Dan Leonard

Dan Leonard asked about the opportunity surrounding higher sensitivity for Signatera, specifically regarding Signatera Genome and the phased variant product, and how to frame the context of this opportunity. He also inquired how Natera is able to keep SG&A flat in 2026 while growing revenue at a pro forma clip of 26%, and what factors are making the sales force more efficient.

Answer

Steve Chapman (CEO, Natera) highlighted the phased variant approach's ability to achieve detection below one part per 10 million in LOD studies, calling it 'incredibly strong performance.' He mentioned that the Genome-based offering will be versioned to include phased and structural variants, creating 'gold-plated MRD offerings' alongside the highly published Exome product, which positions Natera competitively. Michael Brophy (CFO, Natera) explained that the company invested heavily in building out commercial teams, particularly in oncology, in 2025. These teams are now 'ready to go' and positioned to drive significantly more top-line growth, demonstrating operating leverage in the business by growing to profitability through investment rather than cuts.

Dan Leonard asked for clarification on the opportunity presented by higher sensitivity for Signatera, specifically regarding Signatera Genome and the new phased variant product. He also inquired how Natera plans to keep SG&A flat in 2026 while achieving a pro forma revenue growth of 26%, and what factors contribute to increased sales force efficiency.

Answer

Steve Chapman (CEO, Natera) highlighted the phased variant approach's ability to achieve detection below 1 part per 10 million, calling it 'incredibly strong performance.' He emphasized Natera's competitive positioning with both highly reliable exome MRD and gold-plated genome-based offerings (including phased and structural variants), augmented by Latitude tumor-naive MRD. Michael Brophy (CFO, Natera) explained that significant investments in building out commercial teams, particularly in oncology, in 2025 have positioned them to drive substantial top-line revenue, demonstrating operating leverage in the business.

Dan Leonard from UBS asked for clarification on atomic spectroscopy upside related to memory shortages and fab reshoring, and followed up on small molecule growth and the broader pharma situation outside of GLP-1s.

Answer

President and CEO Padraig McDonnell explained atomic spectroscopy's opportunity from memory shortages, global fab reshoring, and AI-supporting chemical demand. He detailed biotech's low double-digit growth, US biotech recovery, and solid mid-single-digit small molecule growth led by Asia, emphasizing GLP-1's strong contribution.

Dan Leonard asked for more context on the atomic spectroscopy upside in the quarter, which was attributed to the memory shortage, and how Agilent is framing this opportunity. He also inquired about the performance of the pharma segment outside of GLP-1s, specifically regarding small molecule growth and the broader situation.

Answer

President and CEO Padraig McDonnell clarified that the atomic spectroscopy strength was due to a mix of memory shortages and global reshoring of fabrication fabs (e.g., India, Asia, Americas), along with downstream processes for AI. He noted that the chemical business, which includes advanced materials, is expected to continue growing, and the energy business is hedged against oil volatility. Regarding pharma, Padraig McDonnell stated that biotech grew low double-digits, driven by specialized CDMO and a recovery in well-funded large-cap US biotechs, with improving funding for small/mid-caps. Small molecule business showed solid mid-single-digit growth, led by Asia. GLP-1s grew 50% (7% analytical, 120% CDMO), and the LC replacement cycle (Infinity III, Pro iQ LC-MS) showed strong momentum.

Dan Leonard asked about the drivers of the downside variance in China's performance during the quarter and the performance across different end markets. He also followed up on the pharma reshoring assumption in the 2026 guidance, seeking context and its importance to the forecast.

Answer

President and CEO Padraig McDonnell explained that China was down 4%, below guidance, with most markets down low to mid-single digits, except A&G. He emphasized the business's stability at around $300 million per quarter and confidence in market share. Regarding pharma reshoring, McDonnell noted ongoing conversations with key pharma companies, expecting orders by the end of 2026, with an estimated $1 billion addressable market opportunity for Agilent by 2030.

Dan Leonard questioned the drivers behind the downside variance in China's Q4 performance across different end markets. He also asked about the importance and context of the pharma reshoring assumption included in the 2026 guidance.

