Qiagen (NYSE: QGEN) continued its track record of beating earnings guidance, posting a first-quarter adjusted profit of $0.28 per share at constant exchange rates, above management's goal of $0.26 to $0.27 per share at constant exchange rates.
While the first-quarter beat is nice -- even if it was only by $0.01 -- to reach management's goal for 2019, the diagnostic testing company will need to pick up the pace in the second half of the year. Fortunately, management has a plan: the expected U.S. launch of the QIAstat, which runs multiple tests to help diagnose complex diseases.
Qiagen results: The raw numbers
|Metric||Q1 2019||Q1 2018||Year-Over-Year Change|
|Revenue||$348.7 million||$343.6 million||1.5%|
|Income from operations||$41.2 million||$47.9 million||(14%)|
|Earnings per share (EPS)||$0.13||$0.14||(7.1%)|
Data source: Qiagen.
What happened with Qiagen this quarter?
- Revenue was hurt by changes in currency exchange rates. At constant rates, revenue increased 6.1%, slightly exceeding management's goal of 5% to 6%.
- The molecular diagnostics division led the way, with sales up 10% at constant exchange rates. Sales of the company's tuberculosis test were up 15% at constant exchange rates. Management also noted that the consumables used on the QIAsymphony systems were growing nicely.
- Sales in the life sciences division were only up 3% at constant exchange rates. While instrument sales increased, sales of consumables were flat year over year due to a tough macro environment that's keeping pharma and academia from buying the company's research and testing products.
- The QIAstat-Dx continues its solid launch in Europe, adding about 1 percentage point to the total sales growth on a constant currency basis.
- The launch of the NeuMoDx is still in its infancy, but Qiagen is shooting for having 11 tests available on the system in Europe by the end of the year, more than double the four tests currently available.
- While operating income was down year over year, the GAAP measurement includes one-time items, such as acquisition-related items. On an adjusted basis, operating income increased 1%. Likewise adjusted EPS came in at $0.28 at constant exchange rates, compared to $0.26 in the year-ago quarter.
- The board authorized a new $100 million share repurchase program on top of the old plan that still has about $50 million left to be used.
QIAsymphony. Image source: Qiagen.
What management had to say
CEO Peer Schatz highlighted the potential for the NeuMoDx: "The NeuMoDx systems are truly disruptive next-generation solutions for molecular testing and clinical laboratories offering full automation, scalability and cost efficiency with ease of use and much faster time to result than others. We believe the market for clinical laboratory testing is currently around $2.7 billion annually and the feedback from customers on our novel solutions is truly exciting."
Schatz also pointed to the QIAstat for new growth, especially with the upcoming U.S. launch:
The QIAstat rollout in the United States is really an extremely important event for us. So, if you look at 2019, it is probably the most significant event for us that we currently foresee. The opportunity in the United States for syndromic testing -- it's an $800 million market -- but 80% of that -- 85% of that is the United States. So, anything that's happened outside the United States more anecdotal and should give us some indications of our ability to succeed in the United States.
Management reiterated its guidance for 2019 revenue growth of 7% to 8% at constant exchange rates. With second-quarter growth expected to be around 5% at constant exchange rates, Qiagen is clearly guiding for a strong second half of the year as sales of the QIAstat ramp up after an expected midyear FDA approval.
On the bottom line, management is looking for full-year adjusted diluted EPS of $1.45 to $1.47 at constant exchange rates, with the second quarter expected to fall in the $0.33 to $0.34 range. Doing the math for the first two quarters ($0.28 + $0.34 = $0.62), earnings will also be substantially weighted to the back half of the year.
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