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Qiagen Q1 Revenues Grow 2 Percent

This article has been updated from a previous version to include comments made during Qiagen's earnings call.

NEW YORK (GenomeWeb) – Qiagen reported after the close of the market on Monday that its first quarter revenues grew nearly 2 percent year over year as the firm fell short of analysts' topline estimates but beat expectations on the bottom line.

For the three months ended March 31, Qiagen posted revenues of $348.7 million, below the Wall Street estimate of $350.7 million. On an adjusted basis and at constant exchange rates (CER), Q1 revenues grew 6 percent year over year.

The company noted that about one percentage point of total CER sales growth came from the launch of its QiaStat-Dx molecular diagnostics system with the rest of the business contributing about 5 percentage points of growth.

The company said this growth absorbed about one percentage point of decline from the combined impact of divesting its veterinary assay portfolio in April 2018 and a decline in third-party instrument service contracts that began in 2018 when the company shifted resources to support new product launches.

"We were pleased with the placements of instruments, particularly under reagent rental contracts, where sales are recognized through consumables purchases over a multi-year period," Qiagen CFO Roland Sackers said in a Tuesday morning conference call recapping Qiagen's earnings.

"However, the focus on reagent rental placements, along with the reduction in third-party instrument service contracts resulted in only a 2 percent CER increase in instrument sales to $36 million in this first quarter of 2019," Sackers said. "Excluding the reduction in third-party service contracts, instrument sales were up 8 percent at CER."

By product category, consumables and related revenues, accounting for 90 percent of total revenues, grew 7 percent at CER to approximately $313 million. Instrument revenues, meanwhile, grew 2 percent at CER to $36 million.

As of Q1 Qiagen changed the way it presents its customer class sales results to match the internal alignment of its business teams. The company is now providing results for two customer classes: molecular diagnostics (human healthcare including precision medicine and companion diagnostics) and life sciences (broken down into academia/applied testing and pharma).

In Q1, molecular diagnostics (48 percent of total revenues) grew 10 percent at CER to $168 million, while life sciences (52 percent of total revenues) grew about 3 percent at CER to $181 million. Within life sciences, academia/applied testing grew 2 percent at CER to $110 million, while pharma grew 4 percent at CER to $71 million.

Qiagen's Q1 net income fell to $29.5 million, or $.13 per share, from $32.3 million, or $.14 per share, a year ago. Adjusted EPS was $.27, edging analysts' average estimate of $.26.

Qiagen's R&D spending grew 3 percent to $40.8 million from $39.5 million a year ago, while its SG&A spending rose 4 percent to $133.6 million from $128.1 million.

The company finished the quarter with $552.9 million in cash and cash equivalents and $227.5 million in short-term investments.

Separately, Qiagen also announced plans to launch a new $100 million share repurchase program after completing its current $200 million share repurchase commitment (announced in January 2018), of which approximately $50 million remains.

Qiagen reaffirmed its full-year 2019 outlook of net sales growth of 7 percent to 8 percent at CER and adjusted EPS of $1.45 to $1.47. For the second quarter of 2019, the company expects net sales growth of about 5 percent at CER and adjusted EPS of $.33 to $.34.

In Tuesday late morning trading on the New York Stock Exchange, Qiagen's shares were down approximately 4 percent to $37.34.