Answer

President and CEO Padraig McDonnell stated China was down 4% in Q4, below guidance, with most markets down low to mid-singles except A&G. He noted growth in biopharma and CAM, declines in food and environmental, and expects FY2026 to be flat, maintaining stable market share. Regarding pharma reshoring, Mr. McDonnell indicated active conversations with key pharma companies, anticipating orders by the end of 2026, with an estimated $1 billion addressable market opportunity for Agilent by 2030, representing potential upside to the forecast.

Dan Leonard of UBS sought to reconcile comments about pricing contribution being both 100 basis points and double the prior year's impact. He also asked for more color on the instrument replacement opportunity in the chemical market.

Answer

Interim CFO Rodney Gonsalves clarified that the pricing impact was ~50 bps last year and 100 bps this year, making the comments consistent. Mike Zhang, President of the Applied Markets Group, explained that the chemical market replacement cycle is being driven by a large installed base and customer demand for new technologies, like the 8850 GC, that offer enhanced productivity and sustainability.

Dan Leonard of UBS sought to reconcile the commentary that pricing was a 100 bps tailwind with the statement that its impact doubled year-over-year. He also asked for more context on the scale of the instrument replacement opportunity in the chemical market.

Answer

Interim CFO Rodney Gonsalves clarified the pricing figures, stating the contribution was about 50 bps in the prior year and 100 bps in the current quarter, thus doubling the impact. Mike Zhang, President of the Applied Markets Group, addressed the chemical market replacement cycle, explaining that innovations from platforms like Intuvo are being integrated into current platforms (e.g., the 8850 GC), driving customer adoption for improved productivity and sustainability. He emphasized Agilent's large installed base and strong innovation pipeline as key drivers.

Dan Leonard of UBS asked for color on business trends in China by end market. He also requested a bridge to explain the sequential deceleration in the Q3 organic growth guidance compared to the strong Q2 result.

Answer

CEO Padraig McDonnell described the China market as 'very stable,' with pharma steady and industrials down slightly, and noted growing excitement for a new government stimulus program. CFO Bob McMahon explained the Q3 guidance reflects a more difficult year-over-year comparison and a prudent approach given macro and tariff uncertainties, advising against over-interpreting the sequential change from Q2.

Dan Leonard expressed surprise at the 20% growth forecast for the analytics portfolio in 2026, given a 37% comparable in 2025. He asked when tough comparisons might become a challenge and how far along Repligen is in the SoloVPE upgrade cycle.

Answer

Olivier Loeillot, President and CEO, expressed confidence in the analytics growth, citing the early stage of the SoloVPE PLUS System upgrade cycle (less than 100 units upgraded out of 1,500-2,000 installed base, a 2-3 year opportunity). He also highlighted the phenomenal funnel improvement from merging the 908 Devices sales organization, offering 5-6 products, and the traction of FlowVPX technology, which is included in about 25% of systems sold.

Dan Leonard expressed surprise at the 20% growth forecast for the analytics portfolio in 2026, given a 37% comparable in 2025, asking when tough comparisons become a challenge and the current stage of the SoloVPE upgrade cycle.

Answer

President and CEO Olivier Loeillot expressed confidence in the analytics growth, citing the early stage of the SoloVPE PLUS System upgrade cycle (less than 100 units upgraded out of 1,500-2,000 installed base), the expanded portfolio from the 908 Devices acquisition, and the traction of FlowVPX technology, which is included in 25% of systems sold.

Dan Leonard inquired about reconciling Repligen's increased sales guidance with the narrowing of its EBIT margin to the lower end of previous guidance, and sought clarification on the appropriate operating margin expansion for a high-teens revenue growth rate.

Answer

Jason Garland, CFO, expressed satisfaction with Q3 margin performance, noting gross margin fluctuations due to business mix but a 230 basis point expansion year-to-date. He explained that while operating income grew 20% (excluding M&A/currency) against 18% non-organic revenue growth, the full year operating income is projected to be up 25% against 16% non-COVID organic revenue growth. He attributed the margin impact to $2 million in one-time OpEx, FX pressure, and strategic investments for future growth.

