QIAGEN N.V. Reports Results For Third Quarter And First Nine Months Of 2014

VENLO, The Netherlands, October 29, 2014 /PRNewswire/ --

  • Adjusted net sales rise approximately 10% CER excluding U.S. HPV business
  • Growth drivers contribute about 30% of total sales, delivering more than 20% CER growth and creating solid foundation for future expansion
  • Free cash flow rises 18% to $72 million
  • QIAGEN reaffirms 2014 expectations for higher adjusted net sales and earnings

QIAGEN N.V. (NASDAQ: QGEN; Frankfurt Prime Standard: QIA) announced results of operations for the third quarter and first nine months of 2014, reaffirming full-year expectations announced in January 2014 for improvements in adjusted net sales and earnings.

"QIAGEN again delivered growth in adjusted net sales and earnings in the third quarter of 2014, and is on track to achieve our full-year goals. Our teams are executing on plans to deliver innovation and growth with many new products advancing toward launch in 2015 that will create opportunities across our entire spectrum of customers from life sciences research to clinical diagnostics," said Peer M. Schatz, Chief Executive Officer of QIAGEN N.V.

"Our growth drivers, now providing about 30% of total sales, are delivering increases at a strong double-digit pace and creating a solid foundation for further expansion. The modular QIAsymphony platform is set to reach 1,250 cumulative placements in 2014, with its superior capabilities and the growing content menu as key drivers for customers. Personalized Healthcare advanced in the third quarter as well, fueled by new FDA-approved and CE-marked companion diagnostics as well as a significant increase in new co-development projects, including ones involving the use of liquid biopsies. Our QuantiFERON-TB diagnostic is gaining broad adoption as the new 'gold standard' for detecting latent tuberculosis infections. Our bioinformatics portfolio is being expanded with new capabilities for analysis and interpretation of complex molecular data, addressing this major roadblock to broad adoption of next-generation sequencing technologies in translational research and clinical healthcare settings. We are determined to deliver on our goals for 2014, overcoming the headwind of reduced U.S. sales for our HPV test and preparing for more innovation and growth as well as exciting new product launches in 2015."

Third quarter 2014 results 


   
                                                                             Change
    In $ millions, except per share information       Q3 2014    Q3 2013    $      CER
    Net sales, adjusted                                 336.8      323.8    4%     4%
    Operating income, adjusted                           84.8       79.5    7%
    Net income, adjusted                                 66.0       62.3    6%
    Diluted EPS, adjusted                               $0.27      $0.26
    Diluted EPS CER, adjusted                           $0.27      $0.26

For information on adjusted figures, please refer to the reconciliation table accompanying this release. Adjusted net sales is a non-GAAP measure that
includes all revenue contributions from Ingenuity (acquired April 29, 2013), CLC bio (acquired August 22, 2013) and BIOBASE (acquired April 3, 2014). Adjusted results for 2013 have also been restated with QIAGEN's policy as of January 2014 to no longer adjust for restructuring costs and share-based
compensation.

Adjusted net sales rose 4% at constant exchange rates (CER) in the third quarter of 2014, driven by higher sales of consumables and related revenues (+3% CER, 87% of sales) and instruments (+11% CER, 13% of sales), as well as improved results in the Molecular Diagnostics, Applied Testing and Pharma customer classes. About one percentage point of total CER growth came from the bioinformatics acquisitions of CLC bio (as of August 22, 2013) and BIOBASE (as of April 3, 2014), and three percentage points from the rest of the business. Currency movements had no tangible impact on reported net sales growth. Excluding sales of U.S. HPV test products in both periods, adjusted net sales rose 10% CER in the third quarter of 2014.

Operating income in the third quarter of 2014 was $50.3 million, up 46% from $34.4 million in the same period of 2013, which included one-time charges for completion of productivity initiatives. Adjusted operating income, which excludes items such as business integration, acquisition-related costs and amortization of intangible assets acquired in business combinations, rose 7% to $84.8 million in the 2014 quarter from $79.5 million a year ago, as the adjusted operating income margin remained at 25% of adjusted net sales. Net income attributable to owners of QIAGEN N.V. was $34.7 million, or $0.14 per diluted share (based on 241.4 million diluted shares) in the third quarter of 2014 compared to $40.7 million, or $0.17 per share (based on 242.4 million diluted shares) in the year-ago period. Results for the third quarter of 2014 included approximately $0.03 of dilution related to the convertible bond transactions completed in March 2014. Adjusted net income rose 6% to $66.0 million, or $0.27 per share ($0.27 CER per share), from $62.3 million, or $0.26 per share.

