult situations in China, although that represents a very small portion of our revenues. When it comes to molecular, molecular overall in the year performed better than the initial assumptions. Clearly, this for us has been a transition year because we launched successfully the LIAISON PLEX with the respiratory panel. And this better result of molecular over the clearly comping at the LTG software performance compared to expectation because of the life science situations, as we have been discussing over the last quarters.

And overall, from a pricing perspective, which is something that we did discuss a few times, in the last quarters, we've implemented a pricing program that was in place and overcompensate the inflationary effects that we -- I mean, as an industry, we are registered in 2024. So overall, I believe that 2024 was a very good year. And we -- to the point that I remind everybody, we raised our guidance twice upward clearly in 2024.

Just a couple of comments on the different legs. If we go back to immuno. Clearly, our U.S. hospital strategy is working well and delivering according to expectation. Let me remind you that our idea was to get to 400 hospitals served by year-end, which was achieved with -- so we are perfectly in plan with the LTP. The LTP calls for 600 systems installs -- 600 hospitals by the end of 2026, '27.

When it comes to MeMed, we had the first active 20 customer hospital systems. I need to be very careful here because when it comes to MeMed, we need to talk about the hospital system because placements do follow the concept of having spoke, right? So multiple installations between key LIAISON XL. And as we discussed, we do have, as a target, 75 hospital system by the end 2025. When it comes to Europe, 2024 has been a very strong year with double-digit growth as a combination of successful placements, increase in volumes and outbreaks in certain areas of Europe. And then last but not least, we finally started to get regulatory approval for the first products manufactured in China. And we expect that by 2026, we are going to have the menu approved in the Chinese market.

If we go to molecular, everybody knows we launched in September our LIAISON PLEX with the respiratory panel. We got the second panel approved shortly thereafter, and we submitted 2 blood culture panels expecting approval in 2025. In November, I made a comment, I said we had a funnel with -- in the U.S. clearly with 100 customers with equivalent -- equivalent to 500 placements. We are well on track, and I will discuss later about that. We're well on track to hit our target. LIASON PLEX has been received extremely positively by the customers, and I'm going to give more color later when I talk about the quarter.

LIAISON, we are wrapping up the clinical study as expected, and they were going to be filing within the next quarter or so. So also is on track.

And finally, let me just comment on the LTG. We certainly had a good performance of the LTG business better than [indiscernible], notwithstanding the unfavorable environment in life science. In fact, at the end of the year, LTG grew by 3% compared to previous year, clearly driven by a very good performance of our diagnostic partners. [ The totally comping said ] that weaknesses in the life science that we have seen at the beginning until midyear 2024. So from a 2024 perspective, a very satisfactory result.

Now let's go to quarter 4. As usual, I'm going to comment on the quarter 4 at constant exchange rate. We had an excellent quarter of total revenues, EUR 310 million in the quarter, with a growth of 5% year-on-year in quarter 4, excluding COVID in line with our expectations and in line with guidance of 2024 full year. When it comes to COVID, clearly, there is a softening of testing. In the quarter, we had EUR 6 million of revenues, EUR 26 million in full year 2024. So -- and we see that testing continues to decrease.

If now we go to -- I would like to comment each individual segment of the business, starting from immunodiagnostic. Immunodiagnostic ex-COVID 6% in the quarter with good performance in U.S. and Europe. You noticed a deceleration versus previous quarters, but that is due to a tough comp versus Q4 '23 because in Q4 '23, we had exceptional instrument revenues. Indeed, if we go down and look at CLIA reagent in the quarter and not immuno, CLIA reagent grew 9% in the quarter. This is net of a clearly negative VBP impact in China. In the U.S., in North America, CLIA grew 14%, and this is related to the hospital strategy that -- where we keep, again, I said before, expanding our presence in U.S. hospitals. In Europe, in Q4, 8% growth for immuno, and CLIA, 9%. So we continue to see a very strong growth for our immuno franchise in Europe as well.

Export in quarter 4 was negative, but this is mainly due to the Iran market where, in Q4 last year, we had, again, shipments that did not materialize in Q4. So it's a phasing issue. China, we continue to experience headwinds as we have been experiencing since many quarters, double-digit decrease in Q4 as a result of VBP in certain provinces and the fact that we continue to see overall tough competition coming from local competitors. Clearly, for DiaSorin, China is a very now small percentage of our business moving forward.

So long story short, Q4 immunodiagnostic, very strong in North America and very strong in Europe, tough comparison to last quarter of last year due to some phasing and the fact that we had instrument sales last year related to certain tenders.

Now let's look at molecular diagnostic. Molecular diagnostic in Q4 ex-COVID is pretty much flat, so plus 1% in the quarter. But again, we need to look at the different components of the business separately. When it comes to our targeted molecular business, which is the DiaSorin business, the original DiaSorin business, so the business we bought from Focus, there is a double-digit growth, above 20%, and this is thanks to the introduction to the U.S. market or the Candida ARIES product, where we continue to see a tremendous traction and success also in 2025.

