QIAGEN Reports Third Quarter 2013 Results
VENLO, The Netherlands, October 29, 2013 /PRNewswire/ --
- Q3 2013 results: Adjusted net sales $323.8 million (+7% CER) on growth in all regions and customer classes; adjusted operating income $87.7 million; adjusted diluted EPS $0.28
- Moving ahead in 2013 to accelerate innovation and growth across QIAGEN portfolio:
- QIAsymphony breaks through 1,000 installed systems, driven by expansion of industry-leading menu that includes European launch of new artus CT/NG assay
- NGS initiative building momentum, as acquisition of CLC bio and combination with Ingenuity build leadership in biological data analysis, interpretation and reporting
- Personalized Healthcare leadership strengthened with U.S. launch of therascreen EGFR companion diagnostic and new pharma co-development projects
- Top seven emerging markets deliver 23% CER growth in first nine months of 2013
- QIAGEN reaffirms guidance for higher adjusted sales and earnings in 2013
QIAGEN N.V. (NASDAQ: QGEN; Frankfurt Prime Standard: QIA) announced results of operations for the third quarter and first nine months of 2013, delivering sales growth in all regions and customer classes along with improved profitability.
Adjusted net sales (including non-GAAP revenues from Ingenuity) in the third quarter rose 6% from the year-ago quarter (+7% at constant exchange rates, CER) to $323.8 million. Adjusted operating income in the quarter rose 5% to $87.7 million, with the adjusted operating income margin at 27% of adjusted net sales. Adjusted diluted earnings per share (EPS) rose to $0.28 in the third quarter of 2013 from $0.26 in the same period of 2012.
"We are executing on strategic initiatives in 2013 to accelerate innovation and growth by expanding QIAGEN's portfolio of new products. We exceeded our communicated targets for improved sales and adjusted earnings in the third quarter of 2013, delivering growth in all customer classes and regions, particularly in emerging markets, under challenging economic conditions," said Peer M. Schatz, Chief Executive Officer of QIAGEN N.V. "Molecular Diagnostics delivered double-digit sales growth, as the QIAsymphony automation platform broke through 1,000 installed systems and we achieved further global expansion of the QuantiFERON-TB latent tuberculosis test as well as our industry-leading Personalized Healthcare franchise. The initiative to enter targeted areas of next-generation sequencing is showing strong momentum, leveraging QIAGEN's leadership in Sample & Assay Technologies to develop an ecosystem of universal products and services for next-generation sequencing, as well as the integrated, automated sample-to-insight GeneReader NGS benchtop workflow. The acquisition of CLC bio, which offers leading bioinformatics analysis software, reaffirms our strategic decision to become a leader in next-generation bioinformatics, with a focus on biological analysis and interpretation/reporting. With the capabilities, resources and employees to continue our transformation despite a challenging macroeconomic environment, QIAGEN continues to be well-positioned to achieve our goals for 2013 and to create new drivers for future growth."
Third quarter 2013 results
Change In $ millions, except per share information Q3 2013 Q3 2012 $ CER Net sales, adjusted 323.8 304.3 6% 7% Operating income, adjusted 87.7 83.7 5% Net income, adjusted 68.4 62.3 10% Diluted EPS, adjusted $0.28 $0.26 For information on the adjusted figures, please refer to the reconciliation table accompanying this release. Adjusted net sales is a non-GAAP measure that includes all revenue contributions of Ingenuity following the acquisition on April 29, 2013. Due to purchase accounting rules, reported net sales is reduced by fair value adjustments to deferred revenue related to sales contracts executed by Ingenuity prior to the acquisition. Reconciliations of reported results in accordance with U.S. GAAP to adjusted results are included in the tables accompanying this release.
Adjusted net sales grew 7% at constant exchange rates (CER) in the third quarter of 2013 on growth in all regions and customer classes. Total CER sales growth was split evenly between the ongoing product portfolio and contributions from Ingenuity Systems, Inc. (acquired April 29, 2013). Currency movements had a negative impact of approximately one percentage point on reported sales growth.
