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UPDATE: Qiagen Q3 Revenues Climb 5 Percent

The story has been updated with comments from a conference call held earlier today.

NEW YORK (GenomeWeb News) – Qiagen reported on Sunday a 5 percent increase in third-quarter revenues year over year, paced by the company's consumables sales.

Revenues in the quarter totaled $304.3 million, up from $288.9 million a year ago and beating the consensus Wall Street estimate of $303.8 million. At constant exchange rates (CER), revenues rose 10 percent year over year.

Consumables and related revenues were up 10 percent year over year CER, with growth seen across all customer classes, and in particular Molecular Diagnostics and Applied Testing, Qiagen said. Instrument sales rose 4 percent CER, driven by efforts to expand new placements of the QIAsymphony automation platform and its Rotor-Gene Q real-time PCR system.

It added that the majority of instrument placements were achieved among Molecular Diagnostics customers, mainly through reagent rental agreements for which revenues are recognized over multiple years. The company also saw strong demand from Applied Testing customers following the launch of new QIAsymphony protocols for such applications early in the year, it said.

Qiagen said that the acquisitions of Cellestis, Ipsogen, and AmniSure provided 7 percentage points of growth CER in the quarter. The rest of the company provided 3 percentage points of growth CER, while currency effects tamped down revenues by 5 percentage points on a reported basis.

By customer class, Molecular Diagnostics grew 15 percent year over year CER. Qiagen noted the rollout of the QIAsymphony automation portfolio, while the QuantiFeron latent TB test, acquired when Qiagen bought Cellestis, remained on pace to deliver greater than 20 percent growth CER in 2012 over pro forma results from a year ago.

On a conference call today, CEO Peer Schatz said Qiagen is on track to achieve its goal of more than 200 new placements of the QIAsymphony automation platform on top of the 550 systems in place at the end of 2011. Most of the new placements were made in Molecular Diagnostics, he said. CFO Roland Sackers added that so far in 2011, placements of the platform have grown 30 percent year over year.

HPV product sales, which comprise 17 percent of Qiagen's total sales, were up 17 percent CER, though for full-year 2012, the company continues to expect that business to be down in the single digits year over year.

"Qiagen is successfully managing its HPV test leadership and maintaining market share in the US, where increasing volumes are being more than offset by pricing pressure tied to implementing multi-year customer agreements," the company said.

Personalized healthcare products grew at a double-digit rate on demand for companion diagnostic kits, spurred on by the US launch of the therascreen KRAS biomarker test, which the US Food and Drug Administration approved in July.

Among its profiling products, the company said that sales increased for many tests used for disease analysis, and among its point-of-need tests, the AmniSure assay for detecting the premature rupture of fetal membranes in pregnant women saw accelerated growth as the business was integrated into Qiagen.

Across Qiagen's three other major customer classes, Applied Testing was up 21 percent CER. Consumables and instrument sales increased at a double-digit clip on stronger demand for human identification/forensics, veterinary medicine, and food safety, and demand for the QIAsymphony automation platform was also strong, following new software which became available in early 2012.

Pharma sales grew at 3 percent CER due to the impact of restructuring within the pharma industry, and sales to academia rose 2 percent CER as consumables sales offset a modest decline in instruments.

Qiagen's net income in the third quarter slid to $29.2 million from $35.1 million, resulting from a one-time gain recognized in the year-ago period in connection with the Cellestis buy, Qiagen said. EPS was $.12, compared to $.15 a year ago. On an adjusted basis, EPS of $.26 beat the average analyst estimate of $.24.

The company said that it plans on submitting several companion diagnostic tests for FDA approval in the next few years. The next submission this year is expected to be its therascreen EGFR assay for use with Boehringer Ingelheim's investigational drug afatinib for patients with non-small cell lung cancer.

A year ago Qiagen announced a restructuring of its operations that included a workforce reduction of between 8 percent and 10 percent. On Sunday, the firm said that it "continues to implement actions to grow more efficiently and effectively," and in July it implemented plans "to improve capabilities and better address customer needs," though it did not elaborate.

Qiagen has set a goal of about $50 million in pre-tax savings for 2012, and further restructuring charges may be taken during the year, it said.

The company also said that it launched a previously announced program to repurchase up to $100 million of its shares, and completed the first tranche on Oct. 18, totaling $10 million.

In addition, Qiagen said that it completed a $400 million US private placement debt offering through the issuance of new senior unsecured notes. Proceeds will go toward the repayment of €170 million ($218 million) on the company's revolving credit facility, as well as toward the Qiagen's longer-term business expansion.

Bernd Uder, senior vice president of Commercial Operations, and a member of the Executive Committee and managing director is retiring in January, Qiagen said, but will continue working with the company in a consulting capacity. Benedikt von Braunmühl, will succeed Uder. He is currently VP of Commercial Operations Emerging regions and Second Channels.

Qiagen reaffirmed full-year 2012 sales growth of 8 percent to 9 percent CER. Adjusted EPS is anticipated to be in the $1.04 to $1.06 range.

The company finished the third quarter with $258.2 million in cash and cash equivalents.

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