Hello, and welcome to the Q1 2024 Revvity Earnings Conference Call. My name is Carla, and I will be coordinating your call today. [Operator Instructions] I will now hand you over to your host, Stephen Willoughby to begin. Steve, please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Revvity's First Quarter 2024 Earnings Conference Call. On the call with me today are Prahlad Singh, our President and Chief Executive Officer; and Max Krakowiak, our Senior Vice President and Chief Financial Officer. I'd like to remind you of our safe harbor statements outlined in our press release issued earlier this morning and also those in our SEC filings. Statements or comments made on this call may be forward-looking statements, which may include, but are not necessarily limited to financial projections or other statements of the company's plans, objectives, expectations or intentions. These matters involve certain risks and uncertainties. The company's actual results may differ significantly from those projected or suggested due to a variety of factors, which are discussed in detail in our SEC filings. Any forward-looking statements made today represent our views as of today. We disclaim any obligation to update these forward-looking statements in the future, even if our estimates change so you should not rely on any of today's statements as representing our views as of any date after today. During this call, we will be referring to certain non-GAAP financial measures. A reconciliation of the measures we plan to use during this call to the most directly comparable GAAP measures is available as an attachment to our earnings press release. I'll now turn it over to our President and Chief Executive Officer, Prahlad Singh. Prahlad?

Thanks, Steve, and good morning, everyone. Following the company's transformation over the last several years, today marks the fourth quarter that we have reported our results as Revvity. And in 2 weeks, I look forward to celebrating with my colleagues, the 1-year anniversary of our new company unveiling. I'm proud to look back on all that we have accomplished in such a short period of time, and I'm excited to continue to build on the great progress we have been making towards reaching our ultimate potential. We were extremely active during the first few months of the year as the team hit the ground running on a number of key initiatives, on which I thought I would provide some more insight this morning. First, from a market perspective, while we have begun to have more constructive conversations with our pharma and biotech customers over the last 45 to 60 days, their actual spending has not yet begun to meaningfully pick back up. So while it is promising to see continued stability, and there are a couple of potential trends on the horizon, which could turn into tailwinds, given we have yet to see a meaningful inflection in actual order trends, we are currently maintaining our outlook for the remainder of the year. Revvity's uniqueness was on display through -- in the first quarter as our Diagnostic businesses have continued to remain strong and performed well. Our Immunodiagnostics franchise, which is by far the largest piece of our Diagnostics segment driving the low double digits in the quarter. Our newborn Screening business also continued to perform well with mid-single-digit growth overall, including double-digit growth outside of China. This helped to offset the significant declines that occurred as we had anticipated in our Applied Genomics business. The combination of these market environments…

Thanks, Prahlad, and good morning, everyone. During the first quarter, we continued to execute at a high level despite the continued challenges in the pharma/biotech industry. As we face these headwinds, the strength of our Immunodiagnostics, newborn and software businesses allowed us to exceed our organic revenue expectations and also overcome some incremental FX pressure. As we've been discussing over the last several quarters, during this period of software, pharma and biotech spending, we have had a concerted effort on controlling those items that are more directly within our control, specifically our operational efficiency and our cash flow generation. It was great to see both of these focus areas really performing well in the first quarter, with our adjusted operating margins of 25.5% being approximately 100 basis points above our expectations, and our $132 million of free cash flow being well over 100% of our adjusted net income in the quarter. As I begin to walk through our financials for the quarter, I wanted to remind everyone that 2023 revenues related to COVID were de minimis, and as such, we will no longer be referencing non-COVID revenue. Instead, I will focus my commentary in our disclosed results solely on our organic performance. Overall, the company generated total adjusted revenues of $650 million in the quarter, resulting in a 3% decline in organic revenue, which was above our expectations. FX was a modest year-over-year headwind, roughly 100 basis points, worse than we had assumed, and we again had no incremental contributions from acquisitions. As it relates to our P&L, we generated 25.5% adjusted operating margins in the quarter as we continued to focus on controlling our operational costs while accelerating the elimination of divestiture-related stranded costs, leading to stronger margins this quarter. We incurred a favorable pricing impact of approximately 100…

[Operator Instructions] Our first question comes from Michael Ryskin from Bank of America.

