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Qiagen NV (NYSE:QGEN)
Q1 2021 Earnings Call
May 5, 2021, 9:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by. I am Tracy, your PGI call operator. Welcome and thank you for joining QIAGEN's Q1 2021 Earnings Conference Call webcast. [Operator Instructions] At this time, I would like to introduce your host, John Gilardi, Vice President, Head of Corporate Communications and Investor Relations at QIAGEN. Please go ahead.

John Gilardi -- Vice President, Head of Corporate Communications and Investor Relations

Thank you, Operator, and thank you to all of you for joining us today for our conference call. Speakers today are Thierry Bernard, the CEO of QIAGEN, and Roland Sackers, the Chief Financial Officer. Also joining us is Phoebe Loh our Senior Director of Investor Relations.

Please note that this call is being webcast live and will be archived on the Investors section of our website at www.qiagen.com. A copy of the press release is also available in the same section.

Before we begin, let me cover our safe harbor statement. This presentation as well as the discussion and responses to your questions on this call reflect management's view as of today, May 4, 2021. We will be making statements and providing responses to your questions that state our intentions, beliefs, expectations, or predictions of the future. These constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. QIAGEN disclaims any intention or obligations to revise any forward-looking statement. For more information, please visit the SEC website for these filings.

We will also be referring to certain financial measures not prepared in accordance with U.S. GAAP. You can find a reconciliation of these figures in the press release and the presentation for this call.

I would like to now turn over the call to Thierry.

Thierry Bernard -- Chief Executive Officer and Managing Director

Thank you, John, and welcome all to our conference call today. As usual, before we begin, I would like to again wish you and your families and loved ones good health and all the best during those times. As you have seen yesterday, the first quarter of 2021 marked another strong quarter for us as we moved through various stages of the pandemic with vaccination progressing in many countries. Of course, some at a pace faster than we had expected, the US, for example, or Israel or the UK, and slower in other areas such as in Europe. Demand for our product groups used in COVID testing overall remained at similar levels to what we saw at the end of 2020. But we have seen this vary between regions.

Beyond the pandemic, research labs have reopened and diagnostic testing in other areas of healthcare is coming back into play. QIAGEN teams continue to execute day after day and manage the demands on our product portfolios while preparing to work through the headwinds that are going to be created by a reduction in COVID-19 testing demand as vaccination rates increase. Indeed, QIAGEN is well-positioned with our five pillars of growth in those exciting times of change in the molecular testing landscape. We are poised to make a significant impact with a series of new product launches in the coming years, especially supported by menu expansion in QIAcuity, QIAstat, or NeuMoDx.

Now, please let me go through our key messages for today. First, our teams have once again exceeded the outlook for the first quarter of 2021 in terms of sales growth and adjusted EPS. This is now the sixth quarter in a row where our Qiatiners are exceeded our guidance. Net sales grew 48% at CER rates over the same quarter of 2020. This beat our outlook of at least 45% CER growth. Adjusted earnings per share were $0.60 CER and above our outlook for about $0.60 to $0.62. As we have said before, we put very serious and tremendous amount of attention on ensuring that we execute on our commitments.

The performance of our non-COVID product groups leads to our second key message. As you have heard QIAGEN say before, those results in Q1 2021 are once again proving that we are COVID-relevant, but we are not COVID-dependent. Sales in the first quarter of '21 for non-COVID product groups reflected an acceleration from the end of last year and grew 16% CER over the first quarter of 2020.

Our third key message relates to the ongoing demand for COVID-19 testing solution in the first quarter and this remain at a high level on par with the fourth quarter of 2020. Sales for those product groups grew 186% CER to $203 million, up from $69 million in the first quarter of 2020. But more importantly, this also compares to sales of $200 million in the fourth quarter of 2020. We confirm, however, as we said in our Deep Dive Day in December '20 that we expect this to slow down progressively in Q2 and H2, 2021.

And as a final key message, we are reaffirming our full-year outlook for 2021. For the full year, we continue to expect sales growth of about 18% to 20% CER over 2020. This is based on expectation for sales growth from COVID-19 product groups to subside as the year progresses, but anchored by continued improvements in demands for non-COVID product groups compared to trends in 2020.

For adjusted EPS, we continue to expect about $2.42 to $2.46 at CER once again. This reflects our plans to invest in our five pillars of growth and strengthen our competitive profile to drive sustainable growth once we move through the pandemic.

And now I would like to hand over to Roland.

Roland Sackers -- Chief Financial Officer and Managing Director

Thank you, Thierry. Hello and thank you as well from me, for joining us for this call. I would like to update you on some key financial results from the first quarter. As Thierry noted, our sales results for the first quarter was 48% at constant exchange rate. They were up 52% at extra weight to $567.2 million due to positive currency movements against US dollar, especially with the euro.

Moving down to the income statement, the adjusted gross margin declined about 1 percentage point to 68.7% of sales. This was due to the higher share of instrument sales, which typically has a lower gross margins than our consumable kit. In addition, there was an overall increase in production costs compared to the first quarter of 2020 associated with the ramp-up of capacity to support higher demand.

The growth in sales outpaced the increase in operating expenses for the first quarter of '21. This led to the adjusted operating income margin rising to a record 34% of sales in Q1, up from 27% in the year-ago period. In addition to production scale-up activities, investment into our five pillars of growth also involve R&D expenses. We are moving ahead to implement plans to expand test menu capabilities for the NeuMoDx integrated PCR clinical testing system and the QIAstat-Dx solutions for syndromic testing. We are also building out the test portfolio based on our QuantiFERON technology, which can be used in diagnostics to detect latent diseases.

We continue to see a positive impact on our business activities as we benefit from increased capacity scaling and leverage efficiencies in sales and marketing expenses which declined to 20% of sales in the first quarter of 2020 from 26% in the same period of 2020. We are using these advantages to develop our digital customer channels and support our global operational response through the pandemic. As we mentioned earlier, adjusted EPS reached $0.65 CER per share and grew at a significantly faster rate than sales, the adjusted tax rate of 19% of sales and slightly above our guide.

