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Qiagen Reports Preliminary Q2 Revenues Above Guidance; Adjusts FY21 Expectations Downward

This story has been updated from a previous version to include information about revenues from specific product groups in the second quarter, as well as comments made by Qiagen executives in an earnings call.

NEW YORK – Qiagen on Monday reported preliminary second quarter revenues and earnings per share above prior guidance and analysts' estimates as lower COVID-19 testing sales were tempered by stronger-than-expected growth in the company's core portfolios.

However, Qiagen also adjusted its full-year outlook for revenue growth downward and said it expects full-year EPS to be at the low end of its prior guidance range as COVID-19 vaccine uptake is expected to continue to weigh on the firm's testing revenues. The company also initiated a $100 million share repurchase program.

For the three months ended June 30, 2021, Qiagen expects to report total revenues of $567.3 million, up 28 percent year over year or 24 percent at constant exchange rates (CER), besting the company's prior outlook for 20 percent CER growth, and beating analysts' consensus expectation of $554.4 million.

Non-COVID-related product groups rose 52 percent at CER to $407.6 million in Q2 and represented 72 percent of total sales, Qiagen said. Meanwhile, COVID-19 product group sales declined 17 percent at CER to $159.7 million from a year ago as testing demand waned due to increased vaccination uptake.

By product type, Q2 consumables and related revenues grew 28 percent at CER to about $498 million, while instrument sales fell 3 percent at CER to $69 million. By customer class, molecular diagnostics grew 28 percent at CER to $272 million while life sciences jumped 20 percent at CER to $296 million.

By specific product groups, sample technologies, representing 36 percent of total sales, fell 3 percent at CER to $203 million in the second quarter. Sales of non-COVID-19 testing kits represented about two-thirds of this product group and rose about 30 percent at CER, buoying a double-digit year-over-year decline in kits used for COVID-19 testing.

In a conference call on Tuesday recapping the Q2 results, Qiagen CFO Roland Sackers noted that Q2 2020 was the first quarter in which the company first saw significant growth as the pandemic gained momentum, making for a tough year-over-year comparison.

"As a reminder, our sample technologies sales are led by kits … for use with DNA and are more weighted toward our life science customers, so we are pleased with our underlying growth," Sackers said.

Diagnostics solutions, comprising about 27 percent of total sales, jumped 71 percent at CER to $154 million in Q2, led by 109 percent CER growth in QuantiFeron latent TB testing to $72 million. "Here we are clearly seeing a resumption of testing and look forward to strong trends in the second half of 2021," especially from back-to-school testing, Sackers said.

Sales of the company's QiaStat-Dx multiplexed syndromic testing platform and NeuMoDx high-throughput sample-to-answer molecular testing platforms both grew in Q2, with QiaStat-Dx rising 4 percent at CER to $22 million and NeuMoDx soaring 209 percent at CER to $22 million.

This year-over-year growth was despite reduced demand for COVID-19 testing, but sales were also slower than in Q1 and less than the company expected, Sackers noted.

"While COVID tests have been the major contributor to sales for these two platforms, we see that sales composition will change as COVID testing demand declines and [sales] emerge from other applications," Sackers said. "We are focusing on developing these platforms for applications beyond COVID testing. The top priority is to expand our test menus as we build up manufacturing capacity to support a growing installed based in the coming years. In terms of that installed base, we are quickly approaching 2,400 total placements of QiaStat Dx systems and recently reached the milestone of 200 total NeuMoDx placements."

In other notable product categories, PCR/nucleic acid amplification sales rose 8 percent at CER to $109 million, while genomics/NGS sales spiked 100 percent at CER to $80 million.

Qiagen said that it expects adjusted Q2 EPS of $.65 to $.66, beating previously stated guidance of $.62 to $.64 and trumping analysts' average estimate of $.62.

Qiagen updated its full-year 2021 outlook for net sales growth of 12 percent at CER compared to prior guidance of 18 percent to 20 percent at CER, and adjusted EPS of at least $2.42 compared to prior guidance of $2.42 to $2.46. On average, analysts are expecting full-year EPS of $2.47.

For the third quarter of 2021, Qiagen expects adjusted net sales to be flat year over year at approximately $483.8 million and adjusted EPS to be in the range of $.52 to $.53 compared to $.58 in the year-ago period. On average, analysts are expecting Q3 EPS of $.58.

On the earnings call, Qiagen CEO Thierry Bernard underscored the "laser focus of our teams on driving further growth from … non-COVID product groups," noting that those groups represented nearly 70 percent of total sales in the first half of 2021 and grew 33 percent at CER. He further noted that Qiagen has set a goal of at least 20 percent CER growth for the full year for non-COVID-related products.

Nevertheless, "We have decided to take a more cautious view on COVID-19 testing trends," Bernard said. "This comes after the faster-than-expected uptake and success of vaccination campaigns, which we all certainly welcome. Our teams obviously remain on the front line of supporting the global response to the pandemic, and we are ready for any future pandemic testing needs, given the increasingly volatile situation with the Delta variant or other variants, but we have not factored … any surge into our forecast" for the second half of 2021, he added.

Qiagen's share repurchase program will see the company purchase up to $100 million of its shares, excluding transaction costs. Based on the closing price of $50.52 on July 9, this represents approximately 2 million shares, the company said.

The share repurchase program "reflects our confidence in Qiagen's growth prospects and is a reaffirmation of our commitment to increasing returns for shareholders," Sackers said in a statement.

Shares of Qiagen closed down more than 3 percent at $48.79 in Monday trading on the New York Stock Exchange. In mid-morning trading on Tuesday shares were down more than 3 percent to $47.15. The company plans to release its full Q2 earnings on July 29.

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