In Q4, I need to remind you that we have discontinued the ARIES platform as part of the plan, that was the synergy plan that was presented to the market after the Luminex acquisition. So we are missing in Q4 the ARIES revenues. And we had in Q4 2023 last buy orders for ARIES. So again, there is a delta which was expected in this quarter due to the discontinuation of the ARIES.

And then last but not least, and not surprisingly, as everybody else has reported, mild start of flu season in Q4, but strong Q1. And so you will see that in Q1, there is going to be a recovery of the respiratory revenues.

Now let's focus a little bit more on PLEX, okay? As said before, full launch started in September 2024. We launched it in the U.S., respiratory. We got first blood culture approved, second; and then the 2 additional blood culture panels blood -- sorry, blood panels submitted to the FDA in September and November 2024. And we expect them to be approved by midyear '25. GI clinical study, ongoing and submission in 2025. This means that as per our long term [indiscernible] and by 2026, we're going to have the full multiplex in panel approved on LIAISON PLEX.

In order to guide or explain the way that our business is performing, we decided that moving forward, we are not going to talk about placements, customers, but we're going to talk about total revenues. And this is because we look at multiplexing as a franchise, a combination of the VERIGENE I, which is a business -- historical business where we are building on and clear the LIAISON PLEX which is the increment -- the new platform that -- where we are going to be building on our installed base and adding certainly new customers.

So the launch has been extremely successful, and our ambition for 2025 is that we are going to grow the overall franchise. So VERIGENE I plus the PLEX to EUR 75 million, so a growth of 25% over prior year as a combination of new accounts and conversion of some respiratory accounts with price increases from the VERIGENE I to the LIAISON PLEX. This corresponds pretty much to the addition of around 150 customers -- PLEX customers by year-end. Again, I'm not going to comment any longer from now on in terms of how many customers we had per quarter. I'm just indicating what is the -- what the budget of DiaSorin today is going to be for PLEX, and I will continue to update the market in total multiplexing revenue growth versus 2024.

What's very interesting is that when it comes to the existing customers that [indiscernible] now the PLEX in the U.S., my last comment was that 50%, which I think was November, 50% were PLEX and 50% were actually fixed. Clearly, moving on, now the situation is that we have more PLEX than fixed, right? And so we see that the adoption of our customer base of the PLEX concept is really providing an advantage versus current solutions that only provide either fixed or mini panels.

Last but not least, which is a very interesting, I think, point -- strategy for DiaSorin, if I look at the current PLEX customer base, 20% are commercial labs and 80% are hospitals. Why is this strategic? Because, as you know, this goes hand in hand with the immuno strategy where we intend to continue to develop the hospital business, combination of immuno and molecular solutions.

The -- just want to comment overall, the VERIGENE other funnels, which is nonrespiratory, are relatively flat.

Now finally, a final comment, Q4 on LTG. The LTG in Q4 did better than expected. So we have a growth of 4% in the quarter, and this is a combination of diagnostic growing, but also we are seeing that the life science is recovering, and we saw also life science slowly growing back in Q4 as well. And we actually continue to see a very favorable LTG trend in the first months of 2025.

Again, you need to understand that for us, this business is not purely life science, but a combination of partnership with diagnostic and life science and biopharma. So we actually serve with this technology, 3 different segments in the market.

One more update, which is more on a clinical side of MeMed, which I think is very interesting, there have been a slew of publications that came to the market as a result of independent clinical study that are being run by MeMed. I think they are available on the MeMed website. And I would like to point specifically to 3 studies, very interesting. The first one has been published on 4,000 patients through -- across 10 different urgent care centers. And the key finding of the study is that there is a 63% reduction in unnecessary antibiotic prescription, and 70% of previously potentially miss bacterial infection have been now correctly identified. So these are very, very, very important data point to support the adoption of MeMed.

The second study on 1,000 patients in 17 centers in the U.S. and Europe and -- which is very interesting where they were comparing MeMed to procalcitonin. And the conclusion is that MeMed BV outperformed standard care calcitonin distinguishing between bacteria and viral infection. Quite often, we get questions from investors about what's different between PCT and BV, and this study clearly shows that BV is much -- MeMed is much better in classifying [indiscernible].

The third study, which goes more on the pharmacoeconomic side, is demonstrating that there is a significant cost saving up to 250 pounds per patient in case of coinfection if you adopt the MeMed [indiscernible] prior to administering the antibody. So not only you do have a clinical impact, you also have an economic impact to the hospital budget.

All said and done, I'm going to now leave the microphone to Mr. Pedron, our CFO, who's going to drive you through the numbers, and then we're going to go to Q&A.

Thank you, Carlo. Good morning, good afternoon, everybody. Thank you for joining DiaSorin Q4 '24 earnings call and for the interest you are showing in our company. In the next few minutes, I'm going to walk you through 2024 financial performance, and then I will turn the line to the operator for the usual Q&A session.