Turning to cash flow trend, we saw a significant increase in free cash flow to about $82 million in the first quarter of '21, thanks to the robust sales growth that absorbed about $46 million of investments into property, plant and equipment. The development of the operating cash flow also came with a reduction in days of sales outstanding, which declined to 54 days, compared to 56 days in the fourth quarter of 2020 and 68 days in the first quarter of 2020. This was most felt in countries of the EMEA, and Asia Pacific, Japan regions as collections have steadily improved since early 2020.

In terms of our balance sheet, our net debt increased to $1.1 billion at the end of the first quarter and this compares to a $1 billion at the end of the first quarter of 2020. This modest change reflects about $498 million of net proceeds from the issuance of the zero-coupon, cash convertible notes last year against payment of about $296 million for the settlement of the convertible notes that were due in '21, as well as about $41 million paid out for the maturing of two tranches of our German private debt instrument known as a Schuldschein. This resulted in a leverage ratio of 1.3 times net debt to adjusted EBITDA at the end of the first quarter of '21 compared to 1.6 at the end of the first quarter of 2020 and 1.5 at the end of 2020.

I would like to now provide a more detailed view of our '21 sales for the first quarter. In terms of sales by product groups, sales of sample technologies, one of our five pillars of growth, goes 42% CER to $227 million. This was due in particular to strong demand for DNA extraction kits accelerating since late 2020. We also continue to experience ongoing solid demand for automated RNA sample preparation kits used in COVID-19 testing. The trend from automated to manual RNA kits that we saw in the second half of 2020, has not stabilized. As a reminder, sample technologies sales on an underlying basis excluding pandemic sales, are led by DNA testing, and all -- are also moving weighted to our customers in the life science. So we are seeing a resumption of this trend so far in '21.

QIAGEN diagnostic solutions were $150 million and rose 52% CER. This involved our molecular testing solutions for use in clinical healthcare. QuantiFERON-TB sales reached $57 million in the first quarter, and were up 22% CER, led by the strongest demand in the US, as testing resumes after the 2020 slowdown. This performance also marks a sharp improvement from the 20% CER decline in the first quarter of 2020, and only 3% CER growth in the fourth quarter last year. Sales of the QIAstat-Dx and NeuMoDx solutions remained at high levels, and on track for the year. We are closely monitoring COVID testing demand trends in various regions, but these platforms have applications well beyond COVID testing. The top priority right now is to expand our test menus, as we're building up manufacturing capacity to serve the growing installed bases.

Other portfolios this product will include our precision medicine assays, companion diagnostic co-development revenues, and women's health portfolio including HPV. We see mixed sales in these areas as activities affected by the pandemic are returning at varying speed. The PCR nucleic acid amplification product groups represents PCR solutions and component for use in research and applied testing. These sales were up 84% CER in this gross quarter, and reached $117 million. These results also reflect the ongoing high level of COVID-19 sales, including four OEM products used by other diagnostic companies. Another driver was ongoing sales expansion of the QIAcuity digital PCR platform that was launched in the second half of 2020.

The last product group is genomics NGS, and includes our universal NGS products and bioinformatics solutions. These sales returned to growth after challenges during 2020, rising 17% CER to $50 million in the first quarter. In terms of bioinformatics, we saw a good incremental growth in applications for clinical oncology. These results also include growing contributions from the newly launched QIAseq NGS portfolio for screening of positive COVID sample for viral variant.

I would like to now discuss our results by non-COVID and COVID-19 product group. As we have been saying, the results for this quarter emphasis -- emphasize the strong performance of our non-COVID portfolio, and give us confidence for growth once we move beyond the tailwinds of the pandemic. Non-COVID groups grew 16% CER this quarter over Q1 2020 as research activity and molecular diagnostic testing showed further increases. In addition to return of high demand in sample technologies and QuantiFERON consumables, we saw a strong performance from other core portfolios including universal NGS kits, which boosts 32% over Q1 2020 from non-COVID related amplification, sales of precision medicine assets which returned to pre-pandemic growth levels, and a solid contribution from non-COVID applications of QIAcuity digital PCR. We have seen significant improvement in non-COVID product groups the last two quarters, and see it as a signal of improving trend to expect during '21.

Sales in our COVID-19 solutions remained healthy in the first quarter, with levels similar to Q4 2020. We saw an ongoing solid demand for sample preparation technologies, PCR, dilution, and third-party reagent, and as mentioned also, some incremental sales of next-generation sequencing products used for variant analysis.

On the next slide, I would like to review our sales by geographic region. For the second quarter in a row, the Americas region delivered growth of about 40% CER. Double-digit CER gains in sales in QuantiFERON-TB boosted the performance for this region. Brazil and Mexico also delivered growth at high levels as sales in both countries far outpaced the rate in the region as a whole. The Europe, Middle East, and Africa region continued the strong trends from 2020 and led the performance for the first quarter of '21. Within the region, Germany, France, Italy, and the United Kingdom experienced robust growth, as demand returned for non-COVID product groups, and was complemented by ongoing sales for COVID testing solutions. Sales in Asia-Pacific, Japan region were bolstered by more than 70% CER growth in China, due in particular to our life science customers. India, South Korea, and Japan, all experienced an uptick in sales, as customer growth in non-COVID areas increased over the year-ago period when the pandemic began. Growth from these countries offset weaker trends in Australia.

I would like to now hand back to Thierry.

