Qiagen NV QGEN shares were coming under intense selling pressure Tuesday following a trio of announcements from the company.
The stock was sliding 19.06% to $25.95 at the time of publication, the lowest in three years.
China Weakness Hurts
The German molecular and genetic testing company announced preliminary third-quarter results and said it expects net sales growth of 3% at constant exchange rates, lower than its previous outlook for 4-5% CER growth.
Qiagen attributed the weakness to significantly weaker-than-expected developments in China.
Excluding China sales, total sales growth at CER was 6%.
The company said it expects adjusted EPS to fall within its previous outlook of about 35-36 cents at CER.
Collaboration Deal With Illumina
In a bid to free up resources, Qiagen announced a strategic collaboration with Illumina, Inc. ILMN, giving up on development of its next-gen genome sequencing machines.
The companies struck a 15-year partnership under which Qiagen receives non-exclusive rights to commercialize IVD kits to be used with Illumina's MiSeq Dx and NextSeq 550Dx Systems.
Qiagen will pay Illumina a platform access fee and milestone payments.
The companies are also exploring opportunities for Qiagen to develop and market companion diagnostics based on Illumina's TruSight Oncology assays that enable comprehensive genomic profiling of tumor samples in immunotherapy.
"We intend to shift resources to support this new partnership, and to also review additional areas for investments in our portfolio where Qiagen can secure solid leadership positions," Qiagen CFO Roland Sackers said in a statement.
"We believe these decisions will help us deliver faster sales growth in the future while maintaining financial discipline and a focus on efficiency gains."
Restructuring In The Works
Qiagen announced initiatives, including shifting its global operations organization to a regional manufacturing structure and expanding the scope of activities at Qiagen Business Services centers in Wroclaw, Poland and Manila, Philippines.
The company said it expects to take a pretax restructuring charge of about $260 million to $265 million or about $1.14-$1.15 per share, predominantly in the third quarter of 2019.
CEO To Quit
The company also said Chairman and CEO Peer Schatz has decided to resign from the roles, although he will serve as special advisor to the supervisory board.
As the company scouts for a replacement, Thierry Bernard, senior vice president and head of the molecular diagnostics business area, will assume the CEO role on an interim basis.
The more than 25% regional decline raises questions about the health of the China IVD and molecular testing markets and also the company's ability to execute on a long-term revenue acceleration plan, JPMorgan analyst Tycho Peterson said in a Tuesday note.
The sudden CEO departure adds more uncertainty to near- and medium-term outlook, the analyst said.
JPMorgan downgraded shares of Qiagen from Neutral to Underweight and lowered its price target from $38 to $25.
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