Dan Leonard inquired about reconciling the sales guidance increase with the narrowing of EBIT margin to the lower end of the prior guidance, and sought insight into the appropriate level of operating margin expansion for Repligen's high-teens revenue growth rate.

Answer

CFO Jason Garland expressed satisfaction with margin performance, noting that gross margin fluctuates with mix and was up 230 basis points year-to-date. He highlighted that operating income grew approximately 20% year-over-year (excluding M&A and currency impacts) against 18% non-organic revenue growth, demonstrating leverage. For the full year, operating income is projected to increase about 25% (excluding M&A and FX) against 16% non-COVID organic revenue growth. Garland attributed some margin pressure to $2 million in one-time operating expenses related to leadership changes and strategic investments in infrastructure and digital capabilities, emphasizing a balanced view between margin expansion and future growth investments.

Dan Leonard asked about the opportunity for Reveal therapeutic monitoring, specifically its impact on both Reveal and Guardant360 volumes.

Answer

Co-CEO Helmy Eltoukhy highlighted the synergistic relationship between Reveal for therapy monitoring and Guardant360 for therapy selection, noting its potential as a significant growth driver for the oncology business, especially with anticipated reimbursement wins for IO and chemo monitoring.

Dan Leonard inquired about the therapeutic monitoring opportunity for Guardant Reveal, seeking elaboration on its potential impact on both Reveal and Guardant360 volumes.

Answer

Helmy Eltoukhy, Co-CEO, expressed excitement for Reveal in therapy monitoring, highlighting its synergistic potential with Guardant360 for therapy selection and subsequent monitoring. He noted that reimbursement wins for IO and chemo monitoring could significantly drive oncology business growth.

Dan Leonard questioned the long-term mid-single-digit growth forecast for Process Chromatography, seeking insight into its drivers and why it isn't projected to grow faster. He also asked if Bio-Rad's Process Chromatography portfolio is disproportionately exposed to vaccines compared to the broader bioprocess industry and requested a breakdown of the growth outlook between organic performance and acquisition contributions, specifically for Stilla.

Answer

Roop Lakkaraju (EVP and CFO, Bio-Rad Laboratories, Inc.) explained that the mid-single-digit long-term forecast for Process Chromatography is a conservative estimate, considering changing government regulations, customer efficiencies, and a growing pipeline of clinical-phase customers. He acknowledged that Bio-Rad's commercial Process Chromatography products are likely over-indexed to vaccines. Lakkaraju noted that Stilla contributed mid-single-digit millions in Q4 revenue, and excluding Stilla, the core Life Science segment saw a slight negative growth rate, primarily due to Process Chromatography's impact.

Dan Leonard asked for further insight into Bio-Rad's long-term forecast of mid-single-digit growth for Process Chromatography, specifically inquiring about the underlying drivers and whether a mix issue contributes to this projection. He also questioned if Bio-Rad's Process Chromatography portfolio is over-indexed to vaccines compared to the broader bioprocess industry and sought clarification on the organic growth forecast versus the acquisition contribution, particularly from Stilla, before its mid-year annualization.

Answer

Roop Lakkaraju (EVP and CFO) explained that the mid-single-digit long-term forecast for Process Chromatography is a conservative estimate, considering changing government regulations, customer efficiencies, and a growing pipeline of clinical-phase customers. He acknowledged that the commercial product portfolio is likely over-indexed to vaccines. Lakkaraju noted that Stilla contributed mid-single-digit millions in Q4 revenue, and excluding Stilla, the core life science segment saw a slight negative growth rate, primarily due to Process Chromatography.

Dan Leonard from UBS asked for clarification on the impact of China's diagnostic policies (VBP, DRG) on Bio-Rad's specific product mix and inquired about the company's operational strategies for managing the uncertain tariff environment.

