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Qiagen Projects Q4, 2015 Shortfalls; Reports Acquisition of Mo Bio Labs

This article has been updated with comments from Wells Fargo and corrected to acurately reflect the expected Q4 and FY 2015 EPS figures.

NEW YORK (GenomeWeb) – Qiagen today reported preliminary earnings for the fourth quarter and fiscal year 2015 that fell short of management's outlook and analyst expectations. The firm also reported a previously undisclosed acquisition of sample prep firm Mo Bio Laboratories.

The firm said it expects a 3 percent increase in FY 2015 adjusted net sales at constant exchange rates but a decrease of 5 percent at actual rates to approximately $1.28 billion, largely due to foreign exchange headwinds. The firm expects adjusted diluted EPS to be approximately $1.13 to $1.14 for full-year 2015, compared to $1.00 in the prior year but short of its outlook of $1.16 and short of analyst estimates.

Qiagen further expects adjusted net sales for Q4 to have risen 3 percent at constant exchange rates, short of its projection of 4 percent. At actual rates they declined approximately 5 percent to $348 million due to foreign exchange headwinds. 

It expects Q4 adjusted diluted EPS to be $0.33 to $0.34 at CER, an increase from $0.25 in Q4 2014, but short of its previously communicated outlook for adjusted diluted EPS of $0.35 CER. The company also said it expects adjusted diluted EPS results at actual rates of approximately $0.31 to $0.32, reflecting the impact of adverse currency movements.

The company also disclosed that it acquired Carlsbad, California-based Mo Bio Labs in the fourth quarter of 2015, but said the deal had a "negligible" contribution to results. Mo Bio is developing sample prep technologies for microbiology.

"Our anticipated results for the fourth quarter of 2015 are disappointing given the shortfall against our expectations for more improvements in adjusted net sales and adjusted earnings per share compared to the same period in 2014," Qiagen CEO Peer Schatz said in a statement. "This performance was hampered by factors that included volatility in the timing of revenues from the growing portfolio of companion diagnostic partnerships as well as lower revenues from instruments, even though we exceeded our target for new placements of QIAsymphony automation systems."

Investors reacted negatively to the news, sending shares of Qiagen down 10 percent to $22.98 in morning trading on the Nasdaq.

In a research note, Mizuho Securities analyst Eric Criscuolo maintained a Neutral rating but said missing its outlook "doesn't help our confidence in the mediocre 2016 guide."

The firm announced its outlook for 2016, saying it expects adjusted net sales to rise approximately 6 percent. It said it expects foreign exchange headwinds of approximately 2 percent for the full-year adjusted diluted net sales and EPS.

Adjusted diluted earnings per share for the full-year 2016 at CER are expected to rise approximately in line with sales; foreign exchange headwinds are expected to have an adverse impact of approximately 2 percent for the full-year 2016 on results for adjusted net sales and adjusted diluted EPS at actual rates, the firm said.

Evercore ISI analyst Vijay Kumar said he wasn't entirely surprised that Qiagen had missed its earnings estimates for Q4 and FY 2015, and noted the company's 2016 implied guidance of approximately $1.10 "should be a modest disappointment." However, he also added that the key for the company in 2016 will be execution, as well as "initial uptake of the GeneReader NGS system in the clinic, which if successful, could prove to be a multi-year revenue driver for the company beginning in 2017."

In a note to investors this afternoon, Wells Fargo analyst Tim Evans said the negative news from Qiagen "unfortunately comes as no surprise." The bank reduced its 2015 EPS estimate for Qiagen to $1.06 from $1.07, and its 2016 EPS estimates to $1.10 from $1.20, but maintained its Market Perform rating.

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