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QIAGEN (QGEN) Beats Q3 Earnings Estimates, Cuts Revenue View

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QIAGEN N.V.’s QGEN third-quarter 2019 adjusted earnings per share (EPS) were 36 cents, up 2.9% year over year. The figure beat the Zacks Consensus Estimate by the same magnitude. At constant exchange rate or CER, the quarter’s adjusted EPS was 36 cents as well.

Reported net loss was 71 cents per share against the year-ago reported EPS of 26 cents.

Revenues in Detail

Net sales at actual rates in the third quarter inched up 1% on a year-over-year basis to $382.7 million (up 3% at CER). However, the top line missed the Zacks Consensus Estimate by 0.3%.

Geographical Revenue Update

In the quarter under review, sales from the Americas (50% of revenues) totaled $192 million, up 3% on a reported basis (up 4% at CER). Revenues from Europe-Middle East-Africa (30% of revenues) rose 3% reportedly (up 7% at CER) to $114 million. Further, revenues from Asia-Pacific/Japan (20% of revenues) fell 6% year over year on a reported basis (down 5% at CER) to $76 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

Segmental Details

As of the third quarter of 2019, QIAGEN has two major customer classes which are Molecular Diagnostics (that includes human healthcare including Precision Medicine and companion diagnostics) and Life Sciences (that includes Pharma and Academia/Applied Testing).

Molecular diagnostics (representing 48% of net sales) revenues were down 2% at CER to $183 million.

Life Sciences (52% of total revenues) reported revenues of $199 million, up 7% at CER. Sales derived from Applied Testing/Academia rose 6% at CER to $122 million. Pharma sales climbed 10% at CER in the third quarter to $77 million.

Operational Update

Gross profit in the quarter under review declined 1% to $254.9 million. Gross margin contracted 133 basis points (bps) to 66.6%.

Adjusted operating income (excluding items like acquisition-related intangible amortization) fell 5.1% year over year to $87.3 million in the third quarter. Adjusted operating margin contracted 153 bps to 22.8%.

Financial Update

QIAGEN exited the third quarter of 2019 with cash and cash equivalents of $700.9 million, up from $624.6 million at the end of the second quarter. Year to date, net cash provided by operating activities was $221.4 million compared with $248.9 million a year ago. Moreover, the company reported year-to-date free cash flow of $135 million compared with $176.7 million a year ago.

2019 Guidance

QIAGEN has updated its 2019 guidance. Total net sales growth is expected at about 4% at CER, indicating a decline from the earlier projection of 5-6% at CER. The Zacks Consensus Estimate for 2019 revenues is pegged at $1.54 billion.

Adjusted EPS guidance for the full year is estimated in the band of $1.43-$1.44 at CER, compared to the earlier projection of $1.42-$1.44 at CER. The Zacks Consensus Estimate for 2019 EPS is pegged at $1.38, which is below the guided range.

The company also issued the financial projection for the fourth quarter of 2019. Net sales are envisioned to grow around 3% at CER. Our consensus estimate for revenues is pegged at $424.5 million. Adjusted EPS is predicted within 45-46 cents at CER on an underlying basis. The Zacks Consensus Estimate for earnings stands at 43 cents, below the guided range.

Our Take

QIAGEN ended the third quarter on a mixed note, as earnings beat while revenues missed estimates. The company registered revenue growth across majority of its geographies and operating segments. We are also upbeat about the company’s Sample to Insight portfolio progress in the quarter. Developments like QuantiFERON-TB’s growth at 18% CER, two FDA approvals of the new therascreen companion diagnostics and continued momentum of the QIAstat-Dx with respiratory panel are impressive. The company’s recent decision to restructure China-based next-generation sequencing joint venture buoys optimism. The 15-year strategic partnership with Illumina inked during the third quarter is also encouraging. On the flip side, a revenue guidance cut for the full year and contraction of both margins are concerning.

Earnings of Other MedTech Majors at a Glance

QIAGEN carries a Zacks Rank #4 (Sell).

Some better-ranked companies, which posted solid results this earnings season, are Edwards Lifesciences (EW - Free Report) , Thermo Fisher Scientific TMO and ResMed RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the consensus estimate by 1.3%.

ResMed reported first-quarter fiscal 2020 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, surpassing the Zacks Consensus Estimate by 3.6%.

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