Michael Ryskin

Michael Ryskin asked about the 2026 tissue ASP outlook, specifically the expectation of reaching $4,000 in Q1 and approximately $4,200 for the full year, questioning the level of conservatism and potential for further true-ups. He also inquired about the open-ended 'positive' adjusted EBITDA guidance for 2026, seeking clarification on the puts and takes and the balance between investment and margin.

Answer

Luke Power, CFO, explained that the $4,000 Q1 tissue ASP is based on signed contracts, and while $4,200 for the full year is the current guide, there is potential headroom. He noted that the company aimed to incorporate most true-ups in 2025. Regarding adjusted EBITDA, he stated the plan is to utilize the leverage from 2025's $136 million adjusted EBITDA to fund 2026 investments, particularly in the first half, aiming to run 'neutral' in H1, and prioritizing long-term value over peak margin in 2026.

Michael Ryskin questioned the conservatism of Caris Life Sciences' tissue ASP guidance for 2026 ($4,000 in Q1, $4,200 for full year), given past discussions of higher ranges, and asked about potential true-ups. He also sought clarification on the adjusted EBITDA guidance for 2026, which was stated as 'positive,' asking about the puts and takes and the balance between investment and margin.

Answer

Luke Power, CFO, stated a measured approach to ASP guidance, confirming confidence in reaching $4,000 in Q1 based on signed contracts, with potential for upside beyond $4,200. He noted that the decision to use whole exome and whole transcriptome sequencing, made eight years ago, has driven industry-leading ASP. For adjusted EBITDA, Luke Power explained the plan to utilize 2025's $136M+ adjusted EBITDA for reinvestment in OpEx (sales & marketing, R&D), aiming for neutral in H1 2026, prioritizing long-term value over peak margin.

Michael Ryskin from Bank of America inquired about the increasing role of AI in R&D processes, asking if Schrödinger has observed changes in conversations with pharma customers regarding AI adoption and if the company is perceived as an 'AI winner' in the R&D space, or if pharma is shifting focus to new solutions from companies like Anthropic or OpenAI. He also asked about the impact of two of Schrödinger's largest customers being acquired, specifically whether this could lead to a disappearance of usage or serve as a beachhead for growth with the acquiring major pharma companies.

Answer

Ramy Farid, CEO, stated that Schrödinger views AI, particularly agentic AI, as a significant tailwind, increasing demand for their software due to the scale-up it enables. He highlighted that their throughput-based licensing model benefits from this increased usage and that agentic AI addresses the barrier of human know-how for large-scale software adoption. Mr. Farid mentioned working directly with Anthropic to integrate agentic AI with their solutions. Richie Jain, CFO, viewed the customer acquisitions as a positive long-term signal, recognizing the impact of Schrödinger's predict-first approach. He noted that despite a reduction in customer count, the throughput and relationship value were largely retained, as the acquiring companies often share a similar computational approach.

Michael Ryskin of Bank of America Merrill Lynch questioned the rationale for the May restructuring given the company's resilient performance and strong balance sheet, and asked about the refined Q4 data timeline for SGR-2921 and SGR-3515.

Answer

CEO Ramy Farid explained the workforce reduction was a broad-based measure that did not impact strategic goals. CFO Richie Jain noted it reflects cost discipline and led to lower operating expense guidance. Karen Akinsanya, President and Head of Therapeutics R&D, clarified the Q4 timeline for the two programs is based on data collection progress and is not related to any FDA delays.

Michael Ryskin asked about the potential to broaden the clinical pipeline given the strong balance sheet and inquired about the quarterly revenue pacing for the remainder of the year after a strong Q1.

Answer

CFO Geoffrey Porges stated that while they are investing to backfill the pipeline, he does not foresee a material step-up in R&D expense or cash burn. Karen Akinsanya, President of R&D, added that some programs are already partnered. Regarding pacing, Porges noted Q4 will still be the largest for software, and the remaining drug discovery revenue will be spread out over the year.

Michael Ryskin asked about the significant jump in key performance indicators for top-tier customers, such as the number of accounts with ACV over $5 million, and questioned the sustainability of this trend.

Answer

CEO Ramy Farid explained that the increase reflects a growing recognition among customers that using the platform at scale (around the $5M+ level) is essential to achieve significant impact. He emphasized that this is not considered the ceiling, as Schrodinger's internal programs utilize the technology even more extensively, indicating substantial further growth potential within these large accounts.

Michael Ryskin of Bank of America, represented by John Kim, sought clarification on whether the delayed 2024 milestones are simply pushed to 2025 or if their achievement is now uncertain.

Answer

CFO Geoff Porges clarified that while no future milestone is 100% certain until experimental data is available, the company's expectation is that these milestones will be recognized in 2025 rather than 2024. He also noted that revenue from the new Novartis drug discovery collaboration is expected to be a significant contributor next year as project teams ramp up.

Michael Ryskin sought clarification on the quarter's dynamics, specifically if the company experienced a slightly slower start than anticipated in select markets like cell analysis, AMG, and food, even after accounting for the $10 million weather shift. He also asked if strengths in GLP-1s and CAM were offsetting these softer areas, or if buffer was built into the model, and requested an updated end market breakout compared to the prior quarter.

Answer

CFO Adam S. Elinoff stated that there were minor differences in small markets, but key markets (pharma, CAM, diagnostics) performed well. He reiterated that the storm hit in the last three days, delaying revenue that was largely recognized subsequently. President and CEO Padraig McDonnell acknowledged academia and government (the smallest part of the business) was slightly less than expected but emphasized strong momentum in key markets like pharma (biotech spend, GLP-1s, CDMO) and CAM, along with outsized growth in Infinity III. Adam S. Elinoff confirmed that the full-year end market guides are being maintained, expecting them to land in roughly the same place.

Michael Ryskin inquired about the significant increase in the 2026 tax rate, asking if it was a new development or related to previously discussed global tax regulations, and if there were potential offsets. He also asked about the M&A deal funnel, Agilent's appetite for deploying cash, and specific areas or sizes of deals being considered.

Answer

CFO Adam Elinoff explained the 250 basis point tax rate increase is due to a combination of Pillar Two, OB Three, and other jurisdictional changes, with no meaningful change expected going forward. He noted that operating performance is more than offsetting this burden. President and CEO Padraig McDonnell reiterated unchanged capital allocation priorities, emphasizing disciplined M&A focused on strategic fit and shareholder return, with a high-quality target list. Elinoff added that M&A focus is on value drivers, disciplined pricing, and upfront integration planning, with confidence from the Ignite system and BioVectra integration.

Michael Ryskin inquired about the significant increase in the 2026 tax rate (250 basis points), asking if it's a new development or related to ongoing global tax discussions, and if there are potential offsets or a future outlook. He also asked about Agilent's M&A and capital deployment strategy, including the deal funnel, appetite for cash deployment, and specific areas of focus.

Answer

CFO Adam Elinoff explained the 250 basis point tax rate increase is due to a combination of Pillar Two, OB3, and other jurisdictional changes, with no meaningful change expected going forward. He emphasized that operating performance above the line is more than offsetting this burden, with further mitigation sought via Ignite. President and CEO Padraig McDonnell reiterated unchanged capital allocation priorities, focusing on disciplined M&A linked to strategy, fit, and shareholder return, not size. Mr. Elinoff added that Agilent will continue to invest in innovation, M&A, strategic capacity, and return excess capital, stressing discipline, value driver understanding, right pricing, and upfront integration planning.

Michael Ryskin of Bank of America Merrill Lynch asked about the drivers of the strong performance in the Chemicals and Advanced Materials (CAM) segment and sought clarification on the full-year tariff impact on margins.

Answer

CEO Padraig McDonnell attributed the 10% growth in CAM to supply chain regionalization, greenfield investments, and an emerging instrument replacement cycle. Interim CFO Rodney Gonsalves clarified that the net tariff cost was approximately $35 million in Q3 and is expected to be similar in Q4, totaling around $70 million for the second half of the year. He confirmed mitigation efforts will ramp through 2026.

Michael Ryskin of Bank of America Merrill Lynch asked for the key drivers behind the 10% growth in the Chemicals and Advanced Materials segment and sought clarification on the total fiscal 2025 margin impact from tariffs and how that should be viewed for fiscal 2026.

Answer

President and CEO Padraig McDonnell attributed the CAM strength to capacity growth from supply chain regionalization, greenfield investments, and an emerging instrument replacement cycle, particularly in the chemical and semiconductor sectors. Regarding tariffs, McDonnell reiterated the plan for full mitigation in 2026 through manufacturing footprint leverage, supplier relocation, and targeted pricing. Interim CFO Rodney Gonsalves quantified the tariff cost at approximately $35 million in Q3 and expects a similar level in Q4, totaling around $70 million for the second half of the year.

Michael Ryskin of Bank of America inquired about the margin cadence for the rest of the year, particularly the drivers of OpEx leverage in the second half. He also asked about the gross margin outlook for fiscal 2026, considering the planned full mitigation of tariffs.

Answer

CFO Bob McMahon explained that second-half margin improvement will be driven by volume, seasonality, and approximately $40 million in savings from the 'Ignite' program, which will primarily benefit OpEx and offset tariff impacts on gross margin. For 2026, he suggested gross margins should improve as tariff costs are fully eliminated through supply chain moves, complemented by volume leverage and enhanced pricing, though he did not provide formal guidance.

Michael Ryskin asked for clarification on the timing of the -7% decline in the academic and government market and followed up on whether the cell analysis business is disproportionately concentrated in this end market.

Answer

CFO Bob McMahon stated the softness was seen globally, with some incremental softness in January related to NIH uncertainty. President of Life Sciences and Diagnostics Simon May confirmed that the cell analysis business does have a proportionately higher exposure to the academic and government market compared to other parts of the portfolio, explaining the impact seen there.

Michael Ryskin asked for insight into how the China stimulus might materialize throughout fiscal 2025 and requested a breakdown of the drivers for the 50-70 bps margin expansion guidance for the year.

Answer

CEO Padraig McDonnell noted that initial China stimulus orders are in the low single-digit millions and more are expected in Q1, but visibility beyond that is limited. CFO Robert McMahon added that the initial guide is conservative on stimulus timing. Regarding margins, McMahon explained the expansion is driven by a combination of factors: annualization of prior cost savings, price, and efficiencies from the Ignite transformation program, which will contribute more in the second half. More details will be provided at the December Investor Day.

Michael Ryskin from Bank of America asked for clarification on why small molecule pharma performed better than large molecule, questioning the specific drivers. He also inquired about the strategic intent behind the BIOVECTRA acquisition and how aggressively Agilent plans to expand its presence in the CDMO market.

Answer

CFO Bob McMahon explained that small molecule was down mid-single digits, aided by growth in Europe, suggesting a replacement need is emerging. He clarified that after excluding the NASD business, biopharma was also down mid-single digits, making the performance more comparable. On CDMO strategy, CEO Padraig McDonnell stated that M&A, like BIOVECTRA, is focused on strategic fit in high-growth markets. Simon May, President of DGG, added that it builds on their strong RNA position and they see rich opportunities for future expansion.

Michael Ryskin sought clarification on why small molecule pharma performed better than large molecule and asked about the strategic intent behind the BIOVECTRA acquisition, specifically how aggressively Agilent plans to expand in the CDMO space.

Answer

CFO Bob McMahon explained that small molecule's relative strength (down mid-singles) reflects underlying replacement needs, especially in Europe. He noted that biopharma, excluding the lumpy NASD business, was also down mid-single digits. CEO Padraig McDonnell described the BIOVECTRA acquisition as the 'start of our ambition' to build out capabilities for customers in high-growth markets, fitting squarely within the company's M&A strategy.

Michael Ryskin of Bank of America pressed on the topic of visibility, asking why it should be considered better now when previous customer conversations proved unreliable. He also questioned the implied $120 million sequential revenue ramp from Q3 to Q4 and the potential risk to that number.

Answer

CFO Bob McMahon responded that the current guidance is more prudent, assuming no significant market inflection in the second half. He noted that for the NASD business, which is a key variable, they have all the necessary orders in-house for H2, increasing confidence. McMahon explained the Q3-to-Q4 ramp is primarily driven by a $30 million NASD step-up as delayed clinical programs are fulfilled in Q4, bringing the underlying seasonality to a more historical level.

Michael Ryskin asked for more specific quantification of Elanco's expected accelerating price in 2026, inquiring whether it reflects a lift from introductory pricing or more aggressive pricing, and the contribution from the Big Six new products versus the rest of the portfolio. He also questioned how Credelio Quattro's uplift for the broader portfolio, including future products like Zenrelia and Befrena, strengthens Elanco's competitive position in major contract renewals with distributors and vet clinics.

