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Qiagen Q1 Revenues Drop 6 Percent on Currency Effects

This article has been updated from a previous version to include comments made by Qiagen executives during a conference call.

NEW YORK (GenomeWeb) – Qiagen said after the close of the market on Tuesday that its first quarter revenues fell 6 percent year over year largely due to negative currency effects.

For the three months ended March 31, Qiagen posted revenues of $298.4 million compared to $317.1 million in Q1 2014, and short of the Wall Street estimate of $304.6 million. On an adjusted basis and at constant exchange rates (CER), revenues increased 2 percent year over year, led by consumables and instrument revenues across all customer classes.

Currency movements had an adverse impact of approximately eight percentage points in the quarter, Qiagen said. About 2 percent of total CER growth came from the company's acquisition of Enzymatics and its next-generation sequencing portfolio in December and Biobase's bioinformatics business in April. Meantime, sales in the rest of Qiagen's business were essentially flat.

Qiagen noted that excluding the impact of lower human papillomavirus test sales in the US — which created six percentage points of headwind on growth — adjusted net sales rose 8 percent in Q1.

"Our results continue to be impacted by the sharp decline in sales of HPV products in the US, and in this quarter, they were down 54 percent and created approximately six percentage points of headwind. This was in line with expectations," Qiagen CEO Peer Schatz said in a conference call on Wednesday recapping the company's Q1 earnings.

Schatz further noted that HPV sales now constitute about 4 percent of total sales at the company after steadily declining over the past few years. "As other offerings enter the market, we have been successful at maintaining our leadership position in HPV testing … at the substantially reduced price levels induced by these new entrants," Schatz added. "What is important here is that we see 2015 as the final year of significant headwinds, because most of the contracts now reflect the new pricing, and this is being annualized. The revenue contributions are also now down to 4 percent, so it is reaching a level where even a significant change would not have a material impact on the overall company."

Consumables and related revenues, representing about 88 percent of total sales, grew 2 percent in the quarter, while instrumentation, about 12 percent of total sales, grew 9 percent.

By customer class, molecular diagnostics, responsible for about 48 percent of sales, inched up 1 percent, delivering 14 percent growth from the core portfolio while absorbing a 54 percent decrease in US HPV test sales. Profiling consumables for infectious disease testing grew at a double-digit pace, supported by an increasing installed base of QIAsymphony automation platforms and expanding test menu; while personalized healthcare delivered a strong year-over-year performance, led by higher revenue contributions from companion diagnostics co-development projects, Qiagen noted.

In particular, Schatz noted during the call that Qiagen is well-positioned in the emerging liquid biopsy market. "Three main types of targets are found in blood: free circulating nucleic acids, exosomes, and circulating tumor cells," he said. "With solutions addressing all three of these targets, which also involve the use of our … automation platforms, we have built a substantial market share lead in this fast-growing area, and this obviously also builds on our overall leading market share in sample technologies."

Meantime, applied testing sales grew 7 percent, pharma grew 2 percent, and academia grew 3 percent year over year.

Qiagen's net income for Q1 was $19.5 million, or $.08 per share, compared to $23.3 million, or $.10 per share, in the year-ago period. On an adjusted basis, EPS was $.22, essentially the same as Q1 2014 and in line with analysts' consensus estimate.

Qiagen's R&D spending fell 5 percent to $38.3 million from $40.3 million in the same quarter a year ago, while its SG&A spending dropped 3 percent to $114.8 million from $118.2 million in Q4 2014.

For the second quarter of 2015, Qiagen expects adjusted net sales to rise approximately 4 percent at CER, which includes four to five percentage points of headwind from lower US sales of HPV tests compared to the year-ago period. The company expects Q2 adjusted EPS of approximately $.26 to $.27 at CER. The company expects currency movements to have an adverse impact of approximately 10 percent on reported sales growth in the quarter and about $.02 on adjusted EPS.

For full-year 2015, adjusted net sales are expected to rise about 4 percent at CER, with growth of 7 to 8 percent in the core portfolio — including about $20 million in sales contributions from the Enzymatics acquisition — exceeding the adverse impact of approximately 3 to 4 percent from lower US HPV sales. Adjusted EPS are expected to be approximately $1.16 to $1.18 at CER compared to $1.00 in 2014, with currency effects having an adverse impact on full-year adjusted sales and EPS.