Answer

Executive VP & CFO Roop Lakkaraju and President & COO Jonathan DiVincenzo explained that Bio-Rad has not been impacted by VBP and had already factored in DRG policy effects in prior guidance. DiVincenzo noted that Bio-Rad's specialty diagnostics portfolio, particularly quality controls, is less exposed to these reimbursement pressures. Regarding tariffs, DiVincenzo detailed that the company has implemented countermeasures, including diversifying suppliers, shifting manufacturing locations, and building flexibility into its supply chain to mitigate impacts.

Dan Leonard asked for an update on the go-forward strategy for the Visium platform, given its lack of growth in 2025, and any plans to bring it back to positive growth.

Answer

CEO Serge Saxonov affirmed continued support for Visium customers and applications, but emphasized that Xenium is increasingly seen as the best choice for spatial analysis for most use cases. He stated that future growth will largely come from Xenium, while Visium will maintain its place.

Dan Leonard sought clarification on the HVP growth assumptions for 2026 compared to 2025, specifically asking for the GLP-1 growth rate in 2025 and the comparable non-GLP-1 HVP growth rate in 2025 to understand the ramp-up in non-GLP-1 and conservatism in GLP-1 forecasts.

Answer

CFO Bob McMahon provided ranges, stating that GLP-1s grew in excess of 50% for the full year 2025, while non-GLP-1s were roughly flat for the full year, with mid-single-digit growth in the second half. He indicated an expected acceleration for the non-GLP-1 business into 2026, targeting high single- to low double-digit growth.

Dan Leonard sought clarification on the HVP growth assumptions for 2026 compared to 2025, specifically asking for the GLP-1 growth number in 2025 and the comparable non-GLP-1 HVP growth number for 2025.

Answer

CFO Bob McMahon provided ranges, stating that GLP-1s grew in excess of 50% for the full year 2025, while non-GLP-1s were roughly flat for the full year, with mid-single-digit growth in the second half. He reiterated expectations for acceleration in non-GLP-1 business into 2026 at high-single to low-double-digit growth.

Dan Leonard with UBS followed up on GLP-1s, noting that West's growth appears faster than script data for Novo and Lilly, and asked if this is due to a compounder element or clinical trial participation.

Answer

CEO Eric Green explained that the broader growth drivers for GLP-1s include increased vial usage (stoppers and seals), a pipeline of new molecules in clinical trials, work with several customers, geographical expansion, and support for generics, indicating a broader scope than just script data from the two main customers.

Dan Leonard followed up on GLP-1 growth, questioning if West's growth rate was faster than market script data and if factors like compounder elements or clinical trial participation were contributing.

Answer

CEO Eric Green explained that West's GLP-1 growth is influenced by factors beyond script data, including increased vial usage (stoppers and seals), a robust pipeline of new molecules in clinical trials, engagement with multiple customers, geographical expansion, and support for generics.

Dan Leonard from UBS Group sought to clarify the guidance update, asking if the organic revenue increase was solely due to the Q2 beat and whether there was any pull-forward of demand into the quarter.

Answer

SVP & CFO Bernard Birkett confirmed the Q2 beat was passed through but also noted the full-year HVP components forecast was raised to mid-to-high single-digit growth, reflecting continued second-half optimism. He stated there was no significant pull-forward, attributing the strong results to true underlying demand for NovaChoice and Daikyo CZ products.

Dan Leonard asked about Medpace's large pharma revenue growth in Q4 and its sustainability. He also requested elaboration on the comment that 2026 is the first year for rolling out AI applications, asking what Medpace is deploying and what it aims to accomplish.

Answer

CFO Kevin Brady stated there was nothing unusual to call out regarding large pharma revenue growth, as it is not a focus for Medpace. President Jesse Geiger explained that AI initiatives fall into two categories: improving efficiency across the organization and assisting with data analytics for feasibility and site selection.

Dan Leonard asked about Medpace's large pharma revenue growth in Q4, inquiring if there were any unusual factors contributing to it and if such growth would be sustainable. He also requested elaboration on Medpace's plans for rolling out AI applications in 2026, asking what specific initiatives are planned and what they aim to accomplish.

Answer

CFO Kevin Brady stated there was nothing unusual to call out regarding large pharma revenue growth, noting it is not a focus for Medpace. President Jesse Geiger explained that AI initiatives fall into two categories: improving efficiency through tech-enabled support across the organization and assisting with data analytics for feasibility and site selection.

