Qiagen N.V. — Interim / Quarterly Report 2021

Aug 23, 2021

QIAGEN N.V. Venlo, The Netherlands

Interim Financial Report

June 30, 2021

(unaudited)

CONDENSED FINANCIAL REPORT PERIOD ENDED JUNE 30, 2021 TABLE OF CONTENTS

	Page
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Income	3
Condensed Consolidated Statements of Comprehensive Income	4
Condensed Consolidated Statements of Cash Flows	5
Condensed Consolidated Statements of Changes in Equity	6
Selected Explanatory Notes to the Condensed Consolidated Financial Statements	7
Responsibility Statement of the Management Board	28
Interim Management Report	29
Principal Risks and Uncertainties	37

CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)

	Note	June 30, 2021	December 31, 2020
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		\$ 758,260	\$ 597,003
Current financial assets	(5)	138,974	117,249
Trade accounts receivable		366,151	380,519
Inventories	(11)	341,041	291,181
Other current assets	(7, 13)	161,166	212,850
Total current assets		1,765,592	1,598,802
Non-current assets:
Property, plant and equipment		459,008	427,352
Goodwill	(6)	2,358,033	2,389,111
Other intangible assets	(6)	837,478	883,600
Right-of-use assets		95,483	101,211
Deferred tax assets		119,287	89,016
Fair value of derivative financial instruments	(7)	266,312	379,080
Other non-current assets	(5)	65,410	60,115
Total non-current assets		4,201,011	4,329,485
Total assets		\$ 5,966,603	\$ 5,928,287

CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)

	Note	June 30, 2021	December 31, 2020
		(unaudited)
Liabilities and equity
Current liabilities:
Current financial debts	(9)	\$ —	\$ 42,539
Trade and other accounts payable		103,004	118,153
Other current liabilities	(4, 7, 13)	410,790	410,203
Total current liabilities		513,794	570,895
Non-current liabilities:
Non-current financial debts	(9)	1,936,098	1,875,168
Deferred tax liabilities		30,611	46,041
Fair value of derivative financial instruments	(7)	536,098	766,410
Other non-current liabilities	(5, 13)	189,286	186,724
Total non-current liabilities		2,692,093	2,874,343
Equity:
Common Shares, 0.01 EUR par value, authorized—410,000 shares, issued—230,829 shares in 2021 and in 2020		2,702	2,702
Share premium		1,855,172	1,840,115
Retained earnings		1,260,392	998,133
Reserves		(256,787)	(239,600)
Less treasury shares at cost—2,191 and 2,844 shares in 2021 and in 2020, respectively	(12)	(100,763)	(118,301)
Total equity		2,760,716	2,483,049
Total liabilities and equity		\$ 5,966,603	\$ 5,928,287

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)

		Six months ended
			June 30,
	Note		2021		2020
			(unaudited)
Net sales	(13)	\$	1,134,514	\$	815,349
Cost of sales:
Cost of sales			(361,546)		(249,076)
Acquisition-related intangible amortization			(35,373)		(30,054)
Total cost of sales			(396,919)		(279,130)
Gross profit			737,595		536,219
Operating expenses:
Other operating income			302		1,198
Research and development expense			(93,088)		(62,344)
Sales and marketing expense			(234,764)		(200,056)
General and administrative expense			(63,885)		(51,382)
Restructuring, acquisition, integration and other, net	(4)		(17,113)		(31,808)
Long-lived asset impairments	(4)		—		(1,034)
Other operating expense			(163)		(2,735)
Total operating expenses, net			(408,711)		(348,161)
Income from operations			328,884		188,058
Financial income			3,711		6,681
Financial expense			(28,475)		(37,095)
Other financial results	(5, 7)		63,640		(19,480)
Total financial income (expense), net			38,876		(49,894)
Income before income taxes			367,760		138,164
Income taxes			(69,358)		(28,706)
Net income		\$	298,402	\$	109,458
Basic earnings per common share		\$	1.31	\$	0.48
Diluted earnings per common share		\$	1.29	\$	0.47
Weighted average shares outstanding (in thousands)
Basic			228,385		228,200
Diluted			232,122		233,119

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in thousands)

		Six months ended
				June 30,
	Note		2021		2020
					(unaudited)
Net income		\$	298,402	\$	109,458
Other comprehensive (loss) income to be reclassified to profit or loss in subsequent periods:
Foreign currency translation adjustments, net of tax of \$0.5 million in 2021 and \$0.6 million in 2020			(29,267)		(53,425)
Gains on cash flow hedges, net of tax of \$1.6 million in 2021 and \$3.0 million in 2020	(7)		4,861		10,873
Reclassification adjustments on cash flow hedges, net of tax of \$1.7 million in 2021 and \$0.1 million in 2020	(7)		(5,225)		(507)
Net investment hedge	(7)		12,444		917
Other comprehensive loss, after tax			(17,187)		(42,142)
Comprehensive income		\$	281,215	\$	67,316

QIAGEN N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

		Six months ended June 30,
	Note		2021		December 31, 2020
			(unaudited)
Net income		\$	298,402	\$	109,458
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			112,992		99,276
Non-cash impairments	(4)		—		1,034
Amortization of debt discount and issuance costs	(9)		15,986		20,099
Deferred income taxes			(41,821)		(12,019)
Share-based compensation	(16)		19,297		16,504
(Gain) loss on financial assets	(5)		(2,090)		167
(Gain) loss on sale of investment	(5)		(442)		2,250
Other non-cash items, including fair value changes in derivatives			(47,630)		23,099
Changes in operating assets and liabilities:
Accounts receivable			4,081		(8,479)
Inventories			(68,864)		(48,126)
Other current assets			1,848		(34,469)
Other non-current assets			186		897
Accounts payable			(11,249)		(1,197)
Accrued and other current liabilities			(40,651)		(46,976)
Other non-current liabilities			3,897		4,726
Income taxes			119,432		50,782
Interest paid			(10,208)		(14,247)
Interest received			908		7,173
Income taxes paid, net of refunds			(48,558)		(3,805)
Net cash provided by operating activities			305,516		166,147
Purchases of property, plant and equipment			(63,637)		(25,964)
Purchases of intangible assets	(6)		(44,112)		(128,196)
Purchases of financial assets	(5)		(136,849)		(25,078)
Proceeds from financial assets	(5)		118,091		98,249
Purchases of investments	(5)		(1,603)		—
Proceeds from investments			—		410
Cash paid for acquisitions, net of cash acquired			—		(133)
Cash received for collateral asset	(7)		42,890		2,683
Other investing activities			43		6,855
Net cash used in investing activities			(85,177)		(71,174)
Payment of intrinsic value of cash convertible notes	(9)		—		(11,125)
Repayment of long-term debt	(9)		(41,345)		(23,000)
Principal payments on leases			(13,830)		(11,098)
Proceeds from issuance of common shares			2,714		7,380
Tax withholding related to vesting of stock awards			(13,291)		(6,441)
Cash received for collateral liability	(7)		10,100		20,169
Other financing activities			(1,656)		(3,381)
Net cash used in financing activities			(57,308)		(27,496)
Effect of exchange rate changes on cash and cash equivalents			(1,774)		(4,484)
Net increase in cash, cash equivalents and restricted cash			161,257		62,993
Cash, cash equivalents and restricted cash, beginning of period			597,003		628,229
Cash, cash equivalents and restricted cash, end of period		\$	758,260	\$	691,222

QIAGEN N.V. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (in thousands)

		Common Shares								Treasury Shares
(unaudited)	Note	Shares	Amount	Share premium	Retained earnings	Cash flow hedge reserve	Pension reserve	Foreign currency translation	Shares	Amount	Total equity
BALANCE AT JANUARY 1, 2020		230,829	\$		2,702 \$ 1,790,504 \$ 948,186 \$	(2,289) \$		(561) \$ (302,729)			(3,077) \$ (111,966) \$ 2,323,847
Net income		—	—	—	109,458	—	—	—	—	—	109,458
Other comprehensive income (loss)	(7)	—	—	—	—	11,283	—	(53,425)	—	—	(42,142)
Total comprehensive income		—	—	—	109,458	11,283	—	(53,425)	—	—	67,316
Tax benefit of employee stock plans		—	—	3,154	—	—	—	—	—	—	3,154
Early conversion of 2021 Notes	(9)	—	—	—	6,430	—	—	—	—	—	6,430
Share-based payments	(16)	—	—	16,504	—	—	—	—	—	—	16,504
Employee stock plans		—	—	—	(30,899)	—	—	—	1,036	38,280	7,381
Tax withholding related to vesting of stock awards		—	—	—	—	—	—	—	(302)	(12,152)	(12,152)
BALANCE AT JUNE 30, 2020		230,829	\$		2,702 \$ 1,810,162 \$ 1,033,175 \$	8,994 \$		(561) \$ (356,154)			(2,343) \$ (85,838) \$ 2,412,480
BALANCE AT January 1, 2021		230,829	\$		2,702 \$ 1,840,115 \$ 998,133 \$ (23,268) \$			(599) \$ (215,733)			(2,844) \$ (118,301) \$ 2,483,049
Net income		—	—	—	298,402	—	—	—	—	—	298,402
Other comprehensive income (loss)	(7)	—	—	—	—	12,080	—	(29,267)	—	—	(17,187)
Total comprehensive income		—	—	—	298,402	12,080	—	(29,267)	—	—	281,215
Tax benefit of employee stock plans		—	—	(4,240)	—	—	—	—	—	—	(4,240)
Share-based payments	(16)	—	—	19,297	—	—	—	—	—	—	19,297
Employee stock plans		—	—	—	(36,143)	—	—	—	1,074	38,856	2,713
Tax withholding related to vesting of stock awards		—	—	—	—	—	—	—	(421)	(21,318)	(21,318)
BALANCE AT JUNE 30, 2021		230,829	\$		2,702 \$ 1,855,172 \$ 1,260,392 \$ (11,188) \$			(599) \$ (245,000)			(2,191) \$ (100,763) \$ 2,760,716

Selected explanatory notes to the condensed consolidated financial statements for the six months ended June 30, 2021 (unaudited)

1. Corporate Information

QIAGEN N.V. is a public limited liability company ('naamloze vennootschap') under Dutch law with registered office at Hulsterweg 82, 5912 PL Venlo, The Netherlands. QIAGEN N.V., a Netherlands holding company, and subsidiaries (we, our or the Company) is a leading global provider of Sample to Insight solutions that enable customers to gain valuable molecular insights from samples containing the building blocks of life. Our sample technologies isolate and process DNA, RNA and proteins from blood, tissue and other materials. Assay technologies make these biomolecules visible and ready for analysis. Bioinformatics software and knowledge bases interpret data to report relevant, actionable insights. Automation solutions tie these together in seamless and cost-effective workflows. We provide solutions to more than 500,000 customers around the world in Molecular Diagnostics (human healthcare) and Life Sciences (academia, pharma R&D and industrial applications, primarily forensics). As of June 30, 2021, we employed more than 5,900 employees in over 35 locations worldwide.

2. Basis of Presentation and Accounting Policies

The accompanying condensed consolidated financial statements were prepared in accordance with International Financial Reporting standards (IFRS) for interim financial information under International Accounting Standards (IAS) 34 Interim Financial Reporting as endorsed by the European Union (EU). The condensed consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments, contingent consideration and financial assets that have been measured at fair value. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation have been included. All amounts are presented in U.S. dollars rounded to the nearest thousand, unless otherwise indicated. These interim condensed consolidated financial statements have not been audited or reviewed.

The results of operations for an interim period are not necessarily indicative of results that may be expected for any other interim period or for the full year. Except for the adoption of new and amended standards and interpretations, these unaudited condensed consolidated financial statements are prepared following the same accounting policies used in and should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report for the year ended December 31, 2020.

