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QIAGEN (QGEN) Q4 Earnings Beat Estimates, Margins Improve

QIAGEN N.V.’s QGEN fourth-quarter 2020 adjusted earnings per share (EPS) were 68 cents, up 41.7% year over year (up 42% at constant exchange rate or CER). Moreover, the figure surpassed the Zacks Consensus Estimate by 3%.

Notably, the bottom line exceeded the company’s EPS projection of 58-60 cents and the outlook of about 64-65 cents at CER, announced on Dec 8, 2020.

The adjustment excludes the impact of certain non-recurring items like business integration, acquisition, restructuring-related expenses, and purchased intangibles amortization expenses, among others.

GAAP EPS for the quarter was 91 cents per share, improving significantly from the year-ago growth per share of 19 cents.

For the full year, adjusted earnings were $2.15 per share, 50.3% up from the year-ago period. It also beat the Zacks Consensus Estimate by 0.9%.

Revenues in Detail

Net sales at actual rates in the fourth quarter rose 38.2% on a year-over-year basis to $571.2 million (up 36% at CER). Also, the top line exceeded the Zacks Consensus Estimate by 3.5%. Top-line growth also exceeded the company’s fourth-quarter expectation of at least 32% growth at CER.

QIAGEN N.V. Price, Consensus and EPS Surprise

 

Total revenues for 2020 were $1.87 billion, up 22.5% from the year-ago period. This also surpassed the Zacks Consensus Estimate by 1.1%.

Robust sales were recorded on improvements in non-COVID areas of the portfolio and strong demand for product groups addressing the critical demand for COVID-19 testing.

Geographical Revenue Update

In the quarter under review, sales from the Americas (43% of sales) totaled $247 million, up 38% on a reported basis (up 38% at CER).

Revenues from Europe, Middle East and Africa (40% of sales) rose 54% reportedly (up 48% at CER) to $225 million.

Further, revenues from Asia-Pacific/Japan (17% of sales) rose 14% year over year on a reported basis (up 10% at CER) to $99 million.

Segmental Details

As of the fourth quarter of 2020, QIAGEN had two major customer classes – Molecular Diagnostics and Life Sciences.

Molecular Diagnostics (representing 50% of net sales) revenues were up 45% on a reported basis (up 43% at CER) to $287 million.

Life Sciences (50% of total revenues) reported revenues of $284 million, up 32% on a reported basis (up 28% at CER).

Operational Update

Adjusted gross profit in the quarter under review rose 32.1% to $390.9 million. However, adjusted gross margin contracted 311 basis points (bps) to 68.4% due to a 53.3% rise in adjusted cost of revenues (adjusting for acquisition-related intangible amortization) to $180.4 million.

Sales and marketing expenses of QIAGEN rose 23.5% to $121.4 million year over year. Research and development expenses rose 36.4% year over year to $46.3 million whereas general and administrative expenses rose 25.3% year over year to $31.7 million.

Adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration, asset impairment) rose 38.5% year over year to $191.4 million in the fourth quarter. Adjusted operating margin expanded 9 bps to 33.5%.

Financial Update

QIAGEN exited 2020 with cash and cash equivalents, and short-term investments of $715.2 million, down from $753.2 million at the end of the previous year. Long-term debt (including current portion) was $1.88 billion in 2020, compared with $1.42 billion in the preceding year.

Cumulative net cash flow from operating activities at the end of 2020 was $457.8 million compared with $330.8 million a year ago.
The company spent $64 million on its share repurchase program over the 12 months of 2020.

Outlook

QIAGEN is upbeat about its progress over the past year and has accordingly reaffirmed its 2021 outlook, which was issued on Dec 8, 2020.

The company reinstated its expectation for full-year sales growth at around 18-20% at CER.     

For 2021, the company expects adjusted EPS in the range of $2.42-$2.46 CER. The Zacks Consensus Estimate for full-year adjusted EPS is pegged at $2.21.

The company has also provided its first-quarter 2021 expectations.

First-quarter net sales growth is expected to grow at least 45% at CER from $372.1 million in the same period of 2020. Adjusted EPS is expected in the range of 60-62 cents at CER from 34 cents in the year-ago quarter. The Zacks Consensus Estimate for first-quarter adjusted EPS is pegged at 57 cents.

Our Take

QIAGEN exited the fourth quarter of 2020 with better-than-expected revenues and earnings. It registered revenue growth across all geographies and both its operating segments in the fourth quarter. The company’s high level of sales for product groups used in the COVID-19 pandemic response drove the top line. Orders for the QIAcuity series of digital PCR platforms reached over 200 at the end of 2020, only a few months after the launch in September 2020. With the rise in demand for sequencing potential mutation, QIAseq SARS-CoV2 Primer Panel has been launched for use in comprehensive monitoring of sequence drift of the virus around the world.

During the quarter, QIAGEN has expanded specimen types that can be used on the existing NeuMoDx SARSCoV-2 test. Also, the FDA EUA approval has been obtained for the use of saliva samples collected with the NeuMoDx Saliva Collection Kit. With the recent launch of the QIAcuity OneStep Viral RT-PCR kit, QIAcuity platforms are being increasingly utilised in COVID-19 wastewater testing to quantify pathogen load in populations and track viral mutations. Expansion of the adjusted operating margin and a raised full-year outlook are impressive.

On the flip side, QIAGEN witnessed a slowdown in the fourth quarter in QuantiFERON latent tuberculosis test sales, mainly due to adverse trends in the Asia-Pacific region.

Zacks Rank and Key Picks

QIAGEN currently carries a Zacks Rank #3 (Hold).

A few other companies in the broader medical space that have announced quarterly results are Abbott Laboratories ABT, AngioDynamics, Inc. ANGO and IDEXX Laboratories, Inc. IDXX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%.

AngioDynamics reported second-quarter fiscal 2021 adjusted EPS of a penny against the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues of $72.8 million beat the consensus mark by 8%.

IDEXX Laboratories reported fourth-quarter 2020 earnings per share of $2.01, reflecting a 93.3% year-over-year rise. The figure surpassed the Zacks Consensus Estimate by 40.6%.  The bottom line grew 19.1% year over year to $720.9 million. Organically, growth was 17.2%. The metric exceeded the Zacks Consensus Estimate by 5.8%.

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