Q4 2025 QuidelOrtho Corp Earnings Call

February 11, 2026

Operator: Good morning or good afternoon. Welcome to the QuidelOrtho Fourth Quarter and Full Year 2025 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared remarks. Please note this conference call is being recorded. An audio replay of the conference call will be available on the company's website shortly after this call. I would now like to turn the call over to Juliet Cunningham, Vice President of Investor Relations.

Speaker #1: Good morning, or good afternoon. Welcome to the Quidel Corp Fourth Quarter and Full Year 2025 Financial Results Conference Call and Webcast. At this time, all participants are in a listen-only mode.

Speaker #1: For those of you participating in the conference call, there will be an opportunity for your questions at the end of today's prepared remarks. Please note this conference call is being recorded.

Speaker #1: An audio replay of the conference call will be available on the company's website shortly after this call. I would now like to turn the call over to Juliet Cunningham, Vice President of Investor.

Speaker #1: Relations.

Speaker #2: Thank you. Good afternoon,

Juliet Cunningham: Thank you. Good afternoon, everyone. Thanks for joining us. With me today are Brian Blaser, President and Chief Executive Officer, Jonathan Siegrist, Chief Technology Officer, and Joe Busky, Chief Financial Officer. This conference call is being simultaneously webcast on the Investor Relations page of our website. To assist in the presentation, we also posted supplemental information on our IR page that will be referenced throughout this call. This conference call and supplemental information contains forward-looking statements, which are made as of today, February 11, 2026. We assume no obligation to update any forward-looking statement except as required by law. Statements that are not strictly historical, including the company's expectations, plans, financial guidance, future performance, and prospects, are forward-looking statements that are subject to certain risks, uncertainties, assumptions, and other factors. Actual results may vary materially from those expressed or implied in these forward-looking statements.

Speaker #2: everyone. Thanks for joining us. With me today are Brian Blaser, President and Chief Executive Officer; Jonathan Seegrist, Chief Technology Officer; and Joe Busky, Chief Financial Officer.

Speaker #2: This conference call is being simultaneously webcast on the Investor Relations page of our website. To assist in the presentation, we also posted supplemental information on our IR page that will be referenced throughout this call.

Speaker #2: This conference call and supplemental information contain forward-looking statements, which are made as of today, February 11, 2026. We assume no obligation to update any forward-looking statement, except as required by law.

Speaker #2: Statements that are not strictly historical, including the company's expectations, plans, financial guidance, future performance, and prospects, are forward-looking statements that are subject to certain risks, uncertainties, and factors.

Speaker #2: Actual results may vary materially from those expressed or implied in these forward-looking statements. Please refer to our SEC filings for a description of potential risk.

Juliet Cunningham: Please refer to our SEC filings for a description of potential risks. In addition, today's call includes discussion of certain non-GAAP financial measures. Tables reconciling these non-GAAP measures to their most directly comparable GAAP measures are available in our earnings release and supplemental information on the IR page of our website. Lastly, unless stated otherwise, all year-over-year revenue growth rates given on today's call are on a constant currency basis. And now I'd like to turn the call over to our CEO, Brian Blaser.

Speaker #2: In addition, today's call includes discussion of certain non-GAAP financial measures. Tables reconciling these non-GAAP measures to their most directly comparable GAAP measures are available in our earnings release and supplemental information on the IR page of our website.

Speaker #2: Lastly, unless stated otherwise, all year-over-year revenue growth rates given on today's call are on a constant currency basis. And now, I'd like to turn the call over to our CEO, Brian Blaser.

Speaker #3: Thank you, Juliet. Good afternoon, everyone. I'd like to begin today's call with a brief reflection on my experience since joining QuidelOrtho in May 2024, and then focus on how the work we've done positions the company for the future.

Joe Busky: Thank you, Juliet. Good afternoon, everyone. I'd like to begin today's call with a brief reflection on my experience since joining QuidelOrtho in May 2024, and then focus on how the work we've done positions the company for the future. I'll highlight key progress from 2025, which includes strong mid-single-digit growth, before turning the call over to Jonathan to discuss our recent progress in R&D. When I joined the business, QuidelOrtho was a company I knew well and respected, with broad and differentiated portfolio spanning the entire patient care journey. It was clear that the opportunity ahead was not driven by structural issues, but more about optimizing our business model and executing more consistently and with greater discipline to unlock the full potential of the portfolio.

Brian Blaser: Thank you, Juliet. Good afternoon, everyone. I'd like to begin today's call with a brief reflection on my experience since joining QuidelOrtho in May 2024, and then focus on how the work we've done positions the company for the future. I'll highlight key progress from 2025, which includes strong mid-single-digit growth, before turning the call over to Jonathan to discuss our recent progress in R&D. When I joined the business, QuidelOrtho was a company I knew well and respected, with broad and differentiated portfolio spanning the entire patient care journey. It was clear that the opportunity ahead was not driven by structural issues, but more about optimizing our business model and executing more consistently and with greater discipline to unlock the full potential of the portfolio.

Speaker #3: And I'll highlight key progress from 2025, which includes strong mid-single-digit growth, before turning the call over to Jonathan to discuss our recent progress in R&D.

Speaker #3: When I joined the business, Quidel Orto was a company I knew well and respected. With broad and differentiated portfolios spanning the entire patient care journey, it was clear that the opportunity ahead was not driven by structural issues but more about optimizing our business model, and executing more consistently and with greater discipline to unlock the full potential of the portfolio.

Speaker #3: Early on, I conducted a comprehensive review of the business with the leadership team across our portfolio, operations, commercial execution, and talent. And from that work, we established three clear priorities.

Joe Busky: Early on, I conducted a comprehensive review of the business with the leadership team across our portfolio, operations, commercial execution, and talent, and from that work, we established three clear priorities: putting customers at the center of everything we do, strengthening, strengthening operational and financial performance, and accelerating product development to support long-term growth. In 2025, we did exactly what we set out to do. We realigned our cost structure, strengthened execution rigor, and improved the way the organization operates day-to-day. To date, our actions have generated $140 million in cost savings, expanded Adjusted EBITDA margins to the low 20s, and increased our financial flexibility. And we did this while delivering strong growth in our labs business, supported by our recurring revenue business model. And importantly, we believe the changes we made in the business will be lasting in nature and designed to be sustained.

Brian Blaser: Early on, I conducted a comprehensive review of the business with the leadership team across our portfolio, operations, commercial execution, and talent, and from that work, we established three clear priorities: putting customers at the center of everything we do, strengthening, strengthening operational and financial performance, and accelerating product development to support long-term growth. In 2025, we did exactly what we set out to do. We realigned our cost structure, strengthened execution rigor, and improved the way the organization operates day-to-day. To date, our actions have generated $140 million in cost savings, expanded Adjusted EBITDA margins to the low 20s, and increased our financial flexibility. And we did this while delivering strong growth in our labs business, supported by our recurring revenue business model. And importantly, we believe the changes we made in the business will be lasting in nature and designed to be sustained.

Speaker #3: Putting customers at the center of everything we do, strengthening operational and financial performance, and accelerating product development to support long-term growth. In 2025, we did exactly what we set out to do.

Speaker #3: We realigned our cost structure, strengthened execution rigor, and improved the way the organization operates day to day. To date, our actions drove cost savings, expanded adjusted EBITDA margins to the low 20s, and increased our financial flexibility.

Speaker #3: And we did this while delivering strong growth in our labs business, supported by our recurring revenue business model. And importantly, we believe the changes we made in the business will be lasting in nature and designed to be sustained.

Speaker #3: And with that context, I'd like to turn now to our Q4 financial highlights, which will be in constant currency unless otherwise noted. Joe will provide greater detail on our Q4 and full-year results, as well as provide our 2026 financial guidance later in the call.

Joe Busky: With that context, I'd like to turn now to our Q4 financial highlights, which will be in constant currency unless otherwise noted. Joe will provide greater detail on our Q4 and the full year results, as well as provide our 2026 financial guidance later in the call. Fourth quarter revenue was $724 million, as reported, with 7% growth in non-respiratory, excluding donor screening. Our labs business reported strong growth of 7% in Q4, driven by continued strength in clinical chemistry. Respiratory revenue declined as expected due to COVID-19. However, we saw strong flu revenue growth of 6%. For the full year, we achieved our 2025 financial guidance with $2.73 billion in revenue as reported. Excluding donor screening, non-respiratory revenue grew 5%.

Brian Blaser: With that context, I'd like to turn now to our Q4 financial highlights, which will be in constant currency unless otherwise noted. Joe will provide greater detail on our Q4 and the full year results, as well as provide our 2026 financial guidance later in the call. Fourth quarter revenue was $724 million, as reported, with 7% growth in non-respiratory, excluding donor screening. Our labs business reported strong growth of 7% in Q4, driven by continued strength in clinical chemistry. Respiratory revenue declined as expected due to COVID-19. However, we saw strong flu revenue growth of 6%. For the full year, we achieved our 2025 financial guidance with $2.73 billion in revenue as reported. Excluding donor screening, non-respiratory revenue grew 5%.

Speaker #3: Fourth quarter revenue was $724 million as reported, with 7% growth in non-respiratory, excluding donor screening. Our labs business reported strong growth of 7% in Q4, driven by continued strength in clinical chemistry.

Speaker #3: Respiratory revenue declined as expected due to COVID-19. However, we saw strong flu revenue growth of 6%. For the full year, we achieved our 2025 financial guidance with $2.73 billion in revenue as reported.

Speaker #3: Excluding donor screening, non-respiratory revenue grew 5%. Our labs business had strong mid-single-digit growth at 6% for the full year and represented 55% of total company revenue, pointing to the strength of our underlying business.

Joe Busky: Our labs business had strong mid-single digit growth at 6% for the full year and represented 55% of total company revenue, pointing to the strength of our underlying business. Respiratory revenue totaled $402 million as reported. Operating expenses decreased by 5% as a direct result of our company-wide cost savings initiatives. Adjusted EBITDA margin was 22%, in line with our 2025 guidance and representing a 240 basis point improvement over the prior year. Our full year results included a significant non-cash goodwill charge in our GAAP results that was recorded in Q3. And let me be clear that this was an accounting reset that reflects post-pandemic market valuations. It does not impact our cash, our operations, or our ability to invest in the core business engine you see performing today.

Brian Blaser: Our labs business had strong mid-single digit growth at 6% for the full year and represented 55% of total company revenue, pointing to the strength of our underlying business. Respiratory revenue totaled $402 million as reported. Operating expenses decreased by 5% as a direct result of our company-wide cost savings initiatives. Adjusted EBITDA margin was 22%, in line with our 2025 guidance and representing a 240 basis point improvement over the prior year. Our full year results included a significant non-cash goodwill charge in our GAAP results that was recorded in Q3. And let me be clear that this was an accounting reset that reflects post-pandemic market valuations. It does not impact our cash, our operations, or our ability to invest in the core business engine you see performing today.

Speaker #3: Respiratory revenue totaled $402 million as reported. Operating expenses decreased by 5% as a direct result of our company-wide cost savings initiatives. Adjusted EBITDA margin was 22%, in line with our 2025 guidance and representing a $240 basis point improvement over the prior year.

Speaker #3: Our full year results included a significant non-cash goodwill charge in our GAAP results that was recorded in Q3. And let me be clear that this was an accounting reset that reflects post-pandemic market valuations; it does not impact our cash, our operations, or our ability to invest in the core business engine you see performing today.

Speaker #3: In closing, we're pleased with our 2025 performance and progress against our priorities. Looking ahead, our objective is to maximize the value of Quidel Orto by delivering superior outcomes for our customers and, over time, converting that value into attractive returns for shareholders.

Joe Busky: In closing, we're pleased with our 2025 performance and progress against our priorities. Looking ahead, our objective is to maximize the value of QuidelOrtho by delivering superior outcomes for our customers, and over time, converting that value into attractive returns for shareholders. We are guided by a clear financial and operating framework, driving above-market growth, expanding margins through execution and mix, generating strong cash flow, and strengthening the balance sheet. These are long-term objectives that reflect the earnings power of the business when executed consistently. And to support this, we have aligned the organization to optimize the customer experience and drive effective execution across every dimension of the business. We are sharpening our focus by prioritizing higher growth markets and being selective in how and where we deploy capital, while also continuing to build a strong leadership team and a culture grounded in quality, accountability, and continuous improvement.