We undertake acquisitions to complement our own internal product development activities. In September 2020, we completed the acquisition of the remaining shares in NeuMoDx Molecular, Inc. ("NeuMoDx"), a privately held U.S. company that designs and develops molecular diagnostics solutions for hospital and clinical reference laboratories. Accordingly, at the respective acquisition date, all the assets acquired and liabilities assumed were recorded at their respective fair values and our consolidated results of operations include the operating results from the acquired company from the acquisition date.

Certain prior year amounts have been reclassified to conform to the current year presentation.

Significant Accounting Policies

The interim condensed consolidated financial statements were prepared based on the same accounting policies as those applied and described in the consolidated financial statements as at December 31, 2020.

Amended standards not yet adopted:

We have not early adopted the following amended standards. We intend to adopt the amended standards at the effective dates.

The IASB amended IAS 37, Provisions, Contingent Liabilities and Contingent Assets, to clarify that when assessing if a contract is onerous, the cost of fulfilling the contract includes all costs that related directly to the contract. The amendments apply prospectively for annual reporting periods beginning on or after January 1, 2022. Earlier application is permitted.

To promote consistency in application and clarify the requirements on determining if a liability is current or non-current, the IASB amended IAS 1 Presentation of Financial Statements. The amendments apply retrospectively for annual reporting periods beginning on or after 1 January 2023. Earlier application is permitted.

Segment Reporting

We operate as one operating segment in accordance with IFRS 8 Operating Segments. Our chief operating decision maker (CODM) makes decisions based on the Company as a whole. In addition, we have a common basis of organization and types of products and services which derive revenues and consistent product margins. Accordingly, we operate and make decisions as one cash generating unit. We provide revenue information in our Management Report by customer class using assumptions for the allocation among the customer classes to allow better insight into our operations.

Estimates

The preparation of the condensed consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates.

In preparing these condensed consolidated financial statements, the significant judgments made by management in applying accounting policies and the key sources of estimating uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2020.

3. Acquisitions

Business Combinations and Asset Acquisitions

For acquisitions which have been accounted for as business combinations, the acquired companies' results have been included in the accompanying condensed consolidated statements of income from their respective dates of acquisition. Our acquisitions have historically been made at prices above the fair value of the acquired net assets, resulting in goodwill, due to expectations of synergies of combining the businesses. These synergies include use of our existing infrastructure, such as sales force, shared service centers, distribution channels and customer relations; to expand sales of an acquired business' products; use of the infrastructure of the acquired businesses to cost-effectively expand sales of our products; and elimination of duplicative facilities, functions and staffing.

If the acquired net assets do not constitute a business under the acquisition method of accounting, the transaction is accounted for as an asset acquisition and no goodwill is recognized. In an asset acquisition, the amount allocated to acquired IPR&D is recognized and measured based on its relative fair value in relation to the cost of the group of assets as a whole at the acquisition date.

2020 Business Combination

In September 2020, we completed the acquisition of the remaining 80.1% of shares of NeuMoDx Molecular, Inc. ("NeuMoDx"), a privately-held U.S. company in which we held a minority interest. NeuMoDx designs and develops molecular diagnostics solutions for hospital and clinical reference laboratories. Prior to acquisition, we held a 19.9% investment in NeuMoDx with a carrying value of \$41.0 million. The cash consideration, net of cash acquired, totaled \$239.4 million for the remaining shares. Of this amount, \$5.8 million was retained in an escrow account as of June 30, 2021 which is expected to be fully utilized to cover claims for breach of any representations, warranties or indemnities. We incurred \$2.5 million acquisition related costs to effect the business combination, of which \$0.3 million was incurred during the six months ended June 30, 2020 and is included in restructuring, acquisition, integration and other, net.

The acquisition date fair value of the minority interest investment was \$52.7 million and a gain of \$11.7 million was recorded in other financial results in the consolidated statement of income for the year ended December 31, 2020. The fair value of the minority interest investment was determined using an implied purchase price reduced by a 20% control premium.

The allocation of the purchase price is preliminary and not yet finalized. The preliminary allocation of the purchase price is based upon preliminary estimates which used information that was available to management at the time the consolidated financial statements were prepared and these estimates and assumptions are subject to change within the measurement period, up to one year from the acquisition date. Accordingly, the allocation may change. We continue to gather information about the acquired asset, liability and tax balances.

The preliminary purchase price allocation for NeuMoDx as of June 30, 2021 and the difference from December 31, 2020 is as follows:

(in thousands)	As of June 30, 2021	As of December 31, 2020	Difference
Purchase Price:
Cash consideration	\$ 251,730	\$ 251,730	\$ —
Fair value of minority interest	52,727	52,727	—
	\$ 304,457	\$ 304,457	\$ —
Preliminary Allocation:
Cash and cash equivalents	\$ 12,291	\$ 12,291	\$ —
Accounts receivable	5,691	5,691	—
Inventories	20,271	20,666	(395)
Prepaid expenses and other current assets	5,961	5,961	—
Accounts payable	(12,450)	(12,450)	—
Accruals and other current liabilities	(19,085)	(18,929)	(156)
Other long-term liabilities	(4,101)	(4,101)	—
Fixed and other long-term assets	7,076	7,076	—
Developed technology	101,000	101,000	—
In-process research and development	55,000	55,000	—
Patents and license rights	770	770	—
Customer backlog	400	400	—
Goodwill	149,658	157,627	(7,969)
Deferred tax asset	21,242	12,457	8,785
Deferred tax liability on fair value of identifiable intangible assets acquired	(39,267)	(39,002)	(265)
Total	\$ 304,457	\$ 304,457	\$ —

The in-process research and development recognized relates to technologies that remain in development and have not yet obtained regulatory approvals. The technologies within in-process research and development are expected to be completed within the next three years. The weighted average amortization period for the acquired intangibles is 10 years. The goodwill acquired is not deductible for tax purposes.

4. Restructuring and Impairments

As part of our restructuring activities, we incur expenses that qualify as constructive obligations under IAS 37 arising from a restructuring program including severance and employee costs as well as contract and other costs, primarily contract termination costs, as well as inventory write-offs and other implementation costs primarily related to consulting fees. Personnel costs (principally termination benefits) primarily relate to cash severance and other termination benefits including accelerated share-based compensation. We also incur expenses that are an integral component of, and are directly attributable to, our restructuring activities which do not qualify as constructive obligations under IAS 37, which consist of asset-related costs such as intangible asset impairments and other asset related write-offs.

Termination benefits are recorded when it is probable that employees will be entitled to benefits and the amounts can be reasonably estimated. Estimates of termination benefits are based on the frequency of past termination benefits, the similarity of benefits under the current plan and prior plans, and the existence of statutory required minimum benefits. Other benefits which require future service and are associated to non-recurring benefits are recognized ratably over the future service period. Other assets, including inventory, are impaired or written-off if the carrying value exceeds the fair value. All other costs are recognized as incurred.

2019 Restructuring

In the second half of 2019, we decided to suspend development of NGS-related instrument systems and entered into a new strategic partnership with Illumina to commercialize IVD kits worldwide on Illumina's diagnostic sequencers. In order to align our business with this new strategy, we began restructuring initiatives to target resource allocation to growth opportunities in our Sample to Insight portfolio.

During 2020, certain of the planned measures were delayed during the acquisition attempt by Thermo Fisher or changed as a result of business needs during the pandemic. The following is a summary of the charges related to the 2019 restructuring program recorded in the consolidated statements of income during the six months ended June 30, 2021 and cumulatively through June 30, 2021.

Classification and Type of Charge (in thousands)	Six months ended June 30, 2021			Total program charges through June 30, 2021
Restructuring, acquisition, integration and other, net
Personnel related	\$	2,609	\$	72,402
Contract and other costs		2,099		56,183
Accounts receivable		(246)		9,957
Inventories		—		13,350
Other current assets		—		17,139
		4,462		169,031
Long-lived asset impairments
Property, plant and equipment		—		13,983
Other intangible assets		—		140,540
		—		154,523
Other financial results
Equity accounted investment impairment		—		4,799
Total	\$	4,462	\$	328,353

Of the total costs incurred, \$6.3 million and \$9.5 million are accrued as of June 30, 2021 and December 31, 2020, respectively, in other current liabilities in the accompanying condensed consolidated balance sheets as summarized in the following table that includes the cash components of the restructuring activity.

(in thousands)	Personnel Contract and Related Other Costs				Total
Liability at December 31, 2020	\$	2,998	\$	6,479	\$	9,477
Additional costs incurred in 2021		2,829		7,323		10,152
Release of excess accrual		(220)		(5,224)		(5,444)
Payments		(3,940)		(3,726)		(7,666)
Foreign currency translation adjustment		(123)		(67)		(190)
Liability at June 30, 2021	\$	1,544	\$	4,785	\$	6,329

Future pre-tax costs up to \$1 million are expected to be incurred primarily related to personnel and consulting in the remainder of 2021.

5. Financial Assets and Equity Accounted Investments

Financial Assets

(in thousands)	June 30, 2021	December 31, 2020
Current financial assets:
Unquoted debt securities	\$ 136,768	\$ —
Quoted equity securities	2,206	117,249
Current Financial Assets	\$ 138,974	\$ 117,249
Non-current financial instruments:
Quoted equity securities	\$ 323	\$ 266
Unquoted equity securities	4,147	4,142
Non-current Financial Assets	\$ 4,470	\$ 4,408
Total Financial Assets	\$ 143,444	\$ 121,657

Unquoted Debt Securities

At June 30, 2021, we had \$136.8 million of money market deposits, commercial paper and loan receivables due from financial and nonfinancial institutions. These instruments are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are measured at fair market value with gains and losses recorded in earnings. Instruments have a stated maturity of less than one year.

Quoted Equity Securities

A summary of our investments in quoted equity securities that have readily determinable fair values follows below. These investments are reported at fair value with gains and losses recorded in earnings.

As of June 30, 2021, our investments in quoted equity securities totaled \$2.5 million, of which \$2.2 million are included in current financial assets and \$0.3 million are included in other non-current assets in the accompanying consolidated balance sheet, as follows:

		Non-current
(in thousands, except shares held)		OncoCyte Corporation (OncoCyte)		Oncimmune Holdings plc (Oncimmune)	HTG Molecular Diagnostics, Inc (HTGM)
Shares held		118,253		610,134		55,556
Cost basis	\$	377	\$	828	\$	2,000
Fair value	\$	679	\$	1,527	\$	323
Total cumulative unrealized gain (loss)	\$	302	\$	699	\$	(1,677)

In the first half of 2021, we received additional shares in Oncimmune and in July 2021, we sold the balance of 610,134 Oncimmune shares for \$1.4 million and recognized a loss of \$0.1 million on the sale.

In the first half of 2021, we sold 2.8 million shares of Invitae Corporation ("Invitae") that were received as part of the consideration for the 2020 sale of our ArcherDX shares. As a result, we received \$117.9 million in cash and recognized a \$2.1 million gain in other financial results in the accompanying condensed consolidated statement of income for the six months ended June 30, 2021 for the change in fair market value since December 31, 2020. In July 2021 upon achievement of certain milestone, we received 1.1 million additional shares in Invitae valued at approximately \$35 million. As of June 30, 2021, we are entitled to up to 0.6 million Invitae shares in the future upon achievement of certain milestones.

Also during the first half of 2021, we received 30,152 shares in OncoCyte with a fair value of \$0.1 million on the date of receipt as further consideration from the 2020 sale of a non-marketable investment not accounted for under the equity method. As of June 30, 2021, we are entitled to up to approximately \$3.0 million in the future upon achievement of certain milestones.

During the six months ended June 30, 2021, total gains recognized for the change in fair market value of all marketable equity securities totaled \$0.5 million, recognized in other financial results in the accompanying condensed statements of income.

As of December 31, 2020, these marketable securities are included in current financial assets and other non-current assets in the accompanying condensed consolidated balance sheet as follows:

		Non-current
(in thousands, except shares held)	Invitae		OncoCyte		Oncimmune	HTGM
Shares held	2,769,189		88,101		560,416	55,556
Cost basis	\$ 100,822	\$	230	\$	657	\$ 2,000
Fair value	\$ 115,780	\$	211	\$	1,258	\$ 266
Total cumulative unrealized gain (loss)	\$ 14,958	\$	(19) \$		601	\$ (1,734)

In 2020, HTGM completed a 15:1 reverse stock split.

