Ladies and gentlemen, thank you for standing by. I am Keith, your PGi call operator. Welcome and thank you for joining QIAGEN's Preliminary Q2 2021 Earnings Conference Call Webcast. [Operator Instructions] Please be advised that this call is being recorded at QIAGEN's request and will be made available on their Internet site. The presentation will be followed by a question-and-answer session. [Operator Instructions] At this time, I would like to introduce your host, John Gilardi, Vice President, Head of Corporate Communications and Investor Relations at QIAGEN. Please go ahead.

Thank you, operator, and welcome to our call today. The speakers with us are Thierry Bernard, the CEO of QIAGEN; and Roland Sackers, the Chief Financial Officer. Also joining us is Phoebe Loh, Senior Director of Investor Relations. Please note that this call is being webcast live and will be archived in the Investors section of our website at www.qiagen.com. A copy of the press release is also available on the same section. Before we begin, let me cover our safe harbor statement. This presentation as well as the discussions and responses to your questions on this call reflect management's views as of today, July 13, 2021. We will be making statements and providing responses to your questions that state our intentions, beliefs, expectations or predictions of the future. These constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. QIAGEN disclaims any intention or obligation to revise any forward-looking statements. For more information, please visit our filings with the U.S. Securities and Exchange Commission, and these are also available on our website. We will also be referring to certain financial measures not prepared in accordance with generally accepted accounting principles. Before moving on, I'd like to remind you that the full results for the second quarter and first half of 2020 are still planned to be published on Thursday, July 29. This will be at the usual time at about 22:05 Frankfurt time, 4:05 p.m. New York time. In light of the call today, we are not planning to hold another conference call with that announcement. I'd like to now turn the call over to Thierry.

Thank you, John, and welcome to our conference call today and for joining us to discuss the announcement of our preliminary result for the second quarter of this year and our first half of 2021 as well as our perspectives on the second half of the year. Let me get right away to our key messages for this call. First of all, our teams delivered excellent results in the second quarter of 2021. The preliminary results show we exceeded the outlook for sales growth and adjusted EPS. Net sales grew 24% at constant exchange rates over the same quarter of 2020, and at a faster 28% pace at actual rates to $567 million. This clearly beats our outlook for about 20% CER growth. The preliminary results for adjusted earnings per share are for about $0.65 to $0.66 CER, and this above our outlook for about $0.62 to $0.64 CER. My second message is that we are seeing the benefits in the second quarter of our unwavered focus on the non-COVID product groups of QIAGEN. Those efforts are positioning our company to emerge from the pandemic as a stronger and more differentiated competitor. The performance of those non-COVID product groups was extremely strong in the second quarter, rising 52% CER to $408 million and providing 72% of our total sales. This confirms what you have heard us saying before. The results show that we are really COVID-relevant, but not COVID-dependent. We are seeing a broad business expansion and using this period to invest in our 5 pillars of growth. This is our highest priority for execution and position in QIAGEN for growth and differentiation. At the same time, we saw a decline in COVID-19 product group sales in the second quarter as they fell 17% CER to $160 million. This marks…

Thank you, Thierry, and thank you as well for me for joining this call today. I would like to provide some perspectives on the sales results for the second quarter and first half of '21. You saw the preliminary top line results with 24% CER growth to USD 567 million. As you know, we have implemented an enhanced view on sales by product groups, so let me walk through each one. The first group involves sample technologies, the first of our 5 pillars of growth. These sales declined 3% CER in the second quarter to USD 203 million. These results overshadow the fact that the sales of non-COVID consumable kits rose about 30% CER over the second quarter of 2020 and represented about 2/3 of sample technology sales in this quarter. Sales of sample technologies from COVID-19 product groups fell at a double-digit CER rate over the second quarter of 2020, which was a quarter in 2020 in which we first saw significant incremental growth as the pandemic gained momentum. As a reminder, our sample technology sales are led by kits sold for use with DNA and are more weighted to our Life Science customers. So we are pleased with the underlying growth. In diagnostic solutions, which involves our product group sold for use in clinical testing, sales advanced 71% CER to USD 154 million. The key driver was the QuantiFERON latent TB test. These sales surged 109% CER to USD 72 million. All regions delivered excellent growth led by the Americas and Europe. Here, we are clearly seeing a resumption of testing and look forward to strong trends in the second half of '21, especially from back-to-school campaigns. Sales of the QIAstat-Dx and NeuMoDx solutions were higher than the second quarter of 2020 in spite of reduced demand for…