Operating income declined 12% to $34.4 million in the third quarter of 2013 from $39.0 million in the same period of 2012, with approximately $12.5 million of restructuring charges taken in the 2013 period for the final group of projects in a major efficiency project being completed this year. Adjusted operating income, which excludes items such as restructuring and acquisition-related costs, share-based compensation and amortization of intangible assets, rose 5% to $87.7 million from $83.7 million in year-ago quarter. The adjusted operating income margin was 27.1% of adjusted net sales in the third quarter of 2013 compared to 27.5% in the 2012 period.
Net income attributable to owners of QIAGEN N.V. rose 39% to $40.7 million, or $0.17 per diluted share (based on 242.4 million shares), from $29.2 million, or $0.12 per diluted share (based on 242.1 million shares) in the year-ago period. Adjusted net income attributable to owners of QIAGEN N.V. rose 10% to $68.4 million, which included currency gains, from $62.3 million in the year-ago period. Adjusted diluted EPS rose to $0.28 per share compared to $0.26 per share in the 2012 quarter.
"QIAGEN is well-positioned for a new growth wave that is taking shape with a portfolio of innovative and differentiated products that address the needs of our customers by transforming biological samples into valuable molecular insights," said Roland Sackers, Chief Financial Officer of QIAGEN N.V. "We have the financial resources to invest in attractive opportunities that create value while also improving returns to shareholders, and the launch of our new $100 million share repurchase program in the third quarter of 2013 is a signal of that commitment. Our teams are determined to generate tangible benefits from the recently completed efficiency program through faster growth, improving profitability and higher cash flows. QIAGEN is on track to deliver improved results in 2013 while building on a broad range of attractive growth opportunities."
First nine months 2013 results
Change In $ millions, except per share information 9M 2013 9M 2012 $ CER Net sales, adjusted 943.7 907.9 4% 4% Operating income, adjusted 249.5 250.4 0% Net income, adjusted 187.3 177.9 5% Diluted EPS, adjusted $0.78 $0.74 For information on the adjusted figures, please refer to the reconciliation table accompanying this release. Adjusted net sales is a non-GAAP measure that includes all revenue contributions of Ingenuity following the acquisition on April 29, 2013. Due to purchase accounting rules, reported net sales is reduced by fair value adjustments to deferred revenue related to sales contracts executed by Ingenuity prior to the acquisition. Reconciliations of reported results in accordance with U.S. GAAP to adjusted results are included in the tables accompanying this release.
Adjusted net sales rose 4% at constant exchange rates (CER) in the first nine months of 2013 on growth in all regions and customer classes, particularly Molecular Diagnostics (+8% CER), as higher sales of consumables and other revenues (+6% CER) more than offset lower instrument sales (-4% CER). Total sales growth of 4% CER was split evenly between the existing product portfolio and the acquisitions of Ingenuity (acquired April 29, 2013) and AmniSure International LLC (acquired May 3, 2012). Currency movements had no significant impact on reported sales growth in the nine-month period.
Operating income in the first nine months of 2013 amounted to $29.3 million compared to $120.9 million in the same period of 2012, due mainly to restructuring charges of approximately $101.0 million related to a major efficiency project completed in 2013. Adjusted operating income, which excludes items such as restructuring and acquisition-related costs, share-based compensation and amortization of intangible assets, was largely unchanged at $249.5 million in the first nine months of 2013 compared to $250.4 million in the 2012 period. The adjusted operating income margin declined to 26.4% of adjusted net sales from 27.6% in the year-ago period.
In the first nine months of 2013, net income attributable to owners of QIAGEN N.V. amounted to $8.9 million, or $0.04 per diluted share (based on 241.4 million shares), compared to net income of $91.1 million, or $0.38 per share (based on 240.4 million shares), in the year-ago period. Adjusted net income rose 5% to $187.3 million, or $0.78 per share on an adjusted diluted EPS basis, from $177.9 million, or $0.74 per share in the 2012 period.