In the first half of 2020, as part of consideration received upon the sale of a non-marketable investment not accounted for under the equity method, we received 88,101 shares in OncoCyte. On the date of receipt, these shares had a fair value of \$0.2 million.

During the six months ended June 30, 2020, total gains recognized for the change in fair market value of all quoted equity securities totaled \$0.5 million, recognized in other financial results in the accompanying condensed consolidated statements of income.

Unquoted Equity Securities

At June 30, 2021 and December 31, 2020, we had investment in non-publicly traded companies that do not have readily determinable fair values with carrying amounts that totaled \$4.1 million which are included in other non-current assets in the accompanying consolidated balance sheet. These investments are required to be accounted for at fair value through profit and loss unless the investment is not held for trading, and the holder elects at initial recognition to account for it at fair value through other comprehensive income. As this election has not been made, these investments are accounted for at fair value through profit and loss in other financial results.

Changes in these investments for the six months ended June 30, 2021 and 2020 are as follows:

(in thousands)	2021	2020
Balance at beginning of year	\$ 4,142	\$ 70,849
Cash investments in equity securities	117	200
Sale of equity securities	—	(250)
Loss on sale of equity securities	—	(2,250)
Foreign currency translation adjustments	(112)	(15)
Balance at end of period	\$ 4,147	\$ 68,534

We made additional investments of \$0.1 million in unquoted equity securities during the six months ended June 30, 2021.

In the above table, the six months ended June 30, 2020 includes the value of our investments in NeuMoDx which we later fully acquired in September 2020 as discussed in Note 3 "Acquisitions", and ArcherDX which we sold in October 2020. During the first half of 2020, we sold an investment in equity securities with a carrying amount of \$2.5 million in exchange for \$0.3 million including the shares in OncoCyte, as discussed above. A corresponding loss of \$2.3 million was recognized in other financial results in the accompanying condensed consolidated statement of income for the six months ended June 30, 2020. Also, we made additional investments of \$0.2 million in unquoted equity securities during the six months ended June 30, 2020.

Equity Accounted Investments

As of June 30, 2021, we had total non-marketable investments that were accounted for as equity method investments of \$16.9 million, of which \$17.4 million is included in other non-current assets and \$0.5 million, where we are committed to fund losses, is included in other non-current liabilities in the accompanying condensed consolidated balance sheet. We made additional investments of \$1.6 million in equity accounted investments during the six months ended June 30, 2021.

As of December 31, 2020, these investments totaled \$11.0 million, of which \$11.5 million is included in other non-current assets and \$0.5 million is included in other non-current liabilities.

6. Intangible Assets

The changes in intangibles assets in 2021 are summarized as follows:

(in thousands)	Other Intangible Assets	Goodwill
Balance at December 31, 2020	\$ 883,600	\$ 2,389,111
Additions	39,839	—
Purchase adjustments	—	(7,969)
Amortization/disposals	(76,154)	—
Foreign currency translation adjustments	(9,807)	(23,109)
Balance at June 30, 2021	\$ 837,478	\$ 2,358,033

Cash paid for purchases of intangible assets during the six months ended June 30, 2021 totaled \$44.1 million, of which \$4.5 million related to current year payments that were accrued as of December 31, 2020 and \$0.1 million is related to prepayments recorded in other non-current assets in the accompanying consolidated balance sheet. Intangible additions of \$39.8 million includes \$39.5 million of cash paid during the year and \$0.3 million of additions which were previously recorded as prepayments.

7. Derivatives and Hedging

Objective and Strategy

In the ordinary course of business, we use derivative instruments, including swaps, forwards and/or options, to manage potential losses from foreign currency exposures and interest bearing assets or liabilities. The principal objective of such derivative instruments is to minimize the risks and/or costs associated with our global financial and operating activities. We do not utilize derivative or other financial instruments for trading or other speculative purposes. We recognize all derivatives as either assets or liabilities on the balance sheet on a gross basis, measure those instruments at fair value and recognize the change in fair value in earnings in the period of change, unless the derivative qualifies as an effective hedge that offsets certain exposures. We have agreed with almost all of our counterparties with whom we had entered into crosscurrency swaps, interest rate swaps or foreign exchange contracts, to enter into bilateral collateralization contracts under which we will receive or provide cash collateral, as the case may be, for the net position with each of these counterparties. As of June 30, 2021, cash collateral positions consisted of \$10.7 million recorded in other current liabilities and \$13.2 million recorded in other current assets in the accompanying condensed consolidated balance sheets. As of December 31, 2020, we had cash collateral positions consisting of \$0.6 million recorded in other current liabilities and \$56.1 million recorded in other current assets.

Non-Derivative Hedging Instrument

Net Investment Hedge

We are a party to a foreign currency non-derivative hedging instrument that is designated and qualifies as net investment hedge. The objective of the hedge is to protect part of the net investment in foreign operations against adverse changes in the exchange rate between the Euro and the functional currency of the U.S. dollar. The non-derivative hedging instrument is the German private corporate bond ("Schuldschein") which was issued in the total amount of \$331.1 million as described in Note 9 "Financial Debts". Of the \$331.1 million, which is held in both U.S. dollars and Euros, €255.0 million was designated as the hedging instrument as of December 31, 2020 against a portion of our Euro net investments in our foreign operations. As further described in Note 9, two tranches of the Schuldschein matured and were paid during the first half of 2021 and as a result, €220.5 million remained designated as a hedging instrument as of June 30, 2021. The relative changes in both the hedged item and hedging instrument are calculated by applying the change in spot rate between two assessment dates against the respective notional amount. The effective portion of the hedge is recorded in the cumulative translation adjustment account within other accumulated comprehensive income. Based on the spot rate method, the unrealized loss recorded in equity as of June 30, 2021 and December 31, 2020 is \$14.4 million and \$26.9 million, respectively. Since we are using the debt as the hedging instrument, which is also remeasured based on the spot rate method, there is no hedge ineffectiveness related to the net investment hedge as of June 30, 2021 and December 31, 2020.

Derivatives Designated as Hedging Instruments

Cash Flow Hedges

As of June 30, 2021 and December 31, 2020, we held derivative instruments that are designated and qualify as cash flow hedges, where the effective portion of the gain or loss on the derivative is reported as a component of other

comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. In 2021 and in 2020, we did not record any hedge ineffectiveness related to any cash-flow hedges in earnings. Based on their valuation as of June 30, 2021, we expect approximately \$3.2 million of derivative losses included in accumulated other comprehensive loss will be reclassified into income during the next 12 months. The cash flows derived from derivatives are classified in the condensed consolidated statements of cash flows in the same category as the condensed consolidated balance sheets account of the underlying item.

We use interest rate derivative contracts to align our portfolio of interest bearing assets and liabilities with our risk management objectives. We are party to five cross currency interest rate swaps through 2025 for a total notional amount of €180.0 million which qualify for hedge accounting as cash flow hedges. We determined that no ineffectiveness exists related to these swaps. As of June 30, 2021 and December 31, 2020, interest receivables of \$1.2 million and \$1.1 million are recorded in other current assets in the accompanying condensed consolidated balance sheets.

Fair Value Hedges

As of June 30, 2021 and December 31, 2020, we held derivative instruments that qualify for hedge accounting as fair value hedges. For derivative instruments that are designated and qualify as a fair value hedge, the effective portion of the gain or loss on the derivative is reflected in earnings. This effect on earnings is offset by the change in the fair value of the hedged item attributable to the risk being hedged that is also recorded in earnings. To date, there has been no ineffectiveness. The cash flows derived from derivatives are classified in the condensed consolidated statements of cash flows in the same category as the condensed consolidated balance sheets account of the underlying item.

We hold interest rate swaps which effectively fix the fair value of \$200.0 million our fixed rate private placement debt and qualify for hedge accounting as fair value hedges. We determined that no ineffectiveness exists related to these swaps As of both June 30, 2021 and December 31, 2020, interest receivables of \$0.6 million are recorded in other current assets in the accompanying condensed consolidated balance sheets.

Derivatives Not Designated as Hedging Instruments

Call Options and Warrants

We entered into Call Options which, along with the sale of the Warrants, represent the Call Spread Overlay entered into in connection with the Cash Convertible Notes. In these transactions, the Call Options are intended to address the equity price risk inherent in the cash conversion feature of each instrument by offsetting cash payments in excess of the principal amount due upon any conversion of the Cash Convertible Notes.

Aside from the initial payment of premiums for the Call Options, we will not be required to make any cash payments under the Call Options. We will, however, be entitled to receive under the terms of the Call Options, an amount of cash generally equal to the amount by which the market price per share of our common stock exceeds the exercise price of the Call Options during the relevant valuation period. The exercise price under the Call Options is equal to the conversion price of the Cash Convertible Notes.

The Call Options and Warrants, for which our common stock is the underlying security, are derivative assets and liabilities, respectively, that require mark-to-market accounting treatment. These derivatives are measured and reported at fair value on a recurring basis, within Level 2 of the fair value hierarchy. The change in fair value of these instruments is recognized immediately in our condensed consolidated statements of income in other financial results.

The Warrants are more fully described in Note 9 "Financial Debts".

Cash Convertible Notes Embedded Cash Conversion Options

The embedded cash conversion option within the Cash Convertible Notes discussed in Note 9 "Financial Debts" is required to be separated from the Cash Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our condensed consolidated statements of income in other financial results until the cash conversion option settles or expires. The embedded cash conversion option is measured and reported at fair value on a recurring basis, within Level 2 of the fair value hierarchy.

Because the terms of the Cash Convertible Notes' embedded cash conversion option are substantially similar to those of the Call Options, discussed above, we expect the effect on earnings from these two derivative instruments to mostly offset each other.

Foreign Exchange Contracts

As a globally active enterprise, we are subject to risks associated with fluctuations in foreign currencies in our ordinary operations. This includes foreign currency-denominated receivables, payables, debt, and other balance sheet positions

including intercompany items. We manage balance sheet exposure on a group-wide basis using foreign exchange forward contracts, foreign exchange options and cross-currency swaps.

We are party to various foreign exchange forward, option and swap arrangements which had, at June 30, 2021 and December 31, 2020, aggregate notional values of \$1.1 billion and \$1.3 billion, respectively, which expire at various dates through January 2022. The transactions have been entered into to offset the effects from short-term balance sheet exposure to foreign currency exchange risk. Changes in the fair value of these arrangements have been recognized in other financial results.

Fair Values of Derivative Instruments

_________________

The following table summarizes the fair value amounts of derivative instruments reported in the condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020:

	As of June 30, 2021			As of December 31, 2020
(in thousands)	Current Asset	Non-current Asset		Current Asset		Non-current Asset
Assets:
Derivative instruments designated as hedges
Interest rate contracts - fair value hedge (1)	\$ —	\$	3,615	\$	—	\$	5,042
Total derivative instruments designated as hedges	\$ —	\$	3,615	\$	—	\$	5,042
Undesignated derivative instruments
Call options	\$ —	\$	262,697	\$	2,415	\$	374,038
Foreign exchange forwards and options	17,714		—		11,712		—
Total undesignated derivative instruments	\$ 17,714	\$	262,697	\$	14,127	\$	374,038
Total Derivative Assets	\$ 17,714		266,312	\$	14,127	\$	379,080
	As of June 30, 2021				As of December 31, 2020
(in thousands)	Current Liability		Non-current Liability		Current Liability		Non-current Liability
Liabilities:
Derivative instruments designated as hedges
Interest rate contracts - cash flow hedge (1)	\$ —	\$	(10,927) \$		—	\$	(17,409)
Total derivative instruments designated as hedges	\$ —	\$	(10,927) \$		—	\$	(17,409)
Undesignated derivative instruments
Equity options	\$ —		\$ (263,739) \$				(5,966) \$ (376,046)
Warrants and embedded conversion option	—		(261,432)		—		(372,955)
Foreign exchange forwards and options	(8,113)		—		(45,498)		—
Total undesignated derivative instruments	\$		(8,113) \$ (525,171) \$				(51,464) \$ (749,001)

⁽¹⁾ The fair value amounts for the interest rate contracts do not include accrued interest.

