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Qiagen Reports 9 Percent Non-COVID Sales Growth in Q2, Cuts Full-Year Guidance

This story has been updated to include additional comments from a call with investors.

NEW YORK – Qiagen reported after the close of the market on Tuesday 9 percent year-over-year sales growth in its core non-COVID-related product portfolio in the second quarter. The firm also announced that it is lowering its full-year revenue guidance slightly due in part to the ongoing decline in COVID testing demand and volatility in bulk orders.

"Our teams at Qiagen exceeded the outlook we set for both sales and profitability in the second quarter of 2023," Qiagen CEO Thierry Bernard said in a statement. "This performance was especially important given the significant drop-off in COVID-19 testing and challenging macro environment."

For the three months ended June 30, Qiagen attained net sales of $494.9 million, down 4 percent from $515.5 million a year ago but ahead of analysts' average estimate of $492.5 million. At constant exchange rates (CER), Qiagen's second quarter sales also declined 4 percent to $497 million, beating prior company guidance for net sales of $490 million at CER.

Qiagen's Q2 non-COVID product group sales rose 8 percent year over year, or 9 percent at CER, to $457 million from $423 million. The firm's COVID-19-related product sales declined 59 percent to $37 million from $92 million a year ago.

In a statement, Qiagen said that its Q2 financial results were impacted by a drop in COVID-19 test demand as well as by volatility in large-scale customer bulk orders in the original equipment manufacturer (OEM) business, which impacted both COVID and non-COVID sales results.

Within the firm's flagship sample technologies business unit, Q2 revenues were down 7 percent to $165 million from $178 million due to a drop in COVID testing demand.

Diagnostics revenues were up 13 percent to $177 million from $157 million. Within diagnostics, Quantiferon latent tuberculosis testing revenues increased 27 percent to $104 million from $83 million, while QiaStat-Dx syndromic PCR testing revenues rose 29 percent to $21 million from $16 million.

On a call with investors on Wednesday morning, Qiagen CFO Roland Sackers specified that the QiaStat-Dx group saw 40 percent CER growth in the quarter in non-COVID applications. Qiagen is currently in discussions with the US Food and Drug Administration regarding its QiaStat-Dx syndromic gastrointestinal panel, CEO Bernard added on the call.

Also within diagnostics, revenues for the firm's automated PCR test system NeuMoDx were down 42 percent to $11 million from $18 million, which the firm attributed to in part to a tough comparison to Q2 2022 as well as delays in expanding the US menu for the system due to a prior focus on COVID testing. Bernard said that the firm has now submitted its second NeuMoDx assay to the US FDA, a test for chlamydia and gonorrhea, and that the system now offers 16 CE marked assays.

Revenues in Qiagen's PCR and nucleic acid amplification business were down 29 percent to $74 million from $105 million due in part to the drop in sales in the OEM business, which Sackers specified consists of a handful of customers placing orders for upwards of seven digits worth of enzymes and oligos. Last year, revenues for the OEM business were approximately $170 million, he said, while this year the firm expects OEM revenues in the range of $90 million.

Meanwhile, Sackers noted that QiAcuity digital PCR sales are on track to meet the firm's 2023 goal for at least $70 million in sales. "We saw dynamic growth for the quarter, driven particularly by increasing consumables pull-through from biopharma placements," he said.

The firm's genomics and next-generation sequencing business saw revenues increase 12 percent to $64 million from $57 million. The Qiagen Digital Insights business delivered 20 percent CER growth in the quarter, Sackers said, adding that the firm also saw incremental revenues from its newly acquired Verogen NGS-based human identification business.

Finally, revenues in the business unit designated "other" were down 20 percent to $15 million from $19 million.

Sackers also said on the call that instrument sales declined at a low single-digit rate due in part to continued conservative capital spending among academic customers. That said, "We continue to see good placement trends for reagent rental agreements that are linked to multi-year consumables contracts among molecular diagnostic customers," Sackers added.

On the call, Bernard said that each of the business units and product lines has advantages that will help it navigate the current challenging macro environment. Overall, 85 percent of recurring revenues across the business units comes from high-margin consumables, he said, driven by the firm's closed automation systems. Also contributing to a solid long-term outlook, the firm sees continued good research funding in life sciences and ongoing translation of advances to clinical use. "More and more, molecular applications are a keystone for future growth in both life science research and clinical diagnostics, and Qiagen is a clear leader in molecular technologies," Bernard said.

Qiagen reported Q2 net income of $80.8 million, or $.35 per share, compared to $96.7 million, or $.42 per share, a year ago. Adjusted EPS was $.51, above analysts' average estimate of $.50. Qiagen said that adjusted EPS at CER was $.52, above its previous guidance of $.50 per share at CER.

For the third quarter of 2023, Qiagen expects net sales of at least $465 million at CER compared to $535 million in Q3 2021, and adjusted EPS of at least $.48 per share at CER.

Qiagen lowered its full-year 2023 net sales outlook to at least $1.97 billion at CER from a previous outlook of at least $2.05 billion at CER. It now expects adjusted EPS of at least $2.07 at CER for full-year 2023, down from previous guidance of $2.10 at CER.

Qiagen finished the quarter with $609.5 million in cash and cash equivalents and $722.4 million in short-term investments.

In Wednesday morning trading on the New York Stock Exchange shares of Qiagen were up approximately 1 percent to $44.93.