Brian Blaser: In closing, we're pleased with our 2025 performance and progress against our priorities. Looking ahead, our objective is to maximize the value of QuidelOrtho by delivering superior outcomes for our customers, and over time, converting that value into attractive returns for shareholders. We are guided by a clear financial and operating framework, driving above-market growth, expanding margins through execution and mix, generating strong cash flow, and strengthening the balance sheet. These are long-term objectives that reflect the earnings power of the business when executed consistently. And to support this, we have aligned the organization to optimize the customer experience and drive effective execution across every dimension of the business. We are sharpening our focus by prioritizing higher growth markets and being selective in how and where we deploy capital, while also continuing to build a strong leadership team and a culture grounded in quality, accountability, and continuous improvement.

Speaker #3: We, financial and operating framework, are guided by a clear drive: above-market growth, expanding margins through execution and mix, generating strong cash flow, and strengthening the balance sheet.

Speaker #3: These are long-term objectives that reflect the earnings power of the business when executed consistently. To support this, we have aligned the organization to optimize the customer experience and drive effective execution across every dimension of the business.

Speaker #3: We are sharpening our focus by prioritizing higher growth markets and being selective in how and where we deploy capital, while also continuing to build a strong leadership team and a culture grounded in quality, accountability, and continuous improvement.

Speaker #3: Our progress this year would not have been possible without the dedication of our employees around the world. Together, we are rebuilding a culture that is grounded in continuous improvement and positioning the company for long-term success.

Joe Busky: Our progress this year would not have been possible without the dedication of our employees around the world. Together, we are rebuilding a culture that is grounded in continuous improvement and positioning the company for long-term success. As teams evolve, leadership transitions naturally occur. Today, we announced that Joe Busky has decided to retire as CFO in June. We've initiated a search for his successor. Both Joe and I are fully committed to ensuring a smooth transition. Joe has built a highly capable finance organization and has been instrumental in achieving our cost savings initiatives over the past 18 months. I want to sincerely thank Joe for his many contributions to QuidelOrtho, and wish him all the best in, in his retirement. Thank you, Joe. Delivering on our ambitions requires a strong and disciplined R&D team.

Brian Blaser: Our progress this year would not have been possible without the dedication of our employees around the world. Together, we are rebuilding a culture that is grounded in continuous improvement and positioning the company for long-term success. As teams evolve, leadership transitions naturally occur. Today, we announced that Joe Busky has decided to retire as CFO in June. We've initiated a search for his successor. Both Joe and I are fully committed to ensuring a smooth transition. Joe has built a highly capable finance organization and has been instrumental in achieving our cost savings initiatives over the past 18 months. I want to sincerely thank Joe for his many contributions to QuidelOrtho, and wish him all the best in, in his retirement. Thank you, Joe. Delivering on our ambitions requires a strong and disciplined R&D team.

Speaker #3: And as teams evolve, leadership transitions naturally occur. Today, we announced that Joe Busky has decided to retire as CFO in June. We have initiated a search for his successor, and both Joe and I are fully committed to ensuring a smooth transition.

Speaker #3: Joe has built a highly capable finance organization and has been instrumental in achieving our cost savings initiatives over the past 18 months. I want to sincerely thank Joe for his many contributions to QuidelOrtho and wish him all the best in his retirement.

Speaker #3: Thank you, Joe. Delivering on our ambitions requires a strong and disciplined R&D team. As I mentioned earlier, this was an area we identified as needing improvement, and we were pleased to welcome Jonathan Seagrist in late 2024 to lead these critical functions.

Joe Busky: As I mentioned earlier, this was an area we identified as needing improvement, and we were pleased to welcome Jonathan Siegrist in late 2024 to lead these critical functions. Jonathan has played a key role in advancing our continuous improvement culture in R&D, and he has several important innovations underway. So I asked him to join us today and provide a deeper look at what's ahead. Jonathan?

Brian Blaser: As I mentioned earlier, this was an area we identified as needing improvement, and we were pleased to welcome Jonathan Siegrist in late 2024 to lead these critical functions. Jonathan has played a key role in advancing our continuous improvement culture in R&D, and he has several important innovations underway. So I asked him to join us today and provide a deeper look at what's ahead. Jonathan?

Speaker #3: Jonathan has played a key role in advancing our continuous improvement culture in R&D, and he has several important innovations underway. So I asked him to join us today and provide a deeper look at what's ahead.

Speaker #3: Jonathan?

Speaker #4: Thanks, Brian. It's a pleasure to be here today, especially as we share our strong results for both the quarter and the year. As Brian noted, QuidelOrtho has undergone a significant transformation, and R&D has been central to that journey.

Jonathan Siegrist: Thanks, Brian. It's a pleasure to be here today, especially as we share our strong results for both the quarter and the year. As Brian noted, QuidelOrtho has undergone a significant transformation, and R&D has been central to that journey. Over the past year, I've had the privilege of leading and advancing our overall R&D organization, including our regulatory and clinical teams. In a short time, we've upgraded talent, modernized our R&D processes, and strengthened our product pipeline to support sustained growth, both in the near term and the long term. We reorganized the team to be more efficient and scalable, strengthened our regulatory and quality teams with external domain expertise, and fostered a culture of scientific rigor, process excellence, and deep cross-functional collaboration. By prioritizing the critical few programs with the greatest impact, we've built a much stronger and more productive R&D organization.

Speaker #4: Over the past year, I've had the privilege of leading and advancing our overall R&D organization, including our regulatory and clinical teams. In a short time, we've upgraded talent, modernized our R&D processes, and strengthened our product pipeline to support sustained growth both in the near term and the long term.

Speaker #4: We reorganized the team to be more efficient and scalable, strengthened our regulatory and quality teams with external domain expertise, and fostered a culture of scientific rigor, process excellence, and deep cross-functional collaboration.

Speaker #4: By prioritizing the critical few programs with the greatest impact, we built a much stronger and more productive R&D organization. That focus delivered tangible results in 2025.

Jonathan Siegrist: That focus delivered tangible results in 2025. In Q4, we received FDA clearance for our high-sensitivity troponin I assay on the VITROS platform and are preparing to begin US shipments within the next few weeks. This extends a proven offering in the US, supporting timely clinical decision-making in emergency and acute care settings. We also received FDA clearance of our ID MS Direct Antiglobulin test card, or DAT card, on the Vision Immunohematology platform. Combined with our recently cleared Ortho Elution kit, QuidelOrtho now offers the only complete gel-based DAT solution, from polyspecific to monospecific. In addition, in 2025, we launched our new informatics middleware solution, QuidelOrtho Results Manager.

Speaker #4: In Q4, we received FDA clearance for our high-sensitivity troponin i assay on the VITROS platform, and are preparing to begin U.S. shipments within the next few weeks.

Speaker #4: This extends a proven offering in the U.S., supporting timely clinical decision-making in emergency and acute care settings. We also received FDA clearance of our IDMTS Direct Anticoagulant Test Card, or DAT card, on the Vision Immunohematology platform.

Speaker #4: Combined with our recently cleared Orthoillusion kit, QuidelOrtho now offers the only complete gel-based DAT solution from polyspecific to monospecific. In addition, in 2025, we launched our new informatics middleware solution, QuidelOrtho Results Manager.

Speaker #4: Starting with our lab's business, Results Manager system brings significant value to our VITROS customers, enabling them to manage their laboratory workflow with an agile and user-friendly experience, and sets the stage for us to expand Results Manager to the rest of our portfolio, with immunohematology and point-of-care planned next.

Jonathan Siegrist: Starting with our labs business, Results Manager System brings significant value to our VITROS customers, enabling them to manage their laboratory workflow with an agile and user-friendly experience, and sets the stage for us to expand Results Manager to the rest of our portfolio, with immunohematology and point-of-care planned next. These are just a few of the exciting examples of momentum we generated in 2025, and they've helped set the stage for what's next. Looking ahead, we're excited about new products that we expect to launch in 2026, including multiple platform launches enabled by a smart mix of organic R&D and inorganic strategic partnerships. We believe these new platforms, spanning systems, informatics, and automation, will deliver strong customer value and drive meaningful assay menu pulls.

Speaker #4: These are just a few of the exciting examples of momentum we generated in 2025, and they've helped set the stage for what's next. Looking ahead, we're excited about new products that we expect to launch in 2026, including multiple platform launches enabled by a smart mix of organic R&D and inorganic strategic partnerships.

Speaker #4: We believe these new platforms, spanning systems, informatics, and automation, will deliver strong customer value and drive meaningful assay menu pulls. In clinical labs, we plan to launch VITROS 450, the first new VITROS platform since 2019, as the successor to the VITROS 350.

Jonathan Siegrist: In clinical labs, we plan to launch VITROS 4050, the first new VITROS platform since 2019, as the successor to the VITROS 350. Built on our novel waterless dry slide chemistry, it's a fully modernized system designed for key OUS markets. We expect to launch later in the first half of this year, and early feedback has been very positive. We're also partnering to offer new innovative immunoassay platforms for OUS markets that will expand our menu with more than 25 new assays on these systems, not currently available on VITROS today, within a total menu of over 70 assays on these new partner systems. Together with VITROS 4050, this will create a combined offering that provides us with opportunities to compete for additional full menu tenders and attractive OUS segments.

Speaker #4: Built on our novel waterless dry slide chemistry, it's a fully modernized system designed for key OUS markets. We expect to launch later in the first half of this year and early feedback has been very positive.

Speaker #4: We're also partnering to offer new, innovative immunoassay platforms for OUS markets that will expand our menu with more than 25 new assays on these systems not currently available on VITROS today—assays on these new partner systems.

Speaker #4: Together with VITROS 450, this will create a combined offering that provides us with opportunities to compete for additional full-menu tenders and attractive OUS segments.

Speaker #4: In Molecular, we're excited for Lex to wrap up the final stages of their 510(k) and CLIA waiver FDA review for the Lex molecular diagnostics platform, and are looking forward to commercializing this technology for the benefit of our customers.

Jonathan Siegrist: In molecular, we're excited for Lex to wrap up the final stages of their 510(k) and CLIA waiver FDA review for the Lex molecular diagnostics platform, and are looking forward to commercializing this technology for the benefit of our customers. Lex is designed to deliver speed and sensitivity with true PCR chemistry and a fully automated swab-to-result system for point of care. This will make it one of the fastest and most intuitive PCR platforms on the market. Overall, we've made rapid and steady progress improving the R&D organization and the strength of the product portfolio we're building for the future, and remain focused on continuous improvement as we go forward to deliver on the exciting product pipeline ahead. Now I'll turn the call over to Joe to cover the financial results.

Speaker #4: Lex is designed to deliver speed and sensitivity with true PCR chemistry in a fully automated swab-to-result system for point of care. This will make it one of the fastest and most intuitive PCR platforms on the market.

Speaker #4: Overall, we've made rapid and steady progress improving the R&D organization and the strength of the product portfolio we're building for the future, and remain focused on continuous improvement as we go forward to deliver on the exciting product pipeline ahead.

Speaker #4: Now I'll turn the call over to Joe to cover the financial results.

Speaker #5: Okay. Thanks, Jonathan. It's been a great pleasure working with you, Brian, and the entire QuidelOrtho leadership team. I'm honored to have been a part of this team.

Joe Busky: Okay, thanks, Jonathan. It's been a great pleasure working with you, Brian, and the entire QuidelOrtho workflow leadership team. I'm honored to have been a part of this team. While my retirement is still months away, I remain fully committed to the company. I will sincerely miss the teams I've had the privilege to work so closely with over the past six years. We've made great strides over the past eighteen months, and I fully expect that we'll continue to make progress on our revenue growth, margin expansion, and cash flow generation going forward. Now let me take you through our Q4 and full year 2025 results, which are detailed on slides 3 and 4 of our earnings presentation on our website.