Full year total revenues at EUR 1,185 million are above the previous year by 3% or EUR 37 million despite the expected decrees in COVID sales, which are down by EUR 33 million and the carve-out of the Flow Cytometry franchise back in Q1 '23. The business ex-COVID is growing at constant exchange rate by 7%, as we heard, therefore, in line with the full year guidance. 2024 COVID sales accounted for EUR 26 million vis-a-vis EUR 60 million in 2023, that's broadly in line with our outlook, which was calling for EUR 30 million. The FX impact in the year is negligible.

Let's now turn to Q4 revenues ex-COVID at constant exchange rate, which grew by 5% as a result of a solid performance of the immuno franchise, up by 6%, as we heard, with CLIA revenues, up by 9%, despite what we heard once again the last year in Q4 -- actually in 2023 Q4 for the reasons that Carlo just discussed about.

We had a good performance of the LTG franchise, up by 4%, thanks to mainly a recovery in instrument sales, which brings 2024 full year performance of the whole LTG business to 2% -- positive 2%. And the flattish performance of the molecular franchise [ plus 1 ] where, once again, the very good start of the LIAISON PLEX RSP panel and the strong growth of the targeted specialty product lines have been offset by the mild beginning of the flu season as per CDC data and a tough comp with Q4 when we had some last time buy orders of the ARIES reagents, as discussed a couple of minutes ago.

2024 full year adjusted gross profit at EUR 782 million is better than last year by EUR 33 million or 4%, with a ratio of revenues of 66%, which is better than 2023, which closed at 65%. All the initiatives aimed at improving operation processes and containing costs allowed us to preserve margins despite, as we know, some inflationary pressure and the manufacturing costs we are incurring in our new plant in Shanghai, which has not reached its full capacity production yet.

As I said last quarter, I do really believe this is a remarkable indicator of the success of the efforts we put in place to safeguard our profitability. Q4 '24 shows a similar dynamic, both in terms of margins at 66% vis-a-vis 65% of 2023 and growth versus previous year.

2024 adjusted operating expenses at EUR 469 million are basically in line with 2023 with a ratio of the revenues of 40% vis-a-vis 41% of last year, confirming the trend we discussed during previous quarter's call. Q4 adjusted OpEx at EUR 125 million are in line with previous year as well. As expected, Q4 is recording an increase in the operating expenses rate compared to the beginning of the year, as we saw last year, by the way, mainly because of the phasing of some projects and true-up of some costs, mainly insurance, health insurance costs, in the U.S. This means, to be clear, that Q4 '24 is higher than the average quarterly rate we should expect for our OpEx during 2025. 2024 other adjusted operating expenses were negative EUR 10 million, therefore recording an increase of EUR 11 million compared to the previous year. This variance is mainly due to a tough comp with 2023, which closed with an income of EUR 1 million as a result of some material one-off positive elements recorded in the previous fiscal year.

Additionally, in 2024, there were several one-off expenses, which made this [indiscernible] even wider. I do really believe it is important to consider this substantial swing between '23 and '24 driven largely by nonrecurring items to fully appreciate our journey to increasing margins. I will further explore this when I discuss the adjusted EBITDA evolution.

As a result of what was just described, full year adjusted EBIT at EUR 303 million or 26% of revenues is higher than '23 by EUR 20 million of 7%. 2024 adjusted interest income at EUR 4 million is EUR 1 million short compared to 2023 because of the lower yield on our cash balance coming mainly from a reduction of interest rates in the second part of 2024, and the adjusted tax rate at 23% is a touch higher than 2023, which closed at 22%. '24 adjusted net result at EUR 236 million or 20% of revenues is better than 2023 by EUR 12 million or 5%. Lastly, full year 2024 adjusted EBITDA stands at EUR 394 million or 33% of revenues, which is EUR 19 million better than 2023 and aligns with the full year guidance. Q4 profitability [indiscernible] 33% is better than 30% achieved the previous year. As mentioned earlier, [indiscernible] appreciate the base business EBITDA margin expansion from '23 to '24, it's important to consider that in '23, we had material and nonrecurring earning elements in other adjusted operating income. Excluding this, the path to EBITDA margin increase would have been even more apparent.

As we will see in a minute, this is confirmed by the 2025 EBITDA guidance, which represents another step forward toward the 2027 margin expansion set during the last Capital Market Day.

Let me now move to the net financial position. We closed 2024 with a net debt of EUR 680 million, therefore, recording an improvement of EUR 159 million compared to the end of 2023, mainly as a result of the very sound free cash flow dated during the year, EUR 241 million vis-a-vis EUR 209 million in 2023. As a result, our net debt-to-EBITDA ratio is down to 1.6% from the 2.1% we saw at the end of 2023, continuing the deleveraging trajectory shared during the last Capital Markets Day.

