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Siemens & UTAK: Price Amendment Discussion - October 30 VIEW RECORDING - 23 mins (No highlights): https://fathom.video/share/8k7FUnaVyVFZzBHwhv83zbEJyyQknqXg --- 0:53 - Raleigh Gallina (UTAK Laboratories) Sam. You Hey, Jim. How you doing? Good. Oh, you can hear me? 1:07 - PIACENTINI, Jim (Siemens Healthineers) I can hear you. Yes. Can you hear us? Yeah, I can hear you. My camera, for some reason, is not working. I was wondering if my audio was, but if you can hear me, that's fine. Perfect. 1:17 - Raleigh Gallina (UTAK Laboratories) Well, we can turn ours off, too, so we're not, like, staring at you, if that's for sure. Yeah, fine. 1:23 - PIACENTINI, Jim (Siemens Healthineers) You're fine. I can see you, so I have the advantage. Oh, too funny. Yeah. Well, how's life? 1:33 - Raleigh Gallina (UTAK Laboratories) Thanks for proposing a new time and, you know, hopping on a call again, and I know, you know, this is going to be a continued conversation as well. I don't know if it's helpful to kind of recap where we left off, or if maybe you wanted to jump in. Where do you want to start, Jim? Yeah, let's start where we left off. 1:55 - PIACENTINI, Jim (Siemens Healthineers) So, yeah, just want to thank you for taking the couple of times. That were proposed, because I know last week, Friday I couldn't do it, but last week I couldn't do it, and yeah, I appreciate the pulling it to today. Last week I was actually at Cape Cod again. Nice, good. yeah, I had planned on it for a long time, so I forgot to let you guys know. All good. Yeah, you know where to find us. 2:27 - Raleigh Gallina (UTAK Laboratories) We're always going to be here, so. Yes. Six to one, and we're glad we made it work for everyone, too. Sure, sure. 2:35 - PIACENTINI, Jim (Siemens Healthineers) Nice. 2:36 - Raleigh Gallina (UTAK Laboratories) Awesome. Well, and actually, the recap will be nice for you, too, Kevin, so just to kind of share where, you know, our last conversation with Jim, so Nicole, Jim, I had met, just kind of talking about that look ahead with understanding that, you know, hey, we're going to be working through, you know, a new agreement and a refreshed agreement, too. That's more in lockstep with. Yeah. A more contemporary one that Siemens has in terms of formatting as well. So, you know, our starting point that we'd proposed to Siemens was UTAK proposing that 5% year-over-year increase for a two-year agreement starting January 2026. And, you know, for Jim to be able to take that to his team, he just needed it in writing. So we went ahead and provided that detail on top of last call's notes. But we do expect that, you know, hey, we'll be having conversation on both ends, too. So that's more what we wanted to touch base. And, you know, Jim, I know things are busy, so no update is also an update. But I'll kind of turn it over to you to see if, you know, Siemens had anything that they wanted to round out in that initial proposal. 3:52 - PIACENTINI, Jim (Siemens Healthineers) Yeah, so I remember we talked about this 5% for the next couple of years and two years. Commitment. I did bring that back, and I didn't get really positive results. So here's what we're doing with our customers. Our customers expect a year-on-year reduction from us, and we've given it to them for the last few years. In the same turn, a few of our suppliers were trying to come back and say year-on-year increases to us, which shrinks our margin quite a bit. So, yeah, I did not get positive feedback on the proposed plan. I think the original plan was a 25% increase. That certainly wasn't going to happen. Is it possible, because I know it got late, the proposal got late in the year, and because our fiscal year starts October 1, and Now we're heading into the end of the first quarter of the fiscal year, which is December. Is it possible to really bring these negotiations up for the following fiscal year, or is that something that you and Kevin and the team don't wish to do? How do you feel about that? 5:26 - Raleigh Gallina (UTAK Laboratories) Oh, so, like, putting a pin in conversation until we'd be able to implement for next fiscal year for Siemens, so October of 2026, is that the ask? 5:39 - PIACENTINI, Jim (Siemens Healthineers) October 1st of 2026, yes, that's the beginning of our next fiscal year, because everything's already been budgeted from our side and finance and the marketing and the rest of the group, and then something coming in late like this. I know it's not a big spend, but it's still a negative. So I'm just wondering if that's something that you would consider. Gotcha. 