"QIAGEN's results for the third quarter and the first nine months of 2014 met our targets and provided a healthy financial position to support the ongoing business expansion," said Roland Sackers, Chief Financial Officer of QIAGEN N.V. "We are reaffirming our targets of higher adjusted sales and earnings for the full year. In pursuit of our commitment to disciplined capital allocation, we initiated our third $100 million share repurchase program during the quarter and will take similar programs under consideration in the future."

First nine months 2014 results 


   
                                                                             Change
    In $ millions, except per share information       9M 2014    9M 2013    $      CER
    Net sales, adjusted                                 985.4      943.7    4%     4%
    Operating income, adjusted                          240.8      222.8    8%
    Net income, adjusted                                180.6      166.5    8%
    Diluted EPS, adjusted                               $0.75      $0.69
    Diluted EPS CER, adjusted                           $0.75      $0.69

For information on adjusted figures, please refer to the reconciliation table accompanying this release. Adjusted net sales is a non-GAAP measure that
includes all revenue contributions from Ingenuity (acquired April 29, 2013), CLC bio (acquired August 22, 2013) and BIOBASE (acquired April 3, 2014).
Adjusted results for 2013 have also been restated with QIAGEN's policy as of January 2014 to no longer adjust for restructuring costs and share-based
compensation.

In the first nine months of 2014, adjusted net sales rose 4% at constant exchange rates (CER) on improving results in all customer classes and regions as well as higher sales of consumables and related revenues (+4% CER, 88% of sales) and instruments (+3% CER, 12% of sales). Total CER growth included about two percentage points from the bioinformatics acquisitions of Ingenuity (as of April 29, 2013), CLC bio (as of August 22, 2013) and BIOBASE (as of April 3, 2014), and about two percentage points from the rest of the business. Currency movements had no tangible impact on reported net sales growth. Excluding sales of U.S. HPV test products, adjusted net sales rose 9% CER in the first nine months of 2014.

Operating income in the first nine months of 2014 was $140.3 million compared to $29.3 million in the same period of 2013, which included one-time charges for completion of productivity initiatives. Adjusted operating income, which excludes items such as business integration, acquisition-related costs and amortization of intangible assets acquired in business combinations, rose 8% to $240.8 million from $222.8 million, as the adjusted operating income margin remained at 24% of sales compared to the same period in 2013. Net income attributable to owners of QIAGEN N.V. was $90.8 million, or $0.38 per diluted share (based on 241.7 million diluted shares) in the first nine months of 2014 compared to $8.9 million, or $0.04 per share (based on 241.4 million diluted shares) in the year-ago period. Results for the first nine months of 2014 included approximately $0.09 of dilution related to the convertible bond transactions completed in March 2014. Adjusted net income rose 8% to $180.6 million, or $0.75 per share ($0.75 CER per share), from $166.5 million, or $0.69 per share.

At September 30, 2014, cash and cash equivalents rose to $484.2 million from $330.3 million at December 31, 2013, mainly due to proceeds from convertible notes transactions completed in the first half of 2014. Net cash provided by operating activities in the first nine months of 2014 was $208.9 million compared to $176.8 million in the same period of 2013, with free cash flow of $148.7 million in the 2014 period compared to $120.9 million a year ago. Net cash used in investing activities was $280.8 million, up from $237.1 million a year ago. Net cash generated from financing activities was $230.5 million in the first nine months of 2014 compared to cash used in financing activities of $49.8 million in the same period of 2013.

Business review 

Geographic regions 

In the third quarter of 2014, the Europe / Middle East / Africa region (+13% CER / 33% of sales) led the performance on improving results in particular in the Nordic region and Turkey. The Americas (-3% CER / 47% of sales) was impacted by the expected decline in revenues related to HPV testing solutions, as well as lower sales in Brazil and Mexico due to the timing of national tenders. The Asia-Pacific / Japan region (+6% CER / 19% of sales) delivered double-digit CER growth in China, and also improvements in Japan and South Korea. Sales in the top seven emerging markets (-1% CER / 14% of sales) were hampered by lower sales in Russia, Brazil and Mexico offsetting gains in China, South Korea, Turkey and India.

Product categories  

Consumables and related revenues (Q3 2014: +3% CER, 87% of sales) benefited from gains in Applied Testing, Molecular Diagnostics and Pharma, while Academia was stable compared to the third quarter of 2013. Contributions from the bioinformatics portfolio acquired during 2013 and 2014 supported results in all customer classes. In the first nine months of 2014, consumables and related revenues rose 4% CER and provided 88% of sales.

Instruments (Q3 2014: +11% CER, 13% of sales) grew at a double-digit CER pace in Molecular Diagnostics, and at solid single-digit CER rates in Pharma and Applied Testing, which more than offset a modest decline in Academia. In the first nine months of 2014, instrument sales (which also include instrument service revenues) rose 3% CER and provided 12% of sales.

