Conor Noel McNamara

Conor McNamara of RBC Capital Markets sought clarification on the revenue guidance adjustments and asked about the go-to-market strategy for the Lex Diagnostics molecular platform, including target customers and sales channels. He also questioned if there was an opportunity to gain share from recent competitor disruption.

Answer

CFO Joseph Busky clarified that the revenue guidance is unchanged because the lower COVID-19 forecast is offset by a neutral foreign exchange impact. CEO Brian Blaser detailed the Lex platform's compelling value proposition and stated the commercial launch would utilize both legacy Quidel and Ortho sales teams. He also confirmed the company would seek to capitalize on any market disruptions.

Conor Noel McNamara asked about QuidelOrtho's ability to offset potential tariff impacts with price increases on reagent rental contracts and whether tariffs would alter long-term manufacturing expansion plans.

Answer

CEO Brian Blaser explained that while the company will implement selective pricing actions, it must be mindful of competitive markets. He noted the company has prior experience with this during past inflationary periods. Blaser also stated that he does not expect any change to the overall manufacturing footprint at this time, emphasizing the value of their current global network, but acknowledged the situation remains fluid.

On behalf of Conor McNamara, an analyst asked about potential opportunities from China's equipment stimulus and the dynamics of the instrument replacement cycle for the immunohematology business heading into 2025.

Answer

CFO Joe Busky noted that while the China stimulus could be a tailwind, it is too early to quantify its impact. Regarding instrument replacements, he emphasized the company's very high customer retention rates and positive new business win/loss ratio, which support the stability and growth of the underlying business.

Conor McNamara of RBC Capital Markets asked about the rationale behind drawing the $35 million revolver and questioned if it signaled a step-up in expenses. He also inquired about the adoption trends for the MSK Access application in the U.S., specifically the timeline from signing to revenue recognition.

Answer

EVP & CFO George Cardoza stated the debt was drawn to strengthen the balance sheet and provide liquidity to support accelerating growth, bringing the cash balance to nearly $95 million. Co-Founder and CEO Jurgi Camblong and President Ross Muken added that MSK Access adoption is strong, with 50 customers globally, and the first U.S. cohort is beginning to come online, which they expect to be a major growth driver.

Conor McNamara from RBC Capital Markets questioned the sustainability of Q1's strong gross margins, the contribution of large biopharma contracts to guidance, and whether customer CapEx constraints present a medium-term opportunity for SOPHiA's SaaS model.

Answer

CFO George Cardoza acknowledged that Q1 gross margin was favorably high due to a positive mix and some one-time items, but stated margins would still improve year-over-year. Regarding biopharma, he confirmed the 2025 guidance assumes flat revenue from this segment, with significant benefits expected in 2026. President Ross Muken and CEO Jurgi Camblong added that while customer budgets are currently healthy, the need to maximize the ROI on new, high-throughput sequencers is driving demand for SOPHiA's broad menu of applications, creating a net positive dynamic.

Conor McNamara of RBC Capital Markets questioned if management was seeing any slowdown in the broader clinical sequencing market and asked whether biopharma revenue pushouts were due to spending caution, competition, or a lower pharma appetite for AI.

Answer

Co-Founder and CEO Dr. Jurgi Camblong stated they have not seen a market slowdown and are experiencing a reacceleration in their own volumes. President Ross Muken noted robust growth in North America and APAC. Dr. Camblong attributed the biopharma delays to customer spending dynamics, not competition, emphasizing that SOPHiA's unique global network outside the U.S. is a key competitive advantage for post-approval pharma services.

Conor McNamara from RBC Capital Markets inquired about the potential to gain market share due to Maravai's U.S. manufacturing footprint amid trade tensions and asked for observations on recent customer buying patterns in biopharma and academia.

Answer

Executive William Martin confirmed they see their U.S.-based vertical integration as a competitive advantage. Chief Commercial Officer Becky Buzzeo described the customer environment as mixed, with some securing long-term funding while others delay decisions. She noted a trend of smaller, more frequent orders in the R&D space, suggesting customers are conserving cash while continuing their work.

Conor Noel McNamara from RBC Capital Markets asked if Illumina is observing customers delaying or deferring instrument purchases in anticipation of new or future product offerings from competitors.

Answer

CEO Jacob Thaysen stated firmly that Illumina has not seen any disruption or delayed customer decisions based on recent competitive technology announcements. He characterized the competitor's news as a 'technology overview' rather than a product launch, emphasizing that customers in tough times prioritize the certainty and reliability of established platforms like Illumina's.

Conor Noel McNamara inquired if Q4 sequencing growth was negatively impacted by higher instrument placements or customers awaiting new single-cell solutions. He also asked about the expected pricing impact in early 2025, given that the NovaSeq X conversion appears to be tracking ahead of schedule.

Answer

CFO Ankur Dhingra stated that the company is pleased with the conversion progress and had anticipated a Q4 slowdown due to fewer working days and holidays. He expressed confidence in the trajectory and expects consumables growth to improve during 2025 as the company begins to lap the initial, more significant pricing impacts from the X transition.

Conor McNamara asked for a breakdown of the approximately $20-25 million full-year revenue guidance reduction, questioning if it was entirely from instruments and which segments were most affected.

Answer

CFO Ankur Dhingra explained the change was due to a variable pace of instrument deal closures. For modeling, he suggested allocating the reduction roughly one-third each to Instruments, Consumables, and Services, noting that some CDx-related service milestones were also delayed into the next year.

