6-K 1 a2017q3pr6-k.htm 6-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________
FORM 6-K
  __________________________________
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under
the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2017
Commission File Number 0-28564
 
__________________________________
QIAGEN N.V.
__________________________________
 
Hulsterweg 82
5912 PL Venlo
The Netherlands
__________________________________


 
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F   x            Form 40-F   o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   o





QIAGEN N.V.
Form 6-K

TABLE OF CONTENTS
 
 
 
Item
Page
Other Information
Signatures
Exhibit Index


2


OTHER INFORMATION
On November 6, 2017, QIAGEN N.V. (Nasdaq: QGEN; Frankfurt, Prime Standard: QIA) issued a press release announcing its unaudited financial results for the quarter ended September 30, 2017. The press release is furnished herewith as Exhibit 99.1 and is incorporated by reference herein.
QIAGEN has regularly reported adjusted results, which are considered non-GAAP financial measures, to give additional insight into our financial performance as a supplement to understand, manage, and evaluate our business results and make operating decisions. Adjusted results should be considered in addition to the reported results prepared in accordance with U.S. generally accepted accounting principles, but should not be considered as a substitute. Reconciliations of reported results to adjusted results are included in the tables accompanying the press release. We believe certain items should be excluded from adjusted results when they are outside of our ongoing core operations, vary significantly from period to period, or affect the comparability of results with the Company’s competitors and our own prior periods.
The non-GAAP financial measures used in this press release are non-GAAP net sales, gross profit, operating income, pre-tax income, net income and diluted earnings per share. These adjusted results exclude costs related to amortization of acquired intangible assets, impairment losses, acquisition and integration, including inventory fair value adjustments related to business acquisitions, as well as other special income and expense items. Management views these costs as not indicative of the profitability or cash flows of our ongoing or future operations and therefore considers the adjusted results as a supplement, and to be viewed in conjunction with, the reported GAAP results.
We use a measure of free cash flow to estimate the cash flow remaining after purchases of property, plant and equipment as required to maintain or expand our business. This measure provides us with supplemental information to assess our liquidity needs. We calculate free cash flow as net cash from operating activities less purchases of property, plant and equipment.
We also consider results on a constant currency basis. Our functional currency is the U.S. dollar and our subsidiaries’ functional currencies are the local currency of the respective countries in which they are headquartered. A significant portion of our revenues and expenses is denominated in euros and currencies other than the United States dollar. Management believes that analysis of constant currency period-over-period changes is useful because changes in exchange rates can affect the growth rate of net sales and expenses, potentially to a significant degree. Constant currency figures are calculated by translating the local currency actual results in the current period using the average exchange rates from the previous year’s respective period instead of the current period.
We use non-GAAP and constant currency financial measures internally in our planning, forecasting and reporting, as well as to measure and compensate our employees. We also use the adjusted results when comparing to our historical operating results, which have consistently been presented on an adjusted basis.


3


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
QIAGEN N.V.
 
 
 
 
By:
/s/ Roland Sackers
 
 
Roland Sackers
 
 
Chief Financial Officer
 
 
 
 
Date:
November 7, 2017


4


EXHIBIT INDEX
 
 
 
 
Exhibit
No.
  
Exhibit
99.1
  



5

 
Exhibit 99.1
qgennewheaderlogoa15.jpg

QIAGEN reports results for third quarter and first nine months of 2017
Solid Q3 2017 performance in line with full-year ambitions:
Net sales $364.0 million (+7% actual, +7% CER); adjusted net sales $364.4 million (+8% actual, +7% CER vs. +7% CER guidance)
EPS $0.21; adjusted EPS $0.32 ($0.32 CER), adjusted EPS excluding restructuring charge $0.32 ($0.32 CER vs. $0.32-0.33 CER guidance)
Nine-month 2017 free cash flow of $146.1 million impacted by $41 million cash restructuring charges
Solid growth of Sample to Insight portfolio led by QuantiFERON latent TB test growing above 25% CER annual target, complemented by QIAsymphony, human ID / forensics and infectious disease testing portfolio
$300 million share repurchase commitment completed ahead of end-2017 goal
New initiative in China to focus on high-growth areas and streamline portfolio
Reaffirming 2017 adjusted EPS target of $1.25-1.27 CER before restructuring; ~7% CER adjusted net sales growth excluding changes in China portfolio
Venlo, the Netherlands, November 6, 2017 - QIAGEN N.V. (NASDAQ: QGEN; Frankfurt Prime Standard: QIA) announced results of operations for the third quarter and first nine months of 2017, delivering on goals for improvements in adjusted net sales and adjusted earnings.
“QIAGEN’s results for the third quarter of 2017 confirm that our Sample to Insight molecular testing solutions are delivering growth across the continuum of customer needs from basic research to clinical healthcare. All customer classes and regions supported growth trends in the third quarter, which were led by our Molecular Diagnostics and Applied Testing customer classes growing at solid rates and complemented by gains in Pharma and Academia,” said Peer M. Schatz, Chief Executive Officer of QIAGEN N.V. “These results demonstrate that we are progressing well and delivering on our full-year ambitions during 2017, especially against a very strong performance in the second half of 2016, with market share gains, solid sales growth and a double-digit increase in adjusted earnings per share while strengthening our foundation for 2018 and beyond.”
Third quarter 2017 results
Net sales grew 7% at actual rates to $364.0 million in the third quarter of 2017 over the year-ago period and also advanced at 7% CER. Organic expansion contributed six percentage points to total CER growth, with about one percentage point from the January 2017 acquisition of OmicSoft Corporation, a leading provider of omics data solutions. Adjusted net sales, which include all revenue contributions from OmicSoft, increased 8% at actual rates to $364.4 million in the third quarter of 2017, and rose 7% CER with one percentage point of favorable currency movements.