At September 30, 2013, cash and cash equivalents declined to $280.0 million from $394.0 million at December 31, 2012. Net cash provided by operating activities amounted to $176.8 million in the first nine months of 2013 compared to $175.0 million in the same period of 2012, with free cash flow improving to $120.9 million compared to $107.0 million in the year-ago period. Net cash used in investing activities was $237.1 million in the first nine months of 2013, higher than the $222.7 million of net cash used in the same period of 2012. Net cash used in financing activities was $49.8 million in the first nine months of 2013, mainly due to completion of a share repurchase program in March 2013 and launch of a subsequent share repurchase program, compared to cash provided by financing activities of $81.6 million in the year-ago period.
In the third quarter of 2013, adjusted net sales in all regions advanced at single-digit CER rates. The Americas (+8% CER, 50% of sales) advanced on higher sales in Mexico, Brazil and the U.S., where sales growth more than offset lower sales of HPV screening products. The Asia-Pacific / Japan region (+7% CER, 19% of sales) was led by solid gains in China, India and Taiwan, while sales in Japan were largely unchanged. The Europe / Middle East / Africa region (+4% CER, 30% of sales) rose on improving results in Turkey, the Nordic region, Germany and Italy. Sales in the top seven emerging markets (China, Brazil, Turkey, Korea, India, Russia and Mexico) grew 38% CER and represented 15% of total sales, with double-digit gains in many key markets.
In the third quarter of 2013, consumables and related revenues (+8% CER, 88% of sales) rose across all customer classes, led by Molecular Diagnostics and Applied Testing. Contributions from products in the Ingenuity portfolio (recorded in this product category) also supported underlying sales growth in Academia, Pharma and Molecular Diagnostics. For the first nine months of 2013, consumables and related revenues were up 6% and represented 88% of sales.
Instruments (+0% CER, 12% of sales) were led by double-digit CER growth in Molecular Diagnostics, supported by growing revenues from multi-year reagent rental placements of the QIAsymphony automation system. Instrument sales were also higher in Applied Testing, which has faced a tough comparison against very strong results during 2012. Pharma and Academia sales of instruments were lower compared to the year-ago period, mainly due to reduced funding for life sciences research. For the first nine months of 2013, instrument sales declined 4% and represented 12% of sales.
An overview of performance in QIAGEN's four customer classes (based on total sales results including organic growth and acquisitions at CER):
Molecular Diagnostics (Q3 2013: +10% CER, 51% of adjusted net sales) delivered double-digit CER growth in both consumables and instruments, backed by growing sales of the QIAsymphony automation platform and QuantiFERON. In Prevention, the QuantiFERON-TB test for detection of latent tuberculosis (TB) maintained a growth pace of more than 20% CER, led by rapid penetration in the U.S. Sales of products for HPV testing (+3% CER, 17% of total adjusted net sales) continued to decline in the U.S. at the expected rate of approximately 10% CER due to implementation of multi-year customer agreements in light of new competitor pricing actions. Sales of products related to HPV were sharply higher in the rest of the world. In Profiling, the growing base of installed QIAsymphony platforms drove consumables sales growth at a double-digit CER pace. Personalized Healthcare sales were mixed, with growth in sales of companion diagnostic assays partially offset by timing-related significantly lower revenues from co-development projects compared to the same period in 2012. In Point of Need, the AmniSure assay achieved results above its 20% CER target growth rate. In the first nine months of 2013, Molecular Diagnostics rose 8% CER and represented 50% of sales.
Applied Testing (Q3 2013: +6% CER, 8% of adjusted net sales) returned to growth in the third quarter of 2013, with solid single-digit CER growth in both consumables and instruments and most of the incremental gains coming from the Asia-Pacific / Japan region. In the first nine months of 2013, Applied Testing sales were up 2% CER and represented 8% of sales.
Pharma (Q3 2013: +3% CER, 19% of adjusted net sales) delivered improved results as single-digit CER growth in consumables more than offset a double-digit CER decline in instruments. All regions contributed to growth, which also included first-time contributions from Ingenuity. In the first nine months of 2013, Pharma sales were up 1% CER and represented 19% of sales.
