NEW YORK (GenomeWeb) – Qiagen said after the close of the market on Wednesday that its fourth quarter revenues were essentially flat year over year as the company missed analysts' consensus estimate on both the top and bottom lines.
For the three months ended Dec. 31, 2014, Qiagen posted revenues of $360.4 million compared to $361.1 million in Q4 2013, and short of the Wall Street estimate of $367.7 million. On an adjusted basis and at constant exchange rates, revenues increased 4 percent year over year, led by double-digit growth in instruments as well as higher sales of consumables and related revenues with contributions from all customer classes.
Currency movements had a significant adverse impact of approximately 4 percentage points on reported net sales growth, Qiagen said. In addition, US sales of the company's HPV products declined 59 percent year over year in Q4. Excluding sales of US HPV test products, net sales rose 10 percent at CER.
By customer class, molecular diagnostics sales increased 3 percent in Q4 and constituted about half of Qiagen's overall sales. Meanwhile, applied testing sales grew 13 percent; pharma sales grew 1 percent; and sales to academia grew 6 percent year over year.
Qiagen's R&D spending edged up slightly to $43.9 million from $43.8 million in the year-ago period, while its SG&A expenses fell 4 percent to $142.2 million from $148.7 million in Q4 2013.
The firm's net income in Q4 was $25.8 million, or $.11 per share, compared to $60.2 million, or $.25 per share, in the year-ago period. On an adjusted basis, EPS came in at $.25 compared to $.33 in Q4 2013 and fell short of analysts' consensus estimate of $.30.
For full-year 2014, Qiagen reported net sales of $1.34 billion, a 3 percent increase from $1.30 billion in 2013. On an adjusted basis and at CER, 2014 sales rose 4 percent. Full-year growth fell shy of analysts' consensus estimate of $1.35 billion.
Sales of Qiagen's HPV products in the US fell 40 percent in 2014, which the company said was greater than previously expected and created approximately 5 percentage points of headwind on total adjusted net sales growth. Excluding US HPV products, net sales rose 9 percent at CER in 2014, the company noted.
"We are working through the last phases of pressure on our US HPV franchise, which has primarily come from intense price pressure," CEO Peer Schatz said in a conference call held Thursday morning to discuss Qiagen's earnings.
"We actually had five percentage points of headwind in 2014, which was above our expectations for about four points," Schatz added. "At the same time we generated 9 percent [CER] growth from the rest of our portfolio, and we see this as one of the fastest growth rates in our industry."
Schatz noted that Qiagen saw an even stronger HPV effect in Q4 "with six points of headwind in the quarter, but with the rest of the portfolio more than compensating for that with 10 percent [CER] growth. These results show that we achieved our 2014 goals to deliver above-market sales growth from our core portfolio, which matters the most for our future growth ambitions against the decline in US HPV sales."
Net sales growth in 2014 was driven by consumables and related revenues, which rose 4 percent at CER and constituted 87 percent of sales; as well as instruments, which rose 8 percent at CER and constituted 13 percent of sales.
About 2 percentage points of CER growth came from the company's informatics-related acquisitions of Ingenuity, CLC Bio, and Biobase, and two percentage points from the rest of the business. Currency movements had an adverse impact of one percentage point in 2014.
By customer class, molecular diagnostics revenues increased 4 percent in 2014 and constituted 50 percent of the company's sales. Excluding US HPV sales, molecular diagnostics rose 16 percent in 2014, the company noted. In molecular diagnostics, instruments sales grew at a double-digit pace, as Qiagen surpassed its goal of 1,250 cumulative placements of the QIASymphony platform. Full-year sales gains were also driven by the company's QuantiFERON-TB test, personalized healthcare portfolio (including higher pharma co-development revenues), and profiling consumables.
Meantime, applied testing revenues grew 9 percent in 2014 on the back of growth in human ID/forensics and veterinary applications, as well as the addition of the bioinformatics portfolio; while pharma sales grew 3 percent and academia sales grew 2 percent in 2014.
Qiagen's R&D costs for the year were $163.6 million, a 12 percent increase from $146.1 million in 2013, while its SG&A expenses fell 13 percent to $503.4 million from $570.6 million in the prior year.
In 2014 Qiagen posted a profit of $116.6 million, or $.48 per share, compared to a profit of $69.1 million, or $.29 per share, in 2013. Adjusted EPS for 2014 was $1.00, down from $1.02 in 2013 and below the consensus Wall Street estimate of $1.04.
During Thursday's call, Qiagen CFO Roland Sackers noted that following the company's acqusition of Enzymatics in December, "we decided to take $22 million of business integration acquisition-related charges in the fourth quarter of 2014, of which about $18 million were non-cash charges. These charges included closing our Gaithersburg, Md., site, as we build up activities in the Boston area. And in line with our policy, these charges were excluded from adjusted results."
At the same time, the company also decided to take a restructuring charge of $25.5 million, Sackers added, of which about $20 million were non-cash items. "These charges mainly involved impairment of technology-related assets," he said. "In line with our new policy, these restructuring charges were not excluded from our adjusted results."
Qiagen finished the year with $392.7 million in cash and cash equivalents and $184.0 million in short-term investments.
For the first quarter of 2015, the company provided guidance of 2 percent net sales growth at CER, including 5 to 6 percentage points of headwind from US HPV sales, and adjusted EPS of approximately $.22 to $.23 at CER. The company expects currency movements to have an adverse impact of approximately seven percentage points on reported sales growth and approximately $.01 per share on adjusted EPS.
For full-year 2015, adjusted net sales are expected to rise about 4 percent at CER, as growth of about 7 to 8 percent CER in the core portfolio (including contributions from its Enzymatics acquisition) exceeds the adverse impact of approximately 3 to 4 percentage points from lower US HPV sales. The company said that it expects 2015 to be the last year of significant headwinds from US HPV sales. Adjusted EPS are expected to be approximately $1.16 to $1.18 at CER compared to $1.00 in 2014.
Recapping key milestones in 2014, Qiagen noted that eight assays for its Rotor-Gene Q real-time PCR platform received regulatory clearance in Europe and/or the US; and more than 300,000 samples have so far been analyzed using the company's Ingenuity Knowledge Base for next-generation sequencing analysis. In addition, sales of its QuantiFERON-TB diagnostics for latent tuberculosis infection surpassed $100 million in 2014, and the company launched a fourth generation of the test — the QuantiFERON-TB Gold Plus — in Europe with CE IVD marking. The company plans to submit the assay for regulatory clearance in the US in 2015, and is preparing submissions for other markets including China and Japan.
In addition, earlier this week Qiagen launched QuantiFERON Monitor, "which is based on the same technology platform as our TB detection test, and will provide clinicians with information on a transplantat patient's net immune status," Schatz said during the call. "Physicians can use this assay to determine if their patients are over- or under-immunosuppressed, and can better tailor patient care by taking the results into consideration with all other clinical factors."
Looking to 2015, Qiagen noted that its GeneReader benchtop NGS instrument is on track to be commercialized in the second half of the year, as is the firm's Ingenuity Clinical web-based decision-support software for NGS users in clinical settings.