Let me now finish my remarks moving to 2025 guidance, as always, expressed at previous year exchange rate. So we expect revenues ex-COVID to grow by about 8% with COVID sales around EUR 20 million, and therefore, total revenue -- total revenues of the company to grow by about 7%. We also expect an increase in our adjusted EBITDA margin, which, in our guidance, we'll be moving from the 33% we had in 2024 to about 34%, which we are guiding for in 2025. Please note that this guidance includes the very recent tariffs, which have been introduced and are now enforced between U.S., Canada, Mexico and China.

Before concluding, let me please remember that DiaSorin financials are highly exposed to the U.S. dollar. As a rule of thumb, consider that for every $0.01 movement of the dollar against the euro, DiaSorin revenues moved by about EUR 6 million to EUR 8 million on a yearly basis. an the adjusted EBITDA moved by EUR 2 million to EUR 3 million.

With that said, let me please turn the line to the operator to open the Q&A session. Thank you.

[Operator Instructions] The first question is from Kavya Deshpande of UBS.

The first one was just on the guidance for 2025. So you've obviously had a very strong 24%, but just thinking about some of the headwinds next year such as the tough kind of European immunodiagnostics comparator, China maybe. When you exclude these, is it fair to say your guide actually probably implies like 9% to 10% underlying growth on the top line? And are there any other factors in that 2024 comparator that we should be thinking about when modeling?

And then my second question was just on immunodiagnostics. So your target of 600 hospitals in the U.S. by the end of 2027, when we think about the LIAISON XXL, does that potentially expand that addressable market? Is that how to think about the opportunity going forward from here?

Kavya, look, I will -- I'm trying to resonate on how to answer here. Let's start on the second one, which is easier. The XXL is -- one of the biggest mistakes that companies can make in diagnostics is to -- when you have a very extensive installed base is to launch a system that is not going to also protect your installed base because then, clearly, your installed base is aging and a new system is not protecting, and then it's a full recipe for disaster. So long story short, the XXL, as we have indicated, is providing 30% to 35% with several features, right, but a 35% increased throughput to the existing XL. And that is fundamentally allowing us on a cost base that is comparable.

And this is fundamentally provide -- allowing us to do 2 things. For the next 10 years, right, we can expand into the hospital market, laboratory markets. And also since everybody is expecting consolidation increased volume, will allow us right, to follow the trend -- by the same token, it will allow us to go back to the base -- our existing 7,000 installed base and protect that. When that is going to be aging, we will substitute with a new system that's fundamentally the same footprint and better throughput. So long story short, I believe that we will continue to be as a specialist into the same segment, which is pretty much the whole market because we're going to -- we are today in very large commercial labs, think about Quest and LabCorp as a specialist with the current XL, and towards the XXL, we continue to go there. And by the same token, we can also serve the mid-segment and high segment of the hospital market.

Now if I go back to the first question you said, yes, if I could cancel China from the map and just look at the other market outside China, we expect that we continue to grow double digit in the main market. So U.S. will continue to be a double-digit market for us. And Europe is going to be a high single-digit market. Australia, Brazil, I mean, everywhere where we are direct, we will continue to see double-digit growth in 2025. When it comes to other geographies, what we call export, it clearly is a touch and go situation there because as we saw in Iran -- I mean, where we do have prices in certain markets. It goes as it goes, right? I mean, it's a flight by night operation in certain situations. However, our expectation for the overall export market, right, ex-Iran is that should deliver growth in immuno around 7%. So we -- 6% to 7%, right? So it's not going to be so dilutive vis-a-vis the rest of the geographies.

The next question is from Maja Pataki of Kepler.

A couple of questions from my side, please. I would like to start with a bigger picture question, Carlo, on the U.S. On the mess that we're seeing in the U.S., it's great news that you're not going to have any but from the tariffs. You're solidly positioned from your manufacturing standpoint. There are a couple of things that are -- moving targets, I understand, still could have a potential impact like vaccination hesitancy [indiscernible] funds. Generally speaking, I guess, a positive for the diagnostic market. Then on the other hand, discussions on the NIH budget cuts and headcount reductions at the FDA. How do you navigate through the new slow mess? And what kind of push and pulls do you expect to have from everything that is happening in the U.S.? That would be my first question.

My second question on China. So you're going to have a broader product portfolio manufactured in China as of 2026. How shall we think about China from then on? Is it going to be a growth market for you? Or what is it in your plan that is going to happen with China?

And my last question is -- I was trying to take notes. I'm not sure I got it. My understanding was that in the beginning, you said that you're well on track to have 100 customers with LIAISON PLEX by the end of 2025, representing roughly 500 placements. And then throughout the call, I thought that you said 150 PLEX customers, maybe I misunderstood, but I just want to make sure that I know which number to take.

