Good morning. My name is Christelle, and I will be your conference operator this morning. At this time, I would like to welcome everyone to the Danaher Corporation's Q2 2021 Earnings Results C onference C all. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question- and- answer session. If you would like to ask a question at that time, please press *1 on your touch-tone phone. If you would like to withdraw your question, please press the # key on your telephone keypad. I will now turn the call over to Mr. Matt Gugino, Vice President of Investor Relations. Mr. Gugino, you may begin your conference. Thanks, Christelle. Good morning, everyone, and thanks for joining us on the call. With us today are Rainer Blair, our President and Chief Executive Officer, and Matt McGrew, our Executive Vice President and Chief Financial Officer. I'd like to point out that our earnings release, the slide presentation supplementing today's call, and the reconciliations and other information required by SEC Regulation G relating to any non-GAAP financial measures provided during the call are all available on the Investor section of our website, www.danaher.com, under the heading Quarterly Earnings. The audio portion of this call will be archived on the Investors section of our website later today under the heading Events and Presentations and will remain archived until our next quarterly call. A replay of this call will also be available until August 5, 2021. During the presentation, we will describe certain of the more significant factors that impacted year-over-year performance. The supplemental material describes additional factors that impacted year-over-year performance. Unless otherwise noted, all references in these remarks and supplemental materials to specific financial metrics refer to results from continuing operations and relate to the Q2 of 2021, and all references to period-to-period increases or decreases in financial metrics are year-over-year. We may also describe certain products and devices which have applications submitted and pending for certain regulatory approvals or are only available in certain markets. During the call, we'll be making forward-looking statements within the meaning of the federal securities laws, including statements regarding events or developments that we believe or anticipate will or may occur in the future. These forward-looking statements are subject to a number of risks and uncertainties, including those set forth in our SEC filings, and actual results may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of the date they are made, and we do not assume any obligation to update any forward-looking statement except as required by law. As a result of the size of the Cytiva acquisition and its impact on Danaher's overall core revenue growth profile, we're presenting core revenue on a basis that includes Cytiva sales. References to core revenue growth include Cytiva sales in the calculation of period-to-period sales growth. With that, I'd like to turn the call over to Rainer. Thanks, Matt, and good morning, everyone. We appreciate you joining us on the call today. We're very pleased with our strong start to the year with another terrific result in the Q2. We saw broad-based strength across the portfolio, which helped us deliver over 30% core revenue growth, more than 70% adjusted EPS growth, and outstanding free cash flow generation. This well-rounded performance is a testament to the positioning of our portfolio and our exceptional team who are committed to leading and executing with the Danaher Business System every day. During the Q2, we continued to strengthen our competitive advantage through significant high-impact organic growth investments and enhanced our portfolio with strategic growth-accelerating acquisitions. We prioritized innovation across Danaher and increased our production capabilities, all of which we believe contributed to the market share gains in several of our businesses. We also announced our pending acquisition of Aldevron, which will expand our presence into the fast-growing and important frontier of genomic medicine. Putting it all together, we believe the combination of our leading portfolio and DBS-driven execution differentiates Danaher today and provides a strong foundation for sustainable long-term outperformance. With that, let's turn to our Q2 results. Our sales were $7.2 billion, and we delivered core revenue growth of 31.5% with strong contributions from all three of our reporting segments. Geographically, high growth markets grew nearly 35%, and developed markets were up more than 25%. Revenue in each of our three largest markets, North America, Western Europe, and China, was up 30% or more in the quarter. Our gross profit margin increased by 710 basis points to 60.9%, primarily due to higher sales volumes, the favorable impact of higher margin product mix, and the impact of prior year purchase accounting adjustments related to the Cytiva acquisition that did not repeat in 2021. Our operating profit margin increased to 27.8%, including 775 basis points core operating margin expansion. Primarily as a result of higher gross margin and continued lower operating expense, as travel and other related costs remained below pre-pandemic levels. Adjusted diluted net earnings per common share of $2.46 were up 71% compared to 2020. We generated $1.8 billion of free cash flow in the quarter, up over 40% year-over-year. In June, we announced our intention to acquire Aldevron, a producer of high-quality plasmid DNA, mRNA, and protein serving academic, biotechnology, and pharmaceutical customers. The addition of Aldevron will expand our capabilities into the important field of genomic