I want to ask one big picture, one sort of qualitative, and then I'll follow up, drill in with a little bit more specifics. So in terms of how the quarter played out, it seems like there's still a decent number of surprises. You talked about Reagents coming out a little worse, pharma and biotech being a little bit worse, but then China was a little bit better, Diagnostics was better. So it just seems like there was a lot of moving pieces. I know we're still operating in a pretty volatile end market environment, but how do you feel about your confidence in terms of predicting growth going forward, in terms of the visibility? Is this something that you anticipate will improve? Is this just -- is this temporary? Or is it something a little more inherent to the business mix as it is?

Mike, I think it's a great question. As both myself and Max said in our prepared remarks, overall, I would say that the market has stabilized. Obviously, our Diagnostics business has done -- continues to shine in light of that. But you'll got to break it down into pieces. You are right on the Reagent side, the Life Sciences, but we had some licensing comp, which pressured things. But excluding that, our core reagents were down only mid-single digits. We did see a slower start to the year as customers delayed their finalizing their budgets and lab activity that continues to have some pockets of volatility. However, given the trends that we have seen now in March and so far here in April, we feel much more optimistic and have not changed our assumption for the full year and continue to expect core reagents to be up in the mid-single digits. On the Diagnostic side of the business, yes, Newborn Screening was pressured in China. But outside of China, Newborn Screening actually grew in the double digits. Software business continued to be better than our expectations. So I think, all in all, you are right that there are quite a few moving pieces. But as you said, at a high level, the differentiation of our portfolio actually shines in markets like this where there is pressure some place else, something else picks it up. So overall, we feel pretty good about where we are.

Okay. That's helpful. And then the follow-up, I do want to drill in exactly into that, Life Science business, the reagents, pharma and biotech. I mean there's a lot of overlap between that, but it seems like that was an area that was a little bit weaker than you thought. And it sounds like it was a little bit weaker than what we've seen from some of your peers reporting. Your mix is a little bit different there. I mean BioLegend alone is a good chunk of that reagents business. But anything in particular you want to call out there? You talked about the licensing comps. Could you provide some clarity on that? How that's going to phase as you go through the rest of the year? And just what gives you confidence that, that business can reaccelerate, pharma and biotech and reagents specifically?

Yes, Mike, I mean, I don't have too much further to add on to what Prahlad already mentioned. I guess if you were to break it down a little bit further, if you look at our performance of the reagent business between academic and government and pharma/biotech, academic and government still grew in the quarter for us from a reagent perspective, which is predominantly the BioLegend portfolio. I think when you look at pharma/biotech, it really goes back to some of Prahlad's comments around, it was just a slower overall start for the year. We have seen good progress through March and April, and we're confident in our full year outlook.

Our next question comes from Matt Sykes from Goldman Sachs.

Prahlad, maybe big-picture question for you on capital allocation. If you kind of look back to over the past couple of years, the acquisitions that you've made that you're now integrating, given what you know now about the environment, both on the capital equipment and just pharma/biotech, is there anything you would have done differently in terms of those acquisitions in the [Technical Difficulty] business? Or do you feel like a better position -- the business position today is just a macro-related issue and that they should start outperforming going forward?

It's a good, great question, Matt. I mean, I think if you look at the acquisition that we did, majority of our acquisitions were in Life Sciences reagents related to biomolecules and large molecules and cell and gene therapy. And I think the longer-term trend that if you look in the marketplace, that is where a majority of the investment is going to go. As you pointed out, there are some headwinds in the market right now, but we are very confident in our strategy about the acquisitions that we have made. Again, going back, what it has done is it has put us in a place where 80% of our revenue is coming on a recurring basis. Life Sciences, Software and even in the Diagnostics area where we play, we have a portfolio that we feel is very differentiated. And I think it is going to serve us well.