Maja, actually, both numbers are correct, but I will go [indiscernible]. It's not [indiscernible] addition, right? I will explain to you why they're correct. So let's start on the first question, which is the big picture about the U.S. Look, I'm going to say a terrible thing, but actually, if you decreased vaccination, you have outbreaks. And you saw the one now in Texas with [indiscernible], right? And so unfortunately, every time vaccination goes down, inflation goes up, and we have the [indiscernible] DiaSorin assuring of measle, mumps, [indiscernible], herpes, name it, all these kind of bugs, we do have a very high market share. And so unfortunately, if Americans decide [indiscernible] it less, we're going to -- we're going to benefit -- not enjoy, benefit from it.

When it comes to the NIH, I mean, your guess is as good as mine guess. So we -- so far, we don't -- clearly, we don't serve the NIH directly, but our partners, ThermoFisher and [indiscernible], all these people do serve the NIH. I don't think that today, there is any visibility, to be honest with you. So I would wait until that settled. And for the time being, what -- as you know, what they've been cutting is budget related to expenses, right? Funding so far has not been cut, but I think they have -- they're not allowing other universities to take more than 15% as overhead, right, because they say everything else has to be spent in the lab. So how that is going to turn, I think we don't know also because every day is a new day in the U.S., right, these days. So let's see.

So FDA, as for the time being, we have not seen delays, although, we don't know. Honestly, I mean, every day you read and you hear something different about what's happening in the U.S. For the time being, the FDA has not been an issue for us in terms of vacancies. I will update you a quarter from now, okay?

The overall hospital business, private lab -- I mean, commercial business, we have not seen any impact, and we don't expect to see any impact from at least what we know today, okay?

China. China, I think we've been very honest because we were one of first one to say that China is going the wrong way, and I continue to say China will continue to go the wrong way. And this is why, for us, is not strategic any longer. However, as I said, we are well positioned if something is going to change because now we're going to have our products made there, we are going to have [indiscernible] on XL. We expect that by the end of Q2, we are going to have the China made and LIAISON XL approved. We submitted and that clearly will allow us to participate to certain tenders. But on the short term, don't hold your breath on China. I mean, it's no good, I think. But it's not a big damage for DiaSorin.

Now let's go to the [indiscernible] 100 to 150. I -- 2 different time horizons. I refer to the comment I made in November, right? And I said we have a funnel of 100 customers, which correspond to 500 systems, okay, the funnel we are working on. What we -- what I said now is that in 2025, our ambition in the U.S. is to have 150 customers running our platforms, right? And that [ correspondent ] will allow us to increase our multiplexing franchise because what's not obvious is that we do have [indiscernible] as we speak of Beijing revenues. And so now we look at this franchise combination of VERIGENE plus PLEX. So our ambition is to get to EUR 75 million in multiplexing business in the U.S., which does represent a 25% growth versus 2024.

Carlo, just one add up. One of the things that I've forgotten to ask you specifically, if there were any cuts introduced to Medicaid, which I believe is in debate and still and everything, my understanding is that Medicaid covered patients are roughly 20% of overall covered patients or insured patients in the U.S. Do you think this is a fair assumption for the overall diagnostics space as well?

I was closer to -- I thought it was more 30%, to be honest with you, okay? So it's slightly higher. But don't forget that in the past, it started with Obamacare and Obama, right, there was actually a program to reduce reimbursement over 5 years, and it was 30%. So it was a significant number. And actually, that program was actually stopped Trump one, right? And then it's been -- the discussion has been lingering there.

Back then, I keep saying, to be honest with you, Maja, that my concern in the U.S., generally speaking, right, except for any draconian measure, right, but my concern when it comes to pricing, let's do more with competition rather than the government reimbursement really driving pricing down significantly, okay? So am I concerned, not that much.

The next question is from Aisyah Noor of Morgan Stanley.

My first one is on LIAISON PLEX. So thank you for the sales guidance of EUR 75 million for 2025. My question is, what portion of this [indiscernible] expect to be from the VERIGENE converted accounts versus a new placement?

My second question is on China. Apologies if I missed it, but did you provide an update to this EUR 5 million to EUR 6 million impact you anticipate from VBP in 2025? And if so, could you just provide some color around the timing of this VBP, what readers are affected? Or any impact you anticipate on a more broader scope of targets?

And then my last question is on your outlook for the immuno business. Just trying to understand the mix of the growth drivers in that portfolio between QuantiFERON, MeMed, [indiscernible]. What are the biggest components that could drive the -- move the needle the most for immuno growth this year?

Okay. So let's start with the first question, I'm not -- okay. I said that what's very relevant for DiaSorin is when it comes to multiplexing is at the end of the [indiscernible] combination of technologies, where is that we want to be at the end of 2027, right? And we said we want to have 10% market share, and pretty much, it's EUR 200 million, give or take, right? And so this is the way we drive the business, and this is the way I want to explain the business to the investors. Otherwise, if I get into how many -- how much are you converting, what's the price increase, believe me, each analyst and every investor is going to do a different calculation, and I will spend more time trying to correct mistakes rather than look at what's relevant for the business. So track it, the EUR 75 million this year will become EUR 200 million, and this is what we are targeting, okay?

