INDUSTRY BUZZ

Industry Buzz: Qiagen and the Terrible, Horrible, No Good, Very Bad Day

Qiagen has been leaking oil for a while now. But after months of disappointing sales and dashed expectations, things came to a dramatic head over the less than 24 hour period between Oct. 7 and 8, 2019.

Poor Earnings

It started with news of disappointing earnings. On Oct. 7, the company announced that net earnings for Q3 2019 would come in at “about 3%,” instead of the between 4% and 5% previously expected. Qiagen attributed the disappointing results to “significantly weaker-than-expected developments in China,” and reaffirmed its faith in strong growth in the long-term. But investors didn’t want to hear it, sending Qiagen stock plunging 20% ahead of the next day’s market opening.

A Crucial Leadership Loss

But while disappointing growth had been anticipated, the Oct. 8 announcement that Qiagen CEO Peer Schatz was stepping down after 27 years to “pursue new opportunities” came as a body blow. Schatz was one of Qiagen’s first employees and a driving force in building the company, which since 1993:

  • Has gone from $2 million to $1.6 billion in annual sales;
  • Increased its market capitalization by over 300 times; and
  • Has grown from 25 to over 5,200 employees in 35 different countries.

Senior VP Thierry Bernard, head of Qiagen’s molecular diagnostics business, serve as interim CEO while the company searches for a permanent successor.

A Surprising New Strategic Direction

On Oct. 8, the same day it announced the loss of Schatz, Qiagen announced a strategic pivot: Rather than trying to develop its own instruments, Qiagen had opted to enter into a long-term partnership with previous rival Illumina to develop next-generation sequencing (NGS) kits and companion diagnostics for Illumina’s hardware. Qiagen also said it plans to reprioritize and reallocate in order to “free up resources” to better focus on its new partnership, including suspending its in-house work on developing NGS-related hardware, though it will continue supporting customers of its GeneReader next-gen system.

Market Reaction

It was a lot for the market to absorb. “Following yet another disappointing quarter, we remain uncertain of QGEN’s ability to execute on its long-term revenue outlook,” wrote J.P. Morgan analyst Tycho W. Peterson. “The CEO’s departure adds more uncertainty to the near- and medium-term outlook,” noted Patterson in downgrading Qiagen’s stock from Neutral to Underweight.

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