medicine, where we're seeing the accelerated adoption of gene and cell therapies, DNA and RNA vaccines, and gene editing technologies. We anticipate Aldevron will be accretive to Danaher on multiple levels, as we expect the business to generate $500 million of revenue in 2022, with more than 20% annual revenue growth and a strong margin profile. We look forward to welcoming this incredibly talented and innovative team to Danaher once the transaction closes. In addition to announcing the Aldevron acquisition, we also accelerated several organic growth investments across the portfolio. One of our core values at Danaher is innovation defines our future, we have made a significant commitment toward our research and development efforts, increasing our research and development spend by more than 30% year-over-year to bring more impactful solutions to our customers. At SCIEX, we launched the ZenoTOF 7600, a high-resolution, accurate mass spectrometry system that enables scientists to identify, characterize, and quantify molecules at previously undetectable levels, helping to advance the development of new biotherapeutics and precision diagnostics. At Beckman Coulter Diagnostics, we recently introduced the DxA 5000 Fit, a compact automation solution designed for small and mid-size laboratories that reduces up to 80% of the manual steps typically required for sample preparation. These are just a few great examples of how we're continuing to invest for growth across Danaher to support our customers and enhancing our competitive advantage through innovation. Additionally, we're making substantial investments to expand capacity across our bioprocessing businesses and Cepheid. Near term, these investments are supporting existing customer demand, driven by both the market and meaningful share gain, they're equally important to support the long-term growth of these businesses, where we see tremendous runway ahead, given the underlying structural growth drivers in the markets they serve. We expect our total capital expenditures across Danaher to be approximately $1.5 billion in 2021, as we continue to invest in support of our customers' needs today and well into the future. We believe the strategic combination of these organic and inorganic investments across our portfolio will reinforce our competitive advantage and accelerate our growth trajectory going forward. Let's go into more detail on our quarterly results across the segments. Life Sciences reported revenue increased 41.5%, with core revenue up 35%. This growth was broad-based, with most of our major businesses in the platform delivering 30% or better core growth. We continue to see strong demand for our bioprocessing solutions with combined core revenue growth of more than 40% at Cytiva and Pall Biotech. Our non-COVID related bioprocessing business was up low double digits, where we saw robust customer activity and order rates. COVID-related vaccine and therapeutic revenues were consistent with the Q1 and exceeded $1 billion over the first six months of the year. I'd be remiss if I didn't take a moment to reflect on Cytiva's fantastic first year as part of Danaher. We've established a new company with a new brand name, added more than 1,500 associates, and made substantial progress in the transition to Danaher, all while maintaining world-class support of our customers, significantly ramping production capacity and growing revenue by more than 50%. When we announced the acquisition, we talked about the strategic and value creation opportunities we saw, and we're excited to welcome such a talented and engaged team to Danaher. I think it's fair to say they've exceeded our expectations in every way, and that's really a testament to the Cytiva team, who've embraced Danaher and the Danaher Business System and continued to execute exceptionally in support of our customers. Moving to diagnostics, reported revenue was up 40.5% and core revenue grew 37%, led by more than 50% core growth at Cepheid. Beckman Diagnostic and Leica Biosystems each grew more than 30% as patient volumes and clinical diagnostic activity approached pre-pandemic levels around the world. At Cepheid, growth outside of respiratory testing was led by our sexual health and hospital-acquired infection assays, particularly among newly acquired Cepheid customers. In respiratory testing, we believe we continued to gain market share as expanded manufacturing capacity enabled the team to produce and ship approximately 14 million cartridges in the quarter. As expected, COVID-only tests accounted for approximately 80% of these shipments, while our 4-in-1 combination test for COVID-19, flu A, flu B, and RSV represented approximately 20%. This broad-based performance across Cepheid was driven by the team's thoughtful install base expansion over the last 15 months, and it's evidence of the significant value Cepheid provides to clinicians with the unique combination of fast, accurate lab quality results and a best-in-class, easy-to-use workflow at the point of care. Moving to our Environmental and Applied Solutions segment. Reported revenue grew 15.5%, and core revenue was up 13%. Revenue growth accelerated across both platforms, with water quality up high single digits and product identification up approximately 20% in the quarter. In our water quality businesses, demand for our analytical chemistries and consumables was driven by improving activity across municipal, chemical, food, and beverage end markets. Equipment order rates accelerated as customers got back up and running and began to invest in larger projects. In product identification, Videojet was up mid-teens, and our packaging and color management businesses were up more than 