Gains and Losses on Derivative Instruments

The following tables summarize the gains and losses on derivative instruments for the six months ended June 30, 2021 and 2020:

	Six months ended June 30,
	2021	2020
(in thousands)	Other financial results
Total amounts presented in the Condensed Consolidated Statements of Income in which the effects of cash flow and fair value hedges are recorded	\$ 63,640	\$ (19,448)
Losses on Derivatives in Cash Flow Hedges
Interest rate contracts
Amount of loss reclassified from accumulated other comprehensive loss	\$ (6,966) \$	(648)
Amounts excluded from effectiveness testing	—	—
Gains (Losses) on Derivatives in Fair Value Hedges
Interest rate contracts
Hedged item	1,427	(3,812)
Derivatives designated as hedging instruments	(1,427)	3,812
Gains (Losses) Derivatives Not Designated as Hedging Instruments
Equity options	(113,756)	44,329
Cash convertible notes embedded cash conversion options	118,274	(44,988)
Warrants and embedded conversion option	57,734	(23,322)
Foreign exchange contracts	11,881	(16,003)
Total gains (losses)	\$ 67,167	\$ (40,632)

Balance Sheet Line Items in which the Hedged Item is Included

The following tables summarizes the balance sheet line items in which the hedged item is included as of June 30, 2021 and December 31, 2020:

			Carrying Amount of the Hedged Assets (Liabilities)
(in thousands)		June 30, 2021		December 31, 2020
Long-term debt	\$	(126,913) \$		(126,881)

8. Fair Value Measurements

Financial instruments are measured at fair value according to a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

• Level 1, Observable inputs, such as quoted prices in active markets;
• Level 2, Inputs, other than the quoted price in active markets, that are observable either directly or indirectly; and
• Level 3, Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Our assets and liabilities measured at fair value on a recurring basis consist of financial assets, which are classified in Level 1, Level 2 and Level 3 of the fair value hierarchy, derivative contracts used to hedge currency and interest rate risk and derivative financial instruments entered into in connection with the Cash Convertible Notes discussed in Note 9 "Financial Debts", which are classified in Level 2 of the fair value hierarchy, and contingent consideration accruals which are classified in Level 3 of the fair value hierarchy, and are shown in the tables below. There were no transfers between levels.

In determining fair value for Level 2 instruments, we apply a market approach, using quoted active market prices relevant to the particular instrument under valuation, considering the credit risk of both the respective counterparty to the contract and the Company. To determine our credit risk, we estimated our credit rating by benchmarking the price of outstanding debt to publicly-available comparable data from rated companies. Using the estimated rating, our credit risk was quantified by reference to publicly-traded debt with a corresponding rating. The Level 2 derivative financial instruments include the Call Options asset and the Warrants liability. See Note 9 "Financial Debts" and Note 7 "Derivatives and Hedging", for further information. The derivatives are not actively traded and are valued based on an option pricing model that uses observable market data for inputs. Significant market data inputs used to determine fair values as of June 30, 2021 included our common stock price, the risk-free interest rate, and the implied volatility of our common stock. The Call Options asset and the embedded cash conversion option liability were designed with the intent that changes in their fair values would substantially offset, with limited net impact to our earnings. Therefore, the sensitivity of changes in the unobservable inputs to the option pricing model for such instruments is substantially mitigated.

Our Level 3 instruments include non-marketable equity security investments for which we estimate the value based on valuation methods using the observable transaction price at the transaction date and other unobservable inputs. These investments are carried at fair value or under the measurement alternative. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Adjustments are determined primarily based on a market approach as of the transaction date.

Our Level 3 instruments also include contingent consideration liabilities. We value contingent consideration liabilities using unobservable inputs, applying the income approach, such as the discounted cash flow technique, or the probabilityweighted scenario method. Contingent consideration arrangements obligate us to pay the sellers of an acquired entity if specified future events occur or conditions are met such as the achievement of technological or revenue milestones. We use various key assumptions, such as the probability of achievement of the milestones (0% to 100%) to (between 6.5% and 6.9%), to represent the non-performing risk factors and time value when applying the income approach. We regularly review the fair value of the contingent consideration, and reflect any change in the accrual in the condensed consolidated statements of income in the line items commensurate with the underlying nature of milestone arrangements.

(in thousands)	Level 1	Level 2		Level 3		June 30, 2021
Financial assets, current	\$ 2,206	\$	136,768	\$	—	\$ 138,974
Financial assets, non-current	323		—		4,147	4,470
Equity options	—		262,697		—	262,697
Foreign exchange contracts and options	—		17,714		—	17,714
Interest rate contracts	—		3,615		—	3,615
Assets	\$ 2,529	\$	420,794	\$	4,147	\$ 427,470
Foreign exchange contracts and options	\$ —	\$	(8,113) \$		—	\$ (8,113)
Interest rate contracts	—		(10,927)		—	(10,927)
Equity options	—		(263,739)		—	(263,739)
Warrants and embedded conversion option	—		(261,432)		—	(261,432)
Contingent consideration	—		—		(23,645)	(23,645)
Liabilities	\$ —	\$	(544,211) \$		(23,645) \$	(567,856)

The following tables presents our hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020:

(in thousands)	Level 1			Level 2	Level 3	December 31, 2020
Financial assets, current	\$	117,249	\$	—	\$ —	\$	117,249
Financial assets, non-current		266		—	4,142		4,408
Equity options		—		376,453	—		376,453
Foreign exchange contracts and options		—		11,712	—		11,712
Interest rate contracts		—		5,042	—		5,042
Assets	\$	117,515	\$	393,207	\$ 4,142	\$	514,864
Foreign exchange forwards and options	\$	—	\$	(45,498) \$	—	\$	(45,498)
Interest rate contracts		—		(17,409)	—		(17,409)
Equity options		—		(382,012)	—		(382,012)
Warrants and embedded conversion option		—		(372,955)	—		(372,955)
Contingent consideration		—		—	(23,593)		(23,593)
Liabilities	\$	—	\$	(817,874) \$	(23,593) \$		(841,467)

For financial liabilities with Level 3 inputs, the following table summarizes the activity for the six months ended June 30, 2021.

(in thousands)	Contingent Consideration
Beginning balance at January 1, 2021	\$ (23,593)
Additions	(52)
Ending balance at June 30, 2021	\$ (23,645)

As of June 30, 2021, of the total \$23.6 million accrued for contingent consideration, \$13.7 million is included in other non-current liabilities and \$9.9 million is included in other current liabilities in the accompanying condensed consolidated balance sheet. For the six months ended June 30, 2021, the \$0.1 million of additions is related to the time value increases of existing contingent consideration liabilities.

The carrying values of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and other current liabilities, approximate their fair values due to their short-term maturities. The estimated fair value of non-current financial debts as disclosed in Note 9 "Financial Debts" was based on current interest rates for similar types of borrowings. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or what will be realized in the future.

The fair values of the financial instruments are presented in Note 9 "Financial Debts" and were determined as follows:

Cash Convertible Notes and Convertible Notes: Fair value is based on using available over-the-counter market information on the Cash Convertible Notes due in 2023 and 2024 as well as the Convertible Notes due in 2027.

U.S. Private Placement: Fair value of the outstanding bonds is based on an estimation using the changes in the U.S. Treasury rates.

German Private Placement: Fair value is based on an estimation using changes in the euro swap rates.

There were no adjustments in the six-month periods ended June 30, 2021 and 2020 for nonfinancial assets or liabilities required to be measured at fair value on a nonrecurring basis.

9. Financial Debt

At June 30, 2021 and December 31, 2020, total non-current financial debt, net of debt issuance costs consists of the following:

(in thousands)	June 30, 2021			December 31, 2020
0.875% Senior Unsecured Cash Convertible Notes due 2021	\$	—	\$	200
0.500% Senior Unsecured Cash Convertible Notes due 2023		368,158		361,304
1.000% Senior Unsecured Cash Convertible Notes due 2024		437,899		429,496
0.000% Senior Unsecured Convertible Notes due 2027		496,537		442,481
3.75% Series B Senior Notes due October 16, 2022		299,795		299,719
3.90% Series C Senior Notes due October 16, 2024		26,962		26,956
German Private Placement (Schuldschein)		306,747		357,551
Total current and non-current financial debts	\$	1,936,098	\$	1,917,707
Less: current portion of financial debts		—		42,539
Total non-current financial debts	\$	1,936,098	\$	1,875,168

In the first half of 2021, we repaid \$41.1 million for two tranches of the German Private Placement bond (Schuldschein) that matured and the remaining \$0.2 million of 2021 Notes was repaid at the original maturity on March 19, 2021.

The notes are all unsecured obligations that rank pari passu.

The principal amount, carrying amount and fair values of long-term debt instruments are summarized below:

	As of June 30, 2021
			Unamortized debt discount and				Fair Value
(in thousands)	Principal Amount		issuance costs		Carrying Amount		Amount	Leveling
Cash Convertible Notes due 2023	\$ 400,000	\$	(31,842) \$		368,158	\$	495,352	Level 1
Cash Convertible Notes due 2024	500,000		(62,101)		437,899		594,075	Level 1
Convertible Notes due 2027	500,000		(3,463)		496,537		484,285	Level 1
U.S. Private Placement	327,000		(243)		326,757		334,733	Level 2
German Private Placement	307,042		(295)		306,747		309,974	Level 2
	\$ 2,034,042	\$	(97,944) \$		1,936,098	\$	2,218,419

Interest expense related to the Cash Convertible Notes was comprised of the following:

	Six months ended June 30,
(in thousands)		2021	2020
Coupon interest	\$	3,500	\$	4,741
Amortization of original issuance discount		14,272		18,322
Amortization of debt issuance costs		1,252		1,407
Total interest expense related to the Cash Convertible Notes	\$	19,024	\$	24,470

Convertible Notes due 2027

On December 17, 2020, we issued zero coupon convertible notes in an aggregate principal amount of \$500.0 million with a maturity date of December 17, 2027 (2027 Notes). The 2027 Notes carry no coupon interest. The net proceeds of the 2027 Notes totaled \$497.6 million, after debt issuance costs of \$3.7 million, of which \$0.3 million was accrued as of June 30, 2021. The debt issuance costs are amortized to interest expense over the term of the 2027 Notes.

Because the Convertible Notes contain an embedded conversion option, we have determined that the embedded conversion option is a derivative financial instrument, which is required to be separated from the Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our consolidated statements of income until the conversion option transaction settles or expires. The initial fair value liability of the embedded conversion options for the 2027 Notes was \$54.1 million which simultaneously reduced the carrying value of the

Convertible Notes (effectively an original issuance discount). For further discussion of the derivative financial instruments relating to the Convertible Note, refer to Note 7 "Derivatives and Hedging".

The effective interest rate of the 2027 Notes is 1.65%, which is imputed based on the amortization of the fair value of the embedded conversion option over the remaining term of the 2027 Note.

The 2027 Notes are convertible into common shares based on an initial conversion rate, subject to adjustment, of 2,477.65 shares per \$200,000 principal amount of notes (which represents an initial conversion price of \$80.7218 per share, or 6.2 million underlying shares). At conversion, we will settle the 2027 Notes by repaying the principal portion in cash and any excess of the conversion value over the principal amount in shares of common stock.

The notes may be redeemed at the option of each noteholder at their principal amount on December 17, 2025 or in connection with a change of control or delisting event.

