QGEN 20-F DEF-14A Report Dec. 31, 2023 | Alphaminr
ALPHAMINR

QGEN 20-F Report ended Dec. 31, 2023

Balance Sheet
Cash Flow
Income Statement
Debt
qgen-20231231
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
or
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2023
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from           to
or
☐
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report
Commission File Number 001-38332
QIAGEN_Logo.jpg
QIAGEN N.V.
(Exact name of Registrant as specified in its charter)
n/a
(Translation of Registrant’s name in English)
The Netherlands
(Jurisdiction of incorporation or organization)
Hulsterweg 82
5912 PL Venlo
The Netherlands
011-31-77-355-6600
(Address of principal executive offices)
_____________________________________________
Roland Sackers , Tel: 011-31-77-355-6600, Fax: 011-31-77-355-6658
QIAGEN N.V., Hulsterweg 82 , 5912 PL Venlo , The Netherlands
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
_____________________________________________
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of class:
Trading Symbol
Name of each exchange on which registered:
Common Shares, par value EUR 0.01 per share
QGEN
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
_____________________________________________
The number of outstanding Common Shares as of December 31, 2023 was 228,202,755 .
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ☒ Yes ☐  No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.    ☐  Yes    ☒ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.    ☒ Yes ☐  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒ Yes ☐  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See
definition of "large accelerated filer," "accelerated filer," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒            Accelerated filer  ☐            Non-accelerated filer  ☐           Emerging Growth Company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to
use the extended transition period for complying with any new or revised financial accounting standards* provided pursuant to Section 13(a) of the Exchange
Act. ☐
* The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effective of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
☒
U.S. GAAP
☐
International Financial Reporting Standards as issued by the International Accounting Standards
Board
☐
Other
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes    ☒  No
Unless the context otherwise requires, references herein to “we,” “us,” “our,” the “Company” or to “QIAGEN” are to QIAGEN N.V. and its consolidated
subsidiaries. Totals within tables presented in U.S. dollar millions may contain rounding differences.
_____________________________________________
EXCHANGE RATES
QIAGEN publishes its financial statements in U.S. dollars. In this Annual Report on Form 20-F, references to “dollars” or “$” are to U.S. dollars, references to
CHF are to the Swiss franc, and references to “EUR”, the “euro” or “€” are to the European Monetary Union euro. Except as otherwise stated herein, all
monetary amounts in this Annual Report on Form 20-F have been presented in U.S. dollars.
The exchange rate used for the euro was obtained from the European Central Bank and is based on the daily co nc e rtat ion procedure between central banks
across Europe, which normally takes place around 2:10 P.M. Central European Time. This rate at March 7, 2024 was $1.0895 per €1.
For information regarding the effects of currency fluctuations on our results, see "Operating and Financial Review."
TRADEMARKS
We have proprietary rights to trademarks, trade names and service marks used in this Annual Report on Form 20-F that are important to our business, many of
which are registered under applicable intellectual property laws. Solely for convenience, trademarks, trade names and service marks referred to in this Annual
Report on Form 20-F may appear without the “®” or “™” symbols, but such references are not intended to indicate, in any way, that we will not assert, to the
fullest extent possible under applicable law, our rights or the rights of the applicable licensor to these trademarks, trade names and service marks. We do not
intend our use or display of other companies’ trademarks, trade names or service marks to imply a relationship with, or endorsement or sponsorship of us by,
any other companies. Each trademark, trade name or service mark of any other company appearing in this Annual Report on Form 20-F is the property of its
respective holder.
Qiagen_20-F_2023_Cover_US-letter.jpg
Table of Contents
C ommon Shares
Market Environment
Despite concerns over inflation, rising interest rates, and increasing geopolitical
tensions around the world, various stock markets defied expectations in 2023
and posted gains during very volatile conditions for the year.
This rally, however, was dominated by a select group of stocks as many others
were held back by fears of recession and higher interest rates.
All three major U.S. indices ended 2023 with gains, making up for losses in
2022. The Dow Jones Industrial Average was up 14% and the S&P 500
re turned 2 4%. Mega-cap tech companies made the biggest comeback,
reflected in the 54% rise in the NASDAQ 100 Index.
In Germany, the blue-chip DAX-40 Index (QIAGEN is a member) rose 20%,
while the TecDAX Index of top technology companies (QIAGEN is also a
member) closed up 14% for the year. This overall performance reflects the
impact on valuations due t o inflation in tandem with the continued economic
recovery following the COVID-19 pandemic.
Global Shares listed in the U.S. and Europe
QIAGEN Global Shares have been registered and traded in the United States
since 1996 and are traded on the New York Stock Exchange (NYSE).
These Shares have also traded in Germany on the Frankfurt Stock Exchange
since 1997, and the Prime Standard segment since its launch in 2003, where
shares are traded on the XETRA electronic trading platform as well as on the
Frankfurt Börse involving floor trading .
The dual listing on the NYSE and the Frankfurt exchange offers advantages for
QIAGEN, our shareholders and employees. The presence in both markets
enhances liquidity, and increases the opportunity to attract investors,
particularly those in the U.S. restricted to only holding in U.S. dollar-
denominated investments. Unlike American Depositary Receipts (ADRs),
QIAGEN’s global shares provide equal rights for all shareholders and can be
traded on either exchange, in U.S. dollars or euros.
Share Price and Liquidity
QIAGEN’s share price fared relatively well in 2023 as the life sciences and
diagnostic industry continued to reset business conditions following significant
gains during the COVID-19 pandemic, ending the year with a 13 % decline to
$43.43 on the NYSE, and a 16 % decline to EUR 39.40 on the Frankfurt Stock
Exchange (XETRA) .
Our shares continued to offer high liquidity, with average daily trading volume
of approximately 1.5 million in 2023 - around 1.0 million in the U.S., and 0.5
million in Germany.
As of December 31, 2023, the free float, which affects weighting of QIAGEN
shares in various indices, was approximately 99%.
Shareholder Structure
QIAGEN has a global investor base comprised of more than 600 identified
institutional investors, with approximately 46% in North America, 50% in
Europe, and the remaining shares held in the rest of the world. Members of the
Managing Board and the Supervisory Board, in total, owned less than 1% of
QIAGEN’s outstanding common shares at the end of 2023 .
Market Capitalization
2023
Year-end market capitalization (in $ million)
9,911
Year-end market capitalization (in € million)
8,991
2982
2983
Annual Shareholder Meeting
At the Annual General Meeting on June 22, 2023, in Venlo, the Netherlands,
shareholders gave overwhelming approval to all agenda items. Shareholders
present or represented at the meeting held approximately 158.7 million shares,
or 69% of QIAGEN’s approximately 230.8 million issued shares as of the
record date for the meeting. Details of attendance and voting results are
available at corporate.QIAGEN.com.
Investor Relations and Shareholder Engagement
QIAGEN is committed to offering shareholders, analysts and communities
around the world transparent, comprehensive and readily accessible
information on our performance, strategy and future prospects, as well as our
vision and mission. Interactions included individual calls, roadshows and
attendance at broker-sponsored investor conferences.
These efforts were acknowledged in the annual “Institutional Investor”
magazine survey of investors, with the QIAGEN Investor Relations team being
recognized as the top team in the EMEA region within the Medtech industry,
and among the top five in the Healthcare sector.
QIAGEN Share Price Development and Average Trading Volume -
NYSE 2023
2023
Year-end price
$43.43
High
$51.18
Low
$34.74
Average daily trading volume (in million shares)
1.02
4153
QIAGEN Share Indices and Historic Prices - NYSE
On January 10, 2018, our Shares began trading on the New York Stock
Exchange (NYSE) under the symbol QGEN. Prior to the transition to the NYSE,
our Common Shares were traded on NASDAQ since the IPO (Initial Public
Offering) in 1996 under the same QGEN ticker.
The following tables set forth the annual high and low sale prices for the last
five years, the quarterly high and low sale prices for the last two years, and the
monthly high and low sale prices for the last six months on the NYSE.
QIAGEN Historical Share Price History - NYSE
High ($)
Low ($)
Annual:
2019
43.16
25.04
2020
55.27
32.97
2021
59.00
45.58
2022
55.12
40.38
2023
51.18
34.74
High ($)
Low ($)
Quarterly 2022 :
First Quarter
55.12
41.32
Second Quarter
50.38
42.44
Third Quarter
50.51
40.49
Fourth Quarter
51.05
40.38
Quarterly 2023 :
First Quarter
51.18
45.08
Second Quarter
46.99
43.80
Third Quarter
47.70
38.98
Fourth Quarter
43.73
34.74
Quarterly 2024 :
First Quarter (through March 7)
45.87
42.17
High ($)
Low ($)
Monthly:
October 2023
40.65
34.74
November 2023
41.48
37.14
December 2023
43.73
40.78
January 2024
45.87
42.73
February 2024
45.38
42.17
March 2024 (through March 7)
44.65
42.60
QIAGEN Share Price Development and Average Trading Volume -
Germany Frankfurt Stock Exchange (XETRA) 2023
2023
Year-end price
€39.40
High
€48.36
Low
€32.74
Average daily trading volume (in million shares)
0.51
4855
QIAGEN Share Indices and Historic Prices - Germany
Our Shares have been traded on the Frankfurt Stock Exchange since a
secondary IPO in September 1997 under the symbol QIA. QIAGEN joined the
blue-chip DAX-40 Index in September 2021, a recognition of our ranking
among the top publicly-traded companies in Germany based on market
capitalization.
The following table sets forth the annual high and low sale prices for the last
five years, the quarterly high and low sale prices for the last two years, and the
monthly high and low s ale prices for the last six months on the Prime Standard.
QIAGEN Historical Share Price History - Germany
High (€)
Low (€)
Annual:
2019
39.19
22.54
2020
46.95
29.55
2021
51.56
37.38
2022
49.37
37.95
2023
48.36
32.74
High (€)
Low (€)
Quarterly 2022 :
First Quarter
49.34
37.95
Second Quarter
46.03
39.94
Third Quarter
49.37
41.32
Fourth Quarter
48.26
41.62
Quarterly 2023 :
First Quarter
48.36
41.57
Second Quarter
43.47
39.62
Third Quarter
43.39
36.73
Fourth Quarter
40.07
32.74
Quarterly 2024 :
First Quarter (through March 7)
42.19
38.83
High (€)
Low (€)
Monthly:
October 2023
38.64
32.74
November 2023
37.83
35.09
December 2023
40.07
37.46
January 2024
42.10
38.83
February 2024
42.19
39.07
March 2024 (through March 7)
41.05
39.32
Busin ess and Operating Environment
Company Overview
QIAGEN is a leading global provider of Sample to Insight solutions that enable
customers to gain valuable molecular insights from any biological sample. Our
sample technologies isolate and process deoxyribonucleic acid (DNA),
ribonucleic acid (RNA) and proteins – the building blocks of life – from blood,
tissue and other materials. Assay technologies make these biomolecules visible
and ready for analysis using a range of technologies. Bioinformatics software
and knowledge bases are used to interpret complex genomic data sets to
provide relevant, actionable insights. Instruments and automation solutions are
used to tie together these products into seamless and cost-effective workflows.
We provide solutions to more than 500,000 customers around the world in
Molecular Diagnostics (human healthcare) and Life Sciences (academic
research, pharma and biotech companies, and applied applications such as
human identification / forensics and food safety). As of December 31, 2023 ,
we employed approximately 6,000 people in more than 35 locations
worldwide.
QIAGEN was founded in 1984 and began operations in 1986 as a pioneer in
the emerging biotechnology sector with a revolutionary method that
standardized and accelerated the extraction and purification of nucleic acids
from biological samples, which means any material containing DNA, RNA or
proteins. As molecular biology and genomic knowledge has grown to influence
many areas of daily life, we have expanded to serve the full spectrum of market
needs, developing new instruments, consumables and digital solutions;
partnering with researchers and pharmaceutical companies, and acquiring
companies and technologies that best complement our portfolio. We believe
the addressable global market for our portfolio totals more than $11 billion .
We continue to accelerate our portfolio growth and increase our efficiency and
effectiveness while also enhancing our customer experience, our corporate
citizenship, and our position as an employer of choice. Our growth strategy is
anchored in our Five Pillars of Growth: sample technologies, the digital PCR
(Polymerase Chain Reaction) platform QIAcuity, the clinical PCR automation
solutions QIAstat-Dx and NeuMoDx and the QuantiFERON technology platform
used to detect medical conditions such as latent tuberculosis. Our growth has
been funded through internally generated funds, as well as debt offerings and
the public sales of equity securities. Our global shares are listed on the New
York Stock Exchange under the ticker symbol QGEN and on the Frankfurt Stock
Exchange as QIA.
QIAGEN N.V. is the holding company for more than 50 consolidated
subsidiaries, many of which have the primary function of distributing our
products and services on a regional basis. Certain subsidiaries also have
research and development or production activities. The Company is registered
under its commercial and legal name QIAGEN N.V. with the trade register
(kamer van koophandel) of the Dutch region Limburg Noord under file number
12036979. QIAGEN N.V. is incorporated under Dutch law as a public limited
liability company (naamloze vennootschap) and is organized as a holding
company. Our principal executive office is located at Hulsterweg 82, 5912 PL
Venlo, The Netherlands, and our telephone number is +31-77-355-6600.
Further information on QIAGEN can be fou nd at www.qiagen.com . The
U.S. Securities Exchange Commission (SEC) web site at www.sec.gov
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC. Information contained in,
or that can be accessed through, our website is not a part of, and shall not be
incorporated by reference into, this Annual Report. We have included our
website address in this document solely as an inactive textual reference.
Operating Environment
Economic Environment
The global economy grew by approximately 2.9% in 2023, slightly below the
3.1% growth rate recorded for 2022, marking it one of the more modest
annual growth performances of the last 20 years. This soft growth trajectory
can be attributed to ongoing inflationary pressures and the complex unwinding
of post-pandemic economic disruptions. Central banks around the world
continued to walk a fine line of monetary tightening, adjusting interest rates to
curb inflation while trying to mitigate impacts on national economies. The U.S.
QIAGEN N.V. | Financial Report 2023
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Management Report
Dollar Index, after seeing volatility in 2022, maintained a relatively stable
performance throughout 2023, with minor fluctuations reflecting ongoing
economic uncertainties.
Industry Environment
Life Sciences and Molecular Diagnostics faced diverging trends in 2023 - there
was growth in areas that had been adversely affected by the pandemic
lockdowns, but another significant drop in demand for COVID-19 testing and
surveillance products compared with the peak level in 2021. The pandemic
had led to significant growth in the installed base of instruments, and
competitors were now seeking to expand this base to other applications in Life
Sciences and Molecular Diagnostics. Although numerous smaller companies
have emerged in recent years, larger companies such as QIAGEN boast the
crucial advantage of better global distribution and production capacity, as well
as brand recognition and credibility.
The addressable Life Sciences and Molecular Diagnostics industry segments
generate an estimated $11billion of annual sales , and are expected to
maintain a healthy rate of single-digit sales growth in the coming years. Key
growth drivers include continued research funding to advance our
understanding of biology, as well as consistently strong medical demand for
molecular clinical testing.
QIAGEN Products
Our leadership in molecular research and testing solutions leverages our
product portfolio across a wide range of applications. These are grouped into
two main categories:
• Consumables and related revenues involve our consumables kits,
bioinformatics solutions, royalties, co-development milestone payments and
services ( 88% of total net sales in 2023 ); and
• Instruments and related services and contracts ( 12% of total net sales in
2023 ).
QIAGEN Product Grou ps
Sample Technologies
Sample Technologies is the first of our Five Pillars of Growth and includes
products involved in the first step of any molecular lab process .
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20240212 Infographic.jpg
Our broad portfolio of Sample technologies includes consumables and
instruments used in sample collection, stabilization, storage, purification and
quality control. Some of our consumables are designed to run on our
instruments, while others are universal kits designed for use with any molecular-
testing platform. These products are used in research and applied testing
(forensics / human identification and food safety) laboratories as well as
clinical testing.
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Management Report
Applications
20240212 Checkmark.jpg
Cloning
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qPCR / dPCR
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DNA
amplification
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Sequencing
/ NGS
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Arrays
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Liquid biopsy
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Gene editing
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Microbiome
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Epigenetics
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Gene silencing
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Cellular
analytics
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Proteomics
Input demands
Processing
Target analytes
Low / high-volume
Manual
Genomic DNA
Low-quantity
Plasmid DNA
Tubes / plates
cfDNA
Input demands
Low-quantity
Automated
mRNA, rRNA
High-quantity
Low-to
miRNA
Tubes / plates
High-throughput
Proteins
Circ. Tumor cells
Selected biological samples
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Tissue
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Stool
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Cells
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Saliva
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Blood
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Other body
fluids
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Serum
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Bone
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Plasma
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Plants
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Urine
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Soil
Sample technologies
Selected QIAGEN brands
Primary Sample technology consumables
• Nucleic acid stabilization and purification kits designed for primary sample materials (DNA, RNA),
manual and automated processing for genotyping, gene expression, viral and bacterial analysis
• Mainly based on silica membrane and magnetic bead technologies
• QIAamp
• PAXgene
• AllPrep
• DNeasy
• AdnaTest
• QIAprep&amp
• RNeasy
• MagAttract
Secondary Sample technology consumables
• Kits and components for purification of nucleic acids from secondary sample materials (e.g., gel,
plasmid DNA)
• QIAprep
• QIAGEN Plasmid
• HiSpeed
• QIAquick
• QIAfilter
• EndoFree
• DyeEx
Sample technology instruments
• Instruments for nucleic acid purification, quality control and accessories
• QIAsymphony
• EZ1 Advanced XL
• TissueLyser III
• QIAcube Connect
• EZ2 Connect MDx
• QIAxpert
• QIAcube HT
• QIAxcel Connect
• QIAcube Connect
MDx
Diagnostic Solutions
Diagnostic solutions include our molecular testing platforms and consumables
covering three of our Pillars of Growth, which are QuantiFERON, QIAstat-Dx
and NeuMoDx, as well as Precision Diagnostics which involves companion
diagnostic co-development revenues from projects with pharmaceutical
companies, regulated assays and solutions for laboratory developed tests.
Additional areas include Oncology and Sexual & Reproductive Health for
detection of various diseases and for other laboratory processes.
Diagnostic solutions
Selected QIAGEN brands
Immune response consumables
• Interferon-Gamma Release Assay (IGRA) for latent TB testing
• Assays for post-transplant testing, viral load monitoring, assessment of T-Cell response to COVID-19
• QuantiFERON
Oncology and Sexual & Reproductive health consumables
• Assays for analysis of genomic variants such as mutations, insertions, deletions and fusions
• Assays for prenatal testing and detection of sexually transmitted diseases and HPV
• therascreen
• AmniSure / PartoSure
• ipsogen
• digene HC2
Sample to Insight instruments and dedicated assays
• One-step molecular analysis of hard-to-diagnose syndromes
• Fully integrated PCR testing
• QIAstat-Dx
• QIAstat-Dx Rise
• NeuMoDx
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PCR / Nucleic Acid Amplification
PCR / Nucleic Acid Amplification involves our research and applied PCR
solutions and components. The product group includes another of our Five
Pillars of Growth: QIAcuity. We offer optimized solutions for end-point PCR,
quantitative PCR and digital PCR. Our kits, assays, instruments and accessories
amplify and detect targets and streamline workflow for virtually any
application.
PCR/Nucleic acid amplification
Selected QIAGEN brands
Research PCR consumables
• Different generations of PCR, quantitative PCR, reverse transcription and combinations (RT-PCR) kits
for analysis of gene expression, genotyping and gene regulation, running on QIAGEN or third-party
instruments and technologies
• QuantiTect
• OneStep RT-PCR
• Type-it
• OmniScript
• QuantiFast
• QIAGEN Multiplex
• miRCURY LNA
• miScript
• QuantiNova
• HotStarTaq
• TopTaq
Human ID / Forensics assay consumables
• STR assays for Human ID, additional assays for food contamination
• Investigator (human
ID / forensics)
• mericon (food safety)
PCR instruments
• Digital PCR solutions
• qPCR solutions
• QIAcuity
• Rotor-Gene Q
• QIAquant
• QIAgility
OEM consumables
• Custom-developed and configured enzymes and PCR solutions that are sold to OEM customers
• Provided on an individualized contract basis
Genomics / NGS
This product group includes our universal NGS (next-generation sequencing)
solutions for use with any NGS sequencer as well as the full bioinformatics
portfolio offered by QIAGEN Digital Insights.
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Genomics / NGS
Selected QIAGEN brands
Universal NGS consumables
• Predefined and custom NGS gene panels (DNA, RNA), library prep kits and components,
whole genome amplification, etc.
• Sequence-based assays for forensic genetic genealogy
• QIAseq
• REPLI-g Epitect
• ForenSeq Kintelligence
QIAGEN Digital Insights solutions
• Bioinformatics solutions analyze and interpret data to deliver actionable insights from
NGS. This includes freestanding software or cloud-based solutions and is also integrated
into many QIAGEN consumables and instruments
• QIAGEN Clinical Insight
• QCI Interpret One
• Ingenuity Variant Analysis
• CLC Genomics Workbench
• OmicSoft
• Ingenuity Pathway Analysis
• QIAGEN Knowledge Base
• HGMD
Custom laboratory and genomic services
• Custom services such as DNA sequencing, whole genome amplification, and non-cGMP
DNA production
• Provided on an individualized contract basis
Other
Revenues from various sources including protein biology products, royalties,
intellectual property and freight charges.
Principal Markets
We sell our products to more than 500,000 customers in two broad customer
groups: Molecular Diagnostics (clinical testing) and Life Sciences (academia,
pharmaceutical R&D and applied testing). Sales to these groups were as
follows:
Net sales (in millions)
2023
2022
2021
Molecular Diagnostics
$1,035.5
$1,126.2
$1,143.7
Life Sciences
929.8
1,015.3
1,108.0
Total
$1,965.3
$2,141.5
$2,251.7
We estimate the total addressable market at over $11 billion annually.
Molecular Diagnostics
The molecular diagnostics market includes healthcare providers engaged in
many aspects of patient care that require accurate diagnoses and insights to
guide treatment decisions in oncology, infectious diseases and immune
monitoring.
We offer one of the broadest portfolios of molecular technologies for
healthcare. The success of molecular testing in healthcare depends on the
ability to accurately analyze purified nucleic acid samples from sources such as
blood, tissue, body fluids and stool. Automated systems process tests reliably
and efficiently, often handling hundreds of samples simultaneously. Our range
of assays for diseases and biomarkers speeds up and simplifies laboratory
workflow and standardizes lab procedures.
Molecular testing is the most dynamic segment of the global in vitro diagnostics
market. The pandemic has demonstrated the value of molecular testing in
healthcare and we expect the market to provide significant growth
opportunities.
We have built a position as a preferred partner to co-develop companion
diagnostics paired with targeted drugs and have created a rich pipeline of
molecular tests that are transforming the treatment of cancer and other diseases.
We have more than 30 master collaboration agreements with pharmaceutical
industry customers, some with multiple co-development projects. In 2023, we
continued to expand on these partnerships with new agreements, for example a
new partnership with Servier for the development of a companion diagnostic in
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Management Report
Acute Myeloid Leukemia therapy. Also, our portfolio of assays was expanded
following the FDA approval of a companion diagnostic for Blueprint Medicines'
therapy for gastrointestinal stromal tumors. Companion diagnostics move
through clinical trials and regulatory approvals, along with the paired drugs, to
commercialization and marketing to healthcare providers.
Selected Molecular Diagnostics products
Sample technologies
Assay technologies
Instruments
Bioinformatics
For extraction from:
• Tissue
• Blood
• Swabs, other
Indication areas
• Oncology
• Immune modulation
• Infectious diseases Technologies:
QuantiFERON, Polymerase Chain Reaction
(PCR), Next-generation sequencing (NGS)
• QIAstat-Dx
• NeuMoDx
• QIAsymphony RGQ
• QIAcube Connect MDx
• EZ2 Connect MDx
• QIAstat Rise
QIAGEN Clinical Insight (QCI)
• Hereditary diseases
• Somatic and germline cancers
• All diseases
Life Sciences
The Life Sciences market includes governments and biotechnology companies –
and researchers using molecular testing technologies who are generally served
by public funding in areas such as medicine and clinical development,
forensics, and exploring the building blocks of life.
We partner with customers across diverse disciplines in academia and industry,
providing sample technologies, assay technologies, bioinformatics and services
to universities and institutes, pharmaceutical and biotech companies,
government and law enforcement agencies.
We provide Sample to Insight solutions to academic and research institutions
around the world. We focus on enabling researchers to use high-quality
technologies to generate reliable, fast, highly reproducible results, sometimes
replacing time-consuming traditional or in-house methods. We often partner
with leading institutions on research projects and develop customized solutions
such as NGS panels for the sequencing of multiple gene targets.
We are a global leader in solutions for governments and industry, particularly
in forensic testing and human identification. The value of genetic
"fingerprinting" has been proven in criminal investigations and examinations of
paternity or ancestry, as well as in food safety. We provide sample collection
and analytical solutions for law enforcement and human identification labs, as
well as advanced technologies for studies of microbiomes and their effect on
health and the environment.
We have deep relationships with pharmaceutical and biotechnology
companies. Drug discovery and development as well as translational research
efforts increasingly employ genomic information, both to guide research in
diseases and to differentiate patient populations that are most likely to respond
to particular therapies. We estimate that about half of our sales to these
companies supports research, while the other half supports clinical
development, including stratification of patient populations based on genetic
information. Also, QIAGEN Digital Insights solutions are widely used to guide
pharmaceutical research and treatment options.
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Management Report
Selected Life Sciences products
Sample technologies
Assay technologies
Instruments
Bioinformatics
~300 different kit types for extraction and
purification of DNA, RNA and proteins from
tissue, blood, cells, stool, plants, soil, and
other sample types
• Real-time PCR
• Digital PCR
• Next-generation sequencing
• QIAsymphony
• QIAcube Connect
• QIAcuity digital PCR
• Ingenuity Pathway Analysis (IPA)
• Genomics Workbench/Server
• Microbial Pro Suite/RNA-seq
• Microbial Epigenetics
Competition
The markets for most of our products are very competitive. Competitors may
have developed, or could develop in the future, new technologies that compete
with our products or even render our products obsolete. In sample technology
products, we experience competition in various markets from other companies
providing sample preparation products in kit form and assay solutions. These
competitors include, but are not limited to, companies with a focus on nucleic
acid separation and purification kits, assay solutions, reagents and
instrumentation. We compete with other suppliers through innovative
technologies and products, offering a comprehensive solution for nucleic acid
collection, pre-treatment, separation and purification needs as well as
downstream applications, providing significant advantages in speed, reliability,
accuracy, convenience, reproducibility and ease of use.
Some of our other products within our molecular diagnostics customer class,
such as tests for chlamydia, gonorrhea, hepatitis B virus, herpes simplex virus
and CMV (cytomegalovirus) , compete against existing screening, monitoring
and diagnostic technologies, including tissue culture and antigen-based
diagnostic methodologies. We believe the primary competitive factors in the
market for gene-based probe diagnostics and other screening devices are
clinical validation, performance and reliability, ease of use, standardization,
cost, proprietary position, competitors' market shares, access to distribution
channels, regulatory approvals and reimbursement.
We believe our competitors typically do not have the same comprehensive
approach to sample to insight solutions as we do, nor do they have the ability
to provide the broad range of technologies and depth of products and services
that we offer. Current and potential competitors may be in the process of
seeking FDA or foreign regulatory approvals for their respective products. Our
continued future success will depend in large part on our ability to maintain our
technological advantage over competing products, expand our market
presence and preserve customer loyalty. There can be no assurance that we
will be able to compete effectively in the future or that development by others
will not render our technologies or products non-competitive.
Global Presence by Product Category and Geographic Market
Product Category Information
Net sales for the product categories are attributed based on those revenues
related to sample and assay products and related revenues including
bioinformatics solutions, and revenues derived from instrumentation sales.
Net sales (in millions)
2023
2022
2021
Consumables and related
revenues
$1,726.2
$1,888.9
$1,986.3
Instrumentation
239.1
252.6
265.3
Total
$1,965.3
$2,141.5
$2,251.7
Geographical Information
We sell our products in more than 170 countries. The following table shows
total revenue by geographic market for the past three years (net sales are
attributed to countries based on the location of the customer, as certain
subsidiaries have international distribution):
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Management Report
Net sales (in millions)
2023
2022
2021
United States
$935.3
$909.6
$909.7
Other Americas
84.8
88.1
97.7
Total Americas
1,020.1
997.8
1,007.4
Europe, Middle East and
Africa
624.6
733.5
814.4
Asia Pacific, Japan and
Rest of World
320.7
410.3
429.9
Total
$1,965.3
$2,141.5
$2,251.7
We have built an increasing presence in key markets as a growth strategy. In
2023, the top six growth markets—China, Brazil, India, South Korea, Mexico
and Türkiye —contribute d 12% of net sales. Russia was excluded as a market in
early 2022 following the invasion of Ukraine, and subsequent decision to stop
business activities in Russia and Belarus.
Seasonality
Our business is not significantly impacted by seasonal factors . Historically, a
significant portion of our sales has been to researchers, universities,
government laboratories and private foundations whose funding is dependent
upon grants from government agencies, such as the National Institutes of Health
and similar bodies. To the extent that our customers experience increases,
decreases or delays in funding arrangements and budget approvals, and to the
extent that customers' activities are slowed, such as during times of higher
unemployment, vacation periods or delays in approval of government budgets,
we may experience fluctuations in sales volumes during the year or delays from
one period to the next in the recognition of sales. Additionally, we have
customers who are active in the diagnostics testing market, and sales to these
customers fluctuate to the extent that their activities are impacted by public
health concerns - for example, the timing and severity of viral infections such as
the influenza or SARS-CoV-2 viruses.
Su ppliers
We strive to ensure that our quality standards, compliance with laws and
regulations as well as environmental and social standards are maintained
along the entire value chain of suppliers and partners. We demand the same
from our business partners. Suppliers are subjected to a risk analysis with
regard to environmental and social criteria based on their geographic location.
Our supplier policy, which all new suppliers sign, is available on our website
and contains requirements with regard to legal compliance, bribery and
corruption, labor rights, non-discrimination and fair treatment, health and
safety, as well as environmental protection and conservation. In addition, first-
tier suppliers must confirm REACH, RoHS and conflict minerals compliance as
appropriate. As part of our supplier assessment procedures, we evaluate on a
monthly basis the supply performance of our raw material and component
suppliers, and we assess on a continuous basis potential alternative sources of
such materials and components, and on a yearly basis the risks and benefits of
reliance on our existing suppliers.
We buy materials for our products from many suppliers, and are not dependent
on any one supplier or group of suppliers for our business as a whole. Raw
materials generally include chemicals, raw separation media, biologics,
plastics, electronics and packaging. Certain raw materials are produced under
our specifications. We have inventory agreements with the majority of our
suppliers and we closely monitor stock levels to maintain adequate supplies. In
the second half of 2023, while the availability of raw materials improved over
2022, raw material prices continued to increase primarily driven by energy
costs and inflation. We use long-term supply contracts when needed to secure
raw materials and mitigate availability challenges when identified. The overall
increase in energy costs and materials has had a significant adverse impact on
our costs for raw materials, specifically plastics and packaging as well as for
logistics. Long-term supply contracts have helped to limit the risks for shortages
in electronic components, but have still resulted in price increases. We expect
improved availability in 2024 under continued pricing pressure. We strive to
maintain inventories at a sufficient level to ensure reasonable customer service
levels and to guard against normal volatility in availability. These initiatives
help us minimize shortages and pricing pressures.
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Research and Development
We are committed to expanding our global leadership in Sample to Insight
solutions in Molecular Diagnostics and the Life Sciences. We target our
research and development resources at the most promising technologies to
address the unmet needs of our customers in healthcare and research labs in
key geographic markets.
Innovation at QIAGEN follows parallel paths:
• Creating new systems for automation of workflows - platforms for
laboratories, hospitals and other users of novel molecular technologies.
• Expanding our broad portfolio of novel content - including assays to detect
and measure biomarkers for disease or genetic identification.
• Integrating QIAGEN Digital Insights with the testing process - software and
cloud-based resources to interpret and transform raw molecular data into
useful insights.
Innovation in automation systems positions us in fast-growing fields of molecular
testing, and generates ongoing demand for our consumable products. We are
developing and commercializing a deep pipeline of assays for preventive
screening and diagnostic profiling of diseases, detection of biomarkers to guide
Precision Diagnostics in cancer and other diseases, and other molecular
targets. Our assay development program aims to commercialize tests that will
add value to our QIAsymphony, QIAstat-Dx and NeuMoDx automation systems
in the coming years, as well as next-generation sequencing (NGS) kits to
support our universal NGS franchise and our in vitro diagnostics partnership
with Illumina. We continue to develop applications for the QIAcuity digital PCR
system which is designed to make digital PCR technology available to Life
Sciences laboratories worldwide.
Sales and Marketing
We market our products primarily through subsidiaries in markets w it h the
greatest sales potential in the Americas, Europe, Australia and Asia.
Experienced marketing and sales staff, many of them scientists with academic
degrees in molecular biology or related areas, sell our products and support
our customers. Business managers oversee key accounts to ensure that we serve
customers’ commercial needs, such as procurement processes, financing, data
on costs and the value of our systems, and collaborative relationships. In many
markets, we have specialized independent distributors and importers.
Our marketing strategy focuses on providing differentiated, high-quality
products across the value chain from Sample to Insight, integrating components
into end-to-end solutions when possible, and enhancing relationships with
commitment to technical excellence and customer service. Our omni-channel
approach seeks to engage customers through their preferred channels - online,
by phone, in person, etc. - and to optimize investment in different customer
types.
We continue to drive the growth of our digital marketing channels – including
our website at www.qiagen.com , product-specific sites and social media.
Since the onset of the pandemic there has been an increase in virtual events
and use of digital sales channels. We have likewise increased the activities in
digital marketing to adapt to these market changes, such as installing an in-
house studio to facilitate creation of video content and live virtual events.
Our eCommerce team works with clients to provide automated processes
supporting a variety of electronic transactions and all major eProcurement
systems. Information contained on our website, or accessed through it, is not
part of this Annual Report.
My QIAGEN is an easy-to-use self-service portal that is personalized to our
customers' needs and enables customers to manage different activities in one
central place. Customers can now easily reorder, place bulk orders, apply
quotes to their cart, and then track their order status. Functionality in the
dashboard allows customers to monitor their instrument use and view the status
of licenses and service agreements. Additionally, customers can access our
exclusive content and services, such as webinars, handbooks and other
documents.
Our GeneGlobe Design & Analysis Hub ( www.geneglobe.com ) is a
valuable outreach to scientists in pharma and academia, enabling researchers
to search and order from approximately 25 million pre-designed and custom
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PCR assay kits, NGS assay panels and other products. The new hub brings
next-level experiment planning, execution and follow-up to life science
researchers, linking our QIAGEN Digital Insights solutions with ordering of
assays to accelerate research.
We use a range of tools to provide customers with direct access to technical
support, inform them of new product offerings, and enhance our reputation for
technical excellence, high-quality products and commitment to service. For
example, our technical service hotline allows existing or potential customers to
discuss a wide range of questions about our products and molecular biology
procedures, online or via phone, with Ph.D. and M.Sc. scientists at QIAGEN.
Frequent communication with customers enables us to identify market needs,
learn of new developments and opportunities, and respond with new products.
We also distribute publications, including our catalog, to existing and potential
customers worldwide, providing new product information, updates, and articles
about existing and new applications. In addition, we hold numerous scientific
seminars at clinical, academic and industrial research institutes worldwide and
at major scientific and clinical meetings. We conduct direct marketing
campaigns to announce new products and special promotions, and we offer
personalized electronic newsletters and webinars highlighting molecular
biology applications.
For laboratories that frequently rely on our consumables, the QIAstock program
maintains inventory on-site to keep up with their requirements. QIAGEN
representatives make regular visits to replenish the stock and help with other
needs, and we are automating this process with digital technologies. Easy-to-
use digital ordering, inventory monitoring and customer-driven changes make
QIAstock an efficient system for providing ready access to our products for the
hundreds of customers worldwide who use this program.
Intellectual Property, Proprietary Rights and Licenses
We have made and expect to continue to make investments in intellectual
property. In 2023 , additions to our intangible assets outside of business
combinations totaled $11.1 million and as of December 31, 2023 , patent and
license rights, net t ota led $75.6 million . While we do not depend solely on any
individual patent or technology, we are significantly dependent in the
aggregate on technology that we own or license. Therefore, we consider
protection of proprietary technologies and products one of the major keys to
our business success. We rely on a combination of patents, licenses and
trademarks to establish and protect proprietary rights. As of December 31,
2023 , we owned 303 issued patents in the United States, 251 issued patents
in Germany and 1,716 issued patents in other major industrialized countries.
We had 360 pending patent applications. Our policy is to file patent
applications in Western Europe, the United States and Japan. Patents in most
countries have a term of 20 years from the date of filing the patent application.
We intend to aggressively prosecute and enforce patents and to otherwise
protect our proprietary technologies. We also rely on trade secrets, know-how,
continuing technological innovation and licensing opportunities to develop and
maintain our competitive position.
Our practice is to require employees, consultants, outside scientific
collaborators, sponsored researchers and other advisers to execute
confidentiality agreements upon commencement of their relationships with us.
These agreements provide that all confidential information developed by or
made known to the individual during the course of the relationship is to be kept
confidential and not disclosed to third parties, subject to a right to publish
certain information in scientific literature in certain circumstances and to other
specific exceptions. In the case of our employees, the agreements provide that
all inventions conceived by individuals in the course of their employment will be
our exclusive property, subject to local laws.
See Risk Factors included in Risks and Risk Management for details regarding
risks related to our reliance on patents and proprietary rights.
QIAGEN N.V. | Financial Report 2023
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Management Report
Descri ption of Pr operty
Our primary production and manufacturing facilities for consumable products
are located in Germany, the United States, Spain and China. Our facilities for
software development are located in the United States, Germany, Poland,
Denmark and Romania. In recent years, we have made investments in
automated and interchangeable production equipment to increase our
production capacity and improve efficiency. Our production and manufacturing
operations are highly integrated and benefit from sophisticated inventory
control. Production management personnel are highly qualified, and many
have advanced degrees in engineering, business and science. We also have
installed and continue to expand production-planning systems that are included
in our integrated information and control system based on the SAP R/3
business software package from SAP SE. Worldwide, we use SAP R/3 software
to integrate most of our operating subsidiaries and are currently undergoing a
multi-year implementation of S/4HANA . Capital expenditures for property,
plant and equipment totaled $149.7 million , $129.2 million and $189.9
million for 2023 , 2022 and 2021 , respectively.
We have an established quality system, including standard manufacturing and
documentation procedures, intended to ensure that products are produced and
tested in accordance with the FDA's Quality System Regulations, which impose
current Good Manufacturing Practice (cGMP) requirements. For facilities that
accommodate cGMP production, special areas were built and these facilities
operate in accordance with cGMP requirements.
The consumable products manufactured at QIAGEN GmbH in Germany, and
QIAGEN Sciences LLC in Maryland, are produced under ISO
9001: 2015, ISO 13485:2016, MDSAP. Our certifications form part of our
ongoing commitment to provide our customers with high-quality, state-of-the-
art sample and assay technologies under our Total Quality Management
system.
Our corporate headquarters are located in Venlo, The Netherlands. The below
table summarizes our largest facilities. Other subsidiaries throughout the world
lease smaller amounts of space.
QIAGEN N.V. | Financial Report 2023
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Management Report
Facility location
Country
Purpose
Owned or leased
Square feet
Hilden
Germany
Manufacturing, warehousing, distribution, research and development and administration
Owned
986,000
Germantown, Maryland
U.S.
Manufacturing, warehousing, distribution and administration
Owned
285,000
Ann Arbor, Michigan
U.S.
Service Solutions, manufacturing, warehousing, distribution and administration
Leased
109,000
Shenzhen
China
Development, manufacturing, warehousing, distribution and administration
Leased
107,200
Manchester
U.K.
Development and Service Solutions
Leased
96,300
Frederick, Maryland
U.S.
Development, Service Solutions, manufacturing, warehousing and distribution
Leased
76,500
Wroclaw
Poland
Business service center
Leased
65,100
Beverly, Massachusetts
U.S.
Enzyme manufacturing
Leased
44,000
Barcelona
Spain
Development, manufacturing, warehousing, distribution, and administration
Leased
31,900
Manila
Philippines
Business service center
Leased
29,300
Shanghai
China
Service Solutions and administration
Leased
28,400
Gdańsk
Poland
Enzyme manufacturing, development, warehousing and administration
Leased
27,100
Germantown, Maryland
U.S.
Service Solutions and training center
Leased
13,500
Redwood City, California
U.S.
Bioinformatics
Leased
12,700
Gdynia
Poland
Enzyme manufacturing, development and warehousing
Leased
11,200
Each of our owned facilities in Hilden, Germany and Germantown, Maryland,
has capacity for future expansion of up to 300,000 square feet of facility
space. In 2023 , we invested in our Hilden, Germany site to add an emergency
power supply and renewable heating systems in order to reduce our
dependency on carbon energy sources and to reduce our carbon emissions.
We believe our existing production and distribution facilities can support
anticipated production needs for the next 36 months. Our production and
manufacturing operations are subject to various federal, state, and local laws
and regulations including environmental regulations. We do not believe we
have any material issues relating to these laws and regulations.
QIAGEN N.V. | Financial Report 2023
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Management Report
Operating and Financial Review
This section contains a number of forward-looking statements. These statements
are based on current management expectations, and actual results may differ
materially. Among the factors that could cause actual results to differ from
management’s expectations are those described in Risk Factors and Note
The discussion that follows focuses on 2023 with comparisons to 2022. For
discussion of the year ended December 31, 2022, compared to 2021, refer to
our December 31, 2022 Annual Report.
O perating Results
Overview
Net sales growth continued in 2023 in the non-COVID product portfolio amid a
challenging macro-environment and total 2023 net sales of $2.0 billion reflect
the advancement of our strategy of "Focus and Balance" on areas offering the
highest growth potential. Focus involves our Five Pillars of Growth strategy to
make significant investments in the commercialization and development of (1)
Sample technologies, (2) QuantiFERON, (3) QIAcuity, (4) NeuMoDx and (5)
QIAcuity. Balance involves developing our portfolio to address more than
500,000 customers across the Life Sciences and Molecular Diagnostics, as well
as to build out our global presence in markets around the world offering growth
potential.
We made solid progress in driving growth of our consumables business, which
accounts for over 85% of our sales, while expanding our installed instrument
base.
Financial highlights of 2023 include:
• While net sales from our non-COVID product portfolio grew 8% in 2023,
total net sales declined 8% over the year-ago period, reflecting a 66%
decline in net sales from COVID-19 products.
• The operating income margin in 2023 was 20.9% of sales compared to
24.8% in 2022, reflecting lower sales contributions as well as higher
expenses from recent production capacity expansion projects, investments in
research and development include BLIRT S.A. and Verogen, Inc. which we
acquired in May 2022 and January 2023, respectively.
• Net cash provided by operating activities declined 36% to $459 million in
2023 from $715 million in 2022. Results in 2023 reflected the reduced net
income compared with 2022 results, as well as higher working capital
requirements, in particular an increase in inventories to ensure product
availability.
We continue to invest to support internal growth with a high level of investment
into research and development for menu expansion of our key platforms as well
as our IT infrastructure. Additionally, in January 2024, we completed a
synthetic share repurchase that combined a direct capital repayment to
shareholders with a reverse stock split. This approach is designed to return cash
to shareholders in a more efficient way than through a traditional open-market
repurchase program.
In January 2023, we acquired Verogen, Inc., a leader in the use of next-
generation sequencing (NGS) technologies to drive the future of human
identification (HID) and forensic investigation. Verogen, a privately held
company founded in 2017 based in San Diego, California, supports the global
human identification community with NGS tools and professional services to
help resolve criminal and missing-persons cases. In May 2022, we acquired
BLIRT S.A., a supplier of standardized and customized solutions for proteins
and enzymes as well as molecular biology reagents located in Gdańsk,
Poland.These acquisitions were not significant to the overall consolidated
financial statements.
As of April 1, 2022, the results of our subsidiary in Türkiye are reported under
highly inflationary accounting, as the prior three-years cumulative inflation rate
exceeded 100%.
Foreign Currencies
The reporting currency of QIAGEN N.V. is the U.S. dollar. The functional
currency of most of our subsidiaries are the local currencies of the countries in
which they are headquartered. All amounts in the financial statements of entities
QIAGEN N.V. | Financial Report 2023
Page 26
Management Report
whose functional currency is not the U.S. dollar are translated into U.S. dollar
equivalents at exchange rates as follows: (1) assets and liabilities at period-end
rates, (2) income statement accounts at average exchange rates for the period,
and (3) components of equity at historical rates. Translation gains or losses are
recorded in equity, and transaction gains and losses are reflected in net
income.
Y ear En ded December 31, 2023 , Compared to 2022
Net Sales
(in millions)
2023
2022
Product type
Net sales
% of net sales
Net sales
% of net sales
% change
Consumables and related revenues
$1,726.2
88 %
$1,888.9
88 %
-9 %
Instruments
239.1
12 %
252.6
12 %
-5 %
Net sales
$1,965.3
$2,141.5
-8 %
Customer class
Molecular Diagnostics
$1,035.5
53 %
$1,126.2
53 %
-8 %
Life Sciences
929.8
47 %
1,015.3
47 %
-8 %
Net sales
$1,965.3
$2,141.5
-8 %
(in millions)
2023
2022
Product group
Net sales
% of net sales
Net sales
% of net sales
% change
Sample technologies
$663.0
34 %
$796.9
37 %
-17 %
Diagnostic solutions
697.6
35 %
660.9
31 %
+6 %
PCR / Nucleic acid amplification
300.2
15 %
390.8
18 %
-23 %
Genomics / NGS
238.9
12 %
224.8
10 %
+6 %
Other
65.6
3 %
68.1
3 %
-4 %
Net sales
$1,965.3
$2,141.5
-8 %
Sample technologies involve the sale of consumables kits and instruments
for use in obtaining DNA, RNA and proteins from biological samples. Overall
sales in this product group declined 17% in 2023 to $663.0 million, due to
significant drop-off in the pandemic testing demand. Growth in Non-COVID
product sales were supported by higher sales of consumables that more than
offset the decline in instruments. Sales results for 2023 were adversely
impacted by approximately one percentage point of currency movements over
the prior year.
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Management Report
Diagnostic Solutions involve the sale of regulated consumables kits and
instruments for use in clinical healthcare, as well as revenues from our Precision
Diagnostics portfolio and companion diagnostic co-development projects with
pharmaceutical companies. Sales in this product group grew 6% to $697.6
million in 2023. The QuantiFERON-TB test for tuberculosis detection maintained
a solid pace with 24% growth in 2023 and QIAstat-DX sales rose, supported
by an ongoing high level of placements. NeuMoDx sales were down compared
to the significant COVID-19 sales in 2022, but exceeded the annual sales goal
in 2023. Sales in the rest of this product group declined, mainly due to lower
sales of COVID-19 products.
PCR / Nucleic Acid Amplification involves consumables kits and
instruments used in non-regulated applications. Sales in this product group fell
23% to $300.2 million due to a sharp decline in COVID product group
demand, as well as the drop-off in sales of OEM products. The QIAcuity digital
PCR system delivered solid growth in 2023 over 2022 results, driven by
increasing consumables pull through and new placements especially to
biopharma customers.
Genomics / NGS involves our portfolio of universal solutions for use on any
next-generation sequencer (NGS) as well as the QIAGEN Digital Insights
bioinformatics business and other products used in genomics analysis
workflows. Sales in this product group rose 6% to $238.9 million in 2023
driven by business expansion in the bioinformatics business and the portfolios
of universal NGS solutions for use with various third-party NGS systems.
Geographic region
(in millions)
2023
2022
% change
Americas
$1,020.1
$997.8
+2 %
Europe, Middle East and
Africa
624.6
733.5
-15 %
Asia Pacific, Japan and
Rest of World
320.7
410.3
-22 %
Net sales
$1,965.3
$2,141.5
-8 %
The Americas region led the performance among our three regions, with
overall results reflecting the COVID-19 product contributions in 2022. Higher
sales were seen in the U.S. and Mexico, against lower results in Canada over
the prior year. Sales in this region were not materially affected by currency
movements.
The Europe, Middle East and Africa (EMEA) region's results were also
affected by the decline in COVID-19 sales, partially offset by one percentage
point of favorable currency movements against the U.S. dollar. Among the top-
performing countries in 2023 were Spain, France and the United Kingdom.
The Asia Pacific, Japan and Rest of World region saw an overall sales
decline in 2023 over the prior year. Sales in this region were adversely
impacted by three percentage points from unfavorable currency movements
against the U.S. dollar.
Gross Profit
(in millions)
2023
2022
% change
Gross profit
$1,233.7
$1,384.6
-11 %
Gross margin
62.8%
64.7%
The gross margin in 2023 primarily reflects changes in individual product sales
and mix. Generally, our consumables and related products have a higher gross
margin than our instrumentation products and service arrangements.
Fluctuations in the sales levels between periods can cause changes in gross
profit between periods. In 2023, gross margin decreased in line with the
significant decline in the overall sales level, which was mainly due to the sharp
reduction in COVID-19 product group revenues. The gross margin in 2023 also
includes costs for higher material and logistics costs over the year-ago periods.
The amortization expense on acquisition-related intangibles within cost of sales
increased to $64.2 million in 2023 compared to $60.5 million in 2022 and
includes amortization related to Verogen acquired in January 2023 . Our
acquisition-related intangible amortization will increase in the event of future
acquisitions.
QIAGEN N.V. | Financial Report 2023
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Management Report
Operating Expenses
(in millions)
2023
2022
Expenses
% of net sales
Expenses
% of net sales
% change
Sales and marketing
$459.9
23.4 %
$474.2
22.1 %
-3 %
Research and development
198.5
10.1 %
189.9
8.9 %
+5 %
General and administrative
119.3
6.1 %
129.7
6.1 %
-8 %
Acquisition-related intangible amortization
10.8
0.5 %
14.5
0.7 %
-26 %
Restructuring, acquisition, integration and other, net
35.3
1.8 %
44.8
2.1 %
-21.1 %
Total operating expenses
$823.8
41.9 %
$853.1
39.8 %
Income from operations
$409.9
20.9 %
$531.5
24.8 %
Sal es and Marketi ng
Sales and marketing expenses declined 3% to $459.9 million over 2022, and
rose to 23.4% of sales from 22.1% in 2022. The overall decrease in sales and
marketing expenses primarily reflects lower freight and other supply chain
costs. Sales and marketing expenses are primarily associated with personnel,
commissions, advertising, trade shows, publications, freight and logistics
expenses, and other promotional expenses. The increased use of digital
customer engagement continues to build on the new habits of customers and
enhance customer engagement with a focus on greater efficiency and
effectiveness.
Research and Development
Research and development expenses increased 5% to $198.5 million in 2023
compared to 2022 and rose to 10.1% of sales from 8.9% in 2022. Results for
2023 included $2.6 million of unfavorable currency exchange movements.
Research and development expense reflects our continued focus on our Five
Pillars of Growth, including investments in NeuMoDx, QIAstat-Dx and QIAcuity.
These investments are targeting new applications within our Five Pillars of
Growth to drive sustainable post-pandemic expansion. As we continue to
discover, develop and acquire new products and technologies, we expect to
incur additional expenses related to facilities, licenses and employees engaged
in research and development. Overall, research and development costs are
expected to increase as a result of seeking regulatory approvals, including U.S.
FDA Pre-Market Approval (PMA), U.S. FDA 510(k) clearance and EU CE
approval of certain assays or instruments. Further, business combinations, along
with the acquisition of new technologies, may increase our research and
development costs in the future. We have a strong commitment to innovation
and expect to continue to make investments in our research and development
efforts.
General and Administrative
General and administrative expenses declined 8% to $119.3 million in 2023
and remained unchanged to 6.1% of sales compared in 2022. These results
reflect lower share-based compensation expense together with efficiency gains
across many administrative functions partially offset by investments into our
information technology systems (including an upgrade of the SAP enterprise
resource planning system) and into cyber security measures. Results for 2023
included $1.0 million of unfavorable currency exchange movements. We
expect future costs to increase due to higher licensing and information
technology costs as well as increased cyber security costs.
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Management Report
Acquisition-Related Intangible Amortization
Amortization expense on acquisition-related intangibles within operating
expense declined 26% to $10.8 million from $14.5 million in 2022 . The
decrease reflects the full amortization of certain previously acquired assets.
Amortization expense related to developed technology and patent and license
rights acquired in business combinations are included in cost of sales.
Amortization of trademarks and customer base acquired in business
combinations are recorded in operating expense under the caption
“acquisition-related intangible amortization.” Amortization expenses of
intangible assets not acquired in business combinations are recorded within
cost of sales, research and development, or sales and marketing line items
based on the use of the asset. Our acquisition-related intangible amortization
recorded in operating expenses will increase in the event of future acquisitions.
Restructuring, Acquisition, Integration and Other, net
Restructuring, acquisition, integration and other, net expenses decreased to
$35.3 million in 2023 , or 1.8% of sales, from $44.8 million , or 2.1% of sales,
in 2022 . Expenses incurred in 2023 included charges related to the 2022
restructuring program, as discussed further in Note 6 "Restructuring," as well as
costs related to our acquisition of Verogen, Inc. in January 2023 . Expenses
incurred in 2022 included costs related to our BLIRT S.A. acquisition in May
2022 and impairments and charges related to our decision to suspend business
in Russia, Ukraine and Belarus in the first quarter of 2022 as well as
impairments to intangible assets of $12.8 million an impairments related to
Ellume, as further discussed in Note 11 "Goodwill and Intangible Assets."
Additionally in 2022 , we incurred $4.6 million of charges related to the 2022
restructuring program.
Other Income (Expense), net
(in millions)
2023
2022
% change
Interest income
$79.0
$32.8
+141 %
Interest expense
(53.4)
(58.4)
-8 %
Other (expense) income,
net
(5.7)
6.7
-185 %
Total other income
(expense), net
$19.9
($18.9)
-205 %
Interest income includes interest earned on cash, cash equivalents and short-
term investments, income related to certain interest rate derivatives as discussed
in Note 14 "Derivatives and Hedging" and other components including the
interest portion of operating lease transactions. The increase in 2023
compared to the prior year was due to increasing interest rates and the
duration and level of short-term investments held during the period.
Interest expense primarily relates to debt, as discussed in Note 16 "Debt" in the
accompanying notes to consolidated financial statements. The decrease in
2023 compared to 2022 is driven by the repayment of the 2023 Notes that
matured in September 2023 totaling $400.0 million partially offset by the
issuance of German private placement bonds in July and August 2022 totaling
€370.0 million .
Other (expense) income, net was $5.7 million of expense for the year ended
December 31, 2023 . Other expense included a loss of $5.8 million on foreign
currency transactions and $4.2 million of im pairments in non-marketable
investments not accounted for under the equity method, partially offset by $4.2
million of income from equity method investments.
Other (expense) income, net was $6.7 million of income for the year ended
December 31, 2022 . Other income included $3.8 million of income from
equity method investments and a gain of $2.7 million on foreign currency
transactions.
QIAGEN N.V. | Financial Report 2023
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Management Report
I nco me Ta x Expense
(in millions)
2023
2022
% change
Income before income
taxes
$429.8
$512.6
-16 %
Income tax expense
88.5
89.4
-1 %
Net income
$341.3
$423.2
Effective tax rate
20.6 %
17.4 %
In 2023, our effective tax rate was 20.6% compared to 17.4% in 2022. Our
effective tax rate differs from the Netherlands statutory tax rate of 25.8% due in
part to our operating subsidiaries being exposed to statutory tax rates ranging
from zero to 35% . Fluctuations in the distribution of pre-tax income or loss
among our operating subsidiaries can lead to fluctuations of the effective tax
rate in the consolidated financial statements. We record partial tax exemptions
on foreign income primarily derived from operations in Germany. These foreign
tax benefits are due to a combination of favorable tax laws and exemptions in
these jurisdictions, including intercompany foreign royalty income in Germany
which is statutorily exempt from trade tax. Further, we have intercompany
financing arrangements in which the intercompany income is nontaxable in
Dubai. The effective tax rate in 2022 reflects the release of uncertain tax
positions following the conclusion of tax audits covering the 2014 to 2016
years in the second quarter of 2022. See Note 17 "Income Taxes" to the
consolidated financial statements for a full reconciliation of the Netherlands'
statutory income tax rate to the effective tax rate.
In future periods, our effective tax rate may fluctuate due to similar or other
factors as discussed in “Changes in tax laws or their application or the
termination or reduction of certain government tax incentives, could adversely
impact our overall effective tax rate, results of operations or financial flexibility”
Liquidity and Capital Resources
To date, we have funded our busines s through internally generated funds, debt,
as well as private and public sales of equity. Our primary use of cash has been
to strengthen our business operations, while our investing activities have
focused on capital expenditure requirements and acquisitions.
(in millions)
2023
2022
Cash and cash equivalents
$668.1
$730.7
Short-term investments
389.7
687.6
Total cash and cash equivalents and
short-term investments
$1,057.8
$1,418.3
Working capital
$1,068.3
$1,419.4
Cash and cash equivalents are primarily held in U.S. dollars and euros, other
than those cash balances maintained in the local currency of subsidiaries to
meet local working capital needs. At December 31, 2023 , cash and cash
equivalents had decreased by $62.6 million from December 31, 2022 ,
primarily as a result of cash used in financing activities of $433.8 million and
cash used in investing activities of $87.7 million , partially offset by cash
provided by operating activities of $459.5 million as discussed in the Cash
Flow Summary below. The decrease in short-term investments at December 31,
2023 , is the result of our active cash management . The overall lower cash and
cash equivalent balance together with a higher current portion of long-term
debt led to the decrease of working capital at December 31, 2023 .
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Management Report
Cash Flow Summary
(in millions)
2023
2022
Net cash provided by operating activities
$459.5
$715.3
Net cash used in investing activities
(87.7)
(726.8)
Net cash used in financing activities
(433.8)
(125.8)
Effect of exchange rate changes on cash and
cash equivalents
(0.6)
(12.5)
Net decrease in cash and cash
equivalents
($62.6)
($149.8)
Operating Activities
For the year ended December 31, 2023 , we generated net cash from
operating activities of $459.5 million compared to $715.3 million in 2022 .
While net income was $341.3 million in 2023 , non-cash components in
income included $205.3 million of depreciation and amortization, $47.1
million of share-based compensation and $30.2 million of amortization of debt
discount and issuance costs. Cash flow impacts from changes in operating
assets and liabilities primarily reflect increased inventories to support customer
demand trends in light of global supply chain tensions. Given that we rely
heavily on cash generated from our operating activities to fund our business, a
decrease in demand for our products, longer collection cycles or significant
technology advances by competitors could have a negative impact on our
liquidity.
Investing Activities
Approximately $87.7 million of cash was used in investing activities in 2023
compared to $726.8 million in 2022 . Investing activities during 2023
consisted principally of $1.0 billion for purchases of short-term investments,
$149.7 million in cash paid for purchases of property and equipment, $149.5
million of net cash paid for the acquisition of Verogen, Inc., $66.6 million paid
to our derivative counterparties to collateralize our derivative liabilities with
them as discussed in Note 14 "Derivatives and Hedging," and $13.1 million
paid for intangible assets. This was partially offset by cash inflows of $1.3
billion from the redemption of short-term investments.
Cash used in investing activities during 2022 consisted principally of $1.4
billion for purchases of short-term investments, $129.2 million for purchases of
property, plant and equipment, $63.7 million of net cash paid for the
acquisition of BLIRT S.A., $20.1 million paid for intangible assets and $9.9
million returned to us from our derivative counterparties with cash provided to
them to collateralize our derivative liabilities with them. This was partially offset
by cash inflows of $883.1 million from the redemption of short-term
investments.
Financing Activities
For the year ended December 31, 2023 , cash used in financing activities was
$433.8 million compared to $125.8 million in 2022 . Financing activities
during 2023 included $400.0 million for the repayment of long-term debt,
$17.7 million paid in connection with net share settlement for tax withholding
related to the vesting of stock awards, and $16.3 million paid to our derivative
counterparties to collateralize derivative assets that we hold with them.
In 2022 , cash used in financing activities totaled $125.8 million and consisted
of $480.0 million for the repayment of long-term debt, $25.4 million paid in
connection with net share settlement for tax withholding related to the vesting of
stock awards, and $4.6 million in cash paid for contingent consideration. This
was partially offset by proceeds of $371.5 million from the issuance of long-
term debt and $12.6 million received from our derivative counterparties to
collateralize derivative assets that we hold with them.
Other Factors Affecting Liquidity and Capital Resources
As of December 31, 2023 , we carry $1.5 billion of long-term debt, of which
$0.6 billion is current and $0.9 billion is long-term.
In July and August 2022, we completed a German private placement bond
(2022 Schuldschein), which was issued in various tranches totaling €370.0
million ($371.5 million) due in various periods through 2035 as described
more fully in Note 16 "Debt." The interest rate is linked to our ESG
performance. As of December 31, 2023 , a total of $408.0 million is
outstanding.
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In December 2020, we issued $500.0 million aggregate principal amount of
zero coupon Convertible Notes due in 2027 (2027 Notes). The 2027 Notes
will mature on December 17, 2027, unless converted in accordance with their
terms prior to such date as described more fully in Note 16 "Debt."
In November 2018, we issued $500.0 million aggregate principal amount of
Cash Convertible Senior Notes due in 2024 (2024 Notes). Interest on the
2024 Notes is payable semiannually in arrears at a rate of 1.000% per
annum. The 2024 Notes will mature on November 13, 2024, unless
repurchased or converted in accordance with their terms prior to such date.
In September 2017, we issued $400.0 million aggregate principal amount of
Cash Convertible Senior Notes due in 2023 (2023 Notes) which were due and
repaid in September 2023.
In 2017, we completed a German private placement (2017 Schuldschein)
consisting of various tranches denominated in U.S. dollars or euros at either
floating or fixed rates, and due at various dates through June 2027 . As of
December 31, 2023 , a total of $121.0 million is outstanding.
In December 2020, we obtained a €400 million syndicated revolving credit
facility with a contractual life of three years, and with the ability to be extended
twice by a one-year period. No amounts were utilized during 2023 . The facility
can be utilized in euros and bears interest of 0.550% to 1.500% above
EURIBOR, and is offered with interest periods of one, three or six months. The
interest rate is linked to our ESG performance. We have additional credit lines
totaling €13.0 million with no expiration date. None of these credit lines were
utilized in 2023 .
We have lease obligations, including interest, in the aggregate amount of
$109.9 million , of which $25.1 million was current as of December 31, 2023 .
We also have purchase obligations of $98.8 million and license commitments
of $7.2 million . In connection with certain acquisitions that we have completed,
QIAGEN could be required to make additional contingent cash payments of up
to $20.7 million based on the achievement of certain revenue and operating
results milestones. These obligations are further discussed in Note 12 "Leases"
and Note 20 "Commitments and Contingencies" in the consolidated financial
statements.