Speaker #5: While my retirement is still months away, I remain fully committed to the company. I will sincerely miss the teams I've had the privilege to work so closely with over the past six years.

Speaker #5: We've made great strides over the past 18 months, and I fully expect that we'll continue to make progress on our revenue growth, margin expansion, and cash flow generation going forward.

Speaker #5: So now let me take you through our fourth quarter and full year 2025 results, which are detailed on slides 3 and 4 of our earnings presentation on our website.

Speaker #5: Total reported revenue for the fourth quarter of '25 was $724 million, compared to $708 million in the prior year period. This 2% year-over-year increase was achieved even as COVID and donor screening revenue declined.

Joe Busky: Total reported revenue for the fourth quarter of 2025 was $724 million, compared to $708 million in the prior year period. This 2% year-over-year increase was achieved even as COVID and donor screening revenue declined. Excluding COVID and donor screening, our reported revenue growth for the quarter was 7%. Breaking down business units and regional results for Q4 and the full year on a constant currency basis, our labs business continued to demonstrate durable underlying demand, growing 7% in the fourth quarter and 6% for the full year, underscoring the strength and stability of our largest business. Immunohematology also delivered steady growth of 3% for the full year, while maintaining its leading global market positions.

Speaker #5: Excluding COVID and donor screening, our reported revenue growth for the quarter was 7%. Breaking down business units and regional results for Q4 in the full year on a constant currency basis, our lab's business continued to demonstrate durable underlying demand growing 7% in the fourth quarter and 6% for the full year, underscoring the strength and stability of our largest business.

Speaker #5: Immunohematology also delivered steady growth of 3% for the full year, while maintaining its leading global market positions. Our Triage business performed very well in '25, with revenue up 16% in Q4 and 7% for the full year, reflecting strong execution and expanding adoption.

Joe Busky: Our Triage business performed very well in 2025, with revenue up 16% in Q4 and 7% for the full year, reflecting strong execution and expanding adoption. Respiratory revenue declined 14% in Q4 and 20% for the full year due to lower COVID testing. We saw a strong start to the 2025-2026 flu season, with a 6% increase in Q4, bringing our full-year flu growth to 3% year-over-year. Now, from a regional perspective, excluding COVID revenue, our North America region was up 4% in Q4, but down 2% for the year as expected, due to the winding down of the US donor screening business. Excluding donor screening, North America was up 2% year-over-year.

Speaker #5: In respiratory, revenue declined 14% in Q4 and 20% for the full year, due to lower COVID testing. We saw a strong start to the 6% increase in the fourth quarter, bringing our full-year flu growth to 3% year-over-year.

Speaker #5: Now, from a regional perspective, excluding COVID revenue, our North America region was up 4% in Q4, but down 2% for the year as expected, due to the wind-down of the U.S. donor screening business.

Speaker #5: Excluding donor screening, North America was up 2% year-over-year. Europe and the Middle East and Africa growth for the quarter was flat and up 4% for the year, while impressively increasing their adjusted EBITDA margins by more than 900 basis points.

Joe Busky: Europe, Middle East, and Africa growth for the quarter was flat and up 4% for the year, while impressively increasing their adjusted EBITDA margins by more than 900 basis points. Latin America and Japan, Asia Pacific growth excelled in 25%. Latin America increased 17% in Q4 and 18% for the year, while Japan, Asia Pacific improved 4% for the quarter and 6% for the year. And finally, China grew 5% in Q4 and 3% for the full year. Now, moving further down the P&L, fourth quarter adjusted gross profit margin was 44.9%, compared to 46.8% in the prior year period, a decline of 190 basis points due to tariffs, higher instrument replacements, and product mix. For the full year, though, our adjusted gross profit margin was 47.4% versus 47%.

Speaker #5: Latin America and Japan Asia-Pacific growth excelled in '25. Latin America increased 17% in Q4 and 18% for the year, while Japan Asia-Pacific improved 4% for the quarter and 6% for the year.

Speaker #5: And finally, China grew 5% in Q4 and 3% for the full year. Now, moving further down the P&L, fourth quarter adjusted gross profit margin was 44.9% compared to 46.8% in the prior year period.

Speaker #5: A decline of 190 basis points due to tariffs, higher instrument placements, and product mix. For the full year, though, our adjusted gross profit margin was 47.4% versus 47%.

Speaker #5: The 40 basis point increase was primarily driven by cost mitigations offset by tariff impacts. Fourth quarter non-GAAP operating expenses of $229 million, comprised of SG&A, and R&D, slightly increased year-over-year due to the timing of sales and marketing expenses.

Joe Busky: A 40 basis point increase was primarily driven by plus litigations, offset by tariff impacts. Fourth quarter non-GAAP operating expenses of $229 million, comprised of SG&A and R&D, slightly increased year-over-year due to the timing of sales and marketing expenses. Non-GAAP operating expenses for the whole year were $894 million, which reflects a 5% or $52 million decrease, resulting from our cost savings initiatives. Fiscal year 2025 GAAP results included a $701 million non-cash goodwill impairment charge recorded in Q3, related to prior acquisition accounting. This charge cleans the slate. With goodwill now reset, our forward GAAP earnings should more closely track our operational value. In Q4, Adjusted EBITDA was $153 million, and Adjusted EBITDA margin was 21%, which was flat to the prior year period.

Speaker #5: Non-GAAP operating expenses for the full year were $894 million, which reflects a 5% or a 52 million decrease resulting from our cost savings initiatives.

Speaker #5: '25 GAAP results, included Fiscal year a $701 million non-cash goodwill impairment charge recorded in Q3 related to prior acquisition accounting. This charge cleans the slate with goodwill now reset our forward GAAP earnings should more closely track our operational value.

Speaker #5: In Q4, adjusted EBITDA was $153 million and adjusted EBITDA margin was 21%, which was flat to the prior year period. For the full year, adjusted EBITDA was $597 million with a 22% margin, which is a 240 basis point increase compared to the prior year.

Joe Busky: For the full year, Adjusted EBITDA was $597 million, with a 22% margin, which is a 240 basis point increase compared to the prior year. Adjusted diluted EPS was $0.46 in the fourth quarter, and $2.12 for the full year, representing growth of 15% year-over-year. Turning now to the balance sheet on slide 6. We finished the year with $170 million in cash and $80 million in borrowings under our $700 million revolving credit facility. We generated $87 million in free cash flow in Q4. Excluding one-time cash items, we generated $135 million in recurring free cash flow. For the year, we used $77 million in free cash flow.

Speaker #5: Adjusted diluted EPS was 46 cents in the fourth quarter and $2.12 for the full year, representing growth of 15% year-over-year. Turning down to the balance sheet on slide 6, million in cash and $80 million in we finished the year with $170 borrowings under our $700 million revolving credit facility.

Speaker #5: We generated $87 million in free cash flow in Q4. Excluding one-time cash items, we generated $135 million in recurring free cash flow. For the year, we used $77 million in free cash flow.

Joe Busky: Excluding one-time cash items, we generated $100 million in recurring free cash flow, or 17% of Adjusted EBITDA. This fell short of our 25% conversion goal, primarily due to $15 to 20 million of ERP system issues and $20 million of sales that occurred late in Q4. Both of these receivables were collected in January 2026. At the end of the year, our net debt to Adjusted EBITDA ratio was 4.2x, which was above our target due to cash collection timing just mentioned. Now I'll provide our full year 2026 financial guidance, which is summarized on slide 7 of our earnings presentation. Based on our current business outlook, we expect the following: full year 2026 reported revenues up between $2.7 and 2.9 billion, with quarterly revenue phasing similar to 2025.

Speaker #5: Excluding one-time cash items, we generated $100 million in recurring free cash flow, or 17% of adjusted EBITDA. This fell short of our 25% conversion goal, primarily due to $15 to $20 million of ERP system issues and $20 million of sales that occurred late in Q4. Both of these receivables were collected in January of 2026.

Speaker #5: At the end of the year, our net debt to adjusted EBITDA ratio was 4.2 times, which was above our target due to the cash collection timing just mentioned.

Speaker #5: Now, I'll provide our full year 2026 financial guidance, which is summarized on slide 7 of our earnings presentation. Based on our current business outlook, we expect the following: full year '26 reported revenues up between $2.7 and $2.9 billion, with quarterly revenue phasing similar to '25.

Speaker #5: Foreign currency exchange to be neutral from the full year based on currency rates as of January of '26. The lab's business continues to grow in the mid-single digits.

Joe Busky: Foreign currency exchange to be neutral for the full year based on currency rates as of January 2026. The labs business continues to grow in the mid-single digits. Immunohematology to grow in the low single digits, and the US donor screening business wind down to be substantially complete by mid-2026. Point-of-care growth is soon to be relatively flat at the midpoint of our guidance, which is based on a typical flu season of 50 to 55 billion annual market tests. We also anticipate that COVID revenue will be flat at $80 billion for the full year 2026. We expect Triage Cardiac growth to continue in the high single digits. The molecular growth to decline slightly with the discontinuation of the Savanna business, given our planned acquisition of Lex Diagnostics.

Speaker #5: Immunohematology to grow in the low single digits, and the US donor screening business wind down to be substantially complete by mid-year '26. Point of care growth is assumed to be relatively flat at the midpoint of our guidance, which is based on a typical flu season of 50 to 55 billion annual market tests.

Speaker #5: We also anticipate the COVID revenue will be flat at $80 million for the full year '26. We expect Triage cardiac growth to continue in the high single digits.

Speaker #5: From molecular growth to decline slightly with the discontinuation of the Savannah business given our planned acquisition of Lex Diagnostics. We anticipate minimal revenue contribution from Lex in 2026 and have factored in the expected diluted impact in our guidance.

Joe Busky: We anticipate minimal revenue contribution from Lex in 2026 and have factored in the expected dilutive impact in our guidance. We expect China to grow in the low single digits based on current market information. Adjusted EBITDA is anticipated to be between $630 million and $670 million, which equates to adjusted EBITDA margin of approximately 23.3%, a 130 basis point improvement compared to full year 2025. We expect gross profit margin to be relatively flat to full year 2025 and adjusted diluted EPS between $2 and $2.42. Included in this range is approximately $20 million in higher depreciation versus 2025, related to growth in our instrument reagent rental agreements, as well as 2025 incremental investments in systems.

Speaker #5: We expect China to grow in the low single digits based on current market information. Adjusted EBITDA is anticipated to be between $630 and $670 million, which equates to adjusted EBITDA margin of approximately 23.3%, a 130 basis point improvement compared to full year 2025.

Speaker #5: We expect gross profit margin to be relatively flat for the full year 2025, and adjusted diluted EPS between $2.00 and $2.42. Included in this range is approximately $20 million in higher depreciation versus 2025, related to growth in our instrument reagent rental agreements, as well as incremental 2025 investments in systems.

Speaker #5: For the full year, we expect $250 million in depreciation. We expect strong free cash flow between $120 million and $160 million, which factors in $50 million to $60 million in one-time cash use associated with our New Jersey facility consolidation and direct procurement cost savings initiative.

Joe Busky: For the whole year, we expect $250 million in depreciation. We expect strong free cash flow between $120 and $160 million, which factors in $50 to $60 million in one-time cash use associated with our New Jersey facility consolidation and direct procurement cost savings initiative. Interest expense to be approximately $200 million based on current debt structure, CapEx to be between $150 and $170, and an effective tax rate of approximately 24% for the full year. So by the end of 2026, we expect net debt leverage to be approximately 3.8 times as we progress towards our goal of between 2.5 and 3.5 times. To conclude, we achieved our 2025 financial goals.

Speaker #5: Interest expense to be approximately $200 million based on current debt structure. CapEx to be between $150 and $170, and an effective tax rate of approximately 24% for the full year.

Speaker #5: So by the end of '26, we expect net debt leverage to be approximately

Speaker #1: we 3.8 times as progress towards our goal of between two and a half and three and a half times conclude , . To we achieved 2025 financial goals .