The 2027 Notes are convertible in whole, but not in part, at the option of the noteholders on a net share settlement basis, at the prevailing conversion price in the following circumstances beginning after January 27, 2021 through June 16, 2027:

• if the last reported sale price of our common stock for at least 20-consecutive trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; or
• if we undergo certain fundamental changes, including a change of control, as defined in the agreement; or
• if parity event or trading price unavailability event, as the case maybe occurs during the period of 10 days, including the first business day following the relevant trading price notification date; or
• if we distribute assets or property to all or substantially all of the holders of our common stock and those assets or other property have a value of more than 25% of the average daily volume-weighted average trading price of our common stock for the prior 20 consecutive trading days; or
• in case of early redemption in respect of the outstanding notes at our option, where the conversion date falls in the period from (and including) the date on which the call notice is published to (and including) the 45th business day prior to the redemption date; or
• if we experience certain customary events of default, including defaults under certain other indebtedness, until such event of default has been cured or waived.

The noteholders may convert their notes at any time, without condition, on or after June 17, 2027 until the 45th business day prior to December 17, 2027.

No Contingent Conversion Conditions were triggered for the 2027 Notes as of June 30, 2021.

Cash Convertible Notes due 2021, 2023 and 2024

On September 13, 2017, we issued \$400.0 million aggregate principal amount of Cash Convertible Senior Notes which is due in 2023 (2023 Notes). The net proceeds of the 2023 Notes were \$365.6 million, after payment of transaction costs and the net cost of the Call Spread Overlay described below.

On November 13, 2018, we issued \$500.0 million aggregate principal amount of Cash Convertible Senior Notes which is due in 2024 (2024 Notes). The net proceeds of the 2024 Notes were \$468.9 million, after payment of transaction costs and the net cost of the Call Spread Overlay described below.

We refer to the 2019 Notes, 2021 Notes 2023 Notes and 2024 Notes, collectively as the "Cash Convertible Notes."

Interest on the Cash Convertible Notes is payable semi-annually in arrears and will mature on the maturity date unless repurchased or converted with their terms prior to such date. The interest rate and corresponding maturity of each Note are summarized in the table below. The Cash Convertible Notes are solely convertible into cash in whole, but not in part, at the option of noteholders under the circumstances described below and during the contingent conversion periods as shown in the table below.

Cash Convertible Notes	Annual Interest Rate	Date of Interest Payments	Maturity Date	Contingent Conversion Period	Conversion Rate per \$200,000 Principal Amount
2021 Notes	0.875%	March 19 and September 19	March 19, 2021	April 29, 2014 to September 18, 2020	7,063.1647
2023 Notes	0.500%	March 13 and September 13	September 13, 2023	October 24, 2017 to March 13, 2023	4,829.7279
2024 Notes	1.000%	May 13 and November 13	November 13, 2024	December 24, 2018 to August 2, 2024	4,360.3098

Additionally, conversion may occur at any time following a Contingent Conversion Period through the fifth business day immediately preceding the applicable maturity date.

Upon conversion, noteholders will receive an amount in cash equal to the Cash Settlement Amount, calculated as described below. The Cash Convertible Notes are not convertible into shares of our common stock or any other securities.

Noteholders may convert the Cash Convertible Notes into cash at their option at any time during the Contingent Conversion Periods described above only under the following circumstances (Contingent Conversion Conditions):

• if the last reported sale price of our common stock for at least 20-consecutive trading days during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
• if we undergo certain fundamental changes, including a change of control, as defined in the agreement;
• if parity event or trading price unavailability event, as the case maybe occurs for the 2023 Notes and 2024 Notes during the period of 10 days, including the first business day following the relevant trading price notification date.
• if we elect to distribute assets or property to all or substantially all the holders of our common stock and those assets or other property have a value of more than 25% of the average daily volume-weighted average trading price of our common stock for the prior 20-consecutive trading days;
• if we elect to redeem the Cash Convertible Notes; or
• if we experience certain customary events of default, including defaults under certain other indebtedness until such event has been cured or waived or the payment of the Notes have been accelerated.

The Contingent Conversion Conditions in the 2023 Notes and 2024 Notes noted above have been analyzed under IFRS 9, Financial Instruments, and, based on our analysis, we determined that each of the embedded features listed above are clearly and closely related to the 2023 Notes and 2024 Notes (i.e., the host contracts). As a result, pursuant to the accounting provisions of IFRS 9, Financial Instruments, these features noted above are not required to be bifurcated as separate instruments.

No Contingent Conversion Conditions were triggered for the 2023 Notes and 2024 Notes as of June 30, 2021.

Upon conversion, holders are entitled to a cash payment (Cash Settlement Amount) equal to the average of the conversion rate multiplied by the daily volume-weighted average trading price for our common stock over a 50-day period. The conversion rate is subject to adjustment in certain instances but will not be adjusted for any accrued and unpaid interest. In addition, following the occurrence of certain corporate events that may occur prior to the applicable maturity date, we may be required to pay a cash make-whole premium by increasing the conversion rate for any holder who elects to convert Cash Convertible Notes in connection with the occurrence of such a corporate event.

We may redeem the Cash Convertible Notes in their entirety at a price equal to 100% of the principal amount of the applicable Cash Convertible Notes plus accrued interest at any time when 20% or less of the aggregate principal amount of the applicable Cash Convertible Notes originally issued remain outstanding.

Because the Cash Convertible Notes contain an embedded cash conversion option, we have determined that the embedded cash conversion option is a derivative financial instrument, which is required to be separated from the Cash Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our condensed consolidated statements of income until the cash conversion option transaction settles or expires. The initial fair value liability of the embedded cash conversion options for the 2021 Notes was \$54.0 million, \$74.5 million for the 2023 Notes, and \$98.5 million for the 2024 Notes, which simultaneously reduced the carrying value of the Cash Convertible Notes (effectively an original issuance discount). For further discussion of the derivative financial instruments relating to the Cash Convertible Notes, refer to Note 7 "Derivatives and Hedging".

As noted above, the reduced carrying value on the Cash Convertible Notes resulted in a debt discount that is amortized to the principal amount through the recognition of non-cash interest expense using the effective interest method over the expected life of the debt, seven years for the 2021 Notes, and six years for the 2023 Notes and 2024 Notes. This resulted in our recognition of interest expense on the Cash Convertible Notes at an effective rate approximating what we would have incurred had nonconvertible debt with otherwise similar terms been issued. The effective interest rate of the 2021 Notes, 2023 Notes and 2024 Notes is 3.809%, 3.997% and 4.782%, respectively, which is imputed based on the amortization of the fair value of the embedded cash conversion option over the remaining term of the Cash Convertible Notes.

In connection with the issuance of the May 2014 Cash Convertible Senior Notes in two tranches, which included the 2021 Notes, we incurred approximately \$13.1 million in transaction costs. We incurred approximately \$6.2 million and \$5.7 million in transaction costs for the 2023 Notes and 2024 Notes, respectively. Such costs have been allocated to the Cash Convertible Notes and deferred and are being amortized to interest expense over the terms of the Cash Convertible Notes using the effective interest method.

Cash Convertible Notes Call Spread Overlay

Concurrent with the issuance of the Cash Convertible Notes, we entered into privately negotiated hedge transactions (Call Options) with, and issued warrants to purchase shares of our common stock (Warrants) to, certain financial institutions. We refer to the Call Options and Warrants collectively as the "Call Spread Overlay." The Call Options are intended to offset any cash payments payable by us in excess of the principal amount due upon any conversion of the Cash Convertible Notes. The Call Options and Warrants are derivative financial instruments and are discussed further in Note 7 "Derivatives and Hedging".

Aside from the initial payment of a premium, we will not be required to make any cash payments under the Call Options, and will be entitled to receive an amount of cash, generally equal to the amount by which the market price per share of our common stock exceeds the exercise price of the Call Options during the relevant valuation period. The exercise price under the Call Options is initially equal to the conversion price of the Cash Convertible Notes.

We issued Warrants as summarized in the table below. The number of warrants and exercise prices are subject to customary adjustments under certain circumstances. The proceeds, net of issuance costs, from the sale of the Warrants are included as additional paid in capital in the accompanying consolidated balance sheets.

Cash convertible notes	Issued on	Number of share warrants (in millions)	Exercise price per share	Proceeds from issuance of warrants, net of issuance costs (in millions)	Warrants expire over a period of 50 trading days beginning on
2023	September 13, 2017	9.7	\$49.9775	\$45.3	June 26, 2023
2024	November 13, 2018	10.9	\$50.2947	\$72.4	August 27, 2024

The Warrants that were issued with our Cash Convertible Notes, could have a dilutive effect to the extent that the price of our common stock exceeds the applicable strike price of the Warrants. For each Warrant that is exercised, we will deliver to the holder a number of shares of our common stock equal to the amount by which the settlement price exceeds the exercise price, plus cash in lieu of any fractional shares. We will not receive any proceeds if the Warrants are exercised.

U.S. Private Placement

In October 16, 2012, we completed a private placement through the issuance of new senior unsecured notes at a total amount of \$400.0 million with a weighted average interest rate of 3.66% (settled on October 16, 2012). The notes were issued in three series: (1) \$73.0 million 7-year term due and paid 2019 (3.19%); (2) \$300.0 million 10-year term due in October 16, 2022 (3.75%); and (3) \$27.0 million 12-year term due in October 16, 2024 (3.90%). We paid \$2.1 million in debt issuance costs which will be amortized through interest expense over the lifetime of the notes. The note purchase agreement contains certain financial and non-financial covenants, including but not limited to, restrictions on priority indebtedness and the maintenance of certain financial ratios. Based on an estimation using the changes in the U.S. Treasury rates, the Level 2 fair value of these senior notes as of June 30, 2021 and December 31, 2020 was approximately \$334.7 million and \$337.7 million, respectively.

German Private Placement (Schuldschein)

In 2017, we completed a German private placement bond ("Schuldschein") which was issued in several tranches totaling \$331.1 million due in various periods through 2027. In the first half of 2021, we repaid \$41.1 million for two tranches that matured. The Schuldschein consists of U.S. dollar and Euro denominated tranches. The Euro tranches are designated as a foreign currency non-derivative hedging instrument that qualifies as a net investment hedge as described in Note 7 "Derivatives and Hedging". Based on the spot rate method, the change in the carrying value of the Euro denominated

tranches attributed to the net investment hedge as of June 30, 2021 totaled \$14.4 million of unrealized loss and is recorded in equity. We paid \$1.2 million in debt issuance costs which are being amortized through interest expense over the lifetime of the notes.

				Carrying Value (in thousands) as of
Currency	Notional Amount	Interest Rate	Maturity		June 30, 2021	December 31, 2020
EUR	€11.5 million	Fixed 0.4%	March 2021	\$	— \$	14,115
EUR	€23.0 million	Floating EURIBOR + 0.4%	March 2021		—	28,224
EUR	€21.5 million	Fixed 0.68%	October 2022		25,535	26,361
EUR	€64.5 million	Floating EURIBOR + 0.5%	October 2022		76,605	79,083
USD	\$45.0 million	Floating LIBOR + 1.2%	October 2022		44,962	44,948
EUR	€25.0 million	Floating EURIBOR + 0.5%	October 2022		29,682	30,642
EUR	€64.0 million	Fixed 1.09%	June 2024		75,966	78,429
EUR	€31.0 million	Floating EURIBOR + 0.7%	June 2024		36,796	37,989
EUR	€14.5 million	Fixed 1.61%	June 2027		17,201	17,760
				\$	306,747 \$	357,551

A summary of the tranches as of June 30, 2021 and December 31, 2020 is as follows:

The financial markets regulators in the United Kingdom and the Eurozone have passed regulations wherein non-dollar LIBORs and one-week and two-month USD LIBOR will end as of Dec 31, 2021, while the remaining USD LIBOR tenors will end as of June 30, 2023. Market participants and regulators are working on establishing new interest rate benchmarks. While the outcome of this work is not clear yet, the USD tranche of the Schuldschein and our interest rate swaps continue to make reference to the current LIBOR benchmark rate. These agreements contain language for the determination of interest rates in case the benchmark rate is not available. However, it appears likely that the agreements will need to be adjusted in line with still to be developed market practice once new benchmark rates become available.