Liabilities associated with uncertain tax positions, including interest and
penalties, were estimated at $98.9 million as of December 31, 2023 . Ultimate
settlement of these liabilities is dependent on factors outside of our control, such
as examinations by the respective taxing authorities and expiration of statutes
of limitation for assessment of additional taxes. Therefore, we cannot
reasonably estimate when, if ever, this amount will be paid.
In January 2024, we completed a synthetic share repurchase that combined a
direct capital repayment with a reverse stock split. The transaction was
announced on January 7, 2024, and involved an approach used by various
large, multinational Dutch companies to provide returns to all shareholders in a
faster and more efficient manner than traditional open-market repurchases.
$295.2 million was returned to shareholders through the transaction, which
reduced the total number of issued Common Shares by approximately 3% to
223.9 million (of which 2.5 million are held in Treasury Shares) as of January
31, 2024.
We did not use special purpose entities and did not have any off-balance sheet
financing arrangements during the years ended December 31, 2023 , 2022
and 2021 .
We expect that cash from financing activities will continue to be impacted by
issuances of our common shares in connection with our equity compensation
plans, and that the market performance of our shares will impact the timing and
volume of the issuances. Additionally, we may make future acquisitions or
investments requiring cash payments, the issuance of additional debt or equity
financing.
We believe that funds from operations, existing cash and cash equivalents,
together with the proceeds from any public and private sales of equity, and
availability of financing facilities, would be sufficient to fund our planned
operations and expansion in the coming year. However, any global economic
downturn may have a greater impact on our business than currently expected,
and we may experience a decrease in the sales of our products, which could
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impact our ability to generate cash. If our future cash flows from operations and
other capital resources are not adequate to fund our liquidity needs, we may be
required to obtain additional debt or equity financing or to reduce or delay our
capital expenditures, acquisitions or research and development projects. If we
could not obtain financing on a timely basis or at satisfactory terms, or
implement timely reductions in our expenditures, our business could be
adversely affected.
Policy on Dividend Distribution
We have not paid any dividends on our Shares since our inception and do not
intend to pay any dividends in the foreseeable future. We intend to retain our
earnings, if any, for the development of our business. In January 2017 and
January 2024 we completed synthetic share repurchases that combined direct
capital repayments with reverse stock splits.
Credit Rating
We currently do not have a rating issued by any credit rating agency.
Critical Accounting Estimates
The preparation of our financial statements in accordance with accounting
principles generally accepted in the United States requires management to
make assumptions that affect the reported amounts of assets, liabilities and
disclosure of contingencies as of the date of the financial statements, as well as
the reported amounts of revenues and expenses during the reporting period.
Critical accounting estimates are those that require the most complex or
subjective judgments, often as a result of the need to make estimates about the
effects of matters that are inherently uncertain. Thus, to the extent that actual
events differ from management’s estimates and assumptions, there could be a
material impact to the financial statements. In applying our critical accounting
estimates, at times we used accounting estimates that either required us to make
assumptions about matters that were highly uncertain at the time the estimate
was made, or it is reasonably likely that changes in the accounting estimate
may occur from period to period that would have a material impact on the
presentation of our results of operations, financial position or cash flows. Our
critical accounting estimates are those related to income taxes, share-based
compensation, acquisitions, amortized intangible assets, and fair value
measurements.
In come Tax es
Calculation of our tax provision is complex due to our international operations
and the multiple taxing jurisdictions in which we operate. Some of our deferred
tax assets relate to net operating losses (NOL). The utilization of NOLs is not
assured and is dependent on generating sufficient taxable income in the future.
To the extent that our estimates of future taxable income are insufficient to
utilize all available NOLs, a valuation allowance will be recorded in the
provision for income taxes in the period the determination is made, and the
deferred tax assets will be reduced by this amount, which could be material. In
the event that actual circumstances differ from management’s estimates, or to
the extent that these estimates are adjusted in the future, any changes to the
valuation allowance could materially impact our financial position and results of
operations.
The calculation of our tax liabilities involves dealing with uncertainties in the
application of complex tax laws and regulations in many jurisdictions across
our global operations. ASC 740 states that a tax benefit from an uncertain tax
position may be recognized when it is more likely than not that the position will
be sustained upon examination, including resolutions of any related appeals or
litigation processes on the basis of technical merits. We record unrecognized
tax positions in accordance with ASC 740 and adjust these liabilities when our
judgment changes as a result of the evaluation of new information not
previously available. Because of the complexity of some of these uncertainties,
the ultimate resolution may result in a payment that is materially different from
our current estimate of the unrecognized tax liabilities. These differences will be
reflected as increases or decreases to income tax expense in the period in
which the new information is available.
Share-Based Compensation
Our stock plan allows for the granting of stock rights, incentive stock options, as
well as for non-qualified options, stock grants and stock-based awards. We
grant performance-based stock units subject to performance periods of three
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years. Thus, the estimates of performance achieved during the performance
period may be subject to significant changes from period to period as the
performance is completed. Any increase or decrease in share-based
compensation expense resulting from an adjustment in the estimated shares to
be released is treated as a cumulative catch-up in the period of adjustment. If
any of the assumptions or estimates used change significantly, share-based
compensation expense may differ materially from what we have recorded in
the current period.
Acquisitions
We frequently enter into business combinations and must determine whether an
acquired entity is considered to be a business or an asset or group of assets. A
portion of the purchase price can only be allocated to goodwill in a business
combination. Transaction costs are expensed in a business combination, yet
capitalized in an asset acquisition. Contingent payments and in-process
research and development costs are also handled differently. A set of assets is
not a business if substantially all of the fair value of the acquired gross assets is
concentrated in a single asset or group of similar identifiable assets. In
determining whether an acquired entity is considered to be a business or a set
of assets, application of the "substantially all" threshold requires judgment.
The purchase price allocation for acquisitions of a business requires extensive
use of accounting estimates and judgments to allocate the purchase price to the
identifiable tangible and intangible assets acquired, including in-process
research and development, and liabilities assumed based on their respective
fair values. An acquisition may include contingent consideration as part of the
purchase price. Contingent consideration is accounted for at fair value at the
acquisition date, with subsequent changes to the fair value being recognized in
earnings.
We have made several acquisitions of businesses in recent years. The purchase
prices for the acquisitions were allocated to tangible and intangible assets
acquired and liabilities assumed based on their estimated fair values at the
acquisition dates. In most acquisitions, we engage an independent third-party
valuation firm to assist us in determining the estimated fair values of acquired
in-process research and development and identifiable intangible assets. Such a
valuation requires significant estimates and assumptions, including but not
limited to determining the timing and estimated costs to complete the in-process
projects, projecting regulatory approvals, estimating projected revenue and
related growth rates, estimating future cash flows, estimating customer attrition
rates, and developing appropriate discount rates. We believe the estimated fair
values of contingent consideration and assets acquired and liabilities assumed
are based on reasonable assumptions. However, the fair value estimates for the
purchase price allocations may change during the allowable allocation period,
which is up to one year from the acquisition dates, if additional information
becomes available.
Amortized Intangible Assets
We assess amortized intangible assets at least annually, as of October 1st of
each year, for indications of impairment and immediately upon an indicator of
possible impairment. Intangibles are assessed for recoverability considering the
contract life, where applicable, and the period of time over which the
intangible will contribute to future cash flow. The unamortized cost of intangible
assets, where cash flows are independent and identifiable from other assets, is
evaluated periodically and adjusted, if necessary, if events and circumstances
indicate that a decline in value below the carrying amount has occurred. Due to
the numerous variables associated with our judgments and assumptions, and
the effects of changes in circumstances affecting the valuation, both the
precision and reliability of the resulting estimates are subject to uncertainty. As
additional information becomes known, we may change our estimates.
Fair Value Measurements
We have categorized our assets and liabilities that are measured at fair value,
based on the priority of the inputs to the valuation techniques, in a three-level
fair value hierarchy: Level 1 - using quoted prices in active markets for identical
assets or liabilities; Level 2 - using observable inputs other than quoted prices;
and Level 3 – using unobservable inputs. We primarily apply the market
approach for recurring fair value measurements, maximize our use of
observable inputs and minimize our use of unobservable inputs. We utilize the
mid-point price between bid and ask prices for valuing the majority of our
assets and liabilities measured and reported at fair value. In addition to using
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market data, we make assumptions in valuing assets and liabilities, including
assumptions about risk and the risks inherent in the inputs to the valuation
technique.
Certain of our derivative instruments, which are classified in Level 2 of the fair
value hierarchy, are valued using industry-standard models that consider
various inputs, including time value, volatility factors, and current market and
contractual prices for the underlying instruments, as well as other relevant
economic measures. Substantially all of these inputs are observable in the
marketplace throughout the full term of the instrument, can be derived from
observable data, or are supported by observable prices at which transactions
are executed in the marketplace.
Certain of our acquisitions involve contingent consideration, the payment of
which is contingent on the occurrence of future events. Contingent consideration
is classified in Level 3 of the fair value hierarchy and is initially recognized at
fair value as a cost of the acquisition. After the acquisition, the contingent
consideration liability is remeasured each reporting period. The fair value of
contingent consideration is measured predominantly on unobservable inputs
such as assumptions about the likelihood of achieving specified milestone
criteria, projections of future financial performance, assumed discount rates,
and assumed weightings applied to potential scenarios in deriving a
probability weighted fair value. Significant judgment is used in developing
these estimates and assumptions both at the acquisition date and in subsequent
periods. If actual events differ from management's estimates, or to the extent
these estimates are adjusted in the future, our financial position or results of
operations could be affected in the period of any change.
Additionally, our Level 3 instruments include non-marketable equity security
investments. Under the measurement alternative, the carrying value is measured
at cost, less any impairment, plus or minus changes resulting from observable
price changes in orderly transactions for identical or similar investments of the
same issuer. Adjustments are determined primarily based on a market
approach as of the transaction date.
For other fair value measurements, we generally use an income approach to
measure fair value when there is not a market observable price for an identical
or similar asset or liability. This approach utilizes management’s best
assumptions regarding expectations of projected cash flows, and discounts the
expected cash flows using a commensurate risk-adjusted discount rate.
The above listing is not intended to be a comprehensive list of all our
accounting policies. In many cases, the accounting treatment of a particular
transaction is specifically dictated by generally accepted accounting principles
in the United States, with limited or no need for management’s judgment. There
are also areas in which management’s judgment in selecting available
alternatives may or may not produce a materially different result. See our
audited consolidated financial statements and notes thereto in this Annual
Report, containing a description of accounting policies and other disclosures
required by generally accepted accounting principles in the United States.
Legal Proceedings
While no assurances can be given regarding the outcome of any proceedings,
based on information currently available, we believe that the resolution of these
matters is unlikely to have a material adverse effect on our financial position or
results of future operations for QIAGEN N.V. as a whole. However, because of
the nature and inherent uncertainties of litigation, should the outcomes be
unfavorable, certain aspects of our business, financial condition, and results of
operations and cash flows could be materially adversely affected.
For information on legal proceedings, see Note 20 "Commitments and
Contingencies" of the Notes to Consolidated Financial Statements.
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Risks and Risk Management
Risk Management
Our risk management approach embodies the key elements of a sound risk
management system including (1) active Supervisory Board and senior
management involvement; (2) adequate policies and procedures; (3) adequate
risk management, monitoring and information systems; and (4) comprehensive
internal controls.
QIAGEN is managed by a Managing Board and an independent Supervisory
Board appointed by the General Meeting of Shareholders. One of the
Managing Board's responsibilities is the oversight of the risk management
system. The Managing Board has developed and implemented strategies,
controls and mitigation measures to identify current and developing risks as
part of this system. These policies and procedures are embodied in our
corporate governance, code of ethics and financial reporting controls and
procedures. A variety of functional experts evaluate these business risks,
attempting to mitigate and manage them on an ongoing basis.
Identified risks are sub-divided into three types:
• a base business risk that is specific to us or our industry and threatens our
existing business;
• a business growth risk that is specific to us or our industry and threatens our
future business growth; and
• an underlying business risk that is not specific to us or our industry, but
applies to a larger number of public companies.
All identified risks are evaluated based on their likelihood of occurring and
their potential impact (estimated in monetary terms) on disrupting our progress
in achieving our business objectives. The overall risk management goal is to
identify risks that could significantly threaten our success and to provide
management the opportunity to successfully implement mitigation actions on a
timely basis. The results of the risk assessment, and any updates, are reported
to the Audit Committee of the Supervisory Board on a regular basis. A detailed
risk reporting update is provided each quarter to the Audit Committee for
specific risks that have been newly identified or have changed since the
previous assessment. At least once on an annual basis, the Supervisory Board
discusses the corporate strategy and business risks, as well as the results of an
assessment by the Managing Board and the Audit Committee of the structure
and operations of the internal risk management and control systems, including
any significant changes.
O ur corporate governance structure outlines the responsibilities of our
Managi ng Board and Supervisory Board (discussed in more detail in their
respective sections in the Corporate Governance chapter) and the function of
the Audit Committee of the Supervisory Board (discussed in more detail in the
Supervisory Board Report ). We maintain internal controls to ensure the
integrity of financial reporting, which is described further in Controls and
Procedures . Additionally, we have a Compliance Committee that consists of
senior executives from various f unctional areas who are responsible for
ensuring compliance with legal and regulatory requirements, as well as
overseeing the communication of corporate policies, including our Code of
Ethics as described further in the Governance section of our Sustainability
Statement of this Annual Report.
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Risk types
Base Business Risk
• Identification and monitoring of competitive business threats
• Monitoring complexity of product portfolio
• Monitoring dependence on key customers for single product groups
• Reviewing dependence on individual production sites or suppliers
• Evaluating purchasing initiatives, price controls and changes to reimbursements
• Monitoring production risks, including contamination prevention and high-quality product assurance
• Ensuring our ability to defend against intellectual property infringements and maintain competitive advantage after expiration
Business Growth Risk
• Managing the development and successful completion of key R&D projects
• Managing successful integration of acquisitions to achieve anticipated benefits
Underlying Business Risk
• Evaluating financial risks, including global economic risks and currency rate fluctuations against the U.S. dollar (our reporting currency)
• Evaluating and monitoring international hostilities
• Monitoring financial reporting risks, including multi-jurisdiction tax compliance
• Reviewing possible asset impairment events
• Assessing cyber security, compliance and legal risks, including safety in operations and environmental hazard risks, compliance with various regulatory bodies and pending product
approvals
• Monitoring risks of FCPA (Foreign Corrupt Practices Act) or antitrust concerns arising from a network of subsidiaries and distributors in foreign countries
Risk Factors
The risks described below are listed in the order of our current view of their
expected significance. Describing the risk factors in order of significance does
not imply that a lower-listed risk factor may not have a material adverse impact
on our results of operations, liquidity or capital resources.
Our continued growth is dependent on the development and
success of new products.
Rapid technological change and frequent new product introductions are typical
in the markets we serve. Our success will depend in part on continuous, timely
development and introduction of new products that address sometimes rapidly
evolving market requirements, such as the pandemic caused by the SARS-CoV-2
virus. We believe successful new product introductions provide a significant
competitive advantage because many customers make an investment of time
into selecting and learning how to use a new product and are reluctant to
switch after these efforts. To the extent that we fail to introduce new and
innovative products, or such products suffer significant delays in development
or are not accepted by customers, we may lose market share to our competitors
that would be difficult or impossible to regain. An inability to successfully
develop and introduce new products, for technological or other reasons, could
reduce our growth prospects or otherwise have an adverse effect on our
business. In the past, we have experienced delays in the development and
introduction of new products, caused by delays in regulatory approvals, for
example, or decisions to stop development of projects, and we may experience
delays or make decisions to stop certain product development in the future.
As a result, we cannot assure you that we will keep pace with the rapid rate of
developments in our markets or that our new products will adequately meet the
requirements of the marketplace, achieve market acceptance or regulatory
approval, or compete successfully with companies offering similar or new
technologies. Some of the factors affecting market acceptance of a new product
include:
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• availability, quality and price relative to existing competitor products;
• the timing of introduction of the new product relative to competitive products;
• perceptions of the new product’s utility;
• citation of the new product in published research;
• regulatory trends and approvals; and
• general trends in life sciences research, applied markets and molecular
diagnostics.
In the development of new products, we may make significant investments in
intellectual property, software solutions and manufacturing capacity. These
investments increase our fixed costs, resulting in higher operational costs in the
short term that will negatively impact our gross profit and operating income
until products potentially reach a minimum level of market acceptance and
sales. The expenses or losses associated with unsuccessful product development
activities or lack of market acceptance of our new products could materially
have an adverse effect on our business, financial condition and results of
operations.
Our continued growth depends significantly on the success of new products in
the molecular research and testing markets that we serve, and our ability to
scale manufacturing capacities to meet customer demands. Important product
programs in early commercialization stage include the QIAstat-Dx system for
one-step, fully integrated molecular analysis of hard-to-diagnose syndromes,
the NeuMoDx 96 and 288 systems offering fully integrated PCR clinical testing,
and the QIAcuity digital PCR system.
The speed and level of adoption of our new automation platforms will affect
sales not only of instrumentation but also of consumables kits – identified as
sample and assay kits – that are designed to run on the systems in a "razor-
razorblade" model. The rollout of new automation platforms are intended to
drive the dissemination and increasing sales of consumables for these systems.
We are developing or co-developing new kits for these platforms and seeking
regulatory approvals for a number of new products. In turn, the availability and
regulatory approval of more tests for processing on the QIAstat-Dx, NeuMoDx
and QIAcuity systems will influence the value of the instruments to prospective
customers. Slower adoption of these systems could significantly affect sales of
instruments as well as consumables products designed to run on these
platforms.
An inability to manage our growth, manage the expansion of our
operations, or successfully integrate acquired businesses could
adversely affect our business.
Our business has grown in recent years, with total net sales increasing to
$1.97 billion in 2023 from $1.53 billion in 2019 . In addition to incremental
sales from our global response to the COVID-19 pandemic, we have made a
series of acquisitions in recent years, including the acquisitions of Verogen, Inc.
in January 2023 and BLIRT S.A. in 2022. We intend to identify and acquire
other businesses in the future that support our strategy to build on our global
leadership position in providing Sample to Insight solutions focused on
molecular research and clinical testing. The successful integration of acquired
businesses requires a significant effort and expense across all operational
areas.
We continue to make investments to expand our existing business operations.
These projects increase our fixed costs, resulting in higher operational costs in
the short term that will negatively impact our gross profit and operating income
until we more fully utilize the additional capacity of these facilities. The
expansion of our business and the addition of new personnel may place a
strain on our management and operational systems. As we continue to upgrade
our operating and financial systems, as well as expand the geographic
presence of our operations, we intend to continue to assess the need to
reallocate existing resources or hire new employees, as well as increase
responsibilities for both existing and new management personnel.
Our future operating results will depend on our ability to continue to implement
and improve our research, product development, manufacturing, sales and
marketing and customer support programs, enhance our operational and
financial control systems, expand, train and manage our employee base,
integrate acquired businesses, and effectively address new issues related to our
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growth as they arise. There can be no assurance that we will be able to
manage our recent or any future expansion or acquisitions successfully, and
any inability to do so could have a material adverse effect on our results of
operations.
Our acquisitions expose us to new risks, and we may not achieve
the anticipated benefits of acquisitions of technologies and
businesses.
During the past several years, we have acquired and integrated a number of
companies, as mentioned earlier, through which we have gained access to new
technologies, products and businesses that complement our internally
developed product lines. In the future, we expect to acquire additional
technologies, products or businesses to expand our operations. Acquisitions
potentially expose us to new operating and financial risks, including risks
associated with the:
• assimilation of new products, technologies, operations, sites and personnel;
• integration and retention of fundamental personnel and technical expertise;
• application for and achievement of regulatory approvals or other clearances;
• diversion of resources from our existing products, business and technologies;
• generation of sales;
• implementation and maintenance of uniform standards and effective controls
and procedures;
• exposure to cyber security risks or compromise of acquired entities;
• maintenance of relationships with employees, customers and suppliers, and
integration of new management personnel;
• issuance of initially dilutive equity securities;
• incurrence or assumption of debt and contingent liabilities;
• increased exposure to geopolitical risks;
• amortization or impairment of acquired intangible assets or potential
businesses; and
• exposure to liabilities of and claims against acquired entities or personnel,
including patent litigation.
Our failure to address the above risks successfully in the future may prevent us
from achieving the anticipated benefits from any acquisition in a reasonable
time frame, or at all.
Global economic conditions could adversely affect our business,
results of operations and financial condition.
Our results of operations could be materially affected by adverse general
conditions in the global economy and financial markets, including inflation and
rising interest rates. Direct conflicts, such as the ongoing wars in Ukraine and
the Middle East, and an increasingly challenging economic environment lead to
uncertainty about the future. Trade restrictions or export controls, as were seen
with the Russia-Ukraine war, could disrupt our supply chain and flow of
products if they disturb the international flow of goods and increase costs.
Our results of operations could also be negatively impacted if the U.S. federal
government were to enact automatic spending cuts (sequestration), which have
occurred in the past. Such a decision could add uncertainty to the timing and
the availability of budget funds for investment decisions by our customers—
particularly researchers, universities, government laboratories and private
foundations whose funding is dependent upon grants from government
agencies, such as the U.S. National Institutes of Health (NIH) and similar
bodies.
While there has been global economic recovery from the COVID-19 pandemic,
higher inflation continues, including on raw material prices which also reflect
higher energy costs. The overall increase in energy costs and materials has had
a significant adverse impact on our business.
Access to financing in the global financial markets has been adversely affected
for many businesses in light of the high-inflation environment. The central banks
in the U.S., the United Kingdom and the Euro Zone tightened their monetary
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policies materially beginning in 2022 by raising interest rates, and continued
headwinds and volatility are expected in 2024. This may impact our ability to
obtain new or refinance existing debt facilities at competitive rates.
Additionally, our customers may face internal financing pressures that adversely
impact spending decisions or the ability to purchase our products, or that lead
to a delay in collection of receivables and thus negatively impact our cash flow.
A severe or prolonged economic downturn could result in a variety of risks to
our business that would adversely impact our results of operations, including the
reduction or delay in planned improvements to healthcare systems in various
countries, the reduction of funding for life sciences research, and intensified
efforts by governments and healthcare payors regarding cost-containment
efforts.
As is the case for many businesses, we face the following risks in regard to
financial markets:
• severely limited access to financing over an extended period of time, which
may affect our ability to fund our growth strategy and could result in delays
to capital expenditures, acquisitions or research and development projects;
• failures of currently solvent financial institutions, which may cause losses from
our short-term cash investments or our hedging transactions due to a
counterparty’s inability to fulfil its payment obligations;
• inability to refinance existing debt at competitive rates, reasonable terms or
sufficient amounts; and
• increased volatility or adverse movements in foreign currency exchange
rates.
Our global operations may be affected by actions of
governments, global or regional economic or public health
developments, weather or transportation delays, epidemics or
pandemics, natural disasters or other force majeure events
(collectively, unforeseen events) which may negatively impact our
suppliers, our customers or us.
Our business involves operations around the world. Our primary manufacturing
facilities are located in Germany, the U.S., Spain and China. We have
established sales subsidiaries in numerous countries, and our products are sold
through independent distributors serving more than 60 countries. Our global
footprint exposes us to unforeseen events, such as the COVID-19 pandemic, or
other natural events. We have analyzed climate change risk and its potential
impact on our largest production and logistics sites, as well as important sites of
our key suppliers. No material risks were identified that could potentially impact
our business, operations, sales or expenditures. However, our facilities may be
harmed by unforeseen events. In the event that we or our customers are
affected by a disaster, we may experience delays or reductions in sales or
production. We may also face significantly increased costs or be required to
identify alternate suppliers and/or rely on third-party manufacturers.
To the extent that our suppliers are impacted by a natural disaster or other
disruption, we may experience periods of reduced production. Any unexpected
interruptions in our production capabilities may lead to delayed or lost sales
and adversely affect our results of operations for a specific period.
In addition, to the extent we temporarily shut down any facility following such
an unforeseen event, we may experience disruptions in our ability to
manufacture or ship products to customers or otherwise operate our business.
Many of our products are manufactured in a single location, and we may
experience significantly adverse effects to the extent that these manufacturing
operations are disrupted and cannot be replaced elsewhere.
While our global operations give us the ability to ship some products from
alternative sites, we may not be able to do so because the facilities of our
customers are shut or the local logistics infrastructure is not functioning. As a
result, our sales, profitability and cash flows would suffer.
Damage to our property due to unforeseen events, and the resulting disruption
of our business, may be covered by insurance. However, this insurance may
not be sufficient to cover all of our potential losses, and the insurance coverage
may not continue to be available to us on acceptable terms, or at all. In
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addition, we may incur incremental costs following an unforeseen event, which
will reduce profits and adversely affect our results of operations.
Terrorist attacks and international hostilities and instability in any
region could adversely affect our business.
Terrorist attacks, the outbreak of war, or the existence of international hostilities
could damage the world economy, adversely affect the global supply chain
and materially impact the availability of and prices for energy and other raw
materials. In February 2022, the government of Russia invaded Ukraine. The
ongoing war is so far confined to Ukraine, but any expansion into other
countries could materially disrupt our operations in Europe and/or increase our
operating costs. In addition, Russia's prior annexation of Crimea, the
annexation of various regions of Ukraine and subsequent military interventions
have led to sanctions being levied by the European Union, the U.S. and other
countries against Russia. Additionally, in October 2023, Hamas launched a
series of coordinated attacks on Israeli targets, and Israel responded by
formally declaring war on Hamas. The armed conflict is ongoing and rapidly
evolving as of the date of this filing, and its length and outcome are highly
unpredictable.
These conflicts and similar current and future conflicts could lead to significant
market and other disruptions, instability in financial markets, supply chain
interruptions, political and social instability and other material and adverse
effects on macroeconomic conditions, any of which could magnify the impact of
other risks described in this Annual Report.
We depend on suppliers for materials used to manufacture our
products, and if shipments from these suppliers are delayed or
interrupted, we may be unable to manufacture our products.
We buy materials to create our products from a number of suppliers and are
not dependent on any one supplier or group of suppliers for our business as a
whole. However, key components of certain products, including certain
instrumentation and chemicals, are available only from a single source. If
supplies from these vendors are delayed or interrupted for any reason, we may
not be able to obtain these materials in a timely manner or in sufficient quantity
or quality to produce certain products, and this could have an adverse impact
on our results of operations.
In 2022, the volatility in product availability and pricing drastically increased
compared to previous years. In 2023, while availability continued to improve,
raw material prices increased, reflecting higher energy costs and inflation.
Supply chain constraints have required, and may continue to require, in certain
instances, alternative delivery arrangements and increased costs and could
have a material adverse effect on our business and operations.
We rely heavily on air cargo carriers and other overnight logistics
services, and shipping delays or interruptions could harm our
business.
Our customers typically keep only a modest inventory of our consumables kits
on hand, and consequently often require rapid delivery of purchases.
Additionally, some of our products require complex supply chains, such as
constant cold storage or shipment using dry ice. As a result, we rely heavily on
air cargo carriers and logistic suppliers. If these services are suspended or
delayed, and other delivery and logistic suppliers cannot provide satisfactory
services, customers may be forced to suspend a significant amount of their
work. The lack of adequate delivery alternatives would have a serious adverse
impact on our customer relations and results of operations.
Changes in tax laws or their application or the termination or
reduction of certain government tax incentives, could adversely
impact our overall effective tax rate, results of operations or
financial flexibility.
Our effective tax rate reflects the benefit of some income being partially exempt
from income taxes due to various inter-company operating and financing
activities. The benefit also derives from our global operations, where income or
loss in some jurisdictions is taxed at rates higher or lower than the statutory rate
of 25.8% in the Netherlands. Changes in tax laws, including changes resulting
from the current work being led by the Organization for Economic Co-
operation and Development (OECD) Inclusive Framework focused on
"Addressing the Challenges of the Digitalization of the Economy", or their
application with respect to matters such as changes in tax rates, transfer pricing
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and income allocation, utilization of tax loss carry-forwards, inter-company
dividends, controlled corporations, and limitations on the deductibility of
interest and foreign related-party expenses, and changes to tax credit
mechanisms, could increase our effective tax rate and adversely affect our
results of operations and limit our ability to repurchase our Common Shares
without experiencing adverse tax consequences.
The breadth of the OECD project extends beyond pure digital businesses and is
likely to impact most large multinational businesses by both redefining
jurisdictional taxation rights and establishing a 15% global minimum tax
(referred to as Pillar Two). The Netherlands formally enacted the Pillar Two
legislation into domestic law and certain aspects of Pillar Two are effective
January 1, 2024, and other aspects effective January 1, 2025. Although
global enactment has begun, the OECD and participating countries continue to
work on defining the underlying rules and administrative procedures. Pillar Two
is effective for us in 2024.
The increased tax burden as a result of changes in law could be material and
may adversely affect our results of operations, cash taxes and effective tax rate.
Additionally, depending on the timing of effective dates, changes in tax law
may limit our ability to accurately forecast the related tax impacts . If our tax
positions are challenged by taxing authorities or other governmental bodies,
such as the European Commission, we could incur additional tax liabilities,
which could also have an adverse effect on our results of operations, financial
flexibility or cash flow.
We rely on secure communication and information systems and
are subject to privacy and data security laws which, in the event
of a disruption, breach, violation or failure, could adversely affect
our business.
We rely heavily on communications and information systems to conduct our
business. In the ordinary course of business, we collect and store sensitive data,
including our own intellectual property and other proprietary business
information and that of our customers, suppliers and business partners, as well
as personally identifiable information (PII) of our customers and employees, in
our data centers and on our networks or in the cloud. Our operations rely on
the secure processing, storage and transmission of confidential and other
information on both our own and cloud-based computer systems and networks.
We have made significant investments to ensure our employees are aware of
cyber security risks facing our company and how to prevent data breaches.
We have modernized our cyber security tools, and are continually updating our
cyber security processes, in an attempt to keep pace with evolving cyber
security risks. In spite of our efforts, we are unable to completely eliminate these
risks, and occasionally experience minor cyber security incidents. External
phishing emails (occurring outside of our computer services) are a growing
threat for our customers. These emails could lead to the disclosing of intellectual
property or personally identifiable information, which could lead to financial
harm or reputational damage. While our cyber security team works diligently
with our employees around the world, as well as with our customers, to mitigate
these threats by helping to identify and analyze phishing emails, we cannot
guarantee that sensitive data will not be lost or stolen.
A breach in cyber security due to unauthorized access to our computer systems
or misuse could include the misappropriation of assets or sensitive information,
the corruption of data, or other operational disruption. Failures in our computer
systems and networks could be caused by internal or external events, such as
incursions by intruders or hackers, computer viruses, failures in hardware or
software, or cyber-terrorists. Furthermore, there is an increased risk of cyber
security attacks by state actors due to the Russian war with Ukraine. Russian
ransomware gangs have threatened to increase hacking activity against critical
infrastructure of any nation or organization that retaliates against Russia. Any
such increase in such attacks on our third-party providers or other systems could
adversely affect our network systems or other operations. If we experience a
breach or failure of our systems, we could experience potentially significant
operational delays due to the disruption of systems, loss due to theft or
misappropriation of assets or data, or negative impacts from the loss of
confidential data or intellectual property. We may face significant liability in
the event personal information that we maintain is lost or otherwise subject to
misuse or other wrongful use, access or disclosure. Furthermore, we could
experience significant negative publicity that could result in reputation or brand
damage with customers or partners.
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Additionally, we are subject to privacy and data security laws across multiple
jurisdictions. These include laws relating to the storage of health information
that are complex, overlapping, sometimes contradictory and rapidly evolving.
In the U.S., individual states regulate requirements and have authority over
privacy and personal data protection. For example, the California Consumer
Privacy Act of 2018 (CCPA), which took effect on January 1, 2020, imposes
expansive new requirements and protections upon the processing of personal
data, aimed at giving California consumers more visibility into and control over
their personal information. The U.S. states of Virginia and Colorado also
enacted comprehensive data privacy laws similar to the CCPA, both of which
became effective in 2023. In addition, laws in all 50 U.S. states require
businesses to provide notice to consumers whose personal information has been
disclosed as a result of a data breach. State laws are changing rapidly and
there is discussion in the U.S. Congress of a new comprehensive federal data
privacy law to which we would become subject if it is enacted. There are also
European privacy laws, such as the General Data Protection Regulation (GDPR)
of the European Union, that impose restrictions on the transfer, access, use and
disclosure of health and other personal information. As our activities continue to
evolve and expand, we may be subject to additional laws that impose further
restrictions on the transfer, access, use and disclosure of health and other
personal information, which may impact our business either directly or
indirectly. A failure to comply with applicable privacy or security laws or
significant changes in these laws could subject us to costly regulatory action or
lawsuits, and could adversely impact our reputation, business and future
business plans.
We may encounter delays in receipt, or limits in the amount, of
reimbursement approvals and public health funding, which may
negatively impact our ability to grow revenues in the healthcare
market or our profitability.
Changes in the market availability or reimbursement of our diagnostic testing
products by insurance providers and health maintenance organizations could
have a significant adverse impact on our results of operations. Third-party
payors are often reluctant to reimburse healthcare providers for the use of
medical tests that involve new technologies or provide novel diagnostic
information. In addition, third-party payors are increasingly limiting
reimbursement coverage for medical diagnostic products and, in many
instances, are even exerting pressure on suppliers to reduce their prices. Since
each third-party payor often makes reimbursement decisions on an individual
patient basis, obtaining such approvals is a time-consuming and costly process
that requires us to provide scientific and clinical data supporting the clinical
benefits of each of our products. As a result, there can be no assurance that
reimbursement approvals will be obtained, and the process can delay the
broad market introduction of new products. If third-party reimbursement is not
consistent or financially adequate to cover the cost of our products, this could
limit our ability to sell our products or cause us to reduce prices, which would
adversely affect our results of operations.
Further, the ability of many of our customers to successfully market their
products depends in part on the extent to which reimbursement for the costs of
these products is available from governmental health administrations, private
health insurers and other organizations. Governmental and other third-party
payors are increasingly seeking to contain healthcare costs and to reduce the
price of medical products and services. With evolving political realities in the
United States, certain sections of the Patient Protection and Affordable Care Act
of 2010 (ACA) have not been fully implemented and the direction of healthcare
policy is unpredictable. Uncertainty around the future of the ACA, and in
particular the impact on reimbursement levels, may lead to uncertainty or delay
in the purchasing decisions of our customers, which may in turn negatively
impact our product sales. In accordance with the Protecting Access to Medicare
Act of 2014 (PAMA), the Centers for Medicare & Medicaid Services calculate
Medicare reimbursement rates for certain clinical diagnostic tests using
weighted median private payor rates, which are based on rate information
reported by applicable laboratories. This new rate methodology means the
lower reimbursement rates previously experienced in the field of molecular
pathology testing now extend to additional diagnostic testing codes on the
Clinical Laboratory Fee Schedule (CLFS). If there are not adequate
reimbursement levels, our business and results of operations could be adversely
affected.
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Reduction in R&D budgets and government funding may result in
reduced sales.
Our customers include researchers at pharmaceutical and biotechnology
companies, academic institutions, and government and private laboratories.
Fluctuations in the research and development budgets of these organizations
could have a significant adverse effect on demand for our products. Research
and development budgets are affected by changes in available resources, the
mergers of pharmaceutical and biotechnology companies, changes in spending
priorities and institutional budgetary policies. Our results of operations could be
adversely affected by any significant decrease in expenditures for life sciences
research and development by pharmaceutical and biotechnology companies,
academic institutions, and government and private laboratories. In addition,
short-term changes in administrative, regulatory or purchasing-related
procedures can create uncertainties or other impediments that can have an
adverse impact on our results of operations.
In recent years, the pharmaceutical and biotechnology industries have
undergone substantial restructuring and consolidation. Additional mergers or
consolidation within the pharmaceutical and biotechnology industries could
cause us to lose existing customers and potential future customers, which could
have a material adverse impact on our results of operations.
We sell our products to universities, government laboratories and private
foundations, whose funding is dependent on grants from government agencies,
such as the NIH (National Institutes of Health) in the U.S. which accounts for the
majority of Life Science funding in the country. Although the level of research
funding has been increasing in recent years, we cannot ensure that this trend
will continue given federal and state budget constraints. Government funding of
research and development is subject to the political process, which is inherently
unpredictable. Future sales may be adversely affected if our customers delay
purchases as a result of uncertainties regarding the approval of government
budget proposals. Also, government proposals to reduce or eliminate
budgetary deficits have sometimes included reduced allocations to the NIH and
government agencies in other countries that fund life sciences research and
development activities. A reduction in government funding for the NIH or
government research agencies in other countries could have a serious adverse
impact on our results of operations.
Competition could reduce our sales.
The markets for most of our products are very competitive. Competitors may
have significant advantages in financial, operational, sales and marketing
resources as well as experience in research and development. These
competitors may have developed, or could develop in the future, new
technologies that compete with our products or even render our products
obsolete. Some competitors may obtain regulatory approval from the U.S. Food
and Drug Administration (FDA) or similar non-U.S. authorities. Our competitors’
development of alternative products offering superior technology, greater cost-
effectiveness and/or receiving regulatory approval could have a material
adverse effect on our sales and results of operations.
The growth of our business depends in part on the continued conversion of
users from competitive products to our sample and assay technologies and
other solutions. Lack of conversion could have a material adverse effect on our
sales and results of operations.
It can be difficult for users of our products to switch from their current supplier of
a particular product, primarily due to the time and expense required to properly
integrate new products into their operations. As a result, if we are unable to be
the first to develop and supply new products, our competitive position may
suffer, resulting in a material adverse effect on our sales and results of
operations.
For our commercial clinical assays, we often compete with solutions developed
by our laboratory customers, and driving conversion from such laboratory-
developed tests (LDTs) to commercial diagnostics assays can be challenging.
The time and expense needed to obtain regulatory approval and
respond to changes in regulatory requirements could adversely
affect our ability to commercially distribute our products and
generate sales.
We and our customers operate in a highly regulated environment characterized
by frequent changes in the governing regulatory framework. Genetic research
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Management Report
activities and products commonly referred to as “genetically engineered” (such
as certain food and therapeutic products) are subject to extensive governmental
regulation in most developed countries, especially in the major markets for
pharmaceutical and diagnostic products such as the European Union, the U.S.,
China and Japan. In recent years, several highly publicized scientific events
(notably in genomic research, gene editing and cloning) have prompted intense
public debate on the ethical, philosophical and religious implications of an
unlimited expansion in genetic research and the use of products emerging from
this research. As a result of this debate, some key countries may increase or
establish regulatory barriers, which could adversely affect demand for our
products and prevent us from fulfilling our growth expectations. Furthermore,
there can be no assurance that any future changes in applicable regulations
will not require further expenditures or an alteration, suspension or liquidation
of our operations in certain areas, or even in their entirety.
Changes in the existing regulations or adoption of new requirements or policies
could adversely affect our ability to sell our approved or cleared products, or to
seek approvals for new products in other countries around the world. Sales of
certain products now in development may be dependent upon us successfully
conducting preclinical studies, clinical trials and other tasks required to gain
regulatory approvals and meet other requirements from the In Vitro Diagnostic
Device Regulation in the European Union, the FDA in the U.S. and regulatory
agencies in other countries. If we are not able to meet the applicable
requirements, we will not be able to commercialize our products and tests,
which will have a material adverse effect on our business.
Several of our key products and programs are medical devices that are subject
to extensive regulation by the FDA under the U.S. Food, Drug and Cosmetic
Act. We plan to apply for FDA clearance or approval of additional products in
the future. Regulatory agencies in other countries also have medical device and
in vitro diagnostic medical devices (IVD) approval requirements that are
becoming more extensive. These regulations govern most commercial activities
associated with medical devices, including indications for the use of these
products as well as other aspects that include product development, testing,
manufacturing, labeling, storage, record-keeping, advertising and promotion.
Compliance with these regulations is expensive and time-consuming.
Our cleared or approved devices, including diagnostic tests and related
equipment, are subject to numerous post-approval requirements. We are
subject to inspection and marketing surveillance by the FDA to determine our
compliance with regulatory requirements. If the FDA determines that we have
failed to comply, it can institute a wide variety of enforcement actions, ranging
from warning letters to more severe sanctions such as fines, injunctions and civil
penalties, recalls or seizures of our products, operating restrictions, partial
suspension or total shutdown of production, denial of our requests for 510(k)
clearance or pre-market approval of product candidates, withdrawal of 510(k)
clearance or pre-market approval already granted and civil or criminal
prosecution. Any enforcement action by the FDA may affect our ability to
commercially distribute these products in the U.S.
Some of our products are sold for research purposes in the U.S. We do not
promote these products for clinical diagnostic use, and they are labeled “For
Research Use Only” (RUO) or “For Molecular Biology Applications.” If the FDA
were to disagree with our designation of a product as having RUO status, we
could be forced to stop selling it until appropriate regulatory clearance or
approval has been obtained.
We are subject to risks associated with patent litigation.
The biotechnology industry has been characterized by extensive litigation
regarding patents and other intellectual property rights, particularly since
industry competitors gravitate around common technology platforms. We are
aware that patents have been applied for and/or issued to third parties
claiming technologies for sample and assay technologies that are closely
related to those we use. From time to time, we receive inquiries requesting
confirmation that we do not infringe patents of third parties. We endeavor to
follow developments in this field, and we do not believe that our technologies
or products infringe any proprietary rights of third parties. However, there can
be no assurance that third parties will not challenge our activities or, if so
challenged, that we will prevail. In addition, the patent and proprietary rights
of others could require that we alter our products or processes, pay licensing
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fees or cease certain activities, and there can be no assurance that we will be
able to license any technologies that we may require on acceptable terms. In
addition, litigation, including proceedings that may be declared by the U.S.
Patent and Trademark Office or the International Trade Commission, may be
necessary to respond to any assertions of infringement, enforce our patent
rights and/or determine the scope and validity of our proprietary rights or those
of third parties. Litigation, or threatened litigation, could involve substantial
cost, and there can be no assurance that we would prevail in any proceedings.
We rely on collaborative commercial relationships to develop
and/or market some of our products.
Our long-term business strategy involves entering into strategic alliances as well
as marketing and distribution arrangements with academic, corporate and
other partners relating to the development, commercialization, marketing and
distribution of certain of our existing and potential products. We may be
unable to continue to negotiate these collaborative arrangements on acceptable
terms, and these relationships also may not be scientifically or commercially
successful. In addition, we may be unable to maintain these relationships, and
our collaborative partners may pursue or develop competing products or
technologies, either on their own or in collaboration with others.
Our Precision Diagnostics business includes projects with pharmaceutical and
biotechnology companies to co-develop companion diagnostics paired with
drugs that those companies either market currently or are developing for future
use. The success of these co-development programs, including regulatory
approvals for the companion diagnostics, depends upon the continued
commitment of our partners to the development of their drugs, the outcome of
clinical trials for the drugs and diagnostics, and regulatory approvals of the
tests and drugs. In addition, the future level of sales for companion diagnostics
depends to a high degree on the commercial success of the related medicines
for which the tests have been designed. More companion diagnostics would be
sold in combination with a widely prescribed drug than one with limited use.
The successful marketing of QIAGEN products, in some cases, depends on
commercial relationships such as joint ventures or distributorships, particularly
in emerging markets where we partner with local companies to augment our
less-established commercial relationships and infrastructure. The continued
commitment of our partners to these ventures, as well as the management of the
commercial efforts, could influence QIAGEN's sales and profitability in these
markets.
We have made investments in and are expanding our business
into growth markets, which exposes us to risks.
Our top six emerging growth markets are Brazil, China, India, South Korea,
Mexico, and Türkiye, which together accounted in 2023 for 12% of total sales.
Russia was removed as a top growth market in 2022 following the invasion of
Ukraine and the subsequent decision to suspend business operations in Russia
and Belarus, which made up less than 1% of total sales. We expect to continue
to focus on expanding our business in these or other fast-growing markets,
including those in the Middle East and Asia. In addition to the currency and
operating risks described above, our international operations are subject to a
variety of risks arising from the economy, political outlook, language and
cultural barriers in countries where we have operations or do business. In many
of these emerging markets, we may face several risks that are more significant
than in other countries where we have a history of doing business. These risks
include economies that may be dependent on only a few products and are
therefore subject to significant fluctuations, weak legal systems that may affect
our ability to enforce contractual rights, exchange controls, unstable
governments, and privatization or other government actions affecting the flow
of goods and currency. In conducting our business, we move products from one
country to another and may provide services in one country from a subsidiary
located in another country. Accordingly, we are vulnerable to abrupt changes
in customs and tax regimes that could have significant negative impacts on our
results of operations.
Some of our customers are requiring us to change our sales
arrangements to lower their costs, and this may limit our pricing
flexibility and harm our business.
Some of our customers have developed purchasing initiatives to reduce the
number of vendors from which they purchase products in order to lower their
supply costs. In some cases, these customers have established agreements with
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large distributors, which include discounts and direct involvement in the
distributor’s purchasing process. These activities may force us to supply large
distributors with our products at discounts in order to continue providing
products to some customers. For similar reasons, many larger customers,
including the U.S. federal government, have requested, and may request in the
future, special pricing arrangements, which can include blanket purchase
agreements. These agreements may limit our pricing flexibility, which could
harm our business and affect our results of operations. For a limited number of
customers, and at the request of customers, we have conducted sales
transactions through distribution and other value-added partners. If sales grow
through these intermediaries, this could adversely impact our results of
operations, in particular our gross profit.
Exchange rate fluctuations may adversely affect our business and
operating results.
Given that we currently market our products throughout the world, a significant
portion of our business is conducted in currencies other than the U.S. dollar, our
reporting currency. As a result, fluctuations in value relative to the U.S. dollar of
the currencies in which we conduct our business have caused and will continue
to cause foreign currency transaction gains and losses. Foreign currency
transaction gains and losses arising from normal business operations are
charged against earnings in the period when incurred. Due to the number of
currencies involved, the variability of currency exposures and the potential
volatility of currency exchange rates, we cannot predict the effects of future
exchange rate fluctuations. As of April 1, 2022, the results of operations from
our subsidiary in Türkiye have been reported under highly inflationary
accounting as the prior three-years cumulative inflation rate exceeded 100%.
While we may engage in foreign exchange hedging transactions to manage
our foreign currency exposure, there can be no assurance that our hedging
strategy will adequately protect our operating results from the effects of future
exchange rate fluctuations.
Our success depends on the continued employment of qualified
personnel, any of whom we may lose at any time.
Although we have not experienced any difficulties attracting or retaining
management and scientific staff, our ability to recruit and retain qualified,
skilled employees will continue to be critical to our success. Given the intense
competition for experienced scientists and managers among pharmaceutical
and biotechnology companies, as well as academic and other research
institutions, there can be no assurance that we will be able to attract and retain
employees critical to our success on acceptable terms. Initiatives to expand
QIAGEN will also require additional employees, including management with
expertise in areas such as research and development, manufacturing,
digitization, sales and marketing, and the development of existing managers to
lead a growing organization. The failure to recruit and retain qualified
employees, or develop existing employees, could have a material adverse
impact on our results of operations.
Our ability to accurately forecast our results during each quarter
may be negatively impacted by the fact that at times a high
percentage of our sales may be recorded in the final weeks or
days of the quarter.
In the markets we serve, a high percentage of purchase orders can be received
in the final few weeks or days of each quarter. Although this varies from
quarter to quarter, many customers make a large portion of their purchase
decisions late in each quarter, in particular because they receive new
information during this period on their budgets and requirements. Additionally,
volatility in the timing of revenue from companion diagnostic partnerships can
be difficult to predict. As a result, even late in each quarter, we cannot predict
with certainty whether our sales forecasts for the quarter will be achieved.
Historically, we have been able to rely on the overall pattern of customer
purchase orders during prior periods to project with reasonable accuracy our
anticipated sales for the current or coming quarters. However, if customer
purchasing trends during a quarter vary from historical patterns, as may occur
with changes in market and economic conditions, our quarterly financial results
could deviate significantly from our projections. As a result, our sales forecasts
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for any given quarter may prove not to be accurate. We also may not have
sufficient, timely information to confirm or revise our sales projections for a
specific quarter. If we fail to achieve our forecasted sales for a particular
quarter, the value of our Common Shares could be significantly affected.
We have a significant amount of debt that may adversely affect
our financial condition and flexibility.
We have a significant amount of debt, debt service obligations and restrictive
covenants imposed by our lenders. A high level of indebtedness increases the
risk that we may default on our debt obligations, and restrictive covenants may
prevent us from borrowing additional funds. There is no assurance that we will
be able to generate sufficient cash flow to pay the interest on our debt and
comply with our debt covenants, or that future working capital, borrowings or
equity financing will be available to repay or refinance our debt. If we are
unable to generate sufficient cash flow to pay the interest on our debt and
comply with our debt covenants, we may have to delay or curtail our research
and development programs. The level of our indebtedness could, among other
things:
• make it difficult for us to make required payments on our debt;
• make it difficult in the future for us to obtain financing necessary for working
capital, capital expenditures, debt service requirements or other purposes;
• limit our flexibility in planning for, or reacting to, changes in our business
and the industry in which we compete; and
• make us more vulnerable in the event of a downturn in our business.
Our business may require substantial additional capital, which
we may not be able to obtain on terms acceptable to us, if at all.
Our future capital requirements and level of expenses will depend on numerous
factors, including the costs associated with:
• marketing, sales and customer support;
• research and development;
• expansion of our facilities;
• possible future acquisitions of technologies, products or businesses;
• demand for our products and services;
• repayment or refinancing of debt; and
• payments in connection with our hedging activities and/or taxes.
We currently anticipate that our short-term capital requirements will be satisfied
by cash flow from our operations and/or cash on hand. As of December 31,
2023 , we had outstanding long-term debt of $1.5 billion , of which
$588.0 million was current. We may choose to refinance these liabilities.
If at some point in time our existing resources should be insufficient to fund our
activities, we may need to raise funds through public or private debt or equity
financings. The funds for the refinancing of existing liabilities or for the ongoing
funding of our business may not be available or, if available, not on terms
acceptable to us. If adequate funds are not available, we may be required to
reduce or delay expenditures for research and development, production,
marketing, capital expenditures and/or acquisitions, which could have a
material adverse effect on our business and results of operations. To the extent
that additional capital is raised through the sale of equity or convertible
securities, the issuance of any securities could result in dilution to our
shareholders.
The accounting for the cash convertible notes we have issued will
result in recognition of interest expense significantly greater than
the stated interest rate of the notes and may result in volatility to
our Consolidated Statements of Income.
We will settle any conversions of the Cash Convertible Notes described under
the heading “Other Factors Affecting Liquidity and Capital Resources”
elsewhere in this Annual Report, entirely in cash. Accordingly, the conversion
option that is part of the Cash Convertible Notes is accounted for as a
derivative pursuant to accounting standards relating to derivative instruments
and hedging activities. Refer to Note 14 "Derivatives and Hedging" and Note
16 "Debt" of the Notes to Consolidated Financial Statements. In general, this
resulted in an initial valuation of the conversion option separate from the debt
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component of the Cash Convertible Notes, resulting in an original issue
discount. The original issue discount will be accreted to interest expense over
the term of the Cash Convertible Notes, which will result in an effective interest
rate reported in our financial statements significantly in excess of the stated
coupon rates of the Cash Convertible Notes. This accounting treatment will
reduce our earnings. For each financial statement period after the issuance of
the Cash Convertible Notes, a gain (or loss) will be reported in our financial
statements to the extent the valuation of the conversion option changes from the
previous period. The Call Options issued in connection with the Cash
Convertible Notes will also be accounted for as derivative instruments,
substantially offsetting the gain (or loss) associated with changes to the
valuation of the conversion option. This may result in increased volatility to our
results of operations.
The cash convertible note hedge and warrant transactions we
entered into in connection with the issuance of our Cash
Convertible Notes may not provide the benefits we anticipate,
and may have a dilutive effect on our common stock.
Concurrently with the issuance of the Cash Convertible Notes, we entered into
Call Options and issued Warrants. We entered into the Call Options with the
expectation that they would offset potential cash payments by us in excess of
the principal amount of the Cash Convertible Notes upon conversion of the
Cash Convertible Notes. In the event that the hedge counter-parties fail to
deliver potential cash payments to us, as required under the Call Options, we
would not receive the benefit of such transaction. Separately, we also issued
Warrants. The Warrants could separately have a dilutive effect to the extent
that the market price per share of our common stock, as measured under the
terms of the Warrants, exceeds the strike price of the Warrants.
An impairment of goodwill and intangible assets could reduce
our earnings.
At December 31, 2023 , our consolidated balance sheet reflected $2.5 billion
of goodwill and $526.8 million of intangible assets . Goodwill is recorded
when the purchase price of a business exceeds the fair value of the tangible
and separately measurable intangible net assets. U.S. generally accepted
accounting principles (GAAP) require us to test goodwill for impairment on an
annual basis or when events or circumstances occur indicating that goodwill
might be impaired. Long-lived assets, such as intangible assets with finite useful
lives, are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. The
impairment review often cannot be done at the level of the individual asset and
it must instead be applied to a group of assets. For the purpose of our annual
goodwill impairment testing based on the current circumstances of how we
manage our business, this group of assets is the Company as a whole. If we
determine that any of our goodwill or intangible assets were impaired, we will
be required to take an immediate charge to earnings and our results of
operations could be adversely affected.
Our strategic equity investments may result in losses.
We have made, and may continue to make, strategic investments in businesses
as opportunities arise. We periodically review the carrying value of these
investments for impairment, considering factors that include the most recent
stock transactions, book values from the most recent financial statements, and
forecasts and expectations of the investee. The results of these valuations may
fluctuate due to market conditions and other conditions over which we have no
control.
Estimating the fair value of non-marketable equity investments in life science
companies is inherently subjective. If actual events differ from our assumptions
and unfavorable fluctuations in the valuations of the investments are indicated,
we could be required to write down the investment. This could result in future
charges on our earnings that could materially have an adverse effect on our
results of operations . It is uncertain whether or not we will realize any long-term
benefits from these strategic investments.
Doing business internationally creates certain risks.
Our business involves operations in several countries around the world. Our
consumables manufacturing facilities are located in Germany, China, Spain
and the U.S. We source raw materials and subcomponents to manufacture our
products from different countries. We have established sales subsidiaries in
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numerous countries. In addition, our products are sold through independent
distributors serving more than 60 countries. Conducting and launching
operations on an international scale requires close coordination of activities
across multiple jurisdictions and time zones and consumes significant
management resources. We have invested heavily in computerized information
systems in order to manage more efficiently the widely dispersed components of
our operations. Worldwide, we currently use SAP R/3 software to integrate
most of our operating subsidiaries and are currently undergoing a multi-year
implementation of S/4HANA. If we fail to coordinate and manage these
activities effectively, or if we face a loss of information or the non-availability of
any system, our business and results of operations will be adversely affected.
Our operations are subject to other risks inherent in international business
activities, such as the general economic and public health conditions in the
countries in which we operate, trade restrictions and changes in tariffs, longer
accounts receivable payment cycles in certain countries, overlap of different tax
structures, unexpected changes in regulatory requirements, and compliance
with a variety of foreign laws and regulations. Other risks associated with
international operations include import and export licensing requirements,
climate change legislation, exchange controls and changes in freight rates, as
may occur as a result of rising energy costs. Further, any misuse or other
wrongful use of our products could expose us to negative publicity resulting in
reputation or brand damage with customers or partners. As a result of these
conditions, an inability to successfully manage our international operations
could have a material adverse impact on our business and results of operations.
In any of the markets in which we do business, increasing attention to
environmental, social and governance (ESG) matters may result in new or
expanded legal or regulatory requirements or expectations specific to ESG
matters. A failure to meet investor or other stakeholder expectations may result
in adverse reputation impacts, loss of business or a negative impact to attract
and retain talent. Further, working to adhere to any new or expanded legal or
regulatory requirements may require additional investments which could
negatively impact our profitability.
Unethical behavior and non-compliance with laws by our sales
representatives, other employees, consultants, commercial
partners or distributors or employees could seriously harm our
business.
Our operations include doing business in countries with a history of corruption
and involve transactions with foreign governments. These factors may increase
the risks associated with our international activities. We are subject to the U.S.
Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act and other laws that
prohibit improper payments or offers of payments to foreign governments and
their officials and political parties by business entities for the purpose of
obtaining or retaining business. We have operations, agreements with third
parties and sales in countries known to experience corruption. Further
international expansion may involve increased exposure to these types of
practices. Our activities in these countries and others create risks of
unauthorized payments or offers of payments, non-compliance with laws, or
other unethical behavior by any of our employees, consultants, sales agents or
distributors, that could be in violation of various laws, including the FCPA, even
though these parties are not always subject to our control.
Our policy is to implement safeguards to discourage these or other unethical
practices by our employees and distributors, including online and in-person
employee trainings, periodic internal audits, and standard reviews of our
distributors. However, our existing safeguards and any future improvements
may not prove to be effective, and our employees, consultants, sales agents or
distributors may engage in conduct for which we might be held responsible.
Violations of the FCPA and other laws may result in criminal or civil sanctions,
which could be severe, and we may be subject to other liabilities, which could
negatively affect our business, results of operations and financial condition.
Real or perceived defects in or misuse of our products could
adversely affect our results of operations, growth prospects and
reputation.
We currently market our products in over 130 countries either directly or
indirectly through commercial partners and distributors. Due to the size and
breadth of our operations, we may not always be able to track the use of our
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products by the end users. If our products are misused or are perceived to be
misused, this could adversely affect our reputation and our customers’
willingness to buy from us, and adversely affect market acceptance or
perception of our products.
Many of our customers - especially those in law enforcement and government
who use our products for forensic testing, human identification, food testing or
other purposes - use our products in applications that are of public interest or
critical to their businesses or missions. As a result, they may have a lower risk
tolerance to defects in our products than to defects in other less critical
products. A defect in or misuse of any of our products by our law enforcement
customers could lead to interference with the administration of justice, such as
damage to forensic evidence. Any defects or misuse, real or perceived, could
cause us to lose sales opportunities, increase our service costs, incur
replacement costs, cause reputational damage, lose customers or subject us to
liability for damages and divert our resources from other tasks. Any one of
these factors could materially and adversely affect our business and results of
operations. In addition, our products could be perceived as ineffective for
reasons outside of our control.
Additionally, if any of our customers, government or otherwise, use or are
perceived to use our products in a manner that is unethical, unlawful or
inconsistent with our values, this may damage our reputation and results of
operations. We strive to ensure that our products are used only in ethical and
lawful ways, but we cannot provide any assurance that we will not be subject
to claims from third parties alleging that our products were misused. Any
allegations of misuse by our customers or third parties may damage our
reputation, even if we took no part in the misuse or take immediate action to
sever ties with such customers.
We believe that our brand and reputation are critical to driving our business.
Building our brand will depend largely on our ability to continue to provide top-
tier service, including high quality products at appropriate price points, which
we may not do successfully. Negative reviews or publicity about our products
or business, especially on media outlets, could harm our reputation and
diminish our ability to make additional sales, which would adversely affect our
business, financial condition, and results of operations.
We depend on patents and proprietary rights that may fail to
protect our business.
Our success depends to a large extent on our ability to develop proprietary
products and technologies and to establish and protect our patent and
trademark rights in these products and technologies. As of December 31,
2023 , we owned 303 issued patents in the United States, 251 issued patents
in Germany and 1,716 issued patents in other major industrialized countries. In
addition, as of December 31, 2023 , we had 360 pending patent applications,
and we intend to file applications for additional patents as our products and
technologies are developed. The patent positions of technology-based
companies involve complex legal and factual questions and may be uncertain,
and the laws governing the scope of patent coverage and the periods of
enforceability of patent protection are subject to change. In addition, patent
applications in the United States are maintained in secrecy until patents issue,
and publication of discoveries in the scientific or patent literature tends to lag
behind actual discoveries by several months. Therefore, no assurance can be
given that patents will issue from any patent applications that we own or
license, or if patents do issue, that the claims allowed will be sufficiently broad
to protect our technology. In addition, no assurance can be given that any
issued patents that we own or license will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide us competitive
advantages. Further, as issued patents expire, we may lose some competitive
advantage as others develop competing products and as a result, we may lose
revenue.
Some of our products incorporate patents and technologies that are licensed
from third parties and for certain products, these in-licensed patents together
with other patents provide us with a competitive advantage. These licenses
impose various commercialization, sub-licensing and other obligations on us.
Our failure to comply with these requirements could result in the conversion of
the applicable license from being exclusive to non-exclusive or, in some cases,
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termination of the license, and as a result, we may lose some competitive
advantage and experience a loss of revenue.
We also rely on trade secrets and proprietary know-how, which we seek to
protect through confidentiality agreements with our employees and consultants.
There can be no assurance that any confidentiality agreements that we have
with our employees, consultants, outside scientific collaborators and sponsored
researchers and other advisors will provide meaningful protection for our trade
secrets or adequate remedies in the event of unauthorized use or disclosure of
such information. There can also be no assurance that our trade secrets will not
otherwise become known or be independently developed by competitors.
We currently engage in, and may continue to engage in, collaborations with
academic researchers and institutions. There can be no assurance that under
the terms of such collaborations, third parties will not acquire rights in certain
inventions developed during the course of these collaborations.
Our business exposes us to potential product liability.
The marketing and sale of our products and services for certain applications
entail a potential risk of product liability. Although we are not currently subject
to any material product liability claims, product liability claims may be brought
against us in the future. Further, there can be no assurance that our products
will not be included in unethical, illegal or inappropriate research or
applications, which may in turn put us at risk of litigation. We carry product
liability insurance coverage, which is limited in scope and amount. There can
be no assurance that we will be able to maintain this insurance at a reasonable
cost and on reasonable terms, or that this insurance will be adequate to protect
us against any or all potential claims or losses.
We are subject to various laws and regulations generally applicable to
businesses in the different jurisdictions in which we operate, including laws and
regulations applicable to the handling and disposal of hazardous substances.
The risk of accidental contamination or injury from these materials cannot be
completely eliminated. In the event of such an accident, we could be held liable
for any damages that result, and any such liability could have a material
adverse impact on us.
Our operating results may vary significantly from period to
period and this may affect the market price of our Common
Shares.
Our operating results may vary significantly from quarter to quarter, and also
year to year, since they are dependent upon a broad range of factors that
include demand for our products, the level and timing of customer research
budgets and commercialization efforts, the timing of government funding
budgets of our customers, the timing of our research and development activities
and related regulatory approvals, the impact of sales and marketing expenses,
restructuring activities, introduction of new products by us or our competitors,
competitive market conditions, exchange rate fluctuations and general
economic conditions. Our expense levels are based in part on our expectations
as to future sales trends. As a result, sales and earnings may vary significantly
from quarter to quarter or from year to year, and actual sales and earnings
results in any one period will not necessarily be indicative of results to be
anticipated in subsequent periods. Our results may also fail to meet or exceed
the expectations of securities analysts or investors, which could cause a decline
in the market price of our Common Shares.
Our holding company structure makes us dependent on the
operations of our subsidiaries.