Answer

Bob Van Hembergen, CFO, stated that Elanco expects price to accelerate from 2% in 2025, reflecting enhanced value from innovation and the comprehensive portfolio. He noted that 2026 would see pricing components for Zenrelia and Quattro as they lap their launch periods, and highlighted the highest price increase to U.S. vets in five years. Jeff Simmons, President and CEO, explained that Credelio Quattro's momentum is driving an additive portfolio effect, with 2,600 clinics adding additional products. He also noted strong corporate account engagement, particularly in Europe for Zenrelia, and anticipates Befrena will further differentiate Elanco's offerings.

Michael Ryskin asked for more specific quantification of the accelerating price expected in 2026, inquiring if it reflects a return to normal pricing or more aggressive increases, and the contribution from the 'Big Six' new products versus the rest of the portfolio. He also questioned how Credelio Quattro's uplift for the broader portfolio and its ability to secure better contracts with distributors or vet clinics would continue into 2026 with Zenrelia and Befrena.

Answer

Bob Van Hembergen, CFO, Elanco Animal Health, confirmed expectations for price acceleration from 2% in 2025, reflecting enhanced value from innovation, and noted the highest price increase to U.S. vets in five years. He added that new products like Zenrelia and Quattro would contribute to pricing in 2026. Jeff Simmons, President and CEO, Elanco Animal Health, highlighted Quattro's portfolio effect, with 2,600 clinics adding additional products, and noted strong corporate account engagement for both Quattro and Zenrelia, expecting continued benefits from a differentiated portfolio.

Michael Ryskin from Bank of America questioned the sustainability of Elanco's 'no-regrets' investment approach for innovation, particularly Credelio Quattro and Zenrelia, given increasing competition, and how incremental margins will ramp relative to investment. He also asked about the strong growth in the livestock market, questioning its sustainability beyond 2025.

Answer

President and CEO Jeff Simmons reiterated the 'no-regrets' approach, citing significant product differentiation, strong launch capabilities, and expansion into growing markets. CFO Bob VanHimbergen added that the innovation basket already boasts gross margins above the corporate average, and the Elanco Ascend program will drive further efficiencies. For farm animal, Jeff Simmons noted sustained global protein demand, producer profitability driving spending, and Elanco's strategic focus on ruminants and poultry, indicating a multi-year positive trend.

Michael Ryskin asked about the margins and investment required to sustain innovation like Credelio Quattro and Zenrelia in increasingly competitive markets, inquiring how Elanco's 'no-regrets approach' would evolve and what the ramp in incremental margins would look like in years two, three, and four of launch versus the necessary investment. He also asked about the strong growth in the livestock (farm animal) segment, its drivers, and whether it represents a one-year cyclical event or a multi-year trend for 2026 and 2027.

Answer

Jeff Simmons, President and CEO, emphasized the significant differentiation of Elanco's products and its strong launch capabilities, noting that every dollar of investment is yielding significant returns. He highlighted that Elanco operates in growing markets, with Zenrelia expanding the dermatology market by attracting new patients. Simmons stressed that Elanco's portfolio is diversified, not reliant on a single product. Bob VanHimbergen, CFO, added that the innovation basket already boasts margins above the corporate gross margin. He also mentioned the Elanco Ascend program, designed to accelerate efficiencies across G&A, manufacturing, and procurement, beyond natural mix and volume benefits. Regarding farm animal growth, Jeff Simmons pointed to growing global protein demand, significant investment in the U.S. dairy industry, and favorable producer economics. He stated that Elanco's strategy focuses on innovation, winning portfolios in ruminants and poultry, value beyond product, and competitive customer access, indicating a durable path beyond just Experior.

Michael Ryskin of Bank of America asked about the gross margin trajectory for new products like Quattro and Zenrelia, specifically at what revenue or volume threshold they shift from dilutive to accretive. He also asked for an assessment of the potential U.S. sales uplift for Zenrelia following the expected removal of the fatal vaccine risk language from its label.

Answer

CFO Bob VanHimbergen acknowledged that new launches will drive margin accretion over time but did not provide specific thresholds, emphasizing a focus on long-term health and data-driven investment. CEO Jeffrey Simmons added that manufacturing synergies are already being realized as Quattro and Zenrelia are produced at an existing facility. Regarding Zenrelia, Simmons stated the label change will create more confidence, leading to wider clinic adoption and deeper penetration, noting that first-line use is already increasing and is higher in international markets with less restrictive labels.

Michael Ryskin questioned why the full-year innovation guidance was only raised by $20 million despite a very strong $198 million contribution in Q1. He also asked for clarification on Credelio Quattro's 10% dollar share, specifically if it was sell-in versus sell-out.

Answer

CEO Jeff Simmons attributed the strong innovation performance to the entire 'Big 6' basket, highlighting Credelio Quattro's strong competitive share capture and favorable cannibalization. CFO Todd Young clarified that the 10% share for Quattro is sell-in to vet clinics, but distributor inventories are lean, and Q2 investments are aimed at driving consumer sell-out.

Michael Ryskin asked for the specific products driving the increased 2025 innovation revenue guidance and sought clarity on management's confidence in the Q4 2025 approval timeline for the IL-31 monoclonal antibody, given regulatory uncertainties.

Answer

President and CEO Jeff Simmons attributed the increased innovation guidance to strong momentum from Experior, which benefited from its heifer clearance, and the robust European launch of Adtab. He also cited the significant market opportunity for Zenrelia and Credelio Quattro. Regarding IL-31, Simmons confirmed that while it is not in the 2025 guidance, the company continues to progress with the USDA and remains confident in a late 2025 approval, noting no change in the program's status.

Michael Ryskin of Bank of America inquired about the specific internal metrics, such as clinic penetration, being used to track the early progress of the Zenrelia launch. He also asked for a detailed breakdown of the factors constraining operating leverage in 2025, including gross margin pressures and incremental investments, to better understand the potential for margin expansion in 2026 and beyond.

Answer

CEO Jeff Simmons explained that key metrics for Zenrelia are clinic penetration and reorder rates, noting that several hundred new clinics are adopting the product weekly and reorder rates are increasing. CFO Todd Young addressed the 2025 outlook, stating that the U.K. CMO issue is a gross margin headwind, while the company plans to keep G&A flat to reinvest savings into the blockbuster launches of Zenrelia and Credelio Quattro, delaying significant operating leverage until 2026.

Michael Ryskin asked about the volatility in the DSA demand environment during 2025 (strong start, summer lull, Q4 pickup). He sought to understand what factors (macro, geopolitical, rates) contributed to this and what gives Charles River Laboratories confidence that 2026 won't see similar fluctuations or that the Q4 2025 strength is not a 'red herring.'

Answer

James Foster, Chair, President, and Chief Executive Officer, attributed 2025's volatility to overall soft demand from clients, biotech concerns about capital access (pausing drugs), and big pharma's cost structure adjustments due to patent cliffs. He expressed cautious optimism for 2026, citing massive biotech funding ($28 billion in Q4 2025), which should generate incremental demand with a lag. He also highlighted the book-to-bill ratio above 1x in Q4 and December as important indicators for Q2 and H2 2026.

Michael Ryskin from Bank of America Merrill Lynch asked about the volatility in DSA demand observed in 2025 (strong start, summer lull, Q4 pickup). He sought to understand the underlying causes (macro, geopolitical, rates) and what gives management confidence that 2026 will not see similar fluctuations, or that the Q4 2025 strength is not a 'red herring'.

Answer

Chair, President, and CEO Jim Foster attributed the 2025 volatility to overall soft demand, with biotech companies concerned about capital access and pausing drug development, and big pharma facing patent cliffs and cost reductions. He expressed confidence for 2026 based on significant biotech funding ($28 billion in Q4 2025 and a strong January), which is expected to generate incremental demand, albeit with a lag. Mr. Foster highlighted the Q4 2025 book-to-bill ratio above 1x (and much higher in December) as a key indicator. He emphasized that while they are cautiously optimistic and not overcalling it, the changing funding environment for biotech, which constitutes the majority of their growth and revenue, supports a more stable outlook, as these companies must outsource their development needs.

Michael Ryskin of Bank of America Merrill Lynch asked a high-level question about the book-to-bill ratio as a leading indicator for revenue, given that the ten-month backlog can offset a sub-1.0x ratio. He questioned what level of book-to-bill is sufficient to achieve flat or positive revenue growth.

Answer

CEO James Foster acknowledged the steady upward trajectory of the book-to-bill is positive but stated that a ratio above 1.0x is not essential for growth. He explained that the ten-month backlog provides significant flexibility to slot in replacement studies for those that slip or cancel, putting the company in a 'good place' to manage its workflow and revenue stream. CFO Flavia Pease added that the short 6-9 month preclinical cycle allows ample time to rebuild the backlog.

Michael Ryskin asked for more details on the DSA bookings with quicker start dates, questioning if it was a pull-forward, and inquired about the potential scope of the strategic review with Elliott Investment Management.

Answer

CEO James Foster described the quick study starts as a one-quarter event driven by client urgency and available capacity, and it is not expected to continue. Regarding the strategic review, he explained the Board committee will conduct a comprehensive analysis of the entire portfolio, but it is premature to speculate on outcomes like divestitures or a sale.

Michael Ryskin requested a more quantitative range for the 'modestly lower' consolidated operating margin guidance for 2025. He also asked for a broader perspective on whether current pricing levels are healthy and sustainable long-term.

Answer

EVP & CFO Flavia Pease declined to give a specific number but pointed out that for 2024, 'modestly down' resulted in a 40 basis point decline. Chair, President & CEO James Foster stated that the current pricing environment is transitory and that as demand rebuilds and capacity tightens, the company will regain meaningful pricing power.

Michael Ryskin from Bank of America asked about the heterogeneity of demand within global biopharma, noting a perceived dichotomy between high-spenders and those cutting back. He questioned the confidence that the current high-spenders wouldn't begin their own reprioritizations later.

Answer

Chairman, President and CEO James Foster responded that he believes all large pharma companies are being cost-conscious due to factors like the looming patent cliff. He emphasized the irony that outsourcing to Charles River is a primary method for these clients to reduce their own internal cost structures and infrastructure, which should continue to support demand. He expects more clarity after Q4 client budget discussions.

Michael Ryskin asked for more details on esoteric testing performance in Q4 2025, including market changes and how it met expectations. He also sought clarification on the Q4 volume weakness in the consumer genomics business, specifically if it was a one-time event or expected to continue into 2026.

Answer

Adam Schechter (Chairman, President and CEO, Labcorp) confirmed that the consumer genetic company impact was a one-time hit in Q4 2025, with good recovery and additional business secured, so it's not expected to be a headwind in 2026. Julia Wang (EVP and CFO, Labcorp) highlighted strong progress in esoteric testing, noting its contribution to total testing revenue increased from 37.5% in Q1 2023 to 41.5% in Q4 2025, outpacing routine testing due to strategic investments in specialty testing and hospital partnerships.

Michael Ryskin asked for more color on esoteric testing performance in the fourth quarter, including any market changes. He also sought clarification on the Q4 consumer genomics volume weakness, specifically whether it was a one-time event or expected to continue into 2026, and the underlying reasons.

Answer

Chairman and CEO Adam Schechter confirmed that the consumer genomics volume weakness in Q4 was a one-time hit, with good recovery and additional business secured, so it is not expected to be a headwind in 2026. EVP and CFO Julia Wang highlighted the strong progress in esoteric testing, noting its contribution to total testing revenue increased from 37.5% in Q1 2023 to 41.5% in Q4 2025. She attributed this growth to Labcorp's strategy of enhancing investment in specialty testing and strengthening partnerships with hospitals and healthcare systems, indicating that esoteric testing continues to outpace routine testing.

Michael Ryskin from Bank of America Merrill Lynch asked for quantification of the potential offsets to the $100 million PAMA impact in 2026 and for more detail on the drivers of the strong underlying margin performance.

Answer

President, CEO, and Chairman Adam Schechter clarified that any PAMA offsets would be in addition to existing Launchpad savings, but they would not be able to offset the entire $100 million impact if it materializes. EVP & CFO Julia Wang attributed the strong margin performance to leverage from revenue growth and cost management. She also noted that the Invitae margin headwind will annualize in Q3, which will help support margin expansion in the second half of the year.

Michael Ryskin of Bank of America Merrill Lynch asked for quantification and timing of PAMA offsets from initiatives like Launchpad and for more detail on the drivers of the strong underlying margin performance, excluding Invitae.

Answer

President, CEO, and Chairman Adam Schechter reiterated the potential $100 million PAMA impact and stated LabCorp is working on offsets beyond the committed Launchpad savings, but could not quantify them yet. EVP & CFO Julia Wang attributed the strong margin performance to revenue growth leverage and cost management. She noted that with the Invitae acquisition annualizing in Q3, the company is positioned to deliver full-year margin expansion.