Thank you, Roland. And as we have updated our full year outlook, we would also like to provide an update on our expectation for our 5 pillars of growth. At our deep dive in December, we gave you full year sales expectation for each of our growth pillars. And now, obviously, we would like to give an update on how we see them developing given our views for the second half of the year. First of all, the sales trend for sample tech and QIAcuity are perfectly on track with our previous expectation. We are seeing solid non-COVID sales trend in those pillars. In terms of instruments, for example, we are on track for over 200 new placement of QIAsymphony system, building on the more than 2,900 cumulative placement at the end of 2020. As Roland alluded to it, QIAstat diagnostic has seen solid placement trends and driven by use for respiratory and COVID-19 testing. And we continue to be optimistic about converting those instruments for use beyond the pandemic. At the same time, keep in mind that for the next few quarters, we anticipate a period before consumable sales fully represent the transition to non-COVID testing application. The updated sales expectation for QIAstat diagnostic is now for over $60 million, 6-0, for 2021. As we have said before, we obviously do not judge our growth drivers on the basis of 1 quarter or even 1 year. This is especially the case early in the life of a product. We still expect QIAstat diagnostic to deliver sustainable double-digit CER growth after working through the pandemic effects. We are, for example, already seeing growth picking up for sales for the gastrointestinal panel in Europe, and we are right on track in our plan to submit this panel to the FDA this…

Thank you, Thierry. The next slide provides you with a bridge on what has changed in the sales outlook for '21. On the left side, we took the low end of the previous outlook for '21, which was for 18% to 20% CER sales growth. As we noted earlier, we are now expecting the COVID-19 product group sales to be down about USD 200 million, while the non-COVID product groups are doing better than expected, and this is by an amount of approximately USD 90 million. This leads to the new outlook for at least 12% CER sales growth for '21, where the non-COVID performance is helping us to offset a significant part of the rebalancing of our portfolio. As noted earlier, we have updated our full year outlook for net sales to be at least 12% CER growth and for adjusted EPS of at least $2.42 at constant exchange rates. This reflects our plans to invest in our 5 pillars of growth and strengthen our competitive profile to drive sustainable growth. We are using this period to change the way we work, in particular, stepping up digital engagement with customers and enhance our profitability growth in the coming years. As for currencies, based on rates as of June 30, '21, we now expect a currency tailwind on full year results at actual rates of about 2 to 3 percentage points. For adjusted EPS, a currency tailwind of about $0.02 to $0.03 per share is expected for the year. For the third quarter, we anticipate CER sales to be at the same level of USD 483.8 million in the same period of 2020 and adjusted EPS of about $0.52 to $0.53 CER, and this compares to results of $0.58 in Q3 2020. In terms of the adjusted tax rate, we expect a rate of about 16% in the third quarter and of about 17% to 18% for the full year of '21. The average number of shares outstanding is around 231 million for the Q3, while the level for the full year is about 232 million. With that, I would like to hand back to Thierry.

Thank you, Roland. We are coming to the end of our call, so let me provide you with a quick summary before we move into the Q&A session. First, and I'd like to repeat this, we had excellent results in the second quarter of 2021, and also for the first half of the year. Our results beat the outlook set for sale and adjusted earnings per share and were driven by the dynamic growth from our non-COVID product group. This is the seventh quarter in a row where we are beating expectation both on sales and EPS. This leads to the second message, and that is the laser focus of our teams on driving further growth from those non-COVID product groups. As a reminder, those groups represented nearly 70% of total sales in the first half of 2021, and they grew 33% CER. And as Roland said, we have a goal of at least 20% CER growth for the full year for the non-COVID-related product. Those efforts will pay off to position QIAGEN for further strong growth beyond the pandemic driven by our 5 pillars of growth. Third point, we have decided to take a more cautious view on COVID-19 testing trends. This comes after the faster-than-expected uptake and success of vaccination campaigns, which we are all certainly welcome. Our teams obviously remain on the frontline of supporting the global response to the pandemic. And we are ready for any future pandemic testing needs given the increasingly volatile situation with the delta variants or other variants. But we have not factored in our numbers for 2021, the second half, any surge into our forecast. Fourth, we have updated our outlook for full year 2021 based on the COVID-19 testing trends. Net sales are now expected to grow at least a 12% CER and for adjusted EPS of at least $2.42. And as a last point, we really believe in our future growth prospect, and this is confirmed with plans to start a new $100 million share repurchase program. With that, I would like to thank you for your attention and hand back to John and the operator for the Q&A session. Thanks a lot.