Conor McNamara of RBC Capital Markets questioned the drivers of the strong process chromatography results, asking if it was a pull-forward ahead of tariffs. He also sought to understand the components of the $40 million reduction in the Life Science guidance and whether the 100 basis point cut to the clinical diagnostics outlook was based on conservatism or observed weakness.

Answer

An executive clarified that the process chromatography strength was driven by customer demand timing and was not a tariff-related pull-forward. The Life Science guidance cut was attributed to softness in the broader academic market, which constitutes about 20% of revenue, not just the 4% from federally funded NIH grants, as well as macro weakness in China. An executive noted a near-halt in grant approvals for several weeks in Q1. The reduction in the diagnostics outlook was attributed to macro dynamics and softness, with China being a significant contributing factor, rather than just general conservatism.

Conor McNamara of RBC Capital Markets inquired about customer reactions to the proposed NIH indirect funding cap and its potential impact on spending. He also asked about the assumptions behind the expected Life Sciences market rebound and the competitive dynamics in the ddPCR market.

Answer

CEO Norman Schwartz noted that the NIH news was a shock to researchers, who are in a "wait-and-see" mode, likely impacting capital equipment sales most in the near term. CFO Roop Lakkaraju clarified that the 2025 outlook assumes sequential improvement but not necessarily a return to a "normal" market. Schwartz and Lakkaraju both commented on the competitive ddPCR market, stating that Bio-Rad continues to invest internally and through acquisitions like Stilla to segment its offerings and compete more effectively.

Conor McNamara inquired about the proportion of Diagnostics revenue derived from reagent rental contracts and whether these contracts include price escalators. He also asked about the penetration rate of the Panther Fusion system and associated customer ordering patterns.

Answer

CFO Karleen Oberton explained that the majority of the molecular business operates on a reagent rental model with 3- to 5-year contracts that typically have fixed pricing. She noted that about one-third of customers now have Fusion capability. CEO Stephen MacMillan added that driving Fusion adoption into the installed base of Panther systems is a key growth driver for the next five years, as it opens up menu expansion opportunities.

Representing Connor McNamara, an analyst asked how the return to normal growth in the gantry business intersects with past chip shortages and equipment replacement cycles. He also questioned how the focus on lower-margin international business impacts the goal of reaching the 31.5% pre-pandemic operating margin.

Answer

Chief Financial Officer Karleen Oberton explained that the company has intentionally made technology upgrades backwards-compatible to avoid creating pent-up demand, leading to a more normalized, ongoing replacement cycle. She added that while international growth is dilutive, the company balances this by driving leverage within the international business itself, allowing for continued overall margin improvement toward the fiscal 2025 goal of 30% plus 50-100 basis points of expansion.

Conor Noel McNamara from RBC Capital Markets asked about the end-market assumptions embedded in the 2025 guidance, the drivers for the expected full-year acceleration, and the pricing impact in 2024 and 2025.

Answer

President and CEO Olivier Loeillot explained that the company is returning to its historical pre-COVID pattern, where the second half of the year is stronger than the first, with Q4 typically being the strongest quarter. CFO Jason Garland added that pricing returned to historical low single-digit levels in 2024 and a similar level is expected for 2025, which he attributed to the company's product differentiation.

Conor Noel McNamara asked for the implied Q4 base revenue growth and EBITDA margins to assess their viability as a jumping-off point for 2025, and whether recent platform wins were competitive.

Answer

President and CEO Olivier Loeillot stated that implied Q4 non-COVID revenue growth is 12-13% and that platform wins are a mix of competitive takeaways and wins in new areas where competition is limited. CFO Jason Garland noted the implied Q4 operating margin is just over 15%, but cautioned about quarterly ebbs and flows in OpEx when modeling for 2025.

Conor Noel McNamara inquired about the impact of new distribution agreements on the third-party business, whether that business was down for the quarter and year, and if the new agreements are margin accretive.

Answer

CEO Michael Stubblefield positioned the new agreements as an important part of the strategy to return the lab business to low-single-digit growth in 2025. He noted these launches are incremental, part of roughly 100,000 new products launched annually, and contribute to having a differentiated portfolio to drive a return to growth for the platform.

Conor Noel McNamara asked what factors would enable Avantor to reach the high end of its Q4 guidance range. He also inquired if strong cash flow and deleveraging could position the company for M&A activity in the next year.

Answer

EVP and CFO Brent Jones stated that hitting the higher end of Q4 guidance depends on a stronger seasonal activity ramp in the Laboratory Solutions business. Both he and CEO Michael Stubblefield confirmed they expect to be below 3x leverage next year, which would allow them to consider M&A, though they remain focused on organic execution and are not in a hurry.

Conor McNamara asked about the development and customer adoption of single-domain antibodies via OmniChicken and questioned the rationale for the recent ATM offering, specifically whether it was to fill a revenue shortfall or serve as a strategic safety net.

Answer

CEO Matt Foehr highlighted that the OmnidAb technology (single-domain antibodies) is a significant driver for new partners, opening up possibilities in CNS, radiotherapy, and infectious diseases. CFO Kurt Gustafson clarified the ATM was a prudent, forward-looking measure to add a 'cushion' to the balance sheet for strategic flexibility amid industry volatility, not to cover a specific near-term shortfall.

Conor McNamara asked about the incremental revenue opportunity as cell therapy programs advance to late-stage trials and inquired about the performance of the Wilson Wolf business.

Answer

CEO Kim Kelderman estimated that order sizes roughly double with each clinical stage advancement. CFO Jim Hippel reported that Wilson Wolf's growth was consistent with Bio-Techne's cell therapy business and highlighted its bright future, with forecasts from just three of its five commercialized customers expected to drive very strong double-digit growth in calendar 2025.