Dan Leonard sought clarification on whether the 'above-market sales growth from emerging markets' comment included China or referred specifically to emerging markets outside of China, and asked for an updated view on China's medium-term growth.

Answer

CEO Patrick Kaltenbach clarified that the 'above-average growth' comment specifically refers to emerging markets *outside* of China, which now constitute 18% of total revenues. CFO Shawn Vadala stated that while there's no formal update, Mettler-Toledo is optimistic for China's medium-to-long term, suggesting mid-single-digit growth would be comfortable to achieve the 6%+ long-term sales growth algorithm, noting emerging markets ex-China are now larger.

Dan Leonard sought clarification on whether the expectation for above-market sales growth from emerging markets included China or specifically referred to emerging markets outside of China. He also asked for the updated medium-term growth view for China and if it was accretive or neutral to the company's overall growth algorithm.

Answer

CEO Patrick Kaltenbach clarified that the above-average growth expectation for emerging markets specifically points to markets outside of China, which now constitute about 18% of total revenues, compared to China's 15-16%. CFO Shawn Vadala stated that while there's no formal update to China's guidance, the company remains optimistic for the medium to long term. He noted that while China may not grow at pre-COVID rates, a mid-single-digit growth rate would still allow the company to achieve its 6%+ long-term sales growth algorithm, especially with the growth opportunities in emerging markets outside of China.

Dan Leonard of UBS inquired about the sources of strength in the Product Inspection business and whether its full-year forecast had been revised. He also asked for the growth rate and outlook for the Process Analytics business.

Answer

CEO Patrick Kaltenbach attributed the strong Product Inspection performance to market share gains driven by a wave of new, innovative products for both mid-range and high-end markets. CFO Shawn Vadala confirmed the full-year outlook for that business was raised to mid-to-high single-digit growth. Regarding Process Analytics, Vadala did not provide a specific growth rate but highlighted strong momentum in bioprocessing and single-use technologies, which was partially offset by softness in the chemical end market.

Dan Leonard followed up on the gross margin discussion, asking about the drivers for a more favorable unwind, considering expected strength in ProteinSimple and recovery in spatial biology. He also posed a high-level question regarding AI's potential impact on demand for Bio-Techne's biotech tools and services.

Answer

Jim Hipple, Bio-Techne's CFO, reiterated that the gross margin improvement would be driven by a more favorable mix, including higher-margin reagents and an improved customer mix within diagnostics. Kim Kelderman, President and CEO, stated that AI is seen as a tailwind, enabling customers to be more specific and use more complex molecules, which plays into Bio-Techne's strengths in high-quality, reproducible ingredients.

Dan Leonard followed up on the gross margin question, asking what factors would drive a more favorable unwind, assuming continued strength in ProteinSimple and recovery in spatial biology. He also posed a high-level question regarding the impact of AI on demand for biotech needs, referencing Pfizer's use of AI for cost savings and productivity.

Answer

CFO Jim Hipple reiterated that a gradually improving market, core business improvement, higher-margin reagents, and a better customer mix within diagnostics would drive gross margin improvement. President and CEO Kim Kelderman viewed AI as a significant enabler for customers, helping them with specificity and the use of more complex molecules, which she believes plays into Bio-Techne's strengths in high-quality, reproducible ingredients and will act as a tailwind.

Dan Leonard of UBS Group questioned whether Bio-Techne's long-term commitment to grow at "market plus 500 basis points" still holds in the current uncertain environment. He also asked how the company plans to achieve 100 basis points of operating margin expansion on low single-digit revenue growth.

Answer

President & CEO Kim Kelderman stated that while outperformance is less predictable in a turbulent market, he has no doubt the company will return to its differentiated growth model of market plus 500+ basis points once clarity returns. CFO James Hippel explained that the fiscal 2026 margin expansion is primarily driven by the divestiture of the Exosome Diagnostics business, which was a ~200 basis point headwind, with some of that benefit being reinvested into core growth pillars.