[Operator Instructions] The first question comes from Matt Sykes of Goldman Sachs.

I just have one question and then a follow-up. Could you just help us understand the margin progression through the back half of the year as we just try to reconcile the decrease in revenue growth guidance for the year versus the -- at least $2.42 in EPS for the year? Just help us understand how the margins should progress maybe relative to the previous year or your expectations.

Yes. Thanks, Matt, for the question. Yes, right now, we expect the margin for the second quarter probably slightly above what we have seen in the first quarter and probably then going somewhat lower in the third quarter and then again being higher in the fourth quarter. So overall, for the full year, it's probably around 33-plus percent operating -- adjusted operating income margin. So quite clearly, overall strong margin development. If you look out on the composition on what is driving margin over the next couple of months, it is quite clear that, on the one hand side, gross margin is probably slightly improving compared to what we have seen in the first quarter. But it's obviously that particular -- the R&D level stays probably around the level in absolute dollars. What we have seen in the second quarter where efficiency clearly comes from the digitalization we see in sales and marketing activities, giving us leverage opportunities. In addition to that, there's also nonoperational leverage what we're seeing coming from a couple of factors, from lower financing costs, tax rates. And I think those are the biggest drivers for overall EPS accretion.

Great. That's very helpful. And then just do you have in mind a durable COVID revenue stream? I think about the variant work being done on the genomics side. But do you have in mind what could potentially be somewhat durable into '22 in terms of COVID-related revenues?

Thanks for the question. As you have understand -- understood with our new outlook, we would prefer not to have our forecast depending on any bet on the COVID-19 trends. I think it's highly volatile. I think what is worth to stress is that should we see any new outbreak once again, delta variant or other variants, we will be ready to supply our customers. But we would prefer not to take -- not to bet anything on QIAGEN on COVID-19 evolution for the rest of the year or for 2022 and beyond.

The next question comes from Scott Bardo of Berenberg.

So just on QIAstat and NeuMoDx, please. It seems that placement rates are still been going pretty well here, but clearly bringing your revenue expectation down sharply in the course of the last few months. Given that the correction in COVID testing seems to be happening a little bit earlier and more deep than you expected, I wonder if you could at least share some sense on the 2022 outlook. You suggest sustainable double-digit growth. Are we now assuming, as of next year, you can grow these franchises positively? Or do you expect that there's still some COVID correction to come next year for these franchises? So if you could clarify there, please. I'd also like to understand, please, a very strong number in genomics at $80 million. How much of that would you clarify -- classify as being COVID and somewhat one-off? And how much is sustainable? And last question, please. The profitability for the company is strong and healthy. And it sounds like you're maintaining a similar margin outlook for the beginning of the year despite the softer top line. I wonder if you can provide some sense, Roland, as we think forward for QIAGEN. Do you think mid to high-20s margin that we've seen in the past is something we'll see again for the company? Or has the company now reached a new structural level for profitability?

Thanks, Scott, for those questions. I would propose to take the first one and then Roland can also speak about the profitability, obviously. So first of all, QIAstat and NeuMoDx. Yes, you are right to highlight that we still consider that we have a healthy level of placement. That means that there is still a strong interest for those 2 platform on the market. Because of the nature of the menu, we believe that, obviously, once we have absorbed the pandemic effect, those 2 platform have clearly, as we said in December of 2020, a double-digit growth profile. I believe in this case that I see QIAstat growing again, obviously, starting 2022, where for NeuMoDx because of the different situation menu-wise between Europe and North America, I would say, rather, a more flattish, I would say, in 2021 to absorb basically the impact of the COVID testing. This is for those 2 platform. As regard to the genomic performance, most of it is really driven by non-COVID application. The COVID part sequencing for COVID testing is still rather limited in our revenues as most of the governments clearly invested major funds into it. We have the solution. We are ready, again, to supply customers if there are more needs, but it's mainly non-COVID-driven. Roland?

