FRANKFURT (Reuters) - Qiagen's (DE:QIA) longtime CEO Peer Schatz resigned after the German genetic testing company disclosed a reversal of its genome sequencing strategy and a slump in its Chinese business, sending its shares tumbling 20%.
In a surprise announcement late on Tuesday, the maker of diagnostic kits for cancer and tuberculosis said it would stop developing its next-generation genome sequencing machines and instead collaborate with industry leader Illumina (O:ILMN).
For the third quarter, Qiagen cut its forecast for sales growth, adjusted for currency swings, to about 3%, down from a previous outlook of 4%-5%, with its China business turning out significantly weaker than expected.
It expected to report adjusted third-quarter earning-per-share of $0.35-0.36, in line with its previous forecast.
Qiagen plans to take a pre-tax restructuring charge of about $260-$265 million, mainly to write down assets linked to the development of next-generation sequencing (NGS) instruments.
It also cited an overhaul of its global manufacturing network and possible job cuts for the writedown.
The company said Thierry Bernard, the head of the group's molecular diagnostics business, would now take over as interim boss until a permanent CEO was found.
Shares plunged 20% to 23.47 euros at 0848 GMT, with the group losing close to 1.4 billion euros ($1.54 billion) in market value, after already shedding about 17% over the previous three months.
"The fall from grace of Qiagen shares since June suggests that the market was already positioning for an unfavorable Q3, but the CEO's departure will come as a surprise," said Berenberg analyst Scott Bardo, adding the business nevertheless held the promise of attractive underlying growth.
Qiagen's core work includes making diagnostics kits that test for a single genetic mutation to help decide on treatment. But in recent years the company has developed into a smaller NGS player, where a wider range or all genes are sequenced.
As part of a 15-year collaboration deal with NGS pioneer Illumina (O:ILMN), Qiagen will rely on its genetic diagnostic products running on its new partner's hardware.
Schatz, who will become a special adviser to the supervisory board, had been with the company for 27 years. Since he started as finance chief in 1993, Qiagen has grown from $2 million in annual revenues to $1.5 billion in 2018.