Joe Busky: Our cost savings initiatives meaningfully strengthened our results, as reflected in our year-over-year EBITDA margin expansion. Looking ahead, we will continue to aggressively pursue further margin and cash flow improvement in 2026, while also investing in our future top-line growth. So with that, I'll ask the operator to please open up the line for questions.

Speaker #1: Our cost savings goals were achieved meaningfully. The initiatives we concluded are reflected in our 2025 financial results. Our expansion strengthened our margin, as EBITDA margin and cash flow improvement will continue to be pursued aggressively in ’26, while also investing in our future top-line growth.

Speaker #1: So with that , I'll ask the operator to please open up the line for questions .

Operator: Of course. We'll now begin our Q&A session. So if you'd like to ask a question, you may do so by pressing star one on your telephone keypad, or if you'd like to remove your question, please press star two. Once again, to ask a question, please press star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking your question. Our first question comes from the line of Tycho Peterson of Jefferies. Your line is open.

Speaker #2: Of course , we'll now begin our Q&A session . So if you'd like to ask a question , you may do so by pressing star one on your telephone keypad .

Speaker #2: Or if you'd like to remove your question , please press star two . Once again , to ask a question , please press star one .

Speaker #2: As a reminder , if you are using a speakerphone , please remember to pick up your handset before asking your question . Our first question comes from the line of Tycho Peterson of Jefferies .

Tycho Peterson: Hey. Hey, thanks. Wanna hit on free cash flow, you know, the guide here, 'cause, you know, it did come in lower than expected in the quarter, and you guys had kind of messaged, you know, I think at several different venues that you were confident in recouping the cash flows. So can you maybe just talk on, you know, did anything happen in November and December when it seemed like most of those cash flows would come back? And then, you know, you talked about a step down in one-time outlays in 2026 and the end of the ERP conversion. So maybe just, you know, all seemingly good guys in flight, so why are we not seeing better conversion, you know, in the timelines that you've laid out here for cash flow?

Speaker #2: Your line is open .

Speaker #3: Hey , hey . Thanks . I want to hit on free cash flow . You know the guide here because you know , it did come in lower than expected in the quarter .

Speaker #3: And you guys had kind of message , I think , at several different venues that you're confident in recouping the cash flows . So can you maybe just talk on , did anything you know , happen in November and December when most of it seemed like those cash come flows would then , you And know , you talked about a step down in one time outlays in 26 and the end of the ERP conversion .

Speaker #3: So maybe just , you know , all seemingly good guys in flight . So why are we not seeing better conversion . You know , in the timelines that you've laid out here for cash flow .

Joe Busky: Yeah. Hey, Tycho, it's Joe. So as just mentioned in the script, the Q4 cash flow came in a little lighter than expected. It came in at 17% as a percent of full year EBITDA versus the 25% of Adjusted EBITDA that I mentioned earlier, for really the two reasons that I mentioned in the script, and that is we had about $15 to 20 million of that system-related AR that we had assumed we were going to collect in Q4, but unfortunately, that spilled into January. We collected that in January. And then the second item that I mentioned was that we had some very late revenue in the quarter of about $20 million, that again, I had originally anticipated we would see that revenue a little sooner in the quarter and would have a chance to collect it in Q4.

Speaker #1: Yeah . Hey , Tycho , it's Joe . So as just mentioned in the script , the Q4 cash flow came in a little lighter than expected .

Speaker #1: We came in at 17% as a percent of full year EBITDA versus the 25% of adjusted EBITDA that I mentioned earlier . For really , the two reasons that I mentioned in the script , and that is we had about 15 to 20 million of that system related AR that we had assumed we were going to collect in Q4 .

Speaker #1: But unfortunately , that spilled into January . We collected that in January , and then the second item that I mentioned was that we had some very late revenue in the 20 million , that , quarter of originally about again , I anticipated we had would see that revenue a quarter little sooner in the and would have a chance to it in collect Q4 .

Joe Busky: But given the way the flu season unfolded, that revenue came in very late, and therefore, we collected that cash in January. So you know, there's about $40 to 45 million of cash that we thought originally would be collected in Q4 that slipped into Q1, January. We've already collected it, to be clear. So it's timing with Q1 only. And that difference, if we had collected that $40 to 45 million in Q4, we would have been, we would have been right at our target. And then as you move to 2026, you know, we have talked about, it's in the script, you know, when I talked about the cash flow, the midpoint of our cash flow range is, was $140 million. And I want to be clear, Tycho, that is, that's real cash flow.

Speaker #1: But given the way the flu season unfolded , that revenue came in very late and therefore we collected that cash in January . So , you know , there's about 40 , $45 million of cash that we .

Speaker #1: Thought originally would be collected in Q4 . That slipped Q1 into January . We've already collected it to be clear . So it's timing with Q1 only , and that that difference , if we had collected that 40 , 45 million in Q4 , we would have been we would have been right at our target .

Speaker #1: And then as you move to 26 , you know , we have talked about it's in the script . You know , when I talked about the cash flow , you midpoint of our cash flow range is 140 million .

Speaker #1: And I want to be clear , that is that's real cash flow . That's not adjusted cash flow . And so when you factor in the the one time items for the new Jersey facility consolidation and the direct know , is procurement , you this the several 50 to 60 million that have been now .

Joe Busky: That's not adjusted cash flow. And so when you factor in the one-time items for the New Jersey facility consolidation and the direct procurement, you know, this is the $50 to 60 million that I've been messaging for several months now, you know, that puts our, if you will, recurring free cash flow at around $200 million, which, you know, according to that same metric, would be a little over 30% of our EBITDA at the midpoint. So we, I think we are making really good progress with cash flow. We just had some timing between Q4 and Q1.

Speaker #1: months You know , messaging for puts our , will , that recurring free cash flow at around 200 million , which according to that same metric would be a little over 30% of our EBITDA at the midpoint .

Speaker #1: So we I think we are making really good progress with cash flow . We just had some timing between Q4 and Q1 .

Tycho Peterson: Okay, that's helpful. And then maybe to dig into the strong performance in lab, you know, you had a nice acceleration, even on a multi-year comp there. Can you maybe just talk a little bit about, you know, how sustainable you think these trends are and any kind of delineation on chemistry versus immunoassay, how you're thinking about that for the year?

Speaker #3: Okay . That's And then helpful . maybe to dig into the strong performance in lab , you know , you had a nice acceleration even on a multiyear comp .

Speaker #3: There . Can you maybe just talk a little bit about , you know , how sustainable you think these trends are and any kind of delineation on chemistry versus immunoassay , how you're thinking about that for the year .

Joe Busky: Yeah, thanks for the question, Tycho. Yeah, so if you look at our underlying growth rates really across the business, you know, I think things look strong. You know, labs was at 7% for the quarter, 6% for the year. Point of care, 7%. We had, you know, strong Triage growth at 16% in the quarter. The IH business was, you know, rock solid at 3% growth for the year. And, you know, if you look across our region, our regions, I think we have really nice regional performance as well. I would point specifically to EMEA and LatAm, where in EMEA we grew 4%, but we did it at the same time as we improved the margins by 900 basis points. LatAm growth was at 18%.

Speaker #1: Yeah . Thanks for the question . Tycho . Yeah . So if you look at our underlying growth rates really across the business , you know , I think things look , look strong .

Speaker #1: You know , labs was at 7% for the quarter , 6% for the year . Point of care 7% . We had strong growth The at quarter .

Speaker #1: business was , you rock solid at 3% growth for the year . And you know , if you look across our region , our regions , we I think we have really nice regional performance as well .

Speaker #1: I would point specifically to EMEA and LATAM, where in EMEA we grew 4%, but we did it at the same time as we improved the margins by 900 basis points.

Joe Busky: JPAC, very solid at 6%. So, you know, as I think about the ability to sustain our growth moving forward, you know, I think about a few things. First of all, we've got really solid market positions in all of our segments. We have excellent brand recognition. We're winning new business. Our renewal rates are high. As you pointed out in the labs business, we continue to benefit from being underpenetrated in immunoassay generally in the lab segment, where our historical strength has always been more in clinical chemistry. So that's a nice growth opportunity for us. And our low OUS market penetration continues to be a growth opportunity for us, you know, just generally. I think, you know, moving forward, we've got we'll have Lex coming into the business.

Speaker #1: Latam growth was at 18% . Jpac very solid at 6% . So , you know , as I think about the ability to sustain our growth moving forward , you know , I think about a few things .

Speaker #1: First of all , we've got really solid market positions in all of our segments . We have excellent brand recognition . We're winning new business .

Speaker #1: Our renewal rates are high as . We you out pointed in the labs business , we continue to benefit from being under-penetrated in immunoassay , immunoassay , generally in the segment where strength our lab has always historical been more in clinical chemistry .

Speaker #1: So that's a nice growth opportunity for us and our low ous market penetration continues to be a growth opportunity for us . You know , just generally I think , you know , moving forward , we've got we'll have Lex coming into the business .

Joe Busky: We are strengthening our competitiveness here with the VITROS 4050 and the OUS system partnership that Jonathan just discussed. So, you know, just generally, I'm thinking, you know, I'm bullish on our growth rate moving forward. I think, you know, we're well positioned, kind of across our business units to perform well.

Speaker #1: We are strengthening our competitive competitiveness here with the fee for 50 and the OUS system partnership that discussed . So , you know , just generally I'm thinking , you know , I'm bullish on our growth rate moving forward .

Speaker #1: I think , you know we're well positioned kind of across our business units to perform well .

Tycho Peterson: Okay. That, that's great. And just last one quickly on China. What are you assuming in the guide for the year? And then I'll hop off. Thanks.

Speaker #3: Okay . That's great . And just last one quickly on China . What are you assuming in the guide for the year . And then I'll hop off .

Joe Busky: Low, low single digit growth in 26. Same as 25.

Speaker #3: Thanks .

Speaker #4: Low single-digit growth in ’26, same as ’25. Okay.

Tycho Peterson: Okay. Thank you.

Speaker #3: you .

Operator: Thank you. Our next question is from the line of Jack Mahan of Nephron. Your line is open.

Speaker #2: Thank you. Our next question is from the line of Jack Mahon of Nephron. Your line is open.

Jack Meehan: Thanks. Good afternoon, guys. Wanted to pick up where Tycho left off there on China. You know, since the press release you had a couple of weeks ago, was wondering if there was any update that you could share in terms of dry slide and VBP?

Speaker #5: Thanks . Good afternoon guys . I wanted to pick up where take a off there on China . You know , since the press release , you had a couple of weeks ago .

Speaker #5: Thanks . Good afternoon guys . I wanted to pick up where take a off there on China . You know , since the press release , you had a couple of weeks ago . wondering if there was any Was update that you could share terms of in dry slide and BP .

Joe Busky: Yeah. Hi, Jack. Nothing really new there. We did put out a pretty extensive statement on the website that kind of covers all the angles to that. But, you know, just to recap, the Jiangxi Provincial HSA had made a statement that they—it was going to explore launching a nationalized VBP program, value-based procurement program, for dried chemistry test strips in 2026. And as far as we know, there has still been no detailed proposal on that. There's been no indication of what products would be included in that or if our products would be included. So we're, you know, waiting to hear details at this point.

Speaker #1: Yeah . Hi , Jack . Nothing really new there . We did put out a pretty extensive statement on the website . That kind of covers all the angles of that .

Speaker #1: But just to recap, the Zhang Provincial HSA had made a statement that it was going to explore launching a nationalized DPP program, a value-based procurement program for dry chemistry test strips in 2026.

Speaker #1: And as far as we know, there still has not been a proposal detailed on that. There's been no indication of what products would be included in that, or if our products would be included.

Speaker #1: So we're waiting to hear details at this point . You know , just to reiterate , you know , we we think that if if our products were included , the estimate of the impact might be between half a percent and a percent of total company revenue .

Joe Busky: You know, and just to reiterate, you know, we think that if our products were included, the estimate of the impact might be between 0.5% and 1% of total company revenue. And, you know, that's something that we would look to offset somewhere else in the business. So, still waiting to hear more on that, but no new news to share at this point.

Speaker #1: And, you know, that's something that we would look to offset somewhere else in the business. So, still waiting to hear more on that.