Michael Ryskin asked about the rationale for maintaining the Biopharma Laboratory Services (BLS) guidance despite favorable FX, inquiring about the key leading indicators being monitored and any changes in customer price sensitivity.

Answer

Chairman and CEO Adam Schechter explained the guidance range was maintained to account for potential macro risks, such as the timing of trial starts and tariff impacts. He noted that while customers are always price-sensitive, most of the BLS business is secured under existing contracts in the backlog. He expressed confidence in improving margins by offsetting any pressures with cost reductions.

Michael Ryskin sought clarification on the timing shift for 2026 revenue, specifically why Q1 is expected to be larger due to late Q4 orders, and whether any additional pricing was offered to secure those orders.

Answer

CFO Adam Taich clarified that approximately $2 million in late December orders spilled into Q1, contributing to the anticipated larger Q1 revenue. He stated that no additional pricing dynamics were involved. Historically, Q1 represents about 23% of full-year revenue, but for 2026, it's expected to be closer to 24%.

Michael Ryskin asked for clarification on the timing shift for Q1 2026 revenue being a larger percentage of full-year revenue due to late Q4 2025 orders, inquiring if any specific factors or additional pricing contributed to this.

Answer

CFO Adam Taich clarified that the timing shift was not due to pricing dynamics but rather $2 million in unanticipated budget flush orders received late in December 2025 that could not be fulfilled until January 2026. He noted that Q1 2026 is expected to be about 24% of the full-year revenue, a point higher than the historical 23%.

Michael Ryskin asked for details on the $4 million revenue pull-forward in China, including how the amount was estimated and what is driving the region's underlying strength.

Answer

CEO Serge Saxonov explained that their confidence in the $4 million estimate comes from their improved go-to-market model in China, which provides close contact with customers who specifically indicated they were ordering ahead of potential tariffs. He attributed the broader strength in the region to these structural business changes and more favorable market dynamics.

An analyst on behalf of Michael Ryskin asked how the academic and government customer segment performed outside of the U.S. during the quarter.

Answer

CEO Serge Saxonov responded that the academic and government business held up "pretty well" outside the U.S. He characterized the international funding environment as "relatively healthy" despite some pressures from the global geopolitical situation.

Michael Ryskin requested more clarity on Q1 2025 seasonality and pressed for reasons why the biopharma segment is not already a larger portion of revenue, questioning what has held back adoption until now.

Answer

CEO Serge Saxonov explained that the product portfolio has only recently matured to be fully suitable for later-stage pharma work, particularly with the introduction of fixation and FFPE sample compatibility. He also noted that adoption cycles in pharma are longer and that key applications like large-scale CRISPR screens are just now gaining broad interest. Finally, he highlighted the new, dedicated biopharma commercial team as a key future growth driver.

Michael Ryskin pointed out that spatial consumables revenue has been relatively flat sequentially for three quarters, despite a significant increase in the Xenium installed base. He asked for an explanation, questioning if it was due to inventory drawdowns or reordering patterns, and what this implies for spatial consumables growth going forward.

Answer

CEO Serge Saxonov explained that sequential dynamics were complex due to new product launches creating initial pent-up demand that later smoothes out. He pointed to encouraging underlying trends like good reorder rates for Visium and consistent growth in Xenium utilization. He also noted that spatial consumables were impacted by the Q3 commercial transformation headwinds, suggesting the strong year-over-year growth provides a more encouraging picture.

Michael Ryskin from Bank of America inquired about Zoetis's competitive outlook for 2026, specifically the level of conservatism in guidance for key brands like dermatology, and the expected price versus volume contributions for the upcoming year.

Answer

CFO Wetteny Joseph explained that 2025's back-half deceleration was anticipated due to competitive launches and U.S. macro pressures, with dermatology growing 6% for the year but 1% in Q4. He confirmed that 2026 guidance prudently factors in various competitive scenarios, including new JAK and IL-31 entrants. Joseph also stated that price is expected to return to a normal 2-3% range, with volume making up the balance.

Michael Ryskin from Bank of America inquired about Zoetis's competitive assumptions for 2026, specifically regarding the level of conservatism factored into key brands like dermatology, which saw moderation in Q4 2025. He also asked for clarity on the expected price versus volume contribution to growth in 2026, considering potential changes in pricing timing.

Answer

Wetteny Joseph, CFO, explained that the guidance for 2026 incorporates various competitive scenarios, including aggressive promotional activities from new entrants in the dermatology space (JAK and IL-31 competitors), which were anticipated to cause deceleration in the latter half of 2025. He projected price contribution to be in the normal 2%-3% range, with the balance coming from volume.

Michael Ryskin inquired about Zoetis's competitive strategy for its Simparica Trio and dermatology franchises, focusing on pricing and the role of alternate channels. He also asked about the expected timeline for Librela's return to growth following new educational initiatives.

Answer

EVP & CFO Wetteny Joseph stated that the strategy for Simparica Trio and dermatology remains disciplined, with strong performance and no patient share loss despite competition. He highlighted the expansion of the triple combination market and growth in alternate channels. CEO Kristin Peck addressed Librela, explaining that new third-party study data, expected from Q4 2025 into 2026, will be key to providing vets with clinical validation and accelerating adoption.

Michael Ryskin asked about the nature and impact of competitive pressures in parasiticides and dermatology, particularly from new entrants. He also questioned if the 2025 outlook for Librela has changed following recent learnings.

Answer

CEO Kristin Peck emphasized Zoetis's first-mover advantage, noting Simparica Trio's 19% growth despite competition and the strength of the dermatology portfolio. CFO Wetteny Joseph reiterated that the three key franchises are expected to grow double-digits in 2025 and highlighted the vast untapped market for OA pain, confirming confidence in the long-term opportunity for Librela.

Michael Ryskin asked about the assumptions for new market entrants and competition factored into the 2025 guidance, particularly for the dermatology franchise, and inquired about incremental investments to support key brands.

Answer

CFO Wetteny Joseph confirmed that the guidance includes various scenarios for competition, expected mainly in the second half of the year. He emphasized the large, untreated market in dermatology (20 million dogs) provides a vast growth opportunity. He also noted that investments in direct-to-consumer marketing and veterinarian education are factored into the 2025 plan and have historically shown strong returns.

Michael Ryskin of Bank of America asked if there were any Q3 inventory stocking or destocking dynamics for key products like Librela and Trio, and requested details on the full-year 2025 financial impact of the medicated feed additives (MFA) divestiture for modeling.

Answer

CEO Kristin Peck confirmed it was a 'clean quarter' with no stocking dynamics. CFO Wetteny Joseph elaborated that distributor inventory levels are at the low end of historical averages and that Librela, being a direct-to-clinic product, is not subject to the same inventory build. For the MFA divestiture, he reiterated the business did about $400 million in 2023 revenue with ~30% margins, which can be used to model the impact for 2025.

Michael Ryskin from Bank of America asked for clarification on Bruker's revenue pacing through 2026, specifically how much of the expected mid-single-digit decline in Q1 and positive growth from Q2 onwards is driven by prior-year comparisons versus underlying market improvements and order book visibility.

Answer

Frank Laukien, President and CEO, explained that both easier prior-year comparisons from Q2 onwards and gradually improving order momentum across many segments contribute to the expected pacing. He highlighted strong bookings in Applied, Semi, and Biopharma in Q3 and Q4 2025, with U.S. ACA Gov still lagging but showing signs of improving trends.

Michael Ryskin asked about the confidence in achieving the higher end of the cost-out range for 2026 margins, given the Q4 2025 margin miss. He also sought clarification on the revenue pacing through 2026, specifically how much of the expected Q1 decline and subsequent positive growth is due to prior year comparisons versus underlying market improvements and order book visibility.

Answer

President and CEO Frank Laukien expressed confidence in the cost-out initiatives, stating that the high end of the $100-$120 million range has been achieved, with additional cuts becoming fully effective by mid-year 2026. He also noted that pricing and supply chain actions have longer lead times to impact revenue. Regarding revenue pacing, Frank Laukien confirmed it's a combination of easier Q2-Q4 2025 comps and gradually improving order momentum across many segments (Applied, Semi, Biopharma, Industrial research), with U.S. academic/government still an outlier but showing less headwinds.

Michael Ryskin from Bank of America asked about the company's medium-term outlook, specifically how Bruker would offset a significant cut to the U.S. academic budget and which business areas would provide that offset. He also requested quantification of the BSI order book and backlog.

Answer

CEO Frank Laukien explained that while 2025 is a defensive year, the company's growth drivers like biopharma, AI demand, and European investments position it for resumed margin expansion in 2026. CFO Gerald Herman added that the BSI order book was only slightly down, with strength in biopharma and industrial markets offsetting academic weakness, and confirmed the total backlog remains at a healthy 7 months.

Michael Ryskin's associate asked for an update on the expected timing of the biopharma market recovery.

Answer

CEO Frank Laukien stated that Bruker does not expect a step-function recovery in biopharma but rather a gradual improvement. He anticipates this recovery will begin in the first half of 2025 and potentially strengthen in the second half of the year.

Michael Ryskin questioned the source of management's confidence in achieving above-market growth and significant margin expansion in 2025, and asked why the company's elevated backlog isn't able to offset the current revenue weakness.

Answer

CEO Frank Laukien cited several factors for his 2025 confidence: a significant excess backlog (7 months vs. a normal 5), strong performance in diagnostics and semiconductor metrology, and counter-cyclical demand for lab automation. Regarding the backlog, Laukien noted that the sequential revenue step-up from Q3 to Q4 is still substantial (around $100 million), and the current guidance reflects a prudent outlook based on the timing of fulfilling that backlog.

Michael Ryskin asked about the perceived conservatism in the 10% GLP-1 growth guidance for 2026, given recent strong trends, and inquired if there had been any changes in customer demand or tone. He also followed up on the strong free cash flow, moderating CapEx, and SmartDose proceeds, asking about potential M&A or share buybacks.

Answer

CFO Bob McMahon confirmed the GLP-1 guidance was a conservative start, noting no change in customer behavior and that the business strength extends beyond GLP-1s. CEO Eric Green stated that capital deployment prioritizes organic growth and bolt-on technologies that accelerate HVP components. Bob McMahon added that returning cash to shareholders is actively being discussed and is viewed as upside.

Michael Ryskin asked about the conservative 10% GLP-1 growth forecast for 2026, inquiring if recent customer conversations or oral GLP-1 launches indicated any demand changes. He also questioned the company's capital deployment strategy, specifically regarding M&A, share buybacks, and the use of strong free cash flow and SmartDose proceeds.

Answer

CFO Bob McMahon confirmed no changes in customer behavior, characterizing the GLP-1 guidance as conservative to highlight strength beyond GLP-1s. CEO Eric Green stated that organic growth remains the first priority, with potential interest in accretive bolt-on technologies for HVP components. Bob McMahon added that returning cash to shareholders is actively discussed and viewed as upside.

Michael Ryskin asked about the sustainability of double-digit growth for HVP components, including GLP-1s and Annex 1, and the moving pieces for margin expansion in the upcoming year.

Answer

CEO Eric Green highlighted sustained HVP components growth from biologics, biosimilars, Annex 1, GLP-1s, and normalized order patterns. CFO Bob McMahon added that Q4 guidance includes low to mid-teens HVP growth and that margin expansion will be driven by gross margin improvements, factory efficiencies, and mixed benefits from higher-value products.

Michael Ryskin from Bank of America inquired about the sustainability of double-digit growth for HVP components, including the impact of GLP-1s and Annex 1, and asked CFO Bob McMahon about the moving pieces for margin expansion in the next year, specifically gross margin, volume leverage, and cost actions.

Answer

CEO Eric Green confirmed confidence in HVP components' double-digit growth, citing normalizing order patterns, strong market position in biologics/biosimilars, and the multi-year growth algorithm of Annex 1 conversions. CFO Bob McMahon indicated that Q4 guidance includes low to mid-teens HVP component growth, and margin expansion opportunities exist in gross margin due to mix benefits from HVP, factory efficiencies, and cost actions below gross margin.

Michael Ryskin of Bank of America Merrill Lynch asked for more quantification on the GLP-1 contribution, which grew to 8% of sales, questioning its durability and expected ramp in the second half.

Answer

CEO Eric Green confirmed the GLP-1 contribution is strong and that West is well-positioned to meet rising customer demand through 2025 by leveraging assets from the pandemic era. He noted that while GLP-1 is a key driver, the expected second-half acceleration in HVP components (to high-single or double-digit growth) will also be driven by biologics and Annex One upgrades.