25% in the quarter. This acceleration reflected a broad-based recovery, with growth across most major geographies and end markets. With that as a backdrop for what we saw this quarter, let's spend some time going through trends geographically and across our end markets. Looking at conditions around the world, most major regions and countries have broadly returned to or are approaching normal operations. This is reflected in the strong results we've seen across the U.S., Europe, and China. That said, we're mindful of the emerging COVID-19 variants driving further outbreaks and have taken action to help minimize the potential impact on our respective businesses. At this point, we've seen no material impact from recent variants or selective lockdowns. We saw positive momentum across our businesses, with order growth trending above revenue growth. Most of our end markets have largely recovered, with growth rates at or above pre-pandemic levels as customers have adapted to the new environment. In-person commercial activity continues to rebound, and we're seeing our teams spend more time on-site with their customers, a trend we expect to continue as we move through the year. Across life sciences, we're seeing healthy demand in most of our end markets, led by biopharma, where the pace of customer activity remains elevated. Biotech funding levels are robust, and the number of life-saving biologic and genomic-based therapies in development and production continues to rise, and it's further augmented by the work around COVID-19 vaccines and therapeutics. Today, there are over 1,500 monoclonal antibody-based therapies in development globally, which is more than 50% increase from just five years ago. We also see over 1,000 gene therapy candidates in development today, a tenfold increase over the last several years, as these technologies mature and therapies gain regulatory approval. Given that many of these candidates are still in early stage research, we expect the growth rate of this market to remain strong for many years to come. In addition to the growth in biologics and genomic-based medicines, there is significant demand related to COVID-19 vaccines and therapeutics, both on the market and in development today. Given the interest we're seeing from customers looking to address emerging variants and increase global supply, as well as evolving vaccination guidelines globally, we expect to see durable growth in this segment of the biopharma market for the foreseeable future. At the current pace of vaccination, it's clear that vaccine demand will continue well into next year. We expect to recognize $2 billion in COVID-related vaccine and therapeutic revenue in 2021, and anticipate entering 2022 with approximately $1.5 billion in COVID-related backlog. These assumptions do not include the potential contribution from booster shots or an expansion of availability to populations under 12 year old, due to the level of uncertainty around each of these scenarios. Given the growing numbers of drugs being developed and the increasing scientific sophistication required to discover and manufacture these complex therapies, customers are looking to partner with vendors who can reliably supply them with solutions for their most challenging problems as they move from the lab to production scale. Comprehensive bioprocessing portfolio and scientific expertise positions us well to do just that. We're confident our proactive investments in innovation and capacity will help us meet this growing customer demand now and far into the future. In the clinical diagnostics market, patient volumes are at or near pre-pandemic levels in most major regions, as patients are returning for wellness checks, routine screenings, and other elective procedures. In molecular diagnostics, while PCR respiratory testing volumes in the U.S. have declined, we're seeing persistent demand for Cepheid's testing at the point of care. Outside of the U.S., which makes up approximately half of Cepheid's revenue, we continue to see strong demand for our testing as vaccination rates lag and emerging variants drive outbreaks. As I mentioned earlier, we shipped approximately 14 million respiratory tests during the Q2, up from 10 million shipped in the Q1, and we now expect to ship approximately 50 million tests in 2021. Looking ahead, with the assumption that COVID-19 will be an endemic disease, we believe that the point-of-care molecular respiratory testing market will expand significantly from where it was prior to the pandemic. Given Cepheid's leading positioning around speed, accuracy, and the ease-of-use workflow advantages, we believe we'll continue to gain market share. The combination of these market share gains, the expansion of Cepheid's leading global installed base, and the broadest molecular diagnostic test menu on the market, creates significant opportunities ahead for broader utilization and demand for Cepheid's point-of-care molecular testing solutions. Moving to the applied markets, we're seeing a continuation of the steady improvement over the first half of the year. Customer activity is accelerating in line with broader economic activity, which we see in healthy order rates for consumables and increasing investment in equipment. Across municipal markets globally, consumable demand remains solid as customers continue to test and treat water. Instrument-oriented project activity is accelerating with the improving funding environment. Now let's look ahead to our expectations for the Q3 and the full year. We expect to deliver Q3 core revenue growth in the mid to high teens range. We anticipate high single-digit core revenue growth in our base business and a high single-digit core