6


Consumables and related revenues (+8% CER / 88% of sales) led the performance, and supported by single-digit CER growth in instrument sales (+2% CER / 12% of sales). Among the customer classes, Molecular Diagnostics (+9% CER / 49% of sales) was led by ongoing solid growth of the QuantiFERON-TB franchise above the annual 25% CER growth target, consumables used for the QIAsymphony automation system and solid contributions from companion diagnostic pharma collaborations.
In the Life Sciences, Applied Testing delivered 14% CER (+15% CER adjusted sales) growth thanks to solid gains in the Human Identification / Forensics portfolio, and supported by single-digit CER growth in Pharma (+4% CER, +5% CER adjusted sales) and Academia (+2% CER).
Among the regions, Europe / Middle East / Africa (+15% CER) had the fastest pace due to double-digit CER growth in France, Turkey and the Netherlands, along with single-digit CER contributions from the United Kingdom and Germany. Asia-Pacific / Japan (+7% CER) benefited from dynamic growth in Korea and India, and supported by single-digit gains in China, while Japan showed a modest single-digit CER decline. The Americas (+3% CER) grew on increased sales in the U.S. and Brazil, but faced a significant expected decline in Mexico due to the expiry of a tender.
Operating income was $63.9 million in the third quarter of 2017 compared to $48.3 million in the same period of 2016. Adjusted operating income, which excludes items such as business integration, acquisition-related costs and the amortization of intangible assets acquired in business combinations, rose 9% to $96.1 million compared to $88.1 million in the year-ago period. The adjusted operating income margin was steady at 26% of sales compared to the same period of 2016. Excluding the pre-tax restructuring charge taken in the third quarter of 2017, which was $1.8 million, adjusted operating income rose 11% to $97.9 million and the adjusted operating income margin was 27% of sales.
Net income attributable to owners of QIAGEN N.V. was $48.5 million, or $0.21 per diluted share (based on 232.7 million diluted shares) compared to $34.8 million, or $0.15 per share (based on 239.3 million diluted shares) in the third quarter of 2016. Adjusted net income was $75.3 million, or $0.32 per share ($0.32 CER), up from $69.3 million, or $0.29, in the year-ago period. Excluding the restructuring charge taken in the third quarter of 2017, which was $0.2 million on adjusted net income, adjusted diluted EPS was $0.32 per share ($0.32 CER).
First nine months 2017 results
Net sales grew 5% to $1.021 billion in the first nine months of 2017 over the same period in 2016, and were up 6% CER with one percentage point of adverse currency movements. Adjusted net sales also rose 5% to $1.022 billion in the first nine months of 2017, and were up 6% CER. Organic expansion contributed four percentage points to total CER growth, while two percentage points came from the acquisitions of Exiqon A/S in June 2016 and OmicSoft in January 2017. The expected decline in U.S. HPV test sales created about one percentage point of headwind, with adjusted net sales rising about 7% CER over the same period in 2016 when excluding these specific product sales.
Higher sales of consumables and related revenues (+7% CER, +8% CER adjusted sales / 88% of sales) more than offset a decline in instruments (-2% CER / 12% of sales). Molecular Diagnostics (+6% CER / 48% of sales) advanced +7% CER when excluding U.S. HPV test sales. In the Life Sciences, Applied Testing delivered double-digit CER gains (+15% CER, +16% CER adjusted sales), supported by single-digit CER growth in Pharma (+6% CER, +7% CER adjusted sales) and Academia (+3% CER). Among the regions,

7


Europe / Middle East / Africa (+10% CER) led the performance, and supported by Asia-Pacific / Japan (+9% CER) and the Americas (+3% CER).
Operating income was $110.0 million in the first nine months of 2017 compared to $94.6 million in the same period of 2016. Adjusted operating income, which excludes items such as business integration, acquisition-related costs and the amortization of intangible assets acquired in business combinations, rose 9% to $230.5 million compared to $212.1 million in the 2016 period. The adjusted operating income margin rose to 23% of sales from 22% in the same period of 2016. Excluding the pre-tax restructuring charge in the first nine months of 2017, which was $19.2 million, adjusted operating income rose 18% to $249.7 million and the adjusted operating income margin was 24% of sales.
Net income attributable to owners of QIAGEN N.V. was $80.1 million, or $0.34 per diluted share (based on 233.4 million diluted shares) compared to $71.8 million, or $0.30 per share (based on 238.8 million diluted shares) in the first nine months of 2016. Adjusted net income was $180.8 million, or $0.77 per share ($0.78 CER), up from $171.3 million, or $0.72, in the year-ago period. Excluding the restructuring charge taken in the first nine months of 2017, which was $14.2 million on adjusted net income, adjusted diluted EPS was $0.84 per share ($0.84 CER).
Balance sheet and cash flows
At September 30, 2017, cash and cash equivalents increased to $671.8 million from $439.2 million at December 31, 2016. Net cash provided by operating activities was $210.7 million in the first nine months of 2017, down from $241.6 million in the year-ago period. Free cash flow for the first nine months of 2017 was $146.1 million, down from $186.7 million in the prior-year period, due mainly to the approximately $41 million impact of cash payments related to the restructuring activities launched in late 2016. Purchases of Property, Plant and Equipment rose to $64.6 million in the first nine months of 2017 from $54.8 million in 2016. Net cash used in investing activities was $371.9 million in the first nine months of 2017, which included payments for the OmicSoft acquisition, compared to $163.3 million in the first nine months of 2016. Net cash provided by financing activities was $386.0 million, which included net proceeds of $726.3 million from debt issuances during 2017 partially offset by $304.9 million of payments in connection with the share repurchase commitment, compared to cash used in financing activities of $15.8 million in the first nine months of 2016.
During the third quarter of 2017, QIAGEN completed the issuance of $400 million of new senior unsecured cash-settled convertible notes outside the U.S. at a 0.5% annual interest rate, and with an effective conversion price of $50.97 due to the entry into derivative transactions.
“QIAGEN has fulfilled its commitment to return $300 million to shareholders ahead of the scheduled end of 2017 target. We are reaffirming our commitment to a disciplined approach to capital allocation, and will review new opportunities to create more value,” said Roland Sackers, Chief Financial Officer of QIAGEN N.V. “We are also making significant progress on initiatives to support the improvements in sales and profitability. Related to these initiatives, we have launched a new project in China to increase investments in high-growth areas and streamline our portfolio. We will be putting more resources toward areas such as the QuantiFERON-TB test, the new MAQGEN joint venture with Maccura for the GeneReader NGS System and the life sciences portfolio. At the same time, we have also decided to discontinue some non-core diagnostic PCR tests, and are in the process of divesting the distribution of our China HPV franchise to a third-party aggregator / distributor to improve our competitive position through a more tailored product offering and better adapt to local market needs.