Academia (Q3 2013: +2% CER, 22% of adjusted net sales) grew in all regions in the third quarter of 2013 at single-digit CER rates, with improving consumables sales but sharply lower instrument sales. The Asia-Pacific / Japan region showed the strongest growth, led by China, while conditions remained weak in the U.S. due to the ongoing U.S. government sequestration (which took effect in March 2013) and cautious buying patterns ahead of the U.S. government shutdown in October 2013. The first-time contributions from Ingenuity added to the underlying sales performance, which was largely unchanged compared to the third quarter of 2012. In the first nine months of 2013, Academia sales were flat and represented 23% of sales.
Accelerating innovation and growth in 2013
QIAGEN is accelerating the pace of innovation and growth in 2013 despite challenging market conditions. Building on the progress of strategic initiatives to leverage QIAGEN's leadership in Sample & Assay Technologies across all customer classes, goals for 2013 focus on continuing to drive platform success, adding test content for use in all customer classes and broadening QIAGEN's geographic presence. Additional goals are to deliver efficiency and effectiveness through resource allocation, improve QIAGEN's position as an employer of choice and enhance customer experience.
Among recent developments in 2013:
- QIAsymphony breaks through 1,000 placements and expands menu: QIAGEN has recently reached an important milestone in the success of its QIAsymphony automation platform, surpassing 1,000 cumulative placements during the third quarter of 2013. QIAsymphony is the industry's first modular sample-to-result system designed to run commercial assays as well as laboratory-developed tests. Building on the more than 750 placements at the end of 2012, demand remains strong for the QIAsymphony platform among customers in Molecular Diagnostics and the Life Sciences customer classes, driven by having the broadest range of tests available on a platform. Important new product launches are expanding the content menu on QIAsymphony, and QIAGEN has a portfolio of more than 35 assays in development. In Europe, QIAGEN launched the artus CT/NG QS-RGQ Kit, a test optimized for the detection of Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (NG) infections. This new artus CT/NG QS-RGQ Kit for the QIAsymphony RGQ delivers a CE-IVD-compliant workflow that has been validated with vaginal, cervical and male urethral swabs and as well as with urine samples.
- Addition of CLC bio builds leadership in biological analysis: QIAGEN recently acquired CLC bio, a global leader in bioinformatics software with a focus on next-generation sequencing (NGS). This acquisition enables QIAGEN to create a complete workflow from biological sample to valuable molecular insights. It strengthens QIAGEN's rapidly emerging portfolio of "universal" products that can be used with any NGS sequencer as well as providing a key element to the portfolio of automated solutions for the GeneReader™ benchtop NGS sequencer workflow, which is currently in late-stage development. CLC bio, a privately-held company based in Aarhus, Denmark, was founded in 2005 and has created the leading commercial data analysis solutions and workbenches for NGS. It serves leading research institutions and top pharmaceutical companies worldwide. CLC bio's products are used as an integrating workbench to handle biological data generated by a sequencer through a series of analysis stages. The addition of this portfolio follows QIAGEN's recent acquisition of Ingenuity Systems, Inc., the market leader in solutions for handling biological data through the interpretation and reporting stages. CLC bio's leading products are CLC Genomics Workbench, a comprehensive and user-friendly analysis package for analyzing, comparing and visualizing NGS data; and CLC Genomics Server, a flexible enterprise-level infrastructure and analysis backbone for NGS data analysis. The "cross-platform" systems offered by CLC bio support all major NGS platforms. QIAGEN intends to offer client/server- based solutions using CLC bio products for the GeneReader system. Financial terms of the transaction were not disclosed. QIAGEN does not expect CLC bio to have a material financial impact on its results for 2013.
- Expanding leadership in biological interpretation and reporting: The rapid adoption of Ingenuity® Variant Analysis™, a market-leading solution based on the Ingenuity Knowledge Base, is solidifying the position of QIAGEN as the leader in the rapidly growing area of biological data interpretation and reporting. More than 4,000 users representing over 500 leading institutions already have adopted this solution as part of the rapid uptake in clinical areas. Interpretation of raw biological data is considered one of the most significant challenges in NGS applications, and QIAGEN's Ingenuity portfolio provides powerful solutions to address this bottleneck. Among the new customers is the Genetic Testing Laboratory at the Icahn Institute for Genomics and Multiscale Biology at Mount Sinai in New York, which has adopted Ingenuity Variant Analysis for research and translational genomics applications related to characterizing and identifying rare diseases. QIAGEN has also announced a new collaboration with the Center for Applied Genomics at the Children's Hospital of Philadelphia involving a large-scale NGS study to identify causal variants in rare childhood diseases.
