Qiagen Starts Slowly but Is On Track

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Qiagen (NYSE: QGEN), the molecular testing and lab supply company, started the year off with growth at the low end of its yearly guidance, although the first-quarter sales number was in line with where management expected to start the year.

Qiagen results: The raw numbers

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Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Revenue

$343.6 million

$307.7 million

12%

Income from operations

$47.9 million

$23.8 million

102%

Earnings per share

$0.14

$0.08

75%

What happened with Qiagen this quarter?

  • Revenue growth benefited from changes in currency rates; looking at constant exchange rates, revenue was up 6%, which was at the high end of management's first-quarter guidance for year-over-year growth of 5% to 6%.
  • Molecular diagnostics, which accounts for about half of the company's revenue, produced sales growth of 9% at constant exchange rates, boosted by the QuantiFERON-TB test, which grew by double digits at constant exchange rates. Increased sales of personalized healthcare and infectious disease testing products also helped boost the segment.
  • While much smaller, the pharma segment grew 8% year over year at constant exchange rates, while academia and applied testing were the laggards at 3% and flat growth, respectively.
  • The company launched QIAstat-Dx in Europe after announcing the acquisition of STAT-Dx a few months ago. The syndromic testing unit allows for the measurement of multiple markers, which can more quickly and accurately diagnose infections. The new machine isn't expected to produce meaningful sales until the second half of the year.
  • Qiagen partnered with Natera to jointly develop cell-free DNA-based genetic tests for Qiagen's next-generation sequencing machine, the GeneReader, which should further boost its potential usefulness in diagnostic labs.

What management had to say

As with any quarter, it's important to keep an eye on placements of the QIAsymphony machine, which runs a multitude of tests, because those tests result in recurring revenue, quarter after quarter. CEO Peer Schatz said the company is in good shape on that front:

Schatz is quite excited about the potential for the QIAstat-Dx and its ease of adoption:

Looking forward

Management reaffirmed its 2018 guidance for sales growth in the 6% to 7% range and adjusted earnings of about $1.31 to 1.33 per share, both at constant exchange rates.

As it was this quarter, the second-quarter sales growth will be a little below the expected 2018 average in the 5% to 6% range at constant exchange rates, while adjusted earnings are expected to be $0.31 to $0.32 per share, again at constant exchange rates. To meet its annualized goal, Qiagen will need to accelerate in the second half of the year; fortunately it has the QIAstat-Dx launch to help get it there.

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Brian Orelli has no position in any of the stocks mentioned. The Motley Fool recommends Qiagen. The Motley Fool has a disclosure policy.