Adjusting for the one-time items including restructuring charges of $75 million, Qiagen (QGEN - Analyst Report) reported adjusted EPS of 31 cents in the fourth quarter of fiscal 2011, beating the Zacks Consensus Estimate of 28 cents as well as the year-ago quarter earnings by 19%. Adjusted EPS in fiscal 2011 stood at 98 cents, comfortably beating the Zacks Consensus Estimate of 90 cents and the year ago adjusted EPS of 93 cents.
Net sales in the quarter were $334.4 million, up 17% year over year (17% at constant exchange rates or CER), higher than the Zacks Consensus Estimate of $323 million. The company witnessed double-digit organic growth in the quarter (contributing 11 percentage points), driven by strong results in Molecular Diagnostics. Also the contributions from Cellestis (as of August 29) and Ipsogen (as of July 12) added 6 percentage points to the sales. Full-year net sales were up 8% (4% at CER) year over year to $1,169.7 million, surpassing the Zacks Consensus Estimate of $1158 million.
Under the product categories, Consumables and related revenues (accounting for 85% of net sales in the quarter) rose a robust 18% year over year at CER, while instrumentation revenues (accounting for the rest) increased by more than 11% at CER, primarily riding on targeted initiatives across the company’s broad product range.Higher QIAsymphony placements also contributed to the growth. Instrument sales also reflected growing pro-rata contributions under multi-year reagent rental agreements implemented since the launch of the full QIAsymphony RGQ system in late 2010.
In the fourth quarter, all the operational regions of the company delivered double-digit growth at CER. Region wise, Americas (46% of revenues) witnessed a 16% increase in sales driven by double-digit growth in Molecular Diagnostics and Applied Testing. However, revenues from Europe- Middle East-Africa (36% of sales) and Asia-Pacific /Japan (18% of sales) increased 22% and 18% at CER, respectively. Europe benefited from the ongoing rollout of the QIAsymphony RGQ automation system. On the other hand, growth contributions from Pharma, Molecular Diagnostics and Applied Testing led to a double-digit growth in Asia-Pacific /Japan.
Qiagen primarily derives revenues from molecular diagnostics, applied testing, pharma and academia, which represented 50%, 7%, 19% and 24% of the total sales, respectively, during the quarter. Molecular diagnostics sales registered a 30% increase at CER. Higher Profiling sales on the back of global rollout of the QIAsymphony automation platform and increased use of Qiagen's broad testing portfolio in Europe and other markets outside the US primarily contributed to this strong growth.
Sales derived from applied testing were up 18% at CER, primarily driven by strong instrument sales. Additionally, consumable product sales registered double-digit growth on human identification and forensics products, as well as contributions from new veterinary testing and food safety products.
Pharma sales rose 8% at CER based on demand for products used in oncology research as well as the GeneGlobe portfolio of molecular pathway analysis products. Academia witnessed a 3% upside in net sales, benefiting from initiatives in the second half of 2011 to accelerate growth in this customer class.
Qiagen exited the fourth quarter with cash and cash equivalent and short-term investment of $275.7 million compared with $934.5 million at the end of fiscal 2010.
Qiagen has adopted several strategic initiatives in the global Sample & Assay Technologies market in order to deliver stronger performance in 2012 and beyond. The company is currently focusing on innovation and geographic expansion to drive organic growth.
Qiagen provided its 2012 outlook. For the full year, net sales are expected to increase in the range of 6-8% CER on the back of mix of organic growth and contributions from the Cellestis and Ipsogen acquisitions in 2011. Foreign exchange rates are expected to adversely impact sales in 2012. For 2012, adjusted EPS is expected to be in the range $1.03 - 1.05 (Current Zacks Consensus Estimate is $1.00 for 2012, lower than the guided range).
Companion diagnostics is currently gaining significant traction and peers of Qiagen like Myriad Genetics (MYGN - Analyst Report) are emerging as strong players in the companion diagnostic market. However, Qiagen is adopting an aggressive acquisition strategy to widen its scope and strengthen its position in the competitive landscape compared to other major players like Life Technologies (LIFE - Snapshot Report) and Sigma-Aldrich .
Qiagen currently retains a short-term Zacks#3 (Hold) Rank, which also reflects our ‘Neutral’ recommendation on the stock over the long term.