Got it. And then if I could just kind of understand a little bit better the dynamics behind the instruments. I know that in Life Sciences, a mid-teens decline might have been a little bit better than expectations. But could you just characterize instrument demand, whether it's in Life Sciences or Applied Genomics in terms of the stabilization that occurred during Q1? Or did things actually incrementally get worse in terms of demand? And what is your outlook for capital equipment demand and the impact on revenue over the course of the year, whether it's phasing of growth over the year or stabilization versus recovery? Just would love to kind of get your view on instrument capital equipment demand as we trend through '24.

Yes. Matt, so as we look at the instrumentation for the rest of the year, we are still basically assuming across both Applied Genomics business as well as our Life Science instrumentation business that it will be down mid- to high single digits for the full year. That was consistent with our previous outlook. I'd actually say for the first quarter, it was an improvement versus what we were anticipating heading into the period. So it was encouraging to see that uptick. And when you really look at the assumptions for the rest of the year, we aren't assuming a recovery in the market. It is kind of assuming a steady-state environment from what we are facing today. And that's, again, consistent with our assumptions we had 90 days ago.

Our next question comes from Patrick Donnelly from Citi.

Prahlad, I just want to follow up on Mike's question on the reagent piece. Can you just talk a little bit more about what you saw in the quarter, how things trended specifically on BioLegend, just what the growth was there? And then what the expectations are in 2Q? I know you called out the licensing headwind in 1Q. Just trying to get a sense for what this business could look like 2Q and going forward as we work our way through the year here?

Yes, Patrick. I mean, again, starting with, as I said earlier, right to Mike's question, we expect our core reagents business to be up mid-single digits for the year. And I think also, the trends that we saw in March and April make us optimistic to keep that profile. As I mentioned, we had licensing comps, which pressured this, excluding that, the reagents are down mid-single. I think the way I would take it is that some of the budget finalization that happened with our pharma/biotech customers, typically, they would happen in December. But I think that sort of bled into January and the release of the budgets happen a little later into the year than as it typically happens. And I think that's where we saw some initial volatility. But again, March and April, it has come back to where we would have expected it to be. So hopefully, that gives you a bit of a flavor of how we relate that.

Okay. And just maybe just the trend on how to think about it for 2Q and the year?

Yes. For the second quarter, Patrick, we do expect the core reagents business to return to positive low single-digit growth in the second quarter. And then in order to get to the mid-single digits growth for the full year, you can do the math in the back half.

Yes. Perfect. And then maybe just quickly on the biopharma conversation firming up in the last 2 months, to your point, Prahlad. Have you seen this before in the last 1.5 years? I'm just wondering if you're seeing some false starts where things sound good and then they tightened back up? Or is this one of the more encouraging signs you've seen over the past few quarters and you feel that visibility is improving?

Yes, Patrick. I think there is more solidity to the conversations, and I think that's more encouraging trend than what we have seen earlier. But as Max said earlier, I mean, they haven't yet converted into orders, so it's not clearly at a point where we can say there's an inflection. But I think the discussions are much more solid and much more prolonged. So that's probably a flavor around what the encouragement that we have on the order trend for the Life Sciences instrument side.

Our next question comes from Andrew Cooper from Raymond James.

Maybe just first, you had a lot of news in terms of Software in the quarter. Maybe just high level, how big do you think that business can get over the next few years? And how much of that growth relies on sort of additional new rollouts versus what you've now launched out there in the market today in terms of getting to that long-term business?

That's a great question, Andrew. I think we are very positive on our Software Signals business. And as you pointed out, we had several launches in the year. And I think, as I've said earlier, the product launches that happened in our Software business are a direct correlation of the user group and voice of customer meetings that we have at least twice a year in different continents. So basically, it's direct output of what our customers asks are and that's why there is a solid trend related to it. The expansion that we had with Signal Clinicals, it takes us outside of the preclinical environment to support customers on the analytics and the data that is generated from clinical trials. In addition, these are SaaS-only, so that gives a more longer-term certainty around the revenue. And we've seen good initial traction with that. Similarly on Signal Synergy, which was launched in mid-April, that connects the data back for our customers between the pharma and the CRO. Again, this is something that I've talked about earlier. There is always -- one of the biggest needs for our pharma customers is the unstructured form in which the data comes through. This product helps them transfer unstructured data, provide the analytics and visualization that our customers are looking for. So pretty promising launches, and I think they will continue to be -- launches that'll come through from our Signals portfolio simply because we are -- we have taken a modular approach as to how we bring our product profile into the customers.