Michael Ryskin requested clarification on pricing commentary, noting the 3.4% contribution in Q1 seemed strong, and asked if West observed customers accelerating orders to get ahead of potential tariffs.

Answer

CFO Bernard Birkett clarified that his comment about lighter pricing was in reference to the full-year outlook, not the first quarter's performance. CEO Eric Green stated that West has not seen any change in customer ordering behavior or pull-forwards related to tariffs, attributing this stability to their regional manufacturing footprint.

Michael Ryskin of Bank of America questioned the fiscal year 2025 EPS guidance, seeking to distinguish between one-time impacts and a fundamental reset to a new earnings base. He specifically asked about the Contract Manufacturing segment's 'air pocket' from exiting continuous glucose monitoring (CGM) contracts and the rationale behind that decision.

Answer

CFO Bernard Birkett clarified that many impacts are concentrated in 2025 and that the company is actively working to improve profitability in areas like drug delivery devices through automation and scale. CEO Eric Green added that the decision to exit the CGM contracts was strategic, as the next-generation devices did not meet West's required financial thresholds, and the capacity will be repurposed for higher-margin business.

Michael Ryskin sought more detail on the Q3 timing benefit, asking if it was broad-based or from a few large orders and which segments were affected. He also asked for a breakdown of the operational drivers behind the $0.10 increase in the adjusted EPS guidance.

Answer

CEO Eric Green clarified the timing benefit was somewhat broad, not from one or two customers, and primarily impacted the biologics and pharma segments. CFO Bernard Birkett explained the operational EPS guidance increase was driven by a combination of factors, including a stronger-than-anticipated operating margin, effective cost management, and favorable business mix, rather than a single item.

Michael Ryskin questioned Avantor's price actions and potential share gains or losses, particularly in lab distribution, and whether 2026 marks the bottom for margins. He also sought clarification on the 'book-to-bill greater than one' comment, its specific segment, and why it doesn't translate to better growth in the Bioscience and Medtech segment.

Answer

Brent Jones, EVP and CFO, stated that Q4 2025 margins were primarily impacted by mix, with a modest negative price effect in the lab business. For 2026, he anticipates flat volume in the lab segment with some price, and better price with less volume in bioscience, not viewing it as a 'race to the bottom.' Emmanuel Ligner, President and CEO, added that the company is working to make Q1 2026 the low point for margins. Brent Jones clarified that the 'book-to-bill greater than one' referred to Process Chemicals, excluding serum. Emmanuel Ligner noted that operational bottlenecks and the time required for new equipment investments prevent immediate translation of the strong order book into faster growth.

Michael Ryskin pressed for details on Avantor's 2026 margins, specifically regarding price actions, share gains/losses, and the long-term viability of current pricing strategies, asking if 2026 represents the bottom for margins. He also sought clarification on the 'book-to-bill greater than one' comment, its specific segment, and why it doesn't translate to better growth in the Bioscience and Medtech segment given tough comps.

Answer

Brent Jones, EVP and CFO, explained that Q4 2025 margins were primarily impacted by mix, with a modest negative price effect in the lab business. For 2026, the plan assumes very flat volume in the lab business with some price, and better price with slightly less volume in bioscience, not viewing it as a 'race to the bottom.' Emmanuel Ligner, President and CEO, stated the company is working hard to make Q1 the low point for margins. Brent Jones clarified that the 'book-to-bill greater than one' and 'full-year high single-digit growth' comments referred specifically to process chemicals, excluding serum. Emmanuel Ligner added that operational bottlenecks and the time required for capital investments (e.g., $20 million for operations) are limiting the immediate translation of the strong order book into higher growth.

Michael Ryskin asked about Avantor's share losses and competitive dynamics, particularly in Laboratory Solutions and Bioscience, seeking clarity on strategies to stem the tide. He also questioned the steps to address the business's perceived complexity and unnecessary centralization, and the expected timeline for these changes.

Answer

Emmanuelle Ligner, President and CEO, acknowledged past share loss in lab services but highlighted recent stability under new leadership, with no new key account losses and opportunities for wallet share growth. He outlined plans to decentralize decision-making, empower local teams, emphasize key brands like VWR and JT Baker, enhance e-commerce, and invest in manufacturing to improve service levels.

Michael Ryskin inquired about share losses and competitive dynamics in Laboratory Solutions and Bioscience, seeking confidence in correcting these trends. He also asked for details on the Avantor Revival plan, specifically addressing business complexity and decentralization.

Answer

President and CEO Emmanuel Ligner confirmed past share loss in lab services but noted stabilization in key accounts and new business wins since March. He highlighted e-commerce as a barrier and the need for a Chief Digital Officer. For bioprocessing, strong order intake exists, but service levels require operational fixes and plant upgrades. He emphasized decentralizing decision-making and leveraging strong brands like VWR and JT Baker.

Michael Ryskin questioned the long-term outlook for the bioprocessing business, asking if recent challenges were one-time issues or indicative of underlying problems. He also sought clarity on the significant sequential growth ramp implied between the Q3 and Q4 guidance, questioning the potential for conservatism in the Q3 forecast.

Answer

President & CEO Michael Stubblefield asserted that absent discrete headwinds, bioprocessing would have performed in the mid-to-high single-digit range, emphasizing strong demand for the core mAbs platform. He expressed confidence in long-term growth. EVP & CFO R. Brent Jones added that the Q3 guidance is 'careful,' assuming a continuation of current lab trends and noting that timing in the silicones business contributes to the Q4 ramp.

Michael Ryskin questioned the drivers behind the significant Q2 guidance step-up from Q1 performance and asked for specifics on what tariff impacts are factored into the revised full-year guidance, particularly regarding the unchanged EPS forecast.

Answer

CFO R. Jones explained the Q2 forecast reflects a typically strong quarter and views Q1's Bioscience Production performance as an anomaly, calling the guide prudent. On tariffs, he clarified the guide includes a modest demand reduction in China but no other material tariff impacts are assumed. He noted the 2% COGS exposure from China is a risk the company has multiple levers to mitigate, such as alternate sourcing and pricing adjustments, but it is not explicitly factored into the earnings forecast due to ongoing volatility.

Michael Ryskin asked for clarification on the bioprocessing growth trajectory for 2025 and questioned the rationale behind the wide 100 bps range for the margin guidance, also probing if cost savings were being realized faster than anticipated.

Answer

CEO Michael Stubblefield reiterated expectations for gradual improvement in bioprocessing. An Unknown Executive explained the margin guidance range was to avoid false precision and reflects the significant operating leverage from sales growth. He confirmed strong momentum on cost savings execution but was not yet prepared to increase the overall program target.

Michael Ryskin asked for confirmation on how to model the financial impact of the clinical services divestiture into fiscal year 2025. He also questioned if the accelerated cost savings were a pull-forward from future years.

Answer

President and CEO Michael Stubblefield confirmed that prorating the Q4 impact of the divestiture (approx. $200M annual revenue, 10 bps margin dilution per quarter) is a reasonable approach for 2025 modeling. EVP and CFO Brent Jones clarified that the cost savings are ahead of schedule due to rapid execution, not a pull-forward, and they expect to exceed the in-year target.

Michael Ryskin asked for clarification on the financial contribution and margin ramp-up for the Corewell Health and Fresenius Medical Care relationships in 2026 and beyond, given their organic nature. He also inquired about the primary swing factors affecting 2026 margins, particularly if they are less than expected in prior years.

Answer

Chairman, CEO, and President James E. Davis detailed that Corewell Health is expected to contribute approximately $250 million in revenue in 2026 at a low single-digit margin rate, which is projected to improve to the low teens in 2027. He stated that Fresenius Medical Care's margin rate is expected to improve throughout 2026, reaching or slightly exceeding the company's operating margin average by year-end. CFO Sam Samad identified the Corewell Health relationship as the biggest swing factor impacting 2026 margins due to its significant incremental revenue at initially low margins. He also mentioned that Fresenius's margin profile is similar to a physician outreach acquisition, starting below average but improving over time, and reiterated that Project Nova's incremental $0.25 in expenses is another key factor, despite which healthy operating margin rate expansion is still anticipated.

Michael Ryskin asked for clarification on the margin opportunity and ramp-up timeframe for the Corewell Health and Fresenius Medical Care contributions in 2026 and beyond, given their organic nature and initial dilutive margins. He also inquired if the Corewell impact was the biggest swing factor for 2026 margins.

Answer

Chairman, CEO and President James E. Davis stated that Corewell, a $250 million business in 2026, is expected to start at a low single-digit margin rate, improving to low teens in 2027. Fresenius's margin rate is projected to improve through 2026, reaching or slightly exceeding the company operating margin average by year-end. Mr. Davis confirmed that Corewell's $250 million incremental business at low single-digit margins is indeed the biggest swing factor for 2026 margins. CFO Sam Samad also pointed to the incremental $0.25 of Project Nova expenses in 2026 as another significant impact, while still expecting healthy operating margin rate expansion overall.

Michael Ryskin requested an update on the integration of Haystack, how it's progressing, and a reaffirmation of its expected flow into the financial model for 2026.

Answer

CEO Jim Davis confirmed that Haystack is fully integrated into Quest Diagnostics, with tests run at their Cancer Center of Excellence in Texas, and volumes are building. He highlighted ongoing research studies to build evidence and expected favorable Medicare reimbursement decisions in November. CFO Sam Samad stated that while Haystack is expected to be relatively dilutive in 2025, it is projected to be a tailwind with less dilution in 2026, driven by market response and learnings around commercial presence and EMR investment.

Michael Ryskin requested an update on the integration of Haystack, its current performance, and a reaffirmation of its financial flow into the 2026 model.

Answer

CEO Jim Davis confirmed that Haystack is fully integrated, with tests run at the Cancer Center of Excellence in Texas, and volumes are building. He noted ongoing research studies and expected favorable Medicare reimbursement decisions in November. CFO Sam Samad expressed excitement about Haystack's potential, acknowledging learnings around commercial presence and EMR investment. He expects Haystack to be a tailwind in 2026, with less dilution compared to 2025, and is pleased with the market response.

Michael Ryskin asked for an update on potential policy and regulatory changes from Washington D.C., specifically regarding PAMA reform and the potential risks from cuts to Medicare or Medicaid.

Answer

James Davis, Chairman, CEO and President, stated that PAMA reform is now the top regulatory priority for the industry, noting there is broad bipartisan support to get something done this year. Regarding reimbursement, he said Medicaid and Managed Medicaid represent about 8% of the business and that it's too early to tell the outcome of budget discussions, but he feels optimistic about support for ACA exchange plans.

Michael Ryskin asked about the future of PAMA, inquiring what a 'permanent legislative solution' might entail beyond the recurring cycle of one-year delays.

Answer

CEO Jim Davis stated that after five consecutive years of delays coupled with high inflation, the industry's strategy has shifted. Instead of advocating for a fix like the SALSA Act, the new goal is to push for a Medicare rate increase. He believes a new data collection process that includes commercial payments to hospital labs will support the case that Medicare rates should rise.

Michael Ryskin asked for an update on the reshoring/onshoring opportunity, including any changes in tone or timing expectations, and sought insights into Europe's better-than-expected performance despite tough comparisons.

Answer

CEO Patrick Kaltenbach views reshoring/onshoring as a 2027 and beyond opportunity, as new factories need to be built, and it's not a significant growth driver for 2026. CFO Shawn Vadala attributed Europe's strength to a robust organization, the Spinnaker program, and strong Product Inspection business driven by innovation targeting the mid-market, despite a challenging economic backdrop.

Michael Ryskin sought an update on the reshoring/onshoring opportunity, asking about any changes in conversations or tone, and the expected timing for initial orders. He also asked about the drivers behind Europe's better-than-expected performance in recent quarters and its sustainability.

Answer

CEO Patrick Kaltenbach characterized reshoring/onshoring as a 2027 and beyond opportunity, primarily for manufacturing and QA/QC, as factories need to be built first. He emphasized proactive engagement with customers to be a preferred supplier for these future facilities, including pharma and battery segments, but noted it's not a significant growth driver for 2026. CFO Shawn Vadala explained Europe's strong performance despite a soft economy, attributing it to a robust organization, the Spinnaker program enabling market share gains, and particularly strong growth in the Product Inspection business driven by innovation targeting the mid-market segment. He noted that other product categories are also competing well, but against a more challenging economic backdrop.

Michael Ryskin asked for a detailed breakdown of the Q3 versus Q4 segment results, inquiring about any pull-forward timing or impact from a potential government shutdown. He also sought clarification on the meaning of 'fully offset' regarding tariffs in 2026, asking if there would be a net tariff impact on EPS and the mechanics behind the offset.