8



Selected key figures 
In $ millions
(Unless indicated / EPS $ per share)
Q3 2017
 
9M 2017
2017
2016
Change
 
2017
2016
Change
Net sales
364.0
338.7
7% /
 
1,020.7
971.5
5% /
(7% CER)
 
(6% CER)
Adjusted net sales
364.4
338.7
8% /
 
1,022.3
971.5
5% /
(7% CER)
 
(6% CER)
Operating income
63.9
48.3
32%
 
110.0
94.6
16%
Adjusted operating income
96.1
88.1
9%
 
230.5
212.1
9%
Adjusted operating income
excluding restructuring charge
97.9
88.1
11%
 
249.7
212.1
18%
Net income
48.5
34.8
39%
 
80.1
71.8
12%
Adjusted net income
75.3
69.3
9%
 
180.8
171.3
6%
Adjusted net income
excluding restructuring charge
75.5
69.3
9%
 
195.0
171.3
14%
Diluted EPS(1)
$0.21
$0.15
 
 
$0.34
$0.30
 
Adjusted diluted EPS(1)
$0.32
$0.29
 
 
$0.77
$0.72
 
Adjusted diluted EPS
excluding restructuring charge(1)
$0.32 /
$0.29
 
 
$0.84 /
$0.72
 
($0.32 CER)
 
($0.84 CER)
 
 
 
 
 
 
 
 
Net cash provided by operating activities(2)
81.2
93.8
 
 
210.7
241.6
 
Less purchases of property, plant and equipment
-26.7
-15.0
 
 
-64.6
-54.8
 
Free cash flow
54.5
78.8
 
 
146.1
186.7
 
(1) Weighted number of diluted shares (Q3 2017: 232.7 million, Q3 2016: 239.3 million) (9M 2017: 233.4 million, 9M 2016: 238.8 million)
(2) 2017 results include cash payments for restructuring (Q3 2017: $10 million, 9M 2017: $41 million)
CER - Constant exchange rates. Results for net income and EPS based on income attributable to owners of QIAGEN N.V.
In Q4 2016, QIAGEN changed to the “multiple attribution method” accounting principle for equity-based compensation. For the third quarter of 2016, diluted EPS was revised to $0.15 (previously $0.14) and for the first nine months of 2016, diluted EPS was revised to $0.30 (previously $0.29) and adjusted diluted EPS was revised to $0.72 (previously $0.71) due to a rounding difference from reduction in equity-based compensation versus increase in number of diluted shares. See table accompanying this release for further information.




9


Adjusted net sales by product category and customer class
 
Q3 2017
 
9M 2017
 
Net sales: $364.0 million
 
Net sales: $1,020.7 million
 
Adjusted net sales: $364.4 million
 
Adjusted net sales: $1,022.3 million
 
Adj. sales
(In $ m)
% CER change
% of
sales
 
Adj. sales
(In $ m)
% CER change
% of
sales
Consumables and related revenues
$322
8%
88%
 
$905
8%
89%
Instruments
$43
2%
12%
 
$118
-2%
11%
 
 
 
 
 
 
 
 
Molecular Diagnostics(1)
$180
9%
49%
 
$490
6%
48%
Applied Testing
$36
15%
10%
 
$98
16%
10%
Pharma
$69
5%
19%
 
$203
7%
20%
Academia
$80
2%
22%
 
$231
3%
23%
(1) Includes companion diagnostic co-development revenues (Q3 2017: $12 million, +22% CER; 9M 2017: $24 million, +20% CER) and U.S. HPV sales (Q3 2017: $8 million, +4% CER, 2% of sales; 9M 2017: $19 million, -13% CER, 2% of sales).
Growth rates at constant exchange rates (CER), sales and sales contributions at actual FX rates. Tables may have rounding differences.

Adjusted net sales by geographic region
 
Q3 2017
 
9M 2017
 
Net sales: $364.0 million
 
Net sales: $1,020.7 million
 
Adjusted net sales: $364.4 million
 
Adjusted net sales: $1,022.3 million
 
Adj. sales
(In $ m)
% CER change
% of
sales
 
Adj. sales
(In $ m)
% CER change
% of
sales
Americas
$172
3%
47%
 
$479
3%
47%
Europe / Middle East / Africa
$117
15%
32%
 
$329
10%
32%
Asia-Pacific / Japan
$74
7%
20%
 
$212
9%
21%
Top 7 emerging markets: Brazil, Russia, India, China, South Korea, Mexico and Turkey (Q3 2017: $61 million, +19% CER, 17% of sales; 9M 2017: $162 million, +15% CER, 16% of sales).
Q3 and 9M 2017: Rest of world represented less than 1% of net sales.
Growth rates at constant exchange rates (CER), sales and sales contributions at actual FX rates. Tables may have rounding differences.
Sustaining growth trajectory with Sample to Insight portfolio
QIAGEN continues to capture growth opportunities with differentiated Sample to Insight solutions enabling molecular testing across the continuum from basic research to clinical healthcare. Among recent developments:
QuantiFERON-TB Gold-Plus (QFT-Plus), the fourth generation of QIAGEN’s market-leading blood test for detecting latent tuberculosis (TB) infection, was launched in the United States. QFT-Plus provides significant detection and workflow benefits for screening programs that form the basis of global TB control efforts, and studies have demonstrated the valuable potential of the test to measure the risk of progression to active, contagious TB. The test’s proprietary CD4+/CD8+ design captures a broad picture of an individual's immune status and delivers a comprehensive evaluation of immune