Thierry Bernard -- Chief Executive Officer and Managing Director

Thank you, Roland, and I'd like to invite you for a quick update now on the progress QIAGEN teams have made regarding our five pillars of growth. In this slide, for example, you can see a brief overview of our portfolio expansion goals for 2021, and our status after the first quarter. We are continuing to focus on our roadmap, and on providing robust menus to support strong growth in all areas beyond COVID testing. In sample technologies, for example, in which QIAGEN has a large portfolio of market-leading sample extraction solutions, we continue to leverage our experience and innovate to bring new solutions to the market. As an example, in the first quarter, we launched QIAcube Connect for molecular diagnostic and the new QIAprep& kit. I will give you more details on these new products in the next slide.

As we continue to successfully rollout QIAcuity digital PCR platform, our teams are working to expand the field of research applications for those systems. For example, a new workflow for integrating digital PCR and exosome-based liquid biopsy for the detection of blood of cancer from urine samples is being released into clinical trials. And QIAstat diagnostic syndromic testing system now feature a new connectivity solution that we call QIAsphere. This is a cloud-based platform allowing users to monitor tests and instruments remotely. We continue to be focused on menu expansion and capacity scale-up to support the use of installed platform beyond COVID testing needs.

For NeuMoDx, our integrated PCR testing platform for collabs, we are also on track for Q-FDA submissions plans for this year. In the first quarter of 2021, as you can see, our US menu has grown with the receipt of the emergency use authorization for a 4-plex test, with simultaneous detection of flu A and B, RSV, and SARS-CoV-2. In our QuantiFERON franchise, we are moving forward with planned launches with the recent release of the LymeDetect assay on DiaSorin LIAISON platform. This assay was developed as part of our ongoing partnership with DiaSorin to leverage our proven QuantiFERON technology on their large installed base of testing platform. I would share once again more details on this opportunity in the next slides.

Let's go back to the sample technology. As you know, our sample technologies product group has continued to perform well throughout the pandemic, and since Q4 2020, we are seeing significant demand returning from sample preparation kits used in applications outside of COVID. Sales in our non-COVID kits grew over 22% in Q1 '21 versus Q1 2020, demonstrating once again, the strength of our sample technologies business, and proving that we are not depending here from the -- on the pandemic.

On this slide, I would like to highlight a few launches in this product group. As noted before, the QIAcube Connect instrument for automated sample processing has now been launched globally for diagnostic application. This system is the latest addition to the QIAcube family of instruments and builds on the successful launch of the QIAcube Connect in research application. The new placements in clinical labs will add to over 9,800 system installed from the QIAcube family worldwide.

We are also expanding our proprietary QIAprep& portfolio with the newly launched artus SARS-CoV-2 Prep&Amp UM kit, which has been CE marked and is now submitted for emergency use authorization in the US. The QIAprep& technology, if you remember, was initially launched in October last year in a kit for viral epidemiology, and we have seen significant demand for this product to automate rapid processing of RNA viral centers on standard labs equipment. The new kit launched in April combines liquid-based sample prep with PCR assay technology to enable clinical labs to rapidly scale up COVID testing.

I would also like to highlight an upcoming launch for the new generation of QIAGEN EZ1 sample processing in three months, which is extremely well known worldwide for this-- for its ease of use. The EZ2 Connect instruments will feature connectivity much like the QIAcube and QIAstat-Dx instruments using the cloud-based QIAsphere solution popular for remote monitoring. In the third quarter, platforms will be launched for research and pharmaceutical application as well as in forensic labs for human identification application. And clinical platform is planned for launch early 2022.

And for this, I would like to remind you what we explained in our QIAGEN Deep Dive Day in December that every automated sample prep solution from QIAGEN has already an upgrade automation launched on the market QIAcube, EZ1, EZ2, QIAcube Connect and we are still working on an upgrade of our flagship instrument QIAsymphony.

Looking forward in 2021, we expect continuous acceleration of our non-COVID sample technologies product quarter-over-quarter. Here again, we are focused on executing on a solid roadmap for this portfolio to drive our post-pandemic business while of course being also prepared for any future pandemics.

Let's spend some time on QuantiFERON. As you have seen, we have recently announced the CE marking of our new Lyme disease test for use on DiaSorin LIAISON platform. This new test addresses an unmet need for early detection of this very debilitating disease. It has been designed to support earlier disease detection which is critical for those suffering from Lyme disease, with the goal to prevent severe illness in those infected with this bacterial disease. DiaSorin once again is the perfect partner for this test and to take over the commercialization given their portfolio of more than 8,000 instruments in stores worldwide. The combination of QuantiFERON technology for the detection of T cell response with DiaSorin existing assets to detect B cell response offer a new level of clinical detection and a very innovative new level of clinical detection.

This is indeed an attractive market as Lyme disease cases are constantly on the rise, especially in the US, and Europe. This is driving an increase in testing volumes year-after-year. In Europe alone, for example, more than 230,000 people are estimated to contract Lyme disease every year. On a global basis, the annual market opportunity is about $400 million to $600 million for Lyme disease testing. And as a next step as we already announced, we are now going to work on the US submission and we will obviously keep you informed.

The second part of our agreement with DiaSorin is obviously the continuous automation of our QuantiFERON solution. As a reminder, we have developed option for customer to create fully automated workflows for the QuantiFERON-TB test using LIAISON system. This allows QIAGEN to reach new customers through new commercial tenants while offering at the same time DiaSorin with a differentiated test to embed in their broad menu. Beyond the existing successful cooperation on the LIAISON XL instruments, the larger volume system, QIAGEN, and DiaSorin have commercial actions now centered on the lower volume LIAISON XS platform. The partnership with DiaSorin is really, really gaining traction in the US and we are looking for recovering strong trends in Europe as well, once the pandemic subsides.

The latent TB market is returning to growth after the pandemic pressures in 2020. And as you have seen with sales rising 22% at constant exchange rate in the first quarter of 2021, the real competitor is the Tuberculosis skin test given that only 25% of the more than 70 million global latent TB tests are converted to modern blood-based testing. So there are still significant greenfield conversion opportunities.