Answer

Shawn Vadala, Chief Financial Officer, provided a detailed comparison: Lab (Q3: +4%, Q4 guidance: low single-digit), Core Industrial (Q3: +11%, Q4 guidance: low single-digit), Product Inspection (Q3: +7%, Q4 guidance: high single-digit), Retail (Q3: +5%, Q4 guidance: +10%). Geographically: Americas (Q3: +10%, Q4 guidance: mid-single-digit), Europe (Q3: +6%, Q4 guidance: flattish), China (Q3: +2%, Q4 guidance: low single-digit). He noted caution on budget flush for Lab and softer Europe. Regarding tariffs, Mr. Vadala stated the organization is expected to fully offset the approximately 6% gross headwind on 2026 EPS through supply chain optimization (started pre-2025) and strategic pricing actions enabled by strong value propositions.

Michael Ryskin asked for a detailed breakdown of the Q3 versus Q4 moving pieces, including segment results, any pull-forward timing, and potential impacts from a government shutdown. He also sought clarification on the meaning of 'fully offset' regarding tariffs in 2026, asking if it implies full offset over the year or as of Q1, and if there's a net tariff impact on EPS next year.

Answer

Shawn Vadala, CFO, provided detailed Q3 actuals and Q4 guidance: Lab (low single-digit, cautious on budget flush), Core Industrial (low single-digit), Product Inspection (high single-digit, acquisition benefit), Retail (10% growth). Regional guidance included Americas (mid-single), Europe (flattish, more cautious), and China (low single-digit). Regarding tariffs, Mr. Vadala stated Mettler-Toledo is confident in offsetting the estimated 6% gross headwind on 2026 EPS through supply chain optimization and pricing actions, noting efforts began before 2025 to create flexibility and de-risk the supply chain.

Michael Ryskin from Bank of America asked for assurance on the company's ability to mitigate tariffs in 2026, even if new ones emerge. He also requested specifics on the mitigation plan for the significant tariff exposure related to Switzerland.

Answer

CFO Shawn Vadala expressed strong confidence in offsetting known tariff impacts for 2026, emphasizing the company's agility and multiple ongoing workstreams in supply chain and pricing. However, he declined to provide specific details on mitigating the Swiss tariff impact, stating it was too early to comment publicly but that the approach would involve a combination of actions.

Michael Ryskin from Bank of America requested a bridge for the 150 basis point reduction in the full-year sales guidance, asking for the impact by geography and business segment. He also inquired about any changes in behavior from customers in the U.S. NIH and government end markets.

Answer

CFO Shawn Vadala provided a detailed bridge, attributing the guidance reduction primarily to a weaker outlook in China and the Americas, which impacted both the Industrial and Laboratory segments. He also noted that while direct NIH exposure is minimal, the broader U.S. academia and government market (about 3% of sales) is under pressure and contributing to headwinds.

Michael Ryskin of Bank of America asked for a numerical breakdown of the components contributing to the $0.50 increase in the 2025 EPS guidance. He also questioned the change in the gross margin outlook for 2025.

Answer

CFO Shawn Vadala explained the EPS bridge by noting the Q4 beat was partially offset by FX headwinds, but that updated interest and other income assumptions also contributed to the net increase. Regarding gross margin, he clarified that the 2025 outlook is similar to previous expectations, but the starting point from 2024 is higher than anticipated. He provided adjusted figures to show underlying expansion, accounting for the shipping delay comparison.

Michael Ryskin sought confirmation of the 2025 flat operating margin outlook, the adjusted margin impact excluding shipping delays, and the long-term strategic view on the Food Retail business.

Answer

CFO Shawn Vadala confirmed the 2025 operating margin is expected to be flattish, with gross margin up 30-40 bps, and agreed that underlying margin expansion would be in the 50-75 bps range excluding the shipping distortion. CEO Patrick Kaltenbach described Food Retail as a lumpy, project-based business that remains a valid part of the portfolio due to technology leverage, with no immediate strategic changes planned.

Michael Ryskin from Bank of America expressed surprise at the 2026 guidance for sequencing consumables and instruments being relatively close, expecting consumables to be better due to dissipating pricing headwinds and instruments potentially worse. He asked for details on NovaSeq X placement expectations (mid-to-high 200s for the year) and the performance of other platforms like NextSeq, MiSeq i100, and NovaSeq 6K.

Answer

CEO Jacob Thaysen reiterated strong performance in clinical high-throughput consumables, with potential upside, but acknowledged headwinds in research and mid-throughput consumables. He suggested the higher end of the consumables guide is more likely. For instruments, he noted continued momentum and strong opportunities, guiding for 50-60 NovaSeq X placements per quarter. CFO Ankur Dhingra confirmed 200-240 NovaSeq X placements for 2026, highlighting strong multi-pack orders and customer interest in fleet expansion, with X performing at an extremely high level after a major software upgrade in early 2025.

Michael Ryskin questioned the 2026 guidance for sequencing consumables and instruments, noting that consumables seemed lower than expected given dissipating pricing headwinds, while instruments seemed better. He asked for details on NovaSeq X placement expectations for 2026 and the performance of other platforms like NextSeq and NovaSeq 6K.

Answer

CEO Jacob Thaysen clarified that clinical high-throughput consumables remain strong with potential upside, but blended consumables reflect headwinds in research and mid-throughput segments. He expects strong instrument momentum to continue, with clinical customers expanding placements. CFO Ankur Dhingra projected 200-240 NovaSeq X placements for 2026 (50-60 per quarter), highlighting strong demand and the X's performance above spec after a major software upgrade in early 2025.

Michael Ryskin of Bank of America asked for the longer-term outlook into 2026 for two key markets: China and the academic/government (ANG) sector. He questioned if China's revenue could fall to zero and whether the current ANG headwinds are temporary or structural.

Answer

CEO Jacob Thaysen acknowledged that China's revenue would continue to decline in 2026 if the regulatory situation remains unchanged, but stressed that cost actions have been taken to protect earnings regardless. He expressed a firm belief that the current academic funding pressure is a temporary 'hiccup' and that the fundamental importance of genomics research will drive a strong recovery.

Michael Ryskin asked about QIAGEN's expectations for end market improvement throughout 2026, particularly in Q1, considering factors like the U.S. government shutdown. He also sought confirmation on the $720 million Sample Technologies target for 2026, including Parse Biosciences' contribution, and the expected ramp-up of new automation solutions.

Answer

Thierry Bernard (CEO) noted that Q1 2026 market guidance aligns with competitors, and while the US research and academia funding environment is improving (e.g., NIH budget slight increase), labs are in a 'wait-and-see' mode. He expects capital expenditure to improve in H2 2026, leading to mid-single-digit market growth. He confirmed the $720 million Sample Technologies target for 2026 includes $40 million from Parse Biosciences, with Parse's contribution weighted 40% in H1 and 60% in H2. New automation solutions like QIAsymphony Connect, QIAspring Connect, and QIAmini are fully embedded in the 2% additional growth projected for H2 2026.

Michael Ryskin asked for more detail on the Q1 2026 outlook beyond QuantiFERON, specifically regarding expectations for end market improvement throughout the year, including the impact of the U.S. government shutdown and broader market trends, and the degree of improvement embedded in the second-half ramp. He also asked to confirm the $720 million Sample technologies target for 2026 includes Parse's $40 million contribution and how much new automation solutions will contribute.

Answer

Thierry Bernard (CEO, QIAGEN) noted that QIAGEN's Q1 guidance aligns with competitors and expects gradual market improvement, particularly in research and academia, as funding visibility (e.g., NIH budget slight increase) improves, leading to better capital expenditure in H2 2026. He confirmed the $720 million Sample technologies target for 2026 includes approximately $40 million from Parse, with Parse's contribution weighted 40% in H1 and 60% in H2. He added that new automation solutions (QIAsymphony Connect, QIAsprint Connect, QIAmini) are fully embedded in the 2% additional growth projected for H2 2026 from new products.

Michael Ryskin asked about performance in China, which was down in the teens, and the outlook for the region, and also inquired about any signs of customer pull-forward or unusual stocking ahead of potential tariffs.

Answer

CEO Thierry Bernard stated that the outlook for China is unchanged, with no recovery expected before 2026 and the region now representing less than 4% of revenue. He firmly denied any pull-forward or unusual inventory building from customers, stating that the 41% growth in QIAstat was not influenced by such patterns.

Michael Ryskin asked about current trends in the pharma and biotech end market and how the company plans to balance its capital allocation priorities between the newly initiated dividend, share buybacks, and M&A.

Answer

CEO Thierry Bernard reported positive trends in the pharma market, particularly for QIAcuity and a growing demand for companion diagnostics (CDx). Regarding capital allocation, he outlined three balanced priorities: 1) investing in organic growth via R&D (9-10% of sales), 2) enhancing shareholder returns through the new dividend and buyback authorization, and 3) pursuing value-creating M&A, noting that the pipeline is 'very, very good' with potential deals in the 'coming weeks'.

Michael Ryskin asked for an outlook on 2025 market conditions, particularly for instrument CapEx, and questioned the drivers of margin expansion, seeking clarity on the trajectory from the >30% target in 2025 to the >31% target in 2028.

Answer

CEO Thierry Bernard expressed confidence in solid market fundamentals but noted concern over volatility, expecting CapEx to normalize in H2 2025. CFO Roland Sackers detailed that only about 45% of the margin improvement is from the NeuMoDx decision, with the majority from efficiency gains. He added that margin improvement will not stop in 2025 and expects double-digit operational profit improvement beyond that year.

Michael Ryskin asked for more detail on the Sample Prep business and the path to reaccelerating its growth, and requested clarification on the expected revenue contribution from NeuMoDx in 2025 during its wind-down.

Answer

CEO Thierry Bernard detailed the Sample Prep strategy, which is focused on automation. He explained that future growth, targeted at ~3% CAGR, will be driven by upgrades to existing systems like the QIA symphony and the launch of three new instruments between 2025 and 2026. For NeuMoDx, he clarified that revenues are expected in Q1 and Q2 of 2025 but should cease in the second half of the year as the manufacturing site is shut down.

Michael Ryskin inquired about the 2026 outlook for the scanners and services segment, specifically why its projected growth is roughly in line with total company revenue growth, rather than a more aggressive outlook given the ongoing Lumina ramp and a tough prior-year comparison.

Answer

CFO John Morici stated that the systems and services segment's growth is expected to broadly align with the company's overall 3-4% revenue guidance. He noted that while there are new opportunities for growth through upgrades and trade-ins, the segment is anticipated to grow at a rate similar to clear aligners.

Michael Ryskin of Bank of America Merrill Lynch asked how the Q2 miss and lowered 2025 outlook affect the long-range plan (5-15% growth) presented at the recent Analyst Day, given the lower starting point.

Answer

President & CEO Joe Hogan acknowledged the Q2 result was a setback but emphasized it was driven by one challenging month. He affirmed that the company stands by the long-term strategic vision and 5-15% growth target presented in New York. He expressed confidence that the business foundation is strong and the goals are achievable once consumer confidence improves.

Michael Ryskin asked about the indirect impacts of the U.S.-China trade war, such as a potential consumer backlash in China. He also inquired about the FX impact on margins and the rationale for no longer disclosing regional revenue splits.

Answer

President and CEO Joe Hogan stated that the company has not experienced any consumer backlash in China, noting a strong quarter there, which he attributed to Align's 'in-China, for-China' operating model. CFO John Morici added that favorable FX provides a slight improvement to operating margin. Regarding disclosures, Morici explained the change was made to simplify reporting and provide the clearest information for analyzing the business.

Michael Ryskin requested clarification on the potential Mexico tariff impact, specifically asking how to think about the 'transfer price' as a component of the cost of goods sold.

Answer

CFO John Morici explained that the transfer price excludes costs like freight and treatment planning. To provide scale, he estimated a 25% tariff on U.S. shipments from Mexico would have a cost impact of $4 million to $5 million per month. He noted that even at this level, manufacturing in Mexico for the U.S. market would remain economically viable.

Michael Ryskin asked if annual restructurings should now be considered the 'new normal' for Align. He also sought to understand the drivers behind the company's confidence in a sequential ASP increase for Q4, given recent headwinds.

Answer

CEO Joe Hogan characterized the restructuring as a responsible reaction to a 'sustained economic malaise' rather than a new normal, emphasizing the need to fund future technologies. CFO John Morici explained that the confidence in Q4 ASPs stems from two factors: the full impact of Advantage Program discounts being reflected in Q3, and a favorable Q4 geographic mix shift towards higher-ASP Europe.

Michael Ryskin asked about the underpinning factors for the projected acceleration in organic growth from 2% in 2025 to 3%-4% in 2026, and which specific end markets or customer groups are expected to drive this improvement. He also sought confirmation on the continued validity of the 3%-6% combined organic growth framework for 2026 and 2027.

