01-08-2025
Diasorin SpA (DSRLF) (H1 2025) Earnings Call Highlights: Strong Growth Amidst Market Challenges
Revenue: 919 million, up 5% compared to the same period last year.
Core Business Growth (Excluding COVID): 8% growth in the first six months of 2025 at constant exchange rate.
Gross Profit: 406 million, representing 60% of total revenues.
Gross Margin: Stable at 66% of revenues in Q2 2025.
Adjusted Operating Expenses: 232 million, representing a 1% increase year over year.
EBITDA: 240 million, exceeding prior year by 8% at current exchange rate.
EBITDA Margin: 35% at constant exchange rate, better than 34% recorded in 2024.
Net Debt: 683 million, an increase of 66 million compared to 2024 year-end.
Cash Flow: Almost 85 million generated in H1 2025.
Immuno Diagnostic Growth: 8% in Q2 2025.
Molecular Diagnostic Growth (Excluding COVID): 8% in Q2 2025.
License Technology Growth: 10% in H1 2025, 7% in Q2 2025.
Adjusted Tax Rate: Increased from 23% to 25%.
Warning! GuruFocus has detected 6 Warning Signs with DSRLF.
Release Date: July 31, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Diasorin SpA (DSRLF) reported a solid quarter with top-line growth and a margin of 36%, in line with expectations.
The immuno diagnostics segment grew by 8% in Q2, driven by strong performance in North America and Europe.
The company signed a significant million-dollar contract in the US, marking a strategic win in the healthcare system.
Molecular diagnostics, excluding COVID, showed an 8% growth in Q2, with a strong performance in the multiplex syndromic business.
The company is on track to meet its target of adding 75 new customers by the end of the year, with 40 active customers already secured.
Negative Points
China remains a challenging market with a double-digit decrease in revenues due to the impact of VBP, although it represents less than 5% of total revenue.
The company faces foreign exchange headwinds, impacting revenues by approximately 11 million in the quarter.
Gross margin remained stable at 66%, but tariffs and the full operation of the Chinese manufacturing plant added pressure.
The company anticipates higher operating expenses in the second half of the year due to salary cycles and discretionary costs.
The discontinuation of the Aries platform resulted in a revenue loss of 5.5 million in H1 2024, with no sales in 2025.
Q & A Highlights
Q: Hi, good afternoon. My first question is on China. Your competitor mentioned a DRG or debundling dynamic impacting panel-based testing in immuno assays. Are your products affected by this debundling plan? A: Yes, we are aware of the DRG dynamic. It is part of China's strategy to cut costs, affecting both local and international companies. China will become a less profitable market due to reduced consumption and price pressures. Our strategy is to focus on specialty products that offer clinical value and are less impacted by these changes.
Q: Could you explain why the gross margin was flat year-on-year, but the EBITDA margin increased by 100 basis points to 35%? A: The gross margin remained stable despite tariffs and costs from our manufacturing plant in China. The EBITDA margin improvement is mainly due to reduced operating expenses, which decreased from 39% to 37% of revenues.
Q: On the million-dollar contract you mentioned, does this represent commitments, and how long will it last? A: The contract covers a healthcare system with core facilities and clinics, marking our first full system sale. This indicates significant business potential, as we previously only had wins in individual hospitals.
Q: On the discontinuation of the Aries business, can you share the revenue loss associated with this and the phasing for the 15 million one-off cost? A: The Aries platform, a molecular platform from Luminex, contributed 5.5 million in H1 2024. We expect no revenue loss as we transition production to Italy. The one-off costs are phased with 8 million booked now, 2-3 million expected in the second half of the year, and the remainder in 2026.
Q: Could you speak about the drivers behind the 11% growth in your molecular business? Was it driven by blood panels or stockpiling for the flu season? A: The growth is due to closing accounts and setting up systems, not stockpiling. Customers typically stock up in Q3 for the flu season.
Q: On licensed technologies, you mentioned expecting a softening in H2. Are you projecting a decline in revenue? A: While we expect a softening, we need to wait and see how the situation evolves. Mathematically, if we project 2-3% growth, H2 should be lower than H1.
Q: Regarding tariffs, are you better positioned than other diagnostic companies, and could this support your margins? A: The impact of tariffs is relatively small. If the industry decides to pursue price increases to cover tariffs, we will follow. However, we are not overly concerned due to our specialization and the small impact.
Q: On North America Immuno, is the growth due to new customer wins or existing customers consuming more of the menu? A: The growth is due to a combination of expanding our hospital install base and increasing product sales to existing customers. We have a strong relationship with major labs in the US, contributing to consistent growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
