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QIAGEN (QGEN) Q1 Earnings Beat Estimates, 2021 Guidance Up

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·6-min read
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QIAGEN N.V.’s QGEN first-quarter 2021 adjusted earnings per share (EPS) were 66 cents, up 94.1% year over year (up 91% at constant exchange rate or CER). Moreover, the figure surpassed the Zacks Consensus Estimate by 4.8%.

Notably, the bottom line exceeded the company’s first-quarter outlook of 60-62 cents at CER, announced on Feb 9, 2021.

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 56 cents per share, improving significantly from the year-ago growth per share of 17 cents, reflecting an uptick of 229.4%.

Revenues in Detail

Net sales in the first quarter rose 52.4% on a year-over-year basis to $567.2 million (up 48% at CER). Also, the top line exceeded the Zacks Consensus Estimate by 2.1%. Top-line growth also exceeded the company’s first-quarter expectation of at least 45% growth at CER.

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 $244 million, up 41% on a reported basis (up 41% at CER).

Revenues from Europe, Middle East and Africa (39% of sales) rose 70% reportedly (up 60% at CER) to $219 million.

QIAGEN N.V. Price, Consensus and EPS Surprise

QIAGEN N.V. Price, Consensus and EPS Surprise
QIAGEN N.V. Price, Consensus and EPS Surprise

QIAGEN N.V. price-consensus-eps-surprise-chart | QIAGEN N.V. Quote

Further, revenues from Asia-Pacific/Japan (18% of sales) rose 51% year over year on a reported basis (up 44% at CER) to $104 million.

Segmental Details

As of the first quarter of 2021, QIAGEN had two major customer classes – Molecular Diagnostics and Life Sciences.

Molecular Diagnostics (representing 49% of net sales) revenues were up 59% on a reported basis (up 54% at CER) to $279 million.

Life Sciences (51% of total revenues) reported revenues of $288 million, up 47% on a reported basis (up 42% at CER).

Operational Update

Adjusted gross profit in the quarter under review rose 50.1% to $388.2 million. However, adjusted gross margin contracted 107 basis points (bps) to 68.5% due to a 57.8% rise in adjusted cost of revenues (adjusting for acquisition-related intangible amortization) to $178.9 million.

Sales and marketing expenses of QIAGEN rose 18.8% to $113.8 million year over year. Research and development expenses increased 8.3% year over year to $47.4 million whereas general and administrative expenses rose 19.9% year over year to $33.8 million.

Adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration, asset impairment) rose 112.6% year over year to $193.2 million in the first quarter. Adjusted operating margin expanded 964 bps to 34.1%.

Financial Update

QIAGEN exited first-quarter 2021 with cash and cash equivalents, and short-term investments of $791.7 million, up from $715.2 million at the end of fourth-quarter 2020. Long-term debt was $1.93 billion in first-quarter 2021 compared with $1.88 billion in the last reported quarter.

Cumulative net cash flow from operating activities at the end of first-quarter 2021 was $128.6 million compared with $15.9 million a year ago, reflecting a surge of 708%.

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 reaffirmed its expectation for full-year sales growth at around 18-20% at CER. The Zacks Consensus Estimate for full-year revenues is pegged at $2.25 billion.

For 2021, the company expects adjusted EPS in the range of $2.42-$2.46 at CER. The Zacks Consensus Estimate for full-year adjusted EPS is pegged at $2.50.

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

Second-quarter net sales are expected to grow at least 20% at CER from $443.3 million in the same period of 2020. The Zacks Consensus Estimate for first-quarter revenues is pegged at $555.3 million.

Adjusted EPS is expected in the range of 62-64 cents at CER versus 55 cents in the year-ago quarter. The Zacks Consensus Estimate for first-quarter adjusted EPS is pegged at 63 cents.

Our Take

QIAGEN exited the first quarter of 2021 with better-than-expected revenues and earnings. It registered revenue growth across all geographies and both its operating segments in the first quarter. The company’s high level of sales for product groups used in the COVID-19 pandemic response drove the top line. Sample technologies products witnessed strong year-over-year growth driven by double-digit CER growth for non-COVID products, particularly consumables kits for DNA extraction. Also, product groups used in COVID-19 testing, particularly automated RNA solutions, saw solid demand during the reported quarter.

The QIAcuity digital PCR instruments witnessed solid growth trends during the first quarter. Sales of the QIAstat-Dx and NeuMoDx automated PCR testing solutions also registered strong growth, driven by robust demand for COVID-19 testing and increasing use of other clinical testing applications.

On the flip side, contraction of gross margin is worrying. The company’s debt in the reported quarter is much higher than the quarter-end cash and cash equivalent, and short-term investments level, indicating weak solvency.

Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader medical space are Boston Scientific Corporation BSX, Illumina, Inc. ILMN and HCA Healthcare, Inc. HCA. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boston Scientific reported first-quarter 2021 adjusted EPS of 37 cents, beating the Zacks Consensus Estimate by 23.3%. Net revenues of $2.75 billion outpaced the consensus estimate by 5.3%. It currently carries a Zacks Rank #2 (Buy).

Illumina, a Zacks Rank #2 company, reported first-quarter 2021 adjusted EPS of $1.89, beating the Zacks Consensus Estimate by 38.9%. Revenues of $1.09 billion outpaced the consensus estimate of $1.08 billion.

HCA Healthcare reported first-quarter 2021 adjusted EPS of $4.14, surpassing the Zacks Consensus Estimate by 23.6%. Net revenues of $14 billion exceeded the Zacks Consensus Estimate by 2.2%. It currently carries a Zacks Rank #2.

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