Answer

Marc Casper, Chairman, President, and Chief Executive Officer, explained that the guidance assumes market conditions similar to 2025, but without the pandemic runoff, effectively starting at around 3% growth. He expressed optimism about industry progression but emphasized setting prudent assumptions. Stephen Williamson, Senior Vice President and Chief Financial Officer, confirmed that the previously shared 2026-2027 framework remains consistent with current assumptions, with the company focused on delivering strong earnings growth and share gains.

Michael Ryskin asked about the underlying factors driving Thermo Fisher Scientific's projected acceleration in organic revenue growth from 2% in 2025 to 3-4% in 2026, inquiring about specific end markets or customer groups showing the most improvement. He also sought confirmation on the consistency of the 2026-2027 financial framework.

Answer

Marc Casper, Chairman, President, and CEO, explained that the guidance assumes market conditions similar to 2025, with the absence of pandemic runoff contributing to the acceleration. He noted optimism from January customer meetings but emphasized a prudent start to the year. Stephen Williamson, SVP and CFO, confirmed the 2026-2027 framework remains consistent with prior assumptions, focusing on delivering strong earnings growth irrespective of market conditions.

Michael Ryskin asked about current market conditions, specifically in pharma, including the impact of MFN and tariff concerns, the progress of reshoring efforts, and how Thermo Fisher Scientific stands to benefit from these trends through facility build-outs, Patheon, and sterile fill-finish capacity in the U.S. He also inquired about the academic and government segment's low single-digit decline, the outlook for the NIH budget, and potential risks from the recent government shutdown.

Answer

Marc Casper (Chairman, President and CEO) highlighted strong engagement with pharma and biotech customers, noting their confidence in pipelines and ability to navigate government policies on pricing and reshoring. He explained that Thermo Fisher is actively supporting customers with new site developments, which will benefit channel, bioproduction, and analytical instruments businesses, with impacts largely expected in 2027-2028. More immediately, leveraging their pharma services network, including the Sanofi site acquisition, helps customers move volume to the U.S. Regarding academic and government, Mr. Casper noted slight improvement in Europe, with the U.S. and China similar to Q2. He mentioned U.S. customers feel better about a stable, flattish NIH budget, but the post-quarter government shutdown adds hesitancy and potential delays, which has been factored into Q4 guidance.

Michael Ryskin asked for clarification on Thermo Fisher's new 7%+ long-term growth outlook, questioning the underlying market growth assumptions and the company's conviction given recent uncertainty. He also inquired about the specific drivers for the projected 50-70 basis points of annual operating margin expansion over the next two years.

Answer

CEO Marc Casper explained the 7%+ long-term outlook assumes a return to approximately 4% market growth plus 2-3 points of share gain, driven by strong industry fundamentals. He framed the near-term 3-6% growth as a gradual improvement from the current environment as headwinds normalize. CFO Stephen Williamson added that the margin expansion will be driven by the proven PPI Business System, highlighting the 100 basis points of underlying margin improvement in Q2 as evidence of its effectiveness.

Michael Ryskin asked about the methodology behind the updated guidance, the potential upside and downside scenarios given macro uncertainty, and the company's levers to manage further changes. He also inquired about the long-term viability of the 4-6% market growth rate in light of new U.S. government funding policies.

Answer

CEO Marc Casper explained that despite a strong Q1, the guidance was updated to transparently reflect the dynamic macro environment, including tariffs and policy shifts. He outlined that an upside scenario would involve less severe U.S.-China trade impacts, while the downside would be further macro deterioration. For the long-term, he expressed optimism based on fundamental drivers like aging demographics and scientific innovation, while noting they will remain agile and transparent if their market view changes.

Michael Ryskin inquired about the 2025 guidance methodology, specifically the assumptions for potential policy changes like tariffs and export controls, and sought more detail on the drivers behind the strong EPS guidance and the projected 90 basis points of operating margin expansion.

Answer

Marc Casper, Chairman, President and CEO, explained that the company's philosophy is to manage through reasonable policy changes and that they anticipate a more business-friendly environment. Stephen Williamson, SVP and CFO, attributed the significant margin expansion to strong volume pull-through from past cost actions and ongoing productivity gains from the PPI Business System, rather than new large-scale initiatives.

Michael Ryskin inquired about the pace of market recovery into 2025, asking if it will remain gradual or if an inflection point is expected. He also requested more detail on the pharma and biotech segment, specifically on performance differences between large pharma and smaller biotech.

Answer

Marc Casper, Chairman, President and CEO, explained that while specific 2025 guidance will be provided in January, he is personally excited for the year as market conditions are modestly improving and pandemic-related headwinds will lessen. He noted that in the pharma and biotech segment, biotech funding and confidence are improving, while large pharma performance shows a normal distribution. Casper emphasized that Thermo Fisher's trusted partner status is driving differentiated performance.

Michael Ryskin (Bank of America) inquired about the conservatism within Danaher's 3%-6% core revenue guidance for 2026, seeking clarity on potential upside drivers across segments. He also pressed for details on the bioprocessing outlook, specifically regarding the order book and book-to-bill ratios for consumables and equipment, to understand the confidence behind the 2026 projections.

Answer

Rainer Blair, President and CEO, explained the guidance is based on expected end market recovery, with bioprocessing projected for high single-digit growth (consumables strong, equipment flat), life sciences and discovery/medical flat, and diagnostics in low single digits. He identified continued life science end market improvement, China acceleration, and bioprocessing exceeding high single-digit growth as key upside levers. Blair confirmed the bioprocessing order book supports high single-digit growth, with consumables book-to-bill around one and encouraging sequential equipment order increases.

Michael Ryskin asked about Danaher's 2026 core revenue guidance, specifically the 3%-6% range, questioning if segment details lean closer to the lower end. He inquired about embedded conservatism, potential upside drivers, and standout segments. Additionally, he sought clarity on the bioprocessing outlook for 2026, including order book and book-to-bill trends for both consumables and equipment, and the confidence behind the forecast given varying comparison bases.

Answer

CEO Rainer Blair explained that the 3%-6% core growth outlook is based on expected continued end market recovery. He detailed expectations for bioprocessing (high single-digit growth, flat equipment), life sciences/discovery & medical (flat with modest improvement), and diagnostics (low single-digit growth, moderating China VBP, stable respiratory). Upside levers include further improvement in life science end markets (policy, biotech funding, China research) and accelerated bioprocessing growth (equipment, consumables from biosimilars). Regarding bioprocessing orders, Rainer confirmed the order book supports high single-digit growth, with consumables book-to-bill around one and encouraging sequential equipment order increases, though it's too early to call a trend.

Michael Ryskin asked about Danaher's fiscal year 2026 guidance range of 3%-6% core revenue growth, seeking clarity on the factors that would lead to the high versus low end of this range and the remaining uncertainties. He also inquired about the ongoing situation with China diagnostics and Volume-Based Procurement (VBP), specifically how de-risked the segment is for 2027 and concerns about potential future waves of policy changes.

Answer

Rainer Blair, President and CEO, provided context on strong Q3 results and proactive Q4 investments for 2026. He detailed planning assumptions for 2026: high single-digit core growth in biotechnology (strong bioprocessing consumables, flat equipment), modest improvement in life sciences, and accelerated growth in diagnostics due to lapping China policy headwinds. Matt McGrew, Executive Vice President and CFO, added that EPS growth is expected to be high single-digits, even at the low end of the revenue range, driven by 35%-40% fall-through on volume and $250 million in net savings from 2025 cost actions. Regarding China VBP, Mr. McGrew stated they are past the initial wave, will anniversary the Q4 impact, and anticipate a modest $75 million-$100 million headwind for 2026, which is manageable.

Michael Ryskin inquired about the specific trends in bioprocessing orders, including the book-to-bill ratio and expectations for the second half, and asked for more detail on the impact of global trade tensions on customer decisions.

Answer

President & CEO Rainer Blair explained that bioprocessing trends were consistent with Q1, with strong consumables growth and delayed equipment orders due to trade policy uncertainty. He noted the book-to-bill ratio was 'around one,' supporting the H2 outlook. Blair added that trade tensions are causing pharma companies to pause decisions on where to build new capacity, an overhang he expects to clear in the next 6-12 months.

Michael Ryskin inquired about the drivers behind increased confidence in the bioprocess business and the specific levers Danaher can use to offset tariff impacts.

Answer

President and CEO Rainer Blair confirmed that strong order momentum in bioprocessing, led by consumables, drove the improved outlook. He detailed tariff mitigation strategies including supply chain regionalization, surcharges, and cost actions. EVP and CFO Matt McGrew added that the company could pursue these levers more aggressively if necessary.

Michael Ryskin questioned the Diagnostics segment's 2025 guidance, focusing on the lower Cepheid respiratory forecast and the accelerated VBP headwind in China. He also asked if the Biotechnology segment's growth was being held back by instrumentation and if a recovery was in sight.

Answer

EVP and CFO Matt McGrew attributed the accelerated VBP headwind to a more aggressive stance from the Chinese government in late Q4. He defended the $1.7 billion respiratory forecast as a return to a 'normal' endemic pattern. President and CEO Rainer Blair addressed bioprocessing, highlighting very strong orders growth and noting that while consumables demand from large customers is normalizing, smaller customers and equipment sales are still recovering.

Michael Ryskin followed up on the bioprocessing exit rate for 2024 and its implications for 2025, asking if the lag between order growth and revenue conversion is closing. He also asked for clarification on Cepheid's respiratory revenue beat, seeking to quantify the pull-forward effect, and requested more detail on where Cepheid is gaining market share.

Answer

EVP and CFO Matt McGrew confirmed that the high single-digit exit rate for bioprocessing in Q4 is a key building block for 2025 and that the gradual recovery seen in 2024 is expected to continue. Regarding Cepheid, McGrew acknowledged a significant portion of the respiratory beat was likely due to customer purchasing ahead of Q4 to ensure supply. He attributed market share gains primarily to the U.S., particularly with Integrated Delivery Networks (IDNs) expanding testing into point-of-care settings beyond the core hospital.

Michael Ryskin questioned the full-year guidance raise, specifically how Ambry's outperformance (low-to-mid 20s growth vs. mid-to-high teens) translates to the updated outlook, and if other segments are offsetting this positive trend.

Answer

Jim Rogers (CFO, Tempus AI) clarified Ambry's Q3 growth was 32%, expected to moderate in Q4. Eric Lefkofsky (CEO, Tempus AI) explained their strategy is to consistently overperform and avoid artificially raising expectations, focusing on long-term 25% growth for the next 3-10 years rather than short-term fluctuations.

Michael Ryskin questioned the full-year guidance raise, noting that Ambry's outperformance suggests a larger revenue addition than the guidance increase, and asked if other segments were offsetting this or for a bridge to the full-year outlook, emphasizing the company's long-term growth strategy.

Answer

CFO Jim Rogers clarified that Ambry's Q3 growth was 32%, and it's expected to sequentially decrease in Q4, not increase. CEO Eric Lefkofsky explained that Tempus AI takes a conservative approach to guidance, aiming for consistent overperformance rather than artificially raising expectations. He reiterated the focus on long-term, sustained growth of 25% for the next three to ten years, emphasizing that short-term quarterly fluctuations are less critical than the overall trajectory of building a very large business.

Michael Ryskin from Bank of America Merrill Lynch questioned the pipeline for major pharma partnerships in the Data and Insights business and the competitive landscape. He also asked about the company's priorities for investment while balancing growth and the path to profitability.

Answer

CEO Eric Lefkofsky described the pharma pipeline as 'super strong,' stating they have not felt pressure from competitors or pharma budget cuts, as AI/data is a small part of R&D spend. Regarding investments, he emphasized the goal of disciplined growth, aiming for sustained operating leverage and reaching adjusted EBITDA breakeven without sacrificing long-term investment. CFO Jim Rogers added that the company is not 'starving the business' to achieve this leverage and is making appropriate investments.

Michael Ryskin asked for a breakdown of the updated $1.25 billion revenue guidance, specifically how much of the new AstraZeneca/Pathos deal is included and whether the growth assumptions for the legacy Tempus oncology and Ambry hereditary businesses remain unchanged.

Answer

CEO Eric Lefkofsky confirmed that some revenue from the new AZ/Pathos deal is included in the guide, but noted the company always expects to sign and deliver a certain amount of new revenue within the year. He stated the company is being 'appropriately conservative' on the growth rates for Ambry and feels the new guidance is the right place to be, highlighting that they have raised guidance by a total of $20 million over the last 90 days.

Michael Ryskin followed up on Ambry's contribution, asking about its longer-term growth outlook beyond 2025. He also questioned the trend in Total Remaining Contract Value (TCV), noting its relative stability and asking why it shouldn't be viewed as a leading indicator for future growth.

