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QIAGEN's (QGEN) Q4 Earnings Top Estimates, Margins Down

QIAGEN N.V.’s QGEN fourth-quarter 2022 adjusted earnings per share (EPS) were 53 cents (55 cents at constant exchange rate or CER), down 28% year over year. The figure, however, surpassed the Zacks Consensus Estimate by 12.8%.

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

GAAP EPS for the quarter was 36 cents per share, down 30% year over year.

For the full year, adjusted earnings were $2.38 per share, down 10% from the year-ago period’s levels. The figure, however, surpassed the Zacks Consensus Estimate by 12.3%.

Revenues in Detail

Net sales in the fourth quarter fell 14.5% year over year to $497.9 million (down 9% year over year at CER). The top line exceeded the Zacks Consensus Estimate by 3.6%. Sales at CER were $531 million, above the fourth quarter outlook of at least $520 million.

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The fourth-quarter sales were driven by 15% CER growth in the non-COVID-19 portfolio to $432 million. However, sales of COVID-19 products plunged 61% at CER to $66 million amid significantly reduced demand.

Total revenues for 2022 were $2.14 billion, up 4.9% from the year-ago period’s levels. The figure lagged the Zacks Consensus Estimate by 7.8%.

Geographical Revenue Update

In the quarter under review, sales from the Americas (48% of sales) totaled $241 million, up 7% reportedly (down 6% at CER).

Revenues from Europe, the Middle East and Africa (34% of sales) fell 23% reportedly (down 13% at CER) to $169 million.

QIAGEN N.V. Price and EPS Surprise

 

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

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

 

Further, revenues from Asia-Pacific/Japan (18% of sales) fell 16% year over year on a reported basis (down 6% at CER) to $88 million.

Segmental Details

As of the fourth quarter of 2022, QIAGEN had two major customer classes – Molecular Diagnostics and Life Sciences.

Molecular Diagnostics (representing 51.5% of net sales) revenues were down 18% on a reported basis (down 12% at CER) to $258 million.

Life Sciences (48.5% of total revenues) reported revenues of $240 million, down 11% on a reported basis (down 5% at CER).

Operational Update

Adjusted gross profit in the quarter under review fell 14.6% to $332.5 million. Meanwhile, the adjusted gross margin contracted 6 basis points (bps) to 66.8% on a 14.3% rise in the total cost of sales (adjusting for acquisition-related intangible amortization) to $165.5 million.

Sales and marketing expenses of QIAGEN rose 2.4% to $122.2 million year over year. Research and development expenses rose 6.2% year over year to $44.7 million, whereas general and administrative expenses fell 2.8% year over year to $31.9 million.

Adjusted operating income (excluding items like acquisition-related intangible amortization, restructuring and integration and asset impairment) declined 31.4% year over year to $133.5 million in the fourth quarter. Meanwhile, the adjusted operating margin contracted 663 bps to 26.8%.

Financial Update

QIAGEN exited 2022 with cash and cash equivalents and short-term investments of $1.42 billion, up from $1.07 billion at the end of 2021. Long-term debt was $1.47 billion at the end of 2022 compared with $1.09 at the end of 2021.

Cumulative net cash flow from operating activities at the end of 2022 was $715.3 million compared with $639 million in the year-ago period.

Guidance

QIAGEN has initiated its outlook for 2023.

Full-year net sales are expected to be about $2.05 billion at CER. The Zacks Consensus Estimate for the metric is pegged at $2.04 billion.

Adjusted EPS for 2023 is expected to be about $2.10 at CER. The Zacks Consensus Estimate for adjusted EPS is pegged at $2.09.

For the first quarter of 2023, the company expects net sales to be at least $490 million at CER. The Zacks Consensus Estimate for the same is pegged at $493.5 million.

Adjusted EPS is expected to be at least 47 cents at CER. The Zacks Consensus Estimate for adjusted EPS is pegged at 48 cents.

Our Take

QIAGEN ended fourth-quarter 2022 with better-than-expected earnings and revenues. However, on a year-over-year basis, earnings and sales both declined. The massive decline in COVID-19 product sales and severe foreign exchange headwind impacted overall performance. Escalating costs and the contraction of gross margin operating margin is a concern.

On a positive note, the ongoing double-digit sales growth in the non-COVID product portfolio, a high level of profitability and strong cash flow are the major upsides. The QIAcuity digital PCR system delivered solid double-digit CER growth for fiscal 2022, supported by the launch of new assays for biopharma applications. Further, QuantiFERON-TB also registered a solid double-digit CER growth in 2022, led by continued conversion of the latent TB market from the traditional skin test.

Zacks Rank and Other Key Picks

QIAGEN currently carries Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are Neogen Corporation NEOG, McKesson Corporation MCK and Hologic, Inc. HOLX.

Neogen, carrying a Zacks Rank #2, reported second-quarter fiscal 2023 adjusted EPS of 15 cents, beating the Zacks Consensus Estimate of loss of 8 cents per share. Revenues of $230 million outpaced the consensus mark by 0.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Neogen has an earnings yield of 2.5% compared with the industry’s 0.2%. NEOG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 70.11%.

McKesson, having a Zacks Rank #2, reported third-quarter 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.

McKesson has a long-term estimated growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in two, the average being 4.79%.

Hologic reported first-quarter 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.

Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 46.08%.

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