Our automation strategy enables us to target a wide range of mid to high throughput laboratories in any market. Also, the launch of our work QIAreach-TB is coming out soon for this year, which is a version of our QuantiFERON-TB test for low resources, high burden countries. And this test will run on a small device that can be used in the field with battery power. So we are on track to achieve our '21 sales goal for over $230 million for the QuantiFERON franchise. Our partnership with DiaSorin is bearing fruit and helping us to expand in both industrialized and emerging market.

Moving now to the appointment of a new Supervisory Board member, I'd like to introduce you to our newest Supervisory Board member and welcome Thomas Ebeling to QIAGEN. Thomas joined the Board in February and brings with him wealth of experience in international management, particularly in healthcare given his previous roles as CEO of the German media company ProSieben, and Division CEO role at Novartis involving Pharmaceuticals and Consumer Health. With the addition of Thomas, the Supervisory Board of QIAGEN now has eight members.

I'd like now to hand back to Roland.

Roland Sackers -- Chief Financial Officer and Managing Director

Thank you, Thierry. As noted earlier, we are reaffirming our current full-year outlook for net sales to rise about 18% to 20% CER. For adjusted EPS, we expect $2.42 to $2.46 at constant exchange rate and this is based on a weighted average of about 234 million shares outstanding for the year. For the second quarter, we anticipate sales growth of about 20% CER from $443.3 million in the same period of 2020 and adjusted EPS of about $0.62 to $0.64 CER from $0.55 in Q1 2020. As for currencies, based on rates as of April 30, '21, we now expect a currency tailwind of about 2 to 3 percentage points on full-year sales at actual rate. For adjusted EPS for '21, we expect a currency tailwind of about $0.02 to $0.03 per share.

For the second quarter, we expect a currency tailwind of about 3 to 4 percentage points on sales at actual rate. For adjusted EPS for Q2, we expect a currency tailwind of about $0.01 per share. We are expecting continued improvements in non-COVID product groups during the year, especially in the second quarter of '21 compared to the year-ago period. We are also anticipating sales for COVID solutions to be in line with year-ago levels in the second quarter of '21.

The outlook for full-year '21 is as well based on expectations for softer sales for COVID product groups in the second quarter -- second half of the year. These expectations include plan for investments in R&D and clinical trials to strengthen the competitive profile of our five pillars of growth beyond the pandemic.

With that, I would like to hand back to Thierry.

Thierry Bernard -- Chief Executive Officer and Managing Director

Thank you, Roland. Now it's time to go to our Q&A session. But before this, let me provide you all with a very quick summary.

First, we had another strong performance for the first quarter, executing once again on both, sales growth and adjusted EPS, coming in above our outlook. Our teams all over the world continued to deliver on commitments to secure growth from our portfolio, in particular our five pillars of growth. Second, strong sales trends in our non-COVID product groups with sales growth of 16% CER in the first quarter of '21 demonstrate once again the strength, the sustainability of our business, as we prepare to move beyond the pandemic in the coming quarters. Third, we continue to invest, to strengthen our five pillars of growth that are set to underpin our growth front. These include menu expansion plans for QIAstat diagnostic and NeuMoDx, fueling the commercialization of the QIAcuity digital PCR instruments, and securing our leadership in sample technology.

And as a last point, we are reaffirming our outlook for sale and adjusted EPS growth in '21, anchored by improving trends in non-COVID product groups, as we also continue to serve customers as the pandemic evolves. In closing, we are off to a strong start in a dynamic year, and well-positioned to emerge in a more competitive position beyond the pandemic.

With that, I'd like to hand back to John, and the operator for the Q&A session. Thanks a lot for your attention.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from Patrick Donnelly of Citi. Please go ahead.

Patrick Donnelly -- Citigroup Global Markets, Inc. -- Analyst

Great, guys. Thanks for taking the question. Thierry, maybe just on the guidance, can you just talk about your comfort level on the guide compared to three months ago when you gave it? I'm just wondering, was there a cushion back then, and now the COVID trends are coming down a bit, that margin for error is a bit smaller. So just looking around at pretty much every other company with testing exposure has pulled down guidance over the past few weeks. Obviously we're seeing what's happening in the US volumes that you touched on. Just want to talk through your confidence level in the guidance today, as you discussed during the call. Clearly, execution on numbers is a big focus for you guys. So just wanted to get color on this piece.

Thierry Bernard -- Chief Executive Officer and Managing Director

Yes. Thanks, Patrick, for the question. And obviously, I mean, we are on the market, and we follow the evolution of the market every day. The -- I would insist on a couple of things, a couple of points. First of all, there is a wide diversity of situation on the COVID-19 testing front. It is true that demand has been softening in some geographies, the US, Israel, for example. But the demand is still extremely strong in some other geographies, in Europe, in some countries in Europe, or if you see the examples or -- of Brazil, Russia, or India showing us that there is still room for significant testing demands. What I mean by this is also the second point, is that, regarding testing volumes, I mean, we are entering a phase probably of increased volatility. Is that taking QIAGEN by surprise? No, because we always said from 2020 that we were expecting numbers in '21 to assume till a significant level of COVID demand in H1, and then plateauing with a lower demand in H2, and at the same time, a quarter-by-quarter acceleration of our non-COVID solutions. And this is exactly on what we are executing as we say. So, yes, there is volatility, but we are coming from Q1 with a strong acceleration of the non-COVID portfolio, which is what we, and where we focus our attention. We believe that the COVID testing needs will continue to be diversified, I mean, geographically. QIAGEN has solution for all those needs. This is also a very strong message. We have not only testing solution for detection of the virus, but if you want to do surveillance program with NGS or wastewater, we have a solution. If you want to test for the efficiency of vaccine, we have a solution with our T cell testing. So we have a solution covering the all range of potential COVID beyond the current situation. So that's why, we are confident in our forecast. Obviously, as we say volatility is increasing, but at the same time, we have certain numbers that are proven by our Q1 result, and now it's up to execution quarter after quarter, until the end of the year.

