Daniel Brennan: Great. Thanks. Thanks for the questions, guys. So ImmunoDX, another solid quarter in the year. Can you just give us a sense of kind of what’s driving the strong growth and like what’s the range of outcomes we can expect for 2024?
Prahlad Singh: Dan, I think, again, as I talked about earlier, it is the differentiate portfolio of the high end Euroimmun test that we have in China that allows us to be in the face of limited competition that we see in that marketplace. And that has innovation pipeline has worked for us and we expect that to continue as we look forward.
Daniel Brennan: Got it. Okay. Maybe on pharma, I know you kind of talked about it throughout a little bit, but it was a key drag at Q3. You guys talked about instruments still under pressure here, maybe from a post-COVID high. Just can you speak to some of your discussions with pharma? What do we expect this year? Just kind of any more color on kind of what you’re hearing there? Thank you.
Prahlad Singh: Yes, Dan. I think on the instrument side or on the capital side, I think we will continue to see some pressure or at least the current trend we expected to continue in the first half of the year. The benefit again that allows us is that the reagent side of the portfolio, once that starts stabilizing and coming up in the second half of the year, at least that’s what the assumption that we have in our current forecast allows us the confidence that we would look. Overall, as we see pharma, I continue to believe that this is a temporary drove in the marketplace and I think it will continue, it will come back to what we have seen is normal pattern of mid-single digit growth in the market over the past several years.
Operator: The next question today comes from the line of Eve Burstein from Bernstein Research.
Eve Burstein: Good morning, thanks a lot for the questions. And first one, you said that you’ve already taken structural cost measures so far this year and you’ll be taking additional cost actions in ‘24. Can you just give us some more color on what those actions are and what’s giving you confidence and the ability to achieve those benefits in this timeframe?
Max Krakowiak : Yes, hey, Eve. So from a structural cost action perspective, the easiest way to think about it is really just right sizing the company given all of the transformation, whether that’s the integration of the acquisitions, which I mentioned we’re still, but we would consider in the early to mid-innings from a process standpoint and then it’s working our way through the stranded costs from the divestiture. So that’s really what’s driving the structural cost actions. In terms of the confidence, those actions have already been taken place and communicated. There’s a little bit of timing in terms of when the actual cost comes out throughout the course of the year, but those actions have more or less already been executed and it’s just a matter of timing at this point. So we have, I would say, a high degree of confidence in those for this year.
Eve Burstein: Great. Thank you. And then you just talked about integration of your acquisitions. You said it’s still early to mid-innings, but you also shared an example of how you brought a Biolegend together with other parts of your business to do something really cool. Where are you really against your synergy target of $100 million in year five, your two-fifths of the year, two-fifths of the way through? Where would you put yourself on that scale?
Prahlad Singh: Yes, I’m not. Good morning, Eve. I don’t think I’m going to quantify as to what’s the dollar amount of how much synergies we are saying. The intent of what we provided as an example is how we are starting to see not just commercial synergies from the full portfolio, but also operational and technological synergies. I think as Max said, I would say we are still in the early to mid-innings of the opportunities that we see from integration of the acquisitions. Keep in mind, two of our acquisitions, BioLegend and Euroimmun are two of our strongest and fastest growing businesses. And then I think the opportunities that they provide are crown jewels in our portfolio and we expect them to continue to perform well. Our intent is how do we support those businesses and how do we leverage the opportunities that we see across the portfolio with them.
Operator: Our final question today coming from the line of Luke Sergott from Barclays.
Luke Sergott: Awesome, thanks for squeezing me in. So real quick on the 1Q margin target, you said like a few 100 basis points lower than your full year, so I assume that’s around like 25%. Can you talk about even though it’s, the growth and everything looks a little bit like 4Q, can you just talk about what’s really driving that de sale and then kind of where you’re going to get the margin uplift throughout the year and then on that steep ramp?
Max Krakowiak : Yes. Hey, Luke. So, I think maybe just to tackle the margin question first, you kind of led with that. So, look, I don’t think your math is that far off from Q1. I think we’ve given you the pieces below the line in Q1 that you’re going to get to roughly that number. As you look at comparing that to Q4, I would say the two mains, really the main driver of that is just a volume step down from a top line perspective. If you look at the actual overall gross margin percentage, it’s roughly flat quarter-over-quarter, OpEx costs are similarly in line quarter-over-quarter. And so from that standpoint, I don’t think really much has changed. Again, as you then look at the volume ramp over the remainder of the year, as we mentioned, one, you’re going to have the timing of the structural cost actions coming into play and the second piece is you’re going to have volume leverage as the year builds.
So that’s how I would think about it from a margin perspective. In terms of the slowdown from an organic growth perspective between Q4 to Q1, I think we’ve mentioned part of that is definitely comp driven. And the biggest piece of that is going to be on the immunodiagnostics business outside of China. Outside of China in the first half last year, immunodiagnostics grew in the high teens. We’ve always said it should be a sort of a low double digit. And so, there is just some normalization there on a two year stack for immunodiagnostics business outside of China.
Luke Sergott: Yes, great. Thanks. I was just referring to the 4Q to 1Q kind of just the similar, you have a pretty steep decline there on the margin. I got the core commentary. And then I guess on the software piece, you guys have talked about converting a lot of these customers more to SaaS-based and that’s kind of aiming to reduce the lumpiness in the orders. And talk about the progress that you’re seeing there. And then on the non-SaaS piece, can you talk about what the orders look like and if they’re inflecting? Because as you talked, gave that 2% framework prior, we were talking about just if software’s not a headwind next year or the way that the contracts come in, that would just be at least 100 basis points of lift.
Max Krakowiak : Yes, so then I’ll maybe start with your second question first, Luke. So as I mentioned, software business was down high single digits in ‘23. It should be moving to up high single digits. That’s what’s assumed in our guidance here for ‘24. That is roughly 125 basis points to the overall company from an organic growth perspective. And so as you look at that dynamic, it’s really driven by this contract renewals. Again, that’s a business that has upper 90% renewal rate. And so most of the contracts we know and they’re coming due and I would say have a high degree of confidence in our ability to deliver on our ‘24 expectations. And then to your first question on sort of the SaaS transition, I think we continue to make really good progress.