Customer classes  

An overview of performance in QIAGEN's four customer classes (based on adjusted net sales):

Molecular Diagnostics (Q3 2014: +6% CER, 52% of sales) advanced on the ongoing solid expansion of QIAGEN's growth drivers, overcoming the expected decline in U.S. HPV test product sales (-46%, 6% of sales) and helping to deliver +19% CER from the rest of the portfolio. The QuantiFERON-TB latent tuberculosis test delivered strong gains in the U.S. and Europe, in line with a 20% CER annual growth rate, and remains on track to exceed $100 million of sales in 2014. Profiling consumables rose more than 20% CER, benefiting from the growing installed base of the QIAsymphony automation system and the related menu expansion in Europe and the U.S. Personalized Healthcare sales also advanced at a solid double-digit CER pace on improving demand for companion diagnostic assays and significantly higher revenues from pharmaceutical co-development projects in the third quarter of 2014. Sales of HPV testing products outside the U.S. declined in the third quarter of 2014, reflecting the impact of timing for national tenders compared to 2013. In the first nine months of 2014, Molecular Diagnostics sales rose 5% CER and provided 51% of sales.

Applied Testing (Q3 2014: +7% CER, 8% of sales) delivered solid single-digit CER sales gains from consumables and instruments, particularly in Human ID / forensics, as well as from expansion of the bioinformatics portfolio to these customers. In the first nine months of 2014, Applied Testing sales also rose 7% CER and provided 8% of sales.

Pharma (Q3 2014: +4% CER, 19% of sales) saw higher instrument sales in the third quarter along with a similar single-digit CER increase in contributions from consumables and bioinformatics, driven by the strongest expansion in the Americas region. In the first nine months of 2014, Pharma sales also rose 4% CER and provided 19% of sales.

Academia (Q3 2014: 0% CER, 21% of sales) experienced a modest decline in instrument sales and largely flat consumable sales compared to the third quarter of 2013, with funding conditions improving modestly in some European countries and the United States during the third quarter of 2014. QIAGEN continues to expect funding levels to improve during the fourth quarter of 2014 and in 2015, but effectively remaining below levels seen in previous years. In the first nine months of 2014, Academia sales rose 1% CER and provided 22% of sales.

Accelerating pace of innovation and growth in 2014 

QIAGEN continues to accelerate the pace of innovation and growth in 2014 by executing on targeted initiatives to expand our leadership in addressing the rapidly evolving needs of customers to transform biological samples into valuable molecular insights. Our focus is on these growth drivers: (1) further increasing adoption of the QIAsymphony automation platform and expanding the test menu, (2) extending leadership in Personalized Healthcare with innovative companion diagnostics to guide treatment decisions, (3) establishing the QuantiFERON-TB test as the modern "gold standard" for latent tuberculosis control, (4) expanding the use of QIAGEN bioinformatics to analyze, interpret and report complex biological data; and (5) creating a leading portfolio of universal NGS solutions and complete workflows to drive its adoption in clinical research and diagnostics.

Among recent developments:

QIAsymphony delivering growth in placements as content menu expands  

  • After surpassing 1,000 cumulative QIAsymphony placements in 2013, QIAGEN is moving ahead toward achieving its goal of 1,250 cumulative placements by the end of 2014. Approximately 60% of current placements are in Molecular Diagnostic laboratories, and 40% are in the Life Sciences with Applied Testing, Pharma and Academia customers.
  • The growing installed base of QIAsymphony instruments and expanding content menus are driving double-digit CER growth in related consumables. So far in 2014, seven QIAGEN tests on the Rotor-Gene Q real-time PCR platform, a member of the QIAsymphony family, have been approved by regulators in Europe and/or the United States. QIAGEN is advancing various additional development projects toward regulatory submissions.

Personalized Healthcare leadership gaining further momentum 

  • A new master collaboration agreement with Astellas Pharma Inc., an R&D-driven global pharmaceutical company headquartered in Japan, aims to develop companion diagnostics paired with Astellas drug candidates in cancer and other diseases. The scope of the agreement can include certain sample types, platforms, indications or biomarkers, thereby giving Astellas access to QIAGEN's development capabilities for assays based on PCR, NGS and multimodal testing technologies using liquid and tissue biopsies. Two initial projects focus on oncology and diagnostics paired with compounds currently in early clinical development: ASP5878, a fibroblast growth factor receptor (FGFR) inhibitor, and ASP8273, an EGFR inhibitor.
  • QIAGEN recently submitted a premarket approval (PMA) application to the FDA for U.S. regulatory approval of a companion diagnostic paired with a drug of an undisclosed partner.


To read full press release, please click here.

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