Speaker #1: But no new news to share at this point.

Jack Meehan: Okay, appreciate it. Wanted to see if I could get a mark-to-market update on Sofia. I was wondering, just as I was looking at the flu and COVID trends, specifically, you know, how much of the flu sales in the quarter were ABC? I was just wondering if maybe conversion from legacy COVID to ABC may have driven any of the shift you saw in the strength in flu versus the COVID decline.

Speaker #5: Okay . Appreciate it . Wanted to see if I could get a mark to market update on Sophia . I was wondering , just as I was looking at the flu and Covid trends specifically .

Speaker #5: You know how much the flu sales in the quarter were ? ABC ? I was if just wondering maybe conversion from legacy ABC might have driven any of the shift you saw the in strength and flu versus the Covid decline ?

Joe Busky: Yeah. Hey, Jack, it's Joe. You know, the revenue from the combo product, or ABC, as you refer to it, is still continuing and strong. Well over 50% of the total flu revenue, and actually it's been very consistent for the last 2+ years. And so, it's the combo test has proven to be very durable. Now, whether there's, you know, some transition, as you mentioned, from standard lone COVID to that, I can't really speak to that. But, I do know that the combo test, as a percentage of the total, has been very consistent now for 2+ years.

Speaker #4: Yeah . Hey , Jack , it's Joe . You know , the the the revenue from the combo product or as you ABC refer to it is still continuing strong .

Speaker #4: Well over 50% of the total flu revenue . And actually it's been very consistent for the last two plus years . And so it's the combo test has proven to be very durable .

Speaker #4: Now , whether there's , you know , some transition , as you mentioned from standard standalone Covid to that , I can't really speak to that .

Speaker #4: But I do know that the combo test as a percentage of the total has been very consistent now for two plus years .

Jack Meehan: Sounds good. Thank you, guys.

Joe Busky: Yep.

Speaker #5: Sounds good . Thank you guys .

Speaker #6: Yep .

Operator: Thank you. Our next question is from the line of Andrew Brockman of William Blair. Your line is open.

Speaker #2: Thank you next question . the line of is from Our Brackman of William Blair . Your line is open

Andrew Brackmann: Hi, guys. Good afternoon, thanks for taking the questions. And Joe, I'll save my farewell until next quarter. But maybe I'll start with you on a question on the guide and particularly the EPS guidance. So I think the low end of your range is actually below your 2025 EPS actual. You know, obviously, you've got interest expense that's gonna be higher for the full year. But as you sort of think about the lower end of the range, can you maybe just talk to us about some of the assumptions that are embedded here to get you closer to that $2 versus maybe that higher end? Thanks.

Speaker #2: .

Speaker #7: Hi Joe , afternoon . Good taking the farewell next until quarter . But but maybe I'll start with you on a question on the guide .

Speaker #7: And particularly EPS guidance. So I think the low end of your range is actually below your 2020 EPS actual. You know, obviously you've got interest expense that's going to be higher for the full year.

Speaker #7: But as you sort of think about the lower end of the range , can you maybe us about just talk to some of the assumptions that are embedded get you closer to that two bucks versus maybe that higher end ?

Joe Busky: Yeah. Hey, Andrew. You know, the guide that we put out just now for 2026 has a wide range, just like it did, you know, the guide for 2024 and 2025. We unfortunately, because of the respiratory portion of our business and, you know, sort of the bit of uncertainty that we have in that business, we have to have a wide range for respiratory. And so, you know, if you think about the range for revenue, it's pretty tight on the non-respiratory business. As I've been saying to you guys for a long time now, you know, that business is super predictable, and, you know, we don't need a lot of range on that.

Speaker #7: Thanks .

Speaker #4: Andrew Yeah . Hey , , you know , the guide that we put out just now for 26 has a has a wide range just like it did .

Speaker #4: You know the guide for 24 and 25 . We unfortunately because of the respiratory portion of our business and you know the the bit of uncertainty sort of the that we have with that business , we have to have a wide range for respiratory .

Speaker #4: And so if you think about the range for revenue , it pretty tight on the Non-respiratory business , as I've been saying to you guys for a long time now , you know , that business is super predictable .

Speaker #4: And you know , we don't need a range on that . lot of most of the of the range on the guide is respiratory .

Joe Busky: So most of the range on the guide is respiratory. And so again, the midpoint is where we want everyone to go to. The midpoint of the guide I just gave is where I think everyone should look to go. And so what is gonna drive it to the low end or the high end? Well, the midpoint for respiratory guide is gonna be, like I said, that 50 to 55 million test market. And, you know, if it drops down to maybe 40, 45, you're gonna go to the low end of the range. You know, if you veer up to 60, 65, you're gonna go to the high end of the range.

Speaker #4: And so, again, the midpoint is where we want everyone to go—to the midpoint of the guide I just gave is where I think everyone should look to go.

Speaker #4: And so what what it's going to drive the low it to end or the high end . Well , the midpoint for respiratory guide is going to be like I said , that 50 to 55 million test market and if it drops down to maybe 4045 you're going to go to the low end of the range .

Speaker #4: And if you're up to 60 , 65 , you're going to go to the high end of the range . And , you know , and again , you guys know this .

Joe Busky: You know, and again, you guys know this. We've seen flu markets of all those sizes over the last several years, so that's why we have to pick up all sizes of the market in that range. And when you have that wide of a range for revenue, it just drops down. So the EBITDA guidance and the EPS guidance just fall right from those revenue numbers. Now, again, I don't think it's probable we go to that low end. I think, you know, again, I want everybody to look at the midpoint of the range. I think that's where people should be. But I also want to call out what I said in the script a few minutes ago, is that we do have depreciation and amortization going up about $20 million year-over-year from 25 to 26.

Speaker #4: We've seen flu markets of all sizes last over the years . So several that's why we have to pick up all sizes of the market in that range .

Speaker #4: when you And have that wide of a range for revenue , it just drops down . So the EBITDA guidance and . The EPs guidance just fall right from those revenue numbers .

Speaker #4: Now again , I don't I don't think it's probable we go to that low end . I think again , I want everybody to look at the midpoint of the range .

Speaker #4: I think that's where people should be . But I also want to call out what I said in the script a few minutes ago is that we do have depreciation and amortization going up about 20 million year over year from 25 to 26 .

Joe Busky: That is, you know, that's about a $0.21, $0.22 impact to the adjusted EPS. As you think about where that EPS range is for 2026 relative to 2025, you know, that's a big impact. There isn't as much of an impact on interest expense. Interest expense is going up, I would say, slightly from 2025 to 2026. I, I wouldn't say it's, it's going up tremendously. Most of that, you know, where you might be thinking, "Why is this EPS so low?" It's because of the increase in depreciation.

Speaker #4: And so that is , you know , that's about a 20 $0.01 , 22 cent impact to the adjusted EPs . And so as you think about where that EPs range is for 26 relative to 25 , you know , that's a big impact .

Speaker #4: There isn't as much of an impact on interest expense. Interest expense is going up. I would say slightly, from 25 to 26.

Speaker #4: wouldn't I say it's going up tremendously . Most of that , you where you might be thinking , why know , is this EPs so low ?

Speaker #4: It's because of the increase in depreciation.

Andrew Brackmann: Okay. That's very, very helpful. And then, Brian, maybe a question for you. You started the call sort of with a reflection of your time in the CEO chair. You know, as you sort of think about the future here, the next couple of years of that continuous improvement sort of outlook that you outlined there, you know, can you maybe sort of talk to us about some of the future areas you're focused on for driving that improvement, specifically as it relates to maybe some cost savings? Thanks.

Speaker #7: That's okay, very helpful. And then, Brian, maybe a question for you. You started the call, sort of, with a reflection of your time in the CEO chair.

Speaker #7: You know , as you sort of think about the future here , the next couple of years of that continuous improvement , sort of sort of outlook that you outlined there , can you maybe sort of talk to us about some of maybe the future areas you're focused on for driving that improvement , specifically as it relates to maybe some cost savings ?

Speaker #7: Thanks .

Joe Busky: Well, yeah, you know, if you consider cost savings, specifically, you know, I'm still, you know, very focused on getting the company to the, you know, 25+ EBITDA range, 25% EBITDA margin range. And, you know, I'm pretty confident in our ability to project into that range for a number of reasons. You know, first, starting in the middle of the year, I think we're gonna see a 50 to 100 basis point improvement just from exiting the donor screening business, you know, that we've announced for a long time. We've got a very rich pipeline of projects in place. We've been working on these direct and indirect procurement projects for some time now.

Speaker #1: Well , yeah , you know , if you consider cost savings specific specifically , you know , I still , you know , very on focused getting the company to the , you know , 25 plus EBITDA range , 25% EBITDA margin range .

Speaker #1: And , you know , I'm pretty confident in our ability to project into that range for for a number of reasons . You know , first , starting in the middle of the year , I think we're going to see 50 to 100 basis point improvement just from exiting the donor screening business .

Speaker #1: You know, that we've announced for a long time, we've got a very rich pipeline of projects in place. We've been working on these direct and indirect procurement projects for some time now.

Joe Busky: We've got a nice portfolio of projects that span multiple years, as well as our plans to optimize our manufacturing footprint further. You know, we still have a lot of opportunity to optimize profitability in a number of regions. I pointed to the 900 basis point improvement we made in EMEA. We've got other opportunities as we look globally. And, you know, we do benefit not only from a growth standpoint, when we place integrated systems because of the immunoassay volume, but that improves our product mix as the immunoassay margins are higher than our clinical chemistry margins. I think we'll see the benefit of margins in Lex as we start to achieve molecular level margins from that platform as it comes online.

Speaker #1: We've got a nice portfolio of projects that span multiple years , as well as our plans to optimize our manufacturing footprint further . You know , we still have a lot of opportunity to optimize profitability in a number of regions .

Speaker #1: I pointed to the 900 basis point improvement we made in EMEA . We've got other opportunities as we look globally . And , you know , we we do benefit not only from our growth standpoint when when we integrated place systems because of the immunoassay volume , but that improves our product mix as the immunoassay margins are higher than our clinical chemistry margins .

Speaker #1: I see the think we'll benefit of margins in less as we start to achieve molecular level margins from that platform as it comes online , and , you know , so so I think , you know , we get probably to the mid with a 20s lot of our procurement initiatives , continued staffing optimization , the Raritan , new Jersey footprint optimization , I think the high 20s come as Lex becomes a bigger component of our product mix .

Joe Busky: And you know, so I think you know, we get probably to the mid-20s with a lot of our procurement initiatives, continued staffing optimization, the Raritan, New Jersey footprint optimization. I think the high 20s come as Lex becomes a bigger component of our product mix. And you know, we still do have some work to optimize staffing. We've done a lot of work there. So you know, those are the things I'm thinking of on the sort of the cost side of the coin. You know, on the growth side, you know, we're really turning to how can we optimize our portfolio with new menu additions for our existing products?

Speaker #1: And , you know , we still do have some some work to optimize staffing . We've we've done a lot of work there .

Speaker #1: So , you know , those are the things I'm thinking of on the sort of the cost side of the coin , you know , growth you know , on the turning we really side , how can we're to optimize our portfolio with new menu additions for our existing products .

Joe Busky: And we're starting to create the financial flexibility that we can start contemplating what our new systems will be, you know, that will allow us to project into higher volume segments, and drive additional growth for the company. So a lot of great things, you know, ahead of us here, and I think, you know, very positive on both the top and the bottom line.

Speaker #1: And we're starting to create the financial flexibility that we can start contemplating what our new systems will be. You know, that will allow us to project into higher volume segments and drive additional growth for the company.

Speaker #1: So a lot , a lot of great things , you ahead of us here . And I think , you know , very positive on both the top and the bottom line .

Jonathan Siegrist: Hey, Andrew, before we go to the next question, operator. Andrew-

Speaker #1: Andrew , before .