Operator

Our next question comes from Daniel Walter from Commerce Bank. Please go ahead.

Daniel Wendorff -- Commerzbank -- Analyst

And I have one, and then a small follow-up on the financial side. And my first question would be on your installed instrument bases. Can you maybe comment on how the growing installed bases of instrument is already helping consumable sales? Maybe also, how it potentially has already influenced non-COVID sales growth in Q1? And that would be my first question. And then, a question on your strong operating cash flow development in Q1, and how should we think about capital allocation over the next quarters, maybe also going into 2022, on the basis of your actually strongly arising cash flow? Thank you.

Thierry Bernard -- Chief Executive Officer and Managing Director

So, to your first point, and then I will let also Roland chime in on the cash flow results. Daniel to your first question, we continue -- and in Q1 as well, to increase the size of our installed base for very relevant instruments. We have increased the numbers of NeuMoDx on the field, increased the number of QIAstat on the field. We have increased the number of QIAcuity as well. So this is going as per plan. And therefore, this is obviously giving us a good expectation, because, as you know, QIAcuity, QIAstat, NeuMoDx are not COVID dependent. Those are menu or application plays. And once we have those installed base on the field, the game now in Q2, in Q3, Q4, and beyond the pandemic, is to make sure that the menu that we have available on QIAstat, the menu that we have available on NeuMoDx is going now to be consumed by those in storage system. And the same for QiAcuity. So, it's always difficult to compare a quarter, first quarter of the year with the fourth quarter of the previous year, because you know, there is always, when acceleration of capital sales at the end of a year, this is normal. This is where hospitals are sometimes using their last budget. But the good thing for us is that, we have seen the continuous progression of the installation of NeuMoDx, QIAcuity, QIAstat, just to speak about those systems. Does it answer your question, Daniel?

Daniel Wendorff -- Commerzbank -- Analyst

Yes, to a certain degree, yes, absolutely. Thank you.

Thierry Bernard -- Chief Executive Officer and Managing Director

Roland, you want to speak about the cash flow?

Roland Sackers -- Chief Financial Officer and Managing Director

Yes, on the second part of your question, Daniel, it's quite obvious that we had a very strong start this year, also in terms of operating and free cash flow. More or less $134 million operating cash flow, $82 million in free cash flow as significant up. And we also believe that we will see strong trends for the remainder of the year compared to last year. That clearly puts us in a very comfortable position to still anticipate both, on the one-hand side, capital allocation in terms of value-enhancing both on acquisition, which clearly stood screening the market for value-enhancing bolt-on deals, at the same time, clearly, we have a good track record since 2012 for share buybacks and bolt is clearly on the table.

Operator

We will now take our next question from Scott Bardo from Berenberg.

Scott Bardo -- Berenberg Bank -- Analyst

Yes, thanks very much for taking my questions. Good afternoon. So the first question, please. I think there is some evolving evidence now of pretty strong demand for low plex testing also for COVID-19, where some of the syndromic, multiplex testing has somewhat disappointed in the competitive landscape. I wonder if this is a dynamic that you are also seeing and whether you, after this first quarter, have any need to change your placement and financial goals, both for QIAstat and NeuMoDx. So that's question number one, please. And second, quick follow-up. We see now another competitor enter the market for latent tuberculosis testing. I know you've expected this for some time. They're claiming certain workflow advantages. I wonder if you expect to see any dent in your QuantiFERON tuberculosis franchise as a result of this new entrant. Thanks.

Thierry Bernard -- Chief Executive Officer and Managing Director

Very good. So, thanks, Scott for the two questions. First, the demand for localized testing. I mean, what I would highlight, Scott, first and foremost is that we have a solution for any kind of plexing on COVID-19. I mean if you want just to have a single plex, we have it on NeuMoDx and on other solutions. If you want to have a low plex, as you have seen, we just got our approval for the 4-plex on NeuMoDx, we have it. If you want to have a larger plex, we have it on QIAstat. So basically we cover the needs and we follow obviously the evolution of those needs. This is why we believe it was extremely important to go beyond the single-plex and have a short plex and we think at this moment that NeuMoDx is a good answer for that. What the next winter will bring is difficult to say. I believe there are still many labs that are very interesting in larger answers than just short answers and the jury is still out there on the market for this. The good thing is QIAGEN has a breadth of portfolio that covers all those needs.

Second on the latent TB, and the arrival of new competitor, Scott, without wanting to sound arrogant, I believe that latent TB is the perfect example with QIAGEN of a company not being arrogant, or complacent while being the number one in the world. We have prepared for the arrival of competition for the last three years with being the only company offering a full integrated automated workflow from front hand, remember the agreement that we have with automation company such as Tecan or Hamilton and back-end result with DiaSorin. And when you look at our partnership with DiaSorin, as we explained today, not only can we cover the high throughput or mid-throughput needs, but we can cover also the low throughput needs with the DiaSorin LIAISON XS. So I continue to welcome the arrival of specialized infectious diseases competitors because they will help us proving the efficiency of latent TB testing. They will help us probably showing that we need to convert from skin test -- because again, make no mistake, Scott, the real competition is not the newcomers, it's still the skin test. And this is clearly our main focus. Are competitors going to put a dent in our market shares, or are changing our view on what TB should be for QIAGEN over the long run? Not at all. I'm not saying that some customers are not going to choose those competitors, but I believe that we build enough value upto entry to make our market share and our position still dominant. And once again, I am much more obsessed in trying to convert the skin test market than by the arrival of new competitor. Does it answer your question, Scott?

Scott Bardo -- Berenberg Bank -- Analyst

Perfect. Thanks, Thierry.

Operator

The next question comes from Doug Schenkel of Cowen. Please go ahead.