Yes. Thank you, Thierry. In terms of profitability, I think as I alluded to before, we expect the second quarter even somewhat better in terms of adjusted EBIT margin than what we have seen in the first quarter, probably quite similar gross margins. So overall, profitability is clearly quite strong. And as I said before, for the second part of the year, it's probably going relatively -- slightly lower or it's going lower in the third quarter before it gets again better in the fourth quarter. And probably for the year ending, it is 33-plus percent adjusted EBIT margin. In terms of mid and long-term outlook, I think, for me, it's quite obvious that a lot of the margin profile going forward, what is driving the margin profile is something that will stay mid and long term. The overall digitalization of our franchise is rather increasing, not decreasing, and I don't think that's going to change. We do probably right now more than 65% of all transactions in a digital way, leading to revenues. If you compare that with 3 years ago, where it was rather above 20%, a significant difference in the way we sell. That is also true for other areas. I also believe that while we continue to expand our portfolio, particular in NeuMoDx, and that comes with incremental R&D spending, that is probably something, what, over the course of '22, is going to stabilize on a certain level. So there's also margin expansion that is something that is reasonable. What is the overall level? I think it's clearly also dependent on what is COVID revenue number for '22 and beyond. While we feel quite comfortable on the non-COVID business, and that is expecting to have a healthy double-digit growth rate in mid and long term, I think that, as Thierry said before, something that we still have to see what is happening here for '22. It depends very much also how we leave the year '21. The one thing where I feel comfortable around is that we will have post pandemic higher margins than we had pre-pandemic. I think that is something where I feel comfortable given that there is new structures, new environments and also a totally new base of revenues. So I think that is the way to think about it.

Our next question comes from Jack Meehan of Nephron Research.

Two follow-ups. Back on genomics, Thierry, was just hoping for a little bit more color. The business has done $40 million to $50 million of sales per quarter since the beginning of 2019. So wasn't COVID in the quarter, but what in the market caused that business to jump to $80 million this quarter? And then a clarification on the antigen side. I see the $70 million of sales pulled out of the guide. How much did antigen contribute in sales in the first half of the year?

Jack, I apologize, but your voice was a bit blurred. Can you repeat the second one? I got the first one but not the second one. I'm sorry.

Sure. Sorry about that. Hopefully, this is better. Just how much did antigen contribute in sales in the first half of the year?

So very quickly for the first half of the year, it's nothing. I remind you that our antigen solution developed together with Ellume is not approved by the FDA. We are answering currently the question of the agency, so we'll see what is happening. And I think as we have shown with Roland, we are not factoring any sales for the second half of the year. Regarding genomics, this is mainly driven, Jack, by the fact that oncology testing are coming back to a much more normalized level, quasi- to a pre-pandemic level. As you perfectly know, I mean, funds have been reallocated during '20, I would say, against allocation to oncology testing. And this is now coming back. This is what is in majority driving our NGS sales. Again, we have an offer on [ Sasco ] genomic surveillance, but those are not the main numbers to account for this performance in H1.

Just to add on that, Jack. For the third quarter in genomics, we probably expect a somewhat lower number compared to the second quarter. It's probably a bit higher than what we have seen in the first quarter. I think that helps you probably in modeling.

Our next question comes from Doug Schenkel of Cowen.

I want to follow up on a couple of things in a bit of a more direct way. Not to be difficult but just to make sure that everybody kind of understands what's going on here and we get the models cleaned up so we don't have to kind of do this again later in the year, obviously, with the intent of putting the stock in a better position moving forward. So my first question, and then I'll come back to my follow-up. But on 2022, many investors with whom we've spoken with have asserted that consensus EPS expectations for 2022 look quite high, considering uncertainty regarding the outlook for COVID-19 testing and ancillary products. You've addressed this in your prepared remarks as well as in response to other questions thus far. But just to be more pointed about it, it's been noted that, with few exceptions, U.S. analysts have much lower estimates than European analysts and, again, that numbers were just too high for 2022 given everything we heard from you and from others when it came to COVID testing. So with that said, could you comment on how you're thinking about 2022 or at least how you think The Street should be forecasting COVID-19 revenue in 2022? I heard you when you commented on taking the numbers out. But just to be more specific -- if it helps, I'll volunteer. We have been assuming the total COVID-19 revenue drops from where we were before at $600 million in 2021, which, obviously, now is too high, to something like $250 million in 2022. And that would translate into, I think, an EPS headwind of about $0.40 year-over-year. Are those reasonable expectations? Or should we be going further than that when we think about the 2022 headwind? And I'll come back with the second question in a second.