QIAGEN N.V. is incorporated under Dutch law as a public limited liability
company (naamloze vennootschap), and is organized as a holding company.
Currently, the material assets are the outstanding shares of the QIAGEN
subsidiaries, intercompany receivables and other financial assets such as cash,
short-term investments and derivative instruments. As a result, QIAGEN N.V. is
dependent upon payments, dividends and distributions from the subsidiaries for
funds to pay operating and other expenses as well as to pay future cash
dividends or distributions, if any, to holders of our Common Shares. Dividends
or distributions by subsidiaries in a currency other than the U.S. dollar may
result in a loss upon a subsequent conversion into U.S. dollars.
Our Common Shares may have a volatile public trading price.
The market price of our Common Shares since our initial public offering in
September 1996 has increased significantly and been highly volatile. Since
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January 10, 2018, our shares have been listed on the New York Stock
Exchange (NYSE). Before that, our shares were listed on the NASDAQ through
January 9, 2018. In the last two years, the price of our Common Shares has
ranged from a high of $55.12 to a low of $34.74 . On the Frankfurt Stock
Exchange our Common Shares have ranged from a high of €49.37 to a low of
€32.74 during the last two years.
In addition to overall stock market fluctuations, factors that may have a
significant impact on the price of our Common Shares include:
• announcements of technological innovations or the introduction of new
products by us or our competitors;
• developments in our relationships with collaborative partners;
• quarterly variations in our operating results or those of our peer companies;
• changes in government regulations, tax laws or patent laws;
• developments in patent or other intellectual property rights;
• developments in government spending budgets for life sciences-related
research;
• general market conditions relating to the diagnostics, applied testing,
pharmaceutical and biotechnology industries; and
• impact from foreign exchange rates.
The stock market has from time to time experienced extreme price and trading
volume fluctuations that have particularly affected the market for technology-
based companies. These fluctuations have not necessarily been related to the
operating performance of these companies. These broad market fluctuations
may adversely affect the market price of our Common Shares.
Holders of our Common Shares should not expect to receive
dividend income.
QIAGEN has not paid an annual dividend since its inception, and does not
intend to implement one at this time. However, in January 2017 and January
2024 we completed synthetic share repurchases that combined direct capital
repayments with reverse stock splits. Although we do not anticipate paying any
cash dividends on a regular basis, the distribution of cash through another
synthetic share repurchase in a currency other than the U.S. dollar will be
subject to the risk of foreign currency transaction losses. Investors should not
invest in our Common Shares if they are seeking dividend income; the only
return that may be realized through investing in our Common Shares would be
through an appreciation in the share price.
Future sales and issuances of our Common Shares could
adversely affect our stock price.
Any future sale or issuance of a substantial number of our Common Shares in
the public market, or any perception that a sale may occur, could adversely
affect the market price of our Common Shares. Under Dutch law, a company
can issue shares up to its authorized share capital provided for in its Articles of
Association. Pursuant to our Articles of Association, our authorized share
capital amounts to EUR 9.0 million, which is divided into 410.0 million
common shares, 40.0 million financing preference shares and 450.0 million
preference shares, with all shares having a EUR 0.01 par value. As of
December 31, 2023 , a total of approximately 228.2 million Common Shares
were outstanding along with approximately 20.9 million Common Shares
reserved under our stock plans as of December 31, 2023 , including the shares
subject to outstanding awards. Additionally, an aggregate of 17.1 million
shares of Common Shares or up to a maximum of 27.0 million shares, subject
to customary adjustments under certain circumstance, may be issued upon
conversion of debt or warrants. The majority of our outstanding Common
Shares may be sold without restriction, except shares held by our affiliates,
which are subject to certain limitations on resale.
Shareholders who are United States residents could be subject to
unfavorable tax treatment.
We may be classified as a “passive foreign investment company”, or a PFIC,
for U.S. federal income tax purposes if certain tests are met. Our treatment as a
PFIC could result in a reduction in the after-tax return to holders of Common
Shares and would likely cause a reduction in the value of these shares. If we
were determined to be a PFIC for U.S. federal income tax purposes, highly
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complex rules would apply to our U.S. shareholders. We would be considered
a PFIC with respect to a U.S. shareholder if for any taxable year in which the
U.S. shareholder held the Common Shares, either (i) 75% or more of our gross
income for the taxable year is passive income; or (ii) the average value of our
assets (during the taxable year) which produce or are held for the production of
passive income is at least 50% of the average value of all assets for such year.
Based on our income, assets and activities, we do not believe that we were a
PFIC for U.S. federal income tax purposes for our taxable year ended
December 31, 2023, and do not expect to be a PFIC for the current taxable
year or any future taxable year. No assurances can be made, however, that
the Internal Revenue Service will not challenge this position or that we will not
subsequently become a PFIC.
Provisions of our Articles of Association and Dutch law and an
option we have granted may make it difficult to replace or
remove management and may inhibit or delay a takeover.
Our Articles of Association (Articles) provide that our shareholders may only
suspend or dismiss our Managing Directors and Supervisory Directors against
their wishes with a vote of two-thirds of the votes cast if such votes represent
more than 50% of our issued share capital. If the proposal was made by the
joint meeting of the Supervisory Board and the Managing Board, a simple
majority is sufficient. The Articles also provide that if the members of our
Supervisory Board and our Managing Board have been nominated by the joint
meeting of the Supervisory Board and Managing Board, shareholders may only
overrule this nomination with a vote of two-thirds of the votes cast if such votes
represent more than 50% of our issued share capital.
Certain other provisions of our Articles allow us, under certain circumstances, to
prevent a third party from obtaining a majority of the voting control of our
Common Shares through the issuance of Preference Shares. Pursuant to our
Articles and the resolution adopted by our General Meeting of Shareholders,
our Supervisory Board is entitled to issue Preference Shares in case of an
intended takeover of our company by (i) any person who alone or with one or
more other persons, directly or indirectly, have acquired or given notice of an
intent to acquire (beneficial) ownership of an equity stake which in aggregate
equals 20% or more of our share capital then outstanding or (ii) an “adverse
person” as determined by the Supervisory Board. If the Supervisory Board
opposes an intended takeover and authorizes the issuance of Preference
Shares, the bidder may withdraw its bid or enter into negotiations with the
Managing Board and/or Supervisory Board and agree on a higher bid price
for our Shares.
In 2004, we granted an option to the Stichting Preferente Aandelen QIAGEN,
or the Foundation ( Stichting ), subject to the conditions described in the
paragraph above, which allows the Foundation to acquire Preference Shares
from us. The option enables the Foundation to acquire such number of
Preference Shares as equals the number of our outstanding Common Shares at
the time of the relevant exercise of the option, less one Preference Share. When
exercising the option and exercising its voting rights on these Preference
Shares, the Foundation must act in our interest and the interests of our
stakeholders. The purpose of the Foundation option is to prevent or delay a
change of control that would not be in the best interests of our stakeholders. An
important restriction on the Foundation’s ability to prevent or delay a change of
control is that a public offer must be announced by a third party before it can
issue (preference or other) protective shares that would enable the Foundation
to exercise rights to 30% or more of the voting rights without an obligation to
make a mandatory offer for all shares held by the remaining shareholders. In
addition, the holding period for these shares by the Foundation is restricted to
two years, and this protective stake must fall below the 30% voting rights
threshold before the two-year period ends.
Note Regarding Forward-Looking Statements and Risk Factors
Our future operating results may be affected by various risk factors, many of
which are beyond our control. Certain statements included in this Annual Report
and the documents incorporated herein by reference may be 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, including statements regarding potential future net sales,
gross profit, net income and liquidity. These statements can be identified by the
use of forward-looking terminology such as “believe”, “hope”, “plan”, “intend”,
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“seek”, “may”, “will”, “could”, “should”, “would”, “expect”, “anticipate”,
“estimate”, “continue” or other similar words. Reference is made in particular to
the description of our plans and objectives for future operations, assumptions
underlying such plans and objectives, and other forward-looking statements.
Such statements are based on management’s current expectations and are
subject to a number of factors and uncertainties that could cause actual results
to differ materially from those described in the forward-looking statements. We
caution investors that there can be no assurance that actual results or business
conditions will not differ materially from those projected or suggested in such
forward-looking statements as a result of various factors. Factors which could
cause such results to differ materially from those described in the forward-
looking statements include those set forth in the risk factors above. As a result,
our future success involves a high degree of risk. When considering forward-
looking statements, you should keep in mind that the risk factors could cause
our actual results to differ significantly from those contained in any forward-
looking statement.
Quantitative and Qualitative Disclosures About
Market Risk
Derivatives and Hedging
In the ordinary course of business, we use derivative instruments, including
swaps, forwards and / or options, to manage potential losses from foreign
currency exposures and variable rate debt. The principal objective of such
derivative instruments is to minimize the risks and / or costs associated with
global financial and operating activities. We do not utilize derivative or other
financial instruments for trading or speculative purposes. We recognize all
derivatives as either assets or liabilities on the balance sheet, measure those
instruments at fair value and recognize the change in fair value in earnings in
the period of change, unless the derivative qualifies as an effective hedge that
offsets certain exposures. In determining fair value, we consider both the
counterparty credit risk and our own creditworthiness, to the extent that the
derivatives are not covered by collateral agreements with the respective
counterparties. To determine our own credit risk, we estimated our own credit
rating by benchmarking the price of our outstanding debt to publicly available
comparable data from rated companies. Using the estimated rating, we
quantify our credit risk by reference to publicly traded debt with a
corresponding rating.
Foreign Currency Derivatives
As a globally active enterprise, we are subject to risks associated with
fluctuations in foreign currencies in our ordinary operations. This includes
foreign currency-denominated receivables, payables, debt and other balance
sheet positions including inter-company items. We manage our balance sheet
exposure on a group-wide basis using foreign exchange forwards, options and
cross-currency swaps.
Interest Rate Derivatives
We use interest rate derivative contracts on certain borrowing transactions to
hedge interest rate exposures. We have previously entered into interest rate
swaps in which we agree to exchange, at specified intervals, the difference
between fixed and floating interest amounts calculated by reference to an
agreed-upon notional principal amount.
We also make use of economic hedges. Further details of our derivative and
hedging activities can be found in Note 14 "Derivatives and Hedging" in the
accompanying consolidated financial statements.
Our market risk relates primarily to interest rate exposures on cash, short-term
investments and borrowings, and foreign currency exposures. Financial risk is
centrally managed and is regulated by internal guidelines which require a
continuous internal risk analysis. The overall objective of our risk management
is to reduce the potential negative earnings effects from changes in interest and
foreign exchange rates. Exposures are managed through operational methods
and financial instruments relating to interest rate and foreign exchange risks. In
the ordinary course of business, we use derivative instruments, including swaps,
forwards and/or options, to manage potential losses from foreign currency
exposures and interest rates. The principal objective of such derivative
instruments is to minimize the risks and/or costs associated with global
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financial and operating activities. We do not utilize derivative or other financial
instruments for trading or other speculative purposes. All derivatives are
recognized as either assets or liabilities in the balance sheet and are measured
at fair value with any change in fair value recognized in earnings in the period
of change, unless the derivative qualifies as an effective hedge that offsets
certain exposures. In determining fair value, we consider both the counterparty
credit risk and our own creditworthiness, to the extent that the derivatives are
not covered by collateral agreements with the respective counterparties.
Further details of our derivative and hedging activities can be found in Note 14
"Derivatives and Hedging" in the accompanying consolidated financial
statements.
Interest Rate Risk
We use interest rate derivatives to align our portfolio of interest-bearing assets
and liabilities with our risk management objectives.
At December 31, 2023 , we are party to cross-currency interest rate swaps
through 2025 for a total notional amount of €180.0 million under which we
exchange, at specified intervals, the difference between the euro and USD
interest amounts calculated on their respective fixed rates by reference to an
agreed-upon euro and USD notional principal amounts. Also at December 31,
2023 , we are party to cross-currency interest rate swaps through 2025 for a
total notional amount of CHF 542.0 million under which we exchange, at
specified intervals, the difference between the CHF and USD interest amounts
calculated on their respective fixed rates by reference to an agreed-upon CHF
and USD notional principal amounts.
At December 31, 2023 , we had $668.1 million in cash and cash equivalents
as well as $389.7 million in short-term investments. Interest income earned on
our cash investments is affected by changes in the relative levels of market
interest rates. We only invest in high-grade investment instruments. A
hypothetical adverse 10% movement in market interest rates would have
impacted our financial statements by approximately $5.7 million .
Borrowings against lines of credit are at variable interest rates. We had no
amounts outstanding against our lines of credit at December 31, 2023 .
A hypothetical adverse 10% movement in market interest rates would not have
materially impacted our financial statements.
At December 31, 2023 , we had $1.5 billion in long-term debt of which
$245.5 million is floating interest rate debt. A hypothetical adverse 10%
movement in market interest rates would not have materially impacted our
financial statements, as the increased interest expense would have been
completely offset by increased interest income from our variable rate financial
assets.
Foreign Currency Exchange Rate Risk
As a global enterprise, we are subject to risks associated with fluctuations in
foreign currencies with regard to our ordinary operations. This includes foreign
currency-denominated receivables, payables, debt and other balance sheet
positions as well as future cash flows resulting from anticipated transactions
including intra-group transactions. We manage our balance sheet exposure on
a group-wide basis primarily using foreign exchange forward contracts, options
and cross-currency swaps.
Russia's February 2022 invasion of Ukraine and the sanctions imposed in
response have led to a decline in the value of the ruble which is expected to
remain highly volatile. In 2022, we suspended our activities in Russia. As of
April 1, 2022, the results of our subsidiary in Türkiye are reported under highly
inflationary accounting as the prior three-years cumulative inflation rate
exceeded 100 per cent.
A significant portion of our revenues and expenses are earned and incurred in
currencies other than the U.S. dollar. The euro is the most significant such
currency, with others including the, British pound, Chinese renminbi, Japanese
yen, and Swiss franc. Fluctuations in the value of the currencies in which we
conduct our business relative to the U.S. dollar have caused and will continue
to cause U.S. dollar translations of such currencies to vary from one period to
another. Due to the number of currencies involved, the constantly changing
currency exposures, and the potential substantial volatility of currency exchange
rates, we cannot predict the effect of exchange rate fluctuations upon future
operating results. In general terms, depreciation of the U.S. dollar against our
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other foreign currencies will increase reported net sales. However, this effect is,
at least partially, offset by the fact that we also incur substantial expenses in
foreign currencies.
We have significant production and manufacturing facilities located in
Germany and inter-company sales of inventory also expose us to foreign
currency exchange rate risk. Inter-company sales of inventory are generally
denominated in the local currency of the subsidiary purchasing the inventory in
order to centralize foreign currency risk with the manufacturing subsidiary. We
use an in-house bank approach to net and settle inter-company payables and
receivables, as well as inter-company foreign exchanged swaps and forward
contracts in order to centralize the foreign exchange rate risk to the extent
possible. We have entered in the past and may enter in the future into foreign
exchange derivatives including forwards, swaps and options to manage the
remaining foreign exchange exposure.
Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk
are cash and cash equivalents, financial assets, and accounts receivable. We
attempt to minimize the risks related to cash and cash equivalents and financial
assets by dealing with highly rated financial institutions, and investing in a
broad and diverse range of financial instruments.
We have established guidelines related to credit quality and maturities of
investments intended to maintain safety and liquidity. Concentration of credit
risk with respect to accounts receivable is limited due to a large and diverse
customer base, which is dispersed over different geographic areas. Allowances
are maintained for potential credit losses and such losses have historically been
within expected ranges. There were no significant concentrations of credit risk
during the reporting period. The maximum exposure to credit risk is represented
by the carrying amount of each financial asset in the statement of financial
position.
Credit risk is managed on a Company basis, except for credit risk relating to
accounts receivable balances. Each local entity is responsible for managing
and analyzing the credit risk for each of their new clients before standard
payment and delivery terms and conditions are offered.
Counterparty Risk
The financial instruments used in managing our foreign currency, equity and
interest rate exposures have an element of risk in that the counterparties may be
unable to meet the terms of the agreements. To the extent that derivatives are
not subject to mutual collateralization agreements, we attempt to minimize this
risk by limiting the counterparties to a diverse group of highly rated
international financial institutions.
The carrying values of our financial instruments incorporate the non-
performance risk by using market pricing for credit risk.
However, we have no reason to believe that any counterparties will default on
their obligations and therefore do not expect to record any losses as a result of
counterparty default. In order to minimize our exposure with any single
counterparty, we have entered into all derivative agreements, with the
exception of the Call Spread Overlay, under master agreement which allow us
to manage the exposure with the respective counterparty on a net basis. Most
of these master agreements, include bilateral collateral agreements.
Commodities
We have exposure to price risk related to anticipated purchases of certain
commodities used as raw materials in our business.
A change in commodity prices may alter the gross margin, but due to the
limited exposure to any single raw material, a price change is unlikely to have
a material unforeseen impact on earnings.
However, the volatility in product availability and pricing continued in 2023,
and we expect some level of market constraints to continue in 2024.
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S us tainability
Profile and business model
As a leading provider of Sample to Insight solutions, we re aliz e our vision of
making improvements in life possible by supporting our global customers across
the molecular diagnostic and life science markets. Our products are used to
advance science and improve outcomes for patients around the world. We are
committed to being a sustainable business and consider the views of our
stakeholders – customers, employees, authorities, regulators, suppliers, and
shareholders – in how we operate. Details about our business, operating
environment and products are included in the section Business and Operating
Building a sustainable business
In 2023, our growth strategy continues to be anchored in our Five Pillars of
Growth:
• Sample technologies
• The digital PCR (Polymerase Chain Reaction) platform QIAcuity
• The clinical PCR automation solutions QIAstat-Dx
• The clinical PCR automation solutions NeuMoDx
• The QuantiFERON technology platform used to detect diseases (such as
latent tuberculosis)
Since 2017, we have focused on integrating sustainability throughout the entire
value chain and aligning our vision with a sustainable business which includes
reducing our impact on the environment and minimizing the carbon footprint of
our products. Our key strategic sustainability activities target increasing
numbers of women in leadership positions, reducing our emissions, avoiding
cyber security incidents, and ensuring a consistent 100% completion rate for
new employee compliance trainings and the commitment of our strategic
suppliers to sustainable improvement goals.
General Approach to Sustainab i l i t y
Sustainability governance
Aligning the QIAGEN vision with sustainable business
QIAGEN plays a vital role in helping to advance our understanding about the
building blocks of life – DNA, RNA, and proteins. Our products are used to
advance science and improve outcomes for patients around the world. This is
underscored by our vision of “making improvements in life possible”, which
extends to our commitment of being a sustainable business ensuring that we do
not negatively impact our environment, community or society as a whole. We
take into consideration the views of our stakeholders in making decisions on the
way to operate our business. Our approach to sustainability is to consider our
actual or potential positive and negative impacts throughout each area of our
business. In line with our vision of making improvements in life possible, we
have a commitment to deliver the best possible portfolio of product and services
while leaving the smallest possible footprint on our planet. From whom we
source to how we produce, we approach each step with the intention to do so
in a sustainable way. We know our people are our most critical asset and we
care about them - from their working environment to career development and
opportunity. We aim to attract and retain talents that contribut e to our vibrant
workforce and our culture of empowerment.
Sustainability anchored in two-tier corporate governance
structure
The Nomination & Environmental, Social, and Governance (ESG) Committee, a
dedicated Supervisory Board Committee, oversees the strategy, development
and performance measurements of our sustainability initiatives. The strength of
the committee lies in the extensive leadership experience of its current members,
as each one of them has served as either the CEO or CFO of publicly listed
companies. (Refer to Corporate Governance and our website for more details,
including the Nomination & ESG Committee charter.) Their background equips
them with a profound understanding of the intricate business implications
associated with sustainability targets, the imperative need for effective risk
management, and the comprehensive reporting requirements spanning both
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financial and no n-fina ncial domains. The Nomination & ESG Committee
reviews the operational activities of the Corporate ESG Committee, a cross-
functional team with representatives from across the Company. The Corporate
ESG Committee is led by our Head of ESG Strategy & Impacts Programs under
the supervision of the Executive Committee. This Committee formulates and
secures approval for our sustainability strategy and actively drives its
implementation throughout the year. Additionally, a key responsibility of the
Corporate ESG Committee is to inform the Audit Committee and Nomination &
ESG Committee about new or updated regulatory requirements, such as the
Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy and the
German Supply Chain Act. In October 2023, the Corporate ESG Committee
conducted a regulatory update with the Audit and Nomination & ESG
Committees and instructed attendees on the relevant requirements from these
three upcoming regulations. This update served to equip the Supervisory Board
with the necessary information to guide their role in overseeing the effectiveness
of internal controls and the risk management system pertaining to sustainability
reporting. The Executive Committee receives updates on the progress of the
implementation of the sustainability strategy and on regulatory changes on a
quarterly basis while the Supervisory Board is informed of these updates at
least twice a year. In 2023, the Corporate ESG Committee met with the
Nomination & ESG Committee twic e to review and approve the sustainability
strategy, its implementation plan and the content of the Sustainability Statement
that is disclosed in the Management Report.
The significance of sustainability within QIAGEN is firmly embedded in our
culture and linked through the compensation system, wherein ESG objectives
are incorporated into the annual Team Goals. These goals serve as the
foundation for a substantial portion of variable short-term incentive
compensation for our global workforce and the Managing Board . In
acknowledgment of the paramount importance of sustainability, we have
elevated the weight and influence of these objectives in line with our
sustainability aspirations, a commitment that aligns with our broader promises
on ESG matters.
Risk management and internal controls over sustainability
reporting
Our risk management approach is discussed under section Risks and Risk
Management . To ensure that newly established sustainability topics are
integrated into the risk management approach, specialized teams were
collaboratively formed in 2023 comprised of representatives from the owners of
material topics and the ESG Reporting team. These teams included experts from
global functions such as Accounting, ES G, U.S. Securities Exchange
Commission (SEC) Reporting, and Corporate Communications . During the
2023 reporting process, provided guidance by these teams on process
requirements was applied by all owners of material topics and documented
accordingly, including applicable reviews.
Reporting boundaries
The basis of our Sustainability reporting is defined in the EU Non-financial
Reporting Directive (2014) and the EU Corporate Sustainability Reporting
Directive (in effect since 2024), including the EU Taxonomy (partially in effect
since 2022), and the proposed EU Sustainability Reporting Standards (in effect
since 2024). The Sustainability reporting has also been aligned with the
guidelines of the Global Reporting Initiative (GRI) and has been prepared in
accordance with the GRI Standards. We also take into account the relevant
requirements of the Sustainability Accounting Standards Board (SASB) for the
Medical Equipment & Supplies industry. Where possible we follow the
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recommendations of the Task Force on Climate-Related Financial Disclosures
(TCFD). Our Sustainability Report is available on our website.
Committed to the Sustainable Development Goals
As a global company, QIAGEN supports the Sustainable Development Goals
(SDGs) of the United Nations (UN). The SDGs identify starting points for policy-
makers, businesses, and private individuals worldwide to tackle the major
challenges of our time - from resource consumption and global inequality to
climate change. The 17 SDGs and the 169 targets were adopted by all UN
member states in 2015 in what is termed the “Agenda 2030.” Companies can
make a major contribution to the implementation of the SDGs due to their
influence on the environment and society in many ways – from production to
distribution of products, the actions and behaviors of employees, and
cooperations with partners, suppliers and customers along the supply chain.
We are aware of this responsibility and want to make an impactful contribution
to the SDGs that can be influenced by our business activities.
Looking at the impact of our business activities on sustainable development, we
have identified five SDGs where QIAGEN can contribute the most:
• SDG 3 Good Health and Well Being
• SDG 5 Gender Equality
• SDG 8 Decent Work and Economic Growth
• SDG 12 Responsible Consumption and Production
• SDG 13 Climate Action
We value this alignment and the way our use of technology, resources and
knowledge contributes to the United Nation's global mission of achieving the
SDGs.
Validation of Carbon Emission Targets
Our carbon emissions targets have now been validated by the Science Based
Targets initiative (SBTi), endorsing our ambition to honor the Paris Agreement’s
climate goals.
The SBTi is a global body that enables companies to set ambitious emissions
reductions targets in line with the latest climate science. The initiative is a
collaboration between the Carbon Disclosure Project (CDP), the United Nations
Global Compact, the World Resources Institute (WRI) and the World Wide
Fund for Nature (WWF), and one of the We Mean Business Coalition
commitments. The SBTi defines and promotes best practice in science-based
target setting, offers resources and guidance to reduce barriers to adoption,
and independently assesses and approves companies’ targets . We are seeking
to achieve net-zero status by 2050 by cutting direct and indirect emissions
throughout our operations. We d is clos e our strategy to meet our targets in the
Sustainability Report available on our website.
Stakeholder engagement
We regard dialogue with our stakeholders as a central element in our
development and the achievement of our long-term vision. We are aware that
the shift toward a more sustainable economy and society requires intensive
dialogue and cooperation with various stakeholder groups. We welcome this
engagement and see these discussions as a way to identify important trends
and developments in society and in our business fields. We take the outcomes
of these discussions into account when shaping our business strategy as well as
our sustainability agenda and objectives.
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Environmental Responsibility
Approach to environmental protection
We make considerable investments into improving our environmental
performance, striving to prevent or mitigate negative impacts from our business
activities, products, or services. Our priority is implementing effective measures
to comply with regulations, protecting the environment, and avoiding
reputational damage or financial loss.
Minimize Carbon Footprint
Climate strategy and value chain
We recognize climate change as one of the most pressing global challenges,
bringing with it risks such as extreme weather events, changes in regulations,
and changes in customer needs and behavior. Operations could, for example,
be negatively impacted by fluctuations in the cost of raw materials,
components, freight and energy. New laws and regulations adopted in
response to climate change could cause a further rise in energy prices, as well
as the price of certain raw materials, components, packaging and
transportation. Based on our 2022 materiality analysis, dialogue with our
stakeholders and ESG ratings evaluations, we concluded that the majority of
our internal and external stakeholders, including our employees and customers,
are very conscious of environmental issues, including plastic consumption and
the recyclability and durability of products. Among others, these factors
influence our customers’ choice of supplier. We recognize that urgent action is
required and are committed to reducing our greenhouse gas emissions in line
with the EU Paris-Agreement.
Science Base Target Initiative (SBTi) Validation
In 2019 we began setting emission reduction goals, and in 2021 we
committed to reducing greenhouse gas emissions in line with the most recent
criteria set out by the SBTi. These targets have been validated and approved by
the SBTi in 2023. The SBTi has assessed our near-term and net-zero targets
against the SBTi's Net-Zero Standard Criteria and the SBTi Near-Term Target
Criteria and Recommendations (Version 5). The SBTi target validation team has
classified QIAGEN's Scope 1 and 2 target ambition and has determined that it
is in line with a 1.5°C trajectory. Our approved targets are:
• Overall Net-Zero Target: We commit to reach net-zero greenhouse gas
emissions (GHG) across the value chain by 2050 from a 2020 base year.
• Near-Term Targets: We commit to reduce absolute Scope 1 and 2 GHG
emissions 42% by 2030 from a 2020 base year. We also commit to
reducing our absolute Scope 3 GHG emissions from business travel, use of
sold products, and end-of-life treatment of sold products 25% within the same
timeframe. We further commit that 67% of our suppliers by emissions
covering purchased goods and services, capital goods and upstream
transportation and distribution will have science-based targets by 2027.
• Long-Term Targets: We commit to reduce absolute Scope 1, 2 and 3 GHG
emissions 90% by 2050 from a 2020 base yea r.
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Investing in People
Employees
QIAGEN’s success starts with our people. Our long-term success and growth
depend on the knowledge, skill and passion of our employees. Investing in our
people, therefore, drives our economic performance and considerably
influences the sustainability of our operations. The attraction, development and
retention of our employees is an integral factor in creating value for customers,
colleagues, partners and shareholders. During 2023, we continued our
strategic focus on being recognized as an employer of choice, which enables
us to attract, develop and retain top talents that are critical to our long-term
success.
Our Corporate Code of Conduct and Ethics provides our employees with a
clear understanding of the principles of business conduct and ethics that are
expected of them. Additionally, respect for human rights is a fundamental value
of QIAGEN. Our Human Rights Policy defines how we strive to respect and
promote human rights in our relationships with our employees, suppliers and
other stakeholders. The policies are reviewed and updated annually and are
both available on our website.
As a company headquartered in the European Union, freedom of association
and collective bargaining are cornerstones of the good relationship between
management and representatives of employees. The majority of our workforce
is employed in member states of the OSCE (Organization for Security and
Cooperation in Europe), which includes states from Europe, Central Asia and
North America. In all regions where we operate, we comply with all applicable
laws regarding freedom of association and collective bargaining and respect
local laws and regulations concerning labor relations as outlined in our Human
Rights Policy . Management believes that its relations with regional labor unions
and employees are good.
The following tables provid e information on the number of employees by
geographical region and main category of activity. We acknowledge and
respect all gender identities, understanding that individuals may identify as
female, male, non-binary, or in various other ways. The gender data in the
tables in this report are presented in the female or male format.
2023
2022
Employees by region
Female
Male
Total (1)
Percentage
Female
Male
Total
Percentage
EMEA
1,800
1,652
3,453
57.9 %
1,863
1,695
3,558
57.6 %
Americas
609
720
1,329
22.3 %
610
760
1,370
22.2 %
APAC
595
590
1,185
19.9 %
632
618
1,250
20.2 %
Total employees
3,004
2,962
5,967
100.0 %
3,105
3,073
6,178
100.0 %
50.3 %
49.6 %
50.3 %
49.7 %
(1) As of December 31, 2023 , one employee identified their gender as non-binary or chose not to disclose .
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Employees by function
2023
2022
2021
Production
28 %
29 %
30 %
Research & Development
18 %
17 %
16 %
Sales
37 %
37 %
37 %
Marketing
6 %
6 %
6 %
Administration
11 %
11 %
11 %
Total
100 %
100 %
100 %
In 2023, the number of employees working in production decreased as
business conditions continued to reset following the significant ramp-up of
production during the COVID-19 pandemic when we employed workers for this
specific need under limited time contracts.
D epending on local laws and customs, there are different types of employment
ranging from long-term fixed contracts to temporary positions. In addition, part-
time, full-time and temporary employees may have access to benefits that offer
flexible time and programs for parents following childbirth and during
schooling, for example. In 2023, part-time employees represented 5.7% of our
workforce and temporary employees, with a fixed-term work contract
representing 7.3%.
Employee Attraction and Development
QIAGEN´s goal is to be the industry employer of choice by attracting,
developing and retaining diverse top talent. Enabling a fair, respectful and
inclusive work environment is embedded in our culture. To drive our economic
performance and create value, we focus on building excellent teams with
remarkable talents. To adapt in the competitive field of talent attraction, the
global Talent Acquisition Policy has been revised in line with an improved
Talent Acquisition Strategy to enhance the global overall recruiting process, the
commitment to diversity and inclusion, our internal application processes, work
with hiring agencies, and adherence to official regulations.
We strive to create a work environment that empowers and involves employees
at all levels. In 2023, we continued our global QIAGEN EMPOWER cultural
change initiative, originally launched in 2021 with v oluntary ambassadors who
actively facilitated discussions and practices around empowerment. The
EMPOWER initiative aims at fostering inclusive networks and inspiring a culture
of empowerment. The initiative also serves as a foundation for the professional
and personal development of each employee. Our goal is to provide our
employees with opportunities to develop, be venturesome, think and act long-
term and, at the same time, motivate them to perform to the best of their ability
with discipline, empathy and trust. We seek to inspire our people to grow so
they have the right mindset and skills to thrive and achieve both professional
and personal objectives. With our focus on performance management,
employee, career and leadership development, we seek to foster effectiveness
and performance. As anchored in our formal coaching guidelines, we
empower every employee and encourage them to take on the responsibility for
their learning and personal growth.
The talent, skills and passion of our employees are key to our success and value
creation. The opportunity to develop personally and professionally is a core
aspiration, both for employees who have recently joined QIAGEN and for
those who have been with QIAGEN for quite some time. Our objective is to
foster a learning culture that gives our employees the opportunity to develop
their own unique career paths while collectively enhancing our ability to
achieve our business objectives and secure a robust pipeline of talent to deliver
on our long-term strategies.
Diversity & Inclusion
At QIAGEN, we firmly believe that diverse teams are the cornerstone of our
success. We recognize that a variety of perspectives, ideas and approaches
foster innovation and drive our business forward. Our commitment to diversity
and inclusion is steadfast, as we strive to cultivate an environment where every
employee feels valued and empowered to contribute their unique talents and
experiences.
Regardless of age, educational background, gender, sexual orientation, gender
identity, nationality, ethnicity, veteran status, abilities , religion, or any other
distinguishing characteristic protected by law, we are dedicated to providing
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equal opportunities for all. We firmly believe that diversity is not only a moral
imperative but also a competitive advantage that propels us forward.
Central to our diversity and inclusion efforts is our Executive Council of Equal
Opportunity (ECEO), a diverse body of volunteers from across the company,
including executives, managers and individual contributors. This cross-functional
council oversees our initiatives aimed at fostering diversity and inclusion within
our organization.
In 2018, we started our strategic initiative on gender diversity with a focus on
improving the number of women in management. The participation of women
in management roles increased from approximately 28% in 2018 to 36% in
2023 (2022: 35%). This was achieved because of strategic initiatives to drive
awareness, engagement and development of better gender representation
among our management team. We continue to work towards gender parity,
and it is our goal to achieve at least 40% of women in management in the mid-
term in accordance with our Gender Diversity Policy.
Occupational H ealth and Safety
Safe workplaces and healthy employees are a top priority at QIAGEN. All
employees are required to adhere to local and global health and safety
procedures and practices. We place the health and safety of our employees
above all other considerations and have introduced multiple measures to foster
a serious culture of safety awareness. Our Global Environment, Health and
Safety team (EHS team) oversees the conscientious implementation of global
EHS policies and procedures. Our local EHS teams constantly manage and
monitor site-specific occupational health and safety risks and activities.
Global processes include the implementation of a Global EHS Management
system based on the ISO45001 standard. The EHS management system aims
to reduce health and safety risks, related injuries, illness and unplanned events
within our business operations to minimize safety risks for employees. All
employees, service providers and company-managed contractors are required
to follow the standards and requirements in our EHS management system.
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Serving Society
Making improvements in life possible is our vision. As a global provider of
resources and tools in molecular testing, we continue to contribute to improving
human health by ensuring communities around the world have access to our
products and solutions. Our global reach extends to encompass public health
organizations and commercial partners in more than 170 countries. We strive
to provide i nnovative sol utions to our customers and their patients by delivering
high-quality products and modern technologies that enable new insights for
scientific research, forensics, food safety or better informed treatment decisions.
Quality and product safety
QIAGEN stands for quality. Since our founding in 1984, our products are
manufactured and distributed in compliance with global regulatory
requirements. Our processes are designed to set state-of-the-art usability
standards and are verified and validated according to their intended purpose.
All processes at QIAGEN are customer- and patient-oriented. Our activities are
systematically and consistently integrated into cross-functional end-to-end
processes. Based on collected insights and facts, reliable and sound
information, and relevant measured data, we continuously monitor and improve
our processes. This assures effectiveness and efficiency of our Quality
Management System (QMS).
Customer Satisfaction
We are committed to continually improving our customers’ experiences, taking
into account their evolving needs and expectations. Since our products extend
across different market segments, our customers have some common
overlapping needs but also hold market-specific expectations for the use of our
products and services. We strive to exceed customer expectations and establish
trustful relationships that translate into customer loyalty, allowing us to best
market our current and developing product portfolio across an established,
diverse set of customers.
Access to Healthcare
Improving access to diagnostics remains one of the world’s greatest healthcare
challenges. Our vision of Access to Healthcare is to ensure that every person
who may benefit from a QIAGEN testing solution has access to one, regardless
of where they live in the world and regardless of their economic status or
background. Our commitment to Access to Healthcare is focused on three
pillars: Accessibility, Affordability and Collaboration, with special focus on
therapeutic areas that disproportionately affect vulnerable populations,
including elimination of Tuberculosis (TB), HIV, COVID-19, Human Papilloma
Virus (HPV), and MPOX, among other infectious and neglected diseases. As
described in our Access to Healthcare policy , our Global Public Health Task
Force (GPHTF) is the highest governing body, responsible for oversight of
QIAGEN’s Access to Healthcare strategy and objectives, including allocation of
resources and overseeing project expansion in crucial regions. The GPHTF is
composed of a diverse population of employees, with representation from each
sales region encompassing APAC, EMEA, and the Americas. It also integrates
members from every functional domain in Molecular Diagnostics, Life Sciences,
and QIAGEN Digital Insights. While public health touches every region,
particular consideration is given to Low and Middle-Income Countries (LMICs)
where global health access pricing of our products is offered.
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Ensuring Business with Integrity
As a publicly listed company with international operations, we are subject to
regulations in various jurisdictions. Unethical behavior and non-compliance with
laws and regulations has the potential to seriously harm our business, our
reputation, our shareholders, and expose our employees to personal liability.
We have established a comprehensive Compliance Program which is overseen
by the Global Compliance Manager and the Compliance Committee, under the
leadership of the Head of Global Legal Affairs and Compliance, who reports in
this function directly to the Audit Committee of the Supervisory Board. The
Compliance Committee consists of managers from Legal, Internal Audit, Human
Resources, SEC Reporting, Clinical and Medical Affairs, and Trade
Compliance.
The Compliance Committee is responsible for our Corporate Code of Conduct
and Ethics, which is updated annually, supplements specific policies for our
employees, and meets the requirements of the SEC and the NYSE Listed
Company Manual. The Corporate Code of Conduct and Ethics applies to all
employees including the chief executive officer, chief financial officer, the
principal accounting officer or controller, and other persons performing similar
functions. The full text of our Corporate Code of Conduct and Ethics can be
found on our website, www.qiagen.com , on the Compliance page under
Investor Relations.
QIAGEN Integrity Line
Our hotline for the good faith reporting of violations of the law or our
compliance policies is in accordance with the applicable German
Whistleblower Act ( Hinweisgeberschutzgesetz ), the U.S. Sarbanes-Oxley Act,
and the listing standards of the NYSE. We follow a strict non-retaliation policy.
U pon identification of a report , we diligently investigate all such complaints and
protect the anonymity of the complainant to ensure protection from retaliation
as well as to secure the employment status of the complainant. We also offer a
direct email and telephone hotline for employees to communicate questions or
make suggestions for our Compliance Program.
In 2023, we updated our Whistleblower Policy to allow compliance- or audit-
related complaints to be collected from outside the organization and not limited
to only reports by employees. The new QIAGEN I ntegrit y line is accessible via
the QIAGEN Website. It is open for all persons or groups of persons who are
directly or indirectly affected by human rights or environmental risks or
violations within QIAGEN’s own business area or within QIAGEN’s supply
chains. A written or oral report can be submitted via the digital reporting
system, with text available in 19 languag es.
Conflict minerals
U.S. legislation has been enacted to improve transparency and accountability
concerning the sourcing of conflict minerals from mines located in the conflict
zones of the Democratic Republic of Congo (DRC) and its adjoining countries.
Conflict minerals comprise tantalum, tin, tungsten (or their ores) and gold.
Certain of our instrumentation product components that we purchase from third
party suppliers contain gold. This U.S. legislation requires manufacturers, such
as us , to investigate our supply chain and disclose if there is any use of conflict
minerals originating in the DRC or adjoining countries. We conduct due
diligence measures annually to determine the presence of conflict minerals in
our products and the source of any such conflict minerals. Because we do not
purchase conflict minerals directly from smelters or refineries, we rely on our
suppliers to specify to us their conflict minerals sources and declare their conflict
minerals status. We disclosed our most recent conflict minerals findings to the
Securities Exchange Commission for the calendar year ending December 31,
2022, on Form SD on May 30, 2023, and will provide updated disclosure to
the Securities Exchange Commission as required.
Human Rights
Respect for human rights is an essential component of promoting sustainability
in our global business. As a publicly listed company with international
operations, we regard ourselves as a responsible corporate citizen in all the
countries and regions where we do business. This role includes rights and
obligations governed by international and national law, with human rights as
one of the foundational elements. Our Human Rights Policy is designed to
provide guidance on all human rights issues in our sphere of influence,
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including our relationships with customers, employees and in our supply chain.
Our Human Rights Policy can be found on our sustainability webpage.
Data and Cyber Security
Considering the increasingly challenging cyber threat landscape, the realities of
a remote workforce and our steadily progressing digitalization efforts, cyber
security remains an important topic for our organization. We have made
investments to improve the cyber-resilience of our organization, products and
services. Preserving the trust of our customers, partners and employees is our
goal.
Despite our security measures, the risk of data breaches remains. Potential
incidents can have severe ramifications including financial loss, reputational
damage, and legal penalties. Cyber-attacks, such as ransomware, can cause
significant operational disruptions, impeding the timely delivery of services and
products and potentially impacting our commitments to our stakeholders. We
are aware that some of the data we are processing, if leaked, may harm the
trust of the general public, our partners and customers. Our cyber security
program, therefore, aims to implement robust measures ensuring the
confidentiality, availability and integrity of critical data and services.
Our cyber security efforts are based on the ISO 27001 standard and
incorporate the Information Security Forum "Standard of Good Practice for
Information Security." Global cyber security and privacy requirements are
actively monitored for and discussed as part of our Cyber Security Council as
well as during Data Protection Committee meetings, both held multiple times a
year.
To facilitate information and knowledge exchange, QIAGEN has joined well-
known industry and governmental cyber security communities like the
Information Security Forum (ISF), Allianz fuer Cyber-Sicherheit and Health-ISAC.
Our Cyber Security Team consists of members with varying professional,
educational, cultural and industry backgrounds, as well as a balanced mix of
technical and managerial skills. We encourage and support our cyber security
employees to further develop their skill set and participate in relevant security
industry and community activities.
Our cyber security program considers evolving business requirements,
regulatory guidance, and emerging threats. We have supporting privacy and
cyber security policies and guidelines in place, which are reviewed and
approved as part of our Cyber Security Council and Compliance Committee
procedures. These policies and guidelines are applicable to all employees and
are available on our intranet. Furthermore, we offer employees mandatory
training during which we carry out knowledge checks to ensure that the content
was understood by the trainees.
For our mandatory cyber security awareness training, we have, on average,
approximately 85% of our staff worldwide successfully complete the training.
We also conduct regular 'phishing' simulations, providing all staff members
with an opportunity to interact in a safe manner with up-to-date phishing threats
as observed from real threat actors. We offer frequent awareness webinars and
workshops on important security topics, including new phishing trends, as well
as role-specific trainings. In addition, the cyber security team regularly conducts
incident response exercises to evaluate the organization's established
procedures, including an analysis of each applicable incident response stage.
We are monitoring our organization’s externally exposed assets and services
(Attack Surface Monitoring), as well as information exposure (Dark Web
Monitoring) to identify blind spots and potential weaknesses. Our vulnerability
management program covers our global networks, digital workplaces and
corporate cloud environments. We are working with Council for Registered
Ethical Security Testers (CREST) certified partners to conduct regular, at least
annual, security assessments of our global infrastructure. We further engage
with external partners as needed to utilize their expertise for advanced security
assessments. Cyber security risks are considered in context of our Enterprise
Risk Management.
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Management Report
G overnance Structure
QIAGEN is a ‘Naamloze Vennootschap,’ or N.V., a Dutch limited liability
company similar to a corporation in the United States. We have a two-tier
board structure under which QIAGEN is managed by a Managing Board
consisting of executive management and acting under the supervision of an
independent Supervisory Board (non-executives).
It is in the interest of QIAGEN and all our stakeholders, including shareholders,
that each Board performs its functions appropriately with a clear division of
responsibilities, as well as in terms of interaction with the General Meeting of
Shareholders (General Meeting) and the external auditor, in a well-functioning
system of checks and balances.
The Supervisory Board follows the principle of increasing stakeholder value and
has always pursued the highest standards in Corporate Governance.
QIAGEN is committed to ensuring a corporate governance structure that best
suits its business and stakeholders, and that complies with relevant rules and
regulations. We follow applicable Dutch law and the principles described in
the Dutch Code, although there are some minor deviations due to factors such
as legal requirements imposed by other jurisdictions in which QIAGEN's
Shares are listed as well as due to industry standards. A brief summary of the
principal differences is presented in the section Dutch Corporate Governance
We believe all of our operations are carried out in accordance with legal
frameworks, including Dutch Corporate Law, U.S. laws and regulations, EU
regulations and applicable German and U.S. capital market laws.
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Corporate Governance
QIAGEN operates under a two-tier corporate structur e
General Meeting
• Each share carries one vote
• Decisions on key topics (e.g. the appropriation of net income, the ratification of the acts of the Managing and
Supervisory Boards and the appointment of independent auditors)
Arrows-mirrored.jpg
Arrows-mirrored.jpg
The Managing Board is accountable for the
actions and decisions by the Executive
Committee
Reports to
Elects and ratifies
Reports to
Elects and ratifies
Close cooperation
for the benefit of
the company
Executive Committee
Managing Board
Supervisory Board
• Comprised of eight members
• Senior leaders representing Business
Areas and key functions across
QIAGEN
• Comprised of two members
(CEO and CFO)
• Top management body of
QIAGEN N.V.
• Comprised of eight members
(As of December 31, 2023)
• Four committees
– Audit
– Compensation & Human Resources
– Nomination & ESG
– Science & Technology
Arrowsright-left.jpg
Informs and
reports to
Arrows-right.jpg
Arrows-right.jpg
Advises, oversees,
approves
Arrowsleft.jpg
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Corporate Governance
Managing Board
General
The Managing Board is responsible for defining and achieving our aims,
strategy, policies and results through the management of QIAGEN worldwide.
The Managing Board is also responsible for financing, managing the risks
associated with our business activities and complying with all relevant
legislation and regulations. Additionally, the Managing Board (specifically the
Chief Financial Officer) is informed of the findings of the Internal Audit function,
which operates under the direct responsibility of the Supervisory Board through
the Audit Committee. The Managing Board provides timely information to the
Supervisory Board for discussions on the development of QIAGEN, and in
particular reviews internal risk management and control systems with the Audit
Committee.
The Managing Board is accountable for the performance of its duties to the
Supervisory Board and the General Meeting. In discharging its duties, the
Managing Board takes into account the interests of all stakeholders, including
shareholders, in a commitment to sustainable long-term value creation.
Composition and Appointment
The Managing Board consists of one or more members as determined by the
Supervisory Board. The Managing Board members are appointed by the
General Meeting upon the Joint Meeting of the Supervisory Board and the
Managing Board (the Joint Meeting), which makes binding nominations. The
General Meeting may overrule the binding nature of any nomination by a
resolution adopted by at least a two-thirds majority of the votes cast, if such
majority represents more than half of the issued share capital.
Managing Board members are appointed annually for one-year terms in the
period beginning on the day following the Annual General Meeting up to and
including the day of the Annual General Meeting held in the following year.
Managing Board members may be suspended and dismissed by the General
Meeting by a resolution adopted by a two-thirds majority of the votes cast, if
such majority represents more than half of the issued share capital, unless the
pro posal was made by the Joint Meeting, in which case a simple majority of
votes cast is sufficient. Furthermore, the Supervisory Board may at any time
suspend (but not dismiss) a member of the Managing Board.
Managing Board Members
The following were our Managing Board members for the year ended
December 31, 2023:
Thierry_1200x674.jpg
Thierry Bernard
Chief Executive Officer
(1964, U.S./French)
Thierry Bernard joined QIAGEN in February 2015 to lead our growing
presence in molecular diagnostics, the application of Sample to Insight solutions
for molecular testing in human healthcare. He was named Chief Executive
Officer in March 2020 after serving in this role on an interim basis, and
became a member of the Managing Board in 2021. Previously, Mr. Bernard
held roles of increasing responsibility during 15 years with bioMérieux SA,
most recently as Corporate Vice President, Global Commercial Operations,
Investor Relations and the Greater China Region. He also held senior
management roles in other leading international companies. He was named in
March 2023 as Chair of the AdvaMedDx Board of Directors, a U.S. industry
trade association. Mr. Bernard has earned degrees and certifications from
Sciences Po, LSE, the College of Europe, Harvard Business School, Centro de
Comercio Exterior de Barcelona, and has been appointed Conseiller du
Commerce Extérieur by the French government.
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Corporate Governance
roland_sackers.jpg
Roland Sackers
Chief Financial Officer
(1968, German)
Roland Sackers joined QIAGEN in 1999 as Vice President, Finance. He
became Chief Financial Officer in 2004, and joined the Managing Board in
2006. From 1995 to 1999, he was an auditor with Arthur Andersen
Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft. Since 2019, Mr.
Sackers has served on the Supervisory Board of Evotec SE, a publicly listed
company based in Germany, including as Chair of the Audit Committee since
2019 and as Vice Chair of the Supervisory Board since 2021. He is also a
member of the Board of the industry association BIO Deutschland. Mr. Sackers
earned his Diplom-Kaufmann from the University of Münster.
Sup ervisory Board
General
The Supervisory Board supervises the policies of the Managing Board, the
general course of our business and strategy for, among other things,
sustainable long-term value creation.
The Supervisory Board assists the Managing Board by providing advice
relating to the business activities of QIAGEN. Meetings are held in the absence
of the Managing Board for select topics at each regular meeting.
In discharging its duties, the Supervisory Board takes into account the interests
of QIAGEN and all stakeholders, including shareholders, in its aim to create
long-term value. The Supervisory Board is responsible for the quality of its own
performance, and conducts a self-evaluation on an annual basis. Our
Supervisory Board has specified matters requiring its approval, including
decisions and actions that would fundamentally change our assets, financial
position or results of operations.
The Supervisory Board has established four Committees - Audit, Compensation
& Human Resources, Nomination & ESG, and Science & Technology - from
among its members. Additional Committees can be established or existing
Committees modified in terms of charter as deemed beneficial. The Supervisory
Board has approved charters for each of these Committees. An overview of
these Committees and meeting attendance is provided below.
Composition and Appointment
The Supervisory Board consists of at least three members, or a larger number
as determined by the Joint Meeting. Members of the Supervisory Board are
appointed by the General Meeting upon the Joint Meeting having made a
binding nomination for each vacancy. However, the General Meeting may
overrule the binding nature of any nomination by a resolution adopted by at
least a two-thirds majority of the votes cast, if such majority represents more
than half of the issued share capital.
The Supervisory Board shall be composed in a way that enables it to carry out
its duties properly and enables its members to act critically and independently
of one another and of the Managing Board and any particular interests. As a
result, the Supervisory Board has adopted a profile in terms of its size and
composition that takes into account the nature of our business, activities and the
desired diversity, expertise and background of the Supervisory Board members.
The current profile of the Supervisory Board can be found on our website
( www.qiagen.com ). The Supervisory Board has appointed a Chair from its
members who has the duties assigned by the Articles of Association and the
Dutch Code.
Members of the Supervisory Board are appointed annually for the period
beginning on the day following the Annual General Meeting of our
shareholders up to and including the day of the Annual General Meeting held
in the following year. Members of the Supervisory Board may be suspended
and dismissed by the General Meeting by a resolution adopted by a two-thirds
majority of the votes cast, if such majority represents more than half of the
issued share capital, unless the proposal was made by the Joint Meeting, in
which case a simple majority of votes cast is sufficient.
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Corporate Governance
The composition of our Supervisory Board is diverse in gender, nationality,
background, knowledge and experience. The targeted profile of the
Supervisory Board is reflected in its regulations, which are published on our
website under “Supervisory Board.”
Independence
The NYSE listing standards require a majority of the Supervisory Board
Members to be independent, which is the case for QIAGEN.
Additionally, the Dutch Code distinguishes between certain independence
criteria that may be fulfilled by not more than one Supervisory Board Member
(e.g., prior employment with the Company, receiving personal financial
compensation from the Company, or having an important business relationship
with the Company) and other criteria that may not be fulfilled by more than the
majority of the Supervisory Board members. In some cases, Dutch
independence requirements are more stringent, such as by requiring a longer
“look back” period (five years) for former executives to become Supervisory
Board members.
In other cases, the NYSE rules are more stringent, such as having a broader
definition of disqualifying affiliations. The majority of members of our
Supervisory Board are currently considered “independent ” under both the
NYSE and Dutch requirements.
Supervisory Board Members
The following is a brief summary of Supervisory Board members for the year
ended December 31, 2023:
Lawrene_Rosen_7446_web_1200x675.jpg
Lawrence A. Rosen
Chair
Committees: Audit, Nomination & ESG (Chair),
Compensation & Human Resources
(1957, U.S.)
Lawrence A. Rosen joined the Supervisory Board in 2013 and was appointed
Chair in 2020. He is currently Chair of the Nomination & ESG Committee and
a member of the Audit Committee. Mr. Rosen also serves on the Supervisory
Boards of Lanxess AG and Deutsche Post AG, where he previously was a
member of the Board of Management and Chief Financial Officer from 2009 to
2016. He served as Chief Financial Officer of Fresenius Medical Care AG &
Co. KGaA from 2003 to 2009, and earlier as Senior Vice President and
Treasurer of Aventis SA in Strasbourg. A U.S. citizen, Mr. Rosen holds a
bachelor’s degree from the State University of New York and an MBA from the
University of Michigan.
Metin_Coplan_7558_web_1200x675.jpg
Dr. Metin Colpan
Committees: Science & Technology (Chair), Nomination & ESG
(1955, German)
Metin Colpan Ph.D. co-founded QIAGEN and served as its first Chief Executive
Officer and a Managing Director from 1985 to 2003. A member of the
Supervisory Board since 2004, Dr. Colpan is currently Chair of the Science &
Technology Committee and a member of the Nomination & ESG Committee.
Prior to co-founding QIAGEN, Dr. Colpan was an Assistant Investigator at the
Institute for Biophysics at the University of Düsseldorf. He has extensive
experience in Sample technologies, in particular the separation and purification
of nucleic acids, and has many patents in the field. Dr. Colpan obtained his
Ph.D. and master’s degree from the Darmstadt Institute of Technology.
Toralf_Haag_7496_web_1200x675.jpg
Dr. Toralf Haag
Committee: Audit (Chair and Financial Expert)
(1966, German)
Toralf Haag Ph.D. joined the Supervisory Board in 2021 and currently serves
as Chair of the Audit Committee. Dr. Haag is Chief Executive Officer and
Chairman of the Corporate Board of Management of Voith GmbH & Co.
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Corporate Governance
KGaA, a privately held German technology company. Before joining Voith as
Chief Financial Officer in 2016, Dr. Haag served for more than 11 years as
Chief Financial Officer and Member of the Executive Committee of Lonza
Group AG. Dr. Haag earned a degree in business administration from the
University of Augsburg and a Ph.D. from the University of Kiel.
Levine.jpg
Prof. Dr. Ross L. Levine
Committee: Science & Technology
(1972, U.S.)
Ross L. Levine M.D. joined the Supervisory Board in 2016 and serves on the
Science & Technology Committee. In 2021, he became Chair of QIAGEN’s
Scientific Advisory Board. A physician-scientist focused on researching and
treating blood and bone-marrow cancers, Dr. Levine is the Laurence Joseph
Dineen Chair in Leukemia Research, the Chief of Molecular Cancer Medicine
and an Attending Physician at Memorial Sloan Kettering Cancer Center, and
Professor of Medicine at Weill Cornell Medicine. Board-certified in internal
medicine and hematology-oncology, Dr. Levine received a bachelor’s degree
from Harvard College and his M.D. from The Johns Hopkins University School
of Medicine.
Elaine_Mardis_7356 1_web_1200x675.jpg
Prof. Dr. Elaine Mardis
Committees: Compensation & Human Resources, Science &
Technology
(1962, U.S.)
Elaine Mardis Ph.D. joined the Supervisory Board in 2014 and serves on the
Science & Technology Committee and the Compensation & Human Resources
Committee. Dr. Mardis is Co-Executive Director of the Steve and Cindy
Rasmussen Institute for Genomic Medicine at Nationwide Children’s Hospital in
Columbus, Ohio, and Professor of Pediatrics at The Ohio State University
College of Medicine. Previously, she was the Robert E. and Louise F. Dunn
Distinguished Professor of Medical Sciences at Washington University School of
Medicine and President of the American Association for Cancer Research. Dr.
Mardis is a scientific advisor to Scorpion Therapeutics LLC, an elected member
of the U.S. National Academy of Medicine, and a member of the Board of
Directors of Singular Genomics Systems, Inc., a publicly listed company based
in the U.S. Dr. Mardis received her bachelor’s degree and Ph.D. from the
University of Oklahoma.
Eva_Pisa_7247_web_1200x675.jpg
Dr. Eva Pisa
Committees: Compensation & Human Resources
(1954, Swedish/Swiss)
Eva Pisa Ph.D. joined the Supervisory Board in 2022 and serves on the
Compensation & Human Resources Committee. She is an advisor to several life
science and diagnostic companies through her company piMed Consulting,
and she previously held senior leadership positions in Roche Diagnostics
International from 2007 to 2020, most recently as Senior Vice President at
Roche Centralized and POC Solutions. Prior to joining Roche, she was Chief
Executive Officer of Sangtec Molecular Diagnostics AB, a Swedish start-up,
from 2001 to 2007. Dr. Pisa holds a Ph.D. from the Karolinska Institutet and an
MBA from Heriot-Watt University.
Steve-Rusckowski_16x9.jpg
Stephen H. Rusckowski
Committees: Compensation & Human Resources, Nomination
& ESG
(1957, U.S.)
Stephen H. Rusckowski joined the Supervisory Board in April 2023 and serves
on the Compensation & Human Resources Committee. He most recently served
as Chairman, President and Chief Executive Officer of Quest Diagnostics. He
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Corporate Governance
joined Quest Diagnostics as President and Chief Executive Officer in May
2012 and was named Chairman in 2016. He stepped down from his role as
President and CEO in 2022, and as Chairman in early 2023. Prior to joining
Quest Diagnostics, Mr. Rusckowski was CEO of Philips Healthcare, which he
joined in 2001 when Philips acquired the Healthcare Solutions Group that he
was leading at Hewlett-Packard/Agilent Technologies. Mr. Rusckowski also
serves on the Board of Directors of Baxter International Inc., and previously
served as a member of the Board of Directors of Xerox Holdings Corporation
and Covidien plc. He earned a bachelor’s degree in Mechanical Engineering
from Worcester Polytechnic Institute and a master’s in Management from the
Massachusetts Institute of Technology’s Sloan School of Management.
Elzabeth_Tallett_7535_web_1200x675.jpg
Elizabeth E. Tallett
Committees: Audit, Compensation & Human Resources (Chair),
Nomination & ESG
(1949, U.S./British)
Elizabeth E. Tallett joined the Supervisory Board in 2011. She is Chair of the
Compensation & Human Resources Committee and a member of the Audit
Committee and the Nomination & ESG Committee. Ms. Tallett is Chair of the
Board of Directors of Elevance Health, Inc., and a member of the Board of
Directors of Moderna, Inc., both publicly listed companies based in the U.S.
From 2002 to 2015, she was a Principal of Hunter Partners, LLC, a
management company for pharmaceutical, biotechnology and medical device
companies, and continues to consult with early-stage healthcare companies.
She previously served as President and Chief Executive Officer of Transcell
Technologies Inc.; President of Centocor Pharmaceuticals; a member of the
Parke-Davis Executive Committee, and Director of Worldwide Strategic
Planning for Warner-Lambert Company. A founding Board member of the
Biotechnology Council of New Jersey, Ms. Tallett received bachelor’s degrees
in mathematics and economics from the University of Nottingham.
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Corporate Governance
The following table outlines the current Supervisory Board members and a selection of their skills and experience:
Key competencies
Lawrence A.
Rosen (Chair)
Dr. Metin
Colpan
Dr. Toralf
Haag
Prof. Dr.
Ross L. Levine
Prof. Dr.
Elaine Mardis
Dr. Eva
Pisa
Stephen H.
Rusckowski
Elizabeth E.
Tallett
Year of Birth
1957
1955
1966
1972
1962
1954
1957
1949
Gender
Male
Male
Male
Male
Female
Female
Male
Female
Nationality
U.S.
German
German
U.S.
U.S.
Swedish / Swiss
U.S.
U.S. / British
Date of initial appointment*
2013
2004
2021
2016
2014
2022
2023
2011
Required competencies
Integrity
•
•
•
•
•
•
•
•
Ethics
•
•
•
•
•
•
•
•
Health
•
•
•
•
•
•
•
•
English language skills
•
•
•
•
•
•
•
•
Experience
•
•
•
•
•
•
•
•
Recommended competencies
Entrepreneur
•
•
•
•
Corporate management multinational
•
•
•
•
•
•
Currently full-time employed / active
•
•
•
Public reputation
•
•
•
•
•
•
•
•
Academic research
•
•
•
Industrial research
•
Diagnostics markets
•
•
•
•
•
Capital markets
•
•
•
•
•
Financial management
•
•
•
•
M&A, business development
•
•
•
•
•
•
Commercial operations
•
•
•
•
•
Public management (e.g., universities)
•
•
•
Regulatory / operations
•
•
•
•
•
*Supervisory Board members are reappointed annually, for one-year terms .
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Corporate Governance
Supervisory Board composition
The composition of our Supervisory Board is diverse in gender, nationality,
background, knowledge and experience. As of March 2024, the Board was
comprised of five men and four women. Four members are American, two are
German, one is U.K.-American, and one is Swedish-Swiss. Many have spent
considerable time during their careers living and working outside their home
countries in developing global management and leadership capabilities.
Following best practice 2.1.10 of the Dutch Corporate Governance Code, the
Supervisory Board establishes that its members are able to act critically and
independently of one another and of the Managing Board. To safeguard this,
the Supervisory Board is composed in such a way that all its members are
independent in the meaning of best practice 2.1.8 of the Dutch Corporate
Governance Code. As a result, the Supervisory Board confirms being of the
opinion that the independence requirements referred to in best practice 2.1.7
to 2.1.9 inclusive of the Dutch Corporate Governance Code have been fulfilled.
We further believe that all Supervisory Board members qualify as independent
under the independence standards set forth in the New York Stock Exchange
(NYSE) Listed Company Manual. Pursuant to the NYSE rules, a majority of the
Supervisory Board members must qualify as independent, as defined in the
Rules. The targeted profile of the Supervisory Board is reflected in its
regulations, which are published on our website under “Supervisory Board.”
Please refer to the discussion below under "Supervisory Board committees" for
information on the principal positions and relevant other positions held by
members of the Supervisory Board. Further detailed information is also
available on the company website at www.qiagen.com .
Supervisory Board meetings in 2023
The Supervisory Board held six meetings in 2023, with each member attending
all meetings. Of these meetings, five were held in person and one was held
virtually. All Managing Board members were also present for these Supervisory
Board meetings in 2023.
The Supervisory Board meetings and the Supervisory Board committee meetings
are held over a number of days, ensuring there is time for review and
discussion. At each meeting, the members discuss among themselves the goals
and outcome of the meeting, as well as topics such as the functioning and
composition of the Supervisory Board and the Managing Board.
Members of senior management are also regularly invited to provide updates
on topics within their area of expertise.
