) reported second quarter 2012 earnings of 14 cents per share, in
line with the year-ago quarter earnings. However, adjusting for
certain one-time items, EPS came in at 25 cents in the quarter,
beating the Zacks Consensus Estimate as well as the year-ago
quarter earnings by a couple of cents.
Net sales during the quarter grew a robust 9% (14% at constant
exchange rates, or CER) year over year to $307.2 million and
surpassed the Zacks Consensus Estimate of $304 million. The upside
in net sales was driven by double-digit sales growth across all the
operational regions of the company. Moreover, all the customer
classes, particularly Molecular Diagnostics and Applied Testing,
delivered encouraging results.
Qiagen primarily derives its revenues from molecular diagnostics,
applied testing, pharma and academia, which represented 48%, 8%,
20% and 24% of total sales, respectively, during the quarter.
Region wise, Americas (46% of revenues) witnessed a 7% increase in
sales at CER, driven by Applied Testing gains and QuantiFERON
latent TB test demand, which compensated for the expected decline
in the US HPV (human papillomavirus) assay sales. Revenues from
Europe- Middle East-Africa (35% of sales) and Asia-Pacific /Japan
(18% of sales) increased 18% and 20% at CER, respectively. Europe/
Middle East / Africa benefited from the expansion in Pharma and
Molecular Diagnostics, driven by the QIAsymphony automation system
as well as rapid growth in Personalized Healthcare. The growth in
Asia-Pacific /Japan came on the back of greater contribution from
Japan and China in the quarter, particularly in Molecular
Under product categories, Consumables and related revenues
(accounting for 86% of net sales in the quarter) rose 12% year over
year at CER, while instrumentation revenues (accounting for the
rest) increased by 28% at CER. The consumable sales during the
quarter benefited from double-digit growth in Molecular
Diagnostics. On the other hand, robust growth in instruments sales
was on the back of initiatives to secure new product placements
such as the QIAsymphony automation portfolio and its Rotor-Gene Q
real-time PCR platform.
Molecular diagnostics registered a 22% increase in sales at CER,
based on a broad portfolio of assays, which more than offset the
decline in HPV sales. In Prevention, the QuantiFERON latent TB test
contributed significantly to the total sales, benefiting from the
acquisition of Cellestis in August 2011. In Profiling, sales
increased in key markets for disease analysis product. In Point of
Need, the AmniSure acquisition contributed to growth.
Sales derived from applied testing were up 28% at CER, primarily
driven by strong instrument sales (doubled year over year) during
the quarter. Consumables sales also increased in the high
single-digits range. The company witnessed demand for human
identification and forensic products across all its geographic
Pharma sales rose 8% at CER primarily based on encouraging
performance in Asia-Pacific/ Japan, benefiting from the expansion
of R&D activities. Academia witnessed mere a 1% upside in net
sales, affected by lower instrument sales.
Qiagen exited the second quarter with cash and cash equivalent and
short-term investment of $266.3 million compared with $275.7
million at the end of fiscal 2011. Year-to-date, net cash provided
by operating activities were $100.0 million from $106.1 million in
the same period of 2011.
Moreover, the company initiated a share buyback program to
repurchase up to $100 million of its shares. The company is also
reviewing its current debt structure, which at the end of the
quarter remained at $447.1 million.
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Qiagen increased its 2012 outlook, though currency will continue to
be a headwind. For the full year, net sales are expected to
increase in the range of 8-9% (earlier range being 6-8%) at CER on
the back of mix of organic growth and contributions from
acquisitions (Cellestis and Ipsogen in 2011 and AmniSure in May
2012). For 2012, adjusted EPS has been raised by a penny on both
sides to $1.04−$1.06. The revised guidance is higher than the
current Zacks Consensus EPS and revenue estimates of $1.00 and
$1.24 billion, respectively.
The company provided its third quarter 2012 EPS guidance of 25
cents (in line with the current Zacks Consensus Estimate) on
revenue growth of 9-10% at CER. The EPS outlook for the third
quarter takes into account approximately one cent per share of
dilution for investments in the next-generation sequencing
initiative, which included the acquisition of Intelligent
Bio-Systems. The Zacks Consensus revenue Estimate of $306 million
for the third quarter of 2012 also falls within the projected
In spite of continued adverse currency movement, we are encouraged
with Qiagen's solid second quarter performance. Even amid a
challenging academic research market with austerity measures and
tight government budgets impacting domestic HPV assay sales, we are
impressed with the huge and growing companion diagnostics market,
which is currently gaining significant traction. Qiagen is also
adopting an aggressive acquisition strategy to widen its scope and
strengthen its position in the competitive landscape compared to
other major players like
Qiagen currently retains a short-term Zacks #3 (Hold) Rank.