Second question, China VBP, a very short answer. Now EUR 5 million, EUR 6 million already started in Q1 because VBP now has been extended from the original panel. Now they went also to they included more assays, right? So the overall effect for DiaSorin yearly is around EUR 5 million to EUR 6 million in 2025.

Third question is immuno. I keep saying that the beauty of DiaSorin is that we are not a one-trick pony as we -- I learned that expression in 2015 when [ vitamin D ] was 44% of our revenues. So we are far off the one-trick pony story. We win and we retain customers because we have an offering of specialties that go across many different segments, okay?

Certainly, QuantiFERON is a door opener and is a relevant assay to have in the hospital market because hospitals are doing QuantiFERON. And actually, as we discussed a few times, hospitals are sending out QuantiFERON, and now they have the ability with a better technology to do it in-house. Tool is a tremendous opportunity because IBD IBS is exploring as a market, and we are very well positioned today to allow this growing volume to be done effectively on our platform. And we have a lot to say when it comes to [indiscernible] 3.0 that is going to be, in my opinion, revolution and the ability to properly diagnose IBD and IBS.

Then you have all the infectious disease panel that follows suit. Let me just give you an example, which is not trivial. Take hepatitis HIV. Hepatitis HIV is one of the most commoditized menu you can imagine because [indiscernible] Siemens, Roche, you name it, they all have it. Our revenues -- our hepatitis franchise in the U.S. as a result of the [indiscernible], we are expanding the installed base in hospitals, and every each hospital is doing hepatitis. Today, that business is close to EUR 60 million, EUR 70 million and is growing more than double digit, okay?

So you're saying what's driving DiaSorin success, it's a combination of certain specialties and all the me-too products, very good quality we have in infectious disease that follow suit as long as you start with the conversation with stool, with TB and now with MeMed. I made a comment already, as you know, that MeMed today is not many dollars, but a ton of interest by customers to talk to DiaSorin and drive placements of existing menu, world validation of MeMed to be completed.

Next question is from Dylan van Haaften of Stifel.

This is Dylan. So just 2 for me. So firstly, just on molecular, and we spoke about the respiratory season, and I think -- I mean, we knew there was going to be delayed season. I just was just wondering maybe we're expecting slightly stronger visibility just on PLEX, maybe with more prebuying happening in the 4Q relative to the 1Q? Any commentary there on, I guess, the purchasing patterns?

And I guess then secondly, just to check -- just on the numbers of VERIGENE, I think you said it was a double-digit number underlying. And then if we think about the EUR 75 million number, then essentially, is it fair to say like PLEX is like low single-digit, maybe even slightly higher incremental growth, let's say, onto your year-on-year growth? Is that kind of the way we should kind of think about it? And is there anything outside of the China weakness and dollar weakness that you want to flag that gets you closer to sort of that 8% that you're guiding right now? Is there anything you haven't spoken about in this call so far?

Dylan, I'm not very sure I understood the second question. I'm going to answer the first question and third. So when it comes to purchasing pattern, it's actually the opposite. Hospitals do not tend to buy in season because they don't have tend to validate. And so this is very interesting because notwithstanding that pattern that hospitals don't want to switch during the season -- and we launched the system fundamentally during the season, we are having strong success, notwithstanding the fact that hospitals have -- don't have a lot of time to validate, right? So the data that you're seeing is not that we upfronted revenues because they bought a lot during the season. It's the opposite, okay? .

Your third question, which is 8%, is there anything -- any headwind that we didn't take into account? Is that what you were interested to discuss?

Sorry, I'll rephrase. It's just that -- I think if I understand correctly, what you're saying about PLEX being incremental, I think it looks like something like 3% incremental growth year-on-year. And then basically, everything else looks like business as usual. So that would point to something like on an underlying level, that actually feels like it's accelerating even excluding the China business. And I think you said already that much with -- saying that U.S. and Europe are kind of like -- Europe is high single digit, U.S. is double digit. I was just wondering how we get to that 8% and whether that's maybe -- I mean, obviously, we'd ask if that's conservative, but I'm just wondering if that's conservative given just PLEX number even being incremental.

Dylan, this is PG speaking. I will try to take it. I'm not sure I completely understood your question, but I will do my best. So I believe Carlo's comment when he was saying double digit and so on and so forth, he was specifically talking about the immuno business because, as you might know, our presence -- molecular presence in Europe is not as big in the U.S., even though we are in the process of launching the PLEX in Europe as well, but it's not as big as in the U.S., right?

