Source: Qiagen NV

Qiagen NV (NYSE:QGEN) solutions are used every day by healthcare providers to analyze patient DNA and RNA in order to guide treatment and by researchers pursuing next generation medicine. The opportunity for Qiagen to help the industry deliver the right drug to the right patient at the right dose at the right time is big, but a significant drop-off in revenue from a legacy product meant that potential didn't translate into significant sales growth last year.

In 2014, Qiagen reported that its sales grew by just 4% to $1.35 billion (at constant currency exchange rates); however, remove the headwind from a 40% drop in U.S. HPV testing sales and revenue would've climbed by 9%.

By the numbers
Qiagen is in the midst of restructuring itself away from its reliance on HPV testing, and as a result, investors may want to focus less on the 5% top-line headwind created by sagging HPV demand in the past year and more on the performance of the company's growth platform.

Sales of those growth products grew at double digit rates last year and now account for 30% of the company's revenue.

In Qiagen's molecular diagnostics business segment, which is Qiagen's largest business unit and accounts for 50% of its sales, growing demand for its next-generation products more than offset HPV's drag on the segment's revenue. For the full year, the molecular diagnostics segment sales actually improved by 4%.

Sales within the company's academia unit overcame challenging research funding obstacles to grow 2% on the year, including a 6% improvement in the fourth quarter. Thanks to improving instrument demand, the academia segment accounted for 23% of Qiagen's sales last year, up from 22% in 2013.

Qiagen's pharmaceuticals segment sales to R&D departments also climbed, particularly in America. Thanks to increasing instrument and consumable demand, the company's pharmaceutical segment sales grew 3% in 2014 versus a year ago and now represents 19% of Qiagen's total revenue.

The company's applied testing business, which serves forensics, veterinary, and food safety industries and accounts for 8% of Qiagen's total revenue, grew most quickly with sales increasing 9% year over year in 2014. The primary driver behind that growth was expanding use of genetic identification and bioinformatics solutions in forensics.

Source: Qiagen NV

Dropping to the bottom line
Qiagen remains profitable and continues to kick off shareholder-friendly cash flow.

For the full year, the company reported that after adjusting operating income to remove business integration and acquisition-related accounting expenses, but leaving in $25.5 million in one-time restructuring charges, it earned $312.5 million, down 2% from last year. That resulted in adjusted earnings per share of $1, down from $1.02 in 2013. In the fourth quarter, adjusted operating income totaled $71.6 million lead to EPS of $0.25.

Overall, the company's free cash flow grew by 15% to $201.4 million in 2014 and the company's cash and equivalents improved from $330.3 million at the end of 2013 to $392.7 million exiting December 2014.

Looking ahead
Since HPV sales fell by nearly half in 2014 and represented just 4% of sales in the fourth quarter, its headwind should ease throughout 2015. Qiagen expects that the HPV drag on sales will fall from a 5% headwind in 2014 to a headwind of between 3% to 4% in 2015.

Since the HPV headwind is easing, Qiagen's growth platform, larger installed customer base, and an improving environment for research spending, could allow it to post a better annual sales growth rate in 2015. Currently, Qiagen is guiding for 4% top line growth and EPS of between $1.16 and $1.18, which would be up nicely from the $1 it reported for 2014. If the company delivers on that forecast, 2015 could prove to be the final year that investors will have to worry about falling HPV demand, allowing them to focus more on the opportunities available through the growing use of personalized medicine.