QIAGEN reports preliminary Q3 2019 results and announces measures to prioritize resource allocation
- Preliminary Q3 2019 sales of about 3% CER growth (vs.~4-5% CER outlook), adjusted EPS in line with outlook
- Initiatives announced to free up resources to invest in best growth opportunities, in particular new partnership with Illumina in NGS clinical decision-making
Venlo, The Netherlands, October 7, 2019 – QIAGEN N.V. (NYSE: QGEN; Frankfurt Prime Standard: QIA) today announced preliminary sales results for the third quarter of 2019 and measures to prioritize resource allocation to the most attractive growth opportunities in its Sample to Insight portfolio, in particular in light of a new orientation for its next-generation sequencing (NGS) activities.
For the third quarter of 2019, QIAGEN currently expects preliminary total net sales growth of about 3% at constant exchange rates (CER) compared to the outlook for about 4-5% CER growth, and mainly due to significantly weaker-than-expected developments in China. Total sales growth was about 6% CER excluding China sales. QIAGEN anticipates adjusted EPS within its outlook for approximately $0.35-0.36 CER. Further information will be provided when QIAGEN plans to report results for the third quarter and first nine months of 2019 on October 30, 2019.
The measures to free up resources comes as QIAGEN announced a new strategic collaboration with Illumina Inc. to advance the use of NGS technologies in clinical decision-making. As a result, QIAGEN has established a new orientation for its NGS-related activities that involves focusing development activities on this collaboration as well as expanding its offering of universal NGS consumables solutions for use with any sequencer. QIAGEN intends to continue supporting customers of the GeneReader NGS System, which is a complete Sample to Insight system for the processing of smaller targeted gene panels, but has now decided to suspend ongoing NGS-related instrument development activities.
Additionally, QIAGEN is implementing initiatives, which are to be completed by the end of 2019, that include shifting its Global Operations organization to a regional manufacturing structure and expanding the scope of activities at QIAGEN Business Services (QBS) centers in Wroclaw, Poland, and Manila, Philippines.
As a result of these initiatives, QIAGEN plans to take a pre-tax restructuring charge of about $260-265 million (or about $1.14-1.15 per share after taxes), and predominantly in results for the third quarter of 2019. This charge includes approximately $195-200 million of non-cash items that are primarily related to the decision on NGS instrument development activities and comprised of charges for the impairment of software and instrument development, licenses, partnership valuations and other assets. Any related workforce reductions will be handled in a socially responsible manner with respect for affected employees and in compliance with local labor laws.
“We are disappointed with the sales performance in the third quarter of 2019, with growth trends adversely impacted by significantly weaker-than-expected developments in China beyond the previously announced discontinuation of our GeneReader NGS System joint venture. At the same time, we saw robust growth in our QuantiFERON latent TB test largely in line with our targets along with solid trends in the United States,” said Roland Sackers, Chief Financial Officer. “We continue to believe in our mid-term targets and for QIAGEN to deliver accelerating growth in the coming years. Additionally, our broad strategic partnership with Illumina is set to revitalize our NGS strategy and offer highly attractive opportunities in clinical decision-making by leveraging our complementary strengths. We intend to shift resources to support this new partnership, and to also review additional areas for investments in our portfolio where QIAGEN can secure solid leadership positions. We believe these decisions will help us deliver faster sales growth in the future while maintaining financial discipline and a focus on efficiency gains.”
QIAGEN N.V., a Netherlands-based holding company, is the leading global provider of Sample to Insight solutions that enable customers to gain valuable molecular insights from samples containing the building blocks of life. Our sample technologies isolate and process DNA, RNA and proteins from blood, tissue and other materials. Assay technologies make these biomolecules visible and ready for analysis. Bioinformatics software and knowledge bases interpret data to report relevant, actionable insights. Automation solutions tie these together in seamless and cost-effective workflows. QIAGEN provides solutions to more than 500,000 customers around the world in Molecular Diagnostics (human healthcare) and Life Sciences (academia, pharma R&D and industrial applications, primarily forensics). As of June 30, 2019, QIAGEN employed approximately 5,200 people in over 35 locations worldwide. Further information can be found at http://www.qiagen.com.
Certain statements contained in this press 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, launches, regulatory submissions, collaborations, markets, strategy, taxes or operating results, including without limitation its expected net sales, net sales of particular products (including anticipated sales of its QuantiFERON latent TB Test, its portfolio of next generation sequencing solutions and QIAstat-Dx), adjusted net sales, adjusted diluted earnings per share results, product launches (including anticipated launches of digital PCR products, a new version of its QuantiFERON-TB test, QuantiFERON-TB Access, the QIAstat-Dx panel for respiratory conditions and a CE-IVD marked panel for meningitis), placements of QIAsymphony modular PCR instruments, improvements in operating and financial leverage, currency movements against the U.S. dollar, and plans for investment in its portfolio and share repurchase commitments, 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 to customers in academia, pharma, applied testing and 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 and the integration of acquired technologies and businesses; and the other factors discussed under the heading “Risk Factors” contained in Item 3 of our most recent Annual Report on Form 20-F. 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).