6:06 - Raleigh Gallina (UTAK Laboratories) Gotcha. Yeah, Kevin, I'd more defer in terms of like UTACs ability and, you know, on that ask too. But I don't know if you'd need also to have internal conversation. Yeah, I think it'd be good to take that back. 6:24 - Kevin Kopp I think the alignment between the fiscal year and the agreement, Jim, is what I would – I think that makes sense, right? Like if your guys' fiscal year is a certain thing and the agreement is on a different path, then there's always going to be a mismatch. So there's some logic there that I can potentially work with. But let me go back to see if that's feasible. 6:52 - PIACENTINI, Jim (Siemens Healthineers) Yes, if it is feasible, then we can lock something into maybe a longer-term amendment. Rather than a year-to-year type of thing, where we lock into a certain price for the next three years, four years, five years, two years, however you want to agree to something so that both sides are benefiting or not being, let's just say, you're not hitting the negative side on either side. Can we just at least go back and propose that? Because we do have another supplier out in California. They were just absorbed by a larger company. Our fear with that is they're our largest spend for SIVA, the SIVA project. Our fear is that they're going to come back now and hit us with something that could really be unfortunate for the team. So we're trying to prepare for more than just one supplier. I don't, you're out in California, so if you heard If the news, you probably already know anyway. I'm not sure who the name is, but it's news. Yeah. 8:12 - Raleigh Gallina (UTAK Laboratories) Yeah, and M&A's always inject a level of uncertainty or certainty in, like, the improper direction, right? Yeah, yeah. 8:20 - PIACENTINI, Jim (Siemens Healthineers) How close are you guys to the Silicon Valley? 8:27 - Kevin Kopp Like five hours this way. Oh, okay, so you're pretty far away. 8:36 - PIACENTINI, Jim (Siemens Healthineers) Okay. Silicon Valley seems to be the – Massachusetts is very high in labor, but California is just as high as higher taxes. But Silicon Valley is probably the number one in the country. I know Seattle's pretty high, but we don't have any suppliers out in Seattle. But Silicon Valley is very high. In Labor and Taxes. Yeah. 9:04 - Raleigh Gallina (UTAK Laboratories) Yeah, it's funny you mentioned that I actually have a cousin of mine where he and his wife, when they have their first kid, they decided to move back to our hometown of Phoenix because they were like, what we can buy in San Francisco versus what we can buy in Phoenix. 9:19 - PIACENTINI, Jim (Siemens Healthineers) It's like so vastly different. Exactly. There's actually folks that I don't know, but someone told me that in certain counties near that area you're talking about of San Francisco and Silicon Valley, if you go to the next county over, the tax drops quite a bit. They bought a house right on the edge of the line, so right on the edge of each county. So they're still benefiting from that location, but now they pay a lot less in taxes. Yeah, but California in general is very high. But anyway, if you could go back, Kevin, Ian, Raleigh, and just propose something. I think because, again, we're already through Q1 of fiscal year 26, and, you know, to know a problem with your side because you didn't know our fiscal year, you thought it said December, I'm sorry, January 1, it's no fault of yours. It's just that we're already through one quarter, and for me to go back and say, hey, we have this price increase, and although I've already mentioned that the price increase before, it's what we're agreeing to. It would be kind of tough, our finance team, but it would be really tough on me or something like that. So, if we can just hold this off to October 1, that would be great, and maybe we negotiate something on both sides, so both sides aren't hurting, if you know what mean. Yeah. 10:55 - Kevin Kopp I think we can take it back, and I'll have some weather. It's out directly early next week or by the end of week at a minimum so that we can get this all scored by. 11:08 - PIACENTINI, Jim (Siemens Healthineers) Yeah, I appreciate that. And I did pass along that line card that you sent, Raleigh. Thank you so much. I did pass it on to the folks here and ask them, can we add scope to UTAK so that we gain more leverage both sides? We can gain more leverage and they have more revenue on their side from us and we can, you know, we can leverage something else so that we're not going to drain, be hit up with some increases going forward. Maybe we can just increase your revenue and kind of get some cost reductions or maybe send a team out there if it's possible to see if there's any opportunities for cost out for both sides. What we do with some of our supplies that we just came out, plan we just came out with last year is that Siemens has... It's quite the purchasing power with a lot of suppliers. We have preferred pricing with a lot of packaging