This gives the Supervisory Board the opportunity to get acquainted with a
variety of managers across QIAGEN, which the Supervisory Board considers
very useful in connection with its talent management and succession planning
activities.
The Supervisory Board also reviewed and discussed agenda items in the
absence of the Managing Board members in each meeting, such as
performance and strategy, as well as to discuss compensation matters.
Supervisory Board committees
The Board has four Committees to cover key areas in greater detail:
• Audit Committee
• Compensation & Human Resources Committee
• Nomination & ESG (Environment, Social and Governance) Committee
• Science & Technology Committee
The Supervisory Board can establish other committees as deemed beneficial.
Charters have been approved by the Supervisory Board under which each of
the committees operates. These charters are published on our website at
www.qiagen.com under "Supervisory Board."
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Corporate Governance
The following table outlines the committee membership and meetings attended
during 2023:
Meeting Attendance
Supervisory Board
Audit
Committee
Compensation &
Human Resources
Committee
Nomination &
ESG Committee
Science &
Technology
Committee
Lawrence A. Rosen
6/6
7/7
4/4
4/4 (Chair)
Dr. Metin Colpan
6/6
4/4
4/4 (Chair)
Thomas Ebeling (1)
3/3
3/3
Dr. Toralf Haag
6/6
7/7 (Chair)
Prof. Dr. Ross L. Levine
6/6
4/4
Prof. Dr. Elaine Mardis
6/6
6/6
4/4
Dr. Eva Pisa
6/6
6/6
Stephen H. Rusckowski (2)
5/5
3/3
Elizabeth E. Tallett
6/6
7/7
6/6 (Chair)
4/4
(1) Mr. Ebeling did not stand for re-appointment at the AGM in June 2023.
(2) Mr. Rusckowski joined the Supervisory Board in April 2023.
Audit Committee
The Audit Committee members are appointed annually by the Supervisory
Board for one-year terms. In 2023, the Audit Committee consisted of three
members and met at least quarterly during during the year. We believe that all
members of this Committee meet the independence requirements as set forth in
Rule 10A-3 of the Securities Exchange Act of 1934, as amended, and the New
York Stock Exchange Listed Company Manual.
The Supervisory Board has designated Dr. Toralf Haag as an “audit committee
financial expert” as that term is defined in the U.S. Securities and Exchange
Commission rules adopted pursuant to the Sarbanes-Oxley Act of 2002, and as
referred to in the Dutch Decree on Audit Committees ( Besluit instelling
auditcommissie ).
The Committee performs a self-evaluation of its activities on an annual basis.
The Committee's primary duties and responsibilities include, among other
things, to serve as an independent and objective party to monitor QIAGEN's
accounting and financial reporting process, control and compliance systems
and internal risk management, including risks related to cyber security. This
Committee also is directly responsible for proposing the external auditor to the
Supervisory Board, which then proposes the appointment of the external auditor
to the Annual General Meeting.
Furthermore, this Committee is responsible for the compensation and oversight
of QIAGEN’s external auditor and for providing an open avenue of
communication among the external auditor as well as the Managing Board and
the Supervisory Board. Our Internal Audit and Compliance functions operate
under the direct responsibility of the Audit Committee. Additionally, this
Committee is responsible for establishing procedures to allow for the
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confidential and or anonymous submission by employees of concerns, including
the receipt, retention and treatment of submissions received regarding
accounting, internal accounting controls, or auditing matters.
The Audit Committee met seven times in 2023 , and also met with the external
auditor excluding members of the Managing Board in August 2023 . The
Committee discussed, among other matters, the following topics, and provided
updates to the Supervisory Board:
• the adequacy of our financial accounting (including reporting principles and
policies), financial and operating controls and procedures with the external
auditor and management;
• consideration and approval of any recommendations regarding changes to
our accounting principles, policies and processes;
• reviewed with management and the external auditor our quarterly earnings
reports prior to their public release;
• reviewed the quarterly and annual reports (reported on Forms 6-K and 20-F)
to be furnished to or filed with the U.S. Securities and Exchange Commission
and the Deutsche Boerse in Germany;
• reviewed the annual report to be filed with the Dutch Authority for the
Financial Markets; and
• reviewed major risk exposures (including cyber security) and reviewed any
legal matter including compliance topics that could have a significant impact
on the financial statements.
Compensation & Human Resources Committee
The Compensation & Human Resources Committee currently consists of four
members that are appointed annually by the Supervisory Board for one-year
terms.
Its primary duties and responsibilities include, among other things, oversight of
our programs, policies and practices related to the management of human
capital resources, including talent management, culture, diversity and inclusion;
the preparation of a proposal to the Supervisory Board regarding the
Remuneration Policy for the Managing Board and Supervisory Board and
proposal for adoption by the General Meeting; preparation of a proposal
concerning the individual compensation for Managing Board members to be
adopted by the Supervisory Board; and preparation of the Remuneration Report
that outlines compensation for the Managing Board and Supervisory Board
members to be adopted by the Supervisory Board, and submitted to the Annual
General Meeting for an advisory vote in accordance with Dutch law. The
Remuneration Report outlines the implementation of the Remuneration Policies
for the most recent year.
This Committee engaged during 2023 with external consultants to ensure that
the overall remuneration levels are benchmarked regularly against a selected
group of companies and key markets in which QIAGEN operates.
The Compensation & Human Resources Committee met six times in 2023 . The
Committee discussed, among other matters, the following topics, and provided
updates to the Supervisory Board:
• policies and practices related to management of human capital resources
including talent management and diversity;
• review and approve all share-based compensation;
• review and approve the annual salaries, bonuses and other benefits of the
Executive Committee, and
• review of general policies relating to employee compensation and benefits.
Nomination & ESG Committee
The Nomination & ESG Committee currently consists of three members that are
appointed by the Supervisory Board annually for one-year terms.
Its primary responsibilities include, among other things, preparing the selection
criteria and appointment procedures for members of the Supervisory Board and
Managing Board; periodically evaluating the scope and composition of the
Managing Board and Supervisory Board; periodically evaluating the
functioning of individual members of the Managing Board and Supervisory
Board, and reporting these results to the Supervisory Board; proposing
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(re-)appointments of members of the Supervisory Board and Managing Board;
conducting periodic evaluations of QIAGEN's ESG (Environmental, Social and
Governance) policies and related public disclosures; and periodically
reviewing the Corporate Governance structure in line with applicable legal
requirements and recommend changes to the Supervisory Board.
The Nomination & ESG Committee met four times in 2023 . The Committee
discussed, among other matters, the following topics, and provided updates to
the Supervisory Board:
• the nomination of Stephen H. Rusckowski as a new member of the
Supervisory Board;
• an annual evaluation on the scope and composition of the Managing Board
and the Supervisory Board, including the profile of the Supervisory Board as
well as the functioning of individual members of Boards;
• proposals for the (re-)appointment of members of the Managing Board and
Supervisory Board, and supervised the Managing Board in relation to the
selection and appointment criteria for senior management;
• the search and selection process for new members and succession planning
considerations for the Supervisory Board, Managing Board, Executive
Committee and other senior management positions, taking into account
short-, medium- and longer-term perspectives;
• the preparation of the Supervisory Board self-evaluation process, which
involved an external expert; and
• regular updates on the progress of our ESG programs, including a review
and discussion of the Gender Diversity Policy.
Science & Technology Committee
The Science & Technology Committee currently consists of three members that
are appointed annually by the Supervisory Board for one-year terms. The
Committee works with the Scientific Advisory Board, which was established in
2021 to provide early evaluation of market and technology developments that
could have an influence on QIAGEN’s development and positioning in the Life
Sciences and Molecular Diagnostics.
The Committee's primary responsibilities include, among other things, reviewing
and monitoring research and development projects, programs, budgets, and
infrastructure management; and overseeing the management risks related to our
portfolio and information technology platforms.
This Committee met four times in 2023 . The Committee discussed, among other
matters, the following topics, and provided updates to the Supervisory Board:
• discussions to gain understanding, clarification and validation of the
fundamental technical basis of our businesses in order to enable the
Supervisory Board to make informed, strategic business decisions and vote
on related matters; and
• guided the Managing Board to ensure that QIAGEN can develop and
leverage powerful, world-class science to create value for our stakeholders,
including shareholders.
Stakeholder management as a central responsibility
The Supervisory Board acts in accordance with the interests of the company
and the business connected with it, taking into consideration the interests of our
stakeholders. The members of the Supervisory Board are in regular close
contact with the Managing Board members, and the same applies to the
members of the Audit Committee.
In 2023, five of the six Supervisory Board meetings were in-person. The in-
person meetings were held at various QIAGEN sites that provided the
opportunity to interact with QIAGEN employees. These meetings also enabled
the Supervisory Board to receive information on relevant topics from senior
leaders and experts, both internally and externally, during committee meetings,
full Supervisory Board meetings, and also as part of their ongoing professional
education.
Direct, one-to-one contact between Supervisory Board members and Managing
Board and Executive Committee members generally builds on the topics
discussed in the meetings of the Supervisory Board. These discussions draw on
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the expertise of individual Supervisory Board members, whose advice is sought
on a wide range of topics.
The Supervisory Board takes an active interest in maintaining a good
understanding of our stakeholders and their positions on various topics related
to QIAGEN’s areas of business. This includes the perceptions of our
shareholders, which is received through direct interaction and calls with major
institutional shareholders. The Supervisory Board is also informed of the
position of the range of QIAGEN stakeholders by the Managing Board and
other senior managers. In addition, the Supervisory Board members collect
information through their own individual networks, and this is shared with other
Board members and the Managing Board.
Role of the Supervisory Board
The Supervisory Board has the task of supervising the activities of the
Managing Board and the general affairs of QIAGEN, including:
• the achievement of corporate objectives;
• the strategy and the risks inherent in the business activities;
• the structure and operation of the internal risk management and control
systems;
• the financial and sustainability reporting process; and
• the observance of good corporate governance.
Throughout 2023, the Supervisory Board agenda was centered around the
strategy and its execution, financial and operational performance, business
developments, risk management, and people and organization. Based on the
strategic priorities for QIAGEN as agreed in the annual strategy review, several
topics were extensively discussed by means of deep dives, allowing a focused
and in-depth review.
With the strong demand for QIAGEN’s products in combination with the
Company’s focus on the execution of its strategic priorities, the Supervisory
Board has confidence in QIAGEN’s long-term growth opportunities and the
continued delivery of value to its stakeholders. As part of the annual strategy
review, we held dedicated discussions focused on QIAGEN’s strategy, in
particular the Five Pillars of Growth. An in-depth review was performed of the
short-, medium- and long-term market developments in the markets served by
QIAGEN and the related plans to meet customer demands. Additional sessions
were focused on longer-term growth opportunities. In line with our overall
strategy, the Supervisory Board also regularly discusses M&A strategy and
relevant developments within our sectors. The Supervisory Board was regularly
informed and kept up to date on the process of reviewing potential M&A
targets during the year. These sessions enable an engaged and focused
discussion between the Supervisory Board and Managing Board on key
strategic matters, and we highly value this way of contributing to the strategic
decision-making process.
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Board-Related Matters
Diversity within the Managing Board and Supervisory Board
On January 1, 2022, a new Dutch gender diversity bill became effective.
Although it does not apply to Dutch companies listed outside of the
Netherlands, the gender diversity bill imposes new requirements on so-called
"large" companies such as QIAGEN to formulate appropriate and ambitious
gender balance targets for the Supervisory Board, Managing Board and senior
management.
Accordingly, we have established gender balance targets that we consider
appropriate and ambitious as follows:
• Our objective is for at least 40% of the Supervisory Board members to be
women and at least 40% men in the mid-term. To achieve this goal, gender
diversity is one of the key selection criteria for new members. As of
December 31, 2023, the Supervisory Board was comprised of 37.5%
women, and in early 2024 the Supervisory Board was expanded with 40%
of the members being women.
• Our current Managing Board consists of two members, the CEO and the
CFO, who are ultimately accountable for the actions and decisions of
QIAGEN. If there is a change of a current Managing Board member, an
expansion in the number or a change in the governance structure, we will
seek to have at least 30% women as members and at least 30% men. We
will consider internal candidates from QIAGEN’s senior management who
fulfill the desired profile for any open position or by defining selection
criteria for new hires that include, among other factors, gender diversity.
• In senior management, our goal is to have at least 40% women and 40%
men in these roles in the mid-term. To achieve this goal, gender diversity is a
goal that is part of our annual Team Goals, as well as a priority in our
recruiting practices and talent development programs. As of December 31,
2023, 36% of senior management roles were held by women, having
increased from 28% in 2018.
Although we are not subject to quota requirements for gender diversity within
the Managing Board and Supervisory Board, we support the trend toward
higher participation of women. At the same time, QIAGEN believes that gender
is only one aspect of diversity and strives to ensure a diverse composition in
terms of factors such as age, nationality, public reputation, industry or
academic experience, etc.
We are committed to increasing diversity while pursuing individuals for these
Boards and senior management roles who offer a unique blend of scientific and
commercial expertise combined with leadership capabilities that will contribute
to the future success of QIAGEN. Management development programs support
the career advancement of leaders regardless of gender and other factors. As a
result, the number of women in key leadership roles, particularly in commercial
and operational positions, has increased within QIAGEN in recent years. In
line with this commitment, our Nomination & ESG Committee will continue to
select future members for the Managing Board and Supervisory Board with due
observance of its aim to ensure a diverse leadership team on the basis of
gender, but also on the basis of other factors - all without compromising our
commitment to hiring the best individuals for those positions. More information
about diversity at QIAGEN can be found below under the section Dutch
Culture
We have a culture at QIAGEN deeply embedded with a commitment to
quality, ingenuity and accessibility - all aligned with our QIAGEN brand values
- to help our customers advance science and improve outcomes for patients
around the world.
This commitment is reflected in our EMPOWER culture that seeks to empower
employees to take ownership – with accountability – in making decisions in the
best interests of QIAGEN, our customers and other stakeholders.
This culture is additionally reflected in our approach to compensation in
rewarding performance in terms of "what" goals are achieved as well as
"how" they are achieved in terms of our cultural aspirations.
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Checks and balances are in place to guide the ethical standards and healthy
business practices we adhere to:
(i) Our Corporate Code of Conduct and Ethics that reflects the highest
standards;
(ii) Our QIAintegrity Line, a web based, independent, impartial and
confidential reporting tool that provides employees and third parties the
opportunity to report misconduct within our Company or in our supply chain;
and
(iii) Our Compliance Committee that consists of senior executives from various
functions responsible for ensuring compliance with our Corporate Code of
Conduct and Ethics.
Conflicts of Interest, Loans or Similar Benefits
Resolutions to enter into transactions under which members of the Managing
Board or Supervisory Board could have a conflict of interest with QIAGEN, and
which may have a material significance to either QIAGEN or a member, must
be reported for review and approval by the Supervisory Board.
In 2023 , neither QIAGEN nor any of its Supervisory Board members entered
into any such transactions.
No credit, loans or similar benefits were granted to members of the Managing
Board or Supervisory Board.
Additionally, the Managing Board and Supervisory Board members did not
receive any benefits from third parties that were either promised or granted in
view of their position with QIAGEN.
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Shareholder Mee tings and Shar e Capital
Shareholder Meetings
Our Shareholders exercise their voting rights through the Annual General
Meeting, and also through any Extraordinary General Meeting that may be
called.
Resolutions at a General Meeting are adopted by an absolute majority of votes
cast, unless a different majority of votes or quorum is required by Dutch law or
the Articles of Association. Each Share confers the right to cast one vote.
Furthermore, the Managing Board, or where appropriate the Supervisory
Board, shall provide all shareholders and other stakeholders with equal and
simultaneous public information about any matters deemed to be materially
relevant and could significantly influence QIAGEN's Share price.
QIAGEN is required to convene an Annual General Meeting in the
Netherlands no later than six months following the end of each year. The
agenda must contain certain matters as specified in our Articles of Association
and under Dutch law, including, among other things, the adoption of the
Annual Financial Statements.
Additional Extraordinary General Meetings may be convened at any time by
the Managing Board, the Supervisory Board, or by one or more shareholders
jointly representing at least 40% of the issued share capital. Furthermore, one
or more shareholders who jointly represent at least 10% of QIAGEN's issued
share capital may, on their application, be authorized by a District Court Judge
in the Netherlands to convene a General Meeting.
Shareholders are entitled to propose items for the agenda provided that they
hold at least 3% of the issued share capital.
Proposals for agenda items must be submitted at least 60 days prior to the
General Meeting date. The notice convening a General Meeting, accompanied
by the agenda, shall be sent no later than 42 days prior to the meeting date.
QIAGEN informs the General Meeting by means of explanatory notes to the
agenda, providing all information relevant to the proposed resolutions.
Pursuant to the Dutch Code, all transactions between QIAGEN and legal or
natural persons who hold at least 10% of the shares in the Company shall be
agreed on terms that are customary to our industry. Decisions to enter into
transactions in which there are considered to be conflicts of interest of material
significance to the Company and/or to the people involved require the
approval of the Supervisory Board. QIAGEN did not enter into any such
transaction in 2023.
Furthermore, pursuant to the Dutch implementation of the Shareholders Rights
Directive II (SRD II), certain material transactions with related parties (in the
meaning of the standards adopted by the International Accounting Standards
Board and approved by the European Commission) require the approval of the
Supervisory Board, or, if all Supervisory Board members are involved in such
transactions, the General Meeting of Shareholders.
Major Shareholders
The following table sets forth certain information concerning the ownership of
our Shares by holders with at least 5% ownership. None of these holders have
any different voting rights than other shareholders.
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Name and country of residence
Shares beneficially owned
Number
Percent ownership (1)
BlackRock, Inc., United States and United Kingdom
27,411,334
(2)
12.01 %
Massachusetts Financial Services Company, United States and Canada
24,066,569
(3)
10.55 %
(1) The percentage ownership was calculated based on 228,202,755 Common Shares outstanding as of December 31, 2023 .
(2) Of the 27,411,334 shares attributed to BlackRock, Inc., it has sole voting power over 25,864,730 and sole dispositive power over all 27,411,334 shares. This information is based solely on the Schedule
13G filed by BlackRock, Inc. with the Securities and Exchange Commission on January 23, 2024, which reported ownership as of December 31, 2023 .
(3) Of the 24,066,569 shares attributed to Massachusetts Financial Services Company, it has sole voting power over 20,451,464 and sole dispositive power over all 24,066,569 shares. This information is
based solely on the Schedule 13G filed by Massachusetts Financial Services Company with the Securities and Exchange Commission on February 9, 2024, which reported ownership as of December 31,
2023 .
Control of Registrant
To our knowledge, QIAGEN is not directly or indirectly owned or controlled by
another corporation, by any foreign government, or by any other natural or
legal person.
As of January 31, 2024, the officers and directors of QIAGEN as a group
beneficially owned 0.9 million Shares, or 0.4% of outstanding Shares.
Holders of any securities with special control rights
Not applicable.
System of control of any employee share scheme where the
control rights are not exercised directly by the employees
Not applicable.
Restrictions on voting rights
At the General Meeting, each Share shall confer the right to cast one vote,
unless otherwise provided by law or our Articles. No votes may be cast in
respect of Shares that we or our subsidiaries hold, or by usufructuaries and
pledgees.
All shareholders and other persons entitled to vote at General Meetings are
entitled to attend General Meetings, to address the meeting and to vote.
They must notify the Managing Board in writing of their intention to be present
or represented no later than on the third day prior to the day of the General
Meeting, unless the Managing Board permits notification within a shorter
period of time prior to the Meeting. Subject to certain exceptions, resolutions
may be passed by a simple majority of the votes cast.
Agreements between shareholders known to the Company and
may result in restrictions on the transfer of securities and/or
voting rights
Not applicable.
Rules governing the appointment and replacement of Board
members and amendments of the Articles of Association
Supervisory Board and Managing Board members are appointed annually for
the period beginning on the day following the Annual General Meeting up to
and including the day of the Annual General Meeting held the following year.
Managing Board members shall be appointed by the General Meeting upon
the Joint Meeting having made a binding nomination. However, the General
Meeting may overrule the binding nature of a nomination by a resolution
adopted by at least a two-thirds majority of the votes cast, if such majority
represents more than half the issued share capital. This is different from the
provisions of many U.S. corporate statutes, including the Delaware General
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Corporation Law, which give the directors of a corporation greater authority in
choosing the executive officers.
Under our Articles, the General Meeting may suspend or dismiss a Managing
Board member at any time. The Supervisory Board shall also be entitled at all
times to suspend (but not to dismiss) a Managing Director. The Articles also
provide that the Supervisory Board may adopt management rules governing the
internal organization of the Managing Board.
The Supervisory Board members shall be appointed by the General Meeting
upon the Joint Meeting having made binding nominations. If a vacancy occurs
in the Supervisory Board during the year, the Supervisory Board may appoint a
new member who will cease to hold office at the next Annual General Meeting,
where this member may stand for appointment to a one-year term along with
other Supervisory Board and Managing Board members.
Under Dutch law, in the event that there is a conflict of interest between a
Supervisory Board member and QIAGEN involving our business, the involved
Supervisory Board member shall not participate in the discussions and voting
on that matter. Additionally, the Dutch law stipulates that a Supervisory or
Managing Board member should report any conflict of interest or potential
conflict of interest in a transaction that is of material significance to the
Company and/or to the member to the Chair of the Supervisory Board without
delay. The Supervisory Board should decide, outside the presence of the
involved Supervisory Board member, whether there is a conflict of interest. If all
Supervisory Board members have a conflict of interest, the relevant resolution
shall be voted on by the General Meeting. Decisions to enter into transactions
under which a Supervisory Board member has a conflict of interest require the
approval of the Supervisory Board.
The Nomination & ESG Committee is primarily responsible for the preparation
of selection criteria and appointment procedures for members of the
Supervisory Board and Managing Board as well as the periodic evaluation of
the scope and composition of the two Boards, including the profile of the
Supervisory Board. It also proposes the (re-)appointments of the members for
both Boards and supervises the policy of our Managing Board in relation to
selection and appointment criteria for senior management.
A resolution of the General Meeting to amend our Articles, dissolve QIAGEN,
issue shares or grant rights to subscribe for shares or limit or exclude any pre-
emptive rights to which shareholders shall be entitled is valid only if proposed
to the General Meeting by the Supervisory Board.
A resolution of the General Meeting to amend our Articles is further only valid if
the complete proposal has been made available for inspection by the
shareholders and the other persons entitled to attend General Meetings at our
offices as from the day of notice convening such meeting until the end of the
meeting. A resolution to amend our Articles to change the rights attached to the
shares of a specific class requires the approval of the relevant class meeting.
Powers of Board members, including to issue or buy back shares
The Managing Board manages QIAGEN and is responsible for defining and
achieving QIAGEN’s aims, strategy, policies and results. It is also responsible
for complying with all relevant legislation and regulations, as well as for
managing the risks associated with our business activities and financing
requirements.
The Managing Board provides the Supervisory Board with timely information
necessary for the exercise of the duties of the Supervisory Board, and takes into
account the interests of QIAGEN, its enterprises and all parties involved in
QIAGEN, including shareholders and other stakeholders.
Supervisory Board members have the powers assigned to them by Dutch law,
the Articles of Association and in certain cases powers assigned by the General
Meeting.
The Supervisory Board assists the Managing Board by providing advice
relating to the business activities and strategy. In discharging its duties, the
Supervisory Board also takes into account the interests of QIAGEN, its
enterprise and all parties involved in QIAGEN, including shareholders and
other stakeholders.
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On June 22, 2023, the General Meeting authorized the Supervisory Board
until December 22, 2024 (i), to issue a number of ordinary shares and
financing preference shares and grant rights to subscribe for such shares, the
aggregate par value of which shall be equal to the aggregate par value of fifty
percent (50%) of the shares issued and outstanding in the capital of the
Company as at December 31, 2022, as included in the Annual Accounts for
Calendar Year 2022 and (ii) to restrict or exclude the pre-emptive rights with
respect to issuing ordinary shares or granting subscription rights, the aggregate
par value of such shares or subscription rights shall be up to a maximum of ten
percent (10%) of the aggregate par value of all shares issued and outstanding
in the capital of the Company as at December 31, 2022.
We may acquire our own shares, subject to certain provisions of Dutch law and
our Articles, if (i) shareholders’ equity less the payment required to make the
acquisition does not fall below the sum of paid-up and called-up capital and
any reserves required by Dutch law or the Articles, and (ii) we and our
subsidiaries would not thereafter hold shares with an aggregate nominal value
exceeding half of our issued share capital. Shares that we hold in our own
capital or shares held by one of our subsidiaries may not be voted. The
Managing Board, subject to the approval of the Supervisory Board, may effect
the acquisition of shares in our own capital. Our acquisitions of shares in our
own capital may only take place if the General Meeting has granted to the
Managing Board the authority to effect such acquisitions. Such authority may
apply for a maximum period of eighteen months and must specify the number
of shares that may be acquired, the manner in which shares may be acquired
and the price limits within which shares may be acquired. Dutch corporate law
allows for the authorization of the Managing Board to purchase a number of
shares equal to up to 50% of the Company’s issued share capital on the date
of the acquisition. On June 22, 2023, the General Meeting resolved to extend
the authorization of the Managing Board in such manner that the Managing
Board may cause us to acquire shares in our own share capital, for an 18-
month period beginning June 22, 2023, until December 23, 2024, without
limitation at a price between one euro cent ( EUR 0.01 ) and one hundred ten
percent (110%) of the higher of the average closing price of our shares on the
New York Stock Exchange or, as applicable, the Frankfurt Stock Exchange, for
the five trading days prior to the day of purchase, or, with respect to Preference
and Finance Preference shares, against a price between one euro cent ( EUR
0.01 ) and three times the issuance price and in accordance with applicable
provisions of Dutch law and our Articles.
Significant agreements to which the Company is a party and
which take effect after or terminate upon a change of control of
the Company following a takeover bid
Certain other provisions of our Articles allow us, under certain circumstances, to
prevent a third party from obtaining a majority of the voting control of our
Common Shares through the issuance of Preference Shares. Pursuant to our
Articles and the resolution adopted by our General Meeting, our Supervisory
Board is entitled to issue Preference Shares in case of an intended takeover of
our company by (i) any person who alone or with one or more other persons,
directly or indirectly, have acquired or given notice of an intent to acquire
(beneficial) ownership of an equity stake which in aggregate equals 20% or
more of our share capital then outstanding or (ii) an “adverse person” as
determined by the Supervisory Board. If the Supervisory Board opposes an
intended takeover and authorizes the issuance of Preference Shares, the bidder
may withdraw its bid or enter into negotiations with the Managing Board and/
or Supervisory Board and agree on a higher bid price for our Shares.
In 2004 (as amended in 2012), we granted an option to the Stichting
Preferente Aandelen QIAGEN (the “Foundation” (Stichting)), whereby the
exercise of the option by the Foundation is subject to the conditions described
in the paragraph above and which option allows the Foundation to acquire
preference shares from us. The option enables the Foundation to acquire such
number of preference shares as equals the number of our outstanding common
shares at the time of the relevant exercise of the right less one share. When
exercising the option and exercising its voting rights on such shares, the
Foundation must act in our interest and the interests of our stakeholders. The
purpose of the Foundation option is to prevent or delay a change of control that
would not be in the best interests of us and our stakeholders. An important
restriction on the Foundation’s ability to prevent or delay a change of control is
that issuing (preference or other) protective shares enabling the Foundation to
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Corporate Governance
exercise 30% or more of the voting rights without the obligation to make a
mandatory offer for all shares held by the remaining shareholders, is only
allowed after a public offer has been announced by a third party. In addition,
the holding of such a block of shares by the Foundation is restricted to two
years and, as a consequence, the size of the protective stake will need to be
decreased below the 30% voting rights threshold before the two-year period
lapses.
Pursuant to our stock plans, the vesting and exercisability of certain stock rights
will be accelerated in the event of a change of control, as defined in the
agreements under the 2014 and 2023 Stock Plans. Further, certain of our
employment contracts contain provisions which guarantee the payments of
certain amounts in the event of a change in control, or if the executive is
terminated for reasons other than cause, as defined in the agreements.
Agreements between the Company and its Board members
or employees providing for compensation in case of resignation
or termination without valid reason or if employment ceases
due to a change of control
The Managing Board members are appointed annually to one-year terms by
the General Meeting based on the nomination of the Joint Meeting. Further, the
Managing Board members have entered into employment agreements with
QI AGEN N.V. and other QIAGEN affiliates. The terms of these agreements
vary for each Managing Board member due to individual arrangements, and
these go beyond the one-year term of appointment as Managing Directors.
These agreements cannot be terminated without cause and, absent such cause,
have to be fulfilled under the terms. These agreements contain provisions that
guarantee certain pa yments in the event of a change in control, as defined in
the agreements. There are no arrangements for any extra compensation in case
of resignation or termination.
The Supervisory Board members are also appointed annually by the General
Meeting based on the nomination of the Joint Meeting.
There are no additional employments in place and there are no arrangements
for any extra compensation in case of resignation or termination.
The General Meeting determines the remuneration of the members of the
Supervisory Board.
Reporting in accordance with Directive 2004/25/EC of the
European Parliament and of the Council of April 21, 2004, on
takeover bids
Not applicable
Structure of our capital, including securities which are not
admitted to trading on a regulated market in a Member State of
the European Union
The authorized classes of our shares consist of common shares, Financing
Preference Shares and Preference Shares. No Financing Preference Shares or
Preference Shares have been issued.
As of December 31, 2023 , a total of approximately 228.2 million Common
Shares were outstanding along with approximately 4.0 million additional
shares reserved for issuance upon the vesting of outstanding stock awards.
Additionally, convertible debt issued in 2020 and Warrants issued as part of
the Call Spread Overlay discussed further in Note 16 "Financial Debts" cover
an aggregate of 17.1 million underlying shares of common stock or up to a
maximum of 27.0 million shares, subject to customary adjustments under
certain circumstances.
Shares - restrictions on the transfer of securities
Our Shares are issued in registered form only. No Share certificates are issued
for our Shares, which are registered in either our Shareholders Register with
Equiniti Trust Company, LLC, our transfer agent and registrar in New York, or
our shareholder register with TMF Fund Services B.V., Westblaak 89, 3012 KG
Rotterdam, the Netherlands.
The transfer of registered Shares requires a written instrument of transfer and
the written acknowledgment of such transfer by QIAGEN or the New York
Transfer Agent (in our name).
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Anti-Takeover Measures
In 2004, the Supervisory Board granted an option to the Dutch Foundation
Stichting Preferente Aandelen QIAGEN that allows the Foundation to acquire
preference shares from QIAGEN if (i) a person has (directly or indirectly)
acquired or has expressed a desire to acquire more than 20% of our issued
share capital, or (ii) a person holding at least a 10% interest in the share
capital has been designated as a hostile person by our Supervisory Board. The
option enables the Foundation to acquire preference shares equal to the
number of our outstanding common shares at the time of the relevant exercise
of the right, less one share. When exercising the option and exercising its
voting rights on these shares, the Foundation must act in the interest of QIAGEN
and the interests of our stakeholders. No preference shares are currently
outstanding.
A d dit io na l I nf ormation
Cyber Security
Cyber security risks are managed at multiple levels throughout the Company
and are considered in the context of our overall Enterprise Risk Management as
discussed under Risks and Risk Management. Cyber security risks facing our
business that are reasonably likely to materially affect us, including our business
strategy, results of operations or financial condition, are described in Risks and
In the last three years through the date of this annual report, there have been no
breaches of cyber security or other related risk threats that have or are
reasonably likely to have, a material impact to our business. We have not
incurred any material expenses and have not incurred any penalties or
settlements.
Cyber Security Risk Management and Strategy
Embedded in our risk management strategy, we maintain a comprehensive
cyber security program to identify and assess material risks, including external
threats, to ensure the confidentiality and integrity of our information assets, and
to ensure our IT systems operate effectively. Reporting to our Chief Financial
Officer, our Chief Information Security Officer (CISO) is responsible for our
enterprise and cyber risk management and leads our cyber security program. A
subject-matter expert with more than a decade of experience leading
information security programs, our CISO is supported by a global team of
security professionals. These security professionals focus on information security
and evaluate our global processes and relevant cyber security threats. The
severity and materiality of incidences are address through an incident reporting
process, and if necessary are escalated internally to senior management, which
assesses the need for public disclosure.
Our cyber security program includes robust testing and training and we engage
third parties in connection with such processes to ensure the effectiveness of our
cyber security controls. Additionally, relevant third-party service providers are
subject to cyber security review. Further details are discussed under Data and
Cyber Security Governance
The Managing Board is ultimately responsible for cyber security management,
which is overseen by our Audit Committee, a committee of our Supervisory
Board. The CISO reports to the Audit Committee on cyber security risks and
incidents. This reporting includes an update on cyber risk management, internal
security awareness testing results, cyber incident response, and planned
improvements. In the event of a material incidence, the Audit Committee would
be informed in a timely manner and kept updated regarding the mitigation and
remediation of such incidence, and would be involved in the assessment of any
public disclosure.
Stock Plans
The stock plan is administered by the Compensation & Human Resources
Committee of the Supervisory Board, which selects participants from among
eligible employees, consultants and directors, and determines the number of
shares subject to the stock-based award, the length of time the award will
remain outstanding, the manner and time of the award's vesting, the price per
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Corporate Governance
share subject to the award, and other terms and conditions of the award
consistent with the Plan. The Compensation & Human Resources Committee's
decisions are subject to the approval of the Supervisory Board.
The Compensation & Human Resources Committee has the power, subject to
Supervisory Board approval, to interpret the plans and to adopt such rules and
regulations (including the adoption of “sub plans” applicable to participants in
specified jurisdictions) as it may deem necessary or appropriate. The
Compensation & Human Resources Committee or the Supervisory Board may at
any time amend the plans in any respect, subject to Supervisory Board
approval, and except that (i) no amendment that would adversely affect the
rights of any participant under any option previously granted may be made
without such participant's consent, and (ii) no amendment shall be effective
prior to shareholder approval to the extent such approval is required to ensure
favorable tax treatment for incentive stock options or to ensure compliance with
Rule 16b-3 under the United States Securities Exchange Act of 1934, as
amended (the Exchange Act) at such times as any participants are subject to
Section 16 of the Exchange Act.
On June 22, 2023, our shareholders approved the QIAGEN N.V. 2023 Stock
Plan, which will replace the 2014 Stock Plan in May 2024. Further detailed
information regarding stock options and awards granted under the plan can be
found in Note 22 "Share-Based Compensation" included in the Consolidated
Financial Statements.
Whistleblower Policy and Corporate Code of Conduct and Ethics
We have a formal Whistleblower Policy concerning the reporting of alleged
irregularities within QIAGEN of a general, operational or financial nature.
Furthermore, we have a published Corporate Code of Conduct and Ethics that
outlines business principles for our employees and rules of conduct. The
Corporate Code of Conduct and Ethics can be found on our website at
www.qiagen.com .
Insider Trading Policy
Dealings in our Shares based on material non-public information about
QIAGEN is strictly prohibited under U.S. and German securities laws.
These laws are complex and penalties can be severe. In order to protect
QIAGEN and its employees from such sanctions, we have adopted an Insider
Trading Policy that outlines basic rules, including procedures governing any
dealings in our Shares, that apply to potential Insiders (individuals with
knowledge of non-public material information) and holders of QIAGEN Shares
(including stock options and Restricted Stock Units). The Insider Trading Policy
applies to the Supervisory Board, Managing Board, and all employees of
QIAGEN N.V. and its subsidiaries.
Clawback Policy
To create and maintain a culture that emphasizes integrity and accountability
and that reinforces our pay-for-performance compensation philosophy, the
Managing Board and Supervisory Board adopted a policy which provides for
the recoupment of certain executive compensation in the event of an accounting
restatement resulting from material non-compliance with financial reporting
requirements under the federal securities laws (Clawback Policy). The
Clawback Policy applies to our current and former executive officers, as
determined by the Supervisory Board, in accordance with the requirements of
Section 10D of the Exchange Act and any applicable rules or standards
adopted by the SEC and any national securities exchange on which our
securities are listed, and such other employees who may from time to time be
deemed subject to the Clawback Policy by the Supervisory Board.
Independent Auditors
In accordance with the requirements of Dutch law, our independent auditor for
our statutory consolidated financial statements prepared in accordance with
International Financial Reporting Standards as adopted by the European Union
and filed with the Netherlands Authority for the Financial Markets (AFM), is
appointed, and may be removed by, the General Meeting. The Supervisory
Board nominates a candidate for the appointment as external auditor, for
which the Audit Committee advises the Supervisory Board. At the Annual
General Meeting in 2023 , KPMG Accountants N.V. was appointed as external
auditor for the Company for the 2023 year. The external auditor is invited to
attend the meeting of the Supervisory Board at which the statutory financial
statements prepared in accordance with International Financial Reporting
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Corporate Governance
Standards and filed with the AFM shall be approved and is furthermore invited
to attend the General Meeting at which the statutory financial statements are
adopted, and may be questioned by the General Meeting on its statement on
the fairness of our annual accounts prepared in accordance with International
Financial Reporting Standards.
Following the appointment of KPMG Accountants N.V. for the audit of our
statutory consolidated financial statements, the external auditor for our
consolidated financial statements prepared under U.S. generally accepted
accounting principles is KPMG AG Wirtschaftsprüfungsgesellschaft, which
audited the U.S. GAAP consolidated financial statements as of and for the year
ended December 31, 2023 .
The remuneration of the external auditor, and instructions to the external auditor
to provide non-audit services, shall be approved by the Supervisory Board on
the recommendation of the Audit Committee, and after consultation with the
Managing Board. At least once every four years, the Supervisory Board and
the Audit Committee shall conduct a thorough assessment of the functioning of
the external auditor. The main conclusions of this assessment shall be
communicated to the General Meeting for the purposes of assessing the
nomination for the appointment of the external auditor.
KPMG Accountants N.V. have been our auditor since 2015. According to
Dutch regulations, an audit firm can be elected only for a period of 10
subsequent years. Therefore, we must appoint a new auditor beginning 2025.
Accordingly, the Supervisory Board has decided to nominate Ernst & Young
Accountants LLP as its external auditor for the reporting year 2025. The formal
appointment of Ernst & Young Accountants LLP will be submitted for voting at
QIAGEN's 2024 AGM.
Dutch Corporate Governance Code – Comply or Explain
The corporate governance structure and compliance with the Dutch Code is the
joint responsibility of the Managing Board and the Supervisory Board. They are
accountable for this responsibility to the General Meeting. We continue to seek
ways to improve our corporate governance by measuring itself against
international best practice. The Dutch Code was last amended on December
20, 2022, and can be found at www.mccg.nl .
Non-application of a specific best practice provision is not in itself considered
objectionable by the Dutch Code, and may well be justified because of
particular circumstances relevant to a company. In accordance with Dutch law,
we disclose in our Annual Report the application of the Dutch Code's principles
and best practice provisions.
To the extent that we do not apply certain principles and best practice
provisions, or do not intend to apply these in the current or the subsequent
year, we state the reasons.
We take a positive view of the Dutch Code and apply nearly all of the best
practice provisions. However, we prefer not to apply some provisions due to
the international character of our business as well as the fact - acknowledged
by the Commission that drafted the Dutch Code - that existing contractual
agreements between QIAGEN and individual members of the Managing Board
cannot be set aside at will.
The following provides an overview of exceptions that we have identified:
1. Best practice provision 2.2.2 recommends that a Supervisory Board member
is appointed for a period of four years and may then be reappointed once
for another four-year period. The Supervisory Board member may then
subsequently be reappointed again for a period of two years, which
appointment may be extended by at most two years.
Members of the Supervisory Board are appointed annually for a one-year
period beginning on the day following the General Meeting up to and
including the day of the General Meeting held in the following year. Dr.
Metin Colpan joined the Supervisory Board in 2004, while Ms. Elizabeth
Tallett has been a Supervisory Board member since 2011, Mr. Lawrence A.
Rosen since 2013 and Prof. Dr. Elaine Mardis since 2014. Dr. Colpan
brings extensive contributions to the Supervisory Board based on his in-depth
scientific and commercial experience, and above all his role as a co-founder
of QIAGEN. He has also served as a board member for various other
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Corporate Governance
healthcare industry companies, which provides unique perspectives and
valuable contributions to the discussions of our Board. Ms. Tallett has
executive- and board-level experience at a number of international
companies, in particular in the pharmaceutical, biotechnology and
healthcare and payor industries. Areas of expertise include international
operations, mergers and acquisitions, strategic planning, marketing, product
development, talent management and executive compensation. Mr. Rosen is
a highly experienced executive who has served at the highest levels of
various publicly-listed multinational companies, including Deutsche Post AG,
Fresenius Medical Care AG & Co. KGaA and Aventis SA. He contributes to
the profile of the Supervisory Board with his knowledge and cross-border
expertise developed during a career working primarily in Europe and
outside his home country of the United States. Key areas in which Mr. Rosen
contributes his expertise include finance, strategy, mergers and acquisitions,
investor relations, corporate governance and engagement with the capital
markets. Prof. Dr. Mardis provides significant scientific acumen to QIAGEN,
especially given her international reputation and many contributions to
advancing our knowledge about biology. QIAGEN highly values and
appreciates the full engagement of Dr. Colpan, Ms. Tallett, Mr. Rosen and
Prof. Dr. Mardis to the success of our Company, and believes that they
beneficially supplement the diverse and mixed profile of the Supervisory
Board.
2. Best practice provision 2.2.4 recommends that the Supervisory Board should
draw up a retirement schedule in order to avoid, as far as possible, a
situation in which many Supervisory Board members retire simultaneously.
The retirement schedule should be made generally available and should be
posted on the company’s website.
The Supervisory Board follows the practice to discuss retirement plans of
individual members early to proactively manage continuity within the
Supervisory Board. QIAGEN believes that this practice provides a more
flexible and better succession planning than a fixed retirement schedule.
3. Best practice provision 3.1.2 vi recommends that when formulating the
remuneration policy, it should be considered that shares awarded to
members of the Management Board should be held for a period of at least
five years
Pursuant to the Company’s Remuneration Policy, long-term equity-based
grants to members of the Managing Board under the 2022 Plan primarily
consist of an award of performance stock units, i.e., long-term incentive
awards which are dependent upon the achievement of pre-defined
performance goals. Grants of restricted stock units, which are based on time
vesting only, are no longer to be granted. Performance stock units and
restricted stock units granted until February 2018 are basically structured so
that 40% of a grant vests after three years, 50% after five years, and the
remaining 10% after ten years. Grants of performance stock units and
restricted stock units granted after February 2018 vest 40% after three years,
60% after five years. Beginning in February 2021, grants of performance
stock units vest after three years.
4. Best practice provision 3.2.3 recommends that the maximum remuneration in
the event of dismissal of a Management Board member may not exceed one
year's salary (the "fixed" remuneration component).
Our Managing Board members have entered into agreements with QIAGEN
N.V. and some QIAGEN affiliates for which they hold managing positions.
In case of termination of an agreement without serious cause as defined by
the applicable law, the respective affiliate would remain obliged to
compensate the Managing Board member for the remaining term of the
employment agreement.
5. Best practice provision 3.3.2 recommends that a Supervisory Board member
may not be granted any shares and/or rights to shares by way of
remuneration.
QIAGEN has granted stock options to the members of the Supervisory Board
as a remuneration component since its establishment until 2013, when we
stopped granting stock options. Since 2007, Supervisory Board members
have been granted restricted stock units. We believe that the reasonable
level of equity-based compensation which we practice allows a positive
alignment of shareholder interests with the other duties of the Supervisory
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Corporate Governance
Board and that this practice is necessary to attract and retain Supervisory
Board members as the granting of share-based compensation to Supervisory
Board members is a common practice in our industry.
NYSE Exemptions
Exemptions from the NYSE corporate governance standards are available to
foreign private issuers, such as QIAGEN when those standards are contrary to
a law, rule or regulation of any public authority exercising jurisdiction over
such issuer or contrary to generally accepted business practices in the issuer’s
country of domicile. In connection with QIAGEN’s listing on the NYSE, the
NYSE accepted QIAGEN's exemptions from certain corporate governance
standards that are contrary to the laws, rules, regulations or generally accepted
business practices of the Netherlands. These exemptions and the practices
followed by QIAGEN are described below:
• QIAGEN is exempt from NYSE’s quorum requirements applicable to
meetings of ordinary shareholders. In keeping with the law of the
Netherlands and generally accepted business practices in the Netherlands,
QIAGEN’s Articles of Association provide that there are no quorum
requirements generally applicable to meetings of the General Meeting.
• QIAGEN is exempt from NYSE’s requirements that shareholder approval be
obtained prior to the establishment of, or material amendments to, stock
option or purchase plans and other equity compensation arrangements
pursuant to which options or stock may be acquired by directors, officers,
employees or consultants. QIAGEN is also exempt from NYSE’s requirements
that shareholder approval be obtained prior to certain issuances of stock
resulting in a change of control, occurring in connection with acquisitions of
stock or assets of another company or issued at a price less than the greater
of book or market value other than in a public offering. QIAGEN’s Articles of
Association do not require approval of the General Meeting prior to the
establishment of a stock plan. The Articles of Association also permit the
General Meeting to grant the Supervisory Board general authority to issue
shares without further approval of the General Meeting. QIAGEN’s General
Meeting has granted the Supervisory Board general authority to issue up to a
maximum of our authorized capital without further approval of the General
Meeting. QIAGEN plans to seek approval of the General Meetings for stock
plans and stock issuances only where required under the law of the
Netherlands or under QIAGEN’s Articles of Association.
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Corporate Governance
Compensation of M anaging and Supervisory
Boards
The Remuneratio n Policy for the Managing Board was approved by
shareholders at the Annual General Meeting (AGM) in June 2021, and came
into force the day after the AGM. This policy complies with the Dutch law
provisions implementing the Shar eholders Rights Directive II (EU Directive
2017/828). Under Dutch law, the Supervisory Board will be required to submit
a proposal to adopt a Remuneration Policy for the Managing Board no later
than at the AGM to be held in 2025.
Managing Board Remuneration Policy
Remuneration of Managing Board members consists of a combination of base
salary, short-term variable cash incentive (STI) tied to the achievement of annual
Corporate Goals and Team Goals, and a long-term incentive (LTI) granted in
share units that only vest after multiple years upon the achievement of pre-
defined targets. In addition, Managing Board members can receive deferred
compensation contributions and other benefits in line with market practices.
The Remuneration Policy complies with the best practices in Corporate
Governance in the U.S. and Germany, where our shares are listed on the New
York Stock Exchange (NYSE) and the Frankfurt Stock Exchange, respectively.
The inclusion of perspectives from the U.S. is particularly important given that
this country is the domicile of many of our competitors, and for many members
of our leadership and senior executive team, and also a country that represents
more than 45% of our annual sales.
The remuneration package for Managing Board members is designed to have
a significant portion of total compensation in variable awards. The value of
these awards can differ substantially from year to year depending on actual
performance. Within the variable component, the incentives for short-term
performance targets have a lower weight than those for long-term incentives,
which are aimed at delivering sustainable value creation for our stakeholders,
including shareholders.
A copy of the Remuneration Policy for the Managing Board can be found on
our website at www.qiagen.com .
Managing Board Compensation for 2023
For the year ended December 31, 2023 , the Managing Board members
received the following compensation:
Annual compensation
Long-term compensation
Managing board member
Fixed salary
Variable cash
bonus
Other (1)
Total
Benefit plans
Performance
stock units granted
Thierry Bernard
$978,500
780,354
33,320
$1,792,174
$199,700
119,695
Roland Sackers
$588,000
319,730
40,270
$948,000
$117,270
67,723
(1) Amounts include, among others, car lease and reimbursed personal expenses such as tax consulting. We also occasionally reimburse our Managing Board members' personal expenses related to
attending out-of-town meetings but not directly related to their attendance. Amounts do not include the reimbursement of certain expenses relating to travel incurred at the request of QIAGEN, other
reimbursements or payments that in total did not exceed $10,000, or tax amounts paid by the Company to taxing authorities in order to avoid double-taxation under multi-tax jurisdiction employment
agreements.
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Corporate Governance
Supervisory Board Remuneration Policy
At the Annual General Meeting of Shareholders in 2021, an update to the
Remuneration Policy for the Supervisory Board was adopted to harmonize the
annual compensation granted to members of certain Board committees. This
policy complies with the Dutch law provisions implementing the Shareholders
Rights Directive II (EU Directive 2017/828). Under Dutch law, the Supervisory
Board will be required to submit a proposal to adopt a Remuneration Policy for
the Supervisory Board no later than at the Annual General Meeting to be held
in 2024.
The objective of the Remuneration Policy for the Supervisory Board is to attract,
retain, and motivate highly qualified Board members, taking into account
QIAGEN's mission and vision, as well as strategic initiatives and opportunities
to create value for stakeholders, including shareholders. It focuses on achieving
a total remuneration level, both short-term and long term, that is comparable
with levels provided by other European and U.S.-based companies.
This Policy supports the long-term development and strategy of QIAGEN in a
highly dynamic environment, while aiming to address the requests of various
stakeholders and maintaining an acceptable risk profile. It builds on
remuneration principles and practices that have proven to be both fitting and
effective for us, especially as a Dutch incorporated company with global
operations, as well as stock market listings in the U.S. and Germany. The
Supervisory Board ensures that the Policy and its implementation are linked to
our objectives.
Supervisory Board Compensation for 2023
The Supervisory Board compensation for 2023 consists of fixed compensation
and additional amounts for Chair and Vice Chair. Annual remuneration of the
Supervisory Board members is as follows:
Fee payable to the Chair of the Supervisory Board
$150,000
Fee payable to each member of the Supervisory Board
$57,500
Additional compensation payable to members holding the following positions:
Chair of the Audit Committee
$25,000
Member of the Audit Committee
$15,000
Chair of the (i) Compensation & Human Resources Committee, (ii) the Nomination & ESG Committee, or (iii) the Science & Technology Committee
$18,000
Member of the (i) Compensation & Human Resources Committee, (ii) the Nomination & ESG Committee, or (iii) the Science & Technology Committee
$11,000
Chair of other committees
$12,000
Member of other committees
$6,000
Supervisor y Boar d members will also be reimbursed for tax consulting costs
incurred in connection with the preparation of their tax returns up to an amount
of €5,000 per person per year.
Supervisory Board members also receive a variable component, in the form of
share-based compensation. We did not pay any agency or advisory service
fees to members of the Supervisory Board in 2023.
Th e Supervi sory Board meetings and the Supervisory Board committee meetings
are held over a number of days, ensuring there is time for review and
discussion. At each meeting, the Supervisory Board members discuss among
themselves the goals and outcome of the meeting, as well as topics such as the
functioning and composition of the Supervisory Board and the Managing
Board. The Supervisory Board Report contains an overview of the committee
membership and meetings attended in 2023.
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Corporate Governance
For the year ended December 31, 2023 , members of the Supervisory Board received the following compensation:
Supervisory board member
Fixed
remuneration
Committee chair
Committee
membership
Total (1)
Restricted
stock units
Lawrence A. Rosen
$150,000
18,000
20,500
$188,500
7,917
Dr. Metin Colpan
$57,500
18,000
11,000
$86,500
7,917
Thomas Ebeling (2)
$28,750
—
5,500
$34,250
7,917
Dr. Toralf Haag
$57,500
25,000
—
$82,500
7,917
Dr. Ross L. Levine
$57,500
—
11,000
$68,500
7,917
Dr. Elaine Mardis
$57,500
—
22,000
$79,500
7,917
Dr. Eva Pisa
$57,500
—
11,000
$68,500
7,917
Stephen H. Rusckowski (3)
$40,570
—
5,500
$46,070
—
Elizabeth E. Tallett
$57,500
18,000
26,000
$101,500
7,917
(1) Supervisory Board members are reimbursed for travel costs and for any value added tax to be paid on their remuneration. These reimbursements are excluded from the amounts presented herein.
(2) Thomas Ebeling did not stand for re-appointment at AGM in June 2023.
(3) Stephen H. Rusckowski joined the Supervisory Board in April 2023, and was not eligible for the equity grant for 2023.
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Corporate Governance
Share Ownership
The following table sets forth certain information as of January 31, 2024 ,
concerning the ownership of Common Shares by members of the Managing
Board and Supervisory Board. In preparing the following table, we have relied
on information furnished by such persons.
Name and country of residence
Shares beneficially owned (1)
Number (2)
Percent ownership
Thierry Bernard, United States
182,662
(3)
*
Roland Sackers, Germany
246,377
(4)
*
Dr. Metin Colpan, Germany
410,886
(5)
*
Dr. Toralf Haag, Germany
679
(6)
*
Dr. Ross L. Levine, United States
12,793
(7)
*
Dr. Elaine Mardis, United States
—
(8)
*
Dr. Eva Pisa, Switzerland
—
*
Lawrence A. Rosen, United States
10,399
(9)
*
Stephen H. Rusckowski, United States
25
*
Elizabeth Tallett, United States
44,011
(10)
*
(1) * Indicates that the person beneficially owns less than 0.5% of the Common Shares issued and outstanding as of January 31, 2024 . The number of Common Shares outstanding as of January 31, 2024
was 221,356,630 . The persons named in the table have sole voting and investment power with respect to all shares shown as beneficially owned by them and have the same voting rights as
shareholders with respect to Common Shares.
(2) Does not include Common Shares subject to options or awards held by such persons as of January 31, 2024. See footnotes below for information regarding stock awards that could become releasable
within 60 days of the date of this table.
(3) Does not include 101,129 shares issuable upon the release of unvested stock awards that could become releasable within 60 days from the date of this table.
(4) Does not include 200,158 shares issuable upon the release of unvested stock awards that could become releasable within 60 days from the date of this table.
(5) Includes 347,156 shares held by CC Verwaltungs GmbH, an entity which is controlled by Dr. Colpan. Does not include 8 ,5 91 shares issuable upon the release of unvested stock awards that could
become releasable within 60 days from the date of this table.
(6) Does not include 2,992 shares issuable upon the release of unvested stock awards that could become releasable within 60 days from the date of this table.
(7) Does not include 8,591 shares issuable upon the release of unvested stock awards that could become releasable within 60 days from the date of this table.
(8) Does not include 8,591 shares issuable upon the release of unvested stock awards that could become releasable within 60 days from the date of this table.
(9) Does not include 8,591 shares issuable upon the release of unvested stock awards that could become releasable within 60 days from the date of this table.
(10) Does not include 8,591 shares issuable upon the release of unvested stock awards that could become releasable within 60 days from the date of this table.
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Corporate Governance
Table of Contents
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Page 98
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Shareholders and Supervisory Board
QIAGEN N.V.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of QIAGEN N.V. and subsidiaries (the Company) as of
December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, changes in equity,
and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with
U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria
established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission, and our report dated March 8, 2024 expressed an unqualified opinion on the effectiveness of the
Company’s internal control over financial reporting.
Change in Accounting Principle
As discussed in Note 2 to the consolidated financial statements, in 2021, the Company changed its method of accounting
for convertible instruments due to the adoption of ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
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Consolidated Financial Statements
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts
or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Assessment of unrecognized tax benefits
As discussed in Note 17 to the consolidated financial statements, the Company conducts its business globally and
operates more than 50 consolidated subsidiaries in multiple tax jurisdictions. This multi-jurisdictional business operation
involves complex intercompany operating and financing activities. The nature of these activities can result in
uncertainties in the estimation of the related income tax exposures. The Company initially recognizes and subsequently
measures the unrecognized tax benefit in its consolidated financial statements when it is more likely than not that the
position will be sustained upon examination by the taxing authorities. As of December 31, 2023, the Company
recorded unrecognized tax benefits of $95.6 million.
We identified the assessment of unrecognized tax benefits as a critical audit matter. Complex auditor judgment and
specialized skills and knowledge were required in evaluating the Company’s interpretation and application of tax laws
in the jurisdictions where it operates and its estimate of the resolution of the tax position.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the design
and tested the operating effectiveness of certain internal controls related to the Company’s unrecognized tax benefit
process, including controls related to (1) its interpretation and application of tax statutes and legislation, and changes
thereto, in the various jurisdictions in which it operates and (2) its determination of the estimate for the associated
unrecognized tax benefit. We inspected the Company’s legal composition to identify and assess changes in operating
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Consolidated Financial Statements
structures and financing arrangements. We inquired of the Company’s tax department in combination with inspecting
correspondence with the responsible taxing authorities with respect to the results of inspections by taxing authorities.
We involved tax and transfer pricing professionals with specialized skills and knowledge, who assisted in:
– analyzing the Company’s interpretation and application of multi-jurisdictional income tax laws, and changes
thereto, and its impact on the unrecognized tax benefit by reading advice obtained from the Company’s external
specialists
– inspecting the lapse of statute of limitations and settlements with taxing authorities over a selection of unrecognized
tax benefits to evaluate the amount in the settlement documents compared to the unrecognized tax benefit, and
– inspecting a selection of intercompany operating and financing activities between group entities to assess the
sustainability of tax positions based on their technical merits and the probabilities of possible settlement
alternatives.
/s/ KPMG AG Wirtschaftsprüfungsgesellschaft
We have served as the Company’s auditor since 2015.
Düsseldorf, Germany
March 8, 2024
QIAGEN N.V. | Financial Report 2023
Page 101
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
To the Shareholders and Supervisory Board
QIAGEN N.V.:
Opinion on Internal Control Over Financial Reporting
We have audited QIAGEN N.V. and subsidiaries’ (the Company) internal control over financial reporting as of December
31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related
consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the years in the
three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements),
and our report dated March 8, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying ’Report of
Management on Internal Control over Financial Reporting’. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing
and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also
included performing such other procedures as we considered necessary in the circumstances. We believe that our audit
provides a reasonable basis for our opinion.
QIAGEN N.V. | Financial Report 2023
Page 102
Consolidated Financial Statements
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG AG Wirtschaftsprüfungsgesellschaft
Düsseldorf, Germany
March 8, 2024
QIAGEN N.V. | Financial Report 2023
Page 103
Consolidated Financial Statements
Q IAGEN N.V. and Subsidiaries Consolidated Balance Sheets
(in thousands)
As of December 31,
Notes
2023
2022
Assets
Current assets:
Cash and cash equivalents
(3)
$ 668,084
$ 730,669
Short-term investments
(7)
389,698
687,597
Accounts receivable, net of allowance for credit losses of $ 17,296 and $ 22,880 , respectively
(3, 24)
381,877
323,750
Inventories, net
(3)
398,385
357,960
Prepaid expenses and other current assets (of which $ 11,929 due from related parties in 2022)
(8, 24)
309,516
293,976
Total current assets
2,147,560
2,393,952
Long-term assets:
Property, plant and equipment, net of accumulated depreciation of $ 516,765 and $ 502,967 , respectively
(9)
765,037
662,170
Goodwill
(11)
2,475,732
2,352,569
Intangible assets, net of accumulated amortization of $ 748,590 and $ 727,691 , respectively
(11)
526,821
544,796
Fair value of derivative instruments - long-term
(14)
3,083
131,354
Other long-term assets
(10, 12, 17)
196,957
202,894
Total long-term assets
3,967,630
3,893,783
Total assets
$ 6,115,190
$ 6,287,735
The accompanying notes are an integral part of these consolidated financial statements.
QIAGEN N.V. and Subsidiaries Consolidated Balance Sheets
(in thousands, except par value)
As of December 31,
Notes
2023
2022
Liabilities and equity
Current liabilities:
Current portion of long-term debt
(16)
$ 587,970
$ 389,552
Accrued and other current liabilities
(13, 24)
407,168
486,237
Accounts payable
(24)
84,155
98,734
Total current liabilities
1,079,293
974,523
Long-term liabilities:
Long-term debt, net of current portion
(16)
921,824
1,471,898
Fair value of derivative instruments - long-term
(14)
98,908
156,718
Other long-term liabilities
(4, 12, 15,17)
207,401
217,985
Total long-term liabilities
1,228,133
1,846,601
Commitments and contingencies
(20)
Equity:
Preference shares, 0.01 EUR par value, authorized— 450,000 shares, no shares issued and outstanding
—
—
Financing preference shares, 0.01 EUR par value, authorized— 40,000 shares, no shares issued and outstanding
—
—
Common Shares, 0.01 EUR par value, authorized— 410,000 shares, issued— 230,829 shares
2,702
2,702
Additional paid-in capital
1,915,115
1,868,015
Retained earnings
2,456,800
2,160,173
Accumulated other comprehensive loss
(18)
( 433,830 )
( 404,091 )
Less treasury shares, at cost— 2,627 and 3,113 shares, respectively
(18)
( 133,023 )
( 160,188 )
Total equity
3,807,764
3,466,611
Total liabilities and equity
$ 6,115,190
$ 6,287,735
The accompanying notes are an integral part of these consolidated financial statements.
QIAGEN N.V. and Subsidiaries Consolidated Statements of Income
(in thousands, except per share data)
Years ended December 31,
Notes
2023
2022
2021
Net sales
(3, 4, 24)
$ 1,965,311
$ 2,141,518
$ 2,251,657
Cost of sales:
Cost of sales
667,425
696,472
733,719
Acquisition-related intangible amortization
(3)
64,198
60,483
67,118
Total cost of sales
731,623
756,955
800,837
Gross profit
1,233,688
1,384,563
1,450,820
Operating expenses:
Sales and marketing
459,912
474,220
456,392
Research and development
(3)
198,511
189,859
189,964
General and administrative
(3)
119,254
129,725
128,076
Acquisition-related intangible amortization
(3)
10,764
14,531
18,542
Restructuring, acquisition, integration and other, net
(1, 3, 6)
35,309
44,768
27,762
Total operating expenses
823,750
853,103
820,736
Income from operations
409,938
531,460
630,084
Other income (expense):
Interest income
78,992
32,757
9,555
Interest expense
( 53,410 )
( 58,357 )
( 54,477 )
Other (expense) income, net
(10, 14)
( 5,711 )
6,741
40,671
Total other income (expense), net
19,871
( 18,859 )
( 4,251 )
Income before income tax expense
429,809
512,601
625,833
Income tax expense
(3, 17)
88,506
89,390
113,234
Net income
$ 341,303
$ 423,211
$ 512,599
Basic earnings per common share
(19)
$ 1.50
$ 1.86
$ 2.25
Diluted earnings per common share
(19)
$ 1.48
$ 1.84
$ 2.21
Weighted-average common shares outstanding:
Basic
(19)
228,146
227,577
227,983
Diluted
(19)
230,619
230,136
232,034
The accompanying notes are an integral part of these consolidated financial statements.