Doug Schenkel -- Cowen & Co. -- Analyst

Hi, Thierry, and good afternoon, everybody. My first question is on guidance and I guess it's a two-parter. So the first part is, earlier this year you provided guidance for QuantiFERON, QIAstat, and NeuMoDx, you had specific targets for each of those line items. I just want to confirm that the targets there are unchanged. And then I was hoping you could also comment on quarterly revenue pacing for the year. You've guided Q2 revenue flat to down slightly sequentially. I'm just wondering if your expectation is for linear improvement over the balance of the year or we should assuming that that -- we should be assuming a really back-ended year meeting most of the balance of the revenues in Q4. And then separate from guidance, your net debt to EBITDA is below two times, I think coming out of the quarter and if you continue to throw off a lot of cash, in part because of all the high margin COVID-19 revenue but also because of the core. I'm just wondering how you're thinking about capital deployment over the balance of the year. Thank you.

Thierry Bernard -- Chief Executive Officer and Managing Director

Very good. And I think that Roland and I can try to answer your different question, Doug. I will start and also ask at a point Roland to chime in. First of all on the target for QuantiFERON, for QIAstat and NeuMoDx, as we have said, Doug, we believe clearly that our target for QuantiFERON this year especially when you look at such a strong quarter one at 22% growth is really in our hand. So we are confident in this one. For NeuMoDx and QIAstat, which are-- two products which are both extremely relevant for COVID at the moment. But as we said, they are menu play, they are not dependent on COVID. We have also said yes there is an increased volatility on the market, but between the two platform, we also believe that all together we can reach our target. Might be that we are going to be a bit above in one of those, a bit below in the others, but the progression of market share still is happening, the progression of installed base still is happening and we are here as well confident. Again, Doug, I really insist on that. We are also managing those two platform clearly post-pandemic. Obviously, we have our solution for COVID but this is not our main obsession. At the moment the obsession is to make sure that we, first of all, deliver on NeuMoDx, the menu available in the Europe-- in Europe, I'm sorry to the US on time. And we also want to deliver GI on QIAstat for the US. We want to deliver meningitis on QIAstat for Europe on time as per our plan, and this is currently what we are doing. Once again, execution is key. So we are confident, yes, for those two platform as well. On the-- basically framework of pace of quarter after quarter, again while highlighting that increased volatility we have a kind of a strong belief that if you consider for Q2, for example, our COVID expectation, they will be very much similar to what we achieved in Q2 of last year, Q2 2020. And if you consider the non-COVID business for Q2, for example, we expect a strong confirmation of the recovery and a strong addition of revenues coming from the non-COVID. And again, this prove exactly, and this confirm what we said last year.

Now on the capital deployment, I'm going to let Roland also chime in here. I just would like to highlight that we are a publicly listed company. We are attentive to any potential opportunity on the market. At the same time, we also confirm what we said some months ago that we have a lot to execute on organically. If there are inorganic opportunities especially bolt-on acquisition to reinforce our five pillars of growth we will obviously not hesitate but I'm sure that Roland also has interesting perspectives here.

Roland Sackers -- Chief Financial Officer and Managing Director

As I said, then again when first Daniel asked the question before, I do think we're clearly keeping a high flexibility. It's also quite obvious that we review carefully the performance of the QIAGEN share price that clearly also goes into our evaluation, because we clearly do believe that, again, there is a strong performance right now seen at QIAGEN, and we want to see a reflection on the share price as well.

Operator

The next question comes from Tien Peterson of JP Morgan.

Casey Rene Woodring -- JPMorgan Chase & Co -- Analyst

Hi, guys. This is Casey up for Tycho. I guess, more broadly speaking on COVID product revenues, how much downside risk is there in the back half of the year now, given, what has been described by several of your competitors as an imminent shift in PCR volumes toward those highly automated, high throughput platforms? How do you see this dynamic playing out, and how much would this affect the COVID revenue portion in sample technologies, and maybe the OEM portion?

Thierry Bernard -- Chief Executive Officer and Managing Director

I would just repeat what we have said many times. We have built our guidance for 2021 and our budget with the assumption of progressively throughout the year, Q2, and especially H2, there will be a softening and roll-off of demand for COVID testing. But again, there is volatility. The market can change very, very quickly. We don't know what the volumes are going to bring. We don't know what the flu season is going to bring related to COVID. So it can goes up as well, very quickly. We are prepared because we have solutions for every need related to COVID. And specifically, on your situation -- on your question regarding high throughput system, I think you understood that we have launched QIAprep& and it's an extremely high throughput solution. It's an extremely quite rapid also solution for COVID, and it's very well considered by many markets in the world. If you see our sales of QIAprep& in Q1, they already increased compared to Q4 of last year. So, again, I mean, we have a very broad portfolio, potentially the broadest portfolio for COVID solutions on the market, addressing every need of the pandemic. But at the same time, we clearly built our numbers, assuming that these would basically slow down throughout the year. That's our assumption, and we confirm it. Roland, would you like to add something to that?

Roland Sackers -- Chief Financial Officer and Managing Director

No, I think, perfectly said.

Operator

The next question comes from Dan Brennan from UBS.

John Jaber -- UBS -- Analyst

Hi, this is John Jaber on for Dan. Thanks for taking the question. China growth recovered pretty strong at 70% in the quarter. And can you talk a little bit on the geographic outlook for 2021, and what specifically you're seeing in China? And with regards to China, can you describe any changes you've seen in your business there since 2019? And then just on COVID, could you provide a little more color on what is the outlook and variability for your COVID revenues beyond 2021? Thanks.