10


response to TB infection with the potential for enhanced clinical insights. The U.S. launch of the fourth-generation version follows the launch and uptake in over 75 countries following the start of commercialization in 2016.
Personalized Healthcare surpassed a milestone of 25 master collaboration agreements with pharma and biotech companies to develop QIAGEN companion diagnostic tests that guide medical decision-making based on individualized genomic insights. QIAGEN has launched 15 new companion diagnostic projects so far in 2017, more than any prior year. In the third quarter of 2017, submissions were initiated for five Premarket Approval (PMA) applications and one PMA supplement, pointing to several potential product launches in 2018. QIAGEN also expanded its footprint in cancer immunotherapy (I-O), adding two new collaborations for development of molecular tests to identify patients who could benefit from I-O therapies.
Next-generation sequencing (NGS) solutions ranging from digital sequencing assays to bioinformatics software were highlighted in multiple studies presented in October 2017 at the American Society of Human Genetics (ASHG) meeting. A study by Counsyl, Inc., a leader in DNA testing and genetic counseling services, found that the QIAGEN Clinical Insight (QCI) platform reduced the time required to interpret and score genetic variants by 75%. QIAGEN and Counsyl have entered a collaboration to deploy QCI as part of Counsyl’s scale-up of their genetic screening technologies. QIAGEN also began a collaboration with CENTOGENE AG to provide more complete Sample to Insight research and clinical testing solutions in rare genetic diseases. The GeneReader NGS System is rapidly gaining acceptance worldwide with a focus on clinical benchtop oncology testing. In October, the ICMP opened its new forensics laboratory in The Hague with GeneReader workflows optimized for human identification, innovative panels designed for identification of missing persons and integrated bioinformatics, marking the first additional application of this system outside of clinical research.

QIAsymphony, the leading Sample to Insight workflow automation solution for molecular labs worldwide, continues to expand its base of global placements, which are nearing the full-year goal for more than 2,000 cumulative systems, up from more than 1,750 at the end of 2016.
Differentiated technologies that enable scientists to gain better insights in large and fast-growing research areas are driving growth, in particular QIAGEN’s industry-leading solutions for liquid biopsies and state-of-the-art technologies in Applied Testing. As non-invasive liquid biopsies disseminate in clinical diagnostics, QIAGEN is partnering with leading providers to incorporate its differentiated solutions for liquid biopsy testing. For example, Clinical Genomics partnered with QIAGEN to use the PAXgene® Blood ccfDNA Tube in sample collection with Clinical Genomics’ assay to monitor patients for recurrence of colorectal cancer. In forensics, QIAGEN has pioneered efforts for years to develop international standards of quality for human identity testing products, and a third-party agency recently certified QIAGEN for meeting the state-of-the-art requirements for forensics supply chain and manufacturing (ISO18385:2016).
Initiatives to sustain faster sales momentum while delivering margin benefits
QIAGEN announced initiatives during the fourth quarter of 2016 to sustain faster sales momentum while improving efficiency and accountability to increase margins. Significant efficiency benefits have already been delivered, and targeted actions are continuing during 2017. QIAGEN has expanded the scope of these

11


programs, in particular aiming to capture greater benefits from shared service centers and digitization. In the third quarter of 2017, QIAGEN recorded a pre-tax restructuring charge of $1.8 million, which was less than $0.01 per share, that was included in adjusted results, bringing the nine-month 2017 pre-tax restructuring charge to $19.2 million (or about $0.06 per share on an after-tax basis). QIAGEN continues to review ways to improve efficiency and effectiveness, and continues to expect a pre-tax restructuring charge for full-year 2017 of approximately $20 million related to these initiatives, or about $0.07 per share, which will be included in adjusted results.
QIAGEN completes $300 million share repurchase commitment
QIAGEN has completed a commitment to return $300 million to shareholders by the end of 2017. The final tranche of approximately $60 million was completed on September 15, 2017, through the open-market repurchase of 1.91 million shares on the Frankfurt Stock Exchange at an average price of EUR 26.84 (or about $31.94 per share based on exchange rates at that time). This tranche came after QIAGEN completed the return of $245 million in January 2017 through a synthetic share repurchase that combined a direct capital repayment with a reverse stock split.
Changes in QIAGEN Executive Committee
After 12 years with QIAGEN, Douglas Liu is retiring from his role as Senior Vice President, Global Operations and member of the Executive Committee. During his tenure, he successfully ensured reliable supply and growth of QIAGEN’s portfolio and effective supply chains while helping to ensure the successful integration of more than 20 companies. He will continue to work closely with QIAGEN in an advisory role. QIAGEN is pleased to announce that Mark Gladwell has joined QIAGEN to assume the role of Senior Vice President, Global Operations and member of the Executive Committee. He brings to QIAGEN more than two decades of experience in manufacturing high-volume, high technology in vitro diagnostics and medical devices, and most recently served as Senior Vice President, Global Operations, at Alere Inc.
Dr. Laura Furmanski, who has served as Senior Vice President of the Bioinformatics Business Area and a member of the Executive Committee since 2014, will be resigning and return to management consulting. She was responsible for leading QIAGEN’s presence in bioinformatics, and oversaw the integration of important acquisitions to strengthen this differentiating leadership position. A search for a successor is in an advanced stage.
Outlook
For full-year 2017, QIAGEN expects adjusted net sales to grow approximately 7% CER. This excludes the 2016 and 2017 revenues related to the decision to streamline the China portfolio as part of the new growth initiative. These revenues amount to about 1-2% of total sales for both years. Further, this guidance is based on about five to six percentage points of organic sales growth from the portfolio (including about one percentage point of headwind from reduced HPV test sales in the U.S.) and approximately one to two percentage points from the acquisitions of Exiqon (June 2016) and, to a lesser extent, OmicSoft (January 2017).
QIAGEN reaffirms its full-year 2017 guidance for adjusted diluted EPS of about $1.25-1.27 CER per share based on operating and financial leverage, which includes benefits from completion of the $300 million share repurchase and efficiency actions initiated in 2016, but excludes $0.07 per share of restructuring costs

