QIAsymphony is on track for total placements to reach 1,750 by the end of the year. Image source: Qiagen.
Qiagen NV's (QGEN 1.40%) second-quarter numbers weren't particularly great, especially on the bottom line, but they point toward a continued recovery and an acceleration of growth in the second half.
Qiagen results: The raw numbers
|
Metric |
Q2 2016 Actuals |
Q2 2015 Actuals |
Change (YOY) |
|---|---|---|---|
|
Revenue |
$334.4 million |
$319.5 million |
5% |
|
Adjusted income from operations |
$69.2 million |
$78.9 million |
(12%) |
|
Adjusted earnings per share |
$0.24 |
$0.26 |
(7.7%) |
Data source: Company press release.
What happened with Qiagen this quarter?
- Revenue was up 5%, which is reasonable considering that Qiagen faced 1 percentage point of currency headwinds and the expected 2-percentage-point decline in growth due to declining sales of its HPV tests in the U.S. Add those back in, and sales could have been up 8% year over year.
- The revenue was boosted by consumables used on the company's QIAsymphony automation platform; those used for infectious diseases, for example, increased by a double-digit percentage at constant exchange rates. The growth in consumables should only continue as Qiagen installs more QIAsymphony machines; adding its goal of another 250 this year will bring the cumulative total to 1,750.
- Because of the one-time charges associated with acquisitions, adjusted income and earnings are a better way of measuring the company's bottom line.
- Nevertheless, adjusted operating income and adjusted earnings per share decreased year over year as the company spent more on research and development and its sales force. Those investments should start to pay off in the second half of the year.
What management had to say
Qiagen's CEO Peer Schatz pointed out that while the company booked less than half of its 2016 revenue guidance during the first half of the year, the goal is still attainable as revenue is expected to accelerate. Schatz explained: "This is why we keep on pointing to the full-year targets that we set. They are the same that we set at the beginning of the year -- the same that we reiterated at the end of the first quarter -- and we are continuing on this path."
Beyond the QIAsymphony, management is really excited about its GeneReader next-generation DNA sequencing platform. Schatz commented:
Starting 2011, what we saw was basically a significant shift of the applications. If you go through the NIH grant profiles you will see that the shift was away from more traditional research into next-generation sequencing and clinical research. That is a shift that we followed and prepared. And some of the things you are seeing now is the fruit of these initiatives that we created as the shift became more and more visible.
Looking forward
Management increased 2016 revenue expectations slightly from 6% growth at constant exchange rates to a range of 6% to 7%, but the increase was at least partially due to the acquisition of Exiqon, which closed in late June and is expected to add $10 million to revenue. As noted above, revenue in the second half of the year is expected to accelerate, with revenue in the third quarter expected to increase 8% to 9% at constant exchange rates.
Sales from Exiqon's non-coding RNA products won't hit the bottom line, though -- the acquisition is neutral toward earnings for now -- so adjusted EPS guidance remains at $1.10 to $1.11 per share at constant exchange rate.