growth contribution from COVID-related revenue tailwinds. Additionally, we expect to generate operating profit fall-through of approximately 40% in the Q3 and for the remainder of 2021. For the full year 2021, we now expect to deliver approximately 20% core revenue growth. We anticipate that COVID-related revenue tailwinds will be an approximately 10% contribution to the core revenue growth rate. In our base business, we now expect that core revenue will be up 10% for the full year, an increase from our prior expectation of high single digits. To wrap up, we've had a great start to the year, and we've seen meaningful opportunities across Danaher to build upon this outstanding performance. Our Q2 results reiterate the power of our portfolio and our exceptional team, a unique combination that differentiates Danaher today and provides a strong foundation for sustainable long-term outperformance. With that, back to you, Matt. Thanks, Rainer. That concludes our formal comments. Christelle, we're now ready for questions. Thank you. As a reminder, if you would like to ask an audio question, please press * 1 on your touch-tone phone. Your first question comes from the line of Tycho Peterson with JP Morgan. Hey, good morning. Congrats on the quarter. Rainer, I think one of the debates around the stock is still around the testing outlook, in particular around 2022 for Cepheid. I know you came out in the Q1 and talked about the fact you thought trends would be sustainable heading into next year. Can you maybe just talk a little bit about what you're seeing in the field, how you're thinking about variants in the near term, and what gives you confidence in the outlook for 2022? Obviously, you're more in hospital. It's PCR, not antigens. We get all those dynamics. I think there's still some debate as to whether testing could drop off more significantly next year. Thanks. Sure, Tycho. Good morning. Thank you for that question. Look, as we think about the remainder of 2021 and how that sets us up for 2022, just a couple things to sort of set the baseline here. First of all, we now expect to ship 50 million tests in 2021 for COVID, either COVID only or 4-in-1, and we've taken that up from the 45 million test guide before. The confidence that we gain here is really through what we've seen. As we've ramped up our capacity here and shipped 14 million cartridges in Q2, you'll recall we originally expected to ship 11 million in Q2, 50% of that outside of the U.S., 50% of that inside the U.S. That really has given us the confidence that there's still plenty of demand for our solution at the point of care. Here's why. We're really not perceiving a slowdown currently in our testing demand, and we're shipping everything that we're producing. While it's true that we see core lab tests trending downwards, we continue to see a strength in the demand for our testing solution. The other thing that we are considering here is we're a bit concerned about some of the RSV breakouts that we're seeing, in the U.S., but also elsewhere in the world, which makes us think that we'll start seeing testing skew more towards the 4-in-1 solution, which of course tests for RSV in addition to flu A, B, and COVID-19. As we think about where we sit today, we feel comfortable that we'll see 50 million tests this year, and we don't have anything that would indicate that our previous guide for 45 million tests in 2022 would be materially different. We continue to see plenty of opportunity. Keep in mind, we've increased our installed base by 40% since the beginning of the pandemic. Of course, have the largest testing menu, with 30+ tests outside the U.S. and 20+ tests in the U.S. We feel strongly that that demand should be available to us once again because of that unique value proposition at the point of care. Okay. That's super helpful. A follow-up on Aldevron. I think you mentioned when we spoke on the deal that you've been looking at this asset for about 5 years. Can you just talk a little bit about how you're thinking about synergies? I know there's capacity expansion that's coming online next year, so if you could talk to that. I think to get to a half a point of growth, the implied growth rate is closer to 35% and definitely greater than 20. I'm just curious how you're thinking about growth outlook and synergies with Pall Biotech and Cytiva in particular. As we look at Aldevron, we really see it as our entry into the genomic medicine market and are seeing it really as a standalone in that regard, specifically with plasmid DNA, protein, and mRNA, and are really not looking initially here at synergies related to Cytiva or Pall Biotech. There's plenty of opportunity inside that scope to invest, expand capacity in the existing product lineup, as well as to globalize that. The great majority of Aldevron's revenues are actually in the U.S., so we see great opportunities to globalize that. From a growth perspective, like we said, this is, in 2022, going to be a half a billion-dollar business growing at 20%, adding about 50 basis points to Danaher's overall growth profile, as well as adding $0.20 of EPS in year 1 and $0.30 EPS in year 2. Yeah. Tycho, they had a little bit better growth historically than that 20%. I think, again, just from our perspective to be prudent from a planning perspective, that's sort of what we've laid out. I think we've had a lot of success with that type of setting up, if you will, for acquisitions in the past. That's sort of why we've kind of come to there versus where they have been a little bit more historically higher. Okay. That's helpful. Just before I hop off, Matt, can you just comment on the bioprocessing order book? I think you said bioprocessing