12


expected for 2017. The portfolio changes in China are not expected to have any material impact on adjusted EPS excluding the restructuring charge. Based on exchange rates as of November 3, 2017, currency movements against the U.S. dollar are expected to have a negative impact on full-year 2017 adjusted net sales of about one percentage point, and a negative impact of about $0.01 per share on adjusted diluted EPS. These expectations do not take into account any further acquisitions that could be completed in 2017.
For the fourth quarter of 2017, adjusted net sales are expected to rise approximately 5-6% CER compared to the same period in 2016. This excludes the 2016 and 2017 revenues in this quarter related to the decision to streamline the China portfolio. This guidance is based on approximately four to five percentage points of organic growth (including about two percentage points of U.S. HPV headwinds) and about one percentage point from the OmicSoft acquisition. Adjusted diluted EPS is expected to be about $0.41-0.42 CER excluding restructuring charges (~$0.01 per share). The portfolio changes in China are not expected to have any material impact on adjusted EPS. Based on exchange rates as of November 3, 2017, currency movements against the U.S. dollar are expected to have a positive impact on adjusted net sales of about two percentage points, and a neutral impact on adjusted diluted EPS.
Quarterly results presentation, conference call and webcast details
A presentation with additional information can be downloaded at http://www.qiagen.com/de/about-us/investors/corporate-calendar/. A conference call will be held on Tuesday, November 7, 2017, at 15:00 Central European Time (CET) / 14:00 GMT / 9:00 Eastern Standard Time (EST). A live webcast will be made available at this website, and a replay will also be made available after the event.
Use of adjusted results
QIAGEN reports adjusted results, as well as results on a constant exchange rate (CER) basis, and other non-U.S. GAAP figures (generally accepted accounting principles), to provide additional insight into its performance. These results include adjusted net sales, adjusted gross profit, adjusted operating income, adjusted net income attributable to owners of QIAGEN N.V., adjusted diluted EPS and free cash flow. Adjusted results are non-GAAP financial measures that QIAGEN believes should be considered in addition to reported results prepared in accordance with GAAP, but should not be considered as a substitute.
Free cash flow is calculated by deducting capital expenditures for Property, Plant & Equipment from cash flow from operating activities. QIAGEN believes certain items should be excluded from adjusted results when they are outside of ongoing core operations, vary significantly from period to period, or affect the comparability of results with competitors and its own prior periods. Furthermore, QIAGEN uses non-GAAP and constant currency financial measures internally in planning, forecasting and reporting, as well as to measure and compensate employees.
QIAGEN also uses adjusted results when comparing current performance to historical operating results, which have consistently been presented on an adjusted basis. For these reasons, we are also presenting adjusted results excluding the impact of the restructuring charge taken in the first nine months of 2017.
Reconciliations are included in the tables accompanying this report. QIAGEN does not reconcile forward-looking non-GAAP financial measures to the corresponding GAAP measures due to the high variability and difficulty in making accurate forecasts and projections that are impacted by future decisions and actions. Accordingly, reconciliations of these forward-looking non-GAAP measures are not available without

13


unreasonable effort. However, the actual amounts of these excluded items will have a significant impact on QIAGEN’s GAAP results.
Change in accounting principle for equity-based compensation
In the fourth quarter of 2016, QIAGEN made a change in accounting principle for equity-based compensation to the “multiple attribution method,” which now aligns QIAGEN’s U.S. GAAP (Generally Accepted Accounting Principles) and IFRS (International Financial Reporting Standards) reporting. QIAGEN believes this change is preferable since it provides better alignment of cost recognition over vesting periods. Results for previous years have been revised without any meaningful impact. For the first nine months of 2016, diluted EPS was revised to $0.30 from $0.29 and adjusted diluted EPS was revised to $0.72 from $0.71, as a reduction of $2.1 million in after-tax equity-based compensation was offset by an increase of about 1.3 million in the weighted average number of shares. For the third quarter of 2016, diluted EPS was revised to $0.15 from $0.14, as a reduction of $1.0 million in after-tax equity-based compensation was offset by an increase of about 1.0 million in the weighted average number of shares. For more information, please see table accompanying this press release and filings with the U.S. Securities and Exchange Commission.
About QIAGEN
QIAGEN N.V., a Netherlands-based holding company, is the leading global provider of Sample to Insight solutions that enable customers to gain valuable molecular insights from samples containing the building blocks of life. Our sample technologies isolate and process DNA, RNA and proteins from blood, tissue and other materials. Assay technologies make these biomolecules visible and ready for analysis. Bioinformatics software and knowledge bases interpret data to report relevant, actionable insights. Automation solutions tie these together in seamless and cost-effective workflows. QIAGEN provides solutions to more than 500,000 customers around the world in Molecular Diagnostics (human healthcare), Applied Testing (forensics, veterinary testing and food safety), Pharma (pharma and biotech companies) and Academia (life sciences research). As of September 30, 2017, QIAGEN employed approximately 4,600 people in over 35 locations worldwide. Further information can be found at http://www.qiagen.com.
Certain statements contained in this press release may be considered forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. To the extent that any of the statements contained herein relating to QIAGEN's products, collaborations, markets, strategy or operating results, including without limitation its expected adjusted net sales and adjusted diluted earnings results, are forward-looking, such statements are based on current expectations and assumptions that involve a number of uncertainties and risks. Such uncertainties and risks include, but are not limited to, risks associated with management of growth and international operations (including the effects of currency fluctuations, regulatory processes and dependence on logistics), variability of operating results and allocations between customer classes, the commercial development of markets for our products to customers in academia, pharma, applied testing and molecular diagnostics; changing relationships with customers, suppliers and strategic partners; competition; rapid or unexpected changes in technologies; fluctuations in demand for QIAGEN's products (including fluctuations due to general economic conditions, the level and timing of customers' funding, budgets and other factors); our ability to obtain regulatory approval of our products; difficulties in successfully adapting QIAGEN's products to integrated solutions and producing such products; the ability of QIAGEN to identify and develop new products and to differentiate and protect our products from competitors' products; market acceptance of QIAGEN's new products and the integration of acquired technologies and businesses.