Thanks for the question, Doug. I mean, once again, I would like to insist that I think it would not be very serious or credible on our side to bet again on expectation for 2022 level of COVID. Roland, once again, in part of the presentation, started to remind that we have a base, which is at $147 million in 2019. And since then, you have seen the bridge in our deck. I really would like to stay away from any forecast on this regard. I mean I prefer really to focus on the perspective of growth for the non-COVID business, which we have said to be at least 20% for the full year '21 and continuing at a healthy double-digit level for 2022. This is where I would prefer because here, we have clearer visibility. Perhaps, Roland, you want to add something to that?

No. I think not much to add. I would say, again, as Thierry has said, there is a part of our business which has -- is gaining momentum and we have our hands around, and it feels well on its way. And I don't think there is anything to change. I think, typically, we also have our hands quite well around profitability. But again, you can work in scenarios, right? If you assume a drop in COVID revenues, as you said before, that for sure has an EPS impact. You could see what the EPS impact was so far for us because some of these products, again, for example, if you think on the antigen product, as you know, they were clearly partnering products for us with a significant lower-than-average gross margin for us. So -- but there is -- again, I would say, 6 months before the year ended in the summer season where most of the COVID issues in this world seems to be addressed, I think it's a little bit too early for looking into 2022.

Yes. And I get that guys and totally appreciate all that. It's just heading into earnings season, consensus was up at $2.27 for 2022. So I wouldn't expect you to guide on that, but I mean it's not helpful for you or for shareholders to have numbers that high given everything we've talked about. So the only reason I'm pressing you on this is to put you in a position where you don't have to keep correcting the sell side on this. So that's why I'm asking. I mean it's the logic that…

And I think it's fair.

Okay. I mean -- and should that number then -- is a number that's closer to -- a lot closer to $2 than $2.30 seemingly reasonable based on the math we talked about already?

Again, everybody has his own model, and we see a lot of different models. If your assumption is if COVID goes down as a significant -- of course, it comes with an EBIT pressure. There is no question around that. But I'm not going to tell you that now, as of today, it's being $0.10 more or less. But again, yes, $2.30 would sound high. There is no question.

Our next question comes from Falko Friedrichs of Deutsche Bank.

So the first question, coming back to your adjusted EPS guidance for this year, to your new guidance, can you elaborate a little bit to what extent the flexibility of your cost models that you flagged before it's helping you here? And in that regard, did you have to postpone certain investments? Or were there other pockets here that help you to keep this EPS guide pretty much unchanged versus the previous guidance? And then a brief follow-up. The share repurchase program that you announced, is that reflected in this new guidance that you provided us?

Starting with the second one. Yes, the $100 million share buyback is reflected in that. But of course, as you can imagine, it's only on a pro rational 1-year part, so it's quite minimal on a 6 months period. On your first part of the question, I do think what is important to understand is what I tried to allude to before. One thing is certain, a significant part of the revenues, which we believe most likely will not come in this year, which is the antigen product, again, is a product with a significantly lower gross margin. So clearly is helpful for us in terms of covering the overall situation. The second thing, it was always quite clear, I think, to everybody and, of course, also for us, that the overall COVID situation has a timing impact. And therefore, we clearly were setting up a cost structure also more or less addressing that topic. So we've worked a lot with variable costs, also with variable cost structures. When we were adding people, for example, into production, there was clearly that we, at your -- again, partner and time contracts in place. So I think that is helpful for us in addressing that on the one hand side. The second is, nevertheless, something that is important also the way we act and interact with our customers, not only we, but I think also the overall industry has changed somewhat. And that is clearly being helpful. And third is we don't have necessarily to reduce cost to aim what we are going to do here. We are more or less maintaining the increased run rate, which we have seen also in the second quarter. So we are well on track on our R&D projects right now. There's nothing what we are -- necessarily had to change. We feel quite comfortable with the run rate. We have today roughly 250, 300 more people on board than pre-COVID, mainly also into R&D and to a certain extent in sales and marketing structures. So I think we feel comfortable with the existing structures where we're not going to ramp it up more. But last but not least, there's, of course, also certain nonoperational factors which are helpful for us. It's probably somewhere around 25 to 1/3 of the equation, meaning, as I said before, we have now a better financing environment. We have a slightly improved tax environment. So there's a couple of things, including also share count, which are helpful for us.