up 40%. I assume that was revenues. What was the order book up? It was north of 60. Okay. Thank you very much. Thanks, Tycho. Your next question comes from the line of Derik De Bruin with Bank of America. Hey, this is Mike Ryskin on for Derik. Hi, Mike. Question. Hey, guys. A couple quick ones just to clarify on the COVID contribution for the fiscal year. It sounds like you're saying 10%, which is roughly unchanged from prior, but you're seeing a lot more cartridges coming out. The 4 -in-1 solution should have some better pricing, if you're going to that versus the COVID only, and the COVID vax is doing better, and the order book is strong. Are there some other moving pieces there, or is this just some uncertainty back half of the year? Just sort of want to reconcile that. Yeah. No, I think, the way to think about the COVID tailwinds is we sort of took up the number for the full year, Mike. I think what I would kind of talk or think about that is that most of that is the $200 million better cartridge performance that we saw here in Q2 sort of rolling through for the full year. If you think about the COVID contributions, I think we're up $200 million versus where we thought we would be. All of that is just going to be sort of rolling that Q2 beat through to the full year, for the COVID side. As far as the 4-in-1 goes, as we think about the contribution kind of going forward, we still think Q3 is probably going to be pretty close to what we saw here in Q2, which was 80% of that was COVID only, 20% was the 4-in-1. Given what Rainer said, and what we saw last year as well, but what Rainer said around the RSV sort of outbreak here that we're seeing in the South, we think we might have a little bit of a different or more of a respiratory season than we did last year. Sort of as we move forward, we're sort of thinking Q4, that split moves more to a kind of a 50/50, 60/40. We'll see where it comes out, but something more like that, in the Q4. Okay, thanks. Could you comment a little bit on instrument trends in some of the analytical markets, I didn't get a clean SCIEX number. Could you just talk a little bit about what you're seeing in LC-MS markets as far as base business recovery? Sure. If we start with the topic of customer activity in these analytical markets, they're really at or very near pre-pandemic levels, with the underlying recovery well underway. We're seeing that customers adapting readily to the new work environment that we're in, there where it's still necessary, or are fully back to normal, where the infection rates are really low. That manifests itself in better order rates. Our funnels are stronger. We see higher instrument and service sales. Keep in mind, at SCIEX, over 30% core growth here in Q2, just as a marker. Really all of our major life science operating companies were at or over 30% core growth for the quarter. We're seeing some very nice momentum there. If you look at the two-year growth stack there, we're really at or very near to pre-pandemic growth rate. A lot of this is driven by more customer activity, but we also have to say in our instrument areas is a place where we have been accelerating R&D investment, and we've seen great traction for some of our new product introductions. I mentioned the SCIEX ZenoTOF, but we've also introduced the 7500. At Beckman Coulter Life Sciences, we introduced the CytoFLEX bench top cell sorter. Those are all things that contribute to what we think is outperformance here, in the instrumentation market. Mike, just to give you a sense, outside of life sciences, just overall, equipment was up north of 20%, and consumables were north of 30%. Just to give you a sense. That's not all that different from what we saw elsewhere as well. Okay, great. One last quick one if I can squeeze it in. I think you called out CapEx of a billion and a half for the year. That's a pretty nice step up, even with Cytiva and the numbers. Just wondering how much of that is specific to more cartridges for Cepheid, for COVID, or more on the bioprocessing side. Is this a fair jumping-off point for 2022 and beyond? Thanks. Yeah. I think, Mike, normally, even inclusive of Cepheid or Cytiva, we'd probably be more like $850 million in CapEx. I think you can kind of size the delta on that $1.5 billion with that. I would say that the preponderance of the increase that you're seeing there is going to be at Cepheid and Cytiva, as well as at Pall on the bioprocessing side. Those would be the three big ones that will be sort of driving that increase. I suspect you'll see that obviously this year. I suspect we might be at something in between those two numbers, maybe we're at the higher end of that number, the $850 million and the $1.5 billion as we head into next year. I think over time, that probably does start to come down a touch. As we've talked about, we've been pulling forward a lot of the capacity increases that we were already planning for all of those businesses, just given the demand now, plus the longer-term secular growth drivers. This is sort of more of a pull forward, is the way I think about it, and I think you'll have a little bit of a bullet here for a couple of years and then probably come back down to a lower landing level. Fantastic. Thanks so much. Your next question comes from the line of Vijay Kumar with Evercore ISI. Morning, Vijay. Good morning, Rainer and team. Congratulations on a solid print this morning. Maybe one on vaccines and bioprocessing, Rainer. The commentary around backlog, exit backlog, stepping up for the year in light of Q2. It feels like maybe the order of conversion, maybe that's stepping down in back half. Is that the right way? This is just more of a timing thing that