Yes. I think if you look at it long term, Andrew, I think we've already come out with the LRP growth assumptions for our Software business. It's high single digits to low-double-digits growth per year. It's what we are expecting here in 2024. And so depending on how long you're trying to model out, you can get to how big this business is, given that it's roughly a $200 million business for us today.

Fair enough. That's super helpful. Maybe just one kind of on some of the numbers here. You called out free cash flow normally weakest in the first quarter, but obviously, pretty strong here. There's some divestiture kind of inflows that are a little bit more onetime in terms of not repeating in '25 maybe, but should we think about higher each quarter for the rest of the year from here? And maybe on a normalized basis, is that same seasonality still what we should expect on a go-forward basis as well?

Yes. Look, I mean, from a cash flow perspective, there will always be some quarterly notes to some extent just given business activity. I think as you look at this year, though, the second and third quarter, I would anticipate to be probably lower than the fourth quarter, but we're still maintaining our overall expectation this year to be greater than $475 million of free cash flow conversion.

Our next question comes from Josh Waldman from Cleveland Research.

One for Max and one for Prahlad. First, Max, can you talk a bit more on the drivers to the op margins coming in better than expected? I mean, it sounds like it was supported by cost efforts and I assume organic upside. I'm curious, how much of the cost benefit was onetime in nature? And I guess what would you need to see to start to pull up your margin outlook either for the year or longer term?

Yes. So I think if you look back at what we had mentioned for the outlook for this year, we had mentioned that, from a margin profile perspective, our operating expenses for the full year were going to be very similar kind of quarter-over-quarter off of our Q4 exit, and that's kind of what you saw here in the first quarter. And again, that's just a function of us taking permanent cost reduction actions to offset the variable expenses that we knew would be coming back this year. And so I don't think that outlook has changed where the upside was in the first quarter was really more on the gross margin side. Again, as you look at the seasonality or I guess, the phasing over the rest of this year, the gross margin rate will uptick as we go throughout the year based on volume, which is what gets you to that then 28% operating margin for the full year. And I think when you look at in terms of what could push us above the 28% for the full year, it's going to be a combination of just better volume or on the gross margin line, again, as our operating expenses will be relatively flat over the course of the year.

Got it. Okay. And then, Prahlad, a couple on China. Within the Life Science segment, curious, any trends you've seen, positive or negative, on the reagent side as the quarter played out and then here into April? And then within instrument, curious, have you seen any sign of stimulus showing up in the funnel or customer activity? And then I guess, lastly, on the Diagnostics side, curious if there's any change in how you're thinking about China Dx for the year? And within that, any change to what you're seeing from a pricing dynamics, anything like VBP or local competition showing up? Or is pricing in China has been fairly stable?

I'll try to remember all 4 or 5 of the questions that you've got in there, Josh. I think the reagent side pretty much played out on the Life Sciences side as we had expected. And to your second question around the stimulus, as some of our peers have mentioned, there has been talk and discussion about it, but that's not something that we are banking or assuming in any of our assumptions so far. On the Diagnostic side of the business, as we've pointed out earlier, we are going to continue to have some volatility related to VBP. And the price declines that we have laid out, that is assumed in our LRP. On the Reproductive Health side, as we mentioned, that birth rates declined more than 20% in the latter half of 2023. So we do expect that softness to continue through 2Q, but as most of you know, we expect that to change in the second half of the year given that it's the year of the dragon in which we have traditionally seen a noticeable increase in the number of babies born, which run through the first quarter of next year. And to some extent, we have already started seeing some signs of this occurring from our prenatal business in China. So there is an indication that the birth rate trend in China is going to improve a bit in the second half of the year. I think I got most of them.

