Qiagen NV Is Prepping for Growth

Qiagen (QGEN 0.61%) reported fourth-quarter earnings last week, which didn't come as much of a surprise since the lab-test maker had already announced preliminary numbers last month. Nevertheless, let's check in and see how the company fared.

Qiagen results: The raw numbers

What happened with Qiagen this quarter?

• While fourth-quarter sales were down about 3% year over year, its sales would have been up 3% year over year at constant exchange rates.
• Income from operations and earnings look great, but the year-ago quarter had some large business-integration and acquisition-related costs that dragged down earnings.
• Excluding those and other items, adjusted operating income and adjusted earnings per share were up 26% and 24%, respectively; Qiagen is keeping costs under control, allowing earnings to grow even with stalled revenue growth.
• U.S. HPV sales continue to go down -- 14% year over year in the fourth quarter -- but they now only make up 3% of sales, so the impact on overall revenue isn't nearly as bad as it was when the decline began.

IMAGE SOURCE: Qiagen.

What management had to say
CFO Roland Sackers highlighted some of the molecular diagnostics products that are selling well: "Bright spots included the ongoing 20% constant exchange rate growth pace for the QuantiFERON latent TB test, and double digit constant exchange rate growth in the sales of consumables for the QIAsymphony system as we achieved our 2015 goal for new system placements."

Peer Schatz, Qiagen's CEO, talked about the rollout of the GeneReader next-generation sequencing system that launched in November, "What customers like the most is that we are not talking about an instrument. We are not solely promoting tech specs. Instead, we are engaged in discussions about offering them a complete and reliable solution that can generate actionable insights while providing transparency about cost."

Rather than competing with the large high-throughput DNA sequencing machines from Illumina (ILMN -1.35%) and Pacific Biosciences of California, Qiagen's GeneReader is a tabletop machine that's designed to be more convenient. While Illumina makes smaller machines, too, Qiagen has the advantage of being a one-stop shop because it has kits for purifying DNA from cells, which is required upstream of the actual sequencing.

Looking forward
Management gave 2016 guidance for revenue growth of 6% excluding an expected 3% impact from currency changes. We'll see growth accelerate as the year progresses since guidance for the first quarter is only for 2% growth at constant exchange rates.

On the bottom line, management expects adjusted earnings per share at constant exchange rate of $1.10 to $1.11 for the year, up from $1.05 per share last year. Keeping with the theme of accelerating growth, first-quarter adjusted earnings are expected to be in the $0.19 to $0.20 range, falling short of a quarter of the yearly guidance.