QIAGEN N.V. and Subsidiaries Consolidated Statements of Comprehensive Income
(in thousands)
Years ended December 31,
Notes
2023
2022
2021
Net income
$ 341,303
$ 423,211
$ 512,599
Other comprehensive (loss) income to be reclassified to profit or loss in subsequent periods:
(Losses) gains on cash flow hedges (net of $ 18,344 tax benefit in 2023)
(14)
( 52,755 )
( 24,098 )
16,780
Reclassification adjustments on cash flow hedges (net of $ 17,183 tax expense in 2023)
(14)
49,417
21,940
( 17,010 )
Cash flow hedges, net of tax
( 3,338 )
( 2,158 )
( 230 )
Net investment hedge
(14)
( 18,396 )
( 14,724 )
24,743
Gain on pension (net of $ 72 , $ 528 and $ 5 tax expense in 2023, 2022 and 2021,
respectively)
167
1,233
11
Foreign currency translation adjustments (net of $ 854 and $ 1,674 tax benefit in 2022
and 2021, respectively)
( 8,172 )
( 61,772 )
( 107,372 )
Other comprehensive loss
( 29,739 )
( 77,421 )
( 82,848 )
Comprehensive income
$ 311,564
$ 345,790
$ 429,751
The accompanying notes are an integral part of these consolidated financial statements.
QIAGEN N.V. and Subsidiaries Consolidated Statements of Changes in Equity
(in thousands)
Notes
Common shares
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
income (loss)
Treasury shares
Total
equity
Shares
Amount
Shares
Amount
Balance at December 31, 2020
230,829
$ 2,702
$ 1,834,169
$ 1,323,091
($ 243,822 )
( 2,844 )
($ 118,301 )
$ 2,797,839
ASU 2020-06 impact of change in accounting
policy
(2)
—
—
( 54,052 )
263
—
—
—
( 53,789 )
Net income
—
—
—
512,599
—
—
—
512,599
Other comprehensive loss
—
—
—
—
( 82,848 )
—
—
( 82,848 )
Purchase of treasury shares
(18)
—
—
—
—
—
( 1,891 )
( 99,987 )
( 99,987 )
Issuance of common shares in connection with stock
plan
(22)
—
—
—
( 44,213 )
—
1,441
52,132
7,919
Tax withholding related to vesting of stock awards
(22)
—
—
—
—
—
( 461 )
( 23,574 )
( 23,574 )
Share-based compensation
(22)
—
—
38,391
—
—
—
—
38,391
Balance at December 31, 2021
230,829
$ 2,702
$ 1,818,508
$ 1,791,740
($ 326,670 )
( 3,755 )
($ 189,730 )
$ 3,096,550
Net income
—
—
—
423,211
—
—
—
423,211
Other comprehensive loss
—
—
—
—
( 77,421 )
—
—
( 77,421 )
Issuance of common shares in connection with stock
plan
(22)
—
—
—
( 54,778 )
—
1,171
54,899
121
Tax withholding related to vesting of stock awards
(22)
—
—
—
—
—
( 529 )
( 25,357 )
( 25,357 )
Share-based compensation
(22)
—
—
49,507
—
—
—
—
49,507
Balance at December 31, 2022
230,829
$ 2,702
$ 1,868,015
$ 2,160,173
($ 404,091 )
( 3,113 )
($ 160,188 )
$ 3,466,611
Net income
—
—
—
341,303
—
—
—
341,303
Other comprehensive loss
—
—
—
—
( 29,739 )
—
—
( 29,739 )
Issuance of common shares in connection with stock
plan
(22)
—
—
—
( 44,676 )
—
873
44,840
164
Tax withholding related to vesting of stock awards
(22)
—
—
—
—
—
( 387 )
( 17,675 )
( 17,675 )
Share-based compensation
(22)
—
—
47,100
—
—
—
—
47,100
Balance at December 31, 2023
230,829
$ 2,702
$ 1,915,115
$ 2,456,800
($ 433,830 )
( 2,627 )
($ 133,023 )
$ 3,807,764
The accompanying notes are an integral part of these consolidated financial statements.
QIAGEN N.V. and Subsidiaries Consolidated Statements of Cash Flows
(in thousands)
Years ended December 31,
Notes
2023
2022
2021
Cash flows from operating activities:
Net income
$ 341,303
$ 423,211
$ 512,599
Adjustments to reconcile net income to net cash provided by operating activities, net of
effects of businesses acquired:
Depreciation and amortization
205,336
208,397
214,931
Non-cash impairments
(6, 10)
4,158
12,970
—
Amortization of debt discount and issuance costs
30,162
33,701
32,294
Share-based compensation expense
(22)
47,100
49,507
38,391
Deferred tax expense (benefit)
(17)
10,731
( 9,603 )
( 5,288 )
Loss on marketable securities
—
6,230
6,550
Gain on sale of investment
(10)
—
—
( 36,086 )
Other items, net including fair value changes in derivatives
7,623
22,732
5,622
Net changes in operating assets and liabilities:
Accounts receivable
(3)
( 55,119 )
15,451
( 7,402 )
Inventories
(3)
( 44,787 )
( 61,950 )
( 81,803 )
Prepaid expenses and other current assets
(8)
4,390
58,999
13,918
Other long-term assets
691
( 2,025 )
1,400
Accounts payable
( 22,417 )
( 1,756 )
( 5,975 )
Accrued and other current liabilities
(13)
( 55,583 )
( 17,837 )
( 71,681 )
Income taxes
(17)
( 7,458 )
( 21,894 )
( 12,832 )
Other long-term liabilities
( 6,675 )
( 869 )
34,363
Net cash provided by operating activities
459,455
715,264
639,001
Cash flows from investing activities:
Purchases of property, plant and equipment
( 149,710 )
( 129,224 )
( 189,904 )
Purchases of intangible assets
(11)
( 13,092 )
( 20,112 )
( 16,630 )
Purchases of short-term investments
(7)
( 976,448 )
( 1,385,929 )
( 397,650 )
Proceeds from redemptions of short-term investments
(7)
1,270,551
883,083
359,560
Cash paid for acquisitions, net of cash acquired
(5)
( 149,532 )
( 63,651 )
—
Cash (paid) received for collateral asset
(14)
( 66,583 )
( 9,881 )
44,900
Purchases of investments, net
(10)
( 2,870 )
( 1,156 )
( 2,645 )
Other investing activities
29
107
( 57 )
Net cash used in investing activities
( 87,655 )
( 726,763 )
( 202,426 )
QIAGEN N.V. and Subsidiaries Consolidated Statements of Cash Flows
(in thousands)
Years ended December 31,
Notes
2023
2022
2021
Cash flows from financing activities:
Proceeds from long-term debt, net of issuance costs
(16)
—
371,452
—
Repayment of long-term debt
(16)
( 400,000 )
( 480,003 )
( 41,345 )
Proceeds from exercise of call options related to cash convertible notes
(16)
36,762
—
—
Payment of intrinsic value of cash convertible notes
(16)
( 36,762 )
—
—
Tax withholding related to vesting of stock awards
( 17,675 )
( 25,357 )
( 23,574 )
Cash (paid) received for collateral liability
( 16,315 )
12,556
8,600
Proceeds from issuance of common shares
163
121
7,919
Cash paid for contingent consideration
—
( 4,572 )
—
Purchase of treasury shares
(18)
—
—
( 99,987 )
Other financing activities
—
—
( 1,979 )
Net cash used in financing activities
( 433,827 )
( 125,803 )
( 150,366 )
Effect of exchange rate changes on cash and cash equivalents
( 558 )
( 12,545 )
( 3,677 )
Net (decrease) increase in cash and cash equivalents
( 62,585 )
( 149,847 )
282,532
Cash and cash equivalents, beginning of period
730,669
880,516
597,984
Cash and cash equivalents, end of period
$ 668,084
$ 730,669
$ 880,516
Supplemental cash flow disclosures:
Cash paid for interest
$ 20,348
$ 23,208
$ 21,588
Cash paid for income taxes, net of refunds
$ 82,409
$ 120,476
$ 102,083
Supplemental disclosure of non-cash investing activities:
Equity securities acquired in non-monetary exchange
(10)
$ 2,604
$ 1,475
$ 35,705
Intangible asset received in exchange for note receivable
$ —
$ —
$ 14,989
The accompanying notes are an integral part of these consolidated financial statements.
1. Corporate Information and Basis of Presentation
Corporate Information
QIAGEN N.V. is a public limited liability company (naamloze vennootschap) under Dutch law with a registered office at
Hulsterweg 82, 5912 PL Venlo, The Netherlands. QIAGEN N.V., a Netherlands holding company, and subsidiaries (we,
our or the Company) is a 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 genomic data to report relevant, actionable insights.
Automation solutions tie these together in seamless and cost-effective workflows. We provide solutions to more than
500,000 customers around the world in Molecular Diagnostics (human healthcare) and Life Sciences (academia, pharma
R&D and industrial applications, primarily forensics). As of December 31, 2023 , we employed approximately 6,000
people in over 35 locations worldwide.
Basis of Presentation
The accompanying consolidated financial statements were prepared in accordance with U.S. generally accepted
accounting principles (GAAP) and all amounts are presented in U.S. dollars rounded to the nearest thousand, unless
otherwise indicated.
As of April 1, 2022, the results of our subsidiary in Türkiye are reported under highly inflationary accounting as the prior
three-years cumulative inflation rate exceeded 100 percent.
QIAGEN has a subsidiary in Moscow, Russia. Due to uncertainties related to the war in Ukraine, and although not
material to our consolidated results of operations, during the year ended December 31, 2022, we recorded a combination
of credit losses, write-offs and impairments related to our business in Russia totaling $ 4.0 million . These charges are
included in the line item restructuring, acquisition, integration and other, net in the accompanying consolidated statement
of income . We have suspended activities in Russia and also with our former commercial partner in Belarus.
We undertake acquisitions to complement our own internal product development activities. In January 2023, we acquired
Verogen, Inc., a leader in the use of next-generation sequencing (NGS) technologies to drive the future of human
identification (HID) and forensic investigation located in San Diego, California. In May 2022, we acquired BLIRT S.A., a
supplier of standardized and customized solutions for proteins and enzymes as well as molecular biology reagents located
in Gdańsk, Poland. At the acquisition dates, all the assets acquired and liabilities assumed were recorded at their
respective fair values and our consolidated results of operations include the operating results from the acquired companies
from the acquisition dates. These acquisitions were not significant to the overall consolidated financial statements.
QIAGEN N.V. | Financial Report 2023
Page 111
Notes to the Consolidated Financial Statements
December 31, 2023
2. Effects of New Accounting Pronouncements
The following new Financial Accounting Standards Board (FASB) Accounting Standards Updates (ASU) were adopted in
2023 , 2022 and 2021 :
Adoption of New Accounting Standards in 2023
No adoption of new accounting standards in 2023.
Adoption of New Accounting Standards in 2022
ASU 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, creates an exception
to the recognition and measurement principles in ASC 805, Business Combinations. The amendments require an acquirer
to use the guidance in ASC 606, Revenue from Contracts with Customers, rather than using fair value, when recognizing
and measuring contract assets and contract liabilities related to customer contracts assumed in a business combination. We
early adopted ASU 2021-08 on January 1, 2022. The amended guidance applies on a prospective basis to business
combinations that occur after the adoption date.
Adoption of New Accounting Standards in 2021
ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, removed certain exceptions for
recognizing deferred taxes for investments, performing intraperiod tax allocations and calculating income taxes in interim
periods. The ASU also adds guidance to reduce complexity in certain areas, including recognizing deferred taxes for tax
goodwill and allocating income taxes to members of a consolidated group. We adopted the ASU on the effective date of
January 1, 2021 and the adoption of this guidance did not have an impact on our consolidated financial statements on the
date of adoption.
ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
reduced the number of accounting models for convertible instruments. The ASU also amended diluted earnings per share
(EPS) calculations for convertible instruments, which will result in more dilutive EPS results, and also amended the
requirements for a contract (or embedded derivative) that is potentially settled in an entity’s own shares to be classified in
equity. ASU 2020-06 was effective for annual periods beginning on January 1, 2022, with earlier adoption on January 1,
2021 permitted. We adopted ASU 2020-06 early on January 1, 2021 and this resulted in a decrease of $ 54.1 million to
additional paid-in capital and an increase of $ 0.3 million to retained earnings for the conversion feature to the liability for
our 2027 Convertible Notes further discussed in Note 16 "Debt."
QIAGEN N.V. | Financial Report 2023
Page 112
Notes to the Consolidated Financial Statements
New Accounting Standards Not Yet Adopted
The followi ng new FASB Accounting Standards Updates were not yet adopted as of December 31, 2023 :
ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures was issued in response to
stakeholder requests for more decision-useful information about reportable segments. The amendments in ASU 2023-07
improve reportable segment disclosure requirements through enhanced disclosures. This ASU does not change how a
public entity identifies its operating segments, aggregates those operating segments or applies the quantitative thresholds
to determine reportable segments. This ASU is effective for fiscal years beginning after Decembe r 15, 20 23, and early
adoption is permitted. We will adopt the new disclosures retrospectively to all prior periods presented in the financial
statements beginning with the annual reporting for the year ended December 31, 2024.
ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures enhances annual income tax
disclosures to address investor requests for more information about the tax risks and opportunities present in an entity's
worldwide operations. The two primary enhancements disaggregate existing income tax disclosures related to the effective
tax rate reconciliation and income taxes paid. This ASU is effective for annual periods beginning after December 15,
2024, and early adoption is permitted. We will adopt the new disclosures prospectively beginning with the annual
reporting for the year ended December 31, 2025.
3. Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of QIAGEN N.V. and its wholly-owned subsidiaries. All
significant intercompany accounts and transactions have been eliminated. Investments in either common stock or in-
substance common stock of companies where we exercise significant influence over the operations but do not have control,
and where we are not the primary beneficiary, are accounted for using the equity method. All other investments are
accounted for as discussed under " Non-Marketable Investments" below. When there is a portion of equity in an acquired
subsidiary not attributable, directly or indirectly, to the Company, we record the fair value of the noncontrolling interests at
the acquisition date and classify the amounts attributable to noncontrolling interests separately in equity in the consolidated
financial statements. Any subsequent changes in the Company's ownership interest while the Company retains its
controlling financial interest in its subsidiary are accounted for as equity transactions.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and
disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and
QIAGEN N.V. | Financial Report 2023
Page 113
Notes to the Consolidated Financial Statements
expenses during the reporting period. While changing conditions in our global environment present additional uncertainty,
we continue to use the best information available to form our estimates. Actual results could differ from those estimates.
Concentrations of Risk
We buy materials for products from many suppliers and are not dependent on any one supplier or group of suppliers for
the business as a whole. However, key components of certain products, including certain instrumentation components and
chemicals, are available only from a single source. If supplies from these vendors were delayed or interrupted for any
reason, we may not be able to obtain these materials timely or in sufficient quantities in order to produce certain products
and sales levels could be negatively affected. Additionally, our customers include researchers at pharmaceutical and
biotechnology companies, academic institutions, and government and private laboratories. Fluctuations in the research and
development budgets of these researchers and their organizations for applications in which our products are used could
have a significant effect on the demand for our products.
The financial instruments used in managing our foreign currency, equity and interest rate exposures have an element of risk
in that the counterparties may be unable to meet the terms of the agreements. We attempt to minimize this risk by limiting
the counterparties to a diverse group of highly rated international financial institutions. The carrying values of our financial
instruments incorporate the non-performance risk by using market pricing for credit risk. However, we have no reason to
believe that any counterparties will default on their obligations. In order to minimize our exposure with any single
counterparty, we have entered into master agreements which allow us to manage the exposure with the respective
counterparty on a net basis.
Other financial instruments that potentially subject us to concentrations of credit risk are cash and cash equivalents, short-
term investments, and accounts receivable. We attempt to minimize the risks related to cash and cash equivalents and
short-term investments by dealing with highly rated financial institutions and investing in a broad and diverse range of
financial instruments. We have established guidelines related to credit quality and maturities of investments intended to
maintain safety and liquidity. Concentration of credit risk with respect to accounts receivable is limited due to a large and
diverse customer base which is dispersed over different geographic areas. Allowances are maintained for potential credit
losses and such losses have historically been within expected ranges.
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Notes to the Consolidated Financial Statements
Foreign Currency Translation
Our reporting currency is the U.S. dollar and the functional currencies of our subsidiaries are generally the local currency
of the respective countries in which they are headquartered. All amounts in the financial statements of entities whose
functional currency is not the U.S. dollar, except for Türkiye (which became hyperinflationary and reports in U.S. dollars),
are translated into U.S. dollar equivalents at exchange rates as follows: (1) assets and liabilities at period-end rates,
(2) income statement accounts at average exchange rates for the period, and (3) components of equity at historical rates.
Translation gains or losses are recorded in equity, and transaction gains and losses are reflected in net income as a
component of other (expense) income, net . Realized gains or losses on the value of derivative contracts entered into to
hedge the exchange rate exposure of receivables and payables are also included in net income as a component of other
(expense) income, net . The net gain or loss on foreign currency transactions was a net loss of $ 5.8 million in 2023 , a net
gain of $ 2.7 million in 2022 , and a net loss of $ 9.0 million in 2021 and is included in other (expense) income, net .
The exchange rates of key currencies were as follows:
(USD equivalent for one)
Closing rate at December 31,
Annual average rate
2023
2022
2023
2022
2021
Euro (EUR)
1.1050
1.0666
1.0814
1.0542
1.1832
Pound Sterling (GBP)
1.2715
1.2026
1.2435
1.2376
1.3758
Swiss Franc (CHF)
1.1933
1.0832
1.1133
1.0486
1.0940
Japanese Yen (JPY)
0.0071
0.0076
0.0071
0.0077
0.0091
Chinese Yuan (CNY)
0.1408
0.1450
0.1413
0.1489
0.1550
Segment Information
We determined that we operate as one operating segment in accordance with the Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC) Topic 280, Segment Reporting. Our chief operating decision maker
(CODM) makes decisions based on the Company as a whole. In addition, we have a common basis of organization and
types of products and services which derive revenues and consistent product margins. Accordingly, we operate and make
decisions as one reporting unit.
Revenue Recognition
We recognize revenue when control of promised goods or services transfers to our customers in an amount that reflects the
consideration that is expected to be received in exchange for those goods or services. The majority of our sales revenue is
recognized when products are shipped to the customers, at which point control transfers.
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Notes to the Consolidated Financial Statements
Warranty
We provide warranties on our products against defects in materials and workmanship for a period of one year . A
provision for estimated future warranty costs is recorded in cost of sales at the time product revenue is recognized. Product
warranty obligations are included in accrued and other current liabilities in the accompanying consolidated balance
sheets.
Research and Development
Research and product development costs are expensed as incurred. Research and development expenses consist primarily
of salaries and related expenses, facility costs, and amounts paid to contract research organizations and laboratories for
the provision of services and materials as well as costs for internal use or clinical trials.
Government Grants
We recognize government grants when there is reasonable assurance that all conditions will be complied with and the
grant will be received. Our government grants generally represent subsidies for specified activities and are therefore
recognized when earned as a reduction of the expenses recorded for the activity that the grants are intended to
compensate. Thus, when the grant relates to research and development expense, the grant is recognized over the same
period that the related costs are incurred. Otherwise, amounts received under government grants are recorded as liabilities
in the balance sheet. When the grant relates to an asset, the nominal amount of the grant is deducted from the carrying
amount of the asset and recognized over the same period that the related asset is depreciated.
Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that takes a substantial period
of time to prepare for its intended use or sale are capitalized as part of the cost of the respective assets (qualifying asset)
when such borrowing costs are significant. All other borrowing costs are expensed in the period they occur.
Shipping and Handling Income and Costs
Shipping and handling costs charged to customers are recorded as revenue in the period that the related product sales
revenue is recorded. Associated costs of shipping and handling are included in sales and marketing expenses. For the
years ended December 31, 2023 , 2022 and 2021 , shipping and handling costs totaled $ 32.4 million , $ 34.4 million and
$ 31.7 million , respectively.
Advertising Costs
The costs of advertising are expensed as incurred and are included as a component of sales and marketing expense.
Advertising costs for the years ended December 31, 2023 , 2022 and 2021 were $ 11.5 million , $ 15.8 million and $ 13.5
million , respectively.
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Notes to the Consolidated Financial Statements
General and Administrative
General and administrative expenses primarily represent the costs required to support administrative infrastructure. These
costs include licensing costs in connection with continued investments in information technology improvements, including
cyber security, across the organization as well as personnel in administrative functions.
Restructuring, Acquisition, Integration and Other
We i ncur indirect acquisition and business integration costs in connection with business combinations which are expensed
when incurred. These costs represent incremental costs that we believe would not have been incurred absent the business
combinations. Major components of these costs include consulting and related fees incurred to integrate or restructure the
acquired operations, payroll and related costs for employees remaining with the Company on a transitional basis and
public relations, advertising and media costs for re-branding of the combined organization.
Restructuring costs include personnel costs (principally termination benefits) as well as contract and other costs, primarily
contract termination costs. Termination benefits are accounted for in accordance with FASB ASC Topic 712, Compensation
- Nonretirement Postemployment Benefits, and are recorded when it is probable that employees will be entitled to benefits
and the amounts can be reasonably estimated. Estimates of termination benefits are based on the frequency of past
termination benefits, the similarity of benefits under the current plan and prior plans, and the existence of statutory required
minimum benefits. Contract and other costs are accounted for in accordance with FASB ASC Topic 420, Exit or Disposal
Cost Obligations and are recorded when the liability is incurred. Additionally, expenses incurred may also include costs
that are an integral component of, and are directly attributable to, restructuring activities which do not qualify as exit and
disposal costs, such as intangible asset impairments and other asset related write-offs. The specific restructuring measures
and associated estimated costs are based on management's best business judgment under the existing circumstances at the
time the estimates are made. If future events require changes to these estimates, such adjustments will be reflected in the
period of the revised estimate.
Income Taxes
We account for income taxes under the liability method. Under this method, total income tax expense is the amount of
income taxes expected to be payable for the current year plus the change from the beginning of the year for deferred tax
assets and liabilities established for the expected future tax consequences resulting from differences between the financial
statement carrying amount and the tax basis of assets and liabilities. Deferred tax assets and/or liabilities are determined
by multiplying the differences between the financial statement carrying amount and the tax bases of assets and liabilities
by the enacted tax rates expected to be in effect when such differences are reversed or settled. Deferred tax assets are
reduced by a valuation allowance to the amount more likely than not to be realized. The effect on deferred taxes of a
change in tax rates is recognized in income in the period that includes the enactment date.
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Notes to the Consolidated Financial Statements
The financial statement effects of a tax position are initially recognized in the financial statements when it is more likely
than not that the position will be sustained upon examination by the taxing authorities. Such tax positions are initially and
subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon
settlement with the taxing authority using the cumulative probability method, assuming the taxing authority has full
knowledge of the position and all relevant facts. Our policy is to recognize interest accrued related to income taxes in
interest expense and penalties related to income taxes within the income tax expense.
Derivative Instruments
We enter into derivative financial instrument contracts to minimize the variability of cash flows or income statement impact
associated with the anticipated transactions being hedged or to hedge fluctuating interest rates. As changes in foreign
currencies or interest rates impact the value of anticipated transactions, the fair value of the forward or swap contracts also
changes, offsetting foreign currency or interest rate fluctuations. Derivative instruments are recorded on the balance sheet
at fair value. Changes in fair values of derivatives are recorded in current earnings or other comprehensive income (loss),
depending on whether a derivative is designated as part of a hedge transaction.
Share-Based Payments
Compensation costs for all share-based payments are recorded based on the grant date fair value, less an estimate for pre-
vesting forfeitures, recognized in expense over the service period using an accelerated method.
Forfeiture Rate - This is the estimated percentage of grants that are expected to be forfeited or canceled on an annual basis
before becoming fully vested. We estimated the forfeiture rate based on historical forfeiture experience.
Restricted Stock Units and Performance Stock Units - Restricted stock units and performance stock units represent rights to
receive Common Shares at a future date. The fair market value of restricted and performance stock units is determined
based on the number of stock units granted and the fair market value of our shares on the grant date. The fair market value
at the time of the grant, less an estimate for pre-vesting forfeitures, is recognized in expense over the vesting period. At
each reporting period, the estimated performance achievement of the performance stock units is assessed and any change
in the estimated achievement is recorded on a cumulative basis in the period of adjustment.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on deposit in banks and other cash invested temporarily in various instruments
that are short-term and highly liquid with an original maturity of less than three months at the date of purchase. Cash
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Notes to the Consolidated Financial Statements
equivalents are carried at amortized cost which approximates fair value. Cash and cash equivalents as of December 31,
2023 and 2022 were as follows:
(in thousands)
2023
2022
Cash at bank and on hand
$ 87,380
$ 122,314
Money market funds
481,360
289,394
Commercial paper
9,982
94,828
Short-term bank deposits
89,362
224,133
Cash and cash equivalents
$ 668,084
$ 730,669
Short-Term Investments
Short-term investments include cash investments with original maturities of more than three months which are classified as
“available for sale” and stated at fair value, which is equivalent to the amortized cost, in the accompanying consolidated
balance sheet. Interest income is accrued when earned and changes in fair market values are reflected in other (expense)
income, net . The amortization of premiums and accretion of discounts to maturity arising from acquisition are included in
interest income. A decline in fair value that is judged to be other-than-temporary is accounted for as a realized loss and the
write-down is included in the consolidated statements of income. Realized gains and losses, determined on a specific
identification basis on the sale of short-term investments, are included in other (expense) income, net .
Short-term investments consisting of marketable equity securities are reported at fair value with gains and losses recorded
in earnings.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, notes receivable, accounts receivable, accounts payable and accrued
liabilities approximate their fair values because of the short maturities of those instruments. The carrying value of our
variable rate debt and leases approximates their fair values because of the short maturities and/or interest rates which are
comparable to those available to us on similar terms. The fair values of the zero coupon convertible debt and the Cash
Convertible Notes are based on an estimation using available over-the-counter market information. The fair values of the
German Private Placement are based on an estimation using changes in the euro swap rates.
Accounts Receivable, Loans and Other Receivables and Allowance for Credit Losses
Our accounts receivable consist of unsecured customer obligations and we are at risk to the extent such amounts become
uncollectible. We maintain allowances for credit losses resulting from the expected failure or inability of our customers to
make required payments. We recognize the allowance for expected credit losses at inception and reassess regularly
considering historical experience with bad debts, the aging of the receivables, credit quality of the customer base, current
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Notes to the Consolidated Financial Statements
economic conditions and other reasonable and supportable expectations for future conditions, if applicable. Once a
receivable is determined to be uncollectible, the balance is charged against the allowance.
We sell our products worldwide through sales subsidiaries and distributors. There is no concentration of credit risk with
respect to trade accounts receivable as we have a large number of internationally dispersed customers. Trade accounts
receivable are non-interest bearing and mostly have payment terms of 30-90 days. For all years presented, no single
customer represented more than ten percent of accounts receivable or consolidated net sales.
The changes in the allowance for credit losses on accounts receivable and loans and other receivables for the years ended
December 31, 2023 , 2022 and 2021 are as follows:
(in thousands)
Accounts receivable
Loans and other receivables
2023
2022
2021
2023
2022
2021
Balance at beginning of year
$ 22,880
$ 23,124
$ 27,052
$ 10,598
$ 5,142
$ 9,132
Provisions for expected credit losses
( 2,873 )
4,483
18
5
5,574
2,155
Deductions from allowance
( 2,378 )
( 2,685 )
( 1,249 )
( 10,552 )
—
( 6,049 )
Recoveries collected
—
—
288
—
—
12
Currency translation adjustments and other
( 333 )
( 2,042 )
( 2,985 )
2
( 118 )
( 108 )
Balance at end of year
$ 17,296
$ 22,880
$ 23,124
$ 53
$ 10,598
$ 5,142
In 2023 , a $ 10.6 million loa n receivab le from a related party was written off against the reserve as described in Note 24
"Related Party Transactions."
Inventories
Inventories are stated at the lower of cost or net realizable value, determined on either a weighted average cost basis or a
standard cost basis which is regularly adjusted to actual. Inventories include material, direct labor and overhead costs and
are reduced for estimated obsolescence. Inventories consisted of the following as of December 31, 2023 and 2022 :
(in thousands)
2023
2022
Raw materials
$ 91,204
$ 97,613
Work in process
94,736
85,488
Finished goods
212,445
174,859
Total inventories, net
$ 398,385
$ 357,960
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Notes to the Consolidated Financial Statements
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated amortization. Capitalized internal-use software costs
include only those direct costs associated with the actual development or acquisition of computer software solely to meet
internal needs and cloud-based applications to deliver our service and comprise costs associated with the design, coding,
installation and testing of the system. Costs associated with preliminary development, such as the evaluation and selection
of alternatives, as well as training, maintenance and support are expensed as incurred. Costs for software to be sold,
leased or otherwise marketed that are related to the conceptual formulation and design are expensed as incurred. Costs
incurred to produce software products and the software components of products to be sold, leased or marketed after
technological feasibility is established are capitalized and amortized in accordance with the accounting standards for the
costs of software to be sold, leased, or otherwise marketed. Depreciation is computed using the straight-line method over
the estimated useful lives of the a sset s . Amortization of leasehold improvements is computed on a straight-line basis over
the lesser of the remaining life of the lease or the estimated useful life of the improvement asset. We have a policy of
capitalizing expenditures that materially increase assets’ useful lives and charging ordinary maintenance and repairs to
operations as incurred. When property or equipment is disposed of, the cost and related accumulated depreciation and
amortization are removed from the accounts and any gain or loss is included in earnings.
Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration.
Company as a lessee
Leases are recognized as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use or at the lease commencement date . Leases are classified as finance or operating based on the criteria
according to ASC 842 Leases, with classification affecting the pattern of expense recognition and amortization of the right-
of-use asset in the income statement.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
• fixed payments, including in-substance fixed payments, less any lease incentives received;
• variable lease payments that are based on an index or a rate;
• amounts expected to be payable to the lessee under residual value guarantees;
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option; and
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Notes to the Consolidated Financial Statements
• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the
lessee's incremental borrowing rate at the lease commencement date is used, which is based on an assessment of interest
rates the company would have to pay to borrow funds, including the consideration of factors such as the nature of the
asset and location, collateral, market terms and conditions, as applicable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and reduced by the lease payments made.
Each lease payment is allocated between the liability and finance charges. The interest element of the finance cost is
recognized in the income statement over the lease period so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period. In addition, the carrying amount of lease liabilities is remeasured if there
is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date less any lease incentives received;
• any initial direct costs; and
• restoration costs.
The company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an
option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the
lease, if it is reasonably certain not to be exercised. The company applies judgment in evaluating whether it is reasonably
certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to
exercise the renewal.
The company leases various items of real estate, vehicles and other equipment. Rental contracts are typically made for
fixed periods but may have extension or termination options.
Company as a lessor
When the company acts as a lessor, it determines at lease inception whether a lease is a finance lease or an operating
lease. Leases in which the company does not transfer substantially all the risks and rewards incidental to ownership of an
asset are classified as operating leases. The company recognizes lease payments received under operating leases as
income on a straight-line basis over the lease terms in the Income Statement.
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Notes to the Consolidated Financial Statements
Business Combinations
We include the results of operations of the businesses that we acquire as of the acquisition date. The purchase price of an
acquired business is allocated to the individual assets acquired and liabilities assumed based on their fair values at the
date of acquisition. Those fair values are determined using income, cost and market approaches, most of which depend
upon significant inputs that are not observable in the market, or Level 3 measurements. The excess of purchase price over
the fair value of identifiable assets acquired and liabilities assumed is recorded as goodwill. Acquisition-related expenses
are expensed as incurred.
The purchase price for some business combinations includes consideration that is contingent on the achievement of net
sales or earnings targets by the acquired business. Contingent consideration is measured initially and on a recurring basis
at fair value. Payments to settle the acquisition date fair value of contingent consideration are presented as financing
activities on the statement of cash flows; any payments in excess of the acquisition date fair value are presented as
operating activities.
Acquired Intangibles and Goodwill
Acquired intangibles with future uses are carried at cost less accumulated amortization and consist of licenses to
technology held by third parties and other acquired intangible assets. Amortization related to patents are computed over
the estimated useful life of the underlying patent, which has historically ranged from 1 to 20 years. Purchased intangible
assets acquired in business combinations, other than goodwill, are amortized over their estimated useful lives unless these
lives are determined to be indefinite. Intangibles are assessed for recoverability considering the contract life and the period
of time over which the intangible will contribute to future cash flow. The unamortized cost of intangible assets, where cash
flows are independent and identifiable from other assets, is evaluated periodically and adjusted, if necessary, if events and
circumstances indicate that a decline in value below the carrying amount has occurred.
Amortization expense related to developed technology and patent and license rights which have been acquired in a
business combination is included in cost of sales. Amortization of trademarks, customer base and non-compete agreements
which have been acquired in a business combination is recorded in operating expense under acquisition-related intangible
amortization. Amortization expenses of intangible assets not acquired in a business combination are recorded within either
the cost of sales, research and development or sales and marketing line items based on the use of the asset.
We dispose the gross carrying amount and accumulated amortization of fully amortized intangible assets from historic
business combinations once they are considered fully integrated into our business.
The fair value of in-process research and development (IPR&D) acquired in a business combination is capitalized as an
indefinite-lived intangible asset until completion or abandonment of the related research and development activities. IPR&D
is tested for impairment annually or when any event or circumstance indicates that the fair value may be below the
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Notes to the Consolidated Financial Statements
carrying value. If and when research and development is complete, the associated asset is amortized over the estimated
useful life.
Goodwill represents the difference between the purchase price and the estimated fair value of the net assets acquired
arising from business combinations. Goodwill is subject to impairment tests annually or earlier if indicators of potential
impairment exist. We have elected to perform our annual test for indications of impairment as of October 1st of each year.
Following the annual impairment tests for the years ended December 31, 2023 , 2022 and 2021 , goodwill has not been
impaired.
Non-Marketable Investments
We have investments in non-marketable equity securities issued by privately held companies. These investments are
included in other long-term assets in the accompanying consolidated balance sheets. Non-marketable investments through
which we exercise significant influence but do not have control are accounted for using the equity method, which requires
that we recorded our share of unrealized gains and losses on our equity method investments in other (expense) income,
net. We monitor for changes in circumstances that may require a reassessment of the level of influence. Our non-
marketable equity securities not accounted for under the equity method are accounted for under the measurement
alternative. Under the measurement alternative, the carrying value is measured at cost, less any impairment, plus or minus
changes resulting from observable price changes in orderly transactions for identical or similar investments of the same
issuer. Adjustments are determined primarily based on a market approach as of the transaction date.
Investments are evaluated periodically, or when impairment indicators are noted, to determine if declines in value are
other-than-temporary. In making that determination, we consider all available evidence relating to the realizable value of a
security. This evidence includes, but is not limited to, the following:
• adverse financial conditions of a specific issuer, segment, industry, region or other variables;
• the length of time and the extent to which the fair value has been less than cost; and
• the financial condition and near-term prospects of the issuer.
We consider whether the fair values of any of our non-marketable investments have declined below their carrying value
whenever adverse events or changes in circumstances indicate that recorded values may not be recoverable. If any such
decline is considered to be other-than-temporary (based on various factors, including historical financial results, product
development activities and the overall health of the affiliate’s industry), then a write-down of the investment would be
recorded in operating expense to its estimated fair value. Investment impairments recorded during the year ended
December 31, 2023 are discussed in Note 10 "Investments."
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Notes to the Consolidated Financial Statements
Variable Interest Entities
We evaluate at the inception of each arrangement whether we have made an investment in an entity that is considered a
variable interest entity (VIE) or if we hold other variable interests in an arrangement that is considered a variable interest
entity. We consolidate VIEs when we are the primary beneficiary. The primary beneficiary of a VIE is the party that meets
both of the following criteria: (1) has the power to make decisions that most significantly affect the economic performance
of the VIE; and (2) has the obligation to absorb losses or the right to receive benefits that in either case could potentially be
significant to the VIE. Periodically, we assess whether any changes in our interest or relationship with the entity affect our
determination of whether the entity is still a VIE and, if so, whether we are the primary beneficiary. If we are not the
primary beneficiary in a VIE, we account for the investment or other variable interests in a VIE as an investment in a non-
marketable investment or in accordance with other applicable GAAP.
Impairment of Long-Lived Assets
We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset or a group of assets may not be recoverable. We consider, amongst other indicators, a history of
operating losses or a change in expected sales levels to be indicators of potential impairment. Assets are grouped and
evaluated for impairment at the lowest level for which there are identifiable cash flows that are largely independent of the
cash flows of other groups of assets. If an asset is determined to be impaired, the loss is measured as the amount by which
the carrying amount of the asset exceeds the fair value as determined by applicable market prices, when available. When
market prices are not available, we generally measure fair value by discounting projected future cash flows of the asset.
Considerable judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could differ from
such estimates.
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Notes to the Consolidated Financial Statements
4. Revenue
Nature of Goods and Services
Our revenues are reported net of sales and value added taxes and accruals for estimated rebates and returns and are
derived primarily from the sale of consumable and instrumentation products, and to a much lesser extent, from the sale of
services, intellectual property and technology. Revenue is recognized upon transfer of control of promised products or
services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or
services. From time to time, we enter into contracts that can include various combinations of products and services, which
are generally distinct and accounted for as separate performance obligations. The transaction price is allocated to
performance obligations based on their relative stand-alone selling prices.
We offer warranties on our products. Certain of our warranties are assurance-type in nature and do not cover anything
beyond ensuring that the product is functioning as intended. Based on the guidance in FASB ASC Topic 606, assurance-
type warranties do not represent separate performance obligations. The Company also sells separately-priced service
contracts which qualify as service-type warranties and represent separate performance obligations.
We sell our products and services both directly to customers and through distributors generally under agreements with
payment terms typically less than 90 days and, in most cases, not exceeding one year and therefore contracts do not
contain a significant financing component.
Consumable and Related Revenue
Consumable Products: In the last three years, revenue from consumable product sales has accounted for between
78 - 81 % of our net sales and revenue is recognized when performance obligations under the terms of a contract with a
customer are satisfied. The majority of our contracts have either a single performance obligation to transfer a single
consumable product or multiple performance obligations to transfer multiple products concurrently. Accordingly, we
recognize revenue when control of the products has transferred to the customer, which is generally at the time of shipment
of products as this is when title and risk of loss have been transferred. In addition, invoicing typically occurs at this time so
this is when we have a present right to payment. Revenue is measured as the amount of consideration we expect to receive
in exchange for transferring products and is generally based upon a negotiated formula, list or fixed price.
Related Revenue: Revenues from related products include software-as-a-service (SaaS), licenses, intellectual property
and patent sales, royalties and milestone payments and over the last three years has accounted for between 7 - 10 % of our
net sales.
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Notes to the Consolidated Financial Statements
SaaS arrangements: Revenue from SaaS arrangements, which allow customers to use hosted software over the contract
period without taking possession of the software, is recognized over the duration of the agreement unless the terms of
the agreement indicate that revenue should be recognized in a different pattern, for example, based on usage.
Licenses: Licenses for on-site software, which allow customers to use the software as it exists when made available, are
sold as perpetual licenses or term licenses. Revenue from on-site licenses is recognized at the later of when the
software is made available to the customer or the beginning of the license term. When a portion of the transaction
price is allocated to a performance obligation to provide support and/or updates, revenue is recognized as the
updates/support are provided, generally over the life of the license. Fees from research collaborations include
payments for technology transfer and access rights. Royalties from licensees of intellectual property are based on sales
of licensed products and revenues are recognized at the later of (i) when the related sales occur, or (ii) when the
performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Milestone Payments: At the inception of each companion diagnostic co-development arrangement that includes
development milestone payments, which represent variable consideration, we evaluate whether the milestones are
probable of being reached and estimate the amount to be included in the transaction price using the most likely
amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is
included in the transaction price. Milestone payments that are not within our control, such as milestones which are
achieved through regulatory approvals, are considered to be constrained and excluded from the transaction price until
the required approvals are received. Revenue is recognized following the input method as this is considered to best
depict the timing of the transfer of control. This involves measuring actual hours incurred to date as a proportion of the
total budgeted hours of the project. At the end of each subsequent reporting period, the proportion of completion is
trued-up. We also re-evaluate the probability of achievement of development milestones and any related constraint on
a periodic basis and, if necessary, adjust our estimate of the overall transaction price. Any such adjustments are
recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment.
Instruments
Revenue from instrumentation includes the instrumentation equipment, installation, training and other instrumentation
services, such as extended warranty services or product maintenance contracts, and over the last three years has
accounted for 12 % of net sales. Revenue from instrumentation equipment is recognized when the customer obtains control
of the instrument which is predominantly at the time of delivery or upon customer acceptance, where applicable. Service
revenue is recognized over the term of the service period as the customers benefit from the service throughout the service
period. Revenue related to services performed on a time-and-materials basis is recognized when performed.
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
Contract Estimates
The majority of our revenue is derived from contracts (i) with an original expected length of one year or less and (ii)
contracts for which we recognize revenue at the amount in which we have the right to invoice as product is delivered. We
have elected the practical expedient not to disclose the value of remaining performance obligations associated with these
types of contracts.
However, we have certain companion diagnostic co-development contracts to provide research and development activities
in which our performance obligations extend over multiple years. As of December 31, 2023 , remaining performance
obligations totaled $ 55.5 million for which the transaction price is not constrained related to these contracts which we
expect to recognize over the next 12 to 18 months .
Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue
pertaining to contracts that have an original expected duration of one year or less, contracts where revenue is recognized
as invoiced and contracts with variable consideration related to undelivered performance obligations, is not material.
Contract Balances
The timing of revenue recognition, billings and cash collections can result in billed accounts receivable, unbilled
receivables (contract assets), and customer advances and deposits (contract liabilities) in the consolidated balance sheet.
Contract assets as of December 31, 2023 and 2022 totaled $ 15.0 million and $ 9.8 million , respectively, and are
included in prepaid expenses and other current assets in the accompanying consolidated balance sheets and relate to the
companion diagnostic co-development contracts discussed above.
Contract liabilities primarily relate to non-cancellable advances or deposits received from customers before revenue is
recognized and are primarily related to instrument service and software-as-a-service (SaaS) arrangements. As of
December 31, 2023 and 2022 , contract liabilities totaled $ 82.1 million and $ 84.2 million , respectively, of which $ 66.4
million and $ 69.0 million is included in accrued and other current liabilities , respectively, and $ 15.7 million and $ 15.2
million in included in other long-term liabilities , respectively. During the years ended December 31, 2023 and 2022 , we
satisfied the associated performance obligations and recognized revenue of $ 66.8 million and $ 57.6 million , respectively,
related to advance customer payments previously received.
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
Disaggregation of Revenue
We disaggregate our revenue based on product type and customer class as shown below for the years ended
December 31, 2023 , 2022 and 2021 :
(in thousands)
2023
2022
2021
Consumables and related revenues
$ 951,366
$ 1,029,791
$ 1,027,215
Instruments
84,111
96,436
116,449
Molecular Diagnostics
1,035,477
1,126,227
1,143,664
Consumables and related revenues
774,847
859,133
959,093
Instruments
154,987
156,158
148,900
Life Sciences
929,834
1,015,291
1,107,993
Total net sales
$ 1,965,311
$ 2,141,518
$ 2,251,657
Additionally, we disaggregate our revenue based on the product categories as shown below for the years ended
December 31, 2023 , 2022 and 2021 :
(in thousands)
2023
2022
2021
Sample technologies
$ 662,991
$ 796,932
$ 850,636
Diagnostic solutions
697,630
660,879
638,759
PCR / Nucleic acid amplification
300,204
390,804
433,972
Genomics / NGS
238,910
224,797
245,066
Other
65,576
68,106
83,224
Total net sales
$ 1,965,311
$ 2,141,518
$ 2,251,657
Refer to Note 21 "Segment Information" for disclosure of revenue by geographic region.
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
5. Acquisitions
We undertake acquisitions to complement our own internal product development activities. Our acquisitions have
historically been made at prices above the fair value of the acquired net assets, resulting in goodwill, due to expectations
of synergies of combining the businesses. These synergies include use of our existing infrastructure, such as sales force,
business service centers, distribution channels and customer relations, to expand sales of an acquired business' products;
use of the infrastructure of the acquired businesses to cost-effectively expand sales of our products; and elimination of
duplicative facilities, functions and staffing.
2023 Business Combination
On January 3, 2023, we acquired 100 % of the shares of Verogen, Inc., a leader in the use of next-generation sequencing
(NGS) technologies to drive the future of human identification (HID) and forensic investigation. Verogen, a privately held
company founded in 2017 and based in San Diego, California, supports the global human identification community with
NGS tools and professional services to help resolve criminal and missing-persons cases. The cash consideration, net of
cash acquired was $ 149.5 million . The acquisition is not significant to the overall consolidated financial statements and as
of September 30, 2023, the allocation of the purchase price was final. At the acquisition date, all the assets acquired and
liabilities assumed were recorded at their respective fair values and our consolidated results of operations include the
operating results from the acquired company from the acquisition date. The acquisition did not have a material impact to
net sales, net income or earnings per common share and therefore no pro forma information has been provided herein.
2022 Business Combination
On May 11, 2022, we acquired BLIRT S.A., a supplier of standardized and customized solutions for proteins and
enzymes as well as molecular biology reagents located in Gdańsk, Poland. Its offering includes proteins and enzymes that
are critical to the life sciences industry and diagnostic kit manufacturers. The cash consideration, net of cash acquired was
$ 63.7 million . The acquisition was not significant to the overall consolidated financial statements. At the acquisition date,
all the assets acquired and liabilities assumed were recorded at their respective fair values and our consolidated results of
operations include the operating results from the acquired company from the acquisition date. The acquisition did not have
a material impact to net sales, net income or earnings per share and therefore no pro forma information has been
provided herei n.
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
6. Restructuring
During the fourth quarter of 2022, we initiated a restructuring plan to discontinue our third-party instrument service
business and realign certain management positions and personnel in order to improve the overall management structure.
The below table shows the pre-tax restructuring charges recorded in 2023 and 2022 in the accompanying consolidated
statements of income .
(in thousands)
2023
2022
Cost of sales
$ —
$ 391
Restructuring, acquisition, integration and other, net
6,948
4,612
Total restructuring charges
$ 6,948
$ 5,003
Cost of sales charges in 2022 were for inventory write-downs.
A summary of the restructuring liability, which is recorded in accrued and other current liabilities in the accompanying
consolidated balance sheets, as of December 31, 2023 and 2022 is as follows:
(in thousands)
Personnel related
Contract and
other costs
Total
Liability at December 31, 2021
$ —
$ —
$ —
Cost incurred in 2022
4,121
491
4,612
Foreign currency translation adjustment
24
3
27
Liability at December 31, 2022
$ 4,145
$ 494
$ 4,639
Costs incurred in 2023
7,457
160
7,617
Release of accruals
( 662 )
( 7 )
( 669 )
Payments
( 3,667 )
( 500 )
( 4,167 )
Foreign currency translation adjustment
137
—
137
Liability at December 31, 2023
$ 7,410
$ 147
$ 7,557
No further charges related to this program are expected to be incurred in 2024.
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
7. Short-Term Investments
As of December 31, 2023 and 2022 , short-term investments were as follows:
(in thousands)
2023
2022
Commercial paper
$ 81,023
$ 672,597
Money market deposits
308,675
15,000
Total short-term investments
$ 389,698
$ 687,597
Short-term investments are highly liquid deposits and fixed-income securities denominated in U.S. dollars. At December 31,
2023 and 2022 , we had $ 389.7 million and $ 687.6 million , respectively, of commercial paper and money market
deposits due from financial and nonfinancial institutions.
Investments in commercial paper, a marketable debt security, are classified as available for sale investments and are
carried at amortized cost, which approximates fair market value. Interest income is calculated and accrued using the
effective interest method.
Money market deposits are interest-bearing deposit accounts, valued at cost with interest income accrued as earned. All
instruments are classified as current assets in the accompanying balance sheet as they have an original maturity of less
than one year. Interest income is determined using the effective interest rate method.
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
8. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets are summarized as follows as of December 31, 2023 and 2022 :
(in thousands)
Notes
2023
2022
Cash collateral
(14)
$ 87,666
$ 21,083
Income taxes receivable
(17)
60,639
53,394
Prepaid expenses
44,854
50,958
Fair value of derivative instruments
(14)
43,230
111,617
Other receivables
38,177
19,026
Value added tax
19,911
28,130
Contract assets
(4)
15,039
9,768
Total prepaid expenses and other current assets
$ 309,516
$ 293,976
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
9. Property, Plant and Equipment
Property, plant and equipment as of December 31, 2023 and 2022 were as follows:
(in thousands)
Estimated useful
lives (in years)
2023
2022
Land
$ 26,239
$ 25,480
Buildings and improvements
up to 60
382,836
362,794
Machinery and equipment
3 - 10
309,930
294,156
Computer software
3 - 20
267,572
262,007
Furniture and office equipment
3 - 10
91,247
90,293
Construction in progress
203,978
130,407
Total property, plant and equipment
1,281,802
1,165,137
Less: Accumulated depreciation and amortization
( 516,765 )
( 502,967 )
Total property, plant and equipment, net
$ 765,037
$ 662,170
For the year ended December 31, 2023 , construction in progress primarily includes amounts related to projects to expand
production lines and increase capacity of manufacturing as well as ongoing software development projects. For the year
ended December 31, 2023 , interest capitalized in connection with these projects totaled $ 1.2 million . No significa nt
interest was capitalized for the years ended December 31, 2022 and 2021 .
For the years ended December 31, 2023 , 2022 and 2021 , depreciation and amortization expense totaled $ 85.6 million ,
$ 89.5 million and $ 85.4 million , respectively. For the years ended December 31, 2023 , 2022 and 2021 , amortization
related to computer software to be sold, leased or marketed totaled $ 11.7 million , $ 10.8 million and $ 9.2 million ,
respectively. As of December 31, 2023 and 2022 , the unamortized balance of computer software to be sold, leased or
marketed was $ 97.9 million and $ 69.2 million , respectively.
Repairs and maintenance expense was $ 19.3 million , $ 16.8 million and $ 16.2 million in 2023 , 2022 and 2021 ,
respectively.
QIAGEN N.V. | Financial Report 2023
Page 134
Notes to the Consolidated Financial Statements
10. Investments
Non-Marketable Investments
We have made strategic investments in certain privately-held companies without readily determinable market values.
Non-Marketable Investments Accounted for Under the Equity Method
A summary of our non-marketable investments accounted for as equity method investments is as follows:
(in thousands)
Ownership
percentage
Equity investments
as of December 31,
Share of income (loss)
for the years ended December 31,
2023
2022
2023
2022
2021
PreAnalytiX GmbH
50.00 %
$ 3,422
$ 6,856
$ 4,977
$ 4,377
$ 10,412
Apis Assay Technologies Ltd
19.90 %
2,408
4,102
( 1,694 )
389
1,773
TVM Life Science Ventures III
3.10 %
7,198
3,872
947
( 901 )
( 264 )
Suzhou Fuda Business Management and Consulting Partnership
33.67 %
2,581
2,608
49
—
—
Actome GmbH
12.50 %
586
779
( 216 )
( 201 )
( 31 )
Hombrechtikon Systems Engineering AG
19.00 %
( 275 )
( 311 )
100
94
97
Total
$ 15,920
$ 17,906
$ 4,163
$ 3,758
$ 11,987
Of the $ 15.9 million of non-marketable investments accounted for as equity method investments, $ 16.2 million is included
in other long-term assets and $ 0.3 million , where we are committed to fund losses, is included in other long-term liabilities
in the accompanying consolidated balance sheet as of December 31, 2023 .
TVM Life Science Ventures III (TVM) is a limited partnership and we account for our 3.1 % investment under the equity
method as we have the ability to exercise significant influence over the limited partnership. This investment is valued at net
asset value (NAV) reported by the counterparty, adjusted as necessary. During the years ended December 31, 2023 ,
2022 and 2021 , we made $ 2.4 million , $ 1.1 million and $ 2.4 million , respectively, in additional cash payments to TVM
and, as of December 31, 2023 , have $ 6.8 million of unfunded commitments through 2029 related to this investment. We
do not have the right to redeem these funds under the normal course of operations of this partnership.
During the years ended December 31, 2023 , 2022 and 2021 , we received dividends of $ 9.1 million , $ 7.5 million and
$ 4.7 million , respectively, from PreAnalytix GmbH. These dividends are included in other items, net including fair value
changes in derivatives in the accompanying consolidated statement of cash flows as they are a return on investment and
therefore classified as cash flows from operating activities.
QIAGEN N.V. | Financial Report 2023
Page 135
Notes to the Consolidated Financial Statements
As of December 31, 2023 , four of our equity method investments are variable interest entities and we are not the primary
beneficiary as we do not hold the power to direct the activities that most significantly impact the economic performance.
Therefore, these investments are not consolidated. As of December 31, 2023 , these investments had a total net carrying
value of $ 9.9 million , of which $ 10.2 million , representing our maximum exposure to loss, is included in other long-term
assets and $ 0.3 million is included in other long-term liabilities in the accompanying consolidated balance sheet. As of
December 31, 2022 , these investments held a balance of $ 8.4 million , of which $ 8.7 million is included in other long-term
assets and $ 0.3 million is included in other long-term liabilities in the accompanying consolidated balance sheet.
Non-Marketable Investments Not Accounted for Under the Equity Method
At December 31, 2023 and 2022 , we had investments in non-publicly traded companies that do not have readily
determinable fair values with carrying amounts that totaled $ 4.4 million and $ 5.3 million , respectively, which are included
in other long-term assets . These investments are measured at cost, less any impairment, plus or minus changes resulting
from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. Changes
resulting from impairment and observable price changes are recognized in the statements of income during the period the
change is identified.
The changes in non-marketable investments not accounted for under the equity method for the years ended December 31,
2023 and 2022 are as follows:
(in thousands)
2023
2022
Balance at beginning of year
$ 5,329
$ 3,945
Impairments
( 4,158 )
—
Cash investments in equity securities, net
491
52
Shares received in exchange for services performed
2,604
1,475
Foreign currency translation adjustments
169
( 143 )
Balance at end of year
$ 4,435
$ 5,329
During 2023 , we fully impaired an investment following adverse changes in an investee's solvency that indicated that the
carrying value was no longer recoverable. The impairment of $ 4.2 million is recorded in other (expense) income, net in the
accompanying consolidated statement of income.
QIAGEN N.V. | Financial Report 2023
Page 136
Notes to the Consolidated Financial Statements
Marketable Equity Securities
During the year ended December 31, 2021, we sold all previously held investments in marketable equity securities that
had readily determinable fair values. These investments were reported at fair value with gains and losses recorded in
earnings.
The changes in marketable equity securities during the year ended December 31, 2021 are presented below.
(in thousands, except shares)
Invitae Corporation
(Invitae)
OncoCyte Corporation
(OncoCyte)
Oncimmune Holdings plc
(Oncimmune)
HTG Molecular Diagnostics,
Inc (HTGM)
Shares
Amount
Shares
Amount
Shares
Amount
Shares
Amount
Balance at December 31, 2020
2,769,189
$ 115,780
88,101
$ 211
560,416
$ 1,258
55,556
$ 266
Shares received upon milestone achievement
1,100,190
35,338
30,152
147
86,218
220
—
—
(Loss) gain on change in fair value
—
( 3,066 )
—
123
—
61
—
65
Sale of investment
( 3,869,379 )
( 148,052 )
( 118,253 )
( 481 )
( 646,634 )
( 1,539 )
( 55,556 )
( 331 )
Balance at December 31, 2021
—
$ —
—
$ —
—
$ —
—
$ —
During 2021, we sold all shares received from Invitae upon milestone achievement and realized a gain of $ 32.3 million in
other (expense) income, net in the accompanying consolidated statement of income.
QIAGEN N.V. | Financial Report 2023
Page 137
Notes to the Consolidated Financial Statements
11. Goodwill and Intangible Assets
The following sets forth the intangible assets by major asset class as of December 31, 2023 and 2022 :
(in thousands)
Weighted
average life
(in years)
2023
2022
Gross carrying
amount
Accumulated
amortization
Gross carrying
amount
Accumulated
amortization
Amortized intangible assets:
Patent and license rights
10.35
$ 202,785
($ 127,163 )
$ 203,549
($ 140,632 )
Developed technology
11.01
798,571
( 447,989 )
780,233
( 407,401 )
Customer base, trademarks, and non-compete agreements
10.97
212,285
( 173,438 )
227,171
( 179,658 )
Total amortized intangible assets
10.90
$ 1,213,641
($ 748,590 )
$ 1,210,953
($ 727,691 )
Unamortized intangible assets:
In-process research and development
$ 61,770
$ 61,534
Goodwill
2,475,732
2,352,569
Total unamortized intangible assets
$ 2,537,502
$ 2,414,103
During 2023 and 2022, certain fully amortized intangible assets with a gross carrying amo unt of $ 87.3 million and
$ 135.3 million , respectively, were retired.
I n-process research and development is from the acquisitions of NeuMoDx in 2020 and STAT-Dx in 2018. The estimated
fair value of acquired in-process research and development projects which have not reached technological feasibility at the
date of acquisition are capitalized and subsequently tested for impairment through completion of the development process,
at which point the capitalized amounts are amortized over their estimated useful life. If a project is abandoned rather than
completed, all capitalized amounts are written-off immediately.
QIAGEN N.V. | Financial Report 2023
Page 138
Notes to the Consolidated Financial Statements
The changes in intangible assets, net excluding goodwill for the years ended December 31, 2023 and 2022 are as
follows:
(in thousands)
2023
2022
Balance at beginning of year
$ 544,796
$ 627,436
Additions
11,077
19,632
Additions from acquisitions
58,000
17,247
Amortization
( 93,755 )
( 93,714 )
Disposals
—
( 35 )
Impairments
—
( 12,829 )
Foreign currency translation adjustments
6,703
( 12,941 )
Balance at end of year
$ 526,821
$ 544,796
Cash paid for purchases of intangible assets during the year ended December 31, 2023 totaled $ 13.1 million which
includes $ 10.8 million of cash paid for current year additions and $ 2.3 million of payments for assets that were accrued
as of December 31, 2022 .
Intangible additions of $ 19.6 million in 2022 include $ 10.9 million of cash paid during the year ended December 31,
2022 together with $ 7.0 million of additions which were previously recorded as prepayments and $ 1.7 million of
additions that were accrued as of December 31, 2022 . Cash paid for purchases of intangible assets during the year
ended December 31, 2022 totaled $ 20.1 million of which $ 4.8 million is related to payments in 2022 for assets that
were accrued as of December 31, 2021 and $ 4.4 million are prepayments recorded in other long-term assets in the
accompanying consolidated balance sheet as of December 31, 2022 .
Amortization expense on intangible assets totaled approximately $ 93.8 million , $ 93.7 million and $ 104.4 million ,
respectively, for the years ended December 31, 2023 , 2022 and 2021 . During 2022 , we recorded a charge to
restructuring, acquisition, integration and other, net in the accompanying statement of income to fully impair a license with
a carrying value of $ 12.8 million . This license was to use technology of Ellume Limited, Australia. In connection with
Ellume starting insolvency proceedings in September 2022, we decided to cease all product development and
manufacturing activities associated with this license and determined that there was no alternative use nor recoverable
value. Accordingly, the license was fully impaired.
QIAGEN N.V. | Financial Report 2023
Page 139
Notes to the Consolidated Financial Statements
Amortization of intangibles for the next five years for the years ended December 31 is expected to be approximately:
(in thousands)
2024
$ 91,349
2025
$ 79,841
2026
$ 72,334
2027
$ 66,847
2028
$ 59,787
The changes in goodwill for the years ended December 31, 2023 and 2022 are as follows:
(in thousands)
2023
2022
Balance at beginning of year
$ 2,352,569
$ 2,350,763
Business combinations
95,136
42,201
Purchase adjustments
( 4,350 )
( 303 )
Foreign currency translation adjustments
32,377
( 40,092 )
Balance at end of year
$ 2,475,732
$ 2,352,569
T he changes in the carrying amount of goodwill during the year ended December 31, 2023 resulted primarily from the
acquisition of Verogen, Inc. in January 2023 and foreign currency translation adjustments driven by changes in the euro,
Swiss franc and British pound. The changes in goodwill during the year ended December 31, 2022 resulted primarily from
the acquisition of BLIRT S.A. in May 2022 and foreign currency translation adjustments.
12. Leases
We have operating leases primarily for real estate. The leases generally have terms which range from one year to 15
years , some include options to extend or renew, and some include options to early terminate the leases. As of
December 31, 2023 and 2022 , no such options have been recognized as part of the right-of-use assets and lease
liabilities.
Operating leases can contain variable lease charges based on an index like consumer prices or rates. During the years
ended December 31, 2023 and 2022 , amounts recorded as variable lease payments not included in the operating lease
liability were not material.
QIAGEN N.V. | Financial Report 2023
Page 140
Notes to the Consolidated Financial Statements
When the interest rate implicit in each lease is not readily determinable, we apply our incremental borrowing rate in
determining the present value of lease payments. All operating lease expense is recognized on a straight-line basis over
the lease term. For the years ended December 31, 2023 and 2022 , we recognized $ 28.6 million and $ 27.0 million in
total lease costs, respectively.
Supplemental balance sheet and other information related to operating leases as of December 31, 2023 and 2022 are as
follows:
(in thousands,
except lease term and discount rate)
Location in consolidated balance sheet
2023
2022
Operating lease right-of-use assets
Other long-term assets
$ 105,240
$ 95,523
Current operating lease liabilities
Accrued and other current liabilities
$ 22,268
$ 22,220
Long-term operating lease liabilities
Other long-term liabilities
$ 79,063
$ 71,406
Weighted average remaining lease term
6.80 years
6.92 years
Weighted average discount rate
2.85 %
2.08 %
Supplemental cash flow information related to operating leases for the years ended December 31, 2023 and 2022 is as
follows:
(in thousands)
2023
2022
Cash paid for operating leases included in cash flows from operating activities
$ 29,300
$ 26,842
Operating lease right-of-use assets obtained in exchange for lease obligations
$ 30,911
$ 25,148
QIAGEN N.V. | Financial Report 2023
Page 141
Notes to the Consolidated Financial Statements
Future maturities of operating lease liabilities as of December 31, 2023 are as f ollo ws:
Years ending December 31,
(in thousands)
2024
$ 25,123
2025
20,876
2026
15,049
2027
11,531
2028
8,162
Thereafter
29,159
Total lease payments
109,900
Less: Imputed interest
( 8,569 )
Total
$ 101,331
As of December 31, 2023 , we do not have any material operating lease that have not yet commenced. We did not hold
any material finance leases as of December 31, 2023 and 2022 .
QIAGEN N.V. | Financial Report 2023
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Notes to the Consolidated Financial Statements
13. Accrued and Other Current Liabilities
Accrued and other current liabilities at December 31, 2023 and 2022 consist of the following:
(in thousands)
Notes
2023
2022
Payroll and related accruals
$ 81,377
$ 99,885
Accrued expenses
70,007
62,469
Deferred revenue
(4)
66,432
69,000
Other liabilities
(6)
62,819
59,187
Fair value of derivative instruments
(14)
49,774
111,252
Operating lease liabilities
(12)
22,268
22,220
Accrued contingent consideration and milestone payments
(15)
18,359
8,181
Income taxes payable
(17)
12,475
13,980
Accrued royalties
(20)
9,699
12,877
Accrued interest on long-term debt
(16)
8,518
5,431
Cash collateral
(14)
5,440
21,755
Total accrued and other current liabilities
$ 407,168
$ 486,237
14. Derivatives and Hedging
Obj ect ive and Strategy
In the ordinary course of business, we use derivative instruments, including swaps, forwards and/or options, to manage
potential losses from foreign currency exposures and interest-bearing assets or liabilities. The principal objective of such
derivative instruments is to minimize the risks and/or costs associated with our global financial and operating activities.