Yes. And maybe just one other piece to add just, I guess, from an overall numbers perspective, our outlook on China for the full year has not changed. Again, the first quarter was mostly in line with our expectations. And for the full year, we are assuming China to be roughly flat for the full year. So there's no change to that assumption.

Our next question comes from Doug Schenkel from Wolfe Research.

Just a couple of quick cleanup questions on guidance. I just want to make sure we understand all the moving parts. So just starting on revenue, you reiterated full year organic revenue guidance and Q2 was guided about as expected. Yet you acknowledge biotech and pharma demand has yet to rebound as maybe hoped. So I think that's a relative bad guy. What's the good guy specifically? What's getting better than what you expected relative to where we started the year? And then turning to margins, coming into the year, you had guided Q2 and Q3 operating margin to be about in line with the full year guidance target. I think you actually said Q2 might be even a little bit below that. Just doing the math there, I think it implies Q4 operating margin will be in the low 30s, I get to 31%. Is that math right? And if so, can you just help us with what makes you confident in that type of ramp given we're starting at 25.5% coming out of Q1?

Yes. So I'll work backwards to your questions there, so maybe starting on the margin one. I mentioned it to Josh's question earlier, but really, the margin story or assumptions we had coming to you are unchanged. Operating expenses are going to be flat. And as we move throughout the year, it is just a volume dynamic moving up our gross margin percentage. In terms of the quarterly phasing that you had mentioned, yes, that's probably about right if you do modestly lower second and third quarter operating margins that would imply a fourth quarter, that's around 30.5%, 31% OM. And again, that's kind of consistent with our business practice and our business seasonality as the volume steps up sequentially as we go throughout the year. I think when you look at it on an organic growth perspective, I think, to maybe use your own words, yes, we were -- everyone was hoping that margins had recovered -- the markets have recovered more strongly here in the first quarter, but that's not what our guidance had assumed. Our guidance had actually assumed that it was a relatively stable -- consistent outlook for what we saw in the fourth quarter, which is what played out here in the first quarter, and we expect to play out for the rest of the year. So I don't know that it necessarily got worse in terms of what our guidance assumptions were.

Okay. That's super helpful. And one, I think somewhat related follow-up. Applied genomics, I think that accounts for roughly 1/4 of Diagnostics. Hopefully, I'm not too far off there. That was down, I think, mid-20s in the quarter. If it weren't for that headwind, I think that means Diagnostics would have grown 5%, 6% mathematically. As we kind of think about things getting better as the year progresses, my guess is that's a big part of the math that makes you feel better about an acceleration in the second half in that business, essentially just annualizing some of the headwinds that you're fighting through right now specific to Applied Genomics, is that right?

That's exactly right. And I would say as we get going throughout the rest of the year for Applied Genomics, it will improve from the first quarter. The fourth quarter will be its worst performance from an overall organic growth perspective. But when you look at multi-year stacks, although it's still improving in a discrete organic growth for the second through fourth quarters, the multiyear stack, we are actually assuming a little bit slower than the multiyear stack we had in the first quarter, which gives us confidence in terms of the rebound for that business for the rest of the year.

Our next question comes from Vijay Kumar from Evercore.

Prahlad, just on the second quarter, I think you mentioned organic is down low singles. And I think reagent are expected to be up. So what drives that low singles, right? If reagents improved sequentially, is there some timing of VBP impact? Like when is VBP supposed to hit? Did we see any impact in Q1?

Vijay, I think on the VBP question, what we've said, we've assumed mid-single-digit price declines on an annual basis, and that's what we continue to see. So it's not a sudden swing that we are seeing, but we're just seeing a leak on the pricing. And that's what we've assumed and what we've shared earlier. I think if the Life Sciences reagent are going to improve sequentially from the Q1 to Q2, the instrument side of the business is still pressured. And I think that's what's assumed in our low-single-digit guidance and hopefully, it will be better.