14


For further information, please refer to the discussions in reports that QIAGEN has filed with, or furnished to, the U.S. Securities and Exchange Commission (SEC).

Contacts
 
 
 
 
 
 
 
Investor Relations:
 
 
 
 
 
 
John Gilardi
 
 
 
 
 
 
Vice President Corporate Communications and Investor Relations
 
 
 
 
 

+49 2103 29 11711
 
 
 
 
 
 
+1 240 686 2222
 
 
 
 
 
 
 
 
 
 
 
 
 
Dr. Sarah Fakih
 
 
 
 
 
 
Associate Director Investor Relations
 
 
 
 
 
 
+ 49 2103 29 11457
 
 
 
 
 
 
Email: ir@qiagen.com
 
 
 
 
 
 
ir.qiagen.com
 
 
 
 
 
 
Public Relations:
 
 
 
 
 
 
Dr. Thomas Theuringer
 
 
 
 
 
 
Senior Director Public Relations and Digital Communications
 
 
 
 
 
 
+49 2103 29 11826
 
 
 
 
 
 
+1 240 686 7425
 
 
 
 
 
 
Email: pr@qiagen.com
 
 
 
 
 
 
pr.qiagen.com
 
 
 
 
 
 
 
 
 
 
 
 
 
www.twitter.com/qiagen
 
 
 
 
 
 
www.facebook.com/QIAGEN
 
 
 
 
 
 
 
 
 
 
 
 
 
Download the QIAGEN Investor Relations App
 
 
 
 
 
 
Apple: https://itunes.apple.com/us/app/qiagen-investor-relations/id1170201291?mt=8
 
 
 
 
 
 
Android: https://play.google.com/store/apps/details?id=com.theirapp.qiagen&hl=de
 
 
 
 
 
 

15


QIAGEN N.V.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

 
 
Three months ended
 
September 30,
(In $ thousands, except share data)
2017
 
2016
Net sales
363,977

 
338,685

Cost of sales
123,096

 
117,625

Gross profit
240,881

 
221,060

Operating expenses:
 
 
 
Research and development
38,429

 
36,040

Sales and marketing
96,641

 
94,245

General and administrative, integration and other
31,863

 
32,644

Acquisition-related intangible amortization
10,017

 
9,851

Total operating expenses
176,950

 
172,780

Income from operations
63,931

 
48,280

Other income (expense):
 
 
 
Interest income
2,670

 
1,658

Interest expense
(12,000
)
 
(9,626
)
Other expense, net
(2,948
)
 
(2,374
)
Total other expense, net
(12,278
)
 
(10,342
)
Income before income taxes
51,653

 
37,938

Income taxes
3,168

 
3,187

Net income
48,485

 
34,751

Net loss attributable to noncontrolling interest

 
(53
)
Net income attributable to the owners of QIAGEN N.V.
48,485

 
34,804

 
 
 
 
Diluted net income per common share attributable to the owners of QIAGEN N.V.
$
0.21

 
$
0.15

Diluted net income per common share attributable to the owners of QIAGEN N.V. (adjusted)
$
0.32

 
$
0.29

 
 
 
 
Diluted shares used in computing diluted net income per common share (in thousands)
232,721

 
239,297















16





QIAGEN N.V.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)

 
 
 
 
 
Nine months ended
 
September 30,
(In $ thousands, except per share data)
2017
 
2016
Net sales
1,020,673

 
971,476

Cost of sales
359,390

 
354,831

Gross profit
661,283

 
616,645

Operating expenses:
 
 
 
Research and development
115,046

 
117,624

Sales and marketing
292,846

 
286,346

General and administrative, integration and other
113,968

 
88,654

Acquisition-related intangible amortization
29,376

 
29,387

Total operating expenses
551,236

 
522,011

Income from operations
110,047

 
94,634

Other income (expense):
 
 
 
Interest income
6,298

 
4,675

Interest expense
(32,742
)
 
(28,369
)
Other expense, net
(3,076
)
 
(41
)
Total other expense, net
(29,520
)
 
(23,735
)
Income before income taxes
80,527

 
70,899

Income taxes
440

 
(781
)
Net income
80,087

 
71,680

Net loss attributable to noncontrolling interest

 
(101
)
Net income attributable to the owners of QIAGEN N.V.
80,087

 
71,781

 
 
 
 
Diluted net income per common share attributable to the owners of QIAGEN N.V.
$
0.34

 
$
0.30

Diluted net income per common share attributable to the owners of QIAGEN N.V. (adjusted)
$
0.77

 
$
0.72

 
 
 
 
Diluted shares used in computing diluted net income per common share
233,428

 
238,775











17





QIAGEN N.V.
RECONCILIATION OF REPORTED TO ADJUSTED FIGURES
(unaudited)
Three months ended September 30, 2017
(In $ millions, except EPS data)
 
 
 
Net sales
 
Gross profit
 
Operating income
 
Pre-tax
 income
 
Income tax
 
Tax rate
 
Net
income
 
Diluted
EPS*
Reported results
 
364.0

 
240.9

 
63.9

 
51.7

 
(3.2
)
 
6
%
 
48.5

 
$
0.21

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business integration and acquisition-related items
 
0.4

 
0.6

 
5.4

 
5.4

 
(1.8
)
 
 
 
3.6

 
0.01

Purchased intangibles amortization
 

 
16.8

 
26.8

 
26.8

 
(8.8
)
 
 
 
18.0

 
0.08

Non-cash interest expense charges
 

 

 

 
5.7

 

 
 
 
5.7

 
0.02

Other special income and expense items
 

 

 

 
2.3

 
(2.8
)
 
 
 
(0.5
)
 

Total adjustments
 
0.4

 
17.4

 
32.2

 
40.2

 
(13.4
)
 
 
 
26.8

 
0.11

Adjusted results
 
364.4

 
258.3

 
96.1

 
91.9

 
(16.6
)
 
18
%
 
75.3

 
$
0.32

Restructuring charges
 

 
0.4

 
1.8

 
1.8

 
(1.6
)
 
 
 
0.2

 
$

Adjusted results excluding restructuring charges
 
364.4

 
258.7

 
97.9

 
93.7

 
(18.2
)
 
