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Qiagen Reports 8 Percent Q4 Revenue Growth; Will Acquire Stat-Dx for up To $191M

This article has been updated from a previous version to include comments made by Qiagen CEO Peer Schatz during a conference call recapping the company's earnings.

NEW YORK (GenomeWeb) – Qiagen said after the close of the market on Wednesday that its fourth quarter revenues grew 8 percent year over year as the firm beat analysts' consensus estimates on the top and bottom lines.

Separately, Qiagen announced that it has entered into an agreement to acquire Stat-Dx, a Barcelona-based developer of multiplex infectious disease diagnostics, for up to approximately $191 million. The company also announced a new commitment to return $200 million to shareholders via open-market repurchases.

For the three months ended Dec. 31, Qiagen posted revenues of $396.9 million compared to $366.5 million a year ago. On average, analysts had expected Q4 revenues of $393.3 million.

On an adjusted basis and at constant exchange rates (CER), Q4 revenues grew 5 percent year over year. Including all revenues from the January 2017 acquisition of OmicSoft, net sales rose 6 percent at CER.

In Q4 2017 Qiagen announced plans to streamline its portfolio primarily by discontinuing some non-core PCR tests and externalizing its China HPV testing franchise R&D and commercial distribution to a local third-party company. Excluding these sales in both periods, adjusted net sales rose 6 percent at CER, including 5 percent organic growth and 1 percent from OmicSoft.

Consumables and related revenues accounted for about 86 percent of sales and grew 6 percent at CER in Q4 to $340 million. Instrument sales were $57 million, growing 6 percent at CER year over year.

By customer class, molecular diagnostics, responsible for about half of the company's sales, grew 4 percent at CER to $193 million. Meanwhile, at CER applied testing jumped 9 percent, pharma grew 9 percent, and academia grew 5 percent year over year.

Qiagen's Q4 R&D spending increased 27 percent to $40.9 million from $32.2 million, while its SG&A expenses fell 8 percent to $166.9 million from $181.9 million.

Qiagen recorded a Q4 net loss attributable to company owners of $39.7 million, or a loss per share of $.18, compared to net income of $8.6 million, or $.04 per share, in the year-ago period. Net income for Q4 included an after-tax charge of $104.4 million, or $.45 per share, primarily due to new US tax legislation. On an adjusted basis, net income was $.43 per share in Q4, beating the Wall St. estimate of $.41 per share.

For full-year 2017, Qiagen recorded net sales of $1.42 billion, up 6 percent (as reported and at CER) from $1.34 billion in 2016, beating analysts' consensus estimate of $1.41 billion. Taking into account the aforementioned business portfolio changes, adjusted net sales rose 7 percent at CER, with organic growth of about 5 percent and additional 2 percent growth from the company's June 2016 acquisition of Exiqon and January 2017 purchase of OmicSoft.

"We are pleased with the performance in 2017 and are delivering on goals to drive the global expansion of our sample-to-insight portfolio," Qiagen CEO Peer Schatz said during a conference call on Wednesday recapping the company's earnings. "We're looking to deliver another year of strong results with accelerating organic growth in 2018 and are on track to achieve our 2020 mid-term targets."

Organic growth drivers in 2017 were led by the QIAsymphony automation system, which set a record for annual placements and reached more than 2,000 cumulative placements; QuantiFeron latent TB testing, which grew 24 percent; and the company's companion diagnostic development activities with pharma companies, which reached a milestone of more than 25 master collaboration agreements.

The company said that it expects to achieve more than 2,300 cumulative QIAsymphony placements by the end of 2018. It has also set a growth target to exceed more than $300 million in QuantiFeron sales in 2020, and, on the companion diagnostics development front, said that it expects more than five US Food and Drug Administration submissions and/or US launches in 2018.

Schatz said that Qiagen acheived double-digit CER growth for its sequencing business in 2017 with sales exceeding $115, enhanced by both a new global enterprise genomics services initiative and MAQGEN, a joint venture in China with Maccura.

"For 2018 we're targeting more than $140 million in NGS-related sales," Schatz said. "We're adding a range of new products and service enhancements to our NGS portfolio for universal solutions as well as for the GeneReader NGS system. We … expect a strong growth trend for GeneReader in terms of placements and reagent pull-through and performance enhancements from new chemistries and menu expansion over the course of 2018, and we are reaffirming our mid-term target for more than 20 percent share of the oncology benchtop sequencing market."

Qiagen's 2017 R&D spending rose 3 percent to $154.1 million from $149.8 million in 2016, while its SG&A spending rose 3 percent to $575.7 million from $556.9 million.

Net income attributable to owners of the company in 2017 was $40.4 million, or $.17 per share, compared to $80.4 million, or $.34 per share in 2016. On an adjusted basis EPS was $1.27, beating analysts' average estimate of $1.21.

The company finished 2017 with $657.7 million in cash and cash equivalents, and $359.2 million in short-term investments.

For full-year 2018, Qiagen said that it expects net sales growth of 6 percent to 7 percent at CER, which includes business portfolio changes in both periods and the acquisition of Stat-Dx. In 2018 Qiagen expects underlying growth in adjusted EPS to be approximately $1.38 to $1.40 at CER, but this is expected to be reduced to about $1.31 to $1.33 at CER due to dilution of about $.03 CER due to US tax law changes, anticipated dilution of about $.05 per share for commercialization and development of the QIAstat-Dx system, and accretion of about $.01 per share from the $200 million share repurchase program.

For the first quarter of 2018 Qiagen guided to between 5 percent and 6 percent organic sales growth at CER, and adjusted EPS of $.23 to $.24.

Stat-Dx acquisition

Qiagen said that it has agreed to acquire all shares of Stat-Dx (subject to the completion of defined development activities by Stat-Dx) for approximately $147 million in cash and additional payments of up to about $44 million based on the achievement of regulatory and commercial milestones.

Stat-Dx has been developing a fully automated, cartridge-based molecular testing system called DiagCORE that can semi-quantitatively and quantitatively identify up to 48 molecular targets simultaneously using real-time PCR. The platform, which will be rebranded as QIAstat-Dx, is also being designed to run immunoassays with time-resolved fluorescence detection.

"The acquisition of Stat-Dx marks our entry into a very attractive, fast-growing market for syndromic testing with a system that represents the next generation of molecular multiplex testing," Schatz said during the call. "This market has seen several first-generation entries, but … reimbursement and in particular clinical needs have evolved significantly. This has changed the required specifications and created new customer needs. We believe QIAStat-Dx represents a very unique answer to these new needs and target specifications."

In January Stat-Dx received CE-IVD marking for the platform and its first test, a 21-target respiratory pathogen panel for use with nasopharyngeal specimens. The company also expects to CE mark a gastrointestinal panel in the first quarter.

Qiagen said that it expects to complete the acquisition in the second quarter of 2018 and fund it with existing cash reserves. For 2018 Qiagen expects $7 million in sales from the QIAstat-Dx launch in Europe and other markets in the second half of the year, and expects at least $30 million in sales in 2019. Due to investments for commercialization, US regulatory clearance, and test development, the transaction is expected to be dilutive to full-year 2018 adjusted EPS by about $.05 per share, but to be neutral in 2019.

In Thursday morning trade on the New York Stock Exchange, shares of Qiagen were up a fraction of one percent at $33.61.