Joe Busky: Go ahead, Joe. Andrew, hang on. I-- Juliet just reminded me on your first question that I left out a piece of information that I probably should have informed you on. When I talked about the higher depreciation, the 26 versus 25, the $20 million, I probably should have mentioned that that's driven by really two main things. It's, the reagent rental capitalization in 25 was about 14% higher than in 24. And so we had a-- You know, this is a good thing, you know, replacing more boxes and instrument location or customer locations, and so that's part of it. And then the other big piece is the systems, the capitalization.

Speaker #4: We go to the next question , operator Andrew , Andrew , hang on . I Juliet , just reminded me on your first question that I left out a piece of information that I probably should have informed you on that when I talked about the higher depreciation , 26 versus 25 , to $20 million , I probably should have mentioned that that's driven by really two main things .

Speaker #4: It's the reagent rental capitalization in 25 was 14% about higher than in 24 . And so we had a you know , this is a good thing .

Speaker #4: You know , we're placing more boxes on instrument location or a customer locations . And so that's part of it . And then the other big piece is the systems .

Joe Busky: You guys have heard me talk a lot about the ERP system conversions, and we spent a lot of money on these system conversions that are done, and so we had to transfer all, and that's all been capitalized in, late Q3, early Q4. And that's those two things are really driving that higher depreciation when you look at 26 versus 25. So sorry, I missed that the first time.

Speaker #4: And capitalization. You know, you guys have heard me talk a lot about the ERP system conversions. And we spent a lot of money on these system conversions that are done.

Speaker #4: And so we had to transfer all that's all been capitalized in late Q3 , early Q4 . And that's those two things are really driving that higher depreciation .

Speaker #4: When you look at '26 versus '25—so sorry, I missed that the first time through.

Jonathan Siegrist: All good. Thanks for the call.

Speaker #7: Okay. Thanks for the color.

Joe Busky: Thank you.

Speaker #4: Thank you .

Operator: Thank you. Our next question comes from the line of Patrick Donnelly of Citi. Your line is open.

Speaker #2: Thank you . Our next question comes from the line of Patrick Donnelly of Citi . Your line is open .

Patrick Donnelly: Hey, guys. Thank you for taking the questions. Joe, maybe one for you, just on the margin front. Can you talk about the gross margins? They were a little bit soft relative to what we were looking for. I know you called out the tariff piece, maybe a little bit of mix. It'd be helpful if you talk through that, and then just the right way to think about the go forward. I guess, those gross margins as we work our way through 2026, maybe just a little bit of progression and cadence on that front would be helpful.

Speaker #8: Hey guys . Thank you for taking the questions , Joe . Maybe one for you . Just on the margin front . Can you talk about the gross margins ?

Speaker #8: little bit soft There were a relative to what we were looking for . the called out tariff piece I know you little bit of mix .

Speaker #8: It would be helpful if you could talk through that. And then, just the right way to think about the go-forward, I guess both gross and operating margins as we work our way through '26—maybe just a little bit of progression and cadence on that front would be helpful.

Joe Busky: Yeah. Hey, Patrick. So the gross margins in Q4 were down, and I would say that it was down due to, I mean, three main things. There definitely was some tariff impact. When you think of-- and again, I'm talking about Q4 2024 to Q4 2025, we're down. It's the tariff impact. We had more instrument revenue in Q4 2025 versus the previous year. And then we also had some other, I would say, negative product mix impacts for Q4. When you look at the full year 2025, we were actually up 40 basis points for the full year 2025 versus 2024. And then as you look forward to 2026, I would say that we're gonna be relatively flat on the GP margin line.

Speaker #4: Yeah . Hey , Patrick . So the gross margins in Q4 were down and I would say that it was down due to , three main things .

Speaker #4: There some tariff impact . When you think . And again , I'm talking about Q4 24 to Q4 25 . We're down . tariff It's the impact .

Speaker #4: We had more instrument revenue in Q4 '25 versus the previous year. And then we also had some other, I would say, negative product mix impacts for Q4.

Speaker #4: When you look at the full year 25 , we were actually up 40 basis points for the full year 25 versus 24 . And then as you as you look forward 26 , I would say that we're going to be relatively flat on the on the GDP margin line .

Joe Busky: And again, we've got some additional tariff impact in there in 2026 that you didn't have early in 2025, and also some product mix impact. As Joe Busky, we definitely have some direct procurement initiatives, but I think those direct procurement initiatives are gonna start hitting, you know, more robustly as you move through 2026 and into 2027. As I've been saying, as I've been saying, these direct procurement initiatives take a little time. They're very complex. So I do think we're gonna get over, you know, the short term as you move from 2026 into 2027 and 2028 even, we're gonna see more gross margin improvement. And Brian and I have a goal to get our gross margin really up much closer to 50% as we move through the next couple of years.

Speaker #4: And again , we've got some some additional tariff impact in there in 26 that you didn't have early in 25 . And also some some product mix impact as a good guy , we definitely have some direct procurement initiatives .

Speaker #4: But I think those direct procurement initiatives are going to start hitting , you know , more robustly as you move through 26 and into 27 .

Speaker #4: I've been saying as I've been saying , these direct initiatives take a little time . They're very complex . So I do think we're going to get over the short term , as you move from 26 to 27 and 28 , even , we're going to see more gross margin improvement .

Speaker #4: And Brian and I have a goal to get our gross margin really much closer to 50% as we move through the next couple of years.

Joe Busky: And that's gonna be a combination of the direct procurement initiatives that I just mentioned, as well as you think about Lex. And once we get through the dilutive stages or the early stages of Lex, molecular margins do typically have higher margins than antigen. So we do expect Lex over time is gonna benefit our gross margins.

Speaker #4: And that's going to be a combination of the direct procurement initiatives that I just mentioned, as well. As you think about Lex,

Speaker #4: And once we get through the dilutive stages or the early stages Lex margins molecular of do typically have higher margins than antigen . So we do expect Lex over time is going to benefit our gross margins .

Patrick Donnelly: Yeah, maybe on that point where you left off on Lex, Joe, it might be one for Brian, just in terms of any milestones we should be keeping an eye out. I know it sounds like, you know, dialogue with FDA is continuing to move forward on Lex. Just what we should be looking out for, confidence on the timelines and, you know, when we should expect to start to see some rev there. Thank you, guys.

Speaker #8: Yeah, on that point where you left off on Lexapro, it might be one for Brian. Just in terms of any milestones we should be keeping an eye out.

Speaker #8: I know it sounds like dialogue with FDA is continuing to move forward on Lex . Just what we should be looking out for .

Speaker #8: On the confidence timelines and when we should expect to start to see some revs there. Thank you, guys.

Joe Busky: Yeah, I'll actually ask Jonathan to comment on that since he's in the middle of it.

Speaker #6: Yeah , I .

Speaker #1: Yeah, I'll actually ask Jonathan to comment on that, since he's in the middle of it.

Jonathan Siegrist: Yeah, sure. Happy to. Thanks for the question, Patrick. Yeah, with regards to Lex, you know, we had talked about Lex back in May. We certainly would have hoped to have clearance right about now, but it's not unexpected, especially given it's a brand new platform for it to take a little bit longer through its first FDA cycle. You know, a reminder that this is a CLIA waiver as well, so they're looking at not only the assay, but the hardware, the software, cybersecurity, the usability as well.

Speaker #6: Yeah , sure . Happy to . Thanks for the question Patrick . Yeah . With regards to Lex , you know , we had talked about Lex back in May .

Speaker #6: We certainly would hoped to have have clearance right about now , but it's not unexpected , especially given it's a brand new platform to take a little bit through its longer first FDA cycle .

Speaker #6: reminder is that this a clear waiver as well . So they're looking at not only assay , but the hardware , the software , cybersecurity , the the usability as well .

Joe Busky: ... All indications we have right now is that it's really going according to plan. And I know from our own FDA review submissions, we've seen FDA taking their deep review of the process. So everything is, like, going according to plan. No, no issues we see at the moment. Just kind of waiting for that to work its way through the rest of the process with the FDA. And then as we spoke about before, once we get to the other side of that, we'll be continuing with all of the acquisition activities, timing, and processes that are associated with that.

Speaker #6: All indications we have right now are that it's really going according to plan. And I know from our own FDA review submissions, we've seen FDA taking their time there.

Speaker #6: Deep review of the process . So everything's going according to plan . No , no issues . We see at the moment . Just kind of waiting for that to work its way through the rest of the process with the and then as we spoke about before , once we get to the other side of that , we'll be continuing with all of the acquisition activities and timing and processes that are associated with that .

Jonathan Siegrist: Thank you.

Speaker #8: Thank you .

Operator: Thank you. Our next question is from the line of Lu Li of UBS. Your line is open.

Speaker #2: Thank you . Our next question is from the line of Lu Li of UBS . Your line is open . Great . Thank you for taking my questions

Lu Li: Great, thank you for taking my questions. Maybe just following up on some of the R&D pipeline that Jonathan just mentioned. I guess, like, maybe on the VITROS system, it seems like all the new product launches are OUS opportunity. So I wonder, like, any plan for the US side? And then also, how should we think about the assay pool for opportunity in the coming years?

Speaker #2: Maybe

Speaker #2: just .

Speaker #9: Following

Speaker #9: on some .

Speaker #9: of the R&D pipeline that Jonathan just mentioned . I guess , like maybe on the visual seems like system , it all the new product launches are us opportunity .

Speaker #9: So, I wonder, like, any plan for the U.S. side? And then also, how should we think about the assay pool for opportunity in the coming years?

Joe Busky: Yeah, so we're gonna be issuing a press release with more details on this agreement that Jonathan discussed in his remarks. But, you know, basically, our OUS markets are becoming a larger part of our business and more important for our growth profile. And, you know, we've recognized that, you know, we need to strengthen our portfolio to take advantage of the growth opportunities in those markets, and that's what this partnership is designed to do. It provided us a way to move quickly with really some very high-quality solutions for the benefit of our customers. So more to come on that. We'll get some details out in the next few days on that. You know, as for systems-based focus on our US markets, they take a little longer to develop.

Speaker #1: Yeah. So, we're going to be issuing a press release with more details on this agreement that Jonathan discussed in his remarks. But basically, our U.S. markets are becoming a larger part of our business.

Speaker #1: And more important for our growth profile. And we recognized that, you know, we need to strengthen our portfolio to take advantage of the growth opportunities in those markets.

Speaker #1: And that's what this partnership is designed to do. It provided us with a way to quickly, and with very high quality, provide solutions for the benefit of our customers.

Speaker #1: more to come on that we'll we'll get some details out in the next few days on that . You know , as for systems based focused on our US markets , they take a little longer to develop .

Joe Busky: As I mentioned, you know, we now have some financial flexibility to start investing in those, you know, new systems that are, you know, at this point, probably years away. Our near-term focus, though, is gonna be on, you know, really heavily focused on content and menu addition for our current systems.

Speaker #1: As I mentioned , you know , we now have some financial flexibility to start investing in those , you know , new systems that will that are , you know , at this point probably years away , our near-term focus , though , is going to be on really heavily focused on on content and menu additions for our current systems .

Jonathan Siegrist: Yeah, and I think, Brian, this is Jonathan here. I would add, you know, on the US side, obviously, with adding our high-sensitivity troponin assay, that rounds out our offering on a menu side here in the US really well. Brian mentioned earlier in the call, and reiterated here, our OUS opportunities on the immunoassay side to round out the menu offering, which is what that partnership helps us with on tenders. And then on the VITROS 450 that I spoke about earlier, that's really hitting those lower volume segments, but it's also important on that, on that design to hit a particular cost target we've done.

Speaker #1: .

Speaker #6: And I think Brian , as Jonathan here , I would add , you know , on the US side , obviously , with adding our high sensitivity troponin assay that rounds out our offering on a menu side here in the US , really ?

Speaker #6: Well , Brian mentioned earlier in the call and reiterated here our US opportunities on the immunoassay side to out the round menu offering , which is what that partnership helps us with tenders and then on the Vitros 450 that I spoke about earlier .

Speaker #6: That's really hitting those lower volume segments , but it's also important on that , on that design to hit a particular target . We've done so from an US perspective .

Jonathan Siegrist: So from an OUS perspective, it's fundamentally and strategically about tenders and hitting with a lower cost capital, some of those lower volume segments, which is why you'll hear us continue talking about all the OUS opportunities in front of us.

