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Qiagen Reports 26 Percent Q3 Revenue Growth; Ups Full-Year Guidance

This story has been updated from a previous version to include comments made by Qiagen CEO Thierry Bernard in an earnings call.

NEW YORK – Qiagen reported on Tuesday afternoon that its third quarter revenues increased 26 percent year over year, prompting the firm to adjust its full-year financial outlook upwards.

Qiagen released its Q3 financial results a little more than a week ahead of the originally planned date of Nov. 4.

For the three months ended Sept. 30, it reported net sales of $483.8 million compared to $382.7 million a year ago, slightly above the $481.3 million it reported preliminarily earlier this month, and well above analysts' average estimate of $462.8 million. On an adjusted basis and at constant exchange rates (CER), year-over-year revenue growth was also 26 percent.

As Qiagen noted when it released preliminary results, growth was driven by COVID-19 testing products and improving customer demand for other products.

"We [saw] an ongoing high level of revenues in the third quarter of 2020 from product groups used in COVID-19 testing," Qiagen CEO Thierry Bernard said in a conference call on Wednesday recapping the company's financial results. "These sales reached $164 million and grew more than 300 percent from the third quarter of 2019. Sales in the rest of the portfolio declined 8 percent [at] CER to $320 million from the same period last year; however, this was an improvement sequentially from the second quarter of 2020."

"We are therefore moving into the final quarter of 2020 with an increasing level of confidence supported … by strong demand for COVID-19 products; improving trends in our business; and the benefits of new product launches," Bernard added.

By product category, consumables and related revenues grew 23 percent on a reported basis to $420 million while instrument revenues jumped 57 percent to $64 million. By customer class, molecular diagnostics revenue grew 29 percent to $237 million while life sciences revenue grew 24 percent to $247 million. Within the life sciences customer class, academia/applied testing grew 31 percent to $160 million while pharma grew 13 percent to $87 million.

Molecular diagnostics growth was driven by sales of sample technology instruments and consumables, supported by gains for the QiaStat-Dx and NeuMoDx diagnostic testing platforms. QuantiFeron-TB latent tuberculosis testing fell 20 percent at CER to $53 million, although it was an improvement on the 46 percent decline at CER in the second quarter.

Qiagen also said that universal next-generation sequencing solution sales were higher in the quarter, while HPV test sales and precision medicine products lagged, including a 25 percent CER drop in companion diagnostic codevelopment revenues.

Life sciences growth was driven by higher sales of sample technology products and supported by gains in OEM component sales to other diagnostic suppliers.

"We have added to our COVID-19 portfolio with the recent launch of QIAprep&amp, which integrates ultra-fast sample preparation and PCR detection in one single kit, and plan to soon launch a rapid COVID-19 antigen test developed with Ellume," Bernard said in a statement.

"As we now focus on five pillars of growth, we recently acquired the remaining 80.1 percent stake in NeuMoDx to strengthen our global position in automated molecular testing, with first incremental sales from this acquisition expected in the fourth quarter of 2020," Bernard added. "Our QiAcuity digital PCR system is also enjoying strong customer interest following the first placements in September 2020. These results show that while Qiagen is increasingly relevant for COVID-19 testing, we are not dependent on COVID-19."

Qiagen reported Q3 net income of $16.9 million, or $.07 per share, compared to a year-ago net loss of $160.6 million, or $.71 per share. On an adjusted basis, Qiagen reported EPS of $.58, beating analysts' average estimate of $.56.

Qiagen's Q3 R&D expenses fell 14 percent to $36.1 million from $41.8 million, while its SG&A costs rose 3 percent to $130.2 million from $125.8 million.

The company finished the quarter with $465.4 million in cash and cash equivalents, $3.9 million in restricted cash, and $36.6 million in short-term investments.

Based on revenue growth in the first nine months of the year and the outlook for continued fourth quarter growth, Qiagen adjusted its full-year sales growth forecast to approximately 20 percent at CER from a prior outlook of 15 percent to 18 percent. It also expects adjusted full-year EPS of $2.07 to $2.09 compared to the prior outlook of $2.00.

In Q4, Qiagen expects net sales growth of 24 percent to 27 percent at CER and adjusted EPS of $.58 to $.60.

The outlook for adjusted EPS for Q4 and full-year 2020 excludes a pre-tax capital gain from Qiagen's minority investment in ArcherDX, which was acquired by Invitae in October. Based on the current share price of Invitae, Qiagen said it estimates the pre-tax capital gain could be approximately $110.8 million, or about $0.35 per share on an after-tax basis. Qiagen also has the right to receive up to 2.1 million additional Invitae shares upon achievement of certain future milestones.

In late afternoon trading on the New York Stock Exchange, shares of Qiagen were up just over 1 percent at $49.81.