We do not utilize derivative or other financial instruments for trading or other speculative purposes. We recognize all
derivatives as either assets or liabilities on the balance sheet on a gross basis, measure those instruments at fair value and
recognize the change in fair value in earnings in the period of change, unless the derivative qualifies as an effective hedge
that offsets certain exposures. We have agreed with almost all of our counterparties with whom we had entered into cross-
currency swaps, interest rate swaps or foreign exchange contracts, to enter into bilateral collateralization contracts under
which we will receive or provide cash collateral, as the case may be, for the net position with each of these counterparties.
As of December 31, 2023 , cash collateral positions consisted of $ 5.4 million recorded in accrued and other current
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Notes to the Consolidated Financial Statements
liabilities and $ 87.7 million recorded in prepaid expenses and other current assets in the accompanying consolidated
balance sheet. As of December 31, 2022 , we had cash collateral positions consisting of $ 21.8 million recorded in
accrued and other current liabilities and $ 21.1 million recorded in prepaid expenses and other current assets in the
accompanying consolidated balance sheet.
Non-Derivative Hedging Instrument
Net Investment Hedge
We are party to a foreign currency non-derivative hedging instrument that is designated and qualifies as a net investment
hedge. The objective of the hedge is to protect part of the net investment in foreign operations against adverse changes in
the exchange rate between the euro and the U.S. dollar. The non-derivative hedging instrument is the German private
corporate bond (2017 Schuldschein) which was issued in 2017 in the total amount of $ 331.1 million as described in
Note 16 "Debt." Of the $ 331.1 million , which is held in both U.S. dollars and euros, € 255.0 million was designated as
the hedging instrument as of December 31, 2022 against a portion of our euro net investments in our foreign operations.
As further described in Note 16, four tranches of the 2017 Schuldschein matured and were paid in October 2022 and
two tranches of the 2017 Schuldschein matured and were paid during 2021. As a result, € 109.5 million remained
designated as a hedging instrument as of December 31, 2023 . In July 2022, we issued an additional € 370.0 million
German private corporate bond (2022 Schuldschein) as described in Note 16, and it is designated in its entirety as the
hedging instrument against a portion of our euro net investments in our foreign operations. The relative changes in both the
hedged item and hedging instrument are calculated by applying the change in spot rate between two assessment dates
against the respective notional amount. The effective portion of the hedge is recorded in the cumulative translation
adjustment account within accumulated other comprehensive loss. Based on the spot rate method, the unrealized loss
recorded in equity as of December 31, 2023 and 2022 is $ 35.2 million and $ 22.6 million , respectively. Since we are
using the debt as the hedging instrument, which is also remeasured based on the spot rate method, there is no hedge
ineffectiveness related to the net investment hedge as of December 31, 2023 and 2022 .
Derivatives Designated as Hedging Instruments
Net Investment Hedge
In September 2022, we entered into a one-month interest rate derivative contract for a total notional amount
€ 135.0 million , that matured on October 13, 2022, which qualified as a net investment hedge. The objective of the hedge
was to protect the additional investments in foreign operations in September 2022 against adverse changes in the
exchange rate between the euro and the functional currency of the U.S. dollar. The relative changes in both the hedged
item and derivative hedging instrument were calculated by applying the change in spot rate between two assessment dates
against the respective notional amount. The effective portion of the hedge is recorded in the cumulative translation
adjustment account within accumulated other comprehensive loss and will be reclassified to earnings upon the disposal or
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Notes to the Consolidated Financial Statements
liquidation of the foreign operations. In October 2022, the interest rate derivative contract expired and the unrealized gain
recorded in equity was $ 5.8 million as of December 31, 2022 .
Cash Flow Hedges
As of December 31, 2023 and 2022 , we held derivative instruments that are designated and qualify as cash flow hedges,
where the effective portion of the gain or loss on the derivative is reported as a component of other comprehensive loss
and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains
and losses on the derivative representing either hedge ineffectiveness or hedge components excluded from the assessment
of effectiveness are recognized in current earnings. To date, we have not recorded any hedge ineffectiveness related to
any cash flow hedges in earnings. Based on their valuation as of December 31, 2023 , we expect approximately $ 2.1
million of derivative gains included in accumulated other comprehensive loss will be reclassified into income during the
next 12 months. The cash flows derived from derivatives are classified in the consolidated statements of cash flows in the
same category as the hedged item.
We use interest rate derivative contracts to align our portfolio of interest-bearing assets and liabilities with our risk
management objectives. Since 2015, we have been a party to five cross-currency interest rate swaps through 2025 for a
total notional amount of € 180.0 million which qualify for hedge accounting as cash flow hedges. In September 2022, we
entered into five new cross-currency interest rate swaps through 2025 for a total notional amount of CHF 542.0 million
which qualify for hedge accounting as cash flow hedges. We determined that no ineffectiveness exists related to these
swaps. As of December 31, 2023 and 2022 , interest receivables of $ 8.4 million and $ 5.5 million , respectively, are
recorded in prepaid expenses and other current assets in the accompanying consolidated balance sheets.
Fair Value Hedges
Until October 2022, we held derivative instruments that qualified for hedge accounting as fair value hedges. For derivative
instruments that are designated and qualify as a fair value hedge, the effective portion of the gain or loss on the derivative
is reflected in earnings. This effect on earnings is offset by the change in the fair value of the hedged item attributable to
the risk being hedged that is also recorded in earnings. The cash flows derived from derivatives are classified in the
consolidated statement of cash flows in the same category as the consolidated balance sheet account of the underlying
item.
We held interest rate swaps which effectively fixed the fair value of a portion of our fixed rate private placement debt and
qualified for hedge accounting as fair value hedges. These interest rate swap derivative instruments expired along with the
repayment of the private placement debt in October 2022, as described in Note 16 "Debt." There had been no
ineffectiveness related to the interest rate swaps.
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Notes to the Consolidated Financial Statements
Derivatives Not Designated as Hedging Instruments
Call Options
We entered into Call Options which, along with the sale of the Warrants, represent the Call Spread Overlay entered into
in connection with the Cash Convertible Notes and which are more fully described in Note 16 "Debt." In these
transactions, the Call Options are intended to address the equity price risk inherent in the cash conversion feature of each
instrument by offsetting cash payments in excess of the principal amount due upon any conversion of the Cash Convertible
Notes. Accordingly, the derivative is presented as either current or long-term based upon the classification of the related
debt.
Aside from the initial payment of premiums for the Call Options, we will not be required to make any cash payments under
the Call Options. We will, however, be entitled to receive under the terms of the Call Options, an amount of cash
generally equal to the amount by which the market price per share of our common stock exceeds the exercise price of the
Call Options during the relevant valuation period. The exercise price under the Call Options is equal to the conversion
price of the Cash Convertible Notes.
The Call Options, for which our common stock is the underlying security, are derivative assets that require mark-to-market
accounting treatment. The Call Options are measured and reported at fair value on a recurring basis within Level 2 of the
fair value hierarchy. The change in fair value is recognized immediately in our consolidated statements of income in other
(expense) income, net .
Cash Convertible Notes Embedded Cash Conversion Option
The embedded cash conversion option within the Cash Convertible Notes discussed in Note 16 "Debt" is required to be
separated from the Cash Convertible Notes and accounted for separately as a derivative liability, with changes in fair
value reported in our consolidated statements of income in other (expense) income, net until the cash conversion option
settles or expires. The embedded cash conversion option is measured and reported at fair value on a recurring basis within
Level 2 of the fair value hierarchy.
Because the terms of the Cash Convertible Notes' embedded cash conversion option are substantially similar to those of
the Call Options, discussed above, we expect the effect on earnings from these two derivative instruments to mostly offset
each other. In September 2023, the 2023 Notes and the related Call Options have been settled as described in Note 16
and we recognized a gain of $ 0.9 million in other (expense) income, net in the accompanying consolidated statement of
income.
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Notes to the Consolidated Financial Statements
Foreign Exchange Contracts
As a globally active enterprise, we are subject to risks associated with fluctuations in foreign currencies in our ordinary
operations. This includes foreign currency-denominated receivables, payables, debt and other balance sheet positions
including intercompany items. We manage balance sheet exposure on a group-wide basis using foreign exchange
forward contracts, foreign exchange options and cross-currency swaps.
We are party to various foreign exchange forward, option and swap arrangements which had an aggregate notional
value of $ 590.9 million at December 31, 2023 , which expire at various dates through September 2024 . At
December 31, 2022 , these arrangements had an aggregate notional value of $ 466.0 million , which expired at various
dates through July 2023 . The transactions have been entered into to offset the effects from short-term balance sheet
exposure to foreign currency exchange risk. Changes in the fair value of these arrangements have been recognized in
other (expense) income, net .
Fair Values of Derivative Instruments
The following table summarizes the fair value amounts of derivative instruments reported in the consolidated balance sheets
as of December 31, 2023 and 2022 :
(in thousands)
2023
2022
Current asset
Long-term asset
Current asset
Long-term asset
Assets:
Derivative instruments designated as hedges
Interest rate contracts - cash flow hedge (1)
$ —
$ 3,083
$ —
$ 12,256
Total derivative instruments designated as hedges
—
3,083
—
12,256
Undesignated derivative instruments
Equity options
39,759
—
102,671
119,098
Foreign exchange forwards and options
3,471
—
8,946
—
Total undesignated derivative instruments
43,230
—
111,617
119,098
Total derivative assets
$ 43,230
$ 3,083
$ 111,617
$ 131,354
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Notes to the Consolidated Financial Statements
(in thousands)
2023
2022
Current liability
Long-term liability
Current liability
Long-term liability
Liabilities:
Derivative instruments designated as hedges
Interest rate contracts - cash flow hedge (1)
$ —
($ 98,908 )
$ —
($ 36,982 )
Total derivative instruments designated as hedges
—
( 98,908 )
—
( 36,982 )
Undesignated derivative instruments
Cash convertible notes embedded conversion option
( 39,830 )
—
( 102,896 )
( 119,736 )
Foreign exchange forwards and options
( 9,944 )
—
( 8,356 )
—
Total undesignated derivative instruments
( 49,774 )
—
( 111,252 )
( 119,736 )
Total derivative liabilities
($ 49,774 )
($ 98,908 )
($ 111,252 )
($ 156,718 )
(1) The fair value am ounts for the interest rate contracts do not include accrued interest.
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Notes to the Consolidated Financial Statements
Gains and Losses on Derivative Instruments
The following tables summarize the gains and losses on derivative instruments for the years ended December 31, 2023 ,
2022 and 2021 :
(in thousands)
2023
2022
2021
Other (expense)
income, net
Other (expense)
income, net
Other (expense)
income, net
Total amounts presented in the Consolidated Statements of Income in which the effects of cash flow and fair value
hedges are recorded
($ 5,711 )
$ 6,741
$ 40,671
Gains (losses) on derivatives in cash flow hedges:
Interest rate contracts
Amount of gain (loss) reclassified from accumulated other comprehensive loss
$ 66,600
$ 21,940
($ 17,010 )
Amounts excluded from effectiveness testing
—
—
—
Gains (losses) on derivatives in fair value hedges:
Interest rate contracts
Hedged item
—
1,971
3,072
Derivatives designated as hedging instruments
—
( 1,971 )
( 3,072 )
Gains (losses) on derivatives not designated as hedging instruments:
Equity options
( 182,011 )
( 130,801 )
( 23,882 )
Cash convertible notes embedded cash conversion option
182,802
131,227
28,154
Foreign exchange forwards and options
( 8,610 )
72,641
10,333
Total gains (losses) on derivative instruments
$ 58,781
$ 95,007
($ 2,405 )
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Notes to the Consolidated Financial Statements
15. Financial Instruments and Fair Value Measurements
Assets and liabilities are measured at fair value according to a three-tier fair value hierarchy which prioritizes the inputs
used in measuring fair value as follows:
• Level 1. Observable inputs, such as quoted prices in active markets;
• Level 2. Inputs, other than the quoted price in active markets, that are observable either directly or indirectly; and
• Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its
own assumptions.
The following table presents our fair value hierarchy for our financial assets and liabilities measured at fair value on a
recurring basis as of December 31, 2023 and 2022 :
(in thousands)
2023
2022
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets:
Cash equivalents
$ 481,360
$ 9,982
$ —
$ 491,342
$ 289,394
$ 94,828
$ —
$ 384,222
Short-term investments
—
81,023
—
81,023
79,600
592,997
—
672,597
Non-marketable equity securities
—
—
4,435
4,435
—
—
5,329
5,329
Equity options
—
39,759
—
39,759
—
221,769
—
221,769
Foreign exchange forwards and options
—
3,471
—
3,471
—
8,946
—
8,946
Interest rate contracts - cash flow hedge
—
3,083
—
3,083
—
12,256
—
12,256
Total financial assets
$ 481,360
$ 137,318
$ 4,435
$ 623,113
$ 368,994
$ 930,796
$ 5,329
$ 1,305,119
Liabilities:
Cash convertible notes embedded
conversion option
$ —
($ 39,830 )
$ —
($ 39,830 )
$ —
($ 222,632 )
$ —
($ 222,632 )
Foreign exchange forwards and options
—
( 9,944 )
—
( 9,944 )
—
( 8,356 )
—
( 8,356 )
Interest rate contracts - cash flow hedge
—
( 98,908 )
—
( 98,908 )
—
( 36,982 )
—
( 36,982 )
Contingent consideration
—
—
( 18,359 )
( 18,359 )
—
—
( 18,088 )
( 18,088 )
Total financial liabilities
$ —
($ 148,682 )
($ 18,359 )
($ 167,041 )
$ —
($ 267,970 )
($ 18,088 )
($ 286,058 )
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Notes to the Consolidated Financial Statements
The carrying values of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable
and other accrued liabilities, approximate their fair values due to their short-term maturities.
Our assets and liabilities measured at fair value on a recurring basis consist of cash equivalents and short-term investments,
which are classified in Level 1 and Level 2 of the fair value hierarchy; derivative contracts used to hedge currency and
interest rate risk and derivative financial instruments entered into in connection with the Cash Convertible Notes discussed
in Note 16 "Debt," which are classified in Level 2 of the fair value hierarchy; contingent consideration accruals, which are
classified in Level 3 of the fair value hierarchy; and non-marketable equity securities remeasured during the years ended
December 31, 2023 and 2022 classified within Level 3 in the fair value hierarchy. There were no transfers between levels
for the year ended December 31, 2023 .
In determining fair value for Level 2 instruments, we apply a market approach using quoted active market prices relevant to
the particular instrument under valuation, giving consideration to the credit risk of both the respective counterparty to the
contract and the Company. To determine our credit risk, we estimated our credit rating by benchmarking the price of
outstanding debt to publicly-available comparable data from rated companies. Using the estimated rating, our credit risk
was quantified by reference to publicly-traded debt with a corresponding rating. The Level 2 derivative financial
instruments include the Call Options asset and the embedded conversion option liability. See Note 16 "Debt" and Note 14
"Derivatives and Hedging" for further information. The derivatives are not actively traded and are valued based on an
option pricing model that uses observable market data for inputs. Significant market data inputs used to determine fair
values included our common stock price, the risk-free interest rate, and the implied volatility of our common stock. The Call
Options asset and the embedded cash conversion option liability were designed with the intent that changes in their fair
values would substantially offset, with limited net impact to our earnings. Therefore, the sensitivity of changes in the
unobservable inputs to the option pricing model for such instruments is substantially mitigated.
Our Level 3 instruments include non-marketable equity security investments. Under the measurement alternative, the
carrying value is measured at cost, less any impairment, plus or minus changes resulting from observable price changes in
orderly transactions for identical or similar investments of the same issuer. Adjustments are determined primarily based on
a market approach as of the transaction date. Refer to Note 10 "Investments" for the change in non-marketable equity
securities with Level 3 inputs during the years ended December 31, 2023 and 2022 .
Our Level 3 instruments also include contingent consideration liabilities. We value contingent consideration liabilities using
unobservable inputs, applying the income approach, such as the discounted cash flow technique or the probability-
weighted scenario method. Contingent consideration arrangements obligate us to pay the sellers of an acquired entity if
specified future events occur or conditions are met, such as the achievement of technological or revenue milestones. We
use various key assumptions, such as the probability of achievement of the milestones ( 0 % to 100 % ) and the discount rate
(between 6.5 % and 6.6 % ), to represent the non-performing risk factors and time value when applying the income
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Notes to the Consolidated Financial Statements
approach. We regularly review the fair value of the contingent consideration and reflect any change in the accrual in the
consolidated statements of income in the line items commensurate with the underlying nature of milestone arrangements.
For contingent consideration liabilities with Level 3 inputs, the following table summarizes the activity for the years ended
December 31, 2023 and 2022 , all of which is related to the 2018 acquisition of STAT-Dx:
(in thousands)
2023
2022
Balance at beginning of year
($ 18,088 )
($ 24,100 )
Changes in fair value
( 271 )
112
Payments
—
5,900
Balance at end of year
($ 18,359 )
($ 18,088 )
As of December 31, 2023 , $ 18.4 million was accrued for contingent consideration and is included in accrued and other
current liabilities in the accompanying consolidated balance sheet . As of December 31, 2022 , $ 18.1 million was accrued
for contingent consideration, of which $ 8.2 million was included in accrued and other current liabilities and $ 9.9 million
was included in other long-term liabilities in the accompanying consolidated balance sheet .
The estimated fair value of long-term debt, as disclosed in Note 16 "Debt," was based on current interest rates for similar
types of borrowings. The estimated fair values may not represent actual values of the financial instruments that could be
realized as of the balance sheet date or that will be realized in the future.
The fair values of the financial instruments are presented in Note 16 "Debt" and were determined as follows:
Cash Convertible Notes and Convertible Notes : Fair value is based on an estimation using available over-the-counter
market information on the Cash Convertible Notes due in 2024 as well as the Convertible Notes due in 2027.
German Private Placements: Fair value is based on an estimation using changes in the euro swap rates.
There were no adjustments in the years ended December 31, 2023 and 2022 for nonfinancial assets or liabilities required
to be measured at fair value on a nonrecurring basis.
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Notes to the Consolidated Financial Statements
16. Debt
At December 31, 2023 and 2022 , total long-term debt, net of debt issuance costs of $ 4.0 million and $ 6.6 million ,
respectively, consists of the following:
(in thousands)
2023
2022
0.500 % Senior Unsecured Cash Convertible Notes due 2023
$ —
$ 389,552
1.000 % Senior Unsecured Cash Convertible Notes due 2024
483,019
464,331
0.000 % Senior Unsecured Convertible Notes due 2027
497,869
497,336
German Private Placement (2017 Schuldschein)
120,956
116,699
German Private Placement (2022 Schuldschein)
407,950
393,532
Total long-term debt
1,509,794
1,861,450
Less: Current portion
587,970
389,552
Long-term portion
$ 921,824
$ 1,471,898
The notes are all unsecured obligations that rank pari passu. N o Contingent Conversion Conditions were triggered as of
December 31, 2023 .
Repayments of long-term debt for the years ended December 31, 2023 , 2022 and 2021 consisted of:
(in thousands)
2023
2022
2021
German Private Placement (2017 Schuldschein)
$ —
$ 153,003
$ 41,145
0.500 % Senior Unsecured Cash Convertible Notes due 2023
400,000
—
—
0.875 % Senior Unsecured Cash Convertible Notes due 2021
—
—
200
3.75 % Series B Senior Notes due October 16, 2022
—
300,000
—
3.90 % Series C Senior Notes due October 16, 2024
—
27,000
—
Total repayment of long-term debt
$ 400,000
$ 480,003
$ 41,345
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Notes to the Consolidated Financial Statements
The principal amount, carrying amount and fair values of long-term debt instruments as of December 31, 2023 and 2022
are summa rized b elow:
(in thousands)
2023
Principal
amount
Unamortized debt
discount and
issuance costs
Carrying
amount
Fair value
Amount
Leveling
Cash Convertible Notes due 2024
$ 500,000
($ 16,981 )
$ 483,019
$ 513,500
Level 1
Convertible Notes due 2027
500,000
( 2,131 )
497,869
453,185
Level 1
German Private Placement (2017 Schuldschein)
121,009
( 53 )
120,956
118,978
Level 2
German Private Placement (2022 Schuldschein)
408,846
( 896 )
407,950
401,684
Level 2
$ 1,529,855
($ 20,061 )
$ 1,509,794
$ 1,487,347
(in thousands)
2022
Principal
amount
Unamortized debt
discount and
issuance costs
Carrying
amount
Fair value
Amount
Leveling
Cash Convertible Notes due 2023
$ 400,000
($ 10,448 )
$ 389,552
$ 493,436
Level 1
Cash Convertible Notes due 2024
500,000
( 35,669 )
464,331
596,485
Level 1
Convertible Notes due 2027
500,000
( 2,664 )
497,336
471,545
Level 1
German Private Placement (2017 Schuldschein)
116,821
( 122 )
116,699
112,401
Level 2
German Private Placement (2022 Schuldschein)
394,638
( 1,106 )
393,532
378,302
Level 2
$ 1,911,459
($ 50,009 )
$ 1,861,450
$ 2,052,169
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Notes to the Consolidated Financial Statements
Future maturities of long-term debt stated at the carrying values as of December 31, 2023 are as follows:
Years ending December 31,
(in thousands)
2024
$ 587,970
2025
56,836
2026
—
2027
614,800
2028
—
Thereafter
250,188
$ 1,509,794
Interest expense on long-term debt was $ 52.4 million , $ 55.1 million and $ 50.7 million for the years ended December 31,
2023 , 2022 and 2021 , respectively.
Interest expense for the years ended December 31, 2023 and 2022 related to the 2027 Notes and the Cash Convertible
Notes was comprised of the following:
(in thousands)
2023
2022
Coupon interest
$ 4,169
$ 7,000
Amortization of original issuance discount
27,341
30,170
Amortization of debt issuance costs
2,328
2,593
Total interest expense related to the convertible notes
$ 33,838
$ 39,763
Convertible Notes due 2027
On December 17, 2020, we issued zero coupon convertible notes in an aggregate principal amount of $ 500.0 million
with a maturity date of December 17, 2027 (2027 Notes). The 2027 Notes carry no coupon interest. The net proceeds of
the 2027 Notes totaled $ 497.6 million , after payment of debt issuance costs of $ 3.7 million .
In accounting for the issuance of the 2027 Notes in 2020 prior to the adoption of ASU 2020-06, we separated the 2027
Notes into liability and equity components. We allocated $ 445.9 million of the 2027 Notes to the liability component,
representing the fair value of a similar debt instrument that does not have an associated convertible feature; and
$ 54.1 million to the equity component, representing the conversion option, which did not meet the criteria for separate
accounting as a derivative as it is indexed to our own stock. ASU 2020-06 was adopted on January 1, 2021, and this
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Notes to the Consolidated Financial Statements
resulted in a decrease of $ 54.1 million to additional paid-in capital and an increase of $ 0.3 million to retained earnings
for the conversion feature related to the liability for the 2027 Notes.
The effective interest rate of the 2027 Notes is 1.65 % , which is imputed based on the amortization of the fair value of the
embedded conversion option over the remaining term of the 2027 Notes.
The 2027 Notes are convertible into common shares based on an initial conversion rate, subject to adjustment, of
2,477.65 shares per $200,000 principal amount of notes (which represented an initial conversion price of $ 80.7218 per
share or 6.2 million underlying shares). Following the January 2024 synthetic share repurchase discussed in Note 18
"Equity," the adjusted conversion rate became 2,475.26 shares per $200,000 principal amount of notes, which
represents an adjusted conversion price per share of $ 80.7996 . At conversion, we will settle the 2027 Notes by repaying
the principal portion in cash and any excess of the conversion value over the principal amount in shares of common
shares.
The notes may be redeemed at the option of each noteholder at their principal amount on December 17, 2025 or in
connection with a change of control or delisting event (as further described in the 2027 Notes).
The 2027 Notes are convertible in whole, but not in part, at the option of the noteholders on a net share settlement basis,
at the prevailing conversion price, in the following circumstances beginning after January 27, 2021 through June 16,
2027:
• if the last reported sale price of our common shares for at least 20 -consecutive trading days during a period of 30 -
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than
or equal to 130 % of the conversion price on each applicable trading day; or
• if we undergo certain fundamental changes, including a change of control, as defined in the agreement; or
• if a parity event or trading price unavailability event, as the case may be, occurs during the period of 10 days,
including the first business day following the relevant trading price notification date; or
• if we distribute assets or property to all or substantially all of the holders of our common shares and those assets or other
property have a value of more than 25 % of the average daily volume-weighted average trading price of our common
shares for the prior 20 consecutive trading days; or
• in case of early redemption in respect of the outstanding notes at our option, where the conversion date falls in the
period from (and including) the date on which the call notice is published to (and including) the 45th business day prior
to the redemption date; or
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Notes to the Consolidated Financial Statements
• if we experience certain customary events of default, including defaults under certain other indebtedness, until such
event of default has been cured or waived.
The noteholders may convert their notes at any time, without condition, on or after June 17, 2027 until the 45th business
day prior to December 17, 2027.
No Contingent Conversion Conditions were triggered for the 2027 Notes as of December 31, 2023 or December 31,
2022 .
Cash Convertible Notes due 2023 and 2024
On September 13, 2017, we issued $ 400.0 million aggregate principal amount of Cash Convertible Senior Notes which
were due and repaid in September 2023 ( 2023 Notes). The net proceeds of the 2023 Notes were $ 365.6 million , after
payment of the net cost of the Call Spread Overlay described below and transaction costs.
On November 13, 2018, we issued $ 500.0 million aggregate principal amount of Cash Convertible Senior Notes which
is due in 2024 (2024 Notes). The net proceeds of the 2024 Notes were $ 468.9 million , after payment of the net cost of
the Call Spread Overlay described below and transaction costs.
We refer to the 2023 Notes and 2024 Notes, collectively as the “Cash Convertible Notes."
Interest on the Cash Convertible Notes is payable semi-annually in arrears and will mature on the maturity date unless
repurchased or converted with their terms prior to such date. The interest rate and corresponding maturity of each Note are
summarized in the table below. The Cash Convertible Notes that remain outstanding as of December 31, 2023 are solely
convertible into cash in whole, but not in part, at the option of noteholders under the circumstances described below and
during the contingent conversion periods as shown in the t able bel ow.
Cash convertible
notes
Annual
interest rate
Date of interest
payments
Maturity date
Contingent conversion
period
Conversion rate per
$200,000 principal
amount (1)
2024 Notes
1.000 %
May 13 and
November 13
November 13, 2024
From December 24,
2018 to August 2, 2024
4,360.3098
(1) Following the January 2024 synthetic share repurchase discussed in Note 18 "Equity," the conversion rate was adjusted to 4,356.8531.
Additionally, conversion may occur at any time following a Contingent Conversion Period through the fifth business day
immediately preceding the applicable maturity date.
Upon conversion, noteholders will receive an amount in cash equal to the Cash Settlement Amount, calculated as
described below. The Cash Convertible Notes are not convertible into shares of our common stock or any other securities.
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Notes to the Consolidated Financial Statements
Noteholders may convert Cash Convertible Notes into cash at their option at any time during the Contingent Conversion
Periods described above only under the following circumstances (Contingent Conversion Conditions):
• if the last reported sale price of our common shares for at least 20 -consecutive trading days during a period of 30 -
consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than
or equal to 130 % of the conversion price on each applicable trading day;
• if we undergo certain fundamental changes, including a change of control, as defined in the agreement; or
• if a parity event or trading price unavailability event, as the case may be, occurs during the period of 10 days ,
including the first business day following the relevant trading price notification date; or
• if we elect to distribute assets or property to all or substantially all of the holders of our common shares and those assets
or other property have a value of more than 25 % of the average daily volume-weighted average trading price of our
common shares for the prior 20 consecutive trading days; or
• if we elect to redeem the Cash Convertible Notes; or
• if we experience certain customary events of default, including defaults under certain other indebtedness until such event
has been cured or waived or the payment of the Cash Convertible Notes have been accelerated.
For the 2023 Notes, the Contingent Conversion Period expired on March 13, 2023 and, as of March 31, 2023 , the
Contingent Conversion Conditions for the 2023 Notes could no longer be triggered. No Contingent Conversion
Conditions were triggered for the 2023 Notes as of December 31, 2022.
No Contingent Conversion Conditions were triggered for the 2024 Notes as of December 31, 2023 or December 31,
2022 .
The Contingent Conversion Conditions in the 2023 Notes and 2024 Notes noted above have been analyzed under ASC
815, Derivatives and Hedging, and, based on our analysis, we determined that each of the embedded features listed
above are clearly and closely related to the 2023 Notes and 2024 Notes (i.e., the host contracts). As a result, pursuant to
the accounting provisions of ASC 815, Derivatives and Hedging, these features noted above are not required to be
bifurcated as separate instruments.
Upon conversion, holders are entitled to a cash payment (Cash Settlement Amount) equal to the average of the conversion
rate multiplied by the daily volume-weighted average trading price for our common shares over a 50 -day period. The
conversion rate is subject to adjustment in certain instances but will not be adjusted for any accrued and unpaid interest. In
addition, following the occurrence of certain corporate events that may occur prior to the applicable maturity date, we may
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Notes to the Consolidated Financial Statements
be required to pay a cash make-whole premium by increasing the conversion rate for any holder who elects to convert
Cash Convertible Notes in connection with the occurrence of such a corporate event.
We may redeem the Cash Convertible Notes in their entirety at a price equal to 100 % of the principal amount of the
applicable Cash Convertible Notes plus accrued interest at any time when 20 % or less of the aggregate principal amount
of the applicable Cash Convertible Notes originally issued remain outstanding.
Because the Cash Convertible Notes contain an embedded cash conversion option, we have determined that the
embedded cash conversion option is a derivative financial instrument, which is required to be separated from the Cash
Convertible Notes and accounted for separately as a derivative liability, with changes in fair value reported in our
consolidated statements of income until the cash conversion option transaction settles or expires. The initial fair value
liability of the embedded cash conversion option was $ 74.5 million for the 2023 Notes and $ 98.5 million for the 2024
Notes, which simultaneously reduced the carrying value of the Cash Convertible Notes (effectively serving as an original
issuance discount). For further discussion of the derivative financial instruments relating to the Cash Convertible Notes, refer
to Note 14 "Derivatives and Hedging."
As noted above, the reduced carrying value on the Cash Convertible Notes resulted in a debt discount that is amortized to
the principal amount through the recognition of non-cash interest expense using the effective interest method over the
expected life of the debt, six years for both the 2023 Notes and 2024 Notes. This resulted in our recognition of interest
expense on the Cash Convertible Notes at an effective rate approximating what we would have incurred had
nonconvertible debt with otherwise similar terms been issued. The effective interest rate is 3.997 % for 2023 Notes and
4.782 % for the 2024 Notes, which is imputed based on the amortization of the fair value of the embedded cash
conversion option over the remaining term of the Cash Convertible Notes.
We incurred approximately $ 6.2 million and $ 5.7 million in transaction costs for the 2023 Notes and 2024 Notes,
respectively. Such costs have been allocated to the Cash Convertible Notes and deferred and are being amortized to
interest expense over the terms of the Cash Convertible Notes using the effective interest method.
Cash Co nvertible Notes Call Spread Overlay
Concurrent with the issuance of the Cash Convertible Notes, we entered into privately negotiated hedge transactions (Call
Options) with, and issued warrants to purchase shares of our common stock (Warrants) to, certain financial institutions.
We refer to the Call Options and Warrants collectively as the “Call Spread Overlay.” The Call Options are intended to
offset any cash payments payable by us in excess of the principal amount due upon any conversion of the Cash
Convertible Notes. The Call Options are derivative financial instruments and are discussed further in Note 14 "Derivatives
and Hedging." The Warrants are equity instruments and are further discussed in Note 18 "Equity."
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Notes to the Consolidated Financial Statements
Aside from the initial payment of a premium, we will not be required to make any cash payments under the Call Options,
and will be entitled to receive an amount of cash, generally equal to the amount by which the market price per share of
our common shares exceeds the exercise price of the Call Options during the relevant valuation period. The exercise price
under the Call Options is initially equal to the conversion price of the Cash Convertible Notes.
During the third quarter of 2023, we received $ 36.8 million in cash upon the exercise of Call Options in connection with
the repayment of 2023 Notes. In the same transaction, we paid $ 36.8 million for the intrinsic value of the 2023 Notes'
embedded conversion option.
The Warrants that were issued with our Cash Convertible Notes, could have a dilutive effect to the extent that the price of
our common stock exceeds the applicable strike price of the Warrants. For each Warrant that is exercised, we will deliver
to the holder a number of shares of our common stock equal to the amount by which the settlement price exceeds the
exercise price, plus cash in lieu of any fractional shares. We will not receive any proceeds if the Warrants are exercised.
U.S. Private Placement
On October 16, 2012 , we completed a private placement through the issuance of new senior unsecured notes at a total
amount of $ 400.0 million with a weighted average interest rate of 3.66 % (settled on October 16, 2012 ). The notes were
issued in three series: (1) $ 73.0 million 7 -year term due and paid on October 16, 2019 ( 3.19 % ); (2) $ 300.0 million 10 -
year term due and paid on October 16, 2022 ( 3.75 % ); and (3) $ 27.0 million 12 -year term due on October 16, 2024
( 3.90 % ) but called and paid in October 2022. We paid $ 2.1 million in debt issuance costs which w er e amortized
through interest expense using the effective interest method over the lifetime of the notes. The note purchase agreement
contained certain financial and non-financial covenants, including but not limited to, restrictions on priority indebtedness
and the maintenance of certain financial ratios. We were in compliance with these covenants at December 31, 2022.
During 2014, we entered into interest rate swaps, which effectively fixed the fair value of $ 200.0 million of this debt. The
interest rate swaps expired in October 2022 following the repayments of $ 127.0 million in 2022 and $ 73.0 million in
2019. These interest rate swaps qualify for hedge accounting as fair value hedges as further described in Note 14
"Derivatives and Hedging."
German Private Placement (2017 Schuldschein)
In 2017, we completed a German private placement bond (2017 Schuldschein) which was issued in several tranches
totaling $ 331.1 million due in various periods through 2027. In the first quarter of 2021, we repaid $ 41.1 million for two
tranches that matured. In October 2022, we repaid $ 153.0 million for the four tranches that matured. The euro tranches
are designated as a foreign currency non-derivative hedging instrument that qualifies as a net investment hedge as
described in Note 14 "Derivatives and Hedging." Based on the spot rate method, the change in the carrying value of the
euro-denominated tranches attributed to the net investment hedge as of December 31, 2023 totaled $ 1.0 million of
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Notes to the Consolidated Financial Statements
unrealized gain and is recorded in equity. We paid $ 1.2 million in debt issuance costs which are being amortized
through interest expense over the lifetime of the notes .
A summary of the tranches is as follows:
Carrying value (in thousands)
as of December 31,
Currency
Notional amount
Interest rate
Maturity
2023
2022
EUR
€ 64.0 million
Fixed 1.09 %
June 2024
$ 70,704
$ 68,215
EUR
€ 31.0 million
Floating
EURIBOR + 0.7 %
June 2024
34,247
33,041
EUR
€ 14.5 million
Fixed 1.61 %
June 2027
16,005
15,443
$ 120,956
$ 116,699
German Private Placement (2022 Schuldschein)
In July and August 2022, we completed another German private placement bond (2022 Schuldschein) which was issued
in several tranches totaling € 370.0 million due in various periods through 2035. The 2022 Schuldschein consists of euro-
denominated tranches which have either a fixed or floating rate. All tranches except for the € 70.0 million fixed 3.04 %
tranche due August 2035 are ESG-linked wherein the interest rate is subject to adjustment of +/- 0.025 % if our ESG rating
changes. The euro tranches are designated as a foreign currency non-derivative hedging instrument that qualifies as a net
investment hedge as described in Note 14 "Derivatives and Hedging." Based on the spot rate method, the change in the
carrying value of the euro-denominated tranches attributed to the net investment hedge as of December 31, 2023 totaled
$ 36.2 million of unrealized loss and is recorded in equity. We paid $ 1.2 million in debt issuance costs which are being
amortized through interest expense using the effective interest method over the lifetime of the notes.
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Notes to the Consolidated Financial Statements
A summary of the tranches is as follows:
Carrying value (in thousands)
as of December 31,
Currency
Notional amount
Interest rate
Maturity
2023
2022
EUR
€ 51.5 million
Floating 6M EURIBOR
+ 0.55 %
July 2025
$ 56,836
$ 54,803
EUR
€ 62.0 million
Fixed 2.741 %
July 2027
68,388
65,967
EUR
€ 29.5 million
Floating 6M EURIBOR
+ 0.70 %
July 2027
32,539
31,388
EUR
€ 37.0 million
Fixed 3.044 %
July 2029
40,803
39,365
EUR
€ 103.0 million
Floating 6M EURIBOR
+ 0.85 %
July 2029
113,586
109,585
EUR
€ 9.5 million
Fixed 3.386 %
July 2032
10,475
10,107
EUR
€ 7.5 million
Floating 6M EURIBOR
+ 1.0 %
July 2032
8,269
7,979
EUR
€ 70.0 million
Fixed 3.04 %
August 2035
77,054
74,338
$ 407,950
$ 393,532
Revolving Credit Facility
Our credit facilities available and undrawn at December 31, 2023 total € 413.0 million (approximately $ 456.4 million ).
This includes a € 400.0 million syndicated ESG-linked revolving credit facility expiring December 2025 and two other lines
of credit amounting to € 13.0 million with no expiration date. The € 400.0 million facility can be utilized in euro and bears
interest of 0.550 % to 1.500 % above EURIBOR, and is offered with interest periods of one , three or six months . The
commitment fee is calculated based on 35 % of the applicable margin. Commitment fees of $ 0.9 million were paid in each
of the years ended December 31, 2023 and 2022 . The revolving facility agreement contains certain financial and non-
financial covenants including, but not limited to, restrictions on the encumbrance of assets and the maintenance of certain
financial ratios. We were in compliance with these covenants at December 31, 2023 . The credit facilities are for general
corporate purposes and no amounts were utilize d at December 31, 2023 .
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Notes to the Consolidated Financial Statements
17. Inco me T axes
I ncome before income tax expense for the years ended December 31, 2023 , 2022 and 2021 consisted of:
(in thousands)
2023
2022
2021
Pretax income in the Netherlands
$ 18,591
$ 14,551
$ 7,062
Pretax income from foreign operations
411,218
498,050
618,771
Total income before income tax expense
$ 429,809
$ 512,601
$ 625,833
I ncome tax expense for the years ended December 31, 2023 , 2022 and 2021 are as follows:
(in thousands)
2023
2022
2021
Current:
The Netherlands
$ 11,393
$ 9,672
$ 1,714
Foreign
66,382
89,321
116,808
77,775
98,993
118,522
Deferred:
The Netherlands
( 5,535 )
( 683 )
( 1,776 )
Foreign
16,266
( 8,920 )
( 3,512 )
10,731
( 9,603 )
( 5,288 )
Total income tax expense
$ 88,506
$ 89,390
$ 113,234
The Netherlands' statutory income tax rate, the income tax rate of our country of domicile, was 25.8 % for the years ended
December 31, 2023 and 2022 and 25 % for the year ended December 31, 2021 . Income from foreign subsidiaries is
generally taxed at the statutory income tax rates applicable in the respective countries of domicile.
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Notes to the Consolidated Financial Statements
T he principal items comprising the differences between income taxes computed at the Netherlands' statutory income tax
rate and our effective tax rate for the years ended December 31, 2023 , 2022 and 2021 are as follows:
2023
2022
2021
The Netherlands' statutory income tax rate
25.8 %
25.8 %
25.0 %
Taxation of foreign operations, net (1)
( 7.6 )
( 4.9 )
( 3.0 )
Unrecognized tax benefits (2)
3.1
0.9
1.6
Excess tax benefit related to share-based compensation
( 0.3 )
( 0.5 )
( 1.0 )
Prior year taxes
0.3
( 1.1 )
0.6
Government incentives (3)
( 1.0 )
( 0.5 )
( 0.6 )
Changes in tax laws and rates
0.2
( 0.2 )
( 0.4 )
Tax impact from nondeductible (deductible) items
1.3
( 1.9 )
0.2
Valuation allowance
( 1.8 )
0.0
( 4.4 )
Other items, net
0.6
( 0.2 )
0.1
Effective tax rate
20.6 %
17.4 %
18.1 %
(1) Our effective tax rate reflec ts our global operations where certain income or loss is taxed at rates higher or lower than the Netherlands’ statutory
income tax rate as well as the benefit of some income being partially exempt from income taxes. These foreign tax benefits are due to a combination
of favorable tax laws, regulations and exemptions in certain jurisdictions. Partial tax exemptions exist on foreign income primarily derived from
operations in Germany. Further, we have intercompany financing arrangements in which the intercompany income is nontaxable in Dubai or partially
exempt or subject to lower statutory income tax rates.
(2) Unrecognized tax benefits include the impact from reassessment of accruals for tax contingencies, primarily related to ongoing taxing authority
examinations .
(3) Government incentives include tax credits in the U.S. relating to research and development expense.
We conduct business globally and, as a result, file numerous consolidated and separate income tax returns in the
Netherlands, Germany and the U.S. federal jurisdiction, as well as in various other state and foreign jurisdictions. In the
normal course of business, we are subject to examination by taxing authorities throughout the world. Tax years in the
Netherlands are potentially open back to 2011 for income tax examinations by the Netherlands taxing authority. The
German group is open to examination for the tax years starting in 2017 and in 2022, the German taxing authority
commenced an examination covering the 2017 to 2019 tax years. The U.S. consolidated group is subject to federal and
most state income tax examinations by taxing authorities beginning with the year ending December 31, 2020 through the
current period. In late 2023, the U.S. Internal Revenue Service commenced a U.S. federal income tax examination for the
periods 2014 to 2020 . The examination was triggered by our 5-year net operating loss carryback under the CARES Act.
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Notes to the Consolidated Financial Statements
Our other subsidiaries, with few exceptions, are no longer subject to income tax examinations by taxing authorities for
years before 2019 .
Changes in the amount of unrecognized tax benefits for the years ended December 31, 2023 , 2022 and 2021 are as
follows:
(in thousands)
2023
2022
2021
Balance at beginning of year
$ 79,283
$ 103,618
$ 100,092
Additions based on tax positions related to the current year
9,632
9,754
6,629
Additions for tax positions of prior years
7,839
4,544
5,036
Decrease for tax position of prior years
( 3,832 )
( 8,958 )
( 266 )
Decrease related to settlements
( 119 )
( 23,346 )
—
Decrease due to lapse of statute of limitations
—
( 580 )
( 344 )
Increase (decrease) from currency translation
2,755
( 5,749 )
( 7,529 )
Balance at end of year
$ 95,558
$ 79,283
$ 103,618
At December 31, 2023 and 2022 , our net unrecognized tax benefits totaled approximately $ 95.6 million and $ 79.3
million , respectively, which, if recognized, would favorably affect our effective tax rate in any future period. It is
reasonably possible that approximately $ 30.8 million of the unrecognized tax benefits may be released or utilized during
the next 12 months due to lapse of statute of limitations or settlements with taxing authorities. However, various events
could cause our current expectations to change in the future. The above unrecognized tax benefits, if ever recognized in
the financial statements, would be recorded in the statements of income as part of income tax expense.
Our policy is to recognize interest accrued related to income taxes in interest expense and penalties within income tax
expense. For the years ended December 31, 2023 , 2022 and 2021 , we recognized income for interest and penalties of
$ 0.4 million , $ 0.4 million and $ 0.6 million , respectively. At December 31, 2023 and 2022 , we have accrued interest
and penalties of $ 3.3 million and $ 3.5 million , respectively, which are not included in the table above.
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Notes to the Consolidated Financial Statements
At December 31, 2023 and 2022 , in the consolidated balance sheets , w e have recorded deferred tax assets of
$ 38.6 million and $ 56.3 million in other long-term assets and deferred tax liabilities of $ 12.8 million and $ 17.5 million in
other long-term liabilities , respectively. The comp one nts of the net deferred tax assets at December 31, 2023 and 2022
are as follows:
(in thousands)
2023
2022
Deferred tax assets:
Net operating loss and tax credit carryforwards
$ 42,944
$ 53,155
Intangible assets
30,084
33,510
Accrued and other liabilities
25,375
27,544
Share-based compensation
25,598
21,792
Property, plant and equipment
2,249
4,032
Convertible notes
2,173
3,621
Inventories
4,268
3,003
Disallowed interest carryforwards
1,157
1,511
Other
7,133
6,479
Total deferred tax assets before valuation allowance
140,981
154,647
Valuation allowance
( 13,214 )
( 21,265 )
Total deferred tax assets, after valuation allowance
$ 127,767
$ 133,382
Deferred tax liabilities:
Intangible assets
($ 50,723 )
($ 55,921 )
Property, plant and equipment
( 46,536 )
( 33,847 )
Inventories
( 579 )
( 820 )
Other
( 4,178 )
( 3,997 )
Total deferred tax liabilities
($ 102,016 )
($ 94,585 )
Deferred tax assets, net
$ 25,751
$ 38,797
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Notes to the Consolidated Financial Statements
As of December 31, 2023 , the valuation allowance principally relates to net operating loss carryforwards. A deferred tax
asset can only be recognized to the extent it is "more likely than not" that the assets will be realized. Judgments around
realizability depend on the availability and weight of both positive and negative evidence.
At December 31, 2023 , we had $ 486.4 million in total net operating loss (NOL) carryforwards which included $ 144.1
million for the U.S., $ 237.3 million for Germany, $ 30.5 million for the U.K., $ 15.2 million for the Netherlands, and
$ 59.3 million for other foreign jurisdictions. The NOL carryforwards in Germany, the Netherlands and the U.K.
carryforward indefinitely. The entire NOL carryforward in the U.S. is subject to limitations under Section 382 of the U.S.
Internal Revenue Code which limits the amount that can be used each year. The NOL carryforwards in the U.S. expire
between 2024 and 2034 . NOL carryforwards of $ 21.3 million in other foreign jurisdictions expire between 2024 and
2031 while the remainder can be carried forward indefinitely. At December 31, 2023 , tax credits total $ 6.7 million and
expire between 2032 and 2041 .
The changes in the valuation allowance for the years ended December 31, 2023 , 2022 and 2021 were as follows:
(in thousands)
2023
2022
2021
Balance at beginning of year
($ 21,265 )
($ 21,326 )
($ 37,332 )
Additions charged to income tax expense
( 2,015 )
( 4,470 )
( 620 )
Deductions charged to income tax expense
9,719
4,287
28,251
Additions charged to additional paid-in capital
—
—
( 13,513 )
Currency translation
347
244
1,888
Balance at end of year
($ 13,214 )
($ 21,265 )
($ 21,326 )
In 2021, $ 13.5 million of the valuation allowance, which had been established in additional paid-in capital in 2020
related to the 2027 Convertible Notes, was reversed due to adopting ASU 2020-06.
As of December 31, 2023 , a deferred tax liability has not been recognized for residual income taxes in the Netherlands
on the undistributed earnings of the majority of our foreign subsidiaries as these earnings are considered to be either
indefinitely reinvested or can be repatriated tax free under the Dutch participation exemption. The indefinitely reinvested
earnings retained by our subsidiaries that would be subject to tax if distributed amounted to $ 1.2 billion at December 31,
2023 . Estimating the amount of the unrecognized deferred tax liability on indefinitely reinvested foreign earnings is not
practicable. Should the earnings be remitted as dividends, we may be subject to taxes including withholding tax. We have
$ 14.5 million of undistributed earnings that we do not consider indefinitely reinvested and have recorded a deferred tax
liability at December 31, 2023 and 2022 of $ 0.7 million and $ 1.0 million , respectively.
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Notes to the Consolidated Financial Statements
18. Equity
Shares
The authorized classes of our shares consist of Common Shares ( 410 million authorized), Preference Shares ( 450 million
authorized) and Financing Preference Shares ( 40 million authorized). All classes of shares have a par value of € 0.01 . No
Financing Preference Shares or Preference Shares have been issued. Common Shares are translated to U.S. dollars at the
foreign exchange rates in effect when the shares are issued.
Synthetic Share Repurchase
In January 2024, we completed a synthetic share repurchase that combined a direct capital repayment with a reverse
stock split. The transaction was announced on January 7, 2024 and involved an approach used by various large,
multinational Dutch companies to provide returns to all shareholders in a faster and more efficient manner than traditional
open-market repurchases. $ 295.2 million was returned to shareholders through the transaction, which reduced the total
number of issued Common Shares by approximately 3 % to 223.9 million (of which 2.5 million Common Shares are held
in Treasury Shares) as of January 31, 2024.
Issuance and Conversion of Warrants
In connection with the issuance of the Cash Convertible Notes as described in Note 16 "Debt," we issued Warrants as
summarized in the table below. The number of warrants and exercise prices are subject to customary adjustments under
certain circumstances. The proceeds, net of issuance costs, from the sale of the Warrants are included as additional paid-in
capital in the accompanying consolidated balance sheets.
The Warrants are exercisable only upon expiration. For each Warrant that is exercised, we will deliver to the holder a
number of shares of our common stock equal to the amount by which the settlement price exceeds the exercise price,
divided by the settlement price, plus cash in lieu of any fractional shares. The Warrants could separately have a dilutive
effect on shares of our common stock to the extent that the market value per share of our common stock exceeds the
applicable exercise price of the Warrants (as measured under the terms of the Warrants).
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Notes to the Consolidated Financial Statements
Cash
convertible notes
Issued on
Number of share
warrants issued
(in millions)
Weighted
average exercise
price
per share
Proceeds from
issuance of
warrants,
net of issuance costs
(in millions)
Warrants expire
over a period of
50 trading days
beginning on
2023 Notes
September 13, 2017
9.7
$ 49.9775
$ 45.3
June 26, 2023
2024 Notes
November 13, 2018
10.9
$ 50.2947
$ 72.4
August 27, 2024
All Warrants related to the 2 023 N otes that matured in September 2023 expired unexercised. Following the January
2024 synthetic share repurchase discussed above, the adjusted weighted average exercise price per share for th e 202 4
Notes is $ 50.3346 .
Share Repurchase Programs
On July 12, 2021, we announced our seventh share repurchase program of up to $ 100 million of our common shares.
During 2021, we repurchased 1.9 million QIAGEN shares for $ 100.0 million (including transaction costs). This program
ended on October 29, 2021.
The cost of repurchased shares is included in treasury stock and reported as a reduction in total equity when a repurchase
occurs. Repurchased shares will be held in treasury in order to satisfy various obligations, which include exchangeable
debt instruments, warrants and employee share-based remuneration plans.
Accumulated Other Comprehensive Loss
The following table is a summary of the components of accumulated other comprehensive loss as of December 31, 2023
and 2022 :
(in thousands)
2023
2022
Net unrealized loss on hedging contracts, net of tax
($ 37,372 )
($ 15,637 )
Net unrealized gain on pension, net of tax
812
645
Foreign currency effects from intercompany long-term investment transactions, net of tax
benefits of $ 13.2 million in 2023 and 2022
( 33,648 )
( 33,311 )
Foreign currency translation adjustments
( 363,622 )
( 355,788 )
Accumulated other comprehensive loss
($ 433,830 )
($ 404,091 )
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Notes to the Consolidated Financial Statements
19. Earnings Per Common Share
We present basic and diluted earnings per common share. Basic earnings per common share is calculated by dividing the
net income by the weighted average number of common shares outstanding. Diluted earnings per common share reflect
the potential dilution of earnings that would occur if all “in the money” securities to issue common shares were exercised .
The following schedule summarizes the information used to compute earnings per common share for the years ended
December 31, 2023 , 2022 and 2021 :
(in thousands, except per share data)
2023
2022
2021
Net income
$ 341,303
$ 423,211
$ 512,599
Weighted average number of common shares used to compute basic
earnings per common share
228,146
227,577
227,983
Dilutive effect of outstanding stock options and restricted stock units
2,473
2,555
3,403
Dilutive effect of outstanding warrants
—
4
648
Weighted average number of common shares used to compute
diluted earnings per common share
230,619
230,136
232,034
Outstanding stock options and awards having no dilutive effect, not included
in above calculation
1
146
8
Outstanding warrants having no dilutive effect, not included in above
calculation
17,562
20,556
19,912
Basic earnings per common share
$ 1.50
$ 1.86
$ 2.25
Diluted earnings per common share
$ 1.48
$ 1.84
$ 2.21
For purposes of considering the 2027 Notes, as discussed further in Note 16 "Debt," in determining diluted earnings per
common share, only an excess of the conversion value over the principal amount would have a dilutive impact using the
treasury stock method. Since the 2027 Notes were out of the money and anti-dilutive during the period from January 1,
2021 through December 31, 2023, they were excluded from the diluted earnings per common share calculation in 2021,
2022 and 2023.
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Notes to the Consolidated Financial Statements
20. Commitments and Contingencies
Licensing and Purchase Commitments
We have licensing agreements with companies, universities and individuals, some of which require certain up-front
payments. Royalty payments are required on net product sales ranging from 0.45 percent to 25 percent of covered
products or based on quantities sold. Several of these agreements have minimum royalty requirements. The accompanying
consolidated balance sheets include accrued royalties relating to these agreements in the amount of $ 9.7 million and
$ 12.9 million at December 31, 2023 and 2022 , respectively. Royalty expense relating to these agreements amounted to
$ 13.9 million , $ 15.5 million , and $ 18.5 million for the years ended December 31, 2023 , 2022 and 2021 , respectively.
Royalty expense is primarily recorded in cost of sales, with a small portion recorded as research and development expense
depending on the use of the technology under license. Some of these agreements also have minimum raw material
purchase requirements and requirements to perform specific types of research.
At December 31, 2023 , we had commitments to purchase goods or services and to make future license and royalty
payments. They are as follows:
Years ending December 31,
(in thousands)
Purchase
commitments
License & royalty
commitments
2024
$ 37,396
$ 1,926
2025
35,992
1,453
2026
13,150
783
2027
11,383
766
2028
903
560
Thereafter
—
1,729
$ 98,824
$ 7,217
Contingent Consideration Commitments
Pursuant to the purchase agreements for certain acquisitions, w e could be required to make additional contingent cash
payments for a previous business combination based on the achievement of certain FDA approval milestones. Potential
milestone payments total $ 20.7 million and may be triggered by the end of 2024. The total milestone payments of $ 18.4
million is included in accrued and other current liabilities in the accompanying consolidated balance sheet as of
December 31, 2023 . Refer to Note 15 "Financial Instruments and Fair Value Measurements" for changes in the contingent
consideration liabilities.
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Notes to the Consolidated Financial Statements
Employment Agreements
Certain of our employment contracts contain provisions which guarantee payments in the event of a change in control, as
defined in the agreements, or if the executive is terminated for reasons other than cause, as defined in the agreements. At
December 31, 2023 , the commitment under these agreements totaled $ 11.5 million .
Contingencies
In the ordinary course of business, we provide a warranty to customers that our products are free of defects and will
conform to published specifications. Generally, the applicable product warranty period is one year from the date of
delivery of the product to the customer or of site acceptance, if required. Additionally, we typically provide limited
warranties with respect to our services. We provide for estimated warranty costs at the time of the product sale. The
changes in the carrying amount of warranty obligations for the years ended December 31, 2023 and 2022 are as
follows:
(in thousands)
2023
2022
Balance at beginning of year
$ 4,899
$ 6,324
Provision charged to cost of sales
3,947
4,606
Usage
( 3,451 )
( 4,517 )
Adjustments to previously provided warranties, net
( 1,501 )
( 1,277 )
Currency translation
50
( 237 )
Balance at end of year
$ 3,944
$ 4,899
Litigation
From time to time, we may be party to legal proceedings incidental to our business. As of December 31, 2023 , certain
claims, suits or legal proceedings arising out of the normal course of business have been filed or were pending against
QIAGEN N.V. or subsidiaries. These matters have arisen in the ordinary course and conduct of business as well as
through acquisition. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing
litigation contingencies is highly subjective and requires judgments about future events. Although it is not possible to predict
the outcome of such litigation, we assess the degree of probability and evaluate the reasonably possible losses that we
could incur as a result of these matters. We accrue for any estimated loss when it is probable that a liability has been
incurred and the amount of probable loss can be estimated. Litigation accruals recorded in accrued and other current
liabilities as of December 31, 2023 and 2022 totaled $ 4.8 million and $ 6.5 million , respectively. As of December 31,
2023 , $ 4.7 million was accrued in other long-term liabilities in the accompanying consolidated balance sheet.
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Notes to the Consolidated Financial Statements
We are not party to any material legal proceeding as of the date of this report except for the matters listed below.
Patent Litigation
Archer DX
In 2018, ArcherDX (a company which spun out as an independent company in conjunction with QIAGEN's acquisition of
Enzymatics in 2015 and was later acquired by Invitae in 2021) and Massachusetts General Hospital (MGH) sued
QIAGEN for patent infringement. In August 2021, a federal jury ruled that QIAGEN infringed two patents owned by
ArcherDX and awarded damages of $ 4.7 million which were accrued in 2021 and, as of December 31, 2023 , are
included in other long-term liabilities in the accompanying consolidated balance sheet. We filed an appeal in August
2023 after the verdict was entered.
Bio-Rad Laboratories, Inc.
In April 2022, QIAGEN filed a lawsuit in a U.S. federal court against Bio-Rad Laboratories, Inc. (Bio-Rad) seeking a
declaratory judgment of non-infringement of certain Bio-Rad patents related to digital PCR technology. In July 2023, the
parties agreed to a settlement that provided for a cross-licensing agreement granting each company mutual rights to their
respective digital PCR technologies.
Other Litigation Matters
For all other matters, a t otal of $ 4.8 million is accrued as of December 31, 2023 in accrued and other current liabilities.
The estimated range of possible losses for these other matters as of December 31, 2023 is between $ 4.0 million and
$ 10.1 million .
Based on the facts known to QIAGEN and after consultation with legal counsel, management believes that such litigation
will not have a material adverse effect on our financial position or results of operations above the amounts accrued.
However, the outcome of these matters is ultimately uncertain. Any settlements or judgments against us in excess of
management's expectations could have a material adverse effect on our financial position, results of operations or cash
flows.
21. Segment Information
We operate as one operating segment. We have a common basis of organization, we make decisions with regards to
business operations and resource allocation based on evaluations of QIAGEN as a whole and our products and services
are offered globally. Product category and geographic information follows below.
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Notes to the Consolidated Financial Statements
Product Category Information
Refer to Note 4 "Revenue" for disaggregation of revenue based on product categories, product type and customer class.
Geographical Information
Net sales are attributed to countries based on the location of the customer. Our primary manufacturing facilities are
located in Germany, China, and the United States and supply products to customers as well as to our subsidiaries in other
countries. The intercompany portions of such net sales are excluded to derive consolidated net sales. No single customer
represents more than ten percent of consolidated net sales. Our country of domicile is the Netherlands, which reported net
sales of $ 20.3 million , $ 31.5 million and $ 28.3 million for the years ended 2023 , 2022 and 2021 , respectively, and
these amounts are included in the line item Europe, Middle East and Africa in the table below.
Net sales by geographical location for the years ended December 31, 2023 , 2022 and 2021 are as follows:
(in thousands)
2023
2022
2021
Americas:
United States
$ 935,281
$ 909,616
$ 909,690
Other Americas
84,774
88,139
97,686
Total Americas
1,020,055
997,755
1,007,376
Europe, Middle East and Africa
624,573
733,469
814,417
Asia Pacific, Japan and Rest of World
320,683
410,294
429,864
Total net sales
$ 1,965,311
$ 2,141,518
$ 2,251,657
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Notes to the Consolidated Financial Statements
Long-lived assets include property, plant and equipment. The Netherlands, which is included in the balances for Europe in
the table below, reported long-lived assets of $ 1.3 million and $ 1.1 million as of December 31, 2023 and 2022 ,
respectively.
Long-lived assets by geographical location as of December 31, 2023 and 2022 are as follows:
(in thousands)
2023
2022
Americas:
United States
$ 164,865
$ 161,645
Other Americas
3,657
2,997
Total Americas
168,522
164,642
Europe, Middle East and Africa:
Germany
496,386
400,009
Other Europe, Middle East and Africa
76,306
75,045
Total Europe, Middle East and Africa
572,692
475,054
Asia Pacific, Japan and Rest of World
23,823
22,474
Total long-lived assets
$ 765,037
$ 662,170
22. Share-Based Compensation
We adopted the QIAGEN N.V. Amended and Restated 2005 Stock Plan (the 2005 Plan) in 2005 and the QIAGEN N.V.
2014 Stock Plan (the 2014 Plan) in 2014. The 2005 Plan expired by its terms in April 2015 and no further awards will be
granted under the 2005 Plan. The 2014 Plan expires in May 2024. The QIAGEN N.V. 2023 Stock Plan (the 2023 Plan)
was approved at the June 2023 Annual General Meeting and at December 31, 2023 , we had approximately 20.9 million
Common Shares reserved and available for issuance under the 2005, 2014, and 2023 Plans.
The plans allow for the granting of stock rights and incentive stock options, as well as non-qualified options, stock grants
and stock-based awards, generally with terms of up to 3 years , with previous grants through 2020 having terms of 5 years
subject to earlier termination in certain situations. The vesting and exercisability of certain stock rights will be accelerated
in the event of a Change of Control, as defined in the plans. All option grants were at the market value on the grant date
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Notes to the Consolidated Financial Statements
or at a premium above the closing market price on the grant date. We issue Treasury S hares to satisfy option exercises
and award releases.
Stock Units
Stock units represent rights to receive Common Shares at a future date and include restricted stock units which are subject
to time-vesting only and performance stock units which include performance conditions in addition to time-vesting. The final
number of performance stock units earned is based on the performance achievement which for some grants can reach up
to 200 % of the granted shares. There is no exercise price and the fair market value at the time of the grant is recognized
over the requisite vesting period. The fair market value is determined based on the number of stock units granted and the
market value of our shares on the grant date. Pre-vesting forfeitures were estimated to be approximately 6.0 % . At
December 31, 2023 , there was $ 59.8 million remaining in unrecognized compensation cost including estimated
forfeitures related to these awards, which is expected to be recognized over a weighted average period of 1.34 years .
The weighted average grant date fair value of stock units granted during the years ended December 31, 2023 , 2022 and
2021 was $ 44.37 , $ 45.49 and $ 48.77 , respectively. The total fair value of stock units that vested during the years ended
December 31, 2023 , 2022 and 2021 was $ 39.4 million , $ 55.8 million and $ 52.6 million , respectively.
A summary of stock units as of December 31, 2023 and changes during the year are presented below.