Dan Leonard asked about Revvity's confidence in the China diagnostics business returning to growth in the second half of the year. He also sought a better understanding of the economic opportunity presented by the AI drug discovery offering in software.

Answer

Max Krakowiak, SVP and CFO, clarified that Revvity is no longer forecasting a return to low single-digit growth for China Immunodiagnostics in the second half of 2026, instead expecting it to be down slightly, reflecting a more prudent and conservative assumption rather than a fundamental market change. Prahlad Singh, President and CEO, described Xynthetica as a transformative AI drug discovery platform that enables scientists to leverage AI/ML models within existing workflows, linking wet lab and in silico modeling. He emphasized its value in providing a federated model for validated AI models, accelerating drug discovery, and driving productivity and efficiency, highlighting the partnership with Lilly TuneLab as a key initiative.

Dan Leonard sought clarification on Revvity's confidence regarding China Immunodiagnostics returning to growth in the second half of 2026, and also asked for a better understanding of the economic opportunity presented by the new AI drug discovery offering in software, Synthetica.

Answer

Max Grykowiak, SVP and CFO, clarified that Revvity is no longer forecasting a return to low single-digit growth for China Immunodiagnostics in H2 2026, instead expecting it to be 'down slightly,' reflecting a more prudent assumption without fundamental market changes. Prahlad Singh, President and CEO, expressed significant excitement for Synthetica, highlighting its transformative potential to accelerate drug discovery by integrating in silico modeling with wet lab experiments on a single, validated platform, emphasizing its role in productivity, efficiency, and the Lilly partnership.

Dan Leonard asked about the growth outlook for Revvity's software business embedded in the 2026 framework, considering challenging comps and the impact of a big new product launch.

Answer

Senior Vice President and CFO Max Krakowiak indicated that software organic growth is expected to be in the mid-single digits for 2026, coming off strong high-teens to 20% growth in 2025. He noted that new product introductions (MPIs) take time to ramp up, and emphasized that metrics like ARR, APV, and net retention rate remain strong indicators of the business's health. President and CEO Prahlad Singh added that new MPIs typically take a few quarters to gain traction and contribute significantly. Leonard also inquired about Revvity's M&A strategy in light of its substantial share repurchase activity. Prahlad Singh reiterated a disciplined M&A approach with an active pipeline, but stated that share buybacks currently represent the most attractive return on capital.

Dan Leonard sought clarification on the 'difficult multiyear comps' in immunodiagnostics and questioned the drivers of the foreign currency impact on EBIT margin, noting FX movements didn't seem dramatic.

Answer

CFO Max Krakowiak clarified that on a multiyear stack basis, the underlying growth for immunodiagnostics (ex-China) is consistent for Q3 and Q4. He explained that while the US dollar has weakened significantly since their last update, the primary driver of margin pressure is the volume loss of high-margin assays in China, not FX.

Dan Leonard (UBS) asked about the sensitivity of Danaher's biotech business segment to improvements in biotech funding, requesting clarification on its proportional exposure. He then inquired about the reshoring topic in bioprocessing, seeking an update on customer conversations and trends over the past three months.

Answer

Rainer Blair, President and CEO, and Matt McGrew, Executive Vice President and Chief Financial Officer, clarified that the emerging biotech sector represents approximately 10%-15% of the bioprocessing business, with 75% driven by commercial volume. Blair discussed reshoring, noting muted equipment investment despite strong consumable demand, suggesting a future catch-up. He confirmed reshoring is progressing, though timing is uncertain, and believes Danaher is in the early stages of a long-term investment cycle.

Dan Leonard asked about the sensitivity of Danaher's biotech business segment to improvements in biotech funding. He then requested an update on the reshoring topic in bioprocessing, specifically how customer conversations and trends have evolved over the past three months.

Answer

CEO Rainer Blair clarified that the emerging biotech sector represents about 10%-15% of the bioprocessing business, with 75% driven by commercial volume. He noted early signs of improved orders from this space in bioprocessing. On reshoring, Rainer highlighted muted equipment investment despite strong consumables demand, suggesting a future catch-up. He confirmed that reshoring continues to advance, and while timing is hard to pinpoint, the need to meet existing demand and the order book for equipment are encouraging, potentially signaling the early innings of a long-term investment cycle.