Speaker #6: It's fundamentally and strategically about tenders and hitting with a lower , lower capital . cost Some of those segments , which is why you'll volume hear us lower continue talking about all the US opportunities in front of us .

Lu Li: Got it. And then maybe I will squeeze, like, two short questions into one. On the lab side, the 7% growth, how much of that is coming out from the instrument? It seems like you have a good instrument quarter, so I'm wondering how much is coming from that. And then also one on leverage. Any initiative in terms of, like, the debt refinancing in 2026 that could potentially lower the interest expense? Thank you.

Speaker #2: Got it .

Speaker #9: And then maybe I will squeeze like two short questions into one on the left side . The 7% growth . How much of that is coming out from the instrument ?

Speaker #9: It seems like you have a good instrument quarter . So I'm wondering how much is coming from that . And then and then also one on leverage .

Speaker #9: Are there any initiatives in terms of debt refinancing in 2026 that could potentially lower the interest expense? Thank you.

Joe Busky: Hey, Lu, I can take the instrument revenue piece of that. Q4, the instrument revenue was relatively flat the prior year, so really none of that growth is being driven by instrument revenue.

Speaker #4: Hey , Lou , I can take the instrument revenue piece of that for Q4 of the instrument revenue was relatively flat to prior year .

Speaker #4: really none of So that growth is being driven by instrument revenue .

Jonathan Siegrist: Okay, and the leverage?

Joe Busky: Oh, I'm sorry. What was the...

Speaker #1: Okay. And the leverage.

Jonathan Siegrist: I said-

Joe Busky: Yeah, the question was around leverage. We just went through a pretty extensive debt refinancing, and at this point, no plans for further refinancing the debt.

Speaker #4: Oh, sorry. What was the—

Speaker #1: Yeah , the question was around leverage . We don't we just went through a pretty extensive debt refinancing . And at this point , no no plans for further refinancing the debt okay .

Lu Li: Okay. Got it. Thank you.

Joe Busky: Okay.

Speaker #9: Got it. Thank you.

Speaker #10: Okay .

Operator: Thank you. Our next question comes from the line of Andrew Cooper of Raymond James. Your line is open.

Speaker #2: Thank you . Our next question comes from the line of Andrew Cooper of Raymond James . Your line is open .

Andrew Cooper: Hey, everybody. Hey, everybody, thanks for the questions. Maybe first, just wanna drill in on, on free cash flow a little bit more again. You know, appreciate guiding to the reported metric. I think that makes it a little bit clearer. But even if we add back that $50 or 60 million you called out of sort of one time that drags against it, you're still looking to get to, like, 30% conversion in 2026. So obviously a little bit shy of that 50+ longer-term goal. Is, is that 50+ still the right bogey? And, and if so, when should we think about, you know, bridging towards that number?

Speaker #7: Hey , everybody . Hey , everybody . Thanks for the questions . Maybe first , just want to drill in on on free cash flow a little bit more .

Speaker #7: Again , you know , appreciate guiding to the reported metric . I think that makes it a little bit clearer . But even if we add back that 50 or 60 million you called out of sort of one time , that like you're still drags to get against it , 30% 26 .

Speaker #7: So conversion in little bit shy of that longer term goal . 50 plus Is that 50 plus still the right bogey . And if so , when should we think about bridging towards that number .

Joe Busky: Hey, Andrew. You know, we've been pretty clear that the target there is 50%. I don't think I said over 50%. It's 50%, and I've also - I thought we've been saying pretty clearly that it's not - It was never gonna be a 2026 goal. It was more gonna be hit a run rate within 2027 once we get further along with the direct procurement initiatives. And, you know, the cash flow goals are really kind of tethered pretty closely to the margin goals. And that, you know, that's more a mid-2027 thing. So what we had said was that we would make progress in 2026, and so I think, you know, we came in a little bit less than I thought in 2025, at 17%.

Speaker #4: Hey Andrew . Yeah we've been pretty clear that the the target there is 50% . I don't think I said over 50% . It's 50% .

Speaker #4: And I've also thought that we've been saying pretty clearly that it's not—it was never going to be a '26 goal. It was more going to be a run rate within '27.

Speaker #4: Once we get further along with the direct procurement initiatives . And , you know , the cash flow goals are really kind of tethered pretty closely to the margin goals .

Speaker #4: And, you know, that’s more a mid-’27 thing. So, what we had said was that we would make progress in ’26. And so, I think we came in a little bit less than I thought in ’25 at 17%.

Joe Busky: When you look at, again, that's a recurring free cash flow metric, but we are making progress from that 17 to the 30%. And obviously, as I said, we're gonna be... You know, there's a full court press within the organization on cash flow right now, and we're gonna be looking under all rocks to try to find ways to increase cash flow and get ahead of that and do better than that 30%. But that, right now, that's the bogey we're putting out there for 2026.... Yeah, I would just add that.

Speaker #4: When you look at it again, that's a recurring free cash flow metric. But we are making progress from 17% to that 30%.

Speaker #4: And obviously , as I said , we're going to you know , be there's a full court press within the organization on cash flow right now .

Speaker #4: And we're going to be looking under all rocks to try and find ways to increase cash flow and get ahead of that, and do better than that.

Speaker #4: 30%. But right now, that's the bogey we're putting out there for '26.

Andrew Cooper: Okay.

Joe Busky: You know, yeah, I would just add that cash flow is a company-wide focus for us, and you know, including executive compensation incentives that'll directly be tied to cash flow targets for the first time this year. So it's a major, major focus for the organization.

Speaker #1: Yeah , I would just add that , you know , cash cash flow is I would just add that cash flow is a company wide focus for us .

Speaker #1: And you know, including incentive executive compensation, that will— incentives will be directly tied to cash flow targets for the first time this year.

Speaker #1: So it's a, it's a major, major focus for the organization.

Andrew Cooper: Okay, that's helpful. And then maybe just one more on the partnership. Appreciate we'll get, some more details, it sounds like, relatively soon. But when we think about really what's being solved for there, I know Jonathan just talked about some of kind of getting where you need to on margins or being able to get into tenders. How much of this is, "Hey, here's the 25 assays that are not available on your existing system, and those have kept you out of tenders," versus bringing a solution that maybe makes a little bit more economic sense in, in some of these settings?

Speaker #7: Okay . That's helpful . And then maybe just one more on the partnership . Appreciate . We'll get some details . It more sounds like relatively soon .

Speaker #7: But think about really what's being solved for there. I know Jonathan just talked about some of kind of getting where you need to on margins, or being able to get into tenders.

Speaker #7: How much of this is , hey , here's 25 the assays not that are available on your existing system . And those have kept you out of tenders versus bringing a solution that maybe makes a little bit more economic sense in some of these settings .

Joe Busky: Yeah, and this is Jonathan. I'll take that one. So yeah, it's a good read behind the question. A good chunk of it is gonna be that tender gap fill, if you will. I think the other important thing here is, again, we'll be talking more soon about the specifics of the partnership, but one other detail, it's a couple of different systems we're partnering on. So the other element of this partnership is it's gonna get us a little bit higher throughput systems that the partner has. So it's a big part tenders for sure, but it's another part of us being able to go upstream a little bit from a customer and a throughput perspective in those OUS markets as well.

Speaker #6: Andrew , this is Jonathan . I'll take that one . So yeah , it's a good , good read behind the question . A good chunk of it is going to be that that tender gap fill .

Speaker #6: If you will . I think the other important thing here is , is again , we'll be talking more soon about the specific the but one other detail .

Speaker #6: It's a couple of different systems we're partnering on. So the other element of this partnership is it's going to get us a little bit higher throughput systems that the partner has.

Speaker #6: So it's a big part. Tenders for sure, but it's another part of us being able to upstream a little bit from a customer and a throughput perspective in those US markets as well.

Andrew Cooper: Okay, I'll stop there. Thank you.

Speaker #7: Okay, I'll stop there. Thank you.

Operator: Thank you. Our next question is from the line of Casey Woodring of JP Morgan. Your line is open.

Speaker #2: Thank you. Next, our question is from the line of Casey Woodring of JP Morgan. Your line is open.

Casey Woodring: Great. Thank you for taking my questions. First, Joe, congratulations on retirement. Maybe following up on Patrick's earlier-

Speaker #8: Great .

Speaker #11: Thank you for taking my questions . And first , Joe , congratulations on retirement . Maybe following up on Patrick's earlier question on margin progression .

Joe Busky: Thank you.

Casey Woodring: Question on margin progression, how should we think about the direct procurement initiative hitting the margin line in 2026? It doesn't sound like a lot of that's baked in this year, unless I, I misinterpreted your comment there. And, and I would also be curious to hear what the guide assumes for free cash flow in Q1. Sounds like you have about $40 million in the bank already that was carried over from last year. So I guess, how do you see the free cash flow progression from Q1 over the course of the year to get to the year guidance range?

Speaker #11: How should we think about the direct procurement initiatives hitting the margin line in 26 ? It doesn't sound like a lot of that's baked in this year , unless I misinterpreted your comment there .

Speaker #11: And then I would also be curious to hear what the guide assumes for free cash flow in one Q. Sounds like you have about $40 million in the bank already.

Speaker #11: Carried—that was over from last year, so I guess, how do you see the free cash flow progression from one quarter over the course of the year to get to your guidance range?

Joe Busky: Hey, Casey, thanks. So, we definitely have some direct procurement savings built into the 2026 guide. But, there are definitely some offsets within GP. Like I said, there's some tariff impacts, there's product mix, there's some Lex dilution built into the guide. Not significant, but that's definitely an offset. And so that's why we're guiding GP margin to be relatively flat, even though there is direct procurement savings into or built into the guide for 2026. I do think there'll be more direct procurement savings that will go into the 2027 guide, but, you know, obviously more to come on that.

Speaker #1: Hey, Casey, thanks.

Speaker #4: So we we definitely have some direct procurement savings built into the 26 guide . But there are definitely some offsets within GP . Like I said , there's some there's tariff impacts .

Speaker #4: There's product mix . There's some some Lex dilution built into the guide . Not significant , but there's that's definitely an offset . And so that's why we're guiding GPP margin to be relatively flat .

Speaker #4: Even though there is direct procurement savings built into the guide for ’26, I do think there’ll be more direct procurement savings that will go into the ’27 guide.

Speaker #4: But you know , more more obviously to come on that . And as far as free cash flow and again , just to be clear , we are you know , this this quarter for 26 , we're now guiding to real cash flow and not just adjusted metric anymore .

Joe Busky: And as far as free cash flow, and again, just to be clear, we are, you know, this quarter for 2026, we're now guiding to real cash flow and not this adjusted metric anymore. But we will be providing more color on the one-time cash. Like I said, we're gonna the midpoint of our guide for 2026 is $140 million of real free cash flow, and there's about $50 to 60 million of one time, which it gets you to that $200 for recurring.

Speaker #4: but But we will be providing more color on the one time cash . Like I said we're the midpoint of our guide for 26 is 140 million of real free cash flow .

Speaker #4: And there's about 50 to 60 million of one time , which gets you to that 200 for recurring . And I would say that similar to the last two years , despite that , some of that timing difference two for between 25 and Q1 in the mentioned script , I still think that the majority of our cash flow is going to be generated in the second half versus the first half of the year , and that's consistent with the last two years .

Joe Busky: I would say that similar to the last two years, despite that some of that timing difference between Q4 2025 and Q1 2026 that I mentioned in the script, I still think that the majority of our cash flow is gonna be generated in the second half versus the first half of the year, and that's consistent with the last two years. I don't think there's really any change there. So, yeah.

Speaker #4: I don't think there's really any change there. And so, yeah.

Casey Woodring: Okay, got it. And maybe as my second question, I just had a few on the high-sensitivity troponin approval on VITROS that you guys called out. Any thoughts on if that could be a meaningful contributor this year to revenue? And I would also just want to ask on the point-of-care piece, too. I think you guys had targeted a launch on high-sensitivity troponin and point-of-care, I think it was in 2024. So any thoughts on potentially getting into that space, you know, anytime soon? And then maybe just lastly, across VITROS and point-of-care, just curious what the TAM is in high-sensitivity troponin and if this could be a real growth area for you guys over the next several years. Thank you.