Revolving Credit Facility

Our credit facilities available and undrawn at June 30, 2021 total €427.0 million (approximately \$507.4 million). This includes a €400.0 million syndicated ESG-linked revolving credit facility expiring December 2023 and three other lines of credit amounting to €27.0 million with no expiration date. The €400.0 million facility can be utilized in Euro and bears interest of 0.550% to 1.500% above EURIBOR, and is offered with interest periods of one, three or six months. The commitment fee is calculated based on 35% of the applicable margin. The revolving facility agreement contains certain financial and non-financial covenants, including but not limited to, restrictions on the encumbrance of assets and the maintenance of certain financial ratios. We were in compliance with these covenants at June 30, 2021. The credit facilities are for general corporate purposes and no amounts were utilized at June 30, 2021.

10. Income Taxes

The interim provision for income taxes is based upon the estimated annual effective tax rates for the year applied to the current period ordinary income before tax plus the tax effect of any discrete items. Our operating subsidiaries are exposed to statutory tax rates ranging from zero to 35%. Fluctuations in the distribution of pre-tax income (loss) among our operating subsidiaries can lead to fluctuations of the effective tax rate in the condensed consolidated financial statements. In the six-month periods ended June 30, 2021 and 2020, the effective tax rates were 18.9% and 20.8%, respectively.

In the first half of 2021 and 2020, tax expense on foreign operations was favorably impacted by lower income tax rates and partial tax exemptions on foreign income primarily derived from operations in Germany, the Netherlands, and Singapore. These foreign tax benefits are due to a combination of favorable tax laws, rules and exemptions in these jurisdictions, including intercompany foreign royalty income in Germany which is statutorily exempt from trade tax. Further, we have intercompany financing arrangements in which the intercompany income is nontaxable in Dubai.

We conduct business globally and, as a result, file numerous consolidated and separate income tax returns in the Netherlands, Germany, and the U.S. federal jurisdiction, as well as in various other state and foreign jurisdictions. In the normal course of business, we are subject to examination by taxing authorities throughout the world. Tax years in the Netherlands are potentially open back to 2009 for income tax examinations by tax authorities. The U.S. consolidated group is open to Federal and most state income tax examinations by the tax authorities beginning with the 2017 tax year. Our subsidiaries, with few exceptions, are no longer open to income tax examinations by tax authorities for years before 2016. The German tax authorities have commenced an audit for the 2014-2016 tax years.

As of June 30, 2021, residual Netherlands income taxes have not been provided on the undistributed earnings of the majority of our foreign subsidiaries as these earnings are considered to be either permanently reinvested or can be repatriated tax free under the Dutch participation exemption.

11. Inventories

The components of inventories consist of the following as of June 30, 2021 and December 31, 2020:

(in thousands)	June 30, 2021		December 31, 2020
Raw materials	\$	72,863	\$ 65,449
Work in process		71,559	74,398
Finished goods		196,619	151,334
Total inventories	\$	341,041	\$ 291,181

12. Equity

Share Repurchase Programs

On July 12, 2021, we announced our seventh share repurchase program of up to \$100 million of our common shares.

On May 6, 2019, we announced our sixth share repurchase program of up to \$100 million of our common shares. During 2020, we repurchased 1.3 million QIAGEN shares for \$64.0 million (including transaction costs). This program ended on December 17, 2020.

The cost of repurchased shares is included in treasury stock and reported as a reduction in total equity when a repurchase occurs. Repurchased shares will be held in treasury in order to satisfy various obligations, which include exchangeable debt instruments, warrants and employee share-based remuneration plans.

13. Revenue

Contract Estimates

The majority of our revenue is derived from contracts (i) with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount in which we have the right to invoice as product is delivered. We have elected the practical expedient not to disclose the value of remaining performance obligations associated with these types of contracts.

However, we have certain companion diagnostic co-development contracts to provide research and development activities in which our performance obligations extend over multiple years. As of June 30, 2021, we had \$30.0 million of remaining performance obligations for which the transaction price is not constrained related to these contracts which we expect to recognize over the next 12 to 18 months.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.

Contract Balances

The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (contract liabilities) in the condensed consolidated balance sheet.

Contract assets as of June 30, 2021 and December 31, 2020 totaled \$9.3 million and \$8.5 million, respectively, are included in other current assets in the accompanying condensed consolidated balance sheets and relate to the companion diagnostic co-development contracts discussed above.

Contract liabilities primarily relate to advances or deposits received from customers before revenue is recognized and is primarily related to instrument service and Software as a Service (SaaS) arrangements. As of June 30, 2021 and December 31, 2020, contract liabilities totaled \$74.3 million and \$68.9 million, respectively, of which \$62.9 million and \$57.1 million is included in other current liabilities, respectively, and \$11.4 million and \$11.8 million in included in other noncurrent liabilities, respectively. During the six months ended June 30, 2021 and 2020, we satisfied the associated

performance obligations and recognized revenue of \$35.3 million and \$32.1 million, respectively, related to advance customer payments previously received.

Disaggregation of Revenue

We disaggregate our revenue based on product type and customer class, product category and geography as shown in the tables below for the six months ended June 30, 2021 and 2020:

(in thousands)	2021	2020
Consumables and related revenues	\$ 484,879	\$ 317,707
Instruments	66,114	62,219
Molecular Diagnostics	550,993	379,926
Consumables and related revenues	511,420	383,690
Instruments	72,101	51,733
Life Sciences	583,521	435,423
Total	\$ 1,134,514	\$ 815,349
(in thousands)	2021	2020
Sample technologies	\$ 429,762	\$ 354,267
Diagnostic solutions	303,949	183,199
PCR / Nucleic acid amplification	225,391	159,321
Genomics / NGS	129,923	78,872
Other	45,489	39,690
Total	\$ 1,134,514	\$ 815,349
(in thousands)	2021	2020
Americas	\$ 500,922	\$ 351,056
Europe, Middle East and Africa	420,609	292,907
Asia Pacific and Rest of World	212,983	171,386
Total	\$ 1,134,514	\$ 815,349

14. Earnings per Common Share

We present basic and diluted earnings per share. Basic earnings per share is calculated by dividing the net income by the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilution that would occur if all "in the money" securities to issue common shares were exercised.

The following table summarizes the information used to compute earnings per common share:

	Six months ended
			June 30,
(in thousands, except per share data)		2021		2020
Net income	\$	298,402	\$	109,458
Weighted average number of common shares used to compute basic net income per common share		228,385		228,200
Dilutive effect of stock options and restricted stock units		3,650		2,971
Dilutive effect of warrants		87		1,948
Weighted average number of common shares used to compute diluted net income per common share		232,122		233,119
Outstanding options and awards having no dilutive effect, not included in above calculation		5		23
Outstanding warrants having no dilutive effect, not included in above calculation		20,473		29,135
Basic earnings per common share	\$	1.31	\$	0.48
Diluted earnings per common share	\$	1.29	\$	0.47

For purposes of considering the 2027 Notes in determining diluted earnings per common share, only an excess of the conversion value over the principal amount would have a dilutive impact using the treasury stock method. Since the 2027 Notes were out of the money and anti-dilutive during the period from January 1, 2021 through June 30, 2021, they were excluded from the diluted earnings per common share calculation in 2021.

15. Commitments and Contingencies

Contingent Consideration Commitments

Pursuant to the purchase agreements for certain acquisitions including business combinations and asset acquisitions as well as other contractual arrangements, we could be required to make additional contingent cash payments totaling up to \$26.6 million in 2022 based on the achievement of certain revenue and operating results milestones.

Of the \$26.6 million total contingent obligation as discussed further in Note 8 " Fair Value Measurements", we have assessed the fair value at June 30, 2021 to be \$23.6 million, of which \$13.7 million is included in other current liabilities and \$9.9 million is included in other non-current liabilities in the accompanying condensed consolidated balance sheet.

Contingencies

In the ordinary course of business, we provide a warranty to customers that our products are free of defects and will conform to published specifications. Generally, the applicable product warranty period is one year from the date of delivery of the product to the customer or of site acceptance, if required. Additionally, we typically provide limited warranties with respect to our services. We provide for estimated warranty costs at the time of the product sale. We believe our warranty reserves of \$5.9 million and \$4.8 million as of June 30, 2021 and December 31, 2020, respectively, appropriately reflect the estimated cost of such warranty obligations.

Litigation

From time to time, we may be party to legal proceedings incidental to our business. As of June 30, 2021, certain claims, suits or legal proceedings arising out of the normal course of business have been filed or were pending against QIAGEN or our subsidiaries. These matters have arisen in the ordinary course and conduct of business, as well as through acquisition. Although it is not possible to predict the outcome of such litigation, we assess the degree of probability and evaluate the reasonably possible losses that we could incur as a result of these matters. We accrue for any estimated loss when it is probable that a liability has been incurred and the amount of probable loss can be estimated.

Litigation accruals recorded in other current liabilities totaled \$5.1 million and \$5.2 million as of June 30, 2021 and December 31, 2020, respectively. The estimated amount of a range of possible losses as of June 30, 2021, is between \$4.7 million and \$16.2 million. Based on the facts known to QIAGEN and after consultation with legal counsel, management believes that such litigation will not have a material adverse effect on our financial position or results of operations above the amounts accrued. However, the outcome of these matters is ultimately uncertain, thus any settlements or judgments

against us in excess of management's expectations could have a material adverse effect on our financial position, results of operations or cash flows.

16. Share-Based Payments

Stock Units

Stock units represent rights to receive our common shares at a future date and include restricted stock units which are subject to time-based vesting only and performance stock units which include performance conditions in addition to timebased vesting. During the six-month period ended June 30, 2021, we granted 0.7 million stock awards compared to 1.0 million stock awards for the six-month period ended June 30, 2020.

At June 30, 2021, there was \$83.1 million remaining in unrecognized compensation expense, less estimated forfeitures, related to these awards which will be recognized over a weighted-average period of 2.23 years.

Share-Based Compensation Expense

Total share-based compensation expense for the six months ended June 30, 2021 and 2020 is comprised of the following:

	Six months ended June 30,
(in thousands)		2021		2020
Cost of sales	\$	1,347	\$	1,242
Research and development		1,647		2,701
Sales and marketing		6,855		6,052
General and administrative		9,448		6,509
Share-based compensation expense before taxes		19,297		16,504
Less: Income tax benefit		6,413		5,096
Net share-based compensation expense	\$	12,884	\$	11,408

In the six months ended June 30, 2021, share-based compensation expense reflects an increase in expense as result of 2020 performance achievement.

No compensation cost was capitalized in inventory at June 30, 2021 or 2020 as the amounts were not material.

Venlo, August 20, 2021

QIAGEN N.V.

/s/ Thierry Bernard	/s/ Roland Sackers
Thierry Bernard	Roland Sackers
CEO	CFO

Responsibility statement of the Management Board to the condensed consolidated financial statements for the six months ended June 30, 2021

(unaudited)

The Managing Board of QIAGEN declares that, to the best of their knowledge,

• the condensed consolidated financial statements for the six months ended June 30, 2021 (half-year financial statements) give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the entities included in the consolidation;
• the management report gives a true and fair view of the important events of the past six-month period and their impact on the half-year financial statements, as well as the principal risks and uncertainties for the six-month period to come, and the most important related party transactions as required by provision 5.25d section 2 sub (c) of the Dutch act on financial supervision (Wet op het financieel toezicht).

Venlo, August 20, 2021

QIAGEN N.V.

/s/ Thierry Bernard	/s/ Roland Sackers
Thierry Bernard	Roland Sackers
CEO	CFO

Interim management report for the six months ended June 30, 2021

(unaudited)

This section contains a number of forward-looking statements. These statements are based on current management expectations, and actual results may differ materially. Among the factors that could cause actual results to differ from management's expectations are those described in "Risk Factors" and "Forward-looking and Cautionary Statements" below.