19
%
 
75.5

 
$
0.32

 
* Using 232.7 M diluted shares
NM - Not meaningful    


Three months ended September 30, 2016
(In $ millions, except EPS data)
 
 
 
Net sales
 
Gross profit
 
Operating
income
 
Pre-tax
income
 
Income tax
 
Tax rate
 
Net
income
 
Diluted
EPS*
Reported results
 
338.7

 
221.1

 
48.3

 
37.9

 
(3.2
)
 
8
%
 
34.8

 
$
0.15

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business integration and acquisition-related items
 

 
0.4

 
9.7

 
9.7

 
(2.8
)
 
 
 
6.9

 
0.03

Purchased intangibles amortization
 

 
20.2

 
30.1

 
30.1

 
(10.1
)
 
 
 
20.0

 
0.09

Non-cash interest expense charges
 

 

 

 
5.0

 

 
 
 
5.0

 
0.02

Other special income and expense items
 

 

 

 
0.8

 
1.8

 
 
 
2.5

 
0.01

Total adjustments
 

 
20.6

 
39.8

 
45.6

 
(11.1
)
 
 
 
34.4

 
0.15

Adjusted results
 
338.7

 
241.7

 
88.1

 
83.5

 
(14.3
)
 
17
%
 
69.3

 
$
0.29


* Using 239.3 M diluted shares


Tables may contain rounding differences 




18





QIAGEN N.V.
RECONCILIATION OF REPORTED TO ADJUSTED FIGURES
(unaudited)
Nine months ended September 30, 2017
(In $ millions, except EPS data)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
Gross profit
 
Operating
 income
 
Pre-tax
income
 
Income tax
 
Tax Rate
 
Net
income
 
Diluted
EPS*
Reported results
 
1,020.7

 
661.3

 
110.0

 
80.5

 
(0.4
)
 
1
%
 
80.1

 
$
0.34

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business integration and acquisition-related items
 
1.6

 
2.0

 
32.8

 
32.8

 
(10.9
)
 
 
 
21.9

 
0.10

Purchased intangibles amortization
 

 
58.3

 
87.7

 
87.7

 
(29.5
)
 
 
 
58.2

 
0.25

Non-cash interest expense charges
 

 

 

 
15.8

 

 
 
 
15.8

 
0.07

Other special income and expense items
 

 

 

 
2.2

 
2.6

 
 
 
4.8

 
0.01

Total adjustments
 
1.6

 
60.3

 
120.5

 
138.5

 
(37.8
)
 
 
 
100.7

 
0.43

Adjusted results
 
1,022.3

 
721.6

 
230.5

 
219.0

 
(38.2
)
 
17
%
 
180.8

 
$
0.77

Restructuring charges
 

 
1.3

 
19.2

 
19.2

 
(5.0
)
 
 
 
14.2

 
$
0.06

Adjusted results excluding restructuring charges
 
1,022.3

 
722.9

 
249.7

 
238.2

 
(43.2
)
 
18
%
 
195.0

 
$
0.84


* Using 233.4 M diluted shares
NM - Not meaningful

Nine months ended September 30, 2016
(In $ millions, except EPS data)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
 
Gross profit
 
Operating
income
 
Pre-tax
income
 
Income tax
 
Tax Rate
 
Net
income
 
Diluted
EPS*
Reported results
 
971.5

 
616.6

 
94.6

 
70.9

 
0.8

 
NM
 
71.8

 
$
0.30

Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Business integration and acquisition-related items
 

 
6.7

 
28.0

 
28.0

 
(8.1
)
 
 
 
19.9

 
0.09

Purchased intangibles amortization
 

 
60.0

 
89.4

 
89.4

 
(30.0
)
 
 
 
59.4

 
0.25

Non-cash interest expense charges
 

 

 

 
14.8

 

 
 
 
14.8

 
0.06

Other special income and expense items
 

 

 

 
1.6

 
3.9

 
 
 
5.5

 
0.02

Total adjustments
 

 
66.7

 
117.4

 
133.8

 
(34.2
)
 
 
 
99.6

 
0.42

Adjusted results
 
971.5

 
683.4

 
212.1

 
204.7

 
(33.5
)
 
16
%
 
171.3

 
$
0.72


* Using 238.8 M diluted shares


Tables may contain rounding differences 


19


QIAGEN N.V.
OVERVIEW OF 2016 RESULTS UNDER MULTIPLE ATTRIBUTION FOR EQUITY-BASED COMPENSATION
(unaudited)

In Q4 2016, QIAGEN changed to the "multiple attribution method" accounting principle for equity-based compensation. For the third quarter of 2016, diluted EPS was revised to $0.15 (previously $0.14) and for the first nine months of 2016, diluted EPS was revised to $0.30 (previously $0.29) and adjusted diluted EPS was revised to $0.72 (previously $0.71) due to a modest rounding difference from reduction in equity-based compensation versus increase in number of diluted shares.



(EPS data in $ per share,
diluted shares in thousands)
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
Results under former single attribution method
 
 
 
 
 
 
 
 
Diluted EPS
 
0.06

 
0.09

 
0.14

 
 
Diluted EPS, adjusted
 
0.19

 
0.24

 
0.29

 
 
Diluted shares
 
236,854

 
237,161

 
238,343

 
 
 
 
 
 
 
 
 
 
 
Results under new multiple attribution method
 
 
 
 
 
 
 
 
Diluted EPS
 
0.07

 
0.09

 
0.15

 
0.04

Diluted EPS, adjusted
 
0.19

 
0.24

 
0.29

 
0.15

Diluted shares
 
238,363

 
238,667

 
239,297

 
239,648




(EPS data in $ per share,
diluted shares in thousands)
 
3M 2016
 
6M 2016
 
9M 2016
 
FY 2016
Results under former single attribution method
 
 
 
 
 
 
 
 
Diluted EPS
 
0.06

 
0.15

 
0.29

 
 
Diluted EPS, adjusted
 
0.19

 
0.43

 
0.71

 
 
Diluted shares
 
236,854

 
237,008

 
237,453

 
 