Stock units
Number of
stock units
(in thousands)
Weighted
average
contractual term
(in years)
Aggregate
intrinsic value
(in thousands)
Outstanding at January 1, 2023
3,771
Granted
1,185
Vested
( 864 )
Forfeited
( 77 )
Outstanding at December 31, 2023
4,015
1.34
$ 174,364
Vested and expected to vest at December 31, 2023
3,744
1.29
$ 162,610
We net share settle for the tax withholding upon the vesting of awards. Shares are issued on the vesting dates net of the
applicable statutory tax withholding to be paid by us on behalf of our employees. As a result, fewer shares are issued than
the number of stock units outstanding. We record a liability for the tax withholding to be paid by us as a reduction to
treasury shares.
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Notes to the Consolidated Financial Statements
St ock Options
We have not granted stock options since 2013. A summary of the status of employee stock options as of December 31,
2023 and changes during the year then ended is presented below.
Stock options
Number of
shares
(in thousands)
Weighted
average
exercise price
Outstanding at January 1, 2023
9
$ 18.68
Exercised
( 9 )
$ 18.68
Outstanding at December 31, 2023
—
$ —
The total intrinsic value of options exercised was $ 0.2 million in each of the years ended December 31, 2023 and 2022
and $ 14.4 million for the year ended December 31, 2021 . The actual tax benefit for the tax deductions from option
exercises totaled $ 0.1 million in each of the years ended December 31, 2023 and 2022 and $ 2.2 million during the year
ended December 31, 2021 . At December 31, 2023 , there was no unrecognized share-based compensation expense
related to employee stock option awards.
There were no options outstanding at December 31, 2023 . At December 31, 2022 and 2021 , 9 thousand and 18
thousand options were exercisable at a weighted average price of $ 18.68 and $ 17.79 per share, respectively.
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Notes to the Consolidated Financial Statements
Compensation Expense
Share-based compensation expense before taxes for the years ended December 31, 2023 , 2022 and 2021 totaled
approximately $ 47.1 million , $ 49.5 million and $ 38.4 million , respectively, as shown in the table below.
(in thousands)
2023
2022
2021
Cost of sales
$ 3,296
$ 2,577
$ 40
Research and development
7,484
6,504
4,909
Sales and marketing
14,495
16,076
13,630
General and administrative
21,825
24,350
19,812
Share-based compensation expense
47,100
49,507
38,391
Less: Income tax benefit (1)
11,035
10,703
8,956
Share-based compensation expense, after tax
$ 36,065
$ 38,804
$ 29,435
(1) Does not include the excess tax benefit realized for the tax deductions of the share-based payment arrangements which totaled $ 1.3 million , $ 2.7
million and $ 6.5 million , respectively, for the years ended December 31, 2023 , 2022 and 2021 .
The lower share-based compensation expense in cost of sales in 2021 resulted from forfeitures upon the separation of an
executive who received a cash severance payment in lieu of accelerated vesting upon separation per the terms of the
arrangement. The cash separation accrual offset the share-based compensation forfeiture.
23. Employee Benefits
We maintain various benefit plans, including defined contribution and defined benefit plans. Our U.S. defined contribution
plan is qualified under Section 401(k) of the Internal Revenue Code and covers substantially all U.S. employees.
Participants may contribute a portion of their compensation not exceeding a limit set annually by the Internal Revenue
Service. This plan includes a provision for us to match a portion of employee contributions. Total expenses under the
401(k) plans were $ 4.5 million for each of the years ended December 31, 2023 and 2022 and $ 4.3 million for the year
ended December 31, 2021 . We also have a defined contribution plan which covers certain executives. We make
matching contributions up to an established maximum. Matching contributions made to the plan, and expensed, totaled
approximately $ 0.1 million for each of the years ended December 31, 2023 and 2022 and $ 0.2 million for the year
ended December 31, 2021 .
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Notes to the Consolidated Financial Statements
We have seven defined benefit, non-contributory retirement or termination plans that cover certain employees in Germany,
France, Italy, Japan, Poland, Philippines and the United Arab Emirates. These defined benefit plans provide benefits to
covered individuals satisfying certain age and/or service requirements. For certain plans, we calculate the vested benefits
to which employees are entitled if they separate immediately. The benefits accrued on a pro-rata basis during the
employees’ employment period are based on the individuals’ salaries, adjusted for inflation. All defined benefit plans are
unfunded. The liability under the defined benefit plans totaled $ 7.4 million and $ 7.2 million as of December 31, 2023
and 2022 , respectively, and is included as a component of other long-term liabilities on the accompanying consolidated
balance sheets.
24. Related Party Transactions
From time to time, we have transactions with other companies in which we hold an interest as summarized in the table
below.
Net sales to related parties for the years ended December 31, 2023 , 2022 and 2021 are as follows:
(in thousands)
2023
2022
2021
Net sales
$ 9,039
$ 8,474
$ 9,089
As of December 31, 2023 and 2022 , balances with related parties are as follows:
(in thousands)
2023
2022
Accounts receivable
$ 2,890
$ 5,136
Prepaid expenses and other current assets
$ 78
$ 11,929
Accounts payable
$ 700
$ 2,708
Accrued and other current liabilities
$ 2,893
$ 3,518
Prepaid expenses and other current assets include loan receivables and supplier advances from companies with which we
have an investment or partnership interest.
As of December 31, 2022 , prepaid expenses and other current assets included a $ 10.6 million convertible note from
Ellume Limited, Australia, which bears interest at 10 % and was due on December 31, 2022 . As of December 31, 2022 ,
we retained the loan receivable, while fully reserved, as we awaited the outcome of voluntary administration and any
creditor arrangement. During 2023 , we had no possibility of collection from Ellume and no expectation of any recovery of
the defaulted amount. Accordingly, the loan receivable was fully written off a gainst the reserve in 2023. Additional
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Notes to the Consolidated Financial Statements
financial impacts of these proceedings with this related party for the fiscal year ended December 31, 2022 included a
$ 4.6 million write off on advances to suppliers and a $ 12.8 million impairment loss on intangible assets, both recognized
in restructuring, acquisition, integration and other, net in the accompanying consolidated statement of income. Refer to
Note 11 "Goodwill and Intangible Assets."
25. Subsequent Event
In January 2024, we completed a synthetic share repurchase that combined a direct capital repayment with a reverse
stock split as discussed in Note 18 "Equity."
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Notes to the Consolidated Financial Statements
Memorandum and Articles of Association
We are a public company with limited liability (naamloze vennootschap)
incorporated under Dutch law and registered with the Dutch Trade Register
under file number 12036979. Set forth below is a summary of certain
provisions of our Articles of Association, as lastly amended on January 29,
2024 (the Articles), and Dutch law, where appropriate. The below also
contains information on provisions of the Dutch Corporate Governance Code
2022, (the Dutch Code), which contains principles of good corporate
governance and best practice provisions that regulate relations between the
Managing Board, the Supervisory Board and the Shareholders. The principles
and provisions are aimed at defining responsibilities for sustainable long-term
value creation, risk control, effective management and supervision,
remuneration and the relationship with Shareholders, including the General
Meeting, and other stakeholders. A listed company should either comply, or if
not, explain in its management report why and to what extent it does not
comply, with the principles of the Dutch Code. The Dutch Code has been taken
into account in the summary below.
This summary does not purport to be complete and is qualified in its entirety by
reference to the Articles, Dutch Law and the Dutch Code.
Corporate Purpose
Our objectives include, without limitation, the performance of activities in the
biotechnology industry, as well as incorporating, acquiring, participating in,
financing, managing and having any other interest in companies or enterprises
of any nature, raising and lending funds and such other acts as may be
conducive to our business.
Managi ng D irectors
QIAGEN shall be managed by a Managing Board consisting of one or more
Managing Directors under the supervision of the Supervisory Board. The
Managing Board is responsible for our continuity and our affiliated enterprise.
The Managing Board focuses on our sustainable long-term value creation and
our affiliated enterprise, and takes into account the impact the actions of the
Company and its affiliated enterprise have on people and the environment as
well as our stakeholders' interests that are relevant in this context, which
include but are not limited to our shareholders. Managing Directors shall be
appointed by the General Meeting upon the joint meeting of the Supervisory
Board and the Managing Board (Joint Meeting), having made a binding
nomination for each vacancy. However, the General Meeting may at all times
overrule the binding nature of such a nomination by a resolution adopted by at
least a two-thirds majority of the votes cast, if such majority represents more
than half the issued share capital. This is different from the provisions of many
American corporate statutes, including the Delaware General Corporation
Law, which give the directors of a corporation greater authority in choosing
the executive officers of a corporation. Under our Articles, the General
Meeting may suspend or dismiss a Managing Director at any time by a
resolution adopted by at least a two-thirds majority of the votes cast, if such
majority represents more than half of the issued share capital, or by a simple
majority of votes cast without any quorum requirements required to be
satisfied, if the suspension or dismissal is proposed by the Joint Meeting. The
Supervisory Board shall also at all times be entitled to suspend (but not to
dismiss) a Managing Director. The Articles provide that the Supervisory Board
may adopt management board rules governing the internal organization of the
Managing Board.
Furthermore, the Supervisory Board shall determine the salary, the bonus, if
any, and the other compensation terms and conditions of service of the
Managing Directors within the scope of the remuneration policy. The current
remuneration policy of the Managing Board was adopted in our Annual
General Meeting on June 29, 2021.
Resolutions of the Managing Board shall be validly adopted, if adopted by
simple majority of votes, at least one of whom voting in favor of the proposal
must be the Chairman. Each Managing Director has the right to cast one vote.
Under Dutch law, in the event that there is a conflict of interest between a
Managing Director and us and our business on a certain matter, that
Managing Director shall not participate in the discussions and voting on that
matter. If all Managing Directors have a conflict of interest, such resolution
shall be adopted by the Supervisory Board. If all Supervisory Directors have a
conflict of interest as well, the General Meeting will be authorized to resolve
on the matter. According to the Dutch Code, any conflict of interest or
apparent conflict of interest between the Company and Managing Directors
should be prevented. To avoid conflicts of interest, adequate measures should
be taken. Under the Dutch Code, the Supervisory Board is responsible for the
decision-making on dealing with conflicts of interest regarding Managing
Directors, Supervisory Directors and majority shareholders in relation to us. A
Managing Director should report any potential conflict of interest in a
transaction that is of material significance to the Company and/or to such
Managing Director to the Chairman of the Supervisory Board and to the other
members of the Managing Board without delay. The Supervisory Board should
decide, outside the presence of the Managing Director, whether there is a
conflict of interest. All transactions in which there are conflicts of interest with
Managing Directors shall be agreed on terms that are customary in the sector
concerned. Decisions to enter into transactions under which a Supervisory
Director would have a conflict of interest that are of material significance to
QIAGEN and/or to the Managing Director concerned, require the approval of
the Supervisory Board.
Supervisory Directors
The Supervisory Board shall be responsible for supervising the policy pursued
by the Managing Board and our general course of affairs. Under our Articles,
the Supervisory Directors are required to serve the interests of our Company
and our business and the interest of all stakeholders (which includes but is not
limited to our shareholders) in fulfilling their duties. The Supervisory Board shall
consist of such number of members as the Joint Meeting may from time to time
determine, with a minimum of three members. The Supervisory Directors shall
be appointed by the General Meeting upon the Joint Meeting having made a
binding nomination for each vacancy. However, the General Meeting may at
all times overrule the binding nature of such a nomination by a resolution
adopted by at least a two-thirds majority of the votes cast, if such majority
represents more than half the issued share capital. If during a financial year a
vacancy occurs in the Supervisory Board, the Supervisory Board may appoint
a Supervisory Director who will cease to hold office at the next Annual
General Meeting, provided that the number of Supervisory Directors that may
be appointed in this manner is limited to one-third of the number of
Supervisory Directors determined by the Joint Meeting. This is different from the
provisions of many American corporate statutes, including the Delaware
General Corporation Law, which provides that directors may vote to fill
vacancies on the board of directors of a corporation. Under our Articles, the
General Meeting may suspend or dismiss a Supervisory Director at any time
by a resolution adopted by at least a two-thirds majority of the votes cast, if
such majority represents more than half of the issued share capital, or by a
simple majority of votes cast without any quorum requirements required to be
satisfied, if the suspension or dismissal is proposed by the Joint Meeting.
Under Dutch law, in the event that there is a conflict of interest between a
Supervisory Director and us and our business on a certain matter, that
Supervisory Director shall not participate in the discussions and voting on that
matter. Under the Dutch Code, a Supervisory Director should report any
conflict of interest or potential conflict of interest in a transaction that is of
material significance to the Company and/or to such Supervisory Director to
the Chairman of the Supervisory Board without delay. The Supervisory Board
should decide, outside the presence of the Supervisory Director concerned,
whether there is a conflict of interest. If all Supervisory Directors have a conflict
of interest, the relevant resolution shall be adopted by the General Meeting.
All transactions in which there are conflicts of interest with Supervisory
Directors shall be agreed on terms that are customary in the sector concerned.
Decisions to enter into transactions under which a Supervisory Director would
have a conflict of interest that are of material significance to QIAGEN and/or
to the Supervisory Director concerned, require the approval of the Supervisory
Board.
In accordance with Dutch law and the Dutch Code, the General Meeting
determines the compensation of the Supervisory Directors upon the proposal of
the Compensation Committee with due observance of the remuneration policy
for Supervisory Directors as adopted at the 2021 Annual General Meeting.
Under the Dutch Code, any shares held by a Supervisory Director in the
Company on whose board he or she sits should be long-term investments.
Liability of Managing Directors and Supervisory Directors
Under Dutch law, as a general rule, Managing Directors and Supervisory
Directors are not liable for obligations we incur. Under certain circumstances,
however, they may become liable, either towards QIAGEN (internal liability)
or to others (external liability), although some exceptions are described below.
Liability towards QIAGEN
Failure of a Managing Director or Supervisory Director to perform his or her
duties does not automatically lead to liability. Liability is only incurred in the
case of a clear, indisputable shortcoming about which no reasonably judging
business-person would have any doubt. In addition, the Managing Director or
Supervisory Director must be deemed to have been grossly negligent.
Managing Directors are jointly and severally liable for failure of the Managing
Board as a whole, but an individual Managing Director will not be held liable
if he or she is determined not to have been responsible for the mismanagement
and has not been negligent in preventing its consequences. Supervisory
Directors are jointly and severally liable for failure of the Supervisory Board as
a whole, but an individual Supervisory Director will not be held liable if he or
she is determined not to have been responsible for the mismanagement and
has not been negligent in preventing its consequences.
Liability for Misrepresentation in Annual Accounts
Managing Directors and Supervisory Directors are also jointly and severally
liable to any third party for damages suffered as a result of misrepresentation
in the annual accounts, management commentary or interim statements of
QIAGEN, although a Managing Director or Supervisory Director will not be
held liable if found not to be personally responsible for the misrepresentation.
Moreover, a Managing Director or Supervisory Director may be found to be
criminally liable if he or she deliberately publishes false annual accounts or
deliberately allows the publication of such false annual accounts.
Tort Liability
Under Dutch law, there can be liability if one has committed a tort
(onrechtmatige daad) against another person. Although there is no clear
definition of “tort” under Dutch law, breach of a duty of care towards a third
party is generally considered to be a tort. Therefore, a Dutch corporation may
be held liable by any third party under the general rule of Dutch laws
regarding tort claims. In exceptional cases, Managing Directors and
Supervisory Directors have been found liable on the basis of tort under Dutch
common law, but it is generally difficult to hold a Managing Director or
Supervisory Director personally liable for a tort claim. Shareholders cannot
base a tort claim on any losses which derive from and coincide with losses we
suffered. In such cases, only we can sue the Managing Directors or
Supervisory Directors.
Criminal Liability
Under Dutch law, if a legal entity has committed a criminal offense, criminal
proceedings may be instituted against the legal entity itself as well as against
those who gave order to or were in charge of the forbidden act. As a general
rule, it is held that a Managing Director is only criminally liable if he or she
played a reasonably active role in the criminal act.
Indemnification
Article 27 of our Articles provides that we shall indemnify every person who is
or was a Managing Director or Supervisory Director against all expenses
(including attorneys’ fees), judgments, fines and amounts paid in settlement
with respect to any threatened pending or completed action, suit or
proceeding as well as against expenses (including attorneys’ fees) actually and
reasonably incurred in connection with the defense or settlement of an action
or proceeding, if such person acted in good faith and in a manner he or she
reasonably could believe to be in or not opposed to our best interests. An
exception is made in respect to any claim, issue or matter as to which such
person shall have been adjudged to be liable for gross negligence or willful
misconduct in the performance of his or her duty to us.
Classes of Shares
The authorized classes of our shares consist of Common Shares, Financing
Preference Shares and Preference Shares. No Financing Preference Shares or
Preference Shares have been issued.
Common Shares
Common Shares are issued in registered form only. No share certificates are
issued for Common Shares and Common Shares are registered in either our
shareholders register with Equiniti Trust Company LLC , our transfer agent and
registrar in New York, or our shareholder register with TMF Fund Services
B.V., Westblaak 89, 3012 KG Rotterdam, the Netherlands.
The transfer of registered shares requires a written instrument of transfer and
the written acknowledgment of such transfer by us or the New York Transfer
Agent (in our name).
Financing Preference Shares
No Financing Preference Shares are currently issued or outstanding. If issued,
Financing Preference Shares will be issued in registered form only. No share
certificates are issued for Financing Preference Shares. Financing Preference
Shares must be fully paid up upon issue. The preferred dividend rights
attached to Financing Preference Shares are described under “Dividends”
below. We have no present plans to issue any Financing Preference Shares.
Preference Shares
No Preference Shares are currently issued or outstanding. If issued, Preference
Shares will be issued in registered form only. No share certificates shall be
issued for Preference Shares. Only 25% of the nominal value thereof is
required to be paid upon subscription for Preference Shares. The obligatory
payable part of the nominal amount (or the call) must be equal for each
Preference Share. The Managing Board may, subject to the approval of the
Supervisory Board, resolve on which day and up to which amount a further
call must be paid on Preference Shares which have not yet been paid up in
full. The preferred dividend rights attached to Preference Shares are described
under “Dividends” below.
Pursuant to our Articles, QIAGEN’s Supervisory Board is entitled, if and in so
far as the Supervisory Board has been designated by our General Meeting, to
resolve to issue Preference Shares in the event that (i) any person who alone or
with one or more other persons, directly or indirectly, have acquired or given
notice of an intent to acquire (beneficial) ownership of an equity stake which
in aggregate equals 20% or more of our share capital then outstanding, or
(ii) the Supervisory Board has determined a person to be an “adverse
person.” For this purpose, an “adverse person” is generally any (legal) person,
alone or together with affiliates or associates, with an equity stake in our
Company which the Supervisory Board considers to be substantial, which must
be at least 10% of the issued share capital, and where the Supervisory
Board is of the opinion that this (legal) person has engaged in an acquisition
that is intended to cause or pressure QIAGEN to enter into transactions
intended to provide such person with short-term financial gain under
circumstances that would not be in the interest of QIAGEN and our
shareholders or whose ownership is reasonably likely to cause a material
adverse impact on our business prospects. Currently the Supervisory Board has
not been designated to issue Preference Shares.
On August 2, 2004, we entered into an agreement (Option Agreement) with
Stichting Preferente Aandelen QIAGEN (SPAQ) which was most recently
amended on June 4, 2012. Pursuant to the Option Agreement, SPAQ was
granted an option to acquire such number of Preference Shares as are equal
to the total number of all outstanding Common Shares minus one in our share
capital at the time of the relevant exercise of the right. SPAQ may exercise its
right to acquire the Preference Shares in all situations that it believes that our
interest or our stakeholders' interests are at risk (which situations include but
are not limited to (i) receipt of a notification from the Managing Board that a
takeover is imminent, and (ii) receipt of a notification from the Managing
Board that one or more activist shareholders take a position that is not in the
interest of QIAGEN, our shareholders or our other stakeholders), provided that
the conditions mentioned in the previous paragraph have been met. Due to the
implementation of the EC Directive on Takeover Bids in Dutch legislation, the
exercise of the option to acquire Preference Shares by SPAQ and the
subsequent issuance of Preference Shares to SPAQ needs to be done with due
observance and in consideration of the restrictions imposed by the Public Offer
Rules.
SPAQ was incorporated on August 2, 2004. Its principal office is located at
Hulsterweg 82, 5912 PL Venlo, The Netherlands. Its statutory objectives are to
protect our interests and our enterprise and the enterprises of companies which
are linked to us. SPAQ shall attempt to accomplish its objectives by way of
acquiring Preference Shares in the share capital of QIAGEN and to exercise
the voting rights in our interests and the interests of our stakeholders.
The board of SPAQ shall consist of at least two directors. Upon incorporation
of SPAQ, two members were appointed to the board of SPAQ who resigned
in 2019. In December 2019, two new members were appointed. After serving
on the board of SPAQ for four years, these board members were reappointed
at the end of 2023 for an additional two year term each. The board of SPAQ
may appoint additional members to the board. Board resolutions will be
adopted by unanimity of the votes cast. SPAQ will be represented either by its
board or by the chairman of its board.
Issuance of shares
Under our Articles, the Supervisory Board has the power to issue Shares and
determine the issue price and further conditions of such issuance, provided that
it has been authorized by the General Meeting to do so. The authorization
referred to in the preceding sentence can only be granted for a specific period
of time not exceeding five years and may be extended in the same manner. If
there is no designation of the Supervisory Board to issue shares in force, the
General Meeting shall have authority to issue shares, but only upon the
proposal of, and in accordance with the issue price and further conditions as
determined by, the Supervisory Board. For these purposes, issuances of shares
include the granting of rights to subscribe for shares, such as options and
warrants, but not the issue of shares upon exercise of such rights.
On June 22, 2023, the General Meeting resolved to authorize the Supervisory
Board until December 22, 2024, to issue Common Shares and Financing
Preference Shares or grant rights to subscribe for such shares, the aggregate
par value of which shall be equal to the aggregate par value of 50% of the
shares issued and outstanding in the capital of the Company as of December
31, 2022, as included in the Annual Accounts for Calendar Year 2022.
Pre-emptive Rights
Under our Articles, existing holders of Common Shares will have pre-emptive
rights in respect of future issuances of Common Shares in proportion to the
number of Common Shares held by them, unless limited or excluded as
described below. Holders of Common Shares shall not have pre-emptive rights
in respect of future issuances of Financing Preference Shares or Preference
Shares. Holders of Financing Preference Shares and Preference Shares shall
not have pre-emptive rights in respect of any future issuances of share capital.
Pre-emptive rights do not apply with respect to shares issued against
contributions other than in cash or shares issued to employees of the Company
or one of our group companies. Under our Articles, the Supervisory Board has
the power to limit or exclude any pre-emptive rights to which shareholders may
be entitled, provided that it has been authorized by the General Meeting to do
so. The authority of the Supervisory Board to limit or exclude pre-emptive rights
can only be exercised if at that time the Supervisory Board's authority to issue
shares is in full force and effect. The authority to limit or exclude pre-emptive
rights may be extended in the same manner as the authority to issue shares. If
there is no designation of the Supervisory Board to limit or exclude pre-emptive
rights in force, the General Meeting shall have authority to limit or exclude
such pre-emptive rights, but only upon the proposal of the Supervisory Board.
Resolutions of the General Meeting (i) to limit or exclude pre-emptive rights or
(ii) to designate the Supervisory Board as the corporate body that has authority
to limit or exclude pre-emptive rights, require a majority of at least two-thirds of
the votes cast in a meeting of shareholders if less than 50% of the issued share
capital is present or represented. For these purposes, issuances of shares
include the granting of rights to subscribe for shares, such as options and
warrants, but not the issue of shares upon exercise of such rights.
On June 22, 2023, the General Meeting resolved to grant the authority to
restrict or exclude pre-emptive rights until December 22, 2024. However, the
General Meeting has limited this authority in a way that the Supervisory Board
can only exclude or limit the pre-emptive rights in relation to no more than
10% of the aggregate par value of all shares issued and outstanding in the
capital of the Company as of December 31, 2022.
Acquisition of Our Own Shares
We may acquire our own shares, subject to certain provisions of Dutch law
and our Articles, if (i) shareholders’ equity less the payment required to make
the acquisition does not fall below the sum of paid-up and called-up capital
and any reserves required by Dutch law or the Articles, and (ii) we and our
subsidiaries would not thereafter hold shares with an aggregate nominal value
exceeding half of our issued share capital. Shares that we hold in our own
capital or shares held by one of our subsidiaries may not be voted. The
Managing Board, subject to the approval of the Supervisory Board, may effect
the acquisition of shares in our own capital. Our acquisitions of shares in our
own capital may only take place if the General Meeting has granted to the
Managing Board the authority to effect such acquisitions. Such authority may
apply for a maximum period of eighteen months and must specify the number
of shares that may be acquired, the manner in which shares may be acquired
and the price limits within which shares may be acquired. Dutch corporate law
allows for the authorization of the Managing Board to purchase a number of
shares equal to up to 50% of the Company’s issued share capital on the date
of the acquisition. On June 22, 2023, the General Meeting resolved to extend
the authorization of the Managing Board in such manner that the Managing
Board may, for an 18-month period beginning June 22, 2023, until
December 24, 2024, cause us to acquire shares in our own share capital, up
to 10% of the Company's issued share capital on the date of the acquisition
and provided that the Company or any subsidiary shall not hold more than
10% of the Company's issued share capital at any time, without limitation at a
price between one euro cent (euro 0.01) and one hundred ten percent
(110%) of the higher of the average closing price of our shares on the New
York Stock Exchange or, as applicable, the Frankfurt Stock Exchange, for the
five trading days prior to the day of purchase, or, with respect to Preference
and Finance Preference shares, against a price between one euro cent (euro
0.01) and three times the issuance price and in accordance with applicable
provisions of Dutch law and our Articles.
Synthetic Share Repurchase
During the Annual General Meeting held on June 22, 2023, the General
Meeting approved a proposal to allow the Managing Board, subject to the
approval of the Supervisory Board, to, during a period of 18 months from the
date of the Annual General Meeting, i.e. until December 22, 2024, adjust the
Company's capital structure and to repay capital to our shareholders via a
synthetic share repurchase within predetermined boundaries, and with the key
consequences of such synthetic share repurchase being that: (i) an amount to
be determined by the Managing Board, subject to the approval of the
Supervisory Board, of up to a maximum $300 million would be paid to our
shareholders as a capital repayment, and (ii) the number of outstanding
Common Shares would at least be decreased by a number of Common Shares
approximately equal to the number of Common Shares that the Company,
theoretically, could have repurchased for the aggregate amount repaid to our
shareholders.
For more information on the synthetic share repurchase, we refer to the
explanatory notes to agenda item 14 in the proxy statement relating to the
Annual General Meeting of June 22, 2023 as well as our press release of
January 18, 2024.
Capital Reduction
Subject to the provisions of Dutch law and our Articles, the General Meeting
may, upon the proposal of the Supervisory Board, resolve to reduce the issued
share capital by (i) canceling shares, or (ii) reducing the nominal value of
shares through an amendment of our Articles. Cancellation with repayment of
shares or partial repayment on shares or release from the obligation to pay up
may also be made or given exclusively with respect to Common Shares,
Financing Preference Shares or Preference Shares.
Cancellation of Fractional Common Shares
Prior to the synthetic share repurchase described above, the Company held
fractional Common Shares and as part of the synthetic share repurchase, the
Company acquired additional fractional Common Shares. In an effort to, as
much as possible, clean up the composition of the Company's share capital,
the General Meeting of June 22, 2023 resolved to reduce the issued share
capital of the Company by cancelling all fractional Common Shares (i) the
Company holds in its own capital at the date of the 2023 Annual General
Meeting, or will hold in its own share capital following execution of certain
steps making-whole the then issued and outstanding fractional Common
Shares, and (ii) the Company will hold in its own capital as a result of the
synthetic share repurchase described above and the execution of certain steps
making-whole the then issued and outstanding fractional Common Shares. The
cancellation may be implemented in one or more tranches, at the discretion of
the Managing Board.
Financ ial Year, Annual Accounts and Independent Registered
Public Accounting Firm
Our financial year coincides with the calendar year. Dutch law requires that
within four months after the end of the financial year, the Managing Board
must make available a report with respect to such financial year, including our
financial statements for such year prepared under International Financial
Reporting Standards and accompanied by a report of an Independent
Registered Public Accounting Firm. The annual report is submitted to the
Annual General Meeting for adoption.
The General Meeting appoints the external auditor of our statutory financial
statements prepared in accordance with International Financial Reporting
Standards and to issue a report thereon. On June 22, 2023, our shareholders
appointed KPMG Accountants N.V. to serve as our external auditor for our
statutory consolidated financial statements prepared in accordance with
International Financial Reporting Standards for the year ending December 31,
2023.
Dividends and Other Distributions
Subject to certain exceptions, dividends may only be paid out of profits as
shown in our annual financial statements as adopted by the General Meeting.
Distributions may not be made if the distribution would reduce shareholders’
equity below the sum of the paid-up and called-up capital and called-up and
any reserves required by Dutch law or our Articles.
Out of profits, dividends must first be paid on any outstanding Preference
Shares (the Preference Share Dividend) in a percentage (the Preference Share
Dividend Percentage) of the obligatory call amount paid up on such shares at
the beginning of the financial year in respect of which the distribution is made.
The Preference Share Dividend Percentage is equal to the average main
refinancing rates during the financial year for which the distribution is made.
Average main refinancing rate shall be understood to mean the average value
on each individual day during the financial year for which the distribution is
made of the main refinancing rates prevailing on such day. The main
refinancing rate shall be understood to mean the rate of the Main Refinancing
Operation as determined and published from time to time by the European
Central Bank. If and to the extent that profits are not sufficient to pay the
Preference Share Dividend in full, the deficit shall be paid out of the reserves,
with the exception of any reserve, which was formed as share premium
reserve upon the issue of Financing Preference Shares. If in any financial year
the profit is not sufficient to make the distributions referred to above and if no
distribution or only a partial distribution is made from the reserves referred to
above, such that the deficit is not fully made good, no further distributions will
be made as described below until the deficit has been made good.
Out of profits remaining after payment of any dividends on Preference Shares,
the Supervisory Board shall determine such amounts as shall be kept in reserve
as determined by the Supervisory Board. Out of any remaining profits not
allocated to reserve, a dividend (the Financing Preference Share Dividend)
shall be paid on the Financing Preference Shares equal to a percentage (the
Financing Preference Share Dividend Percentage) over the nominal value of
the Financing Preference Shares, increased by the amount of share premium
that was paid upon the first issue of Financing Preference Shares. The
Financing Preference Shares Dividend Percentage which percentage is related
to a fixed average effective yield on the prime interest rate on corporate loans
in the United States as quoted in the Wall Street Journal as set forth in article
40.4 of our Articles. If and to the extent that the profits are not sufficient to pay
the Financing Preference Share Dividend in full, the deficit may be paid out of
the reserves if the Managing Board so decides with the approval of the
Supervisory Board, with the exception of the reserve which was formed as
share premium upon the issue of Financing Preference Shares.
Insofar as the profits have not been distributed or allocated to reserves as
specified above, the General Meeting may act to allocate such profits,
provided that no further dividends will be distributed on the Preference Shares
or the Financing Preference Shares.
The Managing Board may, with due observance of Article 2:105 of the Dutch
Civil Code and with the approval of the Supervisory Board, distribute an
interim dividend, if and to the extent that the profits so permit. Interim
dividends may be distributed on one class of shares only.
The General Meeting may resolve, on the proposal of the Supervisory Board,
to distribute dividends or reserves, wholly or partially, in the form of shares.
Distributions as described above are payable as from a date to be determined
by the Supervisory Board. Distributions will be made payable at an address or
addresses in the Netherlands to be determined by the Supervisory Board, as
well as at least one address in each country where the shares are listed or
quoted for trading. The Supervisory Board may determine the method of
payment of cash distributions. Distributions in cash that have not been
collected within five years and two days after they have become due and
payable shall revert to QIAGEN.
Dutch law provides that the declaration of dividends out of the profits that are
at the free disposal of the General Meeting is the exclusive right of the General
Meeting. This is different from the corporate law of most jurisdictions in the
United States, which permits a corporation’s board of directors to declare
dividends.
Shareholder Meetings, Voting Rights and Other Shareholder
Rights
The Annual General Meeting is required to be held within six months after the
end of each financial year for the purpose of, among other things, adopting
the annual accounts and filling of any vacancies on the Managing Board and
Supervisory Board.
Extraordinary General Meetings are held as often as deemed necessary by the
Managing Board or Supervisory Board, or upon a request to the Managing
Board or Supervisory Board by one or more shareholders and other persons
entitled to attend meetings jointly representing (i) at least 40% of our issued
share capital, with those persons jointly being authorized to convene such
meeting themselves in case the Boards do not timely comply with the request,
in accordance with the Articles of Association, or (ii) at least 10% of our issued
share capital, with those persons jointly being authorized to convene such
meeting themselves in case the Boards do not timely comply with the request,
but only if and to the extent authorized thereto by a competent Dutch court in
accordance with the laws of the Netherlands.
General Meetings are held in Amsterdam, Haarlemmermeer (Schiphol
Airport), Arnhem, Maastricht, Rotterdam, Venlo or The Hague. The notice
convening a General Meeting must be given in such manner as shall be
authorized by law including but not limited to an announcement published by
electronic means no later than the forty-second day prior to day of the general
meeting. The notice will contain the agenda for the meeting or the notice is
published along with the agenda.
The agenda shall contain such subjects to be considered at the General
Meeting, as the persons convening or requesting the meeting shall decide.
Under Dutch law, holders of shares representing solely or jointly at least three
hundredth part of the issued share capital may request QIAGEN not later than
on the sixtieth day prior to the day of the General Meeting, to include certain
subjects in the notice convening a meeting. No valid resolutions can be
adopted at a General Meeting in respect of subjects which are not mentioned
in the agenda.
Dutch corporate law sets a mandatory (participation and voting) record date
for Dutch listed companies fixed at the twenty-eighth day prior to the day of
the shareholders’ meeting. Shareholders registered at such record date are
entitled to attend and exercise their rights as shareholders at the General
Meeting, regardless of a sale of shares after the record date.
General Meetings are presided over by the Chairman of the Supervisory
Board or, in his absence, by any person nominated by the Supervisory Board.
At the General Meeting, each share shall confer the right to cast one vote,
unless otherwise provided by law or our Articles. No votes may be cast in
respect of shares that we or our subsidiaries hold, or by usufructuaries and
pledgees. All shareholders and other persons entitled to vote at General
Meetings are entitled to attend General Meetings, to address the meeting and
to vote. They must notify the Managing Board in writing of their intention to be
present or represented not later than on the third day prior to the day of the
meeting, unless the Managing Board permits notification within a shorter
period of time prior to any such meeting. Subject to certain exceptions,
resolutions may be passed by a simple majority of the votes cast.
Except for resolutions to be adopted by the meeting of holders of Preference
Shares, our Articles do not allow the adoption of shareholders resolutions by
written consent (or otherwise without holding a meeting).
A resolution of the General Meeting to amend our Articles, dissolve QIAGEN,
issue shares or grant rights to subscribe for shares or limit or exclude any pre-
emptive rights to which shareholders shall be entitled is valid only if proposed
to the General Meeting by the Supervisory Board.
A resolution of the General Meeting to amend our Articles is further only valid
if the complete proposal has been made available for inspection by the
shareholders and the other persons entitled to attend General Meetings at our
offices as from the day of notice convening such meeting until the end of the
meeting. A resolution to amend our Articles to change the rights attached to
the shares of a specific class requires the approval of the relevant class
meeting.
Resolutions of the General Meeting in a meeting that has not been convened
by the Managing Board and/or the Supervisory Board, or resolutions included
on the agenda for the meeting at the request of shareholders, will be valid only
if adopted with a majority of two-thirds of votes cast representing more than
half the issued share capital, unless our Articles require a greater majority or
quorum.
A resolution of the General Meeting to approve a legal merger or the sale of
all or substantially all of our assets is valid only if adopted by a vote of at least
two-thirds of the issued share capital, unless proposed by the Supervisory
Board, in which case a simple majority of the votes cast shall be sufficient.
A shareholder shall upon request be provided, free of charge, with written
evidence of the contents of the share register with regard to the shares
registered in its name. Furthermore, any shareholder shall, upon written
request, have the right, during normal business hours, to inspect our share
register and a list of our shareholders and their addresses and shareholdings,
and to make copies or extracts therefrom. Such request must be directed to our
Managing Directors at our registered office in the Netherlands or at our
principal place of business. Financial records and other company documents
(other than those made public) are not available in this manner for shareholder
review, but an extract of the minutes of the General Meeting shall be made
available.
According to Dutch law and our Articles, certain resolutions of the Managing
Board regarding a significant change in the identity or nature of us or our
enterprise are subject to the approval of the General Meeting. The following
resolutions of the Managing Board require the approval of the General
Meeting in any event:
(1) the transfer of our enterprise or practically our entire enterprise to a third
party;
(2) the entry into or termination of a long-term cooperation by us or one of
our subsidiaries (dochtermaatschappijen) with another legal person or
partnership or as a fully liable general partner of a limited partnership or
a general partnership, if such cooperation or termination is of a far-
reaching significance for us; and
(3) the acquisition or divestment by us or one of our subsidiaries
(dochtermaatschappijen) of a participating interest in the capital of a
company with a value of at least one-third of the sum of our assets
according to our consolidated balance sheet and explanatory notes in our
last adopted annual accounts.
No Derivative Actions; Right to Request Independent Inquiry
Dutch law does not afford shareholders the right to institute actions on behalf
of us or in our interest. Shareholders, acting alone or together, holding at least
one-tenth of our issued capital, or shares representing an aggregate nominal
value of EUR 225,000 may inform the Managing Board and the Supervisory
Board of their objections as to our policy or the course of our affairs and,
within a reasonable time thereafter, may request the Enterprise Chamber of the
Court of Appeal in Amsterdam to order an inquiry into the policy and the
course of our affairs by independent investigators. If such an inquiry is ordered
and the investigators conclude that there has been mismanagement, the
shareholders can request the Enterprise Chamber to order certain measures
such as a suspension or annulment of resolutions.
Dissolution and Liquidation
The General Meeting may resolve to dissolve QIAGEN upon the proposal of
the Supervisory Board. If QIAGEN is dissolved, the liquidation shall be carried
out by the person designated for that purpose by the General Meeting, under
the supervision of the Supervisory Board. The General Meeting shall upon the
proposal of the Supervisory Board determine the remuneration payable to the
liquidators and to the person responsible for supervising the liquidation.
During the liquidation process, the provisions of our Articles will remain
applicable to the extent possible.
In the event of our dissolution and liquidation, the assets remaining after
payment of all debts and liquidation expenses will be distributed among
registered holders of Common Shares in proportion to the nominal value of
their Common Shares, subject to liquidation preference rights of holders of
Preference Shares and Financing Preference Shares, if any.
Restrictions on Transfer of Preference Shares
The Supervisory Board, upon application in writing, must approve each
transfer of Preference Shares. If approval is refused, the Supervisory Board will
designate prospective purchasers willing and able to purchase the shares,
otherwise the transfer will be deemed approved.
Limitations in our Articles on Rights to Own Securities
Other than with respect to usufructuaries and pledgees who have no voting
rights, our Articles do not impose limitations on rights to own our securities
including the rights of non-resident or foreign shareholders to hold or exercise
voting rights on the securities imposed by foreign law or by the charter or
other constituent document of the Company or state.
Provisions which May Defer or Prevent a Change in Control
The Option Agreement and our Articles could, under certain circumstances,
prevent a third party from obtaining a majority of the voting control of our
shares by issuing Preference Shares. Under the Option Agreement, SPAQ
could acquire Preference Shares subject to the provisions referred to under
"Preference Shares."
If SPAQ acquires the Preference Shares, the bidder may withdraw its bid or
enter into negotiations with the Managing Board and/or Supervisory Board
and agree on a higher bid price for our shares.
Shareholders who obtain control of a company are obliged to make a
mandatory offer to all other shareholders. The threshold for a mandatory offer
is set at the ability to exercise 30% of the voting rights at the general meeting
of shareholders in a Dutch public limited company (naamloze vennootschap)
whose securities are admitted to trading on a regulated market in the EU, such
as QIAGEN.
Ownership Threshold Requiring Disclosure
Our Articles do not provide an ownership threshold above which ownership
must be disclosed. However, there are statutory requirements to disclose share
ownership above certain thresholds under Dutch law — see “Obligation of
Shareholders to Disclose Major Holdings.”
Obligation of Shareholders to Disclose Major Holdings
Holders of our shares or rights to acquire shares (which include options and
convertible bonds - see also below) may be subject to notification obligations
under the Dutch Financial Markets Supervision Act (FMSA).
Pursuant to the FMSA, any person who, directly or indirectly, acquires or
disposes of an interest (including a potential interest, such as options and
convertible bonds) in our issued share capital or voting rights must notify the
Netherlands Authority for the Financial Markets (AFM) without delay, if as a
result of such acquisition or disposal, the percentage of capital interest or
voting rights held by such person in QIAGEN reaches, exceeds or falls below
any of the following thresholds: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%,
50%, 60%, 75% and 95%. The notifications should be made electronically
through the notification system of the AFM.
A notification requirement also applies if a person's capital interest or voting
rights reaches, exceeds or falls below the above-mentioned thresholds as a
result of a change in our total issued share capital or voting rights. Such
notification has to be made no later than the fourth trading day after the AFM
has published our notification as described below.
Under the FMSA, we are required to notify the AFM without delay of the
changes to our total issued share capital or voting rights if our issued share
capital or voting rights changes by 1% or more since our previous notification.
We must furthermore quarterly notify the AFM within eight days after the end
of the relevant quarter, in the event our issued share capital or voting rights
changed by less than 1% in that relevant quarter since our previous
notification.
Furthermore, each person who is or ought to be aware that, as a result of the
exchange of certain financial instruments, such as options for shares, his actual
capital or voting interest in QIAGEN, reaches, exceeds or falls below any of
the following thresholds: 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%,
60%, 75% and 95%, vis-à-vis his most recent notification to the AFM, must
give notice to the AFM no later than the fourth trading day after he became or
ought to be aware of this change.
Controlled entities, within the meaning of the FMSA, do not have notification
obligations under the FMSA, as their direct and indirect interests are attributed
to their (ultimate) parent. Any person may qualify as a parent for purposes of
the FMSA, including an individual. A person who has a 3% or larger interest
in our share capital or voting rights and who ceases to be a controlled entity
for these purposes must notify the AFM without delay. As of the date of that
notification, all notification obligations under the FMSA will become
applicable to that entity.
For the purpose of calculating the percentage of capital interest or voting
rights, the following interests must, inter alia, be taken into account: (i) our
shares or voting rights on our shares directly held (or acquired or disposed of)
by a person, (ii) our shares or voting rights on our shares held (or acquired or
disposed of) by such person's controlled entity, or by a third party for such
person's account or by a third party with whom such person has concluded an
oral or written voting agreement (including a discretionary power of attorney),
and (iii) our shares or voting rights on our shares which such person, or any
subsidiary or third party referred to above, may acquire pursuant to any
option or other right held by such person (or acquired or disposed of,
including, but not limited to, on the basis of convertible bonds). Special rules
apply with respect to the attribution of our shares or voting rights on our shares
which are part of the property of a partnership or other community of property.
A holder of a pledge or right of usufruct (vruchtgebruik) in respect of our
shares can also be subject to the notification obligations of the FMSA, if such
person has, or can acquire, the right to vote on our shares or, in the case of
depository receipts, our underlying shares. The acquisition of (conditional)
voting rights by a pledgee or usufructuary may also trigger the notification
obligations as if the pledgee or beneficial owner were the legal holder of our
shares or voting rights on our shares. A holding in certain cash settled
derivatives (such as cash settled call options and total equity return swaps)
referencing to our shares should also be taken into account for the purpose of
calculating the percentage of capital interest.
Gross short positions in our shares must also be notified to the AFM. For these
gross short positions, the same thresholds apply as for notifying an actual or
potential interest in our issued share capital and/or voting rights as referred to
above, and without any set-off against long positions.
In addition, pursuant to Regulation (EU) No 236/2012, each person holding
a net short position amounting to 0.2% of our issued share capital is required
to report such position to the AFM. Each subsequent increase of this position
by 0.1% above 0.2% will also need to be reported. Each net short position
equal to 0.5% of our issued share capital and any subsequent increase of that
position by 0.1% will be made public via the AFM short selling register. To
calculate whether a natural person or legal person has a net short position,
their short positions and long positions must be set-off. A short transaction in a
share can only be contracted if a reasonable case can be made that the
shares sold can actually be delivered, which requires confirmation of a third
party that the shares have been located.
The AFM does not issue separate public announcements of the above
notifications. However, it does keep a public register of all notifications made
pursuant to the above disclosure obligations under the FMSA on its website
www.afm.nl . Third parties can request to be notified automatically by e-
mail of changes to the public register in relation to a particular company’s
shares or a particular notifying party.
Non-compliance with the notification obligations under the FMSA may lead to
criminal fines, administrative fines, imprisonment or other sanctions. In
addition, non-compliance with the shareholding disclosure obligations under
the FMSA may lead to civil sanctions, including suspension of the voting rights
relating to our shares held by the offender for a period of not more than three
years and a prohibition applicable to the offender to acquire any of our shares
or voting rights on our shares for a period of up to five years.
Management Notifications
Pursuant to the FMSA, each Managing Director and each Supervisory Director
must notify the AFM: (a) within two weeks after his or her appointment of the
number of our shares or rights to acquire shares he or she holds and the
number of votes he or she is entitled to cast in respect to our issued share
capital, and (b) subsequently, each change in the number or our shares or
rights to acquire shares such member holds and of each change in the number
of votes he or she is entitled to cast in respect of our issued share capital,
immediately after the relevant change. If a Managing Director or Supervisory
Director has notified the AFM of a change in shareholding under the FMSA as
described above under “Obligation of Shareholders to Disclose Major
Holdings,” such notification is sufficient for the purposes as described in this
paragraph.
Furthermore, pursuant to European Union Regulation (EU) No 596/2014 (the
Market Abuse Regulation) and the regulations promulgated thereunder, any
Managing Director and Supervisory Director, as well as any other person
discharging managerial responsibilities in respect of QIAGEN who has
regular access to inside information relating directly or indirectly to QIAGEN
and power to take managerial decisions affecting future developments and
business prospects of QIAGEN, must notify the AFM and QIAGEN by means
of a standard form of any transactions conducted for his or her own account
relating to the shares or debt instruments of QIAGEN or to derivatives or other
financial instruments linked thereto.
In addition, pursuant to the Market Abuse Regulation, certain persons who are
closely associated with Managing Directors and Supervisory Directors or any
of the other persons as described above, are required to notify the AFM and
QIAGEN of any transactions conducted for their own account relating to the
shares or debt instruments of QIAGEN or to derivatives or other financial
instruments linked thereto. The Market Abuse Regulation covers, inter alia, the
following categories of persons: (i) the spouse or any partner considered by
national law as equivalent to the spouse; (ii) dependent children; (iii) other
relatives who have shared the same household for at least one year at the
relevant transaction date; and (iv) any legal person, trust or partnership whose,
among other things, managerial responsibilities are discharged by a person
referred to under (i) to (iii) above or by the relevant Managing Directors and
Supervisory Directors or other person discharging the managerial
responsibilities in respect of QIAGEN as described above.
The notifications pursuant to the Market Abuse Regulation described above
must be made to the AFM no later than the third business day following the
relevant transaction date. Under certain circumstances, these notifications may
be postponed until all transactions within a calendar year have reached a total
amount of €5,000 (calculated without netting). Any subsequent transaction
must be notified as set forth above. If a Managing Director or Supervisory
Director has notified a change in the number of our shares or options to
acquire shares such member holds or a change in the number of votes he or
she is entitled to cast to the AFM under the FMSA as described in the first
paragraph above, such notification - but only to the extent there is an overlap
with the notifications obligations under the Market Abuse Regulation - is
sufficient for the purposes of the Market Abuse Regulation as described in this
paragraph.
Principal Accountant Fees and Services
Audit Committee Pre-Approval Policies and Procedures
Our independent registered public accounting firm is KPMG AG
Wirtschaftsprüfungsgesellschaft , Düsseldorf, Germany , Auditor Firm ID: 1021 .
The Audit Committee has adopted a policy that requires the pre-approval of all
services performed for us by our independent registered public accounting
firm. Additionally, the Audit Committee has delegated to the Committee Chair
full authority to approve any management request for pre-approval, provided
the Chair presents any approval given at its next scheduled meeting. All audit-
related services, tax services and other services rendered by our independent
registered public accounting firm or their affiliates were pre-approved by the
Audit Committee and are compatible with maintaining the auditor’s
independence.
Set forth below are the total fees billed (or expected to be billed), on a
consolidated basis, by the independent registered public accounting firm or
their affiliates for providing audit and other professional services in each of the
last two years:
(in millions)
2023
2022
Audit fees
$2.9
$2.8
Consolidated financial statements
2.4
2.1
Statutory financial statements
0.5
0.7
Audit-related fees
—
—
Tax fees
0.2
0.3
All other fees
—
—
Total
$3.1
$3.1
Audit fees consist of fees and expenses billed for the annual audit and
quarterly review of QIAGEN’s consolidated financial statements. They also
include fees billed for other audit services, which are those services that only
the statutory auditor can provide, and include the review of documents filed
with the Securities Exchange Commission.
Audit-related fees consist of fees and expenses billed for assurance and related
services that are related to the performance of the audit or review of
QIAGEN’s financial statements and include consultations concerning financial
accounting and reporting standards and review of the opening balance sheets
of newly acquired companies.
Tax fees include fees and expenses billed for tax compliance services,
including assistance on the preparation of tax returns and claims for refund;
tax consultations, such as assistance and representation in connection with tax
audits and appeals. All other fees include various fees and expenses billed for
services, such as transaction due diligence, as approved by the Audit
Committee and as permitted by the Sarbanes-Oxley Act of 2002.
Taxation
The following is a general summary of certain material United States federal
income tax consequences to holders of our Common Shares who are “U.S.
Holders” (as such term is defined below) and certain material Netherlands tax
consequences to holders of our Common Shares who are “non-resident
Shareholders” or “Shareholders” (as each term is defined below). This
summary does not discuss every aspect of such taxation that may be relevant
to such holders. Therefore, all prospective purchasers of our Common Shares
described above are advised to consult their own tax advisors with respect to
the United States federal, state and local tax consequences, as well as the
Netherlands tax consequences, of the ownership of our Common Shares.
The statements of the Netherlands and United States tax laws set out below are
based on the laws in force as of the date of this Annual Report on Form 20-F,
and as a consequence are subject to any changes in United States or the
Netherlands law, or in the taxation conventions concluded by the United States
and the Netherlands, occurring after such date. Tax considerations associated
with currently enacted laws which are not in force as of this date have not
been addressed in this description.
Netherlands Tax Considerations
The following describes the material tax consequences under Netherlands law
of an investment in our Common Shares. Such description is based on current
understanding of Netherlands tax law currently in force as interpreted under
officially published case law and in published policy, and is limited to the tax
implications for an owner of our Common Shares who is not, or is not deemed
to be, a resident of the Netherlands for purposes of the relevant tax laws (a
“non-resident Shareholder” or “Shareholder”).
Dividend Withholding Tax
General
Upon distribution of dividends, we are obligated to withhold 15% dividend tax
at source and to pay the amount withheld to the Netherlands taxing
authorities. The term “dividends” means income from shares or other rights
participating in profits, as well as income from other corporate rights that is
subjected to the same taxation treatment as income from shares by the laws of
the Netherlands. Dividends include dividends in cash or in kind, constructive
dividends, certain repayments of capital qualified as dividends, interest on
loans that are treated as equity instruments for Netherlands corporate income
tax purposes and liquidation proceeds in excess of, for Netherlands tax
purposes, recognized paid-in capital. Stock dividends are also subject to
withholding tax, unless derived from our paid-in share premium that is
recognized as equity for Netherlands tax purposes.
No dividend withholding tax should apply on the proceeds resulting from the
sale or disposition of our Common Shares to persons other than QIAGEN and
our affiliates. A disposition of our Common Shares to QIAGEN or to our
affiliates should in general be subject to withholding tax.
A domestic exemption from Netherlands dividend withholding tax may apply
when dividends are paid to a corporate Shareholder that owns 5% or more of
the nominal paid-up share capital and qualifies as a beneficial owner and is
solely resident in an EU/EEA Member State or in a country with which the
Netherlands has concluded a tax convention that includes a dividend article.
This general exemption does not apply to abusive structures. A structure is
deemed abusive if a corporate Shareholder owns our Common Shares with
the main purpose or one of the main purposes to avoid tax for another person
and the structure is considered artificial (i.e., not put into place for valid
commercial reasons that reflect economic reality). This domestic exemption
may under conditions further not apply in case of hybrid mismatches.
A corporate Shareholder may also be eligible for relief of Netherlands
dividend withholding tax under Netherlands tax law, or under a tax
convention that is in force between the country of residence of the Shareholder
and the Netherlands.
Specific for U.S. Shareholders
The regular 15% dividend withholding tax is withheld by us on dividends we
pay to a resident of the United States. For a corporate U.S. Shareholder that
cannot benefit from the Dutch domestic exemption (as explained above),
withholding tax on dividends may still be reduced to 5% or 0% if the recipient
is entitled to benefits under the Tax Convention between the Netherlands and
the United States (the Convention), and the relevant specific conditions are
met. Dividends we pay to U.S. pension funds and U.S. tax-exempt
organizations may be eligible for an exemption from dividend withholding tax
under the Convention.
Dividend Stripping
A refund, reduction, exemption, or credit of Netherlands dividend withholding
tax on the basis of Netherlands tax law or on the basis of a tax convention
between the Netherlands and another state, will only be granted if the
dividends are paid to the beneficial owner (“uiteindelijk gerechtigde”) of the
dividends. A recipient of a dividend is amongst others not considered to be the
beneficial owner of a dividend in an event of “dividend stripping.” In general
terms, “dividend stripping” can be described as the situation in which a
foreign or domestic person (usually, but not necessarily, the original
shareholder) has transferred in return for a consideration its shares or its
entitlement to the dividend distributions to a party that has a more favorable
right to a refund or reduction of Netherlands dividend withholding tax than the
foreign or domestic person. In these situations, the foreign or domestic person
(usually the original shareholder) avoids Netherlands dividend withholding tax
while retaining an interest in the shares and the dividend distributions, by
transferring its shares or its entitlement to the dividend distributions in
exchange for a consideration.
Income Tax and Corporate Income Tax
General
A non-resident Shareholder will not be subject to Netherlands income tax or
corporate income tax with respect to dividends we distribute on our Common
Shares or with respect to capital gains derived from the sale or disposition of
our Common Shares, provided that:
a. the non-resident Shareholder does not carry on or have an interest in a
business in the Netherlands through a permanent establishment or a
permanent representative to which or to whom the Common Shares are
attributable or deemed to be attributable;
b. the non-resident Shareholder does not have a direct or indirect substantial or
deemed substantial interest (“aanmerkelijk belang,” as defined in the
Netherlands tax law) in our share capital or, in case of an individual, such
a substantial interest, such interest is a “business asset,” or, in case of a
corporate Shareholder, the arrangement or a series of arrangements are not
put in place with the main purpose or one of the main purposes to avoid
Netherlands income tax for another person or cannot be considered
artificial. An arrangement or series of arrangements are considered artificial
to the extent not put in place for valid commercial reasons that reflect
economic reality; and
c. the non-resident Shareholder is not entitled to a share in the profits of an
enterprise, to which our Common Shares are attributable and that is
effectively managed in the Netherlands, other than by way of securities or
through an employment contract.
In general terms, a substantial interest (“aanmerkelijk belang”) in our share
capital does not exist if the Shareholder (individuals as well as corporations),
alone or together with his partner, does not own, directly or indirectly, 5% or
more of the issued capital of (a class of) our shares, and does not have the
right to acquire 5% or more of the issued capital of (a class of) our shares and
does not have the right to share in our profit or liquidation revenue amounting
to 5% or more of the annual profits or liquidation revenue.
There is no all-encompassing definition of the term “business asset”; whether
this determination can be made in general depends on the facts presented and
in particular on the activities performed by the Shareholder. If the Shareholder
materially conducts a business activity, while the key motive of his investment
in our Shares is not be his earnings out of the investment in our Shares but our
economic activity, an investment in our Shares will generally be deemed to
constitute a business asset, in particular if the Shareholder’s involvement in our
business will exceed regular monitoring of his investment in our Shares.
A non-resident Shareholder that holds a substantial interest in our share capital
may be eligible for an exemption or a reduction of Netherlands income tax or
corporate income tax under a tax convention.
Specific for U.S. Shareholders
U.S. Shareholders that do not own a substantial interest should not be subject
to Dutch Personal Income Tax or Dutch Corporate Income Tax (as explained
above). For U.S. Shareholders that do own a substantial interest, Dutch
Personal Income Tax or Dutch Corporate Income Tax could be due. However,
U.S. Shareholders that are entitled to benefits of the Convention may be
eligible for tax relief.
Gift and Inheritance Tax
A gift or inheritance of our Common Shares from a non-resident Shareholder
should generally not be subject to a Netherlands gift and inheritance tax,
provided that the Shareholder is not considered a (deemed) resident of the
Netherlands. The Netherlands has concluded a tax convention with the United
States based on which double taxation on inheritances may be avoided if the
inheritance is subject to Netherlands and/or U.S. inheritance tax and the
deceased was a resident of either the Netherlands or the United States.
United States Federal Income Tax Considerations
The following summary describes certain U.S. federal income tax
considerations generally applicable to U.S. Holders (as defined below) of our
Common Shares. This summary deals only with our Common Shares held as
capital assets within the meaning of Section 1221 of the Internal Revenue
Code of 1986, as amended (the Code). This summary also does not address
the tax consequences that may be relevant to holders in special tax situations
including, without limitation, dealers in securities; traders that elect to use a
mark-to-market method of accounting; pass-through entities such as
partnerships, S corporations, disregarded entities for U.S. federal income tax
purposes and limited liability companies (and investors therein); holders that
own our Common Shares as part of a “straddle,” “hedge,” “conversion
transaction,” or other integrated investment; banks or other financial
institutions; individual retirement accounts and other tax-deferred accounts;
insurance companies; tax-exempt organizations; U.S. expatriates; holders
whose functional currency is not the U.S. dollar; holders subject to the
alternative minimum tax; holders that acquired our Common Shares in a
compensatory transaction; holders subject to special tax accounting rules as a
result of any item of gross income with respect to the Common Shares being
taken into account in an applicable financial statement; or holders that have
owned or will (directly, indirectly or constructively) own 10% or more of the
total voting power or value of our Common Shares.
This summary is based upon the Code, applicable U.S. Treasury regulations,
administrative pronouncements and judicial decisions, in each case as in effect
on the date hereof, all of which are subject to change (possibly with
retroactive effect). No ruling will be or has been requested from the Internal
Revenue Service (IRS) regarding the tax consequences described herein, and
there can be no assurance that the IRS will agree with the discussion set out
below. This summary does not address any consequences other than U.S.
federal income tax consequences (such as the estate and gift tax, the Medicare
tax on net investment income, state and local tax, or non-U.S. tax). Except as
specifically set forth below, this summary does not discuss applicable tax
reporting requirements.
As used herein, the term “U.S. Holder” means a beneficial owner of our
Common Shares that is, for U.S. federal income tax purposes, (i) a citizen or
resident of the United States, (ii) a corporation or other entity taxable as a
corporation created in or organized under the laws of the United States or any
state thereof or therein or the District of Columbia, (iii) an estate the income of
which is subject to U.S. federal income taxation regardless of its source, or
(iv) a trust (a) that is subject to the supervision of a court within the United
States and the control of one or more United States persons as described in
Section 7701(a)(30) of the Code, or (b) that has a valid election in effect
under applicable U.S. Treasury regulations to be treated as a United States
person.
If an entity or other arrangement classified as a partnership for U.S. federal
income tax purposes acquires our Common Shares, the tax treatment of a
partner in the partnership generally will depend upon the status of the partner
and the activities of the partnership. Partners of a partnership considering an
investment in our Common Shares should consult their tax advisors regarding
the U.S. federal income tax consequences of acquiring, owning and disposing
our Common Shares.
Taxation of Dividends
Subject to the discussion below under “Passive Foreign Investment Company
Status,” the sum of any cash plus the fair market value of any property that we
distribute (before reduction for Netherlands withholding tax) to a U.S. Holder
with respect to our Common Shares generally will be included in the U.S.
Holder’s gross income as a dividend, taxable as ordinary income from foreign
sources to the extent of our current or accumulated earnings and profits (as
determined for U.S. federal income tax purposes).
Dividends paid to a non-corporate U.S. Holder by a “qualified foreign
corporation” may be subject to a reduced rate of tax if certain conditions are
met including the following: QIAGEN must not be classified as a "passive
foreign investment company" (PFIC) (discussed below), QIAGEN must be a
“qualified foreign corporation” (as defined below), the U.S. Holder must satisfy
a holding period requirement, and the distribution must not be treated to the
U.S. Holder as “investment income” for purposes of the investment interest
deduction rules. A “qualified foreign corporation” generally includes a foreign
corporation (other than a foreign corporation that is a PFIC with respect to the
relevant U.S. Holder for the taxable year in which the dividends are paid or
for the preceding taxable year) (i) whose Common Shares are readily tradable
on an established securities market in the United States, or (ii) which is eligible
for benefits under a comprehensive U.S. income tax treaty that includes an
exchange of information program and which the U.S. Treasury Department
has determined is satisfactory for these purposes. Our Common Shares are
expected to be readily tradable on the NYSE, an established securities market.
U.S. Holders should consult their own tax advisors regarding the availability of
the reduced tax rate on dividends in light of their particular circumstances.
Dividends on our Common Shares generally will not be eligible for the
dividends received deduction available to corporations in respect of dividends
received from other U.S. corporations.
Distributions in excess of our earnings and profits (as determined for U.S.
federal income tax purposes) will be treated as a non-taxable return of capital
to the extent of the U.S. Holder’s adjusted tax basis in our Common Shares
and thereafter as capital gain. However, we do not intend to calculate our
earnings and profits under U.S. federal income tax principles. Therefore, U.S.
Holders should expect that a distribution will generally be treated as a
dividend even if that distribution would otherwise be treated as a non-taxable
return of capital or as capital gain under the rules described above.
Foreign Tax Credit
Subject to the PFIC rules discussed below, a U.S. Holder that is subject to
Netherlands withholding tax with respect to dividends paid on the Common
Shares generally will be entitled, at the election of such U.S. Holder, to receive
either a deduction or a credit for such Netherlands withholding tax. Generally,
subject to the limitations described in the next paragraph, a credit will reduce
a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis,
whereas a deduction will reduce a U.S. Holder’s income subject to U.S.
federal income tax. This election is made on a year-by-year basis and
generally applies to all foreign taxes paid (whether directly or through
withholding) or accrued by a U.S. Holder during a year.
Limitations apply to the foreign tax credit, including the general limitation that
the credit cannot exceed the proportionate share of a U.S. Holder’s U.S.
federal income tax liability (determined before application of the foreign tax
credit) that such U.S. Holder’s “foreign source” taxable income bears to such
U.S. Holder’s worldwide taxable income. In applying this limitation, a U.S.