Forward-looking and Cautionary Statements

This report contains forward-looking statements that are subject to risks and uncertainties. These statements can be identified by the use of forward-looking terminology, such as "believe," "hope," "plan," "intend," "seek," "may," "will," "could," "should," "would," "expect," "anticipate," "estimate," "continue" or other similar words. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. We caution investors that there can be no assurance that actual results or business conditions will not differ materially from those projected or suggested in such forward-looking statements as a result of various factors, including, but not limited to, the following: risks associated with our expansion of operations, including the acquisition of new businesses; variability in our operating results from period to period; management of growth, international operations, and dependence on key personnel; intense competition; technological change; our ability to develop and protect proprietary products and technologies and to enter into and maintain collaborative commercial relationships; our future capital requirements; general economic conditions and capital market fluctuations; and uncertainties as to the extent of future government regulation of our business. As a result, our future success involves a high degree of risk. For further information, refer to the more specific risks and uncertainties discussed on pages 30 to 44 of the 2020 Annual Report.

Results of Operations

Overview

We are a leading global provider of Sample to Insight solutions that enable customers to gain valuable molecular insights from samples containing the building blocks of life. Our sample technologies isolate and process DNA, RNA and proteins from blood, tissue and other materials. Assay technologies make these biomolecules visible and ready for analysis, such as identifying the DNA of a virus or a mutation of a gene. QIAGEN Digital insights integrate software and cloud-based resources to interpret increasing volumes of biological data and report relevant, actionable insights. Our automation solutions tie these together in seamless and cost-effective molecular testing workflows.

We sell our products - consumables, automated instrumentation systems using those technologies, and bioinformatics to analyze and interpret the data - to two major customer classes:

• Molecular Diagnostics healthcare providers engaged in many aspects of patient care requiring accurate diagnosis and insights to guide treatment decisions in oncology, infectious diseases and immune monitoring. Includes Precision Medicine and companion diagnostics.
• Life Sciences customers including government, biotechnology companies and researchers who utilize molecular testing and technologies who are generally served by public funding including areas such as medicine and clinical development efforts, forensics and exploring the secrets of life. Includes Pharma, Academia and Applied Testing customers.

We market products in more than 130 countries, mainly through subsidiaries in markets we believe have the greatest sales potential in Europe, Asia, the Americas and Australia. We also work with specialized independent distributors and importers. As of June 30, 2021, we employed more than 5,900 people in more than 35 locations worldwide.

We expect continued strong demand in the non-COVID product group areas of the portfolio during 2021 and for these products to represent the majority of our sales. The faster-than-expected success of vaccination campaigns has led to a reduction in demand for COVID-19 test solutions, and this has led to reduced sales growth over 2020 from these product groups. Investments are planned for research and development and clinical trials to strengthen our five pillars of growth beyond the pandemic, in particular initiatives to enlarge the test menu for the NeuMoDx and QIA-stat-Dx systems.

Six-Month Period Ended June 30, 2021, compared to Six-Month Period Ended June 30, 2020

Net Sales

(in millions)	2021		2020
Non-COVID and COVID-19 product groups		Net sales	Net sales	% change
Non-COVID product groups	\$	771.6	\$ 561.8	+37%
COVID-19 product groups		362.9	253.5	+43%
Net Sales		\$ 1,134.5	\$ 815.3	+39%
Product type
Consumables and related revenues	\$	996.3	\$ 701.4	+42%
Instruments		138.2	114.0	+21%
Net Sales		\$ 1,134.5	\$ 815.3	+39%
Customer class
Molecular Diagnostics	\$	551.0	\$ 379.9	+45%
Life Sciences		583.5	435.4	+34%
Net Sales		\$ 1,134.5	\$ 815.3	+39%

Strong sales in non-COVID product groups during the first half of 2021 were led by QuantiFERON-TB returning to pre-pandemic sales levels and sample technologies. COVID-19 product group sales levels were impacted during the latter portion of the first half of 2021 as the rapid uptake of COVID-19 vaccination campaigns led to reduced demand for testing across all regions. Net sales were positively impacted by about four percentage points from favorable currency movements against the U.S. dollar for the first half of 2021.

(in millions)	2021			2020
Product group		Net sales	Net sales		% change
Sample technologies	\$	429.8	\$	354.3	+21%
Diagnostic solutions		303.9		183.2	+66%
PCR / Nucleic acid amplification		225.4		159.3	+41%
Genomics / NGS		129.9		78.9	+65%
Other		45.5		39.7	+15%
Net Sales		\$ 1,134.5	\$	815.3	+39%

Sample technologies represents products involved in the first step in any molecular lab process. Sales were driven by demand for non-COVID products as these sales represented about two-thirds of this product group in the first half of 2021. Sales of kits used for COVID-19 testing, especially manual sample preparation, declined in the first half of 2021 against high demand in the year-ago period.

Diagnostic solutions includes molecular testing platforms and products as well as Precision Medicine and companion diagnostic co-development revenues. Growth in the first half of 2021 reflected strong growth in QuantiFERON-TB sales in all regions. Sales for the QIAstat-Dx and NeuMoDx automated PCR testing solutions rose in the first half of 2021 despite a decline in COVID-19 testing demand during the latter portion of the period. Higher revenues from companion diagnostic co-development agreements compared to the prior year period were also supported by higher sales of kits used for precision medicine applications.

PCR / Nucleic acid amplification involves research and applied PCR solutions and components. QIAcuity digital PCR sales experienced increasing customer interest following the launch in late 2020. OEM solutions and enzymes used in third-party diagnostic kits also contributed to growth in in the first half of 2021. Instrument sales declined in the first half of the 2021, in particular for the Rotor Gene Q PCR cycler, against high pandemic demand in the first half of 2020.

Genomics / NGS includes universal NGS solutions as well as the full QIAGEN Digital Insights portfolio. Sales for universal NGS consumables used in NGS grew from demand among customers involved in research and clinical applications, increased sales of kits for COVID-19 variant analysis, and sales of patents and technology licenses during the first half of 2021. Sales were also driven by QIAGEN Digital Insights in particular in clinical applications such as oncology.

(in millions)	2021		2020
Geographic region		Net sales	Net sales	% change
Americas	\$	500.9	\$ 351.1	+43%
Europe, Middle East and Africa		420.6	292.9	+44%
Asia Pacific, Japan and Rest of World		213.0	171.4	+24%
Net Sales		\$ 1,134.5	\$ 815.3	+39%

Growth in the Americas region was underpinned by a strong performance in the U.S. including gains in QuantiFERON-TB sales where results grew over pre-pandemic sales levels for this growth pillar in the six-month period ended June 30, 2021. Increased sales in Mexico across both customer classes during the first half of 2021 contributed to the gains in this region. Lower sales in Brazil in Molecular Diagnostics more than outweighed gains in Life Sciences resulting in lower sales overall during the six-month period ended June 30, 2021.

Performance in the Europe, Middle East and Africa region was driven by gains in Germany, Italy, Switzerland, the United Kingdom and Turkey during the six-month period ended June 30, 2021. These gains were balanced against lower sales in France compared to the year-ago period. EMEA sales were positively impacted by nine percentage points from favorable currency movements against the U.S. dollar in the six months ended June 30, 2021.

Results in Asia Pacific, Japan and Rest of World region were driven by growth in China compared to the first six months of 2020 on improving trends for non-COVID product groups. Higher sales were also seen in Australia and South Korea, more than absorbing the decline in India. Sales in the Asia Pacific and Japan region were positively impacted by six percentage points from favorable currency movements against the U.S. dollar in the six months ended June 30, 2021.

Gross Profit

(in millions)	2021		2020	% change
Gross Profit	\$ 737.6	\$	536.2	+38%
Gross Margin	65.0 %		65.8 %

Generally, our consumables and related products have a higher gross margin than our instrumentation products and service arrangements and fluctuations in the sales levels of these products and services can result in fluctuations in gross margin between periods. While net sales from consumables and instruments have shifted towards a higher percentage of consumable sales, the gross margin in the six-month period ended June 30, 2021 reflects the impact of lower instrument margins when compared to the prior period together with increased costs following investments made in expanding our production capacity to support volume growth.

In the first half of 2021, the amortization expense on acquisition-related intangibles within cost of sales increased to \$35.4 million compared to \$30.1 million in the same period of 2020. The increase reflects the acquired intangibles from NeuMoDx as discussed further in Note 3 "Acquisitions". Our acquisition-related intangible amortization will increase in the event of future acquisitions.

Operating Expenses

	2021			2020
(in millions)	Expenses	% of net sales	Expenses				% of net sales	% change
Research and development	\$ (93.1)	8.2%	\$	(62.3)	7.6%	+49%
Sales and marketing	(234.8)	20.7%		(200.1)	24.5%	+17%
General and administrative	(63.9)	5.6%		(51.4)	6.3%	+24%
Restructuring, acquisition, integration and other, net	(17.1)	1.5%		(31.8)	3.9%	-46%
Long-lived asset impairments	—	—%		(1.0)	0.1%	-100%
Other operating income	0.3	0.0%		1.2	0.1%	-75%
Other operating expense	(0.2)	—%		(2.7)	0.3%	-94%
Total operating expenses	\$ (408.7)	36.0%	\$	(348.2)	42.7%
Income from operations	\$ 328.9	29.0%	\$	188.1	23.1%

Research and Development

The overall increase in research and development expense is the result of the continued focus on our five pillars of growth, including investments in NeuMoDx, QIAstat-Dx and QIAcuity. These investments are being made to both expand the use of key solutions for use once the pandemic has subsided in addition to addressing the ongoing COVID-19 testing demand including the ability to detect emerging viral variants. Research and development costs in the six months ended June 30, 2021 include approximately \$6.0 million of unfavorable currency exchange impact. In 2020, research and development costs reflect the suspended development of NGS-related instrument system in connection with the 2019 restructuring measures discussed in Note 4. As we continue to discover, develop and acquire new products and technologies, we expect to incur additional expenses related to facilities, licenses and employees engaged in research and development. Overall, research and development costs are expected to increase as a result of seeking regulatory approvals, including U.S. FDA Pre-Market Approval (PMA), U.S. FDA 510(k) clearance and EU CE approval of certain assays or instruments. Further, business combinations, along with the acquisition of new technologies, may increase our research and development costs in the future. We have a strong commitment to innovation and expect to continue to make investments in our research and development efforts.

Sales and Marketing

Sales and marketing expenses are primarily associated with personnel, commissions, advertising, trade shows, publications, freight and logistics expenses, other promotional expenses and amortization on acquisition-related intangibles. The increase reflects additional sales and marketing efforts supporting our focus on five pillars of growth, as well as increases in freight and other supply chain costs in line with increase in sales and includes \$10.3 million of unfavorable currency exchange impact in the six months ended June 30, 2021. As pandemic lockdowns and restrictions are lifted, we anticipate that absolute sales and marketing costs will increase, along with increases related to new product introductions.

General and Administrative

General and administrative expenses reflect continued investments in information technology systems, including cyber security, across the organization as well as an increase in share-based compensation and personnel expenses due in part to 2020 performance achievements. General and administrative expenses include \$2.4 million of unfavorable currency impact in the six months ended June 30, 2021.

Restructuring, Acquisition, Integration and Other, net

Restructuring, acquisition, integration and other, net expenses totaled \$17.1 million during the six months ended June 30, 2021 including costs for the continued integration of NeuMoDx.

During the six months ended June 30, 2020, we incurred a total of \$31.8 million, of which \$20.9 million was associated with the public takeover offer for QIAGEN and \$1.3 million were related to the 2019 restructuring measures.

Long-lived Asset Impairments

Impairments to intangible assets and property, plant and equipment for the six-month period ended June 30, 2020, totaled \$1.0 million and were incurred in connection with the 2019 restructuring measures as further discussed in Note 4 "Restructuring and Impairments".

