• Revenue: $502 million in Q3 2024, 6% growth at constant exchange rates (CER).
• Adjusted Diluted EPS: $0.57, $0.58 at CER, $0.03 above outlook.
• Diagnostic Solutions Growth: 10% growth at CER.
• Consumables and Related Revenues: 8% growth at CER, contributing 89% to sales.
• Instrument Sales: Declined 9% at CER.
• Adjusted Operating Income Margin: Improved by 3 percentage points to 29.6% of sales.
• Free Cash Flow: 73% increase to $364 million for the first nine months of 2024.
• Full-Year Net Sales Outlook: At least $1.985 billion at CER.
• Full-Year Adjusted EPS Outlook: Increased to at least $2.19 at CER.
• QIAstat Sales Growth: 40% growth at CER.
• QuantiFERON TB Test Sales: Sixth consecutive quarter of sales above $100 million.
• Operating Cash Flow: 56% increase to $482 million for the first nine months of 2024.
• Inventory Reduction: $80 million reduction since end of 2023.

• Warning! GuruFocus has detected 4 Warning Sign with QGEN.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Qiagen NV (NYSE:QGEN) exceeded its sales and adjusted earnings outlook for Q3 2024, with $502 million in sales, representing a 6% growth at constant exchange rates.
• The Diagnostic Solutions product group saw a 10% growth, with consumables and related revenues growing 8% at constant exchange rates.
• The QIAstat product line experienced a strong quarter with 40% sales growth at constant exchange rates, driven by increased demand and over 150 instrument placements.
• Qiagen NV (NYSE:QGEN) achieved several important product launches and milestones, positioning the company for future growth, including FDA clearances for QIAstat panels.
• The company reported a significant improvement in profitability, with a 3% increase in adjusted operating income margin to 29.6% of sales, and a 73% increase in free cash flow for the first nine months of 2024.

Negative Points

• Customer spending on instruments remains cautious, leading to a 9% decline in instrument sales at constant exchange rates.
• Sales in the genomics NGS product group were unchanged compared to the same period last year, indicating a lack of growth in this segment.
• The Asia-Pacific Japan region experienced a 2% decline in sales at constant exchange rates, with China continuing to decline at a high single-digit rate.
• The transition of customers from longer-term license agreements to Software-as-a-Service (SaaS) contracts in the QIAGEN Digital Insights business led to a low single-digit decline in sales.
• The decision to discontinue the NeuMoDx system by 2025 is expected to result in restructuring costs of approximately $400 million, with about 75% being non-cash charges.

Q & A Highlights

Q: Thierry, can you discuss the drivers and sustainability of QuantiFERON's double-digit growth and the competitive landscape? A: Thierry Bernard, CEO: The main drivers for QuantiFERON's growth include converting skin tests, which still make up over 50% of the market, to our blood-based format, which offers value to customers. Our partnership with DiaSorin is also successful, adding value and allowing us to convert customers at a premium. Additionally, more countries are including latent TB testing in their guidelines. We project a 6% to 7% CAGR for QuantiFERON, aiming for $600 million in revenues by 2028.

Q: As we look towards 2025, can you discuss the revenue and margin outlook? A: Thierry Bernard, CEO: We expect continued growth momentum in 2025, driven by strong portfolios like QIAstat, QuantiFERON, and sample technologies. We forecast 4% to 5% growth in H2 2024, setting a solid base for 2025. Roland Sackers, CFO: We anticipate margin improvements, driven by the discontinuation of NeuMoDx and ongoing efficiency programs. We aim for at least a 28.5% margin for 2024 and expect further improvements in 2025.

Q: Can you provide more details on QIAstat placements and the impact of recent panel launches? A: Thierry Bernard, CEO: Q3 saw over 150 QIAstat placements, outperforming competitors. The US market is key, and with approvals for respiratory, GI, and meningitis panels, we are more competitive. We aim for a 50% mix of placements and capital sales. We are confident in achieving $200 million in revenues by 2028.

Q: How are you approaching capital deployment, particularly regarding M&A and buybacks? A: Thierry Bernard, CEO: We are active on both fronts. We committed to returning $1 billion to shareholders by 2028, absent significant M&A. We are open to accretive M&A opportunities to enhance our portfolio's growth potential.

Q: How do you view the growth mix of your portfolio as QuantiFERON normalizes? A: Thierry Bernard, CEO: We focus on areas where we can reinforce leadership or gain market share, such as sample technologies, QuantiFERON, digital PCR, QIAstat, and QDI. We aim for above-market growth in sample technologies and have set ambitious targets for QuantiFERON, digital PCR, and QIAstat by 2028.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.