Thierry Bernard -- Chief Executive Officer and Managing Director

Sure. I will address directly your last part of the question, which is COVID-driven solution beyond '21. I think I would refer to what we said on December 8. We confirm this, we do not rely on significant numbers on our side to ensure the growth of QIAGEN beyond the pandemic. Beyond the pandemic, QIAGEN is a non-COVID dependent -- QIAGEN's company, I'm sorry. And therefore, everything that would come, if there is a resurgence in some geographies because of volumes, because of surge, we will be ready. But it's far too early for me to give numbers here. We would have the solutions. We are ready to act, we are ready to ensure customer needs. So that's the first part. On the question on the geographic situation in China, first of all, you probably know that because we have communicated on that, we have changed our management in China. We are obviously taking advantage of the change of management to continue to strengthen our distribution network. China is a good example, once again, of situation being able to move very quickly. We have more COVID-related sales and expected in China in Q1. Especially, thanks to what we call our second brand, Schengen. But again, we are managing China completely post COVID. The key success factors for us are, first of all, monitoring in a very granular way, our commercial partner's network. You know that most of the sales in China are still made for distributors. Very strict management of those distributors is a key success factor. Second is to continue to find solutions to bring our different solution, especially in the MDEX, where you need registration to what we call NMPA, which the equivalent of the FDA in China. We need to find solution to bring those solution faster because it takes a long time. It takes some time more than 2 or 3 years to be registered. We need to find faster solution. We are working on that. It can be, for example, through OEM with Chinese companies. We are working on that. That's the second key success factor for us. And third is, continue to invest on this market, which is already the second in-vitro diagnostic market in the world. So this is where we are. We believe, China is a market that should bring us a double-digit growth. This is the expectation we have on this market, and this is what we are working on. Does it answer your question?

John Jaber -- UBS -- Analyst

Yes, that's very helpful. Thank you.

Operator

The next question comes from Paulco Fredrik from Deutsche Bank.

Paulco Fredrik -- Deutsche Bank -- Analyst

Thank you. Good afternoon. So my question is on the 16% growth in the non-COVID business, pretty impressive number. How much of this was pent-up demand or catch-up demand from last year, and how much of this can really be sustainable throughout the year in your view? And then, a quick follow-up is on your COVID-19 antigen test. Do you still plan to go ahead with that launch? And if yes, when do you think that this can take place?

Thierry Bernard -- Chief Executive Officer and Managing Director

Thanks for the question. Catch-up, that's just recovered, and it's extremely difficult to give you numbers on that questions. What is clear is that volumes, for example, TB testing, for oncology testing, just two examples, I would say patient needs for those testings are coming back quite to deliver of what they were in 2019. And we have seen that sequentially Q3 of last year, Q4, and confirm in Q1. So yes, I believe this is sustainable. Another example, which is key to QIAGEN because we have been challenged on this last year, for example, when we post a growth of our DNA sample prep solution at more than 22% in Q1, this really shows what we have been saying last year. Even in sample prep, we are not COVID dependent. The vast majority of our sample prep market shares are coming from DNA testing, not RNA testing, and seeing it growing at 22% Q1 is extremely encouraging. And we do not believe that it's just to catch up with last year. It's clearly a recovering of the market demand. So I hope it answers your question. It's very difficult to give you percentage of what was catch up, what was -- no, I think it's an overall recovery, because, basically, people need to be tested for oncology, needs to be testing for latency B. And we are doing, for example, last but not least, this recovery on QuantiFERON, while most of the borders are not open. And while most of universities, or school in many countries are not open -- and you know that two growth drivers for QuantiFERON are obviously, border testing and also community testing. Now to the antigen, you need to understand that, we now have two Antigen solutions. We have a solution that we are basically dedicating in -- to Europe at the moment, which is a decision that we took in Q1, which is proving you also that QIAGEN remains a very agile company. Some markets in Europe, like Germany, not only Germany, but we're asking for significant antigen testing and we found a solution with a partner to be able to bring that solution. It's mainly in Europe, the product is CE marking and some emerging countries. We recorded a moderate price antigen testing. The product that you are referring to is what we call our QIAreach antigen is the partnership with Ellume. We have resubmitted this antigen solution, which is by the way, as you remember, combined with an antibody solution to the FDA, perfectly on time as we said to the market. We are now in the phase where we are constantly exchanging at the FDA, with the reviewer and I cannot speak on behalf of the agency, but yes, we have expectation to have this product approved before the end of the H1. And so, yes, we have this product in our assumptions and in our numbers for H2. Does it answer your question?

Paulco Fredrik -- Deutsche Bank -- Analyst

Yes, it does. Thank you.

Operator

The next question comes from Brian Weinstein from William Blair.

Brian Weinstein -- William Blair & Company, L.L.C. -- Analyst

Hey, guys. Good afternoon to you and thanks for taking the question here. So I appreciate the commentary on the year-over-year growth and how that's improving, but really, when we look sequentially here, the Q2 guide is flat to down sequentially in the quarter. I know this is somewhat asked in the prior question, but it would make three straight quarters at sort of that $365 million to $370 million range. Also, this quarter we saw NeuMoDx down about $3 million sequentially on the larger installed base, QuantiFERON is actually down a little bit, I think $1 million or so sequentially. So I'm just trying to understand how you guys are thinking about the sequential movement here because it would appear to us that Q2 would likely to have to have some conservatism in it or is it really just a flattening out of the actual dollars here? I know someone asked before, but I wasn't quite clear on the answer. So I wanted to go back into the sequentials and what you guys are seeing there.

Thierry Bernard -- Chief Executive Officer and Managing Director

Well, I...

Roland Sackers -- Chief Financial Officer and Managing Director

Let me just compare...

Thierry Bernard -- Chief Executive Officer and Managing Director

Yes, please, please Roland go over and then I will -- yes, please.

