QIAGEN (QGEN) Q3 Earnings and Revenues Beat, Margins Down
QIAGEN N.V.’s QGEN third-quarter 2023 adjusted earnings per share (EPS) were 50 cents (same at a constant exchange rate or CER), down 5.7% from the prior-year period figure. However, the figure surpassed the Zacks Consensus Estimate by 2%.
The adjustment excludes the impact of certain non-recurring items like business integration, acquisition and restructuring-related expenses, purchased intangible amortization expenses and non-cash interest expense charges, among others.
The GAAP EPS for the quarter was 34 cents, down 5.6% year over year.
Revenues in Detail
Net sales in the third quarter fell 4% year over year to $475.9 million (down 6% at CER). However, the top line beat the Zacks Consensus Estimate by 0.9%. Sales at CER were $470 million, ahead of the outlook of at least $465 million.
QIAGEN N.V. Price, Consensus and EPS Surprise
QIAGEN N.V. price-consensus-eps-surprise-chart | QIAGEN N.V. Quote
Third-quarter sales were driven by 5% CER growth in the non-COVID-19 portfolio to $442 million and higher sales from instruments, as well as recurring consumables and related revenues.
Geographical Revenue Analysis
In the quarter under review, sales from the Americas (53.5% of sales) totaled $254 million, up 1% year over year (up 1% at CER). Our model projected the region’s revenues to be $252.9 million.
The CER improvement was led by higher sales in the United States and from QuantiFERON-TB, which outweighed reduced pandemic sales. CER sales growth in the non-COVID-19 portfolio was supported by gains in Mexico compared to the year-ago period.
Revenues from Europe, the Middle East and Africa (30.5% of sales) reportedly fell 6% to $145 million. This compares to our projection of third-quarter revenues of $149.9 billion.
The overall sales declined 11% at CER due to significant COVID-19 sales in the third quarter of 2022.
Revenues from the Asia-Pacific/Japan (16% of sales) fell 18% year over year on a reported basis (down 16% at CER) to $76 million. Our model’s projected revenues were $68.1 million.
Per the company, CER sales for non-COVID-19 product groups were largely unchanged year over year, with the decline in overall sales reflecting headwinds from COVID-19 sales from the third quarter of 2022.
Segmental Details
As of the third quarter of 2023, QIAGEN had two major customer classes — Molecular Diagnostics and Life Sciences.
Molecular Diagnostics’ (representing 53.5% of net sales) revenues were down 1% on a reported basis (down 2% at CER) to $254 million. Our model estimate for the segment’s revenues in the third quarter was $240.2 million.
Life Sciences (46.5% of total revenues) reported revenues of $221 million, down 9% on a reported basis (down 10% at CER). The figure missed our model’s projected revenues of $230.7 million.
Operational Update
The adjusted gross profit (excluding the amortization of acquisition-related intangibles) in the quarter under review fell 6.6% to $314 million.
Meanwhile, the adjusted gross margin contracted 129 basis points (bps) to 66% despite a 1% decline in the cost of sales (excluding amortization) to $161.9 million.
Sales and marketing expenses of QIAGEN fell 2.7% year over year to $111 million. R&D expenses of $47.9 million were down 1.9% year over year to $47.9 million. G&A expenses fell 7.2% year over year to $29 million.
The adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration and others) declined 11.2% year over year to $126 million in the third quarter. Meanwhile, the adjusted operating margin contracted 191 bps to 26.5%.
Financial Update
QIAGEN exited the third quarter of 2023 with cash and cash equivalents and short-term investments of $1.02 billion compared with $1.42 billion as of Dec 31, 2022. The long-term debt, net of the current portion, was $1.38 billion at the end of the third quarter of 2023 compared with $1.47 billion at the end of 2022.
The cumulative net cash provided by operating activities at the end of the third quarter was $308.1 million compared with $590.9 million in the year-ago period.
Guidance
QIAGEN reaffirmed its guidance for 2023.
Full-year net sales are expected to be nearly $1.97 billion (unchanged), driven by the ongoing solid consumables demand that accounted for 88% of total sales in the first nine months of the year, while larger-scale instrument sales remain challenging. The Zacks Consensus Estimate for 2023 revenues is pegged at $1.97 billion.
The adjusted EPS for 2023 is expected at about $2.07 at CER (unchanged). The Zacks Consensus Estimate for adjusted EPS is also pegged at $2.07.
For the fourth quarter of 2023, the company expects net sales of at least $500 million at CER. The Zacks Consensus Estimate is pegged at $518.5 million.
The adjusted EPS is expected to be at least 53 cents at CER. The Zacks Consensus Estimate for the adjusted EPS is pegged at 57 cents.
Our Take
QIAGEN ended the third quarter of 2023 with better-than-expected earnings and revenues. The performance exceeded the company’s outlook, driven by a strategic focus on the key pillars of growth and the benefits of balance in serving more than 500,000 Life Sciences and Molecular Diagnostics customers and a broad geographic presence. Further, results demonstrated the company’s capacity to support its growth prospects, simultaneously ensuring effective cost management.
Meanwhile, revenues and earnings were down in the quarter compared to last year’s reported figures. Despite a decline in expenses, both margins witnessed a contraction, which is discouraging.
Zacks Rank and Key Picks
QIAGEN currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Inari Medical NARI, Insulet PODD and Cencora, Inc. COR.
Inari Medical, carrying a Zacks Rank #2 (Buy), reported a second-quarter 2023 adjusted EPS of 4 cents, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inari Medical has an estimated earnings growth rate of 725% for the next year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Insulet, carrying a Zacks Rank #2, reported a second-quarter 2023 adjusted EPS of 38 cents, which beat the Zacks Consensus Estimate by 58.3%. Revenues of $396.5 million outpaced the consensus estimate by 3.3%.
Insulet has an estimated long-term earnings growth rate of 41.5% compared with the industry’s 14.4% growth. PODD’s earnings surpassed estimates in all the trailing four quarters, the average being 126.9%.
Cencora reported third-quarter fiscal 2023 adjusted earnings of $2.92, which beat the Zacks Consensus Estimate by 3.2%. Revenues of $66.9 billion surpassed the Zacks Consensus Estimate by 5.6%. It currently has a Zacks Rank #2.
Cencora has an earnings yield of 6.8% compared with the industry’s -1.1%. COR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.5%.
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