Yes. I think maybe just to add more specifics to it, Vijay, in terms of what's changed in Q1 to Q2. To your point, reagents will get a little bit better as well Applied Genomics per my response to Doug. Really, what we're not assuming repeats in the second quarter, I think, is the robust growth we saw in both the Newborn business and Immunodiagnostics outside of China, they both continue to grow low double digits, mid-teens, respectively. And so I think we're just being a little bit more conservative in the assumptions for those in the second quarter.

Understood. And then a follow-up to that, Max, on China, down mid-singles in Q1 -- sorry, did we see that 500 basis points of pricing pressure in Q1? Or is that something that's supposed to come in the back half? And I think your guidance for China is up low singles for the year. So what drives that back half? Is that just a comp issue or perhaps timing of VBP?

No. I mean I don't think there's discrete quarterly timing around the pricing there, Vijay. It's kind of a consistent pricing headwinds that we face over the course of the year. So I don't think there's anything specifically there to call from a corporate perspective.

Our next question comes from Jack Meehan from Nephron Research.

I wanted to ask about pharma and biotech maybe through a different lens. I know you're not seeing improvement in orders at this point, but is there any commentary you can share across the different businesses? I'm curious if some of the more production-oriented businesses like a surprising discovery or SIRION are doing better than the lab-oriented areas?

I think I would say that we see maybe from a general commentary perspective, the pressure is still more on the higher-ticket items around the single cell imaging and analysis, but probably not as much on the lower-ticket item. So again, it continues to be a CapEx story around instrumentation, and I think that's where the pressure was assumed and that continues to be there.

Okay. Got it. And then on -- I was just curious, operationally with Spotfire, I know there was some disruption that was caused back in March. How are things going there? I know it's a small business, but just -- how's the customer impact? How is that going?

Yes. I mean, Jack, as you know, and as we have reported, we quickly got an injunction -- received an injunction, which essentially maintains the previous status quo as the litigation plays out. And to your point, any initial customer inquiries and questions have died down significantly. And at the end of the day, we still have an agreement in place into the next decades with renewals beyond that.

Our next question comes from Catherine Schulte from Baird.

Maybe just one more on pharma. Last week, Roche mentioned that it had removed about 20% of the molecules in its pipeline over the last 3 quarters. And that doesn't seem like a dynamic that's been weak to them. So I guess, where do you think we are in this pipeline reprioritization across large pharma? And when do you think the dust settles there?

Yes. Catherine, I think the pipeline realignment is happening, and it will continue to happen. I mean from our perspective, just as we look at preclinical research and discovery, both on the small molecules and on the biomolecule side, and as I've pointed out, the funnel has to be broad enough at the beginning for it to narrow down. I think as they realign their portfolio, they will continue to optimize cost measures as they go further into development from preclinical research and into clinical. But in order to get into development and clinical, they have to have a broad enough funnel. So I think mid- to longer term, we don't see that having much of an impact on our business. I think the key will be how do we continue to help our pharma/biotech customers continue to optimize and make it more efficient for them to bring candidates from discovery into development.

Okay. And then could you just talk through your expectations for pharma and biotech for the second quarter? And when do you think we could see a return to growth in that end market?

Yes, as a reminder, too, we don't necessarily give outlooks on an end-market basis. And so, look, I think as you can hear from our executives that assuming a general change in the overall end market for pharma/biotech as we go throughout the course of this year. So that's probably the best insight I can give you on that question.

Our next question comes from Dan Brennan from TD Cowen.

Maybe just on Immunodiagnostics, solid first quarter, again, comps do get more difficult as we go through the year. Can you just walk us through maybe the Q2 expectation and the outlook for the second half? And anything we should be considering, anything notable whether new products or pricing that support the outlook?