Financial Income (Expense)

(in millions)	2021			2020	% change
Financial income	\$	3.7	\$	6.7	-44%
Financial expense		(28.5)		(37.1)	-23%
Other financial results		63.6		(19.4)	-427%
Total financial income (expense), net	\$	38.9	\$	(49.9)	-178%

Financial income includes interest earned on cash, cash equivalents and short-term investments, income related to certain interest rate derivatives as discussed in Note 7 "Derivatives and Hedging" and other components including the interest portion of operating lease transactions. The decrease in 2021 is partially attributable to the duration and level of short-term investments held during the period.

Financial expense primarily relate to debt, discussed in Note 9 "Financial Debts" in the accompanying notes to the condensed consolidated financial statements. The decrease in 2021 is driven by the repayment of the majority of the 2021 Notes in the first half of 2020.

Other financial results in 2021 includes gains of \$118.3 million related to the embedded cash conversion option on the cash convertible notes and \$57.7 million related to the fair value change in the warrants and embedded conversion option as discussed in Note 7 as well as a \$2.1 million gain recognized from the sale of the Invitae shares partially offset by losses of \$113.8 million related to the change in fair value of equity options.

Other financial results in 2020 includes losses of \$45.0 million related to the embedded cash conversion option on the cash convertible notes and \$23.3 million related to the fair value change in the warrants and embedded conversion option partially offset by gains of \$44.3 million related to the change in fair value of equity options.

(in millions)	2021 2020		% change
Income before income taxes	\$ 367.8	\$	138.2	+166%
Income taxes	(69.4)		(28.7)	+142%
Net income	\$ 298.4	\$	109.5
Effective tax rate	18.9 %		20.8 %

Provision for Income Taxes

Our effective tax rates differ from The Netherlands statutory tax rate of 25% due in part to our operating subsidiaries being exposed to effective tax rates ranging from zero to 35%. Fluctuations in the distribution of pretax income (loss) among our operating subsidiaries can lead to fluctuations of the effective tax rate in the consolidated financial statements. For the six months ended June 30, 2021 and 2020, our effective tax rates were 18.9% and 20.8%, respectively. We continue to record partial tax exemptions tax exemptions on foreign income primarily derived from operations in Germany, the Netherlands and Singapore. These foreign tax benefits are due to a combination of favorable tax laws, rules, and exemptions in these jurisdictions, including intercompany foreign royalty income in Germany which is statutorily exempt from trade tax. Further, we have intercompany financing arrangements in which the intercompany income is nontaxable in Dubai.

In future periods, our effective tax rate may fluctuate from similar or other factors as discussed in "Changes in tax laws or their application could adversely affect our results of operations or financial flexibility" in Principal Risks and Uncertainties of the 2020 Annual Report.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted on March 27, 2020 in the United States. The CARES Act and related notices include several significant provisions, including delaying certain payroll tax payments and mandatory transition tax payments under the Tax Cuts and Jobs Act. We will continue to monitor and assess the impact the CARES Act and similar legislation in other countries may have on our business and financial results.

Liquidity and Capital Resources

To date, we have funded our business primarily through internally generated funds, debt and private and public sales of equity. Our primary use of cash has been to support continuing operations and our investing activities, including capital expenditure requirements and acquisitions. As of June 30, 2021, we had cash and cash equivalents of \$758.3 million and current financial assets of \$139.0 million. As of December 31, 2020, we had cash and cash equivalents of \$597.0 million and current financial assets of \$117.2 million. Cash and cash equivalents are primarily held in U.S. dollars and euros, other than those cash balances maintained in the local currency of subsidiaries to meet local working capital needs. At June 30, 2021, cash and cash equivalents had increased by \$161.3 million from December 31, 2020, primarily as a result of cash provided by operating activities of 305.5 million, partially offset by cash used in financing activities of \$57.3 million and cash used in investing activities of \$85.2 million. As of June 30, 2021 and December 31, 2020, we had working capital of \$1.25 billion and \$1.03 billion, respectively.

Cash Flow Summary

	First six months
(in millions)		2021		2020
Net cash provided by operating activities	\$	305.5	\$	166.1
Net cash used in investing activities	\$	(85.2) \$		(71.2)
Net cash used in financing activities	\$	(57.3) \$		(27.5)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	\$	(1.8) \$		(4.5)
Net increase in cash, cash equivalents and restricted cash	\$	161.3	\$	63.0

Operating Activities: For the six months ended June 30, 2021 and 2020, we generated net cash from operating activities of \$305.5 million and \$166.1 million, respectively. While net income was \$298.4 million in the six months ended June 30, 2021, non-cash components in income included \$113.0 million of depreciation and amortization, \$19.3 million of share-based compensation expense, and \$16.0 million of amortization of debt discount. Operating cash flows include a net decrease in working capital of \$53.3 million excluding changes in fair value of derivative instruments. The current period change in working capital is primarily due to increased inventories to meet the increase in demand and decreased accrued and other current liabilities during the first half of 2021. Because we rely heavily on cash generated from operating activities to fund our business, a decrease in demand for our products, longer collection cycles or significant technological advances of competitors would have a negative impact on our liquidity.

Investing Activities: Approximately \$85.2 million of cash was used in investing activities during the six months ended June 30, 2021 compared to \$71.2 million for the same period in 2020. Cash used in investing activities includes \$136.8 million in purchases of financial assets, \$63.6 million paid for purchases of property, plant and equipment and \$44.1 million paid for intangible assets partially offset by \$118.1 million from the sale of financial assets and \$42.9 million received for collateral assets. Cash used in investing activities during the six months ended June 30, 2020 includes \$128.2 million paid for intangible assets, \$26.0 million purchases of property, plant and equipment and \$25.1 million in purchases of financial assets partially offset by \$98.2 million from proceeds from the sale of financial assets.

Financing Activities: Net cash used in financing activities was \$57.3 million of cash for the six months ended June 30, 2021, primarily due to repayments of long-term debt including \$41.1 million for two tranches of the German Private Placement (Schuldschein) that matured as well as \$0.2 million for the remaining 2021 Notes as well as \$13.8 million in principal payments on operating leases and \$13.3 million paid in connection with net shares settlement for tax withholding related to the vesting of stock awards, partially offset by \$10.1 million of cash received for collateral liabilities. Cash used in financing activities for the six months ended June 30, 2020 includes \$34.1 million of payments upon early conversion of the 2021 Notes, \$11.1 million in principal payments on operating leases and \$6.4 million paid in connection with net shares settlement for tax withholding, partially offset by \$20.2 million of cash received for collateral liabilities.

Other Factors Affecting Liquidity and Capital Resources

As of June 30, 2021, we carry \$1.9 billion of long-term debt, of which no amount is current.

In December 2020, we issued \$500.0 million aggregate principal amount of zero coupon Convertible Notes due in 2027 (2027 Notes). The 2027 Notes will mature on December 17, 2027 unless converted in accordance with their terms prior to such data as described more fully in Note 9 "Financial Debts".

In November 2018, we issued \$500.0 million aggregate principal amount of Cash Convertible Senior Notes which are due in 2024 (2024 Notes). Interest on the 2024 Notes is payable semiannually in arrears at a rate of 1.000% per annum. The 2024 Notes will mature on November 13, 2024 unless repurchased or converted in accordance with their terms prior to such date.

In September 2017, we issued \$400.0 million aggregate principal amount of Cash Convertible Senior Notes which are due in 2023 (2023 Notes). Interest on the 2023 Notes is payable semiannually in arrears at a rate of 0.500% per annum. The 2023 Notes will mature on September 13, 2023 unless repurchased or converted in accordance with their terms prior to such date.

Additionally in 2017, we completed a German private placement consisting of several tranches denominated in either U.S. dollars or Euro at either floating or fixed rates and due at various dates through June 2027. During the first half of 2021, we paid \$41.1 million when two tranches matured as described more fully in Note 9 "Financial Debts".

In March 2014, we issued Cash Convertible Senior Notes of which the remaining \$0.2 million was paid during the first half of 2021.

In October 2012, we completed a U.S. private placement with three series at a weighted average interest rate of 3.66%. The following two series remain outstanding at June 30, 2021: (1) \$300 million 10-year term due in 2022 (3.75%); and (2) \$27 million 12-year term due in 2024 (3.90%).

In December 2020, we obtained a €400 million syndicated revolving credit facility with a contractual life of three years with the ability to extend by one year two times. No amounts were utilized at June 30, 2021. The facility can be utilized in Euro and bears interest of 0.525% to 1.525% above EURIBOR, and is offered with interest periods of one, three or six months. The interest rate is linked to our environmental, social and governance (ESG) performance. We have additional credit lines totaling €27 million with no expiration date, none of which were utilized as of June 30, 2021.

In connection with certain acquisitions, we could be required to make additional contingent cash payments totaling up to \$26.6 million based on the achievement of certain revenue and operating results milestones as further discussed in Note 15 "Commitments and Contingencies".

On July 12, 2021, we announced our seventh share repurchase program of up to \$100 million of our common shares. In May 2019, we announced our sixth share repurchase program of up to \$100 million of our common shares. During 2020, we repurchased 1.3 million QIAGEN shares for \$64.0 million (including transaction costs). This program ended in December 2020. Repurchased shares will be held in treasury in order to satisfy various obligations, which include employee share-based remuneration plans.

We expect that cash from financing activities will continue to be impacted by issuances of our common shares in connection with our equity compensation plans and that the market performance of our stock will impact the timing and volume of the issuances. Additionally, we may make future acquisitions or investments requiring cash payments, the issuance of additional equity or debt financing.

We believe that funds from operations, existing cash and cash equivalents, together with the proceeds from any public and private sales of equity, and availability of financing facilities, will be sufficient to fund our planned operations and expansion during the coming year. However, any global economic downturn may have a greater impact on our business than currently expected, and we may experience a decrease in the sales of our products, which could impact our ability to generate cash. If our future cash flows from operations and other capital resources are not adequate to fund our liquidity needs, we may be required to obtain additional debt or equity financing or to reduce or delay our capital expenditures, acquisitions or research and development projects. If we could not obtain financing on a timely basis or at satisfactory terms, or implement timely reductions in our expenditures, our business could be adversely affected.

Quantitative and Qualitative Disclosures about Market Risk

Our market risk relates primarily to interest rate exposures on cash, short-term investments, and borrowings and foreign currency exposures on intercompany and third-party transactions. The overall objective of our risk management strategy is to reduce the potential negative earnings effects from changes in interest and foreign currency exchange rates. Exposures are managed through operational methods and financial instruments relating to interest rate and foreign exchange risks. We do not use financial instruments for trading or speculative purposes. Our exposure to market risk from changes in interest rates and currency exchange rates has not changed materially from our exposure as discussed in our Annual Report for the year ended December 31, 2020.

Contractual Obligations

There were no material changes at June 30, 2021, from the contractual obligations disclosed in our Annual Report for the year ended December 31, 2020.

Legal Proceedings

For information on legal proceedings, see Note 15 "Commitments and Contingencies" to the accompanying condensed consolidated financial statements.

While no assurances can be given regarding the outcome of the proceedings described in Note 15, based on information currently available, we believe that the resolution of these matters is unlikely to have a material adverse effect on our financial position or results of future operations for QIAGEN N.V. as a whole. However, because of the nature and inherent uncertainties of litigation, should the outcomes be unfavorable, certain aspects of our business, financial condition, and results of operations and cash flows could be materially adversely affected.

Principal risks and uncertainties

Our risk categories and risk factors which could have a material impact on our financial position and result are extensively described in QIAGEN's 2020 Annual Report. There have been no material changes from the risk factors disclosed in the 2020 Annual Report.

2021 Outlook

As announced on July 12, 2021, for the full year 2021 we expect net sales growth of at least 12% at constant exchange rates (CER) from the 2020 level of \$1.87 billion and adjusted earnings per share of at least \$2.42 CER from \$2.15 per share in 2020. The outlook reflects expected ongoing strong demand in non-COVID product groups along with an anticipated reduction in demand for COVID-19 testing due to the faster-than-expected uptake in vaccination campaigns.

Signatures

Venlo, August 20, 2021 QIAGEN N.V.

/s/ Thierry Bernard /s/ Roland Sackers Thierry Bernard Roland Sackers CEO CFO

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