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Qiagen Q2 Revenues Rise 1 Percent

NEW YORK – Qiagen reported after the close of the market on Tuesday that its second quarter revenues increased 1 percent year over year, coming in just under analysts' consensus estimate.

For the three months ended June 30, Qiagen tallied revenues of $381.6 million compared to $377.2 million a year ago. On average, analysts had expected revenues of $382.2 million.

Reported revenues were unchanged from preliminary financial results released by the company last week. At constant currency exchange rates (CER), Q2 revenues increased 5 percent year over year.

In Q2, instruments (about 12 percent of total sales) rose 9 percent at CER to $47 million, while consumables and related revenues (88 percent of total sales) rose 4 percent at CER to $335 million.

By customer class, Molecular Diagnostics grew 5 percent at CER to $188 million, with sales of the company's QuantiFeron-TB tests growing 6 percent at CER. QuantiFeron-TB growth was below the company's annual target of at least 15 percent CER growth due to a very strong year-ago Q2 amid the transition to the fourth-generation version of the test, but was in line with previously provided guidance for the quarter.

Also, within Molecular Diagnostics, companion diagnostic co-development project revenues declined 21 percent at CER in Q2 to $11 million, offset by solid QiaSymphony placements and double-digit CER growth in consumables.

Meanwhile, Life Sciences grew 5 percent to $194 million, including 4 percent growth in Pharma and 5 percent growth in Academia/Applied Testing, all at CER.

In conjunction with last week's earnings pre-announcement, Qiagen also noted that it plans to restructure its next-generation sequencing partnership with Maccura Biotechnology in China, as uptake of its NGS products have been slower than expected. As a result, Qiagen adjusted its expected full-year guidance downward to net sales growth of 5 percent to 6 percent at CER from a previously stated range of 7 percent to 8 percent growth, and to EPS of approximately $1.42 to $1.44 at CER from a previous range of $1.45 to $1.47.

Elaborating on the China JV restructuring in an earnings call on Wednesday, Qiagen CEO Peer Schatz said that sales from the joint venture in China were expected to be about $30 million and weighted to the second half of the year.

"These involved primarily revenues for the service provided by Qiagen to develop in vitro diagnostic assays on behalf of the joint venture, as well as the sale of GeneReader NGS systems and other consumables and products to the joint venture at transfer prices," Schatz said.

"It is important to note that our universal NGS portfolio in this country is not run through the joint venture, but has always been commercialized directly by Qiagen," he added. "These universal NGS products are independent from GeneReader and have been performing very well in China and also on a global basis. So, we continue to believe in the promise of NGS technologies in China, and we will now consider various new options to participate in further growth opportunities there."

Schatz noted that the company expects overall NGS-related sales of about $180 million at CER in 2019, compared to a prior target of $190 million. These expectations now reflect the changes in China, and, when compared to more than $140 million in NGS sales in 2018, represent a growth rate of about 30 percent.

In line with the pre-announcement, Qiagen's Q2 net income was $44.7 million, or $.19 per share, compared to $36.8 million, or $.16 per share, in the year-ago period. On an adjusted basis, Q2 EPS was $.33, or $.34 at CER, in line with the company's previously stated outlook and slightly ahead of the Wall Street expectation for EPS of $.32.

Qiagen's Q2 R&D expenses rose 3 percent to $40.8 million from $39.6 million, while its SG&A expenses shrunk about 10 percent to $136.2 million from $150.8 million.

Qiagen finished the quarter with $624.6 million in cash and cash equivalents and $161.3 million in short-term investments.

For the third quarter of 2019, Qiagen expects net sales to grow 4 percent to 5 percent at CER and adjusted EPS of $.35 to $.36.

In Wednesday morning trade on the New York Stock Exchange, shares of Qiagen were unchanged from the open at $38.41.