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Qiagen Q3 Revenues Fall 7 Percent on Currency Effects; Firm Misses Expectations

This article has been updated from a previous version to include comments from Qiagen CEO Peer Schatz made during an earnings call.

NEW YORK (GenomeWeb) – Qiagen said after the close of the market on Wednesday that its third quarter revenues declined 7 percent year over year largely due to negative currency effects as the firm missed analysts' estimates on the top and bottom lines.

For the three months ended Sept. 30, Qiagen posted revenues of $314.6 million compared to $336.5 million in the year-ago period, and well short of analysts' consensus estimate of $323.2 million.

On an adjusted basis and at constant exchange rates, revenues grew 2 percent year over year, highlighted by growth in the company's QuantiFERON-TB test for latent tuberculosis and an expansion of pharma partnerships for companion diagnostics.

Currency movements had an adverse impact of approximately nine percentage points in the quarter, Qiagen said. About two percentage points of total CER growth came from the company's December 2014 acquisition of Enzymatics, while the rest of Qiagen's business was largely flat year over year.

Excluding the approximately 3 percent headwind created by the expected decline of US human papillomavirus testing for cervical cancer screening, adjusted net sales rose approximately 5 percent in Q3, the company said.

By customer class, molecular diagnostics, responsible for just under half of sales, dropped 3 percent at CER, but increased 3 percent year-over-year when excluding the aforementioned HPV test sales. Instrument sales rose in the low-single digits paced by strong growth for QIAsymphony and QIAcube automation systems, while consumables and related revenues declined at a single-digit rate. QuantiFERON-TB sales, meanwhile, maintained a 20 percent CER growth pace in Q3.

In other customer classes, applied testing, pharma, and academia each grew 6 percent year over year at constant exchange rates.

"The sales performance in the third quarter was marked by strong growth in the life sciences while molecular diagnostics faced some volatility, in part due to the timing of national tenders, and also with weaker results in China and Japan," Qiagen CEO Peer Schatz said in a conference call held Thursday to recap the earnings.

Qiagen's Q3 net income attributable to owners of the company was $33.9 million, or $.14 per share, compared to $34.7 million, or $.14 per share, in Q3 2014. On an adjusted basis, EPS was $.27, just shy of the Wall Street estimate of $.28.

The firm's R&D spending fell 14 percent to $35.6 million from $41.5 million, while its SG&A expenses dropped 7 percent to $113.3 million from $122.1 million.

Qiagen finished the quarter with $331.0 million in cash and cash equivalents, and $98.6 million in short-term investments.

For the fourth quarter of 2015, Qiagen expects adjusted net sales to rise approximately 5 percent at CER, including about two percentage points of headwind from lower US HPV test sales. The company said it expects adjusted EPS of approximately $.35.

For full-year 2015, adjusted net sales are expected to rise about 4 percent at CER, as growth of about 7 percent to 8 percent from the current portfolio (including contributions from Enzymatics) exceeds a 3 percent to 4 percent adverse impact from US HPV sales. The company said its adjusted EPS is now expected to be about $1.16 compared to a previous guidance of $1.16 to $1.18.

"We are moving ahead with initiatives to transform Qiagen and are demonstrating success in areas with strong prospects," Schatz said during the call. "The benefits of these efforts will become even more apparent during 2016 as we put behind us the significant headwinds from the declining sales in the US of the HPV test franchise. Indeed, this year is setting a good foundation for accelerating innovation and growth in our core portfolio."

One area of innovation that investors have been eagerly awaiting is the launch of Qiagen's integrated GeneReader platform for next-generation sequencing. The company has previously said it would launch the system in the fourth quarter of this year. During Thursday's call, in response to an analyst's question on the GeneReader timeline, Schatz reiterated previous guidance.

"We said it would be started here now in the fourth quarter of this year, and we further confirmed that date now three times in the last three calls," Schatz said.

"Yes we are nearing the end of the year, and yes we're still confident that we'll be launching this year," he added. "The one thing I can promise is that you'll be the first to know. This is something that we're clearly preparing, and we want to do this right, and make sure that you have all the information available to also see the power of what we can bring forward.