 
 
 
 
 
 
 
 
 
Results under new multiple attribution method
 
 
 
 
 
 
 
 
Diluted EPS
 
0.07

 
0.16

 
0.30

 
0.34

Diluted EPS, adjusted
 
0.19

 
0.43

 
0.72

 
0.87

Diluted shares
 
238,363

 
238,515

 
238,775

 
238,993


















20




QIAGEN N.V.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
September 30,
2017
 
December 31,
2016
(In $ thousands, except par value)
 
(unaudited)
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
671,751

 
439,180

Short-term investments
 
303,195

 
92,999

Accounts receivable, net
 
294,971

 
278,244

Income taxes receivable
 
34,796

 
23,795

Inventories, net
 
161,948

 
136,552

Prepaid expenses and other current assets
 
104,040

 
66,799

Total current assets
 
1,570,701

 
1,037,569

Long-term assets:
 
 
 
 
Property, plant and equipment, net
 
484,398

 
436,655

Goodwill
 
2,009,856

 
1,925,518

Intangible assets, net
 
524,672

 
557,159

Deferred income taxes
 
70,143

 
68,384

Other long-term assets
 
436,774

 
282,909

Total long-term assets
 
3,525,843

 
3,270,625

Total assets
 
5,096,544

 
4,308,194

Liabilities and Equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
50,550

 
51,218

Accrued and other current liabilities
 
232,954

 
230,305

Income taxes payable
 
11,200

 
26,906

Total current liabilities
 
294,704

 
308,429

Long-term liabilities:
 
 
 
 
Long-term debt
 
1,746,994

 
1,067,096

Deferred income taxes
 
41,592

 
40,621

Other long-term liabilities
 
446,658

 
284,952

Total long-term liabilities
 
2,235,244

 
1,392,669

Equity:
 
 
 
 
Common shares, EUR .01 par value: Authorized - 410,000 shares
Issued - 230,829 and 239,707 shares in 2017 and in 2016, respectively
 
2,702

 
2,812

Additional paid-in capital
 
1,623,345

 
1,794,665

Retained earnings
 
1,289,603

 
1,263,464

Accumulated other comprehensive loss
 
(225,580
)
 
(333,839
)
Less treasury shares at cost - 4,453 and 5,147 shares in 2017 and in 2016, respectively
 
(123,474
)
 
(120,006
)
Total equity
 
2,566,596

 
2,607,096

Total liabilities and equity
 
5,096,544

 
4,308,194






21


QIAGEN N.V.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
 
Nine months ended
 
 
September 30,
(In $ thousands)
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
 
80,087

 
71,680

Adjustments to reconcile net income to net cash provided by operating activities, net of effects of businesses acquired:
 
 
 
 
Depreciation and amortization
 
163,628

 
156,695

Non-cash impairments
 
5,137

 

Amortization of debt discount and issuance costs
 
16,325

 
15,288

Share-based compensation expense
 
27,692

 
20,258

Excess tax benefits from share-based compensation
 

 
(448
)
Deferred income taxes
 
(6,377
)
 
(11,050
)
Loss on early redemption of debt
 

 
717

Loss (gain) on marketable securities
 
1,055

 
(1,360
)
Changes in fair value of contingent consideration
 
(2,769
)
 
(5,501
)
Other items, net including fair value changes in derivatives
 
(2,481
)
 
3,621

Net changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
(208
)
 
19,050

Inventories
 
(23,851
)
 
(13,602
)
Prepaid expenses and other current assets
 
(3,758
)
 
7,856

Other long-term assets
 
(651
)
 
4,607

Accounts payable
 
(3,434
)
 
(14,876
)
Accrued and other current liabilities
 
(11,660
)
 
(6,270
)
Income taxes
 
(27,412
)
 
(1,121
)
Other long-term liabilities
 
(610
)
 
(3,965
)
Net cash provided by operating activities
 
210,713

 
241,579

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property, plant and equipment
 
(64,605
)
 
(54,846
)
Proceeds from sale of equipment
 
42

 
22

Purchases of intangible assets
 
(26,899
)
 
(12,694
)
Purchases of investments
 
(697
)
 
(21,375
)
Cash paid for acquisitions, net of cash acquired
 
(50,549
)
 
(90,490
)
Purchases of short-term investments
 
(345,564
)
 
(436,249
)
Proceeds from sales of short-term investments
 
139,214

 
458,883

Other investing activities
 
(22,816
)
 
(6,505
)
Net cash used in investing activities
 
(371,874
)
 
(163,254
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from long-term debt, net of issuance costs
 
329,949

 

Proceeds from issuance of cash convertible notes, net of issuance costs
 
396,363

 

Purchase of call option related to cash convertible notes
 
(73,600
)
 

Proceeds from issuance of warrants
45,579,000

45,579

 

Capital repayment
 
(243,945
)
 

Repayment of long-term debt
 

 
(6,738
)
Principal payments on capital leases
 
(1,005
)
 
(949
)
Excess tax benefits from share-based compensation
 

 
448

Proceeds from issuance of common shares
 
3,554

 
2,562

Purchase of treasury shares
 
(60,970
)
 

Other financing activities
 
(9,940
)
 
(11,156
)
Net cash provided by (used in) financing activities
 
385,985

 
(15,833
)
Effect of exchange rate changes on cash and cash equivalents
 
7,747

 
2,143

Net increase in cash and cash equivalents
 
232,571

 
64,635

Cash and cash equivalents, beginning of period
 
439,180

 
290,011

Cash and cash equivalents, end of period
 
671,751

 
354,646

 
 
 
 
 
Reconciliation of Free Cash Flow1
 
 
 
 
Net cash provided by operating activities
 
210,713

 
241,579

Purchases of property, plant and equipment
 
(64,605
)
 
(54,846
)
Free Cash Flow
 
146,108

 
186,733

1 Free cash flow is a non-GAAP financial measure and is calculated from cash provided by operations reduced by the Company's investments in property, plant and equipment. QIAGEN believes this is a common financial measure useful to further evaluate the results of operations.

22