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Natural Disasters, Political Unrest Leave Qiagen's Q1 Revenues Flat

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Natural disasters in Japan, Australia, and New Zealand and political unrest in Egypt contributed to essentially flat revenues for the first quarter, Qiagen said after the close of the market on Wednesday.

For the three months ended March 31, the molecular diagnostics and sample prep technologies firm reported revenues of $264.3 million, compared to $264.4 million a year ago, and short of Wall Street estimates of $270.5 million.

In a statement, the company blamed the results partly on the earthquake and tsunami in Japan, flooding in Australia/New Zealand, and political unrest in Egypt, which negatively impacted product delivery and reduced net sales by about 2 percentage points.

In the statement, Qiagen CEO Peer Schatz said that despite the soft Q1 results, the firm remains on track to meet full-year growth targets. "As we position ourselves for sequentially increasing growth, we are making broad progress to expand our business," he said.

Roland Sackers, the company's CFO, added, "Our first-quarter results are not indicative of the full-year performance we are targeting. We expect to deliver substantially higher growth rates as the year progresses, with the strongest results anticipated in the second half of 2011 as we expect to benefit from the rollout of QIAsymphony RGQ, geographic expansion, and predictions for improving market conditions."

Sales were soft across all four customer classes, and Qiagen said that strong instrument sales and "solid demand" for HPV screening tests in the US during the year-ago period made for a tough comparison. In particular, demand for HPV tests deteriorated after the first quarter of 2010 as doctor visits by patients fell off due to a weak economy, Qiagen said.

Consumable and related revenues, which comprise 87 percent of total revenues, retreated 1 percent during the quarter, while instrument revenues, which make up the balance of company revenues, dropped 9 percent from a year ago, coming off a growth rate of 37 percent year over year in the Q1 2010 period.

Qiagen's molecular diagnostics business saw a 2 percent decline as gains in personalized healthcare — which grew on the expansion of companion diagnostics in Europe and co-development deals with pharma — were offset by softness in profiling and prevention.

Prevention was hurt by soft HPV sales in the US, though the firm said that trends are starting to turn positive.

Its applied testing revenues fell 13 percent year over year, while pharma revenues rose 2 percent, benefitting from sustained demand for advanced molecular technologies supporting R&D work for new medicines. Academia revenues slid 2 percent.

By geography, the Americas ticked up 1 percent year over year, while Europe, the Middle East, and Africa dipped 1 percent. Asia-Pacific, including Japan, fell 10 percent.

The firm's R&D costs for the quarter came in at $32.7 million, up 3 percent from $31.6 million a year ago, while its SG&A costs climbed 4 percent to $94.8 million from $90.8.

Qiagen's profit for the first quarter was $28 million, or $.12 per share, down 18 percent from $33 million, or $.14 per share, a year ago. On an adjusted basis, EPS was $.21, compared to $.20 a year ago, matching Wall Street expectations.

Qiagen had $776.6 million in cash and cash equivalents, and $162.3 million in short-term investments as of the end of the quarter.

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