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Qiagen Q4 Sales Drop 3 Percent on Currency Effects

NEW YORK (GenomeWeb) – Qiagen reported after the close of the market Tuesday that its fourth quarter revenues declined 3 percent year over year and fell short of Wall Street expectations on the top and bottom lines.

For the three months ended Dec. 31, Qiagen posted revenues of $348.5 million compared to $360.4 million in the year-ago period and short of analysts' consensus estimate of $351.7 million. The Q4 2015 number was largely in line with its preliminary earnings announcement last month.

On an adjusted basis and at constant exchange rates, Q4 revenues increased about 3 percent year over year.

In addition, the company said that about two percentage points of total CER growth came from its December 2014 acquisition of Enzymatics, while the rest of the business provided about one percentage point of growth. Further, excluding the impact of expected lower US sales of human papillomavirus tests, net sales rose about 4 percent at CER.

Late in Q4 Qiagen completed the acquisition of Mo Bio Laboratories, but this had a negligible contribution to sales.

By customer class, molecular diagnostics, responsible for just under half of total sales, were flat year over year at CER, but grew 2 percent excluding HPV sales. Meantime, Applied Testing and Academia sales each grew 7 percent at CER, while Pharma sales grew 6 percent at CER.

"We delivered solid growth in our Academia, Pharma, and Applied Testing customer classes, but Molecular Diagnostics was dampened in the second half of the year, and this was mainly due to the timing of national tenders in the third quarter and volatility in the timing of milestones from companion diagnostic partnerships and weaker instrument sales in the fourth quarter," Qiagen CEO Peer Schatz said in a statement.

The firm's Q4 R&D spending fell almost 10 percent to $39.7 million from $43.9 million, while its SG&A expenses dropped 16 percent to $119.4 million from $142.2 million.

Qiagen's Q4 net income attributable to owners of the company was $48.6 million, or $.20 per share, compared to $25.8 million, or $.11 per share, in Q4 2014. On an adjusted basis, EPS was $.31, falling short of the Wall Street estimate of $.32 per share.

Qiagen finished the quarter with $290.0 million in cash and cash equivalents and $130.8 million in short-term investments.

For full-year 2015, Qiagen brought in $1.28 billion in revenues, down 5 percent from $1.34 billion in 2014, and in line with analysts' consensus estimate. At CER, adjusted net sales rose about 3 percent in 2015.

Molecular Diagnostics sales grew 1 percent at CER in 2015, but grew 7 percent excluding expected HPV sales headwinds. Meantime, Applied Testing grew 7 percent at CER; and Pharma and Academia each grew 5 percent at CER.

Qiagen's 2015 R&D spending fell 10 percent to $147.2 million from $163.6 million in 2014, while its SG&A spending fell 8 percent to $464.8 million from $503.4 million.

Net income attributable to owners of the company in 2015 was $127.1 million, or $.54 per share, compared to $116.6 million, or $.48 per share, in 2014. On an adjusted basis, EPS was $1.05, just shy of the Wall Street expectation of $1.06.

"Our performance over the last few years has been marked by the sharp impact of declining revenues of HPV tests in the US, which created three percentage points of headwind to reduce the solid 6 percent constant exchange rate growth performance from the rest of the portfolio," Schatz noted in a conference call held Wednesday to recap Qiagen's earnings. "This issue has overshadowed in particular the progress of our growth drivers, as they provided about one third of total sales and grew at a double-digit CER pace in 2015." 

Schatz added that the company's goals in 2016 include "increasing the number of cumulative QIAsymphony placements to more than 1,750 units by the end of the year, and we are seeking to further broaden the test menu. We also want to expand the number of pharma companies working with Qiagen on companion diagnostic projects, and another ambition is to keep up the double-digit constant exchange rate growth in bioinformatics by ramping up the commercialization of new products that we launched in 2015."

Qiagen reaffirmed guidance originally provided in January of 6 percent adjusted net sales growth in 2016, including anticipated contributions of about one percentage point of growth from the Mo Bio acquisition and one percentage point of headwind from reduced US HPV sales. The company said it expects adjusted EPS of $1.10 to $1.11. Qiagen noted that it expects adverse currency effects of about three percentage points on full-year 2016 sales, and about $.03 per share on adjusted EPS.

For the first quarter, Qiagen expects adjusted net sales to rise about 2 percent year over year at CER, and is forecasting adjusted EPS of $.19 to $.20.

Regarding the recent Mo Bio acqusition, Schatz noted that the firm's reagents and kits for accessing nucleic acids from a wide variety of difficult samples makes them essential in metagenomics work.

"[Metagenomics] is one of the most attractive areas of life sciences funding and involves the processing and analysis of complex microbial content such as in the human gut or the environment," Schatz said.

"The topic of microbiomes is now quickly moving into clinical healthcare," Schatz added. "The reason is that understanding microbial diversity of humans is increasingly important for clinical decision making, in particular how it can have an impact on drug efficacy and safety. We are in the process of integrating these Mo Bio products into our global commercial organization, and this will significantly increase Mo Bio's reach."

In Wednesday morning trade on the Nasdaq, shares of Qiagen were down 2 percent at $21.68.

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