Qiagen reports Q3 loss on decision to halt development of new NGS instruments

Headline results for the third quarter:

Revenue	$382.7 million	+1%
Net loss	$160.6 million	Versus profit of $60.3 million

All changes are versus the prior-year period unless otherwise stated

What the company said:

"We have attractive fundamental growth opportunities and are determined to become a stronger and more differentiated leader. This conviction has been strengthened by the partnership with Illumina, which is set to expand our global presence in clinical decision-making using NGS [next-generation sequencing] technology," said Thierry Bernard, who was appointed interim CEO earlier this month after Peer Schatz stepped down. He added that "although we have revised our outlook for 2019, we are…preparing for further growth in sales and adjusted earnings in 2020."

In light of the Illumina deal, Qiagen said it was discontinuing development of new NGS instruments and other measures, resulting in a pre-tax charge of $276.8 million in operating results for the third quarter.

In July, Qiagen announced plans to restructure its NGS joint venture in China "due to the slower-than-expected uptake of in-vitro diagnostic clinical sequencing in the country." Chief financial officer Roland Sackers noted Wednesday that the majority of the restructuring charges taken in the third quarter "involve non-cash items related to ending development of new NGS-based instruments."

Other results:

• Consumables and related revenues: $342 million, up 3%, with gains more than outweighing weaker instrument revenues, with higher sales of the QIAcube Connect, QIAsymphony and QIAstat-Dx systems, but lower sales from the GeneReader NGS system
• Molecular Diagnostics:  $183 million, down 3%, due to results in China and a 37% reduction in revenues, on a constant currency basis, from companion diagnostic co-development projects
• Americas sales: $192 million, up 3%
• EMEA sales: $114 million, up 3%
• Asia Pacific/Japan sales: $76 million, down 6%, with a 24% constant-currency decrease in China sales to $26 million, mainly due to a slowdown in orders from distributors and the end of the China NGS joint venture

Looking ahead:

Qiagen tightened its outlook for 2019 and now expects earnings to range from $1.43 per share to $1.44 per share on a constant currency basis, compared with previous projected earnings per share of $1.42 to $1.44. In addition, sales for the year are anticipated to grow around 4% in constant currencies, versus an earlier outlook of between 5% and 6%.