- NGS initiative from biological sample to valuable molecular insights: QIAGEN is delivering on a strategic initiative to create an industry-leading portfolio of products and services to drive the adoption of next-generation sequencing (NGS) in clinical research and diagnostics. QIAGEN is creating differentiated solutions for workflow challenges. These solutions can accelerate the adoption of NGS in these targeted areas, particularly through improved automation compared to current systems to generate sequencing data as well as through the acceleration of data analysis and interpretation. Key elements include developing and commercializing an innovative sample-to-insight workflow incorporating the GeneReader™ benchtop NGS sequencer with the QIAcube and QIAcube NGS instruments for full automation of pre-analytical steps, and also integrating the market-leading biological data analysis, interpretation and reporting capabilities provided by CLC bio and Ingenuity. QIAGEN has placed the system with select customers for early testing, and initiatives are underway for a phased launch to select customer groups and broad commercialization in 2014. Another key element is commercializing "universal" solutions that are compatible with any NGS platform on the market and functional in a wide range of applications. Products launched to date include several pre-analytic kits, including the REPLI-g Single Cell Kit that enables sequencing from single cells and minute amounts of DNA with highly accurate results, and an expanding portfolio of GeneRead™ DNAseq gene panels for enrichment of targeted DNA regions, which are aligned with interpretation based on Ingenuity Variant Analysis. The current portfolio of nine cancer-focused gene panels is being expanded to 20 gene panels for use in cancer and other areas, including inherited diseases and cardiovascular conditions.
- Personalized Healthcare leadership with new products and collaborations: QIAGEN is advancing its global leadership in companion diagnostics, which are used by physicians to guide treatment decisions, through new product launches as well as new co-development agreements with leading pharmaceutical companies. In July, the U.S. Food and Drug Administration (FDA) approved the therascreen EGFR RGQ PCR Kit as a companion diagnostic to guide the use of the new targeted therapy Gilotrif® (afatinib) from Boehringer Ingelheim, which received FDA approval for use in metastatic non-small cell lung cancer (NSCLC) patients. Discussions with healthcare payers in the U.S. have been very positive, with reimbursement levels reflecting the value of this test in improving healthcare outcomes for patients. The EGFR approval follows the 2012 U.S. launch of the therascreen KRAS RGQ PCR Kit paired for use with Erbitux® (cetuximab) from Eli Lilly and Bristol-Myers Squibb for metastatic colorectal cancer patients. QIAGEN has been expanding its portfolio of co-development projects with agreements that include partnership extensions as well as new projects with pharmaceutical companies. In one of the new partnerships, which was announced on October 21, QIAGEN and Clovis Oncology (NASDAQ: CLVS) have entered into a framework agreement to co-develop and co-commercialize a companion diagnostic test to guide the use of CO-1686, which is currently in clinical development and targets an unmet clinical need in patients with epidermal growth factor receptor (EGFR) driven non-small cell lung cancer (NSCLC) for whom current EGFR-inhibiting drugs no longer control disease.
New $100 million share repurchase program underway
QIAGEN launched its second $100 million share repurchase program in early September. The first $10 million tranche was completed in early October with the repurchase of 483,576 shares on the Frankfurt Stock Exchange at a volume-weighted average price of EUR 15.62. Repurchased shares will be held in treasury in order to satisfy obligations for exchangeable debt instruments and employee share-based remuneration plans. Information on the progress of the program is available in the Investor Relations section of QIAGEN's website at http://www.qiagen.com.
QIAGEN continues to expect to deliver improved results for full-year 2013, with expected adjusted net sales growth of approximately 5% CER and adjusted diluted EPS of approximately $1.13. Full-year reported sales are expected to be adversely affected by currency movements during the year against the U.S. dollar, QIAGEN's reporting currency. For the fourth quarter of 2013, QIAGEN expects adjusted net sales growth of approximately 6% CER and adjusted diluted EPS of approximately $0.35. The full-year 2013 expectations reaffirm the previous guidance provided on July 30, 2013, and do not take into account further acquisitions that could be completed this year.