Speaker #11: Okay . Got it . And maybe as my second question , I just had a few on the high sense troponin approval on Vitros that you guys called out .

Speaker #11: Any thoughts on that? Could it be a meaningful contributor this year to revenue? And I would also just want to ask on the point of care piece, too.

Speaker #11: I think you guys had targeted a launch on Hisense , troponin and point of care . I think it was in 24 . So any thoughts on on potentially getting into that space , you know , anytime soon .

Speaker #11: And then maybe just lastly, across vitro standpoint of care, just curious what the TAM is for troponin, hisense, and if this could be a growth area for you guys over the next several years.

Speaker #11: Thank you .

Joe Busky: Yeah, I think, well, first of all, as it relates to the point-of-care, high-sensitivity troponin, I'm not sure what was communicated there, but, you know, it's something that in theory it is we'd really like to do. We're still working on a number of technology challenges there to be able to provide that in the United States. We are seeing strong contribution with a high-sensitivity troponin assay outside the United States. And so, you know, we would like to pursue a pathway to commercialize the assay here in the US. As it relates to the labs, high-sensitivity troponin that we launched, you know, by itself, I don't—it's not really gonna have a huge impact on our short-term growth rates.

Speaker #1: Yeah , I think , well , first of all , as it relates to point of care , Hisense troponin , I'm not sure what was communicated there , but you know , it's something that in theory , it we'd really like to do .

Speaker #1: We're still working on a number of technology challenges there to be able to provide that in the United States. We are seeing a strong contribution with the Hisense troponin assay outside the United States.

Speaker #1: And so , you know , we would like to to pursue a pathway to commercialize the assay here in the US as it relates to labs , Hisense troponin that we we launched , you know , by itself , I don't it's not really going to have a huge impact on our short term growth rates .

Joe Busky: I think over the long term, it would have become a competitive factor for us. But that said, you know, it will help us compete a little better in the higher volume segments where that particular assay is, you know, growing in importance. And so, you know, we're happy to get it on the system and, you know, it'll-- it's certainly gonna help. It won't hurt, but I don't think we can point to, you know, major step function growth there as a result of a single assay.

Speaker #1: I think over the long term , it would have become a competitive factor for us . But that said , you know , it will help us compete a little segments better in the higher volume where that particular assay is , is , you growing in importance .

Speaker #1: And you know , so , we're we're happy to get it on the on the system and , you know , it'll it'll it's certainly going to going to help .

Speaker #1: It won't hurt . But I don't think we can point know to you , you know major step function growth there as a result of a single assay .

Patrick Donnelly: ... Got it. Thank you.

Speaker #8: Got it .

Speaker #10: Thank you .

Operator: Thank you. Our last question for today's call is from Bill Piniella of Craig-Hallum Capital Group. Your line is open.

Speaker #2: Thank you. Our last question for today's call is from Bill Bonello of Craig-Hallum Capital Group. Your line is open.

Bill Bonello: Hey, guys, thanks. I just wanted to go back once more to the cash flow guide and outlook. So you talked about the, you know, the one-time uses of cash that are going to occur this year and gave us sort of a you know proxy for, you know, what sort of recurring cash flow could look like. I guess, as you consider your plans beyond 2026, it would be helpful to get a sense of whether you're going to have, you know, additional, you know, sort of what you might consider one-time cash investments that you're going to have to make, or is, you know, $200 million or so the right starting point to be thinking about 2027 free cash flow?

William Bonello: Hey, guys, thanks. I just wanted to go back once more to the cash flow guide and outlook. So you talked about the, you know, the one-time uses of cash that are going to occur this year and gave us sort of a you know proxy for, you know, what sort of recurring cash flow could look like. I guess, as you consider your plans beyond 2026, it would be helpful to get a sense of whether you're going to have, you know, additional, you know, sort of what you might consider one-time cash investments that you're going to have to make, or is, you know, $200 million or so the right starting point to be thinking about 2027 free cash flow?

Speaker #12: Hey , guys . Thanks . Just wanted to go back once more to the cash flow . Guide and outlook . So you talked about the , you know , the one time uses of cash that are occur year going to and this gave us sort of a , you know , proxy you know , for , what sort of recurring cash flow could look like , I guess , as you consider your plans beyond 2026 , it would be helpful to get a sense of whether you're going to have additional , you know , sort of what you might consider one time cash investments that you're going to have to make , or is 200 million or so .

Speaker #12: The right starting point to be thinking about 2027 free cash flow?

Joe Busky: Yeah. Hey, Bill, it's Joe. So we have said already that the, you know, the one-time cash would come down significantly. When you go back to 2024, we had over—well over, it was probably like $210 million of one-time cash in 2024. It came down to about $175 million in 2025, and then, like I said, the $50 to 60 million in '26 guide. For '27, I would expect it to be a similar number, probably around, you know, maybe $40 to 50 million of one-time cash in 2027. And it's the same, the same two topics.

Speaker #1: Yeah . Hey , Bill , it's Joe . So we have .

Speaker #13: We have said already that the the one time cash would down come significantly . You go back to 2024 . We had over .

Speaker #1: over Well probably like 210 million of one time cash in 2024 . It came down to about 175 . In 2025 . And then like I said , the 50 to 60 million in 26 guide for 27 , I would expect it to be a similar number , probably around maybe 40 to 50 million of one time cash in 27 .

Speaker #1: And it's the same . The same two topics . It's the it's the Raritan , new Jersey facility shutdown that takes into 27 to complete .

Joe Busky: It's the Raritan, New Jersey, facility shutdown that takes into 2027 to complete, and it's the direct recruitment initiatives, which require some one-time resources in the areas of R&D and quality and regulatory. That is also going to go into 2027. And so but beyond that, I don't have a lot of visibility to other one-time cash at this point that we would utilize. And so, you know, that's all good news as you think about our free cash flow expanding, and I do think that the free cash flow will expand as our EBITDA margin continues to go up and we continue to look at the working capital. I do think there is opportunity in inventory, in 2026 and 2027, that we will go after.

Speaker #1: And it’s the direct recruitment initiatives which will require some time and resources in the areas of R&D, quality, and regulatory. That is also going to go into ’27.

Speaker #1: And so beyond that , I don't have a lot of ability to other one time cash at this point that we would that we would utilize .

Speaker #1: And so , you know , that's news as you think about our free cash all good flow expanding . And I do think that free cash flow will expand as our EBITDA margin continues to go up .

Speaker #1: And we continue to look at working capital . I do there's think there is and opportunity inventory in 26 and 27 that we will we will go after and then and then of course , the one time cash starts to starts to really go away .

Joe Busky: And then, of course, the one-time cash starts to really go away. And so as you think about those areas, as well as starting to whittle down the interest expense as we either refinance the Term loan B, which I anticipate us doing at some point this year, with, because it does look like rates are going to come down, that brings down interest expense. And we'll do everything we can to limit reagent rental cash and try to flip customers in cash instrument sales. We've got some initiatives in place to flip that mix a little more. We'll look to limit CapEx. And so through all those things, all those levers, you know, that's how we get up to that, you know, the 50% conversion rate of Adjusted EBITDA.

Speaker #1: And so as you think about those areas , as well as starting to whittle down the interest expense , as we either refinance the term loan B , which I anticipate us doing at some point this year with , because it does look like rates are going to come down .

Speaker #1: That brings down interest expense, and we'll do everything we can to limit reagent rental cash and try to flip customers' cash. Instrument sales.

Speaker #1: We've got some initiatives in place to to mix flip that a little more . We'll look to limit CapEx . And and so through all those , those things , all those levers , you know , that's how we get up to that 50% .

Joe Busky: So that's sort of the path forward, if that makes sense, hopefully.

Speaker #1: Conversion rate of adjusted EBITDA . So that's that's sort of the path forward , if that makes sense . So forth .

Joe Busky: So that's sort of the path forward, if that makes sense, hopefully.

Bill Bonello: Yeah, no, that does. And then I guess I just wanted to revisit your comments on gross margin. I thought that as part of your answer, and maybe you were talking about full year and not the Q4, you know, sort of year-over-year decline in gross margin. But I thought in answer to Patrick's question, you had cited more instrument revenue as one of the factors impacting gross margin. But then later, in response to a question that somebody asked about, you know, what was instrument, how much of the, you know, to what degree were instruments contributing to the higher lab growth, you said that, you know, instrument was kind of flat year over year. So I'm just trying to reconcile the two.

William Bonello: Yeah, no, that does. And then I guess I just wanted to revisit your comments on gross margin. I thought that as part of your answer, and maybe you were talking about full year and not the Q4, you know, sort of year-over-year decline in gross margin. But I thought in answer to Patrick's question, you had cited more instrument revenue as one of the factors impacting gross margin. But then later, in response to a question that somebody asked about, you know, what was instrument, how much of the, you know, to what degree were instruments contributing to the higher lab growth, you said that, you know, instrument was kind of flat year over year. So I'm just trying to reconcile the two.

Speaker #12: Yeah . No , that that then that does . I And guess I just wanted revisit to your , your comments on gross margin .

Speaker #12: I thought that as part of your answer, and maybe you were talking about full year and not the Q4, there was sort of a year-over-year decline in gross margin.

Speaker #12: But I thought in answer to Patrick's question , you had cited more instrument revenue as one of the factors impacting gross margin . But but then later in response to a question that somebody asked about , you know , what was instrument , how much of the , you know , to what degree was were instruments contributing to the higher lab growth ?

Speaker #12: You said that instrument was kind of flat year over year. So, I'm just trying to reconcile the two.

Joe Busky: Yeah, you're right. It is for Q4 on its own, Bill. It's mostly product mix and tariffs. That's right. It's offsetting.

Speaker #1: Yeah , you're right , it is for Q4 on its own bill . It's mostly product and mix tariffs right . That's . It's offsetting okay okay .

Bill Bonello: Okay. Okay.

William Bonello: Okay. Okay.

Joe Busky: Yeah.

Bill Bonello: Okay. That is all we had. Thanks.

William Bonello: Okay. That is all we had. Thanks.

Speaker #1: Yeah .

Speaker #12: Okay. That is all we had. Thanks.

Joe Busky: Thank you, Bill. Thanks, Bill.

Speaker #1: Bill: Thank you. Thanks, Bill.

Operator: Thank you. That'll conclude today's Q&A session. So I'll now pass it back over to Brian Blaser to close us off.

Speaker #2: Thank you. That concludes today's Q&A session, so I'll pass it back over to Brian Blaser to close us off.

Joe Busky: Thank you, operator, and thank you everyone for your time and continued interest in QuidelOrtho. To wrap things up, we delivered on our 2025 commitments, executing against the priorities we outlined, strengthening our business, expanding margins, and driving solid growth across our portfolio. Looking ahead, our focus remains clear: accelerating growth, expanding margins, and strengthening cash flow while further improving the balance sheet. So thank you again, and we look forward to updating you next quarter.

Brian Blaser: Thank you, operator, and thank you everyone for your time and continued interest in QuidelOrtho. To wrap things up, we delivered on our 2025 commitments, executing against the priorities we outlined, strengthening our business, expanding margins, and driving solid growth across our portfolio. Looking ahead, our focus remains clear: accelerating growth, expanding margins, and strengthening cash flow while further improving the balance sheet. So thank you again, and we look forward to updating you next quarter.

Speaker #1: Thank you . Operator . And thank you everyone for your time and continued interest in ortho to wrap things up , we delivered on our 2025 commitments , executing against the priorities we outlined , strengthening our business , expanding margins , and driving solid growth across our portfolio .

Speaker #1: Looking ahead, our focus remains clear: accelerating growth, expanding margins, and strengthening cash flow while further improving the balance sheet. Thank you again.

Speaker #1: Thank you, and we look forward to updating you next quarter.

Operator: Thank you. That will conclude today's call. Thank you for your participation. You may now disconnect your line.

Q4 2025 QuidelOrtho Corp Earnings Call

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