The next question comes from Derik De Bruin of Bank of America.

So 2 quick questions. The first one is, can you talk a little bit about pricing environment in sample prep? We've had a number of companies obviously enter the market during COVID, and this is a market traditionally dominated by QIAGEN. Can you sort of talk about what you're seeing for pricing in sample prep? And another one, to follow up on Doug's point. You have like $147 million in 2019 for COVID-related revenues, and no other life sciences coming to recover certainly had anything in their model for 2019. So I guess the question is what is that? And why isn't that sort of like a base number in 2022? And -- or are you saying that that's got to come out as well out of the numbers?

So thanks. So first on the pricing environment for sample tech, first of all, as we said last year many times, we didn't try to take advantage of the pandemic to basically [indiscernible] prices. We also adjusted our prices according to the different geographies, and we haven't seen a specific pressure either on automated solution or manual solution. And we do not foresee a specific pressure here. And as I explained in many calls before, it is QIAGEN's strategy to systematically pass price increase as much as we can every year. The first point. The question again on the COVID-19 base, what you have seen in pre-pandemic is to make sure that you can compare products that are of similar categorization and classification. That doesn't mean, obviously, pre-pandemic that they were obviously directed to the COVID-19. So to your point, it's obviously difficult to imagine that this base would vanish anytime soon because it was not related to the pandemic before the pandemic. So if you want to use it as a base, I mean, in a model, it's a decent number. Just what we don't want to do is to take any bet on any growth compared to that on the numbers, which is proving to be extremely volatile. That's what I could provide you as an indication with.

The next question comes from Patrick Donnelly of Citi.

There's obviously been a few on the margin front. Roland, can you maybe just talk about how you balance cost savings to protect the bottom line, inflate the bottom line while revs are coming down here this year while also continuing to invest in some of the growth platforms you've discussed? I just want to talk about that balance again. Obviously, important for you guys to continue to invest given the growth outlook but, at the same time, the bottom line, not really moving much. The margins are hanging in there. I just want to make sure we understand that piece.

Patrick, no, I think we fully agree. We clearly want to invest, particularly in R&D, particularly in menu buildout for QIAstat and, in particular, also for NeuMoDx. That is key for our post-COVID strategy, and there is no if and when. At the same time, we shouldn't forget that, again, pre-COVID, we clearly have a couple of hundred million dollars in incremental revenue base, which, by itself, brings leverage. Compared to pre-COVID, we have literally thousands more platform in the field, which brings a significant efficiency gain to the company because instead of fighting for certain orders, you clearly have recurring revenue streams. We might now see that certain COVID-related revenue streams have an increased volatility or even might go down, but it's quite obvious that the installed base is there. We see over the next couple of quarters as customers will convert away from COVID into more regular lab testing. But this -- again, what we shouldn't forget is over the last couple of quarters, we sold compared to a pre-COVID scenario probably a 3-year plus placement, a number of instruments in a 12-month period into the market. That will be helpful for us also in terms of efficiency. And so I think that is probably the way to address that.

The next question comes from Tycho Peterson of JPMorgan.

This is Casey on for Tycho. On QIAstat and NeuMoDx, the revision in guidance there, how much of that is a function of a faster slowdown in COVID versus potentially increased competition in the market? And I'm just asking this since the last time we spoke, you had talked about how QIAGEN COVID testing is over-indexed to OUS markets that really haven't seen the same type of decline in testing. So maybe can you just talk about the competitive and geographic dynamics that play here for both of those platforms?

