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QIAGEN (QGEN) Q3 Earnings Surpass Estimates, 2021 View Up

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QIAGEN N.V.’s (QGEN - Free Report) third-quarter 2021 adjusted earnings per share (EPS) were 58 cents (same at constant exchange rate or CER), unchanged year over year. Moreover, the figure surpassed the Zacks Consensus Estimate by 9.4%.

Notably, the bottom line exceeded the company’s third-quarter guidance of 52-53 cents at CER.

The adjustment excludes the impact of certain non-recurring items like business integration, acquisition, restructuring-related expenses, and purchased intangibles amortization expenses, among others.

GAAP EPS for the quarter was 57 cents per share, improving significantly from the year-ago 7 cents.

Revenues in Detail

Net sales in the third quarter rose 10.5% on a year-over-year basis to $534.8 million (up 10% at CER). The top line exceeded the Zacks Consensus Estimate by 9.7%. Top-line growth also exceeded the company’s third-quarter net sales expectation at CER, which was anticipated to be at the same level of sales in the third quarter of 2020, approximately $483.8 million.

QIAGEN N.V. Price, Consensus and EPS Surprise

 

QIAGEN N.V. Price, Consensus and EPS Surprise

QIAGEN N.V. price-consensus-eps-surprise-chart | QIAGEN N.V. Quote

Sales growth was driven by a 48% CER gain in sales of the QuantiFERON-TB test and robust growth in DNA sample technologies products. Further, a stronger-than-expected uptake for COVID-19 testing solutions drove the top line.

Geographical Revenue Update

In the quarter under review, sales from the Americas (46% of sales) totaled $248 million, up 9% on a reported basis (up 9% at CER).

Revenues from Europe, Middle East and Africa (33% of sales) rose 6% reportedly (up 6% at CER) to $174 million.

Further, revenues from Asia-Pacific/ Japan (21% of sales) increased 22% year over year on a reported basis (up 20% at CER) to $112 million.

Segmental Details

As of the third quarter of 2021, QIAGEN had two major customer classes – Molecular Diagnostics and Life Sciences.

Molecular Diagnostics (representing 52% of net sales) revenues were up 18% on a reported basis (up 17% at CER) to $279 million.

Life Sciences (48% of total revenues) reported revenues of $256 million, up 4% on a reported basis (up 3% at CER).

Operational Update

Adjusted gross profit in the quarter under review rose 5.1% to $353.5 million. However, adjusted gross margin contracted 344 basis points (bps) to 66.1% due to a 23% rise in total cost of sales (adjusting for acquisition-related intangible amortization) to $181.2 million.

Sales and marketing expenses of QIAGEN rose 10.5% to $112.9 million year over year. Research and development expenses increased 33.7% year over year to $48.3 million whereas general and administrative expenses rose 8.7% year over year to $30.4 million.

Adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration, asset impairment) fell 4.8% year over year to $162 million in the third quarter. Adjusted operating margin, however, contracted 489 bps to 30.3%.

Financial Update

QIAGEN exited third-quarter 2021 with cash and cash equivalents, and short-term investments of $957.3 million, up from $898 million at the end of second-quarter 2021. Long-term debt was $1.57 billion in third-quarter 2021, down from $1.94 billion in the prior quarter.

Cumulative net cash flow from operating activities at the end of third-quarter 2021 was $440.5 million compared with $188.1 million a year ago.

Guidance

In November, QIAGEN updated its full-year view taking into account stronger-than-expected results for the third quarter of 2021.

Full-year net sales are now expected to grow at least 15% at CER (an increase from the earlier outlook of CER growth of 12%). Adjusted EPS for 2021 is now expected to be a minimum of $2.48 at CER (up from the prior outlook of about $2.42 at CER). The Zacks Consensus Estimate for 2021 revenues is pegged at $2.13 billion. The Zacks Consensus Estimate for adjusted earnings per share is pegged at $2.46.

Considering the Nov 1, 2021 exchange rate, currency movements against the U.S. dollar are still expected to create a positive impact of about 2 percentage points on net sales growth at actual rates for full-year 2021. Further, 2 cents of positive impact are expected on adjusted EPS.

For the fourth quarter, the company expects net sales to decline approximately 9% CER. Adjusted EPS is expected to be about 60 cents at CER compared with 68 cents in the year-ago quarter.

Our Take

QIAGEN exited the third quarter of 2021 with better-than-expected revenues and earnings. It registered revenue growth across all geographies and both operating segments in the third quarter. Stronger-than-expected demand for COVID-19 testing solutions in the reported quarter also buoys optimism. An increase in short-term cash level is an added plus. Further, the raised full-year guidance for net sales and EPS is indicative that this growth momentum will continue.

However, a rise in operating costs does not bode well for the company. A decline in operating profit and a weak margin scenario are added concerns.

Zacks Rank and Key Picks

QIAGEN currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , Omnicell, Inc. (OMCL - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .

Thermo Fisher, carrying a Zacks Rank #1 (Strong Buy), reported third-quarter 2021 adjusted EPS of $5.76, which beat the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the consensus mark by 12%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Omnicell reported third-quarter 2021 adjusted EPS of $1.08, surpassing the Zacks Consensus Estimate by 18.7%. Revenues of $296.5 million surpassed the Zacks Consensus Estimate by 4.4%. It currently carries a Zacks Rank #2 (Buy).

West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%. It currently carries a Zacks Rank #2.