suppliers, chemical suppliers, reagent suppliers, whatever. So you benefit from something like that and your other customers benefit. We don't ask for the benefit that you have with other customers. We just ask for the benefit from our side. So you can actually gain that benefit across the board with all of your customers, and you don't even have to relay that message to us of what that is. It's just something we look for, a cost reduction from you. Does that sound like something you'd be interested in? 12:46 - Kevin Kopp Kevin, I know that's more your realm. Yeah, no, I think that does, Jim. think from a packaging perspective, we're kind of in the midst of reviewing that and seeing if there's some opportunities there. I would leave... Chemical Stuff to Nicole. She's more in-depth into those. But, yeah, I do think that that would be very opportunistic. 13:10 - PIACENTINI, Jim (Siemens Healthineers) Now, we have an NDA, so it's not anything secret, I would say. I would send a list of your suppliers over to the group here and ask them, do we use these suppliers? If we do use them, who's our point of contact? Then I would send those point of contacts back, ask them to reach out to the point of contacts and say, what's our preferred pricing? Then relay that message back to UTAK and say, here's our point of contact. Ask your person who you deal with at that supplier to reach out to our point of contact and see if we can benefit from some of these Siemens pricings. Then we all fall under the family tree. And, again, if you're buying things for other customers, you can gain those benefits, too. We don't even need to ask who they are, how much they are. But it's... least you gain those benefits as well. So it's a win-win for everybody, you know. 14:08 - Kevin Kopp I'll kind of relay that information to Nicole and see if she can provide a list of vendors to you. 14:16 - PIACENTINI, Jim (Siemens Healthineers) Okay. And I'm hoping, Kevin, that when you bring this proposal or this gesture back to your team that you also bring up that idea as well, and maybe it'll show a little bit more interest to your team to say, oh, maybe this might work out more ways than one where we add scope and then we add Siemens pricing that would be, you know, it'd be a double one for you, actually, if it works out. 14:43 - Kevin Kopp Makes sense. Does that make sense? Yep. 14:47 - PIACENTINI, Jim (Siemens Healthineers) Yeah, definitely. Good, good. Now, the other thing is, can you send over some of your weather to us here? Because it's 45 degrees and three. He's only here right now. And the poor kids. It's 81 outside, right? Yeah, yeah, thanks. Kevin, you didn't have to share that. It was 90 yesterday. It was hot. Yeah, if your background is live, I can see it. Yeah, that's live. 15:19 - Kevin Kopp I was actually just in Europe a couple, like, last week, actually. And I was actually surprised with how warm it was. I was expecting cooler temperatures, but it was pretty warm. 15:30 - PIACENTINI, Jim (Siemens Healthineers) I mean, not hot, but it was warm. Yeah, it depends on where in Europe you are. know some parts of Germany can be warm and cold. The same with France. But obviously, Turkey, if you go into the Turkey area, really warm. Turkey is their vacation, like ours is to Florida. Yeah. California, should say. Yeah, yeah. I was in, like, southern Italy, mostly. 15:56 - Kevin Kopp Oh, of course, yeah. 15:58 - PIACENTINI, Jim (Siemens Healthineers) You'll get, you'll get. But, um, so my... Family's from Naples. It's not completely south, but it's three-quarters of the way down. It's just above, I want to say, it's, God, I don't know, two hours north of Sicily, but it's below Tuscany in that area. But my family was a hard-working family. They had nothing to do with that. Well, I was there. I was there for a day. 16:32 - Kevin Kopp So, got some pizza, saw Pompeii. was pretty cool. 16:38 - PIACENTINI, Jim (Siemens Healthineers) Is the food not different than what you get over here, right? The food over there is less fattening. It's so much more tasting. It's, yeah, it's, the joke that over here is they try to make everything gluten-free over here. it's practically gluten-free already over there. Yeah, it's definitely, that's right. That's true. For sure. 17:01 - Kevin Kopp I didn't feel as uncomfortable after I ate. I'll say that. And the plate sizing, right, the sizing of the plates is much different. 