Yes. I think as you -- as we look at the outlook for IDX, to your point, it was another strong first quarter here. We continue to expect the business to continue to perform well, even both in China for the rest of the year as well as outside of China. And so our expectation is that for the business for the full year, it's still going to grow in the high single digits. It's multiyear stack, they're still in line with our LRP. And it's really a combination of both the geographic expansion of our Immunodiagnostics portfolio, but then also the wave of innovation and menu expansion that we've been driving for the past couple of years.

And just to add to what Max said, U.S. continues to also be a very good growth driver for us for the Immunodiagnostics business. I know we tend to talk about China, but U.S. for us is probably the fastest grower for our Immunodiagnostics business.

Got it. And then maybe just one on costs. You had a lot of comments in the prepared remarks on new programs, it sounded like, or maybe some emerging programs to take costs out, talked about stranded costs. Can you just elaborate a little bit? Like it sounds like maybe those impacts are going to come after '24? Maybe we'll learn more at the Investor Day, but just kind of any impact in '24 baked in from some of these additional focus on costs? And if not, kind of how do we think about the magnitude of upside beyond?

Yes, it's a great question. So I would say from a cost perspective and really our operating margin initiatives, there is the short term and the long-term bucket. I think when we've talked about short term really for 2024, it's the structural actions we've been taking to remove the stranded costs really in relation to our SG&A functions. And so that has worked, has already mostly been done in the fourth and first quarter here. It's baked into our assumption for the full year. I think then when you look at it long term, it's a lot of the topics that we had mentioned in our prepared remarks this morning, really around in-sourcing, freight lane optimization, vendor consolidation, rooftop consolidation. And so those will continue to be areas that we're focused on executing over the next couple of years. It's part of our playbook for our LRP operating margin expansion. And so that's really probably the way I would think about those 2 different cost actions.

And our final question comes from Luke Sergott from Barclays.

Great. I just want to follow-up, Prahlad, on what you just talked about from the U.S. and IDX being the fastest grower. I mean, this has kind of been the long-term thesis here on EUROIMMUN in general. And so can you just talk about what's driving the accelerated growth here? How big the U.S. is now as a region for EUROIMMUN? And do you guys think that you are close to the critical mass when thinking about the menu or the menu expansion needs to really start to drive share gain here?

I think if you look at our Immunodiagnostics business in the U.S., it has grown at a 20% CAGR since the acquisition. And I don't think we have really gone to where we would say that we have reached close to critical mass so that it would plateau out. It's gone from being 5% to nearly 15% of our overall Immunodiagnostics business. But there is still a lot of growth that we have to cover in the U.S. And I would say that we are still in the early phases of growth that this business is going to see over the next several years in the U.S. And it is all a direct correlation of how many products that we can get onto the panel and get through the FDA approval process into the U.S., and the team is working very hard and diligently on that.

All right. Great. And then just another follow-up here on the Diagnostics side from -- you guys came out with the automated tuberculosis testing. Can you talk about any recent tenders that you've won, any that are coming up throughout the rest of this year? And then I guess, how does the new automated system compared to the quantiferon and the liaison?

It's a great question, Luke. Again, we don't talk on specific tenders, but I'm happy to talk about the launch that we just did and announced at any -- it was even at a current show that's going on. There's a complete workflow that has a specialized liquid handler added to it. It builds on the T-SPOT Select, which has added now chemagic extraction and cell counting ability. So I think the workflow that this product uses, the benefit is that it uses all our other offerings, too, including silica cell counting, the EUROIMMUN reader, which will eventually connect it also the EuroLabs software in the future. It essentially reduces our hands-on time by 50% versus the current existing T-SPOT Select. And it has a reduction of approximately 80% in technician touch points. So this was one of the major hurdles that T-SPOT Select was facing in the market in terms of hands-on and technician time, and the intent really is to significantly eliminate that. And now if you combine for day 1 and day 2, it essentially has lesser total hands-on time versus the competitor's product offering that you talked about.

We currently have no further questions. I will hand back to Steve Willoughby for final remarks.

Thank you, Carla. Thanks, everyone, for your time this morning. We look forward to touching base with everyone over the coming weeks. Have a good day.

This concludes today's call. Thank you for joining. You may now disconnect your lines.