Roland Sackers -- Chief Financial Officer and Managing Director

Yes, just let me be very straight. Hi, Brian. Again, just very clear, we expect sequential growth quarter-over-quarter on the non-COVID side, more or less throughout the year. Also for the second quarter through the first quarter, non-COVID. Again we shouldn't forget them. Second, it's quite obvious. I think Thierry said it very clear before. We feel very comfortable or confident about the full-year guide. The question is really again on the quarterly allocation because there is no doubt volatility on the COVID part of the business and who and ask can tell us if something is happening in the third quarter of a sort of a month or in the first quarter or first month of the quarter. So, I think a certain flexibility is key to take. I don't think that is necessary on a full-year basis. Most important is and just as emphasized is, again, we did quite well, better than we expected in the first quarter in all regards and we shouldn't forget, again sequentially talking, Q4 was clearly a very strong finish of the year. We all know that a fourth quarter of the year is in our industry, a different quarter if it comes to implementation and others. So I think a very straightforward year-to-year comparison as a first quarter is not totally fair. Despite that fact, we have seen a good growth rate. So I do think we feel good about that.

Thierry Bernard -- Chief Executive Officer and Managing Director

Thanks, Roland. Does it answer your question?

Brian Weinstein -- William Blair & Company, L.L.C. -- Analyst

Yes, it did and we're-- I hear what you're saying on the full year, and you're confidence there and whatnot, and that's comforting. I just wanted to follow up on one of the things. It's just your broader thoughts on the multiplex space becoming more crowded, Roche, DiaSorin and Hologic all made moves in the last few months here and just your thoughts on what that space looks like with these bigger players now making moves to compete here?

Thierry Bernard -- Chief Executive Officer and Managing Director

I have seen those moves, first of all, are proving two things. The first is that QIAGEN is an extremely disciplined acquirer. We acquired STAT Diagnostica for $150 million. Roche spent $1.8 billion for GenMark, and Hologic close to $1 billion for Mobidiag. And I clearly believe and we see it in the size of the installed base already and the worldwide presence that QIAstat is a superior product compared to those two solutions. So disciplined acquirer and basically proactive acquirer. The second key message for me is that it simply proves that the syndromic market is exactly what QIAGEN said, which is very promising, still growing market. We said when we acquired STAT Diagnostica that we believe the market was already at $800 million growing at significant double-digit, we said 20% at that time. Most of the publication are now showing that it's a $1.3 billion to $1.4 billion market probably moving to $2 billion market, and we still believe at QIAGEN and it seems to be confirmed by the publication of our competitors that it's still a double-digit growth market. So there is still a lot of room to play. The key success factor for QIAGEN is execution on menu. We have a differentiated platform. There is no platform easier to use than QIAstat. There is no other platform able to deliver what we call semi-quantitative results, not just a yes and no answer. The key success factor is executing on the menu. And as long as we will deliver the menu we said in '21, '22, and beyond, there is no reason why we shouldn't be successful here. Does it answer your question?

Brian Weinstein -- William Blair & Company, L.L.C. -- Analyst

Absolutely. Thank you very much.

Operator

Our last question comes from Hugo Solvet of Exane BNP Paribas.

Hugo Solvet -- Exane BNP Paribas -- Analyst

Hi, guys. Thanks for taking my questions. I have two. On QIAstat-Dx, if I remember well last year you had a fair share of placements in a reagent rental model. Just wondering if you're seeing any change here since the beginning of the year or do you still place products, and -- I mean instruments with a certain degree of visibility on consumable sales? And the second question, I think, Thierry, in your prepared remarks, you mentioned that the trend from manual to automated has stabilized. Can you just give us an indication on where it has stabilized compared to what you were expecting in H2 2020? Thank you.

Thierry Bernard -- Chief Executive Officer and Managing Director

So to your first question, Hugo, thanks for the two question. First of all, I don't know if you use placement just for the installed base because we are still really selling much more than placing QIAstat. And by the way, it's the same for NeuMoDx, and we said that last year. So capital sales over placement is still the trend at the moment. But as we said before, we have still placed a healthy output on the market, as I said, a healthy number of QIAstat system in Q1 and therefore obviously we continue to make sure that those QIAstat are not just COVID-19 driven. Once again, we push our team to two things, engage customers ASAP on assays such as GI, meningitis, and others. And second is try to bring customers to sign priory annual contract to make sure that they do not disappear obviously once the pandemic subsidies. So that's number one.

For automation versus manual, two things I would say, we confirm what we said last year that progressively automation will prevail in the QIAGEN level of sales over manual and we are now at a ratio which is roughly 65% to 45% between automated and manual. 65% automated, 45% to manual, I'm sorry, which is showing two things. First of all, that QIAGEN is extremely relevant in automation of sample tech as well. Second, that we still have a very decent number of manual workflow because this workflow is proving to be quite useful for many countries, especially in the emerging world. Does it answer your question, Hugo?

Hugo Solvet -- Exane BNP Paribas -- Analyst

Very much. Yes, I think. Yes.

John Gilardi -- Vice President, Head of Corporate Communications and Investor Relations

Okay. With that Thierry, and Roland, I'd like to end the call and thank all of you for your participation, again. If you have any questions or comments, please do not hesitate to reach out to Phoebe and me for further discussions. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 73 minutes

Call participants:

John Gilardi -- Vice President, Head of Corporate Communications and Investor Relations

Thierry Bernard -- Chief Executive Officer and Managing Director

Roland Sackers -- Chief Financial Officer and Managing Director

Patrick Donnelly -- Citigroup Global Markets, Inc. -- Analyst

Daniel Wendorff -- Commerzbank -- Analyst

Scott Bardo -- Berenberg Bank -- Analyst

Doug Schenkel -- Cowen & Co. -- Analyst

Casey Rene Woodring -- JPMorgan Chase & Co -- Analyst

John Jaber -- UBS -- Analyst

Paulco Fredrik -- Deutsche Bank -- Analyst

Brian Weinstein -- William Blair & Company, L.L.C. -- Analyst

Hugo Solvet -- Exane BNP Paribas -- Analyst

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