17:12 - PIACENTINI, Jim (Siemens Healthineers) Yeah, they don't stuff you. You're not walking home with a huge doggy bed. I don't think you're walking home with any doggy bed. But yeah, you're right. The meals are just right. The sizes. Yeah. But I got to get over there, Kevin, because I haven't been there yet. But I know, I can tell you, my family's from the Naples area. Yeah. No, it's great. It's awesome. All right. So we have that plan. You guys will go back to your folks here. I'm going to present it again with my manager and inform them of the plan I just mentioned to you. Again, we're doing this with all of our suppliers. We're not seeing any supplier out here. So we're trying to meet them halfway. We're trying or... We're trying Or actually gain benefits for both sides to gain some of that purchasing power. A lot of these suppliers, they buy more reagents than we do, so it's kind of like they're getting better price than we are, so we're pretty much stuck with their pricing. But for packaging, as you mentioned, Kevin, and things like that, we may have some of that power. We have packaging suppliers all over the world, so it's not something. We may be using the same one you're using, I don't know. Or we may have a packaging supplier out in your area that can give you better pricing. However, I don't know what the validation period would be for something like that, especially if you go across the board with it. But anyway, if you could at least propose that idea, and then we can follow up with something either next week or the week after. Is that feasible? Yeah, beautiful. 18:58 - Raleigh Gallina (UTAK Laboratories) Yeah, and again too, Jim. Like, really appreciate the partnership, and, you know, you even mentioned not singling out anyone. Even that window is important to us as well. And, hey, look, dire economic times call for creative strategies, and so thank you for also sharing those with us. And, yeah, we'll put some time on the calendar for the coming weeks. Sure, I appreciate that, Raleigh. 19:25 - PIACENTINI, Jim (Siemens Healthineers) And I believe I mentioned this to you, I mentioned to my other suppliers, that we want to start some type of business review with our suppliers. Would it be quarterly, once a year, twice a year, four times a year, whatever. We'd like to start up a business review with UTAK. We keep it with our strategic suppliers. And then, you know, we'll have stakeholders on the outside, stakeholders on outside. Because the spend isn't really that big here. It could grow. We don't know yet. But the spend right now isn't that big. It's probably a small business review. Maybe an hour, an hour and a half. We just get together and see how are things going, how are the orders going, what else can we do for you, what can you do for us, things like that. So I will start that up in the beginning of the year, maybe with UTAK. It wouldn't be an on-site thing. If you guys were 11 million, I'd be out there in December. But we could do it virtually, unless you guys feel you can come out here to New York or Massachusetts. But I mean, for the spend, it's probably not a wise idea, but who knows what happens in the future. It's true. 20:39 - Kevin Kopp And maybe we should meet in Cape Cod, too. I like that idea. 20:43 - Raleigh Gallina (UTAK Laboratories) you'd like to meet in Cape Cod, and I would like to meet out in Coronado by the sea, too. 20:47 - PIACENTINI, Jim (Siemens Healthineers) I'm in Coronado by the bay. 20:53 - Raleigh Gallina (UTAK Laboratories) Okay, we'll do two quarterly, two reviews then, so we can hit both those targets. 20:58 - PIACENTINI, Jim (Siemens Healthineers) Okay, great. That would be awesome. And I'll let you know. And again, it'll be a small one. probably be like maybe a handful of stakeholders on each side. You start throwing questions at each other. I don't see any issues with UTAK at all. Now, I've seen emails going back and forth about some documentation with Robin and your team. don't know if you guys copied on it at all, but there's some documentation that she's looking for. But other than that, I don't see any problems with UTAK at all. mean, your on-time deliveries seem to be fine. I don't get any messages or anything from our quality people about, you know, scars or anything like that. So, unless I'm missing something. Is our quality person with you? it James Hanrahan? 21:46 - Raleigh Gallina (UTAK Laboratories) Our quality person? Our quality person? 21:49 - PIACENTINI, Jim (Siemens Healthineers) person. Do you have an SQE that normally works with UTAK? Maybe it is James and he's not. I'll find out. I'll find out on the site. I'm not really sure. Okay, I'll find out on the site. But let's see if we can have something in the next week or the week after, and see what your management team comes back with. Perfect. 22:15 - Raleigh Gallina (UTAK Laboratories) Yeah, sounds great. Okay, great. 22:18 - PIACENTINI, Jim (Siemens Healthineers) Anything else? No, I think we're good. 22:22 - Kevin Kopp Okay, great. 22:23 - PIACENTINI, Jim (Siemens Healthineers) And it's just something else. have a great rest of the day and look forward to the next meeting. You too, Jim. Take care. Okay, take care. Bye-bye. Bye-bye.