Yes. Of course. So the competitive environment so far has not changed. I mean we have seen obviously potential newcomers with the acquisition of GenMark of Mobidiag. But I mean the readjustment for us is on your question of the volatility of the COVID testing impact. I think it's fair to say that, at the moment, between 80% to 90% of our base -- for our installed base for NeuMoDx or QIAstat is very much driven by COVID. And now the point now that we have this installed base is to move them to the rest of the menu. We insisted today that we are on track on executing on what we committed to you, which is the GI submission on QIAstat for the U.S. and the meningitis submission on QIAstat for Europe. We are also adding a new menu. You have seen the press release on NeuMoDx with the adenovirus. The way I see clearly the pandemic is that the pandemic has allowed us to probably accelerate our market shares by a year or more. And now we have a solid base of instrument which continues to grow. We have disclosed some numbers for H1 as well and now the place to convert them to the non-COVID part of the menu. It takes some time by customers. I mean we have said that it's going to take some quarters to do that to fully absorb the impact of COVID-19. But once again, those 2 instruments are not COVID-driven. Those are menu instrument, and this is where we are pushing currently our customers. This is why we highlighted in this call that GI, for example, in Europe, is showing very interesting and encouraging growth trend starting Q2. We need now to push that in Q3. We need to launch meningitis and obviously bring GI as soon as possible to the U.S.

The next question comes from Peter Welford of Jefferies.

Just with regards to thinking about 2022 again, but this time with regards to the margin. I guess rather than specifically on the margin, what I'm really more trying to understand, I guess, if you can just put in context the -- I guess, on the SG&A side, the amount of savings, if you like, that we're still seeing this year due to the pandemic and due to the absence of travel, et cetera, that we should then think should come back in next year above the normal sort of inflation. And equally, on R&D, should we consider that the rate of investment given the menu expansion is going to ramp up again in 2022? Or do you feel that the sort of amount of investment we're seeing at the moment on R&D is really unaffected by the pandemic and should essentially be sustained into 2022? Just to give us some sort of idea, I guess, in terms of the -- how, when we take our own view then on COVID, we can sort of model the margin impact through in 2022 numbers.

Yes. First of all, I think, just to remind you, while our overall operating income margin looks high, it's quite obvious that the main driver for that is that we also have superior gross margin. So if you just look on the operational expense basis, I think there are still areas where, also compared to peers, there is room for improvement. Nevertheless, as I said before, we feel comfortable with the investment level we're having. We increased in terms of head count pre-COVID, around 250 to 300, which is very reasonable. We have increased and stepped up significantly in R&D. Have in mind that we went through a significant change at end of 2019 in terms of when we -- how we invest into R&D. And the same time, we stopped a significant R&D program for developing a next-generation gene reader and while we're focusing on our 5 pillars of growth. And I think that was and is still the right track to go. At sales and marketing, there is leverage opportunities for us. We have to deliver on that. And given on what I was alluding before, there's a significant number of placements plus also the overall digitalization environment. That will be helpful. I believe that there is some inflation-based cost increases next year? I think that is fair to assume. Do I believe that there is a cost environment which goes back to a pre-COVID level? I don't see that. I think the days where people were going to Marco Ireland and having big marketing events in that kind of style, I think it will be different going forward.

The last question comes from Lisa Garcia of Wolfe Research.

Just a couple of product ones. Piggybacking off of Derik's question, I don't know if you'd just be comfortable providing maybe some examples of what was in the 2019 COVID base kind of -- just to kind of give us some context? And then just for QuantiFERON for this year, it looks like kind of they've already achieved about 50% on the math of their kind of $255 million goal. And historically, this has been kind of like a back half kind of seasonal strength kind of product. So I just want to make sure I'm not missing anything in terms of seasonality this year for QuantiFERON.

Those are 2 good questions. Basically, what you were seeing in the COVID category pre '19 or pre -- I mean you have some RNA testing. I mean you don't do RNA testing just for COVID. Obviously, you have other viruses. This is an example -- for example, there are also other products related to what we call our extraction and our purification and nucleic acid, some enzymology as well. So this is what you had in that category. On QuantiFERON, you are right. Normally, in a normal year, we have some time an acceleration, especially in the quarter 4. But do not forget that at least one of the main growth drivers for QuantiFERON is still not there and happening in 2021, which is the migrant testing. As Roland said in our presentation, we believe that this will start again progressively probably starting next year. But we don't have it this year. So given the summertime in Europe, given the very strong performance in Q1 and Q2, what we see on QuantiFERON in our forecast at the moment is forecast for Q3 basically slightly below Q2 over Q1 of 2021, and again, an acceleration of Q4, above what we have achieved either in Q2 or in Q1.

Okay. Thank you very much to all of you to -- also to Thierry and Roland for your time today. With that, I'd like to close this conference call and wish you all a good day. Bye-bye.

Ladies and gentlemen, this concludes the conference call. Thank you for joining, and have a pleasant day. Goodbye.