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Qiagen Q2 Revenues Increase 5 Percent, Paced by MDx Business

The story has been updated to include comments from Qiagen's conference call on Wednesday morning.

NEW YORK (GenomeWeb) – Qiagen reported after the close of the market on Tuesday that its second quarter sales rose 5 percent year over year, matching consensus analysts' estimates on the top and bottom lines.

Qiagen recorded sales of $330.8 million, up from $315.2 million during the year-ago quarter, and on par with the average Wall Street estimate. It said that its adjusted net sales were $331.2 million, up 5 percent from $316.4 million for Q2 2013.

By product category, consumables and related revenues increased 5 percent year over year on a constant exchange rate, led by molecular diagnostics and supported by growth in applied testing and pharma, Qiagen said. It added that its bioinformatics portfolio, acquired in 2013 and 2014, supported results in all customer classes.

Instrument sales were down 5 percent year over year overall. Instrument sales to molecular diagnostics and applied testing customers increased in the single digits, but academia and pharma declined as a result of funding issues.

By customer class, molecular diagnostics, which comprises more than half of Qiagen's total sales, rose 8 percent on improved sales of consumables and instruments, which made up for an expected softer US HPV diagnostics business, which was down 31 percent year over year. Outside the US, HPV sales grew in the high-single digits on growth in China and Latin America.

Sales of the firm's QuantiFeron-TB latent tuberculosis test were up more than 20 percent, while profiling consumables also grew more than 20 percent, driven by a growing installed base of QIAsymphony instruments, its broad menu in Europe, and an expanding menu in the US.

Personalized healthcare, a sub-category within molecular diagnostics, saw double-digit growth in companion diagnostic assays and revenues from co-development projects, Qiagen said.

Among other customer classes, applied testing grew 2 percent year over year, while pharma was flat as a modest increase in consumables sales was offset by a double-digit decline in instrument sales.

Academia shrank 4 percent on a double-digit drop in instrument sales, which Qiagen said was a "reflection of the ongoing difficult funding environment." Also, consumables retreated in the single digits within academia.

On a conference call Wednesday morning, Qiagen CEO Peer Schatz said that the company expects improvement in the academic market during the second half of 2014 as the effects of last year's sequestration eases.

He also noted that while committed funding for 2014 has been "quite favorable," Qiagen has not yet seen the positive effects from that through the first six months of 2014, something that the company believes will change for the rest of the year. However, while improvement is expected in H2 2014, the funding environment through the balance of the year is anticipated to "remain below absolute levels seen in previous years," the company said.

For the second quarter, Qiagen posted net income attributable to its owners of $32.8 million, or $.14 per share, compared to a net loss of $51.8 million, or $.22 per share, a year ago. On an adjusted basis, Qiagen had EPS of $.25, matching the average Wall Street estimate.

The Q2 2013 net loss was due to a restructuring charge of $76 million associated with "a major efficiency project designed to free up resources for reallocation to strategic initiatives." On an adjusted basis, its Q2 2013 EPS was $.27.

Its R&D costs of $37.9 million in the most recently completed quarter were up 13 percent from $33.6 million in Q2 2013. Its SG&A expenses were cut by 25 percent to $120.9 million from $160.4 million a year ago.

Qiagen ended the second quarter with $418.9 million in cash and cash equivalents, and $235.8 million in short-term investments.

The company on Tuesday also announced the launch of its third $100 million share repurchase program. It completed the prior program in June with the repurchase of 4.5 million shares.

"Qiagen delivered growth in line with our goals for the first half of 2014, using our healthy financial position to support the business expansion and robust performance of our five growth drivers," Qiagen CFO Roland Sackers said in a statement, referring to QIAsymphony, personalized healthcare, the QuantiFeron-TB test, bioinformatics, and next-generation sequencing.

On the call Schatz said that the five growth drivers currently deliver about 25 percent of total sales, and "we expect the share to increase as we reallocate even more resources to further accelerate their momentum."

QIASymphony, he said, is on pace to exceed 250 new placements in 2014, building on more than 1,000 systems placed as of the end of 2013. The QuantiFeron-TB test, meanwhile, is set to surpass $100 million in sales this year, and has already passed Qiagen's US HPV business in terms of share of total sales.

Also, personalized healthcare is "growing on a base of $100 million in annual sales, thanks to higher assay sales and growing revenues from the companion diagnostic co-development agreements," Qiagen has forged with Eli Lilly, AstraZeneca, Clovis Oncology, and others, while bioinformatics is an important incremental contributor to revenues this year, Schatz said.

In next-generation sequencing, he noted that Qiagen has launched 14 new gene panels encompassing 570 clinically relevant cancer genes, and the company is proceeding in its development of the GeneReader workflow. Schatz reiterated an expected launch of the platform in the second half of 2015.

For the third quarter, Qiagen gave guidance of a 4 percent to 5 percent increase in adjusted net sales, and adjusted diluted EPS of between $.26 and $.27.

For full-year 2014, the company said that adjusted net sales are anticipated to increase between 4 percent and 5 percent, while adjusted diluted EPS is expected to be in the range of $1.07 to $1.09.

Subsequent to the end of the second quarter, Qiagen inked a database distribution deal with BGI and reached a companion diagnostic deal with AstraZeneca targeting non-small cell lung cancer this week.

Last week, Qiagen said it licensed biomarkers from the University of Tokyo that are believed to play a role in the prognosis of patients with blood cancers.

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