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Qiagen Reports 3 Percent Increase in Q1 Revenues

This article has been updated from a previous version to add comments from Qiagen's Q1 earnings call.

NEW YORK (GenomeWeb) – Qiagen reported after the close of the market on Tuesday that its first quarter revenues rose 3 percent, bolstered by increases in sales from every business except instruments.

For the three months ended March 31, the company reported revenues of $307.7 million, up from $298.4 million a year ago, and beating the average Wall Street estimate of $306.9 million.

Qiagen said its consumables sales rose 7 percent at constant exchange rates (CER) for adjusted Q1 revenues of $274.0 million. Consumables made up 89 percent of the company's overall revenues for the quarter. Instrument sales fell 3 percent for adjusted revenues of $35.0 million, making up 11 percent of total sales.

Applied testing rose 21 percent at CER for adjusted revenues of $29.0 million, or 9 percent of overall sales. Pharmaceutical sales rose 8 percent for adjusted revenues of $64.0 million, or 21 percent of total sales, and academia sales rose 3 percent for adjusted revenues of $74.0 million, or 24 percent of total revenues.

The firm's molecular diagnostics sales rose 3 percent at CER for adjusted revenues of $142.0 million, and made up 46 percent of total sales. This includes companion diagnostic codevelopment revenues which rose 11 percent for adjusted revenues of $6.0 million. Within MDx, human papillomavirus test sales in the US fell 51 percent for adjusted revenues of $4.0 million, while MDx sales excluding US HPV sales rose 6 percent for adjusted revenues of $138.0 million. US HPV tests made up about 1 percent of total revenues and MDx excluding US HPV testing made up 45 percent.

"Qiagen delivered a good start into 2017, and this has reaffirmed our confidence in achieving full-year goals for strong sales growth and a double-digit increase in adjusted earnings per share," Qiagen CEO Peer Schatz said in a statement. "The progress we are making in 2017 is providing further support for Qiagen's ambitions for faster sales growth, double-digit earnings gains, and increased cash flows through 2020."

Expanding on this during the conmpany's earnings call on Wednesday, Schatz said that Qiagen is "capturing growth opportunities across our sample-to-insight portfolio, and we're moving ahead on our strategy to strengthen Qiagen as a differentiated leader in supporting customers along the continuum from basic research to clinical healthcare."

Among the company's key products, he added, QuantiFeron-TB grew at a double-digit CER rate and is on track to deliver 25 percent annual growth. Placements of the QIAsymphony system were "very robust," Schatz said, and the company is positioned to reach more than 2,000 cumulative placements by the end of the year. He also highlighted Qiagen's launch of the first US Food and Drug Administration-cleared assay for variants in the JAK2 gene to help diagnose a type of leukemia, and the company's recent acquisition of OmicSoft.

Earlier this week Qiagen announced that it has formed a joint venture with Chinese in vitro diagnostics firm Maccura Biotechnology to commercialize Qiagen's GeneReader next-generation sequencing system in China and develop gene panels for the Chinese market. Responding to a question during today's earnings call about this venture, Schatz outlined Qiagen's strategy around this deal.

"We clearly see China as an extremely important market for us," Schatz said. "It's the second largest IVD market in the world and one that is facing a lot of changes. It's quite clear that there is a significant number of benefits to be a local company in the Chinese IVD market, particularly in terms of their ability to interact with regulatory agencies, the speed of regulatory approvals, and the ability also to participate in tenders."

Schatz noted that Maccura is "an extremely aggressive, well-managed, and successful company that ... shares many of the values that we as a company have. The ability to pool their capabilities with ours we think will significantly accelerate the entry of GeneReader into the Chinese market, and … have a significant benefit for us both in top line and bottom line contribution."

Schatz also noted that Qiagen does have its own operations in China comprising about 500 employees, but added that "for the GeneReader marketing, we are convinced that this is the better route forward."

Qiagen's Q1 net income rose to $17.7 million, or $.08 per share, from $15.7 million, or $.07 per share in Q1 2016. On an adjusted basis, Qiagen reported EPS of $.20, narrowly missing the analysts' average estimate of $.21.

Qiagen's Q1 R&D costs fell 5 percent to $37.8 million from $39.6 million in the year-ago quarter. Its SG&A expenses rose 5 percent to $124.5 million from $118.9 million in Q1 2016.

The firm ended the quarter with $245.4 million in cash and cash equivalents, and $27.9 million in short-term investments.

For full-year 2017, Qiagen reaffirmed its guidance for adjusted net sales growth of approximately 6 percent to 7 percent at CER. Adjusted EPS of $1.25 to $1.27 also was unchanged. "This is based on about 5 to 6 percentage points of organic growth, and about 1 percentage point of combined sales of the Exiqon acquisition, which will become organic as of the second quarter of this year, and the Omicsoft acquisition, which was completed in January," Qiagen CFO Roland Sackers said during the earnings call.

For the second quarter, adjusted net sales are expected to rise approximately 5 percent to 6 percent at CER, and adjusted EPS is expected to be approximately between $.28 and $.29. Analysts currently expect full-year 2017 EPS of $1.22 and Q2 EPS of $.29.