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Acquisitions Boost Qiagen's Q4 Revenues but Hurt Profits

This article has been updated to included comments from a conference call and a stock quote.
 
NEW YORK (GenomeWeb News) – Qiagen today reported revenues of $210.2 million for the fourth quarter ended Dec. 31, 2007, a 67 percent increase over revenues of $125.9 million in the fourth quarter of 2006.
 
Qiagen’s top-line growth was aided by its $1.6 billion acquisition of Digene at the end of July. However, that acquisition, along with its $34 million purchase of eGene earlier in 2007, cut the firm’s profit for both the fourth quarter and the full year.
 
Qiagen posted a profit of $15 million, or $.07 per share, compared with a profit of $19.4 million, or $.13 per share, in Q4 2006. While the firm took charges related to acquisitions in both years, the charges in the fourth quarter of 2007 were much larger — $11.5 million versus roughly $3 million in the comparable period a year ago.
 
Qiagen’s R&D costs more than doubled year over year to $22.8 million from $11 million, while its SG&A expenses climbed 80 percent to $79.4 million from $44.1 million.
 
For full-year 2007, Qiagen had revenues of $649.8 million, a 40 percent increase over revenues of $465.8 million in 2006. While Qiagen did not break out Digene’s contribution to revenues for the year, CEO Peer Schatz said in a statement that organic revenues were 12 percent for the year, while acquisitions added 22 percent of the increase.
 
The firm’s net income dropped 29 percent to $50.1 million, or $.28 per share, from $70.5 million, or $.46 per share. For full-year 2007, Qiagen took acquisition- and integration-related charges of $48.8 million compared to similar charges of around $12.3 million in 2006. Excluding the charges, Qiagen’s EPS for the year would have been $.63 versus $.56 in 2006.
 
Qiagen’s R&D expenses rose 56 percent to $64.9 million from $41.6 million in 2006, while SG&A costs increased 43.8 percent to $236.6 million from $164.5 million.
 
Schatz noted that the firm intends to further expand its sample and assay technology portfolio in the applied testing and molecular diagnostics markets. “We are significantly investing in clinical trials for a number of molecular diagnostic products with the goal of adding more regulated products to our portfolio,'' he said.
 
Qiagen recently introduced its QIAsymphonySP, a modular platform that integrates entire workflows in molecular processing. The platform, which will start shiipiong to customers during the second quarter, marks a major expansion of the firm's instrumentation offerings.
 
“It is a very important flagship product for our medium throughput strategy,” Schatz said during a conference call earlier today. He said the QIAsymphony is the largest development program ever undertaken by Qiagen.
 
Schatz also noted that an add-on module would launch in about a year, but the firm is not disclosing the menu for that module yet. However, Schatz said that Qiagen has 120 PCR-based assays on the market already, and “this is most likely going to be one of the components of the platform.” 
 
In addition, he said that human papillomavirus testing is in the “sweet spot” for the QIAsymphony. The firm currently sells the HPV molecular diagnostic assay it acquired along with Digene and is in the process of developing next-generation versions of that test, as well as a genotyping test for HPV.
 
Qiagen finished the year with $347.3 million in cash and cash equivalents.
 
The firm expects 2008 revenue growth of between $875 million and $905 million.
 
In Tuesday trade on the Nasdaq, shares of Qiagen closed up 2.3 percent at $21.40.

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