Answer

CEO Eric Lefkofsky projected that long-term, Ambry's growth rate should align with Tempus's core genomics business at around 25%. Regarding TCV, both Lefkofsky and CFO Jim Rogers emphasized that the metric is inherently lumpy due to large, multi-year deals. They noted that the fact TCV grew at all while the company recognized record data revenue indicates a very healthy business, providing a substantial buffer and visibility.

Michael Ryskin asked for clarification on the Ambry Genetics acquisition, specifically how much of Ambry's revenue would be incremental versus overlapping with its current role as Tempus's reference lab. He also questioned the drivers behind the sequential improvement in Genomics ASP to $1,530 and the outlook for reimbursement.

Answer

CEO Eric Lefkofsky stated that the vast majority of Ambry's business is not overlapping with Tempus's current volume. CFO Jim Rogers added that the primary call points are complementary, with Ambry focused on genetic counselors and Tempus on oncologists. Regarding ASP, Rogers attributed the improvement to new in-network contracts with payers like Blue Shield of California and Illinois. He noted the next significant reimbursement accelerant would be the migration to the xT CDx assay in Q1 2025, pending ADLT pricing.

Michael Ryskin inquired about the confidence in the Q4 ramp for both organic growth and margins, especially given ongoing DRG impacts, softer Q3 reagents, and the Genomics England contribution.

Answer

Senior Vice President and CFO Max Krakowiak explained that the Q4 margin ramp to 30% is typical due to higher seasonal volumes. He attributed the organic growth ramp to IDX comps, a step-up in software (higher nominal dollars despite lower organic growth), and seasonal instrument volumes. Ryskin also asked for a snapshot of the remaining China ImmunoDiagnostics portfolio, the incremental risk in 2026, and confidence in its return to growth after Q2 2026, given its significant decline in Q3. Senior Vice President of Investor Relations Steve Willoughby stated that the DRG situation is playing out as anticipated, with headwinds expected until the Q2 2026 anniversary, after which the business is expected to return to more muted growth levels.

Michael Ryskin challenged the assumption that China's DRG changes would lead to more single-plex testing rather than just being a cost-cutting measure. He also asked for color on order trends for Life Sciences instruments.

Answer

CEO Prahlad Singh acknowledged the policy is cost-driven but argued that proper patient care for autoimmune diseases will eventually necessitate single-plex tests for specific diagnoses. CFO Max Krakowiak stated they expect the 'stably cautious' environment for instruments to continue through the second half of the year.

Michael Ryskin asked for an update on the Applied Genomics business, which is being resegmented, inquiring about its return to growth and underlying end-market trends. He also sought clarity on the 20-40 bps operating margin expansion guidance, asking about FX impact and the specific areas for the planned step-up in strategic investments.

Answer

CEO Prahlad Singh stated that the Applied Genomics business has likely bottomed out and is on a path to recovery in both clinical and pharma/biotech markets in 2025. He also clarified that FX is not expected to have a material impact on operating margins. The planned step-up in investments is focused on digital capabilities like e-commerce and AI, as well as expanding sales channels in adjacent high-growth markets, and is not considered a catch-up but a strategic move for long-term growth.

Michael Ryskin inquired about the specific drivers behind the revised Q4 2024 outlook, asking for a breakdown of the impact from instrumentation weakness in China versus globally. He also sought a framework for thinking about 2025 organic growth.

Answer

CFO Maxwell Krakowiak explained that the reduced outlook was entirely driven by weaker instrumentation assumptions, particularly in China where customers are pausing purchases ahead of stimulus. CEO Prahlad Singh added that while the worst seems to be over, the market's path to normalization will likely extend into the first half of 2025.

Michael Ryskin asked about the pricing and pass-through component, seeking to understand if current dynamics are short-term, cyclical, or structural, and any visibility on the duration of these trends and when normalization might occur.

Answer

CEO Barry Balfe described the competitive market as stable but elevated, driven by upstream dynamics like regulatory changes, geopolitical factors, and funding for biotech. He emphasized that the industry's focus should be on more cost-effective drug development through better processes and technology, which he believes will increase net spend. Balfe anticipates a gradual return to normalized levels as funding and the regulatory/political picture clarify, but refrained from providing a specific timeline.

Michael Ryskin asked about the nature of the current pricing and pass-through dynamics, specifically whether they are short-term, cyclical, or structural, and sought visibility on the duration of these dynamics and when normalization might occur.

Answer

CEO Barry Balfe described the competitive market as stable but elevated, emphasizing that drug development is too expensive and takes too long, which drives the need for better processes and technology. He attributed pricing dynamics to upstream factors like regulatory, geopolitical, and LOE-related pressures for pharma, and funding for biotech. He anticipates a gradual return to normalized levels as these factors stabilize but declined to provide a specific timeline.

Michael Ryskin from Bank of America Merrill Lynch inquired about the competitive environment, specifically who ICON competes against most frequently, and asked for an update on the progress of cost control initiatives.

Answer

CEO Steve Cutler highlighted good progress on cost controls, citing a $9 million year-over-year reduction in SG&A and the deployment of AI and technology to improve efficiency. COO Barry Balfe added that in the pharma space, competition is mainly with other large, established players, whereas the competitive set is more diversified in the biotech market.

Michael Ryskin of Bank of America questioned why the full-year revenue guidance was not more conservative, given the weak book-to-bill, elevated cancellations, and the removal of two large COVID trials.

Answer

CFO Nigel Clerkin clarified that the guidance is a range that reflects a cautious view on book-to-bill and also accounts for a modest FX tailwind. CEO Dr. Steve Cutler added that positive news regarding the restart of one of the previously delayed trials provides additional reassurance for the current guidance range.

Michael Ryskin asked a big-picture question, referencing the prior quarter's framing of risks versus opportunities, and whether management's perspective on balancing these factors has changed given recent performance and the outlook.

Answer

CEO Dr. Steve Cutler responded with a definitive 'absolutely yes,' confirming their perspective remains the same. He explained that they continue to operate in a highly volatile environment where both risks and opportunities are more numerous and potentially larger in scale. This reality is the primary reason for maintaining the wide guidance range, as navigating this balance is key to performance.

Michael Ryskin asked whether the revised guidance was driven more by the risk of protracted headwinds from the two large pharma customers or by a lack of confidence in offsetting opportunities.

Answer

CEO Dr. Steve Cutler described the quarter as an anomaly where identified risks materialized to a much greater extent than opportunities could offset, a rare occurrence in his experience. He stated the process isn't broken and he doesn't see this imbalance as a new trend. SVP Kate Haven added that the updated Q4 forecast now reflects the continuation of these Q3 headwinds, implying a more conservative view on near-term opportunities.

Michael Ryskin of Bank of America Merrill Lynch sought clarification on the fiscal 2026 guidance, asking to break out the inorganic contribution from the Zoetis MFA acquisition and its impact on adjusted EBITDA. He also questioned the specific drivers behind the strong 7% growth in the legacy Animal Health business during fiscal 2025.

Answer

CFO Glenn David clarified that at least half of the projected $40-50 million incremental EBITDA in fiscal 2026 is from the full-year contribution of the Zoetis business, with the rest from legacy growth and the Fibro Forward initiative. Regarding the strong legacy performance in 2025, he noted that the 4% MFA growth was partly due to weaker comparators in the prior year. COO Larry Miller added that continued strong demand and new product introductions in the vaccines and nutritional specialties segments were also significant contributors to the outperformance.

Michael Ryskin from Bank of America asked for clarification on the updated full-year guidance, noting that while revenue guidance was largely unchanged, the EBITDA and EPS forecasts were raised significantly. He inquired about the primary drivers behind this impressive increase, questioning whether it was due to product mix, the Phibro Forward initiative, or other factors.

Answer

CFO Glenn David explained that the guidance increase was driven by several factors. He confirmed that favorable product mix, particularly in the vaccine portfolio, and incremental growth from the Phibro Forward initiative were contributors. However, David identified the largest factor as the higher-than-expected margin contribution from the newly acquired Zoetis MFA portfolio, which is benefiting from Phibro's ability to leverage its global infrastructure more effectively than initially anticipated.

Michael Ryskin questioned the drivers behind the significant increase in EBITDA and EPS guidance while revenue guidance remained stable. He also requested more specific details on tariff impacts, such as the product categories or geographic sources involved.

Answer

CFO Glenn David attributed the improved guidance to a favorable product mix, benefits from the Phibro Forward initiative, and stronger-than-anticipated margin contribution from the newly integrated Zoetis MFA portfolio. Chairman, President and CEO Jack Bendheim clarified that tariff pressures are not primarily from China-sourced active ingredients but from broader tariffs on various inputs, which the company is managing through supplier negotiations and operational adjustments.

Speaking on behalf of Michael Ryskin, an analyst asked why the EPS guidance for the Zoetis MFA acquisition came in significantly higher than expected while revenue guidance was in line, and also questioned if the initial two-month revenue contribution of $37 million was light relative to the full-year target.

Answer

Chief Financial Officer Glenn David attributed the EPS upside to better-than-anticipated profitability from the Zoetis assets, driven by the timing of hiring costs and a favorable product mix. He clarified that the initial revenue was impacted by expected transition effects like blackout periods and destocking, noting that December sales were double those of November, indicating strong acceleration toward the full-year target.

Michael Ryskin asked for clarification on the Zoetis MFA acquisition guidance, questioning why the 8-month contribution was not a simple pro-rata of the full-year estimate. He also inquired about the rationale for discontinuing the atopic dermatitis product and the sustainability of the strong 15% growth in the legacy MFA business.

Answer

CFO Glenn David explained the Zoetis guidance reflects transitory impacts in the first 3-6 months, including inventory destocking required by the deal and regulatory-driven sales blackout periods in certain markets. EVP Daniel Bendheim stated the atopic dermatitis project was discontinued because it 'missed the mark' on its target product profile. COO Larry Miller and CFO Glenn David attributed the strong MFA performance to continuing trends from FY24, favorable seasonality, strong product demand, and the focus of their sales team.

Michael Ryskin inquired about the specific growth drivers behind the fiscal 2025 revenue guidance for the Animal Health sub-segments, sought more detail on the 'Phibro Forward' initiative's scope and timing, and asked about the regulatory approval status for the Zoetis MFA acquisition.

Answer

CFO Glenn David detailed the FY2025 guidance, projecting continued growth in Animal Health and a recovery in other segments, while noting vaccine growth would moderate from FY2024's high pace. CEO Jack Bendheim and EVP Daniel Bendheim elaborated on the 'Phibro Forward' initiative, describing it as a multi-year plan focused on revenue and cost efficiencies with benefits accelerating in FY2026 and FY2027. Daniel Bendheim also confirmed that U.S. regulatory approval for the Zoetis MFA deal is secured, with one international approval pending, targeting a Q4 calendar year close.

Michael Ryskin of Bank of America Merrill Lynch questioned the current pricing environment, customer price sensitivity, and any differing geographic trends in customer behavior.

Answer

CEO Christian Wojczewski explained that while there is more price pressure in the transactional services business, the company's integrated and strategic partnerships are less price-sensitive due to their unique value. Geographically, he noted strong traction in East Asia, caution in the US, and Europe positioned in the middle, with Evotec's primary exposure being to the US and Europe.

Michael Ryskin asked about the historical volatility in Discovery closed sales, questioning if it's driven by seasonality or large orders and how predictive recent strength is. He also questioned if market demand signals have altered the timeline or extent of the company's cost optimization and capacity reduction plans.

Answer

CBO Matthias Evers explained that the volatility in Discovery sales is driven by high-value, large contracts rather than a steady flow of smaller units. COO Craig Johnstone and CBO Matthias Evers confirmed the cost reset plan is fully on track and its timeline is unchanged, stating the goal is to create a more efficient base from which to grow as the market recovers.

Michael Ryskin from Bank of America Merrill Lynch asked about the key drivers behind the Q2 Average Selling Price (ASP) increase, the level of conservatism in the full-year guidance, and the company's ability to sustain positive adjusted EBITDA.

Answer

Luke Power, SVP & CFO, attributed the strong ASP primarily to the rapid adoption of the FDA-approved MI CancerSEQ assay, which constituted 78% of tissue cases, and improved commercial payer coverage affecting over 170 million lives. He explained the full-year guidance reflects a cautious approach while acknowledging the potential for upside. Power also confirmed the company expects to maintain positive adjusted EBITDA going forward, having crossed a significant profitability milestone.

Michael Ryskin of Bank of America Merrill Lynch inquired about the drivers of the significant Q2 ASP uplift, the potential conservatism in the full-year guidance, and the sustainability of positive adjusted EBITDA.