Conference call and webcast details
Information on QIAGEN's performance will be presented during a conference call on Wednesday, October 30, 2013, at 9:30 ET / 13:30 GMT / 14:30 CET (European times adjusted for the end of European Daylight Savings Time.) The corresponding presentation slides will be available for download shortly before the event at http://www.qiagen.com/About-Us/Investors/Events-and-Presentations/Conference-Calls, and a webcast will be available at this website. A replay will also be made available on this website.
Use of adjusted results
QIAGEN has regularly reported adjusted results, as well as results considered on a constant exchange rate basis, to give additional insight into its financial performance. These adjusted results include adjusted net sales, adjusted gross profit, adjusted operating income, adjusted net income attributable to owners of QIAGEN N.V., adjusted diluted EPS and free cash flow. Adjusted results are non-GAAP financial measures that QIAGEN believes should be considered in addition to the reported results prepared in accordance with generally accepted accounting principles, but should not be considered as a substitute. Free cash flow is calculated by deducting capital expenditures for Property, Plant & Equipment from cash flow from operating activities. QIAGEN believes certain items should be excluded from adjusted results when they are outside of its ongoing core operations, vary significantly from period to period, or affect the comparability of results with its competitors and its own prior periods. Reconciliations of reported results to adjusted results are included in the tables accompanying this release.
As of January 1, 2014, QIAGEN will implement two changes to its presentation of adjusted results. First, share-based compensation will be included as a cost in adjusted results, and information on share-based compensation will continue to be disclosed in QIAGEN's regulatory filings and annual reports. Furthermore, also as of January 1, 2014, with the completion of the efficiency project in 2013, costs for restructuring will only be adjusted for those related to business integration and acquisition-related activities.
Press release and tables with detailed financial information can be downloaded in PDF format at http://www.qiagen.com/about-us/press-releases/.
QIAGEN N.V., a Netherlands holding company, is the leading global provider of Sample & Assay Technologies that are used to transform biological materials into valuable molecular information. Sample technologies are used to isolate and process DNA, RNA and proteins from biological samples such as blood or tissue. Assay technologies are then used to make these isolated biomolecules visible and ready for interpretation. QIAGEN markets more than 500 products around the world, selling both consumable kits and automation systems to customers through four customer classes: Molecular Diagnostics (human healthcare), Applied Testing (forensics, veterinary testing and food safety), Pharma (pharmaceutical and biotechnology companies) and Academia (life sciences research). As of September 30, 2013, QIAGEN employed more than 4,100 people in over 35 locations worldwide. Further information can be found at http://www.qiagen.com.
Certain of the statements contained in this news release may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. To the extent that any of the statements contained herein relating to QIAGEN's products, markets, strategy or operating results, including without limitation its expected operating results, new product developments, new product launches, regulatory submissions, and financing plans are forward-looking, such statements are based on current expectations and assumptions that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations, regulatory processes and dependence on logistics), variability of operating results and allocations between customer classes, the commercial development of markets for our products in applied testing, personalized healthcare, clinical research, proteomics, women's health/HPV testing and nucleic acid-based molecular diagnostics; changing relationships with customers, suppliers and strategic partners; competition; rapid or unexpected changes in technologies; fluctuations in demand for QIAGEN's products (including fluctuations due to general economic conditions, the level and timing of customers' funding, budgets and other factors); our ability to obtain regulatory approval of our products; difficulties in successfully adapting QIAGEN's products to integrated solutions and producing such products; the ability of QIAGEN to identify and develop new products and to differentiate and protect our products from competitors' products; market acceptance of QIAGEN's new products, the consummation of acquisitions, and the integration of acquired technologies and businesses. For further information, please refer to the discussions in reports that QIAGEN has filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC).
Dr. Thomas Theuringer
Director Public Relations
Vice President Corporate Communications and Investor Relations
SOURCE Qiagen N.V.