So if I can try to broadly, right, to dissect for you where this 8% guidance for 2025 is coming from, if I look at our 3 franchises, immuno, molecular and LTG, what I think you should imagine is the molecular business to grow at a faster pace than the 8% because you will see the impact of what Carlo has been discussing about. And this is, by the way, in line with our long-term plan when we guided the molecular franchise to grow low double-digit increase, right? You should expect the immuno franchise to grow more or less at the same pace of our full year guidance, right, which is, once again, in line with our long-term plan when we said high single digit, that was how we guided the market. And then LTG, and don't look at LTG every quarter because we have some [ bike ] shipments, which can skew 1 quarter up the following quarter down. But for the LTG franchise, you should expect a growth in 2025 which is below the 8% for the full DiaSorin business, right? So as a combination of these 3 franchises, you see the 8% we are guiding for.

The next question is from Odysseas Manesiotis of [indiscernible].

Just a couple of modeling ones. So on the Q4 immunoassay weakness, just to think about how to model this for this year, factoring in the VBP weakness, is it fair to expect this one to grow higher than Q4 in the coming quarters, but a touch lower than what you grew last year in the first 9 months?

Secondly, I wanted to get [indiscernible] how your business is performing in North America ex QuantiFERON TB, would saying around 8% to 9% [indiscernible] growth to be a decent estimate for full year '24? Or is it not much of a difference in the 10% you grew in the region last year?

And a quick one for PG. So I remember you're saying around EUR 40 million to EUR 50 million in capitalized R&D for 2023. How did that look in 2024? And what should we expect for this year?

Odysseas, I'm going to take some, but not all of them. So for the immuno franchise, what I believe we were hinting when we discussed about China and the tough comp, I believe, was very clearly captured by Carlo when he said if you look at CLIA growth in the quarter, you had 9%, which is in line with what we saw in Q1, which resonate with what we saw in Q3, which was 10%. If I look at the growth [indiscernible] China, obviously, the growth is even better. And I believe that for the fall of 2025, you will see that EUR 4 million, EUR 5 million VBP impact is a headwind, meaning that the underlying business obviously is doing better, and meaning, once again, that once that VBP under the belt,d you are not going to see that headwind any longer.

For the growth in North America without the QuantiFERON business, I'm not going to comment there. I believe, as Carlo said -- I referred to what Carlo said in one-trick pony, we have several business lines, which are doing very, very well in our immuno franchise in the U.S. QuantiFERON is definitely one of those, but we have much, much more.

I'm sorry, Odysseas, I don't remember -- yes, the CapEx R&D. I believe the right way to think about it is that in '24, you see the peak in terms of R&D CapEx because we are at the, let me say, the highest point of our effort of bringing new platform and new product to the market. Think about the PLEX, which has been launched now. Think about the [indiscernible], think about all the clinical studies to support different panels and products that we're going to launch. I'm expecting a deceleration, and that's budgeted for, by the way, in 2025 of that R&D CapEx and given a further and steeper deceleration in '26 and '27, right, simply because we will go back to, let me say, normal business, if I can use that word, because now we are working on several different platforms at the same time and several different panels.

So if overall you think about our CapEx in 2024, which is around EUR 130 million as a combination of R&D installments we are placing in customer premises, which are staying in our books, I'm expecting that number, and that was included in our long-term plan, to decrease materially not so much in 2025 where we will see any way a deceleration, but even more so in '26 and in '27.

The next question is from Natalia Webster of RBC Capital Markets.

Just following up on some of the previous ones around the expectations in 2025. I wanted to check if you're still confident in your midterm guidance for the high single-digit to low double-digit sales targets to 2027 and the specific segmental guidance you provided within this, particularly on license technologies. You said you're expecting this to be lower than the group 8% in 2025, but are you expecting this to reach the sort of mid- to high single-digit level that you guide for the midterm now that you're seeing some recovery from life science?

Natalia, this is PG speaking. Yes, I mean, absolutely, we feel very comfortable with the midterm guidance we gave. And I believe the fact that we grow already in 2024 the business ex-COVID by 7% is very clear -- and we are guiding for '25 at 8%, it's very clear in -- without the impact of the PLEX, as you know, all of those programs, which are coming our way, I believe we feel very, very comfortable with the high single to low double-digit guidance we gave for the midterm, absolutely, very, very comfortable with that.

You can obviously have some, let me say, little movements amongst the 3 different technologies. So very difficult to say what's going to happen for the license technology. What we saw is that we closed '24 with a plus 2%. But as Carlo was saying, if you look at the performance of the diagnostics business, there is a high single -- mid- to high single digit, it's actually 7%, right? And we've had the headwind for the life science business that everybody has discussed about.

How long is that going to last? Very difficult to say, but I believe we're kind of shielded there compared to pure life science company for the reasons we have discussed. So the mid -- let me say, the mid of the mid- to high single-digit number we gave for the -- during the Capital Market Day, I believe it's absolutely [indiscernible] that once again, these days, it's very difficult to make the additions about what's going to happen in the U.S., but that's how we see it.

That's helpful. And I guess just the same question on the margin. I mean, you're guiding to expansion to 34% in 2025, but you're still confident on that 36% to 37% target for '27. And also just following up, apologies if I missed it, but did you quantify the impact you're assuming from tariffs as well?

