This story has been updated from a previous version to include comments made by Qiagen executives during its earnings call.
NEW YORK (GenomeWeb) – Qiagen said after the close of the market on Monday that its fourth quarter revenues grew 2 percent year over year, falling short of the analysts' average estimate.
Qiagen also said this week that Genomics England has selected the Qiagen Clinical Insights portfolio on behalf of th National Health Service in England to support the UK's program to sequence, analyze, and interpret 5 million genomes over the next five years.
In addition, Qiagen CEO Peer Schatz noted during a conference call to discuss the company's Q4 and full-year 2018 earnings that it received CE marking for hepatitis B and hepatitis C assays, as well as for claim extensions to use swabs for its already CE-marked chlamydia/gonorrhea test on the Qiagen/NeuMoDx fully integrated PCR-based molecular diagnostic system.
For the three months ended Dec. 31, 2018 Qiagen posted revenues of $403.2 million compared to $396.9 million a year ago. On average, analysts had expected Q4 revenues of $408.6 million.
On an adjusted basis and at constant exchange rates (CER), Q4 revenues grew 5 percent year over year.
"We acknowledge that there were moving parts, particularly on the revenue line in the fourth quarter as we shed sizeable businesses over the last 12 months and made many decisions to better focus while lifting one of the broadest portfolios of disruptive next-generation platforms into the molecular diagnostics market," Schatz said during the earnings call.
Providing additional detail, Qiagen CFO Roland Sackers noted during the call that sales were softer due to the reduction of low-margin, third-party instrument service contracts during the quarter.
"Qiagen has offered services to support customers with instruments from other companies," Sackers said. "This has enabled us to achieve critical mass in our global service capacity, but these revenues had relatively low margins. We have taken on a number of these service agreements over the last three years. As we move into a period of new instrument launches, we decided to ramp down many of these agreements to ensure we have available service capacity for our own instruments."
Sales of consumables and related products accounted for about 85 percent of total sales and grew 4 percent at CER to approximately $344 million in Q4. Instrument sales, meanwhile, grew 5 percent year over year at CER to about $59 million.
By customer class, molecular diagnostics, responsible for just under half of the company's sales, grew 5 percent at CER to $194 million. Meanwhile, applied testing sales grew 1 percent at CER to $39 million; sales to pharma customers jumped 5 percent at CER to $74 million; and sales to academic customers grew 6 percent at CER to $95 million.
Qiagen's Q4 R&D spending was essentially flat year over year at $40.7 million, while its SG&A expenses dropped 24 percent to $126.4 million from $166.9 million.
Qiagen's Q4 net income was $61.0 million, or $.26 per share, compared to a net loss of $39.7 million, or a loss per share of $.18 in the year-ago quarter. On an adjusted basis, net income was $.40 per share, in line with the consensus Wall Street estimate.
For full-year 2018, Qiagen recorded net sales of $1.50 billion, up 6 percent as reported and at CER from $1.42 billion in 2017 and falling just shy of analysts' average estimate of $1.51 billion. Consumables and related revenues, about 88 percent of total revenues for the year, grew 6 percent at CER to $1.32 billion, while instrument sales also grew about 6 percent at CER to $186 million.
By customer class in 2018, molecular diagnostics grew 8 percent at CER to $732 million; applied testing was flat at $137 million; pharma sales rose 5 percent at CER to $291 million; and academia sales grew 5 percent at CER to $342 million.
Qiagen's 2018 R&D spending grew 5 percent to $161.9 million from $154.1 million, while its SG&A expenses dropped 7 percent to $533.5 million from $575.7 million.
In 2018, Qiagen recorded a net profit of $190.4 million, or $.82 per share, compared to a net profit of $40.4 million, or $.17 per share in 2017. On an adjusted basis, EPS was $1.34 in 2018, in line with Wall Street estimates.
Qiagen finished 2018 with $1.16 billion in cash and cash equivalents, and $234.6 million in short-term investments.
For full-year 2019, Qiagen said it expects net sales growth of 7 percent to 8 percent at CER on solid expansion of its portfolio, supported by about $30 million in contributions from QiaStat-Dx, acquired in April 2018. Qiagen also expects adjusted EPS of $1.45 to $1.47 at CER, which takes into account investments to support the portfolio, in particular $.03 CER of dilution for digital PCR platforms developed with technology acquired earlier this year from Formulatrix. Analysts on average are expecting adjusted EPS of $1.47 for 2019.
For Q1 2019, net sales are expected to grow between 5 percent and 6 percent at CER, while adjusted EPS is expected to be $.26 to $.27 at CER. Analysts are expecting Q1 adjusted EPS of $.27.