Dan Leonard asked for an elaboration on business trends in China outside of the diagnostics segment and sought to clarify if the full-year EPS guidance would be $0.15 higher based on current foreign exchange rates.

Answer

President & CEO Rainer Blair reported that the China business outside of diagnostics is 'firming up,' with slight growth in bioprocessing and increased activity in life science tools due to stimulus funding. EVP & CFO Matt McGrew clarified that while the math implies the guide could be $0.15-$0.20 higher from favorable FX and respiratory results, the company has not officially flowed that potential upside through to its guidance.

Dan Leonard inquired about the cost implications of the 'Avantor Revival' program, specifically how the increased spending on e-commerce, manufacturing investments, and new hires would balance with margin objectives. He also asked about the risk of further significant share loss following the loss of a couple of large clients, seeking to understand if the company is now in a period of stability or if major opportunities/risks remain.

Answer

Emmanuelle Ligner, President and CEO, stated it's too early to provide precise cost figures for the revival program, emphasizing the need for an accurate, detailed plan that will show impact over several quarters. He confirmed that most very large key account contracts have been renewed, indicating a more stable position with opportunities to gain wallet share, despite past losses still impacting results due to transition time.

Dan Leonard asked about the cost impacts of the Avantor Revival program, including investments in e-commerce, manufacturing, and new hires, and how these balance with margin objectives. He also inquired about the risk of further large share loss, asking if the company is entering a period of stability.

Answer

President and CEO Emmanuel Ligner stated it is too early to quantify the exact cost impacts of the revival program, emphasizing the need for accurate planning before providing numbers, and noted that impacts would unfold over several quarters. He confirmed that most very large key account contracts have been renewed, indicating a more stable position, though past losses continue to have an impact.

Dan Leonard sought clarification on management's 'stay tuned' comment regarding QuantiFERON automation, asking if it implied partnerships beyond the existing one with DiaSorin.

Answer

CEO Thierry Bernard affirmed the strength of the DiaSorin partnership, stating there is no current need for other partners. The alluded-to innovation focuses on enhancing the QuantiFERON test itself to make it simpler, increase throughput, and improve ease of use, in collaboration with DiaSorin. He also mentioned the ongoing development of the QIAreach test for emerging markets.

Dan Leonard of UBS asked about the demand impact of GLP-1 compounding on vials and inquired what proportion of Stevanato's U.S. demand is currently supplied from its U.S. facilities.

Answer

CFO Marco Dal Lago clarified that syringes and cartridges are the predominant formats for GLP-1s, not vials. CEO Franco Stevanato explained that the Fishers plant is still in its early stages, supplying only a small portion of U.S. revenue, with the long-term goal of having the plant serve the U.S. market more fully.

Dan Leonard from UBS Group AG followed up on gross margin, asking how the compression from unfavorable business mix should be viewed going forward, especially in relation to the company's long-term margin expansion framework.

Answer

CEO & Chairman Ari Bousbib acknowledged the unfavorable mix from faster-growing real-world evidence and more FSP work will likely continue in the short term. However, he emphasized that the shift to FSP is not a strong long-term trend, noting FSP was a very low single-digit percentage of Q2 net bookings. EVP & CFO Ron Bruehlman added that these dynamics, along with FX impacts, are already factored into the current guidance.

Speaking on behalf of Dan Leonard, an analyst asked for quantification of the transitory headwinds from supply shortages and respiratory revenue conservatism. A second question concerned the timing and completion of the announced $250 million accelerated share repurchase (ASR) program.

Answer

Chief Financial Officer Karleen Oberton quantified the skeletal stop ship impact at roughly $5 million per month and the respiratory conservatism in the range of $10 million to $20 million, but noted the IV fluid impact is still evolving. She also stated that the $250 million ASR is expected to commence in the coming weeks and finish within the fiscal second quarter, providing a prorated benefit in fiscal 2025.