Holder’s various items of income and deduction must be classified, under
complex rules, as either “foreign source” or “U.S. source” and the limitation is
calculated separately for each with respect to specific categories of income.
Generally, dividends paid by a foreign corporation should be treated as
foreign source for this purpose, and gains recognized on the sale of stock of a
foreign corporation by a U.S. Holder should generally be treated as U.S.
source for this purpose, except as otherwise provided in an applicable income
tax treaty or if an election is properly made under the Code. However, the
amount of a distribution with respect to the Common Shares that is treated as a
“dividend” may be lower for U.S. federal income tax purposes than it is for
Netherlands tax purposes, resulting in a reduced foreign tax credit allowance
to a U.S. Holder.
Each U.S. Holder should consult its own U.S. tax advisor regarding the foreign
tax credit rules.
Disposition of our Common Shares
Subject to the PFIC rules discussed below, upon the sale or other disposition of
our Common Shares, a U.S. Holder will recognize capital gain or loss for U.S.
federal income tax purposes equal to the difference between the amount
realized on the disposition of our Common Shares and the U.S. Holder’s
adjusted tax basis in our Common Shares. Such capital gain or loss generally
will be subject to U.S. federal income tax. In general, capital gains recognized
by a non-corporate U.S. Holder, including an individual, are subject to a lower
rate under current law if such U.S. Holder held shares for more than one year.
The deductibility of capital losses is subject to limitations. Any such gain or loss
generally will be treated as U.S. source income or loss for purposes of the
foreign tax credit. A U.S. Holder’s initial tax basis in Common Shares
generally will equal the cost of such shares.
Passive Foreign Investment Company Status
We may be classified as a PFIC for U.S. federal income tax purposes if certain
tests are met. We will be a PFIC with respect to a U.S. Holder if, for any
taxable year in which the U.S. Holder held our Common Shares, either (i) 75%
or more of our gross income for the taxable year is passive income; or (ii) the
average value of our assets (during the taxable year) which produce or are
held for the production of passive income is at least 50% of the average value
of all assets for such year. Passive income means, in general, dividends,
interest, royalties, rents (other than rents and royalties derived in the active
conduct of a trade or business and not derived from a related person),
annuities, and gains from assets which would produce such income other than
sales of inventory. Passive assets for this purpose generally include assets held
for the production of passive income. Accordingly, passive assets generally
include any cash, cash equivalents and cash invested in short-term, interest-
bearing debt instruments or bank deposits that are readily convertible into
cash. For the purpose of the PFIC tests, if a foreign corporation owns at least
25% (by value) of the stock of another corporation, the foreign corporation is
treated as owning its proportionate share of the assets of the other
corporation, and as if it had received directly its proportionate share of the
income of such other corporation (the “look-through rule”). The effect of the
look-through rule with respect to QIAGEN and our ownership of our
subsidiaries is that, for purposes of the income and assets tests described
above, we will be treated as owning our proportionate share of the assets of
our subsidiaries and of earning our proportionate share of each of our
subsidiary’s income, if any, so long as we own, directly or indirectly, at least
25% of the value of the particular subsidiary’s stock. Active business income of
our subsidiaries will be treated as our active business income, rather than as
passive income. Based on our income, assets and activities, we do not believe
that we were a PFIC for our taxable years ended December 31, 2021,
December 31, 2022, and December 31, 2023, and do not expect to be a
PFIC for the current taxable year. No assurances can be made, however, that
the IRS will not challenge this position or that we will not subsequently become
a PFIC. Following the close of any tax year, we intend to promptly send a
notice to all shareholders of record at any time during such year, if we
determine that we are a PFIC.
If we are considered a PFIC for any taxable year that a U.S. Holder holds our
Common Shares, any gain recognized by the U.S. Holder on a sale or other
disposition of our Common Shares would be allocated pro-rata over the U.S.
Holder’s holding period for our Common Shares. The amounts allocated to the
taxable year of the sale or other disposition and to any year before we
became a PFIC would be taxed as ordinary income. The amount allocated to
each other taxable year would be subject to tax at the highest rate in effect for
individuals or corporations, as appropriate, for that taxable year, and an
interest charge would be imposed with respect to any amount allocated to any
prior taxable year that we were a PFIC. Further, if we are a PFIC for any
taxable year, to the extent that any distribution received by a U.S. Holder on
our Common Shares exceeds 125% of the average of the annual distributions
on our Common Shares received during the preceding three years or the U.S.
Holder’s holding period, whichever is shorter, such excess amount would be
subject to taxation in the same manner as gain on the sale or other disposition
of Common Shares if we were a PFIC, described above. Certain elections may
be available that would result in alternative treatments (such as mark-to-market
treatment) of our Common Shares. If we are treated as a PFIC with respect to a
U.S. Holder for any taxable year, the U.S. Holder will be deemed to own
shares in any of our subsidiaries that also are PFICs. A timely election to treat
us as a qualified electing fund under the Code would result in an alternative
treatment. However, we do not intend to prepare or provide the information
that would enable U.S. Holders to make a qualified electing fund election. If
we are considered a PFIC, a U.S. Holder also will be subject to annual
information reporting requirements.
Prospective purchasers of our Common Shares are urged to consult their tax
advisors regarding the potential application of the PFIC rules to an investment
in the Common Shares.
Foreign Currency Issues
If dividends on our Common Shares are paid in euros, the amount of the
dividend distribution included in the income of a U.S. Holder will be the U.S.
dollar value of the payments made in euros, determined at a spot, euro/U.S.
dollar rate applicable to the date such dividend is includible in the income of
the U.S. Holder, regardless of whether the payment is in fact converted into
U.S. dollars. Generally, gain or loss (if any) resulting from currency exchange
fluctuations during the period from the date the dividend is paid to the date
such payment is converted into U.S. dollars will be treated as ordinary income
or loss.
Backup Withholding and Information Reporting
U.S. backup withholding and information reporting requirements generally
apply to payments made to non-corporate holders of Common Shares that are
paid within the United States or through certain U.S. related financial
intermediaries. Information reporting will apply to payments of dividends on,
and to proceeds from the disposition of, Common Shares by a paying agent
within the United States (or through certain U.S. related financial
intermediaries) to a U.S. Holder, other than U.S. Holders that are exempt from
information reporting and properly certify their exemption. A paying agent
within the United States (or through certain U.S. related financial
intermediaries) will be required to withhold at the applicable statutory rate,
currently 24%, in respect of any payments of dividends on, and the proceeds
from the disposition of, Common Shares to a U.S. Holder (other than U.S.
Holders that are exempt from backup withholding and properly certify their
exemption) if the holder fails to furnish its correct taxpayer identification
number or otherwise fails to comply with applicable backup withholding
requirements. U.S. Holders who are required to establish their exempt status
generally must provide a properly completed IRS Form W-9.
Backup withholding is not an additional tax. Amounts withheld as backup
withholding may be credited against a U.S. Holder’s U.S. federal income tax
liability. A U.S. Holder generally may obtain a refund of any amounts withheld
under the backup withholding rules that exceed such U.S. Holder’s income tax
liability by filing a refund claim with the IRS in a timely manner and furnishing
required information.
Foreign Financial Asset Reporting
Certain U.S. Holders who hold “specified foreign financial assets” (as defined
in Section 6038D of the Code), including stock of a non-U.S. corporation that
is not held in an account maintained by a U.S. “financial institution” (as
defined in Section 6038D of the Code), whose aggregate value exceeds
$50,000 on the last day of the taxable year or $75,000 at any time during
the tax year, may be required to attach to their tax returns for the year certain
specified information (on IRS Form 8938) (higher thresholds apply to married
individuals filing a joint return and certain individuals residing outside of the
United States). Persons who fail to timely furnish the required information may
be subject to substantial penalties. Additionally, in the event a U.S. Holder
does not file such a report, the statute of limitations on the assessment and
collection of U.S. federal income taxes of such U.S. Holder for the related tax
year may not close before such report is filed. U.S. Holders (including entities)
should consult their own tax advisors regarding their reporting obligations and
the possible application of such reporting obligations to the holding of
Common Shares.
Government Regulation s
We are subject to a variety of laws and regulations in the European Union, the
United States and other countries. The level and scope of the regulation varies
depending on the country or defined economic region, but may include,
among other things, the research, development, testing, clinical trials,
manufacture, storage, recordkeeping, approval, labeling, promotion and
commercial sales and distribution, of many of our products.
European Union Regulations
In the European Union, in vitro diagnostic medical devices (IVDs) had been
regulated under EU-Directive 98/79/EC (IVD Directive) and corresponding
national provisions. The IVD Directive required that medical devices meet the
essential requirements, including those relating to d evice safety and efficacy,
set out in an annex of the Directive. According to the IVD Directive, EU
Member States have presumed compliance with these essential requirements
for devices that are in conformity with the relevant national standards
transposing the harmonized standards, such as ISO 13485:2016, the quality
system standard for medical device manufacturers.
IVD medical devices, other than devices for performance evaluation, must bear
the CE marking of conformity when they are placed on the European market.
The CE mark is a declaration by the manufacturer that the product meets all
the appropriate provisions of the applicable legislation implementing the
relevant European Directive. As a general rule, the manufacturer must follow
the EU declaration of conformity procedure to obtain or apply a CE mark.
In May 2022, the Directive was replaced by the In Vitro Diagnostic Device
Regulation (IVDR) (EU) 2017/746 that was published in May 2017 and given
a 5-year transition period until its full implementation on May 26, 2022.
Unlike the IVD Directive, the IVDR has binding legal force throughout every
Member State. The major goal of the IVDR was to standardize diagnostic
procedures within the EU, increase reliability of diagnostic analysis and
enhance patient safety. Under the IVDR as enacted by the European
Commission (EC), IVDs are subject to additi onal legal regulatory requirements.
Among other things, the IVDR introduces a new risk-based classification system
and requirements for conformity assessments. Under the IVDR and subsequent
amendments, IVDs already certified by a Notified Body under the IVD
Directive may remain on the market until May 26, 2025, and IVDs certified
without the involvement of a Notified Body may be placed on, or remain in,
the market for up to three years (until May 26, 2028) depending on the
classification of the IVD. More recently on January 23, 2024 the European
Commission has published a legislative proposal which would extend the time
for legacy IVDs to transition to the IVD regulation. Nonethele ss, the
manufacturers of such devices must comply with specific requirements in the
IVDR according to the timelines established, but ultimately, such products, as
with all new IVDs, will have to undergo the IVDR’s conformity assessment
procedures. Under the IVD Directive the majority of QIAGEN products were
classified as self-declared, while under the IVDR most of QIAGEN products will
require pre-approval, and those that are in the highest risk class will have to
be tested by a Designated Reference Laboratory. In addition, the IVDR imposes
additional requirements relating to post-market surveillance and submission of
post-market performance follow-up reports.
The EC has designated twelve (12) Notified Bodies to perform conformity
assessments under the IVDR, including QIAGEN’s Notified Bodies, TÜV
Rheinland and BSI. MedTech Europe has issued guidance relating to the IVDR
in several areas, e.g., clinical benefit, technical documentation, state of art,
accessories, and EUDAMED. On December 5, 2023, the European
Commission adopted Implementing Regulation (EU) 2023/2713 designating
five EU Reference Laboratories covering the following types of high risk, class
D IVDs: hepatitis and retroviruses; herpesviruses; bacterial agents; respiratory
viruses that cause life-threatening diseases. The designated EU Reference
Laboratories are responsible for verifying performance of IVDs in accordance
with common specifications, batch testing of class D IVDs, collaborating with
Notified Bodies to develop best practices for IVD conformity assessments, and
providing scientific and technical assistance on the implementation of the
IVDR.
The General Data Protection Regulation (GDPR) of the European Union,
imposes restrictions on the transfer, access, use, and disclosure of health and
other personal information. We have implemented the requirements set forth
by the GDPR, which took effect on May 25, 2018. GDPR and other EU data
privacy and security laws impact our business either directly or indirectly. Our
failure to comply with applicable privacy or security laws or significant
changes in these laws could significantly impact our business and future
business plans. For example, we may be subject to regulatory action, fines, or
lawsuits in the event we fail to comply with applicable privacy laws. We may
face significant liability in the event any of the personal information we
maintain is lost or otherwise subject to misuse or other wrongful use, access or
disclosure.
United Kingdom
The U.K.’s withdrawal from the EU has major ramifications for IVD
manufacturers. Among other things, companies now have to follow new
procedures that apply in the U.K., including appointment of a U.K.
Responsible Person rather than relying on European Authorized
Representatives, to manage their compliance efforts in the U.K.
The U.K. Medicine and Healthcare Products Regulatory Agency (MHRA) issued
guidance on how the country will regulate IVDs after January 1, 2021.
According to MHRA, IVDs will require certification in the U.K., which is
defined as England, Scotland and Wales, while companies will still be able to
sell tests in Northern Ireland under existing EU IVD regulations. Under
subsequent amendments to MHRA guidance, MHRA will continue to recognize
CE marks for IVDs certified under the IVD Directive until the earlier of June 30,
2028 or the expiration of the certificate and for IVDs certified under the IVDR
until June 30, 2028. Companies must register with the MHRA before placing
IVDs on the U.K. market. To continue marketing CE marked IVDs in the U.K.
once the designated MHRA recognition period has lapsed, companies selling
in the U.K. will have to obtain a new marking authorization, called a U.K.
Conformity Assessed mark (UKCA), for each IVD product.
United States
In the United States, in vitro diagnostic products are subject to regulation by
the FDA as medical devices to the extent that they are intended for use in the
diagnosis, treatment, mitigation or prevention of disease or other conditions.
Certain types of tests, like some that we manufacture and sell for research use
only in the United States, are not subject to the FDA’s premarket review and
controls because we do not promote these tests for clinical diagnostic use, and
they are labeled “For Research Use Only,” or RUO, as required by the FDA.
Other tests, known as laboratory developed tests (LDTs), which are IVDs that
are designed, manufactured and used within a single, CLIA-certified, clinical
laboratory that meets applicable requirements to perform high-complexity
testing, have generally been subject to enforcement discretion and not actively
regulated by the FDA. As LDTs have increased in complexity, the FDA has
taken steps towards developing a risk-based approach to the regulation of
LDTs; however, most LDTs currently remain under FDA enforcement discretion.
Congress has also signaled interest in clarifying the regulatory landscape for
LDTs. Following several years of inaction by Congress on this issue, the FDA
issued a proposed rule in October 2023 to regulate LDTs under the current
medical device framework and proposing to phase out the current enforcement
discretion policy; the public comment period ended in early December 2023.
The FDA’s proposal envisions that the LDT enforcement policy phase-out
process would occur in gradual stages over a total period of four years, with
premarket approval applications for high-risk tests to be submitted by the 3.5-
year mark, although more details are expected to be provided with the
upcoming final rule. However, the likelihood of the FDA finalizing the
proposed rule in April 2024 (as is currently projected), as well as potential
litigation challenging the agency’s authority to take such action, is uncertain at
this time.
Separately, members of Congress have been working with stakeholders for
several years on a possible bill to regulate in vitro clinical tests including LDTs.
For example, legislation called the Verifying Accurate, Leading-edge IVCT
Development (VALID) Act, as drafted and re-introduced for consideration by
the current Congress, would codify into law the term “in vitro clinical
test” (IVCT) and establish a new regulatory framework for the review and
oversight of IVCTs separate and apart from the medical device framework
under the Food, Drug and Cosmetic Act (FDCA). The new IVCT product
category would include products currently regulated as IVDs, in addition to
LDTs. The proposed regulatory framework adopts various concepts from the
FDCA, utilizing a risk-based approach that aims to ensure that all marketed
IVCTs have a reasonable assurance of both analytical and clinical validity.
It is unclear whether the VALID Act will be passed by Congress in its current
form or signed into law by the President; if enacted, however, it is expected to
require clinical laboratories to spend significant time, resources, and money
towards ensuring compliance. Until the FDA finalizes LDT regulations through
its recently initiated notice-and-comment rule making process, or the VALID Act
or other legislation is passed reforming the federal government’s current
regulatory approach to LDTs, it is unknown how the FDA may regulate LDT
products in the future or what testing and data may be required to support
clearance or approval for such products.
Medical devices, including IVDs, are classified into one of three classes
depending on the controls deemed by the FDA to be necessary to reasonably
assure their safety and effectiveness. Class I devices are generally exempt from
premarket review and are subject to general controls, including adherence to
the FDA’s Quality System Regulation (QSR), which describes device-specific
current good manufacturing practices, as well as regulations requiring facility
registration and product listing, reporting of adverse medical events, and
appropriate, truthful and non-misleading labeling, advertising and promotional
materials. Class II devices are generally subject to premarket notification (or
510(k) clearance), general controls and special controls, including
performance standards, post-market surveillance, patient registries or FDA
guidance documents describing device-specific special controls. Class III
devices are subject to most of the previously identified requirements as well as
to premarket approval (PMA). The payment of a user fee, which is typically
adjusted annually, to the FDA is usually required upon filing a premarket
submission (e.g., premarket notification, premarket approval application, or
De Novo classification request) for FDA review.
510(k) Premarket Notification. A 510(k) premarket notification requires the
sponsor to demonstrate that a medical device is substantially equivalent to
another marketed device, termed a “predicate device,” that is legally marketed
in the United States and is not subject to premarket approval. A device is
substantially equivalent to a predicate device if its intended use(s),
performance, safety and technological characteristics are similar to those of
the predicate; or has a similar intended use but different technological
characteristics, where the information submitted to the FDA does not raise new
questions of safety and effectiveness and demonstrates that the device is at
least as safe and effective as the legally marketed device.
If the FDA determines that the device (1) is not substantially equivalent to a
predicate device, (2) has a new intended use compared to the identified
predicate, (3) has different technological characteristics that raise different
questions of safety and effectiveness, or (4) has new indications for use or
technological characteristics and required performance data were not
provided, it will issue a “Not Substantially Equivalent” (NSE) determination. If
the FDA determines that the applicant’s device is substantially equivalent to the
identified predicate device(s), the agency will issue a 510(k) clearance letter
that authorizes commercial marketing of the device for one or more specific
indications for use.
De N ovo Classification
If a previously unclassified new medical device does not qualify for the 510(k)
premarket notification process because no predicate device to which it is
substantially equivalent can be identified, the device is automatically classified
into Class III. However, if such a device would be considered low or moderate
risk (in other words, it does not rise to the level of requiring the approval of a
PMA), it may be eligible for the De Novo classification process. The De Novo
classification process allows a device developer to request that the novel
medical device be reclassified as either a Class I or Class II device, rather than
having it regulated as a high risk Class III device subject to the PMA
requirements. If the manufacturer seeks reclassification into Class II, the
classification request must include a draft proposal for special controls that are
necessary to provide a reasonable assurance of the safety and effectiveness of
the medical device.
P remarket Approval
The PMA process is more complex, costly and time consuming than either the
510(k) process or De Novo classification. A PMA must be supported by more
detailed and comprehensive scientific evidence, including clinical data, to
demonstrate the safety and efficacy of the medical device for its intended
purpose. A clinical trial involving a “significant risk” device may not begin
until the sponsor submits an investigational device exemption (IDE) application
to the FDA and obtains approval to begin the trial.
After the PMA is submitted, the FDA has 45 days to make a threshold
determination that the PMA is sufficiently complete to permit a substantive
review. If the PMA is complete, the FDA will file the PMA and begin the
substantive review process. The FDA is subject to a performance goal review
time for a PMA that is 180 days from the date of filing, although in practice
this review time is longer. Questions from the FDA, requests for additional data
and referrals to advisory committees may delay the process considerably. The
total process may take several years and there is no guarantee that the PMA
will ever be approved. Even if approved, the FDA may limit the indications for
which the device may be marketed. The FDA may also request additional
clinical data as a condition of approval or after the PMA is approved. Any
changes to the medical device may require a supplemental PMA to be
submitted and approved before the modified device may be marketed.
Any products manufactured and sold by us pursuant to FDA clearances or
approvals will be subject to pervasive and continuing regulation by the FDA,
including quality system requirements, record-keeping requirements, reporting
of adverse experiences with the use of the device and restrictions on the
advertising and promotion of our products. Device manufacturers are required
to register their establishments and list their devices with the FDA and are
subject to periodic inspections by the FDA and certain state agencies.
Noncompliance with applicable FDA requirements can result in, among other
things, warning letters, fines, injunctions, civil penalties, recalls or seizures of
products, total or partial suspension of production, refusal of the FDA to grant
for new devices, withdrawal of existing marketing authorizations and criminal
prosecution.
As a result of the COVID-19 pandemic, the Secretary of the U.S. Department
of Health and Human Services declared a public health emergency and
authorized the FDA to issue emergency use authorizations (EUAs) to provide
more timely access to critical medical countermeasures (including medicines
and diagnostic tests) when there are no adequate, approved, and available
alternative options. EUAs remain in effect until the device emergency use
declarations related to COVID-19 under Section 564 of the FDCA are
terminated, unless the FDA decides to revise or revoke an EUA at an earlier
point as the agency considers public health needs during the emergency and
new data on an authorized product’s safety and effectiveness, or as products
meet the criteria for FDA approval or clearance. Manufacturers of several
types of SARS-CoV-2 assays have been granted EUAs, including QIAGEN. The
FDA has indicated the withdrawal of EUAs for COVID-19 countermeasures will
be done in a gradual, phased process and issued final guidance on a
transitional plan.
Regulation of Companion Diagnostic Devices
If a sponsor or the FDA believes that a diagnostic test is essential for the safe
and effective use of a corresponding therapeutic product, the sponsor of the
therapeutic product will typically work with a collaborator to develop an in
vitro companion diagnostic device. The FDA defines an IVD companion
diagnostic device as a device that provides information that is essential for the
safe and effective use of a corresponding therapeutic product.
The FDA has also introduced the concept of complementary diagnostics that
are distinct from companion diagnostics because they provide additional
information about how a drug is used or identify patients who are likely to
derive the greatest benefit from therapy without being required for the safe
and effective use of that drug. The FDA has not yet provided much guidance
on the regulation and use of complementary diagnostics, but several have
been approved.
The FDA indicated that it will apply a risk-based approach to determine the
regulatory pathway for IVD companion diagnostic devices, as it does with all
medical devices. This means that the regulatory pathway will depend on the
level of risk to patients, based on the intended use of the IVD companion
diagnostic device and the controls necessary to provide a reasonable
assurance of safety and effectiveness. We expect that any IVD companion
diagnostic device that we develop will utilize the PMA pathway and that a
clinical trial performed under an IDE will have to be completed before the PMA
may be submitted.
The FDA expects that the therapeutic sponsor will address the need for an IVD
companion diagnostic device in its therapeutic product development plan and
that, in most cases, the therapeutic product and its corresponding IVD
companion diagnostic device will be developed contemporaneously. If the
companion diagnostic test will be used to make critical treatment decisions
such as patient selection, treatment assignment, or treatment arm, it will likely
be considered a significant risk device for which a clinical trial will be
required.
The sponsor of the IVD companion diagnostic device will be required to
comply with the FDA’s IDE requirements that apply to clinical trials of
significant risk devices. If the diagnostic test and the therapeutic drug are
studied together to support their respective approvals, the clinical trial must
meet both the IDE and IND requirements.
Regulation of Research Use Only Products
Some of our products are sold for research purposes in the United States, and
labeled “For Research Use Only” (RUO) or “for molecular biology
applications.” RUO refers to devices that are in the laboratory phase of
development, while investigational use only, or IUO, refers to devices that are
in the product testing phase of development. These types of devices are
exempt from most regulatory controls pursuant to long-standing FDA guidance
on RUO/IUO diagnostics. Because we do not promote our RUOs for clinical
diagnostic use, or provide technical assistance to clinical laboratories with
respect to these tests, we believe that these tests are exempt from FDA’s
premarket review and other requirements. If the FDA were to disagree with our
designation of any of these products, we could be forced to stop selling the
product until we obtain appropriate regulatory clearance or approval. Further,
it is possible that some of our RUOs may be used by some customers without
our knowledge in their LDTs, which they may then develop, validate and
promote for clinical use. However, QIAGEN does not promote these products
for use in LDTs or assist in the development of such LDTs for clinical diagnostic
use.
HIPAA and Other Privacy and Security Laws
The Health Insurance Portability and Accountability Act of 1996 (HIPAA),
established comprehensive federal standards for the privacy and security of
health information. The HIPAA standards apply to health plans, healthcare
clearing houses, and healthcare providers that conduct certain healthcare
transactions electronically (Covered Entities,), as well as individuals or entities
that perform services for them involving the use, or disclosure of, individually
identifiable health information or “protected health information” under HIPAA.
Such service providers are called “Business Associates." Title II of HIPAA, the
Administrative Simplification Act, contains provisions that address the privacy
of health data, the security of health data, the standardization of identifying
numbers used in the healthcare system and the standardization of certain
healthcare transactions. The privacy regulations protect medical records and
other protected health information by limiting their use and release, giving
patients the right to access their medical records and limiting most disclosures
of health information to the minimum amount necessary to accomplish an
intended purpose. The HIPAA security standards require the adoption of
administrative, physical, and technical safeguards and the adoption of written
security policies and procedures to maintain the security of protected health
information.
Congress subsequently enacted Subtitle D of the Health Information
Technology for Economic and Clinical Health Act (HITECH) provisions of the
American Recovery and Reinvestment Act of 2009. HITECH expanded and
strengthened HIPAA, created new targets for enforcement, imposed new
penalties for noncompliance and established new breach notification
requirements for Covered Entities and Business Associates.
Under 'HITECH’s breach notification requirements, Covered Entities must report
breaches of protected health information that has not been encrypted or
otherwise secured. Required breach notices must be made as soon as is
reasonably practicable, but no later than 60 days following discovery of the
breach. Reports must be made to affected individuals and to the Secretary
and, in some cases depending on the size of the breach, they must be
reported through local and national media. Breach reports can lead to
investigation, enforcement and civil litigation, including class action lawsuits.
Our Redwood City entity serves in some cases as a Business Associate to
customers who are subject to the HIPAA regulations. In this capacity, we
maintain an active compliance program that is designed to identify security
incidents and other issues in a timely fashion and enable us to remediate,
mitigate harm or report if required by law. We are subject to prosecution
and/or administrative enforcement and increased civil and criminal penalties
for non-compliance, including a four-tiered system of monetary penalties
adopted under HITECH. We are also subject to enforcement by state attorneys
general who were given authority to enforce HIPAA under HITECH. To avoid
penalties under the HITECH breach notification provisions, we must ensure that
breaches of protected health information are promptly detected and reported
within the company, so that we can make all required notifications on a timely
basis. However, even if we make required reports on a timely basis, we may
still be subject to penalties for the underlying breach.
California has also adopted the California Consumer Privacy Act of 2018, or
CCPA, which took effect on January 1, 2020 and became enforceable by the
state attorney general on July 1, 2020. The CCPA establishes a new privacy
framework for covered businesses by creating an expanded definition of
personal information, establishing new data privacy rights for consumers in the
State of California, imposing special rules on the collection of consumer data
from minors, and creating a new and potentially severe statutory damages
framework for violations of the CCPA and for businesses that fail to implement
reasonable security procedures and practices to prevent data breaches.
The regulations issued under the CCPA have been modified several times.
Additionally, a new privacy law, the California Privacy Rights Act, or CPRA,
was approved by California voters in the election on November 3, 2020. The
CPRA imposes additional data protection obligations on companies doing
business in California, including additional consumer rights processes,
limitations on data uses, new audit requirements for higher risk data, and opt
outs for certain uses of sensitive data. It also created a new California data
protection agency authorized to issue substantive regulations and could result
in increased privacy and information security enforcement. The majority of the
provisions became effective on January 1, 2023, and additional compliance
investment and potential business process changes may be required. Similar
laws have been adopted in other states (for example, Nevada, Virginia,
Connecticut, Utah and Colorado) or proposed in other states and at the
federal level, and if passed, such laws may have potentially conflicting
requirements that would make compliance challenging.
Many states have also implemented genetic testing and privacy laws imposing
specific patient consent requirements and protecting test results by strictly
limiting the disclosure of those results. State requirements are particularly
stringent regarding predictive genetic tests, due to the risk of genetic
discrimination against healthy patients identified through testing as being at a
high risk for disease. We believe that we have taken the steps required of us
to comply with health information privacy and security statutes and regulations,
including genetic testing and genetic information privacy laws in all
jurisdictions, both state and federal. However, these laws constantly change,
and we may not be able to maintain compliance in all jurisdictions where we
do business. Failure to maintain compliance, or changes in state or federal
laws regarding privacy or security could result in civil and/or criminal
penalties, significant reputational damage and could have a material adverse
effect on our business.
U.S. Fraud and Abuse Laws and Other Healthcare Regulations
A variety of state and federal laws prohibit fraud and abuse involving state
and federal healthcare programs, as well as commercial insurers. These laws
are interpreted broadly and enforced aggressively by various federal and state
agencies, including the Centers for Medicare & Medicaid Services (CMS), the
Department of Justice (DOJ), and the Office of Inspector General for the U.S.
Department of Health and Human Services (OIG). The Company seeks to
conduct its business in compliance with all applicable federal and state laws.
State and federal fraud and abuse laws may be interpreted and applied
differently, and arrangements and business practices could be subject to
scrutiny under them by federal or state enforcement agencies. Sanctions for
violations of these laws could result in a wide range of penalties, including but
not limited to significant criminal sanctions, civil fines and penalties.
The Anti-Kickback Statute
The federal Anti-Kickback Statute (AKS) is a criminal statute that prohibits, in
pertinent part, persons from knowingly and willfully soliciting, receiving,
offering or paying remuneration, directly or indirectly, in cash or in kind, in
exchange for or to induce a person:
• To refer an individual to a person for the furnishing or arranging for the
furnishing of any item or service for which payment may be made by
federal healthcare programs; or
• To purchase, lease, order, or arrange for or recommend purchasing,
leasing, or ordering, any good, facility, service, or item for which payment
may be made by a federal healthcare program.
A person or entity does not need to have actual knowledge of the AKS or
specific intent to violate it to have committed a violation. Recognizing that the
AKS is broad and potentially applies to innocuous or beneficial arrangements,
the OIG issued regulations, commonly known as “safe harbors,” which set
forth certain requirements that, if fully met, insulate a given arrangement or
conduct from prosecution under the AKS. The AKS also has statutory
exceptions that provide protection similar to that of safe harbors. If, however,
an arrangement does not meet every requirement of an exception or safe
harbor, the arrangement does not necessarily violate the AKS. A facts-and-
circumstances analysis is necessary to determine AKS compliance or lack
thereof. Potential statutory penalties for violating the AKS include imprisonment
and criminal fines. In addition, through application of other laws, conduct that
violates the AKS can give rise to civil monetary penalties and possible
exclusion from participation in Medicare, Medicaid, and other federal
healthcare programs. Claims including items or services resulting from a
violation of the AKS also constitute a false or fraudulent claim for purposes of
the False Claims Act.
In addition to the federal AKS, many states have their own anti-kickback laws.
Often, these laws closely follow the language of the federal law, although they
do not always have the same scope, exceptions, safe harbors or sanctions. In
some states, these anti-kickback laws apply to both state healthcare programs
and commercial insurers. The penalties for violating state anti-kickback
provisions can be severe, including criminal and civil penalties (including
penalties under the state false claims law), imprisonment, and exclusion from
state healthcare programs.
The False Claims Act
The federal False Claims Act (FCA) imposes civil liability on any person or
entity that, among other things, knowingly presents, or causes to be presented,
to the federal government, claims for payment that are false or fraudulent;
knowingly makes, uses or causes to be made or used, a false statement or
record material to a false or fraudulent claim or obligation to pay or transmit
money or property to the federal government; or knowingly conceals or
knowingly and improperly avoids or decreases an obligation to pay money to
the federal government. The FCA also prohibits the knowing retention of
overpayments (sometimes referred to as “reverse false claims”).
In addition, the FCA permits a private individual acting as a
“whistleblower” (also referred to as a “relator”) to bring FCA actions on behalf
of the federal government under the statute’s qui tam provisions, and to share
in any monetary recovery. The federal government may elect or decline to
intervene in such matters, but if the government declines intervention, the
whistleblower may still proceed with the litigation on the government’s behalf.
Penalties for violating the FCA include payment of up to three times the actual
damages sustained by the government, plus substantial per-claim statutory
penalties, as well as possible exclusion from participation in federal healthcare
programs.
Various states have enacted similar laws modeled after the FCA that apply to
items and services reimbursed under Medicaid and other state healthcare
programs, and, in several states, such laws apply to claims submitted to any
payor, including commercial insurers.
There is also a federal criminal false claims statute that prohibits, in pertinent
part, the making or presentation of a false claim, knowing such claim to be
false, to any person or officer in the civil, military, or naval service or any
department or agency thereof. Potential penalties for violating this statute
include fines or imprisonment.
Health Care Fraud and False Statements
The federal healthcare fraud statute criminalizes, in pertinent part, knowingly
and willfully defrauding a healthcare benefit program, which is defined to
include commercial insurers. A violation of this statute may result in fines,
imprisonment, or exclusion from participation in federal healthcare programs.
The federal criminal statute prohibiting false statements relating to health care
matters prohibits, in pertinent part, knowingly and willfully (i) falsifying,
concealing, or covering up a material fact, or (ii) making a materially false,
fictitious, or fraudulent statement or representation, or making or using any
materially false writing or document knowing that writing or document to
contain any materially false, fictitious, or fraudulent statements, in connection
with the delivery of or payment for healthcare benefits, items, or services. A
violation of this statute may result in fines or imprisonment.
Civil Monetary Penalties Law
The federal Civil Monetary Penalties Law (CMP Law) prohibits, among other
things, (1) the offering or transfer of remuneration to a beneficiary of Medicare
or a state healthcare program if the person knows or should know it is likely to
influence the beneficiary’s selection of a particular provider, practitioner, or
supplier of services reimbursable by Medicare or a state healthcare program,
unless an exception applies; (2) employing or contracting with an individual or
entity that the provider knows or should know is excluded from participation in
a federal healthcare program; (3) billing for services requested by an
unlicensed physician or an excluded provider; and (4) billing for medically
unnecessary services. The potential penalties for violating the CMP Law include
exclusion from participation in federal healthcare programs, substantial fines,
and payment of up to three times the amount billed, depending on the nature
of the offense.
Physician Payments Sunshine Act
The federal Physician Payments Sunshine Act (Sunshine Act) imposes reporting
requirements on manufacturers of certain devices, drugs, biologics, and
medical supplies for which payment is available under Medicare, Medicaid,
or the Children’s Health Insurance Program (CHIP), with certain exceptions.
Manufacturers to which the Sunshine Act applies must collect and report
annually certain data on certain payments and transfers of value by them (and
in some cases their distributors) to physicians, teaching hospitals, and certain
advanced non-physician healthcare practitioners, as well as ownership and
investment interests held by physicians and their immediate family members.
For reporting beginning January 1, 2022, U.S.-licensed physician assistants,
clinical nurse specialists, certified nurse-midwives, certified nurse anesthetists,
and nurse practitioners must be included in the provider types subject to
Sunshine Act reporting. The reporting program (known as the Open Payments
program) is administered by CMS.
There are also an increasing number of state “sunshine” laws that require
manufacturers to provide reports to state governments on pricing and
marketing information. Several states have enacted legislation requiring
manufacturers, including medical device companies to, among other things,
establish marketing compliance programs, file periodic reports with the state,
make periodic public disclosures on sales and marketing activities, and to
prohibit or limit certain other sales and marketing practices.
Failure to comply with the Sunshine Act or state equivalents could result in civil
monetary penalties, among other sanctions, depending upon the nature of the
violation.
Foreign Corrupt Practices Act
Despite extensive procedures to ensure compliance, we may also be exposed
to liabilities under the U.S. Foreign Corrupt Practices Act (FCPA), which
generally prohibits companies and their intermediaries from making corrupt
payments to foreign officials for the purpose of obtaining or maintaining
business or otherwise obtaining favorable treatment, and requires companies
to maintain adequate record-keeping and internal accounting practices to
accurately reflect the transactions of the company. We are also subject to a
number of other laws and regulations relating to money laundering,
international money transfers and electronic fund transfers. These laws apply to
companies, individual directors, officers, employees and agents.
Environment, Health and Safety
We are subject to laws and regulations related to the protection of the
environment, the health and safety of employees and the handling,
transportation and disposal of medical specimens, infectious and hazardous
waste and radioactive materials. For example, the U.S. Occupational Safety
and Health Administration (OSHA) has established extensive requirements
relating specifically to workplace safety for healthcare employers in the U.S.
This includes requirements to develop and implement multi-faceted programs to
protect workers from exposure to blood-borne pathogens, such as HIV and
hepatitis B and C, including preventing or minimizing any exposure through
needle stick injuries. For purposes of transportation, some biological materials
and laboratory supplies are classified as hazardous materials and are subject
to regulation by one or more of the following agencies: the U.S. Department of
Transportation, the U.S. Public Health Service, the United States Postal Service
and the International Air Transport Association. The U.S. Environmental
Protection Agency (EPA) has also promulgated regulations setting forth
importation, labelling, and registration requirements, among others, which
may apply to certain products and/or establishments of the company.
Rest of the World Regulation
In addition to regulations in the United States and the EU, we are subject to a
variety of regulations governing clinical studies and commercial sales and
distribution of molecular testing instruments, consumables and digital solutions
in other jurisdictions around the world. These laws and regulations typically
require the licensing of manufacturing facilities, as well as controlled research,
testing and governmental authorization of product candidates. Additionally,
they may require adherence to good manufacturing, clinical and laboratory
practices.
We must obtain approval from regulatory authorities in all countries where we
distribute our products. The requirements governing the conduct of product
authorization, pricing and reimbursement vary greatly from country to country.
If we fail to comply with applicable regulatory requirements, we may be
subject to, among other things, fines, suspension or withdrawal of regulatory
approvals, product recalls, seizure of products, operating restrictions, or
criminal prosecution.
Reimbursement
United States
In the United States, payments for diagnostic tests come from several sources,
including commercial insurers, (which might include health maintenance
organizations and preferred provider organizations); government healthcare
programs (such as Medicare or Medicaid); and, in many cases, the patients
themselves. For many years, federal and state governments in the United States
have pursued methods to reduce the cost of healthcare delivery. For example,
in 2010, the United States enacted major healthcare reform legislation known
as the Patient Protection and Affordable Care Act (ACA). Such changes have
had, and are expected to continue to have, an impact on our business.
In addition, in August 2011, the Budget Control Act of 2011, among other
things, created measures for spending reductions by Congress. A Joint Select
Committee on Deficit Reduction, tasked with recommending a targeted deficit
reduction of at least $1.2 trillion for the years 2013 through 2021, was
unable to reach required goals, thereby triggering the legislation’s automatic
reduction to several government programs. This includes aggregate reductions
of Medicare payments to providers up to 2% per fiscal year, and, due to
subsequent legislative amendments, will remain in effect through 2032 unless
additional Congressional action is taken .
We frequently identify value propositions on our products and communicate
them to payors, providers, and patient stakeholders and attempt to positively
impact coverage, coding and payment pathways. However, we have no direct
control over payor decisions with respect to coverage and payment levels for
our products. The manner and level of reimbursement may depend on the site
of care, the procedure(s) performed, the final patient diagnosis, the device(s)
and/or drug(s) utilized, the available budget, or a combination of these
factors, and coverage and payment levels are determined at each payor’s
discretion. Changes in reimbursement levels or methods may positively or
negatively affect sales of our products in any given country for any given
product. At QIAGEN, we work with several specialized reimbursement
consulting companies and maintain regular contact with payors.
As government programs seek to expand healthcare coverage for their
citizens, they have at the same time sought to control costs by limiting the
amount of reimbursement they will pay for particular procedures, products or
services. Many third-party payors have developed payment and delivery
mechanisms to support cost control efforts and to focus on paying for quality.
Such mechanisms include payment reductions, pay-for-performance metrics,
quality-based performance payments, restrictive coverage policies, studies to
compare effectiveness and patient outcomes, and technology assessments.
These changes have increased emphasis on the delivery of more cost-effective
and quality-driven healthcare.
Code Assignment
In the United States, a third-party payor's decisions regarding coverage and
payment are impacted, in large part, by the specific Current Procedural
Terminology (CPT) code used to identify a test. The American Medical
Association (AMA) publishes the CPT, which identifies codes, along with
descriptions, for reporting medical services and procedures. The purpose of
the CPT is to provide a uniform language that accurately describes medical,
surgical, and diagnostic services and therefore to ensure reliable nationwide
communication among healthcare providers, patients, and third-party payors.
CMS uses its own Healthcare Common Procedure Coding System (HCPCS)
codes for medical billing and reimbursement purposes. Level I HCPCS codes
are comprised of current CPT codes, while Level II HCPCS codes primarily
represent non-physician services and Level III HCPCS codes are local codes
developed by Medicaid agencies, Medicare contractors and commercial
insurers. Proprietary Laboratory Analyses (PLA) Codes are an addition to the
CPT® code set approved by the AMA CPT® Editorial Panel. They are alpha-
numeric CPT codes with a corresponding descriptor for labs or manufacturers
that want to more specifically identify their test.
A manufacturer of in vitro diagnostic kits or a provider of laboratory services
may request establishment of a Category I CPT code for a new product or a
PLA Code or both. In addition, Z-Code identifiers are unique five-character
alphanumeric tracking codes associated with a specific molecular diagnostic
test. When a claim is submitted, it includes the associated CPT code and the Z-
Code identifier is entered as a device code. Assignment of a specific CPT code
ensures routine processing and payment for a diagnostic test by both
commercial insurers and government payors.
The AMA has specific procedures for establishing a new CPT code and, if
appropriate, for modifying existing nomenclature to incorporate a new test into
an existing code. If the AMA concludes that a new code or modification of
nomenclature is unnecessary, the AMA will inform the requestor how to use
one or more existing codes to report the test.
While the AMA's decision is pending, billing and collection may be sought
under an existing, non-specific CPT code. A manufacturer or provider may
decide not to request assignment of a CPT code and instead use an existing,
non-specific code for reimbursement purposes. However, use of such codes
may result in more frequent denials and/or requests for supporting clinical
documentation from the third-party payor and in lower reimbursement rates,
which may vary based on geographical location.
CMS reimbursement rates for clinical diagnostic tests are defined by CPT and
HCPCS codes in the Clinical Laboratory Fee Schedule (CLFS). In 2012, the
AMA added 127 new CPT codes for molecular pathology services that
became effective on January 1, 2013. These new CPT codes are biomarker
specific and were designed to replace the previous methodology of billing for
molecular pathology testing, which involved “stacking” a series of non-
biomarker specific CPT codes together to describe the testing performed. CMS
issued final national reimbursement prices for the new CPT codes in November
2013. These federal reimbursement amounts are widely acknowledged to be
lower than the reimbursement obtained by the now outdated “stacking”
method, but commercial insurers and Medicare contractors are still in the
process of solidifying their coverage and reimbursement policies for the testing
described by these new CPT codes.
As of January 1, 2018, in accordance with the Protecting Access to Medicare
Act of 2014 (PAMA), applicable laboratories are required to report to CMS
commercial insurer payment rates and volumes for their tests. CMS uses the
data reported and the HCPCS code associated with the test to calculate a
weighted median payment rate for each test, which is used to establish revised
Medicare CLFS reimbursement rates for certain clinical diagnostic laboratory
tests (CDLTs), subject to certain phase-in limits. For a CDLT that is assigned a
new or substantially revised CPT code, the initial payment rate is assigned
using the gap-fill methodology.
If the test at issue falls into the category of new advanced diagnostic
laboratory test (ADLT) instead of CDLT, the test will be paid based on an actual
list charge for an initial period of three quarters, before being shifted to the
weighted median commercial insurer rate reported by the laboratory
performing the ADLT. Laboratories offering ADLTs are subject to recoupment if
the actual list charge exceeds the weighted median private payor rate by a
certain amount.
Since December 2019, Congress has passed a series of laws to modify
PAMA’s statutory requirements related to the data reporting period and phase-
in of payment reductions under the CLFS for CDLTs that are not ADLTs. Most
recently, the Further Continuing Appropriations and Other Extensions Act of
2024 (Pub. L. 118-22, enacted on November 16, 2023) further delayed the
reporting requirement as well as the application of the 15 percent phase-in
reduction. Under these statutory provisions, the next data reporting period for
CDLTs that are not ADLTs will be January 1, 2025 through March 31, 2025,
and will be based on the most recent data collection period of January 1,
2019 through June 30, 2019. After this data reporting period, the three-year
data reporting cycle for these tests will resume (e.g., 2028, 2031, etc.).
This same series of laws passed since December 2019 also modified the
phase-in of payment reductions resulting from private payor rate
implementation so that a 0.0 percent reduction limit was applied for calendar
years 2021 through 2023, as compared to the payment amounts for a test the
preceding year. The Further Continuing Appropriations and Other Extensions
Act of 2024 further applied a 0.0 reduction limit for calendar year 2024. As
a result, payment may not be reduced by more than 15 percent per year for
calendar years 2025, 2026, and 2027, as compared to the payment amount
established for a test the prior year.
CMS’s methodology under PAMA (as well as the willingness of commercial
insurers to recognize the value of diagnostic testing and pay for that testing
accordingly) renders commercial insurer payment levels even more significant.
This calculation methodology has resulted in significant reductions in
reimbursement, even though CMS imposed caps on those reductions. Given
the many uncertainties built into PAMA’s price-setting process, it is difficult to
predict how payments made by CMS under the CLFS may change from year to
year.
Coverage Decisions
When deciding whether to cover a particular diagnostic test, third-party
payors generally consider whether the test is a medically necessary and, if so,
whether the test will directly impact clinical decision making. For coverage, the
testing method should be considered scientifically valid to identify the specific
gene biomarker or gene mutation, and must have been demonstrated to
improve clinical outcomes for the patient’s condition. Coverage of a drug
therapy and its companion diagnostic for cancer treatment indications may be
validated by a NCCN category 1, 2A or 2B recommendation. However, most
third-party payors do not cover experimental services. Coverage
determinations are often influenced by current standards of practice and
clinical data, particularly at the local level. CMS has the authority to make
coverage determinations on a national basis, but most Medicare coverage
decisions are made at the local level by contractors that administer the
Medicare program in specified geographic areas. Commercial insurers and
government payors have separate processes for making coverage
determinations, and commercial insurer may or may not follow Medicare's
coverage decisions. If a third-party payor has a coverage determination in
place for a particular diagnostic test, billing for that test must comply with the
established policy. Otherwise, the third-party payor makes reimbursement
decisions on a case-by-case basis.
Payment
Payment for covered diagnostic tests is determined based on various
methodologies, including prospective payment systems and fee schedules. In
addition, commercial insurers may negotiate contractual rates with
participating providers, establish fee schedule rates, or set rates as a
percentage of the billed charge. Diagnostic tests furnished to Medicare
inpatients generally are included in the bundled payment made to the hospital
under Medicare's Inpatient Prospective Payment System, utilizing Diagnosis
Related Groups (DRGs) depending on the patient’s condition. Payment rates
for diagnostic tests furnished to Medicare beneficiaries in outpatient settings
are the lesser of the amount billed, the local fee for a geographic area, or a
national limit. Each year, the fee schedule is updated for inflation and could
be modified by Congress in accordance with the CLFS rules and provisions.
Medicaid programs generally pay for diagnostic tests based on a fee
schedule, but reimbursement varies by geographic region.
European Union
In the European Union, the reimbursement mechanisms used by private and
public health insurers vary by country. For the public systems, reimbursement is
determined by guidelines established by the legislator or responsible national
authority. As elsewhere, inclusion in reimbursement catalogues focuses on the
medical usefulness, need, quality and economic benefits to patients and the
healthcare system. Acceptance for reimbursement comes with cost, use, and
often volume restrictions, which again can vary by country.
Exchange Controls
There are currently no limitations either under the laws of the Netherlands or in
our Articles, to the rights of shareholders from outside the Netherlands to hold
or vote Common Shares. Under current foreign exchange regulations in the
Netherlands, there are no material limitations on the amount of cash payments
that we may remit to residents of foreign countries.
Do cuments on Displa y
Docu ments referred to in this Annual Report may be inspected at our principal
executive office located at Hulsterweg 82, 5912 PL Venlo, The Netherlands.
We file reports, including annual reports on Form 20-F, furnish periodic reports
on Form 6-K and other information with the SEC pursuant to the rules and
regulations of the SEC that apply to foreign private issuers. The SEC web site at
www.sec.gov contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC, from which
the public may obtain any materials the company files with the SEC. The
address of the SEC’s website is provided solely for information purposes and is
not intended to be an active link.
Controls and Procedures
Disclosure Controls and Procedures
Our Managing Directors, with the assistance of other members of
management, performed an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures, as that term is defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as
amended, within 90 days of the date of this Annual Report. Based on that
evaluation, they concluded that as of December 31, 2023 , our disclosure
controls and procedures were effective to ensure that information required to
be disclosed by us in the reports that we file or submit under the Exchange Act
is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and is accumulated and communicated
to our management, including our Managing Directors, as appropriate to
allow timely decisions regarding required disclosure.
There are inherent limitations to the effectiveness of any system of disclosure
controls and procedures, no matter how well designed, such as the possibility
of human error and the circumvention or overriding of the controls and
procedures. Therefore, even those systems determined to be effective may not
prevent or detect misstatements and can provide only reasonable assurance of
achieving their control objectives. In addition, any determination of
effectiveness of controls is not a projection of any effectiveness of those
controls to future periods, as those controls may become inadequate because
of changes in conditions or that the degree of compliance with the policies or
procedures may deteriorate.
Report of Management on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting as defined in Rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934, as amended. The
Company’s system of internal controls over financial reporting is designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of the consolidated financial statements in accordance
with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may
not prevent or detect misstatements and even when determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation. Projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Our management assessed the effectiveness of the Company’s internal control
over financial reporting as of December 31, 2023 . In making this assessment,
management used the updated criteria set forth in 2013 by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework.
Based on our assessment under the COSO Internal Control-Integrated
Framework, management believes that, as of December 31, 2023 , our
internal control over financial reporting is effective.
Attestation Report of the Independent Registered Public
Accounting Firm
KPMG AG Wirtschaftsprüfungsgesellschaft, the independent registered public
accounting firm that audited our consolidated financial statements prepared in
accordance with U.S. generally accepted accounting principles (GAAP) as of
and for the year ended December 31, 2023 , has also audited the
effectiveness of the Company's internal control over financial reporting as of
December 31, 2023 . Their reports are included in th is Annual Rep ort on Form
20-F beginning on page 99 .
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting
during 2023 that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.
Disclosure pursuant to Sect ion 219 of the Iran
Threat Reduction & Syria Human Rights Act
(ITRA)
QIAGEN is a global leader in Sample to Insight solutions that transform
biological samples into valuable molecular insights. QIAGEN GmbH, our
subsidiary located in Hilden, Germany, has conducted limited business with
certain Iranian and Syrian entities consisting of sales for our consumables and
instrumentation products. In 2023, sales to Iran totaled $1.4 million, or
approximately 0.07% of our consolidated net sales, and were primarily for
consumables labelled for use in diagnostic testing for tuberculosis
(QuantiFERON tests) and the detection of amniotic fluid (AmniSure ROM test).
These transactions were processed through two distributors and under general
license by the Office of Foreign Assets Control (OFAC) for Medicine and
Medical Devices and in compliance with German and European Union
customs regulations and do not include any products that are “dual-use”
products or products requiring special clearance from the German customs
authorities. There were no sales to Syria in 2023.
Although these activities are compliant with applicable law and not financially
material, the Iran Threat Reduction and Syria Human Rights Act of 2012 (the
Act) requires us to include the following disclosures in this Annual Report. U.S.
affiliates, or foreign affiliates controlled by U.S. affiliates, are not involved in
these sales activities and we have not knowingly conducted a transaction
or dealt with a person or entity designated in U.S. Executive Orders No.
13224 and 13382. No business has been transacted with the Governments of
Iran or Syria as defined in the Act. We do not believe any of our activities are
sanctionable under the Iran Sanctions Act or the Comprehensive Iran
Sanctions, Accountability, and Divestment Act of 2010.
In light of the nature of the products concerned, we do not currently anticipate
any change in activities in Iran that would result in a material impact on
QIAGEN. We do not have any employees in Iran or Syria.
Reference Table Form 20 -F
Item
Form 20-F caption
Location in this document
Page
Item
Form 20-F caption
Location in this document
Page
Part I
Item 1.
Identity of Directors, Senior
Management and Advisers
Not applicable.
Item 4.
C. Organizational Structure
Item 2.
Offer Statistics and Expected
Timetable
Not applicable.
D. Property, Plants and
Equipment
Item 3.
Key Information
Item 4A.
Unresolved Staff Comments
Not applicable.
B. Capitalization and
Indebtedness
Not applicable.
Item 5.
Operating and Financial Review
and Prospects
C. Reasons for the Offer and Use
of Proceeds
Not applicable.
A. Operating Results
D. Risk Factors
B. Liquidity and Capital
Resources
Item 4.
Information on the Company
C. Research and Development,
Patents and Licenses, etc.
A. History and Development of
the Company
B. Business Overview
D. Trend Information
Reference Table Form 20-F
Item
Form 20-F caption
Location in this document
Page
Item
Form 20-F caption
Location in this document
Page
Part I
Item 5.
E. Critical Accounting Estimates
Item 7.
B. Related Party Transactions
Item 6.
Directors, Senior Management
and Employees
C. Interests of Experts & Counsel
Not applicable.
A. Directors and Senior
Management
Item 8.
Financial Information
B. Compensation
A. Consolidated Statements and
Other Financial Information
C. Board Practices
D. Employees
E. Share Ownership
B. Significant Changes
F. Disclosure of a registrant’s
action to recover erroneously
awarded compensation
Not applicable.
Item 9.
The Offer and Listing
Item 7.
Major Shareholders and Related
Party Transactions
A. Offer and Listing Details
A. Major Shareholders
B. Plan of Distribution
Not applicable.
Reference Table Form 20-F
Item
Form 20-F caption
Location in this document
Page
Item
Form 20-F caption
Location in this document
Page
Part I
Item 9.
C. Markets
Item 10.
J. Annual Report to Security Holders
Not applicable.
D. Selling Shareholders
Not applicable.
Item 11.
Quantitative and Qualitative
Disclosures about Market Risk
E. Dilution
Not applicable.
Item 12.
Description of Securities Other than
Equity Securities
Not applicable.
F. Expenses of the Issue
Not applicable.
Item 10.
Additional Information
Part II
A. Share Capital
Not applicable.
Item 13.
Defaults, Dividend Arrearages and
Delinquencies
Not applicable.
B. Memorandum and Articles of
Association
Item 14.
Material Modifications to the Rights
of Security Holders and Use of
Proceeds
Not applicable.
C. Material Contracts
Not applicable.
Item 15.
Controls and Procedures
D. Exchange Controls
Item 16A.
Audit Committee Financial Expert
E. Taxation
Item 16B.
Code of Ethics
F. Dividends and paying agents
Not applicable.
Item 16C.
Principal Accountant Fees and
Services
G. Statement by Experts
Not applicable.
Item 16D.
Exemptions from the Listing
Standards for Audit Committees
Not applicable.
H. Documents on Display
Item 16E.
Purchases of Equity Securities by the
Issuer and Affiliated Purchasers
Not applicable.
I. Subsidiary Information
Not applicable.
Item 16F.
Change in Registrant’s Certifying
Accountant
Not applicable.
Reference Table Form 20-F
Item
Form 20-F caption
Location in this document
Page
Part II
Item 16G.
Corporate Governance
This document contains information required for the Annual Report on Form 20-F for the year
ended December 31, 2023 of QIAGEN N.V. Reference is made to the Form 20-F cross
reference table above. Only the information in this document that is referenced in the Form 20-
F cross reference table and this paragraph, this cross-reference table itself, the section entitled
"Note Regarding Forward-Looking Statements and Risk Factors" shall be deemed to be filed
with the Securities and Exchange Commission for any purpose. Any additional information in
this document which is not referenced in the Form 20-F cross reference table, or the Exhibits
themselves, shall not be deemed to be incorporated by reference, shall not be part of the 2023
Annual Report on Form 20-F and is furnished to the Securities and Exchange Commission for
information only.
This document also includes references to certain information contained on QIAGEN's website.
The information contained on QIAGEN's website is not incorporated by reference and does
not form part of this document.
Item 16H.
Mine Safety Disclosure
Not applicable.
Item 16I.
Disclosure Regarding Foreign
Jurisdictions that Prevent Inspections
Not applicable.
Item 16J.
Insider Trading Policies
Item 16K.
Cybersecurity
Part III
Item 17.
Financial Statements
See Item 18.
Item 18.
Financial Statements
Item 19.
Exhibits
Exhibit No.
Description
Exhibit No.
Description
Articles of Association as confirmed by notarial deed as of January 29, 2024
(English translation)
QIAGEN N.V. 2014 Stock Plan (Filed as Exhibit 99.1) (7)
Schuldscheindarlehensvertrag Form of Loan Agreement dated as of June 19,
2017 (Filed as Exhibit 2.11) (1)
QIAGEN N.V. 2023 Stock Plan
2024 Bonds Indenture dated November 13, 2018 (Filed as Exhibit 2.17) (2)
List of Subsidiaries
2024 Form of Warrant Confirmation dated November 6, 2018 (Filed as Exhibit
2.18) (2)
QIAGEN N.V. Insider Trading Policy
2024 Form of Bond Hedge Confirmation dated November 6, 2018 (Filed as
Exhibit 2.19) (2)
Certification under Section 302; Thierry Bernard, Managing Director and Chief
Executive Officer
Global Bearer Bond Representing Convertible Bonds due 2027 dated as of
December 17, 2020 (Filed as Exhibit 2.12) (3)
Certification under Section 302; Roland Sackers, Managing Director and Chief
Financial Officer
Purchase Agent Agreement dated as of December 10, 2020 (Filed as Exhibit
2.13) (3)
Certifications under Section 906; Thierry Bernard, Managing Director and Chief
Executive Officer and Roland Sackers, Managing Director and Chief Financial
Officer
Subscription Agreement dated as of December 10, 2020 (Filed as Exhibit
2.14) (3)
Consent of Independent Registered Public Accounting Firm
Schuldscheindarlehensvertrag Form of Loan Agreement dated as of July 13,
2022 (Filed as Exhibit 2.13) (4)
QIAGEN N.V. Clawback Policy
Namensschuldverschreibungen Agreement dated as of August 16, 2022 (Filed
as Exhibit 2.14) (4)
*101
Inline XBRL Interactive Data File
Description of Securities (Filed as Exhibit 2.12) (5)
*104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in
Exhibit 101)
QIAGEN N.V. Amended and Restated 2005 Stock Plan (Filed as Exhibit 99.1) (6)
* Filed herewith.
(1) Inc orp orated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 6, 2018.
(2) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 6, 2019.
(3) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 5, 2021.
(4) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 13, 2023.
(5) Incorporated by reference to Form 20-F Annual Report of QIAGEN N.V. filed with the Securities and Exchange Commission on March 2, 2020.
(6) Incorporated by reference to Registration Statement of QIAGEN N.V. on Form S-8 filed with the Securities and Exchange Commission on November 17, 2011.
(7) Incorporated by reference to Registration Statement of QIAGEN N.V. on Form S-8 filed with the Securities and Exchange Commission on April 2, 2015.
The registrant hereby certifies that it meets all of the requirements for filing on
Form 20-F and that it has duly caused and authorized the undersigned to sign
this annual report on its behalf.
QIAGEN N.V.
Dated:
March 8, 2024
By:
/s/ Thierry Bernard
Thierry Bernard, Chief Executive
Officer
/s/ Roland Sackers
Roland Sackers, Chief Financial
Officer
TABLE OF CONTENTS
Note 6 "restructuring,"Note 11 "goodwill and Intangible Assets."Note 14 "derivatives and Hedging"Note 16 "debt"Part To Our Operating Subsidiaries Being Exposed To Statutory Tax Rates RangingNote 17 "income Taxes"Note 14 "derivatives and Hedging,"Note 16 "debt."Note 12 "leases"Note 20 "commitments and Contingencies"Note 20 "commitments andNote 16 "financial Debts"Note 22 "share-based Compensation"Note 10 "investments."Note 21 "segment Information"Note 16 "debt." Of The $ 331. 1 Million, Which Is Held in Both U.s. Dollars and Euros, 255. 0 Million Was Designated AsItem and Derivative Hedging Instrument Were Calculated By Applying The Change in Spot Rate Between Two Assessment DatesNote 16 "debt,"Note 10 "investments"Note 18 "equity,"Note 14 "derivatives and Hedging."Note 14 "derivativesNote 18 "equity."Note 15 "financial Instruments and Fair Value Measurements"Note 4 "revenue"

Exhibits

*1.1 Articles of Association as confirmed by notarial deed as of January29, 2024(English translation) 4.2 QIAGEN N.V. 2014 Stock Plan (Filed as Exhibit 99.1)(7) 2.1 Schuldscheindarlehensvertrag Form of Loan Agreement dated as of June 19,2017 (Filed as Exhibit 2.11)(1) *4.3 QIAGEN N.V. 2023 Stock Plan 2.2 2024 Bonds Indenture dated November 13, 2018 (Filed as Exhibit 2.17)(2) *8.1 List of Subsidiaries 2.3 2024 Form of Warrant Confirmation dated November 6, 2018 (Filed as Exhibit2.18)(2) *11.1 QIAGEN N.V. Insider Trading Policy 2.4 2024 Form of Bond Hedge Confirmation dated November 6, 2018 (Filed asExhibit 2.19)(2) *12.1 Certification under Section 302; Thierry Bernard, Managing Director and ChiefExecutive Officer 2.5 Global Bearer Bond Representing Convertible Bonds due 2027 dated as ofDecember 17, 2020 (Filed as Exhibit 2.12)(3) *12.2 Certification under Section 302; Roland Sackers, Managing Director and ChiefFinancial Officer 2.6 Purchase Agent Agreement dated as of December 10, 2020 (Filed as Exhibit2.13)(3) *13.1 Certifications under Section 906; Thierry Bernard, Managing Director and ChiefExecutive Officer and Roland Sackers, Managing Director and Chief FinancialOfficer 2.7 Subscription Agreement dated as of December 10, 2020 (Filed as Exhibit2.14)(3) *15.1 Consent of Independent Registered Public Accounting Firm 2.8 Schuldscheindarlehensvertrag Form of Loan Agreement dated as of July 13,2022 (Filed as Exhibit 2.13)(4) *97.1 QIAGEN N.V. Clawback Policy 2.9 Namensschuldverschreibungen Agreement dated as of August 16, 2022 (Filedas Exhibit 2.14)(4) *101 Inline XBRL Interactive Data File 2.10 Description of Securities (Filed as Exhibit 2.12)(5) *104 Cover Page Interactive Data File (formatted as Inline XBRL and contained inExhibit 101) 4.1 QIAGEN N.V. Amended and Restated 2005 Stock Plan (Filed as Exhibit 99.1)(6)