Answer

SVP & CFO Luke Power attributed the strong ASP to the high adoption rate of MI CancerSEQ (78% of tissue cases), Medicare reimbursement catch-ups, and new commercial contracts covering over 170 million lives. He clarified that the annual guidance is built on a more linear growth model from a pre-true-up base. Power also confirmed the company expects to remain adjusted EBITDA positive going forward, having crossed that profitability milestone.

Michael Ryskin asked for details on the Q2 Average Selling Price (ASP) uplift, questioning the split between Medicare realization and commercial payer progress, the conservatism in the full-year guidance given the strong Q2 exit rate, and the sustainability of positive adjusted EBITDA.

Answer

Luke Power, SVP, CFO & Chief Accounting Officer, explained that the ASP increase was primarily driven by the mix shift to MI CancerSEQ, which constituted 78% of tissue cases, along with catch-up Medicare payments and new commercial contracts covering over 170 million lives. He noted the guidance reflects a conservative, linear growth model for ASP and volumes in H2. Power also confirmed that the company expects to remain adjusted EBITDA positive going forward, stating they have "crossed that bridge."

Michael Ryskin of Bank of America asked why Fortrea's cancellation trends have been more resilient than peers and questioned the second-half EBITDA outlook, suggesting it appeared conservative given the expected impact of cost savings.

Answer

CFO Jill McConnell attributed the stable cancellation rate to the company's limited exposure to government-funded work and vaccines, along with a conservative bookings policy. Regarding the EBITDA outlook, she explained that the guidance reflects the timing of SG&A savings, which are weighted to the second half, and the impact of slightly lower service fee revenue projected for H2.

Michael Ryskin requested clarification on the cost savings figures, asking what was incremental compared to the prior quarter's announcement and seeking details on the timing and line-item impact.

Answer

CFO Jill McConnell confirmed the figures were consistent with the Q4 call and that no new programs were being announced. The plan remains a $150 million gross reduction ($70M from SG&A, $80M from operations) yielding a $90-$100 million net benefit. She emphasized that while the plans are set, the company continues to 'sharpen the pencil' to find further optimizations to align its cost structure with peers.

Michael Ryskin challenged the clear distinction between pre- and post-spin project quality, noting the employee base is largely the same, and asked if there's a risk that some earlier post-spin bookings could also be lower quality.

Answer

CEO Tom Pike countered that management processes have changed 'quite a lot.' He cited more detailed and frequent project reviews, stricter controls over scope changes, and a more aggressive hubbing strategy to use lower-cost resources as key differences. He asserted that this new discipline has made a significant difference, though it is difficult to apply retroactively to mature projects.

Michael Ryskin from Bank of America Merrill Lynch asked for more detail on the company's increased emphasis on strategic partnerships for the cancer care continuum, including examples of what these partnerships and their financial structures might look like.

Answer

President and CEO Sam Raha used the existing Pathomic partnership as a key example, where a partner's AI capabilities are combined with Myriad's molecular assay. He described a model where partners provide R&D or product development, which is then complemented by Myriad's extensive commercial reach, reputation, and operational infrastructure. He suggested financial structures could include milestone payments and royalties, designed to be mutually beneficial and favorable to Myriad's financials.

Speaking for Michael Ryskin, an analyst from Bank of America asked for quantification of the progress made in reducing the 'no pay' rate and the size of the remaining opportunity, particularly for 2025.

Answer

An executive, likely CFO Scott Leffler, referenced the improvement from a 46% to 44% 'no pay' rate mentioned at the recent investor event and noted that progress continued in Q3. While not committing to a specific 2025 target, he reiterated that achieving a 2% annual improvement is a reasonable minimum expectation, with potential for up to 4% in a good year.

Michael Ryskin sought to clarify the updated revenue guidance, asking for the drivers of the remaining $10 million in operational improvement after accounting for FX and InVueDx. He also asked about the InVueDx consumable sales process, specifically if there is an initial bolus of consumables sold with each instrument placement.

Answer

CFO Andrew Emerson attributed the operational revenue uplift to strong Q2 performance and continued momentum from innovation, which is partially offset by planned commercial investments. CEO Jay Mazelsky explained that InVueDx utilizes a pay-per-run and auto-replenishment model, so there is no large initial bolus of consumables at launch; instead, supplies are shipped as they are used, which is tracked during the onboarding and training process.

Michael Ryskin asked about the macroeconomic impact on clinical visit trends, particularly the dynamics between wellness and non-wellness visits, and inquired about the rollout of the IDEXX inVue Dx analyzer, including customer feedback and placement pacing for the year.

Answer

CEO Jay Mazelsky noted that overall visit trends have stabilized, with a snapback in wellness visits driven by seasonal factors and practices focusing on re-engagement. Executive Andrew Emerson added that the quality of visits remains high, with increased diagnostic utilization. Regarding inVue Dx, Mazelsky confirmed an accelerated rollout in April after moving to a full launch, highlighted enthusiastic customer feedback on workflow benefits, and reiterated the full-year placement goal of 4,500+ units.

Michael Ryskin asked about the widening gap between wellness and non-wellness visit trends in Q4, questioning if it was driven by consumer price elasticity. He also asked for the rationale behind the increased share buyback assumption in the 2025 guidance.

Answer

CEO Jay Mazelsky acknowledged potential macro impacts but emphasized that the quality of wellness visits improved, with higher diagnostic inclusion rates. He believes the new Cancer Dx panel will further support this trend. Incoming CFO Andrew Emerson explained the larger buyback reflects high confidence in the business, strong free cash flow, and a healthy balance sheet, which allows for higher capital deployment while maintaining low leverage.

Michael Ryskin questioned the weakness in Reference Lab revenue, specifically asking for details on the pricing impact from three major new customer agreements. He followed up by asking about the sustainability of the current 5% price realization and if it's expected to normalize to historical levels.

Answer

Executive Brian McKeon explained that Reference Lab organic growth was about 3% when normalized for shipping day effects and that volume growth was positive. He confirmed that price realization was moderated by three major customer agreements that are expected to drive long-term volume growth. CEO Jay Mazelsky added that the Reference Lab is more exposed to pressured wellness testing. Regarding overall pricing, McKeon reinforced the 5% full-year outlook, stating the company continues to deliver significant value through innovation, implying sustained pricing power.

Michael Ryskin of Bank of America Merrill Lynch asked for confirmation on the PANTRACER launch ramp, questioned the company's competitive positioning in the lagging pharma services segment, and inquired about future use of cash and confidence in handling upcoming debt maturities.

Answer

CEO Tony Zook confirmed the PANTRACER launch plan is unchanged, merely delayed. He acknowledged that portfolio gaps, including the inability to sell RADAR 1.0, have impacted pharma services and that he sees continued risk in that segment. CFO Jeff Sherman expressed confidence in future cash flow generation, which he expects will allow the company to grow its cash balance and be in a strong position to address the 2028 convertible notes.

Michael Ryskin of Bank of America Merrill Lynch sought confirmation on the PANTRACER launch ramp, questioned the competitive positioning of the pharma services business, and asked about the company's cash position relative to future debt maturities.

Answer

CEO Tony Zook confirmed the PANTRACER launch plan is intact, just delayed. He attributed some pharma services weakness to the loss of RADAR 1.0 as a portfolio offering. CFO Jeff Sherman expressed confidence in their future cash flow generation and ability to manage the 2028 convertible notes from a position of strength.

Representing Michael Ryskin, John Kim asked for a timeline on NGS reaching 50% of clinical revenue and for an update on the uptake of licensing informatics data to pharma companies.

Answer

CEO Christopher Smith stated that while the market is shifting to NGS, the company has not set a specific timeline for it to reach 50% of revenue, as their other testing modalities are also growing. He noted it is still 'early days' for licensing informatics data, particularly from the newer solid tumor tests.

Michael Ryskin of Bank of America Merrill Lynch focused on the increased win rates in the emerging biopharma (EVP) segment, asking what internal steps were taken to achieve this and if the improvement is sustainable.

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CEO & Chairman Ari Bousbib attributed the success to a 'see more, win more' strategy. This involves aggressively pursuing and responding to more RFPs (which were up low-teens YoY) and being more flexible on pricing to secure wins. He stated the strategy is sustainable because the qualified pipeline remains strong, particularly in EVP, and the execution depends on IQVIA's own capabilities and strategic choices.

Michael Ryskin asked for clarification on the drivers behind the 1.02 book-to-bill ratio, particularly the impact from emerging biotech funding, and followed up with a question about any changes in the R&DS pricing environment.

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Chairman and CEO Ari Bousbib attributed the softer book-to-bill to macro uncertainty causing large pharma to delay contract signings and an unusually high number of EBP awards being excluded from bookings due to unconfirmed funding. He emphasized that quarterly book-to-bill is not a reliable growth predictor. On pricing, he stated there has been no change, as the environment remains tough but stable, consistent with expectations after last year's strategic partnership renewals.

Michael Ryskin sought more clarity on the comment that pharma portfolio reprioritization is '70-75% done,' asking how IQVIA arrives at that figure given the potential for further client cuts.

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Ari Bousbib, CEO, explained that the figure is a 'best guess' estimate derived from continuous, high-level conversations with clients, which provide visibility into their pipelines and programs under review. He strongly cautioned against over-focusing on quarterly metrics like book-to-bill for a long-cycle business, calling the practice 'intellectually flawed' and detrimental to pricing negotiations.

Michael Ryskin inquired about the economic details of the $29 million ARPA-H contract, including revenue recognition, and asked about the security of other government contracts amid potential funding cutbacks.

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Mark Dmytruk, an executive, explained that the $29 million ARPA-H contract is a two-year deal, with revenue recognized over that period, which significantly de-risks the annual guidance. He clarified that Ginkgo is the prime contractor and will recognize the full revenue amount. Executive Jason Kelly added that biotechnology remains a critical technology for the U.S. government, expressing cautious optimism about continued funding and noting recent executive orders supporting domestic production and biosecurity.

Michael Ryskin asked about the long-term tariff impact into 2026 and when the Fishers plant might fully offset it, and also about the recovery timeline for the Engineering segment's gross profit margin.

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CFO Marco Dal Lago acknowledged the Fishers plant ramp-up is the primary long-term mitigator for tariffs. Regarding the Engineering segment, CEO Franco Stevanato stated that legacy projects are on track for completion in 2025, with the majority by mid-year. CFO Marco Dal Lago added that he expects sequential margin improvement in the segment throughout the year.

Michael Ryskin of BofA Securities asked about the expected timeline for a full recovery in the vial market and the key drivers and timing for the Fishers and Latina facilities to transition from being margin dilutive to margin accretive.

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Chairman and CEO Franco Stevanato stated that the company anticipates a gradual recovery in vial demand throughout 2025. CFO Marco Dal Lago added that the Latina plant is expected to achieve normal gross profit margins by the end of 2025, while the larger Fishers facility is projected to turn gross profit positive in the second half of 2025, though it will remain dilutive for the full year.

An analyst on for Michael Ryskin asked how Hologic is thinking about tariff mitigation strategies for fiscal 2026 and whether the current macro environment has altered its capital allocation priorities.

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CFO Karleen Oberton stated that, absent policy changes, the company expects the current $20-$25 million quarterly headwind from tariffs to continue into 2026. On capital allocation, she reaffirmed the company's strategy remains unchanged, with a priority on tuck-in M&A and share repurchases, supported by a strong balance sheet with $1.6 billion in cash and investments and robust cash flow generation.

Speaking for Michael Ryskin, an analyst asked about Panther placement trends and whether a slowdown impacts growth, given the reagent-rental model. He also requested an update on the statistics for Panther customers using multiple assays.

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Chief Financial Officer Karleen Oberton confirmed that Panther placements have slowed as expected from their pandemic peak, but this does not impact business growth, which is driven by assay utilization. Chairman, President and CEO Stephen MacMillan reinforced that the business model relies on recurring assay revenue, not instrument sales. CFO Karleen Oberton added that while specific stats weren't updated, the trend of customers adopting more assays continues to move in the right direction.

Michael Ryskin asked for clarification on management's statement that their blood test would be 'at least comparable' to others. He sought to understand which specific performance metrics this referred to, such as overall sensitivity, specificity, advanced adenoma (AA) detection, or Stage 1 cancer detection.

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CEO Kevin Conroy clarified that they are targeting specificity of at least 90% (the Medicare minimum) and cancer sensitivity in the low 80% range, which is similar to what competitors have shown. He noted that while competitor tests are 'essentially blind' to precancerous polyps beyond the false positive rate, Exact Sciences' test is seeing 'very similar cancer detection' and 'better precancer detection.' He stressed that the ultimate comparison would be in life years gained, where precancer detection is a key factor.