Also for margin, we do feel very, very comfortable with the midterm guidance. We closed 2024 with [ 33% ]. And by the way, the guidance was upgraded, reviewed upward during the year. The budget for -- the guidance for '25 is 34%. So we are absolutely in the trajectory I was telling you for '26 and no doubt there.

For the tariffs, the impact of what has already been approved by the Trump administration and the contract tariffs put in place by Mexico, China and Canada is negligible. It's embedded in our guidance, but it's negligible because, as you know, most of the products we sell in the U.S. are manufactured in the U.S. We have a very big manufacturing footprint there. And so we -- as things are today, we don't see issues.

The next question is from Jan Koch of Deutsche Bank.

I have 3, if I may. [indiscernible] PLEX again. So the EUR 75 million you mentioned as a target for multiplex, does that assume negative growth of your VERIGENE business in 2025?

And secondly, of the customers that have already received a tax system, how many lots do they activate on average?

And then finally, coming to the tariff question again -- thanks for providing [indiscernible] on the potential impact. In case the situation escalates further, how easy is it for you to pass on additional costs to your customers? Are there any differences between your segments in terms of pricing power?

Again, I'm sorry, I don't want to annoy anybody, but I have no intention whatsoever to enter into detail of cannibalization, price increase and so forth because it's very confusing when it comes to PLEX. So I kept saying we have a target to get to EUR 200 million in the plan. And next year, the EUR 200 million is -- talks to the EUR 75 million target, which is a combination of new accounts, conversion of existing accounts, price increase and so forth, okay? .

When it comes to -- the second question has to do with tariffs?

Yes, it was the third. The second was about PLEX customers, but I'm not sure I completely understood what the question was. I understood the third one. The third one -- I can start the third one about tariffs. So what I said is the current guidance for 2025 does include the new tariffs, which have already been, let me say -- which became a reality, right, because of what the Trump administration did and the contact tariffs from Canada and from Mexico. What's going to happen in the future, man, it's very difficult to say, very, very difficult. Yes. And then I believe the question was, would you have pricing power to offset those tariffs. And how can you allocate the different pricing power by segment? I guess that was the question, right, Jan? .

Yes. Yes.

Listen, if I may take one. During the [ innovation ], I think our industry, as everybody else learned that there is a rationale behind, you are allowed to increase your pricing, which we did very successfully. So if there is an increase due to tariffs, the whole industry is going to go back and pressure on the customers for price increases, right? And this is what exactly everybody is saying. Eventually, all these tariffs will bring more inflation because of price increases. So we will do all we can by contract to achieve that.

Okay. Understood. And maybe in terms of the second question, let me rephrase that one. Given that the PLEX has fixed lots, how many slots are being used by an average customer so far?

What we are seeing so far is that many customers are asking to have most of the slots filled, let me put it that way, meaning that most of the chassis, that's how we call the frame, right, that our customers are installing are filled with all of the slots, all of the available slots.

The next question is from Shubhangi Gupta of HSBC.

So my first question is on the LTG business. So it's more of a clarification. So you mentioned you have seen some improvement in the life science as well as the biopharma segment. So could you give some color on what portion is life science and what portion is biopharma?

Second, on the molecular diagnostic business. So in Q4 sequentially, could you give some color on the growth of instruments versus reagents for Q4 versus Q3?

This is PG. I will take it. So broadly speaking, when you think about our LTG business, 50%, half of it is represented by diagnostic companies, diagnostic companies, right, and 50% is what we call life science, so biopharma, academia, research, all the rest, right? And what we said is on the 50%, which is diagnostics, we are very protected because you don't see the headwind that you see on the life science.

We are not sharing numbers of exactly how much we saw in [indiscernible] in instruments or royalties of data, but the main message is that where we are -- where we started the most in 2024 is on installment sales like most of the industry CapEx, let me say, whereas we didn't see such a, let me say, a headwind on bids and royalties because of the installed base, obviously, which is -- which keeps the pooling bid.

Just a quick follow-up on the LTG business. So you have some exposure to the academic customers. So is that direct exposure? And I know this has been covered earlier, but do you have any direct exposure to NIH because you have exposure to academic customers?

No. We -- well, first, you need to understand it's B2B. so we don't know where these instruments are going to because we sell it to ThermoFisher, we sell it to [indiscernible], and they go and they sell themselves, right? So we don't know if there is a big exposure with the NIH. What I know, what we see is that there is a good chunk of the systems that are actually going outside the U.S., first. And second, because we sell to a partner in the U.S. and then they distribute worldwide, the second thing that we see is that there is a growing biopharma business for them, okay?

When it comes to [indiscernible] exposure, as I said, I think, before, we need to wait for their comments in Q1. So we will learn from them how they see the NIH situation.

Mr. Rosa, Mr. Pedron, there are no more questions registered at this time.

Thank you, operator. Bye-bye.

Thank you. Bye.