we're thinking about on the vaccine side when you think about the revenue cadence. Then, ex vaccines, when you think about base bioprocessing, we just had a major Alzheimer's drug approval. I'm curious what it does to either industry growth or perhaps to your business. Well, let's start with bioprocess and how to think about that. Just to level set, we expect to do, and for vaccines and therapeutics this year, $2 billion in revenue. That second half is going to be consistent with what you saw in the first half. The activity level remains elevated. Any detail that you're thinking about is purely related to comp. Now more broadly speaking really for total Danaher, the Q2, Q3 prior year step-up is over 1,000 basis points. Right? If you keep that in mind, I think that characterizes the activity level appropriately. We continue to see strength in vaccine and therapeutic orders. Matt talked about it with Tycho, 40%+ on the revenue side in Q2, 60%+ on the order side. The activity level remains very high. We expect that this will continue, which is why we're confident in talking about a billion and a half dollars of backlog for 2022, which, sitting here on July 20th, looking forward, is a good place for us to be, and it gives us, as you think about 2022, a number of quarters to continue to strengthen that. There's a great deal going on in the vaccine and therapeutic space. Keep in mind, the rollout that we've seen has been primarily a developed market story. We're starting now to see some of the emerging market vaccine manufacturers kicking in and ramping up. There's three in China, to state an example, another one in Russia, of course, and several more, and they're just starting to kick in. We expect that all to provide really some sustained strength for some period of time. Yeah, Vijay, maybe just at a 100,000-foot view, just to think about that in each of the last five quarters in biotech, the bookings have been higher than revenue, and that was also true in Q2. There's all kinds of numbers and comps and everything else, but just to take a step back and just keep that in mind as we head into the second half here. Coming back to your Alzheimer's drug question with ADUHELM. First of all, we can't comment specifically on any particular drug, we're absolutely delighted to see that science and the pharmaceutical industry is making progress on this disease. Alzheimer's, as you know, afflicts so many around the world, there's a real need for a solution. At this point, it's early days. As you know, there's quite a bit of discussion around the efficacy of the drug, the size of the target population, reimbursement, and a number of other questions. I might say that this is one drug. There are several others that are in late-stage qualification and approval processes. We do see here this indication of Alzheimer's disease becoming more and more relevant for monoclonal antibodies. Awfully early to say what impact it has, but we can say that with the breadth of our portfolio, the capability of our team, and the penetration that we have in the market, it's fair to say that we're represented on all of those projects and are confident that we can supply those should there be an elevated need. That's helpful, Rainer. Matt, one quick one for you. Appreciate you trying to simplify the numbers. A lot of numbers flying around. Orders above revenues for five quarters, I think that's straightforward. Margins, assuming mixes, ignoring the mix impact for 2022, any comments on margins for incremental margins for fiscal 2022 as expenses come back? Vijay, I'd love to have the crystal ball for 2022 for you, but I'm just still hoping to get some insight into the second half, frankly. Like you said, besides the mix, we are starting to, as we got into the quarter, I mean, we had pretty good fall through here in the quarter again, but we are starting to see activity resume a little bit, especially late in the quarter. A little bit more travel activity, a little bit more people doing in-person things. I think in my mind, it's a question of there's two things. It's when do the costs come back, because I do believe we will have some costs come back, and how fast that happens. It's just really balancing those two, and I think there's still enough uncertainty out there that it's difficult to pin that down. I'm hoping that as we get into the fall here, that we get a little bit more color on that and hopefully, be able to provide a little bit more when we talk about 2022 later in the year. Unfortunately, I think it's a little early for us to think about it. It's where we are today. Understood. Thanks, guys. Your next question comes from the line of Scott Davis with Melius Research. Hi, Scott. Good morning, guys. Good morning. I was really surprised. I thought you might mention labor and logistics costs and some challenges there, particularly in EAS. Is there a meaningful impact on margins more broad-based than EAS, if so, and just leave it at there? Yeah. No, it's a fair point, Scott. I mean, we have definitely seen it, I think, again, similar to the travel, as we've moved through the quarter. I think we are definitely seeing inflationary pressures here and supply chain pressures. I would say that right now for us, it is modest, and we're able to manage through it. Some of that with better price on our side and some of it just being able to on the daily work, if you will, from a DBS perspective. We are definitely seeing that. We are seeing it in resins, in plastics, in metals. Again, not a huge part for us, but we do see it where that happens. I think the two biggest pieces for us, Scott, are freight is definitely an issue. Fewer cargo flights obviously means it's a little bit