Qiagen Halts PCR Testing System and Shifts Strategy, Earnings per Share Expected to Rise
Qiagen anticipates higher profitability following the discontinuation of its PCR testing system. Although the stock experienced a slight decline on Friday, it has been on an upward trend since mid-April.
The subdued demand has prompted the laboratory service provider and diagnostics specialist Qiagen N.V. to halt its PCR testing system Neumodx. „We see no realistic way to further develop these systems profitably,“ said CEO Thierry Bernard in a statement on Thursday evening. Customer needs have shifted post the COVID-19 pandemic.
Meanwhile, the management expects the decision to have a positive impact on profitability in the fiscal year 2024. The stock saw a slight decrease on Friday at the start of trading.
Qiagen Stock Price Up Almost 12 Percent Since Mid-April Low
According to the Dutch-based DAX company, the adjusted earnings per share (EPS) is now expected to be at least $2.14, four cents higher than previously anticipated after accounting for currency and special effects.
The revised outlook has been positively received by a stock trader. However, the stock price was 0.4 percent lower at 40.94 euros before the weekend. Nevertheless, since the mid-April low, the stock has risen by almost 12 percent.
The discontinuation of the Neumodx 96 and 288 systems is expected to incur pre-tax restructuring costs of around $400 million (approximately 367.9 million euros), as stated by Qiagen. These costs are primarily anticipated in the second quarter.
„This decision underscores our commitment to focus on areas where we can build profitable leadership positions,“ Bernard stated. He intends to reallocate resources to other areas and support Neumodx customers during a transitional period until 2025.
No Statements Yet on Revenue Targets
With regards to revenue targets, the management has not provided details. For the current fiscal year, Neumodx had a targeted revenue of at least $55 million. Further insights into the outlook will be revealed in the second quarter. Previously, the company had a currency-adjusted revenue target of $2 billion.
In February, Qiagen CFO Roland Sackers emphasized that customers, especially in the acquisition of expensive equipment like the Neumodx diagnostic platform, were very cautious. The business could not be sustained profitably in the long term.
As of the end of March, Qiagen reportedly employed over 5,900 staff globally across more than 35 locations.