more expensive to move things by air. I think, as everybody has read and saw, electronics, particularly in the supply chain around the chips globally, has been a challenge for us as well. Again, haven't seen a material impact. I do believe that as we move forward into the second half, that probably does not abate. If anything, might step up a little bit and clearly a challenge here for us. So far, we've been able to work through it with some hard work and a little bit of price and some PPV. Just to follow up on that, Matt, does times like this really make looking at things like on-time delivery kind of wonky? Can you still use that metric with any real sense of confidence since orders are so high? We don't compromise on that. I'll let my boss take that one. The core value, customers talk, we listen, and our focus on quality delivery and cost remains our North Star. We drive our processes, and with that, anybody who's associated with us, starting with what we can control internally, but also our supply partners who have been stepping up to the plate, supporting us here and making the necessary investments. We're not going to compromise on on-time delivery and meeting or exceeding our customers' expectations. Well, that's good to hear. Well, congrats guys, and congrats on a great start, Rainer, in your CEO tenure. Passing on. Thanks, Scott. Your next question comes from the line of Doug Schenkel with- Hi, Doug. Good morning. Hey, good morning, team. I want to go back and try to take a different angle on some of the questions regarding durability of growth when it comes to all things post-COVID. On Cepheid, there was an earlier question on the outlook for testing volume in 2022. As you've noted before, your GeneXpert installed base increased by about 40% since the beginning of the pandemic. You've also previously talked about your efforts to be as smart as you can about where you place boxes. Essentially, the goal has been to, as much as possible, pull forward placements, especially in areas of the world where you may have been under-indexed in an effort to make sure that these instruments are used durably over the long term. I was wondering if you could share some specific data on how you're having success with newer accounts driving utilization of these boxes for non-COVID-19 purposes? Additionally, is it possible that there are some new assays coming over the coming quarters that might move you into additional testing categories that also boost your confidence in the outlook for durability? I ask because right before the pandemic got going, we had picked up on some signs that there were some notable advancements being made on assay development initiatives, including some of those talked about in the past by old Cepheid management, which would greatly increase the TAM for the company. I think a lot of lingering concerns about this category would be further assuaged by combining what we saw in Q2, which was really strong, with the outlook for assay menu expansion and some positive signs in terms of what's going on with newer accounts. Thanks, Doug. I think you're onto a strong point here. We saw this in Q2. Just to level set for everybody here on the phone. Once again, we've increased our installed base here since the beginning of the pandemic by 40%+. That's put thousands of instruments in places where they haven't been before. We've tried to do that very strategically, always, of course, wanting to help with the COVID pandemic and the near-term requirements and needs. Also looking beyond that to see whether those care settings would be able to use the menu that we have available today and the one that, of course, we develop every day in order to launch new assays. We have seen that starting to play out in places where perhaps the COVID need is not as strong. Particularly at new customers. That's manifested, for instance, in our sexual health or our hospital-acquired infections assays, which are up 30%+ here in the Q2 and provide us with an additional pillar of strength. We're very pleased with that, and we expect that to continue here as we not only make progress in the U.S., but in the rest of the world. Very important point, the menu is gaining traction, and we're starting to see that play out here in the Q2 and expect that to continue to be the case going forward. As it relates to new assays, please know that we are working on new assays every day, and you can expect us over time to continue to broaden that lead in menu breadth as well as depth over time. That's absolutely a part of our daily activity here. Okay, super helpful. Hopping over to really the Pall Biotech and the Cytiva side of the equation. As we've talked about a few times, the expected backlog heading into 2022 is $1.5 billion. The potential for upside, I think, seems pretty clear, specific to COVID. That said, there is still some investor uncertainty with regards to what happens if demand were to slow in this category. A basic but important question, if demand were to slow for COVID-related products and services in this category, is it fair to say that you're comfortable that there is enough demand more broadly across biopharma to essentially compensate for that? Our thinking has been this has been an area where there just hasn't been enough good supply of products and services, and that's presented you with a fantastic opportunity to basically solve that problem. Even if the COVID demand were to slow, presumably, you're still going to be able to essentially reallocate these products and services for other purposes. Is that a fair way of thinking about things? I think so. Before we move on to the non-COVID strengths out there. Let's reiterate, in relation to that backlog number that we talked about, what assumptions are in that and which assumptions are not in that number. In that $1.5 billion backlog, that's in addition to the $2 billion that we're shipping this year. That includes all the approved vaccines, whether those are approved in the U.S. and Europe or elsewhere, as well as those in late-stage trials, which you can imagine we're very close to. That's absolutely a part of how we're thinking about that, and it includes these emerging market vaccines that I was talking about. What it doesn't include is a booster shot. We know from Israel, we know from the U.K., we know from China that those countries are now moving to booster shots. We have not assumed that to be a part of our numbers here, nor have we included the younger kids, 12 and under, in a vaccination schedule, which you can imagine on a worldwide basis is a pretty big number. We've kept that out, and we think that's an appropriate assumption. As we look to the non-COVID demand, which has consistently been in the low double digits here with the one or the other quarter, perhaps even above, we feel very confident that the number of projects in the pipeline, we talked about it, over 1,500 monoclonal antibodies in the development pipeline, over 50% more than just five years ago. Then you add, related to that, the gene and cell therapies and genomic medicines where you have over 1,000 projects in the pipeline, which is an order of magnitude more than just five years ago. We feel quite strongly that the capacity utilization will remain very robust here for the mid and long term. All right, guys. Thank you very much. Thanks, Doug. Thanks, Doug. Thank you. Your last question will come from the line of Dan Leonard with Wells Fargo. Hi, Dan. Hello. Two, if I may, the first one on bioprocessing. We're still hearing about supply shortages in the market for filters and such. When do you think we're going to see more of an equilibrium when supply catches up with demand? Is there any change in your thinking on customer inventory dynamics around stocking and such? Let me start with this. I think that in general, there is a strong supply of filters, as you mentioned, perhaps single-use products and such in the market, and that there might be pockets where there's some shortages. I think I would prescribe those to individual type product shortages as opposed to a broad-based shortage as the industry, and particularly Danaher, has continued to ramp capacities with some of the investments that we made. I think that what the industry's been able to do is accompany the growth here and continue to support that. Now, as it relates to your inventory question, here we have been very rigorous in our interactions with our customers who we've asked and encouraged to give us their orders as early as possible to give us the visibility that we need to ensure that they get what they need. As such, we don't believe that there's pockets of inventory that are sitting here in the industry. You can never ignore that there might be one or two places that perhaps that might be the case, but it's really not material in the overall size of the industry. We think that the industry is tight on supply. Everybody is working through it with each other. We, with our customers, with a great deal of visibility, but of course, also with our suppliers who we mentioned earlier, who have also had to ramp up to support us in the value chain. Okay. That's helpful color. My follow-up question is similar to Vijay's earlier on the margin side. Could you perhaps maybe bridge the expense base today when you have these COVID sales tailwinds to a world where those tailwinds might abate? Are there any expenses that go away or just maybe the rate of expense increase starts to moderate? Thank you. I think maybe the way to answer that is today we've been sort of seeing in the last, I guess, five quarters our VCM has been kind of 50%. As I look forward and think about the expenses coming back, and it's not just COVID, I would say it's kind of broadly speaking across the business. We think it's going to start to ramp here in the second half and be in the sort of 40% fall through. Dan, if you think about where we've been more historically, it's probably been more like 35%. I think what we'll see is that the expenses, and here again, the uncertainty and the timing is what I'm still not sure on. But I think what we'll see is that expense base will come back a little bit more closer to that normal longer-term 35%. Part of that is not only we're sort of seeing the benefits, I think, of the investment that we continue to make, and we have been making in innovation and kind of go to market. I think with that, if you think about today, our base business on a two-year stack for this year is going to be 6%-7% core growth, which is 100 basis points plus where we were in 2019. I think the investments that we're making are paying off on the growth side. I think both Rainer and myself are inclined to want to try to keep making those investments while recognizing that we're going to have some costs that come back as we get back to the office and we start to travel again. Maybe, Dan, the way to bridge it would be 50% today, I think it probably is a little bit more like 40% in the second half. Over time, I think it probably is something more like 35%, if I had to guess. Okay. That's helpful. Thank you very much. We have reached the allotted time for questions. I would like to turn the call back over to Mr. Gugino for closing remarks. Thanks, Rochelle. Thanks, everybody for joining us this morning. We're around all day for questions. Take care. This concludes today's conference call. You may now disconnect.